Book Summary Zag talks about how to zig when everyone else zags. In other words, how do you create a brand that is truly different than the competition? How do you make the competition irrelevant Zag gives a clear 17-point checklist for creating a truly innovative business. Right-click here to download the mp3 Who Should [...]

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The firm currently has a "buy" rating on the stock. BHP has been the subject of a number of other recent research reports.

It’s a very interesting concept: I absolutely believe that energy innovation will help the U.S. economy tremendously over the coming years.

Under that vast umbrella of energy innovation, alternative energy has the potential to become a genuine economic engine that can revolutionize personal transportation and the economic landscape.

There is excitement surrounding automaker Tesla Motors, Inc. (NASDAQ/TSLA). This company just doubled on the stock market in a little over a month.

I haven’t driven any of Tesla’s vehicles, but the company’s new four-door sedan looks fantastic, and the quality of the paint job really stands out.

I definitely see more “Chevrolet Volts” around. According to General Motors Company (NYSE/GM), it delivered 5,550 Volts in the first quarter of 2013, up 3.2% comparatively. The company is likely employing new sales incentives.

Virtually every automaker is getting in on the electric vehicle action. Even Porsche has a new electric “supercar.” The company is bringing to market the “918 Spyder,” which has a 4.6 liter V8 engine and two electric motors. The two electric motors provide an additional 218 horsepower on top of the more than 500-horsepower V8. The car can operate on its batteries alone, but I suspect the range would be extremely short.

Trucks and SUVs are bread-and-butter for domestic automakers. But the migration to electric vehicle production (a loss leader right now) is all about range and economies of scale. A $40,000 compact Chevy sedan is a misnomer.

While insider ownership with a company like Tesla is high and its valuation is extreme, the company would be an attractive takeover candidate for a successful automaker. The illusion can become real. BMW AG (XETRA/BMW) perhaps?

Range, costs, and availability of charging stations are obvious barriers for electric automakers.

But there’s been a sea of change with Tesla after so many electric vehicle and alternative energy failures. (See “Why These Old Economy Stocks Aare Absolutely Crucial.”) The company just raised another $1.0 billion from new shares and debt, and it has cashed in on the stock market’s renewed interest.

A close friend of mine who has in-depth knowledge of domestic automakers thinks the whole electric vehicle trend is a bust. Without question, the business case for it is not profitable at this time. (Tesla is even selling its California zero-emission tax credits to other automakers to boost its bottom line.)

But that doesn’t mean that innovation within the industry is not worthy of pursuit—not at all.

There is the issue regarding utility consumption. If electric vehicles become more prevalent, the demand for electricity will go up. The consumer is always on the short end of the stick.

But this build out, if it proves to ... Read More

We all know that McDonalds Corporation (NYSE/MCD) is the reigning king of the fast food sector and one of the top performers over the past decade, based on my stock analysis.

In fact, my stock analysis suggests that McDonalds’ rivals are trying to emulate what is working at the company rather than compete against the seller of the iconic “Big Mac.”

Burger King Worldwide, Inc. (NYSE/BKW) may be pursuing a similar strategy to McDonalds’ by diversifying its menu offering with new items and value-conscious options, based on my stock analysis.

Yet while Wall Street focuses on McDonalds and its burger-oriented rivals, my stock analysis reveals that a stock that I feel offers better valuation and potential upside is Denny’s Corporation (NASDAQ/DENN). With a market-cap of $552 million, Denny’s is dwarfed by the $102-billion market cap of McDonalds, but that doesn’t mean there isn’t a buying opportunity with Denny’s, based on my stock analysis.

In fact, Denny’s is up 50% over the past 52 weeks and has easily outperformed the S&P 500’s advance of 26.8% and McDonalds’ 11.8% gain, according to my technical analysis.

Chart courtesy of www.StockCharts.com

Denny’s is best known for its “Grand Slam” breakfast offerings. The company has gone through a major structural reorganization in which it sold many of its stores to franchisors, thereby reducing its own operating costs and collecting fees instead. As of March 27, 2013, 1,525 of the company’s 1,689 restaurants were franchised. The end results have been stronger operating numbers and a steady rise in the company’s share price, according to my stock analysis.

About 98 restaurants are situated in Canada, Costa Rica, Mexico, Honduras, Guam, Curacao, Puerto Rico, Dominican Republic, and New Zealand.

And in an aggressive and bold move, Denny’s has been looking at expanding into the highly competitive Chinese market, where the top players are McDonalds and YUM! Brands, Inc. (NYSE/YUM)—owner of the Kentucky Fried Chicken (KFC) and Taco Bell brands. The company’s deal with Great China International Group was recently cancelled, likely due to some poor results from the top players in China, based on my stock analysis.

On the operations end, Denny’s reported adjusted earnings of $0.08 per diluted share in its first-quarter earnings season, up 48.4% year-over-year and a penny above the Thomson Financial consensus earnings-per-share (EPS) estimates. It was the third straight quarter of outperformance.

On a comparative valuation basis, Denny’s trades at 1.16X trailing sales and has a price-to-earnings-growth (PEG) ratio of 0.92, versus 3.71X sales and a PEG ratio of 2.04 for McDonalds.

Now, don’t get me wrong; I still believe McDonalds will continue to be the top player in the restaurant and fast foods sector going forward. (Read ... Read More

Blake Shelton has a date and location for his benefit and fellow Oklahoman Carrie Underwood is writing a large check to help benefit those affected by this week's storms in their home state.

Thursday’s upbeat economic news included an impressive report on new home sales.

The flow of Thursday’s upbeat economic news began with the Department of Labor’s report that initial unemployment claims for the week ending May 18 decreased by 23,000 to 340,000.  Economists had been expecting a slightly less-significant decline to 345,000 initial claims.  Weekly New Unemployment Claims at 340K

From the report:

In the week ending May 18, the advance figure for seasonally adjusted initial claims was 340,000, a decrease of 23,000 from the previous week’s revised figure of 363,000. The 4-week moving average was 339,500, a decrease of 500 from the previous week’s revised average of 340,000.

Also on Thursday, the Commerce Department’s Census Bureau reported that New Home Sales for April reached a seasonally-adjusted annual rate (SAAR) of 454,000 – beating expectations of 425,000 sales.  Because the rate of new home sales is considered the best leading indicator of economic health, this upside surprise will likely shape economists’ forecasts concerning the pace of the recovery.

From the report:

Sales of new single-family houses in April 2013 were at a seasonally adjusted annual rate of 454,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 2.3 percent (±12.8%)* above the revised March rate of 444,000 and is 29.0 percent (±20.7%) above the April 2012 estimate of 352,000.

The median sales price of new houses sold in April 2013 was $271,600; the average sales price was $330,800. The seasonally adjusted estimate of new houses for sale at the end of April was 156,000. This represents a supply of 4.1 months at the current sales rate.

The Markit Flash U.S. Manufacturing Purchasing Managers’ Index for May from Markit Economics was not exactly positive because it indicated a decline for the second consecutive month, falling to its lowest reading since last October.  Nevertheless, the reading of 51.9 (compared with April’s 52.1) beat economists’ expectations for a more significant drop to 50.8.  Jobless Claims Fall, Manufacturing Growth Slows in May

The Kansas City Federal Reserve’s Regional Manufacturing Survey for May was expected to increase to only a “less bad” negative 2 from April’s negative 5.  Nevertheless the composite index climbed to positive 2.

From the report:

Tenth District manufacturing activity improved somewhat, rising above zero for the first time in seven months, and producers’ expectations for future activity also increased. Most price indexes recorded little changes from the previous month.

The month-over-month composite index was 2 in May, up from -5 in both April and March (Tables 1 & 2, Chart). The composite index is an average of the production, new orders, employment, supplier delivery time, and raw materials inventory indexes. The rise in production came from both durable and non-durable goods-producing plants, with the biggest increase coming from machinery and metals manufacturing. Other month-over-month indexes were mixed. The production index edged up from 1 to 5, and the shipments, new orders, and new orders for export indexes also rose. In contrast, the employment index fell from -3 to -7, while the order backlog index was unchanged. The raw materials inventory index rebounded from -17 to 0, and the finished goods inventory index moved slightly higher.

The major ETFs expected to respond to the Department of Labor’s report on initial unemployment claims, the Census Bureau’s report on April New Home Sales, the Markit Flash U.S. Manufacturing PMI for May and the Kansas City Fed’s Regional Manufacturing Survey for May are:

Consumer Staples Select Sector SPDR ETF (NYSEARCA:XLP):  -0.41%

SPDR S&P Retail ETF (NYSEARCA:XRT):  +0.51%

Consumer Discretionary Select Sector SPDR ETF (NYSEARCA:XLY):  -0.21%

Industrial Select Sector SPDR ETF (NYSEARCA:XLI):  -0.27%

SPDR S&P Homebuilders ETF (NYSERACA:XHB):  +0.54%

Bottom line:  Thursday’s economic reports demonstrate that the economy continues to make a better-than-expected recovery despite the budget sequester.

While stocks spent the day on a roller coaster, the VIX broke out of its rut.

The Chicago Board Options Exchange volatility index (VIX) spent the day comfortably above its 50-day moving average while the major stock indices went on a roller coaster ride.  Stocks spent the entire morning in the red, as investors reacted to news that the economic slowdown in China brought the HSBC Flash Manufacturing PMI into the range of contraction.  Beyond that, the Japanese stock market took a severe nosedive as soaring government bond yields scared the nation’s investors.  Japanese Stock Market

The S&P 500 dropped as low as 1,635 before upbeat economic data restored investor enthusiasm.  Stocks lost their momentum between 1:00 and 2:00, as the flow of better-than-expected economic reports probably scared investors into thinking that quantitative easing could end sooner than expected.  With the exception of the Russell 2000, the major stock indices finished the day in negative territory.  Negative Session, But Well Off the Lows

The VIX finished Thursday’s session with a 1.81 percent advance to 14.07, after breaking above its 200-day moving average for the first time since April 22.  The VIX had a volatile day, jumping to 15.11 just after 10:00 and falling to 13.87 less than 90 minutes later.  The VIX spent the entire day above its 50-day moving average of 13.46 as its lowest point of the day was 13.87.   Its Relative Strength Index rose from Wednesday’s 53.67 to 55.26.  Although both the MACD and the signal line remain below the zero line (which usually suggests a decline) the MACD has crossed above the signal line, which suggests a continued advance.

VIX ETF Update: 

Volatility Index – New Methodology (VIX): Index:  14.07,  +1.81%,

iPath S&P 500 VIX Short-Term Futures ETN (NYSEARCA:VXX):  +0.81%, This ETN is designed to track volatility in the markets as measured by the Chicago Board Options Exchange Market Volatility Index (CBOE Index), a popular measure of the implied volatility of S&P 500 index options.

VelocityShares Daily 2X VIX Short-Term ETN (NYSEARCA:TVIX):  +1.50%, This ETN is designed to track 2X return on volatility in the markets as measured by the S&P 500 VIX Short-Term Futures Index.

iPath S&P 500 VIX Mid-Term Futures ETN (NYSEARCA:VXZ):  +1.21%, This ETN is designed to track volatility in the markets as measured by the CBOE Volatility Index futures contracts.

S&P 500 Dynamic VIX ETN (NYSEARCA:XVZ):  +0.23%, This ETN is designed to track volatility in the markets as measured by the S&P 500 Dynamic VIX Futures Total Return Index.

Velocity Shares Daily Inverse VIX Short-Term ETN (NYSEARCA:XIV):  -0.74%, This ETN is designed to inversely track the volatility in the markets as measured by the S&P 500 VIX Short-Term Futures Index.

Bottom line:  The VIX spent Thursday’s trading session above its 50-day moving average – and broke above its 200-day moving average for the first time since April 22 – while stocks spent the day on a roller coaster.  Although the VIX finished the day with a relatively-modest 1.81-percent advance, technical indicators suggest that the VIX will be headed higher.