Alcoa Eyes Adding $5 Billion to the Books

Earlier this month, Alcoa filed an S-3 with the SEC, a move that would authorize the metals giant to raise $5 billion in capital.

The shelf registration enables the company to give its balance sheet a 14% bump through the issuance of common stock, class B preferred stock, debt, and other types of securities.

It came just days after Alcoa's second quarter earnings call, when executives impressed the market with the company's 23.1% EBITDA margin, an increase of 4% over results from the first quarter.

As a preliminary filing, the details are limited -- there is no clear indication what mix of securities the company will use to raise the funds, let alone the price and quantity of each. That leaves us to speculate as to how the company will raise the funding, and the impact it might have on shareholders.

What will the financing mix be?
In Alcoa's Q2 earnings call, management highlighted a goal of attaining a 30-35% debt-to-capital ratio in 2014. At the end of the second quarter, the company sat at 35.4%. It seems doubtful the company would finance primarily through bonds if it is already above its desired debt level. Based on a valuation of $18 per share, the higher end of analysts' short-term price targets for the company, and using the 35% debt-to-capital ratio as a ceiling, Alcoa could use debt to raise roughly $1.7 billion.

Alternatively, Alcoa could drop its debt-to-capital ratio to around 31% by raising the $5 billion through common and preferred stock.

Per the S-8 Filing, Alcoa can issue up to 1.8 billion shares of common stock. There are currently 1.174 billion outstanding, plus 93 million held in the company's treasury, and an additional 95 million shares set aside for stock-based compensation. All told, Alcoa has either issued, or committed to issuing 1.36 billion of the 1.8 billion shares the company is authorized to distribute, leaving just under half a billion shares at its disposal.

If the company chose to, it could raise all of the capital through the issuance of roughly 294 million shares. Doing so would raise shares outstanding to 1.47 billion.

Would they?

Alcoa already added just over 100 million shares to its outstanding total earlier this year, and it would be aggressive to increase shares outstanding by almost 400 million in a relatively short period of time.

Preferred stock is an option, though it would need to be used in tandem with another security type. Alcoa is only authorized to issue up to 10 million Class B shares and is in the process of retiring all of its Class A shares.  

Short-term EPS Impact
The company posted earnings of $776 million in the second quarter, roughly $0.12 on a per share basis. An average of analysts' projections anticipates the company will post EPS of $0.59 for 2014. They see growth for Alcoa, projecting an EPS of $0.81 for 2015, but for shareholders, some of that growth could be curbed by dilution.

If the company were to use exclusively common stock for the $5 billion offering, the same earnings estimates would yield EPS around $0.65 – a 12% increase, but a far cry from the analysts' optimistic projections. Under the 35% debt-to-capital scenario, the company would issue roughly 183 million new shares, resulting in a revised EPS of $0.70.

Given the sheer size of the offering, the company may look to slowly roll-out shares to prevent dramatic dilution.

The possibilities
Of course, Alcoa filed the S-3 because it had a plan and needed funding. The form notes that the company will put the proceeds toward "general corporate purposes," which could include capital expenditures, working capital, debt refinancing, and acquisitions.

Last month, the company announced a $2.85 billion deal to acquire Firth Rixson, a manufacturer of jet engine components. This move, coupled with corporate plans to break ground on a new $90 million factory in Indiana and spend $100 million to expand an existing aero component factory in Virginia, signal that the company is diversifying into downstream manufacturing.

And perhaps it isn't done just yet. With $5 billion at its disposal, Alcoa would be poised to make another acquisition, or invest in the company's internal manufacturing capabilities. Both of which would, theoretically, be accretive.

Case and point, the Firth Rixson acquisition is estimated to produce $1.6 billion in revenue and $350 million in EBITDA in 2016.

Foolish takeaway
Alcoa's current financing structure and management's vision make it seem like the majority, if not the entirety, of this offering will come in the form of equity. With the issuance of new stock, Alcoa investors may experience dilution in the short-term, but might see the company put that capital to use shortly, giving a more optimistic medium to long-term outlook.

More from The Motley Fool: Warren Buffett Tells You How to Turn $40 into $10 Million

3 Stocks Under $10 to Trade for Breakouts

DELAFIELD, Wis. (Stockpickr) -- At Stockpickr, we track daily portfolios of stocks that are the biggest percentage gainers and the biggest percentage losers.

Read More: Warren Buffett's Top 10 Dividend Stocks

Stocks that are making large moves like these are favorites among short-term traders because they can jump into these names and try to capture some of that massive volatility. Stocks that are making big-percentage moves either up or down are usually in play because their sector is becoming attractive or they have a major fundamental catalyst such as a recent earnings release. Sometimes stocks making big moves have been hit with an analyst upgrade or an analyst downgrade.

Regardless of the reason behind it, when a stock makes a large-percentage move, it is often just the start of a new major trend -- a trend that can lead to huge profits. If you time your trade correctly, combining technical indicators with fundamental trends, discipline and sound money management, you will be well on your way to investment success.

With that in mind, let's take a closer look at a several stocks under $10 that are making large moves to the upside.

Read More: 5 Stocks Set to Soar on Bullish Earnings

Horizon Pharma

Horizon Pharma (HZNP), a specialty pharmaceutical company, through its subsidiaries, develops and commercializes medicines for the treatment of arthritis, pain and inflammatory diseases. This stock closed up 3.1% to $9.78 in Tuesday's trading session.

Tuesday's Range: $9.41-$9.80

52-Week Range: $2.46-$18.30

Tuesday's Volume: 1.03 million

Three-Month Average Volume: 2.05 million

From a technical perspective, HZNP jumped higher here right above some near-term support at $9.07 with lighter-than-average volume. This stock gapped down sharply in July from around $14 to $7.85 with heavy downside volume. Following that move, shares of HZNP have started to rebound and uptrend, with shares moving higher from that $7.85 low to its recent high of $10.25. That move has now pushed shares of HZNP within range of triggering a major breakout trade. That trade will hit if HZNP manages to take out some key near-term overhead resistance levels at $10 to $10.22 and then above $10.25 with high volume.

Traders should now look for long-biased trades in HZNP as long as it's trending above some key near-term support at $9.07 and then once it sustains a move or close above those breakout levels with volume that hits near or above 2.05 million shares. If that breakout triggers soon, then HZNP will set up to re-fill some of that previous gap-down-day zone that started near $14.

Read More: 10 Stocks George Soros Is Buying

Aeropostale

Aeropostale (ARO), together with its subsidiaries, operates as a mall-based specialty retailer of casual apparel and accessories. This stock closed up 4.6% to $3.82 in Tuesday's trading session.

Tuesday's Range: $3.56-$3.90

52-Week Range: $3.10-$10.68

Tuesday's Volume: 6.76 million

Three-Month Average Volume: 3.44 million

From a technical perspective, ARO ripped notably higher here right above some near-term support at $3.50 and just above its 50-day moving average of $3.38 with monster upside volume flows. This strong move to the upside on Tuesday is quickly pushing shares of ARO within range of triggering a major breakout trade. That trade will hit if ARO manages to take out Tuesday's intraday high of $3.90 and then once it clears more key overhead resistance levels at $4.05 to $4.06 with high volume.

Traders should now look for long-biased trades in ARO as long as it's trending above $3.50 or above its 50-day moving averageat $3.38 and then once it sustains a move or close above those breakout levels with volume that hits near or above 3.44 million shares. If that breakout hits soon, then ARO will set up to re-fill its previous gap-down-day zone from May that started just above $4.50. Any high-volume move above that level will then give ARO a chance to tag its next major overhead resistance levels at $4.94 to $5.09.

Read More: 7 Stocks Warren Buffett Is Selling in 2014

Neuralstem

Neuralstem (CUR), a biopharmaceutical company, focuses on the development and commercialization of treatments for central nervous system disease based on human neural stem cells and the use of small molecule compounds. This stock closed up 2.8% to $3.63 in Tuesday's trading session.

Tuesday's Range: $3.53-$3.66

52-Week Range: $1.55-$4.81

Tuesday's Volume: 470,000

Three-Month Average Volume: 903,416

From a technical perspective, CUR spiked notably higher here right off its 50-day moving average of $3.56 and right above its 200-day moving average of $3.48 with lighter-than-average volume. This stock has been uptrending over the last month, with shares moving higher from its low of $2.67 to its recent high of $3.74. During that uptrend, shares of CUR have been consistently making higher lows and higher highs, which is bullish technical price action. This spike higher on Tuesday is now starting to push shares of CUR within range of triggering a near-term breakout trade. That trade will hit if CUR manages to take out Tuesday's intraday high of $3.66 to some near-term overhead resistance at $3.74 with high volume.

Traders should now look for long-biased trades in CUR as long as it's trending above some key near-term support levels at $3.33 to $3.20 and then once it sustains a move or close above those breakout levels with volume that hits near or above 903,416 shares. If that breakout materializes soon, then CUR will set up to re-test or possibly take out its next major overhead resistance levels at $4.20 to $4.40, or even $4.73 to its 52-week high at $4.81.

To see more stocks that are making notable moves higher, check out the Stocks Under $10 Moving Higher portfolio on Stockpickr.

-- Written by Roberto Pedone in Delafield, Wis.

RELATED LINKS:

>>3 Stocks Spiking on Unusual Volume

>>5 Hated Earnings Stocks You Should Love

>>These 5 Toxic Stocks Could Be Poisoning Your Portfolio

Follow Stockpickr on Twitter and become a fan on Facebook.

At the time of publication, author had no positions in stocks mentioned.

Roberto Pedone, based out of Delafield, Wis., is an independent trader who focuses on technical analysis for small- and large-cap stocks, options, futures, commodities and currencies. Roberto studied international business at the Milwaukee School of Engineering, and he spent a year overseas studying business in Lubeck, Germany. His work has appeared on financial outlets including

CNBC.com and Forbes.com.

You can follow Pedone on Twitter at www.twitter.com/zerosum24 or @zerosum24.

It's a gamer thing: Amazon buying Twitch

Watching people play video games is apparently not only popular, it's extremely valuable. NEW YORK (CNNMoney) Watching people play video games is apparently not only popular, it's extremely valuable.

Amazon (AMZN, Tech30) agreed on Monday to pay $970 million to acquire Twitch, a service that lets users watch and broadcast video game play. Each month millions of people tune into Twitch to watch friends and strangers play video games, including competitive tournaments.

An acquisition by Amazon and the lofty price tag would seem to validate the rise of gaming as a spectator sport. Advertisers are often willing to spend top dollar to reach audiences lured by live sporting events.

"Broadcasting and watching gameplay is a global phenomenon and Twitch has built a platform that brings together tens of millions of people who watch billions of minutes of games each month," Amazon founder and CEO Jeff Bezos said in a statement.

The deal represents a potential setback for Google's (GOOGL, Tech30) YouTube. Earlier this year, reports swirled indicating YouTube was in talks to acquire Twitch for over $1 billion.

  S&P Above 2000? Thank Super Mario

Twitch, which was founded in 2011, is not exactly a household name. But it's clear the service is catching on in the gaming world.

With more than 55 million visitors per month, Twitch calls itself the world's leading video platform and community for gamers.

Twitch represented a whopping 1.35% of all Internet traffic in March, according to networking company Sandvine. To put that into perspective, Twitch generated more traffic than even HBO GO, Sandvine said. (HBO is owne! d by CNNMoney parent Time Warner (TWX)).

Teaming up with Amazon should give Twitch the resources it needs to maintain and even build on that impressive growth.

"Being part of Amazon will let us do even more for our community. We will be able to create tools and services faster than we could have independently," said Twitch CEO Emmett Shear.

Amazon said the all-cash deal is expected to close during the second half of 2014.

Who Will Follow Kodiak Oil & Gas to Be the Next Bakken Buyout?

Despite the fact that Kodiak Oil & Gas (NYSE: KOG  ) has decided to be acquired by Whiting Petroleum (NYSE: WLL  ) for slightly less than market value for similar deals recently, Wall Street seems to love the transaction. Both Kodiak and Whiting have seen shares climb by 10.1% and 10.4%, respectively, following the announcement, which suggests there might have been something bigger to the deal. Let's take a look at what has changed recently for Kodiak and how that could impact other smaller players in the Bakken such as Oasis Petroleum (NYSE: OAS  ) and Triangle Petroleum (NYSEMKT: TPLM  ) .

Source: Chesapeake Energy Media Relations.

Exposing Kodiak's flaw
The first thing that stands out to investors for Kodiak Oil & Gas is its incredible growth story over the past few years. Since the first quarter of 2012 to today, the company has seen production and revenue grow by 7.41 and 7.5 times, respectively. This makes it one of the fastest growing oil producers in the country:

Company	Production Growth 2011-2013
Kodiak Oil & Gas	741%
Whiting Petroleum	138%
Oasis Petroleum	317%

Not only that, but the company has a prime acreage position in the Bakken formation, which is becoming a more prolific oil reserve by the day. Thanks to better drilling technology and more experience in drilling tight oil wells, the total recoverable amount of oil in the region has more than doubled to 7.38 billion barrels of oil since the U.S. Geological Survey's first assessment of the shale play, and top companies in the region even consider that to be a conservative estimate. This means that the 2,100 or so potential drilling locations Kodiak has on its books may only be scratching the surface of this company.

This huge surge in production and Kodiak's push to tap that potential has come at a cost -- its financial health. Along with that revenue growth, its total debt has tripled to $2.25 billion because the company's capital expenditures have been outpacing its cash flow. The theory is that its increased production and revenue would catch up to its debt load, and it would start to generate free cash flow.

In most cases, this theory was starting to work, but one recent change for producers in the Bakken region has changed that dynamic, and that is North Dakota Industrial Commission's decision to limit natural gas flaring at wells. According to the commission, any well that cannot reduce flaring at the well by 74% by October will not be allowed to produce more than 200 barrels per day at each well. Not only will this involve preparing new wells to capture gas, but companies will also need to go back to previous wells. Kodiak doesn't really have the financial flexibility to go back and make those installations at previous wells, nor could it risk having its wells' production be so constrained. By combining forces with Whiting, the combined company will have a bit more financial flexibility to make the necessary fixes at its new and existing wells.

Who's next?
Kodiak Oil & Gas isn't the only one that has employed this growth strategy in the Bakken, and several other companies that are either Bakken-centric or have smaller assets in the region will also struggle with these new regulations. The companies that immediately come to mind are Oasis Petroleum and Triangle Petroleum because they are pure plays, but two other companies that could be at risk here are Halcon Resources (NYSE: HK  ) and Magnum Hunter Resources (NYSE: MHR  ) . While Magnum Hunter and Halcon do have assets elsewhere, they have both been using the Bakken as a production base to generate revenue while they explore less established shale formations. Based on the cash flow at these companies, they can ill afford to see production limited in the Bakken.

Company	% Production From Bakken (on Boe basis)	Total Wells in Bakken (net)	% of Capital Expenditures Covered by Operational Cash Flow (LTM)
Oasis Petroleum	100%	406.2	29.2%
Triangle Petroleum	100%	39.6	19.5%
Magnum Hunter Resouces	31%	98	7.2%
Halcon Resources	71%	188	23.8%

Source: Company 10-ks and S&P capital IQ, authors calculations.

Magnum Hunter has already been in the process of linking its current and upcoming wells to a natural gas gathering system to reduce flaring, so it may be in a better position than the others on this list in that regard. However, if these companies are already struggling to finance operations before these flaring regulations start to take hold, then don't be surprised if they follow a similar path to Kodiak Oil & Gas and sell either its Bakken operations or sell out entirely.

What a Fool believes
The next several months will be very interesting regarding the future of the Bakken. These new regulations will put immense pressure on companies that have not been dealing with natural gas, especially the smaller ones that are already financially stressed. When you add this little wrinkle to the mix, it's a little easier to understand why Kodiak has decided to be acquired by a bigger fish in the Bakken pond for a less than premium price. Investors with a stake in the region should really keep an ear to the ground, because it's very likely that we will see another similar deal soon.

America's $600 billion energy problem means invest in these three stocks today
A dark specter is looming that is ready to stop America's Energy boom right in its tracks, and no one is talking about it. This one critical element could cost us more than $600 billion, but every day we wait, that number grows and grows. The U.S. government thinks investment in this sector is so important, even the Internal Revenue Service will give you a free pass if you invest in this select group of stocks. Our analysts at The Motley Fool have combed over this special class of stocks, and we have identified three that could make you rich! Find out the names of these IRS-gift-wrapped stocks in our special report, "3 Stocks The IRS Is Begging You to Buy." Simply click here, and we'll give you free access to this valuable investing resource.

Benzinga's Volume Movers

Related MNST Markets Close The Week On Negative Note As Ukraine Worries Mount U.S. Stocks Turn Lower; Dillard's Shares Slide On Downbeat Earnings Related KO Markets Gain; J.C. Penney Posts Narrower-Than-Expected Q2 Loss Bank Of America Comments On Coca-Cola Amid Monster Deal Judging the American Consumer by his Appetite (Fox Business)

Monster Beverage (NASDAQ: MNST) shares moved up 26.98% to $90.98. The volume of Monster Beverage shares traded was 1610% higher than normal. Coca-Cola Company (NYSE: KO) and Monster Beverage announced a long-term strategic partnership. As part of the deal, Coca-Cola will buy a 16.7% equity stake in Monster.

Kinder Morgan (NYSE: KMI) surged 2.78% to $40.99. The volume of Kinder Morgan shares traded 449% higher than normal. Kinder Morgan's trailing-twelve-month revenue is $15.61 billion.

Red Robin Gourmet Burgers (NASDAQ: RRGB) shares climbed 3.04% to $54.23. The volume of Red Robin shares traded was 398% higher than normal. On Thursday, Red Robin reported downbeat second-quarter profit.

Paylocity Holding (NASDAQ: PCTY) shares rose 5.95% to $23.49. The volume of Paylocity shares traded was 381% higher than normal. Paylocity reported upbeat quarterly results.

Posted-In: volume moversNews Intraday Update Markets Movers

© 2014 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.

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Credit Card Debt Relief: Only a Few Steps Away

Credit: Flickr user Morgan.

If you're feeling crushed by credit card debt, it may seem as if you're alone in your struggle and it will be nearly impossible to get on solid ground again. If so, you're wrong on both counts. You're far from alone, and you can get credit card debt relief relatively quickly.

When it comes to how much debt the average American carries, estimates vary widely. But they don't vary in showing that many people are in debt to the tune of many thousands of dollars. According to one study, the average American household with credit card debt owes more than $7,000, while many households are burdened with tens of thousands of dollars of debt. The good news, though, is that credit card debt relief is within your reach. Many folks have successfully paid off a lot of debt -- sometimes more than $100,000 of it!

Paths to credit card debt relief

There is a range of strategies for eliminating credit card debt. For starters, you'll need money with which to pay off your debt. There are many ways to accumulate what you need. Ceasing to use your credit cards is a fine first step. Perhaps stash your cards somewhere so that you're not tempted to use them but can access them in emergencies. Studies have shown that people paying with cash tend to spend less than those paying with plastic. Another tip: Remove your stored login and credit card information from online retailers' websites to reduce the convenience of spending money on them.

Next, draft a detailed budget. List your expected income during the coming months or year, as well as all your expected expenses. Allocate as much money as possible to reducing your debt and make those payments pronto. See where you can cut back in your spending in order to funnel more money to credit card debt relief. The examples of cutting out daily coffees or packs of cigarettes are trotted out frequently, but only because they're so powerful. Eliminating a $5 expense each day will net you close to $2,000 per year!

There are other ways to save that you might not have thought of. For example, you can switch from cable TV service to a cheap streaming service. You can also find plenty of free music and movies at a public library. Cancel the delivery of catalogs to your home to avoid temptation and help prevent impulse-buying.

If necessary, think of ways to bring in extra money, such as working a second job, taking in a boarder for a while or selling a newer car for a more affordable one.Your tax refund, as well as any bonus you get at work, should go toward debt repayment if at all possible.

Another good strategy for those targeting credit card debt relief is transferring your balance(s) from high-interest-rate cards to a card with a low balance. Don't just rely on that, though. Follow through with aggressive payments. Note, too, that opening a new credit account can cause your credit score to take a hit for a while, so it could hurt you if you're planning to borrow money in the near future.

Of course, when it comes to achieving credit card debt relief, the bottom line is that you'll simply have to mail in checks over time to pay off your debt. But if you have a lot of debt on lots of cards, you might not know where to start. There are several schools of thought on this. Some recommend paying off your smallest-balance debts first in order to reduce your number of accounts in the red. This makes sense, as you'll soon end up focused on your biggest debts. The most cost-efficient approach, though, is paying off your highest-interest-rate debts first to minimize your overall interest payments.

Credit card debt relief via credit counseling

Another strategy to consider is credit counseling, which can lead to signing up for a debt-management program that collects a single monthly payment from you and puts it toward all your debt. It can be best to try tackling your debt on your own first, though, because if you enroll in a debt-management program, that can appear on your credit report as a red flag suggesting that you had trouble managing your credit. It also doesn't seem to work for roughly half of those who try it, per a Bankrate.com article. On the other hand, it does work for many people and often includes lower negotiated interest rates and payments. If you take this route to credit card debt relief, shop around for a nonprofit credit counseling firm and compare various firms' fees and offerings.

Whatever you do, be aggressive in your efforts to pay down debt. The sooner you get out of debt, the sooner you can put your improved money management skills to work saving and investing for retirement and a less stressful life.

Credit card debt might not exist in the future

The plastic in your wallet is about to go the way of the typewriter, the VCR, and the 8-track tape player. When it does, a handful of investors could stand to get very rich. You can join them -- but you must act now. An eye-opening new presentation reveals the full story on why your credit card is about to be worthless -- and highlights one little-known company sitting at the epicenter of an earth-shaking movement that could hand early investors the kind of profits we haven't seen since the dot-com days. Click here to watch this stunning video.

3 Stocks Rising on Unusual Volume

DELAFIELD, Wis. (Stockpickr) -- Professional traders running mutual funds and hedge funds don't just look at a stock's price moves; they also track big changes in volume activity. Often when above-average volume moves into an equity, it precedes a large spike in volatility.

Read More: Triple Your Gains With These 5 Cash-Rich Companies

Major moves in volume can signal unusual activity, such as insider buying or selling -- or buying or selling by "superinvestors."

Unusual volume can also be a major signal that hedge funds and momentum traders are piling into a stock ahead of a catalyst. These types of traders like to get in well before a large spike, so it's always a smart move to monitor unusual volume. That said, remember to combine trend and price action with unusual volume. Put them all together to help you decipher the next big trend for any stock.

Read More: 5 Stocks Set to Soar on Bullish Earnings

With that in mind, let's take a look at several stocks rising on unusual volume recently.

Kate Spade

Kate Spade (KATE), together with its subsidiaries, primarily designs and markets a range of apparel and accessories. This stock closed up 7.7% to $31.25 in Wednesday's trading session.

Wednesday's Volume: 17.23 million

Three-Month Average Volume: 2.36 million

Volume % Change: 691%

From a technical perspective, KATE ripped to the upside here right above Tuesday's intraday low of $28.30 with monster upside volume flows. Shares of KATE gapped down sharply lower on Tuesday from around $43 to $28.30 with large downside volume. This stock is now starting to rebound off that $28.30 low and off oversold conditions, since its current relative strength index reading is 31. Market players should now look for a continuation move to the upside in the short-term if KATE manages to clear Wednesday's intraday high of $31.69 with high volume.

Traders should now look for long-biased trades in KATE as long as it's trending above Wednesday's intraday low of $29.76 and then once it sustains a move or close above $31.69 with volume that hits near or above 2.36 million shares. If that move starts soon, then KATE will set up to re-test or possibly take out its next major overhead resistance level at its 200-day moving average of $34.21.

Read More: 5 Stocks With Big Insider Trading

Mavenir Systems

Mavenir Systems (MVNR) provides software-based telecommunications networking solutions. This stock closed up 5.6% at $11.35 in Wednesday's trading session.

Wednesday's Volume: 360,000

Three-Month Average Volume: 126,009

Volume % Change: 179%

From a technical perspective, MVNR ripped higher here right above some near-term support at $10.35 with above-average volume. This strong spike to the upside on Wednesday pushed shares of MVNR into breakout territory, since the stock took out some near-term overhead resistance at $11 with high volume. Market players should now look for a continuation move to the upside in the short-term if MVNR manages to take out Wednesday's intraday high of $11.45 with high volume.

Traders should now look for long-biased trades in MVNR as long as it's trending above Wednesday's intraday low of $10.76 or above that recent low of $10.35 and then once it sustains a move or close above $11.45 with volume that this near or above 126,009 shares. If that move begins soon, then MVNR will set up to re-test or possibly take out its next major overhead resistance levels at $12.50 to $13,25, or even its 50-day moving average of $13.51.

Read More: Do You Own These 5 Toxic Stocks? Watch Out!

Volcano

Volcano (VOLC) designs, develops, manufactures and commercializes a suite of precision guided therapy tools primarily to physicians, nurses and technicians worldwide. This stock closed up 2.7% at $12.51 in Wednesday's trading session.

Wednesday's Volume: 1.28 million

Three-Month Average Volume: 713,909

Volume % Change: 85%

From a technical perspective, VOLC bounced notably higher here right above some near-term support at $12 with high volume. This stock recently gapped down sharply lower from just over $16 to its recent low of $11.54 with heavy downside volume. Following that move, shares of VOLC have started to uptrend a bit and it's starting to trend within range of triggering a major breakout trade. That trade will hit if VOLC manages to take out Wednesday's intraday high of $12.57 to its gap-down-day high at $13.25 with high volume.

Traders should now look for long-biased trades in VOLC as long as it's trending above $12 or above that recent low of $11.54 and then once it sustains a move or close above those breakout levels with volume that hits near or above 713,909 shares. If that breakout materializes soon, then VOLC will set up to re-fill some of its previous gap-down-day zone that started just over $16.

To see more stocks rising on unusual volume, check out the Stocks Rising on Unusual Volume portfolio on Stockpickr.

-- Written by Roberto Pedone in Delafield, Wis.

RELATED LINKS:

>>3 Stocks Under $10 to Trade for Breakouts

>>Trade These 5 Consumer Stocks for Gains in August

>>5 Large-Cap Stocks to Trade for Gains

Follow Stockpickr on Twitter and become a fan on Facebook.

At the time of publication, author had no positions in stocks mentioned.

Roberto Pedone, based out of Delafield, Wis., is an independent trader who focuses on technical analysis for small- and large-cap stocks, options, futures, commodities and currencies. Roberto studied international business at the Milwaukee School of Engineering, and he spent a year overseas studying business in Lubeck, Germany. His work has appeared on financial outlets including

CNBC.com and Forbes.com. You can follow Pedone on Twitter at www.twitter.com/zerosum24 or @zerosum24.

Stocks: All This and Nothing

A whole lot of nothing and a little bit of everything helped stocks finish in the red today.

AP

The S&P 500 fell 0.2% to 1,933.75, while the Dow Jones Industrial Average dipped 0.1% to 16,560.54. The Nasdaq Composite dropped 0.3% to 4,389.25 and the small-company Russell 2000 got walloped to the tune of 0.8% to 1,133.03.

There was little in the way of major news today. Germans aren’t feeling very confident. Russia is sending ‘aid’ to Ukraine, a decision some worry could be a pretext for an invasion. Israelis and Palestinians still can’t get along. The U.S. said that its attacks have failed to stop the ISIS advance.

JPMorgan’s David Kelly ponders the “sour mood of the public” towards the stock market:

According to polling by Rasmussen Reports in early August, currently 49% of Americans believe the economy is in recession, 32% believe it is not and 19% aren't sure. This is a startling result given that we are now in the sixth year of economic expansion with an unemployment rate just 0.1% above its 50-year average of 6.1%…

This surprisingly glum mood (given broadly improving economic statistics) could reflect a general mistrust of Washington – both Congress and the President are scoring low in approval ratings and many fear the eventual result of very easy money from the Federal Reserve. Or it could reflect the widening income and wealth gap which has prevented the majority of Americans from experiencing much of the economic recovery.

However, whatever the reason for the still negative public mood, it is important not to allow it to guide investment decisions except to the extent that this mood impacts investment fundamentals…

A generally negative feeling about the state of America is no reason to avoid equities. If the last 15 years have taught us anything about investing, surely it is that the winners tend to be those who invest based on how they think, rather than how they feel.

Morgan Stanley’s Adam Parker and team discuss what would cause them to get bearish:

Our view is that hubris and debt define the top of every cycle, and as such, we monitor signs of growing costs that could ultimately translate into more downside to corporate earnings. Today, it is very hard to make that argument. In fact, we think it is possible that capital intensity is now peaking for the biggest 1500 US companies, at just less than 7% of sales (Exhibit 2). A large increase in capital spending, while positive for GDP numbers, would make us more worried about the potential downside for earnings. The reason is that fixed costs, like a depreciation burden on cost of goods sold (particularly for shorter asset-life industries), can cause material downside to earnings in a revenue shortfall. But this doesn't appear likely. We would wait for signs that backlogs are aging and growing or that book-to-bill ratios are meaningfully above 1.0 in the technology and industrial sectors before we'd expect to see a pickup in total capital spending. We maintain our long-held stance that capital spending will remain muted.

Parker expects the S&P 500 to hit 2,050 by the middle of 2015.

21st Century Fox – Gushing Cash, But Little Else to Love (FOXA)

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21st Century Fox (FOXA) shares rose sharply in morning trades after the media company posted better-than-expected results a day after withdrawing its bid for Time Warner (TWX) and announcing a $6 billion share repurchase program.

The market wasn’t too happy with 21st Century Fox pursuing rival Time Warner for $75 billion. FOXA stock lost as much as 11% in the weeks after news of its pursuit of TWX leaked out.

By that measure, Time Warner spurning 21st Century Fox was the best outcome for FOXA stock.

But, hey … pumping $6 billion into stock buybacks surely helped give FOXA stock that lift, too.

However, perhaps the biggest catalyst for the rally was that fiscal fourth-quarter earnings easily eclipsed analysts’ estimates, driven by record movie profits. 21st Century Fox beat Wall Street expectations by a very comfortable 4 cents a share, earnings 43 cents per share even as poor ratings hurt the broadcasting business.

Anyone holding FOXA stock should be very thankful for film franchises and the cable business, which now includes the YES Network.

“The company’s strong financial performance was driven by sustained affiliate revenue increases at our cable networks and record fourth quarter contributions at our filmed entertainment segment on the strength of global box office successes X-Men: Days of Future Past, Rio 2 and The Fault In Our Stars,” Chairman and CEO Rupert Murdoch said in a press release.

Whether FOXA can replicate that success going forward is the great unknown for all media companies, especially with American Idol contributing to poor ratings and results at Fox Broadcasting. Indeed, television was the only division to report a year-over year decline in operating profit for the final quarter, hurt by lower ad sales.

American Idol and X-Factor are more than showing their ages. Replacing them is a crapshoot.

Record box-office receipts in the quarter also set 21st Century Fox up for tough comparisons at this time next year.

Hey, that’s how it goes with a hit-driven business.

FOXA Stock Delivers the Cash, But…

That said, FOXA is swimming in cash, even after selling its satellite assets to BSkyB. The company expects to generate free cash flow in 2016 of $8.1 billion, down from $9 billion before the loss of the satellite contribution.

That bodes well for capital plans. There’s ample firepower left to buy back shares after the current authorization runs its course. And the meager dividend yield of 0.7% has plenty of room for a raise — 21st Century Fox has a payout ratio of just 18%.

One way or another, anyone holding FOXA stock can expect it to return even more cash to shareholders.

At the same time, FOXA stock gets no premium at all for its market-beating long-term growth. FOXA stock fetches 15.3 times forward earnings with a long-term growth forecast of the same amount. For comparison, the S&P 500 also trades at about 15.5 forward earnings, but analysts peg the market’s long-term growth at less than 10%.

On a relative basis, FOXA stock looks like a bargain … but that doesn’t automatically make it a buy.

It’s hard to believe Murdoch has really given up on Time Warner — not this quickly. He has a track record of pursuing targets for many years before making an offer they can’t refuse.

The TV division desperately needs new hits and box office is notoriously fickle, and 21st Century Fox can easily afford a deal that tops $80 billion.

Just don’t be surprised if the market punishes it for overpaying.

FOXA stock has been a volatile money-loser for most of the year. And with so much uncertainty from M&A to programming, it’s not going to get a higher multiple anytime soon.

As of this writing, Dan Burrows did not hold a position in any of the aforementioned securities.

Happy Ending: Cinemark Climbs On Q2 Beat

Cinemark Holdings (CNK) is climbing Tuesday, shaking off earlier weakness as the market digests its better-than-expected second quarter.

The company said it earned 62 cents a share on revenue of $717.9 million. Analysts were looking for earnings of 48 cents a share on revenue of $707.7 million.

Average ticket price increased 2.1% in the quarter, and concession revenues per patron grew 2.9%. Admissions overall were $455.7 million while concession sales were $226.5 million.

FBR's Barton Crockett reiterated an Outperform rating and $39 price target: "Cinemark’s 2Q14 earnings report was encouraging in a difficult period. Revenues beat our expectations on upside in box office per screen growth in Latin America and U.S. concession pricing. Adj. EBITDA beat because of U.S. expenses. Domestically, while Cinemark’s box office trend was in-line with our estimate, it did not feature the Imax/faith-based movie mix headwinds that resulted in underperformance at Regal Entertainment (RGC) and AMC Entertainment (AMC)."

MKM Partners'' Eric Handler reiterated a Buy rating and $40 price target: "We look for Cinemark’s shares to outperform the market following better than expected 2Q14 results. Cinemark beat our/consensus estimates with upside to both domestic and Latin American results. Our positive view towards Cinemark reflects: (1) continued expansion potential of 100-125 screens annually in Latin America; and (2) projected increases in FCF over the next several years, which could lead to more regular dividend increases. The box office will likely remain choppy for the remainder of 2014, but we believe a strong two-year, global content cycle will begin in 2015."

Congress in a Jam on Road, Transit Funding? So Are We

Jupterimages

WASHINGTON -- Small wonder Congress has kept federal highway and transit programs teetering on the edge of insolvency for years, unable to find a politically acceptable long-term source of funds. The public can't make up its mind on how to pay for them either. Six in 10 Americans think the economic benefits of good highways, railroads and airports outweigh the cost to taxpayers. Yet there is scant support for some of the most frequently discussed options for paying for construction of new roads or the upkeep of existing ones, according to a new Associated Press-GfK poll.

How Are Social Security Benefits Calculated?

Source: Wikimedia Commons.

The size of your monthly Social Security check when you retire will depend largely on how much you earned and how much you paid in Social Security tax during your working years.

It's not as simple as getting your money back, however. The IRS uses special formulas and rules to determine how much you receive in benefits. The maximum amount that you can receive per month if you retire at full retirement age in 2014 is $2,642, but your actual benefits will vary depending on several factors.

Because of the way your benefits are determined, you can't assume that the more you earn, the more you will receive in benefits. Here's how it works.

What factors affect Social Security benefits?
The biggest factor in how much you will receive in Social Security benefits is how much you earned while you were working. For Social Security purposes, what matters is the average amount you earned during your highest-earning 35 years before age 62, adjusted for cost-of-living increases.

The age at which you start taking benefits also affects how much you receive per month once you start. The longer you wait to start taking benefits, up to age 70, the higher your monthly benefits once you start.

If you have earned income in the same year you receive benefits and you either have not reached full retirement age or reached full retirement age that year, your Social Security benefits may be reduced.

Your benefits may also be affected by different types of earnings, and a pension received from a job in which you did not pay Social Security taxes will reduce your benefit.

What factors do not affect Social Security benefits?
Working longer doesn't necessarily mean you get more Social Security benefits. Only your 35 highest-earning years count, so continuing to work won't boost your benefits unless it increases your average income for the highest-earnings years.

Working fewer hours or for less pay as you near retirement won't hurt your Social Security benefits. Some people mistakenly assume that Social Security benefits are based on the last years worked. Fortunately, you can work as long as you want, and your Social Security benefits are still based on your 35 highest-earning years.

Do you qualify for Social Security benefits?
Not everyone who pays into the Social Security system qualifies to receive retirement benefits. To receive Social Security benefits on your record, you must have at least 40 credits. You generally earn four credits per year that you work. In 2014, you receive one credit for each $1,200 you earn, up to four credits per year.

If you don't qualify for benefits under your own record, you may be able to claim benefits under the record of your spouse or former spouse.

Step by step: How are Social Security benefits calculated?
If you qualify for Social Security benefits, here's how the SSA determines the amount of your monthly check.

1. Total earnings: The SSA determines the total amount you earned in the 35 years during which you made the most money, up to a maximum amount per year. The limit is adjusted for inflation -- in 1951, the limit was $3,600. In 2013, it was $113,700.

If you worked fewer than 35 years, the missing years are counted as zero. For example, say you worked 20 years. For calculating your highest earning years, the SSA takes all 20 of the years you worked and factors in 15 years at zero pay.

The amounts you actually earned are also multiplied by an index factor for each year in order to account for inflation.

2. Average indexed monthly earnings: The amount from Step 1 is divided by 420 months (35 years) and rounded down to the nearest dollar to find your average indexed monthly earnings (AIME).

3. Benefit at full retirement age (the age at which you can take full benefits): Your benefit is based on a three-tiered percentage of your average indexed monthly earnings. For 2014, the benefit is calculated as follows:

(90% of your first $816 of AIME) + (32% of AIME above $816 and through $4,917) + (15% of AIME above $4,917)

The sum is your estimated monthly retirement benefit at your full retirement age (2011 calculations).

Example:
If your AIME is $5,000, your benefit is calculated as follows:

   90% x $816 = $734.40

+ 32% x ($4,917 - $816) = $1,312.32

+ 15% x ($5,000 AIME - $4,917) = $12.45

Total monthly benefit = $2,059.17

Full retirement age ranges from 65 to 67 and depends on the year in which you were born. If you were born between 1943 and 1954, your full retirement age is 66.

4. Benefit if you retire early: If you want to retire early and take Social Security benefits before full retirement age, your monthly benefit is reduced. If your full retirement age is 67 and you want to retire at age 62, for example, then multiply the result from Step 3 by 75%.

5. Reductions for earned income while receiving benefits: If you are under your full retirement age and working, you can still receive early Social Security benefits. However, for every $2 you earn above the annual limit, your benefits are reduced by $1. This annual limit in 2014 is $15,480.

In the year you reach full retirement age, before the month in which you reach that age, you can earn up to a certain limit before the SSA deducts $1 for every $3 you earn. In 2014, that limit is $41,400.

After you reach your full retirement age, you can work as much as you want without worrying about your Social Security benefits.

Social Security benefits can be an important part of your retirement plan. Knowing how your benefits are calculated can help you understand how much you can expect to receive -- and help you maximize your benefits for retirement.

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