Keurig Green Mountain's Strong Financial Position Is a Long-Term Catalyst

Keurig Green Mountain (GMCR) has done very well in 2014. The company's important partnerships and new products are its growth drivers. Another striking fact about Keurig is its strong free cash flow, which is strong enough to attract shareholders and investors who are looking for a dividend-paying stock in the industry. Keurig has paid approximately $800 million in the form of dividend and share repurchase programs while maintaining a burly $1.1 billion of cash. This will certainly provide financial flexibility to the company and help her to invest in many new growth opportunities that lie ahead. In addition, Keurig Green Mountain has decided to pay cash dividend of $0.25 per share on August 1, 2014.

Making good progress

Keurig Green Mountain continues to make progress as it focuses on key transition, executed on its Keurig brewers system in portion pack segment. The company will be introducing new Keurig 2.0 hot brewers in the ongoing quarter as a part of its consistent efforts towards adding new brands to its brewers system to enhance its profitability. It expects significant growth opportunity for new Keurig 2.0 hot brewer pack in North America and on the global front as well. The new Keurig 2.0 hot brewers will have more than 250 varieties that are available with Keurig system at present, thus creating enough market opportunity for the company to expand further in the market.

Besides Keurig Green Mountain has brought in new beverage optimization technology in its Keurig 2.0 brewers as it also introduced interactive capabilities that will allow the customers to brew a carafe with the same quality and one-touch simplicity as a single cup, just what consumers have been asking for. This single-cup brewing will create a winning combination for the company as it enhances its capability, and customers now will be able to perfectly brew the beverages regardless of the size or type.

In addition, the company will also be launching its Keurig Cold System new products in the beginning of 2015. This continued investment in its innovation across all the division of its business ranging from product development to merchandising will construct strong pipeline for its new products and definitely put up strong financial and operating background for the company in the coming quarters. The Keurig 2.0 Cold Brewers will be produced in its new Keurig production center in Vermont, where the company plans to start its cold production lines.

Research and development in focus

Apart from this, the company is also getting a lot of benefits as it continuously invests in R&D that will enable multiple platforms for the company and result in incremental growth. This consistent investment has also helped the company get connected with many new partners due to its ACV advantage and leadership in the industry.

Also, the company plans to broaden its relationship with J.M. Smucker's (SJM) and extends hands with Starbucks (SBUX). It also added Peet's, as a new partner in its healthy system that is fed with strong brands. Further, the company also added Krispy Kreme Doughnuts (KKD) to its system and has welcomed long-term partner Lavazza to the Keurig K-Cup system, one of the Italy's favorite coffee br

5 Hated Earnings Stocks You Should Love

DELAFIELD, Wis. (Stockpickr) -- Short-sellers hate being caught short a stock that reports a blowout quarter. When this happens, we often see a tradable short squeeze develop as the bears rush to cover their positions to avoid big losses. Even the best short-sellers know that it's never a great idea to stay short once a bullish earnings report sparks a big short-covering rally.




This is why I scan the market for heavily shorted stocks that are about to report earnings. You only need to find a few of these stocks in a year to help enhance your portfolio returns -- the gains become so outsized in such a short time frame that your profits add up quickly.

Must Read: 5 Rocket Stocks to Buy to Avoid the Selloff




That said, let's not forget that stocks are heavily shorted for a reason, so you have to use trading discipline and sound money management when playing earnings short-squeeze candidates. It's important that you don't go betting the farm on these plays and that you manage your risk accordingly. Sometimes the best play is to wait for the stock to break out following the report before you jump in to profit off a short squeeze. This way, you're letting the trend emerge after the market has digested all of the news.



Of course, sometimes the stock is going to be in such high demand that you risk missing a lot of the move by waiting. That's why it can be worth betting prior to the report -- but only if the stock is acting technically very bullish and you have a very strong conviction that it is going to rip higher. Just remember that even when you have that conviction and have done your due diligence, the stock can still get hammered if Wall Street doesn't like the numbers or guidance.



If you do decide to bet ahead of a quarter, then you might want to use options to limit your capital exposure. Heavily shorted stocks are usually the names that make the biggest post-earnings moves and have the most volatility. I personally prefer to wait until all the earnings-related news is out for a heavily shorted stock and then jump in and trade the prevailing trend.

With that in mind, here's a look at several stocks that could experience big short squeezes when they report earnings this week.

Must Read: 5 Breakout Stocks Under $10 Set to Soar

China Finance Online

My first earnings short-squeeze play is integrated financial information and services provider China Finance Online (JRJC), which is set to release numbers on Monday after the market close. Wall Street analysts, on average, expect China Finance Online to report revenue of $94.70 million.

The current short interest as a percentage of the float for China Finance Online is pretty high at 12.7%. That means that out of the 9.16 million shares in the tradable float, 1.16 million shares are sold short by the bears. This is a low float high short interest situation for shares JRJC. Any bullish earnings news could easily set off a large short-squeeze that forces the bears to cover some of the positions.

From a technical perspective, JRJC is currently trending above both its 50-day and 200-day moving averages, which is bullish. This stock has been uptrending over the last few weeks, with shares moving higher from its low of $6.86 to its recent high of $9.50 a share. During that uptrend, shares of JRJC have been consistently making higher lows and higher highs, which is bullish technical price action. That move has now pushed shares of JRJC within range of triggering a big breakout trade post-earnings.

If you're bullish on JRJC, then I would wait until after its report and look for long-biased trades if this stock manages to break out above some key near-term overhead resistance levels at $9.50 to $9.57 a share with high volume. Look for volume on that move that registers near or above its three-month average action of 3.62 million shares. If that breakout triggers post-earnings, then JRJC will set up to re-test or possibly take out its 52-week high at $11.88 a share. Any high-volume move above that level will then give JRJC a chance to trend north of $12 a share.

I would simply avoid JRJC or look for short-biased trades if after earnings it fails to trigger that breakout and then drops back below some key near-term support at $8 a share with high volume. If we get that move, then JRJC will set up to re-test or possibly take out its next major support levels at its 50-day moving average of $6.90 a share to $6.86 a share. Any high-volume move below those levels will then give JRJC a chance to re-test or possibly take out its 200-day moving average of $5.46 a share.

Must Read: 4 M&A Deal Stocks That Could Cut You a Paycheck This Fall

Synnex

Another potential earnings short-squeeze trade idea is business services provider Synnex (SNX), which is set to release its numbers on Monday after the market close. Wall Street analysts, on average, expect Synnex to report revenue $3.40 billion on earnings of $1.48 per share.

The current short interest as a percentage of the float for Synnes is pretty high at 9.2%. That means that out of the 28.04 million shares in the tradable float, 2.60 million shares are sold short by the bears. This is a decent short interest on a stock with a relatively low tradable float. Any bullish earnings news could easily spark a sharp short-covering rally for shares of SNX post-earnings.

From a technical perspective, SNX is currently trending below both its 50-day and 200-day moving averages, which is bearish. This stock has been downtrending for the last month, with shares moving lower from its high of $71.50 to its recent low of $59.75 a share. During that downtrend, shares of SNX have been making mostly lower highs and lower lows, which is bearish technical price action. That said, shares of SNX have recently started to bounce off that $59.75 low and it's starting to move within range of triggering a near-term breakout trade post-earnings.

If you're in the bull camp on SNX, then I would wait until after its report and look for long-biased trades if this stock manages to break out above its 200-day moving average of $64.35 a share to its 50-day moving average at $65.47 a share with high volume. Look for volume on that move that hits near or above its three-month average volume of 285,038 shares. If that breakout starts post-earnings, then SNX will set up to re-test or possibly take out its next major overhead resistance levels at $71.50 to $74.57 a share.

I would simply avoid SNX or look for short-biased trades if after earnings it fails to trigger that breakout and then drops back below some key support levels at $59.75 to $59.30 a share and then below more past support at $58.47 a share with high volume. If we get that move, then SNX will set up to re-test or possibly take out its next major support level at its 52-week low of $51.65 a share.

Must Read: How to Trade the Market's Most-Active Stocks

Cintas

Another potential earnings short-squeeze candidate is identity uniforms and related business services provider Cintas (CTAS), which is set to release numbers on Monday after the market close. Wall Street analysts, on average, expect Cintas to report revenue of $1.10 billion on earnings of 75 cents per share.

The current short interest as a percentage of the float for Cintas is notable at 6.4%. That means that out of the 97.03 million shares in the tradable float, 6.22 million shares are sold short by the bears. If this company can produce strong earnings results that the bulls like, then shares of CTAS could easily jump sharply higher post-earnings as the shorts rush to cover some of their trades.

From a technical perspective, CTAS is currently trending above both its 50-day and 200-day moving averages, which is bullish. This stock has been uptrending strong for the last six months, with shares moving higher from its low of $55.65 to its recent high of $67.59 a share. During that uptrend, shares of CTAS have been consistently making higher lows and higher highs, which is bullish technical price action. That move has now pushed shares of CTAS within range of triggering a near-term breakout trade post-earnings

If you're bullish on CTAS, then I would wait until after its report and look for long-biased trades if this stock manages to break out above some key near-term overhead resistance levels at $67 to its 52-week high of $67.59 a share with high volume. Look for volume on that move that hits near or above its three-month average action of 458,114 shares. If that breakout develops post-earnings, then CTAS will set up to enter new 52-week-high territory, which is bullish technical price action. Some possible upside targets off that breakout are $80 to $85 a share.

I would avoid CTAS or look for short-biased trades if after earnings it fails to trigger that breakout and then drops back below some key near-term support levels at $65.81 to its 50-day moving average of $65.42 a share with high volume. If we get that move, then CTAS will set up to re-test or possibly take out its next major support levels at $62.24 to its 200-day moving average of $61.31 a share.

Must Read: Must-See Charts: 5 Big Stocks to Sidestep the Selloff

AZZ

Another earnings short-squeeze prospect is electrical equipment and components maker and engineering services provider AZZ (AZZ), which is set to release numbers on Wednesday before the market open. Wall Street analysts, on average, expect AZZ to report revenue of $208.18 million on earnings of 63 cents per share.

The current short interest as a percentage of the float for AZZ stands at 4.4%. That means that out of the 24.79 million shares in the tradable float, 1.09 million shares are sold short by the bears. This isn't a huge short interest, but it's more than enough to spark a decent short-covering rally post-earnings if the bulls get the earnings news they're looking for.

From a technical perspective, AZZ is currently trending below both its 50-day and 200-day moving averages, which is bearish. This stock has been downtrending over the last month, with shares moving lower from its high of $47.46 to its intraday low of $42.52 a share. During that downtrend, shares of AZZ have been consistently making lower highs and lower lows, which is bearish technical price action.

If you're bullish on AZZ, then I would wait until after its report and look for long-biased trades if this stock manages to break out back above its 200-day moving average of $44.40 a share and then above its 50-day moving average of $45.14 a share with high volume. Look for volume on that move that hits near or above its three-month average action of 125,659 shares. If that breakout kicks off post-earnings, then AZZ will set up to re-test or possibly take out its next major overhead resistance levels at $47.46 to its 52-week high at $49.64 a share. Any high-volume move above those levels will then give AZZ a chance to trend north of $50 a share.

I would simply avoid AZZ or look for short-biased trades if after earnings it fails to trigger that breakout and then drops back below some key near-term support levels at $42.38 to $41.18 a share with high volume. If we get that move, then AZZ will set up to re-test or possibly take out its next major support levels at $39.63 to its 52-week low of $37.50 a share. Any high-volume move below those levels will then give AZZ a chance to re-test or possibly take out its next major support levels at $34.17 a share.

Must Read: Sell These 5 Toxic Stocks Before the Next Drop

Acuity Brands

My final earnings short-squeeze play lighting solutions provider Acuity Brands (AYI), which is set to release numbers on Wednesday before the market open. Wall Street analysts, on average, expect Acuity Brands to report revenue of $649.22 million on earnings of $1.22 per share.

The current short interest as a percentage of the float for Acuity Brands sits at 3.92%. That means that out of the 42.35 million shares in the tradable float, 1.65 million shares are sold short by the bears. The bears have also been increasing their bets from the last reporting period by 14%, or by 203,000 shares. If the bears get caught pressing their bets into a bullish quarter, then shares of AYI could easily rip sharply higher post-earnings as the shorts rush to cover some of their bets.

From a technical perspective, AYI is currently trending above its 50-day moving average and just below its 200-day moving average, which is neutral trendwise. This stock has been downtrending a bit over the last few weeks, with shares moving lower from its high of $125.95 to its intraday low of $119.50 a share. During that downtrend, shares of AYI have been making mostly lower highs and lower lows, which is bearish technical price action. That said, shares of AYI have for now started to find some support just above its 50-day moving average of $118.53 a share.

If you're in the bull camp on AYI, then I would wait until after its report and look for long-biased trades if this stock manages to break out above some near-term overhead resistance levels at its 200-day moving average of $124.25 a share to more resistance at $125.95 a share with high volume. Look for volume on that move that registers near or above its three-month average action of 466,681 shares. If that breakout develops post-earnings, then AYI will set up to re-test or possibly take out its next major overhead resistance levels at $132.50 to $138.30 a share.

I would avoid AYI or look for short-biased trades if after earnings it fails to trigger that breakout, and then drops back below both its 50-day moving average of $118.53 a share with high volume. If we get that move, then AYI will set up to re-test or possibly take out its next major support levels at $110 to $104.69 a share.

Must Read: 5 Stocks Insiders Love Right Now

To see more potential earnings short squeeze plays, check out the Earnings Short-Squeeze Plays portfolio on Stockpickr.

-- Written by Roberto Pedone in Delafield, Wis.

RELATED LINKS:

>>3 Big Stocks With Big Volume to Trade for Big Breakouts

>>3 Under-$10 Stocks Triggering Breakout Trades

>>4 Big Tech Stocks on Traders' Radars

Follow Stockpickr on Twitter and become a fan on Facebook.

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

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

CNBC.com and Forbes.com.

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

4 Stocks Triggering Breakout Trades With Unusual Volume

DELAFIELD, Wis. (Stockpickr) -- Professional traders running mutual funds and hedge funds don't just look at a stock's price moves; they also track big changes in volume activity. Often when above-average volume moves into an equity, it precedes a large spike in volatility.

 

Must Read: 5 Stocks Insiders Love Right Now




 

Major moves in volume can signal unusual activity, such as insider buying or selling -- or buying or selling by "superinvestors."



 

Unusual volume can also be a major signal that hedge funds and momentum traders are piling into a stock ahead of a catalyst. These types of traders like to get in well before a large spike, so it's always a smart move to monitor unusual volume. That said, remember to combine trend and price action with unusual volume. Put them all together to help you decipher the next big trend for any stock.



 

With that in mind, let's take a look at several stocks rising on unusual volume recently.

 

Must Read: 4 M&A Stocks That Could Cut You a Paycheck This Fall

 

C&J Energy Services

 

C&J Energy Services (CJES), through its subsidiaries, provides hydraulic fracturing, coiled tubing, wireline and other complementary services to oil and gas exploration and production companies in the U.S. This stock closed up 2.9% at $29.55 in Wednesday's trading session.

 

Wednesday's Volume: 1.95 million

Three-Month Average Volume: 879,264

Volume % Change: 161%

 

From a technical perspective, CJES spiked notably higher here right above its 200-day moving average of $28.06 and back above its 50-day moving average of $29.55 with above-average volume. This move to the upside on Wednesday also pushed shares of CJES into breakout territory, since the stock took out some near-term overhead resistance at $29.27. Shares of CJES are now starting to trend within range of triggering another breakout trade. That trade will hit if CJES manages to clear Wednesday's intraday high of $29.69 to some more near-term overhead resistance at $30.16 with high volume.

 

Traders should now look for long-biased trades in CJES as long as it's trending above its 200-day at $28.06 and then once it sustains a move or close above those breakout levels with volume that hits near or above 879,264 shares. If that breakout develops soon, then CJES will set up to re-test or possibly take out its next major overhead resistance levels at $31.50 to $33

 

Must Read: Must-See Charts: 5 Big Stocks to Sidestep the Selloff

 

Valero Energy Partners

 

Valero Energy Partners (VLP) owns, operates, develops and acquires crude oil and refined petroleum products pipelines, terminals and other transportation and logistics assets in the U.S. This stock closed up 3.9% to $47.52 in Wednesday's trading session.

 

Wednesday's Volume: 287,000

Three-Month Average Volume: 81,900

Volume % Change: 260%

 

From a technical perspective, VLP jumped notably higher here right above some near-term support at $45.03 with above-average volume. This stock has been downtrending for the last month, with shares moving lower from its high of $55.22 to its recent low of $45.03. During that downtrend, shares of VLP have been consistently making lower highs and lower lows, which is bearish technical price action. That said, shares of VLP have now started to spike off that $45.03 low and it's beginning to move within range of triggering a near-term breakout trade. That trade will hit if VLP manages to take out its 50-day moving average of $48.09 to some more near-term overhead resistance at $49.19 with high volume.

 

Traders should now look for long-biased trades in VLP as long as it's trending above some near-term support at $45.03 and then once it sustains a move or close above those breakout levels with volume that hits near or above 81,900 shares. If that breakout begins soon, then VLP will set up to re-test or possibly take out its next major overhead resistance levels at $53.30 to $55.22.

 

Must Read: 4 Breakout Stocks Under $10 for Your Trading Radar

 

Expedia

 

Expedia (EXPE), together with its subsidiaries, operates as an online travel company in the U.S. and internationally. This stock closed up 2.3% to $85.94 in Wednesday's trading session.

 

Wednesday's Volume: 3 million

Three-Month Average Volume: 1.67 million

Volume % Change: 66%

 

From a technical perspective, EXPE jumped higher here right above some near-term support at $82.85 and back above its 50-day moving average of $84.29 with above-average volume. This trend higher on Wednesday is starting to push shares of EXPE within range of triggering a big breakout trade. That trade will hit if EXPE manages to take out some key near-term overhead resistance levels at $88 to its 52-week high at $89.26 with high volume.

 

Traders should now look for long-biased trades in EXPE as long as it's trending above some near-term support at $82.85 and then once it sustains a move or close above those breakout levels with volume that hits near or above 1.67 million shares. If that breakout triggers soon, then EXPE will set up to enter new 52-week-high territory, which is bullish technical price action. Some possible upside targets off that breakout are $100 to $110.

 

Must Read: 10 Stocks Billionaire John Paulson Loves in 2014

 

Blackhawk Network

 

Blackhawk Network (HAWKB) provides various prepaid products and payment services. This stock closed up 1.6% at $25.02 in Wednesday's trading session.

 

Wednesday's Volume: 442,000

Three-Month Average Volume: 260,141

Volume % Change: 93%

 

From a technical perspective, HAWKB trended modestly higher here right above some near-term support at $27.07 and back above its 50-day moving average of $27.73 with above-average volume. This stock has been uptrending strong for the last five months, with shares moving higher from its low of $22.49 to its recent high of $28.71. During that uptrend, shares of HAWKB have been consistently making higher lows and higher highs, which is bullish technical price action. That move has now pushed shares of HAWKB within range of triggering a big breakout trade. That trade will hit if HAWKB manages to take out some key near-term overhead resistance levels at $28.60 to $28.68 and then above its all-time high at $28.71 with high volume.

 

Traders should now look for long-biased trades in HAWKB as long as it's trending above some key near-term support levels at $27.07 or above $26.47 and then once it sustains a move or close above those breakout levels with volume that this near or above 260,141 shares. If that breakout develops soon, then HAWKB will set up to enter new all-time-high territory, which is bullish technical price action. Some possible upside targets off that move are $35 to $40.

 

Must Read: 5 Short-Squeeze Stocks Set to Soar on Bullish Earnings

 

To see more stocks rising on unusual volume, check out the Stocks Rising on Unusual Volume portfolio on Stockpickr.

 

-- Written by Roberto Pedone in Delafield, Wis.

 

RELATED LINKS:

 

>>How to Trade the Market's Most-Active Stocks

 

>>5 Stocks Under $10 Making Big Moves Higher

 

>>5 Rocket Stocks Ready for Blastoff This Week

 

Follow Stockpickr on Twitter and become a fan on Facebook.

 

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

 

Roberto Pedone, based out of Delafield, Wis., is an independent trader who focuses on technical analysis for small- and large-cap stocks, options, futures, commodities and currencies. Roberto studied international business at the Milwaukee School of Engineering, and he spent a year overseas studying business in Lubeck, Germany. His work has appeared on financial outlets including CNBC.com and Forbes.com. You can follow Pedone on Twitter at www.twitter.com/zerosum24 or @zerosum24.

2 Things AT&T Dividend Investors Need to Know

When it comes to dividend investing, AT&T (NYSE: T  ) is on many income investors' radars. And that makes sense: With a dividend yield of 5.2%, the stock nearly doubles the 10-year Treasury with its payouts. AT&T's stock has historically been a high-yielding investment. However, investors today find a vastly different company than the one they used to know.

AT&T started as a subsidiary of Bell Telephone -- named for legendary founder Alexander Graham Bell -- before buying out Bell in late 1899. The company operated as a monopoly for close to a century, until the U.S. government broke up the company in 1984 by requiring the company to spin off its regional subsidiaries into Regional Bell Operating Companies -- then termed "Baby Bells."

The product has also changed. What was initially a wireline operation has become mostly a wireless business. The company has ventured into other business lines -- with the DIRECTV  (NASDAQ: DTV  )  acquisition, AT&T is looking to become a larger presence in pay TV.

Here are two things about AT&T dividend investors need to know.

Own shares? We're about to water you down
The company is using shares to finance the bolt-on buyout of DIRECTV, and it appears this will involve diluting existing stockholders to the tune of nearly 900 million shares (as opposed to Verizon's recent use of debt to acquire full stake in its wireless business).

In addition, on a price-to-free cash flow basis, the company being acquired is actually more expensive than AT&T -- 23 times versus 17.15 over the prior 12 months. Investors would like to see lower numbers here because the company is paying for free cash flow that could go toward dividends, share repurchases, or debt. However, many companies reduce those costs by eliminating redundancy through so-called "synergies."

With that being said, more shares and lower cash flow could make it harder for the company to continue to raise its dividend. By growing the payout from $0.41 per share each quarter in 2009 to $0.46 in 2014, the company has provided solid but not flashy dividend growth of 2.3% per year.

Wireless is performing well, but wireline is withering
Among talk of the wireless wars and scrappy competition courtesy of T-Mobile CEO John Legere, so far AT&T has performed rather well in wireless. Wireless is the biggest part of AT&T's total operating income (60%), as well as the highest-growing segment (mainly through increased data fees). Wireless operating revenue has increased 5.1% per year since 2011.

However, increases there are being weighed on by wireline decreases. Total revenue in that division has actually fallen in the last two years as more households go mobile only. In the company's last fiscal year, the wireline business lost 13.4% in segment income on a year-over-year basis. The drop of $971 million counteracted the $1.3 billion increase in the wireless segment.

There is a silver lining in this, however. As wireless continues to form a larger part of segment income, the slow-growth, low-margin wireline business will matter less to investors. Right now, the wireless segment provides nearly three times as much income as wireline -- $17.8 billion versus $6.2 billion. The addition of DIRECTV would help offset the struggling wireline business as well.

Final thoughts
For dividend investors, AT&T is sort of a paradox. On one hand, the current dividend yield is outstanding. However, the last five years have seen many other companies be more generous with dividend increases. In addition, the purchase of DIRECTV has the potential to make it harder for the company to increase payouts in the future. The issue for income investors is current high payout versus dividend growth. AT&T fits the bill for the former more than the latter.

Top dividend stocks for the next decade
The smartest investors know that dividend stocks simply crush their non-dividend paying counterparts over the long term. That's beyond dispute. They also know that a well-constructed dividend portfolio creates wealth steadily, while still allowing you to sleep like a baby. Knowing how valuable such a portfolio might be, our top analysts put together a report on a group of high-yielding stocks that should be in any income investor's portfolio. To see our free report on these stocks, just click here.

Dow Down 0.6%; CarMax Shares Fall After Q2 Results

Related BZSUM Ascena Retail Drops On Downbeat Earnings; CF Industries Shares Gain Markets Mixed; Carnival Profit Tops Street View

Toward the end of trading Tuesday, the Dow traded down 0.60 percent to 17,069.87 while the NASDAQ gained 0.35 percent to 4,511.69. The S&P also fell, declining 0.49 percent to 1,984.48.

Leading and Lagging Sectors

In trading on Tuesday, basic materials shares were relative leaders, up on the day by about 0.02 percent. Top gainers in the sector included AuRico Gold (NYSE: AUQ), up 4.9 percent, and CF Industries Holdings (NYSE: CF), up 6.5 percent.

Non-cyclical consumer goods & services shares fell 0.76 percent on Tuesday. Top losers in the sector included Diamond Foods (NASDAQ: DMND), down 4.2 percent, and Omega Protein (NYSE: OME), off 3.6 percent.

Top Headline

Carnival (NYSE: CCL) reported better-than-expected fiscal third-quarter earnings and raised its FY14 forecast.

The Miami, Florida-based company posted a quarterly fiscal third-quarter profit of $1.25 billion, or $1.60 per share, versus a year-ago profit of $934 million, or $1.20 per share.

Its revenue climbed to $4.95 billion from $4.73 billion. On an adjusted basis, Carnival earned $1.58 per share in the quarter. However, analysts were expecting a profit of $1.44 per share on revenue of $4.93 billion.

Equities Trading UP

Salix Pharmaceuticals (NASDAQ: SLXP) shares shot up 4.52 percent to $167.05 on report of takeover talks with Allergan. Allergan (NYSE: AGN) is set to acquire Salix Pharmaceuticals in a deal probably worth more than $10 billion, according to Dow Jones Newswires.

Shares of Sangamo Biosciences (NASDAQ: SGMO) got a boost, shooting up 3.16 percent to $11.11 after dropping 5.90% on Monday. Jefferies initiated coverage on Sangamo BioSciences with a Buy rating and a $22.00 price target

CF Industries Holdings (NYSE: CF) shares were also up, gaining 6.60 percent to $272.66 on confirmation of merger talks with Yara International ASA (OTC: YARIY).

Equities Trading DOWN

Shares of Ascena Retail Group (NASDAQ: ASNA) were down 17.66 percent to $13.61 after the company reported downbeat fourth-quarter earnings and issued a weak outlook.

Avanir Pharmaceuticals (NASDAQ: AVNR) shares tumbled 2.24 percent to $10.96 after the company announced an offering of $200 million of common stock.

CarMax (NYSE: KMX) was down, falling 10.21 percent to $47.42 after the company reported downbeat fiscal second-quarter profit.

Commodities

In commodity news, oil traded up 0.84 percent to $91.63, while gold traded up 0.46 percent to $1,223.50.

Silver traded up 0.06 percent Tuesday to $17.79, while copper fell 0.10 percent to $3.04.

Eurozone

European shares were lower today. The eurozone’s STOXX 600 declined 1.38 percent, the Spanish Ibex Index fell 1.33 percent, while Italy’s FTSE MIB Index declined 1.56 percent. Meanwhile, the German DAX fell 1.58 percent and the French CAC 40 fell 1.87 percent while UK shares dropped 1.44 percent.

Economics

The ICSC-Goldman Store Sales Index rose 0.1% in the week ended Saturday versus the earlier week.

The Johnson Redbook Retail Sales Index declined 0.6% in the first three weeks of September versus August.

The FHFA house price index gained 0.1% in July, versus a 0.3% growth in June.

The flash reading of US Markit manufacturing PMI came in unchanged at 57.9 in September, versus economists’ expectations for a reading of 58.

The Richmond Fed manufacturing index rose to 14.00 in September, versus a prior reading of 12.00. However, economists were expecting a reading of 10.00.

Posted-In: Earnings News Guidance Eurozone Futures Commodities M&A Markets

© 2014 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.

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Small-Business Confidence Edges Higher in August

Daniel Acker/Bloomberg via Getty Images WASHINGTON -- Small-business optimism edged slightly higher in August as more owners said they expected business conditions to improve in coming months and planned to increase capital spending, according to a survey released Tuesday. The National Federation of Independent Business said its Small Business Optimism Index rose 0.4 point to 96.1. Eight of the index's 10 components either improved or showed no change in the survey based on a random sample of 598 small business owners. The job growth indicated in the survey was sluggish, with owners adding an average of only 0.02 workers per firm, and fewer saying they planned to hire more workers in the future. Some businesses appeared to lose pricing power, with 15 percent of respondents saying they had reduced prices, and a drop in the number of owners saying they planned price hikes. Though more owners said they expect an improvement in business conditions than said so in the month before, a slight majority still aren't convinced conditions will improve. The index is still 4 points below where it was before the start of the 2007 financial crisis and recession, though it has been making progress back toward that level. Overall the index points to economic growth slightly slower than that expected by many forecasters and Federal Reserve officials. The results of the survey point to economic growth of around 2 percent this year, not the greater than 3 percent growth cited by other forecasters.

Wall St. drools over El Pollo Loco's earnings

El Pollo Loco has 401 restaurants, mostly located in California. NEW YORK (CNNMoney) Wall Street seems to have a hankering for some crazy grilled chicken.

Shares El Pollo Loco's stock rose as much as 5% Thursday evening after the company released earnings for the first time since going public.

El Pollo Loco said quarterly sales are up about 6%. It also turned a profit, earning $6.1 million compared to the $410,000 it made during the same quarter last year when the company was still private.

It went public on July 25, opening at $15 per share and immediately jumping 60% to finish the day above $24. Shares closed Thursday at $34.79.

The California-based restaurant chain specializes in Mexican-style grilled chicken. It competes with Chipotle Mexican Grill (CMG) and other fast-casual restaurants like Chick-fil-A and Yum! Brands (YUM) KFC.

El Pollo Loco (LOCO) has 401 company-owned and franchise locations in five states, including Texas and Arizona. But the vast majority of its restaurants are in the Golden State.

  El Pollo Loco en fuego after IPO

The company said Thursday that it expects to open more than a dozen new stores before the end of the year, including its first in the Houston area.

5 Things Gilead Sciences, Inc. Management Wants You to Know

Gilead Sciences (NASDAQ: GILD  ) presented at the Morgan Stanley Healthcare Conference last week. Rather than the standard presentation of a slide deck, the conference is more of a Q&A, which produces off-the-cuff responses that can be more enlightening for investors than the rehearsed sound bites you often hear at conferences.

Here are five quotes from John Milligan, president and COO of Gilead, from the conference:

John Milligan. Source: Gilead Sciences.

"If you think about the overall HCV market in the United States, there's, from a patient perspective, somewhere between 3 million and 4 million -- I think it's closer to 4 million patients -- who have HCV. Through the first half of this year we've treated 70,000, and that's been a pretty significant increase in the run rate versus last year."

Do the math. At the current rate, it'll take 20 years or more to work through all of the patients infected with the hepatitis C virus, or HCV. There was a bump in sales between the first and second quarters, so the run rate will probably be a little more than 140,000 per year, but it's pretty clear the limiting factor in the near term will be the number of slots for doctors appointments, not the number of patients. For the long term, the key is how accurate the estimate of 3 million-4 million patients is since many of them are undiagnosed.

"There are 140 million people who have HCV around the world, and our current manufacturing capacity could not ever accommodate all those patients. And so, we need the scale that they have in order to achieve this. So it's a very similar strategy, we will get a small royalty in return."

Now, that's a lot of patients. Of course most of them can't afford the $80,000-plus price tag for the drug, so Gilead's strategy is to license the rights to its hepatitis C drugs in emerging markets, collecting a small royalty.

And I do mean small.

"When I think about the next generation of products, I think the price per patient is probably similar to the current price of a regiment."

Gilead should gain FDA approval shortly for its all-oral HPV treatment that combines Sovaldi with another drug. While the statement makes it sound like there won't be a price increase, that's not really the case. Currently, many people infected with HPV have to take Sovaldi and either Merck's (NYSE: MRK  ) Pegintron or Roche's Pegasys. The plan seems to be to price the Sovaldi combination at the current price of Sovaldi plus the price of the companion drug.

"As you know, we have an ongoing share buyback program from a previously authorized share buyback program, which will expire the end of this quarter. As that expires, the board has authorized another $5 billion worth of share buyback, which will occur over the next 3 years -- up to the next 3 years, depending on how aggressive we are in the market. And that's up to our CFO, and she will determine the aggressiveness of that, as we go through that program. So that is our immediate-term capital allocation."

With Sovaldi an instant megablockbuster, Gilead is swimming in cash. Beyond the increased earnings from increased revenue, the buybacks help increase earnings per share, which helps drive up the stock price.

Conspicuously absent from Milligan's answer about capital allocation: any mention of a potential dividend. While that might be an option down the line, I think it's likely Gilead avoids giving a dividend in the near future because cash flow is dependent on Sovaldi, which will dry up at some point.

"If you try to chase [R&D spending] as a percentage [of revenue], you make bad choices and you hire too many people, and you end up with some of the situations you see today, with then having to lay off people. And I don't want to ever have to do that. So, I want to maintain a really thoughtful growth pattern around R&D."

Buybacks can only go so far, Gilead has to set itself up for revenue growth beyond Sovaldi. But as Milligan points out, it's a tough problem that can go terribly wrong if the company isn't smart about growing its pipeline. Investors should examine closely the drugs Gilead in-licenses over the coming years; moving beyond HIV and hepatitis C is key to success.

Gilead might not offer a dividend, but these companies do
The smartest investors know that dividend stocks simply crush their non-dividend paying counterparts over the long term. That's beyond dispute. They also know that a well-constructed dividend portfolio creates wealth steadily, while still allowing you to sleep like a baby. Knowing how valuable such a portfolio might be, our top analysts put together a report on a group of high-yielding stocks that should be in any income investor's portfolio. To see our free report on these stocks, just click here.

Top Portfolio Products: New ETFs from ALPS, Compass & First Trust

New products and changes introduced over the last week include a gold ETF from ALPS, two ETFs listed on NASDAQ, two fixed index annuities from Forethought, and a fixed index annuity and changes to a variable annuity by Sammons Retirement Solutions.

In addition, Aequitas Capital started an RIA membership network; and the Saudi Arabian market pened to foreign investors.

Here are the latest developments of interest to advisors:

1) ALPS Announces Sprott Gold Miners ETF

ALPS has announced the launch of the Sprott Gold Miners ETF (SGDM), a fund designed to deliver exposure to the Sprott Zacks Gold Miners Index (ZAXSGDM), which uses a transparent, rules-based methodology designed to identify 25 gold stocks that historically have the highest beta to the spot price of gold, with each stock's weighting in the index adjusted based on its quarterly revenue growth and long-term debt to equity. The stock selection and index weighting criteria were co-developed by Sprott Asset Management.

As a principal investment strategy, SGDM will normally invest at least 90% of its net assets in component securities that comprise the Sprott Zacks Gold Miners Index. The Index is rebalanced on a quarterly basis to incorporate the latest financial data into the screening process.

2) NASDAQ Lists Two ETFs

NASDAQ OMX has announced the listing of two ETFs: the First Trust Enhanced Short Maturity ETF (FTSM) and the Compass EMP U.S. Discovery 500 Enhanced Volatility Weighted Index (CSF).

FTSM is actively managed and seeks to provide current income, consistent with preservation of capital and daily liquidity. Its strategy invests in short-duration securities that are primarily U.S. dollar-denominated investment-grade securities. The fund will be invested across a broad range of asset classes to maintain diversification and at least 80% of the fund's assets will be investment-grade securities. FTSM seeks to achieve its objectives by strategically laddering highly liquid investments over the near-term horizon. As market conditions change, the portfolio managers have the flexibility to strategically rotate among various market sectors while maintaining a focus on preservation of capital and liquidity.

CSF is designed to track the performance of the CEMP U.S. Small Cap 500 Long/Cash Volatility Weighted Index, before expenses. The fund will track the CEMP Smart Beta Index and will combine Smart Beta methodologies with the ability to move cash in the event of a market decline. The CEMP U.S. Small Cap 500 Long/Cash Volatility Weighted Index is based on the daily price of the CEMP U.S. Small Cap 500 Volatility Weighted Index. The index represents the broad U.S. small cap stock market, and is designed to hedge downside risk potential.

3) Forethought Launches Two FIAs for Broker-Dealer Distribution

Forethought Life Insurance Company has announced the launch of two fixed index annuities designed for broker-dealer distribution.

The first, ForeAccumulation, is designed for clients seeking savings potential and protection, while the second, ForeIncome, offers a guaranteed lifetime income stream for retirement.

4) Sammons Announces Fixed Index Annuity, Changes to VA

Sammons Retirement Solutions Inc. has announced the launch of the LiveWell Fixed Index Annuity (FIA), issued by Midland National Life Insurance Company, as well as changes to the LiveWell Variable Annuity, also issued by Midland.

The LiveWell FIA offers the LiveWell Income for Life rider that can guarantee income for life while allowing consumers to maintain control of their money. This feature offers the option to stop and start once income is elected, as well as the flexibility to decide frequency for scheduled payments.

The LiveWell VA now has increased fund options and an endorsement that offers investors a way to reduce long-term annuity costs. The addition of American Funds, Alps, Oppenheimer Funds and Transparent Value means that the VA now offers more than 135 investment options from 28 money managers.

The LiveWell value endorsement lowers fees by offering clients the option to reduce their separate account annual expenses by 0.20% (to 1.15%) in exchange for a surrender schedule. The VA with the value endorsement allows advisors to create an individual strategy for each client based on time horizon, risk tolerance and tax deferral goals. Additionally, the VA offers a return-of-premium death benefit.

5) Aequitas Capital Launches RIA Membership Network

Aequitas Capital has announced the launch of Aequitas Capital Partners (ACP), a new business division created to support growth-oriented RIAs with intellectual, financial and human capital to fuel succession planning and firm mergers or acquisitions.

 

6) Ashmore Calls Saudi Arabia’s Equity Market a $560 Billion Opportunity

Saudi Arabia has given approval for its equity market to open to foreign investors, with the market expected to open in the first half of 2015.

Ashmore Investment Management Ltd. has characterized the change as a $560 billion opportunity, the amount of the market cap of the Tadawul All Share Index. The index is made up of more than 160 companies, and the Saudi stock exchange is ranked seventh out of 58 emerging and frontier market equity exchanges, 20th in the world.

According to Ashmore, it is too soon to know whether Saudi Arabia will be included in indices as an emerging or a frontier market, although MSCI has said it need not necessarily be classed as a frontier market before being upgraded to an emerging market. Its designation will depend on how accessible it is to foreign investors. The firm pointed out that the Saudi government will issue rules for foreign investors (Qualified Foreign Investor) and will probably also impose foreign ownership limits (FOL), both of which will likely affect not just the market’s accessibility but also its designation.

Read the August 3 Portfolio Products Roundup at ThinkAdvisor.

 

Time Warner Inc Beats EPS Estimates; Reaffirms Outlook; Stock Falls (TWX)

Time Warner (TWX) reported its second quarter results before the opening bell on Wednesday morning, with earnings and revenues coming in higher than last year’s Q2.

TWX’s Earnings in Brief

Time Warner reported second quarter revenues of $6.79 billion, up from last year’s Q2 revenues of $6.61 billion. Total adjusted operating income came in at $1.62 billion, an increase from last year’s Q2 figure of $1.39 billion. The company's adjusted EPS for the quarter was 98 cents, marking a solid uptick from last year’s Q2 EPS of 76 cents. Time Warner beat analysts’ EPS estimates of 84 cents, but revenues came in slightly below the $6.87 billion expectation. In addition to releasing its Q2 earnings, TWC also reaffirmed its 2014 EPS outlook, and still sees percentage growth in the low-teens.

CEO Commentary

TWX Chairman and Chief Executive Officer Jeff Bewkes released the following comments: "We had another strong quarter, reflecting the strength of our businesses and our potential for continued growth as we deliver on our strategic plan to be the world's leading video content company. Adjusted Operating Income increased 17%, while Adjusted EPS rose 29%, and over the first half of the year we generated $2 billion of Free Cash Flow, up 16% year-over-year. We achieved these results in a milestone quarter during which we spun off Time Inc. as an independent, publicly-traded company, further unlocking value for our shareholders and giving Time Warner even more operational focus.”

TWX’s Dividend and Buyback

Time Warner paid its last dividend on June 6. We expect the company to declare its next quarterly payout of 32 cents in the coming days. In its earnings report, the company announced that the board of directors have authorized and additional $5 billion in stock repurchases.

Stock Performance

TWX stock was down $10.94, or 12.84%, in pre-market trading. YTD, the stock is up 29.28%.

TWX Dividend Snapshot

As of Market Close on August 5, 2014

Click here to see the complete history of TWX dividends.

Warren Buffett: How to Avoid Going Broke

It's only when the tide goes out that you learn who's been swimming naked.

- Warren Buffett (1992)

If Warren Buffett, the chairman and CEO of Berkshire Hathaway (NYSE: BRK-A  )   (NYSE: BRK-B  ) , repeats an idiom on numerous occasions throughout multiple decades, then it's probably not a bad idea to figure out what he means by it. His is, after all, the greatest investor of all time.

And so it is with his warning that "It's only when the tide goes out that you learn who's been swimming naked." By my count, he's written some variation of this in four separate shareholder letters spanning the years 1992 to 2007.

Buffett, a bathing suit, and Hurricane Andrew
I trust it's obvious that Buffett isn't speaking literally here. While the 83-year-old billionaire is fond of sexual metaphors -- in 1974, for instance, he described feeling like an "oversexed man in a harem" thanks to an abundance of bargains in the stock market at the time -- there's little evidence he either skinny-dips himself or hangs around others that do.

Instead, Buffett is referring to the more mundane tendency of financial companies to overextend when times are good only to regret their imprudence when the tide eventually (and inevitably) turns.

The year 1992 serves as an apt example. In August, large swaths of Florida and the Gulf Coast were ravaged by Hurricane Andrew. An estimated 63,000 homes were destroyed, causing the deaths of 65 people, and leaving roughly 175,000 other Americans homeless. It was the costliest hurricane in U.S. history, with a final tally of $26 billion worth of damage -- adjusted for inflation, that's equivalent to $43.7 billion today.

The impact on the insurance industry was equally alarming. As Buffett recounted in his shareholder letter that year, a number of small insurers were destroyed, a major insurer "escaped insolvency solely because it had a wealthy parent that could promptly supply a massive transfusion of capital," and countless others were awakened to the fact that their own insurance against catastrophe, known as "reinsurance," was far from adequate.

In the absence of Hurricane Andrew, these companies would have continued to tout their underwriting discipline and profitability. Because of it, however, many were rendered in or on the cusp of insolvency. And herein lies Buffett's point that you only know who's been swimming naked when the tide goes out.

Insurance companies aren't the only businesses that swim naked
The validity of Buffett's observation extends beyond insurance companies. Most notably, the business of banking is just as susceptible to the same tendency to overindulge when times are good and then purge when the credit cycle inverts.

Perhaps nothing illustrates this better than the housing debacle that first reared its head in 2007. Mortgage lenders, including many of the biggest and best known banks in the country, had spent the previous five years underwriting trillions of dollars' worth of subprime loans to aspiring homeowners who had little to no hope of ever paying them back.

Yet, along the way, lenders were assuring their investors that everything was fine; that they were continuing to apply the same level of caution in the underwriting process as ever before. As late as July 2007, for instance, the CEO of Wachovia, the nation's fourth largest bank by assets at the time, was praising his bank's balance sheet growth and risk management.

In risk management, I am particularly happy with their position in a very difficult environment.

Net charge-offs continue to be a very low 14 basis points. [Nonperforming assets] increased for us slightly in this quarter; that was primarily in mortgage. But if you compare our mortgage company to almost any other in the industry, our NPAs are outstanding, and our NPAs at a company level would have to be considered outstanding in comparison to our peer group.

Lastly, we are very comfortable with where we sit today in a conservative position in virtually all asset classes as markets reprice risks

Sadly, nothing could have been further from the truth. A little over a year later, Wachovia's losses thanks to imprudent underwriting rendered it insolvent, forcing the government to step in and broker its sale to Wells Fargo (NYSE: WFC  ) . To Buffett's point, in turn, it's only when the tide goes out that you know who's been swimming naked.

The Foolish takeaway
The takeaway here is simple. At least when it comes to insurance companies, banks, and other leveraged financial companies, investors would be wise to apply a healthy dose of skepticism to the pronouncements of executives. Take these for what they are: self-interested statements by people who are heavily compensated to make them.

Going broke doesn't scare Buffett, but this big upside technology does
At the recent Berkshire Hathaway annual meeting, Warren Buffett admitted this emerging technology is threatening his biggest cash-cow. While Buffett shakes in his billionaire-boots, only a few investors are embracing this new market which experts say will be worth over $2 trillion. Find out how you can cash in on this technology before the crowd catches on, by jumping onto one company that could get you the biggest piece of the action. Click here to access a FREE investor alert on the company we're calling the "brains behind" the technology.