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Showing posts from January, 2011

US following Britain's lead -- speed bump's ahead?

In the wake of the November elections and the State of the Union speech, the differences in outlooks between the Democrats and the Republicans are clear. With respect to the economy, the Republicans contend reducing government spending will lead to prosperity while the Democrats fear a significant reduction in spending will hurt the economy at a time when it is still fragile.

Republicans and Democrats alike might do well to keep an eye on England. Fourth quarter GDP was just reported by the U.K. and it was surprisingly weak, down 0.5% after expanding 0.7% in the previous quarter. Analysts had been expecting 0.4%.

Factors in play --

Some say the quarter was so bad due to the severe snow storms and cold weather that the U.K. at the end of 2010.  That could be true but it does remind me of how retailers always blame the weather when they have a bad quarter.

Other analysts, politicians and even some members of the Bank of England worry that the decline in GDP is the result the current Cons…

BRICs are so yesterday -- get ready for CIVETS

Certain investment themes become so well known that they merit their own acronym. One of those is the BRICs - shorthand for the popular emerging market countries Brazil, Russia, India and China.

There are some investors and analysts, however, who are always looking for the next big thing. As Brazil, China and India become victims of their own success and begin to raise interest rates in order to cool their over-heated, inflation-prone economies, many investors are looking elsewhere to deploy their emerging market portfolio allocations.

So prepare yourself for a new acronym: CIVETS

For those people who are well versed in zoology, you may know that a civet is a nocturnal, cat-like, mostly arboreal mammal native to the tropics of Africa and Asia. But for our purposes, CIVETS stands for a group of countries that some analysts feel represent the next wave of emerging markets. They are: Colombia, Indonesia, Vietnam, Egypt, Turkey and South Africa.

The CIVETS owe their acronym to the Economi…

Not just GARP -- new Growth Stock screen captures some real winners

I have been playing with a new stock screen lately. The objective is to identify reasonably valued stocks with good growth potential. I look for stocks that have solid earnings, high Return-on-Equity, good earnings growth expectations based on PEG and a low Debt-to-Equity ratio.

These characteristics are reminiscent of GARP, growth at a reasonable price. If you are not familiar with it, the GARP strategy is a combination of both value and growth investing: it looks for companies that are somewhat undervalued and that have solid sustainable growth potential.

To get into the details, the screen looks for stocks with PEG less than 1.2, ROE greater than 25, positive cash flow over the trailing four quarters and a very low Debt-to-Equity ratio. A further requirement is that the stock's performance has been no worse than 10% below that of the S&P 500. I put the result on Alert HQ Premium as the Profitable Growth Stock Report. At this point, I'm running the report on a weekly bas…

Financials consolidate their position among top trending ETFs

Back on December 11 I wrote that, to my surprise, the financial sector seemed to be staging a real comeback. At that time I pointed out that the ETF Trend Performance Report indicated that a group of financial ETFs had shown the biggest improvement in trend scores for the week. Feeling some skepticism about the financials I was not surprised to see them pull back the very next week.

After running tonight's Alert HQ process, the Thursday ETF Scorecard shows that the financials have not only rallied since then, they have established strong bullish trends. Six of the top 10 are financial ETFs and there is another one at position 19.

The following ETFs have registered the strongest possible trend score (6 out of 6) indicating solid bullish trends in progress:

FASDirexion Daily Financial Bull 3X SharesIYGiShares Dow Jones U.S. Financial Services Index FundRKHMerrill Lynch Regional Bank HOLDRSUYGProShares Ultra Financials ETFVFHVanguard Financials ETFXLFSelect Sector SPDR Fund - Financia…