Budget Analysis: Impact of Budget 2013 on investments

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On the eve of budget 2013, there was a lot of hope that the finance minister will address the middle class investors concerns on increasing inflation by increasing the tax exemption slab and provide more deductions on tax saving investments. But budget 2013 has just been unraveled and the initial reaction is that of some disappointment on the investor's front as a lot could have been done. I present you the highlights and the aspects of the budget related to investments.

Tax free bonds: In order to provide a boost to the infrastructure sector, infrastructure finance companies have been allowed to issue tax free bonds to the tune of Rs. 50000 crores in the next financial year. This is good for investors in the highest tax slab as it would provide assured and better long term returns than fixed deposits. But considering the fact the interest rates are likely to fall going ahead, it has to be seen what rates the issuers will offer.

Inflation indexed bonds: The government in consultation with RBI has proposed to introduce " Inflation indexed bonds" or savings certificates in order to help investors provide a hedge against inflation. This will ensure that investors have a better fixed income alternative to combat inflation. Only the tenure and tax implications, which will be announced later, will decide if this turns out to be a good alternative or not. These bonds are linked to inflation rates and the interest rates are periodically reset to take care of varying inflation rates.

Additional Deduction on 1st home loan: First time home loan seekers upto Rs 25 lakhs will be eligible for an additional interest deduction of Rs 1 lakh provided they take a loan in financial year 2013-14. This would amount to a total interest deduction of Rs. 2.5 lakhs which is a great positive. If the limit is not utilized in the financial year 2013-14, then the balance can be carried forward in the next financial year. Considering the present home loan interest rate of 10.5% for a 15 year period, the total additional savings will be Rs. 20000 if the investor is in the 20% tax slab and Rs. 30000 if he is in the 30% tax slab. This benefit is likely to spur first time home buyers into finally buying their dream home.

Rajiv Gandhi Equity Savings Scheme (RGESS): The much delayed scheme has been proposed to be extended for 3 successive financial years and the income eligibility criteria has also been raised from Rs. 10 lakhs to 12 lakhs for next year. Under this scheme one can invest in specified stocks, Exchange traded funds or mutual funds upto Rs. 50000 a year and claim a deduction of Rs. 25000. The compulsory redemption of this scheme after 3 years is a dampener though as at the time of redemption if the markets are down, the returns might get affected.

TDS on property: From next financial year, on the sale of any property worth Rs. 50 lakhs and above there will be a compulsory deduction of TDS at the rate of 1%. This may increase paperwork for claiming the deduction for investors especially if the sale proceeds are to be invested in capital gains instruments or another property for saving tax. 

No change in Capital gains tax norms & STT: With the finance minister mentioning that the DTC (direct tax code) will be revised and introduced in the budget session, as of now the short term and long term capital gains tax parameters remain as they were earlier. Even the STT (securities transaction tax) for equities and mutual segment has been retained while the same has been reduced for equities futures category and non agricultural commodities.

It is very likely that the DTC may get the nod during the budget session and get implemented too in this financial year. That may be one of the reasons that the finance minister did not tinker with the tax slabs. The only benefit that has been provided to investors is the Rs. 2000 tax credit for income tax slab ranging from Rs. 2 lakhs to 5 lakhs. One only hopes that there is more clarity at the earliest on DTC so investors can plan their investments at the beginning of the new financial year rather than having to react to last minute clarifications.

The author is a member of The Financial Planners' Guild, India (FPGI) . FPGI is an association of Practicing Certified Financial Planners to create awareness about Financial Planning among the public, promote professional excellence and ensure high quality practice standards.

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Advaxis: First Cancer Vaccine For Cervical Cancer To Be In Pivotal Trial

Advaxis (ADXS.OB) is a development stage biotechnology company focused on the research, development and commercialization of safe and effective therapeutic cancer vaccines that utilize multiple mechanisms of immunity.

The Company is developing a live, attenuated Listeria vaccine technology under license from the University of Pennsylvania which secretes a protein sequence containing a tumor-specific antigen. This vaccine technology is capable of stimulating the body's immune system to process and recognize the antigen as if it were foreign, generating an immune response able to attack the cancer. This is a broadly enabling platform technology that can be applied to the treatment of many types of cancers, infectious diseases and auto-immune disorders.

This technology involves the creation of genetically engineered Listeria that stimulates the immune system to induce antigen-specific anti-tumor immune response involving both innate and adaptive arms of the immune system. In addition, this technology facilitates the immune response by altering tumors to make them more susceptible to immune attack, and increasing the number and maturation of development of specific cells that underlie a strong therapeutic immune response.

The Listeria platform technology is unique and holds advantages over its peers in three ways.

Advaxis' Listeria-based cancer vaccine can deliver bioengineered cancer antigen fused with a unique, proprietary strong adjuvant LLO which elicits both innate and adaptive immune systems in the body to fight cancer. The immune response elicited by Advaxis' cancer vaccines has been the most comprehensive and robust so far in the industry. Advaxis' cancer vaccines can reduce the amount of regulatory T cells and myeloid suppressor cells which help protect tumors from attacking by cytotoxic T cells. Another distinctive feature of Advaxis' cancer vaccines is their ability to change the ratio between killer T-cells and regulatory T cells (the Kill Ratio) inside the tumor! from 1:1.3 to 22.7:1.

Based on its proprietary Listeria technology, Advaxis has established a pipeline targeting various cancer indications. The Company's lead candidate is ADXS-HPV.

ADXS-HPV is currently under two Phase II clinical trials for the treatment of cervical cancer and two Phase I trials for the treatment of head and neck cancer and anal cancer respectively.

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Updated Phase II Results for ADXS-HPV at ASCO

On June 2, 2013 at the ASCO meeting, Advaxis reported final 12 month overall survival and additional data for ADXS-HPV (Lm-LLO-E7-15) from a randomized Phase II study evaluating the safety and efficacy of ADXS-HPV +/- cisplatin in patients with recurrent cervical cancer.

As a reminder, ADXS initiated the Phase II study in November 2010 in India in 110 Patients with recurrent or refractory cervical cancer. This study is being conducted at 22 sites in India. All patients randomized to the trial have been previously treated with chemotherapy, radiotherapy or both, and their cancer has progressed subsequent to treatment and has been confirmed by CT or radiologic scan.

Patients are randomized into 2 groups of 55 patients receiving: ADXS-HPV or ADXS-HPV + cisplatin (40 mg/m2, weekly x5). Patients got either 3 doses of ADXS-HPV at 1 x 109 CFU or 4 doses of ADXS-HPV at 1 x 109 CFU with cisplatin chemotherapy. Naprosyn and oral promethazine are given as premedications and a course of ampicillin is given 72h after infusion thereby clearing any residual vector. Patients receive CT scans at baseline and Days 84, 184, 273, 365 and 545. The primary endpoint is 12 month survival.

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Enrollment was completed in May 2012 and preliminary results were presented at 2012 ASCO and GOG meeting in the summer of 2012 and at the Society for Imm! unotherap! y of Cancer (SITC) 27th Annual Meeting in October 2012.

As of May 17, 2013, 110 patients have received 264 doses of ADXS-HPV (ADXS11-001). Final 12-month overall survival is 36% (39/110) with a (current) 18 month survival of 22% (16/73). This compares to 33% and 17%, respectively, at the last update and are the best results yet reported for this study.

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These data are comparable to the results for the landmark 2004 Moore Phase III study of cisplatin alone and cisplatin plus paclitaxel in recurrent cervical cancer patients with the same initial performance (health) status (0-2). In that study, 12 month survival was presented as 35% for cisplatin alone and 32% for the combination and 18 month survival was presented as 20% for combination therapy and 12% for cisplatin, alone.

Median overall survival was approximately 8.5 months. Those patients who have completed the study will continue to be followed for survival. Survival results were not significantly different between groups who had previous therapy of radiation, alone, chemotherapy, alone, or a combination of both.

The tumor response rate was 11% with 6 complete responses and 6 partial responses/110 patients and was similar in both treatment groups per RECIST 1.1 criteria. Stable disease >3 months was observed in 33 additional patients, for a disease control rate of 41% (45/110). Average duration of response after 12 month minimum follow-up was 10.5 months for both treatment groups. In those patients treated with ADXS-HPV alone who had stable disease, the average duration of response was 6 months compared to 4.1 months in patients treated with ADXS-HPV plus cisplatin. Activity was observed against all high risk human papillomavirus (HPV) strains detected, including 16, 18, 31, 33, and 45! .

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Subset analyses showed that the addition of cisplatin to ADXS-HPV did not significantly improve survival or tumor response in this study; and survival and tumor response were equally strong in patients with aggressive disease (defined as recurrence ≤2 years from initial diagnosis) versus non-aggressive disease (defined as recurrence >2 years from initial diagnosis).

The tolerability of ADXS-HPV continues to compare favorably with single agent and combination chemotherapies active in this disease setting. 41% (45/110) of patients experienced 104 mild-moderate Grade 1-2 adverse events and 2% (2/110) of patients experienced a Grade 3 serious adverse event. This compares to published treatment-related serious adverse event rates of 100%-400% in studies evaluating a range of chemotherapy regimens for cervical cancer, including the Moore study and studies conducted by the Gynecologic Oncology Group (GOG) of the National Cancer Institute (NCI).

Our Takeaways From the Updated Results

The data presented at the ASCO are very encouraging.

After 110 patients and 264 doses, the safety data is encouraging. ADXS-HPV continues to demonstrate a well-tolerated and manageable safety profile with 32% of patients reporting Grade 1 or 2 transient, flu-like symptoms that self-resolve or respond to symptomatic treatment. Less than 2% of patients reported serious adverse events associated with ADXS-HPV. Published studies on chemotherapy treated patients like these show 100% of patients experiencing severe adverse events, usually multiple times. Serious adverse events result in death, are life-threatening, cause significant disability or require inpatient hospitaliz! ation.

Great efficacy has been observed which are very promising. Compared to GOG historical one year survival of 5%, ADXS-HPV has achieved 36% one year survival rate. This is a huge improvement. Other literature data showed that generally, recurrent cervical cancer has a poor 1-year survival rate of 15% and a 5-year survival rate of 3-13%. ADXS-HPV's 36% one year survival rate is also a 100% improvement. Further investigation is warranted. 18 month survival also reached 22%.

ADXS-HPV appears to be emerging as an active agent in recurrent/refractory cervical cancer with significantly less toxicity than chemotherapy.

The positive ADXS-HPV data may trigger partnership talks for Advaxis.

ADXS-HPV for cervical cancer is the Company's current focus. Advaxis plans to conduct new short term clinical trials to support its partnership talks as well as the planned Phase III trial of ADXS-HPV.

Encouraging Interim Phase I Data of ADXS-cHER2 For Canine Osteosarcoma

On July 17, Advaxis announced updated preliminary data from a dose escalation Phase I study evaluating the safety and efficacy of ADXS-cHER2 in the treatment of dogs with osteosarcoma that overexpress human epidermal growth factor receptor-2 (HER2).

ADXS-cHER2 is an Lm-LLO immunotherapy for HER2 overexpressing cancers (such as breast, gastric and other cancers in humans and for osteosarcoma in canines). ADXS-cHER2 secrets the cHER2 antigen, fused to LLO, directly inside APC that are capable of driving a cellular immune response to cHER2 overexpressing cells.

As a reminder, on August 2, 2012, Advaxis announced the initiation of a Phase I study of ADXS-HER2 for canine osteosarcoma at the University of Pennsylvania, School of Veterinary Medicine. In this trial, dogs that have undergone standard of care treatment for osteosarcoma, including limb amputation and follow up chemotherapy, and that over-express the tumor marker HER-2/neu in their tumors, are treated with Advaxis agent ADXS-cHER2. This immunotherapy is designed! to stimu! late the dog's immune system to attack cancer cells that express the HER-2/neu marker. The goal is to elicit anti-tumor immunity and prolong survival.

Updated preliminary data from the first two of three dose groups (6 dogs/3 dogs per dose group) show a significant survival advantage for dogs that received standard of care (SOC) plus ADXS-cHER2 compared to 11 dogs whose owners elected not to participate in the trial but who were followed for survival (p=0.04). At this point in the study, 8 of 9 dogs treated with ADXS-cHER2 are alive (mean survival undefined), compared with 5 of 11 dogs in the control group (mean survival 265 days).

ADXS-cHER2 continues to be well-tolerated with the dogs experiencing only mild, easily managed side effects (fever, increased heart rate, and vomiting) consistent with immune activation (cytokine release syndrome) observed at the time of treatment. There is no evidence of any cumulative or long-term side effects on the dogs, including their cardiovascular systems.

Once the dose has been selected, the study is intended to expand into Phase II and additional collaborative academic centers will be added.

Canine osteosarcoma is a leading killer of large breed dogs that causes tumors to form on long leg bones. Dogs undergoing standard of care (SOC) treatment (affected limb amputation and follow-up chemotherapy) have a median survival rate of only 1 year. We believe there is a significant commercial opportunity for ADXS-cHER2 in the veterinary medical market. Advaxis is discussing these data with several veterinary health companies.

Pipeline further Expanded by New Phase I/II Trial Of ADXS-HPV in Anal Cancer

On Feb 19, 2013, Advaxis announced that the Brown University Oncology Research Group (BrUOG) will be coordinating a Phase I/II study of ADXS-HPV in 25 patients with HPV-associated anal cancer. Dr. Howard Safran, professor of medicine, will be principal investigator. Patients will be treated at Rhode Island Hospital and The Miriam Hospital (th! e main te! aching hospitals of The Warren Alpert Medical School of Brown University). Multiple institutions will collaborate.

This non-randomized, open-label, multi-center study will evaluate the safety and effectiveness of ADXS-HPV when combined with standard chemotherapy and radiation treatment for anal cancer. The primary objectives of the trial include the evaluation of adverse events and the evaluation of 6-month clinical response.

As of July 2013, 3 patients have been enrolled in the study. Multiple institutions will collaborate.

Virtually all cases of squamous cell cancer (SCC) of the anus are caused by a Human Papilloma Virus (HPV) infection. Anal cancer cells infected with HPV have the tumor associated antigen HPV E7. ADXS-HPV causes antigen presenting cells to stimulate other immune cells to attack cancer expressing HPV E7. In Phase I clinical trials and preliminary data from ongoing Phase II trials, ADXS-HPV has been safely administered to 193 patients with other HPV-associated diseases (recurrent/refractory cervical cancer and CIN 2/3), and has demonstrated clinical benefit as a single agent or in combination with chemotherapy.

This new indication of ADVX-HPV for anal cancer is an important step for the pipeline expansion. With this new indication, ADXS has now a series of clinical trials under study including three Phase II trials, two Phase I/II trials and three Phase I trials. This is quite unusual to a small cap biotech company.

Phase I/II Trial of ADXS-HPV Initiated for Head and Neck Cancer

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On May 8, 2012, Advaxis' partner Cancer Research UK (CRUK) began to enroll patients into REALISTIC, a Phase I/II study to investigate the use of ADXS-HPV for the treatment of 27 patients with HPV positive head and neck cancer. HPV is associated with 40-70% of head and neck cancers.

This trial is being conducted at the Aintree Ho! spital at! the University of Liverpool, the Royal Marsden Hospital at the University of London, and the Cardiff Hospital at the University of Wales. The study will investigate the safety and efficacy of ADXS-HPV in preventing recurrence of head and neck cancer among patients who have been treated with surgery, radiotherapy, and/or chemotherapy; alone or in combination. A maximum of 45 patients are to be enrolled in this study, and all costs will be assumed by CRUK. Two patients have already been enrolled in the trial at the Aintree Hospital in Liverpool, UK.

As of July 2013, 16 patients have been enrolled in the study.

This trial further expands the ADXS-HPV clinical development program to another HPV-associated tumor type.

According to the National Cancer Institute and the American Cancer Society, head and neck cancers represent approximately 3 percent of all cancers in the United States and are twice as common in men as in women. Historically, head and neck cancer has been associated with people over the age of 50 and with the use of alcohol and tobacco (including smokeless tobacco), however, there has been a recent rise in HPV-related oropharyngeal cancers in caucasian men under the age of 50. Recurrence rates in patients are high, in some studies over 80% within 2 years. ADXS-HPV may provide a treatment option for doctors and patients with HPV-related head and neck cancers.

Huge Market Potential For ADXS-HPV

Cervical cancer is a worldwide problem and ranks as the 2nd leading cause of cancer death of women in the world. According to WHO, about 630 million people are infected with one of the over 100 strains of HPV. Global prevalence of clinically pre-malignant HPV infections is between 28 to 40 million women. Approximately 500,000 women are diagnosed of cervical cancer each year and about 11.4% of women in the general population are estimated to harbor cervical HPV infection. In the US, about 12000 new cases of cervical cancer are diagnosed each year. Prevalence of cervical cancer! is highe! r in developing countries and India, China and South America are the three regions with highest cervical cancer prevalence (50% of cervical cancer burden).

In addition to cervical cancer, ADXS-HPV has potential to target other HPV-mediated cancers, which further expand ADXS-HPV's market. The Company already initiated clinical studies of ADXS-HPV for head & neck cancer as well as anal cancer.

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Balance Sheet Boosted By Financial Commitment

As of April 30, 2013, the Company had cash of approximately $1.0 million. However, balance sheet has been boosted by recent financial commitment.

On October 31, 2012, Advaxis (ADXS) announced that it has secured $10 million in equity financing from Magna Group, LLC through its flagship Equity Enhancement Program, with an additional $1.4 million in financial commitments from a combination of sources.

Below are the highlights of the financing.

Magna committed via the Equity Enhancement Program to purchase up to $10 million of Common Stock by Hanover Holdings I, LLC, an affiliate of Magna Group. The purchase price will generally be 90% of the market as defined in the Agreement. In consideration for Hanover's commitment, the Company has issued them 3,500,000 shares of Common Stock. Hanover Holdings I, LLC also funded $265,000 in two private placements during September and October, 2012. Magna will assume the $740,600 of outstanding Convertible Notes, owned by third parties. The Company will deliver Convertible Notes to Magna Group in the same aggregate principal amount paid by Magna Group. As part of the $740,600 assumption, the Company delivered a new Convertible Note in the aggregate principal amount of approximately $400,100 to Magna Group. The Convertible Notes bear interest at 6% and are convertible into shares of Common Stock at a conversion price of 73% of the market as defined in the Agreement. The purchase of ! $375,000 ! of Convertible Notes by private investors and institutional investors. The private investors include Dr. Yvonne Paterson, the scientific founder of the Company, Dr. James Patton, MD, a director of the Company, and Christine French, the Company's executive director of medical affairs. On October 17, 2012 warrants to purchase approximately 15.9 million shares of Common Stock containing full anti-dilution protection expired unexercised.

We think this financing comes at a crunch time. The combination of the $10 million Equity Enhancement Program, debt assumption and funding short term capital needs matches the Company's current requirements and boosts its balance sheet. These institutional investments as well as the investments by the Company's management and directors further validate the Company's technology and clinical programs.

Most importantly, partnership talks with big pharma continue. We think this is important because this kind of financing improves balance sheet without diluting existing shareholder base. So far, the existing financing has been at the cost of share dilution. Further, any partnership, if established, validates the Company's technology and clinical programs.

Current equity line can, at the Company's current volume and pricing, deliver over $1.2 million per month versus $0.6 million required. This is a great achievement for ADVX. With the ease of cash concern, the Company should be able to focus on advancing its clinical programs.

Reverse Stock Split Completed, Paving The Way For New Financing

On July 15, Advaxis announced a 1-for-125 reverse stock split of its common stock and a decrease in the number of its authorized shares of common stock from 1,000,000,000 to 25,000,000.

At the effective time of the reverse stock split, every 125 shares of Advaxis' issued and outstanding common stock will automatically be combined into 1 issued and outstanding share of common stock without any change in the par value of the shares. This will reduce the number of ! outstandi! ng common shares of Advaxis from approximately 609 million to approximately 4.9 million.

We think the reverse stock split is prudent for Advaxis. Though the reverse stock split does not fundamentally change stockholder value or the market capitalization of Advaxis, but increasing the price per share will make its stock more attractive to a broader range of institutional and other investors. Also, the increased price per share also facilitates new financing in our view. Therefore, the reverse stock split will ultimately increase stockholder value.

Valuation Is Attractive

We think Advaxis' live, attenuated Listeria technology is a unique immunotherapeutic platform which can target various cancer indications and infectious diseases.

Based on this unique platform technology, Advaxis has established a pipeline targeting a variety of cancer indications including cervical cancer, head and neck cancer, prostate cancer, anal cancer and breast/brain cancers. The Company currently has three Phase II clinical trials and three Phase I/II under way.

Near term catalysts are shown below:

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In terms of valuation, we think Advaxis is undervalued. The Company should be worth more than current value of $16 million in market cap in our view.

Currently, the Company shares are trading at about $2.80 per share which values the Company at about $14 million in market cap based on 5 million outstanding shares. This is certainly a deep discount. We believe this is mainly due to its week balance sheet. However, we reminder investors that the Company recently announced $11.4 million financing, which boosted the balance sheet greatly. Further, according to management, partnership talks continue with big pharma companies about its cervical cancer program. With the preliminary positive Phase II data of ADXS-HPV for cervical cancer, partnership may be able to materialize in lat! e 2013.

Our price target of $7.50 per share values the Company at $38 million in market cap, which is conservative. Apparently, risk is also high for Advaxis at this stage. We will keep a close eye on cash balance.

Source: Advaxis: First Cancer Vaccine For Cervical Cancer To Be In Pivotal Trial

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. (More...)

Get In On This Stock Before Buffett And Ackman Do

Billionaires Warren Buffett and Bill Ackman have helped make investors serious money in the railroad industry over the past couple of years. If you missed these opportunities while trying to navigate the financial crisis, never fear: There's still time to get in on the next great railroad investment.

 

Back in 2010, Buffett took market leader BNSF private at a roughly 30% premium. Ackman went into activist mode at Canadian Pacific Railway in 2011 after Canada's No. 2 rail company had grossly underperformed top peer Canadian National for a number of years. For the three years prior to Ackman's Canadian Pacific stake, the stock was down 5%, while Canadian National was up nearly 70%.

Since Ackman got involved during mid-2011, Canadian Pacific has outperformed Canadian National four times. There's definitely still money to be made in railways.

A similar opportunity is forming at Norfolk Southern (NYSE: NSC). The company has been essentially flat over the past five years and is in dire need of some activist-style improvements. 

Norfolk's stock is up a mere 3% over the past five years. Compare this with top rival CSX, up 20%; Union Pacific (NYSE: UNP) and Kansas City Southern (NYSE: KSU), each up 100%; and Canadian National Railway (NYSE: CNI), up 85%. Even the S&P 500 index has grossly outperformed Norfolk, returning 25%.

Ackman's key thesis at Canadian Pacific was that management issues were to blame for the company's underperformance. He was instrumental in ousting CEO Fred Green and getting former Canadian National CEO Hunter Harrison appointed to the top seat. 

A big positive for Norfolk of late has been its own management shakeup. In June, James Squires took over as president, essentially separating the CEO and president roles. Current CEO Charles Moorman will now focus solely on operations, while Squires will take over managing strategy and planning. Well-managed railroads are afforded higher valuations, and this is a first step toward a higher valuation for Norfolk.

One hot-button topic is pollution, which Norfolk is looking to tackle. Earlier this year, Norfolk laid out its initiatives, which includes fuel efficient engines, and turning to battery- and biofuel-powered engines. Its long-term goal includes lowering its greenhouse emissions by 10% per mile before 2014.

While the more efficient engines will no doubt help with emissions, there are company-specific benefits that are not to be ignored. As these engines come into play, the company should start seeing material improvement in lower operating expenses.

What makes Norfolk interesting is that with some slight improvements in the company, shareholders could easily be rewarded with share appreciation, and not just the industry-leading 2.7% dividend yield it pays.

Last quarter, Norfolk's operating ratio (operating expenses divided by net revenue) came in at 70.2%, compared with CSX's 68.6%. That might not seem like much, but it can be the difference of several million dollars over the course of a year. Norfolk and CSX have similar balance sheets, but CSX has a return on equity of 20%, while Norfolk is at 17%. Norfolk's move toward more efficient engines and operations is a first step for lowering its operating ratio and boosting returns on equity.

One of Norfolk's biggest initiatives for boosting its top line is to promote the move from trucks to trains, hence the gaining strength of its intermodal segment. The coming online of its Crescent Corridor, an intermodal corridor connecting Louisiana and New Jersey, should only further help drive the trading in of trucks for trains. Helping exacerbate the growth in intermodal should be the double-stacking that Norfolk is implementing. The majority of its intermodal shipments are now double-stacked, which allows Norfolk to move more cargo with fewer trips, leading to higher revenue per mile.

As natural gas prices tanked over the past few years, the trading in of coal for natural gas by the major power companies squeezed a number of major railroad operators, where coal transports have historically been a major part of revenues. Norfolk is mitigating this transition nicely, as revenues from intermodal should come close to passing coal this year as its top revenue generator. Intermodal volumes were up 8% in the past quarter, compared with coal being down 4%.

One of the real beauties of Norfolk is that the downside here is limited. The North American railroad system has one of the best-known legal economic moats in the world, as the railroad industry has infrastructure that just cannot be replicated. The amount of money that it would take to replicate such a network is unimaginable, not to mention the inability to access the land, where railroads hold age-old rights of way. 

Risks to Consider: Norfolk could fail to maintain its managerial and operational improvements and revert to being a subpar railroad operator. Railroads are also inherently tied to the economy, so any unexpected pullback in the recovery could be a big negative.

Action to take --> Investors can buy Norfolk now for roughly 70 cents per dollar of assets, which is well below any of the other major railroads. With the inherent moat that the railroad industry provides, there's not much room on the downside. With operational improvements, Norfolk should trade in line with the leading U.S. railroad operator, Union Pacific, at 17.5 times earnings. That price-to-earnings multiple on analysts' 2014 earnings per share estimates for Norfolk would yield a $110 price target.

P.S. -- Norfolk reminds us a lot of one of those stocks you can buy and hold forever. The company's roots date to 1881, and despite its recent underperformance, it has paid a dividend since 1987. StreetAuthority expert Elliott Gue and his team have put together a list of these "Forever Stocks" that investors can own forever. To find out the name and ticker symbols of these "Forever Stocks," click here.

Can Zynga Entertain Your Portfolio?

With shares of Zynga (NASDAQ:ZNGA) trading around $3, is ZNGA an OUTPERFORM, WAIT AND SEE or STAY AWAY? Let's analyze the stock with the relevant sections of our CHEAT SHEET investing framework:

T = Trends for a Stock’s Movement

Zynga is a provider of social game services with 240 million average monthly active users over 175 countries. The company develops, markets, and operates online social games as live services played over the Internet and on social networking sites and mobile platforms. Zynga's games are accessible on Facebook (NASDAQ:FB), as well as other social networks and mobile platforms, to players globally — wherever and whenever they want. It operates its games as live services, and they are all free to play. However, it does generate revenue through the in-game sale of virtual goods and advertising.

Today, Zynga shares rose after the company confirmed that Microsoft (NASDAQ:MSFT) Xbox chief Don Mattrick would be replacing founder Mark Pincus as Chief Executive Officer of the gaming company. Zynga has been facing some major struggles lately, but investors hope that the person who gave Microsoft the Xbox will be able to create similarly innovative technology to save it from failure. As social gaming continues to pick up steam among consumers worldwide, a pioneer in the industry like Zynga stands to see rising profits for many years.

T = Technicals on the Stock Chart are Mixed

Zynga stock has been part of a value range for most of the last year. The stock is now near the top-end of the range so it may need time before deciding on the next move. Analyzing the price trend and its strength can be done using key simple moving averages. What are the key moving averages? The 50-day (pink), 100-day (blue), and 200-day (yellow) simple moving averages. As seen in the daily price chart below, Zynga is trading above its rising key averages which signal neutral to bullish price action in the near-term.

(Source: Thinkorswim)

Taking a look at the implied volatility (red) and implied volatility skew levels of Zynga options may help determine if investors are bullish, neutral, or bearish.

	Implied Volatility (IV)	30-Day IV Percentile	90-Day IV Percentile
Zynga Options	72.36%	93%	90%

What does this mean? This means that investors or traders are buying a very significant amount of call and put options contracts, as compared to the last 30 and 90 trading days.

	Put IV Skew	Call IV Skew
July Options	Flat	Average
August Options	Top Financial Stocks To Watch Right Now Flat	Average

As of today, there is an average demand from call buyers or sellers and low demand by put buyers or high demand by put sellers, all neutral to bullish over the next two months. To summarize, investors are buying a very significant amount of call and put option contracts and are leaning neutral to bullish over the next two months.

On the next page, let’s take a look at the earnings and revenue growth rates and the conclusion.

E = Earnings Are Mixed Quarter-Over-Quarter

Rising stock prices are often strongly correlated with rising earnings and revenue growth rates. Also, the last four quarterly earnings announcement reactions help gauge investor sentiment on Zynga’s stock. What do the last four quarterly earnings and revenue growth (Y-O-Y) figures for Zynga look like and more importantly, how did the markets like these numbers?

	2013 Q1	2012 Q4	2012 Q3	2012 Q2
Earnings Growth (Y-O-Y)	100.00%	94.40%	-700.00%	-400.00%
Revenue Growth (Y-O-Y)	-17.88%	-0.02%	3.20%	19.11%
Earnings Reaction	-6.56%	9.12%	12.20%	-37.40%

Zynga has seen improving earnings and mixed revenue figures over the last four quarters. From these numbers, the markets have been on the fence about Zynga’s recent earnings announcements.

P = Excellent Relative Performance Versus Peers and Sector

How has Zynga stock done relative to its peers, Electronic Arts (NASDAQ:EA), Activision Blizzard (NASDAQ:ATVI), Facebook (NASDAQ:FB), and sector?

	Zynga	Electronic Arts	Activision Blizzard	Facebook	Sector
Year-to-Date Return	42.16%	60.88%	34.84%	-7.40%	27.31%

Zynga has been a relative performance leader, year-to-date.

Conclusion

Zynga provides a social game experience to consumers all around the world. The company has recently announced that the man who brought the Xbox to life, Don Mattrick, will be their CEO with hopes of moving the company forward. The stock has struggled over the last year and is now near the top of a range so it may need time before deciding on the direction of a future trend. Over the last four quarters, investors in the company have been on the fence as earnings have only improved slightly while revenue figures have been mixed. Relative to its peers and sector, Zynga has been a year-to-date performance leader. WAIT AND SEE what the new CEO brings to the table.

Retirement Assets Continue to Recover: ICI

Investors took advantage of a growing economy and favorable market conditions to add almost a trillion dollars to retirement accounts in the first quarter.

The Investment Company Institute reports in its quarterly roundup that total U.S. retirement assets were $20.8 trillion as of March 31, up 4.6% from $19.9 trillion on Dec. 31. Retirement savings accounted for 36% of all household financial assets in the United States.

Assets in individual retirement accounts totaled $5.7 trillion, an increase of 5.1% from year-end 2012. Defined contribution plan assets rose 5.7% to $5.4 trillion.

Government pension plans—including federal, state and local government plans—held $5.2 trillion in assets as of the end of March, a 5.3% increase from the end of the fourth quarter of 2012. Private-sector defined benefit (DB) plans held $2.7 trillion in assets at the end of the first quarter, and annuity reserves outside of retirement accounts accounted for another $1.9 trillion.

Top 10 High Tech Companies To Own For 2014

Defined Contribution Plans

Americans held $5.4 trillion in all employer-based DC retirement plans on March 31, of which $3.8 trillion was held in 401(k) plans. Those figures are up from $5.1 trillion and $3.6 trillion, respectively, as of December 31. Mutual funds managed $3.1 trillion of assets held in 401(k), 403(b), and other DC plans at the end of March, up from $2.9 trillion at year-end 2012. Mutual funds managed 57% of DC plan assets at the end of the first quarter.

Individual Retirement Accounts

IRAs held $5.7 trillion in assets, up from $5.4 trillion at the end of 2012. Forty-six percent of IRA assets, or $2.6 trillion, was invested in mutual funds.

Other Developments

Target date mutual fund assets totaled $529 billion, an increase of 10% in the first quarter. Retirement accounts held the bulk of target date mutual fund assets: 91% of target date mutual fund assets were held through DC plans and IRAs.

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Check out Median Retirement Balance Is $3,000 for All Working-Age Households on AdvisorOne.

Avoiding Enforcement Actions on Social Media: Lessons From Facebook Movie

“The Internet’s not written in pencil," Facebook founder Mark Zuckerberg's girlfriend warns him in the movie The Social Network. "It’s written in ink.”

According to two attorneys at Sutherland Asbill & Brennan, this quote sets the tone for the online regulatory environment for advisors.

The attorneys published an article in the June issue of Banking & Financial Services Policy Report using The Social Network, the 2010 film about the rise of Facebook, to demonstrate the rise of enforcement against financial advisors for social media infractions.

“Although Internet content does not disappear (too easily), when it does, it can have far-reaching and long-lasting effects on firms and representatives who use it,” Brian Rubin and Caroline Crenshaw wrote.

Rubin is a partner in Sutherland’s Washington, D.C., office and leads the firm's securities enforcement and litigation practice team. Crenshaw is a member of Sutherland’s litigation practice group.

To mitigate those long-term effects, advisors need to have well-documented processes in place for all their communications: email, instant messaging, blogs, social media and any platform yet to come along.

Broker-dealers have to keep business-related records for at least three years, according to the paper, and the first two of these have to be easily accessible. Investment advisors have to keep business-related records, including recommendations, disclosure documents and advertising, in their principal office for at least two years; then they can move them to another (readily accessible) location for another three years.

A case in 2007 showed that just keeping the records wasn’t enough, though. According to the paper, FINRA fined a firm in August 2007 for failing “to preserve, review or retain emails sent via external accounts.” Enforcement actions were brought against firms that were unable to prove that personal email accounts weren’t being used to do business, electronic systems were being maintained properly and emails were readily accessible.

Instant messaging and social media brought up concerns about being able to preserve communications, according to the paper. Rubin and Crenshaw noted that FINRA was the first regulator to show interest in instant messaging. In February 2007, the regulator fined four affiliated firms for failing to preserve communications, and in April fined a representative for inadequately supervising electronic communications.

However, the paper found regulators weren’t satisfied with storing electronic communications electronically. In July 2010, the SEC fined a broker-dealer and its chief compliance officer for keeping instant messages stored on a computer instead of in hard copy or disabling the program altogether.

“Regulatory guidance indicates that firms should preserve all business-related communications, including not just emails but also text messages and social media (as well as whatever channel or forum of communication is developed by the next generation of dropouts from Harvard College or Reed College),” the authors wrote. They stressed that even when firms have policies and procedures in place, they need to confirm that they can access communications easily.

Stocks Market News for July 10, 2013 - Market News

An encouraging start to the second quarter earnings season propelled indices higher on Tuesday. Better-than-expected reports on the home front coupled with positive earnings reports have lifted investor sentiment recently. Benchmarks finished in the green for the fourth consecutive day. Investors overlooked the International Monetary Fund's discouraging comments on world economic growth. The IMF reduced its global growth estimate for this year yesterday. Nine out of the ten S&P 500 industry groups finished in the green. Shares of the materials and industrial sectors gained the most.

For a look at the issues currently facing the markets, make sure to read today's Ahead of Wall Street article.

The Dow Jones Industrial Average (DJI) gained 0.5% to close the day at 15,300.34. The S&P 500 added 0.7% to finish yesterday's trading session at 1,652.32. The tech-laden Nasdaq Composite Index rose 0.6% to end at 3,504.26. The fear-gauge CBOE Volatility Index (VIX) declined 2.9% to settle at 14.35. Consolidated volumes on the New York Stock Exchange, American Stock Exchange and Nasdaq were roughly 5.8 billion shares, lower than 2013's average of 6.4 billion shares. Advancing stocks outnumbered the decliners. For the 72% that advanced, only 25% declined.

Following yesterday's gains, the S&P 500 is marginally shy of its all-time high, achieved on May 21. Investors have become more positive following encouraging reports from the private sector and positive government data on the job markets. A positive start to the earnings season acted as a catalyst as expectations from the second quarter earnings season are low. Going forward, second quarter corporate earnings is expected to decide the trajectory of markets.

Top Casino Stocks To Invest In 2014

Aluminum giant Alcoa Inc (NYSE:AA), reported second quarter results after the close of market! s on Monday. The company posted earnings and revenue that surpassed the Street's estimates. Despite healthy quarterly results, shares declined nearly 0.1% yesterday. The company's earnings were boosted by robust demand for aluminum from autos and airplanes. Alcoa said global demand for aluminum will increase by 7% in 2013. According to Thomson Reuters data, earnings of the S&P 500 companies are expected to increase by 2.9% in the second quarter from the same period a year ago. This is considerably below the April forecast of 6.1%. Banking giants JPMorgan Chase & Co. (NYSE:JPM) and Wells Fargo & Co (NYSE:WFC) are due to report quarterly results on Friday.

Meanwhile, the International Monetary Fund reduced global growth forecast for the fifth consecutive time for the year 2013. The IMF trimmed its global growth forecast for this year to 3.1% from the previous projection of 3.3%. The IMF said: "the possibility of a longer growth slowdown in emerging market economies, especially given risks of lower potential growth, slowing credit, and possibly tighter financial conditions if the anticipated unwinding of monetary policy stimulus in the U.S. leads to sustained capital flow reversals." In light of rising government spending cuts, IMF reduced its U.S growth estimate for the year 2013 to 1.7%, lower than 2.0% predicted by the U.S. government's Office of Management and Budget. The fund also said central banks of rich countries should continue with stimulus measures until full economic recovery is attained. IMF further added that a rise in long-term interest rates have hampered the growth of emerging countries.

Rating agency Standard & Poor's decreased Italy's sovereign credit rating to BBB from BBB+. The agency said: "The rating action reflects our view of the effects of further weakening growth on Italy's economic structure and resilience, and its impaired monetary transmission mechanism."

Shares of material sector gained the m! ost after! Alcoa reported better-than-expected quarterly results. The Materials Select Sector SPDR (XLB) gained 1.6%. Stocks such as Air Products & Chemicals, Inc. (NYSE:APD), Monsanto Company (NYSE:MON), Praxair, Inc. (NYSE:PX), and Airgas, Inc. (NYSE:ARG) added 3.9%, 2.2%, 1.6% and 1.3%, respectively.

e-Commerce Stock Update - July 2013 (pt. 2) - Industry ...

This is part two of our e-Commerce Industry Outlook. Click here to read part one.

Although retail e-Commerce is the segment that most of us are interested in, it is in fact just a part of the overall e-Commerce market. In fact, retailers and service providers generate just 4.7% and 3.0%, respectively of their revenues online, a slightly higher percentage than they did in the prior year. The U.S. Census Bureau categorizes these two segments as business-to-consumer.

According to the U.S. Census Bureau, the manufacturing sector is the largest contributor to e-commerce sales (49.3% of their total shipments), followed by merchant wholesalers (24.3% of their total sales). These two segments make up the business-to-business category.

This places the business-to-business category at 90% of total e-Commerce sales, with the balance coming from the business-to-consumer category. The latest numbers from the Bureau suggest that the fastest-growing segments were retail and wholesale. [All the above data from the U.S. Census Bureau relate to 2011, as published in May 2013]

The industry is evolving very rapidly, so data collection and evaluation are particularly difficult. Consequently, one has to rely largely on surveys by both government and private agencies.

In this section, we will discuss segments of the e-Commerce market than do not relate directly to the retail of goods, and discuss instead travel, payments, security and advertising.

Travel

The U.S. Commerce Department expects international travel to the U.S. to continue increasing over the next few years. Visitor volume is currently expected to increase 6-8% a year from 2012 to 2016 leading to a 49% increase in the number of users during the period.

Visitors from the Middle East are expected to be the slowest-growing (29%). South America, Asia and Oceania growth rates are expected to be comparable at 83%, 82% and 82%, respectively.

The fastest growth is expected to come from China (232%), Sou! th Korea (200%), Brazil (150%), Russian Federation (139%) and India (94%). Travel and tourism is one of the country's strongest industries, contributing a trade surplus in each of the last 20 years.

The top travel booking sites are Booking.com, Expedia.com, Hotels.com, Priceline.com, Kayak.com (acquired by Priceline), Travelocity.com, Orbitz.com and Hotwire.com. Since Booking.com and Kayak are part of Priceline (PCLN) and both Hotels.com and Hotwire.com part of Expedia (EXPE), this narrows down the top companies in the segment to Priceline, Expedia, Orbitz Worldwide (OWW) and Travelocity. However, there are several others worth considering that include Ctrip International (CTRP), MakeMyTrip (MMYT) and TripAdvisor (TRIP), which was spun off from Expedia.

The global travel market grew 4% in 2012 and is expected to grow another 2-3% this year. The Asia/Pacific region is expected to see the strongest growth (up 6%), followed by Europe and South America (mainly Brazil) at 2% each. North America (mainly U.S.) is expected to be flat this year. [World Travel Monitor 2012]

According to the April 2013 TravelClick North American Hospitality Review (NAHR), both occupancy and average daily rates (ADRs) in North America are seeing steady growth this year, with individual bookings (both leisure and business) doing better than group bookings. In the second quarter of 2013, total travel occupancy growth was 3.6% from last year with ADR growth even better at 3.8%.

Online travel agents (OTAs) are growing the fastest this year – up 13.7% in the first quarter, according to the TravelClick North American Distribution Review (NADR). The hotels' own websites were up 5.0%, with direct walk-ins and calls to the hotel growing 3.7%. The areas of weakness were the global distribution system used by travel agents and CRS (calls to a hotel's toll-free number).

Share of individual bookings-



Global corporate travel bookings were up 8.8% in April, according to Pegasus Solutions, which is the single largest processor of electronic hotel transactions. This is the highest volume growth through GDSs since August 2011.

Smartphones are playing a key role in travel purchases, especially for last minute purchases. eMarketer expects smartphone travel researchers in the U.S. to grow to 50 million or 40% of all digital travel researchers this year, with total U.S. mobile travel sales touching $13.6 billion.

The top site for travel content is TripAdvisor, visited by 60% of Americans when choosing a hotel. Google's (GOOG) YouTube is now growing in popularity and is the second in line, according to MMGY Global's 2013 Portrait of American Travelers study.

Another report by PhocusWright mentioned that when online penetration of the travel market reached 35% in any country, growth rates were likely to slow down to single-digits. The research firm mentioned that only the U.S., U.K. and Scandinavia had reached this level of penetration and most other markets across Europe, Asia and Latin America would continue to show good growth rates.

Payment Systems

With practically all market research indicating solid growth in e-Commerce sales over the next few years, online players are vying with each other to come out with convenient and secure payment solutions.

The FIS Mobile Wallet from Fidelity National Information Services Inc. (FIS) is basically a bar code reader that feeds information related to the purchase into the user's smartphone and uses it as a medium to transfer the information to the cloud. Online purchase of merchandise is also possible. The solution provides good security, since the transaction is carried out entirely in the cloud through the retailer's and banker's applications and personal information is not shared at the time of purchase.

QR code payments have already been made by most smartphone users in the U.S. an! d the tec! hnology is moving mainstream. However, the safety of the system comes at a price, which is the time it takes to complete a transaction. This is the reason that Google is still hanging on to its digital wallet.

Google's digital wallet allows a customer to make a payment by waving his mobile phone over a POS terminal. Other than the convenience of the whole thing, the main attraction being highlighted is the security of the payment channel, since neither the customer nor the retailer would be recording the personal information related to the customer. Adoption of the device, although it is some way off, will have a remarkable effect on the volume and value of mobile transactions, since it should increase the percentage of higher-value sales.

However, the cost of POS terminals is a downside to the system that could easily turn away retail partners. This is an evolving area and much could change over the next few years.

Visa (V) has also jumped on the bandwagon, claiming that its V.me is a digital wallet with a difference. Not only can it be used to make mobile contactless payments (bar code, QR code or NFC), but it can also be used for online checkout (it remembers card details from several providers).

The greatest success however is currently being enjoyed by eBay's Paypal, which has seen success at a large number of traditional retailers such as The Home Depot (HD) and Office Depot (OD). One drawback that remains is that although the system is itself secure, there is always a security risk for a buyer not used to dealing with Paypal, since it requires personal information.

Mobile banking is set to grow very strongly over the next few years, according to Juniper Research. The research firm estimates that a billion mobile devices (or 15% of the installed base) will be used for banking transactions by 2017, up from an expected 590 million at the end of this year. Most banks already offer at least one mobile banking offering, with some larger banks offering more tha! n one opt! ion. Messaging remains the most popular across the world, but apps are likely to remain the preferred channel in most developed markets.

Mobile banking has not picked up sufficiently in either the U.S. or Canada, due to security-related concerns. However, an analysis by Deloitte shows that mobile banking could become the most-preferred banking method by 2020. The study estimates that 20-25 million "Generation Y" (Gen Y) consumers will become new banking customers by 2015.

A banking.com study shows that 48% of Gen Y consumers are already using online banking services. Moreover, their preference for online banking is so high that around 30% said they would consider switching financial institutions if they did not provide the service. Both online and mobile banking by Gen Y largely consists of checking account balances and transferring funds, although they also like to pay bills on the platform.

It is believed that high smartphone penetration, higher income within this group and greater digital sophistication will drive increased demand for mobile banking services. Since mobile banking is expected to be the most cost efficient for banks, investment in technology to improve and expand mobile banking services is likely to increase.

Security

With online transactions expected to boom over the next few years, the topmost concern remains security. While banks will spend significantly on secure payment systems, hackers are expected to have a field day, largely targeting the flood of customers going online. Last year saw a huge increase in security breaches, something that may be expected to continue.

Recent research from McAfee revealed certain important facts: first, that mobile malware was primarily spreading through apps; second, 75% of infected apps came from Google Play; third, the chances of downloading malware or suspicious URLs was 1 in 6; fourth, 40% of malware families disrupt the system in more than one way, which is an indication of the increasing sophist! ication o! f hackers; and fifth, 23% of mobile spyware can result in data loss.

Even more alarming is that even "secure" payment platforms like digital wallets using NFC technology can now be infected by worms within close range of devices ("bump and infect"). An infected device can give out personal information during the payment process that can be used to steal from the wallet.

Mobile security offerings currently come from AirWatch, Apple (AAPL), Avast, Check Point, Cisco (CSCO), IBM (IBM), Juniper (JNPR), Kaspersky, McAfee, Microsoft (MSFT), MobileIron, RIM (Blackberry) (BBRY), Symantec (SYMC) and Trend Micro, among others.

Alternative payment systems will continue to gain popularity. While some of these payment systems, such as eBay's (EBAY) PayPal have been around for a while, other systems, such as Google's digital wallet, V.me and the FIS Mobile Wallet are still in the making. Alternative payment systems never really gained momentum in the past because of the low volume of transactions. However, as online transactions continue to increase, many more such systems could suddenly become more available.

We expect mobile security to become a major focus area for technology companies, since this is the stumbling block to payments through the mobile platform (currently just 2% of U.S. online spending).

Digital Advertising

The U.S. digital advertising market has seen some very strong growth in the past few years, despite the recession that impacted the entire economy. eMarketer estimates that the market will grow 14.0% in 2013, compared to the 15.0% growth in 2012.

Growth rates are expected to continue declining: 12.4% in 2014, 10.2% in 2015, 9.0% in 2016 and 6.9% in 2017. Retail, financial services, consumer packaged goods (CPG) and travel in that order, are expected to drive this growth.

The current strength in online advertising is coming primarily from the growing popularity of the display format. Of all the forms of online advertising,! display ! (including video, banner ads, rich media and sponsorships) is expected to see the strongest growth over the next few years. Also, of all the forms of display advertising, video and banner ads are expected to grow the strongest from 2011 to 2016.

Search will remain supreme until 2016, gradually giving way to video and banner ads, both of which will grow rapidly. The lower pricing of video and banner ads has made them popular with brand advertisers, so ad inventories are solid. Another factor favoring display ads is the proliferation of smartphones, where the smaller screens make display ads more effective than text ads.

The underlying drivers of growth of the display format are the continued increase in the number of users, greater propensity of users to consume online, a growing inventory of advertisements that serve to lower advertisement prices and the need to create brand awareness online.

Search advertising is expected to remain popular, because results are measurable, and therefore, more predictable than other media. This also makes the market more resilient in recessionary conditions, since advertisers are more confident about the results of their spending.

Since ecommerce entails the buying and selling of goods or services over electronic systems, it includes companies that are totally dependent on these sales, those that are gradually moving to it, as well as those that want to use it partially. Therefore, the biggest sellers or the ones growing the strongest are not necessarily those that are solely dependent on the Internet. The following diagrams seek to explain the position of companies primarily dependent on the Internet for the distribution of their goods and services in the context of the Zacks Industry Rank.

Two (Retail/Wholesale and Computer & Technology) of the 16 broad Zacks sectors are related to the ecommerce industry as depicted below.



! We rank t! he 264 industries across the 16 Zacks sectors based on the earnings outlook and fundamental strength of the constituent companies in each industry. To learn more visit: About Zacks Industry Rank.

The outlook for industries positioned at #88 or lower is 'Positive,' between #89 and #176 is 'Neutral' and #177 and higher is 'Negative.'

Therefore, Internet Commerce being in the 114th position is in Neutral territory, with Internet Services (185th position) being negative and Internet Services – Delivery (58th position) being positive.

So it is not surprising that the average rank of stocks in the Internet Commerce industry is 3.00, for Internet Services it is 3.15, while for Internet Services – Delivery, it is 2.76. [Note: Zacks Rank #1 denotes Strong Buy, #2 is Buy, #3 means Hold, #4 Sell and #5 Strong Sell].

Earnings Trends

The broader Retail/Wholesale sector, of which Internet Commerce is a part, appears to be turning the corner. While the revenue beat ratio is on the low side (34.1%), the earnings beat ratio is pretty robust at 61.4%.

Total earnings for the sector were up 5.7%, but not nearly as good as the 7.4% growth in the fourth quarter of 2012. Total revenues were up 1.5% from last year compared to a 4.9% increase in the fourth quarter.

The other companies we are discussing in the e-Commerce outlook (Part 2) fall under the broader Technology sector. Here too, we see a fairly strong earnings beat ratio of 63.1%, partially supported by a revenue beat ratio of 45.6%.

However, total earnings in the sector were down 4.4% compared to a 1.7% increase in the fourth quarter. Total revenues did slightly better, increasing 2.9% from last year, down from 5.3% in the fourth quarter.

Initial earnings estimates for 2013 and 2014 indicate double-digit growth in both years for Retail/Wholesale. Technology on the other hand is expected to be flat this year and up double-digits in the next.

OPPORTUNITIES

While many of the compan! ies discu! ssed are expected to do well this year, there are a few stand-out opportunities.

TripAdvisor (TRIP) is doing extremely well right now and the company's decision to invest in offline advertising (TV) makes sense. Traffic continues to surge, as the company continues to add content, both in the U.S. and important international markets.

Another good investment is Yahoo (YHOO), which is altering course under the leadership of Marissa Meyer. The company has been acquiring aggressively to position itself in the mobile segment and last reports indicated growing engagement.

Facebook (FB) is another opportunity worth looking into. The company is cozying up with Samsung, which has taken the mobile market by storm. It is also getting more innovative by the day, which is the only way to success here.

WEAKNESSES

We do not see a lot of weakness, although many of the companies may not be great opportunities either.

Revenue growth prospects for online travel companies Priceline, Expedia and Orbitz Worldwide are good. International expansion is a key factor driving growth for these companies and collaborative agreements with local players will be the key. Lower-value inventories in international markets are on the rise, so margins could be impacted.

Investors snub gold; prefer stocks, real estate: Survey

In the wake of present global economic crisis, India's declining GDP growth, political reform paralysis and recent market scams, India's first financial services website, Equitymaster.com, recently took the much needed initiative on investor awareness.

It started an Investor Survey 2013 on 3rd May this year, the very first move aimed at learning how confident you as an investor are and more importantly, what you are doing with your money.

Awareness is always a part of investor education, and the survey was the first step towards that.

Equitymaster, being "the investor's best friend" along with a member base of 1,484,807 readers across 71 countries worldwide, took the onus on itself to spread more alertness and transparency among investors with this survey.

The survey, being accessed and participated by 16,421 investors from within and outside India, asked the following basic questions.

1.Who is to blame for the dismal returns of your stock portfolio?

2.What will impact the Indian stock market in the near future?

3.Are you invested in the Indian stock market?

4.What is preferred choice of stocks?

5.Are you buying gold?

6.Where are you placing your bank deposits?

7.Where are you invested the most?

8.What is the most preferred mode of investment?

9.Where do you see the BSE Sensex in the short term and the long term?

And some interesting results were found. Almost 34.6% of the participants think that they lost money due to their own greed. They are also positive about the situation changing for the better with proper policy initiatives by the Indian government.

The good thing is they choose to remain invested over a variety of asset classes, although equity/mutual funds (38.5%) and real estate (34.7%) remain the preferred options.

What is probably surprising is that investors have different opinions about whether or not to invest in gold.

With only 8.! 9% of the investors looking to buy more gold, it can be safely said that Indian investors are gradually moving away from their most-preferred, age-old, safe investment choice.

That being said, gold still is a recommended investment, considering the incessant money printing by more and more economies, along with the currently unstable global economic condition.

However, the most crucial point made is that overall more than 60% of investors are pretty optimistic about the upward potential of the stock markets in the coming couple of years.

Around 62.7% of the respondents believe the Sensex will rise up above 20,000 in the coming year. Around 37.2% of the respondents think that the Sensex would reach 30,000 in the next 2-3 years.

It is good to see that investors are still optimistic and more importantly, have become more aggressive about investing in equity over time.

You can find more about the Investor Survey 2013 at the link below: http://www.equitymaster.com/Survey/investor-survey-2013.aspx

About Equitymaster

Equitymaster is a Mumbai, India-based independent equity research initiative aimed at empowering the investor by giving him honest, unbiased opinions on investing in share markets.

Who Is John Burbank? GuruFocus’ New Fundamental and Macro-Focused Guru

While relatively young, John Burbank's firm, Passport Capital, has been quite successful on the strength of its fundamentals-focused stock picking and more exotic plays based on global macro conditions. Since Burbank launched Passport in 2000, he has grown assets to $3.3 billion under management, delivered an annualized 23 percent return to investors, and, this month, become GuruFocus' newest Guru.

In his pre-hedge fund past, Burbank was a consultant to Roger Richter of JMG Triton Offshore Ltd. and director of research at ValueVest Management. His investing career began just before the late-'90s Asian crisis, where he learned valuable lessons that helped him avoid the dot-com debacle several years later. He earned a B.A. from Duke University and an MBA from Stanford Graduate School of Business.

Currently Burbank has both an equity portfolio and some intriguing irons in the fire elsewhere, but his 12-year history with Passport has been eventful as well.

In Passport's first year of operation, it shunned the tech craze and shorted high-flying technology stocks. For the three years the S&P 500 reeled from the backlash of the overvalued stocks with returns in the negative numbers, Burbank's flagship Global Strategy fund returned 36% in 2000, 7% in 2001 and 22.1% in 2002.

A few years later, Burbank made a very prescient call on the collapse of the U.S. housing market. He began shorting the overheated market in 2004, buying subprime mortgage-backed credit default swaps, exemplifying one of his standout quotes, "The way to make high returns is to invest in things people don't understand."

By 2007, as systemic cracks were spreading in the U.S. housing market, the Global Strategy Fund posted a staggering 219.7% return compared to 5.5% for the S&P, marking its eighth straight year of positive returns.

In 2008, when most of the market was crashing, Passport's returns when down with it, like most funds. They posted a 50.9 percent loss that year. Tho! ugh 13Fs from the period are not available, a Forbes article from April 2008 says that a quarter of the fund was invested in basic materials such as iron ore and gold miners, with other large positions in Indian financial exchange firm Financial Technologies, Asian education company Raffles Education, Yamana Gold (AUY) and Transocean (RIG).

By the end of 2008, Yamana Gold fell almost 50 percent, and Transocean plunged about 63 percent.

Now, Burbank is bullish on emerging markets, and one of his favorite ideas is investing in Saudi Arabia, which he has been doing for about three years, as foreigners were not allowed to invest there until August 2008. In February 2012, he had 15 percent of his fund allocated there, according to Bloomberg. High prices of oil, he says, are helping Saudi Markets, only 1 percent of which is held by foreigners.

The Saudi market was at that point trading at 11 times earnings with a 5 percent dividend yield, on an unlevered basis, and Saudis have about $600 billion in reserves and little corporate debt, making it a less risky investment, he said in a Bloomberg interview.

Burbank in his first-quarter letter to investors was pessimistic about the economy and foresees a recession in the U.S. in 2012 or early 2013. In response, he reduced portfolio illiquidity, increased shots and hedges, initiated an investment in mortgage-backed securities, added to his physical gold holdings and established a long position in Brent Crude.

Regarding equities, Burbank said 2012 is a great year for long and short equities. "Our strategy is to be picking individual securities of companies that aren't depending on economic growth, and obviously biotech and healthcare is one of those sectors," he said on Bloomberg.

His largest new buys in the first quarter are: Penn Virginia Group Holdings LP (PVG), Wynn Resorts Ltd. (WYNN), Methanex Corp. (MEOH), Solutia Inc. (SOA) and Georgia Gulf (GGC). Of his top eight stocks, five are from the chemicals industr! y.
His largest holdings are Cytec Industries Inc. (CYT), Vivus Inc. (VVUS), Marathon Petrol (MPC), Google Inc. Cl A (GOOG) and Liberty Media A (LINTA).

See John Burbank's portfolio here. Also check out the Undervalued Stocks, Top Growth Companies and High Yield stocks of John Burbank.

Hot Penny Stocks To Invest In Right Now

Related links:John BurbankHe said on BloombergPortfolio hereUndervalued StocksTop Growth CompaniesHigh Yield stocks

Social Finance Careers: Creating A Better World

A background in finance is sure to lead to money, but what if you want more than money? If you believe that finance can be used to engineer more than just profits, then a career in social finance may be right for you.

What Is Social Finance?
Social finance is the application of finance to achieve a social objective. Long the focus of governments and charities, social finance has now become a specialized field of finance and an area of focus for profit-seeking corporations.

Many different kinds of organizations seek better methods to reach and serve those in the lowest socio-economic groups. Banks, consumer finance companies, retailers, non-profit organizations and even telecom companies are just a few examples. Although their embrace of the world's lower income population may appear similar, organizations often differ in their intentions. Some seek the elimination of poverty as a social good, others seek to create new pools of consumers for their products. Some seek to do both.

Types of Social Finance Careers
As the world integrates, globalizes and becomes more interdependent, financial capital is moving into previously untapped geographic regions - such as emerging markets and pre-emerging markets. As a result, money is flowing into the hands of more people around the globe.

As a result of this increased globalization, new combinations of skills are in demand in the financial marketplace, and careers in social finance have expanded to become more varied to meet that demand. Some examples of careers in social finance include:
Community Investor - A community investor gathers, oversees and directs capital to investments in communities that have been historically underserved by other financial services. Community investors generally report to a board of directors and, ultimately, the shareholders of the company. Examples of community investors include community bankers and community development venture capitalists.
Micro-Financier - A micro-financier is a community investor who seeks to provide people in poverty with the means to invest or borrow money by creating financial transactions that eliminate the need for collateral, and that have smaller-than-average minimum investment requirements. Micro-financiers may be self employed or may work for companies as diverse as community banks, non-governmental organizations (NGOs), traditional commercial banks, consumer finance companies or consumer retailers.
Nonprofit or Foundation Executive - One of the more traditional careers in social finance is the nonprofit or foundation executive. This individual works for a nonprofit organization or private foundation and generally reports to a board of directors or board of trustees, depending on the organization's legal structure. Areas served by nonprofits and foundations include, but are not limited to, the arts, science, the environment, child welfare, animal protection, and civic and political interests.
Social Entrepreneur - Social entrepreneurs create organizations that provide innovative solutions to difficult social problems. These organizations can include for-profit businesses that have positive social externalities. Enterprises created by social entrepreneurs can also completely eliminate the distinction between non-profit and for-profit through hybrid enterprises that have features of both. Benefits of a Career in Social Finance
Why do people choose a career in social finance? They do because these careers are:
Interdisciplinary - Individuals in these careers generally draw upon two or more academic disciplines, combining finance with other fields of expertise such as philosophy, sociology, anthropology, political science, technology or other fields of study. Individuals who desire a global or big-picture view of the world may be attracted to work that combines finance with many different areas of expertise. Financial purists might prefer other, more traditional, financial careers or a career in social finance that involves being part of a collaborative team.
Leading Edge - People in social finance are often pioneers building new ways to solve problems that a government or business alone has not been able to satisfy. Individuals attracted to these careers tend to be creative leaders who can identify resources and put them together in innovative ways. Although fundraising is generally a part of these careers, money is considered only one of many resources. Individuals who prefer following tried-and-true methods for success might not appreciate the challenges of social finance.
Hands-On - People in social finance tend to be highly hands-on people with varied talents. Traveling, meeting with people of diverse backgrounds and solving practical problems are features of these careers. Those who prefer theoretical or academic work alone might not like the degree of flexibility required by this type of job.
Meaningful - In the final analysis, these jobs are well-suited to people who appreciate seeing money being put to use for social change. Those who prefer to leave their philosophy at home, or individuals who expect a career to pay off in monetary gains alone, may not find these careers to be a good fit. Advice for Aspiring Social Financiers
For those interested in exploring a career in social finance, here are some suggestions:
Begin Where You Are: If you have a desire to connect your financial skills to a social cause, you may wish to look first in your local community. Volunteer work leads to new contacts, new experiences and, often, a new job or career. If you are looking for volunteer, consulting or other work in your region, you might find what you're looking for at Idealist.org, an online community that seeks to link people, consultants, volunteers and organizations.
Link up with Like-Minded People: Business-leaders, policymakers, academics, students and social entrepreneurs are linking up via online communities, such as Social Edge and Changemakers.net. Networks like these put resources together and provide a platform for solving problems together online.
Consider SpecializedSchools and Programs - If you haven't yet completed your formal education, you may wish to specialize in disciplines that complement your studies in finance. Languages, especially, can be helpful for those seeking to work in the global world of social finance. If you're looking for an advanced degree, you might wish to consider one of the many specialized programs of study, such as The Center for the Advancement of Social Entrepreneurship at DukeUniversity's Fuqua School of Business or Stanford Graduate School of Business's Center for Social Innovation. The Bottom Line
Historically, social objectives have been viewed as the domain of governments and charities. That is no longer the case, as viable economic solutions are emerging for previously intractable social problems. A career in social finance allows an individual to apply financial skills to complex social problems. Social finance careers can be a good fit for those who seek interdisciplinary, leading-edge, hands-on and meaningful work.

Is Wells Fargo the Healthiest Bank?

With shares of Wells Fargo (NYSE:WFC) trading around $40, is the company an OUTPERFORM, WAIT AND SEE, or STAY AWAY? Let's analyze the stock with the relevant sections of our CHEAT SHEET investing framework:

T = Trends for a Stock’s Movement

Wells Fargo is a diversified financial services company. It has three operating segments: Community Banking, Wholesale Banking, and Wealth, Brokerage and Retirement. The company provides retail, commercial, and corporate banking services through banking stores and offices, the Internet, and other distribution channels to individuals, businesses, and institutions around the world. Wells Fargo also provides wholesale banking, mortgage banking, consumer finance, equipment leasing, agricultural finance, commercial finance, securities brokerage and investment banking, insurance agency and brokerage services, computer and data processing services, trust services, investment advisory services, mortgage-backed securities servicing, and venture capital investment. As a major bank operating in the financial industry that is the backbone of most economies around the world, its need is undoubted. Look for Wells Fargo to provide financial services of various forms to growing entities and a growing consumer base worldwide.

T = Technicals on the Stock Chart are Strong

Wells Fargo stock has seen its stock break above a value range extending back a number of years. The stock is now trading near all-time high prices and sees no signs of slowing. Analyzing the price trend and its strength can be done using key simple moving averages. What are the key moving averages? The 50-day (pink), 100-day (blue), and 200-day (yellow) simple moving averages. As seen in the daily price chart below, Wells Fargo is trading above its rising key averages, which signals neutral to bullish price action in the near-term.

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(Source: Thinkorswim)

Taking a look at the implied volatility (red) and implied volatility skew levels of Wells Fargo options may help determine if investors are bullish, neutral, or bearish.

	Implied Volatility (IV)	30-Day IV Percentile	90-Day IV Percentile
Wells Fargo Options	20.39%	90%	88%

What does this mean? This means that investors or traders are buying a very significant amount of call and put options contracts, as compared to the last 30 and 90 trading days.

	Put IV Skew	Call IV Skew
June Options	Steep	Average
July Options	Steep	Average

As of today, there is an average demand from call buyers or sellers and high demand by put buyers or low demand by put sellers, all neutral to bearish over the next two months. To summarize, investors are buying a very significant amount of call and put option contracts and are leaning neutral to bearish over the next two months.

On the next page, let’s take a look at the earnings and revenue growth rates and the conclusion.

E = Earnings Are Increasing Quarter-Over-Quarter

Rising stock prices are often strongly correlated with rising earnings and revenue growth rates. Also, the last four quarterly earnings announcement reactions help gauge investor sentiment on Wells Fargo’s stock. What do the last four quarterly earnings and revenue growth (Y-O-Y) figures for Wells Fargo look like and more importantly, how did the markets like these numbers?

	2013 Q1	2012 Q4	2012 Q3	2012 Q2
Earnings Growth (Y-O-Y)	22.67%	24.41%	22.22%	17.14%
Revenue Growth (Y-O-Y)	-1.74%	6.52%	8.08%	4.43%
Earnings Reaction	-0.79%	-0.84%	-2.64%	3.22%

Wells Fargo has seen increasing earnings and revenue figures over the last four quarters. From these figures, the markets have had mixed feelings about Wells Fargo’s recent earnings announcements.

P = Average Relative Performance Versus Peers and Sector

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How has Wells Fargo stock done relative to its peers, Bank of America (NYSE:BAC), Citigroup (NYSE:C), JPMorgan Chase (NYSE:JPM), and the sector?

	Wells Fargo	Bank of America	Citigroup	JPMorgan Chase	Sector
Year-to-Date Return	19.08%	15.93%	30.36%	23.66%	21.16%

Wells Fargo has been an average performer, year-to-date.

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Conclusion

Wells Fargo is a leading provider of financial services to consumers and companies around the world. The stock has recently broken above a multi-year price range and is trading near all-time high prices. Over the last four quarters, earnings and revenue figures have increased, which has produced mixed feelings among investors. Relative to its peers and sector, Wells Fargo has been an average year-to-date performer. Look for Wells Fargo to catch-up and OUTPERFORM.

Why JPMorgan Is Treading Water Today

After yesterday morning's plunge and late-in-the-day rally, JPMorgan Chase (NYSE: JPM  ) jumped in overnight trading and has tentatively staked a spot in the green: up 0.60% around midday. This is better performance than two of its Big Four brethren, but don't expect it to necessarily hold through the end of trading.

Through the looking glass
The sector is mixed, and markets are mixed. At the time of writing, JPMorgan is up, as is Wells Fargo, but both Citigroup and Bank of America are down. As for the markets, both the S&P 500 and the Dow Jones Industrial Average are down, while the Nasdaq Composite is just barely keeping its head above water.

We can look to the Federal Reserve for the vague feeling of uncertainty in the markets. With overall strengthening economic data, there's concern the Fed is going to begin tapering back its massive monthly bond purchases, which is widely believed to be behind the nascent U.S. economic recovery.

The concern is warranted: Bernanke and company have made it clear they want to slow down quantitative easing as the economy improves. It's a double-edged sword. If the economy shows signs of improvement, there's fear Fed support for the economy will slowly begin disappearing, and investors will pull back.

But signs of continuing economic weakness mean the likely continuation of the Fed's easy money policies, keeping investors in the markets. So some weak manufacturing data released yesterday actually fueled the markets' rally.

Foolish bottom line
There's no breaking news for JPMorgan that's going to swing it one way or the other today. It will likely ride whatever wave the market throws at it. Often times, it's difficult if not impossible to ascertain the exact reason for a stock's daily move, which is why here at The Motley Fool, we stress a long-term view of investing.

Day to day, week to week, and even month to month, stocks can gain or lose for no seemingly good reason. Tune out the market noise and tune into the fundamentals of the companies you're invested in -- and leave the constant ticker checks to the day traders: Your portfolio will thank you, even if your broker won't. 

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