Let us all welcome the year 2013 with varied ideas to bring home tax planning for you and your family and also take you through Investment Strategies for investing your money. The following thirteen important Investment Tips for the year 2013 will surely help you to achieve your desired results :-
1. Income-tax file for one and all:
In whose name to make the investment yes, this should be the first point in the back of your mind before planning investment strategies for 2013, it is time now for every tax payer of the country to make a resolution to have a separate independent Income-tax File for every member in the family. The objective of this is to achieve tax planning and cut down on your income-tax payments. Firstly think of your wife and if she does not have till now a separate independent Income-tax File, then start of having such independent Income-tax File for your wife. The concept of gift and loans in the name of your wife will help you to achieve this. However, do remember that your wife can receive gift from any relative other than her husband, her father in law and her mother in law. However, wife is free to take loan with reasonable interest from anyone including the husband. Similarly adopt the concept of gifting your major children and start having separate independent Income-tax File for your major children.
2. Investments for Hindu Undivided Family tax file in your kitty
Investments made by your Hindu Undivided Family can bring rich dividends for you in the year 2013. If you are a Hindu, then it is time now to find out whether you have a separate independent Income-tax File of your Hindu Undivided Family. If still now you have not been instrumental in opening a separate Income-tax File for your Hindu Undivided Family, then right now is the time when you should start such separate Income-tax File in your family so that it helps you in the process of tax planning. The HUF file apart from enjoying the basic income-tax exemption of Rs. 2,00,000 will also continue to enjoy tax deduction in terms of section 80C as well as deduction for interest on housing loans. Also do remember that your HUF file can come into existence whether you have a son or just a daughter and even if you do not have any children, still your HUF file can come into existence right now.
3. Plan for Investments for your minor children
If you are having a minor child or a grand child, plan right now the different strategies for the safety and security of your minor child in particular. If you want to have lots of income and wealth in the name of the minor child and would still like no clubbing of the income of the minor child, then it is time now to think of creating a separate independent hundred per cent "Specific Beneficiary Trust" in the name of the minor child based on the principles enunciated by the various courts of India including the Supreme Court of India so that the income of the minor child with special terms and conditions mentioned in the Trust Deed is not clubbed with the income of the parents. It is also possible for you to think of starting a PPF account in the name of the minor child for his or her safety and also do not forget to take out Life Insurance Policies specially in the name of your minor child which will help the process of investment strategy in the years to come for the safety, security of your loving children.
4. Deposits in savings bank account:
In the year 2013 also consider keeping money in the Savings Bank Account specially because the interest rates in the Savings Bank Account have gone up and moreover the biggest advantage is that from the Financial Year 2012-13 the interest income from Deposits in Savings Bank Account in Bank, a Co-operative Society and a Post Office will be exempted up to Rs. 10,000 as per section 80 TTA of the Income tax Act, 1961. This benefit is available to Individuals and Hindu Undivided Families. The "Time Deposits" interest income would not enjoy the deduction.
5. Zero Coupon Bond:
Think of investing in Zero Coupon Bond in the year 2013 and it should be taken as a preferred tool of instrument of investment specially by persons not interested in regular income. Generally the maturity time of Zero Coupon Bond is ten years. Also look into the tax planning aspect at the time of maturity. Because of the benefit of Cost Inflation Index tax will be virtually nil on your income from Zero Coupon Bond at the time of maturity. It is also good to gift Zero Coupon Bonds to your minor children aged eight years and above.
6. Tax free bonds:
If you are coming in the highest income bracket, namely if you are having income exceeding Rs. 10 lakhs in a year, then surely it is worthwhile for you to make your investment in tax free bonds specially if you calculate the impact of income-tax savings on the same. The investment in the year 2013 in tax free bonds would be better than Bank Fixed Deposits.
7. Postal Instruments:
Do invest in Postal Office Instruments like National Savings Certificate VIII issue, National Savings Certificates IX issue, Post Office Time Deposit Receipts, as well as in Senior Citizen Savings Scheme specially keeping in view the aspects connected with tax deduction under section 80C and also the rise in the interest rates. The above items from Post Office will be eligible for 80C deduction. There has also been some increase recently in the interest of these investments.
8. Continue investment in Public Provident Fund:
In the year 2013 also please continue to keep your investment in Public Provident Fund Account specially because of the fact that the interest income from Public Provident Fund will now be 8.8 per cent. Moreover, such income will continue to be exempted from income-tax. Also do open Public Provident Fund Account specially for your minor children and your spouse. However, the total investment in Public Provident Fund Account for you and your minor children taken together in a financial year should not exceed Rs.1 lakh.
9. Real Estate Investments for the family:
In case you do not yet own your own residential house property then it is time now to start investing in new residential house property so that you can have your dream house. The investment in residential property would also bring home for you special tax deduction under section 24 for interest payment on loan for residential property. The maximum deduction would be Rs.1,50,000 for interest payment. Besides, the repayment housing loan also would enjoy tax deduction under section 80C. It would be better to buy a house in the name of two or more family members so that each one can enjoy tax deduction. From tax angle it would not be worth just to buy a piece of land because no tax benefit is available only on land purchase.
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With shares of Dell Inc. (NASDAQ:DELL) trading at around $13.40, is Dell 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 PC industry is in constant decline, revenues have been declining, and earnings have been inconsistent. As of right now, shareholders are set to receive $13.65 per share in cash by the second quarter of 2014 thanks to an LBO. Dell's board is attempting to finalize the deal, but shareholder greed is getting in the way. Considering the circumstances, it might be wise for them to take the money and run. Q1 results for Dell weren't impressive. Non-GAAP EPS came in at $0.21 on $14.1 billion in revenue. Both were declines on a year-over-year basis. Enterprise Solutions Group revenue increased 10 percent, and Dell Services revenue increased 2 percent. However, Dell Software suffered an operating loss, and End User Computing revenue declined 9 percent. Gross margin declined to 19.5 percent from 21.3 percent for the same quarter one year ago. Costs and competition have increased. For those looking for good news, Dell yields 2.40 percent. Sorry, but there isn't much more good news to report. 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! The chart below compared fundamentals for Dell and Hewlett-Packard Company (NYSE:HPQ). | DELL | HPQ | | Trailing P/E | 12.69 | N/A | | Forward P/E | 8.29 | 5.89 | | Profit Margin | 3.30% | -10.86% | | ROE | 18.56% | -41.00% | | Operating Cash Flow | 3.38B | 11.94B | | Dividend Yield | 2.40% | 2.50% | | Short Position | 1.70% | 3.20% | Let's take a look at some more important numbers prior to forming an opinion on this stock. T = Technicals Are Mixed Dell has performed well year-to-date, but it has underperformed the market for years. | 1 Month | Year-To-Date | 1 Year | 3 Year | | DELL | 0.04% | 32.93% | -7.09% | -8.57% | | HPQ | 8.38% | 49.71% | 1.73% | -52.35% | At $13.40, Dell is trading below its 50-day SMA, but above its 200-day SMA. | 50-Day SMA | 13.66 | | 200-Day SMA | 12.37 | E = Equity to Debt Ratio Is Normal The debt-to-equity ratio for Dell is close to the industry average of 0.70. NEW! Discover a new stock idea each week for less than the cost of 1 trade. CLICK HERE for your Weekly Stock Cheat Sheets NOW! | Debt-To-Equity | Cash | Long-Term Debt | | DELL | 0.67 | 10.90B | 7.25B | | HPQ | 1.21 | 12.63B | 28.25B | E = Earnings Have Been Inconsistent Earnings have traveled across rolling hills over the past several years. Revenue performance has been even more concerning. | Fiscal Year | 2009 | 2010 | 2011 | 2012 | 2013 | | Revenue ($) in millions | 61,101 | 52,902 | 61,494 | 62,071 | 56,940 | | Diluted EPS ($) | 1.25 | 0.73 | 1.35 | 1.88 | 1.35 | As stated earlier, Q1 EPS came in at $0.21 on $14.1 billion in revenue. Below is a look at the four previous quarters. | Quarter | Apr. 30, 2012 | Jul. 31, 2012 | Oct. 31, 2012 | Jan. 31, 2013 | | Revenue ($) in millions | 14,422 | 14,483 | 13,721 | 14,314 | | Diluted EPS ($) | 0.36 | 0.42 | 0.27 | 0.30 | 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 Do Not Support the Industry PCs and laptops are in decline, and Europe is still very weak. On a global scale, there is an enormous disconnect between what's taking place in equity markets and what's taking place in the real economy. In other words, the consumer isn't as strong as advertised. 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 Dell has been a well-run company for many years, but there isn't much reason for optimism at the moment. Dell’s goal is to become a leading global provider of services to enterprises. The following is a related quote from Brian Gladden, Dell CFO:
As high-net-worth investors work with greater numbers of financial professionals and gravitate toward boutique-like service models, such as RIAs, multifamily offices and state-registered trust companies, the pressure is on providers to attract new wealthy clients. In a wide-ranging report on the high-net-worth market, defined as clients with $5 million or more in investable assets, Cerulli Associates said that while new clients were crucial, firms courted danger if they failed to better engage the heirs of existing clients. Heirs who are not adequately prepared for inheritances not only threaten legacies, but are the greatest threat to legacy providers’ asset bases when the fortunes are dispersed among numerous beneficiaries, Cerulli said. The study found that HNW providers generally understood that engaging heirs now, including a spouse, increased the odds of retaining the inherited assets. Many providers are trying to involve children at the outset of a new relationship, or persuading existing clients to invite their children. Others are designing boot camp programs to educate younger HNW investors on basic and advanced investing concepts, and to provide an opportunity to network with well-off peers. These efforts give patriarchs and matriarchs the opportunity to explain the risks associated with accumulating wealth, and the risks that need to be hedged against when preserving wealth. Cerulli said legacy providers, including wirehouses and bank trusts, should engage heirs to ensure they do not take cues from their wealth-creating peers, who are progressively shifting their assets to providers that offer greater levels of flexibility and control, including direct providers such as Fidelity and Charles Schwab. The HNW Market’s Allure HNW families and their advisors offer asset managers intriguing opportunities owing to their complex needs, primary objectives and wide-ranging aspirational goals. It’s not surprising, then, that 56% of all asset managers surveyed by Cerulli considered the HNW market more appealing than other business lines because of investors’ sophistication. Another 53% found the market more attractive because of the various vehicles used, and 50% liked the long hold periods. Less attractive aspects of the HNW market included a time-consuming sales process. Cerulli said asset managers could gain significant insights by viewing these attributes of the individual distribution channels that are advising the clients. For example, asset managers rank RIAs as the most attractive channel for HNW clients. Most RIAs, as well as multifamily offices, rely on third-party managers. Because they are autonomous and embrace open architecture, they are highly accommodating providers for cutting-edge products such as hedge funds. Bank trusts represent the longest holding periods, but asset managers view them as conservative providers and do not like the lengthy sales process that averages 10 months. The big wirehouses are an anomaly. With their immense scale, scope of services and huge advisor force, they dominate the overall HNW market both in assets and market share and are expected to uphold control, Cerulli said. Their advisors distribute the largest percentage of HNW assets to mutual funds and separate accounts compared with other channels. And thanks to their internal resources, they represent the fastest timeframe in winning an HNW account at an average of just five months. However, the wirehouses are only the fourth-most attractive HNW channel for asset managers. Cerulli attributed this to the surge of RIAs and MFOs, bank trusts increasingly adopting open architecture and the fact that wirehouses are well known for leveraging their influence on required revenue sharing. State-Registered Trusts Cerulli estimated that state-registered trust companies control $446 billion in HNW assets, making them the third-largest HNW channel, albeit far behind wire houses with $2.3 trillion and private client groups with $1.4 trillion. Cerulli said 2013 marked the first year it had presented state trusts as their own unique channel. For asset managers, the majority of these banking organizations are nimbler and more technologically savvy than their nationally registered counterparts. As well, these firms tend to be more reliant on third-party managers and products because they lack the resources for proprietary funds. At the same time, the study found, efficiently wholesaling into these firms may be a challenge owing to their private nature and scattered locations. Cerulli expected state-registered trusts to continue to grow as more wealth managers and investors take advantage of states vying for the business via lax state laws and taxation. It projected that the state-registered entities would post asset growth of more than 8% over the next 3.5 years, outpacing the growth of both nationally registered bank trusts and private client groups. Fee Compression Cerulli’s data showed that nearly three-quarters of HNW providers remained committed to their “stated fee schedules” during the past three years, while the remaining one-quarter reported an increase. However, Cerulli said that despite the actions taken over the past three years, major differences existed between HNW providers’ stated fees and those they actually imposed. Given the intensifying competition for HNW assets, a client’s investable assets continued to be the pivotal element in determining fees, according to the report. Approximately three-quarters of HNW providers said their minimum fee was 1%, if not greater, while only 18% reported a minimum between 50 and 99 basis points. In reality, discounting among HNW wealth managers remains rampant, the report said. On average, they impose a fee of just 51 basis points on all investors with more than $5 million in investable assets. Cerulli reported that, on average, bank trust organizations were imposing among the lowest stated fees. This was especially true for clients investing between $25 million and $50 million. --- Check out another story on this study, HNW Investors’ Needs Differ as Wealth Increases: Cerulli, on ThinkAdvisor.
Housing is making a big comeback. The numbers are hard to argue with. For years, we've built fewer homes than are needed to keep up with population growth, soaking up excess inventory from last decade's bubble and then some. Now, homebuilders have the wind at their back as construction booms. Housing starts are up more than 30% year over year. But don't take my word for it. Here's what eight CEOs of the nation's biggest homebuilders said in conference calls that took place in the last three months. Stuart Miller, CEO, Lennar (NYSE: LEN ) : While production continues to lag the need, we are experiencing supply shortages against a growing demand. While some have argued that increased demand is being driven by low interest rates, we believe that it's being driven by a generally improving economy, driving household formation and a decoupling of households under one roof. New families are seeking to find independent shelter. Where attractive financing is available and obtainable, households seek for-sale product. But in the absence of a for-sale option, they seek rentals. But that just increases demand for rentals and drives up the rental rates, making for-sale monthly payments even more attractive. The bottom line is that there are too few dwellings for a growing population and for normalized household formation. Larry Nicholson, CEO, Ryland Group: Not a lot has been keeping me up at night. The interest rate thing ... as long as the economy continues to move forward on solid ground, I think we are fine. A year ago I was worried about Fannie and Freddie, but today I am not. There is mortgage availability. So I am not real concerned with a whole lot right now. I think that pricing will continue to move up. If you look at peak-to-trough pricing and you look at where we are today, we still got room to move. So I think there is a lot of things still playing to our favor today. Donald Tomnitz, CEO, DR Horton (NYSE: DHI ) : We're dramatically improving our margins. We think we're in a wonderful position. There is a shortage of finished homes on the marketplace. So not only with our good inventory of specs that we consistently have maintained in this company, we will continue to push price as well as volume. Clearly we've said before, our goal is, improve the bottom line better than we improve the top line. But nevertheless, we are in a position where we can do both. Jeffrey Mezger, CEO, KB Homes (NYSE: KBH ) : Let me address the recent concerns many have raised regarding the recent uptick in mortgage rates and its potential impact on housing. In my view, there is no question that housing dynamics are significantly better than they were a year ago. At the same time, in my view, we are still in the early innings of a recovery that is continuing to accelerate. The positive factors underpinning the current housing recovery remain fully in place and will continue to drive favorable market fundamentals. There is substantial pent-up demand driven by population growth, job growth, an increase in household formation and record affordability. At the same time, in most areas of the country, there is a shortage of supply and monthly mortgage payments for a typical home are lower than rent; further reinforcing the appeal of homeownership. Despite the recent rise in rates, affordability is still at extraordinary levels, and demand is significantly outpacing supply in every market we serve. Anecdotally, we are hearing from the sales floor that the uptick in rates has actually created an increased sense of urgency, as buyers don't want to miss out on this incredible opportunity. Larry Mizel, CEO, MDC Holdings (NYSE: MDC ) : So I think that the United States is in a unique place where it's a safe haven for capital. As we look around the world, there's not a lot of safe havens. And so housing benefits from the pent-up demand. It benefits from the low interest rates. And the home value and the affordability, as you know that the affordability is well imbalanced, and there seems to be room to run between the cost and what the affordability index would anticipate. And so I think the industry is working hard to expand to meet the demand and the needs of the buyer. We're creating jobs, which is great for our country. We're helping the GDP, which is certainly lacking in many areas. So I think the aggregate impact of providing housing and value is working out very well for everyone. Richard Dugas, CEO, PulteGroup (NYSE: PHM ) : In a number of communities across the country, demand has been so strong that we have taken action to slow the overall pace of sales. While I would expect that everyone listening to the call today is aware of builders taking such action in Phoenix, Tampa and Washington D.C., we are now seeing this in cities as diverse as Austin, Cleveland and Seattle. In fact, while it's tough to get precise data, a recent survey of our division president suggests that we have taken steps to purposefully slow sales to varying degrees in 25% or more of our communities. I am sure that most of you know the answer, but why would we limit sales? Given the lack of land development during the 6 years of housing market downturn, finished lots in the better submarkets are scarce. Accelerating sales pace means that we sellout a neighborhood sooner and have to look to the next community which may not have been developed yet. Although less of an influence, labor constraints in certain markets can also make it prudent to meter the sales pace to help ensure build times are not extended too far into the future. Ara Hovnanian, CEO, Hovnanian (NYSE: HOV ) : In the majority of the situations, we have been able to raise our home prices more than the construction costs have increased, thereby increasing gross margin. Southern and Northern California, as well as Phoenix, certainly have many communities that fall into that category. In other markets, we've been able to raise prices -- home prices equal to construction cost increases. Houston and Dallas are examples of that. And finally in some markets, the construction cost increases have actually risen ahead of our community home price increases. This is in a minority of the markets, but Minneapolis comes to mind in this category. Fortunately, home prices are gaining momentum here as well. In the aggregate, our home price increases have more than offset any increases in construction costs that we have seen to date, helping contribute to our gross margin increase. Ara Hovnanian, CEO, Hovnanian: While the housing market is clearly recovering, we have not yet reached the level of the previous lows of 1 million starts. All of the excess production of mid-decade has now been wiped out by the deficit production plus a little. In fact, on Slide 26, we show the excess starts from the last decade and stack them -- excess above the average, stack them on top of the deficit reduction of the last 5 years, and what you see is that the -- we are still far below the average production for the decade. As has often happened, the market has overcorrected, and on -- in this case, on the downside. In addition, like the '70s, most demographers are projecting higher housing needs this particular decade, based on population and household growth. The Harvard Joint Center for Housing Studies, Moody's and others, are projecting housing starts between 1.6 million and 1.9 million new home starts per year for the entire decade. This exacerbates the current underproduction issues. Steve Hilton, CEO, Meritage Homes: As much as prices have gone up, affordability is still at a historic low, of course a lot of that is because of interest rates. Sooner or later rates are going to go up, and so we have to be mindful that and I think we are, and that's why we are focused on more A&B locations than going into the outer markets. I think the thing that people aren't really talking a lot about is that the entry level business, at least from my vantage point, really has been recovered to the degree that the mover market is and the interest and see what happens out there, but affordability is one metric to watch, and we still feel very good about it. Hat tip to SeekingAlpha.com for providing conference call transcripts. More from the Motley Fool
Interested in more about the economy? My new free report, "Everything You Need to Know About the National Debt," walks you through with step-by-step explanations about how the government spends your money, where it gets tax revenue from, the future of spending, and what a $16 trillion debt means for our future. Click here to read it.
Retail is a fickle place for investors, where fashions go in and out of favor in quick succession. But for those who are comfortable with the ups and downs of the industry, owning what used to be The Limited stock -- the company recently changed its corporate name from Limited Brands to L Brands (NYSE: LTD ) -- has been a long-term winning strategy, with the stock having posted strong returns both since the financial crisis in 2009, and over the past two decades. Let's take a closer look at what's happened with L Brands, in general, and with The Limited, in particular, recently. What's behind shares of L Brands?
The key thing to realize is that L Brands no longer owns The Limited. In 2010, L Brands sold The Limited to the private equity company Sun Capital Partners, with Sun taking control of the then-struggling 200-plus-store chain. Sun still owns The Limited, with the chain having grown to 257 locations in the U.S. as of April. What's amazing in hindsight is how long it took for L Brands to jettison the word "Limited" from its name. Now, the company's main assets are its Victoria's Secret and Bath & Body Works stores, with other companies like the White Barn Candle brand and Canada's La Senza playing a secondary role, and bringing in just 10% to 15% of L Brands' total revenue. How has L Brands fared?
Lately, L Brands has done a good job of keeping sales moving upward. In May, the company recorded 3% gains in same-store sales, overcoming the headwinds that some other retailers faced in what was a relatively cold spring. With a stranglehold in the intimate apparel market, Victoria's Secret gives L Brands almost unlimited potential, both from store sales as well as catalog offerings. But rivals have seen the value of the lingerie business and are taking aim at Victoria's Secret's success. American Eagle Outfitters (NYSE: AEO ) has had substantial success with its Aerie lingerie brand, which has helped keep American Eagle's overall results relatively strong. Moreover, Aerie has done what L Brands hasn't been able to do: post strong success in its Internet-based sales. Another up-and-coming competitor is Juicy Couture, a brand of Fifth and Pacific (NYSE: FNP ) , which plans to launch a new line of intimate apparel early next year. For Fifth and Pacific, getting Juicy Couture to perform better would mark the final step in its overall turnaround, with the company's other two major brands having already seen gains in comps recently. What's ahead for L Brands?
Perhaps the biggest challenge for the company will be to choose a permanent name. Having taken so long to jettison the out-of-date impression of still being The Limited stock, L Brands is still a complete misnomer, given that neither of its major brands has an L anywhere in their names. As silly as it sounds, if management can't move more quickly on something as simple as a corporate name, how well can it fare with more crucial business decisions? One thing is certain: Shares of L Brands won't go back to being called The Limited stock anytime soon, barring an unlikely reacquisition of the old Limited stores. Given the potential within Victoria's Secret, that's not a bad thing, as the upside for shareholders is almost unlimited if the company can improve its execution, and make the most of its strong brand reputation. The retail space is in the midst of the biggest paradigm shift since mail order took off at the turn of last century. Only those most forward-looking and capable companies will survive, and they'll handsomely reward those investors who understand the landscape. You can read about the 3 Companies Ready to Rule Retail in The Motley Fool's special report. Uncovering these top picks is free today; just click here to read more. Click here to add L Brands to My Watchlist, which can find all of our Foolish analysis on it and all your other stocks.
Buy a product that's patented or trademark-protected, and you're paying the company that made it for the rights surrounding it. But once you've paid for it, that's where the manufacturer's rights end. You can then turn around and do whatever you like with that product, including giving it away or selling it to someone else. The concept is called "patent exhaustion", and it essentially says a seller's rights to a product end after the first sale. That's how sellers on eBay are able to sell all their used stuff in the world's biggest garage sale. Seeds of dissent
Yet the Supreme Court just said that when it comes to Monsanto's (NYSE: MON ) genetically modified seeds, farmers can't "blame the bean," in Justice Elena Kagan's words, and reuse its Roundup Ready soybean seeds. Farmer Vernon Bowman had previously used and paid the seed giant for its seeds but had a riskier, late-season crop that he wanted cheaper seeds for. He went to a grain elevator and purchased seeds he thought probably would be Roundup Ready, which proved correct, and he replanted them over the course of eight years. Monsanto sued him for failing to pay them for the seeds and won in lower courts. Appealing all the way up to the Supreme Court, Bowman asserted the "patent exhaustion" theory and also said soybean seeds self-germinate, so he's using the progeny of Monsanto's patent and it shouldn't hold in perpetuity. Unfortunately for farmers everywhere, Monsanto maintains its stranglehold on the industry. The court unanimously rejected his defense, instead siding with the seed company's argument -- and another legal theory -- that says you can't copy a patent. It rejected Bowman's contention that it was the seed doing the copying because it is self-replicating, which led to Kagan's commentary on holding the seed responsible. Specifically, she said, "Patent exhaustion does not permit a farmer to reproduce patented seeds through planting and harvesting without the patent holder's permission." The seed that wouldn't die
Roundup is Monsanto's herbicide that farmers often use to control weeds. Monsanto genetically modified the seeds it sells to be able to survive applications of the herbicide. More than 90% of the soybean crops planted have had their DNA altered (and 86% of the corn crop), according to the Center for Food Safety, and it goes on to note that Monsanto has filed 142 lawsuits against 466 farmers and small business farms, winning some $23 million from them so far. Just three companies -- Monsanto, DuPont (NYSE: DD ) , and Syngenta (NYSE: SYT ) -- control more than half the world's seed supply. The implications of the decision are broad with tech, health care, and other industries watching this case and entering on the side of Monsanto. While the court said its decision was specific to this case only, many believe it establishes a level of protection elsewhere now, too. A monstrous outcome
And that's a dangerous precedent, because copying and pirating software is protecting a man-made thing, while this decision allows Monsanto to control the lifecycle and offspring of a living organism, putting us into a brave new world. Maybe we can't blame the seed, but we can blame the court for plowing under the American farmer. Individuals would do better to buy heirloom seeds that haven't been tainted by Monsanto's rewired genetic coding and plant their own gardens as a means of reducing their reliance on Frankenfoods. The Motley Fool's chief investment officer has selected his No. 1 stock for the next year. Find out which stock it is in the brand-new free report: "The Motley Fool's Top Stock for 2013." Just click here to access the report and find out the name of this under-the-radar company.
For a company with a long history of hits, Apple (NASDAQ: AAPL ) has two rather prominent tarnishes on its record in recent years: Siri and Maps. Siri has mostly not lived up to its full revolutionary potential and has been relegated to little more than a novelty feature. Apple's mapping missteps are also well documented, and Tim Cook has directly apologized over the service's shortfalls. Would you give a ride to both Siri and Maps? We need a lift
That's what Apple may be betting on in the next version of iOS, according to 9to5Mac's well-placed sources. The Mac maker is reportedly looking to "aggressively" push into car integration with the two services in iOS 7, which will be unveiled in June. Apple is collaborating with numerous automakers to add center consoles that an iDevice could attach to, which would provide a redesigned Apple Maps in lieu of current proprietary GPS systems. Recent events also lend to the idea that Apple wants more of a presence in automobiles. General Motors (NYSE: GM ) has partnered with Apple to integrate Siri's Eyes Free feature in the Chevrolet Spark and Sonic. Volkswagen recently unveiled an iBeetle that integrates directly with iPhones after collaborating with Apple. Honda Motors (NYSE: HMC ) is also adding Eyes Free to models in its 2013 lineup of Hondas and Acuras. Automakers benefit by adding a complementary selling feature that appeals to Apple's large installed base. It's also worth noting that as part of Apple's executive shakeup late last year, Siri and Maps were both rolled under the jurisdiction of online services exec Eddy Cue. Scott Forstall took the blame for both fumbles, and Cue is known as a man who fixes things. Cue also happens to be a car enthusiast and joined Ferrari's board of directors late last year. Both Siri and Maps are only going to get better before. Apple has little choice but to bolster Siri's capabilities, especially with Google (NASDAQ: GOOG ) launching Now on iOS this week. Now has been praised as what Siri should have been, and bringing the rival virtual assistant to iOS will put some pressure on Apple to up Siri's game. In fact, Now will reach more iOS users than it does Android users. Only 25% of Android devices use Jelly Bean, which includes Now, while Now will be available on all iDevices on iOS 5 or later, which includes all iPhones sold since 2009. Apple's also been hiring mapping engineers to beef up its map making prowess. It may never catch up to Google's defining service, but there's still plenty of work needed to get Apple Maps competitive. Siri and Maps may have been big mistakes thus far, but there are worse backseat drivers. There's no doubt that Apple is at the center of technology's largest revolution ever and that longtime shareholders have been handsomely rewarded, with more than 1,000% gains. However, there is a debate raging as to whether Apple remains a buy. The Motley Fool's senior technology analyst and managing bureau chief, Eric Bleeker, is prepared to fill you in on reasons to buy and reasons to sell Apple and what opportunities are left for the company (and your portfolio) going forward. To get instant access to his latest thinking on Apple, simply click here now.
With the markets hitting new all-time highs in recent weeks, I want to point something out that is literally true: Not a single investor in today's market practicing legitimate buy and hold in a low-cost index fund has ever lost money. Not one. If you bought at the top of the dot-com bubble in 2000, you're ahead. If you bought at the top in 2007, you're ahead. If you bought the day before 9/11, or just before we all learned that Wall Street was a lit fuse, you are ahead. That's an extraordinary statistic, isn't it? It's even more extraordinary when you realize how few investors it applies to. Analytics firm Dalbar gathered data on how the average stock fund investor performed from 1990 to 2010, and compared it to the market index. The results are unsurprising, but thoroughly depressing:  Source: Dalbar. There are several reasons for this, but the big one is simple. Most investors are not long-term buy-and-holders. They lack the patience and require the thrill of something more. Either they are convinced of their ability to time the market, which usually leads to dismal returns, or they are emotional pendulums, buying at the top and selling out at the bottom of markets, which always leads to dismal returns. Part of the reason I think so many lack the fortitude to hang on without being shaken out of the market by volatility is a lack of appreciation for how normal volatility is. Take a look at this chart. The red line is the S&P 500 since 1928. The grey lines mark times when the index began a decline of least 20% from a recent high:  Source: S&P Capital IQ. Since 1928, there are 20 periods of a 20%-or-more decline. The market increased nearly 100-fold during this period, or 140-fold with dividends and inflation factored in. Think about that. During a period when people made 140 times their money in real terms, they saw at least one-fifth of their wealth melt away 20 times, or once every 4.5 years. Even if you limit it to the post-World War II period, big market drops occur at least once a decade. The only real difference between buy and holders and the average investor is this: Buy-and-holders view volatility like the flu. Yeah, it's not fun. It can hurt. But you're probably going to get it once a year. When you do, it's not the end of the world. Drink some water. Take a nap. Wait it out. Life will go on, and you'll be healthy before long. Average investors view volatility like Stage IV cancer. Something that shouldn't occur, should be utterly feared, and attacked mercilessly when the most extreme treatments. That's honestly it. And it applies to those in low-cost index funds and stock-pickers alike. Coca-Cola (NYSE: KO ) has averaged 12.5% annual returns since 1968, but lost more than 20% of its value six times during that period. If you tried to avoid the latter, you almost certainly missed the former. Berkshire Hathaway (NYSE: BRK-B ) is up half a million percent since 1965, but as Charlie Munger put it in 2009: "This is the third time that Warren and I have seen our holdings in Berkshire Hathaway go down, top tick to bottom tick, by 50%." He went on: I think it's in the nature of long term shareholding of the normal vicissitudes, in worldly outcomes, and in markets that the long-term holder has his quoted value of his stocks go down by say 50%. In fact, you can argue that if you're not willing to react with equanimity to a market price decline of 50% two or three times a century you're not fit to be a common shareholder, and you deserve the mediocre result you're going to get compared to the people who do have the temperament, who can be more philosophical about these market fluctuations. Buy-and-holders are sometimes heckled for being too simplistic, or not astute, or ideologically worshiping a theory that, for some reason, some think has been discredited. But the scores are in: No true buy-and-holder has ever lost money; the vast majority of traders and market timers have. As Tolstoy said, "The two most powerful warriors are patience and time."
Linked here is a detailed quantitative analysis of Procter & Gamble (PG). Below are some highlights from the above linked analysis: Company Description: The Procter & Gamble Company is a leading consumer products company markets household and personal care products in more than 180 countries. Fair Value: In calculating fair value, I consider the NPV MMA Differential Fair Value along with these four calculations of fair value, see page 2 of the linked PDF for a detailed description: 1. Avg. High Yield Price
2. 20-Year DCF Price
3. Avg. P/E Price
4. Graham Number PG is trading at a premium to all four valuations above. Since PG's tangible book value is not meaningful, a Graham number can not be calculated. The stock is trading at a 32.3% premium to its calculated fair value of $61.84. PG did not earn any Stars in this section. Dividend Analytical Data: In this section there are three possible Stars and three key metrics, see page 2 of the linked PDF for a detailed description: 1. Free Cash Flow Payout
2. Debt To Total Capital
3. Key Metrics
4. Dividend Growth Rate
5. Years of Div. Growth
6. Rolling 4-yr Div. > 15% PG earned two Stars in this section for 2.) and 3.) above. The stock earned a Star as a result of its most recent Debt to Total Capital being less than 45%. PG earned a Star for having an acceptable score in at least two of the four Key Metrics measured. The company has paid a cash dividend to shareholders every year since 1891 and has increased its dividend payments for 56 consecutive years. Dividend Income vs. MMA: Why would you assume the equity risk and invest in a dividend stock if you could earn a better return in a much less risky money market account (MMA) or Treasury bond? This section compares the earning ability of this stock with a high yield MMA. Two item! s are considered in this section, see page 2 of the linked PDF for a detailed description: 1. NPV MMA Diff.
2. Years to > MMA The NPV MMA Diff. of the $387 is below the $500 target I look for in a stock that has increased dividends as long as PG has. If PG grows its dividend at 5.2% per year, it will take 4 years to equal a MMA yielding an estimated 20-year average rate of 3.41%. PG earned a check for the Key Metric 'Years to >MMA' since its 4 years is less than the 5 year target. Memberships and Peers: PG is a member of the S&P 500, a Dividend Aristocrat, a member of the Broad Dividend Achievers™ Index and a Dividend Champion. The company's peer group includes: Clorox Corporation (CLX) with a 3.1% yield, Colgate-Palmolive Co. (CL) with a 2.1% yield, and Kimberly-Clark Corporation (KMB) with a 3.1% yield. Conclusion: PG did not earn any Stars in the Fair Value section, earned two Stars in the Dividend Analytical Data section and did not earn any Stars in the Dividend Income vs. MMA section for a total of two Stars. This quantitatively ranks PG as a 2-Star Weak stock. Using my D4L-PreScreen.xls model, I determined the share price would need to decrease to $76.41 before PG's NPV MMA Differential increased to the $500 minimum that I look for in a stock with 56 years of consecutive dividend increases. At that price the stock would yield 3.2%. Resetting the D4L-PreScreen.xls model and solving for the dividend growth rate needed to generate the target $500 NPV MMA Differential, the calculated rate is 5.9%. This dividend growth rate is higher than the 5.2% used in this analysis, thus providing no margin of safety. PG has a risk rating of 1.75 which classifies it as a Medium risk stock. PG should benefit from innovation and growth in new markets and categories, along with increases in global market share. The company's goals are to return to 8% to 10% EPS growth and free up funds for reinvestment. Going forward currency exchange should be more favorable! and the ! company should reap the benefits from productivity improvements. The company's strengths include its broad product portfolio and vast distribution network. Its free cash flow payout at 69% (up from 63% in the June review) is well above the 60% maximum that I prefer. This is offset with a relatively low debt to total capital of 34%. As my allocation allows, I will continue to give consideration to PG when it is trading below or near my calculated fair value of $61.84. Disclaimer: Material presented here is for informational purposes only. The above quantitative stock analysis, including the Star rating, is mechanically calculated and is based on historical information. The analysis assumes the stock will perform in the future as it has in the past. This is generally never true. Before buying or selling any stock you should do your own research and reach your own conclusion. See my Disclaimer for more information. Full Disclosure: At the time of this writing, I was long PG (4.4% of my Dividend Growth Portfolio) and long KMB. See a list of all my dividend growth holdings here. Related Articles:
- Meredith Corp. (MDP) Dividend Stock Analysis
- Target Corporation (TGT) Dividend Stock Analysis
- Waste Management, Inc. (WM) Dividend Stock Analysis
- Coca-Cola Company (KO) Dividend Stock Analysis
- More Stock Analysis Also check out: (Free Trial) High Yield Dividend Stocks in Gurus' Portfolio Top dividend stocks of Warren Buffett Top dividend stocks of George Soros » Take a Free Trial of Premium Membership About the author:Dividends4LifeVisit Dividends4Life at: http://www.dividend-growth-stocks.com/ | Currently 4.25/512345 Rating: 4.3/5 (4 votes) |
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