Net income at Noah Holdings (NOAH) up 88 percent

With great wealth comes the desire to make even more of it, and Noah Holdings (NYSE:NOAH) appears perfectly positioned to help China’s newest millionaires amass even more cash.

First off, this disclaimer: Noah Holdings Limited (NYSE:NOAH) is one of the biggest holdings in my portfolio right now. A wealth management company that serves high-net-worth individuals in China, Noah released 4Q earnings last night. Analysts were spot on with their calls. The company reported $0.09 earnings per share, which met the Thomson Reuters consensus estimate of $0.09, according to AmericanBankingNews.com.

Net revenues at the company shot up 157 percent from $5.4 million in Q4 2009 to $14 million in Q4 2010. Over that same time span, net income attributable to shareholders rose 88.9 percent to $4.2 million. Those are heady numbers, and so are the company’s expectations for the rest of the year. Noah forecasts non-GAAP net income attributable to shareholders to hit a year-over-year increase in the range of 56.7% and 86.6%.

Analysts are also positive on the stock. JPMorgan Chase & Co. (NYSE: JPM) initiated coverage on Noah Holdings with an Overweight rating and a $22.00 price target last month. Bank of America (NYSE: BAC) analysts currently list Noah as a Buy with a $22.20 price target.

Both targets are more than 40 percent higher than the stock’s current price at $15.43. Apparently, I should have waited to buy my shares, which are down 3.5 percent since opening day, but I’m definitely not worried about the company’s long-term prospects.

There’s much talk about China’s burgeoning middle class, but, if luxury purchasing is any indication, the ranks of the upper class are swelling even faster. A new report by broker CSLA forecasts overall consumption in China will rise 11 percent per year over the next five years. Sales of luxury goods are expected to grow more than twice as quickly, by 25 percent a year.

“The wealth of China’s upper-middle class has reached an inflection point, reckons [the author of the CSLA report] Mr. Fischer. They have everything they need,” The Economist writes. “Now they want a load of stuff they don’t need, too.”

With great wealth comes the desire to make even more of it, and Noah appears perfectly positioned to help China’s newest millionaires amass even more cash.

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Buffett trims fat from portfolio (BAC, NKE, FISV, LOW)

Interestingly, Berkshire wasn’t the only investment company to shift capital out of banks. Trian Partners made the same bet in order to focus on food stocks.

We got a glimpse at Warren Buffett’s recent investment moves with Berkshire Hathaway Inc.’s (NYSE:BRK.B) 13F filing, which details the company’s stock trades through the end of 2010. Most notably, the Oracle of Omaha ditched 5 million shares in Bank of America Corp. (NYSE:BAC).

“He’s closing out a loser,” Jeff Matthews, author of ‘Pilgrimage to Warren Buffett’s Omaha’ told Bloomberg. “We bought it during the crisis. But its earnings power coming out the crisis has been reduced.”

Buffett took a loss of more than 55 percent on the trade after purchasing the shares during the height of the mortgage crisis. Some analysts see the move out of BAC as a sign that Buffett’s cleaning house as he prepares to hand over the reins to a group of successors.

Other positions Berkshire closed out last year:

  • Becton Dickinson & Co. (NYSE:BDX)
  • Comcast Corp. (NYSE:CMCSA)
  • Fiserv Inc. (NYSE:FISV)
  • Lowe’s Companies Inc. (NYSE:LOW)
  • Nalco Holding Co. (NYSE:NLC)
  • Nestle (NSRGY.PK)
  • Nike Inc. (NYSE:NKE)

Berkshire now holds positions in just 25 companies. That’s down from 37 in June, according to NewsyStocks.com. Interestingly, Berkshire wasn’t the only investment company to shift capital out of banks.

Trian Partners, which is headed by widely-followed investor Nelson Peltz, ditched stakes in Bank of America, J.P. Morgan Chase (NYSE: JPM) and U.S. Bancorp, (NYSE: USB), according to BizJournals.com, to make a big bet on food stocks, specifically Kellogg’s (NYSE: K).

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HDFC Bank turns dominant in India’s credit card market (HDB)

HDFC Bank Limited (NYSE:HDB) looks poised to outgrow its peers in 2011 as it captures more of the credit card market and continues to surprise analysts to the upside.

With rising defaults on personal loans in India, the country’s credit card market has undergone subtle but seismic shifts over the past two years, and it’s beginning to look like HDFC Bank Limited (NYSE:HDB) is poised to come out on top. The company defied market expectations last quarter by reporting a 33 percent rise in net profits.

The number of active credit cards in India has tumbled since March of 2008 from 20.75 million to 10.82 million as of November 2010, according to the Times of India. Unlike most domestic and foreign banks operating in the country, though, HDFC has aggressively grown it’s credit card portfolio.

“Industry officials estimate that HDFC Bank is nearing leadership position, followed by ICICI Bank (ICICI Bank Limited, NYSE:IBN) and SBI Cards,” Mayur Shetty writes in the Times. “Although HDFC has been the most aggressive in card issuance, its card customers are predominantly account holders in the bank.”

Rising interest rates and higher commodity prices will likely crimp borrowing going forward, but the Head of Equities at Ambit Capital, Saurabh Mukherjea, expects HDFC to outperform the sector.

“There will be consensus pullbacks in our FY12 economic growth rates and the banking sector will see some pullback on the back of that,” Mukherjea told the Economic Times. “But by and large the higher quality banking names, HDFC in particular, will outperform the rest of the sector as we enter a softer period from an economic growth perspective.”

The Royal Bank of Scotland ranks HDFC highest among private-sector banks in India, according to Reuters. Analysts there have retained a “buy” rating on HDFC, “hold” on ICICI Bank and “sell” on Axis Bank (AXBK.BO).

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Top five stock picks for 2011

One of the keys to successful investing is beating the herd to the next hot stock. These five stocks and sectors could be those diamonds in the rough in 2011.

One of the keys to successful investing is beating the herd to the next hot stock. Here are my top five stock picks for 2011. They might not be in the limelight yet, but they very well could be by the end of the year:

1) Tech IPOs. In my unofficial tech IPO calendar for 2011, I detail 23 major tech companies that could have large, high-profile IPOs this year. Only one of those companies (Demand Media, Inc., NYSE:DMD) has gone public so far, and it shot up 33 percent in its first day of trading. The best are yet to come, from coupon-of-the-day company Groupon, which turned down a $6 billion offer from Google, to LinkedIn, a social networking company for professionals with more than 90 million members. Keep an eye on tech IPOs throughout the year as the market seems ready to take on more risk in a sector that’s growing rapidly; particularly in China.

2) Cloud-computing. As more businesses move their web sites and applications from dedicated web servers onto distributed server platforms, several companies are poised to soak up that new revenue stream. Amazon.com, Inc. (Public, NASDAQ:AMZN) has been at the forefront of the cloud computing industry although the company’s not all that transparent on how much revenue cloud computing actually generates for them. Estimates range from $500 million in 2010 to $1 billion. UBS analysts Brian Pitz and Brian Fitzgerald predict cloud computing could pull in some $2.5 billion a year for Amazon by 2014. Two other players you might consider in the space: Cisco Systems, Inc. (Public, NASDAQ:CSCO) and dedicated web hosting company Rackspace Hosting, Inc. (NYSE:RAX). Shares in Rackspace are up more than 86 percent over the past six months.

3) Blue chip stocks. Thanks to exchange rates and a falling dollar, even investors abroad are moving into large-cap American stocks. “Australian investors have a once-in-a-generation opportunity to get as much money as they can into overseas assets, ideally blue-chip global industrial companies,” Mike Hawkins, head of private clients at Evans and Partners, tells The Australian. “When you’re talking about those high-quality global blue-chip names, the likes of Nestle and Procter and Gamble (NYSE:PG) and Kraft (NYSE:KFT) and Unilever (NYSE:UL), you’re talking about companies that are well tapped into the growth in income and demand coming from emerging markets. We see this as a bigger story than China and India’s demand for Australia’s raw materials: the growth of the emerging-market consumer is a far more powerful and enduring theme than simply the supply of raw materials to China.” As a middle class begins to develop in emerging markets, consumers will have more disposable income for food and hygiene products. American blue chips have been positioning themselves in those markets for decades, and it could finally start paying off as the falling dollar will make their goods more affordable on Chinese shelves.

4) Platinum and palladium stocks. In the precious metals community, the focus throughout 2010 was almost exclusively on gold and silver. Gold posted gains for the year of 30 percent and silver rose 80 percent. Platinum and palladium did just as well with palladium shooting up 100 percent in 2010 and platinum rising 20 percent. The gains in platinum and palladium largely came on the heels of increasing demand from China and India where the metals are used as autocatalysts to limit pollution from cars and other vehicles. Car sales surged 32 percent in China and 31 percent in India last year. GM’s President of International Operations Tim Lee expects that growth rate to slow to 10 to 15 percent in 2011 as commodity prices rise. Still, Lee points out that the sheer size of the market in China still equates to a lot of demand. “Even 10 to 15 percent growth on such a huge base makes China a vast market,” he tells AFP. For all the talk of hybrid and electric vehicles, they still only account for 3 percent of the auto market worldwide, meaning they’ll hardly dent the growing appetite for platinum and palladium. Stricter emission standards in the U.S. should also compensate for the decreased demand for platinum and palladium as more of the metals will be used to limit emissions. ETFs offer the easiest (and safest) way to get a finger in the palladium pot. Try ETFS Physical Palladium Shares (NYSE:PALL). PALL’s up 66 percent in the past six months.

5) Wealth management in emerging economies. My fifth and final pick comes from my personal portfolio: Noah Holdings Limited (NYSE:NOAH). A wealth management company, Noah serves high net worth individuals in China. After the company’s IPO in November, shares briefly spiked 30 percent and they’ve since flat-lined around the IPO price. Heavy resistance at $16 per share indicates that the downside risk is limited, and some analysts are calling for earnings growth of 35 percent in 2011 and a target price of $22 per share. The company’s numbers are off the charts with year-over-year growth in net revenue at 210 percent. It makes sense that as the ranks of China’s wealthy swell, so too will the profits at the companies that serve them. Noah Holdings should be perfectly positioned to rake in growing profits from a brand new market.

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NFC: The next trillion dollar industry (AAPL)

The stakes are enormous for NFC companies as they start chipping away at the 2 percent+ cut credit card companies have been siphoning off purchases for decades.

Just when you started to think that Apple Inc. (NASDAQ:AAPL) couldn’t possibly come up with another multi-billion dollar money-making venture, rumors have started trickling in that the iPhone 5 and iPad 2 will contain near field communication systems.

This “wave and pay” technology, dubbed NFC for near field communication, will allow you to swipe your phone like a credit card at Macy’s or the local gas station. And it will all rely on a small chip that can exchange data with a checkout terminal when the terminal’s within four inches of your phone. If Apple adopts the technology, it should have an inherent advantage over competitors thanks to the fact that most iPhone and iPad users have already linked their devices with a credit card or bank account via iTunes.

The biggest hurdle to adoption? Ensuring that retailers support NFC. According to Reuters, Apple is considering deeply subsidizing the terminals, or giving them away for free to encourage nationwide adoption of the technology.

With Americans charging more than $1.8 trillion a year on credit cards, the move could be yet another game-changer for Apple and the credit card industry in general. Indeed, an army of startups have been working on ways to make purchases easier and more rewarding for smartphone-wielding customers.

I wrote recently about the Bay-area startup Bling Nation, which has partnered with PayPal to test a RFID sticker that users could affix to their phones and use to make charges. Other companies are experimenting with key fobs, loyalty cards and NFC-enabled SIM cards.

The stakes are enormous as businesses start chipping away at the 2 percent+ cut credit card companies have been siphoning off purchases for decades. The progression from plastic to mobile makes perfect sense, though. Mobile phones are centralizing all of our tasks in one device. They’ve replaced watches, calculators, MP3 players, notepads, day planners and phone books. And that leaves just two more things in our pockets that phones will one day eliminate: wallets and keychains. Today the battle is being fought over the wallet, and the spoils in this war couldn’t be any larger.

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Five stocks picks for 2011 from John Paulson

After returning as much 590 percent betting against mortgages in 2007, John Paulson’s looking toward precious metals, energy and housing in 2011.

Hedge fund manager John Paulson became an icon in the investing world when he made a huge wager against subprime mortgages in 2007. That year, his funds gained as much as 590 percent, according to the Wall Street Journal.

Paulson’s 2010 returns ranged between 11 percent and 45 percent compared with the 15 percent gain the S&P locked in. That was enough to net Paulson himself some $5 billion. Here’s a look at where he’s making his bets for 2011:

1) Precious metals. For several years now, Paulson’s been urging investors to buy gold. Just based on monetary expansion alone, he said last year, gold could hit $2,400 an ounce. Tack on significant inflation on top of that, and gold prices at $4,000 an ounce aren’t out of the question. Paulson’s gold positions in 2010 netted him a return of 45 percent, and he’s still optimistic that gold will outperform for the next 5 years calling it “the ideal vehicle to hedge against the risk of the U.S. dollar,” Forbes reports.

Among Paulson’s biggest gold positions last year were AngloGold Ashanti Limited (NYSE:AU), Osisko Mining Corp. (TSE:OSK) and the SPDR Gold Trust ETF (NYSE:GLD). Currently, his funds own securities that represent the rough equivalent of 96 metric tons of the metal, according to the New York Times. That’s more gold than the Australian government holds.

2) Internet security. Of the top positions initiated by Paulson as of Sept. 30, 2010, McAfee, Inc. (NYSE:MFE) made the list. McAfee, which makes antivirus software, firewalls and other software-based security for computers, made headlines after a buyout by Intel Corporation (NASDAQ:INTC) was announced in August. Paulson’s reputation as a macroeconomic investor makes it clear where he sees big opportunities for growth: protecting data from hackers.

3) Oil and natural gas. Paulson has jettisoned his position in banks in favor of energy stocks. Chief among his energy holdings going into 2011? Anadarko Petroleum Corporation (NYSE:APC), the Texas-based oil and natural gas producer. It’s returned 20 percent over the past three months.

4) Biotechs. Genzyme Corporation (NASDAQ:GENZ) also made the list of top stocks that Paulson was acquiring late last year. Another buyout target, Sanofi-Aventis SA (NYSE:SNY) appears close locking in a deal to buy Genzyme. Trend anyone?

5) Housing. Paulson argued late last year that it was the best time to buy a house in 50 years. “If you don’t own a home, buy one,” he said at a lecture for New York’s University Club. “If you own one home, buy another one, and if you own two homes buy a third and lend your relatives the money to buy a home.” Can’t buy a home? Consider some beat-down real estate or construction stocks. A few good picks and you, too, might be on your way to earning $5 billion a year.

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Best India stocks to buy in 2011

Here’s a look at some of the best India stocks to buy in 2011. January’s lower stock prices could present a buying opportunity, or it could be the start of a prolonged drop in stocks as the government applies the brakes to the economy in an attempt to curb inflation.

While it often takes a backseat to economic news out of China, India’s economy has surged back to its pre-crash 2008 levels. GDP is approaching double-digit growth rates, and the country seems to have everything it needs to continue growing, according to Andrew Mickey of the Prosperity Dispatch. They’ve got all the ingredients:

  • A young population
  • A growing workforce
  • Government-controlled property rights

How can you benefit from India’s growth? By picking winning stocks in rapidly growing sectors. One of the best ways to do this is by leveraging the knowledge of fund managers whose job it is to pick winning Indian stocks. A simple way to do this is by taking a look at the top holdings of a major ETF focused on Indian securities. The India Fund, Inc. (NYSE:IFN), for example, is one of the country’s largest ETFs with a market cap of $1.5 billion.

Here’s a look at the India Fund’s Top 5 holdings and the percentage of capital they’ve allocated to each stock:

1) Infosys Technologies, Ltd. (NASDAQ:INFY), 8.57 percent. One of India’s largest and most established IT companies, Infosys employed more than 122,000 employees in 2010. Infosys’s CEO Kris Gopalakrishnan expects growth to increase rapidly this year. “The top five (IT) companies are estimated to hire 160,000 to 180,000 new employees in the next 12 months,” he said recently. If Infosys hires a fifth of those 160,000 new employees, their employment number would grow by more than 25 percent this year. You’ve got to have substantial gains in profits to support that sort of expansion.

2) Reliance Industries, Ltd. (BOM:500325), 7.67 percent. India’s largest company by market cap, Reliance Industries operates in three primary sectors: petrochemicals, refining, and oil and gas. Net profits at Reliance surged 28 percent year over year in the quarter ended December 31, 2010, largely on the strength of its refining and petrochemicals businesses. The conglomerate claims that “1 out of every 4 investors in India is a Reliance shareholder.”

3) ICICI Bank, Ltd. (NYSE:IBN), 5.69 percent. India’s second largest bank, ICICI operates more than 2,500 branches around the world. The company’s looking to expand into mobile banking as a way to reach consumers who don’t live near a branch. ICICI recently partnered with Vodafone to offer banking services at the mobile company’s 1.5 million retail outlets. That could potentially ramp up ICICI’s client base as more than 50 percent of the country’s farming households do not have access to credit.

4) Tata Motors, Ltd. (NYSE:TTM), 4.35 percent. India’s largest car company, Tata Motors is also one of the country’s most ambitious. The company launched its Tata Nano – the world’s cheapest production car – in 2008. Retailing at just $2,200, the car has struggled with image problems, missed deadlines, employee strikes, safety accusations and low sales, but its evidence for me of one thing: a company that isn’t afraid to take risks. If they can successfully re-brand the “people’s car,” Tata’s P/E should drop quickly from its current 16.39.

5) Tata Consultancy Services, Ltd. (BOM:532540), 3.39 percent. The second largest company in India by market cap (behind only corporate giant Reliance Industries, Ltd.), Tata Consultancy’s IT services have been expanding rapidly as the global economy improves. According to the most recent numbers available, Tata’s revenue grew 7 percent quarter over quarter during Q3.

Despite improving numbers in India’s overall economy, not everyone’s bullish on Indian stocks. “India’s ‘free money’ punch bowl is about to be taken away,” Mickey writes. “The expected rate increases has sent India’s stock market tumbling. India’s primary index, the Sensex, has fallen nearly 10% in less than two weeks to start 2011.”

It could be a buying opportunity, or it could be the start of a prolonged drop in stocks as the government applies the brakes in an attempt to curb inflation in India.

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Analysts like Noah Holdings Limited stock (AMEX:NOAH)

Currently trading at a P/E ratio of 89, Noah’s shares sound expensive, but the company’s growth just might justify the premium.

A month and a half after Noah Holdings Limited’s IPO (AMEX:NOAH), analysts have started weighing in on the Chinese wealth management company, and they seem to like what they see – even at what appears to be an extremely high price for shares in a young company.

Here’s the first batch of analyst ratings that started rolling in earlier this month: JPMorgan Chase & Co. (NYSE:JPM) gives NOAH an “overweight” rating, and Roth Capital Partners joins Bank of America Corporation (NYSE:BAC) in listing it as a “buy.” Both Wells Fargo & Company (NYSE:WFC) and Oppenheimer (NYSE:OPY) started the stock at “perform.”

Noah targets wealth management products to high net worth individuals in China, and that’s a decent niche to fill. The ranks of China’s wealthy are swelling as high net worth individuals in the PRC controlled some $5.6 trillion in 2009, according to Reuters. That was good enough to rank them No. 4 in the world in terms of high net worth individuals in 2009.

Currently trading at a P/E ratio of 89, Noah’s shares sound expensive, but the company’s growth just might justify the premium. During the first half of 2010, Noah’s net revenue more than doubled to $13.7 million over the same period in 2009. Even better: Noah’s profits grew fivefold during that time span to $4.04 million.

“As investors, we like to see companies that can grow,” Benjamin Kirby, a Santa Fe, New Mexico-based analyst at Thornburg Investment Management, told Businessweek. Noah definitely meets that qualification, and that’s made me a believer in the stock.

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Bling Nation sets sights on Visa (NYSE:V) and Mastercard (NYSE:MA)

It astounds me that credit card companies like Visa Inc. (NYSE:V) and MasterCard Incorporated (NYSE:MA) haven’t made a strong push into the mobile payments arena. Bling Nation of Palo Alto appears to be doing just that.

Investing in Bling NationIt astounds me that credit card companies like Visa Inc. (NYSE:V) and MasterCard Incorporated (NYSE:MA) haven’t made a strong push into the mobile payments arena. Roughly 264 million Americans ages 13 and older use mobile devices. If you could turn those mobiles into payment tools, it would make buying goodies at the mall (or anywhere for that matter) even easier than swiping plastic.

Bling Nation, a Bay-area startup, has seen the writing on the wall, and they’re rolling out a pilot program now that allows consumers to pay for products with their phones. Kind of. Here’s their vision: small businesses offer RFID stickers to loyal customers who can affix the stickers to the backs of their phones.

The customers can then link the stickers with their PayPal accounts, and use it make purchases at that business. If the price for the goodie is high enough, the consumer will have to enter a PIN number. Otherwise, they’re done.

Here’s where it gets interesting, though: Bling Nation charges businesses just 1.5 percent to use their purchasing platform. That’s half the cost most credit card companies charge (take that Visa and Mastercard!). Bling Nation has also partnered with Facebook so that consumers can optionally broadcast their purchase and/or location to Facebook.

Small business owners can track purchases and set up loyalty programs for their customers using Bling Nation’s online software. It’s the perfect marriage of old-world payment processing, new world social-networking and good old-fashioned capitalism.

Icing on the cake comes in the form of a rather spectacular board of advisors. Bling Nation has enlisted help from John Reed, the former Chairman of Citibank and former Chairman of the New York Stock Exchange, Jeff Stiefler, Chairman of Intuit’s advisory board and former President of American Express, Carl Pascarella, former President and Chief Executive Officer of VISA USA and VISA International, and Brian Swette, former Chief Marketing Officer of Pepsi and COO of eBay and current Chairman of Burger King, among other heavy-hitters.

It seems Bling Nation is the real deal. Now, if only there was a way to invest in the startup… It looks like you’ll just have to settle for shares in PayPay’s parent company eBay Inc. (NASDAQ:EBAY). If the idea takes off, though, watch for a buyout offer or an IPO in the coming years.

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

WikiLeaks or not, I remain bullish on Bank of America (NYSE:BAC) as the Fed’s money-printing policies make it easy for lending institutions to profit on near-zero percent interest rates.

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.

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