Thursday, February 28, 2013

3 FTSE 100 Shares Hitting New Highs

LONDON -- The FTSE 100 (FTSEINDICES: ^FTSE  ) was hovering around the 6,300 mark all morning but has now risen 49 points to 6,323, flirting with its latest 52-week high of 6,355 points, set on Wednesday. But even after a 6.4% rise in the index of the U.K.'s biggest companies during January, sentiment still seems to be positive during these times of little concrete economic news.

And even if it's been two days since the FTSE broke new ground, there are still plenty of individual companies climbing to new heights. We take a look at three of them.

ITV (LSE: ITV  )
Shares in media giant ITV have jumped 2% to hit a new 52-week high of 117 pence. That takes the price up more than 50% over the past 12 months -- and the shares have more than six-bagged since the depths of 2009.

Since then, ITV's performance has come back strongly with impressive earnings-per-share growth and a resumption of divided payments in 2011. Expectations for the year to December 2012 suggest a further 10% rise in earnings and a 2% dividend yield, with the shares on a price-to-earnings ratio of 13. Results for the year should be with us on Feb. 27.

Dunelm (LSE: DNLM  )
Dunelm Group also reached a 52-week high this morning of 772 pence, though the shares have dropped back to 762 pence later in the day. The soft-furnishings supplier has seen its shares soar by more than 60% over the past year after reporting double-digit earnings growth for five straight years. The dividend has been raised strongly as well, and there should be more to come.

Forecasts for the year to June 2013 predict another 12% rise in earnings and another nice boost to the dividend -- albeit to a yield of only 2%, with the shares on a relatively lofty P/E of 19. We're expecting half-year results on Feb. 12.

Pace (LSE: PIC  )
Pace has reached a new high of 228 pence today, pushing the share price up a massive 150% over the past 12 months. The digital TV specialist has gone from strength to strength in recent years, though a 20% fall in earnings per share last year caused a slump in the price. But there's a return to growth expected for the year to December 2012, followed by forecasts of double-digit earnings growth for the subsequent two years. And even after the recent price rise, Pace shares are still only on a P/E of 11, dropping to a forecast 9.7 for the end of 2013.

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Why Is the Blockbuster Model Breaking?

The pharma megablockbuster model is dead. Rest in peace.

It isn't that drugmakers wanted to kill it. Drugs that hit the multibillion-dollar sales level typically produce higher margins than other drugs. It doesn't cost that much more to market a $5 billion drug than it does to market a $750 million drug.

But alas, investors will need to plan for the future when megablockbusters are the rare exception.

Where's the innovation?
Some people will argue that the problem is simply that drugmakers aren't innovating, perhaps because all the easy discoveries have already been made.

There's probably some truth to that. Some drugmakers have taken to developing me-too drugs as a less risky way pathway to development since the targets of the drug are already validated. Without innovation, drugs are only going to rack up a fraction of the sales of the first-in-class drug that preceded it. For example, sales of Merck's (NYSE: MRK  ) Januvia/Janumet franchise in 2012 were $5.7 billion, while Bristol-Myers Squibb (NYSE: BMY  ) and AstraZeneca's Onglyza/Kombiglyze franchise, which targets the same DPP4 molecule, amassed a little more than $700 million.

We've treated this before
The bigger problem that I see isn't necessarily innovation, but the competition that drugs face once they hit the market. Being first-in-class doesn't guarantee sales anymore.

First, there's the competition before drugs ever get to the market. For some diseases, such as diabetes, placebos aren't allowed, and drugmakers must compare their drugs to a currently approved drug. Can't beat the current offerings? Sorry, game over.

When drugs offer a benefit, it's often slight. Once they hit the market, they have to compete with drugs that doctors are already comfortable prescribing. I think this is the number one reason for the recent rash of slow drug launches.

In addition to the doctor's comfort with safety and efficacy, new brand drugs often have to compete on price with generic versions of drugs that came before them. When generic versions of Merck's Zocor hit the U.S. market in the middle of 2006, sales of Pfizer's (NYSE: PFE  ) Lipitor slipped. Now that generic Lipitor is on the market, we're seeing the same issue with AstraZeneca's�Crestor. U.S. prescriptions of Crestor were down 6% in the fourth quarter, despite a 2% increase in total prescriptions for statins, the class of drugs that Crestor, Lipitor, and Zocor belong to.

Exception that proves the rule
Obviously, the corollary should also be true. A drug should do pretty well if it enters a large market where the standard of care isn't very effective and there aren't any competing generics, which is exactly what we saw with Vertex Pharmaceuticals' (NASDAQ: VRTX  ) Incivek.

Sales of the hepatitis C drug hit $420 million in its first full quarter on the market. Annualize that out and you've got a megablockbuster. Sales have pulled back some, but that's just a function of the hepatitis C market -- where drugs cure patients -- so sales are completely dependent on new patients starting medication.

Four singles still scores a run
The death of the megablockbuster isn't the end of the world. Drugmakers can still hit one out of the revenue park; it's just going to take a few drugs to get to the same sales level that one megablockbuster could hit.

The multidrug approach will cut into the bottom line. Developing multiple drugs costs more for R&D than one drug, and margins are likely lower for drugs at lower revenue levels.

But pharma is working to be more efficient with its R&D dollars, going after orphan indications where clinical trials can be cheaper to run for instance. They're also working on increasing the likelihood of success by limiting money spent on drugs that are bound to fail. Amgen's (NASDAQ: AMGN  ) strategy is to "pick winners" by developing drugs with a solid genetic basis, which should increase the likelihood of success.

If pharma can pump out the drugs and the FDA doesn't tighten the approval strings, investors might not feel the need to erect a shrine at the megablockbuster's gravesite.

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Oil trims gains on weak U.S. growth

FRANKFURT (MarketWatch) � Oil futures trimmed a modest gain Thursday after the Commerce Department revised up its estimate of fourth-quarter gross domestic product by less than economists had forecast.

Crude oil for April delivery CLJ3 �rose 15 cents at $92.91 a barrel. The move added to a 13-cent gain during Wednesday�s regular New York Mercantile Exchange trade. Read: Oil logs minor gain on supply; stays below $93

Reuters A Repsol oil refinery in Cartagena, Spain.

London-traded Brent crude for April UK:LCOJ3 � � which had fallen 0.8% on ICE Futures Wednesday � rose 25 cents to $112.12 a barrel.

The Commerce Department said the U.S. economy grew at a 0.1% annualized pace in the fourth quarter, compared with an earlier estimate of a 0.1% decline. Economists had expected the revision to show GDP expanded by 0.5%.See: Economy grew, just barely, in fourth quarter.

Helping support gains for crude, the U.S. dollar eased further from its gains on the back of somewhat dovish comments from Federal Reserve Chairman Ben Bernanke.

Thursday�s modest gains for oil in Asia came against the background of a sharp stock-market rally, which saw Japan�s Nikkei Average JP:100000018 �shoot 2.7% higher. Likewise, Wednesday�s bump up in Nymex crude occurred as the Dow Jones Industrial Average DJIA �rallied to near all-time highs.

U.S. stocks advanced in early going on Wall Street.

Citi Futures analysts suggested oil and stocks may be decoupling after a period of tandem movement.

Click to Play Small jets taking over the skies

Passengers who think they've booked a regular flight are often surprised to find themselves on smaller, bumpier regional jets.

�It looks as though the correlation trade with the equity market is breaking down, highlighting that each market really does have its own fundamentals, and that the ones for crude oil might well be bearish,� they wrote late Wednesday.

Citi Futures is short crude � both Nymex and Brent � citing the current supply-and-demand dynamics.

�As the headlines on the revised U.S. data for 2012 pointed out, U.S. petroleum demand was the lowest in 16 years, and U.S. crude-oil production was the highest in 17 years, not exactly bull-market statistics,� they said.

Meanwhile, April natural gas NGJ13 �improved by 2 cents, or 0.6%, to trade at $3.46 per million British thermal units, though still below Wednesday�s session high of $3.55.

Sony’s Submersible ‘Experia Z’ Tablet Turns Heads

BARCELONA

Among the gadgets getting buzz here at the Mobile World Congress is Sony's (SNE) “Experia Z” tablet, a 10-inch piece of glass that's very lightweight and thin, has a superb 8-megapixel rear camera and a very decent 2-megapixel front camera, runs on a quad-core 1.5-gigahertz processor, has 2 gigs of RAM, and runs Google's Android.

A battery life estimate wasn't offered, but I was told by a rep in Sony's booth that he has reliably made it through viewing of three movies in a row on a single charge. It has an IR blaster that can control all manner of home gizmos, from iPod docks to TVs to stereos and on and on (there's actually a rather impressive-looking drop-down menu of choices when one is adding a new device to the tablet's control panel.)

One industry observer at the show with whom I spoke described it as the best Android tablet out there.

But one of the more striking features is that the waterproof tablet is able to be submerged in a meter of water for up to thirty minuts and “keep on ticking,” as they say. The booth had a glass case filled with water on top of a podium, with the Experia tablet attached to an armature. You could press a button and watch the Experia get dunked. It was probably one of the more enjoyable experiences at the conference, though it would have been better if it involved pitching a softball at a target.

Cincinnati Bell Misses Where it Counts

Cincinnati Bell (NYSE: CBB  ) reported earnings on Feb. 27. Here are the numbers you need to know.

The 10-second takeaway
For the quarter ended Dec. 31 (Q4), Cincinnati Bell beat slightly on revenues and missed expectations on earnings per share.

Compared to the prior-year quarter, revenue expanded slightly. Non-GAAP earnings per share dropped to a loss. GAAP loss per share shrank.

Gross margins shrank, operating margins dropped, net margins expanded.

Revenue details
Cincinnati Bell notched revenue of $374.7 million. The seven analysts polled by S&P Capital IQ hoped for revenue of $367.7 million on the same basis. GAAP reported sales were the same as the prior-year quarter's.

Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures may vary to maintain comparability with estimates.

EPS details
EPS came in at -$0.01. The seven earnings estimates compiled by S&P Capital IQ anticipated $0.03 per share. Non-GAAP EPS were -$0.01 for Q4 against $0.03 per share for the prior-year quarter. GAAP EPS were -$0.06 for Q4 versus -$0.17 per share for the prior-year quarter.

Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.

Margin details
For the quarter, gross margin was 50.7%, 150 basis points worse than the prior-year quarter. Operating margin was 15.5%, 430 basis points worse than the prior-year quarter. Net margin was -2.6%, 570 basis points better than the prior-year quarter.

Looking ahead
Next quarter's average estimate for revenue is $341.3 million. On the bottom line, the average EPS estimate is $0.02.

Next year's average estimate for revenue is $1.40 billion. The average EPS estimate is $0.18.

Investor sentiment
The stock has a four-star rating (out of five) at Motley Fool CAPS, with 147 members out of 161 rating the stock outperform, and 14 members rating it underperform. Among 46 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 43 give Cincinnati Bell a green thumbs-up, and three give it a red thumbs-down.

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Cincinnati Bell is hold, with an average price target of $5.94.

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Wednesday, February 27, 2013

CNBC: New Audit Trail Could See Much More of What We Trade

CNBC’s Bob Pisani reports this afternoon that the Securities & Exchange Commission is expected to make an announcement as soon as Monday about new kinds of circuit breakers it will require to prevent market collapse. The SEC hasn’t yet figured out what the drop percentage in such a circuit breaker should be, but it sounds like it will be something close to 10%, rather than as deep as a 25% drop.

Interestingly, the Financial Industry Regulatory Authority (FINRA), an outgrowth of the old NASD system, will likely be charged with maintaining a central “audit trail” of trades that the SEC can review if need be on a regular basis. Everyone, in other words, will have their trades watched more than today.

That could put pressure, writes Pisani, on high-frequency traders, and so-called dark pools of trading, as well as the internal trade operations of the Bulge Bracket banks, none of which currently offer much information about how and what they trade.

High-frequency traders also don’t guarantee liquidity, writes Pisani, as seen from Testimony Tuesday before Congress that high-freq shops left the market as things got bad last Thursday.� Pisani doesn’t say whether regulators are considering requring some sort of commitment to keep providing liquidity, which is often brought up as the main defense of high-frequency trading shops.

Dow Edges Higher Ahead of Goods Orders and Home-Sale Data

LONDON -- Stock index futures at 7 a.m. EST indicate that both the Dow Jones Industrial Average (DJINDICES: ^DJI  ) and the S&P 500 (SNPINDEX: ^GSPC  ) may open 0.17% higher this morning.

One reason for the cautious outlook might be today's economic calendar. Durable-goods orders for January are expected at 8:30 a.m. EST, and consensus forecasts suggest that orders fell 5.5% last month after rising 4.6% during December. Also due are January's pending home sales, which are due at 10 a.m. EST and are expected to show that pending sales rose by 2% last month after falling 4.3% in December.

Finally, after speaking to the Senate yesterday, Federal Reserve Chairman Ben Bernanke will testify to the House Committee on Financial Services today at 10 a.m. EST. Expect a repeat of yesterday's comments, which confirmed his support for the Fed's bond-buying programs.

In corporate news, Priceline.com and Edison International may be in demand after both companies beat expectations in their fourth-quarter results last night. Priceline.com shares were 4.3% higher in premarket trading this morning, while Edison International was up by 4.1%. However, shares in First Solar are expected to fall after the company disappointed analysts with its 2013 guidance last night -- the company's shares were 12.8% lower in premarket trading.

Target (NYSE: TGT  ) released its fourth-quarter earnings this morning, reporting that profit dipped 2% to $961 million, or $1.47 per share. However, excluding items, EPS came in at $1.65, beating analyst expectations of $1.47. Sales met analyst expectations, up 7% to $22.7 billion.

Earlier this morning, The AES Corp reported full-year adjusted earnings of $1.24, beating expectations of $1.22 per share. Dollar Tree, ITT, and TJX Companies are also expected to report earnings before the markets open.

Apple will be closely watched this afternoon -- the company holds its shareholders meeting at 12 p.m. EST, and investors will be keen to find out whether the company will give way to pressure to return some of its $137 billion cash pile to shareholders following a high-profile campaign by Greenlight Capital founder David Einhorn. Finally, Groupon and J. C. Penney are expected to report after the closing bell today.

European markets
European markets edged higher this morning, helped by growing rumors that in Italy, a coalition deal may be developing that would enable Democratic Party leader Pier Luigi Bersani to form a government. There was also good news in the U.K., where revised GDP figures showed that the British economy grew by 0.3% over the last year, ahead of expectations for no growth.

At 7:50 a.m. EST, the DAX was up 0.35%, the CAC 40 was up 0.78%, the FTSE MIB was up 0.78%, and the IBEX 35 was up 0.76%. In London, the FTSE 100 (FTSEINDICES: ^FTSE  ) was up 0.33%, with engineering group Weir Group gaining 3.5% and topping the table after announcing that sales rose by 11% and operating profit rose by 18% during 2012. At the bottom end of the table, oil field services group Petrofac was 6.1% lower despite a decent set of results showing a 17% increase in net profit during 2012 and a 17% dividend raise.

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Range Resources Beats on Both Top and Bottom Lines

Range Resources (NYSE: RRC  ) reported earnings on Feb. 26. Here are the numbers you need to know.

The 10-second takeaway
For the quarter ended Dec. 31 (Q4), Range Resources beat expectations on revenues and beat expectations on earnings per share.

Compared to the prior-year quarter, revenue grew significantly. Non-GAAP earnings per share expanded significantly. GAAP earnings per share expanded.

Margins increased across the board.

Revenue details
Range Resources booked revenue of $458.0 million. The 21 analysts polled by S&P Capital IQ foresaw sales of $402.5 million on the same basis. GAAP reported sales were 9.0% higher than the prior-year quarter's $420.2 million.

Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures may vary to maintain comparability with estimates.

EPS details
EPS came in at $0.46. The 36 earnings estimates compiled by S&P Capital IQ predicted $0.28 per share. Non-GAAP EPS of $0.46 for Q4 were 39% higher than the prior-year quarter's $0.33 per share. GAAP EPS were $0.32 for Q4 versus -$0.02 per share for the prior-year quarter.

Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.

Margin details
For the quarter, gross margin was 78.5%, much better than the prior-year quarter. Operating margin was 30.5%, much better than the prior-year quarter. Net margin was 11.6%, much better than the prior-year quarter.

Looking ahead
Next quarter's average estimate for revenue is $399.7 million. On the bottom line, the average EPS estimate is $0.24.

Next year's average estimate for revenue is $1.76 billion. The average EPS estimate is $1.18.

Investor sentiment
The stock has a two-star rating (out of five) at Motley Fool CAPS, with 543 members out of 594 rating the stock outperform, and 51 members rating it underperform. Among 169 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 146 give Range Resources a green thumbs-up, and 23 give it a red thumbs-down.

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Range Resources is outperform, with an average price target of $77.06.

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Democrats to Unveil Bill to Replace Budget Cuts

WASHINGTON (AP) -- President Barack Obama's Democratic allies in the Senate are unveiling legislation to avoid a looming set of sharp, across-the-board spending cuts set to strike the Pentagon and domestic agencies in just two weeks.

The measure would impose a minimum tax rate on million-dollar incomes and replace the automatic cuts, known as a sequester in Washington-speak, with cuts to much-criticized farm subsidies and more gradual reductions to the Pentagon budget.

The legislation set to be revealed Thursday is sure to die at the hands of Republicans opposed to new tax hikes when a vote is called the week of Feb. 25.

The automatic cuts would drain $85 billion from the government's budget over the coming seven months, imposing an 8 percent cut to the Pentagon and 5 percent from domestic agencies.

Top Stocks For 2/27/2013-5

Global Hunter Corp. (TSX.V: BOB) (FSE:G5D) is pleased to announce that it recently completed a surface sampling program at La Corona de Cobre. The program was designed to collect surface samples from the numerous prospective shear zones. This will aid in the definition of drill targets to expand on the copper oxide mineralization. The company has collected approximately 250 samples from the shear zones listed below.

The shear zones and areas of alteration that have been sampled (from East to West) include the following zones:

- El Manto
- La Golondrina
- Cerro Borracho
- El Tazon
- La Copa
- La Varrilla
- Et Tazon
- Vino Fino
- Abisinia
- Las Posadas

These shear zones can be traced on surface for hundreds of metres, with the longest being Vino Fino, which has been mapped for over 6,000 metres. Local miners are currently extracting ore from several shear zones on the property and transporting it to Enami for processing.

The surface sample results in conjunction with previous geophysical work completed on the property, Global Hunter intends to prepare a multi-hole drill program on the shear zones scheduled to begin early 2011 as part of its ongoing evaluation of its Corona de Cobre project. In addition to sampling and drilling of the prospective shear zones at La Corona de Cobre mentioned above, The Company will continue its work on the Las Posadas resource over the coming months and will provide a summary of its progress as information becomes available.

Global Hunter’s flagship project is the La Corona de Cobre property, located 70 kilometres north of La Serena, Chile, along the Pan American Highway, within the coastal belt of the Andean Cordillera. The NI 43-101-compliant resource contains 225 million pounds of copper oxide. In addition, the Company has its Rabbit South molybdenum project in south-central British Columbia, Canada.

For More Information Go To: www.globalhunter.ca

HIRU CORPORATION (Other OTC: HIRU.PK) subsidiary Shuangshi AHP Co. dispatched company representatives to evaluate the agricultural developments and increase company sales in the regions of Ganzhou, Yichun and Jian.

Shuangshi’s assistant general manager and sales manager met with several potential customers in the aforementioned regions to discuss the potential of Shuangshi products on the local markets, as the company works on gaining more exposure with Chinese farmers for their vaccination needs.

The representatives also negotiated with two new agricultural clients, each client reporting annual sales of approximately $30 million USD. Following these negotiations, Shuangshi AHP representatives supplied the customers with new HIRU products for testing and evaluation by the clients. Shuangshi AHP anticipates to gain more new clients as the company’s top quality animal vaccination products gain exposure in the market.

Hiru Corporation is considering a merger with a Canada-based health products company. This company operates a full-service natural health clinic and distributes its signature brand of health products.

The company’s various products promote brain health, pain management and hormone balance, and help combat high blood pressure and high cholesterol. These products come highly regarded by the Chinese market, and have already received positive online testimonials from consumers who say using the products improved their health.

Services at the natural health clinic include specialty massage, EIS scanning, acupuncture, and computer-guided biofeedback scanning.

Acme Packet, Inc. (Nasdaq:APKT) announced on Tuesday November 30, 2010 that Etisalat Lanka, a wholly-owned subsidiary of the United Arab Emirates-based Etisalat Telecommunications Corporation, is deploying Acme Packet Net-Net� session border controllers (SBCs) to support its IP interconnects for international calls.

Acme Packet, Inc., incorporated on August 3, 2000, provides session border controllers (SBCs) that enable service providers, enterprises, government agencies and contact centers to deliver interactive communications.

Magellan Health Services, Inc. (Nasdaq:MGLN) has rolled out a proven outcomes-based tool, the Child and Adolescent Needs and Strengths (CANS) assessment, for use by residential treatment and other behavioral health providers in Nebraska, that promises to improve the effectiveness of behavioral health care received by children and adolescents.

Magellan Health Services, Inc. (Magellan) is engaged in the specialty managed healthcare business. The Company provides services to health plans, insurance companies, employers, labor unions and various governmental agencies.

ANSYS, Inc. (Nasdaq:ANSS) is helping MANN+HUMMEL to access and reuse historical engineering simulation information for speeding the creation of innovative automotive designs. The family-owned German company has licensed ANSYS� Engineering Knowledge Manager� (EKM�) technology, which manages the huge amount of data generated by computer-aided engineering (CAE) activities.

ANSYS, Inc. (ANSYS) develops and markets engineering simulation software and technologies widely used by engineers and designers across a spectrum of industries, including aerospace, automotive, manufacturing, electronics, biomedical, energy and defense.

Tuesday, February 26, 2013

Will These Numbers from Best Buy Be Good Enough for You?

Best Buy (NYSE: BBY  ) is expected to report Q4 earnings on Feb. 28. Here's what Wall Street wants to see:

The 10-second takeaway
Comparing the upcoming quarter to the prior-year quarter, average analyst estimates predict Best Buy's revenues will decrease -2.6% and EPS will compress -38.1%.

The average estimate for revenue is $16.29 billion. On the bottom line, the average EPS estimate is $1.53.

Revenue details
Last quarter, Best Buy booked revenue of $10.75 billion. GAAP reported sales were 3.5% lower than the prior-year quarter's $11.15 billion.

Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures may vary to maintain comparability with estimates.

EPS details
Last quarter, non-GAAP EPS came in at $0.03. GAAP EPS were -$0.03 for Q3 versus $0.42 per share for the prior-year quarter.

Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.

Recent performance
For the preceding quarter, gross margin was 24.0%, 160 basis points worse than the prior-year quarter. Operating margin was 0.4%, 300 basis points worse than the prior-year quarter. Net margin was -0.1%, 150 basis points worse than the prior-year quarter.

Looking ahead

The full year's average estimate for revenue is $49.23 billion. The average EPS estimate is $2.48.

Investor sentiment
The stock has a one-star rating (out of five) at Motley Fool CAPS, with 2,659 members out of 3,448 rating the stock outperform, and 789 members rating it underperform. Among 884 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 679 give Best Buy a green thumbs-up, and 205 give it a red thumbs-down.

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Best Buy is hold, with an average price target of $17.80.

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US Airways, American Airlines Officials Tout Increased Competition

Executives of American Airlines (NASDAQOTH: AAMRQ  ) and US Airways (NYSE: LCC  ) told lawmakers Tuesday that combining their companies will benefit consumers by creating a tougher competitor for industry giants United (NYSE: UAL  ) and Delta (NYSE: DAL  ) .

Although an American-US Airways merger would create the world's largest airline, the new American would still have less than 25 percent of the U.S. market, the executives said. Asked directly whether prices would go up with fewer airlines left, the executives said they didn't know.

The executives made the comments at a hearing of a House antitrust law subcommittee. American, owned by AMR Corp., and US Airways Group announced on Feb. 14 that they planned to merge in a deal valued at $11 billion in stock. The new airline would be called American but run by US Airways' CEO Doug Parker.

Two opponents of the merger -- and congressmen sympathetic to their views -- said they feared that it would lead to higher prices and less service on routes where American and US Airways now compete. They said that American was completing a successful restructuring, US Airways just reported a record profit and each would do fine on its own.

"Industry consolidation may benefit the airlines that remain, but it comes with potential costs to the consumer," said Rep. John Conyers, D-Mich.

AMR general counsel Gary Kennedy and US Airways executive vice president Stephen Johnson said the companies needed to merge to compete with United Continental Holdings and Delta Air Lines, each of which grew bigger through recent acquisitions.

"Our customers have been telling us that they want a bigger network," Johnson said. "They have been telling us indirectly by leaving American Airlines and leaving US Airways to fly on Delta and United's new, bigger networks."

Congress has no formal role in approving the merger -- that's up to antitrust regulators in the Department of Justice, the federal judge overseeing American's bankruptcy case and company shareholders. Lawmakers used the hearing to detail their positions and, in several cases, to make parochial pitches for additional service at local airports.

Rep. Keith Rothful, R-Penn., appealed for more flights to Pittsburgh, but couldn't extract any hard promises from the airline executives.

Rep. Steve Cohen, D-Tenn., said that Delta CEO Richard Anderson assured lawmakers in 2008 that the Delta-Northwest merger would lead to more service at Memphis International Airport, which is in Cohen's district. Instead, daily flights went from 240 to 96. "On Saturdays, it looks like Dodge City," he said.

link

Fannie, Freddie Stay in Mortgage Game

Talk of a pullout for the U.S. government in the housing market has shifted direction due to recommendations made recently by the Housing Commission of the Bipartisan Policy Center. Commission members advised that a “public guarantor” should replace the government-sponsored entities (GSEs) known as Fannie Mae and Freddie Mac, but only after a multiyear transitional period wherein both GSEs will continue to buy and sell mortgages and issue mortgage-backed securities. The guarantor would not do those things, and eventually the system would allow for more private participation in the market. For more on this continue reading the following article from TheStreet.

A bipartisan report on housing released Monday called for continued involvement of the government in the mortgage market even as it wants greater private participation.

The Bipartisan Policy Center's Housing Commission -- headed by former U.S. Senators George Mitchell, a Democrat, Republicans Christopher Bond and Mel Martinez and former Housing and Urban Development Secretary Henry Cisneros -- is proposing winding down Fannie Mae (FNMA) and Freddie Mac (FMCC) and replacing it with a "public guarantor."

"While private capital must play a greater role in the housing finance system, continued government involvement is essential to ensuring that mortgages remain available and affordable to qualified homebuyers," the report said.

The public guarantor, unlike Fannie and Freddie, would not buy or sell mortgages or issue mortgage-backed securities. Rather, it will guarantee timely payment of principal and interest on securities, a model similar to Ginnie Mae, the government agency that guarantees securities backed by government agencies including the Federal Housing Administration and the Department of Veteran Affairs.

The "limited catastrophic guarantee" would be triggered only after "all private capital ahead of it has been exhausted."

The guarantee also will be "explicit" and fully paid for through premium collections that exceed expected claims.

The commission proposes winding down Fannie and Freddie after a multiyear transition period. The report recommends that the Federal Housing Finance Agency, the conservator of the GSEs, to continue letting them raise fees and gradually lower loan limits to allow larger loans to flow to private capital.

The current GSE limits are $417,000 in most areas and $625,500 in high-cost locations.

The report also noted the various obstacles that restrict mortgage credit, including overly tight standards, fear of putback risk, demand for multiple appraisals and the use of distressed properties as a basis for market comparisons.

It says the Treasury should be directed to develop a plan to align various regulatory requirements as much as possible to help get mortgage credit flowing again.

The report also includes recommendations for affordable renting, rural housing and solutions for an aging population.

The Jobs of Tomorrow


Recent college grads are still entering a shaky job market even as the economy continues to recover. And though there's always been parental encouragement behind degree and job selection, that may be even stronger now that the selection of jobs is even more limited.

But what parents may not consider is that the world is changing—fast. Sure, the highest paying jobs right now are still positions in finance, engineering, and law, but a new wave of fast-growing positions will take over and evolve into the high-paying jobs of tomorrow.

Yahoo! Education analyzed the fastest-growing jobs between 2010 and 2020 according to data from the Department of Labor.

The top seven jobs are as follows: auditor or accountant, medical assistant, social worker, human resources specialist, health services manager, public relations specialist, and paralegal.

But in the ten years to 2030, the job market is likely to evolve again, accounting for changes in lifestyle that we're already seeing today. That's not to say these fast-growing jobs are going to disappear; they'll more likely form the starting point for the jobs of the future.

Futurologists from the U.K. has studied the changes in society, technology, and lifestyle to create a guess of what popular jobs might be in the future. They accounted for the changing medical industry, a growing robotic presence in the workplace, and the increasing global population.

Futurologist Ian Pearson, for example, believes augmented reality will become a part of everyday life. He told the Telegraph:

“When you look at a building it's constrained by planning laws, but in cyberspace you can make it look however you want.”

“A company with a high street presence could make their shop look like Downton Abbey, or set it in a post-nuclear apocalypse environment.”

So let's add programmer to that list of growing jobs. We're already seeing growth in this industry with the evolving technology sphere and burgeoning social media.

Taking a look at the growing careers of this decade and the futurologist predictions for the decade following, we can see what jobs might be important in the years to come.

Medical careers will, undoubtedly, continue to grow. Life expectancy is growing and, with current medical advancements, will continue to grow, and as today's research becomes tomorrow's medical treatments, we can hope that diseases like cancer and Alzheimers will no longer be a death sentence.

But that means cancer specialists and Alzheimers specialists will be even more important for tracking treatment and monitoring recovered patients. Medical assistants may evolve into elderly care assistants so the elderly can receive treatment or nursing care at home.

As robots start to become ubiquitous in the workforce, Pearson points out, people with “human skills” will be more necessary as well. This will up the importance of social workers, public relations specialists, and human resources specialists.

Human resources positions may evolve in a computer-based workforce to create the barrier between human employees and robotic systems. They will be a source of understanding for workplace dilemmas and a mediator for confusion that might arise from computerized systems.

But a number of positions that are not popular or nonexistent today may also arise for tomorrow. Bioengineers, for example, could be in charge of anything from organ and body part growth to—Huxley forbid—child design.

And as we continue to explore the final frontier, particularly Mars and its potential for sustaining human life, there could even be room for a Martian realtor.

The Telegraph lists other future jobs mentioned by futurologists—including climate controllers, haptic programmers (to work with touch and physical feeling), and avatar manager (for holographic people)—that seem to be a little further away than two decades.

But the Google Glass was just launched, providing a technology that until now was only associated with futuristic spies. So no one can really predict how quickly our technology will evolve.

 

Will These Numbers from HomeAway Be Good Enough for You?

HomeAway (Nasdaq: AWAY  ) is expected to report Q4 earnings on Feb. 20. Here's what Wall Street wants to see:

The 10-second takeaway
Comparing the upcoming quarter to the prior-year quarter, average analyst estimates predict HomeAway's revenues will grow 21.3% and EPS will grow from $0.00 per share the prior year.

The average estimate for revenue is $70.9 million. On the bottom line, the average EPS estimate is $0.04.

Revenue details
Last quarter, HomeAway chalked up revenue of $73.1 million. GAAP reported sales were 20% higher than the prior-year quarter's $61.1 million.

Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures may vary to maintain comparability with estimates.

EPS details
Last quarter, EPS came in at $0.06. GAAP EPS were $0.06 for Q3 compared to -$0.05 per share for the prior-year quarter.

Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.

Recent performance
For the preceding quarter, gross margin was 84.6%, 160 basis points worse than the prior-year quarter. Operating margin was 14.3%, 280 basis points worse than the prior-year quarter. Net margin was 7.0%, 250 basis points better than the prior-year quarter.

Looking ahead

The full year's average estimate for revenue is $279.7 million. The average EPS estimate is $0.16.

Investor sentiment
The stock has a two-star rating (out of five) at Motley Fool CAPS, with 87 members out of 122 rating the stock outperform, and 35 members rating it underperform. Among 44 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 31 give HomeAway a green thumbs-up, and 13 give it a red thumbs-down.

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on HomeAway is outperform, with an average price target of $27.23.

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Take the Top Wealth Managers Quarterly Pulse Survey

We have extended the Top Wealth Manager Quarterly Pulse Survey for Q4 2010 through March 15th. Registered investment advisors (RIAs) with $50 million or more in assets under management (AUM) can take the survey right now. Now, RIA firms can be registered at the state or SEC level, as long as they meet the rest of the criteria. Completing the survey is the first step for a firm to be eligible for the Top Wealth Managers Quarterly ranking.

Click here to review eligibility criteria and take the survey.

Only ADV-reported AUM is eligible to be included in the minimum $50 million in AUM.

Please note, commission assets are ineligible. This category includes brokerage account assets and any assets on which the firm received an immediate or ongoing service commission or trail.

Eligibility
To be considered, a firm must:
1. Be an SEC-or State-registered investment advisor with its own IARD number.
2. Have minimum assets under advisement of $50 million.
3. Have individuals or high-net-worth individuals (as defined by the SEC) as more than half of its client base
4. Offer financial planning services

The following are not eligible to participate:
1. Banks
2. Broker-Dealers
3. Trust Companies
4. Branches of independent broker-dealers
5. Subsidiaries of larger companies, unless they meet all other requirements and file their own ADV.

Click here to see the full eligibility rules and take the survey. 

It’s Official: The Cloud Is a Game Changer

Cloud computing is every bit the game changer some investors believe it to be. So says a new survey commissioned by Rackspace Hosting (NYSE: RAX  ) and conducted by Manchester Business School,�which found that U.S. businesses cut total IT costs by 26% using cloud computing.

Sixty-two percent of study respondents from 1,300 U.K. and U.S. businesses agreed that cloud computing had helped them boost profits and a whopping 94% of U.S. participants said using the cloud saved them money. Importantly, 92% of start-up companies said using the cloud made it easier to set up operations, a notion widely shared among venture capitalists.

Can Rackspace take advantage of these favorable industry dynamics in spite of talk of a so-called "price war" with its closest competitor, Amazon.com (NASDAQ: AMZN  ) ? Tim Beyers of Motley Fool Rule Breakers and Motley Fool Supernova addresses this question and more in the video below. Please watch, and then leave a comment to let us know what you think.

Amazon may be the king of the retail world right now, but at its sky-high valuation, most investors are worried it's the company's share price that will get knocked down instead of its competitors'. We'll tell you what's driving the company's growth and fill you in on reasons to buy and reasons to sell Amazon in our Motley Fool premium report. We'll also be providing a full year of free analyst updates to keep you informed as the company's story changes, so click here now to read more.

Can Trina Solar Beat These Numbers?

Trina Solar (NYSE: TSL  ) is expected to report Q4 earnings on Feb. 26. Here's what Wall Street wants to see:

The 10-second takeaway
Comparing the upcoming quarter to the prior-year quarter, average analyst estimates predict Trina Solar's revenues will contract -37.8% and EPS will remain in the red.

The average estimate for revenue is $271.2 million. On the bottom line, the average EPS estimate is -$0.80.

Revenue details
Last quarter, Trina Solar tallied revenue of $298.0 million. GAAP reported sales were 38% lower than the prior-year quarter's $481.9 million.

Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures may vary to maintain comparability with estimates.

EPS details
Last quarter, non-GAAP EPS came in at -$0.48. GAAP EPS were -$1.00 for Q3 against -$0.50 per share for the prior-year quarter.

Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.

Recent performance
For the preceding quarter, gross margin was 0.8%, 1,000 basis points worse than the prior-year quarter. Operating margin was -25.5%, 2,060 basis points worse than the prior-year quarter. Net margin was -19.3%, 1,280 basis points worse than the prior-year quarter.

Looking ahead

The full year's average estimate for revenue is $1.26 billion. The average EPS estimate is -$3.09.

Investor sentiment
The stock has a two-star rating (out of five) at Motley Fool CAPS, with 1,035 members out of 1,250 rating the stock outperform, and 215 members rating it underperform. Among 215 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 132 give Trina Solar a green thumbs-up, and 83 give it a red thumbs-down.

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Trina Solar is hold, with an average price target of $5.99.

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Why Western Digital Is Poised to Outperform

Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, disk drive specialist Western Digital (NASDAQ: WDC  ) has earned a coveted four-star ranking.

With that in mind, let's take a closer look at Western Digital and see what CAPS investors are saying about the stock right now.

Western Digital facts

Headquarters (founded)

Irvine, Calif. (1970)

Market Cap

$11.1 billion

Industry

Computer storage and peripherals

Trailing-12-Month Revenue

$15.7 billion

Management

CEO Stephen Milligan (since 2012)

CFO Wolfgang Nickl (since 2010)

Return on Equity (average, past 3 years)

21.9%

Cash/Debt

$3.8 billion / $2.1 billion

Dividend Yield

2.1%

Competitors

EMC

Seagate Technology

Toshiba

Sources: S&P Capital IQ and Motley Fool CAPS.

On CAPS, 95% of the 1,384 members who have rated Western Digital believe the stock will outperform the S&P 500 going forward.

Just last week, one of those Fools, dreamjob, succinctly summed up the Western Digital bull case for our community:

I actually came across this one on an Earnings Surprise Screen. [Western Digital] handily beat estimates with very strong sales (not just cost cutting). Upon further evaluation, [Western Digital] is generating healthy amounts of cash, sporting a high ROIC, and it looks quite cheap (even at moderate growth projections). I think this has a lot of upside. Let's see where it goes.

If you want market-topping returns, you need to put together the best portfolio you can. Of course, despite its four-star rating, Western Digital may not be your top choice.

We've found another growth play we are incredibly excited about -- excited enough to dub it "The Only Stock You Need to Profit from the NEW Technology Revolution." We have compiled a special free report for investors to uncover this stock today. The report is 100% free, but it won't be here forever, so click here to access it now.

Want to see how well (or not so well) the stocks in this series are performing? Follow the TrackPoisedTo CAPS account.

Monday, February 25, 2013

Top Stocks For 2/24/2013-11

Tiens Biotech Group Inc. (AMEX:TBV), is a leading nutritional products company engaged in the research, development, manufacturing and marketing of high quality nutritional supplements and wellness products worldwide.

Tiens‘ herbal products, vitamin and mineral supplements and personal care products are sold in China and approximately 90 countries on six continents.

A rapidly-growing company, Tiens has generated significant revenue and earnings increases by capitalizing on worldwide consumer demand for nutritional and wellness products. Tiens is well positioned to further expand its market share through product line enhancements and additional channels of distribution.

Holding the principle of “contributing to the health of mankind, benefiting the society, developing the industry and serving our country”, Tiens is committed to developing, manufacturing and delivering the highest quality healthcare products that benefit the well being of people throughout the world.

Tiens’ dedicated management team and personnel are firmly committed to improving the life quality of our customers who are the cornerstone of our success, increasing our dominant industry presence and generating greater acceptance of our products worldwide.

MusclePharm Corporation (OTCBB:MSLP), one of the fastest growing nutritional supplement companies in the United States with a proprietary formulation used in eight performance products, reports that MuscleGel has achieved NSF certification. In addition, the Company�s Recon and Assault nutritional products will be NSF certified within the coming months.

�We are extremely pleased MusclePharm�s MuscleGel is now NSF certified and look forward to Recon and Assault�s future addition to the NSF�s list of approved supplements,� commented Brad Pyatt, MusclePharm�s Chief Executive Officer. �Our Chief Medical Researcher, Dr. Jeffery Stout, Ph.D. and his team of scientists, doctors, and top professional athletes were instrumental in achieving the NSF�s certification of MuscleGel, Recon and Assault. These three products provide strong, unique opportunities for us to expand MusclePharm�s distribution within the professional athletic community, including the MLB and NFL.�

NSF International is an independent, not-for-profit organization that meets the growing demands of athletes, coaches and all those concerned about banned substances in sports supplements. NSF International created the new NSF Certified for Sport Program. This new NSF program is a focused solution designed to minimize the risk that a dietary supplement or sports nutrition product contains banned substances. This program is part of NSF’s successful 60-year history of providing certification programs for food, water and consumer goods.

MLB, the MLB Player�s Association, NFL, the NFL Player�s Association, PGA, LPGA and the CCES have all chosen NSF�s Certified for Sport program to help verify the products their athletes use are safer and free of banned substances. NSF GMP for Sport certification verifies that the facility, operations and ingredient sourcing are in compliance with GMP requirements via ongoing audits.

Is Eli Lilly Being Wise About YZ?

It's now more than halfway through the period that Eli Lilly (NYSE: LLY  ) has called its "years YZ," a term describing the years spanning from 2011 to 2014. The company knew that this period would be particularly challenging as several of its top drugs lost patent protection.�

In April 2011, Lilly CEO John Lechleiter laid out the company's plans to navigate the difficult period. How have these plans worked out so far? Let's look to see if Lilly is being wise in how the company is handling years YZ.

Controlling costs
One of the first things that Lechleiter pointed out in his 2011 speech was Lilly's efforts to control costs. He noted then that the company was well on its way to achieve cost reduction goals set a few years earlier. How has Lilly done since that point?

LLY Total Operating Expenses TTM data by YCharts.

Operating expenses continued to climb through the end of 2011, but then began to come back down. That's the good news. The bad news is that operating margins have steadily declined so far in the YZ years.

Staying the course
In his 2011 speech,�Lechleiter took a swipe at other pharmaceutical companies by stating that some of Lilly's "peers are shifting direction, moving away from innovative drugs or staking their future on consolidation." He emphasized that "this is not our path at Lilly."

Lechleiter's comments about consolidation likely referred to Pfizer's (NYSE: PFE  ) acquisition of Wyeth and Merck's (NYSE: MRK  ) buyout of Schering-Plough. The remark about peers "moving away from innovative drugs" perhaps was an early hint at Abbott's (NYSE: ABT  ) spin-off of�AbbVie (NYSE: ABBV  ) as a separate business, which was publicly announced several months later. How have these moves by Pfizer, Merck and Abbott paid off for investors compared to Lilly's stay-the-course approach?

LLY data by YCharts.

Judging by share price appreciation since 2011, Lilly's approach has worked out pretty well for shareholders. Pfizer won overall in stock performance, but just barely. Abbott isn't too far behind Lilly. (Note: Abbott's price dropped in 2012 in connection with the AbbVie spin-off.) Merck's performance wasn't so great.

Lilly's stick-to-your-knitting philosophy didn't totally rule out smart acquisitions, though. The company announced just weeks prior to Lechleiter's April 2011 speech that it was buying Janssen�Pharmaceutical's animal health business. However, true to his word, Lechleiter has not led the company to any major acquisitions so far in the YZ years.

Growth areas
In early 2011,�Lechleiter pointed to three growth areas for the company: Japan, emerging markets, and animal health. How have these panned out for Lilly so far?

As for Japan, growth numbers look all right. Lilly reported volume growth in the country of 14% for 2012. One important factor is that the company still retains patent protection for Zyprexa in Japan. However, lower prices for several drugs translated to total Japanese revenue growth of 7%.�

Lilly's international growth outside of developed nations isn't as strong. The company reported zero volume growth in these regions in 2012 with a 5% decline in total sales. However, Lilly expects solid growth in 2013, particularly in China.

The biggest success story has been animal health. Total revenue in 2012 was up 21% -- helped by the acquisition from Janssen. Lilly sees continued double-digit growth for the coming years. The company has no plans to spin off the unit as Pfizer recently did with Zoetis.�

Innovation
Much of Lechleiter's 2011 speech focused on innovation and the company's pipeline. He voiced confidence that Lilly's continued innovation would help it overcome the difficulties of the YZ years.�

The company certainly has plenty of drugs in the pipeline, with 13 candidates in late-stage trials and 49 drugs in phases 1 and 2. Some drugs approved over the past couple of years appear to have good revenue potential, particularly Tradjenta for patients with diabetes.

However, Lilly has also experienced setbacks. In December, the company discontinued one of three late-stage studies of experimental rheumatoid arthritis drug�tabalumab due to disappointing efficacy results.�A few months earlier, Lilly announced that�solanezumab failed to meet primary endpoints in a phase 3 study targeting treatment of Alzheimer's disease. However, the company is moving forward with another late-stage study of the drug in treating patients with a mild form of the disease.

Getting there?
The theme for Lilly's 2010 annual report and its CEO's early 2011 speech was "Getting There." Can the company legitimately claim to be getting there now that it is halfway through the YZ period?

If we only look at the stock performance, we would probably answer affirmatively. Lilly's shares have done well so far. However, I don't think the company's YZ strategy will be enough over the next couple of years as it loses patent protection for Cymbalta and Humalog in 2013 and Evista in 2014.�The three drugs combined for sales of $8.4 billion last year.

Lilly's pipeline could pay off, but not quickly enough to cushion the blow of these coming losses. My view is that the company needs to modify its stance on acquisitions somewhat. I don't think Lilly needs a megadeal, but spending some of its $6.9 billion in cash to buy a smaller company seems to make a lot of sense. That would be a wiser approach for the remaining years YZ in my opinion. And it would be fairly "EZ," too.

Over the next two years, Eli Lilly will see nearly $0.40 of every $1.00 in sales exposed to generic competition. How does the company plan to respond to this huge patent cliff? Better yet, what does this mean for investors? In a brand new premium report on Eli Lilly, The Motley Fool's top pharmaceuticals analyst delves into everything investors need to know about the stock today. Simply click here now to claim your copy.

Plains Exploration & Production Misses Where it Counts

Plains Exploration & Production (NYSE: PXP  ) reported earnings on Feb. 21. Here are the numbers you need to know.

The 10-second takeaway
For the quarter ended Dec. 31 (Q4), Plains Exploration & Production beat expectations on revenues and missed estimates on earnings per share.

Compared to the prior-year quarter, revenue increased significantly. Non-GAAP earnings per share grew significantly. GAAP earnings per share grew significantly.

Margins grew across the board.

Revenue details
Plains Exploration & Production recorded revenue of $869.2 million. The six analysts polled by S&P Capital IQ wanted to see revenue of $782.4 million on the same basis. GAAP reported sales were 68% higher than the prior-year quarter's $517.5 million.

Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures may vary to maintain comparability with estimates.

EPS details
EPS came in at $0.42. The 13 earnings estimates compiled by S&P Capital IQ forecast $0.51 per share. Non-GAAP EPS of $0.42 for Q4 were 110% higher than the prior-year quarter's $0.20 per share. GAAP EPS of $1.65 for Q4 were 139% higher than the prior-year quarter's $0.69 per share.

Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.

Margin details
For the quarter, gross margin was 78.0%, 910 basis points better than the prior-year quarter. Operating margin was 24.4%, 690 basis points better than the prior-year quarter. Net margin was 25.2%, 630 basis points better than the prior-year quarter.

Looking ahead
Next quarter's average estimate for revenue is $1.12 billion. On the bottom line, the average EPS estimate is $0.80.

Next year's average estimate for revenue is $4.36 billion. The average EPS estimate is $2.38.

Investor sentiment
The stock has a four-star rating (out of five) at Motley Fool CAPS, with 383 members out of 398 rating the stock outperform, and 15 members rating it underperform. Among 87 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 84 give Plains Exploration & Production a green thumbs-up, and three give it a red thumbs-down.

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Plains Exploration & Production is hold, with an average price target of $47.45.

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Why AVG Technologies Shares Popped

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of AVG Technologies (NYSE: AVG  ) have popped today by as much as 14% after the company reported earnings.

So what: Revenue in the fourth quarter totaled $95.2 million, which was shy of the $96.4 million consensus estimate. The good news is that the non-GAAP earnings per share of $0.32 was well ahead of the $0.26 per share that the Street was expecting, showing that the company's efforts to optimize costs are paying off.

Now what: AVG also offered up rather rosy guidance. Full-year sales are expected to be $408 million to $420 million, which crushes the consensus estimate of $403 million. AVG sees adjusted earnings per share of $1.68 to $1.88 for 2013, also well ahead of the $1.44 per share in adjusted profit that analysts were modeling for. At the end of the year, AVG boasted a user base of 146 million.

The dawn of big data
The amount of data we store every year is growing by a mind-boggling 60% annually! To make sense of this trend and pick out a winner, The Motley Fool has compiled a new report called "The Only Stock You Need to Profit From the NEW Technology Revolution." The report highlights a company that has gained 300% since first recommended by Fool analysts but still has plenty of room left to run. To get instant access to the name of this company transforming the IT industry, click here -- it's free.

Gap Earnings Are on Deck

Gap (NYSE: GPS  ) is expected to report Q4 earnings on Feb. 28. Here's what Wall Street wants to see:

The 10-second takeaway
Comparing the upcoming quarter to the prior-year quarter, average analyst estimates predict Gap's revenues will grow 8.1% and EPS will increase 59.1%.

The average estimate for revenue is $4.63 billion. On the bottom line, the average EPS estimate is $0.70.

Revenue details
Last quarter, Gap reported revenue of $3.86 billion. GAAP reported sales were 7.8% higher than the prior-year quarter's $3.59 billion.

Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures may vary to maintain comparability with estimates.

EPS details
Last quarter, EPS came in at $0.63. GAAP EPS of $0.63 for Q3 were 66% higher than the prior-year quarter's $0.38 per share.

Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.

Recent performance
For the preceding quarter, gross margin was 41.2%, 450 basis points better than the prior-year quarter. Operating margin was 13.5%, 380 basis points better than the prior-year quarter. Net margin was 8.0%, 260 basis points better than the prior-year quarter.

Looking ahead

The full year's average estimate for revenue is $15.56 billion. The average EPS estimate is $2.29.

Investor sentiment
The stock has a two-star rating (out of five) at Motley Fool CAPS, with 527 members out of 845 rating the stock outperform, and 318 members rating it underperform. Among 267 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 175 give Gap a green thumbs-up, and 92 give it a red thumbs-down.

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Gap is hold, with an average price target of $37.81.

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  • Add Gap to My Watchlist.

CF Industries Earnings: An Early Look

Earnings season is in full swing, with huge numbers of companies having already given their latest numbers to investors, and CF Industries (NYSE: CF  ) is about to release its quarterly earnings report. The key to making smart investment decisions with stocks releasing their quarter reports is to anticipate how they'll do before they announce results, leaving you fully prepared to respond quickly to whatever inevitable surprises arise. That way, you'll be less likely to make an uninformed knee-jerk reaction to news that turns out to be exactly the wrong move.

Companies that enhance farm productivity have been in hot demand lately, as high crop prices encourage farmers to use any means necessary to boost yields from their land. Combined with low input costs, CF has seen its nitrogen-based fertilizer segment take off. But will the good times last? Let's take an early look at what's been happening with CF Industries over the past quarter and what we're likely to see in its quarterly report next Tuesday.

Stats on CF Industries

Analyst EPS Estimate

$6.97

Change From Year-Ago EPS

(2.2%)

Revenue Estimate

$1.59 billion

Change From Year-Ago Revenue

(7.6%)

Earnings Beats in Past 4 Quarters

3

Source: Yahoo! Finance.

Will CF Industries grow like a weed this quarter?
Analysts have been fairly optimistic in their assessment over the past three months of CF's earnings, with modest increases in earnings-per-share projections for 2012's fourth quarter and more aggressive jumps of $0.25 for the current quarter. The stock has shared that enthusiasm, rising more than 10% since mid-November.

The fertilizer sector has been one of the hottest industries in the market over the past several years, with global demographic trends supporting substantial rises in farm commodity prices. Yet recently, the type of fertilizer you make has played a big role in comparative success. Earlier in the cycle, potash producers Mosaic (NYSE: MOS  ) and PotashCorp (NYSE: POT  ) had huge margins from high prices and relatively low production costs. But more recently, with potash mining-related costs on the rise, PotashCorp and Mosaic have fallen behind.

Meanwhile, as natural-gas prices hit all-decade lows, the nitrogen-based fertilizers that CF and majority-owned Terra Nitrogen (NYSE: TNH  ) make have seen increased demand, leading to much better margins than for potash-based fertilizers. To a lesser extent, that has also helped rival Agrium (NYSE: AGU  ) , which straddles the industry with both potash and nitrogen fertilizer production.

So far, trends in natural-gas prices seem to support continued tailwinds for CF Industries. Shale plays in the U.S. continue to produce huge amounts of natural gas, and another relatively warm winter has led to reduced demand for the fuel, keeping prices low. With gas prices being the primary unpredictable variable for the company, a favorable outlook for continued low prices bodes well for the company.

In CF Industries' report, watch for early reports of spring fertilizer demand from the agricultural sector. If early planting activity happens again this year, it could point to another promising year for CF.

Will potash beat out nitrogen?
The main theme in fertilizer lately has been cheap natural gas giving nitrogen-based fertilizers an edge over potash. But as the global leader in potash production, PotashCorp aims to regain its lost glory. Click here now to access The Motley Fool's new premium research report on PotashCorp, in which we cover precisely what these barriers-to-entry are and detail several other key reasons why this company presents such a compelling investment opportunity today.

Click here to add CF Industries to My Watchlist, which can find all of our Foolish analysis on it and all your other stocks.

UK Homebuyers Don’t Want Fixer-Uppers

Analysts at Stacks Property Search say new data reveal that buyers shopping for country homes in the United Kingdom are less interested in properties that need a lot of renovation work done and are trending toward homes in better condition. Part of it is the difficulty associated with getting upfront financing, but there is also hesitancy among many to buy a property for which the price of restoration is uncertain. To cope with the loss of appetite for period homes, many sellers are dividing larger lots to sell individually for people who are looking for a fresh start. For more on this continue reading the following article from Property Wire. 

Properties in the country that are in good condition are likely to sell quicker than those needing work as cash strapped buyers cannot afford to undertake major renovation work, it has been suggested.

It means that buyers who would have previously only considered period and older properties are now showing more interest in new homes, according to the team at Stacks Property Search.

‘Buyers have lost their appetites for projects. Increasingly, our clients want a property to be in perfect condition so they can move straight in. It's hard enough to raise finance to buy the property, but it becomes even harder if you have to factor in money for renovations too,’ said the firm’s Bill Spreckley.

‘The current psychology is that finances need to be certain, and that means knowing how much you need to spend and what the running and maintenance costs are. That does of course mean there are more opportunities for those who are actively looking for a project,’ he explained.

‘The market has reversed. Ten years ago, wrecks would go for barmy prices at auction as developers, builders and renovate to live buyers competed with each other. Today the auction rooms are a much quieter place,’ he added.

His colleague Catherine McAllister has found that buyers who would previously have only considered period property are being seduced by newer homes. ‘The unpredictable nature of repairs and maintenance that old properties can require, together with the sometimes eye watering heating bills, is making cash conscious buyers see new, insulated, double glazed, efficient properties as a very attractive proposition,’ she pointed out.

 

‘Certainly buyers are more interested in EPC data than ever before, and question vendors closely about running costs. Eco features are a very strong selling point in today's market,’ she added.

It also means that larger properties with a lot of land are being divided into more manageable proportions to make them more attractive  and affordable for buyers. ‘Large properties with many acres of land, and separate annexes or cottages are being re-lotted and sold as separate titles. In some areas there is a real shortage of buyers in the £2 million plus bracket due in part to the new stamp duty band, and partly because property at this level can be difficult to sell,’ said Amanda Ake.

‘Selling some of the land separately, or packaging up a separate cottage with its own parcel of land, can open up completely new markets. Buyers can keep their eyes open for opportunities to approach a vendor's agent about an extra bit of garden or land, a barn, or a separate property. Anything goes, and there's nothing to be lost by asking,’ she added.

Country house buyers are increasingly searching for property that has potential to generate income, according to the firm’s Briony Mathams. ‘An annexe that can be used for holiday lets, B&B accommodation, land and stabling for liveries are options. Or at a less commercial level, space for chickens, pigs, or vegetables for a taste of the good life,’ she said.

Wal-Mart Keeps Dividend-Raising Streak Going

Wal-Mart (NYSE: WMT  ) announced today it was increasing its annual cash dividend for fiscal year 2014 by 18% to�$1.88 per share to be�paid in four quarterly installments of $0.47 per share each. The company says this is one of the largest dividend increases in its history and that it has increased its dividend every year since it first declared a dividend (of $0.05) in 1974.

"Our global businesses consistently generate strong free cash flow, providing ample opportunities to fund growth across all our markets and to deliver strong returns to shareholders," President and CEO Mike Duke was quoted by the company as saying.

Last year, Wal-Mart returned $13 billion to shareholders in the form of dividends and stock repurchases. The dividend will rise from the $1.59 per share it paid in fiscal year 2013, an increase of $0.29 per share. The payable dates are April 1, June 3, and Sept. 3, this year and Jan. 2, 2014.

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Northrop Wins $160 Million to Develop Aircraft Anti-Missile Protection

On Wednesday, the Department of Defense announced it has awarded Northrop Grumman (NYSE: NOC  ) a $160 million firm-fixed-price contract modification to procure hardware and support for the Large Aircraft Infrared Countermeasures System (LAIRCM).

LAIRCM �began under the Department of the Navy. Strangely, however, DoD is describing the instant contract as coming out of the Air Force's budget;�but the current award is being run out of Wright-Patterson Air Force Base in Ohio.

LAIRCM uses Northrop's high-intensity Viper Laser to target and blind incoming heat-seeking missiles, to disable them before they can engage an aircraft on which it is installed. It is currently in operational use upon Sikorsky CH-53E helicopters, but plans are to install it also upon many different kinds of fixed-wing transport aircraft, such as C-17 and C-130 transports�, as well as helicopters.

Low-end estimates �of the system's cost suggest that each LAIRCM system installed upon an aircraft will cost at least $3 million. Northrop has estimated, however, that a similar system being researched back in 2008 -- then known as the "Guardian" -- could cost as little as $1 million per system when produced at scale.

Northrop has been very active in the anti-missile countermeasures space of late. Last month, the company announced it had delivered demonstration versions of its new Common Infrared Countermeasures missile defense system to the U.S. Army ahead of schedule.

4 Categories That Describe Women Entrepreneurs’ Financial Goals, Needs

What keeps women business owners up at night? A study released Monday by The American College, a nonprofit educational institution devoted to financial services, found that 95% of women entrepreneurs fall into one of four categories that reflect individual confidence, different stress levels and abilities to achieve work/life balance.

  • 31% of study respondents comprise the Sleeping Soundly segment. These have the highest business revenues of all the groups. They feel they have met their expectations by being an entrepreneur. They enjoy a good work/life balance, and manage the financial aspects of their businesses. They are confident about their current financial stability, and feel they have planned well.
  • 15% of respondents spend the night Tossing & Turning because they are extremely stressed by their businesses. Being a business owner is not what they expected. They fret about almost every aspect of owning a business. They overwhelmingly feel their business robs them of important time with family and friends.
  • 16% of women business owners can be found Sleeping with One Eye Open. Among the four groups, they have the lowest reported business revenue and fewest employees. They do not focus on planning for retirement or transitioning their business to family members. Nevertheless, they report a strong sense of contentment with their work/life balance, and say their business meets their expectations.
  • 33% of women are asleep Dreaming about the Future. These entrepreneurs are comfortable taking risks. They are motivated to grow their businesses while maintaining financial stability and transitioning to financial independence. They report a good work/life balance, with sufficient time for family and friends.

The survey of 835 American women and 420 men was conducted online by Ipsos on behalf of the State Farm Center for Women and Financial Services at The American College in mid-July last year. “Business owners” were defined as individuals who own half or more of a business with annual revenues of $50,000 or more and who make or share in financial and other business decisions.

The State Farm Center has constructed a quiz http://www.theamericancollege.edu/why-us/faculty/mary-quist-newins-chfc-clu-cfp women business owners can take to test themselves. In a statement, the center said the quiz is intended to help women entrepreneurs who want to better understand where they are and how they can improve.

“Women business owners can do more to improve their financial security when they identify priorities for their work and home lives, implement prudent cash management practices and create plans to both grow and protect their wealth,” Mary Quist-Newins, the center’s director, said in the statement.

“Engaging a competent and trustworthy financial professional (and/or team) can provide tremendous benefits, as indicated in this and other studies. With sound financial planning, more women business owners can begin ‘sleeping soundly’ instead of ‘tossing and turning’' all night long.”

The Takeaway: The futility of active management

Portfolio

Bob Farrell's 10 Investing Rules - Visualized! (Street Talk Live)

The futility of active management. (Capital Spectator)

Americans are going to blame the GOP for sequestration. (Washington Post)

Goldman's asset managers are finding overlooked growth names in the small cap space. (Barron's)

Get to know SMID - the stability of mid caps combined with the sex appeal of small caps. (AllianceBernstein)

The Biz

When your client cuts your face time in half. (Trusted Advisor)

Why Vanguard is staying out of the junk bond ETF war. (Investment News)

Survey of financial advisers finds that a majority expect their clients to push back retirement. (FA Magazine)

The Challenge: One in five US seniors outspends his or her savings by more than 50%! (Financial Planning)

Outliers

All aboard! The Goldman Sachs ferries to and from New Jersey have officially set sail! (DealBook)

***

Disclaimer: Joshua Brown is an investment advisor representative with Fusion Analytics. The content above is for informational purposes only, nothing here should ever be construed as investment advice or a solicitation to trade any securities. Mr. Brown or his firm may be long or short securities mentioned above for client or personal accounts at any time.

Sunday, February 24, 2013

The Year of Cooking Dangerously

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Close Photography by Stefan Ruiz

RECIPE FOR SUCCESS | Alex Atala in the back room of his restaurant D.O.M.

STRAIGHT OFF A DECEMBER red-eye from the Amazon, Alex Atala is back home, sitting at the buffed ip� wood bar of his S�o Paulo restaurant D.O.M.�rated the best on the continent and fourth best in the world�talking about the time he was kidnapped.

"In the Amazon," says Atala, who is 44 and freshly sunburned, with tightly cropped gray hair, countless tattoos and a graying red beard that resembles van Gogh's, "this kind of thing can happen." It was 1998, the year before D.O.M.'s inception, and Atala had embarked on a fishing trip in the Amazonian state of Mato Grosso. The first week on the upper Araguaia River passed like an idyll. Butterflies lined the shore; pirarucu, some of the largest freshwater fish in the world swam alongside the boat. A friend was shooting footage for a proposed television program. After several days on the river, and passage into increasingly remote territory, the cameraman asked his native guides what they wanted in return for appearing on tape; they requested, and soon received, a new outboard motor. "The problem," says Atala, "is there's a lot of jealousy between tribes. You buy a beautiful brand-new motor for one, and the others get angry."

When his cameraman was taken into captivity and Atala himself was held at gunpoint by the jealous tribe, a .22 aimed at his heart, he was afraid, but also equipped to handle what came next. Even though he grew up in S�o Paulo, in the blue-collar district of S�o Bernardo do Campo, Atala spent a considerable amount of time exploring tucked-away corners of Brazil with his family by car. His mother, Otavia, worked as a dressmaker and his father, Milad, in a factory that made compression stockings. After several neighbors were caught in a fire, Atala's parents combined skills to manufacture dressings for burn victims. "We were unusual," he says. "Everybody else went to the beach, but my father always loved places that were really wild." So, while his cameraman was held hostage, Atala was forced back onto the river to procure a second outboard motor. "I was under huge pressure," he says, his dark eyes narrowing to a wince. "I tried to go as fast as I could. It took a couple days, and I only slept a couple hours. I had to stop because the river was low and impossible to navigate in the darkness with all the sandbanks, all the rocks."

Photos: The Blocks of a Culinary Empire

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Since delivering the motor and freeing his captured companion, Atala has never turned away from the Amazon. His intense lifelong connection to Brazil's massive rainforest�the Amazon is bigger than all of Western Europe�and his ability to navigate its many pitfalls have fundamentally propelled D.O.M.'s success. Having entered the prestigious World's 50 Best Restaurants rankings�sponsored by San Pellegrino and voted on by more than 800 industry insiders�at number 50 in 2006, it has since moved up 46 spots, now trailing only Ren� Redzepi's Noma and two restaurants in Spain. That forward momentum is largely owed to Atala's treating the most biodiverse region in the world as his pantry.

The result is a singular cuisine, one that speaks to both indigenous ways and modern techniques. Dishes at D.O.M. have a way of feeling both out of time and of the moment: contemporary high-end dining with exploitation-free and sustainable Amazonian tribal roots. There are insects on the menu at D.O.M., burnished like jewels. A vibrant yellow sauce called tucupi must be boiled for 20 minutes to eliminate its lingering natural toxicity. One dish features spicy-tart flowers served over ice.

"I feel responsible for helping to show what Brazilian ingredients can do," says Atala. And the way he does it is eye-opening, maybe the last, best gastronomic shock on the planet. "I had never experienced so many of the flavors and ingredients that Alex plays with," says Daniel Humm of New York's esteemed Eleven Madison Park. "It makes for a cuisine unlike anything I've ever seen in my life." Momofuku kingpin David Chang recalls a recent dish of Atala's involving a coconut apple and seaweed. A coconut apple is the spongy mass that grows inside a germinated coconut, and it's not typically consumed; nevertheless, Atala slices it and pairs it with seaweed, giving the dish the flavor, he says, of a beach after a storm�which is exactly what it tastes like. "It was the best first course I've had in years," says Chang. "In a nutshell, it explains the emotion behind Alex's cooking. It's something nobody ever appreciated that he's made brilliant."

WHEN ATALA FIRST bought the building that now houses D.O.M., in 1999, people asked if he had lost his mind. The space, a failed Japanese restaurant with 20-foot ceilings, sat on a poorly lit, dead-end side street. Foot traffic was minimal, and the homeless population was high. Even more audacious than his location was his desire to begin developing a haute cuisine based on Brazilian ingredients that had been previously classified as less sophisticated, less important and less interesting�if they were known at all�than the foods from Italy and France that had dominated diners' interests.

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"Until 1990, you could not really import food into Brazil," says Atala. But then import taxes were slashed dramatically. Free trade was introduced under President Fernando Collor de Mello, the first democratically elected head of state after three decades of military rule. Hyperinflation, often marked by four-digit increases, remained a core issue until the finance minister and future president, Fernando Henrique Cardoso, introduced The Real Plan in 1994, establishing the real as a stable currency after the prior seven currencies had failed. "The '90s were booming, all about people going crazy for these foreign ingredients," says Atala. "Brazil became addicted to other cuisines."

True to form, Atala went against the grain. He'd always felt like an outsider, growing up not in the center of S�o Paulo, but on its fringes, with a Palestinian first and last name�he was born Milad Alexandre Mack Atala�owing to his father's Middle Eastern heritage. Risk was in Atala's blood: His maternal great-grand- father was a British expatriate, a gentleman explorer and businessman named Arthur Claude Brizzard Brink, who was murdered in the Amazon, poisoned after challenging the perpetrator of an embezzlement scheme to a duel. Says Chang: "Whenever I see that Dos Equis commercial�the most interesting man in the world�I always think, No, that's not true. The most interesting man in the world is Alex Atala."

Atala's street-punk style emerged in his teens, when he began sporting a foot-high red Mohawk and crude piercings: needles protruding from his neck, cheeks and ears. He was both an amateur welterweight boxer and a DJ at the seminal S�o Paulo punk club Rose Bom Bom. "Problems, drugs, fights," says Atala, "I looked like a real junkie�stick thin, punk rock style. We didn't have so much heroin in S�o Paulo. Cocaine, though, a lot. And it was the time when ecstasy first came out, which was strong."

“"Whenever I see that Dos Equis commerical�the most interesting man in the world�I always think, no, that's not true. The most interesting man in the world is Alex Atala."” �David Chang

Things calmed down in 1989 when Atala got clean and moved to Europe. But where plenty of ambitious young gastronomes hit the European restaurant trail, apprenticing at Michelin-starred kitchens with the determination of medieval crusaders, Atala simply went overseas to immerse himself in the hard-core music scene he loved. He made money painting houses until he needed a visa to stay on the continent. The easiest route? Admission to a culinary school outside of Brussels. "Later, I tried to get a job cooking in Paris," he says. "I went into Jo�l Robuchon and they took one look at me, found out I was a Brazilian who had studied in Belgium and walked out of the room."

While cooking in Belgium and France, Atala worked with Bernard Loiseau, an influential French chef in the '90s who is now best known for committing suicide after Figaro newspaper suggested he was about to lose a Michelin star. But Atala always came home to Brazil in the summer. He'd camp, fish, see family and throw big parties with his valuable continental currencies. In 1993, he moved to Milan with his first wife, Cristiana, and found a job at an osteria called Sancho Panza, located behind the Piazzale Loreto. (Atala has an 18-year-old son, Pedro, from his first marriage and 10-year-old twins, Joana and Tomas, with his current wife, Marcia.) "I decided not to work in big restaurants," says Atala. "I worked in small restaurants so I could enjoy my life." Still, Atala nearly quit his job at Sancho Panza. "I was Brazilian," he says. "I wasn't part of their community." Feeling detached and poor, Atala was close to packing it up, but he ultimately stayed, buckled down and got a promotion to sous chef.

"I always wanted to open a bar in Brazil because I loved music," he says. "But the day I got that promotion I realized becoming a chef was my best choice." Around the same time, Atala began seeing the acronym D.O.M. everywhere he looked�on churches and bottles of liquor�finally asking a local priest what it all meant. "He shared this beautiful history," says Atala, an atheist, who learned how Benedictine monks marked their monastery doors with those letters, and how from them, travelers and pilgrims knew they'd found a hospitable place to eat and drink. (D.O.M. stands for Deo Optimo Maximo, Latin for "To God The Good, The Great.")

When Atala returned to Brazil in 1994, he did what he needed to get on his feet. Like everyone else, he cooked foods from other places, beginning his career in S�o Paulo at a restaurant called Sushi Pasta before moving on to two of the most acclaimed Italian eateries of the time. At the end of 1998, Atala sold his car and opened his own restaurant, Namesa, a casual spot�16 seats around a single table�that quickly became a local sensation for the chef's palpable warmth as well as his duck confit and chicken Milanese. But cooking sure-fire international standards�going with the flow, culinary or otherwise�clashed with the chef's character, and he began to develop his own point of view, his own ideas about cooking, through more frequent trips to the Amazon. "I began talking with the natives," says Atala. "I began visiting and became obsessed with their ingredients."

THE DOORS AT D.O.M. are 14 feet tall, wood and monumental in the way of a Richard Serra sculpture. Directly inside stands a svelte-looking four-seat Amazonian canoe. The room is lined with tall, creamy banquettes, the walls are painted beige, and the chairs all have caned backs, leather seats and slightly bowed wooden arms. A single honey-colored Zingiber flower sits on each table, like a small waxen beehive. As the restaurant begins to fill up for lunch, Atala puts on his glasses and inserts a pair of curved-tip tweezers into the breast pocket of his chef's jacket. He'll use them to garnish his plates with flowers and microgreens too delicate for his thick fingers to touch.

For Atala, maintaining an outsider's sensibility in a Brazilian kitchen meant developing a deep fascination and connection with the interior of his own country. Before going back to work in the kitchen, he shows me a photo of the massive new back tattoo he's been working on since May. Between his shoulder blades, a series of tightly drawn black stripes extend from his tailbone to his neck. Another column of stripes stretches from one deltoid to the other. "This is how natives in Brazil used to paint themselves," he says.

His passion for his homeland has paid off. Lunch and dinner at D.O.M. are booked months in advance. Atala has cooked for three Brazilian presidents (though, as a huge Elvis fan, he gets more excited about having recently cooked for Priscilla Presley, displaying near the back of his dining room the bottle of '96 Ch�teau Latour she signed for him: "Maravilhoso Obrigado Priscilla Presley"). And last December, he was invited to help draw the order for the 2013 FIFA Confederations Cup, the precursor to next year's World Cup in Brazil, which will, in turn, bring even more curious diners from around the globe to his restaurants. By the 2014 tournament, there will be three: D.O.M; the casual Dalva e Dito, with its accompanying gourmet shop, offering typical varieties of Brazilian cuisine like beans, rice, barbecued meats and farofa (Atala walks the 100 steps between the two restaurants about a dozen times a day); and Riviera, which is Atala's first bar concept, in collaboration with the S�o Paulo night-life impresario Facundo Guerra.

Atala pushes through his kitchen's double glass doors and takes his place at the head of the line. "Let me show you jambu," he says. "Jambu is very traditional in Amazonas." Tonight he'll use the leaf liberally: around the rim of a bowl of mushroom consomm� and atop a fermented manioc flour dish called chib�. Jambu functions on three levels: It numbs the lips and tongue, generates a surprising amount of saliva in the back of the mouth and works as what feels like a consciousness-expanding drug for vegetables, fats and proteins. Adding jambu makes everything taste bigger. "The first time I tried it, it was awful," says Atala. "But it becomes an addiction."

Atala then proudly presents a couple inches of a gnarled root that looks better suited for weaving rope than it does for kitchen use: priprioca, a relative of wetland plants like papyrus and rush, which he incorporates as an aromatic in desserts. This makes sense, considering that the plant, until he got a hold of it, was used exclusively to scent makeups and perfumes. It took Atala three years of research and development, with the help of chemists, to get it on the menu. His interest in it, he writes in a recent issue of The International Journal of Gastronomy and Food Science, began as a matter of indignation, stemming from, he says, "the fact that the cosmetic and pharmacy industries know better and dedicate themselves more to the products from the rainforest than gastronomy does. In the past, these kinds of companies spoiled the area considerably. Although they are trying to improve their relationship with this region, the situation is far from successful." To Atala, then, priprioca is both a way to enhance his lemon and banana ravioli�three translucent citrus discs pocketing thin slices of banana de oro, each the size of a dime�and, also, an emblem of the fact that D.O.M. exists in a perpetual discovery phase, where outcomes must track in terms of both plating and sustainability.

"The logic toward the rainforest in Brazil used to be that you could only profit from it if you destroyed it," says Roberto Smeraldi, director of the environmental protection group Amigos da Terra for the past two decades, a coauthor of federal environmental legislation and a member of the board of AT� ("fire" in Tupi), a new institute and think tank founded by Atala last June to address food-related practices in the Amazon. "But now," he continues, "people have started to see the forest as an asset, so in order to use it, we must conserve it." Smeraldi counts Atala as an emerging voice in the conservation movement.

"Alex had reached a moment of his career," says Smeraldi, "when he realized his professional success would need to be used in service of a larger cause." Smeraldi sees new endeavors in food production as perhaps one of the best ways to introduce sustainable management techniques to the Amazon, and he sees Atala as an important pioneer for new development. Atala sees it all as a logical carryover from his punk days. "Back then I was always against something," he says, tweezing tiny tropical flowers onto a warm white plate. "Now I use that same energy to fight for something. My main idea is to show local people how important these ingredients can be for them." It's an idea that extends beyond the Amazon. "Go see my rice producer," Atala tells me, getting choked up. "You'll see what I mean."

Jos� Francisco Ruzene is a barrel-chested, third-generation rice farmer from the town of Pindamonhangaba in S�o Paulo state, about a two- hour drive northeast from D.O.M. He's wearing a straw hat to keep the strong summer sun off his face, as he proudly shows off his new 600-square-meter processing facility. A few years ago, Ruzene showed up at D.O.M. and felt so impoverished and ashamed that he didn't want to walk through the door. But Atala took to his product, a specialty black rice, and ever since, the Ruzenes have experienced a kind of Alex Atala bailout plan. Now, their rice is served in restaurants and sold in stores. The box of their small-grain rice bears a photo of Ruzene, his wife and Atala clustered like a family. Business has spiked by 500 percent, and the Ruzenes have been able to pay off decades' worth of debt while dedicating their time to developing additional specialty strains of rice. "Alex changed my life," says Ruzene, adjusting his hat. "He talks and other chefs listen. Everyone who eats wants what he has."

IT'S NEARLY MIDNIGHT and D.O.M. is bustling, tables still turning over, diners just starting their eight-course tasting menus. Atala is rotating between my table, the kitchen and a four top where AT� board members Smeraldi and the Brazilian branding heavyweight Ricardo Guimar�es are meeting with executives from Banco do Brasil. One of the executives is the vice president of agribusiness and a former senator. ("He still has the president's ear," Atala tells me later. "That was a very important meeting for our institute.") They're all discussing financing for artisanal and native food producers and throwing support behind farmers with sustainable practices rather than the big agricultural conglomerates responsible for a large share of the Amazon's deforestation.

Food flows from the kitchen. Next up: Ants, two of them, sitting on a cube of cold pineapple. They taste not like lemongrass, exactly, but like a field of lemongrass all concentrated into one small insect. When Atala first found them in the far northwestern city of S�o Gabriel da Cachoeria, while doing research for D.O.M., he asked what they'd been seasoned with. Because the flavor struck him as profound, he was astonished to hear the answer: "They are just ants."

Around 2 a.m., Atala is preparing to go home, but not before he takes the Banco do Brasil guys into the kitchen for photographs (everyone who comes to D.O.M. asks for photographs), posing with the former senator and his associate in front of a framed native headdress. After he steps back through the glass doors and says his goodbyes, he thumbs a cigarette and shows me another tattoo. Inked across the crook of his right arm, he says, is his story, a crude comic strip that boils it all down to a simple linear equation: There's a sad face with Mohawk leading to a plus sign leading to a boiling pot. Then, there's an equal sign and happy face wearing a toque. "I've had two lives," says Atala. "I was a punk who became a happy chef."

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