The world’s largest defense contractor, Lockheed Martin ( LMT ) is expected to bring in sales of more than $45 billion this year. Yet the whole company sells for about $29 billion. The low price is likely owed to two worries. First, like many companies with pension plans, Lockheed must make large contributions to offset last year’s market losses, Management expects to contribute $1 billion this year and $1.4 billion next year, up from $109 million contributed in 2008. But the stock market’s rebound this year might have reduced Lockheed’s pension shortfall, and in any case, more money set aside today means less that will be needed tomorrow. Second, the federal government is overspending its tax receipts by a margin that seems unsustainable, making cuts to discretionary spending, including on defense, necessary. But Lockheed brass sees sales increasing by 4% to 5% in each of the next three years. Perhaps the bosses are too bullish, but shares at 10 times earnings seem amply cheap. Go here to see the original: 3 Stocks Priced 50% Below the Market

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Trackback URL for this story: http://www.smartmoney.com/tb/Jdmt.2FdQ.3D What is a Trackback? It is a way to tell us that you have published something that references this story. How do I send a Trackback? If you blog or mention this story on your website, you can use this Trackback URL to notify us about it. Some blogging software programs can help in sending a Trackback to us. Click here to read more about Trackbacks. See the rest here: 12 Cheap Funds With Solid Track Records

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Stock analysts should carry pom-poms, for all the cheerleading they seem to do for the companies they cover. For S&P 500 companies, 49% of recommendations say “buy” and 44% say “hold.” Just 7% say “sell.” Perhaps analysts find S&P 500 companies or the broader stock market particularly attractive now, but the dearth of “sell” recommendations is nothing new. Maybe “hold,” as vaguely positive as it may sound (investors tend to hold stocks they like), has become an unlikely euphemism for “don’t bother to hold.” Whatever the case, analysts who go overtly negative usually seem to have good reason. Long-term studies show that “buy” recommendations have little predictive power, but that “sells” foretell underperformance more often than not. Analysts, you might say, can’t quite pick winners, but can sure spot stinkers. See original here: 3 Stocks Analysts Say to Sell

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Honeywell International ( HON ) makes industrial products for aerospace companies, home builders, manufacturers, car makers, among other customers. None of these groups is having a banner year, and so sales for Honeywell are expected to fall 15% this year. Early forecasts call for a sales rebound next year, but management is expected to spend $800 million or so to fund the company’s pension account, which will likely cause earnings to decline. There’s much to like about the company, though. Many of its products, including air conditioning systems and turbochargers, can reduce energy use and should see strong customer demand and perhaps even legislative support in coming years. Debt, apart from the pension obligation, is modest. Shares sell for just 15 times next year’s earnings forecast. And the dividend yield is over 3%. The rest is here: 3 Stocks With Plentiful Free Cash Flow

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With 620 restaurants, Buffalo Wild Wings ( BWLD ) is a little less than one-third the size of Applebee’s (which is owned, along with IHOP, by DineEquity ( DIN )) and a little more than one-third the size of Chili’s (owned by Brinker International ( EAT )). Sales for the two larger chains are expected to drop by double-digit percentages this year. Analysts forecast Buffalo’s sales for the year to increase 28%. What’s working? Analysts say the restaurant has separated itself from the bar-and-grill competition by becoming a hangout for sports fans. Two-thirds of sales come from wings and alcohol. Perhaps the big-game crowd is less budget-minded than families when it comes to meals out. Buffalo’s expansion efforts are aided by the company’s lack of debt and the tendency of its franchisees to earn healthy returns. Investors eyeing the stock today should do so cautiously, though, for two reasons. First, chicken wing prices are bizarrely high, recently topping even breast prices, likely because consumers are trading down from fancy dining to what they perceive as cheap eats. Buffalo has responded by pushing “boneless wings” (breast strips, really), but high wings costs are nonetheless crimping margins. Second, shares trade at a lofty 25 times forecast 2009 earnings. Go here to see the original: 3 Stocks With 25% Sales Growth

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This week we are concentrating on the industry’s small fry. You may be surprised to find out these funds actually constitute a majority of the offerings on the market. Indeed, of the 21,551 funds and share classes in our database, just over 17,000 hold less than $250 million each. We knocked out of contention the ones that charged a sales load and high annual fees. That left us with a list of 50 funds and from those we selected 12 that were actively run and featured decent long- and short-term track records. They are listed on the table below. See the original post here: 12 Tiny Funds Up at Least 25% in 2009

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To judge a dividend’s affordability, some investors compare the dollar amount of payments with some measure of how much money a company makes, like earnings or free cash flow. That’s a good start, but it has shortcomings. Earnings aren’t quite the same as real cash coming in. Free cash flow is, but it can swing wildly from one year to the next. Also, low payout ratios aren’t necessarily a promising sign. A 2003 study published in Financial Analysts Journal showed to the surprise of many (or at least, to the surprise of many finance nerds) that high payout ratios tend to predict faster earnings growth. And anyhow, sometimes companies with perfectly affordable payments cut them to fund acquisitions and such. See the rest here: 3 Stocks With Reliable 3% Dividends

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Green Star Alternative Energy (GSAE) is a demand driven, eco-energy company that concentrates its efforts on changing the way energy is produced. A bright future is dependent upon the appropriate actions of today – and Green Star is developing projects world wide to meet the global need for clean, environmentally friendly methods of energy creation. Green Star Alternative Energy Inc. is currently being carried by momentum.  The company currently has several great opportunities in the works with their wind farm development program.  Their value has doubled since September and at present moment, what with their current news releases and financial conditions, this stock is strongly recommended. Green Star Erects Wind Sensor at Ram

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If you’re going to search for upside surprises, though, look for big ones. While you’d think that companies would surprise pleasantly as often as they disappoint, and that the average results of many companies over many quarters would match forecasts, in fact, companies have since the 1980s grown gradually more likely to beat estimates. That suggests managers are either systematically guiding analysts too low, or tweaking the numbers during a close quarter to beat forecasts by a smidgen, or, as some studies suggest , both. Note that tweaking isn’t necessarily cheating. A manager might, say, slash research spending late in the quarter, to the detriment of long-term profits but to the aid of immediate ones. But the result is that companies that beat by a whisker while slashing crucial spending typically end up producing poorer stock returns than ones that miss by a little while making healthy investments in the business. Original post: 3 Stocks That Trounced Earnings Forecasts

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Charlotte, N.C.-based snack maker Lance ( LNCE ), founded in 1913, has long specialized in cracker sandwiches filled with peanut butter or cheese spread. The company bought Cape Cod potato chips in 1999 but struggled with stagnant sales in the early part of this decade. An irreverent radio ad campaign launched in 2003 around the phrase “I Got Lance in My Pants,” along with a short-lived invitation to customers to film and submit their own commercials featuring the slogan, somehow failed to ignite demand. However, over the past four years, the company has appointed new managers, tapped shipper UPS ( UPS ) for advice on delivery routes, overhauled its technology systems and bought a few new brands: nut specialist Tom’s Foods in 2005, cookie maker Archway last year and Stella D’Oro, another cookie concern, in October. In recent years, operating margins have crept from four cents of each sales dollar to five, and in recent quarters, to six. There’s room for further improvement; the industry average is eight cents on the dollar. Lance is still a small company, with less than $1 billion in yearly sales, and its brands have mostly regional (but not yet national) popularity, so opportunities for sales gains abound. The company hasn’t yet perfected the art of manipulating Wall Street’s forecasts to easily beatable levels, so once in a while it disappoints, as in its third quarter. But sales are still growing steadily and shares seem reasonably priced. See the original post here: 3 Stocks With Dividends and Growth Potential

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That said, by studying these funds investors can pick out trends — and then decide whether they have staying power or not. Over a dozen of the funds on our larger list are classified as emerging-market offerings. T. Rowe Price Emerging Europe and Mediterranean ( TREMX ), for instance, is up a whopping 113% this year. This concentrated fund invests over half its assets in Russia, 17% in Turkey and almost 7% in Egypt. Several Matthews funds concentrating on India, China and Korea are up big, too. These funds have benefitted from investors willing to take on more risk as the market shows signs of improvement and from the general rise in commodities prices. If either of those pillars is shaken, though, the returns could easily cool off. Visit link: 15 Funds on a 30% Run in 2009

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I mentioned Harley-Davidson ( HOG ) here just last week in a look at companies whose earnings are expected to double next year. That sounds like a promising attribute, but I view it as a negative one, because it makes for high expectations that are easily fallen short of. But Harley is at least building from a low base. Earnings this year are seen totaling just 42 cents a share. Next year they’re forecast to jump to $1.37 a share, mostly on aggressive cost cuts. That puts shares, priced at about $26 apiece, at 19 times 2010 earnings. But last year the company earned $2.79 a share and three years ago it earned close to $4. Again, a return to either level would prove shares cheap. Harley will soon have a smaller U.S. manufacturing presence it used to, because part of its cost-cutting plans involve closing a York, Pa., plant. It’s difficult to imagine hogs being built anywhere but the U.S., though, and about 30% of sales come from elsewhere.

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Bet on aging: People everywhere will reach a median age of 38 in 2050, up from 29 today, and rich countries by then will be closer to 50, reckons the United Nations. Among other things, that probably bodes well for sales of corrective lenses. Essilor International (ticker EF on Paris Stock Exchange) is the world sales leader in the lens business, with a market share of greater than 25%. Brands include Varilux, Transitions and Nikon. Europe contributes 45% of sales and the U.S., 42%. The company turns about 18 cents of each sales dollar into operating profit, versus 10 cents for the median S&P 500 company. Analysts expect Essilor to increase its sales 8% this year and 6% next year. One negative: At 20 times earnings, shares are priced merely in line with the U.S. and European markets at the moment, which is to say, they look a touch expensive.

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Trackback URL for this story: http://www.smartmoney.com/tb/JtCm.2FNM.3D What is a Trackback? It is a way to tell us that you have published something that references this story. How do I send a Trackback? If you blog or mention this story on your website, you can use this Trackback URL to notify us about it. Some blogging software programs can help in sending a Trackback to us. Click here to read more about Trackbacks.

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Here’s the recipe for a high-yield mortgage trust: Using securities as collateral, borrow heaps of money cheaply through overnight repurchase agreements, or repos, which currently cost less than 0.5% a year. Buy mortgage securities with the money you raise. You won’t get more than 5% at the moment, because even though mortgages seem risky, government-backed ones sell for a premium over their repayment value, which pushes yields well below the rates house buyers pay. Let’s say you get 4%. Interest rate swings can create havoc for investors in long-term, fixed-rate securities, a risk you must protect against. Hedge the portfolio using interest rate swaps at a cost of about 1.5%. Your 4% yield, minus your 0.5% borrowing costs and 1.5% hedging costs, leaves you with a 2% return. Multiply it several times over by borrowing well more than the value of your portfolio. Many mortgage trusts use seven to eight times leverage at the moment. Thus, the 16% yields.

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That said, if you are taking the mutual fund route, consider T. Rowe Price Financial Services ( PRISX ). We interviewed manager Jeff Arricale two years ago, just as the financial system was showing signs of cracking. He knows the industry intimately, but has struggled since our interview to keep the fund posting good results. Last year it lost 40%. (Not bad, considering the year.) However, the fund is up 33.5% year to date. Its top holdings include JP Morgan Chase  ( JPM ), Bank of America ( BAC ) and Wells Fargo ( WFC ).

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Based in Atlanta, Newell Rubbermaid ( NWL ) sells household products like Rubbermaid storage containers and Calphalon nonstick pans; office supplies like Sharpie markers and Paper Mate pens; and tools, like Lenox saw blades. With consumers cutting spending, offices cutting staff and builders finding less work, sales for the company are expected to tumble 14% this year. Management has aggressively cut costs and shuttered businesses with slim margins or little growth potential. Deutsche Bank ( DB ) analyst Bill Schmitz, who covers the stock with a “buy” recommendation, wrote to clients in mid-September that the company is “turning a long corner,” and that it’s poised for significant improvement in profit margins once sales growth returns. The company halved its dividend rate in March to 20 cents a year, paid quarterly. Its current yield is 1.3%.

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First, there’s price/earnings, long suspected of predicting stock performance, but first shown conclusively to do so in a study by Sanjoy Basu in 1977, once computers had made the job easier. Price/sales, far less subject to accounting subjectivity than P/E, came out the winner in James O’Shaughnessy’s 1998 comparison of stock-picking measures, called “What Works On Wall Street.” In a 2000 paper, Joseph Piotroski, then an accounting professor at the University of Chicago, found that low price/book-value stocks beat the market by six percentage points a year over 20 years ended 1996 (or a whopping 13 points a year, once the stocks were further screened for nine other promising financial attributes). I used price/free-cash-flow, too, because unlike pure accounting measures, real cash coming in denotes financial strength, something particularly important when financing is tight, as it is now. I also used dividend yields because studies by the likes of Robert Arnott, former editor of Financial Analysts Journal, suggest reinvested dividends, not price gains, form the bulk of stock returns over long time periods.

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