Filed under: General Motors (GM), Stocks to Buy

General Motors (GM) faced immense problems during the financial crisis which hammered most of the U.S. automakers. With the help of the U.S. government, the company managed to restructure its business and emerge as a stronger company, even reporting a profit for the second half of 2010. The new GM commenced operations on July 10, 2009, after it completed the acquisition of substantially all of the assets and assumed certain liabilities of the old GM through a 363 Sale under the Bankruptcy Code. GM is now focusing its resources upon four core brands: Cadillac, GMC, Buick and Chevrolet and competes with players like Toyota (TM), Honda (HMC), Ford (F), Daimler, Volkswagen and Hyundai.

Continue reading GM Market Share Recovery Supports Value

GM Market Share Recovery Supports Value originally appeared on BloggingStocks on Mon, 21 Mar 2011 13:20:00 EST. Please see our terms for use of feeds.

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Filed under: Industry, Recession

ArcelorMittal (MT) is currently the largest steel manufacturer in the world, formed by the merger of two steel giants, Arcelor and Mittal in 2006. The company competes with other international Steel giants like BaoSteel, Posco, Nippon Steel and ThyssenKrupp.

Our price estimate for Arcelor Mittal stands at .67, roughly 10% above market price.

Continue reading ArcelorMittal Results Suggest Slow and Steady Recovery in Steel Industry

ArcelorMittal Results Suggest Slow and Steady Recovery in Steel Industry originally appeared on BloggingStocks on Mon, 28 Feb 2011 17:00:00 EST. Please see our terms for use of feeds.

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Filed under: India, Commodities

ArcelorMittal (MT) is currently the largest steel manufacturer in the world, formed by the merger of two steel giants, Arcelor and Mittal in 2006. The company competes with other international Steel giants like BaoSteel, Posco, Nippon Steel and ThyssenKrupp.

Our price estimate for Arcelor Mittal stands at .67, roughly 10% above market price.

Continue reading ArcelorMittal Results Suggest Slow and Steady Recovery in Steel Industry

ArcelorMittal Results Suggest Slow and Steady Recovery in Steel Industry originally appeared on BloggingStocks on Thu, 24 Feb 2011 15:00:00 EST. Please see our terms for use of feeds.

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BloggingStocks

Filed under: American Express (AXP)

Founded in 1950, New York-based American Express(AXP) is a leading global financial services company offering card payment products and travel-related services to consumers and businesses across the globe. It is now the third largest player in the US in terms of card transaction volumes, after Visa(V) and MasterCard(MA). It also competes with other financial institutions that have credit card services like Discover Financial(DFS)and Capital One(COF).

What differentiates American Express from MasterCard and Visa is its relatively more affluent customer base, which it maintains by offering generous benefits and reward programs. Since American Express brings higher spending consumers to merchants, it can charge a higher commission (known as the interchange fee) on sales. Also, unlike Visa and MasterCard, American Express only issues charge and credit card products but not debit cards, which have been gaining widespread acceptance over the past couple of years. With these critical differences in mind, we explore the opportunities that lie ahead for American Express in an evolving macroeconomic environment.

Our price estimate is .16, which is just slightly higher than the current market price.

Impact of regulatory reforms

The Obama Administration in February 2010 passed the Credit Card Accountability, Responsibility and Disclosure Act, or the CARD Act which enforces more disclosure about interest rates, caps on service fees, grace periods and also makes it difficult for people under the age of 21 to obtain cards. All this is expected to negatively impact the growth in the number of cards in use but lead to lower net write-off rates and defaults by card members.

The Durbin Amendment, enacted in July 2010, granted the Fed the power to control the levels of this fee. In December, the Fed enforced one such limit – 12 cents per debit card transaction. While this adversely affects the two largest card payments-processing networks Visa and MasterCard, which also issue debit cards, we believe it presents upside opportunity for American Express as credit cards would gain prominence over debit cards, at least from the issuers’ end.

Improving economic conditions

The macroeconomic conditions are improving in the US, albeit at a slow pace. The unemployment levels are still close to historical high levels but on a downward slope, declining from 9.8% in November 2010 to 9.4% in December 2010. Consumer spending has picked up and so have the corresponding card transactions.

Household purchases, which constitute about 70% of the economy, grew at 4.4% in December 2010, the highest since the first quarter of 2006.American Express’ card delinquency rates (the proportion of outstanding balances past the due date to total balances) continues to decline month on month to 2.1% from 2.5% in the previous quarter. Charge-offs (the loans deemed uncollectible and hence, written-off) also declined from 5.2% to 4.4% over the same period. Improvements in macroeconomic conditions hint at more relaxed card-issuing criteria and higher credit limits.

If spending increases more than we currently forecast, this could improve our price estimate. Drag the trend line in the modifiable chart above to see the impact. For example, a 5% increase in annual spending in 2012 per customer translates to around a 2% improvement in our price estimate.

See our estimates for American Express.

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American Express Outlook Improves on Recovery in Spending originally appeared on BloggingStocks on Thu, 17 Feb 2011 13:20:00 EST. Please see our terms for use of feeds.

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Filed under: General Electric (GE), Intel (INTC), International Business Machines (IBM), Comfort Zone Investing

If you think the economic recovery is just beginning, then these three stocks will benefit. They’ve just released their earnings so you can see how they’ve fared even in these tough times. They all share positive attributes: plenty of cash, growing sales and earnings, and a dividend.

General Electric (GE): This stock has been a frustration for years. It cut the dividend. The price went from a share to from 2008 to 2009. Now it’s coming back. The latest quarterly and annual reports for 2010 confirm the company’s finally seeing better demand for most of its products and services.

GE mirrors the economy because it’s in so many different parts of it. Here are only some of its offerings: jet engines, light bulbs, credit, mortgage finance, appliances, power plants, locomotives, electric distribution and control equipment, generators and turbines, real estate, commercial finance, aircraft leasing, NBC Universal, health care and several more. When the economy does well, so does GE.

Continue reading Comfort Zone Investing: Ride the Recovery with These Three Stocks

Comfort Zone Investing: Ride the Recovery with These Three Stocks originally appeared on BloggingStocks on Sat, 29 Jan 2011 10:30:00 EST. Please see our terms for use of feeds.

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Filed under: General Electric (GE), Stocks to Buy

Diversified industrial giant General Electric (GE), first discussed here on June 2, 2009 at a price of .80, continues to put the summer’s bottom at/near .75 behind it, with the shares vectoring toward , and I obviously still like the stock at this juncture.

Look for GE’s energy infrastructure, consumer/industrial, technology units to post revenue increases in 201q, boosted by both emerging market and developed-world demand and order increases. GE should record impressive gains in oil and gas products, health care imaging, and airplane engines. Meanwhile, losses at GE Capital Finance should decline in 2011, as it did it in 2010.

Overall 2011 revenue will likely rise 3-4.5%, followed by a 3-5% rise in 2012. Margins should improve to about 12.5% in 2011.

Further, despite, disappointing orders for gas turbines, wind power products, and locomotives, overall industrial orders should increase adequately in 2011, building on 2010’s good second-half performance.

Continue reading Think U.S. Recovery, Think GE

Think U.S. Recovery, Think GE originally appeared on BloggingStocks on Tue, 28 Dec 2010 14:30:00 EST. Please see our terms for use of feeds.

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Filed under: Economic Data, Housing

I am projecting U.S. GDP growth at about a 2% rate for the remainder of this year and in 2011. The two propellants of growth so far in this economic recovery — the inventory revival and fiscal stimuli — are largely exhausted.

The ending of inventory liquidation and their rebuilding in the past five quarters, starting with the third quarter of 2009, accounted for 58.5% of the overall gain of 3.6% in real GDP. Conversely, real final sales (real GDP ex inventories) grew just 1.4% in the last five quarters and were responsible for less than half the rise in real GDP, 48.2%.

Continue reading Why There Won’t Be An Economic Recovery Soon

Why There Won’t Be An Economic Recovery Soon originally appeared on BloggingStocks on Mon, 13 Dec 2010 18:00:00 EST. Please see our terms for use of feeds.

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Filed under: Stocks to Buy

Natural gas/energy storage and transmission play TransCanada Corp.’s (TRP) shares, first discussed on May 11, 2009 at a price of .56, have not progressed as much as forecast in the past year, but I still like the business model at this stage. Here’s why:

TransCanada’s natural gas operations hold considerable promise: it’s a natural gas transmission and storage company that also owns oil assets and electric power generation assets (including 19 wholly-owned power plants).

Also, Phase 1 of TRP’s billion Keystone Pipeline System (Alberta, Canada to Midwest U.S.), with the capacity to transport 435,000 barrels per day (bpd) of crude oil, opened in June 2010. Eventually, the pipeline be able to transport 591,000 bpd.

Continue reading TransCanada: Natural Gas Play That’s Ready for the Recovery

TransCanada: Natural Gas Play That’s Ready for the Recovery originally appeared on BloggingStocks on Tue, 02 Nov 2010 15:10:00 EST. Please see our terms for use of feeds.

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Filed under: Forecasts, Bad News, Commodities, Oil

One thing OPEC can never be accused of is: being a bastion of economic stimulus.

An OPEC official said some members of the group are calling for a 0 per barrel oil price, due to the dollar’s recent weakening. Oil is priced in dollars.

Venezuelan Energy and Oil Minister Rafael Ramirez told Bloomberg News the recent fall in the dollar means the “real price” of oil is less than current levels, justifying a 0 price. Oil closed down .43 to .26 per barrel Friday.

Continue reading OPEC’s 0 Oil Goal Could Short Circuit U.S. Recovery

OPEC’s 0 Oil Goal Could Short Circuit U.S. Recovery originally appeared on BloggingStocks on Fri, 15 Oct 2010 16:30:00 EST. Please see our terms for use of feeds.

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Filed under: Forecasts, Commodities

No natural gas price recovery before 2012? That’s what one firm is predicting.

Canada-based FirstEnergy Capital Corp. lowered its 2010 average natural gas price forecast to .63 per million BTUs (MMBtu), down from per MMBtu, calgaryherald.com reported Monday.

FirstEnergy also lowered its average 2011 price to .75 per MMBtu. Among the factors likely to keep natural gas prices low: increased shale gas production in the United States.

Continue reading Firm Sees Little Chance for Natural Gas Price Recovery Before 2012

Firm Sees Little Chance for Natural Gas Price Recovery Before 2012 originally appeared on BloggingStocks on Mon, 30 Aug 2010 15:30:00 EST. Please see our terms for use of feeds.

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