Thursday, January 28, 2010

Lamar: Advertising Angst

By Eric Jackson
RealMoney Contributor

1/28/2010 12:45 PM EST
Click here for more stories by Eric Jackson

Lamar Advertising Company (LAMR - commentary - Trade Now) is a Baton Rouge-based national outdoor advertising company (with some digital operations), which took a significant hit to its stock price after Lehman's collapse a year and a half ago. Investors sold the stock as it became clear that the economy -- and with it the ad market -- would slump on the heels of the collapse on Wall Street. The stock dropped from $37 in early September 2008 to $14 by the end of 2008.

In the dark days of early 2009, the stock continued its decline, dropping to a March 2009 low of $5.59. When confidence grew in the government's steps to stabilize the financial markets, the worst-performing shares over the preceding six months became the best-performing ones. Stocks like Lamar, which were seemingly near death, rallied aggressively. From Mar. 9, 2009, to Jan. 6, 2010, the stock rallied 500% to over $33. Today, the stock is down to $29.

What was, and still is most worrying about Lamar, though, is not its exposure to a form of advertising now much less in demand (outdoor billboards and posters) than web, TV, or radio, but its debt. Lamar was carrying about $2.7 billion in long- and short-term debt as of the end of September 2009. We'll find out where that tally currently stands in about three weeks, when it releases its fourth-quarter and full-year results. The company's debt is about equal to its market capitalization.

[This post is an excerpt of the full article, available by clicking here to go to RealMoney.com.] Note: subscription required.]

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Wednesday, January 27, 2010

Volcker Rule Would Make Banks Be Banks

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Thursday, January 21, 2010

Apple's Tablet Won't Wreck Amazon

By Eric Jackson

RealMoney Contributor


1/21/2010 1:03 PM EST

With the coming of Apple's (AAPL - commentary - Trade Now) tablet next week, what's the short-term impact on Amazon's (AMZN - commentary - Trade Now) stock price? The short answer: Not much. The longer answer is it might be a good time to re-enter the stock.

Amazon's stock has been on a roll since it released its earnings back in October. The stock jumped from $93 to $114, at which point many investors said the stock had got ahead of itself. I remember one investor who exited after the earnings announcement, who tweeted, "I love the stock but it's now at crazy levels."

It's gotten crazier.

That good momentum carried it through the holiday shopping season and beyond. (Question: If we all continue to increase our buying online vs. in-store every year for another 10 years, can we still call the shift a trend -- or will it be a natural state?) The stock hit $140 a few days after Christmas; it's now off 10% from those levels.

[This post is an excerpt of the full article, available by clicking here to go to RealMoney.com.] Note: subscription required.]

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Putting a Price Tag on Apple's Upside

By Eric Jackson
RealMoney Contributor

1/20/2010 4:01 PM EST

After a conversation with Gene Munster of Piper Jaffray, Henry Blodget has come out with a $1,000 price target on Apple (AAPL - commentary - Trade Now). Call it a current-day version of his $400-a-share Amazon (AMZN - commentary - Trade Now) call back in 1998.

The market liked the call on Tuesday, along with several analyst upgrades, good feelings about next week's Tablet announcement and the prospects of a solid earnings report on Monday. The stock was up 4% on Tuesday, to $215, and it closed Wednesday at $210.81.

We've known for a long time that Apple is not a valued on the basis of fundamentals alone. It has undergone a rapid expansion of revenue and operating profit in the last five years. In the 2004 holiday quarter, Apple reported top-line revenue of $3.5 billion with a net profit of 70 cents per diluted share. The consensus for Monday's earnings announcement is that the company will have a $12 billion quarter with net earnings of $2.05 per diluted share. That's progress.

Since Apple trades at a trailing P/E ratio of 34 (although this will drop later this year because of an accounting rule change in how iPhone revenue is recognized) and at $215 per share, which is beyond the $200 it reached in late 2007, some observers believe this stock is living beyond its means. They're wrong.


[This post is an excerpt of the full article, available by clicking here to go to RealMoney.com.] Note: subscription required.]

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Wednesday, January 20, 2010

Apple's iSlate Will Be Game-Changing

Stock quotes in this article: AAPL , EBAY , RIMM , PALM , MSFT , HPQ , AMZN

Next Wednesday's new product announcement is Apple's(AAPL Quote) worst kept secret.

At this point, we all know that Apple will announce its new tablet computer. We know the Moscone Center has been rented. We know it's to be called iSlate. We know the media have all been invited. Apple knows just how to leak out information is just such a way to create a feeding frenzy among tech reporters and gizmo enthusiasts.

While many tech blogs are focusing on the possible specs for the new device, the majority of mainstream analysts and investors following Apple -- while enthusiastic about the new product - are taking a more measured approach.

What's driven as much if not more excitement in the price of Apple's stock over the past month has been potential holiday upside surprises that will be announced in Monday's earnings, rather than Wednesday's iSlate announcement. This is an oversight.

Let's step back and look at Apple and how much it's grown in the last three years. Top-line revenue is up 52% to $36.5 billion. Operating income is up 77% to $7.7 billion. Over that time period, the iPod has hit market saturation. iMac sales continue to grow, even amidst the economic slowdown. iPhone has also taken market share in the handset market at a blistering pace from zero units three years ago.

Many of us have become immune to yet another new product announcement from Apple. They always have something new, it seems, to announce.

[This post is an excerpt of the full article, which available on TheStreet.com by clicking here.]

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Thursday, January 14, 2010

Lucky Levers of Profit

By Eric Jackson

RealMoney Contributor


1/14/2010 1:48 PM EST


Click here for more stories by Eric Jackson

Instead of rolling the dice with casinos, pull the lever at the slots.

The gaming industry is facing long odds these days: a slow recovery after a brutal recession, cash-strapped consumers and expense-shy businesses. Some of the bigger players, such as Las Vegas Sands (LVS - commentary - Trade Now) and MGM Mirage (MGM - commentary - Trade Now), have placed big bets on growth in Asia's gambling Mecca, Macau -- but carry huge debts. Smaller outfits such as Boyd Gaming (BYD - commentary - Trade Now) are focused on Las Vegas and other smaller locales at home, with the attendant limits of potentially disappointing results if consumers stay cautious.

There are hints of a turnaround, but a shaky one. Nevada's recent November gaming numbers told that conflicted story well. Gaming revenues were up for the first time in nearly two years, yet room rates fell. It's good to know the people who came were big spenders, but bigger volumes would mean more dependable levels of cash flowing through. And that's the conundrum for investors in casino stocks in 2010: sector stocks could double if the recovery keeps rolling, or they could half if it turns up snake eyes.

Gaming is a niche sector with sub-niche players, and the slot companies offer investors another angle of play, one I believe deserves a closer look. The slot suppliers have two trends working for them in 2010: orders for upgrades from existing casinos and growing demand from state and local governments.

The Contenders


[This post is an excerpt of the full article, available by clicking here to go to RealMoney.com. Note: subscription required.]

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Wednesday, January 13, 2010

The Government Can't Create Jobs

By Eric Jackson, Senior Contributor

01/13/10 - 06:01 AM EST

Stock quotes in this article: C , BAC , WFC , GS , MS

With last Friday's announcement that the economy lost another 85,000 jobs in the month of December and an unemployment rate still above 10%, renewed pressure is on the federal government to create jobs.

However, the truth is that it can't create any new jobs -- at least ones that are going to last beyond any short-term project. A new study shows the government's efforts had virtually no impact on changing the jobless rate.

We endlessly hear about the unemployment rate and the need for jobs. Many economists and politicians are now talking about the need for more jobs and a second stimulus. However, we need some clear headedness about this discussion.

What exactly can government do to fix this problem of too many unemployed or under-employed? I think the honest answer is not much directly or immediately. It can only create jobs in the long term and indirectly, through following policies that enable businesses to better compete.

The government passed a $700 billion TARP program to aid the country's financial institutions in the fall of 2008. By measure of the fact that all the big banks and brokers are still around today, with much of the money repaid to the American taxpayer, this program was a success.

We can quibble about whether the big banks such as Citigroup(C Quote), Bank of America(BAC Quote), and Wells Fargo(WFC Quote) are lending enough or how much Goldman Sachs(GS Quote) and Morgan Stanley(MS Quote) are paying their top performers, but the fact remains that these institutions are still standing today. We weren't so sure they would be 12 short months ago.

[This post is an excerpt of the full article, which available on TheStreet.com by clicking here.]


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Tuesday, January 12, 2010

Score Some Beijing Bling With Fuqi

By Eric Jackson

TheStreet.com Senior Contributor


1/8/2010 6:59 AM EST

Tremendous wealth has been created over the past four years due to China's boom, with the property market being particularly heated, and that trend looks likely to continue throughout 2010. Seeing opportunity in these newly found fortunes, armies of Chinese retailers are seeking to entice the nouveau riche with their goods.

Compared to North America, high-end luxury brands in Asia have been raking in huge margins for years, and those companies are now lining up to take advantage of China's growth. Naturally, jewelry is part of that group, but rather than play an expansion of a larger Western brand into China, consider directly investing in Chinese high-end jewelry wholesaler Fuqi International (FUQI - commentary - Trade Now).

[This post is an excerpt of the full article, available by clicking here to go to RealMoney.com. Note: subscription required.]

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Weill, Citigroup's Fall Intertwined

By Eric Jackson

01/06/10 - 06:01 AM EST

Stock quotes in this article: C , BAC

Sandy Weill, former chairman and CEO of Citigroup(C Quote), is disappointed.

Weill, who was the architect of the financial supermarket concept, the builder of the global bank on which the sun never set, and the main proponent of repealing the Glass-Steagall Act which allowed banks which were too big to fail, went public this past weekend with his beefs on how he's been portrayed for contributing to Citi's failure. His arguments are long on sour grapes and short on details.

In his interview over the weekend with the New York Times, Weill pointed out that Chuck Prince (his successor) and John Reed (his co-CEO following Citi's merger with Travelers) were more to blame for the bank's problems than him. Weill also blamed a lack of management quality, for which he agrees he's partly to blame, for Citi's undoing.

Weill used the interview as a vehicle to try and rehabilitate his image. His main points are that (1) Citi will always be his baby and he's taken the bank's fall from grace very hard; (2) he was an important person in shaping Citi but he's only one person and he left the top job in 2003 and the chairman's role in 2006 before problems emerged; (3) he's been a major benefactor in his post-Citi years; (4) despite accusations that he drove Jamie Dimon away from the bank in 1999, he wasn't ready to retire and Dimon only would stay if he got the CEO job; and (5) Weill has tried to help Citi since trouble broke out but has been rebuffed by the board.

[This post is an excerpt of the full article, which available on TheStreet.com by clicking here.]

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Monday, January 11, 2010

Predictions for 2010: China, Dollar, Dow

By Eric Jackson

TheStreet.com Senior Contributor


12/30/2009 10:00 AM EST

Last week, I covered five specific off-the-beaten-path Chinese stocks that I like as long picks for 2010. This week, I provide more-general 2010 predictions.

China Begins to Emerge as the World's Leading Economy

Although China won't be the top dog in terms of gross domestic product, 2010 is going to be the first year we look back on and say that's really when China started to take center stage from the U.S., which will continue to be preoccupied with getting its own domestic economy on the mend.

Many companies in China currently trade at P/E discounts relative to their U.S. peers. In 2010, investors will start to rethink the logic of that, considering that these companies will be growing their earnings at a much faster pace to a foreseeable date much further out in time. Four years from now, it will be the U.S. companies with a lower P/E ratio than their Chinese peers. Other emerging economies, especially India, will show real strength in 2010.

Specific Chinese stock names are in last week's RealMoney column, all of which I hold long positions in.

[This post is an excerpt of the full article, available by clicking here to go to RealMoney.com. Note: subscription required.]

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Hey Fed, What's Going On?

By Eric Jackson

12/30/09 - 06:05 AM EST

Stock quotes in this article: WFC , C

Last week, Canadian hedge fund manager Eric Sprott published a white paper titled, "Is it all just a Ponzi scheme?" . The document digs into who is actually purchasing the recent Federal Reserve U.S. Treasury auctions and concludes that the biggest new buyer this year vs. last year is actually the U.S. government. Hence the Ponzi scheme allusion: One arm of the federal government is running huge deficits and quantitative easing programs that are being financed in part by another arm of that government. How can this story not get more attention from others in the press, in politics, or in the market?

Sprott is an unapologetic bear. He and David Rosenberg must hang out in the same coffee shops of Toronto and share notes. Therefore, his views regularly get dismissed by some with a rosier view of life. At some point, if you're a relentless bear -- like Roubini, Rogers, Rosenberg, Abelson, and probably Whitney now -- people stop listening to your content.

"This is the 'end-of-the-world' guy again," you think, "I know what he's about and don't have to listen." Yet, Sprott is also Canada's most successful hedge fund manager and clearly someone who does his homework. Here's his argument about what's gone on with the Fed and Treasury purchases this year.

In order to fund bigger deficits, the U.S. government in 2009 has had to sell three times the amount of debt it issued in 2008. That amounts to an extra $1.89 trillion in debt sales as of December, according to the U.S. Treasury.

[This post is an excerpt of the full article, which available on TheStreet.com by clicking here.]

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