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Updated: 3 hours 33 min ago

California Water Service Group: A Self-Justifying Utility Stock

25 Sep ’14

Headquartered in San Jose, California, in the United States, California Water Service Group (NYSE:CWT) operates in the utilities industry along with its subsidiaries: California Water Service Company (Cal Water), New Mexico Water Service Company, Washington Water Service Company, CWS Utility Services, HWS Utility Services and Hawaii Water Service Company, Inc. California Water Service Group is involved in the production, purchase, storage, distribution and sale of water for domestic, industrial and irrigation uses. The company also provides water services for fire protection. CWT serves over 475,100 customers in 83 communities in California; 16,000 customers in Tacoma and Olympia, Washington; about 4,200 customers on the islands of Maui and Hawaii; and nearly 7,600 customers in the Belen, Los Lunas and Elephant Butte areas in New Mexico.

In this report, I will focus on several factors that make California Water Service Group a safe investment. I will also be discussing the company's future

Rubicon Minerals: Here's Why I'm Buying

25 Sep ’14

Rubicon Minerals (NYSEMKT:RBY) is an advanced stage gold development company which is focused on bringing the high-grade Phoenix Gold project into production by mid-2015. The company's project is fully permitted for initial production at 1,250 tonnes per day and should produce 165,000 ounces of gold on average per year at all-in sustaining costs of just $870 per ounce.

In addition, the company also owns and controls 100 square miles of exploration land in the prolific Red Lake gold district, which also hosts Goldcorp's (NYSE:GG) world class Red Lake Mine, as well as 350 square miles of mineral claims in Nevada.

With its Phoenix project mostly funded towards production and fully permitted, a high-grade gold resource base with 3+ million ounces of gold, projected all-in costs less than $900 and huge exploration upside at Phoenix which could push it to the 4-5+ million ounce level, I think Rubicon Minerals is a

Why You Should Consider Selling Your TIPS Holdings

25 Sep ’14

iShares Barclays TIPS Bond (NYSEARCA:TIP) could continue to weaken as rising Treasury rates and falling consumer prices weigh on inflation expectations. Treasury bonds have been under pressure recently, pushing up yields, as the Federal Reserve is expected to begin raising short term rates by next summer. Meanwhile, U.S. consumer prices fell for the first time in nearly one and a half years in August, underlying that inflation is still muted. The TIPS bond ETF has fallen alongside the news, and could see further declines as higher rates continue to pressure consumer prices.

Fed Chair Janet Yellen said last week that the central bank's bond-purchases program would likely conclude in October, then the next phase would be to raise short term rates. Although Yellen reiterated that rates would stay ultra-low for a "considerable time" after a bond-buying stimulus program ends, improved economic data the past few months led many to

Carsales.Com Expanding Into Big Asian And South American Car Markets

25 Sep ’14

(Editor's Note: Investors should be mindful of the risks of transacting in illiquid securities such as CSXXY. Carsales.Com's listing in Australia, CRZ.AX, offers stronger liquidity.)

Carsales.Com (OTCPK:CSXXY) is now the number one car sales search website in Australia with annual revenue of $208.7 million and net profit of $95.5 million. It is not involved in the actual vehicle sales, but acts as a site to bring buyers and sellers together.

In addition, it offers complementary sites for other vehicles like motorcycles, recreational caravans and boats, but by far the most revenue generation comes from autos.

Since listing on the Australian Stock Exchange in 2009, net profit has more than doubled with a compound annual growth rate of 21.9%. Due to it not holding inventory like an auto dealer or other items in stock, net profit margin is usually 38% - 40%. Likewise return on equity is in the high 40s

How You Should Prepare For The Fed's New Monetary Policy

25 Sep ’14

How are you planning to adjust your portfolio as the Fed changes its monetary policy?

I just got back Sunday afternoon from our Total Wealth Symposium in Panama. I had space for just one workshop while I was there, and given the anticipation over rising interest rates, I decided to advise our attendees on how to prepare for the Fed's market manipulation.

This discussion grows increasingly important, because as Jeff Opdyke and I have noted, the Fed is on the cusp of entering into a new era - an era of rising interest rates, albeit at a very muted pace.

As long as you understand that, you can better prepare yourself today.

It all comes down to a correlation Jeff shared with his readers of the Sovereign Investor monthly newsletter in June's issue. The correlation, as simple and obvious as it may seem, explains so much about the future

A Smooth Exit From Stimulus Should Be Impossible

25 Sep ’14

The Federal Reserve does its absolute best to, after having taken markets higher, guarantee that when it stops the monetary stimulus they won't come back down. However, this ought to be impossible. I will explain why.

The asymmetry

First of all, the Federal Reserve is incredibly asymmetric in its policies when it comes to the markets, namely the stock market. In the latest round of QE, it took it one second to start buying $40 billion per month in treasuries and MBS. And it took just another month for it to start buying a further $45 billion per month, since the markets didn't start going up right after the first $40 billion.

Now, look at how it stopped printing:

  • First, it took an entire year to stop, in $10 billion increments;
  • Even then, it left the $15 billion slug to the very last meeting;
  • Plus it will end in October,

Monitise's Move To Subscription Model Will Require Transition

25 Sep ’14

By Clayton Browne

A September 24th blog post from BTIG Research's Mark Palmer suggests that mobile payment firm Monitise's (OTCPK:MONIF) switch from a one-time license fee business model to a subscription-based model might eventually work out well based on Adobe Systems' (NASDAQ:ADBE) similar transition over the last couple of years.

Monitise has lost over one-third of its market cap over the last week as investors are bailing out over concerns about competition and the fact that Visa Inc (NYSE:V) is "considering its options" in disposing of its 5.5% stake in the firm.

Statements From Monitise Co-CEOs

New co-CEO Elizabeth Buse is excited about the move to a subscription model. "If Monitise had not changed its business model, I would not be here," said new Buse, who came to Monitise this summer after 16 years with Visa, where she was once considered a top CEO candidate. "I am here because I

Update: I Was Definitely Wrong About Gold Reserve As The Award Is Larger Than I Thought

25 Sep ’14

Excellent news for the shareholders of Gold Reserve (OTCQB:GDRZF), as the ICSID has announced it is ordering Venezuela to pay the company a total amount of $740M after it confiscated the company's most important asset. As the total compensation for the project itself is $713M, I definitely have to admit my estimates in my earlier article were dead-wrong as the compensation came in at twice as much as what I was expecting. I was wrong, and the Gold Reserve shareholders were right.

I am surprised to see the share price didn't move that much, which seems to be a sign that the market doesn't believe Gold Reserve will be able to effectively collect the $740M from Venezuela. I would think that collecting the money would actually be easier than winning the arbitration procedure, as Venezuela really has no choice here. If it wouldn't pay the settlement it would be defaulting

Gold And U.S. Monetary Policy

25 Sep ’14

Treesdale Partners, portfolio manager of the AdvisorShares Gartman Gold/Euro ETF (NYSEARCA:GEUR), AdvisorShares Gartman Gold/British Pound ETF (NYSEARCA:GGBP), AdvisorShares Gartman Gold/Yen ETF (NYSEARCA:GYEN) and AdvisorShares International Gold ETF (NYSEARCA:GLDE), share their thoughts about the gold space.

In this week's Gold Report we conduct a historical analysis of the impact of US monetary policy announcements on the price of gold in US dollars. Beginning with the Federal Reserve's extra-ordinary 75 basis point Fed Funds rate cut in January 2008 and the most significant central bank policy announcements since, the analysis looks at the resulting reaction of the gold market and the US 10 year real yield over a three month period. In previous reports we have looked at the relationship between the gold price in dollars and the real 10 year interest rate and found a strong inverse relationship between the level of the real interest rate and the level of the

Ruger Innovation Continues, But You Can't Beat The Cycle

25 Sep ’14

Since 2008, gun sales have seen two distinct bullish cycles. The latest cycle, spurred by the 2012 election and the tragedy at Sandy Hook, is winding down. Although it may have seemed like firearm and ammunition sales would forever defy gravity, the industry has historically been cyclical. From Bloomberg, "Requests for criminal background checks for gun purchases, a gauge of interest in firearms, averaged 1.75 million a month in 2014 through July, according to U.S. Federal Bureau of Investigation data, down 3.8 percent from a year earlier." Most ammunition has returned to the shelves of dealers and is available at normal retail prices, with the notable exception of 22 caliber long rifle and 380 ACP. Some ammunition, such as .223 Remington or 5.56 are even being discounted now. Can innovation allow growth in this cyclical industry?

One of the drivers of growth recently has been new women gun buyers

Why You Should Take Charlie Munger's Secret To Success Seriously

25 Sep ’14

By Tim Melvin

Charlie Munger once described the secret of success as "take a simple idea and take it seriously."

While that can be applied to many aspects of life, it is nowhere more important than in the stock market. The one simple rule to succeed in the markets doesn't involve fancy chart patterns or 42 factor financial models to implement.

It is not necessary to have an in-depth knowledge of quantum mechanics or advanced physics. It is the simple philosophy and approach that lies at the heart of many of the great fortunes made by the greatest of our time.

Buy undervalued securities, and sell overvalued ones. It is a very simple idea that is often paraphrased as "Buy Low, Sell High."

Many will point out that Mr. Munger is best known for getting Warren Buffett to start focusing on great companies at good prices, as opposed to just

SanDisk Is A Worthy Buy

25 Sep ’14

SanDisk Corporation (NASDAQ:SNDK) announced the world's fastest micro SD memory card, the 64GB SanDisk Extreme Pro micro SDXC UHS-I card. To remain one step ahead of its competitors SanDisk also introduced the 512GB SanDisk Extreme Pro SDXC UHS-I card, the world's highest capacity full-sized SD memory card. The demand for flash memory storage is likely to increase at a fast pace because 4K ultra HD video resolution requires enormous amounts of memory and SanDisk has prepared itself to take advantage of this situation as more devices capable of recording 4K video become available.

SanDisk's earnings growth is impressive and the company is able to boost its profit margins through its solid product portfolio and strong market position. SanDisk has shown decent revenue and earnings growth and for the third quarter the company expects to generate $1.68 billion to $1.73 billion in revenue. In the second quarter of 2014, SanDisk's revenue

EVs Winning Is Not The Same As Tesla Winning

25 Sep ’14

When Tesla (NASDAQ:TSLA) is the subject, often the debate turns into the relative merits of EVs (Electric Vehicle) and ICEs (Internal Combustion Engine). For Tesla supporters, it's as if EVs winning would be the same as Tesla winning.

Sometimes, even Elon Musk's intention to accelerate EV adoption is brought to the fore. Were such a thing to happen, Tesla supporters seem to think, and for sure Tesla would be a winner.

Such couldn't be farther from the truth. If EVs win in any meaningful way, then Tesla would have a giant problem. The reason is simple: traditional carmakers, which would be forced to compete directly with Tesla if EVs won clearly and early, are much more efficient than Tesla at producing cars. And not only are they much more efficient, but they also produce those cars with higher quality.

So, if Tesla was put into direct competition with these much

Infosys Vs. Accenture On Key Environmental And Social Metrics

25 Sep ’14

By Kate Schrank, J.D., Founder and CEO of Sustainability Partners, Inc. (SPI), ESG Analyst | Sustainability Practitioner| Strategist | Former Corporate Environmental Attorney.

ModernGraham recently identified Accenture (NYSE: ACN) as appropriate for Enterprising Investors, and Infosys (IN: INFY) as appropriate for Defensive or Enterprising Investors. As a potential investor, now I want to know how well these two global professional service enterprises perform beyond the financial metrics, by examining their environmental, social and governance (or ESG) or sustainability performance.

Why Do Investors Value ESG Data? There is a growing body of evidence of a strong link between long-term financial performance and sustainability performance from trusted sources like Deloitte, Harvard Business Review and Global 100. See this white paper (p. 5/9) for links to these sources. Also, this summer IR magazine published the results of a study by New Amsterdam Partners that concluded that investors could improve their returns and lower

Burlington Stores Continues To Look Like A Winner

25 Sep ’14

Shareholders in off-price retailer Burlington Stores (NASDAQ: BURL) are likely enjoying the ride in 2014, with the company's share price up more than 20%, thanks to solid growth in its adjusted operating income, up 18.9% in the first six months of FY2014. The company has benefited from an uptick in its operating margin, a trend that management has attributed to reduced promotional activity, as well as greater cost efficiencies in its supply chain. In addition, Burlington Stores has continued to gain traction from higher customer traffic flows, which helped it to post a comparable store sales gain of 3.6% during the period, positively impacting its average store productivity. After a solid stock price run, though, is the company a good bet for investors?

What's the value?

Burlington Stores is a major player in the off-price retail space, operating a network of more than 500 stores around the country, mostly

Stay Far Away From Bitcoin

25 Sep ’14

By Thom Lachenmann

As more and more retailers announce that they're going to be accepting Bitcoin (Pending:COIN) for purchases, we once again need a reminder that the "currency" isn't really a currency at all. We got that reminder this week when it made headlines that Bitcoin's value continued its drop that has been taking place over the last three months steadily.

(click to enlarge)

The news of Bitcoin losing its value comes as the geopolitical climate around the world continues to be unsteady. The U.S. dollar has been on one of its best rallies in history over the last few months. While markets are taking the news in stride thanks to the U.S. Federal Reserve, Bitcoin has continued to show weakness.

We believe this fall off to be attributed to a lack of confidence in the new payment method. Bitcoin defenders have made other excuses over the last couple of

Suncor Is A Better Dividend Growth Stock Than Either Exxon Or Chevron

25 Sep ’14

Suncor Energy (NYSE:SU) is the largest Canadian energy company and is the most prominent player in the oil sands. Suncor increased its dividend significantly over the past couple years and the stock now yields 2.7%. While it is dwarfed by larger U.S. based rivals Exxon Mobil (NYSE:XOM) and Chevron (NYSE:CVX), Suncor has become an intriguing company for dividend growth investors. This article will evaluate Suncor against these two competitors and from a dividend growth perspective.

Although Suncor owns several international assets and some conventional oil and natural gas production, the majority of its revenue stems from Canadian oil sands production, refining and marketing. It owns stakes in some of the largest oil sands projects in the country, including 12% of Syncrude, the largest energy project in Canada. Through its acquisition of Petro-Canada in 2009, Suncor has also become a major North American player in energy refining and retailing.

Over the

Apple Short Interest Has Skyrocketed - Negative Headlines Could Add To It

25 Sep ’14

Apple's (NASDAQ:AAPL) iPhone 6 and iPhone 6 Plus became available for sale September 19th. The new, larger iPhones have been flying off the shelves. In fact, over 10M iPhone 6s were sold the opening weekend, smashing previous sales records, and reviews have been mostly positive. It sure doesn't sound like a good time to be short Apple, but apparently it is - the latest short interest report shows short interest increased over 30% from 96M shares on 8/29 to over 138M shares on 9/15. The short sellers were likely playing the extended ramp in Apple's share price, rising from $75 in April to over $103 at the end of August, and figured there would be a sell-off post launch. Toss in the "naked picture" security flap on 9/2 and a toppy market, and the short trade was making more sense. Below are 3 recent incidents that have created "headline risk"

Warren Buffett Hates Gold, But His Arguments Against It Are Weak And Inaccurate

25 Sep ’14

Warren Buffett is considered one of the greatest investors of our time, if not the greatest. I like his style of investing: buy value, buy assets that are out of favor, if you don't find what you want then wait. If you love a stock at $10 and it goes down to $8, then you should love it even more. These are all basic principles of investing, but you would be surprised at how few people follow these.

I'm a believer in gold, it has performed extremely well over the last 15 years, even when you factor in this current downtrend. I think owning the SPDR Gold Trust Shares (NYSEARCA:GLD) or physical gold is a good investment. Warren Buffett on the other hand doesn't care for it at all. A recent article titled "Why Warren Buffett Hates Gold" pretty much sums up his feelings for it.

I have read Buffett's

Expectations For Accelerating Earnings Growth To Push SolarWinds Higher

25 Sep ’14

SolarWinds (NYSE:SWI) is executing its growth strategy ahead of expectations as the company ramps up spending in order to increase its product offerings and capture market share. The efforts are paying off and SolarWinds' share price is up 30% from my November 2013 article. Recent developments further strengthen my long case for SolarWinds, and I am raising my price target from $54 to $56.5, which represents 30% upside from the current price. I continue to believe that the downside should be limited to around $40, while the maximum downside should be limited to around $34. The more bullish scenario that I will present in this article assumes multiple expansion on expectations for margin expansion and accelerating earnings growth in the next couple of quarters which could bring SolarWinds' share price above $70 in the next 12 to 24 months.

Q2 highlights

SolarWinds delivered Q2 revenue and earnings ahead of