Below is the verbatim transcript of Roongta's interview with CNBC-TV18.
Q: What are the key differences between top down and bottom up approach of investing?
A: We do come across a lot of investors who wish to start investing in direct equities, but given the number of listed entities, which is more than 5,000; they do not know where to begin from.
There are two basic methods which will help one to start research as to in which company to invest if it is direct equity. The first method would be a top down approach. In top down approach one begins with looking at the broader economic factors and situation. Look at the gross domestic product (GDP) numbers, look at interest rate scenario, the exchange rates, inflation and then see how these factors are going to affect a particular sector.
We have seen depreciation of the rupee in the last one month to the extent of about 7-7.5 percent. In this scenario one should evaluate what is the impact of this weakening of the rupee and which sectors are likely to benefit out of it, for example, all the export oriented IT companies are likely to benefit with the weakening of the rupee and on a contrary the companies which are import oriented are likely to be affected negatively with this development.
So, that is a first step and then see IT sector, if one identifies to be benefiting out of this then go a step further to see which IT company in the sector is going to benefit and which has good management, which has the fundamentals in place. This is a top down approach wherein one goes from step one, which is the broader economic situation and boiling down to the company management and the market share that it enjoys.
The other method is a bottom up approach. In this, one goes exactly the reverse; first identify some companies which possibly are investors using products or has heard name of, for example Colgate Palmolive (India) is a household name. It is one of the leaders in the oral healthcare segment. So, pickup a company, look at the management and look at the market share it enjoys, see the debt that the company has, see the performance of the company; the financials and fundamentals then go a step ahead and see what is the standing that the company has given the economic circumstances.
The idea and the thought behind this process is that the investor feels that a company can independently function irrespective of whatever the external factors are.
So, these are two methods wherein one can look at companies and evaluate whether to invest. There is no right and wrong method. Whatever one is comfortable with, should choose that method and begin. An investor could possibly start looking at two different companies with two different approaches. So, this is one of the methods which the investor can use to start thinking which company to invest in.
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Tags: Harshvardhan Roongta, Roongta Securities, top down, bottom up, GDP, economic, inflation, depreciation, rupee, import, SBI Magnum Balanced Fund, Colgate
Buy NIIT; target Rs 31: Ventura
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Accenture Plc. (ACN) sored yet another win at the Telenor Group, a provider of tele, data and media communication services. As per the contract, Accenture is expected to speed up the implementation process of the global shared services vision acrossdifferent companies within the Telenor Groupacross the Finance & Accounting, HR, IT and transactional procurement/purchase functions.
The agreement allows Telenor Global Shared Servicesto access Accenture's highly experienced management group. The $215 million five-year contract will help improve Telenor's efficiency by streamlining its shared services platform.
Accenture is implementing various growth strategies to penetrate newer markets and win more clients. These include emerging markets like India, the Philippines, China andLatin America. The company is offering customized services and focusing on working with local clients.
These strategies will decrease the risk from the slow-performing the major economies, which currently provide around 80% of Accenture's total revenue.
Moreover, Accenture is making small-scale acquisitions in underpenetrated regions to gain customized technology and knowledge to serve local clients. A couple of years ago, in Saudi Arabia, Accenture acquired a majority stake in Al Faisaliah Business & Technology Company. At the same time, competition in emerging markets is on the rise, which may moderategrowth prospects.
Although frequent deal wins have helped the company, competition from companies like IBM Corp. (IBM) continues to increase. Additionally, a strained spending environment as well as significant exposure to Europe may temper growth to some extent.
Currently, Accenture has a Zacks Rank #3 (Hold).
Investors may also consider other stocks in the sector such as Information S! ervices Group (III), with a Zacks Rank #1 (Strong Buy) and Towers Watson (TW), with a Zacks Rank #2 (Buy).
The 3-D printing industry continues to see major breakthroughs, but the technology has only scratched the surface with consumers. Will we ever reach the point when most homes can print up a new part for the car, or a toy for the kid? That was the topic addressed by experts at CE Week in New York City. Motley Fool analyst Rex Moore was there, and spoke with CNET executive editor Paul Sloan, who moderated the panel, "Bringing 3D Printing to Consumers." In this segment, Sloan explains how 3D Systems' (NYSE: DDD ) business model differs from competitors like Stratasys (NASDAQ: SSYS ) . Printing up a bright future
The Economist compares this disruptive invention to the steam engine and the printing press. Business Insider says it's "the next trillion dollar industry." And everyone from BMW, to Nike, to the U.S. Air Force is already using it every day. Watch The Motley Fool's shocking video presentation today to discover the garage gadget that's putting an end to the Made In China era... and learn the investing strategy we've used to double our money on these 3 stocks. Click here to watch now! Top China Companies To Invest In 2014: Invensys(ISYS.L) Invensys plc develops and applies technologies that enable the operation of manufacturing and energy-generating facilities, mainline and mass transit rail networks, and appliances worldwide. The company?s Invensys Operations Management division provides technology, software, and consulting services. Its services create and apply technologies to facilitate operation of industrial and commercial operations, such as oil refineries, fossil fuel and nuclear power plants, petrochemical works, and other manufacturing sites. This division offers Foxboro and Eurotherm recorders, and other equipment that measure and record plant information; distributed control systems, and Triconex, an automated safety system; SimSci-Esscor simulation software, which allows plant operators to simulate various scenarios for training purposes; and Avantis asset management software that schedules predictive maintenance. The company?s Invensys Rail division provides software-based signaling, communic ation, and control systems that facilitate operation of trains in mainline and mass transit networks. This division offers rail trackside and train-based monitoring products for the measurement of traffic in a rail network, identifying where trains are, and how fast they are going. Its European rail traffic management system, communication based train control, and train safety solutions control traffic on rail networks. The company?s Invensys Controls division designs, engineers, and manufactures products, components, systems, and services used in appliances, heating, air conditioning/cooling, and refrigeration products in a range of industries in residential and commercial markets. This division?s products within appliances or climate control systems various conditions comprising heat, humidity, and pressure. The company is based in London, the United Kingdom. Top China Companies To Invest In 2014: Spirent Plc(SPT.L) Spirent Communications plc operates as a communications technology company in Europe, the Asia Pacific, the Americas, and Africa. It operates in three segments: Performance Analysis, Service Assurance, and Systems. The Performance Analysis segment provides solutions that test current and next-generation communications technologies in the lab. It develops test solutions for the engineers in the communications industry that allow them to evaluate the performance of the latest technologies, infrastructure, and applications to be deployed worldwide. This segment also offers tools for service technicians and field test engineers to enhance network quality and make troubleshooting of live networks. In addition, it allows network equipment and mobile device manufacturers, service providers, enterprises, and government entities to test and benchmark the performance of their networks, network elements, mobile devices, and services; and delivers solutions, which address high speed E thernet, data center, cloud computing, virtualization, IMS, IPTV, location based services, multi-GNSS satellite technologies, 3G and 4G/LTE wireless, and other technologies. The Service Assurance segment provides network monitoring and field test solutions for live networks. This segment allows service providers to diagnose, troubleshoot, and determine how to resolve issues with networks and systems within the live network. The Systems segment supplies electronic control systems for electrically powered vehicles in the medical mobility and industrial markets. These include vehicles, such as powered wheelchairs and mobility scooters, as well as industrial vehicles, including floor cleaning equipment, fork-lift trucks, aerial access platforms, and golf carts. Spirent Communications plc was founded in 1936 and is headquartered in Crawley, the United Kingdom. I.M.A. Industria Macchine Automatiche S.p.A., together with its subsidiaries, engages in the design, manufacture, and sale of automatic machines for the processing and packaging of pharmaceuticals, cosmetics, tea, and coffee. The company operates in three segments: Tea, Herbal Tea, and Coffee Packaging; Pharmaceutical Packaging; and Pharmaceutical Processing. The Tea, Herbal Tea, and Coffee Packaging segment offers machines for the packaging of tea and herbal teas in filter bags and coffee in pods; and related services. The Pharmaceutical Packaging segment provides machines for the packaging of pharmaceutical capsules and tablets in blisters and bottles; machines for filling bottles and vials with liquid and powdered products in sterile and non-sterile environments; machines for freeze-drying; machines for cartoning and end-of-line equipment; tube-filling machines for the pharmaceuticals, cosmetics, chemicals, and food industries; and related services. The Pharmaceutical P rocessing segment offers machines for the production of tablets and capsules; machines for coating and fluid bed granulators; and related services. The company also operates in the food and beverage, and personal care packaging activities. I.M.A. Industria Macchine Automatiche S.p.A. sells its products primarily in Italy, European Union, other European countries, North America, Asia, and the Middle East. The company was founded in 1961 and is headquartered in Ozzano dell?Emilia, Italy. I.M.A. Industria Macchine Automatiche S.p.A. is a subsidiary of SO.FI.M.A. Societa Finanziaria Macchine Automatiche S.p.A.
Two years after removing Hosni Mubarak the Egyptian people have once again called for the removal of their President, Mohammed Morsi. Citing his and the Muslim Brotherhood's promoting religious law in the constitution, the military deposed Morsi in early July, replacing him with the Chief Justice of the Supreme Constitutional Court. While this change of power plays out, the Egyptian economy has taken a massive hit and the Central Bank is scrambling to maintain a functioning currency. Below we take a look at the revolution timeline to see what events triggered economic changes as well . The End of the Arab SpringJanuary to February, 2011 - Egyptians stage nationwide demonstrations against President Hosni Mubarak. The price of the Egypt Index ETF drop like a stone for the first time since it's inception. February 11 - Mubarak steps down and turns power over to the military as the price of EGPT makes a quick and full recovery. February to October - Tensions once again run high as a number of small protests end in violence leading up to the first parliamentary elections of the new government. Both the Egyptian Pound and ETF slip during this intermission, leading the Standard & Poor's rating agency to lower Egypt's credit rating from B+ to B . November 28, 2011 to Feb 15, 2012 - Egypt holds multistage parliamentary elections; the Muslim Brotherhood wins nearly half the seats in the lower house, with ultraconservative Salafis take another quarter. In the upper house, Islamists take nearly 90 percent of the seats. EGPT sees a small price bump at the beginning of election season. May 23 - The first round of voting in presidential elections leave Morsi and Ahmed Shafiq, the prime minister under Mubarak, as the top two finishers. The weeks leading up to the primary elections see huge growth for EGPT as international i! nvestors see promise in the stability of Egypt. Looking Up With MorsiJune 16 - On election day Morsi wins with 51.7% of the vote and is sworn into office only two weeks later . July to October - After taking another dip right before Morsi took office, EGPT once again recovers and begins a rally which lasts into late fall before peaking. During this time, Morsi has removed all top military officials from Mubarak era and drafted a new constitution. click to enlargeNovember 19 - Members of liberal parties and Egypt's churches withdraw from the 100-member assembly writing the constitution, protesting attempts by Islamists to impose their religion on the country. Nov. 22 - Morsi decrees greater powers for himself, giving his decisions immunity from judicial review and bans the courts from dissolving the constituent assembly. The move sparks days of protests and investors pull out of EGPT in droves. Nov. 30 -Islamists in the constituent assembly complete the draft of the constitution in a rush, announcing it will come into affect December 15th . Returning to the StreetsDecember 4 - More than 100,000 protesters march on the presidential palace, demanding the cancellation of a new constitution. Violence breaks out between protesters and government supporters the next day. December 22 - Egyptians vote in the constitution, with 63.8 percent voting in favor. Turnout is low. December 24 - S&P once again downgrades Egypt's long term credit rating, now valued at B- . click to enlargeDecember 29 - The Egyptian Central Bank announces that foreign reserves is at $15 billion and have fallen to a "critical minimum" and tries to stop a sharp slide in the value of the Egyptian pound. It now stands at just more than 7 to the dollar, compared to 5.5 to the dollar in 2010. January 25, 2013 to April – Hundreds of thousands hold protests against Morsi on the 2-year anniversary of the start of the revolt against Mubarak, causing a ripple affect.! Protests! rage in Port Said, Alexandria, and other cities for weeks, with dozens dying and thousands injured. Both the Egyptian Pound and ETF continue to suffer in the chaos. May 9 - S&P takes another crack at Egypt's long term debt, lowering it to CCC+ . June - Millions of Egyptians demonstrate, calling for Morsi to step down. As these protests finally start to gain traction in Egypt by the end of the month, the price of EGPT once again climbs as investors see a lucrative growth opportunity. The Military Steps InJuly 1 - Large-scale demonstrations continue, and Egypt's military gives the president and Muslim Brotherhood two days to resolve their disputes with the citizens, or it will impose its own solution: replacing Morsi with an interim administration, canceling the Islamist-based constitution and calling elections in a year. Morsi delivers a late-night speech on the 2nd in which he pledges to defend his legitimacy and vows not to step down . July 3 - Egypt's military chief announces that Morsi has been deposed, to be replaced by the Chief Justice of the Supreme Constitutional Court, Mansour Adly, until new presidential elections while Muslim Brotherhood leaders are arrested. Much like the time following Mubarak's ousting, the Egyptian Pound and ETF respond by rallying higher. Looking ForwardAs the government continues to work towards stability, investors should expect very little of that from EGPT and the Egyptian Pound. The economy was shattered during the Arab spring and has not had a chance to recover, with outside help only able to do so much. As citizens return to normal life, analysts expect the country will return back to prosperity, but as long as protesting and temporary governments remain a theme here, there will be little long-term growth potential for anyone besides day traders. Follow me on Twitter @lynpaintzall Disclosure: No positions at time of writing.
Whole Foods Market (NASDAQ:WFM) opened its first store in Austin, Texas, in 1980 and it has since become the undisputed king of organic grocers. The company has laid out plans to open 1,000 stores in the U.S. in the coming decades, but it remains to be seen if its business model can support this kind of growth in the long term. Let's use our CHEAT SHEET investing framework to decide whether Whole Foods is an OUTPERFORM, WAIT AND SEE, or STAY AWAY. C = Catalysts for the Stock's Movement Shares of Whole Foods jumped almost 10 percent on May 7 as the company announced strong second-quarter earnings. The organic grocer improved its gross margin by five basis points in the second quarter. This alleviated some concerns by investors that Whole Foods margin would erode as the competition intensified in the organic food space. Additionally, some analysts thought that Whole Foods' investments in price discounts and promotions would hurt its margins. Instead, these investments were offset by a reduction in administrative expenses due to greater economies of scale and strong comparable store sales growth of 6.9 percent. The company is scheduled to announce its third-quarter earnings on July 31. Greater capabilities in customer analytics and more investments in price discounts and promotions should give way to increased growth in same-store sales. Whole Foods continues to demonstrate a high return on invested capital, even in its oldest stores, and expects to open 32 more outlets this year. The company has opened 16 new stores in the first half of the fiscal year and bought the leases of six Johnnie's Foodmaster stores in the greater Boston area last quarter. While it is too early to tell whether Whole Foods can meet its ambitious goal of opening 1,000 stores across the country in the long term, new store openings will boost economies of scale, strengthen supplier relationships, and increase national brand recognition. E = Earnings are Increasing Year-over-Year Whole Foods' earnings growth has been impressive: The company has increased earnings per share over the past 18 consecutive quarters on a year-over-year basis. The most recent quarterly number of 38 cents showed an 18.75-percent increase from the previous year's quarterly earnings of 32 cents. Administrative and selling expenses continue to compress due to greater economies of scale. Additionally, promotional endeavors such as its Team Member Appreciation Double Discount Day last quarter, along with the increasingly popular 365 Everyday Value line, have given more budget-conscious consumers a reason to shop at Whole Foods. | 2013 Q2 | 2013 Q1 | 2012 Q4 | 2012 Q3 | 2012 Q2 | | Qtrly. EPS | $0.38 | $0.39 | $0.30 | $0.32 | $0.32 | | EPS Growth YoY | 18.75% | 20.00% | 43.82% | 26.00% | 25.49% | | Revenue Growth YoY | 13.37% | 13.71% | 23.64% | 13.65% | 13.59% | E = Exceptional Relative Performance to Peers? Whole Foods' biggest competitors in the high-growth retail store space are Fresh Market (NASDAQ:TFM) and Vitamin Shoppe (NASDAQ:VSI). Whole Foods has the highest forward price-to-equity multiple of the three, implying that it is the most expensive. However, it has a reasonable price-to-sales ratio — an important metric in measuring retail stores. Whole Foods is a growth stock, so one should expect to pay a higher price for its future earnings potential. Also, it benefits from being a much bigger company than its peers and has a much lower debt-to-equity ratio than Fresh Market. Still, Whole Foods is expensive relative to the industry. | WFM | TFM | VSI | | Forward P/E | 32.74 | 28.57 | 18.01 | | Price/Sales | 1.68 | 1.90 | 1.50 | | Operating Margin | 6.71% | 7.76% | 10.76% | | ROE | 14.61% | 36.26% | 14.92% | T = Technicals on the Stock Chart are Strong Whole Foods is currently trading at around $56.38, above both its 200-day moving average of $47.09 and its 50-day moving average of $52.50. The stock has experienced a strong uptrend in the past year — it's up 20.81 percent in the past 12 months. The Whole Foods management announced a two-for-one stock split along with its second-quarter earnings announcement, which provided the impetus for an almost 10-percent gain in the stock price on May 7. Additionally, the 50-day moving average recently crossed over the 200-day moving average, suggesting that investor sentiment is improving. The company is trading right around its 52-week high of $56.72. 
Conclusion Whole Foods continues to demonstrate profitability as a natural foods grocer. With an impressive expansion plan over the next several years and substantial investments in pricing discounts and promotions, the company will be able to cater to more customers than ever before and capitalize on the estimated 12-percent growth in the organic food industry over the next two years. While competition will certainly intensify as bigger-name retailers shift their focus toward natural foods, Whole Foods has built strong brand equity and a loyal customer base. There is certainly some downside risk if the macroeconomic picture darkens: Some customers will inevitably find cheaper substitutes to Whole Foods. However, because of the grocer's strong history of profitability and impressive growth prospects, Whole Foods is an OUTPERFORM.
A recent report by Deloitte suggests that we have only scratched the surface of shale drilling, both in the U.S. and around the world. With foreign companies pouring tons of money into joint ventures to team up with U.S. shale producers, adoption of these new methods will catch on around the world.� Another thing to consider is how young these new technologies and methods really are. With even top shale producers such as Continental Resources (NYSE: CLR ) optimistically getting well recovery rates of 5%, there's still a lot of opportunity for this technology and methodolgy to advance. In this video, Fool.com contributors Tyler Crowe and Aimee Duffy look at some of the other reasons we haven't fully grasped the potential of shale drilling and some of the companies that could help further advance the cause.� Best Tech Stocks To Watch For 2014: Meade Instruments Corp.(MEAD) Meade Instruments Corp. engages in the design, manufacture, import, and distribution of telescopes, telescope accessories, binoculars, spotting scopes, microscopes, and other consumer optical products in North America and internationally. The company?s products include LX200 series of telescopes, which combine LX200 with the precision of advanced coma free optics; LX90GPS that brings GPS capabilities to Schmidt-Cassegrain telescope; LS, computerized telescopes that use Lightswitch technology; and Deep Sky Imager series of charge-coupled device cameras. It offers its products under the brand names of Meade and Coronado. The company primarily serves the beginning, intermediate, and serious amateur astronomers. Meade Instruments sells its products through a domestic network of mail order and Internet dealers, specialty retailers, distributors, and mass merchandisers. The company was founded in 1972 and is headquartered in Irvine, California. Best Tech Stocks To Watch For 2014: NORSAT INTL (NII.TO) Norsat International Inc. provides broadband communication solutions that enable the transmission of data, audio, and video in remote and austere environments. Its Sinclair Technologies segment offers radio frequency (RF) antennas, including base station antennas, mobile/transit antennas, covert antennas, filters, receiver multicouplers, and accessories; and RF filter products, such as cavity filters, transmitter combiners, duplexers, isolators, circulators, and receiver multi-couplers. It serves public sector and military network operators, private sector networks, and original equipment manufacturers, as well as mobile radio, public safety, military, cellular, aviation, and heavy transport industries. The company�s Satellite Solutions segment provides a portfolio of portable satellite systems, including GLOBETrekkerTM, an intelligent portable satellite system that enables users to establish a reliable broadband connection on short notice; Norsat Rover, a satellite termi nal that fits into an extended-mission backpack; and OmniLink, a product family designed to address the needs of users seeking to establish broadband connectivity on a temporary basis. It serves defense, emergency services, and broadcasters. Norsat International Inc.�s Microwave Products segment designs, develops, and markets satellite receivers, transmitters, power amplifiers, and other customized products that enable the transmission, reception, and amplification of signals to and from satellites. Its customers include resellers, system integrators, antenna manufacturers, and service providers. Norsat International Inc. also provides engineering consulting services. The company has operations in the United States, the United Kingdom, Canada, Switzerland, Italy, and Germany. The company was formerly known as NII Norsat International, Inc. and changed its name to Norsat International Inc. in July 1999. Norsat International Inc. was founded in 1977 and is headquartered in Ri chmond, Canada. Imagination Technologies Group plc engages in the design, development, and marketing of multimedia technology and related products. It involved in the development of embedded graphics, video, display, and multi-threaded processor and multi standard broadcast receiver and connectivity technologies, including semiconductor system-on-chip intellectual property (SoC IP) products. The company licenses its SoC IP products, such as POWERVR visual intellectual property (IP), ENSIGMA communications IP, and META multi-threaded processor IP to a range of semiconductor and consumer electronics companies worldwide for use in the mobile phone multimedia, handheld multimedia, home consumer, mobile computing, and in-car electronic markets. It also develops, manufactures, and markets consumer products, such as digital and connected radios. The company is headquartered in Kings Langley, the United Kingdom. Best Tech Stocks To Watch For 2014: Dataram Corporation(DRAM) Dataram Corporation engages in the development, manufacture, and marketing of large capacity memory products primarily used in high performance network servers and workstations worldwide. The company offers customized memory solutions for original equipment manufacturers (OEMs) and compatible memory for computers manufactured by various companies. It also manufactures a line of memory products for Intel and AMD motherboard based servers. The company sells its memory products to OEMs, distributors, value-added resellers, and end-users. Dataram Corporation was founded in 1967 and is based in Princeton, New Jersey.
The U.S. was the wealthiest nation in terms of built assets in 2012, with total wealth estimated at $39.7 trillion, according to the first Global Built Asset Wealth Index, published Tuesday. ARCADIS, a global engineering and consultancy firm, and its subsidiary EC Harris, a global built asset consultancy, conducted the study to provide insight into the current and future prosperity of nations around the world based on analysis of investment in infrastructure and the built environment. The index compares the U.S. with the 30 countries that collectively represent 82% of global GDP. It shows that total built asset wealth within these countries stands at $193 trillion, the equivalent of nearly three times the $68 trillion GDP of the same countries. Researchers defined “built assets” as including all the tangible fixed capital investment counted in the national accounting framework used by national statistical offices: infrastructure investment, residential and non-residential construction, investments in plant and machinery and improvements in natural assets such as land reclamation. Following are the top 10 nations on the index: Country Built Asset Wealth ($ trillion) 1. U.S. $39.7 2. China $35.4 3. Japan $18.3 4. India $11.8 5. Germany $10.4 6. France $7.8 7. Italy $7.4 8. South Korea $6.0 9. Russia $5.9 10. Spain $5.9 The index forecasts U.S. total wealth to grow to $47.2 trillion by 2022, a 19% increase. China is coming on fast, and could surpass the U.S. in built asset wealth as early as 2014. By 2022, it is projected to have accumulated $75.7 trillion in built assets. The study found that growth in built asset investment in the U.S. would average around 6.5% over the coming decade. However, two factors will contribute to China’s overtaking the American economy in built asset terms. China still surpasses the U.S. in GDP growth, even as its economic growth slows. At the same time, with built asset investment at nearly half of GDP in 2012, China invests more in its built assets as a share of GDP than the U.S. Sustaining this level of investment will allow China to exceed the built asset accumulation in the U.S. in the coming years, according to the study. Elsewhere, Asian and Middle Eastern countries are taking advantage of large cash reserves to invest in their built environment at what the study said was “an unprecedented rate.” In contrast, growth in European countries with an aging built environment and less cash is expected to be much more subdued at around 2.7%. Indeed, investment may fall short of asset depreciation in some struggling Eurozone economies, leading to a drop in the built asset stock. “Indicators like GDP and unemployment, which are traditionally used to define a country’s performance, only tell one side of the story,” Matt Bennion, global director of buildings at ARCADIS, said in a statement. “While GDP quantifies national income, this analysis of the total stock of built assets provides an indication of accumulated wealth and the resources which can be drawn upon to fuel future economic growth. Those nations that make the most from investing, developing, operating and reinventing their built environments are the best placed to succeed in the changing world economy.” --- Check out REITs Post Gains in First Half of ’13 but Trail Broader Equity Market on ThinkAdvisor.
On Jul 5, 2013, we downgraded our recommendation on Lazard Ltd. (LAZ) to Underperform from Neutral. The downward revision was based on the company's first-quarter 2013 adjusted earnings, which lagged the Zacks Consensus Estimate and reflected a dismal top-line performance. Why Underperform? Financial Advisory Revenues contributed substantially to Lazard's total revenue comprising about 42% in first-quarter 2013. It is anticipated that Lazard will continue to rely on financial advisory fees for a substantial portion of its revenue for the foreseeable future, and a decline in advisory engagements or the market for advisory services would adversely affect its business, financial condition and result of operations. Notably, in first-quarter 2013, these revenues dropped 39% year over year. Though operating expenses declined in first-quarter 2013 taking into account the ongoing cost-savings initiatives, it remained at elevated levels. Notably, operating expenses were significantly up on a year-over-year basis in 2012, primary contributors being a fourth-quarter 2012 charge aggregating $100 million related to the cost saving initiatives and higher levels of compensation and benefits expenses (up 16%). The continuation of such a trend is expected to affect the margin level of the company. At the current level, asset management businesses are under cyclical and secular pressures, many of which have been aggravated by the financial crisis. These pressures include volatile markets and new regulatory restrictions. Though Lazard remains well positioned over the long term, given the ongoing macro headwinds, a limited upside is expected in the near term. For Lazard, the Zacks Consensus Estimate for 2013 decreased 13.1% to $1.72 per share, over the last 90 days. For 2014, the Zacks Consensus Estimate declined 6.8% to $2.34 per share, over the same time frame.
Lazard is expected to release its second-quarter 2013 earnings on Jul 25, 2013. The Zacks Consensus Estimate for the second quarter is 32 cents per share. Zacks Earnings ESP (Read: Zacks Earnings ESP: A Better Method) for Lazard is -6.25% for the second quarter. This reduces the chances of a positive earnings surprise, though it carries a Zacks Rank #3 (Hold).
Other Companies to be Considered
Some investment companies that are worth considering include Fortress Investment Group LLC (FIG) and SEI Investments Co. (SEIC) with a Zacks Rank #1 (Strong Buy) while Ameriprise Financial, Inc. (AMP) carries a Zacks Rank #2 (Buy).
U.S. equities ended the day barely changed as investors turned their focus to the the latest FOMC minutes and Ben Bernanke's press conference. The minutes hinted that central bank officials are divided on when the Fed should begin scaling back its massive bond-buying program. The minutes stated that "Several members judged that a reduction in asset purchases would likely soon be warranted, but many members indicated that further improvement in the outlook for the labor market would be required before it would be appropriate to slow the pace of asset purchases." . Global Market Overview: UCO Pops As Crude Tops $106, IBB RalliesFollowing a lackluster trading session, only two major U.S. equity indexes managed to close in positive territory. The Dow Jones Industrial Average ETF slipped 0.05% after its underlying index snapped its four-day win streak. The S&P 500 ETF edged 0.04% higher, while the tech-heavy Nasdaq ETF gained 0.57%. In Europe, markets were broadly higher, rebounding from earlier losses; the Stoxx Europe 600 rose 0.1%. Meanwhile, Japan's Nikkei Stock Average fell 0.4%, while China's Shanghai Composite rallied 2.2% despite a surprise decline in both Chinese exports and imports in June. Bond ETF Roundup U.S. Treasuries fell today as investors digested the latest FOMC minutes. Yields on 10-year notes rose 4 basis points, while 30-year bonds and 5-year note yields rose 3 and 2.5 basis points, respectfully . Commodity Roundup Crude oil futures surged past $106 a barrel today to settle at their highest level in 15 months after the U.S. Energy Information Administration reported a 9.9 million-barrel decline in stockpiles for the week ended July 5. In other energy trading, gasoline futures rose 3% after the EIA reported supplies falling by 2.6 million barrels. Meanwhile, gold futures rose on Fed minutes. ETF Chart Of The Day #1: The Ultra DJ-UBS Crude Oil ETF was one of the best performers today, gaining 3.20% during th! e session. As crude oil rallied to close above $106 a barrel, this ETF gapped significantly higher at the open. UCO inched higher throughout the majority of the day, eventually settling at $35.78 a share . Click To Enlarge ETF Chart Of The Day #2: The Nasdaq Biotechnology Index Fund ETF also posted a strong performance today, gaining 1.17% during the session. Biotech and healthcare shares were among today's top performers, allowing this ETF to rally throughout the session. IBB eventually settled at $184.62 a share . Click To Enlarge ETF Fun Fact Of The DayThe best-performing themed strategy over the trailing 13-week period has been the High Tech ETFdb Portfolio, which has gained 5.85%. Disclosure: No positions at time of writing.
Should value investors make their investment decisions based on the macro picture, such as if Greece will exit the eurozone? Or if all Spanish banks will be nationalized? Or Germany will agree to the idea of a euro bond? These are hard questions. Any of these events will impact the market dramatically, at least in the short term. It would be great if one could predict these events and their outcomes, and invest accordingly. In his book ��he Most Important Thing: Uncommon Sense for the Thoughtful Investor��(Columbia Business School Publishing), Howard Marks lists three ways of dealing with macro events such as the economy and politics. The first is to try to predict these events. But historically no one has been able to predict with any accuracy that is better enough than random occurrences. Those who get some correct would get others completely wrong. The second is to realize that macro pictures are totally unpredictable, and give up completely. These investors would be more passive with their investing. They are more likely to be always fully invested, and buy on a dollar cost average basis. The third way is not to predict, but make investment decisions based on where we are instead of where we might be. Howard Marks thinks that the third way is the best way. This makes a lot of sense. It is too hard to predict what the world might be like. And it is much easier to know where we are today. We can make decisions based on where we are today. How does this apply to individual stock picking? Say you dig into a company, find that you love the business, the company is doing well and the valuation is reasonable. Why would the macro picture matter in this case? Well, most likely it doesn��. But after you have done all the research, taking a look at where we are with the market will help you to think deeper on questions like why the company can grow as the macro economy struggles. Is the growth sustainable? Where are we with its business cycle? Are you pi! cking a stock that is just relatively cheap but actually still overvalued? Warren Buffett said many times that he has no idea of where the market will be next month or even next year. But he does pay attention to where the market valuation is compared with historical valuations. In "Mr. Buffett on the Stock Market," published on Dec. 22, 1999, he used the ratio of GNP on total market cap to argue that the market was way overvalued and was positioned for poor returns. By the way, based on Warren Buffett�� way of valuing the market, GuruFocus created its market valuation page, which is updated daily. As of today, the market is about modestly overvalued and is positioned to return 4.6% annually in the coming years. Warren Buffett also pointed out, ��erhaps you are an optimist who believes that though investors as a whole may slog along, you yourself will be a winner.��A similar argument would be: Although the market is overvalued, you can always pick the undervalued stocks. Maybe you can. But knowing where we are with the market will help you get a clearer picture for your research into individual companies. One can certainly argue that if investors had foreseen the macro picture of the housing market crash, they would have avoided deep losses in 2008. That might be true. But if investors noticed that the stock market was quite overvalued in 2007 as measured by GDP over market cap and managed their portfolio risk accordingly, they would also have avoided losses. Therefore, paying attention to where we are with market valuations will be enough. Value investors should avoid the difficult task of predicting the economy and macro events. They should look through the headlines that flood the media daily and keep an eye on the overall market valuation and its expected returns while spending most of their time researching individual companies. Top Undervalued Stocks To Invest In Right Now: Schlumberger N.V.(SLB) Schlumberger Limited, together with its subsidiaries, supplies technology, integrated project management, and information solutions to the oil and gas exploration and production industries worldwide. The company?s Oilfield Services segment provides exploration and production services; wireline technology that offers open-hole and cased-hole services; supplies engineering support, directional-drilling, measurement-while-drilling, and logging-while-drilling services; and testing services. This segment also offers well services; supplies well completion services and equipment; artificial lift; data and consulting services; geo services; and information solutions, such as consulting, software, information management system, and IT infrastructure services that support oil and gas industry. Its WesternGeco segment provides reservoir imaging, monitoring, and development services; and operates data processing centers and multiclient seismic library. This segment also offers variou s services include 3D and time-lapse (4D) seismic surveys to multi-component surveys for delineating prospects and reservoir management. The company?s M-I SWACO segment supplies drilling fluid systems to improve drilling performance; fluid systems and specialty tools to optimize wellbore productivity; production technology solutions to maximize production rates; and environmental solutions that manages waste volumes generated in drilling and production operations. Its Smith Oilfield segment designs, manufactures, and markets drill bits and borehole enlargement tools; and supplies drilling tools and services, tubular, completion services, and other related downhole solutions. The company?s Distribution segment markets pipes, valves, and fittings, as well as mill, safety, and other maintenance products. This segment also provides warehouse management, vendor integration, and inventory management services. Schlumberger Limited was founded in 1927 and is based in Houston, Texas. Advisors' Opinion: - [By Robert Holmes]
Schlumberger has the most potential upside of any stock in this group of 50 that also makes the firm's Best Ideas list. Analyst Ole Slorer says Schlumberger has "what we consider the most advanced technology portfolio in the industry." "Its fundamentals are impressive, with what we think are some of the best field personnel, a pristine service and performance reputation, and leading market share in most of its product lines," Slorer writes. Though Slorer's price target is 42% above current levels, his most bullish scenario for Schlumberger over the next year would see shares climb a whopping 116%. On the downside, his most bearish scenario for the company would see shares slide 38% over the next 12 months. - [By Kathy Kristof]
Headquarters: Houston
52-Week High: $79.38
52-Week Low: $56.86
Annual Sales: $39.5 bill.
Projected Earnings Growth: 18% annually over the next five years
Energy-services giant Schlumberger is the prototypical multinational. The company derives roughly 85% of its revenues from overseas, including developing markets in Africa, Brazil and Asia.
With particular expertise in deep-water drilling, Schlumberger is well-positioned to compete in a world where oil is harder to find, says Argus Research analyst Philip Weiss. Admittedly, oil exploration is a cyclical business, driven largely by crude prices. And weak prices for natural gas have hit the company’s stock, Weiss says. But the price of natural gas has little to do with Schlumberger’s profits, so Weiss just sees this as an opportunity to get the shares at a more reasonable price. - [By Rebecca Lipman]
Together with its subsidiaries, supplies technology, integrated project management, and information solutions to the oil and gas exploration and production industries worldwide. Market cap of $91.49B. EPS growth (5-year CAGR) at 24%. According to Morgan Stanley: "Thanks to an estimated $1 billion investment per year in R&D, Schlumberger has what we consider the most advanced technology portfolio in the industry." - [By Brian Stoffel]
This company has been a pick of both Jordan DiPietro and Bryan White. And both analysts have pointed to the company's opportunity for oil exploration abroad -- which is where much of the demand will soon be coming from as well. Bryan points out that three-fourths of the company's revenue comes from abroad, with "Brazil, the Middle East, and Africa [as] key regions where activity is expected to be robust and growing." Jordan adds, "[Schlumberger] has an important presence in high-growth regions of the world such as Iraq, Mexico, and Russia, and has the competitive advantage to be able to offer full services, from managing entire oil fields to drilling wells."
Top Undervalued Stocks To Invest In Right Now: Dollar Tree Inc.(DLTR) Dollar Tree, Inc. operates discount variety stores in the United States and Canada. Its stores offer merchandise primarily at the fixed price of $1.00. The company operates its stores under the names of Dollar Tree, Deal$, Dollar Tree Deal$, Dollar Giant, and Dollar Bills. Its stores offer consumable merchandise, including candy and food, and health and beauty care, as well as household consumables, such as paper, plastics, household chemicals, in select stores, and frozen and refrigerated food; variety merchandise, which includes toys, durable housewares, gifts, party goods, greeting cards, softlines, and other items; and seasonal goods, such as Easter, Halloween, and Christmas merchandise. As of April 30, 2011, it operated 4,089 stores in 48 states and the District of Columbia, as well as 88 stores in Canada. The company was founded in 1986 and is based in Chesapeake, Virginia. Advisors' Opinion: - [By Sam Collins]
Dollar Tree (NASDAQ:DLTR) is a leading operator of discount variety stores. The stock has hugged its 50-day moving average since mid-February. But a recent minor revision of earnings for this year by several analysts and the recent market sell-off have resulted in a fall from its high of the year at over $70 to under $66. However, Goldman Sachs (NYSE:GS) increased its price target to $73 from $69. Technically DLTR is oversold, according to MACD. A break below its 50-day moving average could result in a pullback to $64, but positions could be taken at the current market price. The trading target for DLTR is $72.
Tupperware Brands Corporation operates as a direct seller of various products across a range of brands and categories through an independent sales force. The company engages in the manufacture and sale of kitchen and home products, and beauty and personal care products. It offers preparation, storage, and serving solutions for the kitchen and home, as well as kitchen cookware and tools, children?s educational toys, microwave products, and gifts under the Tupperware brand name primarily in Europe, Africa, the Middle East, the Asia Pacific, and North America. The company provides beauty and personal care products, which include skin care products, cosmetics, bath and body care, toiletries, fragrances, nutritional products, apparel, and related products principally in Mexico, South Africa, the Philippines, Australia, and Uruguay. It offers beauty and personal care products under the Armand Dupree, Avroy Shlain, BeautiControl, Fuller, NaturCare, Nutrimetics, Nuvo, and Swissgar de brand names. The company sells its Tupperware products directly to distributors, directors, managers, and dealers; and beauty products primarily through consultants and directors. As of December 26, 2009, the Tupperware distribution system had approximately 1,800 distributors, 61,300 managers, and 1.3 million dealers; and the sales force representing the Beauty businesses approximately 1.1 million. The company was formerly known as Tupperware Corporation and changed its name to Tupperware Brands Corporation in December 2005. The company was founded in 1996 and is headquartered in Orlando, Florida. Advisors' Opinion: - [By Sam Collins]
Household name Tupperware Brands Corp. (NYSE:TUP) is a global direct seller of products with multiple brands through an independent sales force of 2.4 million people. Its product line focuses on kitchen storage and serving solutions, as well as personal-care products. Over 60% of sales in 2011 are expected to come from Europe and Asia, and the stock has appeal as an emerging markets story. S&P estimates that 2011 earnings will increase to $4.54 versus $3.53 in 2010, and it increased its rating to a “five-star strong buy” with a recently revised 12-month target of $81, up from $73. The 2005 purchase of Sara Lee’s (NYSE:SLE) direct-sales business, which has a high growth rate, should be a long-term benefit. TUP’s annual dividend yield is 1.92%. Technically TUP had a pullback following a new high at over $70 and is currently oversold. Buy TUP at the current market price with a trading target of $70, but longer term a much higher target will likely be attained.
Top Undervalued Stocks To Invest In Right Now: Caterpillar Inc.(CAT) Caterpillar Inc. manufactures and sells construction and mining equipment, diesel and natural gas engines, industrial gas turbines, and diesel-electric locomotives worldwide. It operates through three lines of businesses: Machinery, Engines, and Financial Products. The Machinery business offers construction, mining, and forestry machinery, including track and wheel tractors, track and wheel loaders, pipelayers, motor graders, wheel tractor-scrapers, track and wheel excavators, backhoe loaders, log skidders, log loaders, off-highway trucks, articulated trucks, paving products, skid steer loaders, underground mining equipment, tunnel boring equipment, and related parts. It also manufactures diesel-electric locomotives; and manufactures and services rail-related products and logistics services for other companies. The Engines business provides diesel, heavy fuel, and natural gas reciprocating engines for Caterpillar machinery, electric power generation systems, marine, petrol eum, construction, industrial, agricultural, and other applications. It offers industrial turbines and turbine-related services for oil and gas, and power generation applications. This business also remanufactures Caterpillar engines, machines, and engine components; and offers remanufacturing services for other companies. The Financial Products business provides retail and wholesale financing alternatives for Caterpillar machinery and engines, solar gas turbines, and other equipment and marine vessels, as well as offers loans and various forms of insurance to customers and dealers. It also offers financing for vehicles, power generation facilities, and marine vessels. The company markets its products directly, as well as through its distribution centers, dealers, and distributors. It was formerly known as Caterpillar Tractor Co. and changed its name to Caterpillar Inc. in 1986. Caterpillar Inc. was founded in 1925 and is headquartered in Peoria, Illinois. Advisors' Opinion: - [By Roberto Pedone]
Caterpillar (CAT) is staging a textbook breakout in May. Shares of heavy equipment maker haven't exactly been kind to investors year-to-date; CAT has barely broken even during a time when the broad market has been in a historic rally. But a textbook breakout should change that. CAT started forming an inverse head and shoulders pattern back in early April. The inverse head and shoulders is formed by two swing lows that bottom out around the same level (the shoulders), separated by a lower low called the head; the buy signal comes on the breakout above the pattern's "neckline" level, which was just below $86 for CAT. That puts this stock's upside target right around $92. Even though CAT has nearly hit its upside target already (the post-breakout buying has been very quick), the longer-term implication for investors is a break of the downtrend that had been haranguing shares this year. Now, with that downtrend broken, CAT should have more room to move higher. I'd just expect some consolidation first. - [By Jim Cramer,TheStreet]
Caterpillar (CAT) could be a monster in 2011, especially with the integration of Bucyrus International (BUCY), which I think will turn out to be a fantastic acquisition. Current earnings-per-share estimates of about $6 are, I think, way too low. I see this stock going to $120 in the next year. Too gutsy? Ask yourself what happens if the United States comes back as a growth nation? Right now almost all of the growth is overseas. Still a fantastic mineral play and a terrific call on world growth. - [By Ben Levisohn]
For one day at least, this CAT is not a dog. Caterpillar (CAT) has gained 2% to $86.22 today, its largest gain since in a month and the largest gain among the Dow components. The machinery manufacturer has dropped 11% during the past six months, however, as a slowdown in China and cost-cutting at mining companies have hit its shares.  Bloomberg Susquehanna’s Ted Grace offers reasons for optimism, even as he lowers his 12-month price target to $97 from $104: CAT remains Positive rated with 15% upside to our $97 price target and upside-downside of 1.2-to-1 (which, like most of our machinery names, is admittedly shy of the 2-to-1 or better ratio we prefer). Despite our 2014-15 EPS being ~6% below consensus, we view our updated estimates as closer to buyside expectations while noting that consensus appears to embed a low tax rate that explains over half of the variance. While there remains plenty of uncertainty on 2014/15, particularly in mining, we believe CAT shares currently discount reasonable top-line expectations while recent meetings with mgmt suggest potential for structural cost savings that could drive better than expected margins/ incrementals. While difficult to identify discernible catalysts, if CAT’s framework for flat-to-better RI revenue growth in 2014 proves correct (admittedly not assumed in our estimates), this would almost certainly debunk the core of the bear thesis and be meaningfully positive for shares. Investors waiting for the stock to actually, you know, rise can take comfort in Caterpillar’s $2.40 dividend per share and its more than $3 per share in buybacks in 2013, Grace says. Caterpillar’s 2% gain has trumped the Dow Jones Industrial Average’s 0.04% rise, and United Technology’s (UTX) 0.1% drop, while competitor Deere (DE) has gained 1.9% to $83.22.
With shares of Nokia (NYSE:NOK) trading around $3, is NOK an OUTPERFORM, WAIT AND SEE or STAY AWAY? Let's analyze the stock with the relevant sections of our CHEAT SHEET investing framework: T = Trends for a Stock’s Movement Nokia operates as a mobile communications company worldwide. It designs and develops mobile products and services; provides digital map information and related location-based content and services for mobile navigation devices, automotive navigation systems, Internet-based mapping applications; and provides mobile and fixed network infrastructure, communications and networks service platforms, as well as professional services and business solutions, to operators and service providers. Nokia operates in three segments: Devices & Services, HERE, and Nokia Siemens Networks. Nokia has announced it will acquire the remaining stake it doesn't already own in the Nokia Siemens network. Nokia is buying Siemens's (NYSE:SI) 50 percent of the network for a lower-than-expected 1.7 billion euros. Shares in both companies rose after the announcement. The mobile movement is very hot at the moment and if executed correctly, Nokia may be able to see significant profits. Should Nokia provide more relevant mobile products, look for it to become a major player in the space once again. T = Technicals on the Stock Chart are Mixed Nokia stock seen a reasonable amount of selling pressure in recent years. The stock is now rebounding higher on higher highs and higher lows. Analyzing the price trend and its strength can be done using key simple moving averages. What are the key moving averages? The 50-day (pink), 100-day (blue), and 200-day (yellow) simple moving averages. As seen in the daily price chart below, Nokia is trading above its rising key averages which signal neutral to bullish price action in the near-term. 
(Source: Thinkorswim) Taking a look at the implied volatility (red) and implied volatility skew levels of Nokia options may help determine if investors are bullish, neutral, or bearish. | Implied Volatility (IV) | 30-Day IV Percentile | 90-Day IV Percentile | | Nokia Options | 66.11% | 70% | 68% | What does this mean? This means that investors or traders are buying a significant amount of call and put options contracts, as compared to the last 30 and 90 trading days. | Put IV Skew | Call IV Skew | | July Options | Flat | Average | | August Options | Flat | Average | As of today, there is an average demand from call buyers or sellers and low demand by put buyers or high demand by put sellers, all neutral to bullish over the next two months. To summarize, investors are buying a significant amount of call and put option contracts and are leaning neutral to bullish over the next two months. On the next page, let’s take a look at the earnings and revenue growth rates and the conclusion. E = Earnings Are Decreasing Quarter-Over-Quarter Rising stock prices are often strongly correlated with rising earnings and revenue growth rates. Also, the last four quarterly earnings announcement reactions help gauge investor sentiment on Nokia’s stock. What do the last four quarterly earnings and revenue growth (Y-O-Y) figures for Nokia look like and more importantly, how did the markets like these numbers? | 2013 Q1 | 2012 Q4 | 2012 Q3 | 2012 Q2 | | Earnings Growth (Y-O-Y) | 13.64% | -87.10% | -778.57% | -537.50% | | Revenue Growth (Y-O-Y) | -23.40% | -20.68% | -23.13% | -29.56% | | Earnings Reaction | -12.93% | -8.92% | -5.00% | 6.49% | Nokia has seen mostly decreasing earnings and revenue figures over the last four quarters. From these numbers, the markets have been disappointed with Nokia’s recent earnings announcements. P = Average Relative Performance Versus Peers and Sector How has Nokia stock done relative to its peers, Apple (NASDAQ:AAPL), BlackBerry (NASDAQ:BBRY), Ericsson (NASDAQ:ERIC), and sector? | Nokia | Apple | BlackBerry | Ericsson | Sector | | Year-to-Date Return | -2.15% | -23.24% | -12.97% | 13.42% | 2.64% | Nokia has been an average performer, year-to-date. Conclusion Nokia provides valuable communications products to consumers and companies worldwide. With the recent acquisition of the remaining stake of the Nokia Siemens Network, the company is poised to continue to grow. The stock has struggled in recent years but is now seeing a powerful rebound. Over the last four quarters, investors in the company have been disappointed as earnings and revenue figures have been mostly decreasing. Relative to its weak peers and sector, Nokia has been an average year-to-date performer. WAIT AND SEE what Nokia does this coming quarter.
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