Top 5 Small Cap Stocks To Watch Right Now

When investors have the willingness to take short term positions and the ability to bear a certain degree of risk, small-cap funds could be the correct choice. These funds generate significant demand driven sales during a market upswing, which lead to an increase in their prices. Smaller firms also look to continuously reinvest their profits back into their business. This reassures shareholders of superior performance and higher profit potential from such companies. Small Cap funds therefore make excellent additions to a well-diversified portfolio.

Below we will share with you 5 top rated small-cap mutual funds. Each has earned a Zacks #1 Rank (Strong Buy) as we expect these mutual funds to outperform their peers in the future. To view the Zacks Rank and past performance of all small-cap funds, investors can click here to see the complete list of funds.

Top 5 Small Cap Stocks To Watch Right Now: Achillion Pharmaceuticals Inc.(ACHN)

Achillion Pharmaceuticals, Inc., a biopharmaceutical company, engages in the discovery, development, and commercialization of treatments for infectious diseases. The company focuses on the development of antivirals for the treatment of chronic hepatitis C; and the development of antibacterials for the treatment of resistant bacterial infections. Its drug candidates for the treatment of chronic HCV include ACH-1625, a protease inhibitor, which is in phase IIa clinical trial for the treatment of chronic HCV; ACH-2684, a pangenotypic protease inhibitor, which is in phase I clinical trial for the treatment of chronic HCV infection; and NS5A inhibitors for the treatment of chronic HCV infection, including ACH-2928, which is to enter a phase I clinical trial, as well as various additional NS5A inhibitors in preclinical development. Its pipeline of product candidates also includes ACH-702 and ACH-2881 for drug resistant bacterial infections; elvucitabine for HIV infection; and AC H-1095 for HCV infection. The company was founded in 1998 and is based in New Haven, Connecticut.

Advisors' Opinion:

• [By Brian Nichols]

  Achillion is an odd play because it has both the most upside and the most downside of any stock on this list. The company's developing and testing its hepatitis C treating drug, ACH-1625, which is currently in phase II. The results of initial testing have consisted of ups and downs, but after many years and a long process, ACH-1625, appears to be on the right track for an FDA approval.

  The upside in shares of ACHN comes from two places: encouraging data from trials and its likelihood of being acquired. In my opinion, ACHN has a very high chance of being acquired in the next 6 months. Both Pharmasset (VRUS) and Inhibitex (INHX) were acquired over the last 5 months with insanely large premiums. VRUS was purchased at a 81% premium and INHX for a 182% premium. ACHN is perhaps the most speculative, but it could also be purchased the cheapest.

  The stock's recently pulled back after a downgrade and is trading much lower over the last couple weeks. The stock's trend reminds me so much of INHX; the month following the VRUS acquisition when INHX traded higher by nearly 300%. But then after the one-month gain, INHX lost its momentum and traded lower by 40% before being acquired with a 182% premium. INHX traded higher after the VRUS purchase because investors thought it would also be acquired, because of its hepatitis C candidate. ACHN is following the same trend, from November 12 till January 13 the stock more than doubled, but has since retraced.

  At $10 I think ACHN is a buy, it does have a good HCV candidate, and I believe that big pharma will bid to acquire ACHN in the near future. However, the risk in ACHN is if the company's not acquired, then it could have significant loss over the next year. But in a competitive biotechnology industry I believe the reward is worth the risk, and that a large pharma company will take the chance and purchase ACHN in an attempt to stay competitive and capitalize on the trend of investors being bullish on HCV treating drugs.

Top 5 Small Cap Stocks To Watch Right Now: FuelCell Energy Inc.(FCEL)

FuelCell Energy, Inc., together with its subsidiaries, engages in the development, manufacturing, and sale of high temperature fuel cells for clean electric power generation primarily in South Korea, the United States, Germany, Canada, and Japan. The company offers proprietary carbonate Direct FuelCell Power Plants that electrochemically produce electricity from hydrocarbon fuels, such as natural gas and biogas. Its fuel cells operate on a range of hydrocarbon fuels, including natural gas, renewable biogas, propane, methanol, coal gas, and coal mine methane. The company also develops carbonate fuel cells, planar solid oxide fuel cell technology, and other fuel cell technologies. It provides its products to universities; manufacturers; mission critical institutions, such as correction facilities and government installations; hotels; and natural gas letdown stations, as well as to customers who use renewable biogas for fuel, including municipal water treatment facilities, br eweries, and food processors. The company was founded in 1969 and is headquartered in Danbury, Connecticut.

Advisors' Opinion:

• [By Roberto Pedone]

   Fuelcell Energy (FCEL) designs, manufactures, sells, installs and services ultra-clean, highly efficient stationary fuel cell power plants for distributed baseload power generation. This stock is trading up 7.2% to $1.01 in recent trading.

  Today’s Range: $0.94-$1.01

  52-Week Range: $0.83-$1.95

  Volume: 1.27 million

  Three-Month Average Volume: 1.04 million

  From a technical perspective, FCEL is ripping higher here right above its 50-day moving average of 92 cents per share with above-average volume. This move is quickly pushing shares of FCEL within range of triggering a near-term breakout trade. That trade will hit if FCEL manages to take out its 200-day moving average at $1.05 and then once it takes out more overhead resistance at $1.06 with high volume.

  Traders should now look for long-biased trades in FCEL as long as it’s trending above its 50-day at 92 cents per share, and then once it sustains a move or close above those breakout levels with volume that hits near or above 1.04 million shares. If that breakout hits soon, then FCEL will set up to re-test or possibly take out its next major overhead resistance level at $1.18. Any high-volume move above $1.18 will then put $1.39 into range for shares of FCEL.

• [By SmallCap Investor]

  The developer of stationary fuel cells used by commercial and government customers might be headed for a rebound from a pullback that began this spring - which has left the stock down 39 percent year-to-date.

Best Warren Buffett Companies To Own For 2014: EZchip Semiconductor Limited(EZCH)

EZchip, a fabless semiconductor company, engages in the development and marketing of Ethernet network processors for networking equipment. Its products include network processor chips, evaluation boards and network-processor based systems, and development software toolkits. The company offers network processors for use in forming the silicon core of networking equipment, such as switches and routers; and for voice, video and data integration in various applications. Its network processors are single-chip solutions, which enable its customers to design multi-port line cards, such as processing and classification engines, traffic managers, media access controllers, as well as a range of specialized hardware blocks that accelerate various functions. The company offers Evaluation systems which enable customers to test NPU-based systems; and toolkits that assist customers in creating, verifying, and implementing solutions based on its network processors. It provides a library f eaturing data plane code for a range of applications, which include Metro Ethernet protocols, Multi-Protocol Label Switching, IPv4 and IPv6 routing, Access Control Lists, GPON/EPON OLT functionality, Network Address Translation, and Server Load Balancing. The company sells its products directly, and through contract manufacturers and distributors to network equipment vendors. It markets its products in Israel, China, Hong Kong, the Far East, Canada, the United States, and Europe. The company was formerly known as LanOptics Ltd. and changed its name to EZchip Semiconductor Ltd. in July 2008. EZchip Semiconductor Ltd. was founded in 1989 and is based in Yokneam, Israel.

Advisors' Opinion:

• [By Paul]  

  Known for designing high-speed networking equipment chips. They had a solid first quarter as revenue gained 38% and now they are sitting on $75 million of cash with no expenses or debt. I believe this is a strong technology bet and I place a target of $30.

Top 5 Small Cap Stocks To Watch Right Now: Sify Technologies Limited(SIFY)

Sify Technologies Limited provides enterprise and consumer Internet services primarily in India. The company offers various corporate network/data services comprising e-commerce and network connectivity solutions, such as end-to-end services network, application, and security services; voice origination and termination services; co-location and managed hosting services; and system integration services for data centre build, hardware distribution, security solutions, and turnkey projects. It also provides application services, including SLEMS and Microsoft Exchange messaging platforms; I-test for online assessment and LiveWire, which enable management of training processes across the organization; document management system for the management of documents electronically; and Forum, a forward supply chain solution. In addition, the company operates e-Ports that offer browsing, chat, email, gaming, utility bill payment, travel ticketing, hotel booking, mobile recharge, Intern et telephony, and online share trading services; and portals, which provide news, views, reviews, interactions, and services in the areas of movies, sports, finance, food, videos, astrology, online games, shopping, and travel, as well as offers content offerings and broadband services. Further, it provides infrastructure management services, such as network management, datacenter and helpdesk outsourcing, desktop and storage outsourcing, IT security outsourcing, LAN and WAN outsourcing, database and telecom outsourcing, and application monitoring and management services to automotive, chemical, media, and financial enterprises; and virtualization design, integration, and deployment services for servers, storage, networks, and end user clients. Sify has approximately 1,278 e-Ports in 200 towns and cities; and serves 1,06,000 broadband subscribers through 1500 cable TV Operators. The company, formerly known as Sify Limited, was founded in 1995 and is based in Chennai, India. Advisors' Opinion:

• [By Wyatt Research Staff]

  Shares of SIFY skyrocketed last week after the company announced a new partnership with Saudi telecom. SIFY will provide ICT services to the Middle East's largest telecom carrier.

  Shares of the Indian-based internet and network services have doubled over the past four months.

Top 5 Small Cap Stocks To Watch Right Now: InterDigital Inc.(IDCC)

Interdigital, Inc. engages in the design and development of digital wireless technology solutions. The company offers technology solutions for use in digital cellular and wireless products and networks, including 2G, 3G, 4G, and IEEE 802-related products and networks. It holds patents related to the fundamental technologies that enable wireless communications. The company licenses its patents to equipment producers that manufacture, use, and sell digital cellular and IEEE 802-related products; and licenses or sells mobile broadband modem solutions, including modem IP, know-how, and reference platforms to mobile device manufacturers, semiconductor companies, and other equipment producers that manufacture, use, and sell digital cellular products. InterDigital?s solutions are incorporated in various products comprising mobile devices, such as cellular phones, tablets, notebook computers, and wireless personal digital assistants; wireless infrastructure equipment, such as base stations; and components, dongles, and modules for wireless devices. The company was founded in 1972 and is headquartered in King of Prussia, Pennsylvania.

Advisors' Opinion:

• [By CRWE]

  InterDigital, Inc. (NASDAQ:IDCC) reported that certain of its subsidiaries have completed the previously announced sale of roughly 1,700 patents and patent applications to Intel Corporation for $375 million in cash.

• [By SmallCap Investor]

  The wireless technology company said it's exploring its options, including a possible sale, following last month's successful auction of Nortel Networks intellectual property which brought in $4.5 billion. IDCC owns about 1,300 patents related to mobile phone technology.

Volatility Is Not Risk

This article was inspired by Roger Nusbaum's post on his Random Roger blog – Sunday Morning Coffee on Sunday, April 8, 2012. Roger is a highly respected financial blogger that I believe is genuinely interested in providing his readers meaningful and prudent investment advice and guidance. Therefore, I have a great deal of respect for his work and intentions. On the other hand, Roger and I often disagree on certain investing principles, especially those that deal with asset allocation, proper diversification and the definition of risk. However, I would hope that he respects my differing views as being offered with the same best of intentions, as I see his offerings.

The Greater Risk Is People's Reaction to Volatility

Roger's blog dealt with his feelings about a recurring theme in Barron's over the weekend referencing people's complacency for risk. The first part of his writing dealt with the risks associated with the utilization of puts. On this subject, Roger and I are in agreement. However, the second part of his blog talked about what he obviously felt was the great risk of using dividend paying equities as an alternative investment choice. The following excerpt introduces his views, which frankly, up to this point, I take little exception to:

"The other point from Barron's (this was repeated in a couple of places) was a repeat of the idea that the Fed's interest rate policy (and the other attempts to stimulate the economy) are forcing investors into other instruments to seek a "reasonable return."

However, I do take exception to his next paragraph as I felt that it is overstating the risk associated with the utilization of dividend paying stocks for two primary reasons. First of all, his assumption that a bear market will provide a tragic outcome because dismayed investors will panic is more assumption than fact. Second, his last sentence insinuates, at least in my opinion, that dividend paying stocks are not safe investments.

"I hate this line ! of thinking. It would be great to get a "reasonable" rate of return from cash and treasuries but for now that is not the case. That people put what should be their low risk dollars into higher risk instruments to get a return they used to get from cash has tragic outcome written all over it. If there is another bear market before interest rates normalize there will be an avalanche of dismayed investors panic selling their dividend stocks because they thought the stocks were "safe."

But it was with the last couple of sentences of his blog post that I took the greatest exception. More precisely, I found that his example of Phillip Morris International (PM) to be misleading. However, not because of what Roger included, but rather because of what he left out. I will elaborate more right after the following excerpt where he closed out his blog post:

"All stocks have strong and weak holders and I promise you that the weak holders will sell into the face of something bad--this is normal market behavior and has nothing to do with the merits of a stock or a strategy. I believe a client holding Philip Morris Intl (PM) is favorably viewed by the dividend crowd yet it went down 32% from when it spun off in March 2008 into the March 2009 low--weak hands not bad stock."

It is certainly possible, and perhaps even probable that Roger is correct in assuming that so-called "weak holders" may in truth do as he suggests and panic sell. However, I believe a lot of that "normal market behavior" can greatly be attributed to the preponderance of negatively biased information that is promogulated upon the general public, especially regarding equities and how risky they are. In other words, if people were offered a more reasoned perspective, then perhaps much of the irrational and catastrophic panic selling that Roger alludes to could be avoided.

The following analysis utilizing the F.A.S.T. Graphs™ earnings and price correlated research tool on Philip Morris International illuminate! s the imp! ortant parts that I feel Roger's comment left out. Roger is correct regarding how far that Philip Morris International's stock price dropped, as can be seen by reviewing the black monthly closing stock price line marked by the flags on the graph. Phillip Morris International's stock price did, in fact, fall by the 32% plus number that Roger presented, and as he also stated, can most likely be attributed to "weak hands." However, what his comment left out was the fact that the company's operating earnings were stable and continued to grow. More simply stated, the stock price fell even though the company's operating results remained strong and solid.

Therefore, investors armed with that information could have seen that this low point in Philip Morris International's stock price represented an incredible opportunity not a high risk. The smart money (strong hands) would have added to their positions in this high-quality company that was continuing to post good results and raised its dividend every year, rather than sell out. However, even if no one added money and simply held on they would have been given a substantial increase in their dividend each year and had their stock price rise from the original $50 a share to the more than $80 a share that it currently trades at (see flags on graph). The risk was not in the volatility itself, true risk would have been irrationally reacting to the volatility.

My point is that price volatility in itself is not risk, in my opinion, true risk is how people react to volatility when it occurs. Moreover, I believe that the reason there are so many "weak hands" is because of the weak information that investors are inundated with. Knowledge is power, and I believe that if people were provided with greater knowledge on how equities, especially dividend paying equities, truly work, then we would be cultivating a lot more strong hands. At the end of the day, this could also reduce the level of volatility by reducing the level of panic that ! would res! ult from a better informed public.

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Risk, Diversification and Prudent Behavior

In an attempt to summarize my views on diversification and how they differ from Roger's I offer the following. The principles of proper diversification are both important and sound, and therefore should never be neglected when developing an asset allocation strategy. Moreover, the principles of proper diversification are valid and necessary when dealing with uncertain markets, but especially during times when markets are functioning (plus or minus) in a normal manner. Therefore, I am comfortable with and embrace a strategy of diversifying across numerous asset classes as long as each asset class makes sound and prudent economic sense at the time. However, when, and if, an asset class sits at an extreme level, then I feel it is imprudent to utilize it for the sole sake of so-called diversification.

I believe bonds of all types are currently sitting at such an extreme. Traditionally thought of as safe investments, I believe that over the next four or five years bond prices could show more downside volatility than equities did even during the great recession of 2008. Under normal times, bonds would offer yields that were several percentage points higher than quality dividend paying stocks. Consequently, bonds were attractive due to the higher level of income they offered and were relatively stable as long as interest rates remained within historical normal ranges. Today that is not true.

As a result, I currently eschew the asset class bonds in favor of high-quality blue-chip dividend paying stocks. To be clear, when bond yields move back to more normal levels I would once again be happy to embrace including them in a properly diversified asset allocation ! plan. But! at today's low rates, I believe that the traditionally safe bond has become one of the riskier asset classes, especially if you consider the potential for high volatility with their prices as risk. My point is, my aversion to bonds is a temporary one that would change if and when interest rates normalize and stabilize.

Therefore, to mindlessly invest in an obviously dangerous asset class for the sole sake of diversification does not make sense to me. We believe that investors should always think their way through the process of allocating their assets when building their portfolios. On the other hand, I don't believe that money should be forced into an asset class when it doesn't make economic sense just because you hold the notion of diversification as sacred.

Diversification when properly applied is a great way to control risk. But investing in an asset class that is upside down solely for the purpose of diversification when it can be obviously avoided makes no sense to me. Technology stocks during the 1999 bubble were a case in point. All you had to do was run the numbers and you could have quickly determined that there was no economic value in technology stocks at that time.

In contrast, today when looking at quality blue-chip dividend paying stocks that are trading at historically low valuations thereby offering above-average and growing yields, makes a lot of sense to me. I would argue that because of historically low valuations, they have never been a safer investment choice than they are today. And, the only reason to consider a Dividend Aristocrat or a Dividend Champion, at least to my way of thinking, is because you intend to own it for a very, very long time. Therefore, you cannot avoid short to intermediate term volatility, nor should you try. Instead you should accept it as an unavoidable fact of the market. Otherwise, a record of increasing the dividends every year for 25 straight years or more doesn't really seem relevant, unless you were going to hold f! or many y! ears.

Not All Price Drops are the Same

A final point I would like to introduce is the idea that not all price drops are the same. Sometimes the drop in a company's stock price is justified and the harbinger of real systemic issues. At other times, a drop in the price of a stock can represent an incredible opportunity to buy an excellent business that has unjustifiably gone on sale. Making these distinctions regarding volatility is a critical differentiation that should be made.

Furthermore, it's also valuable to be able to identify and determine whether an interruption of a company's business is a temporary one or a more permanent phenomenon. Because, there are times when the drop in price of a stock is a sell signal, and there are times when it represents an attractive buying opportunity. The following discussion is offered to illustrate examples of the many faces of stock price volatility to include the good, the bad and the ugly. These are just a few select examples, and there are many others that I could have used.

Bank of America an Ugly Price Drop

Our first example looks at Bank of America (BAC), and represents a quintessential example of an operating meltdown due to the now infamous financial crisis. Bank of America's stock price fell from a high of over $55 to a low of $2.53, which followed an earnings collapse from $4.65 in calendar year 2006 to a loss by calendar year 2009 (see red highlight at bottom of graph). Therefore, since both earnings and price collapsed, not only was the price drop justified, but the recovery may be years away, if ever. This is why I consider this an ugly price drop.

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General Electric - a Bad Price Drop and an Ugly Price Drop

In the case of General Electric (GE), there are actually multiple variations of different kinds of price drops. First, we can see that in calendar year 2000 Gene! ral Elect! ric's stock price had become massively overvalued. Consequently, even though earnings continued to look good for several years, the falling prices in 2001 and 2002 were justified due to excessive valuation. Then, of course, we see a price drop where prices followed earnings down during the financial debacle in 2008 and 2009. In this case, recovery should be sooner than what we saw with Bank of America, although it still looks like it's still going to be many years away.

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Wells Fargo - a Bad Price Drop Getting Better

Wells Fargo & Co. (WFC) represents a financial that had a bad price drop that followed a similar drop in earnings. However, earnings have subsequently recovered and stock price recovery has already been good to the extent that it may soon eclipse historical highs.

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Cognizant Technology Solutions - A Good Price Drop

My last example looks at a company that had its stock price drop significantly during the great recession, while operating earnings continued to increase at a very strong rate. Consequently, this represents an example of a good price drop that created an extraordinary bargain. Therefore, price recovery has already dramatically exceeded historical highs (see price flags on graph).

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The point with this exercise was simply to illustrate that a drop in a company's stock price is not always a bad thing. Sometimes it is, as we saw with the Bank of America example, and sometimes it represents a great opportunity as illustrated by the Cognizant Technology Solutions' example. I believe that investors need to make these types of distinctions in order to truly be able to make s! ound and ! proper buy, sell or hold decisions. In other words, sometimes the price drop is justified and sometimes it's not.

Summary and Conclusions

As I mentioned in the opening of this article, it was inspired by comments that were made by a financial blogger that I respect. On the other hand, there was much about what he wrote that I disagreed with and therefore, I felt compelled to offer my opposing views. On the other hand, I cannot argue with his position regarding weak or strong hands. It is true, that many investors, because they are ignorant of the facts, can and will panic during periods of market turbulence. However, what I disagreed with most was the fatalistic attitude surrounding the notion that equities were bad because investors would panic.

I once read a quote attributed to Bob Veres, a respected columnist for the financial planning community that at its essence summarizes my view. I offer it as a pseudo-quote because I maybe interjecting a little paraphrasing:

"the definition of an excellent investment adviser is one who possesses the courage and integrity to insist that his clients do what they should do, rather than what they want to do."

In my way of thinking, I believe it is our responsibility as professional financial advisers and bloggers to educate our clients and readers to factual and valid principles of sound investing practices. To suggest that it's a bad idea for investors to own equities only because you believe they will panic because their hands are weak, is not a valid recommendation, in my humble opinion. Instead, I believe it's incumbent upon us to offer the correct information and education that will prevent investors from behaving in irrational ways that could hurt their long-term investment results.

Furthermore, the bottom line is that I believe that equities, especially blue-chip dividend paying equities are being given a bad rap from this attitude by suggesting they are riskier than, in fact, they truly are. The tru! th is tha! t blue-chip companies such as Procter & Gamble (PG), Johnson & Johnson (JNJ) and many others too numerous to mention, have long legacies spanning decades of operating excellence and increasing dividends. To classify them as risky investments based on simply the idea that pricing can be volatile, is in my way of thinking, an injustice.

If these blue-chip companies are purchased at reasonable valuations based on fundamentals, then the prudent investor can and should be capable of owning them over long periods of time. On the best ways to do this is to make the distinction between emotionally-driven price volatility versus permanent deterioration of the company's long-term fundamentals. As I stated before, both competent mountain climbers and Dividend Growth Investors recognize that the only way to get to the highest peak is to be willing to traverse the occasional valley along the way. We should not be telling investors that they are too dumb or weak-minded to own stocks, instead, we should be educating them on the true benefits and risks that come with owning them. Knowledge is power.

Disclosure: Long CTSH 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.

ManTech Gets DOJ Contract - Analyst Blog

Critical software services provider ManTech International Corporation (MANT) recently procured a $16-million worth time and materials (T&M) contract from the Department of Justice's (DOJ) Civil Division to provide the requisite IT support, strategic planning and training services to end users.

The Civil Division of DOJ represents Members of Congress, Cabinet Officers and other federal employees in any civil or criminal matter within its scope of responsibility. Its primary responsibilities include ensuring the uniformity of the Federal Government's voice in its view of the law, preserving the intent of Congress and credibility of the government before the courts.

According to the agreement, ManTech will provide a 24/7 service desk in addition to software development, training, and administration services to the end users to ensure easy accessibility of information. The company has a long-standing business association with DOJ and the current contract reinforces this mutual relationship.

Over the years, ManTech has a steady stream of contract awards (bookings). Bookings aggregated $306 million in first quarter 2013, representing a book-to-bill ratio of 0.5. With a significant number of awards, the company had a healthy backlog of business worth $6.1 billion by the end of the quarter. At quarter-end, ManTech had $172 million in cash and cash equivalents.

With strong liquidity position and robust business backlogs, ManTech is poised to register solid revenue growth in 2013. The company envisages continuous recruitment initiatives to fulfill its order backlogs. We also remain encouraged by the positive developments in the industry.

ManTech presently carries a Zacks Rank #3 (Hold). Other players in the industry worth reckoning include Syntel, Inc. (SYNT), NeoPhotonics Corporation (NPTN) and TriQuint Semiconductor, Inc. (TQNT), each carrying a Zacks Rank #2 (Buy).

Comcast's Home Pass Eases Login - Analyst Blog

Comcast Corporation (CMCSA) – the largest cable MSO in the U.S. – is offering its Home Pass automated authentication service to Xfinity TV customers. This innovative and hassle-free account access service has successfully passed Comcast's trials.

The new Home Pass solution offers immediate access to subscribers of Xfinity.com/TV website from their home itself without any user name and password. This uniqueness of the solution will not only save time but also the trouble of remembering the password.

Last year, during London Olympics, Comcast had put the new Home Pass service on trial and has received a warm response.

Comcast has also launched Facebook Connect, which connects customers to the Comcast.net account through their Facebook accounts. Moreover, the company also offers a secondary email authentication solution which allows the user to stay connected for 30 days at a stretch.

Comcast is continuously launching new products and services in order to retain its subscribers as well as to safeguard its position against popular pay-TV operators like Time Warner Cable (TWC), Cablevision Systems Corp. (CVC) and DirecTV (DTV).

In the recently concluded first quarter of 2013, Comcast lost 60,000 video customers compared with a net loss of 37,000 customers in the prior-year quarter. Hence, we believe that the launch of such popular services coupled with the increasing popularity of its Xfinity TV services will lead to higher subscriber and ARPU growth while moving ahead.

Currently, Comcast Corporation carries a Zacks Rank #2 (Buy).

Best Bank Companies To Watch For 2014

After being a big part of the problem for gold, the U.S. Federal Reserve and its chairman, Ben Bernanke, are finally becoming a part of the solution. On Wednesday, Bernanke made clear that the growing concern in the precious metals markets that quantitative easing would begin to taper off were unfounded. Combined with positive comments from miners,�including Newmont Mining (NYSE: NEM  ) and Gold Fields (NYSE: GFI  ) , the result was a major surge for gold during Thursday's trading session. Making the move all the more interesting is the fact that the miners are outperforming the commodity, an unusual occurrence over the course of this year.

The Fed
On July 10, the Fed minutes were released showing the intense divide which still remains among the central bank's senior officials:�"Others were concerned that stating an intention to slow the pace of asset purchases, even if the intention were conditional on the economy developing about in line with the Committee's expectations, might be misinterpreted as signaling an end to the addition of policy accommodation or even be seen as the initial step toward exit from the Committee's highly accommodative policy stance."

Best Bank Companies To Watch For 2014: Ampco-Pittsburgh Corporation(AP)

Ampco-Pittsburgh Corporation and its subsidiaries manufacture and sell custom-engineered equipment in the United States and internationally. It operates in two segments, Forged and Cast Rolls, and Air and Liquid Processing. The Forged and Cast Rolls segment produces forged hardened steel rolls used in cold rolling for the producers of steel, aluminum, and other metals; and cast iron and steel rolls for hot and cold strip mills, medium/heavy section mills, and plate mills. The Air and Liquid Processing segment manufactures finned tube and plate finned heat exchange coils for the commercial and industrial construction, as well as for process and utility industries; custom air handling systems used in commercial, institutional, and industrial buildings; and a line of centrifugal pumps for the refrigeration, power generation, and marine defense industries. The company was founded in 1929 and is based in Pittsburgh, Pennsylvania.

Advisors' Opinion:

• [By EntreBankph.com]

  Aboitiz Power Corporation (AP) is a publicly-owned holding company listed with the Philippine Stock Exchange that, through its subsidiaries and affiliates, is a leader in the Philippine hydroelectric power generation industry and has interests in some of the largest privately-owned distribution utilities in the Philippines. Since its incorporation in 1998, AP has accumulated interests in both hydroelectric power generation facilities and in thermal plants.

Best Bank Companies To Watch For 2014: Banco Bilbao Vizcaya Argentaria S.A. (BBVA)

Banco Bilbao Vizcaya Argentaria, S.A. (BBVA) is a diversified international financial group, with strengths in the traditional banking businesses of retail banking, asset management, private banking and wholesale banking. The Company also has investments in some of Spain�� companies. During the year ended December 31, 2009, BBVA focused its operations on six major business areas: Spain and Portugal, Wholesale Banking and Asset Management, Mexico, The United States, South America and Corporate Activities. On August 21, 2009, through its subsidiary BBVA Compass, BBVA acquired certain assets of Guaranty from the United States Federal Deposit Insurance Corporation (the FDIC).

Spain and Portugal

The Spain and Portugal business area focuses on providing banking services and consumer finance to private individuals, enterprises and institutions in Spain and Portugal. The main business units included in the Spain and Portugal area Spanish Retail Network, which manages individual customers, high net-worth individuals (private banking) and small companies and retailers in the Spanish market; Corporate and Business Banking, which manages business with small and medium enterprises (SMEs), large companies, institutions and developers in the Spanish market, and Other units, which includes consumer finance, that manages renting and leasing business, credit to individual and to enterprises for consumer products and Internet banking; European Insurance that manages the insurance business in Spain and Portugal, and BBVA Portugal, that manages the banking business in Portugal. The Spanish Retail Network unit services the financial and non-financial needs of households, professional practices, retailers and small businesses. The Corporate and Business Banking unit offers a range of services and products to SMEs, large companies, institutions and developers with specialized branch networks for each segment.

The Company�� European Insurance unit�� activities are conducted through! various insurance companies that provide direct insurance, reinsurance and insurance brokering services in Spain and Portugal and market products for different types of customers (private individuals, SMEs, retailers, professional service firms and providers and self-employed individuals) through this unit�� branch offices. BBVA Portugal manages its banking business in Portugal.

Wholesale Banking and Asset Management

The Wholesale Banking and Asset Management area focuses on providing services to large international companies and investment banking, capital markets and treasury management services to clients. The business units included in the Wholesale Banking and Asset Management area are Corporate and Investment Banking, which coordinates origination, distribution and management of a complete catalogue of corporate and investment banking products (corporate finance, structured finance, syndicated loans and debt capital markets) and provides global trade finance and global transaction services with coverage of large corporate customers specialized by sector (industry bankers); Global Markets, which handles the origination, structuring, distribution and risk management of market products, which are placed through its trading rooms in Europe, Asia and the Americas; Asset Management, which designs and manages the products that are marketed through its different branch networks including traditional asset management, alternative asset management and Valanza (its private equity unit); Industrial and Other Holdings, which helps to diversify the area�� businesses with the aim of creating medium and long-term value through active management of a portfolio of industrial holdings and other Spanish and international projects, and Asia.

During the year ended December 31, 2009, it launched two products: BBVA Bonos Cash (BBVA Cash Bonds), a money market fund for retail customers, and BBVA Bonos Largo Plazo Gobiernos II (BBVA Long-Term Government Bonds), a public-debt fu! nd. In ad! dition it launched through this unit additional fixed-income long-term funds, including BBVA Bonos Corporativos 2011 and BBVA Bonos 2014, which were sold to HNWI customers.

Mexico

The business units included in the Mexico area are Retail and Corporate banking and Pensions and Insurance. BBVA Bancomer launched six new mortgage products for lending to home buyers in 2009. These products included: loans for home improvements, remodeling or additions to homes and financial discount which provides liquidity to construction companies. In Mexico, it operates its pensions business through Afore Bancomer, its insurance business through Seguros Bancomer, its annuities business through Pensiones Bancomer and its health insurance business through Preventis.

The United States

The business units included in the United States area are BBVA Compass and Other units: BBVA Puerto Rico and Bancomer Transfers Services (BTS). During 2009 this unit marketed and sold several new products, The ClearPoints credit card, Business Build-to-order Checking, Compass for your Cause and Money Market Sweep.

South America

The South America business area includes its banking, insurance and pension businesses in South America. The business units included in the South America business area are Retail and Corporate Banking, which includes banks in Argentina, Chile, Colombia, Panama, Paraguay, Peru, Uruguay and Venezuela; Pension businesses, which includes pensions businesses in Argentina, Bolivia, Chile, Colombia, Ecuador and Peru and Dominican Republic, and Insurance businesses, which includes insurance businesses in Argentina, Chile, Colombia, Dominican Republic and Venezuela.

Corporate Activities

The Corporate Activities area handles its general management functions. These mainly consist of structural positions for interest rates associated with the euro balance sheet and exchange rates, together with liquidity management and shareholde! rs��fun! ds.

Top 5 Energy Companies To Watch For 2014: National Bank of Greece SA (NBG)

National Bank of Greece S.A. (the Bank), incorporated on March 30, 1841, is a Greece-based financial institution. It offers a range of integrated financial services, including corporate and investment banking, retail banking (including mortgage lending), leasing, stock brokerage, asset management and venture capital, insurance, real estate and consulting services. In addition, the Company is involved in various other businesses, including hotel and property management, real estate and information technology (IT) consulting. On May 19, 2009, the Bank established Ethniki Factors S.A., a wholly owned subsidiary. On June 8, 2009, Finansbank A.S. established Finans Faktoring Hizmetleri A.S. (Finans Factoring), a wholly owned subsidiary. On June 30, 2009, NBG Luxemburg Holding S.A. and NBG Luxfinance Holding S.A. were merged to NBG Asset Management Luxemburg S.A. On January 18, 2010, the Bank acquired 35% of the share capital of AKTOR FM. On October 16, 2009, United Bulgarian Bank A.D. (UBB) established UBB Factoring E.O.O.D., a wholly owned subsidiary of UBB. On September 15, 2009, the Bank disposed of its investment in Phosphoric Fertilizers Industry S.A.

At December 31, 2009, the Bank operated in Greece through 575 branches, one private banking unit, one unit for financial institutions and 10 specialized banking units that deal exclusively with troubled and non-performing loans. At December 31, 2009, the Bank had over 1500 automated teller machines (ATMs).

Retail Banking

The Bank offers retail customers a number of different types of deposit and investment products, as well as a range of services and products. The Bank offers a range of mortgage products, with floating, fixed, or a combination of fixed and floating interest rates. In February 2009, the Bank introduced a new floating rate product, the ESTIA MIKTO with flexible payment terms. In addition to fire and earthquake property insurance, the Bank offers an optional life insurance plan together with mortgage! s.

The Small Business Lending Unit (SBL Unit) a part of the Bank's retail banking division consists of three credit centers situated in Athens, Thessaloniki and Patrastail. The SBL Unit offers term loans geared towards medium and long-term working capital needs for the financing of asset purchases.

Corporate and Investment Banking

The Bank offers corporate accounts with overdraft facilities, foreign currency loans, variable rate loans, and currency swaps and options for corporate customers. The Bank's commercial loan portfolio in Greece comprises approximately 50,000 corporate clients, including small and medium sized enterprises. It offers the corporate clients a range of products and services, including financial and investment advisory services, deposit accounts, loans denominated in euro and other currencies, foreign exchange services, insurance products, custody arrangements and trade finance services. The Bank lends primarily in the form of credit lines, which are generally at variable rates of interest with payment terms of up to 12 months. In addition, the Bank provides letters of credit and guarantees for its clients.

The Bank�� shipping finance and syndicated loan portfolio consists of first-tier shipping groups involved in diversified shipping activities. The Bank provided project finance advisory services to the Hellenic Republic on two infrastructure projects: the new Attica Motorway and Kasteli International Airport.

Global Markets & Asset Management

The treasury activities provided by the Bank and its subsidiaries include

Greek and other sovereign securities trading, foreign exchange trading, interbank lending and borrowing in euro and other currency placements/ deposits, forward rate agreement trading, repurchase agreements, corporate bonds, and derivative products, such as options and interest rate and currency swaps. The Bank also conducts a portion of its treasury activities through its subsidia! ry CPT. A! s at December 31, 2009; CPT's portfolio comprised Greek government bonds and corporate bonds, with a total value of EUR 1.8 billion.

The Bank offers its private banking services both domestically and internationally from its international private banking units in London. The Bank offers custodian services to its foreign and domestic institutional clients who hold equity securities listed on the ATHEX or listed Greek State debt, as well as remote settlement and custody services on the Cyprus Stock Exchange. The Bank offers trade settlements, safekeeping of securities, corporate action processing, income collection, proxy voting, tax reclamation, brokerage services, customized reporting, regular market flashes and information services. The Bank also acts as global custodian to its domestic institutional clients who invest in securities outside of Greece.

The domestic fund management business is operated by NBG Asset Management, which is wholly owned by the Group. NBG Asset Management manages funds that are made available to customers through the Bank's extensive branch network. As at December 31, 2009, NBG Asset Management's total assets under management were EUR 1.9 billion.

National Securities S.A offers a range of investment services to both individual and institutional customers. In September 2009, National Securities S.A. opened a branch in Nicosia, Cyprus, to provide brokerage services to local private investors.

Turkish Operations

The Bank�� Turkish operations include the Finansbank group of companies and NBG Bank (Malta) Ltd. Finansbank's group of companies includes Finans Invest, Finans Leasing, Finans Portfolio Management, Finans Investment Trust, Finans Factoring, IBTech, Finans Pension, and Finans Consumer Finance. As at December 31, 2009, Finansbank operated through a network of 461 branches in 60 cities.

Finansbank Corporate Banking serves corporations through its eight branches in the four cities in Turkey.! Finansba! nk Commercial Banking serves medium-sized companies located in 23 cities in Turkey through its head office, four regional offices (three in Istanbul and one in Ankara) and a distribution network, which includes 61 branches.

Finansbank Investment Banking consists of project finance, corporate finance and technical consulting. Investment Banking acts as a client relations specialist while providing medium to long-term loans and other products. Finansbank Private Banking has been providing investment products and asset management services to individuals through eight private banking centers and 28 private banking corners located in Finansbank's branches in the cities throughout Turkey.

International

The Bank's international operations include the Bank's branches in Albania, Egypt and Cyprus, as well as banking subsidiaries in six countries: NBG Cyprus; Stopanska Banka A.D. in FYROM; United Bulgarian Bank A.D. in Bulgaria; Banca Romaneasca S.A., in Romania; Vojvodjanska in Serbia; and the South African Bank of Athens, as well as other subsidiaries, primarily in the leasing sector. As at December 31, 2009, the Bank had foreign branches in four countries, including one in the United Kingdom, 30 in Albania, one in Cyprus, 15 in Egypt and one in Guernsey (which closed early in 2010).

Insurance

The Bank provides insurance services to individuals and companies through the wholly owned subsidiary Ethniki Insurance Group (EI) and Finans Pension. EI offers a range of products such as life, accident and health insurance for individuals and groups, fire, catastrophe, credit, motor, marine hull and cargo insurance, and general third party liability. EI operates through a network of 2,850 tied agents and 2,620 independent insurance brokers, in addition to selling bancassurance products through the Bank's network. EI provides bancassurance products through our insurance brokerage subsidiary NBG Bancassurance S.A. (NBGB), which assumes no insurance underwr! iting ris! k, and the Bank's extensive network in Greece.

Advisors' Opinion:

• [By Roberto Pedone]

  National Bank of Greece (NBG) is engaged in providing financial services, including retail and commercial banking, global investment management, investment banking, insurance, investment activities and securities trading. This stock closed up 2.5% to $3.61 in Tuesday's trading session.

  Tuesday's Range: $3.49-$3.70
  
  52-Week Range: $2.85-$32.50
  
  Tuesday's Volume: 3.59 million
  
  Three-Month Average Volume: 3.59 million

  From a technical perspective, NBG bounced modestly higher here right above some near-term support at $3.20 with solid upside volume. This stock has been crushed over the last two months, with shares drooping from over $8 to its low of $2.85. Since that drop, the stock has started to stabilize and it's now moving within range of triggering a major breakout trade. That trade will hit if NBG manages to take out some near-term overhead resistance at $3.88 with high volume.

  Traders should now look for long-biased trades in NBG as long as it's trending above $3.20 and then once it sustains a move or close above $3.88 with volume that hits near or above 3.59 million shares. If that breakout triggers soon, then NBG will set up to re-test or possibly take out its next major overhead resistance levels at $4.47 to $5.63

Best Bank Companies To Watch For 2014: Citigroup Inc.(C)

Citigroup, Inc., a global financial services company, provides consumers, corporations, governments, and institutions with a range of financial products and services. The company operates through two segments, Citicorp and Citi Holdings. The Citicorp segment operates as a global bank for businesses and consumers with two primary businesses, Regional Consumer Banking and Institutional Clients Group. The Regional Consumer Banking business provides traditional banking services, including retail banking, and branded cards in North America, Asia, Latin America, Europe, the Middle East, and Africa. The Institutional Clients Group business provides securities and banking services comprising investment banking and advisory services, lending, debt and equity sales and trading, institutional brokerage, foreign exchange, structured products, cash instruments and related derivatives, and private banking; and transaction services consisting of treasury and trade solutions, and securiti es and fund services. The Citi Holdings segment operates Brokerage and Asset Management, Local Consumer Lending, and Special Asset Pool businesses. The Brokerage and Asset Management Business, through its 49% stake in Morgan Stanley Smith Barney joint venture and Nikko Cordial Securities, offers retail brokerage and asset management services. The Local Consumer Lending business provides residential mortgage loans, retail partner card loans, personal loans, commercial real estate, and other consumer loans, as well as western European cards and retail banking services. The Special Asset Pool business is a portfolio of securities, loans, and other assets. Citigroup Inc. has approximately 200 million customer accounts and operates in approximately 160 countries. The company was founded in 1812 and is based in New York, New York.

Advisors' Opinion:

• [By Holly LaFon] Citigroup is a global financial services company with approximately 200 million customer accounts that does business in more than 160 countries and jurisdictions in North America, EMEA, Latin America and Asia.
  
  Citigroup has a P/E of 9.9, which has been increasing since mid-2012. Its stock has increased 44% year to date and reached $37.80 per share. Earnings per share increased to $3.63 in 2011 from $3.50 per share in 2010, after two years of losses.
  
  
  
  In 2011, the company grew loans by 15%, deposits increased from $845 million in 2010 to $865.9 million, and its Tier 1 capital ratio increased from 10.8% to 11.8%.
• [By Philip van Doorn]

  Citigroup (C_). O'Connor on Friday reiterated his "Buy" rating and raised his 12-month price target for Citi to $46 from $40, saying that "in our base-case scenario, our preference is to own bank stocks that still have leverage to the recovery (vs. current stock prices). We believe C is best positioned for this." The analyst estimates that Citigroup will earn $4.60 a share in 2013, with EPS increasing to $5.14 in 2014 and $6.01 in 2015, with key elements being the U.S. housing recovery and the company's cost-cutting efforts. O'Connor also sees less interest rate risk for Citigroup than for other large U.S. banks, because of the company's international exposure. Citigroup also trades at the lowest multiples to book value and to forward earnings estimates, among the banks covered by Deutsche Bank. Citi's shares closed at $41.39 Thursday, trading for 0.8 times the reported Sept. 30 tangible book value of $52.70.

• [By Victor Mora]

  Citigroup provides valuable and essential financial services to companies and consumers operating in a multitude of industries around the world. The stock took a good beating during the 2008 Financial Crisis but seems to be perking-up and getting ready to seek higher prices. Over the last four quarters, earnings and revenue figures have been improving which has generally pleased investors. Relative to its peers and sector, Citigroup has been a year-to-date performance leader. Look for Citigroup to OUTPERFORM.

Best Bank Companies To Watch For 2014: Royal Bank Of Canada(RY)

Royal Bank of Canada provides personal and commercial banking, wealth management services, insurance, corporate and investment banking, and transaction processing services under the RBC name worldwide. Its Canadian Banking segment offers personal financial services, business financial services, and cards and payment solutions. The company?s Wealth Management segment provides wealth and asset management, and estate and trust services to affluent and high net worth clients through distributors, as well as directly to institutional and individual clients in Canada, the United States, Europe, Asia, and Latin America. Its Insurance segment provides various life and health insurance, including universal life, accidental death and critical illness protection, disability, long-term care insurance, and group benefits; and property and casualty insurance comprising home, auto, and travel insurance, as well as wealth accumulation solutions; and reinsurance products through retail ins urance branches, call centers, independent insurance advisors and travel agencies, financial institutions, and career sales force. The company?s International Banking segment offers various financial products and services to individuals, business clients, and public institutions in the U.S. and Caribbean. This segment also provides global custody, fund and pension administration, securities lending, shareholder services, analytics, and other related services to institutional investors. Royal Bank of Canada?s Capital Markets segment engages in the trading and distribution of fixed income, foreign exchange, equities, commodities, and derivative products for institutional, public sector, and corporate clients; and involves in investment banking, debt and equity origination, advisory services, corporate lending, private equity, and client securitization businesses. The company was founded in 1864 and is headquartered in Toronto, Canada.

Best Bank Companies To Watch For 2014: Federal National Mortgage Association Fannie Mae (FNMAT)

Federal National Mortgage Association Fannie Mae is a government-sponsored enterprise (GSE) chartered by the United States Congress to support liquidity and stability in the secondary mortgage market, where mortgage-related assets are purchased and sold. The Company�� activities include providing market liquidity by securitizing mortgage loans originated by lenders in the primary mortgage market into Fannie Mae mortgage-backed securities (Fannie Mae MBS), and purchasing mortgage loans and mortgage-related securities in the secondary market for its mortgage portfolio. Fannie Mae operates in three business segments: Single-Family business, Multifamily Business (formerly Housing and Community Development (HCD)) and Capital Markets group. Its Single-Family Credit Guaranty and Multifamily businesses work with its lender customers to purchase and securitize mortgage loans customers deliver to the Company into Fannie Mae MBS.

The Company obtains funds to support its business activities by issuing a variety of debt securities in the domestic and international capital markets. Fannie Mae acquires funds to purchase mortgage-related assets for its mortgage portfolio by issuing a variety of debt securities in the domestic and international capital markets. It also makes other investments. Fannie Mae conducts its business in the United States residential mortgage market and the global securities market. It conducts business in the United States residential mortgage market and the global securities market. During the year ended December 31, 2011, the Company��

Single-Family Business

Single-Family business includes mortgage securitizations, mortgage acquisitions, credit risk management and credit loss management. Single-Family business works with the Company�� lender customers to provide funds to the mortgage market by securitizing single-family mortgage loans into Fannie Mae MBS. Its Single-Family business also works with its Capital Markets group to facilitate the purc! hase of single-family mortgage loans for the Company�� mortgage portfolio. Fannie Mae�� Single-Family business prices and manages the credit risk on its single-family guaranty book of business, which consists of single-family mortgage loans underlying Fannie Mae MBS and single-family loans held in its mortgage portfolio. Single-Family business and Capital Markets group securitize and purchase primarily single-family fixed-rate or adjustable-rate, first lien mortgage loans, or mortgage-related securities backed by these types of loans.

The Company securitizes or purchases loans insured by Federal Housing Administration (FHA), loans guaranteed by the Department of Veterans Affairs (VA), and loans guaranteed by the Rural Development Housing and Community Facilities Program of the Department of Agriculture, manufactured housing loans, reverse mortgage loans, multifamily mortgage loans, subordinate lien mortgage loans and other mortgage-related securities. Its Single-Family business securitizes single-family mortgage loans and issues single-class Fannie Mae MBS. Fannie Mae�� Single-Family business securitizes loans solely in lender swap transactions, in which lenders deliver pools of mortgage loans to the Company, which are placed immediately in a trust, in exchange for Fannie Mae MBS backed by these loans. Generally, the servicing of the mortgage loans held in its mortgage portfolio or that backs its Fannie Mae MBS is performed by mortgage servicers on the Company�� behalf. Lenders who sell single-family mortgage loans to Fannie Mae service these loans for the Company. For loans it owns or guarantees, the lender or servicer must obtain its approval before selling servicing rights to another servicer.

Fannie Mae�� mortgage servicers collect and deliver principal and interest payments, administer escrow accounts, monitor and report delinquencies, perform default prevention activities, evaluate transfers of ownership interests, respond to requests for partial releases of sec! urity, an! d handle proceeds from casualty and condemnation losses. Its mortgage servicers are the primary point of contact for borrowers and perform implementation of its homeownership assistance initiatives, negotiation of workouts of troubled loans, and loss mitigation activities. Mortgage servicers also inspect and preserve properties and process foreclosures and bankruptcies.

Multifamily Mortgage Business

Multifamily business works with the Company�� lender customers to provide funds to the mortgage market by securitizing multifamily mortgage loans into Fannie Mae MBS. Through its Multifamily business, Fannie Mae provides liquidity and support to the United States multifamily housing market principally by purchasing or securitizing loans that finance multifamily rental housing properties. It also provides some limited debt financing for other acquisition, development, construction and rehabilitation activity related to projects that complement this business. Fannie Mae�� Multifamily business also works with its Capital Markets group to facilitate the purchase and securitization of multifamily mortgage loans and securities for Fannie Mae�� portfolio, as well as to facilitate portfolio securitization and resecuritization activities.

The Company�� multifamily guaranty book of business consists of multifamily mortgage loans underlying Fannie Mae MBS and multifamily loans and securities held in Fannie Mae�� mortgage portfolio. Revenues for Fannie Mae�� Multifamily business are derived from a variety of sources, including guaranty fees received as compensation for assuming the credit risk on the mortgage loans underlying multifamily Fannie Mae MBS and on the multifamily mortgage loans held in its portfolio and on other mortgage-related securities; transaction fees associated with the multifamily business, and other bond credit enhancement related fees. As with the servicing of single-family mortgages, multifamily mortgage servicing is performed by the lenders who s! ell the m! ortgages to the Company. Fannie Mae�� Multifamily business is organized and operated as an integrated commercial real estate finance business.

Capital Markets

Capital Markets group's primary business activities include mortgage and other investments, mortgage securitizations, structured mortgage securitizations and other customer services, and interest rate risk management. Capital Markets group manages the Company�� investment activity in mortgage-related assets and other interest-earning, non-mortgage investments. It funds its investments primarily through proceeds the Company receives from the issuance of debt securities in the domestic and international capital markets. Its business activity is focused on making short-term use of its balance sheet rather than long-term investments. Activities Fannie Mae is undertaking to provide liquidity to the mortgage market include whole loan conduit, early funding, real estate mortgage investment conduit (REMICs) and other structured securitizations and dollar roll transactions. Whole loan conduit activities include its purchase of both single-family and multifamily loans principally for the purpose of securitizing them. During the year ended December 31, 2010, it was engaged in dollar roll activity. A dollar roll transaction is a commitment to purchase a mortgage-related security with a concurrent agreement to re-sell a similar security at a later date or vice versa.

Fannie Mae�� Capital Markets group is engaged in issuing both single-class and multi-class Fannie Mae MBS through both portfolio securitizations and structured securitizations involving third party assets. Its Capital Markets group creates single-class and multi-class Fannie Mae MBS from mortgage-related assets held in its mortgage portfolio. Fannie Mae�� Capital Markets group may sell these Fannie Mae MBS into the secondary market or may retain the Fannie Mae MBS in its investment portfolio. The Company�� Capital Markets group creates single-class ! and multi! -class structured Fannie Mae MBS, for its lender customers or securities dealer customers, in exchange for a transaction fee. The Company�� Capital Markets group provides its lender customers and their affiliates with services that include offering to purchase a range of mortgage assets, including non-standard mortgage loan products; segregating customer portfolios to obtain optimal pricing for their mortgage loans, and assisting customers with hedging their mortgage business.

Although the Company�� Capital Markets group�� business activities are focused on short-term financing and investing, revenue from its Capital Markets group is derived primarily from the difference, or spread, between the interests it earns on its mortgage and non-mortgage investments and the interest it incurs on the debt the Company issues to fund these assets. Its Capital Markets revenues are primarily derived from the Company�� mortgage asset portfolio. Capital Markets group funds its investments primarily through the issuance of a variety of debt securities in a range of maturities in the domestic and international capital markets. Investors in the Company�� debt securities include commercial bank portfolios and trust departments, investment fund managers, insurance companies, pension funds, state and local governments, and central banks.

The Company competes with Freddie Mac, FHA and Ginnie Mae.

Americans, and Their Money, Flee High-Tax States

Is it firms like Jacksonville-based HCI Group — third-ranked on Inc.'s 5,000 Fastest Growing Private Companies list, with $25.5 million in annual revenue — that account for Florida’s economic growth?

Or might 5,933 New Yorkers who moved there with $766 million in net adjusted gross income in a recent year (2009) be even more of a factor?

Rapidly growing private companies like HCI Group, a health care company; Orlando-based retailer UbreakiFix (with $17 million in annual revenue); or Sarasota-based Integrity Funding ($11.1 million), all companies with 3-year average annual growth above 10,000%, add nicely to Florida’s revenue base.

They are the three Florida-based Inc. 5000 companies that can be found among that list’s Top 20 (the entire list has hundreds of Florida companies).

And yet their revenue contribution pales in comparison to the “free” money brought by tax migrants from other states, which totaled $3.5 billion in 2009, the last year for which data compiled by the Tax Foundation was available.

Indeed, the tax research group’s analysis, “Migration of Personal Income,” released this week, puts the income built up over careers in other states closer to the league of Fortune 500 companies based in the state, such as Boca Raton-based Office Depot, with $10.7 billion in annual revenue.

But that’s not all. The Tax Foundation analysis of IRS data shows that over a period of 10 years — from 2000 to 2010 — Florida and other tax-friendly states (the Sunshine State is one of seven with no individual income tax) have been the biggest beneficiaries of interstate migration, to the tune of $67.3 billion in Florida’s case.

Indeed, the U.S. Census Bureau shows New York to Florida was the most common state-to-state move in 2011, with 59,288 movers, while neighboring Georgia sent 38,658 new residents to the Sunshine State.

The Tax Foundation report quantifies these moves in terms of personal income gained or lost, and the list of winners is as unsurprising as the list of revenue losers. After Florida, the biggest 10-year gainers were Arizona ($17.7 billion), Texas ($17.6 billion), North Carolina ($16.2 billion), and Nevada ($11.2 billion). Texas and Nevada, like Florida, do not tax individual income.

New York lost the most revenue by far, bleeding $45.6 billion in tax returns and nearly 540,000 residents from 2000 to 2010. About a third of them moved to Florida, sending about $13.3 billion in net adjusted gross income to Tallahassee rather than Albany.

Neighboring New Jersey took in the second-largest huddled mass of New Yorkers — 81,000 — but the No. 3 relocation site was tax haven North Carolina, which attracted 52,000 former Empire State residents.

California’s refugees spread out to Nevada (93,000), Arizona (87,000), Texas (76,000) and Oregon (58,000), taking with them net AGI of $6.5 billion, $5.6 billion, $4.5 billion and $4.3 billion, respectively, over 10 years. In total, California lost 382,000 residents and $29 billion in revenue over the period, with the more affluent residents seemingly heading north to the Beaver State and its less wealthy making their homes in Arizona.

Illinois lost third most in personal income, totaling more than $20 billion from 2000 to 2010. Of the 233,000 taxpayers departing the Prairie State, the largest cohort chose Florida (38,000) as their new home, followed by neighboring Indiana (24,000), tax and sun havens Texas and Arizona (23,000 each) and neighboring Wisconsin (22,000).

While people might choose to relocate for a variety of reasons, including better weather, health care or retirement options, it has often been speculated that tax considerations play a role. A Wall Street Journal editorial this week critiquing Minnesota for enacting a new 10% gift tax on top of its existing 16% estate tax, had this to say:

“A successful New York business owner with, say, $50 million of lifetime savings can move his family and company to Florida, Georgia, Texas or 29 other states and cut his death-tax liability by up to $8 million.”

Recently golf pro Phil Mikkelson stirred controversy when he openly wondered whether newly enacted taxes were reason enough to move from his home state of California.

A wealth tax in France sent that nation’s wealthiest citizen, Bernard Arnault, looking for tax relief from Belgium, while actor Gerard Depardieu accepted Russian citizenship but then settled in a Belgian village bordering his native France.

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Check out these related stories on ThinkAdvisor:

Bond Labs Continues International Growth (OTCMKTS:BNLB, OTCMKTS:CRWE)

Bond Laboratories, Inc. (BNLB)

Today, BNLB surged (+16.79%) up +0.023 at $.163 with 185,870 shares in play thus far (ref. google finance Delayed: 11:45AM EDT July 2, 2013).

Bond Laboratories, Inc. marketed primarily through its wholly owned operating division, NDS Nutrition Products ("NDS"), previously repoted the Company has received an initial purchase order to begin supplying product for GNC® franchise locations in Mexico.

Take a look at Bond Laboratories, Inc. (BNLB) 5 day chart:

Crown Equity Holdings Inc. (CRWE)

Together with their digital network of Websites, Crown Equity Holdings Inc. (OTCMKTS:CRWE) (www.crownequityholdings.com ) offers advertising branding and marketing services as a worldwide online multi-media publisher. The company focuses on the distribution of information for the purpose of bringing together a targeted audience and the advertisers that want to reach them.

Today, CRWE remains (0.00%) +0.000 at $.130 thus far (ref. google finance 12:35PM EDT  July 2, 2013). Keep in mind, last Friday (June 28), CRWE had surged (+73.33%) up +0.0055 at $.0130 with 2,500 shares in play at the close (ref. google finance June 28, 2013 – Close).

Recently (June 26), CRWE Files 10-Q. To view click URL http://www.otcmarkets.com/edgar/GetFilingHtml?FilingID=9371051

Recently (June 26), CRWE Files 10-K. To view click URL http://www.otcmarkets.com/edgar/GetFilingHtml?FilingID=9371048

Crown Equity Holdings Inc. 5 day chart:

Pre-Retirees, Retirees Have Different Ideas About Life After Work

Survey results released Thursday by ING U.S. found that pre-retirees may be in for a rude awakening when they stop working. Although just 8% said they expect to have a lower standard of living in retirement than they do currently, 33% of retired respondents said they’ve had to cut back now that they aren’t working.

In a separate survey conducted online by ING in June, 80% of respondents said they would rather tighten their purse strings now to guarantee income in retirement. Almost 40% still expected to run out of money in retirement. That might not be very surprising, though, considering over a third of respondents think they can retire comfortably with $500,000.

ING surveyed 850 adults over age 30 for the phone poll in early June. The online poll gathered responses from about 2,400 consumers in mid-June and early July. Results from both surveys were released simultaneously.

ING found that advisors were a significant factor in respondents’ confidence. Almost 90% of respondents who work with an advisor said they’ve calculate what their current savings mean for their monthly income in retirement, compared to 59% of those without an advisor. While 37% of respondents thought it likely that they’d run out of money in retirement, among those without an advisor, 41% had the same fear.

“Don’t get me wrong; change is good and we all hope to get to that point at some time, but without some help, a retiree can easily get thrown off course,” Rich Linton, president of individual markets for ING U.S., said in a presentation discussing the surveys’ results.

One of the greatest obstacles to retirement planning is inertia, Linton said. “Retirement planning is complicated, it’s not an immediate need for me today, or frankly, it’s not interesting to an individual so they put it off,” he said.

An advisor’s value starts, then, with helping investors get over those obstacles, he added. One way for advisors to do that, according to Linton, is to help frame retirement in a way that makes it tangible and relevant to today.

Linton said that retirement savings are not one goal, but three: “It’s about understanding your needs, your wants and your wishes.”

He stressed that advisors should focus on life stages to help frame retirement planning. For example, a younger client may have student debt they’re still paying off, and may need help seeing past those obligations to plan for retirement.

Rick Mason, president of corporate markets, addressed the role plan sponsors play in retirement planning. He said 12% of sponsors currently offer an income solution in their fund line-up, and that is expected to double over the next year. “It shows there’s an increase in focus on helping participants connect their savings to income,” Mason said.

He suggested applying some of the automatic features that have helped investors in the accumulation phase could benefit those in the decumulation phase as well.

“Employers are going to be increasingly involved in advancing retirement readiness in the work force, not just because employees are asking for it, but because employers are being increasingly looked at by policymakers to play a greater role.”

They also stand to benefit, though, because when employees aren’t ready to retire, it can drive up health care costs and keep older workers in positions instead of advancing younger workers.

BMY/Pfizer Seek to Expand Eliquis Label - Analyst Blog

Bristol-Myers Squibb Company (BMY) and partner Pfizer Inc. (PFE) recently announced that their supplemental New Drug Application (sNDA) for Eliquis has been accepted by the US Food and Drug Administration (FDA). The companies are looking to get the drug approved for the prevention of deep vein thrombosis (DVT) in adults who have undergone hip or knee replacement surgery.

We note that DVT can lead to pulmonary embolism (PE), which can be fatal. The FDA is expected to render a final decision on the drug by Mar 15, 2014.

The sNDA was submitted on the basis of data from ADVANCE-1 and ADVANCE-2 (evaluating the use of Eliquis in patients undergoing elective total knee replacement) and ADVANCE-3 (evaluating the use of Eliquis in patients undergoing elective hip replacement) along with a part of the EXPANSE program. These trials compared the safety and efficacy of Eliquis to Sanofi's (SNY) Lovenox (enoxaparin).

We note that Eliquis, a Factor Xa inhibitor, was launched in multiple countries including the US and EU for reducing the risk of stroke and systemic embolism in patients with nonvalvular atrial fibrillation in the first quarter of 2013. We believe that the label expansion of the drug will boost its sales potential.

Eliquis is also approved in the EU and some other nations for prevention of venous thromboembolic events (VTE) events in adults, who have undergone elective hip or knee replacement surgery.

Other Factor Xa inhibitors currently available in the market include Xarelto, which is approved for several indications including prophylaxis of DVT, which may lead to PE in patients undergoing knee or hip replacement surgery.

While Bristol-Myers carries a Zacks Rank #4 (Sell), Pfizer carries a Zacks Rank #3 (Hold). Jazz Pharmaceuticals (JAZZ) appears to be more attractive with a Zacks Rank #1 (Strong Buy).

Pfizer Looking A Little Tired

At some point this bull market in all things health care will fade out, and I wonder if Pfizer (NYSE:PFE) shares will maintain this sort of valuation when that occurs. With the spin-off of Zoetis (NYSE:ZTS), years of restructuring, and a reorganization that will create "innovative" and "value" cores, I have to think that Pfizer management has pulled every trick out of its bag aside from a full break-up of the company. What's more, while there are some worthwhile products in the pipeline, I think the company is looking at pretty sluggish long-term growth as those new products will struggle to offset the loss of exclusivity on other lucrative drugs.

Q2 Comes Out Okay On Better Margins
Pfizer's second quarter was like so many other pharma reports this quarter – okay, but with most of the good news coming from lower spending (better margins) and overall sluggish sales growth trends.

SEE: Evaluating Pharmaceutical Companies

Revenue fell 7% as reported, or 4% on an operating basis, with pharmaceutical sales down 5% on that same operating basis. Although Lyrica was up 13% and Celebrex was up 10%, Prevnar (down 1%) and Enbrel (up 1%) were pretty weak. Pfizer's consumer health business saw 5% growth this quarter, which is pretty good for that space.

As mentioned, margins were a big help in Pfizer making this quarter. Gross margin improved more than a point on an adjusted basis, and although operating income declined 16%, Pfizer still squeezed out a small beat on an operating basis.

A Modest Delay In Xeljanz Data Doesn't Change The Pipeline Outlook
Pfizer could certainly use some positive news with respect to its pipeline. Although the recent decision by the CHMP to reaffirm the rejection of Xeljanz sets that product back by years in Europe, this wasn't really a surprise after the initial rejection earlier this year. Even so, it's still curious to me that European regulators refused this drug on safety concerns given that Europe's approach tends to be more relaxed in comparison to the FDA.

Investors will also note that the company has announced that the read-out on Phase 3 data of Xeljanz has been pushed back by a quarter or two. Although this isn't a big deal, the company's excuse (which, in essence, was "this is hard") seemed a little weak. It's also worth noting that AbbVie's (Nasdaq:ABBV) Humira is still performing pretty well and Xeljanz's pricing could be a headwind to wider adoption, with Celgene's (Nasdaq:CELG) apremilast on the way and management's intention to price it at a meaningful discount to biologics like Humira.

SEE: 8 Stages Of New Drug Development

With over $10 billion of revenue at risk of losing exclusivity through 2015 (I'm excluding most of Enbrel for the time being), the Street-average estimate of $8.5 billion in pipeline revenue contributions for 2019 looks a little thin. To be fair, palbociclib looks like it has a lot of potential in HER2- breast cancer (Roche (Nasdaq:RHHBY) is stronger in HER2+), and I believe the company's Prevnar-13, staph, and meningitis B vaccines are probably underrated, as the former could become a routine adult vaccine and the latter two could become staples in at-risk populations. Even so, there aren't a lot of drugs behind those where investors are likely to get really excited, and that could make Pfizer a bigger player in licensing/M&A deals in the coming years.

Will Reorganizing Lead To Improved Performance?
Ahead of this earnings announcement, Pfizer management unveiled another restructuring/reorganization plan that will see the business split into three units – one "value" core, and two innovation cores split between vaccines/oncology/consumer health and a wide swath of immunology/metabolic/CV/pain/neuro/rare disease.

I have little doubt that this is going stoke expectations that the company will eventually break-up entirely at some later date. I'm skeptical, though, as to whether the reorganization is going to lead to meaningfully better financial results. I've seen a lot of different corporate structures in Big Pharma, but the constant thread is that companies that do well in their preclinical R&D and post-approval marketing efforts ultimately do pretty well. I'm not really sure that this new structure enhances either of those, so consider me a skeptic for the time being as it pertains to the value this move creates (though I'm not skeptical at all about the value perception it may create).

SEE: Pharmaceutical Sector: Does The FDA Help Or Harm?

The Bottom Line
Pfizer is hardly the only pharma company with an iffy pipeline, but I'm not that enamored of the valuation today. I think that low single-digit growth is about the most the company will manage, and I wouldn't pay much more than $27 for that. As such, I suppose Pfizer is a decent hold so long as this healthcare bull market lasts, but this wouldn't be my pick for a long-term holding in pharma.

Disclosure – At the time of writing, the author owned shares of Roche.

7 Articles ETF Investors Must Read: 7/11

Wall Street started off the week in high spirits after aluminum giant Alcoa (AA) kicked off the unofficial start of the Q2 earnings season. After the closing bell on Monday, the company reported a $119 million second quarter loss; the bellwether did, however, manage to beat analysts' EPS estimates by one cent. Up ahead, investors will keep a close eye on the banking sector as JPMorgan Chase (JPM) and Wells Fargo & Co. (WFC) report their quarterly earnings. On the macro front, investors kept a close eye on the latest FOMC minutes and commentary from Ben Bernanke . 

Below, we highlight seven insightful articles circulating around the financial space this week:

Looking at BKF and SPY, some think international investing is a zero-sum game (Price Action Lab)Bullish signals for small-cap equities (IWM) (Morpheus Trading Group)The second half of 2013 appears to have more downside risk than upside (Financial Sense)66% of stocks in the S&P 500 are above their 50-day moving averages (Think B.I.G)Technical analysis – silver bear market (Factor)Roseneft agreement sparks new optimism in underpforming energy sector (WisdomTree)A new reason companies are holding onto cash hoards (Quartz)Follow me on Twitter @DPylypczak.



Disclosure: No positions at time of writing.

Maintain investment discipline to ensure superior returns

At the time of its IPO, Sobha Developers reserved a quota of 10 per cent of the total equity for its employees. Incentives and benefits upto Rs 50,000 were given per employee to participate in the company's IPO where Rs 56 crore worth of shares were reserved for them.

Explaining its investment initiatives, JC Sharma, Vice Chairman & MD, Sobha Developers explained, "As and when the Budget comes in February, we ensure that all our employees are communicated with the kind of savings and what kind of instruments they should take to ensure that they can invest wisely on those schemes and save tax."

Also, given that the company is primarily into real estate, employees are given the maximum possible discount to buy a Sobha home.

An audience poll conducted by CNBC-TV18 suggested that almost 50 per cent of the employees are somewhat comfortable with stock markets or mutual funds. But an equal number said they are not at all comfortable while a minuscule 8 per cent said they are very comfortable.

Most people said they have most of the money still finding its way to traditional bank fixed deposit.  A mere 4 per cent invests in gold ETFs, which is in contrast with a whole lot of people interviewed so far, who are now beginning to favour gold ETFs.

Also, 16 per cent of people favour insurance investments. Currently, about 44 percent of people invest under one lakh, which ideally qualifies only a stack saving. The active wealth creation between Rs 1-3 lakh surplus annually is done by about 40 per cent and the real aggressive investors are about 8 percent.

CNBC-TV18's expert panel consisting Ambareesh Baliga, Independent Analyst and Uday Dhoot, Deputy CEO, International, Money Matters, talk to Sobha employees to solve their investment queries.

Below is the edited transcript of the interview with CNBC-TV18.

Q: If you look at India as a whole, things seem to be on the mend. There is some amount of liquidity that is also coming in maybe because of global sources. Do you see the return of retail investors, therefore, into the equity market?

Baliga: I do see the return of retail investors but I don't expect them to come back in droves tomorrow just because things have changed. After this four year of bearish stage we have been in, it will take a while for these retail investors to come back.

Unless they see that the market holding up at higher levels, I don't expect them to come back so soon. But hopefully, if things look better, I suppose in the next 4-6 months, you should see retail investors back.

Q: If retail investors are not participating in the equity market, there are still investments that are being done. A lot of it would be finding its way into mutual funds or other products, can you take us through the other gamut of products that are available besides the very obvious choices that people are making?

Dhoot: If you look at any investor in India, typically it starts with tax saving. So when it is tax saving, the traditional ways are first you go in for insurance, you go for PPF etc but most of the people are basically stuck in insurance. There is a lot of money which goes in insurance. The recent RBI report said in the last few years, investor interest is more towards physical assets by way of real estate, by way of gold and not necessarily towards financial assets.

Retail investors typically go in when the party is getting over and then get stuck and move along. But I think what people need to do is to know one's needs and then begin financial planning in terms of identifying what is the right product.

Q: Most investors following the traditional method of investment and choose to buy gold physically than invest in ETFs. Do you advise that ETF is the best form or to buy it in the physical form?

Dhoot: In India, gold has a lot of traditional value apart from the investment value that we have been talking about. Indians have been investing in gold for ages. But from purely an investment perspective, gold, for us, is nothing but like insurance in your portfolio. When will gold do well? Gold will do well when everything else around you is not doing so well.

Gold, otherwise, gives you no regular returns. There is no interest or dividend coming from gold. So, gold is purely a hedge against uncertainty. Now look at traditional investments, we have all been buying physical gold now. If you look at today's investments, you can buy gold through something called ETF, which is nothing but an Exchange Traded Fund (ETF), typically a unit of that gold ETF approximates to around 1 gram of gold.

You can buy even if you do not have a demat and trading account. You can buy gold through mutual funds as well by way of gold savings fund. Typically, these gold savings fund, in turn, invest in gold ETFs. In this way, you get exposure to gold from that. The good part about this gold is that all of this gold is backed by actual gold in banks. So, it is a fairly safe way of investing in gold.

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No intent to control capital; fund-raising door open: FM

No intent to control capital; fund-raising door open: FM

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Buffett-Munger Screener Highlight: ITT Educational Services (ESI)

ITT Educational Services (ESI) is a company in the for-profit education services industry, and appears on GuruFocus' Buffett-Munger screener. This screener can be used to find companies with high quality businesses at undervalued, or fairly-valued, prices. Businesses on this screener are able to consistently grow revenue and earnings, maintain and expand profit margins while growing, and incur little debt during growth.

To be sure, the entire for-profit industry has received negative press in addition to vilifying attacks from both critics and regulators. However, ESI distinguishes itself from the typical for-profit educational firm--it has a long history of providing post-high school technical education services.

As of March 30, 2012, the company traded around $66, has a market cap of $1.622 billion, and has the following price multiples: P/E=5.9; P/B=10.4, and P/S=1.1.



Let's take a quick, broad look at the company to see why you might be interested in it.

What Do They Do?
ESI is a leading proprietary provider of postsecondary degree programs in the United States based on revenue and student enrollment. As of December 31, 2011, they offered master, bachelor and associate degree programs to approximately 73,000 students across 144 locations (including 141 campuses and three learning sites) in 39 states. They also offered one or more of their online programs to students who are located in 48 states. They design their education programs, after consultation with employers and other constituents, to help graduates prepare for careers in various fields involving their areas of study. ESI has provided career-oriented education programs since 1969 under the "ITT Technical Institute" name and since June 2009 under the "Daniel Webster College" ("DWC") name. Beginning in 2011, ESI began operations at 11 new ITT Technical Institute campuses and d! iscontinued operations at one learning site. Their programs cover: Information Technology (IT), Electronics Technology, Drafting & Design, Business, Criminal Justice, and Breckenridge School of Nursing and Health Sciences.

How Do They Make Money?
ESI sells educational services by collecting tuition. Most of the tuition is via Title IV Federal student aid, which includes traditional student loans (Stafford, Direct, and Perkins) and Pell Grants.

Competition
ESI competes with many other for-profit ventures, including:
Other for-profit educators, such as: Strayer (STRA), Apollo (APOL), DeVry (DV), Capella (CPLA), Corinthian Colleges (COCO), and Career Education Corporation (CECO)Traditional colleges/universitiesCommunity colleges
Sales, EBITDA and Earnings
ESI has steadily increased revenue and earnings. In the last decade they've grown revenue at 20.8%; EBITDA at 34.4%; FCF at 22.5%, and Book Value at 8.5%.


Gross, Operating, and Net Margins
From the chart below, we can see that over the last decade ESI has steadily wrung out extra costs, increasing gross, operating, and net margins. No doubt this is due to their scalable business model. Once a site's infrastructure is in place, the incremental cost to educate an additional student is low, which drives large margins.


Management Effectiveness
As Buffett has taught us, a CEO's main job is efficient capital allocation for shareholders, and it looks like ESI meets that test. As we can see from the chart below, they handily exceed an ROC of 15%.



Share Buybacks
ESI has been returning capital to shareholders through their share buyback program hand-over-fist. Since 2001, they've reduced the share count 43%, and it looks like they've accelerated the pace within the last two years.


Valuation
Lastly, because of the negative perception the entire industry has received, prices in this sector have been absolutely pummeled. ESI now trades at the lower end of all of its historical! valuatio! n bands: P/E, P/B, and P/S.

Bullish Points
Guru ownership and avg price: ESI owned by Hussman ($76.15), Weitz ($75.32), and Greenblatt ($73.29)Over 35% of shares are short, potential short squeezeStock buyback plan: ESI reduced outstanding shares by 19% yoy at the end of the 4th quarter. They repurchased 370K shares in 3Q11.The business model is scalable; the incremental cost to educate each additional student is low, leading to high marginsESI acquired Daniel Webster College, giving them a regional accreditation which they can use to broaden their reach in online classes
Bearish Points
High costs of education, in general, rightly or wrongly attract government intervention and could squeeze margins over time. Total student debt surpassed credit card balances, and sits at $1 Trillion as of the end of 2011.Subject to compliance with Dept of Education's 90/10 rules, which states a college can't collect more than 90% of revenue from students participating in federal loan programs.Cohort Default Rate (CDR): for-profit colleges must monitor the federal loan default rates of students who graduate or leave the school. If a school's CDR exceeds 25% for 3 consecutive years, or 40% in any one year, its students won't be eligible for federal financial aid.ESI competes on quality of product which is measured by graduation rates and ability to secure employment. For 2010, 70% of ESI graduates got employment in positions using skills taught in their program of study within 1 year. As of Oct 2011, this rate was 600 bp higher. The average annual salary reported by employed 2011 grads was $32K, compared to $32.4K for 2010 grads.With an improving economy, there's a potential ESI would see declining new student enrollmentsOver 35% of shares are short
Summary
The Buffett-Munger screener is designed to find Buffett-type investments with extraordinary profitability, consistency, and future prospects. Our monthly Buffett-Munger Bargains Newsletter picks one stock from the screener. Our in-depth analysis s! hares wit! h you why a younger Buffett and Munger would like this stock. If you are a premium member, you can download it here. If you are not, we invite you for a 7-day Free Trial.

Disclosure: Long ESI

DISCLAIMER: This review/analysis is provided for informational and entertainment purposes only and is the opinion of the author. The information and content contained herein should not be construed as a recommendation to invest or trade in any type of security. Neither the information, nor any opinion expressed, constitutes a solicitation of the purchase or sale of any security or investment of any kind. Conduct your own research and due diligence.