RSSArchive for 2013

Whose Responsibility Is Company Payroll?

The payroll function within organizations of whatever size is vital but there continues to be some debate over whose responsibility it should be – HR or finance? We look at where the buck should stop.

A natural fit

Payroll would seem to fall into the remit of both HR and finance but sometimes it’s unclear where it fits naturally. Some argue that HR is its natural home, others that finance should have responsibility and yet further arguments maintain that it should either be split between the two or outsourced altogether.

There is no doubting its importance or the sensitivity which is attached to payroll. Employees all work for a wage or a salary and ensuring that they are paid the correct amount on time is essential.

Employee confidentiality is also paramount and data protection procedures must be in place. For these reasons and for others involving direct employee enquiries, time-sensitive issues, bonuses, redundancy payouts and benefits, some organisations make HR responsible for dealing with payroll.

Other businesses make a counter-argument, however. They maintain that because payroll is one of the largest expenses within any business or department, it must be classed under the auspices of finance. Issues such as reconciliation and compliance with taxation require specialist training and knowledge in order to comply with current and constantly-changing legislation.

A third point of view is that payroll should be split between HR and finance within an organisation. This approach tacitly understands that differentiations between the function of the departments can lead to payroll being regarded as falling between two stalls but recognises that it must be dealt with by both.

Finally, a significant proportion of organisations now outsource their payroll function to a third party specialist. The reasons for this can be summed up neatly: cost and resources.

Integration

Where overlap between HR and finance does occur, the responsibilities shared by the departments must be clearly delineated to establish functional and effective procedures. Collaboration is essential to ensure, for example, efficient hiring and firing, maternity pay, bonus calculations and overtime payments for individual employees. When both departments are involved, they can each ensure quality control procedures are in place and accountability is established.

Software

Whether responsibility is shared or allocated to one specific department, one payroll essential is effective computer systems which can be incorporated into an organisation’s precise needs. Specialist, integrated software allows HR and finance departments to effectively perform their functions and retain autonomy in the areas in which they specialise which is why more and more businesses, both small and large, are taking advantage of the systems available at the moment. Companies such as CIPHR offer great Software for HR which can not only save organisations time and money, but improve efficiency through on-line accessibility and increased accuracy. More complex functions, such as payslip generation and distribution, electronic P6/P9/SL1 and SL2 can also be handled by such software, whether it’s in-house or outsourced, to provide seamless functionality for payroll.

So whatever size of business you’re involved with, from SME to multi-national, effective payroll function must remain at the top of the HR and/or finance agenda.

Things to Keep in Mind When You Are Organising a Business Banquet

If you have just started a job as a personal assistant or office manager, it is likely that you will be asked to organise some events from time to time. There is often a lot involved in these events, regardless of how many attendees there will be. When there are fewer people involved, it tends to mean that those selected will be the CEOs, partners, etc. meaning they will have high expectations for their treatment and service. Of course when there are a lot of attendees due to come to an event, you will have to ensure that you have kept everyone’s personal requirements to mind when making arrangements.

Perhaps one of the most time-consuming tasks will be trying to organise a business banquet, whether this is a companywide celebration or a something your business wants to do for customers and clients. However when you get it right, you can expect to be highly commended for your efforts, meaning it can be very rewarding in the long run. So here are some tips to keep in mind so you get the results you need to succeed:

Venue size

The primary consideration you will need to make is what venue will fit the number of guests / delegates. There are some places that you will need to rule out based on the fact that they will be too cramped, or the layout won’t be conducive to holding specific groups of people. It would be bad manners to have one subset of people in one area, and then have the remainder in another; people should be sat together for these types of occasions.

Dietary requirements

Of course if you are organising a business banquet you will need to pay close attention to the food that will be served. People have many specific requirements these days, so you will need to identify how many vegetarian, vegan, gluten-free and allergy-free meals need to be cooked. You will need the remaining count for the other meals, as well as deciding how many courses should be served and what price bracket you will choose.

Ease of access

If you are welcoming guests from all over, it makes sense to host your business banquet in an area close to an airport or train station. That is why something like a London, Manchester or Belfast hotel would make the perfect venue. You want people to be able to arrive in time, as well as departing safety, which is why a location in or around a city would be ideal.

Hotel rooms available?

Finally, if the event will be taking place in the late afternoon or the evening, it makes sense for there to be some hotel rooms available to cater to the guests who have travelled a greater distance to attend. This is certainly the case for any international guests who have travelled by air and are not able to get a return flight until the next day.

The Top Ten Greatest Stock Trades of All-Time

The Top Ten Greatest Stock Trades of All-Time

Screen Shot 2013-09-13 at 12.31.59 AMHedge Fund titan Jon Paulson pulled off the greatest trade of all time in 2007, raking in a cool $15 billion in his bet against subprime mortgages - according to the International Business Times who ranked the top ten greatest trades of all-time. Some were brilliant masterminds, others were just plain lucky.

The Top Ten Greatest Trades of All-Time

1.    John Paulson’s bet against sub prime mortgages made him $15 billion in 2007

2.   Jesse Livermore’s call on the Crash of 1929 (a legendary trader featured in the popular book, Reminiscences of a Stock Operator).

3.   John Templeton’s foray into Japan in the 1960s (a true investment pioneer, Templeton foresaw the rise of Japan after World War II and profited hugely from it).

4.   George Soros’ breaking of the Bank of England in 1992 (Soros made $1 billion).

Screen Shot 2013-09-13 at 12.31.45 AM5.   Paul Tudor Jones’ shorting of Black Monday in October 1987 (he predicted the crash, bet a bundle & tripled his money as the market crashed 22% in one day).

6.   Andrew Hall’s $100 oil prediction (with oil trading at $30 per barrel in 2003, Hall bet prices would rise to $100 in 5 years; they did and he took home a personal paycheck of $100 million in 2008).

7.   David Tepper’s 2009 bet on financials (as the market hit its low in early 2009, Tepper bought financial services stocks & his fund earned $7 billion that year ($4 billion of that went to Tepper).

8.   Jim Chanos’ prescient shorts (his sharp analysis led him to predict the demise of Enron, WorldCom, and other firms, and he is known as the best short-seller in the world).

9.   Jim Rogers’ early call on commodities (he was bullish on commodities back in the 1990s & has been riding them to great profits ever since).

10.  Louis Bacon’s geopolitical play (he correctly predicted that Saddam Hussein would invade Kuwait in 1990 & profited handsomely by going long on oil & shorting stocks, which helped his fund return 86% that year).

Screen Shot 2013-09-13 at 12.32.41 AMMost of these trades were ‘global macro’ plays where huge, concentrated bets were made by analyzing fundamental economic/business conditions.  These investors excelled at turning a great observation about the world into a great investing idea. But, while these make the headlines, you never hear about the other investors who made a big call and missed, and ended up out of business.

It’s almost impossible for regular investor folks to make a ‘big score’ like these traders.  Rather than trying to throw a touchdown pass on every play and make a big score like these traders, the smarter game plan is to focus on trying to get consistent first downs. Do your homework, watch market/sector developments, don’t chase stocks up or down.  Do that, and the score may take care of itself.

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Source: International Business Times

Bank of America: A Financial Powerhouse’s Road to Prosperity

Bank of America: A Financial Powerhouse’s Road to Prosperity

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If you currently own Bank of America (NYSE: BAC) then you have been a strong supporter of the new direction the bank is going in and have been loving the impressive run the stock has been on, +83% year-to-date, +183% over the past 20 months. Just take a look at both of the BofA charts below and you’ll see why investors have been loving BofA’s recent stock performance. While BofA’s recent rally has been nothing short of stellar, it didn’t come from nothing. It was supported by the fact that fundamentally BofA is a strong company from top to bottom. Overall, there is a lot to like about Bank of America and the new direction the company is going in under the watch of CEO, Brian Moynihan.

Bank of America has clawed its way back from oblivion to the delight of traders and investors alike, who have profited on the stock’s advance. BofA has been a great momentum trade and going forward we expect shares to continue to soar. BofA is a great value play and as you can see, the stock is gradually recovering, climbing back to where they were trading before the financial markets collapsed.

Bank of America’s Past 12-Months Stock Performance: +82.13%

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Bank of America’s Past 20-Months Stock Performance: +182.97%

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BofA’s Legal Worries & Future Concerns

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Some of the biggest concerns investors have when it comes to Bank of America are the bank’s legal woes, pending lawsuits and the potential financial ramifications from these lawsuits. Some speculate that the legal settlements could cost the bank and its shareholders billions of dollars. When it comes to investing, I prefer to look at the fundamentals of a company rather than giving into fear and listening to all the rumors. Right now all these numbers being thrown around are nothing but speculation and in the end BofA will pay a lot less in legal penalties than originally expected. Just examine all of the past legal cases against Bank of America and analyze the amount BofA actually paid out versus what analyst’s originally speculated, it’s consistently been a lot less. Many can attribute this success to the work of CEO Brian Moynihan, who before embarking on a career in banking was a high-powered Boston Lawyer. In all seriousness, this legal onslaught is a battle that the company has been at for several years now, as CEO Brian Moynihan has been systematically knocking lawsuits out of the way slowly, steadily, and one at a time.

With all the legal worries soon to be behind them, investors should now be focusing on the many great prospects Bank of America currently has going for them. The two biggest factors that make Bank of America successful are their ability to innovate their products to attract new customers while cutting costs and also their ability to produce strong sales numbers.

BofA’s Impressive Sales Growth

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A strong indicator for past and future success for Bank of America has been their impressive sales growth. BofA has increased their sales growth across all segments of their business. In their 2Q earnings report, BofA’s five main operating segments all posted impressive growth rates and earnings. Compare the two figures below to see just how substantial BofA’s sales growth has been:

2nd Quarter of 2013: $1.4 Billion

2nd Quarter of 2012: $184 Million

Bank of America’s 2013 2nd Quarter net income ballooned to $1.4 billion vs $184 million prior year driven by higher net interest and non-interest income. BofA’s net income multiplied 7.6 times in one year, a very impressive figure and a strong indicator for continued future success. What was more impressive was the factthat it was a balanced performance with BofA seeing all five segments of their business improve:

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  1. Retail Banking: Despite banking center consolidation and cost reduction, BofA saw a significant increase on the retail side in deposits, new accounts, plus credit/debit card usage.
  2. Mortgage/Loans: Real estate services managed to come in with $1 billion in revenue and marks a great improvement over last year’s -$186 million.
  3. Wealth Management: Revenues in investment management literally skyrocketed 10-fold to $4.5 billion with net income increasing 261% to $758 million. The segment now has a 17% net income-margin.
  4. Global Investment Banking: Global banking revenues increased to $4.1 billion up from $231 million in the same period last year driven by investment banking activity and loan origination. Global banking now has a 31% net income-margin and is highly profitable.
  5. Equity Trading: Global markets revenue, driven by equity revenue came in at $4.2 billion and profits at $959 million.

Sales are what drive Bank of America as a company and to see this kind of growth across all segments of their business is very impressive and a bullish indicator for future success.

BofA’s Ability to Innovate

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Innovation has always been something that has distinguished Bank of America as a company and made them stand out from their competitors. BofA’s ability to innovate new products, making the lives of their customers easier while cutting costs has been a winning strategy. The newest innovation will be BofA’s ‘Teller Assist‘ ATM machines that will allow customers to do the following:

  • Cash checks for the exact amount, including receiving change.
  • Receive cash withdrawals in a variety of denominations ($1, $5, $20 & $100).
  • Deposit checks with cash back.
  • Split a deposit into two or more accounts.
  • Make loan or credit card payments.

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Bank of America has consistently been making strides to go automated in its entirety, in terms of banking; similar to the way tons of food stores now have implemented self-scan devices for checkout. The more machines in place, the more automation, the fewer tellers needed, the less the bank spends. This has been an initiative that the bank has been working on for the past few years, and I believe that this forward looking “automation innovation” is going to yield the bank tangible results in terms of cost cutting and general efficiency in the future. Katy Knox, Retail Banking and Distribution Executive at Bank of America says it perfectly in the following quote:

“We know that customers want to bank on their schedule – not ours – so we are constantly looking at how to deliver more convenient banking options to them. This technology gives customers easy, convenient access to ATM banking services with the added option of having a personal interaction and the support of a teller available at the push of a button.”

In one new innovation, Bank of America will be simplifying the lives of their customers while cutting costs and saving money in the long-run. It’s a win-win if you ask me and it’s innovations like the Teller Assist ATMs that will lead BofA to prosperity.

BofA’s Stock is Significantly Undervalued

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When it comes to valuation, BofA is significantly undervalued compared to its peers as it has a book value discount of 28% and a forward P/E of 10.5. Bank of America trades at the largest discount to book value while Goldman Sachs (NYSE: GS) and Wells Fargo (NYSE: WFC) already manage to trade at a premium. Even though Bank of America had a great Q2 with an EPS estimate beat of 28%, its valuation continues to lack its peers. While the P/B industry average stands at 1.1, Bank of America is comparatively cheap with a near 30% discount from book value and near 10% earnings yield providing investors with a significant margin of safety.

What to Expect from BofA’s 3Q Earnings?

Bank of America surprised everyone with their 2Q earnings, reporting a 70% increase in profits, primarily through cost cutting measures. Overall revenues grew 3.5% however BofA’s stock price and valuation still lag compares to its immediate peers. While reducing uncertainty with respect to book value credibility and legal risks, Bank of America’s valuation remains low and attractive. I also expect that Brian Moynihan will be a man of his word and Bank of America will step up its shareholder remuneration policy with an estimated annualized dividend yield of 2-3% in 2014/15.

I expect BofA to once again beat the analyst’s expectations reporting strong 3Q earnings. BofA has been making strategic cuts to reduce overall costs while increasing revenues & strengthening the core parts of their business. Merrill Lynch continues to be BofA’s most profitable division & expect Merrill’s profits to continue to increase going forward as the two companies become more integrated with one another. Overall, BofA is a great long-term investment and a strong BUY for investors. Those who currently own the stock, simply hold onto your shares and over time watch them grow!

Conclusion: What to Expect from BofA Long-Term?

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Investors need to look past the newspaper headlines and short-term outrage against Bank of America and instead analyze the core parts of BofA’s business. Bank of America combines a market-leading, deposit-strong banking franchise with impressive sales and earnings growth, declining/encouraging delinquency and loss trends, and a low valuation. Dividends and share buybacks can further add fantasy to the stock. Under Moynihan’s ‘Project New BAC’, BofA has been able to leave its legal troubles behind and focus on fundamentals and cost cutting. Going forward the company is going to remain a lean and clean sales machine for investors.

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Innovation continues to be a strength of BofA as consistently they have been able to innovate their consumer bankingproducts to attract the highest number of customers and in return deposits. Over 50% of Americans currently has some form of relationship with Bank of America whether it’s a checking/savings accounts, credit card, mortgage, auto loan, investments, you name it.

As the economy improves, Bank of America should profit from higher consumer spending and an increased transaction business with a strong possibility to outperform EPS estimates. Fueled by its innovation, future steady dividend and the recovering housing market, I recommend investors to buy BAC. My 12-month price target for Bank of America is $24 per share, a yield of +65%.

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24option.com: The Top Binary Options Broker

24option.com: The Top Binary Options Broker

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Binary options are becoming an increasingly popular form of trading in the financial markets. They offer a way to trade a wide variety of assets across multiple markets and offer greater reward in a shorter period of time to regular investments. For investors looking to profit off binary options the key is to find a great Binary options broker. 24option is not only one of the top ranking brokers worldwide but it also is our personal favorite binary options broker.

Established in mid-2010 and headquartered out of London, 24option specializes in trade with options based on multiple investment instruments allowing inroads in several markets at once. 24option’s known for offering its customers a wide variety of underlying assets and types of options to operate. There are also a number of advantages that make 24option one of the top brokers for binary options traders.

So why trade binary options? Without getting into too much detail, we have listed 7 of the great advantages/benefits to trading binary options:

1. Limited Risk

2. High Rewards and Fast Returns

3. Simple Trading

4. Low Investment

5. Wide Range of Internationally Traded Assets

6. Trade on Any Market Condition

7. Trade Anywhere, Any Time

Screen Shot 2013-08-22 at 6.02.12 PMOn top of these many advantages, traders who use 24option’s platform are more equipped to succeed and generate large profits. 24option is a proven system that has produced great results since it was first established and in addition they offer users a plethora of great amenities.

In our opinion, 24option is by far the best binary options broke out there and if you read all the reviews you can learn why. Read more at 24option review to find out why they are the best of breed broker when it comes to binary options. Not only does 24option offer a great product with top-ranked customer service but 24option is one of the few services that offers users free demos. Everyone make sure to take advantage of this great innovative service and traders read more at  24option review to find out how to profit off binary options!

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Dollar-Cost Averaging-How to Get Higher Returns Without Taking Significant Risks

Dollar-Cost Averaging-How to Get Higher Returns Without Taking Significant Risks

imagesThe formula for investment success seems simple enough: “Buy low and sell high.” The problem, of course, is predicting when a security’s price will be low and when it will be high. The best analysts and market watchers are fortunate indeed if they can predict the general direction of the market correctly. Certainly, the individual investor cannot be expected to properly “time” specific securities purchases and sales with consistent success.

Dollar Cost Averaging is a method that helps to maximize the opportunity to buy low. To be more specific, Dollar-Cost-Averaging enables you to buy, over time, shares of a security at an average cost which is less than the average price. More importantly, it greatly reduces the risk that you’ll invest all or the majority of your assets at or near a market high.

It may sound too good to be true, but Dollar-Cost-Averaging really can work. All it requires is a commitment on your part to invest a fixed amount of money into the investment of your choice at regular intervals. The result is that you’ll buy more shares when the price is low and fewer shares when the price is high. The example below illustrates this concept:

The investor commits $1,000 to a certain stock each month. The lowest share price was $25 (in April), a price at which 40 shares could be purchased for the $1,000. The highest share price was $50 (in February and June), at which only 20 shares could be purchased with the $1,000. Over the course of six months 155 shares were purchased for $6,000.

Dollar-Cost-Averaging

Month Purchased

Investment Amount

Share Price

Shares Purchased

January

$1,000

$40

25

February

$1,000

$50

20

March

$1,000

$40

25

April

$1,000

$25

40

May

$1,000

$40

25

June

$1,000

$50

20

Totals

$6,000

155

Average Share Price = Your Average Cost Per Share = Difference/Savings Per share= =

$40.83 $38.70 $2.13

The figures shown are for illustrative purposes only and don’t reflect any actual performance of any particular investment.

silver-dollar-cost-averagingDividing $6,000 by 155 we arrive at our average cost per share: $38.70. The average price (the sum of the six share prices divided by six) over this period was $40.83, or $2.13 higher than we paid for each share on average. This confirms the principle of Dollar‐Cost‐Averaging. Most significant, however, is the fact that Dollar‐Cost‐Averaging kept us from investing the entire $6,000 at $50 per share. Had we invested the entire lump sum at that price we would have purchased just 120 shares—35 less than purchased using Dollar‐ Cost‐Averaging! Of course, we could have been extremely lucky and invested all our money at $25 per share—the low—in which case we would have purchased 240 shares.

If you have an aggressive risk temperament and are comfortable trying to time the market in pursuit of maximum gains, then Dollar‐Cost‐Averaging may not be for you. Conversely, if you’re looking for absolute guarantees, this time‐tested strategy won’t assure a profit. Remember, Dollar‐Cost‐Averaging works towards reducing your average cost per share. You’ll enjoy a profit only if your selling price exceeds your average cost per share (as it does in the example illustrated here).

Dollar‐Cost‐Averaging works best for the investor who is neither an aggressive market timer nor the other extreme ‐‐ the risk‐averse investor. In other words, Dollar‐Cost‐Averaging is for the moderate investor who is willing to give up some of a security’s upside potential in exchange for some downside protection.

This is because Dollar‐Cost‐Averaging doesn’t assure a profit or protect you from loss in a declining market. Also, since such a program involves regular investment purchases regardless of fluctuating price levels of the investment, consider your financial ability to continue purchases through periods of low price levels.

One of the most convenient and flexible means of beginning a Dollar‐Cost‐Averaging program is by setting up an automatic investment program. Most plans and investment product providers welcome and encourage automatic bank drafts, with a minimum investment as low as $25. Don’t miss out on the valuable benefits of Dollar‐Cost‐Averaging.

Guest Post by Zach MacDougall who runs a comprehensive financial planning practice out of San Diego, CA. He specializes in working with medical professionals and small business owners.

This information is a general discussion of the relevant federal tax laws. It is not intended for, nor can it be used by any taxpayer for the purpose of avoiding federal tax penalties. This information is provided to support the promotion or marketing of ideas that may benefit a taxpayer. Taxpayers should seek the advice of their own tax and legal advisors regarding any tax and legal issues applicable to their specific circumstances.

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Tencent Keeps Soaring Higher Despite China’s Weak Economy

Tencent Keeps Soaring Higher Despite China’s Weak Economy

imagesWhile U.S. social media stocks like Facebook (NASDAQ: FB), Groupon (NASDAQ: GRPN), and Zynga (NASDAQ: ZNGA) have struggled to live up the hype; China’s Tencent Holdings (0700.HK & OTC: TCEHY) on the other hand has been thriving despite a weak Chinese economy.

Who & What is Tencent?

Tencent is a Chinese investment holding company whose subsidiaries provide everything from mass media, entertainment, Internet, gaming and mobile phone services to China’s population of 1.35 billion people. They are China’s largest Internet Company and the 3rd largest tech company in the world, behind Google & Amazon. The Internet has become one of China’s leading industries and as a result an ultra-competitive market as new companies are being established daily as everyone is trying to capitalize off the new trends and growing user base. While many companies have been experiencing growing pains, Tencent has continued to dominate the market thanks to their diversified mix of businesses.

Tencent’s 3 Top Services

  1. QQ, China’s largest instant-messaging service with over 850 million users.
  2. QQ Games, a massive, youth-oriented, multiplayer gaming network.
  3. WeChat, a free mobile social-network that allows users to send photos, videos, and voice messages to their friends, walkie-talkie style.

Tencent is China’s Facebook, Twitter, eBay, Yahoo, Google, Zynga, and Tumblr all rolled into one. What makes Tencent stand out from their competitors is the fact they can offer their users, advertisers, and application developers access to everything from a single platform.

One of the Greatest Growth Stocks of the Past Decade

tencent-pony-ma-1Tencent’s dominance has resulted in their stock more than doubling over the past three years. Tencent has been one of the greatest growth stocks of the decade, appreciating +392% in the past five years along with a ridiculous +7,595.89% since their IPO in 04’. Tencent’s competitors are not experiencing the same success as many are struggling, held back by the uncertainties surrounding the health of the Chinese Economy.

Baidu (NASDAQ: BIDU), one of China’s Internet Giants and a competitor of Tencent, is down over -13% the past year compared to Tencent’s +39% yield over the past year. Same thing happened during 1Q earnings, many Chinese companies fell flat falling short of analyst’s expectations. Tencent on the other hand, reported better than expected 1st Quarter earnings beating analyst expectations sending shares up +31% since April.

Short-Term Expectations, What to Expect in 2013?

Many investors want to know whether Tencent’s great run will ever end? My outlook is this, the 2nd half of 2013 could cause some challenges for Tencent due to volatility in the months ahead. Tencent has seen an overall slowdown in their gaming business, which is expected to continue as long as the Chinese economy continues to struggle. Add to that the fact that Tencent’s two most recent ventures, e-commerce and mobile are not expected to start generating revenue until at least 2014. For most companies, these problems would be a blessing but for Tencent’s ridiculous growth to continue they will need to find a way to supplement the lost revenue through its other services.

Long-Term Expectations, What to Expect Over the Next 5 Years?

tencent_penguin-244x300Tencent’s dominance should grow stronger in the next several years as they plan to capitalize off China’s rapidly growing mobile and ecommerce markets.  If there is one thing Tencent knows how to do, it’s turn their users into profits as seen in their strong 2013 profit margins of 28.93%.

Originally founded as an instant-messaging platform in 1998. Much like Facebook, Tencent grew very quickly recruiting a high volume of new users. Tencent was surprised that having lots of users didn’t automatically translate into profits so the company changed their business model building on their large user base and creating an online-gaming presence. Tencent has since then expanded into many different online services the two most popular are QQ, +850 million users, and WeChat, +300 million users in two years. Tencent’s ability to attract users and in turn profit of them is a major reason analysts are very bullish about Tencent’s long-term prospects.

Tencent’s Huge Opportunity With China’s Growing Mobile Market

Tencent currently trades at a premium valuation, something they’ve earned thanks to their years of dominance. Tencent’s dominance in China’s online market can be attributed to their efficient operations, strong senior management and their ability to continue to release new innovative services. Tencent’s growth can be directly attributed to their efficient and effective investing producing a ROE of 35.38% and ROA of 13.90%. Its numbers like those than show why Tencent’s senior management have been the driving force behind the company’s success. Tencent’s CEO, Ma Huateng, deserves a lot of the credit. A recurring candidate for Barron’s World Best CEO, Huateng is described as very patient and careful executor, often planting seeds and experimenting before jumping in.

This explains why Tencent often takes its time to develop new brands, making sure that the right infrastructure is in place to allow the new venture to truly succeed. Quality control is a huge part of Tencent’s business development strategy.  They always like to make sure that their new brands are fully developed and well tested before they release it to the public. Tencent’s reasoning is that most people will only give an app, game, online service, or new social media platform one shot and if a user experiences any technical difficulties or bugs in the software, the likelihood of them becoming a long-time user greatly diminishes. 

Tencent’s Establishing a Foothold in China’s Growing Mobile Market 

tencent-oThis strategy can be seen with Tencent entering China’s mobile market. Establishing a foothold in China’s growing mobile gaming market is a huge opportunity and one they want to build the right way, not the quick one.

Executives cautioned that it was still early days for e-commerce and mobile gaming, stressing that focusing on the quality of the user experience is the key to long-term success. They also wanted to curb expectations and not let analysts call these ventures a bust for failing to produce profits, when Tencent doesn’t expect them to become a factor in the company’s revenue strategy until at least 2014 maybe 2015. Executives are really excited about the prospects of the company’s shift into mobile gaming saying that they have the right infrastructure in place to link its applications like mobile QQ and Weixin to mobile-gaming, as well as filling the pipeline with “high quality games.”

Mobile gaming is a much larger market than traditional gaming and for Tencent that means it’s a much more lucrative opportunity as well. The differences between the two are that mobile gamers range between ages 18 to 60 versus traditional gamers range between ages 18 to 24. This opens up a whole new group of people that Tencent can market their single platform services to. Over 80% of China’s population of 1.36 billion is expected to be using the Internet by 2025.  Adding to this, it’s reported that Mobile phones have become the top devise for accessing the Internet in China and over 60% of mobile users purchase mobile products on a monthly basis. So as you can see, there is a huge untapped market that Tencent has yet to capitalize from.  Currently gaming makes up half of Tencent’s revenue. If they are successful in tapping into the mobile gaming market then this number should rise substantially.

Tencent’s Strong Long-Term Prospects

Tencent is a well-run company with a solid balance sheet, over HK$25 billion in net cash, and a strong array of popular, revenue producing services. With a current 0.30% dividend, executives have said that they plan to both increase the dividend and continue to buybacks shares to return cash to shareholders.  Investors looking to capitalize on both emerging markets and the technology sector should look no further than Tencent. They are clear the leader in a rapidly growing sector and they hold many great long-term prospects that I believe will allow them to continue to dominate the Chinese market. Continued development of both mobile and ecommerce services will make Tencent the only company that can offer its users and advertisers a single platform to fulfill all their online needs.

Tencent’s 12-Month Price Target

The consensus among analysts is that Tencent will continue to outperform its competitors, as they expect earnings to grow 22% in 2014 to over HK$25 billion (HK$13.55 a share) on HK$95 billion in sales. I also believe Tencent will beat its competitors and as a result I expect Tencent’s stock to continue to rise to $375 over the next 12-months, an annual yield of 25%.

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World GDP: Is Our Global Economy Actually Improving?

World GDP: Is Our Global Economy Actually Improving?

global-currencyOnly four years have past since the world was hit with one of the worst financial crisis of all-time and while many believe our economies are improving others disagree stating that some of the improvements are superficial as in fact the world is faltering again.

According to The Economist’s calculations, world GDP grew by just 2.1% during the first quarter of 2013 compared with a year earlier. Just 12 months ago, output was growing at a reasonable clip of 3.1%. The European Union, the world’s second-largest economy, which welcomes its 28th member on July 1st, is back in recession. Meanwhile there are concerns about stumbling blocks as China seeks to rebalance toward a more consumption-oriented economy and more moderate growth rates. Long the mainstay of the world’s fortunes, China alone has been responsible for nearly half of all world economic growth since the end of 2009 when the world began growing again. Other big emerging markets, Turkey, Brazil and India, are struggling to quell social unrest over frustration with governments’ inability to deliver growth and make appropriate reforms.

How do you feel about the overall health of our global economy? Are we truly making improvements to get back on the right track or have we yet to fix the true problems that crippled our economy just four years ago? People always point to the success of the stock market as a sign that out economy is improving but history has shown us that the correlation between the stock market going up and our economy improving can sometimes be very far apart. We want to hear what you think so simply click on the link & share your opinion on our Facebook Fan Page or by sending either Stocks on Wall Street or our Founder a Tweet.

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Source: Economist

Articles of the Week: Is Warren Buffett More Myth Than Legend?

Articles of the Week: Is Warren Buffett More Myth Than Legend?

Hope everyone had a great week and are enjoying an even better 4th of July weekend! We have some great reads to help you all enjoy it a little more. So sit back, relax, and enjoy the articles below. Like always, if you have any investment questions or need advice on a specific stock, Stocks on Wall Street is always here for you so feel free to Contact Us at anytime. We always love to hear from our readers so please shoot us an email. Also let us know what you think about the articles below and your thoughts on the market’s current climate by either commenting below, posting on our Facebook Fan Page or by sending either Stocks on Wall Street or our Founder a Tweet.

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Is Warren Buffett More Myth Than Legend? (Marketwatch)

Celebrity Economists Make Waves (At Work)

An Open Letter To The Idiot Nation (StoneKettle)

Are we having fun yet? On the banks’ barely believable behaviour (London Review of Books)

Gladwell: The Gift of Doubt (New Yorker)

In Connecticut, a struggle to launch Obamacare (WaPo)

Basel Examines Banks’ Diverging Views of Risk-Weighted Assets (Bloomberg)

Thoughts on the future of finance blogging (FT Alphaville)

Finance blogging is not for the faint of heart (Abnormal Returns)

The Fed’s magic jobs number (Fortune)

Gold – Has the ‘Narrative’ Failed? (Acting Man)

Elizabeth Warren Tackles Wall Street (The Nation)

Why doesn’t Apple enable sustainable businesses on the app store? (Stratechery)

The Answer is a Click Away: The Internet Era’s Great Placebo Effect (Medium)

4 Steps to Viral, Or How to Create Infographics That Blow up the Web (visual.ly)

Pandora Paid Over $1,300 for 1 Million Plays, Not $16.89 (The Understatement)

Pandora and Royalties (Pandora)

The Immortal Life of the Enron E-mails (MIT Technology Review)

Morsi repeated McCain’s error: Ignore the economy (MarketWatch)

Egypt Interim Leader Inherits Troubled Legacy From Mursi (Bloomberg)

The Economics of Eating Out (priceonomics)

Mankiw, Kaplan, CEO Pay and the Defense of the 1 Percent (Economic Policy Institute)

Lockdown: Why Google Killed RSS Reader (Marco)

Surprise! Inflation is too low almost everywhere on earth (Wonkblog)

Do budget deficits cause inflation?  (Mainly Macro)

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Top 10 Energy Stocks To Buy

Top 10 Energy Stocks To Buy

 Screen Shot 2013-06-23 at 9.52.34 PMAcross the board, 2013 has already been a strong year for oil and natural gas companies and we’re only five months into the year! What we have seen is that many of these oil and natural gas stocks have already made double digit gains on the year alone. This is one of the main reasons we have decided to focus this week on getting you invested in the right energy stocks.

When it comes to energy stocks, all we have been seeing is huge gains across the board and that’s why we believe this is a great time to invest in the energy sector. More importantly, we believe American based energy companies are set to produce some of the biggest returns over the next few years as there is a lot of speculation that we are entering an American Energy Boom that will propel these stocks higher. So here you go, our list of our Top 10 Energy Stocks:

Halliburton (NYSE: HAL) Projections: +57.2%

images-3A little over 19 months ago, we first recommended investors to BUY Halliburton as we saw it as a strong long-term investment. During those long 18 months, we unfortunately have nothing to show for it as shares are now trading at the same levels of where they were when we first initially invested. Our timing for HAL was originally wrong as we invested at the wrong moment as shares fell over 40% in the first 9 months due to falling oil prices and overall weakness in our global economy. Since then however, HAL has recovered quite nicely as shares are up +27% over the past 6 months and up +40% over the course of the past year as share prices are now back to where they were when we first initially invested. Fundamentally we still like Halliburton for all the same reasons, read our original article to find out more details.

Halliburton (NYSE: HAL) Poised to Pop: Good Times Ahead 

Going forward, HAL’s outlook is very bullish with 91% of analysts covering HAL issuing a BUY rating or higher. Overall there are 32 analysts currently covering HAL and all but 3 think it’s a great BUY opportunity. If that doesn’t make you feel comfortable then maybe this will, HAL is represented in the equity portfolio of Soros Fund Management who holds a $34 million stake.

2013 has been a good year for HAL investors for several reasons. For one, HAL’s share price has appreciated +18% year-to-date, secondly in February Halliburton announced a +39% increase in its quarterly dividend to $0.125 per share, and finally in its most recent quarter (Q1 2013), the oil and gas E&P play reported a record $7.0 billion. Halliburton’s management has stated that it’s focused on improving North American margins in the intermediate-term and we have no reason to doubt that they won’t accomplish this goal, as historically they have always been one of the most efficient management teams worldwide. If you’re looking from George Soros point of view, he might see HAL as the best way to play America’s energy boom.

Halliburton’s strength in the tight oil and gas space is underrated. Trading at 10.7 times forward earnings, HAL is cheap especially compared to its peers. Going forward we are very optimistic about HAL’s long-term outlook and believe that the company will continue to outperform against their competition and we believe they will position themselves as the leader of the American energy boom. As a result, we believe shares of HAL will be trading at $65 per-share 12-months from now which included with their annual dividend of 1.20% works out to be a total net yield of +57.2%.

Rex Energy (NYSE: REXX) Projections: +21%

oil-stocks330Rex Energy has been a favorite of ours along with being one of our top-performing stock picks for both 2012 and 2013. We first recommended REXX as a strong BUY opportunity around a year ago. In that short time period, shares have soared over +78%. This probably lead to many investors to sell off their whole position thinking that the stock couldn’t rise any higher without however actually reanalyzing the company’s past and future performance, long-term projections, and overall outlook to see if there in fact is more potential still there. We did in fact take the time to reanalyze REXX and what we found was that while it had been a great year there was nothing to suggest that this run would stop or that REXX would lose value going forward. In fact, many key indicators led us to continue to be bullish on REXX. We did however sell half of our position recommending our readers to do the same as in case of a market correction it would protect our portfolio allowing us to play with the houses money rather than still having all our original starting capital at risk. To find out why we like REXX going forward simply click on the LINK below:

After A Successful Rally, Rex Energy Is Ready To Soar Even Higher

Going forward we expect REXX to continue to outperform their peers and have placed a 12-month price target of $20 per share, a total net yield of +21%.

Range Resources (NYSE: RRC) Projections: +27%

Natural-Gas-StationRange Resources stock price has steadily climbed throughout the past year as shares are up +21% year-to-date and +38% over the course of the past 12 months. Going forward, there is nothing to doubt that RRC won’t continue to rise higher as the company foresees production to grow between 20% to 25% over the course of the next few years. RRC’s total resource potential is estimated to be anywhere between 50 to 70 trillion cubic feet equivalent of natural gas. Being a low-cost producer, RRC should yield exceptional profits from these upbeat production numbers.

We also believe that RRC’s new strategy and focus on per-share growth instead of focusing on growth at all costs will be a big driving force for the company going forward and we believe it will be a key factor in sending share prices even higher. With increased production and exports expected to continue to grow there is little to suggest that Range Resource’s stock won’t stop continuing to steadily rise higher. In fact, we think RRC will be a big winner going forward and we expect shares prices to hit $95 over the course of the next 12 months, a total yield of +27%.

Southwestern Energy (NYSE: SWN) Projections: +40%

saupload_oil_stock330Southwestern Energy has made some key recent capital investments that we believe will only further strengthen the company’s long-term outlook as well as sending share prices significantly higher. SWN recently doubled down on its Marcellus acreage, purchasing 162,000 acres from Chesapeake Energy for $93 million. Being the discoverer of the Marcellus play, SWN made the most of its first-mover advantage as they have continued to improve their operations within the acreage. This strategic investment has greatly strengthened SWN’s overall outlook going forward leading to an increase in their overall projections across the board.

Even as SWN expands, the bulk of their assets are still in the Fayetteville Shale. SWN’s strategic capital investments have been crucial providing the company with a low-cost structure that will help SWN profit even if gas prices were to fall or weaken. Shares of SWN rose +37% over the course of the past year, to many investors that is a great return but when you dig deeper and see the long-term potential you realize that SWN is just getting started. The combination of both SWN’s smart and strategic investments along with their luck in what they discovered has led to increased optimism on SWN’s overall long-term outlook. These findings have also led to many analysts across Wall Street upping their projections adding an additional +30% upside to SWN from current levels.  The biggest news of all might be that SWN’s recent acquisitions has led to them becoming a new position in the hedge fund managed by George Soros, the fund disclosed a $16.7 million position in Southwestern Energy.

Following a strong first quarter where SWN posted an annual increase in production of 11% along with earnings of $0.36 per share versus $0.30 EPS just a year ago representing solid growth. Add in the recent developments, acquisitions, and investments and SWN has become a much more interesting play and one that holds a lot more potential and value now going forward. We project shares of SWN to be trading at $52 per-share 12-months from now, a total net yield of +40%.

Ultra Petroleum Corp (NYSE: UPL) Projections: +63%

images-2Just like RRC, Ultra Petroleum is another low-cost producer utilizing a new strategy to increase overall future production. UPL are now using their cost position to focus on profitable growth. UPL has cut back its capital program to make sure they invest within their cash flow. In doing so, they were able to trim off more than a billion dollars from their capital plans for this year alone. Going forward, the company will have the ability to spend more capital as cash flow increases. UPL’s management team has chosen this strategy to keep the business more efficient and cash flow positive. They want to avoid the possibility of any possible cash flow problems going forward and this new strategy will allow for them to stay within their means and only spend what they can afford to.

UPL has robust projections when it comes to future production, as they believe that by 2016 they can grow their production by 42% while their EBITDA will more than double. These conservative projections only assume a minimal rise in natural gas prices, however it’s very likely that the price of natural gas will rise above the $4.50 price that Ultra is modeling it to be by 2016. If this is true and natural gas prices do rise higher, then UPL will easily exceed their projections benefiting the business in many different positive ways. For one, higher natural gas prices will lead to an increase in both total revenue and overall profit for UPL. In turn, this will lead to higher cash flow numbers giving UPL more capital to reinvest back within the business which will only further promote increased growth and production. In turn, all of these added benefits will lead to a stronger long-term outlook for UPL, leading them to beat all future earnings estimates which will only further propel the stock to rise higher and higher.

UPL is already having a strong year in 2013, as share prices are up +28% year-to-date. Going forward, we firmly believe that UPL will be a quick riser and we project shares to be trading at $37 per-share 12 months from now, a total net yield of +63%.

Anadarko Petroleum (NYSE: APC) +33%

imagesAnadarko Petroleum (NYSE: APC) is a large, United States based, crude oil and natural gas exploration and production company. The firm markets, processes, produces, develops, and explores for crude oil, natural gas, and natural gas liquids. Most of Anadarko’s revenues come from onshore United States as well as deep-water operations in Algeria and the Gulf of Mexico. Other deep-water operations include operations along both coasts of Africa, Brazil, China, Indonesia, and New Zealand. Proved oil and gas reserves were 2,560 million barrels of oil equivalent BOE in 2012 with a reserve mix of 46% liquids and 54% natural gas. Last year total production increased 10% and we expect this number to increase going forward as Anadarko plans to spend about $5.5 billion on onshore capital expenditures in the United States in 2013 alone. Due to current low natural gas prices, Anadarko plans to reduce activities at Marcellus and Pinedale/Jonah to free-up resources for more profitable projects.

Last year international production accounted for 27% of total revenues and we expect this number to increase as APC plans to spend $1 billion in capital expenditures on its international operations. In 2012, APC made some significant discoveries of oil in Ghana and natural gas in Mozambique. The natural gas discovery in Mozambique is very large with a base estimated at 35-65 trillion cubic feet equivalent. We think APC is a great value stock especially at its current price. Anadarko is trading at $86.10 per share with a total market cap of more than $43.1 billion. Anadarko has an inexpensive forward earnings multiple of 16.5 times 2013 earnings as well as a PEG ratio of 1.04. APC has strong analyst coverage as well, 90% of the 30 analysts covering the stock have a BUY rating or higher.

APC has the right mix of onshore U.S. developments and foreign exploration projects to continue to thrive and produce great revenue numbers going forward. New discoveries such as the recent APC findings in the Gulf of Mexico and in Mozambique should be very profitable in the long run. Another strength about APC is despite natural gas prices being really low, they have continued to remain profitable despite the fact they are a major natural gas producer. This is why APC will be such a big winner if natural gas prices increase. APC is a great oil play to own and the added benefit of having exposure to natural gas markets is a huge bonus. We believe natural gas prices have bottomed and will inevitably rise. The consensus on Wall Street among analysts is the same. When that does happen, Natural Gas producers like APC will reap large profits. For all these reasons mentioned above, we believe APC is a great BUY opportunity. The current average 12-month price target for APC is $110, we believe in 12-months APC will be trading at $115, a 33% total yield!

Apache (NYSE: APA) +37%

images-1Apache is an oil & gas company operating in several countries including the U.S., Canada, the U.K North Sea, Argentina, Australia, and Egypt. At the end of 2012, it had around 2.85 billion BOE in proved reserves, concentrated in the U.S. and Canada. The proved reserves and the Permian/Central Resources total around 11.7 billion BOE, four times higher than the current proved reserves. The U.S. Permian Basin accounted for around 28% of the company’s total reserves. The company is considered the most active driller in the Permian Basin with around 38 operating rigs.

What makes me interested in Apache is its conservative capital structure. As of March 2013, it had nearly $32 billion in equity, $248 million in cash, and only $11.5 billion in long-term debt. Moreover, Apache is a consistent dividend payer. Its dividend increased from $0.21 per share in 2003 to $0.66 per share in 2012. For the full year 2013, Apache expects to push its costs down, increase its dividend, and restructure its asset portfolio. The company expects to divest $4 billion in assets, and then it would use $2 billion to reduce its debt level and the remaining amount to repurchase 30 million shares. APA currently has a great revenue numbers and management has shown its effectiveness as they have produced great ROE & ROA numbers. Apache is trading at $84.90 per share with a total market of nearly $33.3 billion. The market values Apache at only 9.5 times its forward earnings.

While the markets and competing oil stocks have had a great year so far with S&P up 15%, APA on the other hand has been sluggish appreciating only 8%. Despite this, APA is held by many famous investors, most importantly oil guru, T. Boone Pickens as APA accounts for 9.5% of Pickens portfolio, his second largest position. Compared to peers Anadarko Petroleum (NYSE: APC) and ExxonMobil (NYSE: XOM), Apache is valued the cheapest. As a result, investors should invest in APA due to its lowest earnings valuation, strong balance sheet, and the potential asset sales. If it could divest $4 billion in assets this year, Apache could drive its EPS higher, thanks to the potential share repurchases and debt reduction. Analysts across Wall Street agree that APA is undervalued with an average 12-month price target of $110. We believe Apache will be trading at $117 in 12-months, a yield of 36%. Add on a 0.90% dividend and you have a total yield of 36.90%!

 Eni SpA (NYSE: E) +26% 

AERIO_LOULOUDIEni SpA (NYSE: E), an integrated energy company, engages in the exploration, production, transportation, transformation, and marketing of oil and natural gas. Eni SpA has a market cap of $84.9 billion and is part of the energy industry. Year-to-date E is down 8%, opening up a buy opportunity for many investors. We consider Eni SpA to be a great BUY opportunity. The company’s strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance, impressive record of earnings per share growth, compelling growth in net income and attractive valuation levels.

We feel these strengths outweigh the fact that the company shows weak operating cash flow. Revenue growth has been a strength for E as they greatly exceeded the industry average of 6.9%. On top of that, revenues rose by 42.8% over the past year. Growth in the company’s revenue appears to have helped boost the earnings per share. We expect this kind of earnings growth to continue propelling ENI SPA and sending the stock price higher. The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Oil, Gas & Consumable Fuels industry. The net income increased by 65.5% when compared to the same quarter one-year prior, rising from $1,972.25 million to $3,264.41 million.

The company has come along ways in a year. Compared to where it was a year ago today, the stock is now trading at a higher level, reflecting both the market’s overall trend during that period and the fact that the company’s earnings growth has been robust. While ENI SPA doesn’t receive much analyst coverage with only 3 analysts covering the stock (1 Strong Buy, 1 Buy, 1 Hold) that doesn’t mean it’s not a great investment opportunity. The fact it is relatively unknown adds to more potential as if they continue to increase earnings year after year they will soon get recognized and soar significantly higher as a result. ENI SPA is also a great dividend play with a dividend yield of 5.20%. Overall, we believe ENI SPA is a great long-term BUY opportunity and have a 12-month price target of $65 per share, a yield of 21%. Add to that a dividend of 5.20% and you have a total yield of 26.20%

  Chevron (NYSE: CVX) +23%

Gas industry, gas transmission systemChevron is the second largest U.S. integrated energy company. For investors who like strong growth, dividend stocks then Chevron is the right pick for you. CVX has been an avid dividend grower for decades, with an average annualized dividend growth of 9.1% over the past five years. Its dividend growth rate over that period was lower than its EPS growth rate, which stood at 13.7%, on average. Among its main competitors, CVX has had the highest rate of dividend growth since 2004. Even though the company is expected to post a paltry EPS CAGR of less than 1% for the next five years on average, its solid cash flow generation will likely support continued dividend increases. Chevron explicitly states that one of its consistent financial priorities is to “maintain and grow dividend.”

CVX has a strong balance sheet, with $17.3 billion in cash and only $12.1 billion in long-term debt. Its long-term debt is only 8.6% of its stockholders’ equity. CVX has the highest profitability per barrel among its peers and the highest cumulative cash flow per share expansion over the past five years. Thus, its case is supported by leading earnings and cash margins, strongest future volume growth among its main peers, and solid shareholder value enhancement potential.

It should be noted that the company is known for its generous share buyback programs – it returned $5 billion in share repurchases last year alone. Chevron is currently covered by 25 analysts, of which 67% hold a BUY rating or higher. We are among the group that believes CVX is a great buy opportunity and we hold a 12-month price target of $145, a yield of 20%. Add to that Chevron’s 3.20% dividend and CVX is set to return a 23.20% annual return.

 Total SA (NASDAQ: TOT) +45%

saupload_oil_stock330Total SA is the main French integrated oil company, operating worldwide and employing more than 95,000 people worldwide. The company deals with all aspects of the oil & gas chain, from exploration to production, refining, transportation and marketing. Total keeps announcing new oil discoveries, a growing production and improving results and dividends. Moreover, the French company’s strategy is now to focus on exploration and invest in riskier/growing sectors such as shale gas in the U.S. or bituminous sand in Canada. Total has been ramping up its efforts to rejoin the big boys of the oil and gas sector. The company has achieved a strong production base in Africa, and for the next three years, it is striving to capitalize in the Middle East as well by building a $1.5 billion condensate refinery in Qatar.

Total SA is currently undergoing several other projects to position itself as one of the most competitive in the industry along with the goal of increasing its profits and market share. These, in turn, will more likely improve the market share of the company and its stock price. The P/E ratio of the company stands at ’10.17’, which shows that the stock price is equally valued. On the other hand, P/B indicates that the stock price is discounted relative to the industry average of ‘2.49’, making it attractive to investors. Price to Earnings per Growth indicates the Total is currently trading at a premium as compared to the industry average. However, it is trading at a discount compared to major players in the industry. Other major reasons to buy Total are, for one they are the leaders in the oil & gas sector and invest massively in exploration. The company just got several licenses in the new potential Artic fields. Total is also investing in the solar and biomass energies, which should drive the revenues at long term. Total’s objective is to invest $22 Billion annually between 2012 and 2014 while selling off $20 Billion of assets by 2014. TOT also offers a great dividend yield of more than 4.5% right now, which has kept growing over the years. Total developed a good payout ratio of 45% in 2011 as well as a strong link with its investors over the years.

Overall we believe TOTAL SA is a great BUY opportunity based on their attractive valuation level as seen in its P/E which is well discounted in comparison to the industry average. On top of that, the company shows outstanding financial performance as seen in its high earnings yield and high revenue growth. The future outlook of the company looks promising as it continuously embarks on several modernization and innovative projects such as the Antwerp refining and Port Arthur shale gas which can boost its profit and position the company as one of the most competitive company in the industry. Our 12-month price target for TOT is $72 per share, a yield of 40%. Add on a 4.5% dividend and you have a total net yield of 44.5%.

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Articles of the Week: It’s Not Just the Fed, It’s China, Too

Articles of the Week: It’s Not Just the Fed, It’s China, Too

OB-XX549_2006CH_E_20130620073351Hope everyone’s had a great week so far and are excited for an even better weekend! We have some great reads to help you all enjoy it a little more. So sit back, relax, and enjoy the articles below. Like always, if you have any investment questions or need advice on a specific stock, Stocks on Wall Street is always here for you so feel free to Contact Us at anytime. We always love to hear from our readers so please shoot us an email. Also let us know what you think about the articles below and your thoughts on the market’s current climate by either commenting below, posting on our Facebook Fan Page or by sending either Stocks on Wall Street or our Founder a Tweet.

It’s Not Just the Fed, It’s China, Too (Moneybeat)

7 charts that tell the Fed not to taper QE3 (MarketWatch)

 Gold Takes a Plunge Below $1,300 (WSJ)

The Conflict Between Managing Funds and Selling Funds (Bronte Capital)

Decline and fall: how American society unravelled (theguardian)

Can Others See When You View Them on LinkedIn? (Full Contact)

The Trouble With Kickstarter (WSJ)

Finance blogger wisdom: summer reading (Abnormal Returns)

Parsing the Fed: How the Statement Changed (Real Time Economics)

New China billionaires blowing massive bubbles (MarketWatch)

Gold is now only back to where it was in September 2010  (Moneybeat)

The Second Great Depression (Foreign Affairs)

Congress is wildly unpopular. Should anyone actually care? (Wonkblog)

Why Monopolies Make Spying Easy (New Yorker)

Bernanke’s Bond-Buying Paradox for Markets (WSJ)

Crossed signals over Fed’s stimulus efforts (Washington Post)

Financial Sector Thinks It’s About Ready To Ruin World Again (Onion)

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Part II: Top Ten Energy Stocks You Should Own

Part II: Top Ten Energy Stocks You Should Own

How-To-Invest-In-Oil-Stocks-300x299We’re only half-way through 2013 yet energy stocks have already felt the many great benefits of a bullish market with their soaring stock prices. Many of our favorite oil and natural gas stocks have already made substantial double digit gains and we’re not even at the half-way mark of 2013! This surge is one of the main reasons we decided to publish our Two Part Series listing our Top 10 Energy Stocks. It gives us an opportunity to showcase what energy stocks we believe you should be investing in. More importantly, it allows us to tell you why we believe you should invest in these energy stocks. Going forward, we believe American based energy companies are set to produce some of their biggest returns over the next few years as there is a lot of speculation that we are entering an American Energy Boom that will propel these stocks higher.

Last week we released the first Part to our two part article series by showcasing our first Top 5 Energy Stocks. Thanks for waiting everyone and here’s the second part to our series! To read our first article, simply follow the link below:

Part I: Top 10 Energy Stocks You Should Own 

Anadarko Petroleum (NYSE: APC) +33%

imagesAnadarko Petroleum (NYSE: APC) is a large, United States based, crude oil and natural gas exploration and production company. The firm markets, processes, produces, develops, and explores for crude oil, natural gas, and natural gas liquids. Most of Anadarko’s revenues come from onshore United States as well as deep-water operations in Algeria and the Gulf of Mexico. Other deep-water operations include operations along both coasts of Africa, Brazil, China, Indonesia, and New Zealand. Proved oil and gas reserves were 2,560 million barrels of oil equivalent BOE in 2012 with a reserve mix of 46% liquids and 54% natural gas. Last year total production increased 10% and we expect this number to increase going forward as Anadarko plans to spend about $5.5 billion on onshore capital expenditures in the United States in 2013 alone. Due to current low natural gas prices, Anadarko plans to reduce activities at Marcellus and Pinedale/Jonah to free-up resources for more profitable projects.

Last year international production accounted for 27% of total revenues and we expect this number to increase as APC plans to spend $1 billion in capital expenditures on its international operations. In 2012, APC made some significant discoveries of oil in Ghana and natural gas in Mozambique. The natural gas discovery in Mozambique is very large with a base estimated at 35-65 trillion cubic feet equivalent. We think APC is a great value stock especially at its current price. Anadarko is trading at $86.10 per share with a total market cap of more than $43.1 billion. Anadarko has an inexpensive forward earnings multiple of 16.5 times 2013 earnings as well as a PEG ratio of 1.04. APC has strong analyst coverage as well, 90% of the 30 analysts covering the stock have a BUY rating or higher.

APC has the right mix of onshore U.S. developments and foreign exploration projects to continue to thrive and produce great revenue numbers going forward. New discoveries such as the recent APC findings in the Gulf of Mexico and in Mozambique should be very profitable in the long run. Another strength about APC is despite natural gas prices being really low, they have continued to remain profitable despite the fact they are a major natural gas producer. This is why APC will be such a big winner if natural gas prices increase. APC is a great oil play to own and the added benefit of having exposure to natural gas markets is a huge bonus. We believe natural gas prices have bottomed and will inevitably rise. The consensus on Wall Street among analysts is the same. When that does happen, Natural Gas producers like APC will reap large profits. For all these reasons mentioned above, we believe APC is a great BUY opportunity. The current average 12-month price target for APC is $110, we believe in 12-months APC will be trading at $115, a 33% total yield!

Apache (NYSE: APA) +37%

images-1Apache is an oil & gas company operating in several countries including the U.S., Canada, the U.K North Sea, Argentina, Australia, and Egypt. At the end of 2012, it had around 2.85 billion BOE in proved reserves, concentrated in the U.S. and Canada. The proved reserves and the Permian/Central Resources total around 11.7 billion BOE, four times higher than the current proved reserves. The U.S. Permian Basin accounted for around 28% of the company’s total reserves. The company is considered the most active driller in the Permian Basin with around 38 operating rigs.

What makes me interested in Apache is its conservative capital structure. As of March 2013, it had nearly $32 billion in equity, $248 million in cash, and only $11.5 billion in long-term debt. Moreover, Apache is a consistent dividend payer. Its dividend increased from $0.21 per share in 2003 to $0.66 per share in 2012. For the full year 2013, Apache expects to push its costs down, increase its dividend, and restructure its asset portfolio. The company expects to divest $4 billion in assets, and then it would use $2 billion to reduce its debt level and the remaining amount to repurchase 30 million shares. APA currently has a great revenue numbers and management has shown its effectiveness as they have produced great ROE & ROA numbers. Apache is trading at $84.90 per share with a total market of nearly $33.3 billion. The market values Apache at only 9.5 times its forward earnings.

While the markets and competing oil stocks have had a great year so far with S&P up 15%, APA on the other hand has been sluggish appreciating only 8%. Despite this, APA is held by many famous investors, most importantly oil guru, T. Boone Pickens as APA accounts for 9.5% of Pickens portfolio, his second largest position. Compared to peers Anadarko Petroleum (NYSE: APC) and ExxonMobil (NYSE: XOM), Apache is valued the cheapest. As a result, investors should invest in APA due to its lowest earnings valuation, strong balance sheet, and the potential asset sales. If it could divest $4 billion in assets this year, Apache could drive its EPS higher, thanks to the potential share repurchases and debt reduction. Analysts across Wall Street agree that APA is undervalued with an average 12-month price target of $110. We believe Apache will be trading at $117 in 12-months, a yield of 36%. Add on a 0.90% dividend and you have a total yield of 36.90%!

 Eni SpA (NYSE: E) +26% 

AERIO_LOULOUDIEni SpA (NYSE: E), an integrated energy company, engages in the exploration, production, transportation, transformation, and marketing of oil and natural gas. Eni SpA has a market cap of $84.9 billion and is part of the energy industry. Year-to-date E is down 8%, opening up a buy opportunity for many investors. We consider Eni SpA to be a great BUY opportunity. The company’s strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance, impressive record of earnings per share growth, compelling growth in net income and attractive valuation levels.

We feel these strengths outweigh the fact that the company shows weak operating cash flow. Revenue growth has been a strength for E as they greatly exceeded the industry average of 6.9%. On top of that, revenues rose by 42.8% over the past year. Growth in the company’s revenue appears to have helped boost the earnings per share. We expect this kind of earnings growth to continue propelling ENI SPA and sending the stock price higher. The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Oil, Gas & Consumable Fuels industry. The net income increased by 65.5% when compared to the same quarter one-year prior, rising from $1,972.25 million to $3,264.41 million.

The company has come along ways in a year. Compared to where it was a year ago today, the stock is now trading at a higher level, reflecting both the market’s overall trend during that period and the fact that the company’s earnings growth has been robust. While ENI SPA doesn’t receive much analyst coverage with only 3 analysts covering the stock (1 Strong Buy, 1 Buy, 1 Hold) that doesn’t mean it’s not a great investment opportunity. The fact it is relatively unknown adds to more potential as if they continue to increase earnings year after year they will soon get recognized and soar significantly higher as a result. ENI SPA is also a great dividend play with a dividend yield of 5.20%. Overall, we believe ENI SPA is a great long-term BUY opportunity and have a 12-month price target of $65 per share, a yield of 21%. Add to that a dividend of 5.20% and you have a total yield of 26.20%

  Chevron (NYSE: CVX) +23%

Gas industry, gas transmission systemChevron is the second largest U.S. integrated energy company. For investors who like strong growth, dividend stocks then Chevron is the right pick for you. CVX has been an avid dividend grower for decades, with an average annualized dividend growth of 9.1% over the past five years. Its dividend growth rate over that period was lower than its EPS growth rate, which stood at 13.7%, on average. Among its main competitors, CVX has had the highest rate of dividend growth since 2004. Even though the company is expected to post a paltry EPS CAGR of less than 1% for the next five years on average, its solid cash flow generation will likely support continued dividend increases. Chevron explicitly states that one of its consistent financial priorities is to “maintain and grow dividend.”

CVX has a strong balance sheet, with $17.3 billion in cash and only $12.1 billion in long-term debt. Its long-term debt is only 8.6% of its stockholders’ equity. CVX has the highest profitability per barrel among its peers and the highest cumulative cash flow per share expansion over the past five years. Thus, its case is supported by leading earnings and cash margins, strongest future volume growth among its main peers, and solid shareholder value enhancement potential.

It should be noted that the company is known for its generous share buyback programs – it returned $5 billion in share repurchases last year alone. Chevron is currently covered by 25 analysts, of which 67% hold a BUY rating or higher. We among the group that believes CVX is a great buy opportunity and we hold a 12-month price target of $145, a yield of 20%. Add to that Chevron’s 3.20% dividend and CVX is set to return a 23.20% annual return.

 Total SA (NASDAQ: TOT) +45%

saupload_oil_stock330Total SA is the main French integrated oil company, operating worldwide and employing more than 95,000 people worldwide. The company deals with all aspects of the oil & gas chain, from exploration to production, refining, transportation and marketing. Total keeps announcing new oil discoveries, a growing production and improving results and dividends. Moreover, the French company’s strategy is now to focus on exploration and invest in riskier/growing sectors such as shale gas in the U.S. or bituminous sand in Canada. Total has been ramping up its efforts to rejoin the big boys of the oil and gas sector. The company has achieved a strong production base in Africa, and for the next three years, it is striving to capitalize in the Middle East as well by building a $1.5 billion condensate refinery in Qatar.

Total SA is currently undergoing several other projects to position itself as one of the most competitive in the industry along with the goal of increasing its profits and market share. These, in turn, will more likely improve the market share of the company and its stock price. The P/E ratio of the company stands at ’10.17’, which shows that the stock price is equally valued. On the other hand, P/B indicates that the stock price is discounted relative to the industry average of ‘2.49’, making it attractive to investors. Price to Earnings per Growth indicates the Total is currently trading at a premium as compared to the industry average. However, it is trading at a discount compared to major players in the industry. Other major reasons to buy Total are, for one they are the leaders in the oil & gas sector and invest massively in exploration. The company just got several licenses in the new potential Artic fields. Total is also investing in the solar and biomass energies, which should drive the revenues at long term. Total’s objective is to invest $22 Billion annually between 2012 and 2014 while selling off $20 Billion of assets by 2014. TOT also offers a great dividend yield of more than 4.5% right now, which has kept growing over the years. Total developed a good payout ratio of 45% in 2011 as well as a strong link with its investors over the years.

Overall we believe TOTAL SA is a great BUY opportunity based on their attractive valuation level as seen in its P/E which is well discounted in comparison to the industry average. On top of that, the company shows outstanding financial performance as seen in its high earnings yield and high revenue growth. The future outlook of the company looks promising as it continuously embarks on several modernization and innovative projects such as the Antwerp refining and Port Arthur shale gas which can boost its profit and position the company as one of the most competitive company in the industry. Our 12-month price target for TOT is $72 per share, a yield of 40%. Add on a 4.5% dividend and you have a total net yield of 44.5%.

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