Canadian Stocks Snap Four-Day Slump as Gold Shares Rally - Bloomberg Canadian Stocks Snap Four-Day Slump as Gold Shares Rally - Bloomberg

Thursday, May 17, 2012

Canadian Stocks Snap Four-Day Slump as Gold Shares Rally - Bloomberg

Canadian Stocks Snap Four-Day Slump as Gold Shares Rally - Bloomberg

Canadian stocks rose, breaking a four-day losing streak, as a rally in gold helped equities avoid declines seen in the U.S. and Europe.

Barrick Gold Corp. (ABX), Goldcorp Inc. (G) and Yamana Gold Inc. increased more than 6 percent. Canadian Natural Resources Ltd. (CNQ) climbed 1.6 percent as energy shares rose. China Gold International Resources Corp. surged 14 percent after a Bloomberg News survey showed that China’s economic growth is likely to accelerate in the third quarter. Royal Bank of Canada (RY) and Toronto-Dominion Bank (TD) fell at least 1.4 percent.

The Standard & Poor’s/TSX Composite Index (SPTSX) advanced 37.48 points, or 0.3 percent, to 11,363.56 at 11:57 a.m. Toronto time. It slumped 3.5 percent during the previous four days, and had declined in 10 out of the past 11 sessions.

“This is a weak bounce-back day led by oil and gold stocks,” Todd Johnson, a money manager at BCV Asset Management in Winnipeg, Manitoba, said in a telephone interview. The firm oversees C$340 million ($335 million). “Markets don’t do straight down forever. Maybe investors are getting a little exhausted from all the negative Spanish and European news.”

Equities fell in the U.S. and Europe as Spain’s borrowing costs rose at an auction, stoking concern that the region’s financial contagion is spreading from Greece. Moody’s Investors Service is set to downgrade the credit ratings of Spanish banks later today, said two people with knowledge of the situation, who asked not to be identified because the decision hasn’t been announced.

Weekly Decline

The S&P/TSX is heading for its third straight weekly decline as concerns mount that the Greek debt crisis, European elections and a slowing Chinese economy may curb demand for commodities. Energy and raw-material companies account for 44 percent of Canadian stocks by market value, according to data compiled by Bloomberg.

Materials stocks in the S&P/TSX rose for a second straight day as gold rallied for the first time in five sessions. The metal jumped the most in 16 weeks amid speculation that turmoil in Greece may boost demand for it as an alternative investment.

Barrick Gold, the world’s largest producer of the metal, rose 6.5 percent to C$38.02. Goldcorp, the second-largest producer of the metal, gained 8.2 percent to C$35.92. Yamana Gold Inc. (YRI), Canada’s third-largest company in the industry by market value, increased 6 percent to C$13.98.

China Gold, which explores and develops projects throughout Asia, surged 14 percent to C$3.52. China’s third-quarter economic growth will rebound to 8.3 percent from 7.9 percent this quarter, the first increase in seven periods, according to the median estimate of 21 economists surveyed by Bloomberg News.

Energy companies also snapped a four-day skid as Enbridge Inc. and Enterprise Products Partners LP prepared to reverse flows on their Seaway pipeline, easing a glut in the central U.S.

Canadian Natural Resources, the country’s third-biggest energy company, climbed 1.6 percent to C$29.40. Suncor Energy Inc. (SU), Canada’s largest oil and gas producer, rose 0.8 percent to C$27.67.

To contact the reporter on this story: Joseph Ciolli in New York at

To contact the editor responsible for this story: Nick Baker at

4-Star Stocks Poised to Pop: Lorillard - Motley Fool

Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, cigarette specialist Lorillard (NYSE: LO  ) has earned a respected four-star ranking.

With that in mind, let's take a closer look at Lorillard's business and see what CAPS investors are saying about the stock right now.

Lorillard facts

Sources: S&P Capital IQ and Motley Fool CAPS.

On CAPS, 95% of the 373 members who have rated Lorillard believe the stock will outperform the S&P 500 going forward.  

Just last month, one of those Fools, Buffettinvestor, succinctly summed up the bull case for our community:

Still cheap even after its recent huge rally. Earns great returns on capital and owns the second most sold brand in the US (Newport), and the most sold brand of menthols. Cigarettes will not go away, for the same reason as alcohol won't go away. It's too ingrained in to world culture, and too much money and jobs are dependent on it.  

If you want to retire rich, you need to put together the best portfolio you can. Owning exceptional stocks is a surefire way to secure your financial future. Of course, despite a strong four-star rating, Lorillard may not be your top choice.

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Stocks Struggle On Europe Concerns -

POSTED: 6:59 am PDT May 17, 2012
UPDATED: 9:52 am PDT May 17, 2012

Stocks with Strong Financial Metrics (NYSE: LAD) -
Shares of LAD fell by 6.50% or $-1.57/share to $22.60. NYSE is trading at a price to book ratio of 1.65. The PEG is 0.41 suggesting that the shares are trading at an excellent value relative to firm's growth rate. The price to sales ratio came in at 0.22. Hence, the firm is extremely cheap relative to its top line sales figures. On average, 394802 shares of LAD exchange hands on a given day and today's volume is recorded at 513446. These factors combined may make this company a potential takeover candidate. Lookout for any takeover chatter or takeover news regarding this stock as one of the bigger players may have an eye on this one.

Lithia Motors, Inc. is an operator of automotive franchises and a retailer of new and used vehicles and services.

US STOCKS-Wall St falls on Europe woes, U.S. data - Reuters UK

Thu May 17, 2012 3:33pm BST

* European shares hit fresh 2012 low

* Philly Fed lowest since September, leading indicators miss

* Wal-Mart shares rise after results

* Indexes off: Dow 0.3 pct, S&P 0.3 pct, Nasdaq 0.4 pct (Adds details, comments, updates trading)

By Rodrigo Campos

NEW YORK, May 17 (Reuters) - U.S. stock indexes fell on Thursday as weak economic data spooked investors already concerned about Spain's economy and banking system, and about developments in Greece.

A gauge of future U.S. economic activity fell in April for the first time in seven months and the Philadelphia Fed business conditions index hit its lowest since September, compounding worries about a struggling economic recovery.

"The market wasn't prepared for this; it was expecting risks from Europe," said Subodh Kumar, chief investment strategist, Subodh Kumar & Associates in Toronto.

Adding to investors' worries, Spain's El Mundo newspaper reported that customers at troubled Spanish lender Bankia had withdrawn more than 1 billion euros over the past week. The Spanish government denied the report. Bankia shares fell 14 percent after sliding as much as 30 percent earlier.

News that some Greek banks face emergency funding needs hurt sentiment and caused a further decline in risk assets which have already dropped over the past weeks.

"The whole equities market is being driven by a macro trade based upon contagion fear in Europe, and really the problem is undercapitalized banks there," said Jack de Gan, chief investment officer at Harbor Advisory Corp in Portsmouth, New Hampshire.

Greek politicians who reject conditions for a bailout which is keeping the country's finances afloat are likely to win next month's election, adding to worries about Greece leaving the euro zone.

Spain's medium-term borrowing costs rose sharply in a Thursday auction of 3- and 4- year bonds, hardly affecting broad views that Spanish yields are likely to rise further in coming weeks.

"We're in a vacuum waiting for something to happen in Europe and if Greece isn't going to have elections for another month, the markets are going to be backing and filling," said De Gan, who expects volatility to continue.

The CBOE volatility index hit its highest level since mid January.

Giving investors some respite, Japan's economy grew 1.0 percent in the first quarter, slightly more than expected. A 0.2 percent contraction in the final quarter of 2011 for the world's third-largest economy was revised up to flat.

The Dow Jones industrial average dipped 32.66 points, or 0.26 percent, to 12,565.89. The S&P 500 Index fell 4.03 points, or 0.30 percent, to 1,320.77. The Nasdaq Composite fell 12.58 points, or 0.44 percent, to 2,861.46.

The pan-European FTSEurofirst 300 index fell 1.1 percent after hitting a fresh 2012 low. A gauge of European bank stocks dropped 2.5 percent.

Wal-Mart shares jumped 5.1 percent after the world's largest retailer reported better-than-expected quarterly profit.

Sears Holdings Corp surged 11 percent after the company said it plans to spin off a large part of its stake in its Canada unit to better focus on its U.S. business. (Additional reporting by Ryan Vlastelica. Editing by Bernadette Baum)

Want to Dump Stocks? Here Are Your Alternatives - Daily Finance

With the stock market dropping almost every day lately, a lot of nervous investors are looking longingly at the sidelines. Even professional investors have started to get bearish about the future prospects for stocks.

But before you hit that sell button, make sure you take a look at the other side of your trade. Once you've sold your stocks, what are you going to do with that cash? After looking at the alternatives, you might well come to a different conclusion about whether stocks are such a bad investment right now.

Volatility's back
The current mood on stocks is a big change from what we saw less than a month ago. Coming off a six-month rally, investors grew complacent and fearless. Between their highs in early October 2011 through the end of April, the iPath S&P 500 VIX Short-Term Futures ETN (NYS: VXX) , which tracks volatility measures, fell about 75%, while the leveraged VelocityShares Daily 2x VIX ETN (NYS: TVIX) lost almost 95% of its value.

But in May, fear has come back into the stock market, and many investors are responding by reaching for the sell button. Those same volatility ETNs are up 25% and 40%, respectively, since May 1, making conservative investors wonder whether it's time to get out of stocks now before things get any worse.

Where can you hide?
Whenever you sell an investment, you should also focus on what you're going to do with the money instead. Even if you're right about selling out, it does you no good if the alternative is worse.

The obvious alternative to stocks is cash. Bank accounts, Treasury bills, and other cash equivalents give you the security of knowing you can never see a loss of principal. With the Dow down more than 5% since May 1, that's a comforting guarantee.

But short-term Treasury bills pay less than 0.1% right now, while many bank accounts don't even get that far. Top-yielding savings accounts from CIT and Barclays (NYS: BCS) yield 1% as the banks are willing to pay above-average rates to draw savers in, but at that level, you'll fall well short of breaking even after inflation and taxes.

Reaching for more
So to avoid the surefire inflation-adjusted loss that savings accounts represent right now, you might look to other choices. But consider their pros and cons:

  • Bank CDs are just as safe as savings accounts. But even the highest-yielding five-year CDs listed on Bankrate earn less than 2% annually, and you commit to locking up your money for a long time. You'll face substantial fees if you pull your money out early.
  • Gold has acted as a safe haven in times of turmoil in the past. But this time around, gold has actually underperformed stocks, and the silver-tracking iShares Silver Trust (NYS: SLV) has done even worse as the combination of a potential slackening in industrial demand and bad investor sentiment take away interest in the white metal. Even longtime gold bulls like Jim Rogers believe that gold's near-term prospects are as bad as or worse than what some analysts are predicting for the stock market.
  • Various bond investments have different appeals and problems. Treasuries don't yield anything more than bank CDs do, making them an inferior choice. Even high-grade corporate bonds don't give you much of a boost over Treasuries, with IBM (NYS: IBM) having recently sold three-year notes at 0.75% and seven-year bonds at 1.875%. Meanwhile, in the high-yield corporate realm, you can find some more attractive yields, but you have to be careful to assess whether you're willing to take on the higher credit risk associated with their issuers. Most importantly, the threat of higher interest rates hangs over the entire bond market and could eventually cause price declines that would rival a bear market in stocks.
  • Commodities other than gold have seen mixed performance recently. But crude oil has seen big price drops lately, setting the stage for a change in profitability that could reverse huge portions of the growth in the energy industry in recent years.

Tread carefully
As you can see, all of these investments have their downsides. The question is whether their potential benefits outweigh them. Your answer to that question may be different from anyone else's, because it depends a lot on your particular financial situation.

But with many individual stocks offering solid dividend income and less volatility than the overall market, you can't count stocks out automatically. After looking at your portfolio, you may decide that keeping the stocks you own -- or switching into others that are better -- could be a far better choice than selling out and expecting financial Armageddon.

Investing for retirement takes resolve, discipline, and good investing ideas for the long haul. Let me invite you to read The Motley Fool's special report on retirement to find some stock suggestions as well as tips for staying the course through bull and bear markets. Get your free copy right now.

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