By David Sterman

Investing in an undervalued high-growth play brings an inherent challenge. Shares are usually undervalued because the near-term growth prospects aren't as bright as the long-term prospects. This was the biggest risk factor I laid out when I added Cree Inc. (Nasdaq: CREE) to my $100,000 Real-Money Portfolio.

"Cree isn't a

My CVS Caremark (CVS) pick continues to gain since I first presented my bullish outlook on the firm. It has risen 3% within a little more than a month since I last reiterated buying the stock. The firm continues to be rated near a "strong buy" on the Street versus a "hold" for Walgreen (WAG). Based on my multiples analysis and DCF model, I continue to find that CVS will outperform its competitor.

From a multiples perspective, Walgreen is the cheaper of the two. It trades at a respective 11.7x and 11.5x past and forward earnings with a dividend yield of 2.6%. CVS may trade at 17.2x and 13.3x past and forward earnings, but it has a free cash flow yield that is 370 basis points higher than that of its competitor at 7.8%.

At the fourth quarter earnings call, CVS' CEO, Larry Merlo, noted strong performance:

We're obviously very

Q4 2011 Earnings Call

February 14, 2012 8:30 am ET

Executives

Randall J. Weisenburger - Chief Financial Officer and Executive Vice President

John Wren - Chief Executive Officer, President and Director

Analysts

James Dix - Wedbush Securities Inc., Research Division

John Janedis - UBS Investment Bank, Research Division

Alexia S. Quadrani - JP Morgan Chase & Co, Research Division

Tim Nollen - Macquarie Research

Anthony J. DiClemente - Barclays Capital, Research Division

David Bank - RBC Capital Markets, LLC, Research Division

Craig Huber

Michael Nathanson - Nomura Securities Co. Ltd., Research Division

Daniel Salmon - BMO Capital Markets U.S.

Presentation

Operator

Good morning, ladies and gentlemen, and welcome to the Omnicom Fourth Quarter 2011 Earnings Release Conference Call. [Operator Instructions] As a reminder, this conference call is being recorded. At this time, I'd like to now introduce you to today's conference call host, Executive Vice President, Chief

By Stuart Burns

Maybe it would be unkind to suggest Boeing (BA) will be reading the developing story of Airbus’ A380 wing-crack problems with glee — all airlines suffer issues of this type at some time — but rarely has Boeing and Airbus’ rivalry been so intense, or the counter claims of government subsidies been so bitter. Nevertheless, Airbus has moved swiftly to minimize the PR damage, ensuring plenty of information was made available regarding the nature, extent and solution to the cracking issue.

For anyone not following the unfolding events, it started back in November when the Rolls Royce engine on a Qantas A380 failed rather spectacularly in mid-flight, sending shrapnel through the wings. According to the Telegraph, subsequent inspections during the repair process showed the presence of tiny cracks in an L-shaped bracket that connects the wing’s exterior to the internal “rib” structure.

Last month the European Aviation

What follows is a list of strong brand name media businesses that have strong upside and limited downside. The Street is least bullish about Walt Disney (DIS), but I find this sentiment unwarranted given management's strong execution and diversification. Although I find the least upside for Disney, I believe that it is the safest of the three from the effects of a double dip.

Walt Disney

Disney is rated a "hold" on the Street and trades at a respective 16.5x and 12.5x past and forward earnings with a dividend yield of 1.5% and a free cash flow yield of 4.6%.

Consensus estimates for Disney's EPS forecast that it will grow by 17.3% to $2.98 in 2012 and then by 13.8% and 13.3% in the following two years. Assuming a multiple of 14x and a conservative 2013 EPS of $3.32, the rough intrinsic value of the stock is $46.48, implying 12.1%

"We are a great company, we execute extremely well, our financials are in order, we are fundamentally sound, the future looks extremely bright and you should consider investing on our company for the long term."

The quote above is something that every CEO in America would love to either start with or be the end statement of each quarterly conference call. For the most part, each of the of the above bits are often hinted upon during each earnings announcement and typically left up to the listener to decide that the financial information that they have just heard is often leading to or suggest that the current status of the company is as described above.

That takes a lot of work for the company to carefully craft a statement to be both factual in its disclosures yet provide such glowing allusions. At the same time, it requires an equal amount

Q4 2011 Earnings Call

February 14, 2012 9:00 am ET

Executives

Karen King -

Thomas E. Werner - Chief Financial Officer and Senior Vice President of Finance

Sumant Ramachandra - Chief Scientific Officer and Senior Vice President of Research & Development & Medical Affairs

Analysts

Gregory B. Gilbert - BofA Merrill Lynch, Research Division

Ami Fadia - UBS Investment Bank, Research Division

Louise A. Chen - Collins Stewart LLC, Research Division

Marshall Urist - Morgan Stanley, Research Division

David H. Roman - Goldman Sachs Group Inc., Research Division

Christopher Schott - JP Morgan Chase & Co, Research Division

Matthew Taylor - Barclays Capital, Research Division

Presentation

Operator

Welcome to Hospira's Fourth Quarter and Full Year 2011 Conference Call. [Operator Instructions] I will now turn the call over to Karen King, Vice President of Investor Relations. Karen, you may now begin your conference.

Karen King

Thank you. Good morning,

The commodity market, especially for steel, after the US financial meltdown, was being driven by Chinese demand. Last year, steel and scrap prices experienced a sharp declining trend, which has now reversed to some extent. US sheet prices have recently outperformed the rest of the world and appreciated more than the appreciation witnessed by iron ore. However, trading at a premium leaves little room for further appreciation. We have a cautious stance on the US steel market due to the mixed signals received from various ends.

U.S. carbon sheet prices are expected to trade flat in the near term. Imports are now hurting the U.S. Steel producers due to an increased price differential between local and imported steel. Moreover, the recent strengthening of the US dollar is likely to turn competition in favor of importers. Increased imports and consistent local production will lead to an excess supply which may not

There was a lot of Linsanity this past weekend. Monday we saw what the market thought of Jeremy Lin's 38 point game against the Lakers on Friday night, followed up by a 20 point performance on Saturday. Lin has led the Knicks to five straight wins, made even more amazing because the team's two best players, or what was perceived to be its two best players, have been out during this streak. Lin hasn't just revitalized the team, which was struggling through a poor season, and his coach Mike D'Antoni, who just a week ago was faced with rumors he would be fired, but he has fired up the fan base.

For those of you living under a

Banro Corporation (BAA), a Toronto-based gold mining firm, is on track with its scheduled full capacity production at its Twangiza project in the Democratic Republic of Congo, which is located in Central Africa. The company has a market capitalization of over $860 million, as of January 20, 2012, and it sits well below the industry average based on its relative valuation, which is the key valuation metric used in the mining sector.

After two years of construction of the mines and facilities, the company began production in late 2011. The Twangiza project is designed to produce 120,000 ounces of gold a year on average as noted on the company's website here.

"Following Twangiza's first gold pour in October 2011, the mine and plant continue to gear up to full commercial production. The addition of two CIL (carbon in leach) tanks in the second half of 2012 will bring the mill

Companies that don't have leverage are often said to be stable. When a company doesn't have to worry about meeting interest payments, it can spend more time focusing on the operations of the business. No debt also means that bondholders are no longer in the picture, so the companies will do their best to return capital back to shareholders. The following five companies have no debt.

Bed Bath & Beyond Inc., (BBBY), together with its subsidiaries, operates a chain of retail stores. It sells a range of domestic merchandise, such as bed linens and related items, bath items, and kitchen textiles.

Bed Bath & Beyond is a well run company. While the company may be a big box retailer, its not feeling the pinch like other big box companies. The company has grown revenue by 20% during the recession and increased margins. The company has $1.5 billion in cash, which

Retail sales rose 0.4% last month, the government reports. That’s below what many economists were forecasting, but predictions aside there’s nothing particularly troubling with the latest numbers. Indeed, the revival in January’s retail sales growth after December’s sluggish pace is welcome news.

But there’s always something to worry about, of course, especially these days, and one potential dark cloud is the slowdown in the year-over-year trend in consumption. Granted, the annual rise in retail sales is still quite robust, but it continues to decelerate. On the other hand, looking at January’s numbers suggests that the American consumer remains willing and able to buy. If we consider the latest retail sales update with other economic reports of late—the surge in transport activity, for instance, as Ed Yardeni notes—the case for expecting moderate economic growth in the

At the conclusion of each week, VFC's Stock House examines the stocks and stories that made news through various sectors during the previous trading week, but may also make headlines or influence trends during the upcoming week as well.

A modest pullback on Friday capped off a recent solid run fueled by encouraging jobs data, but some still argue that the new job growth is not enough to justify a general turnaround in economic indicators.

Global tensions are also still in full swing, with the threat of an Israeli strike on Iran and a total meltdown in Syria dominating the recent international press, as well as the continued economic calamity in Greece.

All in all, it should be another exciting week for the traders, with an eye towards some of these stocks:

InVivo Therapeutics (NVIV.OB): Shares of InVivo Therapeutics are moving again after having retreated back to the two dollar

Falling natural gas prices (NG) have impacted a wide array of stocks, stretching further than just traditional natural gas producers. Beneficiaries of lower NG prices are utilities and pipeline stocks, but coal producers and railroads have begun to feel the pinch of lower prices. Long-term gas supply looks abundant, and short-term unseasonably warm weather has only exacerbated the NG over supply situation. Natural gas prices appear as if they will stay low for the foreseeable future, and there will be both winners and losers of this trend.

Approximately twenty percent of U.S. utilities rely upon natural gas as their energy source. Though coal is also a cheap and abundant resource at their disposal, increasing government regulation and more consistently available inexpensive NG will allow utilities to structure their businesses around natural gas going forward. In the short-term, many utilities have the ability to switch to NG when prices decline relative

In 2011, when biotech Geron Corporation (GERN) halted its work and FDA-approved clinical trial on spinal cord research using human embryonic stem cells in patients, they left a gaping hole, confusion and disappointment for many investors and patients with spinal cord injury (SCI). The decision had been pegged as purely a financial one as the company said it wanted to focus on developing cancer treatments instead. But before the trial was ended, Geron had injected stem cells into the spine of a small number of spinal patients to test safety. In its statement the company said the treatment had been "well tolerated with no serious adverse events". The man who led Geron's effort towards spinal cord research was Dr. Edward Wirth M.D., Ph.D. At Geron, Dr. Wirth spent 7 years as Medical Director, Regenerative Medicine, where he led human clinical trials of the application of human progenitor cells to spinal

Emerging market ETFs were hailed as a must buy for all portfolios after 2010 watched a number of these product produce eye-popping returns. But last year had other things in mind, as the majority of these products felt the pinch of volatile markets and endured a hefty slide. The combination of euro woes along with negative economic indicators in the US, namely the downgrade in our credit quality, shattered investor confidence in these investments as their prices entered a dangerous nosedive. Among the biggest losers was India, the world’s second most populated country [see also Doomsday Special: 7 Hard Asset Investments You Can Hold in Your Hand].

A key member of the BRIC, India has long been one of the world’s premier growth stories, though it often falls in the shadows of China, which has also been experiencing growth at an astounding pace. 2011 was an especially tough year for

Its tough to imagine casino companies doing well in this economy. However, they are doing just that. The reason is not because of Las Vegas, but due to Macau. Macau has actually surpassed Vegas in gambling revenue and growth continues to accelerate. The following four companies are in a prime position to profit from this boom.

Las Vegas Sands Corp. (LVS), together with its subsidiaries, owns, develops, and operates various integrated resort properties primarily in the United States, Macau, and Singapore.

CEO Sheldon Adelson has done a great job of turning around the company from the brink of bankruptcy. The Venetian Macau is doing very well. The company has generated plenty of free cash flow and has even instituted a dividend. This year the company will pay about $800 million in dividends to shareholders. The stock has a forward P/E of 17.

MGM Resorts International (MGM), through its subsidiaries, primarily

Referencing the weekly homework and stock radar, I am highlighting a few of the charts below for potential trades in undervalued stocks.

As expected, The "Greece is saved" theme continued yet again. Stocks bounced back on Monday as Greece finally approved austerity plans late Sunday. The next test for the plan is a vote on Wednesday from the European finance ministers. They will vote to approve the bill.

I'd be interested in the statistical data for how many times our markets have run-up from similar type news over the past year. Wednesday's vote from the European finance ministers to approve the bill creates another catalyst. This means we could see yet another "Greece is saved" move up in the markets, so be prepared.

The concerning part for the bulls is that today was reported as the lowest volume day in a decade for a non-holiday. It is hard to create

Cisco (CSCO) reported Q1 FY 2012 earnings recently, and this is a great opportunity to evaluate how Cisco's restructuring is doing. The short answer - not bad. The longer answer - not bad, assuming a few things.

Representative of its last few quarters, Cisco's earnings were a testament to how massive shifts in industry trends are affecting Cisco's business. Essentially, Cisco now has four main profit drivers: its core business - routing, switching and associated services (which includes comprehensive security and mobility solutions), new products (which includes solutions for wireless, collaboration, video, data center virtualization and cloud, and architectures for business transformation), services, and "other" (consisting primarily of optical networking products, emerging technologies, such as physical security and video surveillance, and digital media systems).

Revenue from routers and switches is in decline across most consumer and commercial markets, and enterprise markets are not doing much better. However this

Utilities are one of my favorite areas of the market. Although the stocks of these companies generally do not demonstrate much in the way of capital appreciation, the regulated utilities have geographic monopolies and what amounts to guaranteed profits and return on equity. In this article I analyze my best ideas for hefty dividends and some potential appreciation.

CH Energy Group (CHG): CH Energy Group is currently in a well established upward trend that has carried it from $48 per share a year ago to over $57 per share as of today. In addition to this capital appreciation the company also pays out a dividend of $2.22 per share bringing the dividend yield in at 3.8%. This dividend is paid out on a consistent basis. The payout ratio on the dividend is 59% of the company's earnings which is in line with the industry average of 60%. The company's closest

Should the investors of the Huber Capital Equity Income Fund (HULIX) be dancing the hula? Certainly there is cause to celebrate: HULIX is rated very highly, earning 5s (the highest score) for total return and consistent return from Lipper. Morningstar also rates the fund highly, giving it 5 Morningstars.

Unfortunately, HULIX is no day at the beach. The mutual fund charges investors 1.49% in fund expenses. Do investors need to pay such high fees for a renowned portfolio?

Instead of outsourcing portfolio construction by purchasing this fund via shares HULIX, investors can boost their returns by purchasing the fund's dividend-paying stock holdings directly. Buying directly sidesteps the fund's recurring annual expenses by paying trading costs and broker fees only once. This fund replication strategy allows retail investors to benefit from portfolio manager research and stock selection for free.

Consider the following 12 HULIX holdings summarized below:

American Electric Power Co.,

By Brendan Gilmartin
Overview

Deere & Co. (DE) is slated to report 1Q 2012 earnings before the opening bell on Wednesday, February 15. Results will follow with a conference call at 10:00 a.m. The actual results are typically available via press release at 7:00 a.m. EST. Given Deere's size and influence as an industrial bellwether, the results have the potential to impact the broader market gauges, including the S&P Futures, particularly if results are way out of line in either direction.

Outliers & Strategy

Key measures:

• Earnings Per Share: Deere typically reports a "clean" number that is comparable to consensus. The Street is currently looking for EPS of $1.23. The range is $1.05 - $1.35 (Source: Yahoo! Finance). Last quarter, the company delivered earnings of $1.62 per share, handily topping the consensus of $1.43.
• Revenue: Revenue is seen rising 17.6% to $6.49 bln. The high end of the range is

The Overview

It's not everyday that the athletic prowess of a single person propels an entire company's shares to record highs. Then again, its not everyday that a Jeremy Lin comes by. Jeremy Lin, now the starting point guard for the New York Knicks, has reinvigorated the New York Knicks franchise. He was an instrumental playmaker in the Knick's five consecutive wins, the longest of the season, a fact made even more astounding considering Knicks heavyweights Carmelo Anthony and Amare Stoudemire were absent for most of the run. As Marley Seamen, AP Business Writer, notes, the combination of Lin's role as the first NBA Asian-American player, a devout Christian, and a Harvard graduate has resulted in "Linsanity" gripping the entire league. Investors have taken notice: shares of The Madison Square Garden Co. (MSG) have gradually trended upward until they soared 3.69% to $32.30, an all-time high, on Monday. MSG is

2011 was a year of extreme volatility."High-quality" companies significantly outperformed the market. Here we review our 2011 results and describe our road map for 2012 which, unfortunately, we expect to look a lot like 2011.

"It's déjà vu all over again."
--Yogi Berra

2011 was a frustrating year. In late 2010, we predicted an expectation for volatile and range bound markets. Then, we explored just how fragile the economic recovery has been. Throughout the year, we made the case that "high-quality" companies would outperform the market. High-quality companies were modestly cheap (on an absolute basis) and significantly cheaper than the overall market (on a relative basis). In addition, these companies have far stronger business characteristics than the "market." In the end, high-quality companies outperformed the overall market by a sizeable margin no matter how you look at it.[1] The lowest 2011 return on the various high-quality portfolios we track was

If I leave here tomorrow
Would you still remember me?
For I must be traveling on, now
'Cause there's too many places I've got to see
But, if I stayed here with you, girl
Things just couldn't be the same
'Cause I'm as free as a bird now
And this bird you can not change
And this bird you can not change
And this bird you can not change
Lord knows, I can't change

Bye, bye, baby it's been a sweet love
Though this feeling I can't change

But please don't take it so badly
'Cause Lord knows I'm to blame…

"Freebird" -- Lynyrd Skynyrd

In my last post, we discussed one of the most frequently asked questions: when to sell a stock. Sometimes, when we use options to gain exposure to the position and earn time premium, the decision is made for us. Like Lynyrd Skynyrd says, "don't take

I have yet to make up my mind on what direction the stock market is going to take next. But as high as all of the indices appear, the only logical direction to expect (one would think) is down. Except the market does not care what you or I think. There are stocks that should not be going up, but are. Yet on the flip side, there are those (less fortunate) that are losing ground on a daily basis when all logic and common sense suggest that they should be going up.

The point of all of this I'm realizing is that it's not worth the fight. What I'm realizing early on after having a chance to digest the volume of earnings that have been reported so far this year is that companies are feeling increasingly more comfortable with the prospects of not only the U.S. economic recovery, but also