5 Stocks Insiders Love Right Now

DELAFIELD, Wis. (Stockpickr) -- Corporate insiders sell their own companies' stock for a number of reasons.

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They might need the cash for a big personal purchase such as a new house or yacht, or they might need the cash to fund a charity. Sometimes they sell as part of a planned selling program that they have put in place for diversification purposes, which allows them to sell stock in stages instead of selling all at one price.

Other times they sell because they think their stock is overvalued and the risk/reward is no longer attractive. Some even dump their own stock because they have inside knowledge that a competitor is eating their lunch and stealing market share.

But insiders usually buy their own shares for one reason: They think the stock is a bargain and has tremendous upside.

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The key word in that last statement is "think." Just because a corporate insider thinks his or her stock is going to trade higher, that doesn't mean it will play out that way. Insiders can have all the conviction in the world that their stock is a buy, but if the market doesn't agree with them, the stock could end up going nowhere. Also, I say "usually" because sometimes insiders are loaned money by the company to buy their own stock. Those loans are often sweetheart deals and shouldn't be viewed as organic insider buying.

At the end of the day, its large institutional money managers running big mutual funds and hedge funds that drive stock prices, not insiders. That said, many of these savvy stock operators will follow insider buying activity when they agree with the insider that the stock is undervalued and has upside potential. This is why it's so important to always be monitoring insider activity, but it's twice as important to make sure the trend of the stock coincides with the insider buying.

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Recently, a number of companies' corporate insiders have bought large amounts of stock. These insiders are finding some value in the market, which warrants a closer look at these stocks. Here's a look at some stocks where insiders have been doing some big buying in per SEC filings.

Accelerate Diagnostics

One medical equipment player that insiders are active in here is Accelerate Diagnostics (AXDX), which develops the BACcel system, planned for rapid diagnosis in life-threatening bacterial infections. Insiders are buying this stock into big time strength, since shares are up 222% so far in 2013.

Accelerate Diagnostics has a market cap of $505 million and an enterprise value of $478 million. This stock trades at a premium valuation, with a price-to-book of 18.41. This is a cash-rich company, since the total cash position on its balance sheet is $27.17 million and its total debt is zero.

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A director just bought 11,500 shares, or about $142,000 worth of stock, at $12.26 to $13.14 a share. Another director also just bought 7,191 shares, or about $91,000 worth of stock, at $12.56 to $12.73 a share.

From a technical perspective, AXDX is currently trending above both its 50-day and 200-day moving averages, which is bullish. This stock has been downtrending for the last few weeks, with shares dropping from its high of $16.45 to its recent low of $11.91 a share. That low corresponded with AXDX's 50-day moving average at $11.62 a share. This stock subsequently has started to form a double bottom chart pattern at $11.81 to $11.91 a share.

If you're bullish on AXDX, then I would look for long-biased trades as long as this stock is trending above its 50-day moving average at $11.62, and then once breaks out above some near-term overhead resistance at $14 a share with high volume. Look for a sustained move or close above that level with volume that hits near or above its three-month average action of 105,818 shares. If that breakout hits soon, then AXDX will set up to re-test or possibly take out its 52-week high at $16.45 a share. Any high-volume move above that level will then give AXDX a chance to tag $20 a share.

Freeport-McMoRan Copper & Gold

Another integrated mining player that insiders are loading up on a huge amount of stock in here is Freeport-McMoRan Copper & Gold (FCX), which deals in the mining of copper, gold and molybdenum. Insiders are buying this stock into decent strength, since shares are up 10% so far in 2013.

Freeport-McMoRan Copper & Gold has a market cap of $39 billion and an enterprise value of $61 billion. This stock trades at a reasonable valuation, with a trailing price-to-earnings of 13.83 and a forward price-to-earnings of 11.83. Its estimated growth rate for this year is -20.2%, and for next year it's pegged at 24.5%. This is not a cash-rich company, since the total cash position on its balance sheet is $2.22 billion and its total debt is a whopping $21.12 billion. This stock currently sports a dividend yield of 3.3%.

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A director just bought 1.5 million shares, or about $56.17 million worth of stock, at $37.38 per share.

From a technical perspective, FCX 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 four months, with shares soaring higher from its low of $25.83 to its intraday high of $37.96 a share. During that uptrend, shares of FCX have been consistently making higher lows and higher highs, which is bullish technical price action. That said, shares of FCX have now entered overbought territory, since its current relative strength index reading is 81.15.

If you're in the bull camp on FCX, then I would look for long-biased in this stock after it's worked off some of its overbought condition. Look for this stock to pullback towards $35 or its 50-day moving average of $33.22 a share before jumping into this name from the long side.

Fusion-IO

One computer hardware player that insiders are snapping up a large amount of stock in here is Fusion-IO (FIO), a provider of data-centric computing solutions. Insiders are buying this stock into extreme weakness, since shares are down by 52% so far in 2013.

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Fusion-IO has a market cap of $1.1 billion and an enterprise value of $727 million. This stock trades at a cheap valuation, with a price-to-sales of 2.77 and a price-to-book of 2.30. Its estimated growth rate for this year is -233.3%, and for next year it's pegged at 57.1%. This is a cash-rich company, since the total cash position on its balance sheet is $225.26 million and its total debt is zero.

The CEO just bought 105,500 shares, or about $1 million worth of stock, at $9.52 per share.

From a technical perspective, FIO is currently trending below both its 50-day and 200-day moving averages, which is bearish. This stock recently gapped down sharply from $13 to $9.40 with heavy downside volume. Following that gap down, shares of FIO have now started to rebound off that $9.40 low and it's quickly moving within range of triggering a near-term breakout trade.

If you're bullish on FIO, then look for long-biased trades as long as this stock is trending above $10 or that low of $9.40 and then once it breaks out above some near-term overhead resistance at $11.31 a share with high volume. Look for a sustained move or close above that level with volume that hits near or above its three-month average volume of 4.61 million shares. If that breakout triggers soon, then FIO will set up to re-fill some of its previous gap down zone that started just above $13 a share. If that gap gets filled with volume, then FIO could easily tap its 200-day moving average of $14.87 a share.

Mirati Therapeutics

One biopharmaceutical player that insiders love right here is Mirati Therapeutics (MRTX), which discovers, develops, and commercializes novel therapeutics with an initial focus on cancer and infectious diseases. Insiders are buying this stock into massive strength, since shares are up sharply by 93% so far in 2013.

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Mirati Therapeutics has a market cap of $174 million and an enterprise value of $151 million. This stock trades at a premium valuation, with a price-to-book of 27.80. Its estimated growth rate for next year is -22.5%. This is a cash-rich company, since the total cash position on its balance sheet is $20.26 million and its total debt is zero.

A beneficial owner just bought 400,000 shares, or $7 million worth of stock, at $17.50 per share. Another beneficial owner also just bought 57,143 shares, or about $1 million worth of stock, at $17.50 per share.

From a technical perspective, MRTX is currently trending above both its 50-day and 200-day moving averages, which is bullish. This stock has been trending sideways and consolidating for the last month, with shares moving between $16.30 on the downside and $20.90 on the upside. Shares of MRTX are now slowly starting to trend within range of triggering a breakout trade above the upper-end of its recent sideways trading chart pattern.

If you're bullish on MRTX, then look for long-biased trades as long as this stock is trending above some key near-term support levels at $16.72 or at $16.30 and then once it breaks out above some near-term overhead resistance levels at $19 to its all-time high at $20.90 a share with high volume. Look for a sustained move or close above those levels with volume that hits near or above its three-month average action of 51,282 shares. If that breakout hits, then MRTX will set up to enter new all-time high territory, which is bullish technical price action. Some possible upside targets off that breakout are $25 to $27 a share.

Coach

One final name with some big insider buying is Coach (COH), which is a marketer of fine accessories and gifts for women and men. Insiders are buying this stock into modest weakness, since shares are down by 8% so far in 2013.

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Coach has a market cap of $14.3 billion and an enterprise value of $13.1 billion. This stock trades at a reasonable valuation, with a trailing price-to-earnings of 14.09 and a forward price-to-earnings of 13.11. Its estimated growth rate for this year is -6.2, and for next year it's pegged at 10.9%. This is a cash-rich company, since the total cash position on its balance sheet is $854.74 million and its total debt is just $985,000. This stock currently sports a dividend yield of 2.7%.

The CEO just bought 21,000 shares, or about $1.01 million worth of stock, at $48.38 per share.

From a technical perspective, COH is currently trending below both its 50-day and 200-day moving averages, which is bearish. This stock recently gapped down sharply from over $54 to $48.88 a share with heavy downside volume. Following that gap down, shares of COH have now started to rebound off that $47.88 low and enter a V-shaped uptrend.

If you're bullish on COH, then look for long-biased trades as long as this stock is trending above support at $50 or at $49, and then once it breaks out above Wednesday's high of $51.13 a share with high volume. Look for a sustained move or close above that level with volume that hits near or above its three-month average action of 4.03 million shares. If that breakout triggers soon, then COH will set up to re-fill some of its previous gap down zone that started just above $54 a share. This stock could even tag $55 to $56 if that gap gets filled with volume.

To see more stocks with notable insider buying, check out the Stocks With Big Insider Buying portfolio on Stockpickr.

-- Written by Roberto Pedone in Delafield, Wis.

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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.

Nurtisystem’s Healthy Earnings Boosts Stock, Healthy Valuation Spooks Analysts

Investors are hungering for Nurtisystem’s (NTRI) stock. How else to explain Nutrisystems’s huge jump today, following its earnings beat?

Reuters

The Wall Street Journal explains:

For the third quarter, Nutrisystem reported a profit of $356,000, or a penny a share, down from $2.6 million, or nine cents a share, a year earlier. Excluding one-time charges and other items, adjusted profit grew to 15 cents a share from 10 cents…

Looking ahead, Nutrisystem sees fourth quarter per-share results ranging between a two cent profit to a two cent loss, compared to the penny loss forecast by analysts polled by Thomson Reuters. The company also expects revenue will rise in the mid-single digits.

Analysts are far less enthusiastic than investors, however, largely because of valuation. Imperial Capital’s Mitchell Pinheiro explains:

We are raising our one-year price target on NTRI shares to $18, about 20% above the recent share price and maintaining our In-Line rating. NTRI is in the early stages of recovering from five years of declining revenue and we are encouraged by the 3Q13 results that reflect management's initial back-to-basics strategies in the core direct marketing business. An attractive slate of growth initiatives for 2014 appears promising and we believe these should provide real newness to a product and brand that went stale with consumers. Expansion in retailers such as Walmart (WMT) and the potential for additional retail distribution in 2014 provide potential upside to revenue. At recent prices, we believe the stock reflects the improved outlook sufficiently and we remain appropriately cautious on the outlook for consumer discretionary spending in the January diet season along with the expectation that commercial diet competitors will become more aggressive.

Janney’s John San Marco and Elizabeth Bland concur:

Nutrisystem's execution of its turnaround has been commendable and much greater and more rapid than we anticipated, and its pristine balance sheet and 4% C14E FCF yield provide flexibility as numerous initiatives are still underway. However, at 13x EV/EBITDA following a +12.3% after-hours jump, we think valuation already reflects certainty of a turnaround. We see fair value of $15 (from $11) based on 11x C14E EV/EBITDA, balancing Nutrisystem's improving execution and significant runway for further improvement, against a relatively unpredictable long term revenue outlook and challenging diet and weight loss industry dynamics.

Shares of Nutrisystem have gained 20% to $18.05 at 1:34 p.m., while Weight Watchers (WTW) has risen 3.6% to $39.42. Medifast (MED), however, has dropped 1.9% to $24.94.

The States With The Most (And Least) Affordable Schools

Average in-state tuition at public four-year universities rose by just 2.9% this year, the smallest increase in more than three decades, according to data released last week by College Board. When adjusted for inflation, it has barely increased at all.

In the current school year, the average cost of tuition and fees at a public, four-year institution for an in-state student is $8,093. At a private four-year university, tuition and fees are more than $30,000. With the cost of tuition for private universities still astronomically high, more students may be opting to attend a public school within their home state.

Not all school systems offer the same discount relative to private education. A student attending a public university in his native Wyoming pays an average of just $4,404 in tuition and fees. Meanwhile, a New Hampshire native would spend $14,665 to attend a public university at home. 24/7 Wall St. reviewed the 10 colleges with the highest and lowest average in-state tuition and fees.

It might be assumed that the states with the highest tuition and fees would have the best colleges, but that doesn't appear to be the case. Based on the U.S. News & World Report's ranking of the best public four-year institutions, only four of the states with the highest tuitions have a school in the top 20-ranked universities. Meanwhile, North Carolina and Florida, both of which have among the lowest tuitions have colleges in the top 20.

Some states invest much more in their public institutions than others, and it appears that this translates into lower costs for their students. The two cheapest state university systems, Alaska and Wyoming, each had more than $15,000 in state appropriations per student. By comparison, only two of the 10 most expensive college systems are in the top half, nationally, for per-student appropriations for higher education. In New Hampshire, the most expensive state, appropriations amounted to just $2,482, the lowest spending in the country.

Usually, the cost of in-state tuition at the state's best-known public institution is a good indicator of how much all of its colleges cost. The three most expensive states for in-state tuition also have the three most expensive flagship universities — New Hampshire's UNH, Vermont's UVM, and Pennsylvania's Penn State – University Park. Penn State has an average in-state tuition of $17,926. In contrast, at the 10 least expensive state school systems, only one has a flagship school with in-state tuition and fees of more than $8,000.

One factor that may affect the higher tuition in many of these states is their relative cost of living. It follows that because the states have to pay more in salary and supplies, they would charge students more. In seven of the 10 most expensive public university systems, the relative cost of goods are among the highest in the country. In the states with the least expensive universities, the cost of goods is generally lower, but does not appear to be as much of a factor as it is with the most expensive states.

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Some of these states also may charge in-state students less because they levy a high premium on out-of-state undergraduates. In seven of the 10 least expensive states, students from out of state spend more than three times what natives pay in tuition and fees. In North Carolina, out-of-state tuition and fees are $21,352 per year, compared to just $6,514 for in-state residents.

24/7 Wall St. reviewed College Board's 2013 Trends In College Pricing's list of average tuition and fees for in-state students of public colleges and universities for the 2013-2014 school year. We also reviewed from the report current average and historical inflation-adjusted tuition and fees for public two-year and private two- and four-year universities. College Board also provided these figures for each state's flagship university, which is considered the most prestigious public university within the state. From the U.S. Census Bureau's 2012 American Community Survey, we reviewed household income data, as well as the proportion of state adults with a bachelor's degrees. From the Bureau of Economic Analysis, we reviewed the relative cost of consumer goods and services, by state, for 2011. Figures on student debt for the class of 2011 are from The Institute for College Access & Success (TICAS), while 2-year default rates for the 2011 fiscal year from the Department of Education.

These are the states with the most (and least) affordable colleges

Wal-Mart - Less Than Great Results Have Undervalued This Retail Giant

Wal-Mart (WMT), the gigantic international retailer, has had a shaky time in the middle of this year. News of the dissolution of its partnership in India and its worse than expected results in the prior quarter have created a rough year for the retailer. Added to this, the recent government shutdown will likely have a strong impact on the coming Q3 earnings due November 14th.

(click to enlarge)

Q2 2014 (April 27 - July 26, 2013)

Wal-Mart disappointed investors with its most recent quarterly earnings result. While EPS only lagged estimates by a penny at $1.24, the overall comparative store sales figure showed a 0.3% decline and a slowdown in store traffic in the U.S. operations, its bread and butter. Overall U.S. sales grew at a pace of 2.1% including new stores and International operations showed growth of 2.9% resulting in total sales growth of 2.4% including Sam's Club operations.

Operating income margins increased in the U.S. from 7.79 in 2012 to 8.0% in the quarter, while international margins slid from 4.6% to 4.4%. In that same time, Wal-Mart's shareholder returns program returned $3.4B in dividends and share repurchase.

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Store Count Growth and International Expansion

As shown below, its U.S. store count has grown at an average pace of 1.9% over the last 5 years. On the other hand, the international segment added stores at an average rate of 14.5%, though many of these were fueled by international acquisitions. (click to enlarge)

While the international growth in itself is a positive factor, Wal-Mart has not been fully successful with its International ventures. The pinnacle of this is the expansion into India with Bharti Enterprises thr! ough the Joint Venture Bharti Wal-Mart Private Limited, which has built 20 stores since it was formed in 2007. The joint venture was dissolved in the current year and since the dissolution, Wal-Mart has found itself in some legal problems with Indian regulations regarding small supplier sourcing and foreign investment rules.

This has thrown a wrench in Wal-Mart's plans to open hundreds of stores in India over the next couple of years. This expansion is starting to resemble the company's prior failed ventures into Germany and South Korea, where its unique style did not catch on and resulted in full withdrawals in 2006.

Wal-Mart seems however to be undeterred from its expansion plans elsewhere in the world. The largest expansions are expected in China where it plans to add hundreds of stores to its over 400 store portfolio and continue to invest in its supply chain. It is currently tied for second place as the largest retailer in China behind the Sun Art Retail Group and continues to face stiff competition.

Revenue Growth

My biggest concern with WMT is the slowing pace of revenue growth as the retailer has maxed out its growth in its largest markets and is expanding into more difficult markets.

(click to enlarge)

While sales have increased year over year, the bulk of these increases was fueled by acquisitions rather than organic growth through sales in existing stores. For the past 3 years, Wal-Mart's same-store sales have grown between -0.6% and 2.4% while the overall increase in revenues in the same period was between 3.4% and 5.9%

(click to enlarge)

While increasing sales by opening new stores is not inherently a bad thing, these new stores are not driving the same results as would be expected. Wal-Mart's new stores are primarily opening in its International Se! gment and! these new international sales are occurring at lower operating margins. Margins earned in the International Segment over the last 5 years are in the range of 5% compared to the U.S. sales earning around 7.7%. Wal-Mart's overall gross profit margins for the past three years have correspondingly shown a trend of decline from 24.8% in 2011 to 24.4% in the most recent year.

This declining growth in margins shows that Wal-Mart's valuation should not fully reflect its growth in sales as they cannot be counted on to earn the same margins as the existing sales.

Decrease in U.S. Consumer Spending

The 16 day government shutdown will certainly affect the upcoming quarter for Wal-Mart's U.S. segment (approximately 60% of the company's total sales). During this period, consumer confidence was pushed downwards and while furloughed employees were staying put, others were cutting down their shopping lists.

Wal-Mart did not provide any estimations of the impact it would have on sales or revenues, but did mention they would expect shoppers to spend less. With 2 of the 13 weeks in the upcoming quarter affected directly by this shutdown, it would not surprise me to see a noticeable impact on Wal-Mart's revenues for the quarter.

This decrease may be partially offset as Wal-Mart continues to roll out its new E-Commerce Expansion to compete with rival Amazon (AMZN). With the increase in online order fulfillment centers, and strategies are being tested involving using existing stores as fulfillment centers, Wal-Mart is developing a strong new potential to help push its U.S. sales base.

Valuation

WMT remains consistently profitable with a 23% return on equity and 5 year EPS growth of 9.13%. The stock is attractively valued compared to its rivals with a P/E ratio of 14.9 compared to Target's (TGT) 15.4 and Costco's (COST) 25. Costco's much higher P/E ratio may be overdone considering expectations for the company's growth; however, it also points to a potential undervaluation for WMT.

The s! tock yields 2.5% in dividends compared to Target's 2.7% and Costco's 1.1%. WMT and TGT both supplement these dividend yields with extensive dividend buy-back programs, further adding to shareholder value.

WMT's Price to Book ratio of 3.5 is significantly lower than Costco's 4.7; however, it does not seem to be undervalued when compared to Target's 2.5. The price to sales ratio for all three companies is consistent in the range of 0.48 to 0.55

Wal-Mart's valuation seems to adequately reflect the fact that the company's growth going forward will be limited. The International expansions are successfully increasing sales; however, margins are consistently decreasingm leaving a small bump in earnings. While still growing, the U.S. operations are very mature and can be counted on to provide consistent earnings, albeit with limited growth.

Conclusion

Wal-Mart's International operations have struggled to provide the same sort of high margin sales found in its U.S. operations. The company continues to seek growth in international segments, with strong growth particularly in China, however, the market is unconvinced that this growth will deliver much in terms of results, and the company is finding itself undervalued relative to competitors.

Wal-Mart is due to release Q3 2013 earnings on November 14th, 2013. Analysts expect EPS of $1.13 compared to the prior quarter's $1.25 and the prior year's $1.08. With a range of one cent in three of the last four earnings releases between analyst estimates and actual results, it's safe to say investors will be counting on a consistent earnings release. However, a slowdown from the two week government shutdown in the current quarter could lead to weaker results and a buying opportunity for patient investors.

Wal-Mart remains an excellent company to own and has a very strong base of sales in the U.S. that will continue to provide consistent earnings and cash flows. Its current valuation is lower than that of its competitors and presents buyer! s with a ! great opportunity to own the company at a reasonable price. Coupled with the 2.5% dividend yield and the significant share buybacks in progress, the company will continue to provide strong returns for investors.

Source: Wal-Mart - Less Than Great Results Have Undervalued This Retail Giant

Disclosure: I am long WMT. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. (More...)

'Mad Money' Lightning Round: Take a Pass on Sony

Search Jim Cramer's "Mad Money" trading recommendations using our exclusive "Mad Money" Stock Screener.

NEW YORK (TheStreet) -- Here's what Jim Cramer had to say about some of the stocks callers offered up during the "Mad Money Lightning Round" Friday evening:

First Majestic Silver (AG): "I'd rather you be in a gold ETF rather than a single mining stock."

Sony (SNE): "I'd take a pass on that one." MGM Resorts (MGM): "I think it can see $25 a share." Icahn Enterprises (IEP): "It's never to late to get into this stock." Atmel (ATML): "No. There's nothing there. I don't want to own it." To read a full recap of "Mad Money" on CNBC, click here. To sign up for Jim Cramer's free Booyah! newsletter with all of his latest articles and videos please click here. To watch replays of Cramer's video segments, visit the Mad Money page on CNBC. -- Written by Scott Rutt in Washington, D.C. To email Scott about this article, click here: Scott Rutt Follow Scott on Twitter @ScottRutt or get updates on Facebook, ScottRuttDC

The Deal: Jeff Bezos and the Amazon Post

NEW YORK (TheDeal) -- Jeff Bezos closed the purchase of the Washington Post on an auspicious news day. 

The change in control on Oct. 1 coincided with the shutdown of the Federal government and the debut of the health insurance exchanges created by the Affordable Care Act. As a news story, political discord plays well in the Washington Post's local audience and among the readers outside the Beltway who make up 90% of its online audience. 

The dual local-national nature of the Washington news market presents a dilemma for Bezos and the paper's leadership. 

Should the Washington Post focus on the attractive markets in Washington,  Maryland and Virginia, or devote the resources to develop national coverage and advertising, which it has attempted to do in the past?  There is more for the Amazon.com Inc. (AMZN) founder and CEO to contemplate. Bloomberg LP and Politico LLC have introduced custom information services  in Washington that bill thousands of dollars a year.  Their success on the Washington Post's home field underscores the opportunity to provide lucrative information services to lobbyists, contractors and others who do business in Washington.  The speculation about how the e-commerce tycoon will remake the paper has been boundless since Bezos announced his $250 million investment this Summer. Basic questions about geographic emphasis and the application of technology to consumer or professional audiences provide a starting point for contemplating the Amazon Post.  "They need to decide what they are going to be," said Merrill Brown, director of Montclair State University's School of Communication and Media, who was the founding editor-in-chief of MSNBC.com and a Washington Post reporter.  In addition to chasing stories, Brown suggests, the editorial mission would include product development and collaboration with the business side of the paper. Changing the news model likely will involve rethinking such fundamental journalistic principles as the church-state division, which could create profitable news formats but could also produce newsroom turmoil. Especially since Bezos is known equally as much for his volcanic temper as for his business vision.  "The most important thing to do there is to really create a different culture," Brown said of the newspaper. Gannett Co.'s  (GCI) appointment of MarketWatch founder Larry Kramer as the publisher of USA Today could serve as an example of an online-minded overhaul.  "The reality is there isn't a deep bench of great digital thinking there," he said of the Washington Post.  Bloomberg and Politico have demonstrated the market for high-priced digital products in Washington. In early 2011, the former introduced Bloomberg Government and the latter, Politico Pro. Lobbyists, congressmembers, staffers, association executives, contractors and others pay thousands of dollars a year for subscriptions to the real-time news services.  "That market was just taken away from the Post," said Ken Doctor, a consultant with Outsell Inc. in Burlingame, Calif. "Under Bezos, they could contest that market."  The Amazon founder's deep pockets will help. Doctor said Bezos would be more open to exploring new markets and formats than the prior ownership, which remained committed to the newspaper model. 

Bloomberg Government charges $5,700 annually per subscriber. Don Baptiste, who co-founded and heads the unit, led the development of the service in 2009 and 2010, and conducted market research with potential subscribers. 

"We asked them some pretty simple questions," he said. "What do you like? What don't you like? If you could have anything you want what would it be," he said. 

Baptiste said that people cited "the usual suspects for information here in Washington" when asked about their reading habits. 

The Washington Post topped many lists. Many subscribed to Congressional Quarterly, National Journal and the Leadership Directories Inc., or to specialty publications such as Jane's Defense Weekly.  In addition to traditional news, Bloomberg Government provides legislative tracking alerts, Congressional Research Services reports, transcripts of hearings, updates from a data team that watches the floor of the House and Senate and other formats of news and information.  "When a law is passed we link all the regulations that come out of it," Baptiste said.  Bloomberg Government also maintains a database of contractors and has a new "partner finder" app that helps subscribers identify potential collaborators for bids.  When Politico introduced its high-priced professional service in February 2011, General Electric Co.  (GE) sponsored the launch. The Fairfield, Conn., manufacturing and financial services company was Politico Pro's sole advertiser in its first quarter.  The service includes news alerts and perks such as briefings with editors and events. Initially, Politico Pro focused on energy, healthcare reform and technology. In 2012 it added defense, financial services, tax and transportation. Earlier this year it added trade, agriculture and education.  Parent Allbritton Communications Co. will have ample funds to develop Politico and Politico Pro, pending completion of the $985 million sale of eight television station to Sinclair Broadcast Group.  Politico Pro would not disclose the price of a subscription, though it reportedly exceeds $3,000 per year. The company said in March it had 7,000 users at more than 1,000 organizations, with a 96% renewal rate.  "What Politico has proven is you can be a general news organization and a B-to-B custom house at the same time," Outsell's Doctor said.  The Washington Post covers subjects like the nexus of healthcare and politics, Doctor said, "but it covers them like a newspaper."  Washington regulatory lawyer Andy Lipman of Bingham McCutchen LLP suggested that targeted professional services would have been "a natural progression" for the paper, but that management may have been concerned about cannibalizing its readership. The Washington Post or others could develop services that track news across regulatory bodies, or that follow diplomatic missions in Washington.  Lipman also suggested Amazon-like features could be integrated into the Washington Post's content. "You're reading a news report about a particular agency," he said, "and you can have the underlying legislation or the relevant case law sent to you." 

For Amazon.com and other online retailers, location can be an abstract concept. Amazon's ubiquity and scale have a lethal effect on retailers from mom-and-pop, neighborhood shops to big-box chains. The company has also tried to cultivate a local touch by setting up drop-off boxes in stores and offering customers local deals. An investment in urban marketing site LivingSocial Inc. exemplifies this focus. 

"The Washington Post has a very strong local footprint," Doctor said. "It is number one, it is Tier 1, in the D.C. area." 

The company committed to local coverage after Watergate, he said. "The Times invested in plants around the country and became an national paper," Doctor explained. "The Post decided to double down in D.C." 

The paper, though, has made efforts to expand nationally. In 1962 the Post and the Los Angeles Times established a joint news wire.  "Washington Post content was carried in newspapers all over the country and overseas as well," Doctor said.  The paper set up national bureaus in Chicago, Denver, Los Angeles, Miami and New York, and published The Washington Post National Weekly Edition.  It came to an end in 2009, however, when the company disbanded the partnership with the L.A. Times, closed the last of its national bureaus and ceased publication of the weekly.  Bezos could revisit the national market, and the automotive, travel and image advertising accounts that go with it.  "Today more than 80% of uniques come from outside the D.C. area," Doctor said.  "There is a possibility of monetizing that audience," he added. "But it has been difficult for newspapers to monetize a nonlocal audience."  There is a Coke and Pepsi factor that comes into play in the advertising market. In terms of nationwide audience, the Washington Post trails the Wall Street Journal, New York Times and USA Today.  Cuts to the editorial staff don't help. Doctor said the Washington Post's newsroom is about half the size of the one that produces The New York Times, putting it at a disadvantage. "Especially on the Internet you want to be No. 1 or No. 2," Doctor said, "otherwise there is very little money."  The Alliance for Audited Media reported that the Wall Street Journal and New York Times had the top daily newspaper readership in March 2013, with average print and online circulation of 2.4 million and 1.9 million, respectively.  USA Today came next, with a blended print and online daily circulation of 1.7 million. The Los Angeles Times, New York Daily News and New York Post had higher print-online numbers than the Washington Post, which scored a daily circulation of 475,000 for print and digital.  The Wall Street Journal and New York Times grew 12.3% and 17.6% for the year ended March 2013, respectively, while the Washington Post declined 6.5%.  Peter Krasilovsky of BIA/Kelsey said that developing local bureaus throughout the country would be costly.  "The New York Times went through this 15 or 20 years ago," he said, when the company invested in various bureaus.  Partnerships with foundations or local news organizations could be an appealing alternative.  The New York Times has made content deals with the Bay Citizen in San Francisco and Austin, Texas-based Texas Tribune. The deal with the Bay Citizen ended in 2012, but the Texas Tribune provides content to the Times.  Krasilovsky suggested that Bezos would also "leverage the Post brand in the Washington, D.C., area to make it more of a local commerce hub."  The Washington Post has already developed local initiatives such as Service Alley, a social media site that provides information on home-related services.  Though the deal closed in October, there is no sign that a dramatic Amazonification of the Washington Post is imminent. The newspaper and a representative for Bezos declined to comment for this article.  "They regret that Politico happened elsewhere," Brown said. "They should similarly be apprehensive that Bloomberg and others are spending an enormous amount of money to cover Washington."  Part of the challenge is that the Washington Post is an existing institution, whereas Politico Pro and Bloomberg Government are new ventures.  Imagining ways that the Washington Post could be laboratory for the delivery of news has real allure.  Gauging the cultural issues, such as the collaboration of newspaper business and editorial departments, and how that could affect reporting, is more difficult but are an equally important part of the experiment.

Written by Chris Nolter

Japan stocks slip on rising yen, earnings caution

LOS ANGELES (MarketWatch) -- With the yen holding on to its gains and investors cautious as earnings season kicks off, Japanese stocks slid lower Friday after closing the previous day with some late-session gains. The Nikkei Stock Average (JP:NIK) fell 0.9% to 14,358.28, with the Topix down 0.8%, as the dollar bought 97.36 yen, little changed from 24 hours earlier. The relatively strong yen weighed on some names with high global exposure, as Sharp Corp. (JP:6753) (SHCAF) lost 1%, Pioneer Corp. (JP:6773) (PNCOF) dropped 1.6%, and Bridgestone Corp. (JP:5108) (BRDCF) fell 1.2%. An outlook cut from Canon Inc. (JP:7751) (CAJ) helped send its shares down 1%, while rival Nikon Corp. (JP:7731) (NINOF) lost 1.8%, though Olympus Corp. (JP:7733) (OCPNF) gained 1%. Telecoms were weak, with Softbank Corp. (JP:9984) (SFTBF) falling 2.5%, KDDI Corp. (JP:9433) (KDDIF) down 1.7%, and NTT DoCoMo Inc. (JP:9437) (NTDMF) off 1.1% as a Nikkei business daily report said it would post a mild rise in operating profit for the previous quarter. Among the top gainers, Hitachi Construction Macheriny Co. (JP:6305) (HTCMF) rallied 3.4% on a separate Nikkei report that the company will post a first-half operating profit well above the consensus estimate, while Mitsubishi Motors Corp. (JP:7211) (MMTOF) climbed 4.2% after hiking its fiscal-year profit outlook by 40%. The market appeared to show little reaction to consumer inflation data out just ahead of the open, which printed in line with expectations.

Read the full story:
Asian shares mostly lower; techs struggle in Seoul

Rieder: Why Buffett didn’t buy ‘Washington Post’

Investor nonpareil Warren Buffett was close to the Graham family, which owned The Washington Post until it agreed in August to sell the paper to Amazon.com founder and CEO Jeff Bezos. Buffett's company, Berkshire Hathaway, for years was a major owner of Washington Post Co. stock. And he has been buying up newspapers over the past couple of years.

So why didn't the Oracle of Omaha purchase the Post when it went on the block?

In fact, Buffett did consider it briefly, according to Fortune magazine. But he decided to pass because he didn't want the financially struggling daily to ultimately be a burden to either to his company or his family, the magazine reported.

A spokeswoman said Buffett was traveling and wouldn't be available to comment.

Buffett, who once said he wouldn't buy newspapers "at any price" given the tumult in the industry in the digital age, has changed his mind in a big way. He now owns 30 dailies.

10 Best Warren Buffett Stocks To Invest In Right Now

But while he told me earlier this year, "It's almost unnatural how much I love newspapers," he doesn't love them indiscriminately. Buffett has stressed that he is only interested in acquiring small and medium-size papers, not larger metropolitan dailies, which face stiffer challenges.

Buffett briefly discussed the Post nonpurchase in a question-and-answer session at the Metropolitan Club in Washington, D.C., according to Fortune. He said that if he had Berkshire Hathaway buy it, he might leave a future CEO with an asset he or she didn't want. And if he bought it individually, it might become a burden for his three children.

Bezos, who paid $250 million for the Post, took possession of the paper on October 1.

LIVE FROM FPA EXPERENCE: Tech integration adds ROI

Financial advisers who integrate technologies will pay more than those who buy separate software solutions, but they stand to gain in annual income as well as future positioning.

"You're going to pay more for integration because you get more," said Cameron Sheehan, director of adviser services for Tamarac AdvisorServices, at the Financial Planning Association's national conference in Orlando on Saturday. "All changes are synchronized among all the systems when they are integrated."

Advisers who integrated technology, or linked their software to communiate with each other, earned an extra 20% in income per adviser, about $181,000 compared to $151,000 for those with standalone systems, Mr. Sheehan said, quoting an April study by Aite Group.

The systems that advisers increasingly are connecting include portfolio accounting, customer relationship management systems and most recently a client portal for investors can see their aggregated accounts, Mr. Sheehan said.

This type of client portal is the industry's answer to clients who want the functionality that some online financial advisers offer, a sort of Mint.com, he said. About 60% to 70% of employees with access to such a client portal log in at least once in the months following its availability.

With integrated technologies, clients can see dynamic reports, not just static performance PDFs that advisers prepare. Clients increasingly want such real time reports.

"Things are moving away from what did I have last month to what do I have now," Mr. Sheehan said.

Full integration and training for these different systems takes about a year, he told advisers at the conference.

Integrating these systems, as well as automating workflow and efficient and electronic document manaagement adds to the annual bottom line and leads to greater value when it becomes time to consider a business sale or other succession plan, said Tim Welsh, founder of Nexus Strategy LLC, at the FPA conference on Sunday morning.

"Look at technology as an investment, as opposed to an expense," Mr. Welsh said.

Automating workflow has been shown to save about 5% on back office costs and document mangement systems can save advisers about 9% in overhead, he said.

BlackBerry facing shareholder lawsuit

TORONTO (AP) — A class-action lawsuit has been filed against BlackBerry by a shareholder claiming the company misled investors about its future, including how the BlackBerry 10 smartphone line would fare against competitors.

The lawsuit seeks to represent thousands of shareholders who purchased BlackBerry stock from Sept. 27, 2012, to Sept. 20, 2013, a period in which it alleges executives misrepresented the state of BlackBerry's operations.

Waterloo, Ontario-based BlackBerry, formerly Research In Motion, misled investors last year by saying that the company was "progressing on its financial and operational commitments," and that previews of its BlackBerry 10 platform were well received by developers, according to shareholder Marvin Pearlstein in a lawsuit filed in a federal court in Manhattan on Friday.

"In reality, the BlackBerry 10 was not well received by the market, and the company was forced to ... lay off approximately 4,500 employees, totaling approximately 40% of its total workforce," the complaint alleges.

BlackBerry's CEO Thorsten Heins and Chief Financial Officer Brian Bidulka were also named as defendants.

A representative for BlackBerry declined to comment, saying the company is "reviewing the matter."

BlackBerry disclosed last month that it would book nearly a billion dollars in losses related primarily to the write down of unsold BlackBerry Z10 touchscreen smartphones.

The court filings outline numerous news releases issued by BlackBerry, as well as quarterly conference calls where it alleges executives "deceive the investing public."

The lawsuit claims that the recent tumble in BlackBerry stock was a direct fallout from the executives' misrepresentation of BlackBerry's financial state.

"The timing and magnitude of BlackBerry's stock price decline negates any inference that the loss suffered by the plaintiff and the other class members was caused by changed market conditions, macroeconomic or industry factors," the lawsuit alleges.

Since Sept. 20, when the company first disclosed the massive loss and layoffs, BlackBerry's share price has tumbled 25%.

BlackBerry has faced numerous other class-action lawsuits in the past.

In 2011, a U.S. judge threw out a lawsuit claiming executives of the company, then known as Research In Motion, misled investors on its financial condition and the prospects for its devices, which included the failed launch of its PlayBook tablet. The case is being appealed by the plaintiffs.

Another class-action lawsuit was filed the same year by Montreal-based law firm Consumer Law Group, seeking refunds for the downtime caused by a massive BlackBerry service outage.

Bad News for Boeing: The Dreamliner's Battery Is a Nightmare

Boeing's (NYSE: BA  ) 787 Dreamliner just returned to the skies after a four-month grounding, but already there's trouble. The director of the Airline Pilots' Association of Japan, Toshikazu Nagasawa, said that pilots weren't satisfied with the changes Boeing made to it's lithium-ion battery and are concerned that they won't receive appropriate in-flight warnings if there's an issue. Some scientists and battery experts are also expressing concern about the safety of Boeing's battery.

Officials at All Nippon Airways and Japan Airlines said they're satisfied with Boeing's changes and have resumed flights, but investors may have cause for concern knowing that that the pilots -- the people whose lives depend on the safety of Boeing's battery -- aren't satisfied. Here's what you need to know. 

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Source: H. Michael Miley, Wikimedia Commons. 

Are the issues in the past?
In March, Japanese pilots raised 30 safety concerns about the Dreamliner. One of their major concerns was that they didn't think Boeing had provided enough proof that the 787 would be safe to fly if the batteries failed. They also expressed concern that the warning indicator for a battery malfunction didn't indicate the severity of the problem.

More recently, the pilots' group expressed concern that Boeing didn't figure out what caused the problems with the batteries in the first place and is now downplaying the battery's necessity for flight. Consequently, the group challenged Boeing to conduct flight tests without the lithium-ion battery to prove its safety.  

Boeing's vice president and the chief project engineer for the 787, Mike Sinnett, addressed these issues by saying the Dreamliner has backup systems that allow it to continue flying if the batteries fail, and that the warning indicators were ranked by severity, but these assurances have done little to quell the pilots' concerns.

Scientists add fuel to the fire
Battery experts and scientists have also publicly questioned the safety of Boeing's battery. Elton Cairns, a Lawrence Berkeley National Laboratory professor and battery technology expert, said: "I'm shocked that Boeing was willing to stake its reputation on these batteries. Even with the modifications, the individual cells of the battery are crammed too closely together and feature an internal chemistry that's far too volatile."  

More pointedly, Michel Armand, a professor of chemistry at the University of Picardie and a research director at the French government's Centre National de la Recherche Scientifique, told Barron's: "Using these batteries in planes makes no sense, with all the lives potentially at stake. These batteries are unpredictable and prone to thermal runaway and fires."  

Fires, fires, everywhere
Boeing's 787 Dreamliner isn't alone when it comes to problems with its lithium-ion battery. In 2006, Meggitt (LSE: MGGT  ) subsidiary Securaplane Technologies -- which incidentally builds the charger for Boeing's battery -- suffered millions in damages when a lithium-ion battery exploded during testing and burned an Arizona facility to the ground. 

Further, in both 2010 and 2011, 747 cargo planes carrying pallets of lithium-ion batteries crashed because of a fire, killing the crew.

In neither case could authorities determine a cause for the fire.

In March of this year, Mitsubishi Motors reported two incidents involving a lithium-ion battery. These batteries were manufactured by Mitsubishi's venture with GS Yuasa, the maker of Boeing's lithium-ion battery, although the batteries themselves are not the same. Mitsubishi reported that the problem was caused by contaminants getting into the battery cells during the screening process. 

Fires ahead for Boeing?
Separately, these incidents are scary but manageable. But when you combine these accidents and factor in the pilots' concerns, you get the feeling that lithium-ion batteries are anything but safe. Underscoring this point is the decision by EADS' Airbus to pull the plug on putting lithium-ion batteries in its A350 plane, citing "immaturity of lithium-ion-battery technology." If the Dreamliner's battery really is fixed, this plane could prove to be quite profitable for Boeing. However, given all the issues it's had in the past, and the uncertainty of the battery, investors would do well to keep an eye on the Dreamliner -- especially considering Boeing's stock has risen and fallen right along with the Dreamliner.

Boeing operates as a major player in a multitrillion-dollar market in which the opportunities and responsibilities are absolutely massive. However, emerging competitors and the company's execution problems have investors wondering whether Boeing will live up to its shareholder responsibilities. In our premium research report on the company, two of The Motley Fool's best minds on industrials have collaborated to provide investors with the key, must-know issues surrounding Boeing. They'll be updating the report as key news hits, so don't miss out -- simply click here now to claim your copy today.

IMF Forecast Behind the Curve

The latest outlook from the IMF on global growth does not reflect the current economic reality and MoneyShow's Jim Jubak thinks the inevitable revision might impact the markets.

The International Monetary Fund issues its World Economic Outlook twice a year, and they just came out with the newest one on October 8 and it basically says, "Well, after a really pretty not great year-really pretty not great year in 2013, when the global economy grew by about 2.9%, we're looking for an increase in growth rate globally to 3.6% in 2014." The problem with this, is that this is completely outdated by this point, that, if you remember, that this doesn't include any possible effects of the US government shutdown. It doesn't include the effects of US debt ceiling crisis.

All of those things aren't there, and this idea that the world global economy is going to grow at 3.6% in 2014, up from 2.9% in 2013, is based on a whole series of assumptions about what the developed economies of the world are going to do. The IMF, before all these crises, was saying, "Hey, we're seeing more momentum." The European economies are going to go from contraction to expansion in 2014.

The US economy actually looks like it's going to do better, so these numbers really were kind of dismal beforehand, 2.9%, 3.6% growth. China is slowing. India may be picking up, but emerging economies are not doing very well. They weren't that great going in. They were, but not great picture, but we were still positive, based on a view that the developed economies of the world were going to show better growth in 2014, than in 2013, and now, largely because of the crisis in Washington, you'd have to say that comes with a big, big question mark and I think the IMF, next time it goes through this, is going to wind up downgrading all these numbers, and I think that's a real worry as we look forward to 2014 and where the stock market is, especially in the United States right now.

This is Jim Jubak for the MoneyShow.com Video Network.

How a Fast-Growing RIA Gets Referrals

It’s all about the client experience.

When Schwab Advisor Services reported the findings of its most recent benchmarking survey, it revealed that some of the fastest-growing RIAs owed their success to a talent for making clients happy and thereby getting solid referrals.

These best-in-class RIAs saw net organic growth rise five times faster in 2012 than all other firms. And regardless of size — whether they managed $250 million to $500 million, $500 million to $1 billion or more than $1 billion — these fast-growing firms generated an average of 36% more new clients from referrals than all other firms, said Jonathan Beatty, senior vice president of Schwab Advisor Services’ sales and relationship management, when the findings were released.

“These firms have black-belt status at relationship marketing,” Beatty said at the time. “The client experience floats all the way through the system.”

Sounds good. But what does the day-to-day client experience actually look like for one of those fast-growing RIAs in the Schwab survey?

According to Scott Swenor, CFO of boutique RIA Manchester Capital Management, a survey participant that Schwab identified as excelling in the client experience, referrals start with his firm’s clear understanding of its specific value proposition and ideal client profile. (In 2012, Swenor noted, Manchester had $2.5 billion in assets under management and 15% AUM growth.)

From there, Swenor said in a phone interview on Thursday, Manchester follows a written plan that extends across the firm’s four locations nationwide when it approaches people for referrals.

“Strategically, we set the concept of getting referrals through existing clients and centers of influence as a priority,” Swenor said. “We seek out a select number of law and accounting firms that can provide a mutually beneficial client experience if it fits in with our ideal client profile.”

“The client priority is ingrained into the firm's culture, business model, employee rewards, strategic direction, policy and procedures,” Manchester Capital Management says in a comment on the firm’s culture.

At the same time, Swenor said, each of the firm’s four offices in Manchester, Vt.; Montecito, Calif.; New York City; and Charlottesville, Va., has the freedom to develop its own business development and marketing plan.

“These plans speak to referrals and how each office identifies referral sources,” Swenor said. “Each office knows their existing and potential future relationships.”

In the Vermont office, for instance, where Swenor is based, “we’re good at deep relationships with just a few centers of influence because so much of wealth management is relationship-based,” he said. “Rather than going shotgun to have as many as possible, we have fewer but deeper relationships. It speaks to long-term relationships and secondly, a two-way street of having conversations so that we refer to our clients and they refer to us. Not all of our clients are looking for a new lawyer or accountant, and not all of their clients are looking for a wealth manager, but there are opportunities over time.”

The Vermont office has identified its ideal client profile — and written up that profile as a one-page document that spells everything out — as a multigenerational family with $10 million or more in investable assets that feels comfortable delegating investment-making decisions and family office services to the firm.

In comparison, Swenor said, the New York office counts many trust and estate attorneys among its centers of influence. And professionals in the newest office, in Virginia, are now building relationships by sitting on philanthropic boards of three or four local organizations and holding charitable events. “It develops an interactive and engaged audience that allows us to showcase our thought leadership without it feeling like a paid commercial,” Swenor said.

The Basics: Swenor’s Tips for RIAs on How to Get Referrals

1) Understand your specific value proposition and ideal client profile. First, determine your firm’s strengths and weaknesses, then use that knowledge to shape your ideal client profile. “Don’t try to be everything to everybody,” Swenor said.

2) Pay attention to your centers of influence (COIs). Keeping tabs on the people and firms that your firm comes into contact with on a regular basis is an organic way to boost market access and credibility — and a potential source of referrals, according to Swenor. “There is a mutual benefit in finding the right firms, individuals and settings after you know what you want,” he said, pointing to the advantages of finding potential referral sources in firm-to-firm meetings with like-minded accounting and legal services groups.

3) Make referrals a strategic priority by putting a formal plan into place that’s known throughout the organization. “Each of our office leaders has completed a three-page business development and marketing plan with a consistent measurement of prospects, COI referrals, public relations, events and expanding relationships with existing clients,” Swenor said.

---

Read Schwab Reveals Secret of Fastest-Growing RIAs at ThinkAdvisor.

PCAOB Toughens BD Audit Standards

The Public Company Accounting Oversight Board adopted Thursday a bunch of new audit requirements for broker-dealers.

PCAOB adopted two attestation standards pertaining to audits of BDs designed to help protect customer funds by enhancing the quality of compliance information provided to the Securities and Exchange Commission and used in its regulatory oversight of broker-dealers.

The Board also adopted an auditing standard applicable when auditors are engaged to perform audit procedures and report on supplemental information that broker-dealers and others file with the SEC. Finally, the Board adopted related amendments to other PCAOB standards.

The Dodd-Frank Act amended the Sarbanes-Oxley Act to, among other things, authorize the PCAOB to oversee the audits of brokers and dealers registered with the SEC.

“The standards adopted today are an important step for the Board's oversight of audits of broker-dealers authorized under the Dodd-Frank Act. They will strengthen procedures for auditors and improve the reliability of annual reports required by the SEC for oversight of customer assets held by broker-dealers,” said PCAOB Chairman James Doty, in a statement.

As the PCAOB explains, the two attestation standards cover the auditor’s examination of compliance reports and the auditor’s review of exemption reports.

The requirements for BDs to prepare compliance or exemption reports, and for PCAOB-registered auditors to examine or review such reports, are new requirements included in the SEC’s recent amendments to Exchange Act Rule 17a-5. The compliance and exemption reports contain statements made by BDs regarding compliance with key SEC financial responsibility rules, including those involving the safekeeping of customer assets or with applicable conditions for exemption.

“Consistent with the requirements of Rule 17a-5, the attestation standards establish requirements for auditors examining certain statements in broker-dealer compliance reports and reviewing statements in broker-dealer exemption reports,” PCAOB said.

The supplemental information standard establishes the auditor’s responsibilities when engaged to perform audit procedures and report on supplemental information that accompanies the audited financial statements. Supplemental information includes the supporting schedules that broker-dealers are required to file with the SEC.

The Board initially proposed the attestation standards and auditing standard for supplemental information on July 12, 2011. The Board adopted these standards after consideration of comments received on the proposal and as a result of amendments made to Rule 17a-5 that were adopted by the SEC on July 30, 2013.

“Both attestation standards emphasize coordination between the examination or review engagement, the audit of the broker-dealer’s financial statements and audit procedures performed on the supplemental information,” said Martin F. Baumann, PCAOB Chief Auditor and Director of Professional Standards, in the same statement.

“This emphasis on coordination can promote overall audit effectiveness and avoid redundancy in the work performed.”

U.S. Refiners Boosting Global Supply: IEA

U.S. crude oil refiners' stocks are surging Friday following the release of the International Energy Agency's (IEA) October Oil Market Report. U.S. refinery throughput in September led to the agency to increase its forecast of global refinery production by 100,000 barrels a day to 77.3 million barrels a day. Throughput rose by 1.2 million barrels a day year-over-year despite a drop of 700,000 barrels a day at European refiners.

U.S. exports of refined products such as gasoline and diesel fuel totaled 3.37 million barrels a day in the first week of October, more than 500,000 barrels a day more than in the same week a year ago and nearly 900,000 barrels a day more than the first week of October 2011.

Booming crude oil production from the Bakken play in North Dakota and the Eagle Ford and Permian Basin plays in Texas is giving refiners a very strong position regarding the price they pay for domestic crude. Including transportation costs, refiners are paying an amount that meets or beats the price of imported Brent by enough to enable shipping the refined products to Europe and still make a profit. This is true both for primarily Gulf Coast refiners like Valero Corp. (NYSE: VLO) and Marathon Petroleum Corp. (NYSE: MPC) and East Coast refiners like PBF Energy Inc. (NYSE: PBF). Phillips 66 (NYSE: PSX) owns a refinery in New Jersey and three more along the Gulf Coast.

Refiners currently have the upper hand in oil business and barring some unexpected event will hold the upper hand for the rest of this year and into 2014.

Shares of Valero are up 3.6% in mid-afternoon trading Friday at $36.84 in a 52-week range of $25.49 to $44.76.

Marathon's shares are up about 3.1% at $67.37 in a 52-week range of $52.36 to $92.73.

PBF shares are trading at $24.28, up 1.6% in a 52-week range of $20.15 to $42.50.

Shares of Phillips 66 are up 2.7% at $60.17 in a 52-week range of $42.45 to $70.52.

Men’s Wearhouse fires back at George Zimmer

A day after George Zimmer quit the board of Men's Wearhouse, the company released an unusually detailed statement of why the well-known pitchman and company founder was fired last week.

UPDATE: Men's Wearhouse nixes Jos. A. Bank offer

Zimmer "refused to support" a management team that replaced him unless they "acquiesced to his demands," the board statement released Tuesday said. He "expected veto power over significant corporate decisions (including executive compensation), and reversed his longstanding position against taking the company private," it said.

COMPANY: June 25 statement from Men's Wearhouse board of directors

Shares of Men's Wearhouse jumped 5.7% Tuesday to close at $37.13. The 52-week trading range of the stock is $25.97 to a peak of $38.59.

Zimmer, 64, was abruptly fired as the company's executive chairman a week ago in a terse statement with no details. On Monday, he submitted a letter resigning from the board. The Associated Press reported he was not immediately available for comment Tuesday.

Zimmer, who owns about 3.5% of the company's shares, is one of TV's most recognizable pitchmen in company ads that almost always appeared during televised NFL games and featured the slogan: "You're going to like the way you look. I guarantee it."

Zimmer's resignation letter says it's clear from his firing that the board is determined to avoid addressing his growing concerns with recent board decisions and the company's direction.

ZIMMER: Story on June 19 firing of company founder

In the lengthy response, the board charged that not only had Zimmer refused to work with the new management team and argued for sale to an investment firm, he had tried to undermine company efforts to have an outside firm review strategic options.

Doug Ewert replaced Zimmer as CEO more than two years ago. Zimmer seemed to have difficulty "accepting the fact that Men's Wearhouse is a public company with an independent board of directors," the statement said. "T! he board is unanimously of the view that now is not the time to sell the company. ... Our actions were not taken to hurt George Zimmer."

"Reminds me of when the Gap fired Mickey Drexler," says Eric Gustavsen, a principal at Graj & Gustavsen brand imaging firm. "They brought in a leader who was not a merchant and it took them over 10 years to right the ship. ... Mickey went on to build J. Crew and Madewell."

Some financial analysts have speculated that the company split with Zimmer in an attempt to appeal to a younger demographic. According to online daily branding research firm YouGov, Men's Warehouse had an edge in purchase consideration with Millennials, ages 19-34, that began to erode in December.

According to YouGov's brand index, Men's Warehouse continues to outperform competitors with shoppers 35 and older. However, so far in 2013, menswear brands sold at Joseph A. Bank, Nordstrom, Macy's and Lord & Taylor have pulled ahead in wooing Millennials.

Financials don't yet reflect that. Same-store sales were up 7.1% year-over-year in the fiscal first quarter reported June 12 and profits increased 23%, the company said. Revenue and profit gain have been on the upswing the past two years after recovering from the hammering the company and its rivals got during the Great Recession.

"They can certainly be successful with or without George Zimmer if they do a great job: stay true to their brand, continue to deliver value and style, and forge great relationships with their customers," Gustavsen says.

Zimmer built Men's Wearhouse from one small Texas store using a cigar box as a cash register to one of North America's largest men's clothing sellers, with 1,143 locations.

Beyond creating a successful men's retail chain, Zimmer is known as something of a cowboy in the business world. He added spiritual leader Deepak Chopra as a board member in 2004 and spent millions of his own money in 2010 supporting California's failed Proposition 19 to legalize marijuana. Men! 's Wearho! use also didn't conduct criminal background checks on hires because Zimmer believes everyone deserves a second chance.

Contributing: USA TODAY's Ben Mitchell, Jayne O'Donnell, The Associated Press

PCAOB Toughens BD Audit Standards

The Public Company Accounting Oversight Board adopted Thursday a bunch of new audit requirements for broker-dealers.

PCAOB adopted two attestation standards pertaining to audits of BDs designed to help protect customer funds by enhancing the quality of compliance information provided to the Securities and Exchange Commission and used in its regulatory oversight of broker-dealers.

The Board also adopted an auditing standard applicable when auditors are engaged to perform audit procedures and report on supplemental information that broker-dealers and others file with the SEC. Finally, the Board adopted related amendments to other PCAOB standards.

The Dodd-Frank Act amended the Sarbanes-Oxley Act to, among other things, authorize the PCAOB to oversee the audits of brokers and dealers registered with the SEC.

“The standards adopted today are an important step for the Board's oversight of audits of broker-dealers authorized under the Dodd-Frank Act. They will strengthen procedures for auditors and improve the reliability of annual reports required by the SEC for oversight of customer assets held by broker-dealers,” said PCAOB Chairman James Doty, in a statement.

As the PCAOB explains, the two attestation standards cover the auditor’s examination of compliance reports and the auditor’s review of exemption reports.

The requirements for BDs to prepare compliance or exemption reports, and for PCAOB-registered auditors to examine or review such reports, are new requirements included in the SEC’s recent amendments to Exchange Act Rule 17a-5. The compliance and exemption reports contain statements made by BDs regarding compliance with key SEC financial responsibility rules, including those involving the safekeeping of customer assets or with applicable conditions for exemption.

“Consistent with the requirements of Rule 17a-5, the attestation standards establish requirements for auditors examining certain statements in broker-dealer compliance reports and reviewing statements in broker-dealer exemption reports,” PCAOB said.

The supplemental information standard establishes the auditor’s responsibilities when engaged to perform audit procedures and report on supplemental information that accompanies the audited financial statements. Supplemental information includes the supporting schedules that broker-dealers are required to file with the SEC.

The Board initially proposed the attestation standards and auditing standard for supplemental information on July 12, 2011. The Board adopted these standards after consideration of comments received on the proposal and as a result of amendments made to Rule 17a-5 that were adopted by the SEC on July 30, 2013.

“Both attestation standards emphasize coordination between the examination or review engagement, the audit of the broker-dealer’s financial statements and audit procedures performed on the supplemental information,” said Martin F. Baumann, PCAOB Chief Auditor and Director of Professional Standards, in the same statement.

“This emphasis on coordination can promote overall audit effectiveness and avoid redundancy in the work performed.”

Twitter Reveals Long-Awaited IPOÂ Plans

Twitter revealed its confidential IPO filing today, clearing the way for one of largest and most hyped IPOs since Facebook.

The filing reveals that the company is still growing, but is losing money. It also provides some insight into which of the major insiders will be making a sizable wealth from the IPO.

Twitter's revenue was $253.6 million in the first half of this year, up from $122.4 million in the year-ago period. However, the company had a net loss of $69.3 million in the first half, compared to a net loss of $49.1 million in the year-ago period.

In 2012, Twitter had revenue of $316.9 million, up from $106.3 million in 2011. Net loss was $79.4 million, compared to a net loss of $164.1 million in 2011.

In the first half of 2013, advertising made up 87% of the company's revenue, compared to 85% in the year-ago period. Ad rates were down 46% sequentially in its most recent quarter, my colleague Rob Hof notes, driven by an increase in ad inventory. Its main three products now are: Promoted Tweets, Promoted Accounts and Promoted Trends.

One question investors will be asking is about Twitter's international growth. Overall revenue per timeline view is $0.80 in the quarter ending in June. However it is $2.17 per timeline view in the U.S., while it is just $0.30 in the rest of the world. That's an issue Twitter will have to address, since its user base internationally is larger and growth is faster there as well: there were 49.2 million MAUs in the US (up 35% year-over-year) and 169.1 MAUs (47%) in the rest of the world.

While Twitter did not say exactly how much it plans to raise in the IPO, it listed an estimate of $1 billion. The company also did not list its estimated price range yet but that is typically added closer to the actual IPO pricing.

Twitter, which plans to trade under the ticker "TWTR," has 215 million monthly active users and about 500 million Tweets per day, the company says. In its most recent quarter, Twitter had 218.3 million average monthly active users in the three months ending June 30, which is up 44% from the year-ago period.

Mobile is a big part of Twitter's story and the company says 75% of users accessed Twitter through a mobile device in the quarter ending June 30. More than 65% of ad revenue was from mobile devices.

In describing what the company does, Twitter says: "Twitter is a global platform for public self-expression and conversation in real time. Our platform is unique in its simplicity: Tweets are limited to 140 characters of text. This constraint makes it easy for anyone to quickly create, distribute and discover content that is consistent across our platform and optimized for mobile devices. As a result, Tweets drive a high velocity of information exchange that makes Twitter uniquely 'live.'"

The major individual shareholders who stand to make a killing on the IPO are Twitter cofounder Ev Williams with 12.0% (who is now a billionaire), Twitter cofounder Jack Dorsey with 4.9% and Twitter CEO Dick Costolo with 1.6%.

Major institutional shareholders with more than 5% of the company–the exact amount is not revealed in the filing–are Rizvi Traverse, Spark Capital, Benchmark, Union Square Ventures and DST. Benchmark, however, apparently owns about 6.7%, according to the filing.

Twitter,  with 200 million users, has raised hundreds of millions of dollars from investors including Union Square Ventures, Charles River Ventures, Spark Capital, SV Angel, Chris Sacca, Benchmark Capital, Institutional Venture Partners, Insight Venture Partners, T. Rowe Price, Morgan Stanley, DST Global and Kleiner Perkins Caufield & Byers.

Underwriters on the deal are Goldman Sachs, Morgan Stanley, JP Morgan, BofA Merrill Lynch and Deutsche Bank Securities.

Last month, Twitter announced in a Tweet that it had confidentially filed its documents with the SEC for an IPO. But the company did not publicly reveal the S-1 filing until today.

Under SEC rules established in the JOBS Act passed last year, so-called "emerging growth companies" can initially file their S-1′s confidentially if their annual revenue is less than $1 billion. Companies do not have to make their IPO filings public until 21 days before the company goes on its "road show" to pitch to investors on Wall Street. The confidential filing implied that Twitter's annual revenue is less than $1 billion and today's filing confirms that.

3 Biotech Breakouts Underway (BONE, PSTI, ABIO)

Traders may not want to get married for the long haul to any of them, but for speculators looking for a quick, profitable hit, Arca Biopharma Inc. (NASDAQ:ABIO), Pluristem Therapeutics Inc. (NASDAQ:PSTI), and Bacterin International Holdings Inc. (NYSEMKT:BONE) may be better-than-average bets. Here's why.

Until this week, Bacterin International Holdings Inc. wasn't on many traders' radars. The $36 million company that makes coating for open wounds, and though revenue was steady, BONE wasn't profitable, but wasn't expected to be any time soon either. Yet, the chart not only says the market's starting to favor the stock, but this week's bullish nudge looks like it's started a much bigger-picture rally.

Though it actually wiggled its way out of a wedge formation a couple of weeks ago, it wasn't until today that BONE has made the kind of move that (1) gets traction, and (2) gets attention. Now that the ball is rolling with the cross above the 100-day moving average line, it should stay in motion. The clincher is the fact that Bacterin International Holdings shares are making this bullish breakout move on steadily rising volume.

While Bacterin International Holdings may have been mired in obscurity until this week, Arca Biopharma wasn't... though not for a good reason. ABIO shares were crushed in May after the company sold a ton of shares to raise some money. The market clearly didn't like the dilution.

More important to us now, however, Arca Biopharma Inc. shares blasted past a semi-critical resistance yesterday, and are following through on the move today. Between the volume and the fact that the bulls didn't flinch when the stock reached new multi-week high territory, it looks like the plan here is for ABIO to close the gap it left behind with the big late-May plunge. That would translate into more than a 40% gain. Given the underlying story and the fact that the dilution is old news at this point, odds are decent that Arca shares could get there.

Finally, Pluristem Therapeutics Inc. has rekindled an old uptrend, but there's a lot of meat left on this bone.

PSTI is the stem cell biotechnology company developing therapies for critical limb ischemia and muscle injuries. There's no revenue to speak of yet, but with one of its key trials in Phase 2/3 and the other in Phase 2, there's enough of a light here at the end of the tunnel to get - and keep - people interested in Pluristem.

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The current chart of PSTI, however, says that interest is swelling so rapidly right now that shares could take off soon. In fact, they already have, they it's not too late to hop on board. Pluristem Therapeutics shares easily walked past the 100-day and 200-day moving average lines within the past six weeks, not only breaking old (and nagging) downtrend lines that extend back to mid-2012, but have established a new bullish channel. Though we're still apt to see some up and down from here, the hard work's been done.

For more trading ideas and insights like this one, be sure to sign up for the daily SmallCap Network e-newsletter. It's chock full of stock picks, market calls, and more. Plus, it's free!

Why Jamba Shares Got Crushed

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Jamba Juice (NASDAQ: JMBA  ) plummeted 19% today after the fruit smoothie chain slashed its outlook for 2013.

So what: Jamba shares have rallied nicely over the past year on steadily improving same-store sales, but yesterday's downbeat guidance reignites serious concerns over its ability to grow profitably. While the news wasn't all bad (Jamba also announced that retail giant Target will be rolling out 1,000 JambaGo locations), management's disappointing outlook for sales, four-wall profit margins, and operating earnings suggests that Jamba's competitive position is rapidly weakening.

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Now what: Management now expects same-store sales to increase no more than 1% in 2013, well below its prior growth forecast of 4% to 6%. "Jamba's adjusted targets for 2013 and preliminary forecasts for 2014 represent a realistic and balanced approach to achieve sustained, long-term growth and also drive significant gains this year in operating margin, net income and other key metrics," Chairman and CEO James White reassured investors. Of course, when you couple Jamba's intensifying competitive environment with the stock's forward P/E of 17, I'd wait for an even wider margin of safety before buying into that bullishness.

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Tata Motors Limited (ADR) (TTM): Diving To The Edges

While Tesla Motors, Inc. (TSLA) crashes and burns on YouTube and with its stock price, another car stock, Tata Motors Limited (TTM) is driving higher.

Based in Mumbai, India, Tata engages in the manufacture and sale of commercial and passenger vehicles primarily in India. The company's product portfolio includes micro, compact, and midsize passenger cars; premium and luxury sports utility vehicles and cars; utility vehicles; and small, light, intermediate, and medium and heavy commercial vehicles, as well as vans, trucks, buses, and defense and homeland security vehicles. It also develops electric and hybrid vehicles for personal and public transportation.

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TTM is traveling in the opposite direction of most cars stocks today thanks to an upgrade from Deutsche Bank. Analyst Srinivas Rao moved the Indian automaker to a "Buy" from a "Hold" rating.

He says, "We upgrade Tata Motors to Buy with a TP [target price] of Rs 400 (15% upside potential). The increase in TP is driven by 1) 14.3%/11.2% increases in FY15E/FY16E EPS and 2) a 25% increase in valuation, in line with the expansion in valuation multiples for automotive peers reflecting the improvement in global macro. China and the US, which account for 45% of Jaguar LandRover's volumes, have been particularly robust. For JLR, this has echoed in falling incentives, volume momentum and robust margins. Our target price implies FY15E EV/EBITDA of 7.5x for India business and 3.8x for JLR. The valuation for JLR is in line with BMW (3.5x CY14E), adjusting for differences in R&D accounting."

The new price-tag works out to $32.40 for the American TTM ADR. We get there by converting the rupee to dollars. We used the exchange rate of 0.016 rupees per US dollar, and the ADR ratio is one US share for every five shares that trade on the Indian exchange.

To hit $32.40, Tata needs to trade at 7.8 times 201! 5's consensus earnings estimate of $4.15, which 18% higher than Tata's five-year average P/E of 6.64, and well below the auto industry's average P/E of 12.86.

On a price-to-sales (P/S) basis, Deutsche Bank price target requires Wall Street to value TTM at 0.52 times next year's revenue estimate of $40.09 billion. Since September 2008, Tata Motors average price-to-sales (P/S) ratio was 0.405; so, Rao is correct in that TTM's P/S valuation needs to increase by roughly 25% to meet his mark.

Overall: It's been our experience that multiple expansion requires – at least for us to be happy about it – roughly an equivalent uptick in earnings growth rates. Based on current 2014 and 2015 estimates, the rate of change is closer to 17% than  25%, which puts $32.40 at the outer edge of where we feel comfortable.

Best Buy Co., Inc. (BBY): CEO Dumping Shares After 224% Gain In 2013

The Street loves a good turnaround story. Not only do investors like to root for the underdog, but turnaround stocks also have the ability to deliver market-crushing returns. And there's been no shortage of them in 2013.

That group includes Herbalife Ltd (HLF), up 116%, Green Mountain Coffee Roasters, Inc. (GMCR), up 94% and Chesapeake Energy Corp (CHK), up 60%.

But even though those are all impressive, market-crushing gains on their own, there is one stock that trumps them all. This well-know, industry leader has delivered an eye-popping 224% return in 2013, making it a top contender for turnaround stock of the year. Take a look at the impressive move below.

I'm talking about Best Buy Co., Inc. (BBY), a familiar name to most and a global leader in consumer electronics. The company's big gain in 2013 comes on the heels of a crushing 3 year slide that saw Best Buy crash from a multi-year high above $48 in early 2010 to just $11 in December of 2012.

That big rebound has been driven by the company's strategic initiative to adjust its business model and adapt to a dynamic market where Best Buy is being challenged with intense competition from online retailers and mobile, ecommerce.

But even though Best Buy's big turnaround effort is producing phenomenal results on the chart, it also triggered a key event that should make investors nervous.

New CEO Hulbert Joly recently made one the biggest insider moves I've seen in a long time, shocking the market by dumping 450,000 shares, exercising and selling 350,467 stock options while also selling 100,686 previously owned shares. 

So what is Mr. Joly looking at that has him locking in big profits?

The official statement from Best Buy says the sale was driven by Joly's recent divorce and a short-term need for cash and liquidity. It's also important to note that Mr. Joly remains heavily invested in Best Buy, as most CEO's engineering a turnaround story are. But Best Buy's recent surge and valuation made this a very go! od time to lock in some profit. Because while shares have been surging on the chart, earnings and estimates have only increased marginally.

With the 2013 estimate up 7% in the last 3 months, Best Buy is expected to earn $2.41 this year. That has shares trading with a forward P/E 16x. That hardly seems unreasonable when companies such as Tesla, Inc. (TSLA) trades with a forward P/E of 862. But when considering that Best Buy's forward P/E was just a pinch below 5x early in the year, which represents more than a 200% increase how the company is being valued by the Street in less than 9 months. And it was a big enough swing to push Mr. Joly into locking in some profit while the taking is good.

Because long term, big-box retailers are going to struggle as the space contracts due to intense competition from online channels.

 

The Takeaway

Best Buy has seen a huge bounce in 2013, with shares up a market-crushing 224% on the year. But even though the company continues to successfully execute a comprehensive turnaround strategy, shares have jumped from a forward P/E of 5X early in the year to 16X, more than a 200% increase in less than 9 months. That means it's a good time for regular investors to think about locking in some profit after an incredible rebound.

Pepsi: Why Not To Buy This Overvalued Soft Drink Maker (Or Coca-Cola)

Let's make no mistake about it: Pepsico (PEP) is a great company with market leading positions in Salty Snacks, Hot Cereal, Sports Drinks and a number two position in Juice and Carbonated Soft Drinks. In 2012, Pepsico earned $65 billion in net revenues of which 49% were coming from beverages and 51% from the snack business (65% of revenues were achieved in developed markets vs. 35% in developing markets). Pepsico has a promising product portfolio comprising of 22 $1 billion dollar brands: Brands that achieve at least $1 billion in annual sales. Surely, investors will have heard about at least some of them:

(click to enlarge)

Historical free cash flows and projections

Below I have compiled the cash flows from Pepsico's latest 10k filing including the most recent three year cash flow comparison. Pepsico has pretty stable operating cash flows while investing activity showed some variation over the years. I forecast Pepsico's net borrowing to change in the amount of $2-3 billion a year including short and long-term debt items consistent with historical averages.

I estimate Pepsico can earn $7,658 million in FCFE in 2014. Given the diluted share count of 1,567 million, this translates to an intrinsic FCFE value per share of $4.89. Pepsico's most recent share price stands at $79.62 (04/10/2013), giving the stock a 16.29 multiple based on the estimated forward FCFE per share. This is a very rich FCFE multiple, given Pepsico's moderate organic revenue growth prospects of 5%, and investors pay a substantial premium for Pepsico's dividends and share buybacks. The Coca-Cola company (KO) also trades at a substantial premium multiple, and investors looking for stable income growth can find better opportunities elsewhere in the marketplace.

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Market valuation

In terms of market valuation, the beverage sector really is not that cheap. Considering that Pepsico trades at 16x forward FCFE and Coca-Cola at 17x, it should not be surprising that the individual P/E ratios are equally high: Pepsico trades at the largest peer group P/E of 16.88, while Coca-Cola trades at 16.43. Dr. Pepper Snapple (DPS) is the cheapest of the industry, at 13.26 times forward earnings. All companies are great companies with top-notch product portfolios, but trade at premium valuations. Investors pay a hefty markup, which restricts equity valuation growth from the outset and makes multiple expansion unlikely.

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A consequence of a high share price relative to fundamental value is a low dividend yield. The chart below depicts the dividend yields for the most relevant beverage sector players: Pepsico has the lowest dividend yield of 2.85% while Dr. Pepper outperforms its peers, not only on valuation, but also on a dividend yield of 3.5%.

(click to enlarge)

The table below summarizes the results for the companies in the beverage/snack sector. Pepsico trades at a 8.76% premium to the peer group average P/E and a 8.65% discount to the average dividend yield. Those metrics aren't too convincing for investors to pay 16 times estimated 2014 FCFE.

(click to enlarge)

Conclusion

Pepsico is a great company with a strong brand portfolio and leading positions in key markets such as the United States, Russia, India and Egypt. Operating cash flow risks remain relatively lo! w given P! epsico's historical cash flow trends. From a valuation perspective (P/FCFE, P/E and D/P), Pepsico commands premium prices which significantly reduce upside potential for Pepsico shares. Investors who still desire beverage sector exposure could take a closer look at Dr. Pepper Snapple which clearly is the underdog (in terms of valuation and share price performance, see below). Income investors also may find Dr. Pepper an interesting alternative to the overvalued large-cap companies Coca-Cola and Pepsico.

(click to enlarge)

Source: Pepsi: Why Not To Buy This Overvalued Soft Drink Maker (Or Coca-Cola)

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. (More...)