Are you diversifying your portfolio wisely?

These are the words which many of you may have heard often while investing.  Diversification has been widely talked about for the merits it offers, but quite often incorrectly or incompletely followed by many investors.

It is noteworthy that diversification is one of the basic tenets of investment planning, and therefore vouched by many investment advisors. It helps one in reducing the risk to one's portfolio, and thus makes it resilient.  But having said that you need to diversify in a prudent manner which can thus aid you to cushion against the wild swings of the markets.

Very often, through experience we can say that many investors often keep buying various stocks, mutual funds and debt instruments on an ad-hoc basis, and believe that they are diversifying their portfolio. But, in our view unless you don't do it the effective way, it is meaningless and cannot add value to your overall portfolio.

The legendary author on investments- Mr Robert Kiyosaki has so beautifully said, "Your future is created by what you do today, not tomorrow." And thus in context to that, it is indeed imperative that you as investors learn to diversify wisely in the following way:

1. Diversify across asset classes
Yes, it is important to diversify your portfolio across asset classes, since all assets don't move in the same direction. Thus while you may have a high risk appetite and therefore investing in equities, you ought to have exposure to other asset classes- such as debt, gold and real estate as well. This helps you to reduce the overall risk of wealth erosion to your portfolio.

So, say when the Indian equity markets turn turbulent (as they are at present for instance), allocating your hard earned money into debt instruments such as fixed deposits (FDs) and fixed maturity plans (FMPs) can prove to be handy.

However while you diversify across classes, allocate your assets the smart way . Take into account factors such as your age, income, expenses and nearness to goals, which can help you build a rationally diversified portfolio across asset classes. Also, you may follow a diversification model based on your risk profile. Thus say if your willingness to take risk is high (aggressive), you can skew your portfolio more towards the equity asset class. Similarly, if your willingness to take risk is relatively low (conservative), your portfolio can be skewed towards fixed income instruments, and if you are a moderate risk taker you can take a mix of 60:40 into equity and debt respectively.

2. Diversify across investment avenues
Within each asset class too, there is a need to be diversified across various investment avenues. Thus say for example; while your risk profile allows you to participate with a dominant composition towards equities, you ought to diversify well between stocks and mutual fund schemes. Moreover, within stocks and mutual fund schemes too, there needs to be optimal diversification, which can help you to reduce risk as well as create wealth. Hence, care should be taken that you don't over-diversify your portfolio nor make it concentrated either, by holding too many or too little stocks and mutual fund schemes in equity. 
Similarly for debt composition of the portfolio too, care should be taken to diversify across various debt instruments such as bank FDs, corporate FDs, debt mutual funds (suiting your needs) and small savings schemes.

3. Diversify across time horizons
You should hold multiple investment portfolios each catering to a distinct need and running over a commensurate time horizon. For example, as an investor you could have short-term goals (going on a vacation), medium-term goals (buying a house) and long-term goals (providing for retirement). Each of these objectives should be backed by a distinct portfolio and the investments therein should be aligned with the time frames. Equities can account for a higher composition for a long-term portfolio given that they are best equipped to deliver over longer time frames. Conversely, debt instruments could dominate the short-term portfolios.

4. Diversify across issuer of securities
Very often we come across investors who have invested in securities only of some issuers, either believing they are safe, or due to mere penchant for the issuer. It is vital to note that investing is a serious business, and thus it is important to keep emotions at bay and invest rationally.

While you build a portfolio, it is imperative that you diversify across various issuers (i.e. providers or suppliers) of securities, or else you'll be provoking the risk of concentration. Thus for example, although you may be fond of investing in stocks bearing a 'Reliance' tag, you ought to prudently select them through thorough analysis. Likewise in mutual funds schemes as well, you ought to invest across Asset Management Companies (AMCs), and not merely because it comes from a big or renowned fund house. It is noteworthy that each AMC can offer a unique investment style and process, thereby aiding the portfolio on the diversification front. Moreover, it is vital to select winning mutual funds prudently for your portfolio , rather than merely going by what your friends, family and colleagues say.

Similarly while investing in debt instruments too; one should diversify across issuers of securities. Thus for example while you would like to plough your hard earned money into FDs, you should look out for issuers such as various bank and corporates.

5. Diversify across countries
Today, with resident Indians being permitted to invest in assets and securities abroad, subject to the regulations issued by the Reserve Bank of India (RBI), your scope for diversification has further more widened, since you now diversify across countries. However, while undertaking diversification for your portfolio you ought to be cognisant about the economic scenario in the global economy- and more specifically the country which you would like to have exposure to. Also, you got to be well-versed with the tax implications, because unless meaningful tax-adjusted returns aren't obtained, wealth creation would be muted, although one may get a unique diversification edge.   

Don't forget to rebalance your portfolio…
It is noteworthy that any attempt to diversify comes to a zilch, if it is not followed by disciplined portfolio rebalancing. Rebalancing isn't easy and thus many often fail to rebalance their portfolio in the right manner. It involves re-alignment of the portfolio, and what's optimal re-alignment is not known to many. For example you may have suitably diversified your portfolio in accordance to time horizon, by investing for the long-term to take care of your retirement. But unless you don't re-balance your portfolio by shifting from risky asset classes to safer asset classes as you are close to about three years away from your financial goal, you are assuming more risky and may cause harm to your portfolio.

Hence, one should remember that diversification and re-balancing are both integral to the art of investment management and utmost necessary.

PersonalFN  is a Mumbai based Financial Planning and Mutual Fund Research Firm.

We Had a Good First 6 Weeks of 2012 – What’s Next?

I made the case last month, as I had in October, November and December 2011, that the risk of a major correction, predicted by so many, was completely off base. I noted that fears of Europe driving the world into another Great Recession were unfounded, that Greece, with the same GDP as Michigan, was unlikely to be the trigger for said event, and that U.S. private employers were lean and mean and ready to begin hiring once again if only we could keep our national government from providing so much incentive to remain unemployed and on the dole as to prevent workers from even seeking work. Despite the worst intentions of those who would create armies of expensive government employees, middlemen and administrators to give out benefits and entitlements, in fact the American private sector has become lean and mean and ready to hire again.

Fortunately for those of us willing to climb the proverbial and very real Wall of Worry, many (most?) investors continue to cling to their belief that this rally is a head-fake, that the country is headed to hell in a hand basket, and that "this time it's worse than ever before." I hear from them all the time when they tell me what an idiot I am after reading my articles on Seeking Alpha, ForexPro, GuruFocus or elsewhere.

As I wrote to a brilliant investor friend who was concerned that the institutional manipulation by Wall Street makes this time different, a viewpoint I didn't touch on in last month's issue: "It's true that HFT, program trading, dark pools, et al are new ways Wall Street has come up with to avoid transparency and middle the very people they claim to be on the same side as. But thus has it always been. Back in the 1920s it was bald-faced manipulation via "trust" companies, in the 1960s it was the crooked specialist system -- put in a trailing stop 2 points away and the stock would magically decline 2 points for one trade then magically recover by 1.98 with the next trade. We should always expect double-dealing from Wall Street.

"I do! n't know, but my guess is that the average holding period for the 76% of trading today dominated by institutions may be closer to 5 seconds, factoring in the millions daily that last a millisecond as well as the pension funds that hold for 6 months.

"But I really don't care. I don't have to compete with them, and I don'tcompete with them. While they are making millions of trades to make a sure penny each trade, I am buying quality under-loved companies too thinly traded, foreign or boring for them to bother with. My holding period may be 6 months, a year, or much longer. They can keep their approach; there is a whole universe of companies it isn't worth their while to manipulate or in which they might get caught on the wrong side and lose all their other ill-gotten gains.

"I'll still fight to get appropriate regulation of these yahoos, but we basically work different sides of the street so, while a flash crash will affect me for a couple of days, I can use Wall Street's foolishness and venality to my own advantage. You can try to fight 'em using their tools, you can join them, or you can ignore them. As much as possible, I choose the last course."

Our current portfolios reflect our optimism. But nothing goes straight up or straight down. Every day the market goes up, the more overloaded the boat is becoming on the "greed" side of the fear/greed equation: a gnawing sense on the part of many investors that they are missing something. And they have, of course. January 2012 enjoyed the largest January gain in history for both the Dow and the S&P 500. I believe people need time to digest these gains and that, for many, the temptation to grab whatever profits they can before what they see as the inevitable next slide down, means we will have a pullback.

Unlike many commentators, I see that "slide" as relatively slight and well-contained. Still, we have been placing ever-tighter trailing stops all during February. It doesn't matter that I see this as an excellent year; it matters th! at we get! ahead of the crowd our clients and avoid the falling knives investor panic creates. The catalyst for the decline could be something real, like soaring U.S. unemployment or terrible corporate earnings, or it could be a chimera like Greece defaulting or fear of Europe dragging us all into the morass. (Re the latter: the highest estimate I've ever seen show that Europe represents no more than 10% of the earnings of S&P 500 companies. We are competitors of the big Euro firms rather than suppliers or recipients of their sub-contracting. In addition, I read a great quote from Lazard Capital Markets' head of Product Strategy, Art Hogan, who noted, "Portugal is smaller than Greece. If Italy's economy was a dinner meal, then Greece and Portugal's combined would not be enough to leave the tip."

None of this means that one can simply buy and hold yet! "There is many a slip twixt cup and lip." Though I believe the year will end well, I expect thrills and spills along the way. Those facile fools who say things like, "As goes January, so goes the year," are repeating trite piffle that will doom them to lose even as we exit the year with a profit.

There are no short cuts to investing success. Yet every year people too lazy to do the hard analysis required to beat the market try to take short cuts like the "January Barometer." An up first five days of January means the year will be up? Dumb. The market rises roughly 70% of the time anyway (albeit not in Secular Bear years!) If you just said, "The market will rise every year," you'd be right about 7 out of 10 times (which is why perennial optimists get all the forecasting jobs on Wall Street). So to say, "The market will rise if January — especially the first five days of January — rises," is stating the obvious — but for the wrong reasons.

Since there is a January effect in most years, however, and since the market goes up most years, there is a strong correlation. But is it causative or merely correlative? I'd argue the latter. The fact tha! t the fir! st five days of January are up, or even the whole month of January is up, doesn't mean the market is destined to outperform. The fact that the market is up most years, anyway, simply gives credence to throwing bones in a circle, reading tea leaves, or using astrology or the January Barometer to "predict" an up year. I think tea leaves, old bones, and the January Barometer are harmless distractions unless you take them seriously with serious money.

What you might want to note, instead, in support of an up market this year, is that there is a latent strain of optimism that runs through the American national consciousness. We believe in vast frontiers and the power of high technology, cosmetic surgery, and paying taxes up to the point of fairness to propel us ever forward. For that reason, we simply cannot abide this many down years in a row. American optimism and, more importantly, American entrepreneurialism, spurred by a complete revamping of the idiotic way we invite immigrants to our country, will be a better barometer than the date on the calendar every time.

Putting aside the January Barometer as unworthy of serious consideration as a predictive tool doesn't mean we should ignore the January effect. This is typically due to large asset inflows and/or year-end repositioning of portfolios from institutional investors. Big mutual funds and others hold what they have at year-end, hedging so they can hang on to whatever gains they have and get their bonuses for beating the benchmarks by .00001%. The New Year gives them a reason to get frisky again — after all, they'll have 50 weeks or so to undo any damage they do by taking big risks on small companies early in the year. (And those small companies just might provide good gains to create a cushion for mediocre performance the rest of the year.)

Then there's the self-fulfilling prophecy angle: Once the January effect became well known, investors who didn't want to miss out put cash into the market, thus confirming the hypothesis that! the mark! et rises in January. There could even be an element of New Year's resolutions at work, as people resolve to save and invest more this year. And people often do get cost-of-living increases, raises, bonuses and retirement plan contributions at this time of year, all of which mean money that needs to be saved or invested.

I'm not one to look a gift horse in the mouth. If someone wants to give us a 10%-plus gain in six weeks, we'll take it. But we'll now tighten up our trailing stops so we still retain 8-9% if I'm correct and the market takes a breather here. There will always be other opportunities for those of us who don't choose to follow the market up and then right back down. I don't expect a correction to last more than a month or so, but I think it will be less than enjoyable for the group that wants to buy and hold, and I'll wager will only reinforce the stubborn view of those who believe we are doomed to enter a Great Depression. The former will give back a chunk of their profits, the latter will stay on the sidelines until the news is all rosy again. We think there's lots of money to be made between now and then! Place trailing stops on your stocks and see future articles for what we will be buying.

Hancock Initiated at Neutral - Analyst Blog

On Jul 3, we initiated our coverage on regional bank, Hancock Holding Company (HBHC) at Neutral, based on its strong organic and inorganic growth prospects. However, persistently rising operating expenses, a low rate environment and increased regulations remain major causes of concern.

Why the Neutral Stance?

Hancock's focus on its organic growth strategy as well as expansion through acquisitions prompted us to initiate with this stance. Further, the company continues to build capital, resulting in a better financial position that will help in fulfilling the stringent capital requirements. Moreover, with a strong liquidity position and meaningful capital deployment, Hancock remains an asset for yield-seeking investors.

Nevertheless, due to the low interest rate environment, Hancock is expected to continue experiencing pressure on its net interest margin. Moreover, increased non-interest expenses and significant exposure to real estate markets remain major causes of concern for the company. In addition, Hancock's profitability remains subject to the stringent regulatory landscape.

Further, in the first quarter of 2013, Hancock lagged the Zacks Consensus Estimate due to decreased revenues and higher operating expenses. The company is scheduled to announce its second-quarter results on Jul 25.

The Zacks Consensus Estimate for the quarter is pegged at 56 cents per share. The Zacks Earnings ESP (Read: Zacks Earnings ESP: A Better Method) for Hancock is +1.79% for the second quarter. This, along with its Zacks Rank #3 (Hold), makes it likely for the company to report a positive earnings surprise.

Other Stocks to Consider

Other stocks in the same industry that are currently performing well include Capital City Bank Group Inc. (CCBG), SY Bancorp Inc. (SYBT) and WesBanco Inc. (WSBC). All of them carry a Zacks Rank #1 (Strong Buy).

Homebuilder Stocks Surge after Bernanke Comments - ...

Shares of some top homebuilding companies jumped during the trading session on Thursday, Jul 11, on Federal Reserve Chairman Ben Bernanke's comments to keep interest rates low for sometime and continue to support the U.S economy by maintaining an 'accommodative' monetary policy.

After market close on Wed, Jul 10, Bernanke commented that Fed plans to keep the short-term interest rates at record low even if the unemployment rate falls below 6.5%, which is Fed's current benchmark to consider a tight monetary policy.

Stocks of both large homebuilders like D.R. Horton, Inc. (DHI), PulteGroup, Inc. (PHM), Lennar Corporation (LEN) and Toll Brothers (TOL) as well as smaller ones like The Ryland Group, Inc. (RYL), Meritage Homes Corporation (MTH), KB Home (KBH) and MDC Holdings Inc. (MDC) rose on Bernanke's comments. Prices of these companies rose in the range of 6%-9% as homebuilding stocks are most sensitive to the outlook of interest rates.

Low interest rates increase demand for new homes as mortgage loans become cheaper; thus improving the purchasing power of the buyer. Homebuilders have largely benefited from historically low interest rates, eventually leading to the sharp increase in home buying activity since mid-2012.

The broader housing market also enjoyed a strong rally and the SPDR S&P Homebuilders (XHB) jumped 3.6%. Moreover, the Dow Jones and S&P 500 index surged to record highs on the news.

The Fed is currently buying $85 billion in government bonds and mortgage backed securities a month, known as quantitative easing, to keep interest rates low and boost economic growth. Last month, Bernanke had announced plans to scale back this bond buying plan and instead adopt a tighter monetary policy to avoid deflation. The U.S. markets tumbled on the news.

Especially, investor confidence in the overall housing recovery was shaken due to concerns of rising interest rates if a tighter monetary policy was implemented. Bernanke's recent comments ! have put these concerns to rest, at least for some time

Is BP Back On Track?

With shares of BP (NYSE:BP) trading at around $42.98, is BP plc an OUTPERFORM, WAIT AND SEE or STAY AWAY? Let's analyze the stock with the relevant sections of our CHEAT SHEET investing framework:

C = Catalyst for the Stock's Movement

The infamous 2010 oil spill in the Gulf of Mexico was a horrific event, but from an investing perspective, it may have presented an opportunity.

There will likely be a lot of volatility ahead for BP, which relates to litigation. However, keep in mind that BP has set aside $41 billion for damages. What happens if the costs aren't as high as expected? This would likely lead to a boost in the stock price.

NEW! Discover a new stock idea each week for less than the cost of 1 trade. CLICK HERE for your Weekly Stock Cheat Sheets NOW!

There are other factors working in favor of BP as well. It has high-margin operations in the Gulf of Mexico, it has made new finds in the North Sea, analysts are beginning to jump on board, regulatory constraints have quietly eased, it has eight new rigs in the Gulf of Mexico with the goal of adding two more in the near future, it has sold off $38 billion in non-core assets since 2010, it has an improved its balance sheet, cash flow improvements are likely in the future, and it recently beat expectations. In addition to that, it has a 5 percent yield, which is higher than its peers Exxon Mobil Corporation (NYSE:XOM) and Chevron Corporation (NYSE:CVX), which have 2.80 percent and 3.20 percent yields, respectively.

Exxon Mobil and Chevron have outperformed BP by tremendous margins over a three-year time frame, but this mostly had to do with the oil spill and the following litigation. At this point, BP has been beaten down too much and has a lot of ground to make up. However, that doesn't mean everything is fine and dandy. There are still some external risks. We'll get to those risks soon.

The chart below compares fundamentals for BP, Exxon Mobil, and Chevron.

	BP	XOM	CVX
Trailing P/E	6.05	9.16	9.25
Forward P/E	7.65	10.92	9.79
Profit Margin	6.05%	10.86%	11.89%
ROE	18.32%	28.26%	19.47%
Operating Cash Flow	20.96B	50.48B	36.14B
Dividend Yield	5.00%	2.80%	3.20%
Short Position	N/A	1.10%	0.90%

Let's take a look at some more important numbers prior to forming an opinion on this stock.

T = Technicals Have Strengthened

BP has underperformed the market as well as its peers over the past three years, but it has been gaining momentum as of late. The 5 percent yield is also a big bonus.

	1 Month	Year-To-Date	1 Year	3 Year
BP	4.67%	5.82%	13.82%	-1.16%
XOM	1.68%	5.21%	10.98%	49.24%
CVX	2.01%	14.02%	23.18%	68.74%

At $42.98, BP is trading above its averages.

50-Day SMA	42.19
200-Day SMA	42.10

 

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E = Equity to Debt Ratio Is Normal

The debt-to-equity ratio for BP is close to the industry average of 0.30. BP is focused on debt management. Therefore, it’s not likely to be an issue in the near future.

	Debt-To-Equity	Cash	Long-Term Debt
BP	0.35	28.28B	46.42B
XOM	0.08	6.21B	13.41B
CVX	0.10	19.05B	14.14B

 

E = Earnings Are Inconsistent

Earnings might be inconsistent on an annual basis, but other than the disaster year of 2010, BP always delivers big profits. Annual revenue has been on the right track.

Fiscal Year	2008	2009	2010	2011	2012
Revenue ($) in billions	367.05	243.96	308.93	386.46	388.28
Diluted EPS ($)	6.694	5.252	-1.189	8.057	3.627

When we look at the last quarter on a year-over-year basis, we see an increase in revenue and earnings. Revenue and earnings have also increased on a sequential basis.

Quarter	Mar. 31, 2012	Jun. 30, 2012	Sep. 30, 2012	Dec. 31, 2012	Mar. 31, 2013
Revenue ($) in billions	97.42	94.89	93.12	103.57	107.21
Diluted EPS ($)	1.798	-0.4374	1.703	0.5053	5.257

Now let's take a look at the next page for the Trends and Conclusion. Is this stock an OUTPERFORM, a WAIT AND SEE, or a STAY AWAY?

T = Trends Might Support the Industry

On the positive side, companies drilling in the Gulf of Mexico have been performing well as of late. GOM is back! On the negative side, finding low-cost barrels of oil remains a challenge, and future global demand is questionable.

NEW! Discover a new stock idea each week for less than the cost of 1 trade. CLICK HERE for your Weekly Stock Cheat Sheets NOW!

Conclusion

As long as the broader market holds, BP should perform well going forward. If litigation costs exceed expectations, it might lead to a drop in the stock price, but that would only be temporary. Investors would then look at it as something that's now out of the way, which is always a positive.

Read This to Learn About the World's Safest Gold Stocks

As Jeff Clark expected would happen in late June, gold stocks have put in a bottom... and staged a huge rally.

 

The benchmark gold index is up 36% off its lows.

 

Like Jeff, I expect gold stocks will work higher over the longer-term. Of course, there will be corrections along the way, which is why you should stick to some of the world's safest gold stocks.

 

The key to safety is to focus on "all-in" costs. This is the total cost of an ounce of gold production. It includes the cost of mining at each mine the company owns, plus the costs of running the company.

 

It is a way to look at gold-mining companies as businesses, instead of simply a way to play rising gold prices. It's a critical idea for making money in the gold-stock sector...

 

In my most recent issue of the S&A Resource Report, I presented a proprietary, in-depth analysis of the gold sector. I showed readers a selection of the best companies from the gold sector with our estimated "all-in" costs.

 

It's important to understand that we did not try to figure out the industry's "all-in sustaining cost" that we see companies reporting today. We used some assumptions that the industry wouldn’t want... For example, I assumed unprofitable mines were closed.

 

In the table below, I compared the all-in cost and the price of gold at the top of the column. If the costs are higher than the gold price, the company will lose money. We sorted the list by operating costs with gold at $1,200 an ounce, the recent low.

 

All-In Costs
Gold Price per Ounce	$800	$1,200	$1,600	$2,000
Agnico Eagle	$1,495	$1,245	$1,245	$1,245
Kinross	$1,258	$1,144	$1,144	$1,144
Newmont	$1,148	$1,110	$1,128	$1,128
AngloGold Ashanti	$1,058	$1,034	$1,040	$1,040
Yamana	$1,035	$1,025	$1,025	$1,025
Gold Fields	$932	$974	$974	$974
B2Gold	$1,014	$935	$935	$935
Eldorado	$846	$841	$841	$841
Goldcorp	$801	$807	$807	$807
Barrick	$682	$737	$740	$720
Randgold	$734	$734	$734	$734
Iamgold	$699	$732	$748	$748
New Gold	$680	$727	$727	$727

All but Agnico Eagle are profitable with gold at $1,200 per ounce. If gold suffers another big move down, however, a lot of these businesses will struggle.

 

You can see what I mean in the table below. It shows how much money each company will earn at a given gold price. These numbers are the profit per ounce multiplied by the volume of gold produced per year.

 

We sorted the table by earnings at $1,200 an ounce.

 

Operating Earnings (Millions)
Gold Price per Ounce	$800	$1,200	$1,600	$2,000
Barrick	$731	$3,665	$6,848	$11,547
Goldcorp	-$2	$1,195	$2,411	$3,627
AngloGold Ashanti	-$508	$642	$2,231	$3,824
Newmont	-$1,433	$436	$2,405	$4,440
Iamgold	$78	$412	$774	$1,137
Gold Fields	-$123	$398	$1,103	$1,808
Randgold	$47	$334	$620	$907
Eldorado	-$29	$260	$549	$839
Yamana	-$280	$221	$726	$1,231
New Gold	$39	$218	$402	$586
Kinross	-$815	$145	$1,190	$2,234
B2Gold	-$40	$88	$220	$352
Agnico Eagle	-$370	-$45	$351	$747

At $800 per ounce of gold, our model estimates that nine companies will not be profitable. On the other hand, we see companies like Barrick, Iamgold, Randgold, and New Gold should be profitable.

 

Now... I'm not saying gold will go down to $800 an ounce... or even $1,200 an ounce. But if you're interested in gold companies that will stay profitable if gold doesn't soar from its current levels, consider owning the companies with the low "all-in" costs. These are the safest gold companies on the market. And they're the ones I'm encouraging my readers to own.

 

Good investing,

 

Matt Badiali

Top 10 Biotech Companies For 2014

What's the source of your investment strategy? Many look to great investors like Warren Buffett for guidance on how to invest. Some take what we at the Fool call a "motley approach" and try a little bit of everything. Others really don't have an investment strategy at all. They just throw their money at whatever looks good at the time.

Here's another angle: Learn from successful companies. In other words, see what made a given company do well in the market and find others that exhibit similar attributes. There are plenty of companies to choose from, but let's see how this approach plays out with an example from the biotech world:�Vertex Pharmaceuticals (NASDAQ: VRTX  ) . Here are three investment strategy lessons from Vertex's success.

1. Understand the market opportunity.
Even the best-run company in the world won't produce stellar returns if it operates in a sector with lackluster sales potential.�Before buying a stock, make sure you understand the market opportunity. Look at the realistic potential for sales and the strength of competitors. If all looks good, the stock can advance to your next stage of analysis.

Top 10 Biotech Companies For 2014: Cell Therapeutics Inc (CTIC.A)

Cell Therapeutics, Inc. (CTI), incorporated in 1991, develops, acquires and commercializes treatments for cancer. The Company�� research, development, acquisition and in-licensing activities concentrate on identifying and developing new ways to treat cancer. As of December 31, 2011, CTI focused its efforts on Pixuvri (pixantrone dimaleate) (Pixuvri), OPAXIO (paclitaxel poliglumex) (OPAXIO), tosedostat, brostallicin and bisplatinates. As of December 31, 2011, it developed Pixuvri, an anthracycline derivative for the treatment of hematologic malignancies and solid tumors. Another late-stage drug candidate of the Company, OPAXIO, is being studied as a potential maintenance therapy for women with advanced stage ovarian cancer, who achieve a complete remission following first-line therapy with paclitaxel and carboplatin. As of December 31, 2011, it also developed tosedostat in collaboration with Chroma Therapeutics, Ltd. (Chroma). On May 31, 2012, CTI completed its acquisi tion gaining worldwide rights to S*BIO Pte Ltd.'s (S*BIO) pacritinib.

Pixuvri

As of December 31, 2011, the Company developed Pixuvri, an aza-anthracenedione derivative, for the treatment of non-Hodgkin�� lymphoma (NHL), and various other hematologic malignancies, and solid tumors. Pixuvri was studied in the Company�� EXTEND, or PIX301, clinical trial, which was a phase III single-agent trial of Pixuvri for patients with relapsed, refractory aggressive NHL who received two or more prior therapies and who were sensitive to treatment with anthracyclines. On September 28, 2011, CTI announced that a second independent radiology assessment of response and progression endpoint data from its PIX301 clinical trial of Pixuvri was achieved with statistical significance. The results of the EXTEND trial met its primary endpoint and showed that patients randomized to treatment with Pixuvri achieved a significantly higher rate of confirmed and unconfirmed co mplete response compared to patients treated with standard! c! hemotherapy had a significantly increased overall response rate and experienced a statistically significant improvement in median progression free survival. Pixuvri had predictable and manageable toxicities when administered at the proposed dose and schedule in the EXTEND clinical trial in heavily pre-treated patients. In March 2011, the Company initiated the PIX-R trial to study Pixuvri in combination with rituximab in patients with relapsed/refractory diffuse large B-cell lymphoma (DLBCL). Pixuvri has also been studied in patients with HER2-negative metastatic breast cancer who have tumor progression after at least two, but not more than three, prior chemotherapy regimens. In the second quarter of 2010, the NCCTG opened this phase II study for enrollment. The study is closed to accrual and results are expected to be reported by the NCCTG later in 2012.

OPAXIO

OPAXIO is the Company�� biologically-enhanced chemotherapeutic agent that links pacli taxel to a biodegradable polyglutamate polymer, resulting in a new chemical entity. As of December 31, 2011, the Company focused its development of OPAXIO on ovarian, brain, esophageal, head and neck cancer. OPAXIO was designed to improve the delivery of paclitaxel to tumor tissue while protecting normal tissue from toxic side effects. In November 2010, results were presented by the Brown University Oncology Group from a phase II trial of OPAXIO combined with temozolomide (TMZ), and radiotherapy in patients with newly-diagnosed, high-grade gliomas, a type of brain cancer. The trial demonstrated a high rate of complete and partial responses and a high rate of six month progression free survival (PFS). Based on these results, the Brown University Oncology Group has initiated a randomized, multicenter, phase II study of OPAXIO and standard radiotherapy versus TMZ and radiotherapy for newly diagnosed patients with glioblastoma with an active gene termed MGMT that reduces respons iveness to TMZ. A phase I/II study of OPAXIO combined ! with r! a! diothera! py and cisplatin was initiated by SUNY Upstate Medical University, in patients with locally advanced head and neck cancer.

Tosedostat

In March 2011, the Company entered into a co-development and license agreement with Chroma Therapeutics, Ltd. (Chroma), providing the Company with marketing and co-development rights to Chroma�� drug candidate, tosedostat, in North, Central and South America. Tosedostat is an oral, aminopeptidase inhibitor that has demonstrated anti-tumor responses in blood related cancers and solid tumors in phase I-II clinical trials. Interim results from the phase II OPAL study of tosedostat in elderly patients with relapsed or refractory acute myeloid leukemia (AML) showed that once-daily, oral doses of tosedostat had predictable and manageable toxicities and results demonstrated response rates, including a high-response rate among patients who received prior hypomethylating agents, which are used to treat myelodysplastic synd rome (MDS), a precursor of AML.

Brostallicin

As of December 31, 2011, the Company developed brostallicin through its wholly owned subsidiary, Systems Medicine LLC, which holds rights to use, develop, import and export brostallicin. Brostallicin is a synthetic deoxyribonucleic acid (DNA) minor groove binding agent that has demonstrated anti-tumor activity and a favorable safety profile in clinical trials, in which more than 230 patients have been treated as of December 31, 2011. The Company uses a genomic-based platform to guide the development of brostallicin. A phase II study of brostallicin in relapsed, refractory soft tissue sarcoma met its predefined activity and safety hurdles and resulted in a first-line phase II clinical trial study that was conducted by the European Organization for Research and Treatment of Cancer (EORTC).

The Company competes with Bristol-Myers Squibb Company, Sanofi-Aventis, Pfizer, Roche Group, Genentech, Inc., Astellas Pharma, Eli Lilly and Company, Cel! gene, Tel! ik! , Inc., T! EVA Pharmaceuticals Industries Ltd. and PharmaMar.

Top 10 Biotech Companies For 2014: Sanofi(SNY)

sanofi-aventis engages in the discovery, development, and distribution of therapeutic solutions to improve the lives of everyone. The company offers a range of healthcare assets, including a broad-based product portfolio in prescription drugs, OTC/OTX, generics, vaccines, and animal health. It has a strategic alliance with Regulus Therapeutics Inc. to discover, develop, and commercialize micro-RNA therapeutics, initially in fibrosis. The company was founded in 1970 and is headquartered in Paris, France.

Advisors' Opinion:

• [By Dividend Stocks Online]

  Sanofi (SNY) has a market capitalization of $129.70 billion. The company employs 113,719 people, generates revenue of $47.297 billion and has a net income of $6.562 billion. The firm’s earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $13.805 billion. The EBITDA margin is 29.19 percent (the operating margin is 16.18 percent and the net profit margin 13.87 percent). 
  
  Financial Analysis: The total debt represents 15.41 percent of the company’s assets and the total debt in relation to the equity amounts to 27.46 percent. Due to the financial situation, a return on equity of 10.42 percent was realized. Twelve trailing months earnings per share reached a value of $3.05. Last fiscal year, the company paid $1.79 in the form of dividends to shareholders. 
  
  Market Valuation: Here are the price ratios of the company: The P/E ratio is 16.07, the P/S ratio is 2.74 and the P/B ratio is finally 1.70. The dividend yield amounts to 3.46 percent and the beta ratio has a value of 0.91.

• [By Michael]

  Sanofi is a global and diversified healthcare company. Cramer holds 2,600 shares of SNY stocks. SNY has a dividend yield of 5.40% and returned 7.19% since the beginning of this year. It has a market cap of $87.11B and a P/E ratio of 14.42. Ken Fisher invested nearly $600 million in SNY.

Top Oil Stocks To Buy For 2014: Applied Nanotech Holdings Inc (APNT)

Applied Nanotech Holdings, Inc., incorporated on May 22, 1989, is engaged in nanotechnology research and development business. The Company's nanotechnology research involves performing contract research and development services for others to develop products and materials for new applications, and then leveraging this research by applying it to other similar applications in other industries. The Company also develops intellectual property (IP) around its products and technologies. The Company develops five technology platforms: nanosensor technology; nanocomposites, based on carbon nanotube composites; thermal management materials; nanoelectronics applications, and electron emission activities, primarily in the display area. The Company's electron emission IP is divided into display activities and non-display activities. Applied Nanotech Holdings, Inc. is the parent company. Applied Nanotech, Inc. (ANI) is a subsidiary of ANHI. During the year ended December 31, 2012, the Company formed EZDiagnostix, Inc., (EZDX).

Sensors

The Company develops sensors based on ion mobility sensor technology and differential mobility spectroscopy. The Company is involved in projects to develop Mercaptan and Methane sensors for uses in the natural gas industry. The Company is also applying this technology to other applications, including agricultural pathology, wound care, and breath analysis. The Company develops hydrogen sensor for use in the measurement of hydrogen in power transformer products. The Company develops carbon monoxide sensor that can last for 10,000 hours on a single battery. The Company's carbon nanotube technology is for use in biosensors. Sensors based on carbon nanotubes or other nanomaterials can be used to detect chemical, organic, or biological warfare agents, as well as explosives, hydrogen, ammonia and numerous other chemicals.

Nanocomposites

The Company is in the advanced stages of development of nanomaterials using carbon nanotube (CNT) and! other composites. Epoxies are used in industries with worldwide markets, with applications, including adhesives, paints, coatings, and composites. In addition to epoxy resins, the Company develops other types of resins, including polyesters and vinyl esters. Vinyl esters are used in a variety of industrial applications, including storage tanks, piping, and construction. The Company develops a process for coating nylon pellets with CNTs to improves electrical conductivity. Nylon 6 with improved electrical conductivity can be used for its anti-static qualities, electrostatic discharge, and electromagnetic/RF shielding.

Thermal Management

The Company markets thermal management material called CarbAl. CarbAl provides a passive thermal management solution for temperature control issues that plague electronics manufacturers. CarbAl is a carbon based metal nanocomposite comprised of 80% carbonaceous matrix and a dispersed metal component of 20% aluminum. The Company also develops a simplified version of CarbAl based on graphite.

Conductive Inks

The Company develops aluminum and silver inks and pastes that is ideal for use in the production of solar cells. The Company also develops aluminum paste that can be used in current solar cell production.

The Company competes with Zyvex Performance Materials, GSI Creos, Amroy Europe, Ltd., DuPont and Ferro

Top 10 Biotech Companies For 2014: Johnson & Johnson(JNJ)

Johnson & Johnson engages in the research and development, manufacture, and sale of various products in the health care field worldwide. The company operates in three segments: Consumer, Pharmaceutical, and Medical Devices and Diagnostics. The Consumer segment provides products used in baby care, skin care, oral care, wound care, and women?s health care fields, as well as nutritional, over-the-counter pharmaceutical products, and wellness and prevention platforms under the brands of JOHNSON?S, AVEENO, CLEAN & CLEAR, JOHNSON?S Adult, NEUTROGENA, RoC, LUBRIDERM, DABAO, LISTERINE, REACH, BAND-AID, CAREFREE, STAYFREE, SPLENDA, TYLENOL, SUDAFED, ZYRTEC, MOTRIN IB, and PEPCID AC. The Pharmaceutical segment offers products in various therapeutic areas, such as anti-infective, antipsychotic, contraceptive, dermatology, gastrointestinal, hematology, immunology, neurology, oncology, pain management, and virology. Its principal products include REMICADE for the treatment of immune me diated inflammatory diseases; STELARA for the treatment of moderate to severe plaque psoriasis; SIMPONI, a treatment for adults with moderate to severe rheumatoid arthritis, psoriatic arthritis, and ankylosing spondylitis; VELCADE for the treatment of multiple myeloma; PREZISTA and INTELENCE for treating HIV/AIDS patients; NUCYNTA for moderate to severe acute pain; INVEGA SUSTENNAtm for the acute and maintenance treatment of schizophrenia in adults; RISPERDAL CONSTA for the management of bipolar I disorder and schizophrenia; and PROCRIT to stimulate red blood cell production. The Medical Devices and Diagnostics segment primarily offers circulatory disease management products; orthopaedic joint reconstruction, spinal care, and sports medicine products; surgical care, aesthetics, and women?s health products; blood glucose monitoring and insulin delivery products; professional diagnostic products; and disposable contact lenses. The company was founded in 1886 and is based in Ne w Brunswick, New Jersey.

Advisors' Opinion:

• [By Jon C. Ogg]

  Johnson & Johnson (NYSE: JNJ) is at least expected to gain 7.2% in 2013 to rise to $75.14. With a 3.4% dividend, this is one of the smallest expected gainers for the year. This might not be such a big surprise, but it is interesting that Johnson & Johnson was so close to its 52-week high at the end of 2012. With so many former quality control issues, and with this market cap already up at $196 billion, it is a real question as to what could be the next driver. Johnson & Johnson has accumulated so many medical units that perhaps its next way to generate value is to identify ways of divesting assets.

• [By Zachary Silver]

  Healthcare giants like Johnson & Johnson have performed extraordinarily well this year. Johnson & Johnson has a beta of 0.38, meaning that it will be less volatile than the market. This might bring peace of mind to some investors who have grown tired of the recent volatility in the markets. With its attractive dividend rate, historically strong free cash flow margins, and a low beta, Johnson & Johnson could be a good addition to a core retirement portfolio.

• [By Buffett]

   The world's largest health care company, Johnson & Johnson (JNJ) owns popular brands you've no doubt heard of and used regularly -- such as Tylenol and Band-Aid. But what you might not know is that the company has the No. 1 or No. 2 position in more than half of its product lines. Beyond consumer products, Johnson & Johnson has a strong pharmaceutical division supported by a solid research pipeline, and it is a leader in medical devices.

  All of this has helped Johnson & Johnson produce the kind of steady, long-term earnings growth and profitability that Buffett likes. Earnings have risen in all but two of the past 10 years. And, over the past decade, Johnson & Johnson has produced an average 25.7% return on equity, according to Validea.

  That's well above the 15% minimum Buffett likes -- and a reason he owns 42.6 million shares. Morningstar is bullish on Johnson & Johnson, giving it a four-star (of a possible five) rating.

Top 10 Biotech Companies For 2014: DiaMedica Inc (DMA)

DiaMedica Inc. (DiaMedica) is a development-stage company. The Company is a biopharmaceutical company engaged in the discovery and development of drugs for the treatment of diabetes and related diseases. DiaMedica's compound, DM-199, is a recombinant human protein for the treatment of both Type I and Type II diabetes and their complications. DiaMedica is starting a Phase I/II clinical trial for DM-199. DM-199 is a recombinant human protein, which improves glucose control, protects beta cells through the expansion of a population of antigen-specific immunosuppressive cells (Tregs), and proliferates insulin producing beta cells through the activation of certain growth factors. The Company�� DM-204 is a G-protein-coupled receptor agonist (GPCR) monoclonal antibody to treat Type II diabetes and some of the associated complication's. activating a receptor resulted in insulin sensitivity, insulin secretion and vasodilation.

Top 10 Biotech Companies For 2014: EntreMed Inc (ENMD)

EntreMed, Inc. (EntreMed), incorporated in 1991, is a clinical-stage pharmaceutical company. EntreMed's drug candidate is ENMD-2076, an Aurora A and angiogenic kinase inhibitor for the treatment of cancer. ENMD-2076 has completed Phase I studies in patients with advanced solid tumors, multiple myeloma and leukemia and is completing data for a multi-center Phase II study in patients with platinum resistant ovarian cancer. The Company�� other product candidates have includes MKC-1, ENMD-1198 and 2-methoxyestrdiol (2ME2, Panzem) for treatment of rheumatoid arthritis.

ENMD-2076 is a novel orally-active, Aurora A/angiogenic kinase inhibitor with potent activity against Aurora A and multiple tyrosine kinases linked to cancer and inflammatory diseases. ENMD-2076 is relatively selective for the Aurora A isoform in comparison to Aurora B. Aurora kinases are key regulators of the process of mitosis, or cell division, and are often over-expressed in human cancers. ENMD-2076 exerts its effects through multiple mechanisms of action, including anti-proliferative activity and the inhibition of angiogenesis. ENMD-2076 has demonstrated significant, dose-dependent preclinical activity as a single agent, including tumor regression, in multiple xenograft models (such as breast, colon, leukemia), as well as activity towards ex vivo-treated human leukemia patient cells.

Top 10 Biotech Companies For 2014: Dendreon Corporation(DNDN)

Dendreon Corporation, a biotechnology company, engages in the discovery, development, and commercialization of therapeutics to enhance cancer treatment options for patients. The company offers active cellular immunotherapy and small molecule product candidates to treat various cancers. Its product candidates comprise Provenge (sipuleucel-T), an active cellular immunotherapy for the treatment of metastatic, castrate-resistant prostate cancer; DN24-02, an investigational active immunotherapy for the treatment of patients with bladder, breast, ovarian, and other solid tumors expressing HER2/neu; and TRPM8, a small molecule agonist to transient receptor potential ion channel, for multiple cancers. The company also has a range of products in preclinical studies, which include Carcinoembryonic antigen for the treatment of lung, colon, and breast cancer; and Carbonic AnhydraseIX for the treatment of kidney cancer. Dendreon Corporation was founded in 1992 and is headquartered in S eattle, Washington.

Advisors' Opinion:

• [By Johanna Bennett]

  Once, one of the hottest biotech stocks around, Dendreon (DNDN) has become a cautionary tale, warning investors what can happen when a cutting-edge�drug turns into a dud.

  Now at less than $3 a share, the stock had traded as high as $54 in 2010 as excitement buzzed over the�experimental prostate cancer vaccine Provenge. Initially, Wall Street expected peak sales of $3 billion to $4 billion. But insurers balked at the�hefty price tag for Provenge, and now, three years after it�won FDA approval, analysts see annual sales at roughly $300 million.

  Disappointing sales are just one reason Deutsche Bank has joined the�bearish�voices surrounding this drug maker.�Today, analyst Robyn Karnauskas downgraded Dendreon�to a Sell and cut the�price target to $1, warning that even if the company�can significantly reduce�costs and drastically restructures, its�spending may still outpace revenue growth in the short-term. Karnauskas believes Dendreon may have to refinance its debt, negatively impacting shareholders.

  Earlier this month, the company�posted a bigger-than-expected second-quarter loss as Provenge sales fell compared to last year. A restructuring plan was�unveiled in late July, though�analysts say it isn’t enough without revenue growth.�Today, Deutsche Bank’s Karnauskas writes:�

  …By our math, even with $165M in cost cuts, the co will have to grow current sales from $300M to $525M over next 7 years to support current share price. 2Q13 sales were $73M and DTC campaign does not seem to have a lot of effect to offset impact from competition so that the company could reach profitability in 4Q13. While they note that they plan to cut costs, we are concerned it may be too late. Revenue growth is not occurring quick enough; we note 1Q13 yoy growth was guided and in 2Q13 they noted this was unlikely to occur going fwd. The co�� inability to guide growth & provide visibility makes it difficult for us to see sales accelerating sufficiently in next 12-18 months to give equity & debt shareholders confidence.

  Today, Dendreon�� share price fell 10% to $2.87.

• [By Sally Jones] The current DNDN share price is $3.39, or 53% off the 52-week high of $7.22.
  
  Down 27% over 12 months, Dendreon Corp. (DNDN) has a market cap of $534.26 million, and trades at a P/S of 1.63.
  
  Dendreon is a biotechnology company focused on the discovery, development and commercialization of novel therapeutics that improve cancer treatment options for patients. Its product portfolio includes active cellular immunotherapy and small molecule product candidates.
  
  Revenue and net income tracking:
  
  [ Enlarge Image ]
  
  The company recently reported a net loss in the second quarter of 2013 as $68.8 million, or $0.45 per share, compared to a net loss of $96.1 million, or $0.65 per share for the same period in 2012.
  
  Top Guru shareholder PRIMECAP Management holds 2.43% of shares outstanding, with 3,789,800 shares. It�� taken a losing position for more than 30 quarters since the fourth quarter of 2003, averaging a loss of 85% on 9,168,650 shares bought at an average price of $23 per share.
  
  
  
  Steven Cohen is another long-time stakeholder that sold out in the third quarter of 2012, unloading 173,800 shares at an average price of $5.86 for a loss of 42.2%. Cohen made a new buy in the first quarter of 2013, purchasing 352,600 shares at an average price of %5.86 per share for a loss of 42%.

Top 10 Biotech Companies For 2014: Amgen Inc.(AMGN)

Amgen Inc., a biotechnology medicines company, discovers, develops, manufactures, and markets human therapeutics based on advances in cellular and molecular biology for grievous illnesses primarily in the United States, Europe, and Canada. The company markets recombinant protein therapeutics in supportive cancer care, nephrology, and inflammation. Its principal products include Aranesp and EPOGEN erythropoietic-stimulating agents that stimulate the production of red blood cells; Neulasta and NEUPOGEN to stimulate the production of neutrophils, which is a type of white blood cell that helps the body to fight infections; and Enbrel, an inhibitor of tumor necrosis factor that plays a role in the body?s response to inflammatory diseases. The company also markets other products comprising Sensipar/Mimpara, a small molecule calcimimetic that lowers serum calcium levels; Vectibix, a monoclonal antibody that binds specifically to the epidermal growth factor receptor; and Nplate, a thrombopoietin (TPO) receptor agonist that mimics endogenous TPO, the primary driver of platelet production. In addition, it provides Denosumab, a human monoclonal antibody that targets RANKL, an essential regulator of osteoclasts. Further, the company offers product candidates in mid-to-late stage development in a variety of therapeutic areas, including oncology, hematology, inflammation, bone, nephrology, cardiovascular, and general medicine consisting of neurology. It markets its products to healthcare providers, including physicians or their clinics, dialysis centers, hospitals, and pharmacies; consumers; and wholesale distributors of pharmaceutical products. The company has various collaborative arrangements with Pfizer Inc.; GlaxoSmithKline plc; Takeda Pharmaceutical Company Limited; Daiichi Sankyo Company, Limited; Array BioPharma Inc.; Kyowa Hakko Kirin Co. Ltd.; and Cytokinetics, Inc. Amgen Inc. was founded in 1980 and is headquartered in Thousand Oaks, California.

Advisors' Opinion:

• [By Paul Goodwin]

  For many investors Amgen is considered the biotech stock to own, and one of the very best in this sector. With an international focus and excellent returns this stock is one that many financial advisors own.

Top 10 Biotech Companies For 2014: Osiris Therapeutics Inc.(OSIR)

Osiris Therapeutics, Inc., a stem cell company, focuses on the development and marketing of therapeutic products to treat various medical conditions in the inflammatory, autoimmune, orthopedic, and cardiovascular areas. It operates in two business segments, Therapeutics and Biosurgery. The Therapeutics segment focuses on developing biologic stem cell drug candidates from a readily available and non-controversial source, adult bone marrow. The Biosurgery segment works to harness the ability of cells and novel constructs to promote the body's natural healing. This segment focuses on developing biologic products for use in surgical procedures. The company?s lead biologic drug candidate is Prochymal, which is in phase 2 and 3 clinical trails for various indications, including acute graft versus host disease (GvHD), Crohn's disease, acute myocardial infarction, type 1 diabetes, pulmonary disease, and gastrointestinal injury resulting from radiation exposure. Its biologic drug candidates also include Chondrogen, a preparation of adult mesenchymal stem cells that is in phase 2 clinical trials for osteoarthritis and cartilage protection. The company has collaboration agreements with Genzyme Corporation for the development and commercialization of Prochymal and Chondrogen in various countries except in the United States and Canada. It also has a partnership with Juvenile Diabetes Research Foundation for the development of Prochymal as a treatment for the preservation of insulin production in patients with newly diagnosed type 1 diabetes mellitus. Osiris Therapeutics, Inc. was founded in 1992 and is headquartered in Columbia, Maryland.

Advisors' Opinion:

• [By Skousen]

  Osiris is one of the nanotechnology stocks that has really shown potential. This stock shows a twelve month ROE of more than eighty five percent, making it one to own for some.

Top 10 Biotech Companies For 2014: Regeneron Pharmaceuticals Inc.(REGN)

Regeneron Pharmaceuticals, Inc., a biopharmaceutical company, discovers, develops, and commercializes pharmaceutical products for the treatment of serious medical conditions in the United States. The company?s commercial product includes ARCALYST (rilonacept) injection for subcutaneous use for the treatment of cryopyrin-associated periodic syndromes, including familial cold auto-inflammatory syndrome and muckle-wells syndrome in adults and children. Its products under Phase III clinical development stage consist of VEGF Trap-Eye, an aflibercept ophthalmic solution developed using intraocular delivery for the treatment of serious eye diseases; ARCALYST for the prevention of gout flares in patients initiating uric acid-lowering treatment; and Aflibercept (VEGF Trap), which is developed in oncology. The company?s earlier stage clinical programs include various human antibodies, such as REGN727 for low-density lipoprotein cholesterol reduction, REGN88 for rheumatoid arthritis and ankylosing spondylitis; REGN668 for atopic dermatitis and asthma; REGN421 and REGN910 for oncology; REGN475 for the treatment of pain; and REGN728 and REGN846. It also conducts preclinical research programs in the areas of oncology and angiogenesis, ophthalmology, metabolic and related diseases, muscle diseases and disorders, inflammation and immune diseases, bone and cartilage, pain, cardiovascular diseases, and infectious diseases. The company distributes its products through third party service providers. It has strategic collaboration with sanofi-aventis Group to discover, develop, and commercialize human monoclonal antibodies; and Bayer HealthCare LLC to develop and commercialize VEGF Trap. Regeneron Pharmaceuticals, Inc. was founded in 1988 and is based in Tarrytown, New York.

Advisors' Opinion:

• [By Melly Alazraki]

  Regeneron Pharmaceuticals (REGN)also had an impressive quarter, soaring 36.1% to $44.68 as of Wednesday's close, after setting an intra-day 52-week high of $45.11. This $3.88 billion market cap biopharmaceutical company has been on a tear with a yearly return of 67% as it continued to develop cancer, eye-condition and gout treatments.
  
  In fact, Regeneron, which sells onlyone product-- Arcalyst (rilonacept), for the treatment of a rare, inherited, inflammatory condition -- last monthsubmitted an applicationto the Food and Drug Administration for its VEGF Trap-Eye for the treatment of the eye disorder that is the leading cause of blindness in patients older than 65 in the U.S. and Europe. If the treatment is approved, Regeneron hopes to take market share from Roche/Novartis's (NVS) Lucentis.
  
  However, Regeneron'spipelinealsosuffered a setbackrecently. Aflibercept, its candidate drug for non-small-cell lung cancer -- a notoriously difficult-to-treat disease -- failed to increase overall survival time in a late-stage study. For now, analysts favor the stock with a consensus buy recommendation, but this setback follows others, making ongoing studies of aflibercept vital for Regeneron's future. The company co-developed aflibercept with Sanofi-Aventis (SNY).

Understanding risk taking ability

We often hear that people should invest in assets depending upon their risk taking ability. But the million dollar question is what is ones risk taking ability? Can a questionnaire alone decide how much risk one can take ? If so will it remain the same till one meets his goals?

The answer is indeed very tricky. This is so because our risk taking ability is decided by many external factors. For example when the markets perform well even risk averse investors start investing in the markets and when markets don't do well our portfolio tends to get skewed towards debt. Our risk taking ability also depends on factors like peer pressure, our past experience, our family background etc.

Risk taking ability should purely depend upon your milestones and your current financial condition. If the goals are Short term in nature then it is better to invest in fixed income bearing securities though other riskier options could look exciting. Similarly when the goals are long term in nature a certain amount of risk could be taken in order to improve our return on investments. The problem is that more often than not people lose focus of  their goals and start investing looking at the product features and immediate gains. In such conditions your  ability to take risks changes drastically. When this happens and the investments don't yield the desired result then the entire planning falls flat.

So what should ideally decide your risk taking ability is the importance and seriousness of your milestones for which that particular investment is to be done. Once this is clear an assessment of one's risk taking ability could be easier and investments could be more focused and streamlined.

Mukund Seshadri is the senior partner at MSVentures Financial Planners.

July 12: Earnings to Test Market Rally - Economic Highlights

J.P. Morgan (JPM) and Wells Fargo (WFC) kicked off the second quarter earnings season for the banking sector with very strong reports this morning. The earnings growth outlook for the Finance sector has been the only bright spot this earnings season and reports from these two banks provide us with a solid start to the Q2 reporting season for the sector.

We will know more next week as a ton bank earnings reports arrive, including from Bank of America (BAC), Citigroup (C), Goldman Sachs (GS) and the regional players. A read-through from these two reports paint a favorable picture for bank earnings, even though a straight extrapolation from these two banks to the rest of the group may not be appropriate.

The Finance sector has been amongst the few in the S&P 500 that experienced positive estimate revisions in the recent past even as estimates for most other sectors, particularly Technology, Basic Materials, and Industrials got cut. This makes sense given Finance's domestic cyclical orientation and the improving growth outlook for the U.S. economy. The sectors experiencing negative estimate revisions, Technology in particular, is not only faced with secular headwinds, but also have outsized exposure to a growth challenged international environment.

The recent rise in long-term interest rates is a net positive for banks as it helps expand their net interest margins, even though the very sudden and sharp spike could potentially result in major losses on bond holdings on the balance sheet. We didn't see any unusual negative trading effects from this morning's JPM and WFC reports, but that doesn't mean we may not see the same from other players next week. Another area where rising rates could potentially become problematic for banks is in mortgage banking, particularly on the refinancing side. The refinancing slowdown will become more evident in next quarter's results, but banks could potentially offset a drop in the refinancing activity through increased origina! tions as we saw with this morning's reports. Importantly, credit quality improved at both the banks, with loan-loss provisions and net charge-offs coming down.

Including the reports from J.P. Morgan and Wells Fargo, total earnings for Finance are expected to be up +21.3% from the same period last year, the strongest performance of any of the major sectors within the S&P 500; the Construction sector is expected to have +46.5% total earnings growth in Q2, but that sector is way too small to move the needle for the index as whole. There is not much growth outside of Finance, with 9 of the 16 Zacks sectors expected to show negative earnings growth in Q2. Earnings growth for the S&P 500 as a whole is expected to be +0.7% in Q2, but the growth rate turns to a decline of -3.4% outside of the Finance sector.

This is still very early in the reporting cycle, as we have Q2 earnings reports from only 29 S&P 500 companies as of this morning. The growth rate will almost certainly improve as more companies report – we have 76 S&P 500 companies on deck to report results next week. But more important than the Q2 earnings growth rate will be management guidance for the coming quarters that will determine expectations for second half of the year. As we have mentioned here in the past, expectations for the second half of the year reflect a strong rebound in overall earnings growth, with total earnings for the S&P 500 expected to be up +4.8% in Q3 and +11.4% in Q4.

As this morning's negative pre-announcement from UPS (UPS) shows, those estimates will need to come down. It will be interesting to see if the stock market can sustain its bullish momentum in the face of negative estimate revisions in the coming days, particularly if the Fed will be playing a less supportive role going forward.

Inflation worries: What can you do about it

We are a country of savers but want to save without risk. We clamour for fixed, but  good interest rates.  Many times the interest rates seem good on the surface. But what one notices is the pre-tax rates. Post-tax, the rates are not so attractive. For instance, a 9.5% pre-tax rate translates to a 6.6% post-tax return for someone in the highest tax bracket. It does not look that good after all.  

The story does not end there. There is a spoilt-sport called Inflation here, who will further wield the chopper. The effect of inflation is acknowledged; but it's deleterious effect is not fully understood.  Inflation is the silent killer which we don't acknowledge as such.

Inflation number we hear is pure fiction for the man on the street, 7.5% inflation figure is a joke. The common man is experiencing double-digit inflation in many areas of his life. Food inflation is probably the most troubling. It probably is anywhere between 15-20%. Prices of most food items have doubled in the last three years. Vegetables which used to have seasonal variations, are stubbornly stuck at Rs.40+/kg levels.

The inflation in fuel is probably around that figure too. Auto Rickshaws & taxis hiked their rates by around 25% recently. It's cruel to say electronics prices have come down over time. After all, how many TVs or cameras do we buy in a year? Including a bunch of items in a common WPI & CPI brings down the number but that does not help the man on the street who is battered by double digit inflation in food & fuel.

In this situation, the money is losing value fast. Saving in instruments which offer 7% returns is not good enough. What can investors do about it?

Invest in growth assets: To beat inflation, invest in growth assets. This is a well-worn advice but there isn't anything else. Assets like Equity ( including Equity schemes of Mutual Funds ), Property are growth assets. Investing in them will ensure that one can make money grow in real terms. But, even that happens over time. In the short-term Equities are prone to volatility and can shake the faith of people ( like it is doing now ). Gold has been performing very well in the past 10 years.  A small allocation ( say 5% of the portfolio ) here can be good too. Get this right and you would be able to be ahead of inflation, atleast in the longterm.

Look for investments where taxes are minimal: When taxation is minimal, the returns are better hence offering good post-tax income helping to combat inflation better.  Investing in PPF /EPF is a good idea due to the tax exemption they enjoy at investment, accumulation and disbursement (EEE treatment). Even this may not beat true inflation that one is facing; but it would be vastly better as compared to say FDs, where interest is fully taxable. Debt MFs are a good bet too. Investments over one-year in debt MFs come under capital gain tax treatment. Here, the taxes are 10% without indexation and 20% with indexation. Indexation takes into account inflation ( government published figures, though ) and that makes matters a bit better. The effective tax after indexation may be 5% or less, for a one year plus period. Also, tax free bonds ( which was issued for 8.2-8.3% coupon rate ) are good too. Only for those in the lower income tax brackets, bank and company FDs may be good options.

Make your existing assets sweat: Many investors do not manage their money well. In many cases, we have found huge amounts of money lying around in SB accounts which yield 4% interest. Now, this income is also taxable… for those in the highest bracket, the yield is a mere 2.8%!  Many are locked into low yielding FDs ( which was done a while ago and was never reviewed ) & Investment oriented insurance policies ( which yield 6% or less ). This results in a very poor return from a portion of the portfolio and hence negative real returns. Regular review of the portfolio is a must to correct these problems. Again, this is something many investors don't do.

"Inflation is when you pay fifteen dollars for a ten dollar haircut, you used to get for five dollars when you had hair", goes a wise crack. Inflation is something we do not have any control over. RBI has been trying to tame it, without much success. 

Inflation is a systemic risk, which cannot be diversified. So we need to live with it, after taking measures we can. But haircut inflation rankles the most we may not have too much hair left, thanks to inflation worries… but still, they charge the same amount for a haircut making it exponentially costly per strand of hair tackled!

How to Analyze Net-Nets Undergoing Change

Someone who reads my articles asked me a question:

Hi again Geoff,

I am very new to net-nets, so I haven't got everything thought out yet about how I view them. Or rather, I have reawakened to them, thanks to you and Oddball Stocks mostly, after being a bit more dismissive of 'lesser' businesses. It seems you use net-nets more as a quantitative screen rather than as making 100% sure the downside protection in the balance sheet is absolutely firesure. I can sympathize with this and the thing about finding stocks that are cheap on more than one metric strikes a chord with me.

I am trying to value a Swedish net-net right now (the only one I could find actually, its name is Empire). The problem is that the business as an ongoing concern is not that easy to value at all. They sold off most of it (and now sit on $25 million in inventory, $35 million in receivables, $55.8 million in cash and $47.9 million in total liabilities. The market cap is about $45 million. No non-current assets. They recently paid out $10.3 million in dividends.

They were the Scandinavian reseller of Sodastream (SODA) but Sodastream bought them out and what remains now is some other rather bland kitchen/household gadget business, some of it in their own brand and some of it as an agent for Babyliss. Basically, they sell toasters, which surely isn't the best of businesses but they have eked out profits in all years except 2009 under the current structure. The company had a wholly different profile before 2004.

Total sales last year were $375.6 million but without Sodastream proforma sales were $101.5 million, with 2-3% EBIT margins in the last two years. The Sodastream business was actually heavily contracting (saturated market with high household penetration) while the other business is growing nicely (21% year over year), and won't have the same problem of saturating markets (toasters, water boilers and shaving appliances are not 'one-off' products in the same way as a gadget which gets a buzz around ! it for a while, at least not in my mind).

Would you ever consider a stock like this or does the lack of operating history in its current form make you put it in the too hard pile immediately? I find that the business as such is far from worth the market cap, obviously, but they could pay out something like $40 million and still have a business worth probably about $15 million to $20 million with significant possibility on the upside, if they can continue to grow profitably. But they won't do so, obviously. They are going to try to expand faster in different ways with the help of the cash.

Would be great to hear some thoughts on this if you have the time...

Regards,

Karl

Have you read "You Can Be a Stock Market Genius?"

It discusses investments that are similar in how you have to analyze them to something like this:

· Spin-offs

· One money-losing division, one money-making division

· Etc.

So, first of all, this is a tough topic. It's often hard to analyze the actual businesses of net-nets. It's much easier to analyze wide-moat companies. And net-nets usually don't fall in that category.

When you add change to the mix it's even harder. Business change of any kind is a really tough part of any investment analysis. And, yes, a net-net that was in a competitive business to start with and now is undergoing a lot of change — that can sometimes be too much to analyze.

As part of a group, you can definitely invest in businesses undergoing change. If you could find 50 companies facing a lot of change — but selling for less than their net current assets — you could have a nice portfolio. Some will blow up entirely. They'll go to zero. But those that recover will pay off handsomely.

Right now, you'd have to be a smaller investor willing to cast a worldwide net to find anything like 50 net-nets where the big problem was business change. For investors in a few countries — Japan, Korea, etc. — there ! are more ! net-nets to pick from. Investors in those countries can keep themselves busy just focusing on net-nets.

It doesn't sound like Sweden has a lot of net-nets. Especially if you only know of one.

I wouldn't know. The strength of Sweden's currency makes me less likely to invest there — I wouldn't want to buy a Swedish stock unless I knew I wasn't at risk of losing a lot of money when I swapped my kronas for dollars after I sold the stock. I don't normally hedge currency risk. So, Sweden wouldn't be the first country I'd look to invest in because I'd have to hedge there. (Here's an illustration of the issue: The Economist's January 2012 Big Mac Index showed a Big Mac sells for the equivalent of $5.91 in Sweden but just $4.20 in the U.S. Assuming that pattern will hold is not a risk I want to take.)

What about the idea of investing in a net-net for reasons other than the operating business?

Yeah. I've done that.

You want to be careful to pick on reason or the other though. It's kind of like how people can get themselves into trouble with a convertible security. Is it a good income producing security? Yes. With a conversion opportunity — yes. Perfect. That's a good investment. But, is it a so-so fixed income investment with this conversion supposedly making it a really attractive combination...

That might work. But you have to be honest with yourself. Why are you buying this thing? Four almost-good-enough reasons may not be as good as one obviously great reason.

Ideally, I like buying perfectly decent businesses when they sell below their net current assets. I think that's the best approach in the long run. I think it's something I can stick to.

But, yes, I'd be willing to buy something just because I think it's safe and I know it's selling for less than it could be liquidated for.

In fact, I've bought stocks with no real operating business left. We have one such stock in the Ben Graham: Net-Net Newsletter! 's mode! l portfolio right now. I won't say the name. But it's just a cash pile (with maybe some value in future tax savings). Anyway, you've read about this kind of stock — and quite possibly this exact stock — at a lot of blogs. No operating business. But it's selling for less than it could be liquidated for.

That works. The in-between situations are tricky. I'd like to know a stock is clearly good enough to invest in comfortably on an operating business valuation or a liquidation valuation. I don't want to justify the investment by thinking I've found a stock that's just good enough when you look at both of those facts. Because chances are the liquidation value will end up being frittered away if the operating business turns out much worse than you expected.

Managers rarely rush to evacuate excess capital from a sinking ship. Usually, they're still there trying to save the wreck.

So I'd be careful about situations that look like a mixed opportunity — half supported by a decent liquidation value and half supported by an operating business.

What about pure liquidations?

I have invested in liquidations. And actually I've had tremendous success in that very narrow category (I've made less than one such investment a year — maybe I've participated in about one liquidation every two years). For example, I bought a company that was basically just a cash pile (it sold its operating business) and was majority owned by Carl Icahn. After a few months, he bought out the remaining shareholders. No surprise. Worked fine. The annualized return was obviously terrific. Any time you get bought out within a few months the annualized number looks great.

I also owned stock in a business that was a poor performer — its product was made obsolete by cell phone cameras — that chose to liquidate. That worked fine too. Took a while. But it worked fine on both an absolute and relative (to the market) basis. And the nice thing about liquidations is they tend! not to m! ove with the rest of your portfolio. They work on their own timetable. A nice kind of diversifying plus.

There are a couple other examples. But that's a good taste of some of what I've invested in outside the normal range of businesses that are still doing today pretty much what they did last year and the year before.

There is nothing wrong with investing in a corporation undergoing a lot of change. In fact, generally, it's far, far better to invest in a corporation that's undergoing a lot of change than in a business undergoing a lot of change. You should be able to figure out what a business is worth in just about any corporate structure — financed in just about any way.

A business undergoing a lot of change is harder to figure out. It's a more fundamental problem to solve. Usually too fundamental. Changing customer habits are the worst. It can be nearly impossible to predict future earnings in situations where you know future customer habits will differ from past habits. That's because customer habits are so basic, so fundamental to everything a business does that a change of habit can ripple through all the financial statements in a way that makes the future completely unlike the past.

Okay. Let's look at the company you asked about.

First of all, I have to admit I didn't even know what Sodastream was before reading your email.

I would watch a situation like this. I'm not sure I'd consider investing in it unless I had a clearer idea of whether it would pay out money or intended to reinvest it all.

If you could get a rump business for very little because a lot of your purchase price will be returned to you in cash over the next year or so — that would be great.

But that doesn't seem to be what you are describing.

If they really intend to reinvest this capital it would be hard to analyze.

From what you said, I think you have history from around 2004 or 2005 to today. So, maybe we are talking about seven ! or eight ! years or something. Correct me if I'm wrong.

And the remaining part of the business was profitable in six or seven of those seven or eight years — all but one.

Yes. I usually prefer — in fact, require — at least 10 years of history before investing in any company for any reason other than its cash.

I like to have 15 to 20 years of history whenever possible. It's often possible with U.S. companies, because EDGAR goes back to around 1996 or so. If a company's been public that long, you can get the data.

Combine this seven or eight years of history with 2% or 3% operating margins — and I'd be very hesitant. To me, I'm not sure how I could ever value that company on an earnings basis. It seems like all I could do is look at liquidation value.

But I would definitely follow the company. They have excess working capital. That's always interesting. You want to be the first person to really understand what is going on if they make an announcement about any distribution, liquidation, acquisition, etc., because of the position they are in. It's definitely a stock that could be mispriced. Stocks going through these kinds of changes can be oddly valued by the market. People just don't know what to do with them.

Just because it's not a decent, consistent business doesn't mean you can't invest in it.

I picked GTSI (GTSI) for the Ben Graham: Net-Net Newsletter.

And that is not a good business. It lost money in about half of the last 10 years. It had no history of earning more than about 6% on equity over time. It was a truly terrible business.

But it was selling for less than its cash and receivables and it had a stake in another company that was obviously worth something.

So, you can include a stock like that as part of a group. I would not have bought it as my only net-net investment. But I had no problem adding it to a newsletter that has picked over a dozen net-nets. As part of a group like that, I think it's a ! fine addi! tion — because it really is selling for less than you could liquidate it for.

With Empire, it sounds like management's plans are the key. So I would follow the stock. And I'd pay attention to who is running the company, what they are saying, and what's going on there.

If they end up owning things you can easily value, it may make a good investment at some point.

Corporate change alone is not a problem. I'd be very happy following a John Malone company through all sorts of corporate changes. Because I can usually figure out what the businesses are worth it's just the structure and changes in what the corporation holds that's tricky.

You get the idea. Change itself is not the problem. A short corporate history in a certain form is not a problem.

But a business that isn't super easy to predict the results of — there's no moat, there is lots of price competition, etc. — where the company is going to increase investment pretty rapidly...

That can be too hard to figure out.

If they end up expanding with some products that you can't evaluate — it'll be a pass for you. But it's worth following. Overcapitalized companies undergoing change are good stocks to follow.

Especially if they are in your home country. Many of my best investments were in my home state of New Jersey when I lived there. Some were pretty local. It helps to follow companies that are maybe a little more obscure.

My best results have been in stocks that were both very simple and very obscure.

I can guarantee you that worldwide there are fewer investors looking at Swedish stocks than U.S. stocks. So you have an advantage there. Use it.

I never like to see someone in a country with a stock market that's not so well known worldwide spending too much of their time analyzing U.S. stocks, UK stocks, Japanese stocks, huge companies, etc.

You actually have an advantage. The companies I know best are American companies. And American com! panies sh! ow up on everybody's screens. So if it's just a matter of being a net-net, below tangible book value, low P/E, high dividend yield, etc. — something really quantitatively conspicuous like that — well, everybody's at least had a chance to glance at that company if it's in the U.S.

This is less likely in most of the rest of the world.

So follow companies like this one. Even if you never actually end up buying Empire you'll get a good idea of what net-net investing is like. Not as good an idea as owning a net-net — that's quite a different experience. More people are abstractly interested in the idea of net-nets than actually end up practicing net-net investing on a regular basis. That's because of how frustrating these stocks — and their managements can sometimes be.

You won't experience that as viscerally when you don't own the stock. But it helps to watch a lot of net-nets you don't own. They will test your patience.

Personally, in this case, I wouldn't know how to evaluate additional investment in some related business of theirs until I actually start seeing the results. So, I don't think I could buy a stock like Empire today. If they were going to pay the money out as a dividend, that would be different. And if they were going to buy an existing business I could research, that would be different. But rapidly growing the existing business — with only a limited history of less than a decade (and really thin margins) to go on is probably too tough for me to wrap my head around.

Read Geoff's Other Articles
Ask Geoff a Question
Check out the Buffett/Munger: Bargain Newsletter
Check out the Ben Graham: Net-Net Newsletter

10 Best Gold Stocks For 2014

Throughout most of 2013, you could count on the Dow Jones Industrials (DJINDICES: ^DJI  ) to recover from early losses to post impressive gains by the market's close. Yet lately, the stock market has been reversing that trend, with today marking a perfect example. After climbing to a gain of more than 75 points, the Dow steadily worked its way lower throughout the day, and by the close, the Dow finished down almost 43 points. The broader stock market was closer to unchanged, with drops in bond yields and gold prices offset by oil prices that came closer to the $100 per barrel level on fears about unrest in Egypt and the potential impact on oil flows through the Suez Canal.

Yet a couple of important stocks posted significant declines in response to news events. General Electric (NYSE: GE  ) fell 1.9% as it decided not to challenge a regulatory finding by the Financial Stability Oversight Council that the company's GE Capital arm is a systemically important financial institution, a term of art that imposes more regulations on the conglomerate's financial services segment. The move seems somewhat surprising in light of the company's numerous efforts to deemphasize its formerly dominant GE Capital division to favor other businesses like energy, but the division still represents a substantial part of GE's overall business, and a future financial crisis could do its share of damage to the stock.

10 Best Gold Stocks For 2014: First Majestic Silver Corp.(AG)

First Majestic Silver Corp. engages in the production, development, exploration, and acquisition of mineral properties with a focus on silver in Mexico. The company owns interests in La Encantada Silver Mine comprising 4,076 hectares of mining rights and 1,343 hectares of surface land located in Coahuila; La Parrilla Silver Mine consisting of mining concessions covering an area of 69,867 hectares; and San Martin Silver Mine comprising approximately 7,841 hectares of mineral rights and approximately 1,300 hectares of surface land rights located in Jalisco. It also holds interests in Del Toro Silver Mine consisting of 393 contiguous hectares of mining claims and an additional 129 hectares of surface rights located in Zacatecas; Real de Catorce Silver Project comprising 22 mining concessions covering 6,327 hectares located in San Luis Potosi state; and Jalisco Group of Properties consisting of mining claims totalling 5,240 hectares located in Jalisco. The company was founded in 1979 and is headquartered in Vancouver, Canada.

Advisors' Opinion:

• [By Goodwin]

  The shares closed at $88.19, down $1.1, or 1.23%, on the day. Its market capitalization is $77.08 billion. About the company: Siemens AG manufactures a wide range of industrial and consumer products. The Company builds locomotives, traffic control systems, automotive electronics, and engineers electrical power plants. Siemens also provides public and private communications networks, computers, building control systems, medical equipment, and electrical components. The Company operates worldwide.

10 Best Gold Stocks For 2014: Goldman Sachs Group Inc.(The)

The Goldman Sachs Group, Inc., together with its subsidiaries, provides investment banking, securities, and investment management services to corporations, financial institutions, governments, and high-net-worth individuals worldwide. Its Investment Banking segment offers financial advisory, including advisory assignments with respect to mergers and acquisitions, divestitures, corporate defense, risk management, restructurings, and spin-offs; and underwriting securities, loans and other financial instruments, and derivative transactions. The company?s Institutional Client Services segment provides client execution activities, such as fixed income, currency, and commodities client execution related to making markets in interest rate products, credit products, mortgages, currencies, and commodities; and equities related to making markets in equity products, as well as commissions and fees from executing and clearing institutional client transactions on stock, options, and fu tures exchanges. This segment also engages in the securities services business providing financing, securities lending, and other prime brokerage services to institutional clients, including hedge funds, mutual funds, pension funds, and foundations. Its Investing and Lending segment invests in debt securities, loans, public and private equity securities, real estate, consolidated investment entities, and power generation facilities. This segment also involves in the origination of loans to provide financing to clients. The company?s Investment Management segment provides investment management services and investment products to institutional and individual clients. This segment also offers wealth advisory services, including portfolio management and financial counseling, and brokerage and other transaction services to high-net-worth individuals and families. In addition, it provides global investment research services. The company was founded in 1869 and is headquartered in New York, New York.

10 Best Energy Stocks To Invest In 2014: Thompson Creek Metals Company Inc.(TC)

Thompson Creek Metals Company Inc., through its subsidiaries, engages in mining, milling, processing, and marketing molybdenum products in the United States and Canada. The company?s principal properties include the Thompson Creek Mine and mill in Idaho; a metallurgical roasting facility in Langeloth, Pennsylvania; and a joint venture interest in the Endako Mine, mill, and roasting facility in British Columbia. It also holds interests in development projects comprising the Davidson molybdenum property and the Berg copper-molybdenum-silver property located in northern British Columbia; the Howard?s Pass property, a lead and zinc project situated in the Yukon territory-northwest territories border; and the Maze Lake property, a gold project located in the Kivalliq district of Nunavut. The company produces molybdenum products, primarily molybdic oxide and ferromolybdenum, as well as soluble technical oxide, pure molybdenum tri-oxide, and high purity molybdenum disulfide. As o f December 31, 2010, its consolidated recoverable proven and probable ore reserves totaled 462.2 million pounds of contained molybdenum in the Thompson Creek Mine and the Endako Mine. The company was formerly known as Blue Pearl Mining Ltd. and changed its name to Thompson Creek Metals Company Inc. in May 2007. Thompson Creek Metals Company Inc. is based in Denver, Colorado.

Advisors' Opinion:

• [By Christopher Barker]

  My recent survey of bargain-basement stock valuations among gold miners identified Thompson Creek Metals as a glaring opportunity for value investors. The miner sports two world-class molybdenum mines with 534 million pounds of reserves between them, along with an array of attractive development projects in the pipeline. Foremost among those is the Mt. Milligan copper and gold project, where Thompson Creek expects to launch itself into the ranks of intermediate gold producers with production commencing in late 2013.

  With 6 million ounces of gold reserves, accompanied by 2.1 billion pounds of copper, Mt. Milligan will deliver about 262,100 ounces of gold per year for the first six years of a 22-year mine life, averaging 194,500 ounces annually over that entire span. Although 25% of that gold production is already spoken for through a gold stream agreement with Royal Gold (Nasdaq: RGLD  ) , Thompson Creek Metals is sure to enjoy a powerful cash-flow explosion.

10 Best Gold Stocks For 2014: Goldcorp Incorporated(GG)

Goldcorp Inc. engages in the acquisition, exploration, development, and operation of precious metal properties in Canada, the United States, Mexico, and Central and South America. It produces and sells gold, silver, copper, lead, and zinc. The company was founded in 1954 and is headquartered in Vancouver, Canada.

Advisors' Opinion:

• [By Christopher Barker]

  Every ship needs an anchor, and for gold investors looking to navigate the admittedly rough seas of the gold mining industry, I can think of no greater anchor than Goldcorp. With the important caveat that some of the company's substantial challenges faced during 2012 could present further selling pressure in early 2013 as forward production guidance takes a bit of a haircut, I agree with Credit Suisse analyst Anita Soni that any such weakness may present a meaningful buying opportunity. I won't go into great detail here, since investors can access my premium research report on Goldcorp for further discussion of the substantial long-term investment opportunity in the shares of this quality producer.

• [By Smith]

  Although its name does little to denote this, Goldcorp is a well-positioned silver play for 2011, according to the analysts we surveyed.

  “The name is one that people tend to think of it as gold, but it's in the top 20 of silver producers globally with about 13 million ounces a year ,” says Peter Sorrentino of Huntington Funds.

  Morningstar analyst Min Tang-Varner recently raised her fair value estimate for Goldcorp by $12 a share to $48 after the company reported a 28 per cent rise in revenue for the third quarter ended Sept. 30 compared with the year before.

  This, despite 4 per cent decline gold production, as revenue received a boost from $1,239/oz realized gold prices and $19.15/oz silver prices.

  Tang-Varner tells investors that the reduction of Goldcorp's cash cost by $100/oz from the prior quarter to $260/oz due to higher silver, copper and zinc production and the run-up in their prices, was “rather extraordinary.”

  Sorrentino says Goldcorp is a stock that investors would be “wise to consider” if they were looking for a name that would be discovered suddenly as a major silver play, without feeling that they were overpaying for it.

  Goldcorp also prices everything that it does in Canadian dollars, which should reduce currency risks for investors in Canada.

10 Best Gold Stocks For 2014: CME Group Inc.(CME)

CME Group Inc. operates the CME, CBOT, NYMEX, and COMEX regulatory exchanges worldwide. The company provides a range of products available across various asset classes, including futures and options on interest rates, equity indexes, energy, agricultural commodities, metals, foreign exchange, weather, and real estate. It offers various products that provide a means of hedging, speculation, and asset allocation relating to the risks associated with interest rate sensitive instruments, equity ownership, changes in the value of foreign currency, credit risk, and changes in the prices of commodities. CME Group owns and operates clearing house, CME Clearing, which provides clearing and settlement services for exchange-traded contracts and counter derivatives transactions; and also engages in real estate operations. Its primary trade execution facilities consist of its CME Globex electronic trading platform and open outcry trading floors, as well as privately negotiated transact ions that are cleared and settled through its clearing house. In addition, the company offers market data services comprising live quotes, delayed quotes, market reports, and historical data services, as well as involves in index services business. CME Group?s customer base includes professional traders, financial institutions, institutional and individual investors, corporations, manufacturers, producers, and governments. It has strategic partnerships with BM&FBOVESPA S.A., Bursa Malaysia Derivatives, Singapore Exchange Limited, Green Exchange, Dubai Mercantile Exchange, Johannesburg Stock Exchange, and Bolsa Mexicana de Valores, S.A.B. de C.V., as well as joint venture agreement with Dow Jones & Company. The company was formerly known as Chicago Mercantile Exchange Holdings Inc. and changed its name to CME Group Inc. in July 2007. CME Group was founded in 1898 and is headquartered in Chicago, Illinois.

10 Best Gold Stocks For 2014: Australian Dollar(AU)

AngloGold Ashanti Limited primarily engages in the exploration and production of gold. It also produces silver, uranium oxide, and sulfuric acid. The company conducts gold-mining operations in South Africa; continental Africa, including Ghana, Guinea, Mali, Namibia, and Tanzania; Australia; and the Americas, which include Argentina, Brazil, and the United States. It also has mining or exploration operations in the Democratic Republic of the Congo, Guinea, and Colombia. As of December 31, 2010, the company had proved and probable gold reserves of 71.2 million ounces. The company has a strategic alliance with Thani Dubai Mining Limited to explore, develop, and operate mines across the Middle East and parts of North Africa. AngloGold Ashanti Limited, formerly known as Vaal Reefs Exploration and Mining Company Limited, was founded in 1944 and is headquartered in Johannesburg, South Africa.

Advisors' Opinion:

• [By Mel Daris]

  AngloGold Ashanti (AU), a South African company, is trading for $33 and pays a dividend which yields 3.20%. The stock has an astonishing P/E of 1,015. Its net income totaled $112 million last year, but negative cash flows of $620 million. It holds net tangible assets of $4.3 billion and its balance sheet has not grown nearly as quickly as the other companies on this list. AngloGold has two new mines coming online in Congo and Colombia.

10 Best Gold Stocks For 2014: Iamgold Corporation(IAG)

IAMGOLD Corporation, together with its subsidiaries, engages in the exploration, development, and production of mineral resource properties worldwide. It primarily explores for gold, silver, zinc, copper, niobium, diamonds, and other metals. The company holds interests in eight operating gold mines, a niobium producer, a diamond royalty, and exploration and development projects located in Africa and the Americas. Its advanced exploration and development projects include the Westwood project in Canada; and the Quimsacocha project, which consists of 3 mining concessions covering an aggregate area of approximately 8,030 hectares in Ecuador. The company was formerly known as IAMGOLD International African Mining Gold Corporation and changed its name to IAMGOLD Corporation in June 1997. IAMGOLD Corporation was founded in 1990 and is based in Toronto, Canada.

Advisors' Opinion:

• [By Christopher Barker]

  Although I have not shed my long-standing contention that Yamana Gold offers one of the more deeply discounted vehicles for long-term gold exposure, lately my outlook for IAMGOLD has turned particularly bullish. With a looming spin-off of a 10% to 20% stake in the company's reliably profitable Niobec niobium mine, and the recent sale of its interest in a pair of high-cost gold operations in Ghana for $667 million, IAMGOLD finds itself in terrific financial shape to execute an aggressive $1.2 billion expansion imitative at existing operations.

  Considering the $1.6 billion net asset value (after tax) that IAMGOLD recently assessed for the Niobec mine alone, and a presumed hoard of more than $1.2 billion (in cash, cash equivalents, and gold bullion held for investment), at a market capitalization of $6.9 billion I find extreme comfort in the market's resulting valuation for IAMGOLD's 15.2 million ounces of attributable gold reserves.

10 Best Gold Stocks For 2014: Claude Resources Inc.(CGR)

Claude Resources Inc. engages in the acquisition, exploration, and development of precious metal properties, as well as production and marketing of minerals in Canada. It primarily explores for gold in northern Saskatchewan and northwestern Ontario. The company holds interests in the Seabee gold mine located at Laonil Lake, northern Saskatchewan; and the Madsen property that consists of 6 contiguous claim blocks totaling approximately 10,000 acres, located in the Red Lake Mining District of northwestern Ontario. It also holds interest in the Amisk Gold project, which covers an area of 13,800 hectares in the province of Saskatchewan. The company was founded in 1980 and is based in Saskatoon, Canada.

Advisors' Opinion:

• [By Christopher Barker]

  Hardly a johnny-come-lately, Claude Resources initiated small-scale gold production from its flagship Seabee mine in Saskatchewan in 1991. Just last year, Claude added the Santoy 8 mine to that operation to offer a touch of timely growth. Meanwhile, the operation hosts a number of compelling exploration targets like the recently discovered Neptune zone. After 10 of 15 recent drill holes from Neptune featured visible gold, including a nice high-grade intercept of 84.66 g/t over 3.2 meters, prospects are building for Claude to add some additional years to this time-tested operation.

  While I welcome the existing cash flow from Seabee, my investment thesis for Claude Resources centers around a pair of exciting exploration properties: the Amisk joint venture project southeast of Seabee and the Madsen property at Red Lake, Ontario. At Madsen, historical gold production between 1938 and 1976 yielded 2.4 million ounces at an average grade of 9 g/t. To date, Claude has identified an indicated resource of 928,000 ounces at a comparable grade. At Amisk, drill intercepts of eye-catching thickness suggest strong potential for a profitable open pit operation, including an intercept of 2.16 g/t over 241 meters! The deposit's 921,000 indicated gold-equivalent ounces represent only an early stage hint of the deposit's full potential. The stock is a top-10 holding for Sprott Asset Management, and a core holding for this Fool as well.

10 Best Gold Stocks For 2014: Newmont Mining Corporation(Holding Company)

Newmont Mining Corporation, together with its subsidiaries, engages in the acquisition, exploration, and production of gold and copper properties. The company?s assets or operations are located in the United States, Australia, Peru, Indonesia, Ghana, Canada, New Zealand, and Mexico. As of December 31, 2009, it had proven and probable gold reserves of approximately 93.5 million equity ounces and an aggregate land position of approximately 27,500 square miles. The company was founded in 1916 and is headquartered in Greenwood Village, Colorado.

10 Best Gold Stocks For 2014: Golden Star Resources Ltd(GSS)

Golden Star Resources Ltd., a gold mining and exploration company, through its subsidiaries, engages in the acquisition, exploration, development, and production of gold properties. It owns and operates the Bogoso/Prestea gold mining and processing operation that covers approximately 40 kilometers of strike along the southwest-trending Ashanti gold district in western Ghana; and the Wassa open-pit gold mine located to the east of Bogoso/Prestea in southwest Ghana. The company also has an 81% interest in the Prestea underground gold mine located in Ghana. In addition, it holds interests in various gold exploration projects in Ghana, Sierra Leone, Burkina Faso, Niger, and Cote d?Ivoire, as well as holds and manages exploration properties in Brazil in South America. The company was founded in 1984 and is based in Littleton, Colorado.

Advisors' Opinion:

• [By Curtis]

  Golden Star Resources, Ltd Com (AMEX:GSS): This equity had 10,766,183 shares sold short as of Aug 31st, as compared to 9,400,663 on Aug 15th, which represents a change of 1,365,520 shares, or 14.5%. Days to cover for this company is 3 and average daily trading volume is 3,419,976. About the equity: Golden Star Resources Ltd. is a mid-tier gold mining company. The Company’s operating mines are situated along the Ashanti Gold Belt in Ghana, West Africa.