NEW YORK (CNNMoney) -- Startup advertising firm Adzookie has latched on to a high-profile way to publicize itself: by turning homes into massive billboards.
In exchange, Adzookie says it will pay the house owner's mortgage every month for as long as the home stays painted.
Adzookie launched the offer on its website Tuesday -- and by late afternoon, the company had already received more than 1,000 applications, according to Adzookie CEO Romeo Mendoza. One even came from a church.
"It really blew my mind," Mendoza said. "I knew the economy was tough, but it's sad to see how many homeowners are really struggling."
Adzookie intends to paint its logo and social media icons onto participating homes. Houses must remain painted for at least three months, and the agreement may be extended up to one year.
Painting is expected to begin in a few weeks. The above photo, which is included on the program's site, is a digital mockup. (No actual homes have yet been painted.)
Mendoza hopes buzz about the program -- plus, of course, the house-sized ads -- will publicize the fledging Adzookie. Mendoza started the Anaheim, Calif., company 16 months ago and has been running it on his own funds.
Adzookie is mobile ad network that places local businesses' ads for free if they, in exchange, allow ads to be placed on their own mobile sites. Alternatively, ads can be purchased for about $1 a day.
The company currently employs just eight people, but Mendoza said he is looking to raise venture capital and expand.
The home billboard scheme could raise the company's profile -- but don't expect too many homes to score the subsidized deal. Mendoza's budget for the entire program is $100,000, and he expects to spend about $8,000 per house on the painting alone.
At the end of the agreement, Adzookie will paint the house back to its original colors. Leases and rentals aren't allowed, nor are homes in cities with bylaws that would prohibit the bright painting.
From CNN
Friday, April 8, 2011
Tuesday, March 1, 2011
Stocks to Stalk
Here are some stocks that you may want to stalk:
ALME - Alamo Energy Corp $1.56
EXTR - Extreme Networks Inc. $3.70
CPMCF - Coastal Pacific Mining... $0.05
HHWW - Horiyoshi Worldwide Inc. $1.13
KNKT - Kunekt Corporation $1.83
UCPC - UniCapital Corporation $0.001
The above symbols are stocks that have been moved to our "watching" portfolio.
Happy Trading!
Thursday, February 3, 2011
3 Small Stocks That Could Make Investors Rich
Despite economic challenges, the United States remains as a compelling hotbed of innovation. So many items in everyday use -- especially in the field of medicine -- got their start here. [In fact, Andy Obermueller recently revealed his favorite game-changing medical picks in the latest issue of Game-Changing Stocks]
The quest is always on to develop devices, drugs and services that help save money and boost the user's experience. And investors who get in early can be richly rewarded.
Of course, the path from idea to large-scale revenue can be excruciatingly slow at times. And up until now, these three companies were better known for consuming capital. But each of them has hit upon novel, potentially game-changing technologies that may eventually shower investors with riches.
BioLase Technologies (Nasdaq: BLTI)
Nobody likes going to the dentist. Memories of a metal drill boring into our gums linger long, and it's often a reason why people don't go to the dentist as often as they should. But Biolase has an alternative: Lasers that can cut dental tissue in a very precise fashion. As you know, the use of a drill usually requires that a patient be injected with Novocain since drilling and grinding can be quite painful. Lasers cause no pain and require no anesthetic. This shortens the amount of time a patient is in the dental chair, allowing dentists to see more patients in any given day. It also leads to much happier patients, making them more likely to maintain regular dental visits.
Yet the set-up can be expensive for dentists, which explains why only a minority have gone the laser route. In the first half of the past decade, sales grew sharply, hitting $67 million by 2007. Sales have since cooled and most recently outright plunged as the company was unable to see its products gain traction with key dental distributors such as Henry Schein (Nasdaq: HSIN). Shares of Biolase, which hit $18 in 2004, have lost 90% of their value.
Despite appearances, laser-based dentistry wasn't a bust. Instead, the company has been forced to re-think designs, remove costs from the manufacturing process, and alter sales incentive programs with distributors. The outlook for 2011 is perking up, setting the stage for the first year of sales growth since 2006.
Among the positive recent developments: Biolase has recently signed a second major U.S. distributor, Benco, that augments an existing relationship with Henry Schein. In addition, the company is rolling out new portable devices such as the iLase, which is off to an impressive start. The company is also now expanding into Asia.
Needham's Dalton Chandler sees 2011 sales rebounding more than 50% to $40 million, but even more modest sales growth at half that rate would likely put like put this former hot stock back on investors' radars. Shares of this microcap trade for around $1.50, but Needham predicts they'll double in 2011.
Research Frontiers (Nasdaq: REFR)
This company has led many investors to chuckle. Most of its press releases involve yet another round of capital-raising. The company has cracked the $1 million sales mark just once and has never come close to making a profit. But Research Frontiers may have the last laugh in 2011. The company's specialized glass technology, which automatically adjusts to filter out sunlight at times of high air-conditioning loads, has caught the attention of major construction firms, some of which are expected to use the glass in 2011.
But it's the auto market that has captured a great deal of recent buzz, pushing shares from $4 to $7 in the last three months. Mercedes apparently intends to use Research Technology's "Smart Glass" in an upcoming line of cars. Some suggest the technology will be adopted for the whole car line, and the company's most bullish supporters expect other auto makers to make similar moves in 2011 as well.
The rising stock price implies those rumors may have merit. But the company's history should give you pause. Research Frontiers has been oh-so-close to success many times before but thus far has been unable to capitalize on the opportunity. How big an opportunity does the company face? The automotive glass industry likely tops $5 billion and the architectural glass biz is similarly-sized. If only a small portion of auto makers and architects utilized the technology and Research Frontiers was able to secure a small percent of royalties, then the company may be looking at tens of millions in revenue, most of which would flow to the bottom line. Not bad for a company valued at just $122 million.
Sooner than later, we'll know if the Mercedes rumors are true. Several months from now, shares will either be well higher than current levels or they'll fall all the way back toward the $4 mark.
BSD Medical (Nasdaq: BSDM)
BSD's systems are used to treat certain tumors with heat (hyperthermia) while increasing the effectiveness of other therapies such as radiation therapy. Cancer cells can be killed at just 108 degrees, a lower temperature than other cells. As the body senses the heat in the treated area, it also moves to generate other benefits such as increased blood flow, which raises oxygen levels, which raises the effectiveness of radiation therapy. The clinical data in support of BSD's devices have been quite strong.
This is another company that has been long on promise but short on results. Sales cracked $5 million in 2008, but have been falling since. Shares, which hit $7 in late 2007, fell all the way to $1 this past summer before a recent rebound back to almost $5. The rebound comes from rising hopes that BSD's novel cancer treatment, which has proven to be effective, could soon win more converts as the company signs up a growing roster of distributors.
At this point, BSD must figure out ways to get the many customers that have been testing the system to make a purchase. Or the company needs to partner with -- or sell to -- a larger medical device firm that is better-equipped to tackle this "missionary" type sales effort. There's lot of promise here, but investors will need to see better sales traction in 2011.
Action to Take --> These stocks should never constitute core holdings in a portfolio. But if you have some discretionary funds that can be tapped to swing for the fences, these stocks may turn out to be tidy additions. I like the basket approach: A small position in several speculative plays. One home run can more than offset losers elsewhere.
Source:
The quest is always on to develop devices, drugs and services that help save money and boost the user's experience. And investors who get in early can be richly rewarded.
Of course, the path from idea to large-scale revenue can be excruciatingly slow at times. And up until now, these three companies were better known for consuming capital. But each of them has hit upon novel, potentially game-changing technologies that may eventually shower investors with riches.
BioLase Technologies (Nasdaq: BLTI)
Nobody likes going to the dentist. Memories of a metal drill boring into our gums linger long, and it's often a reason why people don't go to the dentist as often as they should. But Biolase has an alternative: Lasers that can cut dental tissue in a very precise fashion. As you know, the use of a drill usually requires that a patient be injected with Novocain since drilling and grinding can be quite painful. Lasers cause no pain and require no anesthetic. This shortens the amount of time a patient is in the dental chair, allowing dentists to see more patients in any given day. It also leads to much happier patients, making them more likely to maintain regular dental visits.
Yet the set-up can be expensive for dentists, which explains why only a minority have gone the laser route. In the first half of the past decade, sales grew sharply, hitting $67 million by 2007. Sales have since cooled and most recently outright plunged as the company was unable to see its products gain traction with key dental distributors such as Henry Schein (Nasdaq: HSIN). Shares of Biolase, which hit $18 in 2004, have lost 90% of their value.
Despite appearances, laser-based dentistry wasn't a bust. Instead, the company has been forced to re-think designs, remove costs from the manufacturing process, and alter sales incentive programs with distributors. The outlook for 2011 is perking up, setting the stage for the first year of sales growth since 2006.
Among the positive recent developments: Biolase has recently signed a second major U.S. distributor, Benco, that augments an existing relationship with Henry Schein. In addition, the company is rolling out new portable devices such as the iLase, which is off to an impressive start. The company is also now expanding into Asia.
Needham's Dalton Chandler sees 2011 sales rebounding more than 50% to $40 million, but even more modest sales growth at half that rate would likely put like put this former hot stock back on investors' radars. Shares of this microcap trade for around $1.50, but Needham predicts they'll double in 2011.
Research Frontiers (Nasdaq: REFR)
This company has led many investors to chuckle. Most of its press releases involve yet another round of capital-raising. The company has cracked the $1 million sales mark just once and has never come close to making a profit. But Research Frontiers may have the last laugh in 2011. The company's specialized glass technology, which automatically adjusts to filter out sunlight at times of high air-conditioning loads, has caught the attention of major construction firms, some of which are expected to use the glass in 2011.
But it's the auto market that has captured a great deal of recent buzz, pushing shares from $4 to $7 in the last three months. Mercedes apparently intends to use Research Technology's "Smart Glass" in an upcoming line of cars. Some suggest the technology will be adopted for the whole car line, and the company's most bullish supporters expect other auto makers to make similar moves in 2011 as well.
The rising stock price implies those rumors may have merit. But the company's history should give you pause. Research Frontiers has been oh-so-close to success many times before but thus far has been unable to capitalize on the opportunity. How big an opportunity does the company face? The automotive glass industry likely tops $5 billion and the architectural glass biz is similarly-sized. If only a small portion of auto makers and architects utilized the technology and Research Frontiers was able to secure a small percent of royalties, then the company may be looking at tens of millions in revenue, most of which would flow to the bottom line. Not bad for a company valued at just $122 million.
Sooner than later, we'll know if the Mercedes rumors are true. Several months from now, shares will either be well higher than current levels or they'll fall all the way back toward the $4 mark.
BSD Medical (Nasdaq: BSDM)
BSD's systems are used to treat certain tumors with heat (hyperthermia) while increasing the effectiveness of other therapies such as radiation therapy. Cancer cells can be killed at just 108 degrees, a lower temperature than other cells. As the body senses the heat in the treated area, it also moves to generate other benefits such as increased blood flow, which raises oxygen levels, which raises the effectiveness of radiation therapy. The clinical data in support of BSD's devices have been quite strong.
This is another company that has been long on promise but short on results. Sales cracked $5 million in 2008, but have been falling since. Shares, which hit $7 in late 2007, fell all the way to $1 this past summer before a recent rebound back to almost $5. The rebound comes from rising hopes that BSD's novel cancer treatment, which has proven to be effective, could soon win more converts as the company signs up a growing roster of distributors.
At this point, BSD must figure out ways to get the many customers that have been testing the system to make a purchase. Or the company needs to partner with -- or sell to -- a larger medical device firm that is better-equipped to tackle this "missionary" type sales effort. There's lot of promise here, but investors will need to see better sales traction in 2011.
Action to Take --> These stocks should never constitute core holdings in a portfolio. But if you have some discretionary funds that can be tapped to swing for the fences, these stocks may turn out to be tidy additions. I like the basket approach: A small position in several speculative plays. One home run can more than offset losers elsewhere.
Source:
David Sterman
Contributor, SmallStocks.com
Contributor, SmallStocks.com
Wednesday, February 2, 2011
An Undervalued Small Cap with a 12% Yield
Although you have probably never heard of this company, chances are you use its technology every single day.
Do you watch television, or use a computer? Have you bought an iPad or iPhone? Do you use a cell phone, digital camera or a GPS navigation system in your car? If so, then you're most likely using what this company makes.
Yet, despite the wide-ranging use of this company's products and the continuing proliferation of new devices that use them, this company's stock price has been stuck in the doldrums. But that could change soon...
Taiwan-based semiconductor company Himax Technologies, Inc. (Nasdaq: HIMX) is one of the world's primary makers of chips used in flat-panel display monitors. These chips are critical components used for large screens like TVs and computers as well as small screens such as those used for Apple's (Nasdaq: AAPL) iPhone, digital cameras and GPS navigation systems.
Himax sells its chips to the biggest and best in the business. Clients include Taiwan-based Chimei Innolux, the world's largest manufacturer of LCD monitors. Also among major clients for large and medium screens is Samsung Electronics (OTC: SSNLF.PK), the world's largest flat-panel TV manufacturer, and TPV Technology, the world's largest LCD TV maker. Clients that make small screens include Wintek, Apple's touch-screen manufacturer for the iPad and iPhone.
One would think that business should be booming as the recovery is gaining steam, but that hasn't been the case. Revenue in the first nine months of the year is actually lower than the year ago period by 2%, totaling $501 million. Earnings per share (EPS) have fallen from $0.15 per share in the same period last year to $0.12. In the third quarter, revenue has plunged 32% from the year ago quarter. As a result, the stock is down 28% in the past year, compared with a 15% gain for the S&P 500.
What's going on?
The reason is simple. Demand for flat screen TVs is decreasing. It's decreasing because people in the United States and Europe have passed the rapid growth stage of upgrading to HD flat-screen digital TVs -- just about everyone has one already. The demand explosion that took place earlier this decade has run its course.
People are still buying TVs, but at a slower rate. In the first three quarters of 2010, global TV shipment growth slowed to 17%, from 26% in the year ago period. In the third quarter, sales of large panel display drivers at Himax fell 48% from the year ago quarter.
But here's the good news: the stock price already reflects the recent disappointing sales and there are still several strong catalysts for growth going forward...
The Chinese market
In addition to a growing middle class and increasing domestic consumption in China, the country will move to a digital TV standard by 2015. In the United States, the move to digital helped created a boom in the HD TV market. Currently only about 17% of Chinese homes with cable use digital, so there is potential growth of hundreds of millions of consumers in this market.
3D
Himax recently launched a 2D-to-3D conversion solution used in large screens that the company says has been widely praised as offering the best 3D effect in the marketplace. While 3D TVs have not taken off yet, they could see strong growth in the years ahead.
Small screens
Global proliferation of handsets with display screens is increasing demand for the chip used in small and medium-sized display screens. This segment of the company's revenue grew 11.8% in the third quarter and now contributes more than one quarter of revenue.
In addition, Himax is in stellar financial shape, with just $44 million in debt and $392 million in shareholder's equity and $80 million in cash as of its most recent filing (Sept. 30). The company is well-prepared to service increasing demand going forward through expansions and acquisitions.
And then there's the dividend. Despite the fact that Himax is an emerging-market technology company, it steps out of character by using its superior financial condition to pay a fat dividend. Dividends are paid once a year, and the company's 2010 payment of $0.25 per share gives the stock a whopping trailing yield of about 12%.
Action to Take --> The strong growth trends in Himax's business may take several quarters or more to come to fruition. However, given the current low price and the fact that the stock pays a double digit yield while you wait, it is a good buy at the current price.
Do you watch television, or use a computer? Have you bought an iPad or iPhone? Do you use a cell phone, digital camera or a GPS navigation system in your car? If so, then you're most likely using what this company makes.
Yet, despite the wide-ranging use of this company's products and the continuing proliferation of new devices that use them, this company's stock price has been stuck in the doldrums. But that could change soon...
Taiwan-based semiconductor company Himax Technologies, Inc. (Nasdaq: HIMX) is one of the world's primary makers of chips used in flat-panel display monitors. These chips are critical components used for large screens like TVs and computers as well as small screens such as those used for Apple's (Nasdaq: AAPL) iPhone, digital cameras and GPS navigation systems.
Himax sells its chips to the biggest and best in the business. Clients include Taiwan-based Chimei Innolux, the world's largest manufacturer of LCD monitors. Also among major clients for large and medium screens is Samsung Electronics (OTC: SSNLF.PK), the world's largest flat-panel TV manufacturer, and TPV Technology, the world's largest LCD TV maker. Clients that make small screens include Wintek, Apple's touch-screen manufacturer for the iPad and iPhone.
One would think that business should be booming as the recovery is gaining steam, but that hasn't been the case. Revenue in the first nine months of the year is actually lower than the year ago period by 2%, totaling $501 million. Earnings per share (EPS) have fallen from $0.15 per share in the same period last year to $0.12. In the third quarter, revenue has plunged 32% from the year ago quarter. As a result, the stock is down 28% in the past year, compared with a 15% gain for the S&P 500.
What's going on?
The reason is simple. Demand for flat screen TVs is decreasing. It's decreasing because people in the United States and Europe have passed the rapid growth stage of upgrading to HD flat-screen digital TVs -- just about everyone has one already. The demand explosion that took place earlier this decade has run its course.
People are still buying TVs, but at a slower rate. In the first three quarters of 2010, global TV shipment growth slowed to 17%, from 26% in the year ago period. In the third quarter, sales of large panel display drivers at Himax fell 48% from the year ago quarter.
But here's the good news: the stock price already reflects the recent disappointing sales and there are still several strong catalysts for growth going forward...
The Chinese market
In addition to a growing middle class and increasing domestic consumption in China, the country will move to a digital TV standard by 2015. In the United States, the move to digital helped created a boom in the HD TV market. Currently only about 17% of Chinese homes with cable use digital, so there is potential growth of hundreds of millions of consumers in this market.
3D
Himax recently launched a 2D-to-3D conversion solution used in large screens that the company says has been widely praised as offering the best 3D effect in the marketplace. While 3D TVs have not taken off yet, they could see strong growth in the years ahead.
Small screens
Global proliferation of handsets with display screens is increasing demand for the chip used in small and medium-sized display screens. This segment of the company's revenue grew 11.8% in the third quarter and now contributes more than one quarter of revenue.
In addition, Himax is in stellar financial shape, with just $44 million in debt and $392 million in shareholder's equity and $80 million in cash as of its most recent filing (Sept. 30). The company is well-prepared to service increasing demand going forward through expansions and acquisitions.
And then there's the dividend. Despite the fact that Himax is an emerging-market technology company, it steps out of character by using its superior financial condition to pay a fat dividend. Dividends are paid once a year, and the company's 2010 payment of $0.25 per share gives the stock a whopping trailing yield of about 12%.
Action to Take --> The strong growth trends in Himax's business may take several quarters or more to come to fruition. However, given the current low price and the fact that the stock pays a double digit yield while you wait, it is a good buy at the current price.
Source:
Tom Hutchinson
Contributor, SmallStocks.com
Tom Hutchinson
Contributor, SmallStocks.com
Tuesday, February 1, 2011
3 Small Caps with 9%-Plus Yields
Are you an income investor or a growth investor? It's pretty much been accepted as common knowledge that a stock either offers great dividends, or great potential for price appreciation, but not both. If you look hard enough though -- and far enough down the market cap scale -- every now and then you'll find a double-barreled name that serves up the best of both worlds.
In fact, there are three such ideas I've found worth considering today.
Small cap yield # 1: 9%
Though categorized as a credit services stock, that's not actually what Fifth Street Finance Corp. (NYSE: FSC) is. It's mostly a business development company, or BDC, offering conventional and bridge financing to smaller but established business. Many of the loans, however, include an equity component… which is where the growth opportunity is packed in for Fifth Street's shareholders.
Whether you define it as a fund, a BDC, or just a conglomerate, one thing is undisputable -- Fifth Street Finance knows how to drive consistent income, the bulk of which is passed along to shareholders.
While 2010 was a bit of an off year, with the company only earning $0.95 a share, 2011's earnings are expected to reach $1.17 a share.
Astute investors will notice that the trailing dividend yield of about 10% is slightly greater than the recently-projected earnings yield of 9.3%... a scenario that seemingly can't last indefinitely. Don't sweat it. The financier closed more than $270 million worth of new loans in the yet-to-be reported quarter ending at the end of December. That was by leaps and bounds the busiest quarter the company had seen all year, pointing to one key theme: business is picking up. The dividend rate should be easy to cover by mid-year at the current pace of business.
Small cap yield #2: 10%
With a dividend yield around 10% and a price-to-earnings (P/E) ratio of about 9, Israeli telecom Partner Communications Co. (Nasdaq: PTNR) may well be one of the market's best-kept secrets.
In fact, Partner Communications is on pace to turn in its best year ever on the revenue and income fronts: analysts are looking for $6.5 billion in revenue and earnings per share (EPS) of $7.97. That's 6.9% and 8.1% higher than 2009's respective numbers, a feat underscored by five straight annual EPS increases and revenue increases in four out of the past five years. Yet, the market continues to overlook the stock. Big mistake.
Partner Communications has not only upped its bottom line in the past few years, but it's also increased its dividend payout accordingly. For perspective, shareholders received a total of $1.33 a share in dividends in 2006, but owners took in $2.09 a share in regular dividends in 2010.
The point is, the dividend is well protected, and growing with the company.
Small cap yield #3: 9%
And finally, Triangle Capital Corp. (NYSE: TCAP) is another one of those off-the-radar ways to score some nice income on your investments while waiting for capital appreciation.
Like Fifth Street Finance, Triangle Capital is predominantly a business development company. And, like Fifth Street, Triangle Capital has gotten strangely good at driving consistent income. Like Partner Communications, however, Triangle Capital has clearly paired bigger bottom lines with better dividend payouts.
As of the last tally, the forecasted earnings per share for 2011 is $1.67. That's actually a little more than enough to cover the $1.65 worth of dividends -- a yield of about 9% -- paid out in 2010. Considering we're starting to see more earnings beats than misses from Triangle, however, don't be surprised if both figures inch higher this year.
Things to consider
But two small cap business development companies in the same portfolio -- each of which specializes in small company financing? Isn't that a tad concentrated, like owning two mutual funds from the same style box?
In some regards yes, but in most regards, no.
One of the advantages a BDC has that investors can't find anywhere else is a BDC's ability and willingness to invest in small, growing companies that are investment-worthy, but not always publicly-traded. These are the stocks that are most like the Amgens and Microsofts from 20 and 30 years ago, when each was a great idea practically nobody had heard of at the time (even if they were publicly traded then). But, each BDC has very unique investment opportunities presented to it that rarely make their way in front of other business development companies.
So, the industry actually offers a lot of built-in diversity, and more importantly, it offers the one-two punch of income as well as growth.
Action to Take --> It's tough to find the best of both worlds, but not impossible. Clearly though, you have to look at the smaller end of the stock size scale to find a decent selection of names with both good growth and income potential. And, you generally have to move quickly when you see such an opportunity, simply because other investors are looking for the same assets and can bid them up before you step in. Any of these three names mentioned are good options for investors.
Source:
In fact, there are three such ideas I've found worth considering today.
Small cap yield # 1: 9%
Though categorized as a credit services stock, that's not actually what Fifth Street Finance Corp. (NYSE: FSC) is. It's mostly a business development company, or BDC, offering conventional and bridge financing to smaller but established business. Many of the loans, however, include an equity component… which is where the growth opportunity is packed in for Fifth Street's shareholders.
Whether you define it as a fund, a BDC, or just a conglomerate, one thing is undisputable -- Fifth Street Finance knows how to drive consistent income, the bulk of which is passed along to shareholders.
While 2010 was a bit of an off year, with the company only earning $0.95 a share, 2011's earnings are expected to reach $1.17 a share.
Astute investors will notice that the trailing dividend yield of about 10% is slightly greater than the recently-projected earnings yield of 9.3%... a scenario that seemingly can't last indefinitely. Don't sweat it. The financier closed more than $270 million worth of new loans in the yet-to-be reported quarter ending at the end of December. That was by leaps and bounds the busiest quarter the company had seen all year, pointing to one key theme: business is picking up. The dividend rate should be easy to cover by mid-year at the current pace of business.
Small cap yield #2: 10%
With a dividend yield around 10% and a price-to-earnings (P/E) ratio of about 9, Israeli telecom Partner Communications Co. (Nasdaq: PTNR) may well be one of the market's best-kept secrets.
In fact, Partner Communications is on pace to turn in its best year ever on the revenue and income fronts: analysts are looking for $6.5 billion in revenue and earnings per share (EPS) of $7.97. That's 6.9% and 8.1% higher than 2009's respective numbers, a feat underscored by five straight annual EPS increases and revenue increases in four out of the past five years. Yet, the market continues to overlook the stock. Big mistake.
Partner Communications has not only upped its bottom line in the past few years, but it's also increased its dividend payout accordingly. For perspective, shareholders received a total of $1.33 a share in dividends in 2006, but owners took in $2.09 a share in regular dividends in 2010.
The point is, the dividend is well protected, and growing with the company.
Small cap yield #3: 9%
And finally, Triangle Capital Corp. (NYSE: TCAP) is another one of those off-the-radar ways to score some nice income on your investments while waiting for capital appreciation.
Like Fifth Street Finance, Triangle Capital is predominantly a business development company. And, like Fifth Street, Triangle Capital has gotten strangely good at driving consistent income. Like Partner Communications, however, Triangle Capital has clearly paired bigger bottom lines with better dividend payouts.
As of the last tally, the forecasted earnings per share for 2011 is $1.67. That's actually a little more than enough to cover the $1.65 worth of dividends -- a yield of about 9% -- paid out in 2010. Considering we're starting to see more earnings beats than misses from Triangle, however, don't be surprised if both figures inch higher this year.
Things to consider
But two small cap business development companies in the same portfolio -- each of which specializes in small company financing? Isn't that a tad concentrated, like owning two mutual funds from the same style box?
In some regards yes, but in most regards, no.
One of the advantages a BDC has that investors can't find anywhere else is a BDC's ability and willingness to invest in small, growing companies that are investment-worthy, but not always publicly-traded. These are the stocks that are most like the Amgens and Microsofts from 20 and 30 years ago, when each was a great idea practically nobody had heard of at the time (even if they were publicly traded then). But, each BDC has very unique investment opportunities presented to it that rarely make their way in front of other business development companies.
So, the industry actually offers a lot of built-in diversity, and more importantly, it offers the one-two punch of income as well as growth.
Action to Take --> It's tough to find the best of both worlds, but not impossible. Clearly though, you have to look at the smaller end of the stock size scale to find a decent selection of names with both good growth and income potential. And, you generally have to move quickly when you see such an opportunity, simply because other investors are looking for the same assets and can bid them up before you step in. Any of these three names mentioned are good options for investors.
Source:
James Brumley
Contributor, StreetAuthority.com
Contributor, StreetAuthority.com
Saturday, January 22, 2011
10 American Companies That Will Disappear in 2011
Companies disappear all the time. Sure, it may be news when large corporations with well-known brands go belly-up. But think about it: Businesses like Circuit City, Northwest Airlines and Countrywide are gone now.
24/7 Wall St. recently looked at a number of large American companies, some of which are owned by foreign companies, to see which will disappear in 2011. A vanishing firm may go bankrupt and its assets sold off, it may be closed after being bought by another company or it may cease to exist due to a merger.
The website looked at a variety of companies: those that are in deep trouble, the merger and acquisitions targets, firms in industries that have too many competitors for any to become highly profitable or corporations that Wall Street believes are worth more in parts than as a whole. The 19 companies below were picked from this universe, because odds they are they won't exist a year from now:
Saab USA
Saab has tried to create a renaissance of sorts. The company was sold to Netherlands specialty carmaker Spyker last year. Spyker took an awful risk, particularly in the U.S. -- because Saab is one of the few car firms that did recover when the U.S. car market expanded last year. The total number of cars and light vehicles sold in America in 2010 was up 11% to 11.6 million.
Sales of some niche brands surged. Porsche sales in the U.S. were up 29% to over 29,000. Audi sales rose 22% to over 101,000. But Saab sales collapsed -- falling 37% to 5,445. American car companies have also created new lines of vehicles that have begun to sell well, particularly in the middle market where Saab operates. The Japanese still control the lower-price, high-quality portion of the market. And Korea's Hyundai took share from nearly everyone else last year, as its sales rose over 24% to just above 538,000. There's no room in the American market for tiny operator like Saab.
Office Depot
The company is running third in a three-horse race with Office Max and Staples. Office Depot also has to compete with small business centers in Sam's Clubs and Costcos. The firm operates on razor-thin margins, while managing 1,150 locations -- which are very costly due to employee and real estate expenses. Office Depot is a strong candidate to be taken over by one of its rivals or a broader retail chain like Target.
The market is too competitive for Office Depot to stand on its own. A consolidation in the sector would allow a merged operation to cut thousands of people and close hundreds of locations. Operating margins, then, would not be so modest.
Dean Foods
The maker of dairy products like Land O'Lakes and Silk has struggled as much as any other large public company this year. The costs of raw milk, butterfat, soybeans and sugar have risen sharply. Dean Foods has also been crippled by debt. The firm's shares were down as much as 60% at one point during the last 12 months.
Despite all the bad news, hedge fund investor David Tepper bought a 7.35% stake in the company. Dean Foods shares rose 9% after the announcement. Dean has already sold its yogurt business to Schreiber Foods. And Tepper, one of the cleverest investors on Wall Street, has probably bet the balance of Dean Foods will be sold off in parts. Probably the Fresh Dairy Direct-Morningstar and WhiteWave/Alpro business units would draw the most bidders. Watch for Dean to be broken up, to satisfy debtholders and arge investors.
Frontier Airlines
The carrier is owned by Republic Airways Holdings and was bankrupt when Republic bought it in 2009. Republic recently merged another of its holdings, Midwest Air, into Frontier. Denver-based Frontier is simply too small to compete in the domestic carrier market -- which has become increasingly dominated by large airlines that are growing due to mergers.
Wall Street has also become increasingly worried about Republic's future. Its shares are down 13% over the last quarter, while shares in rival JetBlue are up 9% during the same time frame. Frontier's Milwaukee hub, which serves the East and Midwest, and its Denver hub, which serves the West, the South, and Mexico, would be valuable to a larger carrier. Airline mergers and buyouts like the Continental/United deal and Delta's takeover of Northwest are popular in the industry because they allow for personnel reductions and route cuts -- as well as trimming the number of aircraft that have to be maintained. Two airlines together can have a better margin than separately. Frontier is a buyout target; its brand is not.
Sara Lee
The company that makes Ball Park hot dogs and Jimmy Dean breakfast foods is already being circled by corporations in similar businesses and by private equity firms -- groups interested in breaking Sara Lee up. Apollo Global Management has recently considered a bid. JBS, the Brazilian meat processor, made an offer that was turned down.
Media reports say Sara Lee is in the midst of a plan to separate its coffee and meat businesses. If that happens, the new companies may be named Hillshire Farm and Pickwick Tea. A deal to sell off pieces of the firm will probably happen before midyear.
Borders
The large bookstore chain is almost gone already. The only question remaining is whether it will be dissolved or sold to a related retailer like Barnes & Noble. It appears Borders has little choice other than to go bankrupt, given its debt and cash-flow situation. Two ominous signs for the bookseller: It says it's unable to pay some of its largest publishers for their books.
Border's stock also dropped under $1 a share, a warning sign that the shares could eventually be delisted -- that is, if Borders lasts long enough. The company's 500 locations may have value to a buyer, but its name does not, being associated with little more than failure.
Gateway
Gateway was bought by Taiwanese PC giant Acer in 2007. Acer is currently the No. 3 PC company in the world after Dell and Hewlett-Packard. The buyout was not unlike the one that China-based Lenovo made of the IBM PC division. Lenovo found the IBM brand was useful for marketing in the U.S., but dropped the name in favor of its own. Lenovo saw no reason to support two brands any longer and wanted to be recognized by its corporate name in the U.S. market.
Acer, meanwhile, has become an established brand in the U.S. over the last two years, particularly for its netbooks and notebooks -- while the Gateway brand has faded. Gateway is still a stand-alone corporation but will likely disappear this year.
DollarThrifty
Dollar Thrifty has a tentative deal to be bought by Avis Budget -- but the FTC has not given the transaction final approval. If the buyout closes, then the Avis, Budget, Dollar and Thrifty car rental businesses will all be under one roof. Dollar Thrifty has lost any momentum in its efforts to expand. The company said in December that it would add 31 new franchises in the U.S. It has 1,550 locations in 81 countries worldwide.
Ironically, Dollar Thrifty is itself the result of a merger of two companies. Thrifty was owned by Chrysler and combined with Dollar in 1990. Avis should close its takeover by mid-2011
Answers Corp.
The online search firm's stock is down 40% in five years. Google, in comparison was up nearly 40% during that period. The smaller company had third-quarter revenue of only $4.5 million, which means it barely has a reason to be a public company. Operating income for the quarter was only $379,000, and its total average page views daily are about 14 million.
Answers will likely be sold to a company that could use its technology platform and unique visitor traffic. This might include one of the portals or large online content companies like News Corp. The company's market value is only $65 million, which is pocket change for a really large Web company.
E*Trade
There are too many big discount brokers in the U.S. There have been persistent rumors that E*Trade will be bought by one of its larger competitors --Charles Schwab or TDAmeritrade. The rumors even caused a large move in E*Trade's options early last month. Broker Collins Stewart downgraded E*Trade shares recently, pointing to problems with loan portfolio growth on the banking side of the online brokerage's business.
Wall Street's view of the other two discounters is much more positive. The brokerage business has been ideal for consolidation for years. Full-service brokers went through a large number of mergers and acquisitions in the 1970s, 80s and 90s. The reason for the rollups were compelling then as they are now for E*Trade. There are a number of expensive duplicate functions among these companies -- which include marketing costs, trading platforms and administration. Either Schwab or TDAmeritrade will use those economies of scale to buy E*Trade, the weakest member of the sector.
Nine Tax Deductions You Shouldn't Even Think About Claiming
If you opt to itemize your deductions on your federal income tax return, you'll see a lot of emphasis on saving taxes by not overlooking common deductions. This makes sense because, as a taxpayer, you absolutely have the right to reduce your taxable income by using your available deductions. However, be smart. Make sure you claim those deductions for which you're entitled and steer clear of bogus deductions. To help you out, following is a list of nine deductions that you shouldn't even think about claiming on your tax return:
1.) Reimbursed Job Expenses. It's true that you can deduct business expenses on your federal income tax return so long as they are paid or incurred during your tax year; used for carrying on your trade or business of being an employee; and ordinary and necessary. However, the expenses must also be unreimbursed -- to the extent that your employer pays you back for any of those costs, those portions of the expenses are not deductible.
2.) Diets and Health Club Dues. Most diets and health club dues aren't deductible even if your doctor has recommended that you lose some weight in order to improve your health. While you can deduct medical expenses for the diagnosis, cure, mitigation, treatment or prevention of disease, including the costs of doctors and medications, you cannot deduct the cost of expenses that are merely beneficial to your health -- this includes most diets and health club dues. To be deductible, the diet or exercise plan must be specifically prescribed by a doctor for a diagnosed medical condition, not as preventative care and not just so that you look and feel better. Some limited exceptions apply.
3.) Primary Telephone Landlines. The IRS will allow you to deduct the cost of a second telephone landline or a cell phone to be used in business but you may not deduct the cost of your home telephone line -- even if you use it for business. The IRS considers a primary telephone line routinely personal and thus, not deductible. You may not pro rate the cost of the phone even if you can prove non-personal use. You can, however, deduct long distance and other related charges if you can prove business use.
4.) Home Improvements. At some point, almost every homeowner spends money for some kind of improvements to their home. For the most part, while those improvements may make your home more comfortable (and may increase the cost basis and fair market value of your home), they are generally not deductible. You may still be entitled to a tax break, however: Under current law, you can get a tax credit for the purchase and installation of certain energy-efficient improvements.
5.) Campaign Expenses. Thinking of running for office? To the extent that you have to pay for campaign expenses out of pocket, you're going to have to chalk that up to the cost of public service. Expenses incurred as part of your election campaign aren't deductible on your federal income tax return.
6.) Commuting Costs. While it's true that you can deduct certain travel expenses related to your job (such as traveling from one workplace to another in the course of your job or business; visiting clients, vendors or customers; and going to a business meeting away from your workplace), you can't deduct the costs of commuting to and from work. This is true even if you travel long distances to work (say, from Philadelphia to New York City every day) or if the method of getting to work is expensive (for example, you take a cab).
7.) Charitable Services. While you can deduct the cost of goods and cash that you donate to qualified organizations, you may not deduct the cost of services that you donate to charity, even if you can easily measure the value of those services. You can, however, deduct out of pocket costs that you incur while performing those services.
8.) Pet Care. If you're like me, you may consider your pet a member of your family. However, as much as you may adore your furry (or scaly) addition to the family, he or she does not count as a dependent. You may not deduct the cost of taking care of your pet even if your pet incurs significant medical expenses. An exception applies with respect to guide dogs and service animals -- you can include the costs of buying, training and maintaining those animals as part of your deductible medical expenses.
9.) Attorney's Fees. Attorney's fees may be deductible for businesses, but as a general rule, individual taxpayers cannot deduct most legal fees. This includes attorney's fees related to divorces, disputes over property boundaries and personal injury cases. Those legal disputes are considered personal in nature, which means the IRS won't allow you to take a deduction for them. However, you can deduct personal legal fees that you paid to determine, contest, pay or claim a refund of any tax (including tax advice) as well as those legal fees related to producing or collecting taxable income.
Hope this helps some of you out on your taxes!
Article Author: Kelly Phillips Erb
1.) Reimbursed Job Expenses. It's true that you can deduct business expenses on your federal income tax return so long as they are paid or incurred during your tax year; used for carrying on your trade or business of being an employee; and ordinary and necessary. However, the expenses must also be unreimbursed -- to the extent that your employer pays you back for any of those costs, those portions of the expenses are not deductible.
2.) Diets and Health Club Dues. Most diets and health club dues aren't deductible even if your doctor has recommended that you lose some weight in order to improve your health. While you can deduct medical expenses for the diagnosis, cure, mitigation, treatment or prevention of disease, including the costs of doctors and medications, you cannot deduct the cost of expenses that are merely beneficial to your health -- this includes most diets and health club dues. To be deductible, the diet or exercise plan must be specifically prescribed by a doctor for a diagnosed medical condition, not as preventative care and not just so that you look and feel better. Some limited exceptions apply.
3.) Primary Telephone Landlines. The IRS will allow you to deduct the cost of a second telephone landline or a cell phone to be used in business but you may not deduct the cost of your home telephone line -- even if you use it for business. The IRS considers a primary telephone line routinely personal and thus, not deductible. You may not pro rate the cost of the phone even if you can prove non-personal use. You can, however, deduct long distance and other related charges if you can prove business use.
4.) Home Improvements. At some point, almost every homeowner spends money for some kind of improvements to their home. For the most part, while those improvements may make your home more comfortable (and may increase the cost basis and fair market value of your home), they are generally not deductible. You may still be entitled to a tax break, however: Under current law, you can get a tax credit for the purchase and installation of certain energy-efficient improvements.
5.) Campaign Expenses. Thinking of running for office? To the extent that you have to pay for campaign expenses out of pocket, you're going to have to chalk that up to the cost of public service. Expenses incurred as part of your election campaign aren't deductible on your federal income tax return.
6.) Commuting Costs. While it's true that you can deduct certain travel expenses related to your job (such as traveling from one workplace to another in the course of your job or business; visiting clients, vendors or customers; and going to a business meeting away from your workplace), you can't deduct the costs of commuting to and from work. This is true even if you travel long distances to work (say, from Philadelphia to New York City every day) or if the method of getting to work is expensive (for example, you take a cab).
7.) Charitable Services. While you can deduct the cost of goods and cash that you donate to qualified organizations, you may not deduct the cost of services that you donate to charity, even if you can easily measure the value of those services. You can, however, deduct out of pocket costs that you incur while performing those services.
8.) Pet Care. If you're like me, you may consider your pet a member of your family. However, as much as you may adore your furry (or scaly) addition to the family, he or she does not count as a dependent. You may not deduct the cost of taking care of your pet even if your pet incurs significant medical expenses. An exception applies with respect to guide dogs and service animals -- you can include the costs of buying, training and maintaining those animals as part of your deductible medical expenses.
9.) Attorney's Fees. Attorney's fees may be deductible for businesses, but as a general rule, individual taxpayers cannot deduct most legal fees. This includes attorney's fees related to divorces, disputes over property boundaries and personal injury cases. Those legal disputes are considered personal in nature, which means the IRS won't allow you to take a deduction for them. However, you can deduct personal legal fees that you paid to determine, contest, pay or claim a refund of any tax (including tax advice) as well as those legal fees related to producing or collecting taxable income.
Hope this helps some of you out on your taxes!
Article Author: Kelly Phillips Erb
Monday, January 17, 2011
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