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Archive for December, 2010

Dec

2010

Five reasons to invest in a Groupon IPO

by Ed Roven

I’m torn on Groupon’s reported IPO late in 2011 or early 2012 – especially now that it’s looking like Facebook could IPO in 2011, too. Of the two, my money would be on Facebook, but I’d seriously consider laying down some cash on a Groupon IPO. Here are five reasons why:

1) Groupon shot down buyout bids of $2 billion (from Yahoo!) and $6 billion (from Google) this year alone. That haughtiness shows that Groupon’s leadership knows they’ve tapped into a very special market with lots of room for growth.

2) Groupon’s expects sales of more than $500 million this year, according to Bloomberg. Not bad for a company that’s barely two years old!

3) Groupon has more than 35 million registered users, and they’re users who are in the habit of spending money at local restaurants and businesses. As that database of users grows, so too will Groupon’s ability to target ads to specific users and types of users based on their past buying habits.

4) Groupon’s valuation estimates have shot up more than 400 percent since April. That type of growth just doesn’t come around often. As the business expands into new domestic markets and around the globe, Groupon should be able to keep generating fresh sales even as companies like Twitter struggle to find viable revenue options.

5) Groupon produces results for local business owners – at least according to Groupon. Groupon claims that 90 percent of their “featured” local businesses ask to be featured a second time on the site. The best part of the model is that small business owners don’t have to shell out a penny up front. They make money when Groupon sells coupons. It’s a hard model to resist, even if Groupon keeps the bulk of the cash from the coupon sale.

Tags: Facebook, GOOG, Groupon, Twitter, YHOO
Posted in business ideas, IPOs, NASDAQ, tech stocks | No Comments »

Dec

2010

How to invest in rare earths stocks

by Fred Mason

China’s growing stranglehold on the production of commodities and metals like coal, iron ore, tungsten, antimony and tin give the Chinese government more control over foreign businesses than we might like to admit. And yet, it’s China’s control over heavy rare earth materials that really makes me nervous.

Consider this: China currently produces 99 percent of the world’s rare earths supply. It seems Beijing has realized it can exploit that control, too, by cracking down on illegal rare earths mining within the country and limiting exports abroad. On Tuesday, China’s commerce ministry announced its export quotas for rare earth metals will drop by 35 percent during the first six months of 2011.

Why does that matter? Because heavy rare earths are vital in the production or operation of high-tech goodies like iPhones, Blackberries, wind turbines and nuclear power plants.

Shares in rare earth stocks rocketed up on the news. Want to get in on the action? Here’s a short list of rare earths stocks:

Molycorp, Inc. (NYSE:MCP); +394 percent YTD
Rare Element Resources Ltd. (CVE:RES); +263 percent YTD
Neo Material Technologies Inc. (TSE:NEM); +68 percent YTD
Lynas Corporation Limited (ASX:LYC); +255 percent YTD
Medallion Resources Ltd. (CVE:MDL); +157 percent YTD
Ultra Uranium Corp. (CVE:ULU); +54 percent YTD
Fieldex Exploration Inc. (CVE:FLX); -15 percent YTD

Not interested in picking individual rare earths stocks? There’s at least one rare earths ETF that will help you diversify in the sector: the Market Vectors Rare Earth/Strategic Metals ETF (NYSE:REMX). The relatively new ETF launched in October and has risen 22 percent since then with a big chunk of the gains coming on Tuesday’s export news out of China. The ETF was up 7 percent yesterday.

Tags: FLX, LYC, MCP, MDL, NEW, rare earths, REMX, RES, ULU
Posted in base metals, ETFs, mining stocks, precious metals | No Comments »

Dec

2010

How to invest in palladium

by Fred Mason

Since it doesn’t end up in the news very often, individual investors rarely look to palladium as an investment option in the precious metals field. That could change in the coming year as 2010′s return on palladium (+83 percent YTD) has out-paced gold (+24 percent), silver (+71 percent) and platinum (+16 percent YTD).

Why the spike in palladium?

Of the big four precious metals (gold, silver, platinum and palladium), platinum and palladium are closely tied to economic development. Since both metals are used extensively in the production of catalytic converters for automobiles, they do well when economies are expanding (think China and India). Palladium could also see increased investor demand thanks to new ETFs and plans by the U.S. Mint to start producing American Eagle palladium bullion coins.

How can I invest in palladium?

There are a handful of ways to legitimately (and fairly safely) invest in palladium:

Buy palladium bullion coins
Buy stock in a palladium ETF (exchange-traded fund)
Buy stock in a palladium mining or palladium recycling company

Where can I find palladium bullion coins?

U.S. President Barack Obama signed a bill into law on Dec. 14, 2010, that would “authorize the production of palladium bullion coins” by the U.S. Mint. No word yet on when the palladium bullion coins will hit the market. Expect them to be a hot commodity, though, if for nothing else than owing to their scarcity.

After being discontinued in 1999, the Canadian Mint started producing its Palladium Maple Leaf one-ounce palladium bullion coin again in 2005. Individuals cannot purchase coins directly from the mint, but Canadian palladium bullion coins are available through coin dealers and occasionally on auction sites like eBay. Still, they’re difficult to find.

Other palladium bullion bars and coins from countries like Switzerland, China, Russia and France are available on various web sites and via coin dealers. Make sure you FULLY understand what you’re buying before you try to acquire these coins or bars.

Palladium ETFs

Palladium ETFs are a newcomer on U.S. stock exchanges. There are currently two palladium ETFs on the NYSE that I’m aware of:

ETFS Physical Palladium Shares (NYSE:PALL): A palladium ETF that looks to match movements in the palladium spot price minus fees
ETFS White Metals Basket Trust (NYSE:WITE): A physical silver, platinum and palladium ETF that started trading on Dec. 3, 2010

Finding the best palladium stocks

Palladium mining stocks operate in a small niche. Most of the world’s palladium deposits are concentrated in just four countries: Russia, which produces 44+ percent of the world’s palladium, South Africa, which produces 40 percent, Canada, which produces 6 percent and the U.S., which produces 5 percent.

The biggest deposit in the U.S. is concentrated in the Stillwater igneous complex in Montana (incidentally the home state of Rep. Dennis Rehberg who introduced the American Eagle Palladium Bullion Coin Act of 2010). Stillwater Mining Company (NYSE:SWC) is an obvious candidate for buying a palladium stock. Stillwater’s shares are up 116 percent YTD.

Here are some palladium stock suggestions for further research as we move into 2011:

North American Palladium Ltd. (AMEX:PAL), +89 percent YTD
Noril’skiy nikel’ GMK OAO (PINK:NILSY), +64 percent YTD
Anooraq Resources Corporation (AMEX:ANO), +66 percent YTD

Palladium Image Source: http://images-of-elements.com/palladium.php

Tags: ANO, bullion coins, NILSY, PAL, PALL, palladium, platinum, SWC, WITE
Posted in AMEX, commodities, ETFs, mining stocks, NYSE, precious metals | 1 Comment »

Dec

2010

Has Dangdang finally stopped dropping (NYSE:DANG)?

by Fred Mason

After a spectacular 87 percent climb during it’s IPO on Dec. 9, shares in E-Commerce China Dangdang Inc. (NYSE:DANG) started unwinding. The so-called “Chinese Amazon.com” lost 25 percent of its value over the past seven trading days, and I started sweating my early investment in the company.

Still, a decent 6+ percent rise in the stock’s share price today has me feeling a bit better, and I’m hoping prices are starting to look attractive to the buy-and-hold crowd.

Overall, I’m bullish on Dangdang, and I remain convinced the company has a great shot at succeeding – even in the crowded Chinese Internet market. Here’s why:

Despite fears of online competition poaching clients from DANG, the company is the undisputed market leader in online book sales in China. Their client base is literate, tech-savvy and comfortable making purchases online. They also helped the company pull in $2.4 million in net income last year.

Still, Amazon.com, Inc. (NASDAQ:AMZN) makes the majority of its income from products other than books, and Dangdang has taken note. The company started moving into other retail niches last year.

The biggest hurdle to widespread success for Dangdang comes in the form of China’s online shopping behemoth, Taobao.com. Taobao is the third most-visited Web site in China, according to rankings from Alexa.com, while DangDang.com ranks 75th.

DangDang must leverage their experience in the online books market to compete with Taobao, but they might be able to do that if they can form the right partnerships and come up with a decent pipeline for the delivery of digital media on a Kindle-like device.

We can’t forget that Amazon’s success has come in fits and starts, too. Acquisitions like Audible.com, Zappos.com and IMdB as well as in-house developments like cloud computing offerings, Amazon videos on demand and the Kindle have transformed the company right in front of our eyes. The right management could do the same for Dangdang.

Tags: AMZN, DANG, Dangdang
Posted in Chinese stocks, Internet stocks, IPOs, NASDAQ, tech stocks | No Comments »

Dec

2010

Smartphone market share and penetration in the U.S. in 2010

by Ed Roven

Time for the State of the Mobile Union Address from TradingStocks.me: The U.S. population is approximately 310 million. As of October of 2010, 234 million of the roughly 264 million Americans ages 13 and older used mobile devices, according to comScore.

Of the 234 million U.S. mobile users, 60.7 million owned smartphones, again per comScore. That means roughly 26 percent of the mobile market in the U.S. uses smartphones. That rate is growing at nearly 15 percent per quarter, which means that by the end of 2011, we should see the smartphone market share eclipse the 50 percent.

It’s important to note, though, that just because someone owns a smartphone, that doesn’t mean they’re using it to browse the web, check email or surf the Internet. In fact, just 36 percent of smartphone owners used their devices to browse the web. Just 33 percent downloaded an app, and 21 percent used their smartphone to access a social networking site.

According to these numbers, just 21 million or so of the smartphone-toting American population are online. You can look at that as a small number, or a market that’s poised for explosive growth over the next five years. I choose the latter.

Tags: aapl, android, GOOG, iphone, mobile, mobile web, smartphones
Posted in Internet stocks, NASDAQ, tech stocks | No Comments »

Dec

2010

Bank of America (BAC) to rise 50 percent per year over next three years?

by Ed Roven

Despite a recent downgrade of Bank of America Corporation (NYSE:BAC) stock by Keefe Bruyette Woods, analyst Richard Bove of Rochdale Securities has called for BAC to hit $32 per share in three years. That’s a downward revision of Bove’s May prediction for banking stocks when he said shares in Citigroup Inc. (NYSE:C) and BAC could sextuple by 2015.

“While his official price target is $19.25, he also states in the report that he believes Bank of America will ‘more likely’ return to its historical price of 1.5 times book value, which would be $32,” BusinessInsider.com reports.

Shares in Bank of America have markedly underperformed Citigroup over the past six months as news sources speculate BAC could be the target of an upcoming WikiLeaks document release. Bank of America shares have lost 20.5 percent in value since June, while Citigroup shares are up more than 17 percent.

WikiLeaks or not, I remain bullish on banks as the Fed’s money-printing policies make it easy for lending institutions to profit on near-zero percent interest rates.

Posted in BAC, Bank stocks, C, financial stocks | No Comments »

Dec

2010

Twitter’s secret key to making money

by Fred Mason

Valuing companies that aren’t making money yet is part of what makes investing so fun. It’s also the reason a lot of us lose money as investors. It’s impossible to know in advance if you’re looking at the next Google, Inc. (NASDAQ:GOOG) or the next MySpace.

Now that more tech companies are staying private long after they’ve reached global scale (think Facebook and Twitter), investors have been struggling to find ways to value those companies without a close look at their books. The general sense is that given enough scale, a Web-based company will hold appeal to advertisers – a fact that should eventually translate into positive cash flow. In the case of Twitter, though, investors still seem confused about how the company will make money.

Sure, Twitter’s valued at $3.7 billion, but News Corporation (NASDAQ:NWSA) bought MySpace for $580 million in 2005, and now there are rumors the whole site could get shuttered. It appears Twitter’s finally serious about finding ways to make money, but it wasn’t until I thought about Twitter’s widgets that I really started getting optimistic about the future of the company.

Once you start noticing Twitter’s widgets, you realize they’re everywhere. From CNN and ESPN’s sites to tiny conspiratorial blog sites, everyone has a Twitter widget embedded on their site (we’ve even got one on TradingStocks.me – just take a glance at the right-hand sidebar on this page). What if Twitter started giving advertisers the ability to place ads inside those widgets then taking a cut of the income and pushing the rest of the profits into the hands of the Web publishers who run those sites?

The ads could be contextually targeted to the keywords in the tweets users have sent out, and the widget itself could search the individual site’s content for relevant keywords. It would give advertisers nearly real-time access to whatever fashion, music or movie topics are trending up on the Web, and it would give Web site publishers even more incentive to push their Twitter widgets as legitimate news sources.

Facebook, of course, could do the same, and they likely will with their “Facebook Like” boxes, which show a regular stream of updates from company and individual Facebook pages. Both could prove fertile ground for new advertising revenue, and they could end up challenging Google’s online advertising hegemony.

Tags: Facebook, GOOG, MySpace, NWSA, Twitter
Posted in Internet stocks, IPOs, NASDAQ, private companies, tech stocks | 1 Comment »

Dec

2010

Facebook to earn more than Google (GOOG) in two years?

by Fred Mason

Facebook has it’s eyes set on becoming the world’s largest Web company, and the only thing standing in their way is Google Inc. (NASDAQ:GOOG). Depending on who you listen to, privately-held shares in Facebook have risen more than 50 percent over the past year, giving the company a market cap of more than $40 billion. That’s a far cry from Google’s market cap of $188 billion, but I’ve finally come across some compelling arguments for how Facebook might be able to topple Google from its throne atop the tech world.

As we know, Facebook’s earnings currently come from a combination of click-based ad sales on the site and brand-awareness-building ads that function like TV commericals. David Pakman at Adage.com argues that Facebook’s true revenue growth will come late next year when the company starts focusing on the sell of virtual goods (which nets Facebook 30 percent of all sales).

Virtual goods and gaming add-ons are already big business for Chinese Web companies, and Pakman speculates they could double Facebook’s current revenues on their own by next year.

Still, there’s an even more potent business opportunity that Facebook might roll out late next year: utilizing Facebook Connect as a way to give advertisers access to all of Facebook’s partner’s sites. A move like that could seriously threaten Google’s position as the online advertising leader – particularly as Facebook gets integrated with a growing number of Web sites through its Facebook Like Buttons and Facebook Connect Platform.

That’s exactly what Pakman sees happening.

“Today, we understand that Facebook generates about $2 to $3 per user per year in revenues,” he writes. “Google, however, generates about $25 per user per year (more than $25 billion in revenue from about 1 billion users). The gap is considerable, but Facebook is just getting started with their monetization efforts.”

Based on Pakman’s estimates, Facebook could be generating $25 billion+ in two years. How exactly? By adding onto its 50 percent+ growth rate and changing nothing, Facebook could be generating $8 billion in two years. Tack on another $4 billion for growth in the sales of virtual goods, then another $20 billion for advertising on Facebook Connect sites and other Web properties that have integrated Facebook services, and you’ve got a true Web Goliath that’s generating $32 billion+ a year. No wonder investors are panting for a Facebook IPO…

Tags: Facebook, GOOG, marketing
Posted in Internet stocks, IPOs, NASDAQ, private companies, tech stocks | No Comments »

Dec

2010

U.S. gets first gold bullion bar ATM in Boca Raton

by Ed Roven

Boca Raton – long a bastion for moneyed, elbow-patch-wearing New Yorkers who winter on the Florida coast – has taken the curtain off the United States’ first gold-dispensing ATM. The “Gold to Go ATM” was officially unveiled yesterday in an opening ceremony at the Town Center Mall in Boca Raton at 10 a.m. EST.

“Boca is for the rich and famous,” Glen Calder, a PR rep for PMX Gold, the Boca Raton company that will operate the machines, told the Palm Beach Post. “The Town Center Mall is where a lot of people go to spend a lot of money. It’s a good fit.”

Feed the ATM cash or a credit card and you can get gold bullion bars or gold bullion coins in return. Prices on the gold are updated every 90 seconds to ensure the company doesn’t lose money against current spot prices on the yellow metal. Shares of the parent company for PMX Gold, PMX Communities, Inc. (OTC:PMXO), shot up 30 percent on yesterday’s news, and it sounds like this ATM could be the first of many in South Florida.

“PMXO previously entered into a preliminary agreement for the purpose of developing proposals for licensing and franchise agreements for German engineered, unmanned point-of-sale technology and to conduct exclusive test marketing in the State of Florida,” said Michael Hiler, the Company’s President and CEO, in a press release. “Since that time, we have secured prime, high traffic retail mall space, obtained legal advice regarding exemption from Florida state sales tax issues, acquired newly minted Credit Suisse .9999+ pure gold bars and developed the initial infrastructure to commence retail Gold Bullion sales. Upon satisfaction of final equipment testing and security details, we plan to start operations.”

Despite its boring name, the Town Center Mall seems like a good place to test out gold ATMs. It plays host to just about every opulent store you could expect to find in Beverly Hills or South Beach: Cartier, Bvlgari, Tiffany & Co., Burberry, Armani Exchange, Neiman Marcus, Coach, LaCoste, Louis Vuitton, etc., and – perhaps more importantly – it doesn’t cater to the type of clientele that might try toss the ATM in the back of their pick-up trucks. No word yet on whether or not silver ATMs are in the pipeline.

Tags: gold atms, PMX Gold, PMXO
Posted in AMEX, gold, gold stocks, penny stocks, precious metals | No Comments »

Dec

2010

Facebook’s sales up 100+ percent to $1.5 billion over past year

by Fred Mason

While Twitter struggles to develop an advertising model that can sustain the site, Facebook, Inc. appears well on its way to justifying its $43 billion market cap. Advertising sales are well ahead of the company’s targets, and they’ll more than double last year’s numbers on revenues of about $2 billion, according to Bloomberg.

All signs point to an imminent IPO, although Facebook CEO Mark Zuckerberg evaded the question during a recent interview on 60 minutes. “Are you ever going to have the IPO? Ever?” Leslie Stahl asked the 26-year-old. “It’s like you can’t let go.”

“You know, maybe,” Zuckerberg replied. “I don’t think it’s letting go. Here’s the way that I think about it. A lot of people who… build startups or companies think that selling the company or going public is this end point. You win when you go public. That’s just not how I see it.”

Facebook’s private market cap has grown so large, there are only two tech company’s in the world that are close according to Investor Business Daily’s 34-company Internet-Content group. That would be Google Inc. (NASDAQ:GOOG), with a massive market cap of $189 billion and the Chinese search engine company Baidu.com, Inc. (ADR) (NASDAQ:BIDU) at $34 billion.

Investors have been so excited about getting a piece of the Facebook pie that cottage LLC’s have sprung up around the private company giving high-net-worth individuals the ability to invest in Facebook before its IPO. It’s a sign that the market’s ready. Zuckerberg just needs to give the thumbs up.

Tags: BIDU, Facebook, GOOG, Twitter
Posted in IPOs, NASDAQ, private companies, tech stocks | No Comments »

Archive for December, 2010

Five reasons to invest in a Groupon IPO

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How to invest in rare earths stocks

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How to invest in palladium

Why the spike in palladium?

How can I invest in palladium?

Where can I find palladium bullion coins?

Palladium ETFs

Finding the best palladium stocks

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Has Dangdang finally stopped dropping (NYSE:DANG)?

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Smartphone market share and penetration in the U.S. in 2010

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Bank of America (BAC) to rise 50 percent per year over next three years?

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Twitter’s secret key to making money

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Facebook to earn more than Google (GOOG) in two years?

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U.S. gets first gold bullion bar ATM in Boca Raton

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Facebook’s sales up 100+ percent to $1.5 billion over past year

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