Avnet to Boost Core Biz with MSC Group - Analyst Blog

Electronics and IT distributor Avnet Inc. (AVT) recently announced that it will acquire German distributor of electronic components (embedded computing technology and display solutions), MSC Investoren GmbH (or MSC Group). Financial details of the deal were kept confidential. The acquisition reflects further strengthening of Avnet's core business of distributing electronic components.

Per the deal, Avnet will initially hold the majority of MSC Group's shares, while the remaining would be acquired some time later (time not specified). On completion of the merger transaction, Avnet will be able to integrate MSC Group's distribution and supply chain services with its capabilities.

Apart from owning an enhanced product portfolio, Avnet will be better positioned to meet growing demand for electronic solutions in the European industrial electronics market. The addition will also help Avnet to boost its margins. The transaction, which is awaiting certain regulatory approvals, is expected to be accretive to Avnet's earnings per share, helping it to achieve long-term return on capital (ROC) of 12.5%. The earnings accretion expectation seems to be achievable, given MSC Group's solid revenue generation of more than $450.0 million in fiscal 2012.

Earlier, in June, Avnet acquired N.J.-based cloud and data center automation service provider, Seamless Technologies for an undisclosed sum. Seamless' capabilities will smoothly integrate with Avnet's solutions, allowing it to deliver and implement large-scale private/hybrid/public clouds. Additionally, the broadening of cloud services will help to attach more value to hardware and will allow its partners to be more profitable.

Earlier this year, Avnet acquired RTI Holdings Ltd. and TSSLink and solidified its service portfolio.

Distribution companies usually operate on razor-thin margins. Therefore, there are only a couple of ways to grow in this market. One of the most fruitful ways is through accretive acquisit! ions.

During 2012, the company acquired as many as 13 new units. These acquisitions are expected to augment the company's product portfolio and enhance its performance quite comprehensively going forward.

Avnet sees significant competition for both its domestic and foreign operations. It has an archrival in Arrow Electronics Inc. (ARW), although other big players such as Anixter International Inc. (AXE) and Richardson Electronics Ltd. (RELL) are also not to be discounted.

Currently, Avnet has a Zacks Rank #3 (Hold).

Apple Found Guilty in E-book Trial - Analyst Blog

Apple (AAPL) found itself at the receiving end of an adverse ruling in the e-book pricing case filed by the U.S. Department of Justice (DOJ). U.S. District Judge Denise Cote ruled that the iPhone maker had conspired with five U.S. publishers to raise e-book prices.

In the civil antitrust lawsuit, the DOJ had charged Apple and five publishers for conspiring and manipulating e-book prices to make an average $2.0 to $3.0 extra on each book for a three-day period in early 2010. This resulted in consumers paying millions of dollars more for the e-books.

The accused publishers included Hachette Book Group, News Corp.'s (NWS) HarperCollins, Holtzbrinck Publishers, Pearson's Penguin Group and CBS Corp's (CBS) Simon & Schuster Inc. Though all the publishers have already settled with the DOJ, only Apple stood for the trial.

Apple entered the e-book market with the launch of its iBookstore app in 2010 and initiated an 'agency model' for pricing the e-books. Per the agency pricing model, publishers could set the retail prices of e-books and the retailer would earn 30% of the e-book price as commission. This assured a guaranteed income for the retailer and also enabled the publisher to raise e-book prices to more than 50% of the list price, which is what competitor Amazon (AMZN) was offering.

Amazon had a wholesale price model, under which the retailer paid the publisher half the listed price of the books, while it retained the option to charge any amount for the e-book. Amazon used to charge a maximum of $9.99 for e-books, making losses on the sales to promote its reader.

Many online retailers shifted to the new agency model. After some brief resistance, Amazon eventually gave in to the demand of publishers. This led to the e-book prices equaling the physical ones at times. Apple continues to deny any wrong doing in the case and stated that it would appeal.

The current ruling is likely to have a domino effect as it will open up other private lawsuits agai! nst Apple for alleged price-fixing. Separately, the company is facing lawsuits on possible damages to customers for charging higher e-book prices brought by 33 state attorney generals.

This judgment is a major blow to Apple as it may not only result in possible penalty payments but it also tarnishes Apple's image. Besides this unfavorable ruling, Apple continues to face a number of other legal headwinds, including pending patent infringement lawsuits against Samsung in different countries.

Recently, Apple had lost to Samsung at the U.S. International Trade Commission. Moreover, Apple withdrew its lawsuit against Amazon for using the "app store" word.

We, however, believe that since the e-book segment does not form a major part of Apple's business, it will not be a major overhang on the stock in the near term.

Currently, Apple has a Zacks Rank #3 (Hold).

Bull of the Day: Cree (CREE) - Bull of the Day

Hot Gold Stocks To Invest In 2014

Now that we are in the heart of earnings season, many investors are zeroing in on company reports to drive the market. While investors seem to be pretty bullish on financials for this quarter, one segment that may also provide some earnings growth is technology.

However, not just any tech company will do, as you will need to drill down into a few key segments for strong earnings growth. In particular, the semiconductor segment could be an interesting choice, thanks to the high Zacks Industry Ranks for this space, and the surging stock prices of many companies in this corner of the tech world. A number of semiconductor firms fit this bill as solid investments during this time frame, but one stands out for its promise this earnings season; Cree (CREE).

CREE in Focus

Cree is a North Carolina-based company that focuses on LED products that are used in a number of applications including game displays, automobiles, signage, among others. Beyond their LED division, the company also makes power conversion products, Radio Frequency-based items, and semiconductor materials as well.

The firm is becoming increasingly well-known as demand increases for energy efficient applications across the board. Plus, it doesn't hurt that the firm's stock has risen by almost 200% in the past 52 weeks alone. While this is obviously an already amazing level of stock price growth, there is plenty of reason to believe that this trend can continue, especially if you look to earnings estimates for the company.

Estimate Picture

The consensus is looking for earnings growth of 87.5% for the current quarter and then 100% growth for the next quarter. Meanwhile, for the current year and next year periods, earnings growth is expected to come in at a robust 60%+ for both periods.

Estimates have also been rising lately, with all in the past 90 days rising. In fact,! the most recent analyst estimates—for the next quarter and next year periods—were up 10%, suggesting that expectations are continuing to rise for CREE.

While this might be concerning to some investors, especially with the lofty growth that is baked into the company's projections, CREE does have a good track record of beating or meeting analyst expectations. The firm has met or beat expectations in all five of the last earnings reports, including double digit beats in two of the last four.

Thanks to these factors, the company has earned itself a Zacks Rank #1 (Strong Buy), suggesting that the firm could outperform in the months ahead as well. Plus, the stock has a Zacks recommendation of Outperform, meaning that the longer term look is also favorable.

To top things off, the Zacks Industry Rank for this corner of the Semiconductor market is ranked extremely well. In fact, the industry is actually the highest ranked one, bar none, in our classification system, suggesting that the space is well poised to rise this earnings season too.

Bottom Line

As companies try to become more energy efficient, Cree's products look to become more in demand. This could continue to boost CREE's surging stock, and make this top ranked firm a solid investment.

This is especially true given how bullish many analysts are on the company and the firm's solid history at earnings season. And then when you add in the number one overall Zacks Industry Rank, investors could definitely still have a winner on their hands with this interesting tech company.

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Is Rio Tinto Undervalued at These Prices?

With shares of Rio Tinto (NYSE:RIO) trading around $43, is RIO an OUTPERFORM, WAIT AND SEE, or STAY AWAY? Let's analyze the stock with the relevant sections of our CHEAT SHEET investing framework:

T = Trends for a Stock’s Movement

Rio Tinto is engaged in finding, mining, and processing mineral resources. Its products include iron ore, aluminum, copper, diamonds, coal, uranium, gold, and industrial minerals. Rio Tinto has been trying to divest itself of non-core and unprofitable assets since CEO Sam Walsh took over the company. The firm previously stated it was not interested in selling its Mozambique coal operations, but changed its mind after failing to find a buyer for its diamond businesses. Expect Rio Tinto to grow as it grabs hold of its business again, and continues to provide raw materials around the world.

Rio Tinto has achieved a record output of iron ore for the first half of the year. The mining company exceeded expectations for iron ore output, and says it's on track to expand into a remote region of Australia that could yield a significant addition of iron ore tons per year. However, Rio Tinto makes the majority of its profits from mining iron ore, and the volatile price of the metal could hurt the company's bottom line, even if they manage to mine a lot of it.

T = Technicals on the Stock Chart are Weak

Rio Tinto stock has struggled a bit in recent years. The stock is now trading at multi-year lows. Analyzing the price trend and its strength can be done using key simple moving averages.

What are the key moving averages? They are the 50-day (pink), 100-day (blue), and 200-day (yellow) simple moving averages. As seen in the daily price chart below, Rio Tinto is trading below its declining key averages, which signal neutral to bullish price action in the near-term.

(Source: Thinkorswim)

Taking a look at the implied volatility (red) and implied volatility skew levels of Rio Tinto options may help determine if investors are bullish, neutral, or bearish.

	Implied Volatility (IV)	30-Day IV Percentile	90-Day IV Percentile
Rio Tinto Options	36.01%	43%	41%

What does this mean? This means that investors or traders are buying a significant amount of call and put options contracts, compared to the last 30 and 90 trading days.

	Put IV Skew	Call IV Skew
August Options	Steep	Average
September Options	Steep	Average

As of today, there is average demand from call buyers or sellers, and high demand by put buyers or low demand by put sellers, all neutral to bearish over the next two months. To summarize, investors are buying a significant amount of call and put option contracts, and are leaning neutral to bearish over the next two months.

On the next page, let’s take a look at the earnings and revenue growth rates, and what that means for Rio Tinto’s stock.

E = Earnings Are Mixed Year-Over-Year

Rising stock prices are often strongly correlated with rising earnings and revenue growth rates. The last four quarterly earnings announcement reactions can also help gauge investor sentiment on Rio Tinto’s stock. What do the last four quarterly earnings and revenue growth (Y-O-Y) figures for Rio Tinto look like, and more importantly, how did the markets like these numbers?

	2012	2011	2010	2009
Earnings Growth (Y-O-Y)	-417.94%	-121.95%	145.73%	182.46%
Revenue Growth (Y-O-Y)	-19.58%	2.51%	33.28%	-7.35%
Earnings Reaction	N/A	N/A	N/A	N/A

Rio Tinto has seen mixed earnings and revenue figures over the last four years.

P = Weak Relative Performance Versus Peers and Sector

How has Rio Tinto stock done relative to its peers, BHP Billiton (NYSE:BHP), Freeport-McMoRan (NYSE:FCX), Vale (NYSE:VALE), and the overall sector?

	Rio Tinto	BHP Billiton	Freeport-McMoRan	Vale	Sector
Year-to-Date Return	-24.96%	-21.02%	-17.46%	-34.69%	-19.33%

In a weak sector, Rio Tinto has been a poor relative performer, year-to-date.

Conclusion

Rio Tinto is a global mining firm that provides raw products for many uses around the world. The company has achieved a record output of iron ore for the first half of the year, but it may not be enough, as raw material prices have experienced significant volatility. The stock has struggled over the last few years, and is now trading near lows not seen since 2009. Over the last four years, earnings and revenue figures have been mixed for the company. Relative to its weak peers and sector, Rio Tinto has been a poor year-to-date performer. STAY AWAY from Rio Tinto for now.

A North Korean Smartphone? Last Week's 3 Most Bizarre Tech Stories

North Korea's carefully staged press reports always have a heavy dose of the surreal. When the country unveiled a factory supposedly built to mass produce smartphones this week, its surreal theater entered the tech space. 

Never mind that its citizens still don't have access to the mobile Internet to use these phones. In the following slideshow, I'm running down three of the most bizarre tech stories from this week. Also included is Samsung releasing its newest smartphone which is also a ... flip phone. Finally, we have a mobile operating system trumpeted as a competitor to Apple's iOS and Android that's being sold on eBay instead of at stores for the major carriers. 

Hot Small Cap Companies To Own For 2014

To see a full run-down of three surprising tech stories from last week, just click on the slideshow below. Also, if you're looking for more information on investing in Apple after its recent share price spike, check out our newest report named "Apple Will Destroy its Greatest Product." Can Apple really disrupt its own iPhones and iPads? Find out by clicking here, its free!

Ave Maria Funds Deliver Heavenly Returns

“There’s no SRI going on here at all,” George Schwartz, CFA and president of Schwartz Investment Counsel, bluntly stated at the outset of the interview. “We do MRI.”

For those wondering, SRI is obviously socially responsible investing, but MRI?

“Morally responsible investing,” Schwartz said.

Although Schwartz (left) is the manager of the Ave Maria Mutual Funds, he gets quite a bit of input, much of it from notable names. The funds’ advisory board is a who’s-who of high-profile Catholics; retired football coach Lou Holtz, Larry Kudlow of CNBC, pundit Phyllis Schlafly and philosopher Michael Novak are just a few.

Hot Energy Companies To Invest In 2014

The direction they give is what you’d expect with a fund that invests according to religious prescripts.

“We screen for a narrow focus,” Schwartz explained. “Abortion is a big one, so any company that performs abortions or donates to abortion providers is prohibited. That includes dug companies that make abortifacients and hospitals that perform them. Investment is prohibited in any company that donates to Planned Parenthood, for instance.”

Investment in embryonic stem cell research is also prohibited, though Schwartz was quick to point out that adult stem cell research is not.

“Lastly, any company that makes and distributes pornography is screened out,” he added.

Does that include companies like HBO and some of the racier content they sometimes air?

“We have a number of screening service providers the board has approved that make those determinations.”

He noted that companies screened out account for around 150 companies out of the benchmark Russell 3000, so the impact is not great, but it’s nonetheless strict. The board’s direction provides less room for movement on the issue than even that allowed by United States Conference of Catholic Bishops. That organization states no more than 5% of a company’s revenue can come from the mentioned topics in order to invest; for Ave Maria, it’s zero.

“Some might say it’s operating with one hand tied behind my back,” Schwartz argued. “I don’t see it that way at all. For me, it’s needed direction. And some of those companies we wouldn’t invest in anyway; they’re just lousy businesses with poor fundamentals.”

And to the ongoing argument that investors must sacrifice returns for their conscience when investing in SRI —er — MRI companies?

“We’ve experienced a 9.6% average return each year with our largest fund for the past five years, versus 6.1% for the index. So that 350 basis points of outperformance each year for the past five years.”

Other items of interest to which Schwartz pointed:

---

Check out Does Catholic-Friendly Investing Lead to Earthly Rewards? on AdvisorOne.

'Angry Guy' Ackman Pushes for New Chairman at J.C. Penney

Top China Stocks To Own Right Now

Norm Betts/Bloomberg via Getty ImagesWilliam "Bill" Ackman, founder and CEO of Pershing Square Capital Management. Activist investor and J.C. Penney independent director Bill Ackman is "an angry guy" responsible for tanking the company's stock, management expert Jeffrey Sonnenfeld said Friday, a day after all hell broke loose in the retailer's boardroom. In a letter to Penney's board on Thursday, Ackman -- whose Pershing Square Capital Management is also one of the retailer's biggest investors -- voiced frustration that the process to fill the CEO job permanently hasn't advanced quickly enough. In a subsequent letter Friday, Ackman demanded the company's board meet as soon as possible and that Chairman Tom Engibous be replaced. The company had no immediate comment on that latest demand. "What you have is an angry guy going through his temper tantrums," Sonnenfeld said in a "Squawk Box" interview.

"We've seen how [Ackman] can inspire the ire of Carl Icahn and get into a mud throwing spat ... akin to Rosie O'Donnell and The Donald. He's capable of the same kinds of things when he's on a board of directors. It's sort of a frat boy affect." Back in April, Mike Ullman was brought back as chief executive to stem the sales plunge blamed on his predecessor Ron Johnson, who was plucked from Apple's retail side by Ackman in 2011 to turn the 111-year-old Penney into a trendier department store. Sonnenfeld, a senior associate dean at the Yale School of Management, said that anybody behind the scenes at Apple (AAPL) would say it was Steve Jobs, not Johnson, who created and ran Apple's innovative stores. "[Penney] wrongly brought in Ron Johnson and ... Bill Ackman is the guy responsible for tanking this stock." J.C. Penney (JCP) shares fell 4.4 percent to $13.05 early Friday, nearing lows last seen more than 10 years ago. One analyst said the whole spat could keep the company from finding a new leader, provided it actually wants one. "Sounds like a great working environment that will surely tempt a quality CEO," Stacey Widlitz, president of SW Retail Advisors, told CNBC. In first his letter, Ackman advocated another management move -- claiming former Penney CEO Allen Questrom has conditionally agreed to return as chairman -- an assertion that Questrom told CNBC is not a done deal. He said he won't come back under hostile circumstances. "[Questrom] is not the right guy for this job," Sonnenfeld said. "Allen Questrom served for three-and-a-half years, almost four years. What did he do as CEO? ... Almost the same thing as Ron Johnson, miss the customer base of J.C. Penney." Meanwhile, Penney's current chairman Thomas Engibous said Thursday evening the board "strongly disagrees" with Ackman, and was "extremely disappointed" that his letter was made public. He also called Ackman's latest move "disruptive and counterproductive."

Alnylam Up to Positive Data - Analyst Blog

Alnylam Pharmaceuticals, Inc. (ALNY) recently announced positive top-line results from a phase I study on ALN-TTRsc. The news positively impacted Alnylam share price by 15.8%.

ALN-TTRsc is a ribo nucleic acid interference (RNAi) therapeutic targeting the transthyretin (TTR) gene that is being developed for the treatment of TTR-mediated amyloidosis (ATTR).

Results from the study revealed that ALN-TTRsc was successful in reducing serum TTR protein levels to more than 80% in healthy volunteers who were enrolled in the study. The recent study results were at par with the previously reported ALN-TTRsc results in non-human primates.

Results from the phase I study further revealed that ALN-TTRsc was generally safe and well tolerated. The randomized, double-blind, placebo-controlled, single- and multi-dose, dose-escalation study is still ongoing. Alnylam will assess the safety and tolerability of the candidate (single or multiple ascending subcutaneous doses) along with other parameters like assessment of clinical activity of the candidate as measured by serum TTR levels.

Alnylam plans to initiate a phase II study on ALN-TTRsc later this year depending on the successful completion of the phase I study. Positive results from the phase II study will lead to the initiation of a phase III study on the candidate in 2014.

We remind investors that Alnylam also has ALN-TTR02 in its pipeline that is being developed for the treatment of ATTR. Alnylam is currently evaluating the safety and tolerability of the candidate in a phase II study.

We note that Alnylam has a development and commercialization agreement with Sanofi (SNY) for Alnylam's RNAi therapeutics, which include ALN-TTR02 and ALN-TTRsc. The agreement is for the development and commercialization of these candidates in Japan and the broader Asian-Pacific region. Alnylam intends to develop and commercialize the ALN-TTR program in other countries as well.

We are encouraged by the pipeline progress at ! Alnylam. The company is expecting several study results on its RNAi therapeutic candidates in the coming quarters. Positive pipeline related news will boost the stock.

Alnylam, a biopharmaceutical company, presently carries a Zacks Rank #1 (Strong Buy). Other biopharmaceutical stocks such as Jazz Pharmaceuticals Public Limited Company (JAZZ) and Santarus, Inc. (SNTS) also look well positioned with both carrying a Zacks Rank #1.

Don't Make The Same Devastating Investing Mistake As Apple

Apple (Nasdaq: AAPL) has a monster of a problem.

The maker of iPhones and iPads has roughly $137 billion of cash on its balance sheet. On paper, that looks like $137,000,000,000 -- or more than the gross domestic product of Ecuador.

That doesn't even count the money the company is raking in this quarter. It's just the cash it has sitting in the bank right now.

This might seem like a nice problem to have... After all, an ample cash reserve is important for independence and security. But having too much cash, especially at current record-low interest rates, may be crippling Apple's ability to grow.

For the better part of the last decade, Apple was a model of innovation and financial performance. The company enjoyed a track record of introducing sleek, game-changing products and services, including the iPod and iTunes. But it wasn't always a smooth ride for Apple.

In 1997, Apple was in deep financial trouble. The company brought back its visionary founder Steve Jobs. But Jobs alone couldn't save Apple... he needed money. The only way Apple could save itself was to grovel before its arch rival Microsoft (Nasdaq: MSFT) and borrow $150 million.

Apple never wanted to be put in that position again, so it adopted a corporate culture of hoarding cash. Apple continued to fight its old demon long after the company had plenty of money. And now Apple has created a monster drag on its potential growth.

But what does Apple's problem have to do with you?

The chances are good that you created the same monster. And now it is dragging down your retirement plan's growth.

Investors were rightly horrified by the market's collapse in late 2008 and early 2009.

Most realized all too late the importance of maintaining an adequate cash balance. But just like Apple in the aftermath of its financial crisis, investors appear to be overcompensating. In the three years that followed the market crash, the growth in U.S. savings deposits puts Apple's cash war ches! t to shame.

The desire for security is understandable. But keeping too much cash on the sidelines earning an average 0.6% interest rate in the short term can jeopardize retirement security in the long term.

Even when investors realize this, they are still unwilling to take on the market's volatility and/or believe the market may stagnate. But there is a strategy that could help investors ease back into the market and achieve better growth with less volatility...

Most investors believe that to achieve growth, they must own aggressive securities or be in on what my colleague Andy Obermueller calls "The Next Big Thing." But there is a tried-and-true investment strategy that provides a gentler path to growth. By reinvesting the dividends from safer -- even boring -- securities, investors can create a less volatile portfolio without sacrificing growth.

For instance, if you invested $10,000 in a stock with a yield of 5% and automatically reinvested the dividends, then in 10 years' time, your investment would be worth $16,289. That 62.9% return assumes the stock never appreciates a single penny.

Of course, that's how it works in theory. How does it work in the real world? So far, even better...

Concerned by the growing number of investors sitting in cash, I launched a real-world, dividend reinvestment experiment called The Daily Paycheck. In December 2009, I started with $200,000 in cash and slowly invested it in carefully selected dividend-paying securities. I set up my brokerage account to automatically reinvest the dividends. Since its inception, my portfolio has gained 38.9%, slightly outpacing the S&P 500 Index with 42% less volatility.

Everyone knows the market is risky. But what few people -- and even some companies like Apple -- f! ail to re! alize, is the long-term risk of sitting on too much low-yielding cash. Even at the current rate of inflation in the United States, money sitting in a low-interest checking or savings account will be worth less next year than it is worth this year.

And imagine if the rate of inflation shot up?

To put it plainly, you've got to let your money grow in order to retire comfortably.

Action to Take --> If you've been sitting out on the sidelines, then dividend reinvestment is a good way to ease yourself back in the game. Consider running your own real-world dividend reinvestment experiment. Start slowly. Pick one or two stable dividend-paying securities and watch the growth that even a few months of dividend reinvestment can deliver. And if you want to know more about my dividend reinvestment strategy, then go here.

Top 10 Bank Stocks To Buy Right Now

After opening down, shares in Citigroup (NYSE: C  ) are now up. But breaking news could send the stock in either direction today.

This just in
Financial Times is reporting that Citi has settled a major lawsuit with the Federal Housing Finance Agency. The suit accused Citi and 16 of its peers of selling Fannie Mae and Freddie Mac bad mortgage-backed securities from 2005 to 2007, the peak of the country's subprime-lending boom.

There's no official word yet on the final cost, but if precedent from similar settlements holds for this case, the superbank might pay out $3.5 billion. Citi had previously been fighting the suit tooth and nail, and is the first of the big banks to settle.�

A glass half full or half empty
Someone bullish on Citi might see the news of this big settlement as evidence that the superbank has taken yet another step in shedding its financial-crisis downside: Counting from the collapse of Bear Stearns in March of 2008, we're more than five years out from the start of the financial crisis. At this point, how many more big settlements like this could still be looming out there?

Top 10 Bank Stocks To Buy Right Now: M&T Bank Corporation (MTB)

M&T Bank Corporation operates as the holding company for M&T Bank and M&T Bank, National Association that provide commercial and retail banking services to individuals, corporations and other businesses, and institutions. It offers business loans and leases; business credit cards; deposit products, such as demand, savings, and time accounts; and financial services, including cash management, payroll and direct deposit, merchant credit card, and letters of credit. The company also provides residential real estate loans; multifamily commercial real estate loans; commercial real estate loans; one-to-four family residential mortgage loans; investment and trading securities; short-term and long-term borrowed funds; brokered certificates of deposit and interest rate swap agreements related thereto; and branch deposits. In addition, it offers foreign exchange, as well as asset management services. Further, the company provides consumer loans, and commercial loans and leases; cred it life, and accident and health reinsurance; and securities brokerage, investment advisory, and insurance agency services. As of December 31, 2009, it had 738 banking offices in New York State, Pennsylvania, Maryland, Delaware, New Jersey, Virginia, West Virginia, and the District of Columbia; a commercial banking office in Ontario, Canada; and an office in George Town, Cayman Islands. The company was founded in 1969 and is headquartered in Buffalo, New York.

Top 10 Bank Stocks To Buy Right Now: EverBank Financial Corp (EVER.N)

EverBank Financial Corp, incorporated in 2004, is an unitary savings and loan holding company. The Company provides a range of financial products and services directly to customers through multiple business channels. Its operating subsidiary is EverBank. As of December 31, 2011, EverBank had $ 10.3 billion deposits. EverBank offers a range of banking, lending and investing products to consumers and businesses. EverBank provides services to customers through Websites, over the phone, through the mail and at 14 Florida-based Financial Centers. The Company operates in two operating business segments: Banking and Wealth Management, and Mortgage Banking. Its Banking and Wealth Management segment includes earnings generated by and activities related to deposit and investment products and services and portfolio lending and leasing activities. Its Mortgage Banking segment consists of activities related to the origination and servicing of residential mortgage loans. In April 201 2, the Company acquired MetLife Bank�� warehouse finance business. In October 2012, it acquired Business Property Lending, Inc.

Asset Origination and Fee Income Businesses

The Company has a range of asset origination and fee income businesses. The Company generates generate fee income from its mortgage banking activities, which consist of originating and servicing one-to-four family residential mortgage loans. It originates prime residential mortgage loans using a centrally controlled underwriting, processing and fulfillment infrastructure through financial intermediaries (including community banks, credit unions, mortgage bankers and brokers), consumer direct channels and financial centers. Its mortgage origination activities include originating, underwriting, closing, warehousing and selling to investors prime conforming and jumbo residential mortgage loans. From its mortgage origination activities, it earns fee-based income on fees charged to b orrowers and other noninterest income from gains on sales ! fr! om mortgage loans and servicing rights. During the year ended December 31, 2011, it originated six billion dollars of residential loans. It generates mortgage servicing business through the retention of servicing from its origination activities, acquisition of bulk mortgage servicing rights (MSR) and related servicing activities.

The Company�� mortgage servicing business includes collecting loan payments, remitting principal and interest payments to investors, managing escrow funds for the payment of mortgage-related expenses, such as taxes and insurance, responding to customer inquiries, counseling delinquent mortgagors, supervising foreclosures and liquidations of foreclosure properties and otherwise administering its mortgage loan servicing portfolio. It earns mortgage servicing fees and other ancillary fee-based income in connection with these activities. It services a portfolio by both product and investor, including agency and private pools of mortgages secured by properties throughout the United States. As of December 31, 2011, its mortgage servicing business, which services mortgage loans for itself and others, managed loan servicing administrative functions for loans with unpaid principal balance (UPB) of $54.8 billion.

The Company originates originate equipment leases nationwide through relationships with approximately 280 equipment vendors with networks of creditworthy borrowers and provide asset-backed loan facilities to other leasing companies. Its equipment leases and loans finance essential-use health care, office product, technology and other equipment. Its commercial financings range from approximately $25,000 to $1.0 million per transaction, with typical lease terms ranging from 36 to 60 months. Its commercial finance activities provide it with access to approximately 25,000 small business customers nationwide, which creates opportunities to cross-sell its deposit, lending and wealth management pro ducts. It focuses to offer warehouse loans, which are s! hort-! te! rm revo! lving facilities, primarily securitized by agency and government collateral. It provides financial advisory, planning, brokerage, trust and other wealth management services to its mass-affluent and high-net-worth customers through its registered broker dealer and recently-formed registered investment advisor subsidiaries.

Interest-Earning Asset Portfolio

As of December 31, 2011, the Company�� interest-earning assets were $11.7 billion. As of December 31, 2011, its loan and lease held for investment portfolio was $6.5 billion. As of December 31, 2011, the carrying values of its interest-earning assets are: residential, government-insured (residential), securities, commercial and commercial real estate, Bank of Florida (covered), lease financing receivables, and other.

Residential includes primarily prime loans originated and retained from its mortgage banking activities, acquired from third parties or held for sale to other investors. government-insured (residential) includes Government National Mortgage Association (GNMA) pool buyouts with government insurance, sourced from its mortgage banking segment and third-party sources. Securities include non-agency residential mortgage-backed securities (MBS) and collateralized mortgage obligation (CMO) purchased at significant discounts. This portfolio includes protection against credit losses from purchase discounts, subordination in the securities structures and borrower equity. Commercial and commercial real estate includes a range of commercial loans, including owner-occupied commercial real estate, commercial investment property and small business commercial loans. As of December 31, 2011, Bank of Florida (Covered) includes commercial, multi-family and commercial real estate loans with $71.3 million of purchase discounts. Lease financing receivables include covered lease financing receivables. As of December 31, 2011, the lease portfolio had $64.7 million of total discounts. Other includes home equity loan! s and lin! ! es of cre! dit, consumer and credit card loans and other investments.

Deposit Generation

As of December 31, 2011, the Company had approximately $10.3 billion in deposits. Its market-based deposit products, consisting of its WorldCurrency, MarketSafe and EverBank Metals Select products, provide investment capabilities for customers seeking portfolio diversification with respect to foreign currencies, commodities and other indices. Its financial portal includes online bill-pay, account aggregation, direct deposit, single sign-on for all customer accounts and other features. Its Website and mobile device applications provide information on its product offerings, financial tools and calculators, newsletters, financial reporting services and other applications for customers to interact with it and manages all of their EverBank accounts on a single integrated platform. Its new mobile applications allow customers using iPhone, iPad, Android and Blackberry devices to view account balances, conduct real time balance transfers between EverBank accounts, administer billpay, review account activity detail and remotely deposit checks.

The Company generates deposit customer relationships through its consumer direct, financial center and financial intermediary distribution channels. Its consumer direct channel includes Internet, e-mail, telephone and mobile device access to product and customer support offerings. Its direct distribution with a network of 14 financial centers in Florida metropolitan areas, include Jacksonville, Naples, Ft. Myers, Miami, Ft. Lauderdale, Tampa Bay and Clearwater. As of December 31, 2011, its financial centers had average deposits of $130.5 million, which is approximately double the industry average. In addition, it generates noninterest-bearing escrow deposits from its mortgage servicing business.

5 Best Safest Stocks To Own For 2014: Royal Bank Of Canada(RY)

Royal Bank of Canada provides personal and commercial banking, wealth management services, insurance, corporate and investment banking, and transaction processing services under the RBC name worldwide. Its Canadian Banking segment offers personal financial services, business financial services, and cards and payment solutions. The company?s Wealth Management segment provides wealth and asset management, and estate and trust services to affluent and high net worth clients through distributors, as well as directly to institutional and individual clients in Canada, the United States, Europe, Asia, and Latin America. Its Insurance segment provides various life and health insurance, including universal life, accidental death and critical illness protection, disability, long-term care insurance, and group benefits; and property and casualty insurance comprising home, auto, and travel insurance, as well as wealth accumulation solutions; and reinsurance products through retail ins urance branches, call centers, independent insurance advisors and travel agencies, financial institutions, and career sales force. The company?s International Banking segment offers various financial products and services to individuals, business clients, and public institutions in the U.S. and Caribbean. This segment also provides global custody, fund and pension administration, securities lending, shareholder services, analytics, and other related services to institutional investors. Royal Bank of Canada?s Capital Markets segment engages in the trading and distribution of fixed income, foreign exchange, equities, commodities, and derivative products for institutional, public sector, and corporate clients; and involves in investment banking, debt and equity origination, advisory services, corporate lending, private equity, and client securitization businesses. The company was founded in 1864 and is headquartered in Toronto, Canada.

Top 10 Bank Stocks To Buy Right Now: Commonwealth Bank of Australia (CBA)

Commonwealth Bank of Australia (the Bank) is engaged in the provision of a range of banking and financial products and services to retail, small business, corporate and institutional clients. The Bank is a provider of integrated financial services, including retail, business and institutional banking, superannuation, life insurance, general insurance, funds management, broking services and finance company activities. Its operating segments include Retail Banking Services, Business and Private Banking, Institutional Banking and Markets, Wealth Management, New Zealand, Bankwest and Other. Its retail banking services include home loans, consumer finance, retail deposits and distribution. Its business and private banking include corporate financial services, regional and agribusiness banking, local business banking, private bank and equities and margin lending. The Bank and its subsidiaries ceased to be a substantial holder in Ten Network Holdings Limited, as of September 12, 2012. Advisors' Opinion:

• [By Dale Gillham]

  CBA has held up better relative to the 2009 low and has been less volatile than ANZ. Also, the retracement in 2011 was just under 50 per cent ($42.02) of the range from the 2009 low to the high at $60.00, whereas the other banks broke this level.

  Over recent months CBA has rebounded and is currently close to strong resistance around $49.50. Like ANZ, the overhead resistance may hold the stock back in the short term. However, if CBA jumps the immediate hurdle it also has the potential to move up over the coming months by around 10 per cent to between $53.00 and $56.50.

Top 10 Bank Stocks To Buy Right Now: FirstMerit Corporation(FMER)

FirstMerit Corporation operates as the bank holding company for FirstMerit Bank, N.A. that provides a range of banking, fiduciary, financial, insurance, and investment services to corporate, institutional, and individual customers in northern and central Ohio, and western Pennsylvania. The company?s commercial business offers commercial term loans, revolving credit arrangements, asset-based lending, leasing, commercial mortgages, real estate construction lending, letters of credit, cash management services, and other depository products. Its retail business provides various financial products and services, including consumer direct and indirect installment loans, debit and credit cards, debit gift cards, residential mortgage loans, home equity loans and lines of credit, fixed and variable annuities, and ATM network services, as well as deposit products comprising checking, savings, money market accounts, and certificates of deposit. The company?s wealth business provides a sset management, private banking, financial planning, estate settlement and administration, and credit and deposit products and services. FirstMerit Corporation also offers trust and investment services, including personal trust and planning, and investment management; retirement plan services; retail mutual funds, other securities, variable and fixed annuities, personal disability and life insurance products, and brokerage services; and private banking services, including credit, deposit, and asset management solutions. As of December 31, 2009, it operated a network of 160 full service banking offices and 182 ATMs. The company was founded in 1855 and is headquartered in Akron, Ohio.

Top 10 Bank Stocks To Buy Right Now: HSBC Holdings PLC (HBC)

HSBC Holdings plc (HSBC), incorporated on January 1, 1959, is a global banking and financial services organizations. As of December 31, 2010, it provided a range of financial services to around 95 million customers through two customer groups, Personal Financial Services (PFS), including consumer finance, and Commercial Banking (CMB), and two global businesses, Global Banking and Markets (GB&M), and Global Private Banking (GPB). Its international network covers 87 countries and territories in six geographical regions; Europe, Hong Kong, Rest of Asia-Pacific, the Middle East, North America and Latin America. As of December 31, 2010, the Company had an international network of some 7,500 offices in 87 countries and territories in six geographical regions; Europe, Hong Kong, Rest of Asia-Pacific, the Middle East, North America and Latin America. PFS incorporates the Company�� consumer finance businesses, which include HSBC Finance Corporation (HSBC Finance). In April 2011, the Company closed its retail banking operation in Russia. In July 2011, the Company sold its unsecured written-off personal loan and credit card portfolio to J M Financial Asset Reconstruction Co. Pvt. Ltd. On May 20, 2012, HSBC Holdings PLC's wholly owned subsidiary HSBC Bank USA, N.A. and other wholly owned subsidiaries, sold 195 retail branches to First Niagara Bank, N.A. (First Niagara). In May 2012, the Company�� 70.03% owned subsidiary, HSBC Bank Malta plc, sold its card acquiring business to HSBC Merchant Services Ltd. In June 2012, the Company�� indirect wholly owned subsidiary, HSBC Iris Investments (Mauritius) Ltd, sold its 4.73% interest in Axis Bank Limited and 4.74% interest in Yes Bank Limited. In July 2012, its subsidiary, HSBC Europe (Netherlands B.V.), sold its 100% interest in HSBC Credit Zrt, to CentralFund Kockazati Tokealap. On March 31, 2013, Enstar Group Ltd�� subsidiary completed the acquisition from Household Insurance Group Holding Company of HSBC Insurance Company of Delaware and Household Life Insur! ance Company of Delaware, as well as its three subsidiary insurers.

The Company�� principal banking operations in Europe are HSBC Bank plc in the United Kingdom, HSBC France, HSBC Bank A.S. in Turkey, HSBC Bank Malta p.l.c., HSBC Private Bank (Suisse) S.A. and HSBC Trinkaus & Burkhardt AG. Through these operations it provides a range of banking, treasury and financial services to personal, commercial and corporate customers across Europe. HSBC�� banking subsidiaries in Hong Kong are The Hongkong and Shanghai Banking Corporation Limited and Hang Seng Bank Limited.

The Company offers a range of banking and financial services in the People�� Republic of China, mainly through its local subsidiary, HSBC Bank (China) Company Limited. It also participates indirectly in the People�� Republic of China through its four associates. Outside Hong Kong and the People�� Republic of China, it conducts business in 22 countries and territories in the Rest of Asia-Pacific region, through branches and subsidiaries of The Hongkong and Shanghai Banking Corporation, with coverage in Australia, India, Indonesia, Malaysia and Singapore.

In the Middle East, the Company has network of branches of HSBC Bank Middle East Limited, together with HSBC�� subsidiaries and associates. Its North American businesses are located in the United States, Canada and Bermuda. Operations in the United States are conducted through HSBC Bank USA, N.A., which is concentrated in New York State, and HSBC Finance, a national consumer finance company based near Chicago. HSBC Markets (USA) Inc. is the intermediate holding company of, inter alia, HSBC Securities (USA) Inc. HSBC Bank Canada and HSBC Bank Bermuda operate in their respective countries.

The Company�� operations in Latin America consists of HSBC Bank Brasil S.A.-Banco Multiplo, HSBC Mexico, S.A., HSBC Bank Argentina S.A. and HSBC Bank (Panama) S.A. In addition to banking services, it operates insurance businesses in Brazil, Mexi! co, Argen! tina, Panama and a range of smaller markets.

Personal Financial Services

PFS offers the Company�� products and services to customers based on their individual needs. Premier and Advance services are for customers who value international connectivity and benefit from its global reach and scale. It offers a range of banking products and services reflecting local requirements. In addition, it issues card globally, offering HSBC branded cards, co-branded cards with selected partners and private label (store) cards. Its customer offerings include personal banking products, including current and savings accounts, mortgages and personal loans, credit cards, debit cards and local and international payment services, and wealth management services, including insurance and investment products and financial planning services.

HSBC Premier provides preferential banking services to high net worth customers and their immediate families with a relationship manager, wealth advice and solutions. Customers can access emergency travel assistance, telephone banking and an online global view of their Premier accounts globally with free money transfers between them. HSBC Advance provides a range of preferential products and services customized to meet local needs. With a telephone service, access to wealth advice and online tools to support financial planning, it gives customers an online global view of their Advance accounts with money transfers between them. Wealth Solutions & Financial Planning process designed for global individual customer needs to help its clients to protect, grow and manage their wealth through investment and wealth insurance products manufactured by in-house partners, including Global Asset Management, Global Markets and HSBC Insurance, and by selected third party providers. During 2010, PFS provided 92 million individual and self-employed customers with financial services in over 60 markets globally.

Commercial Banking

The Company ! segments ! its CMB business into Corporate, to serve both Corporate and Mid-Market companies, and Business Banking, to serve the small and medium-sized enterprises (SME��) sector. It provides support to companies as they expand both domestically and internationally, and ensures a focus on the business banking segments. It offers a range of financing, both domestic and cross-border, including overdrafts, receivables finance, term loans and syndicated, leveraged, acquisition and project finance. Asset finance is offered in selected sites, focused on leasing and instalment finance for vehicles, plant and equipment. It is a provider of domestic and cross-border payments and collections, liquidity management and account services globally, delivered through its e-platform, HSBC net. It provides international trade products and services, to both buyers and suppliers, such as export finance, guarantees, documentary collections and forfeiting to improve efficiency and help mitigate risk throughout the supply chain.

CMB customers are volume users of its foreign exchange, derivatives and structured products. Capital markets & advisory is raising capital on debt and equity markets and provide advisory services. Commercial cards issuing helps customers enhance cash management, credit control and purchasing. Card acquiring services enable merchants to accept credit and debit card payments in person or remotely. CMB offers key person, employee benefits and a range of commercial risk insurance, such as property, cargo and trade credit. Direct channels include online and direct banking offerings, such as telephone banking, HSBCnet and Business Internet Banking.

Global Banking and Markets

GB&M provides tailored financial solutions to government, corporate and institutional clients and private investors globally. Managed as a global business, GB&M operates a long-term relationship management approach to build a understanding of clients��financial requirements. Sector-focused client service! teams co! nsisting of relationship managers and product specialists develop financial solutions to meet individual client needs. GB&M is managed as four principal business lines: Global Markets, Global Banking, Global Asset Management and Principal Investments.

Global Markets operations consist of treasury and capital markets services. Products include foreign exchange; currency, interest rate, bond, credit, equity and other derivatives; government and non-government fixed income and money market instruments; precious metals and exchange-traded futures; equity services; distribution of capital markets instruments, and securities services, including custody and clearing services and funds administration to both domestic and cross-border investors. Global Banking offers financing, advisory and transaction services. Its products include capital raising, advisory services, bilateral and syndicated lending, leveraged and acquisition finance, structured and project finance, lease finance and non-retail deposit taking; international, regional and domestic payments and cash management services; and trade services for large corporate clients.

Global Asset Management offers investment solutions to institutions, financial intermediaries and individual investors globally. Principal Investments includes its relationships with third-party private equity managers and other investments. GB&M is a global business, which provides financial solutions to government, corporate and institutional clients globally.

Global Private Banking

GPB works with the Company�� high net worth clients to offer ways to manage and preserve wealth. HSBC Private Bank is the principal marketing name of its international private banking business, GPB. GPB works with its clients to offer both ways to manage and preserve wealth while optimising returns. GPB accesses six advisory centers in Hong Kong, Singapore, Geneva, New York, Paris and London. Private Banking services consist of multi-currency depo! sit accou! nts and fiduciary deposits, credit and specialist lending, treasury trading services, cash management, securities custody and clearing. GPB works to ensure that its clients have access to other products and services available in HSBC, such as credit cards, Internet banking, corporate banking and investment banking.

Private Wealth Management consists of both advisory and discretionary investment services. A range of investment vehicles is covered, including bonds, equities, derivatives, options, futures, structured products, mutual funds and alternatives (hedge funds, private equity and real estate). Corporate Finance Solutions helps provide clients with solutions for their companies, working in conjunction with GB&M. Private Wealth Solutions consist of planning, trustee and other fiduciary services to protect wealth and preserve it for future generations. Its expertise includes trusts, foundation and company administration, charitable trusts and foundations, insurance, family office advisory and philanthropy.

Other

The Company�� Other contains the results of certain property transactions and unallocated investment activities. It also includes centrally held investment companies, movements in fair value of own debt, HSBC�� holding company and financing operations.

Top 10 Bank Stocks To Buy Right Now: Wilshire Bancorp Inc.(WIBC)

Wilshire Bancorp, Inc. operates as the holding company for Wilshire State Bank that offers a range of financial products and services. It accepts various deposit products that include certificates of deposit, regular savings accounts, money market accounts, checking and negotiable order of withdrawal accounts, installment savings accounts, and individual retirement accounts. The company?s loan portfolio comprises commercial real estate and home mortgage loans, commercial business lending and trade finance, and small business administration lending, as well as consumer loans, including personal loans, auto loans, and other loans. It also provides trade finance services that include issuance and negotiation of letters of credit, handling of documentary collections, advising and negotiation of commercial letters of credit, transfer and issuance of back-to-back letters of credit, and trade finance lines of credit. In addition, the company offers Internet banking services, auto matic teller machines, and armored carrier services. It has 24 full-service branch offices in Southern California, Texas, New Jersey, and the greater New York City metropolitan area; and 6 loan production offices in Colorado, Georgia, Texas, New Jersey, and Virginia. The company was founded in 1980 and is headquartered in Los Angeles, California.

Advisors' Opinion:

• [By Philip]

  Shares of Wilshire Bancorp (WIBC) of Los Angeles closed at $3.42 Friday, down 55% year-to-date. The shares have 18% upside potential, based on a mean 12-month price target of $4.04, among analysts polled by FactSet.

  The company had $2.7 billion in total assets as of Sept. 30, with 24 branches in Southern California, Texas, New Jersey, and the New York City area, and six loan production offices in n Colorado, Georgia, Texas (two offices), New Jersey, and Virginia.

  Wilshire Bancorp owes $62.2 million in federal bailout funds received through the Troubled Assets Relief Program, or TARP. The company raised $100 million in common equity during the second quarter, following an agreement with the Federal Deposit Insurance Corp. and state regulators to bring main subsidiary Wilshire State Bank's Tier 1 leverage ratio up to at least 10%. The Bank subsidiary's Tier 1 leverage ratio was 13.24% as of Sept. 30.

  The holding company reported third-quarter net income available to common shareholders of $10.2 million, or 14 cents a share, increasing from $2.1 million, or 4 cents a share, during the second quarter, and $5.0 million, or 14 cents a share, during the third quarter of 2010.

  The main factor in the earnings improvement was a reduction in credit costs, with a third-quarter provision for loan losses of $2.5 million, declining from $10.3 million the previous quarter and $18.0 million a year earlier. A $5.7 million decline in loan loss reserves during the third quarter directly boosted earnings.

  With the company continuing its aggressive reduction of its commercial real estate loan portfolio and its nonperforming loans, Wilshire Bancorp's total assets declined 17% from a year earlier. During the third quarter, the company sold $28.7 million in loans, most of which were nonperforming, for a gain of $1.7 million.

  Net interest income declined 14% year-over-year to $25.5 million in the third quarter, reflecting the balance sheet reduction.

  The net interest margin -- t! he difference between a bank's average yield on loans and investments and its average cost for loans and deposits -- was a strong 4.23% in the third quarter, which was down from 4.42% the previous quarter, but up from 3.393% a year earlier.

  Wilshire Bancorp's ratio of nonperforming assets to total assets was 2.46% as of Sept. 30, improving from 3.22% the previous quarter and 2.87% a year earlier. The annualized ratio of net charge-offs -- loan losses less recoveries -- to total loans was 0.46%, and with reserves covering 5.27% of total loans, the company appeared well-positioned for continued significant releases of reserves.

  FIG Partners analyst Timothy Coffey on Oct. 28 reiterated his "Outperform" or "Buy" rating for Wilshire Bancorp, raising his 12-month price target to $4.50 from $3.80, also "estimating tangible book values of $3.43 in 2011, $4.21 in 2012 and $4.84 in 2013." The analyst said that he anticipated that "could start to reverse the DTA-Deferred Tax Asset valuation allowance over the coming quarters," and that "the improvement in the earnings power has resulted in losses below management's projections, which has increased the valuation allowance to $40 million." Coffey estimated that "company could have no tax expense or very limited expense in 2012 before a normalized expense returns in 2013."

  The shares trade for 6.8 times the consensus 2012 earnings estimate of 50 cents, among analysts polled by FactSet, and just above their Sept. 30 tangible book value of $3.27, according to SNL Financial.

  Four out of seven analysts covering Wilshire Bancorp rate the shares a buy, while the remaining analysts all have neutral ratings.

Top 10 Bank Stocks To Buy Right Now: Mitsubishi UFJ Financial Group Inc (MTU)

Mitsubishi UFJ Financial Group, Inc. (MUFJ), incorporated on April 2, 2001, is a holding company for The Bank of Tokyo-Mitsubishi UFJ, Ltd. (BTMU), Mitsubishi UFJ Trust and Banking Corporation (MUTB), Mitsubishi UFJ Securities Holdings Co., Ltd. (MUSHD), Mitsubishi UFJ Morgan Stanley Securities Co., Ltd.( MUMSS), Mitsubishi UFJ NICOS Co., Ltd. (Mitsubishi UFJ NICOS) and other companies engaged in a range of financial businesses. Its services include commercial banking, trust banking, securities, credit cards, consumer finance, asset management, leasing and fields of financial services. In May 2010, the Company and Morgan Stanley formed two joint ventures in Japan by integrating our respective Japanese securities companies engaged in investment banking and securities businesses. The Company converted the wholesale and retail securities businesses conducted in Japan by the former MUS into one of the joint venture entities, which is named MUMSS. Morgan Stanley contributed the investment banking operations conducted in Japan by its formerly wholly owned subsidiary, Morgan Stanley Japan Securities Co., Ltd. (MSJS) into MUMSS and converted the sales and trading and capital markets businesses conducted in Japan by MSJS into a second joint venture entity called Morgan Stanley MUFG Securities, Co., Ltd.

Integrated Retail Banking Business Group

The Integrated Retail Banking Business Group covers all domestic retail businesses, including commercial banking, trust banking and securities businesses, and enables the Company to offer a range of banking products and services, including financial consulting services, to retail customers in Japan. This business group integrates the retail business of BTMU, MUTB and MUMSS, as well as retail product development, promotion and marketing in a single management structure. Many of its retail services are offered through its network of MUFG Plazas providing individual customers with access to its financial product offerings of integrated commercial b! anking, trust banking and securities services.

The Company offers a range of bank deposit products, including a non-interest-bearing deposit account that is redeemable on demand and intended for payment and settlement functions, and is insured without a maximum amount limitation. It also offers a variety of asset management and asset administration services to individuals, including savings instruments, such as current accounts, ordinary deposits, time deposits, deposits at notice and other deposit facilities. MUFJ also offers trust products, such as loan trusts and money trusts, and other investment products, such as investment trusts, performance-based money trusts and foreign currency deposits.

The Company creates portfolios by combining savings instruments and investment products. It also provide a range of asset management and asset administration products, as well as customized trust products for high-net-worth individuals, as well as advisory services relating to the purchase and disposal of real estate and effective land utilization, and testamentary trusts. The Company provides a varied line up of investment trust products allowing its customers to choose products according to their investment needs through BTMU, MUTB and MUMSS, as well as kabu.com Securities, which specializes in online financial services. In the fiscal year ended March 31, 2010, BTMU offered a total of five investment trusts. As of the end of March 2010, BTMU offered its clients a total of 73 investment trusts.

The Company offers securities, including publicly offered stocks, foreign and domestic investment trusts, Japanese government bonds, foreign bonds and various other products. The Company offers housing loans, card loans and other loans to individuals. With respect to housing loans, in addition to housing loans incorporating health insurance for seven major illnesses, BTMU began offering in June 2009 preferential interest rates under its Environmentally Friendly Support program ! to custom! ers who purchase environment-conscious houses (like houses with solar electric systems), which meet specific criteria in response to increasing public interest in environmental issues. In September 2009, BTMU launched housing loans with home mortgage insurance, which BTMU jointly developed with the Japan Housing Finance Agency, a governmental agency under the Japanese government�� economic stimulus measures, under which the agency indemnifies BTMU for losses from housing loans.

The Company offers products and services through a range of channels, including branches, automated teller machines (ATMs) (including convenience store ATMs shared by multiple banks), Mitsubishi-Tokyo UFJ Direct (telephone, Internet and mobile phone banking), the Video Counter and postal mail. It offers integrated financial services combining its banking, trust banking and securities services at MUFG Plazas. These Plazas provide retail customers with integrated and flexible suite of services at one-stop outlets. As of March 31 2010, the Company provided those services through 47 MUFG Plazas. The Company offers MUTB�� trust related products and advisory services through its trust agency system not only for MUTB customers but also for BTMU and MUMSS customers. As of March 31, 2010, BTMU engaged in eight businesses as the trust banking agent for MUTB: testamentary trusts, inheritance management, asset succession planning, inheritance management agency operations, business management financial consulting, lifetime gift trusts, share disposal trusts, and marketable securities administration trusts.

Integrated Corporate Banking Business Group

The Integrated Corporate Banking Business Group covers all domestic and overseas corporate businesses, including commercial banking, investment banking, trust banking and securities businesses, as well as UnionBanCal Corporation (UNBC). UNBC is a wholly owned subsidiary of BTMU and a US bank holding company with Union Bank being its primary subsidiary. T! he Compan! y provides various financial solutions, such as loans and fund management, remittance and foreign exchange services. It also helps its customers develop business strategies, such as inheritance-related business transfers and stock listings.

It offers advanced financial solutions to companies through corporate and investment banking services. Product specialists globally provide derivatives, securitization, syndicated loans, structured finance and other services. It also provides investment banking services, such as merger and acquisition (M&A) advisory, bond and equity underwriting. It provides online banking services that allow customers to make domestic and overseas remittances electronically. It also provides a global cash pooling/netting service, and the Treasury Station, a fund management system for a multi-company group. The Company�� global Corporate and Investment Banking business (Global CIB), primarily serves companies, financial institutions, and sovereign and multinational organizations with a set of solutions for their financing needs.

Integrated Trust Assets Business Group

The Integrated Trust Assets Business Group covers asset management and administration services for products, such as pension trusts and security trusts by integrating the trust banking expertise of MUTB and the international strengths of BTMU. The business group provides a range of services to corporate and pension funds, including stable and secure pension fund management and administration, advice on pension schemes, and payment of benefits to scheme members. Its Integrated Trust Assets Business Group combines MUTB�� trust assets business, comprising trust assets management services, asset administration and custodial services, and the businesses of Mitsubishi UFJ Global Custody S.A., Mitsubishi UFJ Asset Management Co., Ltd. and KOKUSAI Asset Management Co., Ltd.

Advisors' Opinion:

• [By Louis Navellier]

  Mitsubishi UFJ Financial (NYSE:MTU) is a Japanese holding company mainly engaged in the banking business. Mitsubishi Financial has posted a gain of 11% since this time last year. MTU stock gets a “B” grade for operating margin growth, a “B” grade for the magnitude in which earnings projections have increased over the past months, and an “A” grade for cash flow.

Top 10 Bank Stocks To Buy Right Now: Northern Trust Corporation(NTRS)

Northern Trust Corporation, through its subsidiaries, provides asset servicing, fund administration, asset management, and fiduciary and banking solutions for corporations, institutions, families, and individuals worldwide. The company offers corporate and institutional services, including global master trust and custody, trade settlement, and reporting; fund administration; cash management; investment risk and performance analytical services; investment operations outsourcing; and transition management and commission recapture services. It also provides personal financial services, such as personal trust, investment management, custody, and philanthropic services; financial consulting; guardianship and estate administration; brokerage services; and private and business banking services, as well as customized products and services. In addition, the company offers active and passive equity and fixed income portfolio management, as well as alternative asset classes comprisin g private equity and hedge funds of funds, and multi-manager products and advisory services. Further, it engages in fund administration, investment operations outsourcing, and custody business that provides specialized services to a range of funds, which include money-market, multi-manager, exchange-traded funds, and property funds for on-shore and off-shore markets. Additionally, the company provides administrative and middle-office services consisting of trade processing, valuation, real-time reporting, accounting, collateral management, and investor servicing. Northern Trust Corporation was founded in 1889 and is based in Chicago, Illinois.

Top 10 Bank Stocks To Buy Right Now: Bank of America Corporation(BAC)

Bank of America Corporation, a financial holding company, provides banking and nonbanking financial services and products to individuals, small- and middle-market businesses, large corporations, and governments in the United States and internationally. The company?s Deposits segment generates savings accounts, money market savings accounts, certificate of deposits, and checking accounts; and Global Card Services segment provides the U.S. consumer and business card, consumer lending, international card and debit card services. Its Home Loans & Insurance segment offers consumer real estate products and services, including mortgage loans, reverse mortgages, home equity lines of credit, and home equity loans. It also provides property, disability, and credit insurance. The company?s Global Commercial Banking segment offers lending products, including commercial loans and commitment facilities, real estate lending, leasing, trade finance, short-term credit, asset-based lending, and indirect consumer loans; and capital management and treasury solutions, such as treasury management, foreign exchange, and short-term investing options. Its Global Banking & Markets segment provides financial products, advisory services, settlement, and custody services; debt and equity underwriting and distribution, merger-related advisory services, and risk management products; and integrated working capital management and treasury solutions. The company?s Global Wealth & Investment Management segment offers investment and brokerage services, estate management, financial planning services, fiduciary management, credit and banking expertise, and asset management products. Bank of America Corporation serves customers through a network of approximately 5,900 banking centers and 18,000 automated teller machines. It was formerly known as NationsBank Corporation and changed its name on October 1, 1998. Bank of America Corporation was founded in 1874 and is based in Charlott e, North Carolina.

Advisors' Opinion:

• [By Jon C. Ogg]

  Bank of America Corp. (NYSE: BAC) was the best performer of all 30 DJIA components in 2012. With gains of over 100%, the stock is now overvalued according to Wall St. analysts. Meredith Whitney may have recently upgraded Bank of America, but the year-end consensus price target of $10.60 was implying a negative return of almost 9%. There is at least something positive to say here, and that is that analysts are ratcheting their targets slightly higher already. Thomson Reuters already has lifted its consensus mean target to $11.13. Bank of America only yields 0.3% because it has not been allowed to raise its dividend. What if that changes in 2013?

Ask Wedgewood Partners' David Rolfe Your Investing Question for GuruFocus Reader Q&A

David Rolfe, chief investment officer of the $1.3 billion investment management firm Wedgewood Partners Inc., is joining GuruFocus for a reader Q&A. Rolfe has also been a Premium Member of GuruFocus since 2007. Readers are welcome to submit their questions – regarding Wedgewood's process, their personal investing or the economy at large – by entering them in the comments box below.

Over the past 15 years – Wedgewood's preferred measurement range – it has beat the S&P 500 316.1% to 124.3%, cumulatively. A patient, focused and disciplined value approach has driven the superior performance.

As Wedgewood Partners' managers explain in their third-quarter letter, they think so like business owners that they virtually ignore short-term market price fluctuations of their holdings and instead concentrate on "the long-term appreciation of equity, relative to the underlying growth of the business." This inevitably results in an increase in equity value that reduces the risk of permanent loss of capital. In short, they "believe the philosophy of the business owner repeatedly trumps the whimsy of the easily influenced speculator."

To find the right companies, they look for five fundamental factors in each prospect: 1) sustainably superior competitive advantage 2) compelling valuation 3) double-digit growth 4) exceptional financial strength and 5) limited overlap with existing portfolio holdings.

They are so selective about what they include in the portfolio that they don't mind waiting, sometimes years, for companies they find attractive to finally exhibit all of these criteria before they invest.

Their overall investing strategy is summarized below:

[ Enlarge Image ]

Over the past 12 months, only two new stocks merited inclusion in the Wedgewood portfolio: Charles Schwab (SCHW) and Coach (COH).

Their largest holdings as of the end of the second quarter are Ap! ple (AAPL), Berkshire Hathaway (BRK.A)(BRK.B), Google (GOOG), Express Scripts (ESRX) and Qualcomm (QCOM).

To learn more about David and Wedgewood Partners, read their recently released third quarter shareholder letter and outlook or visit their portfolio.

Don't forget to ask David your question in the comments section below. Answers will appear shortly.

Sign up for a GuruFocus Premium Membership here.

Related links:David RolfeThird quarter shareholder letter and outlookVisit their portfolio

Is Johnson & Johnson Still a Good Defensive Play?

With shares of Johnson & Johnson (NYSE:JNJ) trading at around $87.45, is JNJ an OUTPERFORM, WAIT AND SEE or STAY AWAY? Let's analyze the stock with the relevant sections of our CHEAT SHEET investing framework:

C = Catalyst for the Stock's Movement

Johnson & Johnson has been rated an OUTPERFORM in this column every month since December. The stock has performed well over that time frame, but is it about to run out of steam?

Johnson & Johnson has a diverse revenue base, regional diversification, a superb pipeline, impressive cash flow, a strong company culture, consistent revenue improvements, and it offers an impressive yield of 3.10 percent. The stock is also resilient in bear markets.

In regards to company culture, according to Glassdoor.com, employees have rated their employer a 3.5 of 5, and 75 percent of employees would recommend the company to a friend. A very impressive 89 percent of employees approve of CEO Alex Gorsky.

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Yet another plus is that many institutional investors are moving out of technology and into healthcare. On the other hand, there has recently been a lot of talk about a bubble forming in dividend stocks. Dividend stocks have acted as an alternative to fixed income for many investors. With the Federal Reserve forcing responsible investors to take unnecessary risks, dividend stocks have been one of the only games in town. In regards to whether or not there is a bubble forming in dividend stocks, a good argument can be made for either side.

A bigger concern for Johnson & Johnson is that 37 percent of revenue comes from pharmaceuticals. The pipeline is always strong, but there have been many setbacks. If this setback trend continues, then it has the potential to affect results, and more importantly, it has the potential to affect investor confidence.

Johnson & Johnson recently beat Q1 expectations, and it reiterated its FY2013 EPS guidance of $5.35-$5.45. The latter isn't a negative, but many investors were hoping for upped guidance.

Let's take a look at some numbers before forming an opinion on the stock. The chart below compares fundamentals for Johnson & Johnson, Procter & Gamble (NYSE:PG), and Colgate-Palmolive (NYSE:CL).

	JNJ	PG	CL
Trailing P/E	23.75	17.97	25.49
Forward P/E	15.13	18.52	19.74
Profit Margin	15.22%	15.61%	13.60%
ROE	15.76%	17.53%	110.92%
Operating Cash Flow	14.88B	14.45B	3.31B
Dividend Yield	3.10%	3.10%	2.20%
Short Position	3.00%	0.70%	1.00%

Let's take a look at some more important numbers prior to forming an opinion on this stock.

T = Technicals Are Strong

Johnson & Johnson has outperformed other popular dividend stocks over the past year.

	1 Month	Year-To-Date	1 Year	3 Year
JNJ	4.81%	25.75%	42.22%	52.16%
PG	0.73%	19.81%	28.67%	40.98%
CL	5.15%	20.72%	25.99%	62.63%

At $87.45, Johnson & Johnson is trading above its averages.

50-Day SMA	84.05
200-Day SMA	76.08

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E = Equity to Debt Ratio Is Strong

The debt-to-equity ratio for Johnson & Johnson is stronger than the industry average of 0.40. Of the three companies listed below, Johnson & Johnson has displayed the best debt management as of late.

	Debt-To-Equity	Cash	Long-Term Debt
JNJ	0.24	21.67B	15.89B
PG	0.47	5.88B	32.22B
CL	2.65	1.10B	5.36B

Now let's take a look at the next page for the Trends and Conclusion. Is this stock an OUTPERFORM, a WAIT AND SEE, or a STAY AWAY?

T = Trends Might Support the Industry

Johnson & Johnson is a quality defensive play, but it still performs better in strong markets. That being the case, the direction of the broader market is important. A popular conversation right now is how to get the retail investor interested in the stock market again. At the moment, the majority of retail investors despise the Federal Reserve and feel that the stock market is manipulated and geared to reward those in the inner circle and wealthy while slyly stealing from the middle class. That would be an accurate assessment. Therefore, the only way to attract the retail investor back to the stock market is for the Federal Reserve to stop getting involved. However, this would pose tremendous risk. If it's proven that this has been a Fed-fueled rally and that the economy can't stand on its own two feet, then it would be a long way down. Drop a boulder and you won't hear it fall.

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Conclusion

As far as Johnson & Johnson goes, even if the market crashed, it would only be a matter of time before it clawed its way back. It's always better to invest in strong companies than it is to time the market. And when it comes to investing in strong companies, not many have better fundamentals and management, or such a strong history of rewarding shareholders, than Johnson & Johnson.

How Bitcoin Works

Top Growth Stocks To Own Right Now

Bitcoin is a digital currency that exists almost wholly in the virtual realm, unlike physical currencies like dollars and euros. A growing number of proponents support its use as an alternative currency that can pay for goods and services much like conventional currencies. Bitcoin is the first and easily the most popular cryptocurrency, or currency that uses cryptography1 (see "Definitions and Key Concepts" at end of article) to control its creation, administration and security.

Bitcoin was set up in 2009 by a mysterious individual or group with the pseudonym Satoshi Nakamoto, whose true identity is yet to be revealed and who left the project in 2010. It rocketed to prominence in 2013, when the value of a Bitcoin soared more than 10-fold in a two-month period, from $22 in February to a record $266 in April. At its peak, based on more than 10 million bitcoins issued, the cryptocurrency boasted a market value of over $2 billion.

Bitcoin Versus Conventional Currencies
Bitcoin differs from conventional currencies in some very fundamental ways, as noted below (for the sake of simplicity, we use the U.S. dollar as a proxy for conventional currencies). Bitcoin uses P2P technology without a central authority: Bitcoin is a decentralized currency managed by peer-to-peer technology (P2P2), without a central authority. All functions such as Bitcoin issuance, transaction processing and verification are carried out collectively by the network, without a central supervisor or agency to oversee operations. In contrast, a conventional currency is issued by a central bank as part of its mandate to manage national monetary policy. In the U.S., only the Federal Reserve has the power to issue dollars; it is also the central authority that conducts monetary policy, supervises banks, maintains financial system stability, and provides financial services to depository institutions. Bitcoin is primarily digital: Although physical Bitcoins are available from companies such as Casascius and BitBills, Bitcoin has been designed primarily to be a digital currency. Physical Bitcoins are somewhat of a novelty, and the very idea of a tangible form defeats the purpose of a digital currency, according to the most ardent supporters of the concept. Conversely, your dollars exist primarily in physical form; the balances that you hold at your bank and online brokerage can be converted into physical dollars within minutes if you so desire. Bitcoin has a maximum 21 million limit: The total number of Bitcoins that will be issued is capped at 21 million. The Bitcoin "mining"3 process presently creates 25 Bitcoins every 10 minutes (the number created will be halved every four years), so that limit will not be reached until the year 2140. While Bitcoin critics argue that the maximum limit is not large enough, supporters maintain that since each Bitcoin is divisible to eight decimal places, the number of fractional Bitcoins (called "satoshis") – at 21 x 1014 – will be more than enough for all conceivable applications. Conventional currencies, on the other hand, can be issued without limit. Bitcoin is a complex product: The concepts of cryptocurrencies in general are abstruse and abstract, and understanding how and why Bitcoin works requires a fair degree of technological knowledge. Bitcoin has limited acceptance: It has limited acceptance so far and cannot be used at brick-and-mortar storefronts, although that may eventually change if it continues to gain traction. The dollar, on the other hand, has near-universal acceptance as the world's global reserve currency. Bitcoin transactions have limitations: A Bitcoin transaction can take as long as 10 minutes to confirm. Transactions are also irreversible and can only be refunded by the Bitcoin recipient. These limitations do not exist with conventional currencies, where debit and credit transactions are confirmed within seconds; certain transactions can also be reversed for valid reasons by the originator, without having to rely on the recipient's largesse. Bitcoin balances are not insured: This means that if you lose your Bitcoins for any reason – for example, your hard drive crashes, or a hacker steals the digital wallet in which your Bitcoins are stored, or the Bitcoin exchange where you held a balance went out of business – you have little recourse. Currency balances held at banks, on the other hand, are insured against certain events such as bank failure by agencies like the Federal Deposit Insurance Corporation in the U.S. How Bitcoin Works
Let's say you want to test the Bitcoin waters. The first thing you need to do as a new user is install a digital wallet on your computer or mobile device. This wallet is simply a free, open-source software program that will generate your first and subsequent Bitcoin addresses. There are three types of wallets – a software wallet (installed on your computer), a mobile wallet (which resides on your mobile device) or a Web wallet (located on the website of a service provider that hosts bitcoins).

Bitcoin uses public key encryption4 techniques for security. This means that when a new Bitcoin address is created, a cryptographic key pair consisting of a public key and private key – which are essentially unique, long strings of letters and numbers – is generated.

Each address has its own Bitcoins balance, so all you need to do is acquire a number of Bitcoins that will be held at one of the addresses in your wallet. You can acquire Bitcoins through a number of ways – by buying them from a Bitcoin currency exchange such as Mt. Gox or Bitstamp, or through a service like BitInstant that enables fund transfers between Bitcoin exchanges and supports various payment mechanisms.

Note that all Bitcoin transactions are stored publicly and permanently on the Bitcoin network, which means that the balance and transactions of any Bitcoin address are visible to anyone. Experts therefore recommend that Bitcoin owners create a new address for each transaction as a means of ensuring privacy and enhancing security.

Once you have created a Bitcoin address and have acquired Bitcoins, you can use them for an online transaction with a company that accepts Bitcoins as a payment mode. The company will send you the Bitcoin address to which you can send your Bitcoin payment. You direct the payment to that address; while the transaction takes place within seconds, verification can take 10 minutes or longer.

All Bitcoin transactions, without exception, are included in a shared public transaction log known as a "block chain". This is to confirm that the party spending the Bitcoins really owns them, and also to prevent fraud and double-spending.5

Why does transaction verification or confirmation take so long? Because the complex algorithms involved in Bitcoin mining (see description below) take time to solve, even with immense computing power at one's disposal.

An Example of a Bitcoin Transaction
Let's assume you want to make an online payment to a company – call it BitChamp – using 5 Bitcoins that you have in an address in your digital wallet. Here are the steps in the transaction: BitChamp creates a new Bitcoin address and directs you to send your payment to it. This creates a private key (known only to BitChamp) and a public key (available to you and anyone else). Note that just as a seller does not need to know your physical identity if you pay cash, you do not need to disclose your real identity to BitChamp and can remain anonymous. You instruct your Bitcoin client (the free Bitcoin software you first installed on your computer) to transfer 5 Bitcoins from your wallet to the BitChamp address. This is the transaction message. Your Bitcoin client will electronically "sign" the transaction request with the private key of the address from where you are transferring the Bitcoins. Recall that your public key is available to anyone for signature verification. Your transaction is broadcast to the Bitcoin network and will be verified in a few minutes. The 5 Bitcoins have been successfully transferred from your address to the BitChamp address. Note that only the first two steps involve action by the seller and you respectively. The latter two steps are automatically executed by the Bitcoin client software and Bitcoin network. As well, storing the private key attached to an address safely and securely is of the utmost importance; otherwise, anyone who obtains the private key can control the Bitcoins at that address and use them fraudulently.

Bitcoin Pros and Cons
Bitcoin has a number of advantages: As the first cryptocurrency to capture the public imagination, Bitcoin has "first mover" advantage and a head start over the competition. Total issuance is limited to 21 million, so it is unlikely to be devalued because of the prospect of a massive influx of new bitcoins. As a decentralized currency, Bitcoin is free from government interference and manipulation. Transaction costs are much lower than with conventional currencies. On the flip side, Bitcoin's disadvantages include: The price of a Bitcoin has been increasingly volatile, making it difficult to assess its real value and increasing the risk of losses for investors in the cryptocurrency. The relative anonymity of Bitcoin may encourage its use for illegal and illicit activities such as tax evasion, weapons procurement, gambling and circumvention of currency controls. The fact that bitcoins exist primarily in digital form renders them vulnerable to loss. Conclusion
Bitcoin has made significant progress in its adoption and usage since it was unveiled in 2009. Its evolution over the next few years will determine whether this leading cryptocurrency will become an integral part of the global financial system, or whether it is destined to remain a niche player.


Definitions and Key Concepts

1 Cryptography refers to the practice and technique of using encryption for secure communication and transmission of data and information.

2 In a P2P network, a group of computers is connected to enable the sharing of resources and information by users, and there is no central location for the network. This is diametrically opposed to a typical client-server network, where the central server controls the level of access by users to shared network resources. Popular applications of the P2P concept are Skype and file-sharing services such as BitTorrent.

3 Bitcoin mining refers to the computationally-intensive task of generating Bitcoins. While any computer can be put to the task of Bitcoin mining by using a free mining application, in reality a great deal of computing power is required to solve the extremely complex algorithms involved and to share those solutions with the entire Bitcoin network. The mining process is quite complicated and involves advanced concepts such as cryptographic hashes and nonces.

In simple terms, Bitcoin miners use powerful computers to track and compile pending Bitcoin transactions every 10 minutes into a new block. These miners then set to work doing the intensive number-crunching required to verify all the transactions in the block. This is a competitive process, and the first miner to solve the algorithms and verify the transactions transmits the results to the entire Bitcoin network. Upon confirmation by the rest of the network, the block is then added to the block chain. Each block includes a certain number of Bitcoins in a "coinbase" transaction that is paid out to the successful miner. This reward was set at 50 Bitcoins when the system first commenced operations in 2009, but was halved to 25 Bitcoins in November 2012, and will reduce by 50% approximately every four years.

4 Public key encryption combines a public key and a private key. While the public key is available to anyone, the matching private key is stored securely in the digital wallet and is generally password-protected. Each Bitcoin transaction is signed by the private key of the initiating user, providing mathematical proof that it has indeed originated from the owner of the address, and preventing the transaction from being altered once it has been issued. Since the key pair is mathematically related, any data or information encrypted with a private key may only be decrypted or deciphered with the corresponding public key and vice versa.

5 Double-spending means spending the same digital currency twice, something that is impossible with physical currencies.