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Investing in Ontario: Royal Bank of Canada (RY), Manulife Financial (MFC), Toronto-Dominion Bank (TD)

Its abundance of resources and location on the Great Lakes have made Ontario an economic powerhouse. Canada's capital, Ottawa can be found there, as well as its largest city, Toronto, which is also Canada's financial hub. Seven of Ontario's eight largest companies are financial institutions, and Toronto is also the home of one of the largest stock exchanges in the world. When the Motley Fool took a look at stock investment opportunities in Ontario this past June, three of the companies they focused on were financial institutions: Royal Bank of Canada (NYSE: RY), Manulife Financial Corp. (NYSE: MFC) and Toronto-Dominion Bank (NYSE: TD). Considering the credit crunch and the weakness of the U.S. dollar, I thought it might be interesting to see how those companies are faring now.

The Royal Bank of Canada, also known as RBC Financial Group, is Canada's largest financial institution. It has 1,300 domestic locations and offices in 30 countries. In September, RBC's Gord Nixon won Canada's Outstanding CEO of the Year award for 2007. More recently, RBC announced the acquisition of a Caribbean bank, and it was one of four Canadian banks affected by restructuring at VISA. With RBC's five-year earnings per share growth rate of 26.5% (better than the S&P 500), the consensus recommendation of analysts surveyed by Thomson Financial is to buy RBC, despite missing earnings expectations for the past two quarters. RBC's share price is near an all-time high on the NYSE, closing Thursday at $57.09 on the NYSE. RBC will release its next quarterly report on November 30.

Continue reading Investing in Ontario: Royal Bank of Canada (RY), Manulife Financial (MFC), Toronto-Dominion Bank (TD)

Boeing (BA): 'A rare sale'

The recent decline in Boeing (NYSE: BA) should be viewed as a "rare opportunity" to buy the stock on sale, according to BizRadio host, Daniel Frishberg in his The MoneyMan Report.

The advisor notes, "Since 9/11, the aerospace & defense industry has been among the strongest sectors. Rarely have there been sell offs that give us a great entry point."

Recently, however, Boeing announced a delay in their 787 Dreamliner by 6 months. Frishberg suggests, "We believe this is temporary and the stock decline was an overreaction. We rarely get to buy a company of this caliber on sale."

The advisor explains, "We believe after a fall of 11% from its recent high, Boeing is a buy. The long-term growth prospects for this dominant company are excellent and we like this company for several reasons."

He observes, "With Boeing, we get a company that is benefiting from the growth in Asia, the weak dollar, and defense spending continuing to increase." In addition, he adds, Boeing just bounced off of its 200-day moving average, which many technicians watch closely.

Each day, Steven Halpern's TheStockAdvisors.com features the latest stock picks and investment ideas from the nation's leading financial newsletter advisors.

Google (GOOG) trio scores another jet plus exclusive airport access

With Google, Inc. (NASDAQ: GOOG) shares at an all-time high (giving the search leader a ridiculous $200 billion market cap), the triumvirate leadership of founders Larry Page and Sergey Brin and CEO Eric Schmidt have set their collective eyes on yet another jumbo jet to cruise around the world in.

This situation sounds like 1999-era dot-com exuberance madness, but the market has pushed Google to insane levels and the company has billions of cash on hand for anything it needs, as in acquisitions, global computer server farms and huge jets.

In addition to the new jet purchased under the auspices of a company names H211, LLC, the three Google leader have scored an exclusive agreement for airport access at Moffett Field, including the rights for four planes in total. Moffett Field is very close to Google's Mountain View, California headquarters.

The current staple of planes owned and operated by Google's seemingly-eccentric leadership trio includes two Gulfstream Vs, a Boeing 767, and the new Boeing 757. Are other Silicon Valley CEOs jealous? Most likely, yes. But, at least the Google folks are buying 'green' credits to offset the jet fuel they'll be expunging. As a Google shareholder, do you think the company needs a small jet army like this?

McAfee (MFE): Computer security specialists

Almost everyone who has surfed the Internet understands the potential for assault from hackers, spammers and other cyber villains. Among the best known defenders of a computer system's integrity is an outfit headquartered in Santa Clara, California.

McAfee (NYSE: MFE) provides computer security solutions for home and business systems. Offerings include anti-virus and anti-spyware services; encryption and backup applications; and programs used to stop unwanted e-mail. The company also provides consulting, support, and training services and has strategic alliances with such industry specialists as Cisco Systems (NASDAQ: CSCO), IBM (NYSE: IBM) and Microsoft (NASDAQ: MSFT). Earlier in the week, it announced the $350 million acquisition of SafeBoot, a developer of security software for laptops, smartphones, and other mobile devices.

Continue reading McAfee (MFE): Computer security specialists

JB Hunt (JBHT) misses expectations; Analysts remain positive

JBHT logoAfter the closing bell on Thursday, JB Hunt (NYSE: JBHT) announced earnings that missed analyst expectations as profit fell 12% in the quarter, but analysts remain generally optimistic on the stock. A Goldman Sachs analyst maintained his buy rating on the company, saying that the weak trucking results may hurt shares for a few days, but the intermodal railroads, which carry goods between other modes of transportation, are more important to the company. A KeyBanc Capital Markets analyst said he was also impressed with the company's gains in the intermodal market. If you agree with these analysts and think that the company won't fall by too much in the coming months, then now could be a good time to look at a bullish hedged trade on JBHT.

After hitting a one-year high of $31.94 in July, the stock has been slipping over the past few months. JBHT opened this morning at $26.86. So far today the stock has hit a low of $26.36 and a high of $27.07. As of 11:30, JBHT is trading at $27.49, up $0.40 (1.48%). The chart for JBHT looks bearish but improving, while S&P gives the stock a neutral 3 STARS (out of 5) hold rating.

For a bullish hedged play on this stock, I would consider a February bull-put credit spread below the $22.50 range. A bull-put credit spread is an options position that combines the purchase and sale of put options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. This particular trade will make a 19% return over just 4 months as long as JBHT is above $22.50 at February expiration. The stock would have to fall by more than 19% before we would start to lose money.

JBHT hasn't been below $22.50 since January and has shown support around $25.50 recently. This trade could be risky if the company's next earnings (due out a few weeks before February expiration) disappoint, but even if that happens, the stock would have to break through strong historic support before this position is in trouble.

Meg Massie is an options analyst and writer at Investors Observer.
DISCLOSURE: At publication time, Meg neither owns nor controls positions in JBHT.

McDonald's (MCD) will beat expectations as September sales grow 11.5%

I remember the last time I had a burger at a McDonald's Corp. (NYSE: MCD) restaurant. It was two and a half years ago and I just couldn't stomach it. After the first bite, it went into the garbage with me feeling utterly nauseous. Yet, even I, a person who purports to eat healthy, don't boycott McDonald's altogether. While I had the last McDonald's burger on that fateful day, I came back for breakfasts, the salads and even the coffee. Indeed, I am not embarrassed to admit that I prefer it to Starbucks' (NASDAQ: SBUX) coffee, though not to Tim Hortons' (NYSE: THI).

Well, it seems that McDonald's has indeed managed to offer something for everyone, even granolas like me. The results could be seen in its latest reported same-store sales report, which have continued the fast food chain's hot streak. McDonald's global sales from restaurants open more than a year rose 5.9% in September. The world has been kinder to McDonald's than its domestic sales. While U.S. sales rose 3.5% -- increasing consecutively for the 54th month -- same-store sales rose 5.7% in Europe and 12% in its Asia/Pacific, Middle East and Africa division. Its total systemwide sales rose 11.5% for the month and 11.8% for the quarter.

Following these impressive numbers, the company now expects to exceed Wall Street's estimates for third-quarter profit. It now expects to earn 83 cents per share in the quarter when it reports October 19. Including a 6 cents per share gain from the sale of Boston Market, it should report 89 cents per share for the quarter, beating estimates.

No doubt, the company has found a way to offer something for everyone. Its value menu, breakfast offerings and drinks helped boost sales, as did premium coffee. The long hours, the promotions and new products like the wraps I occasionally enjoy, also drove sales growth.

McDonald's shares are trading up 29 cents to $56.54, 0.52% higher. This isn't perhaps the surge some had hoped for, but as the company has been doing so well, much of that surprise was already priced in. MCD shares have gained nearly 28% year-to-date and over 34% the past year. It may just continue this performance a while longer, especially as it encroaches further on Starbucks' business.

Investor AB's interest in V&S Group Absolut

In 1917, the Swedish government created a company with a monopoly on the alcoholic beverage business within its borders. The company, V&S Group, is still owned by the government, making internationally known brands such as Absolut. Now comes word that the Wallenberg family, through its public holding company Investor AB, is interesting in buying the firm, for as much as $6 billion.

The Wallenbergs are major holders of many of Sweden's largest companies, including Ericsson, ABB Ltd. (NYSE: ABB), Scania, SAAB, Husqvarna and Electrolux (OTC: ELUXY). Investor had a rough third quarter in 2007, posting a loss of $1.21 billion, attributed to the liquidity problem in the global credit market. It apparently hasn't quenched the family's thirst for new properties.

Investor is not the only suitor for V&S, though; industry giant Diageo (NYSE:DEO), makers of Smirnoff vodka, has already taken a tasting and found it worthy of further consideration.

Investor's deal would be made as a joint bid with the private equity firm EQT, of which Investor is the largest shareholder. Investor's net asset value at the end of the third quarter was around $24 billion.

V&S reached almost $1.6 billion in sales in 2006. It has 2,500 employees, and makes wines, Absolut spirits and other distilled products.

Rich get richer and middle class stagnates

You probably won't be surprised when you read today's Wall Street Journal and find out that the income-inequality gap is widening. The wealthiest Americans in the top 1% earned 21.2% of all income in 2005, according to data from the IRS. That's a lot different than in 1986 when the top 1% of earners earned 11.3% of all income earned.

What do you have to earn to be in that top 1% bracket - at least $364,657. People in this group also saw the biggest jump in income. Their 2001 income in current dollars was at least $292,913, which means a $71,744 increase during the five year period or 4.9% per year. There were 1,316,116 tax filers in this bracket.

Next group of earners tracked are the top 5%. (The IRS tracks this cumulatively, so the top 1% is included in the numbers.) The top 5% earned 35.75% of all income in 2005, so those between 1% and 5% earned 14.55% of all income in 2005. To be in this bracket, you would need to have earned between $145,283 and $364,656. People in this group saw an income increase in current dollars of at least $17,379 in earnings between 2001 and 2005, or a 2.7% increase per year. There were 5,304,466 tax filers in this bracket.

Continue reading Rich get richer and middle class stagnates

With labor issues almost settled, will Ford (F) sell Jaguar?

Ford's (NYSE: F) negotiations with the UAW should be over soon. If it gets a deal that looks like the ones the union put together with Chrysler and General Motors (NYSE: GM), the No.2 car company should have labor costs much closer to its Japanese rivals. It may have to put $20 billion into a healthcare fund for the union, but the firm has almost twice that much cash on its balance sheet.

The New York Times has pointed out that the sale of Ford unit Jaguar is going much slower than expected. The paper says: "Ford's bidding date is now Oct. 30, a person involved in the process said Thursday. That is a month later than bidders originally thought they would be making offers." Several private equity firms and India's Tata Motors are rumored to be interested in the British car company and another Ford unit, Rover.

But, taking a step back for a moment, Ford may not sell the Jaguar unit at all. The US company may have needed the money if the UAW payment was going to be onerous. But, the funding of a union benefit plan now seems within Ford's means. It is entirely possible that the car units were being shopped in case Ford needed the money. Now, it does not.

Ford management should have a look at the fact that if a private equity firm can turn Jaguar around, then a big car company should be able to do just as well. If Ford can't get a premium price for Jag, it should not sell it.

Douglas A. McIntyre is a partner at 24/7 Wall St.

Oracle (ORCL) offers BEA Systems (BEAS) $17 a share -- will it offer more?

On Monday, Jim Cramer suggested to quickly buy BEA Systems before it gets a bid. Today, Oracle Corp. (NASDAQ: ORCL) indeed said it has proposed to buy business software maker BEA Systems Inc. (NASDAQ: BEAS) for more than $6.66 billion or $17 a share, a 25% premium over Thursday's close. Yet, BEA shares are up over 32% to $18+, suggesting shareholders expect an even higher bid to come.

SAP (NYSE: SAP) acquired Business Objects (NASDAQ: BOBJ) on Monday. Following the deal, many pundits, including Cramer, called the market of business intelligence hot. So the question now is how hot? Will BEA Systems see a proposal from SAP as it wants to give an answer to its rival's growth and thwart its plans for more? Maybe from International Business Machines Corp. (NYSE: IBM) as it might try to halt Oracle's advance into an area it is now dominant in, the middleware programs that connect server computers? Will Oracle simply increase its own proposal despite Oracle President Charles Phillips saying his company has made a "serious proposal including a substantial premium for BEA."

Despite BEA sales declining, now trailing IBM's, no doubt Oracle could use BEA's footprint in the middleware software biz, not to mention access to more customers. Perhaps it could lure some of those BEA customers that are now using SAP. BEA would also bring support fees. These are all good reasons for Oracle, which has grown remarkably well by growth (PeopleSoft notwithstanding).

No doubt, the signs were there. First, Carl Icahn had announced recently his stake in BEA Systems reached 13.22%. Of course, the line BEA executives have often used, "BEA is not for sale," is pretty much meaningless now with Icahn in the picture. Icahn has been pushing to have BEA sold. Then, SAP acquired Business Objects and pundits started calling for consolidation in the business with BEA being on the short list. If you had listened to Cramer on Monday, you could have sold your BEAS shares 32% higher today. Not bad for a week.

Eastman Kodak (EK) ditches Olympic advertising

EK logoEastman Kodak Co. (NYSE: EK) announced this morning that it will end its Olympic sponsorship following the 2008 Summer Games in Beijing, as they reassess their marketing and attempt to move in a new direction. EK is moving significantly higher today on this news and not much else, so it looks like investors are happy with this move. If you think that the company won't fall by too much in the coming months, then now could be a good time to look at a bullish hedged trade on EK.

After hitting a one-year high of $30.20 in June, the stock has up and down sharply within a $2-dollar range over the past three months. EK opened this morning at $27.24. So far today the stock has hit a low of $27.18 and a high of $28.44. As of 10:45, EK is trading at $28.20, up $1.16 (4.3%). The chart for EK looks neutral but improving, while S&P gives the stock a neutral 3 STARS (out of 5) hold rating.

For a bullish hedged play on this stock, I would consider a November bull-put credit spread below the $25 range. A bull-put credit spread is an options position that combines the purchase and sale of put options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. For this particular trade, we will make a 13.6% return in just 5 weeks as long as EK is above $25 at November expiration. Kodak would have to fall by more than 11% before we would start to lose money.

EK hasn't been below $25 since June and has shown support around $27 recently. This trade could be risky if the company's earnings (due out on 11/1) disappoint, but even if that happens, this position could be protected by strong support between $25 and $27, where EK has bottomed throughout the past three months.

Brent Archer is an options analyst and writer at Investors Observer.


Oracle (ORCL) flat after BEAS offer

ORCL logoOracle Corp. (NASDAQ: ORCL) stock is relatively flat after announcing a $6.7 billion offer to buy BEA Systems (NASDAQ: BEAS). Activist shareholder Carl Icahn has been pressuring BEAS to put itself up for sale, though company officials have said recently that they have no plans to sell. However, investors have driven the share price of BEAS up 32% since the announcement, almost a dollar above ORCL's $17 per share offer price, suggesting expectations of a potential rival bid. CNBC's Jim Cramer predicted earlier this week that SAP AG (NYSE: SAP) would make a bid for BEAS to boost its strength against ORCL. If a rival bid appears, Oracle could end up overpaying for BEAS. If you think this stock won't be rising too far in the coming months, then it could be a good time to look at a bearish hedged play on ORCL.

ORCL stock has been strong over the past few months, hitting a one-year high of $23.00 yesterday. This morning, ORCL opened at $22.40. So far today the stock has hit a low of $22.11 and a high of $22.58. As of 11:05, ORCL is trading at $22.48, up 0.02 (0.1%). The chart for ORCL looks bullish and steady, while S&P gives the stock a very positive 5 STARS (out of 5) strong buy rating.

For a bearish hedged play on this stock, I would consider a December bear-call credit spread above the $25 range. A bear-call credit spread is an options position that combines the purchase and sale of call options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. For this particular trade, we will make a 5.3% return in 10 weeks as long as ORCL is below $25 at December expiration. Oracle would have to rise by more than 11% before we would start to lose money. Learn more about this type of trade here.

ORCL has not been above $25 since 2001 and has shown some resistance around $23 recently. This trade could be risky if the company's earnings (due out in mid-December) are a positive surprise, but even if that happens, this position could be protected by the resistance the stock formed when it topped around $23.

Brent Archer is an options analyst and writer at Investors Observer.

Allegheny Tech (ATI) plunges after cutting forecast

ATI logoAllegheny Technologies Inc. (NYSE: ATI) is plunging today after the company cut its 2007 forecast this morning, citing weak demand for stainless sheet steel. This is one example of an industrial goods manufacturer getting caught as the credit crunch potentially slows down economic expansion. If you think this stock won't be rising too far in the coming months, then it could be a good time to look at a bearish hedged play on ATI.

After hitting a one-year high of $119.70 in April, the stock has been volatile over the past few months. This morning, ATI opened at $97.00. So far today the stock has hit a low of $92.80 and a high of $97.54. As of 10:55, ATI is trading at $95.50, down $11.15 (-10.5%). The chart for ATI was bullish and steady before today's dive, while S&P gives the stock a neutral 3 STARS (out of 5) hold rating.

For a bearish hedged play on this stock, I would consider a November bear-call credit spread above the $115 range. A bear-call credit spread is an options position that combines the purchase and sale of call options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. For this particular trade, we will make a 7.5% return in 5 weeks as long as ATI is below $115 at November expiration. Allegheny Tech. would have to rise by more than 20% before we would start to lose money.

ATI has not been above $115 by more than a few cents at a time since April and has shown some resistance around $112 recently. This trade could be risky if the industrial goods market turns around, but even if that happens, this position could be protected by the resistance the stock formed around $115 over the past few months, plus the big drop it suffered this morning.

Brent Archer is an options analyst and writer at Investors Observer.


Apple (AAPL) price target raised to $180 by Morgan Stanley

Apple, Inc. (NASDAQ: AAPL) continued to see its highest-ever share price this week, closing yesterday right under $163 per share. Right at the time this post was being written, AAPL shares stood at $165.58, up over 2% from yesterday's close. Are the company's shares headed to $200?

In an easy answer, yes they are -- but the question is, will it happen this year? That depends on iPhone sales numbers plus sales for its newer iPod products, released just in time for holiday pickings in standard Apple release schedule fashion.

Morgan Stanley (NYSE:MS) wisely upped its price target on Apple from $150 to $180 this week, citing the iPhone's forecasted ability to drive "more ancillary revenue" than the investment house's previous guess. In addition, Morgan Stanley said that market estimates still are not taking into account Apple's "true operating margin potential."

With the company settled in for yet another blockbuster iPod holiday sales season as well as the impending release of its new Leopard MacIntosh computer operating system, perhaps Morgan Stanley should reconsider its $180 target and go for the jugular at $200. Maybe even that level is too low.

More bad news for Beazer Homes (BZH)

Beazer Homes (NYSE: BZH) just can't seem to catch a break. The stock actually went up when the company announced that it would have to restate earnings going back three years. With the uncertainty over its accounting seemingly out of the way, the Street breathed a sigh of relief.

But Beazer also found that employees had been violating the Department of Housing and Urban Development's regulations related to down payment assistance. Oh, and the company also recently fired its chief accounting officer for shredding documents.

Of course, concerns over internal controls and accounting are not the only thing hurting Beazer; there's also that little problem of the housing downturn. Beazer is reporting that during the last quarter, 68% of prospective home buyers canceled their orders, compared with 36% for the previous quarter.

Oh, and the company is facing lawsuits from home buyers accusing Beazer of unfair and deceptive sales practices.

Given the concerns about governance and management, combined with the concerns about the industry and business, shares of Beazer are probably too risky for most investors.

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Last updated: October 12, 2007: 02:28 PM

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