The second half of this year has been great for gold. Prices have jumped from a low of $1560 in July to its current $1700. Early in October, prices were knocking on $1800, but failed to get over the milestone. However, gold has seen a pullback since then, and I believe that we could see a resurging gold market after these election results. Understandably, investors have been turning to gold as a hedge against the uncertainties that the market faces such as the U.S. fiscal cliff, Europe’s debt crisis and China’s cooling economy.

When it comes to gold, there are a wide variety of ways to invest. For the purposes of this article, we will talk about gold miners. My favorite play is AngloGold Ashanti (AU). To be fair, AngloGold recently settled a worker strike in South Africa, which was losing the company 32,000 ounces of gold each week. However, the strike is over, and workers will be heading back to work; hopefully, the company can make up a little of that production in the coming weeks.

Lets take a look at the fundamentals to determine the strength of AngloGold Ashanti. To start, the gold miner has a forward price to earnings ratio of 6.86, PEG of 0.96 and has a reasonable debt load, with the debt to equity ratio at 0.45. I like to see a current ratio of 2.72, because that tells me that the company is in strong enough financial position to pay off any unforeseen costs or liabilities. To continue reading, click here.

The tech industry is often mentioned as one of the highest-growth sectors, with many top performers delivering strong, rapid growth. Google (GOOG), Apple (AAPL), Microsoft (MSFT), AT&T (T), Cisco (CSCO), and Amazon (AMZN) have an enviable reputation in the sector, creating beautifully simple, intuitive products across all device segments. The sector is worth trillions of dollars, with a number of fast-moving companies attracting the attention of investment managers across the board.

One of them, Google, recently announced financial results for the quarter ended September 30th, 2012. Revenue was up 45% year-on-year, and the company earned its first $14-billion revenue in a quarter, an increase of 45% compared to the third quarter of 2011. The GAAP operating income in the third quarter of 2012 was $2.74 billion, or 19% of revenue, compared to GAAP operating income of $3.06 billion, or 31% of revenue, in the third quarter of 2011. Its revenues (advertising and others) were $11.53 billion, or 82% of consolidated revenue, representing a 19% increase over third quarter 2011 revenue of $9.72 billion. Google’s revenue from the United Kingdom totaled $1.22 billion, representing 11% of Google’s revenues in the third quarter of 2012, compared to the 11% in the third quarter of 2011.

I believe that Google is significantly overvalued based on valuation at its current price around $679 per share, but I also think its stock price could increase in the next few years. While many of its rivals are fretting about competition and decrease in market share, Google executives are excited that at just 14 years of age, the company has recorded a $14-billion revenue for the first time in a quarter. To continue reading, click here.

Investing is all about financing a project with as little capital as possible to receive the most capital back as quickly as possible. Some companies appear better-poised to return capital to investors than others.

Some firms which are selling assets are trading at lower price multiple than firms which are tapping the markets for more capital. The former are attractive buy candidates, while the latter are not.

Companies Selling Debt

According to the Markit iTraxx Crossover Index, the credit ratings of 50 companies have been raised 14 basis points within four consecutive days in the UK. Legal & General Group Head of Credit Strategy Ben Bennett stated during an interview, “We’ve had an amazing run of spread compression and it’s only natural that credit takes a bit of a breather. There is still good demand for new issuance, particularly rare names or deals that provide more yield.”

Two of the world’s biggest companies, Nokia (NOK) and Pepsico (PEP) are selling bonds in Europe. Nokia, which is facing deteriorating sales and market share, has planned to bolster funds by selling convertible bonds in the new European market and thus prevent debt maturity failure. Many other local and international companies are also inclined to sell bonds in Euros to secure their respective financial positions. The increasing stock ratings of high-yield credit companies entice investments in the European market from many multinational businesses.

This sale will provide about $978 million for Nokia with debt maturities in 2017. To continue reading, click here.

While telecoms are struggling through a capital-intensive period, Verizon (VZ) is enjoying expanding profit margins. The telecom jumped ahead of the pack in the buildout of its long-term evolution (LTE) network. It is now focused on maintaining market share as an onslaught of competition approaches. With an estimated 140 million subscribers expected to jump onto LTE networks in the U.S. by 2015 (DigiWorld), global telecoms players are moving in.

The question being kicked about by analysts is, how will the entry of Japan’s Softbank (SFTBF.PK) into the U.S. LTE market affect the competitive dynamics of the LTE market. By buying a 70 percent stake in Sprint Nextel (S), Softbank has fortified a weak competitor in the LTE market with cash and experience deploying LTE in Japan. It is now Sprint – in addition to number one carrier AT&T (T) – Verizon must watch in its rearview mirror.

Having executed brilliantly as the first mover in LTE networks, however, Verizon will not be easily unseated. By the end of 2011, Verizon had 3.5 million LTE subscribers, or 66 percent of the U.S. market among the major LTE operators, according to DigiWorld. Subscriber growth has been impressive in 2012. In the third quarter alone, Verizon signed up 1.5 million new subscribers, 10 times more than AT&T, which has reached about half of Verizon’s U.S. LTE coverage of 260 million.

After investing heavily to blanket 80 percent of the U.S. population with LTE coverage, Verizon’s return on its investment now depends on pricing and cool devices – the bells and whistles it uses to retain customers. LG (LG) and Nokia (NOK) are rolling our LTE phones. The feature-packed LG Spectrum 2 and Nokia Lumia will be sold exclusively by Verizon. To continue reading, click here.

There are few things quite so profitable as a government sanctioned monopoly. And when that monopoly is granted in a market with growing demand (the result of irresistible demographic forces), the stage is set for considerable value creation.

Yes, the pharmaceutical industry is a profitable one. But that river of profits comes with a dark side. Regardless of the size of these companies, they and their shareholders have learned, to the dismay of both groups, that research and development efforts do not necessarily scale. That is, it is difficult to forecast the payoff of an incremental $1 billion spent in R&D. With a need to constantly replenish their roster of patent-protected drugs, many pharmaceutical companies have aggressively used their financial heft to buy the innovation that they are increasingly hard-pressed to deliver internally. Great deal for biotechnology companies, questionable deal for pharma shareholders.

Here I will analyze five of the giants, and see how they stack up. In this analysis, I will focus on measures suggestive of management’s ability to operate with financial discipline, rather than digging into the pipeline of drugs in development for each of these behemoths.

Pfizer (PFE)

SG&A: Over the past three years, SG&A as a % of sales has jumped to 32.5% from 30.5%.

Research & Development: While this expense increased 16.5% between FY09 and FY11, when viewed as a % of sales, it appears that management has managed to wring some efficiencies out of their massive R&D program. The amount has dropped more than two percentage points, to 13.5% from 15.9%.

Cash and Short-Term Investments: $3.5 billion in cash and $23.3 billion in short-term investments sat on the balance sheet as of FY11.

Debt: Net Debt is $42.3 billion, down considerably from $55.7 billion in FY09. Leverage has dropped to 1.4x, from 2.2x. To continue reading, click here.

Mobile computing devices, such as smartphones and tablets, are displacing laptop and desktop computer sales in developed economies. This structural shift in the technology sector has sent shares of many personal computer companies down in price. Are their valuations low enough at today’s market prices to justify the risk of investing in a losing sector?

The End of An Era

After being number one in market share for six straight years, Hewlett-Packard Co. (HPQ) has dropped to second place behind Lenovo Group (LNVGY.PK). Surely this change was no surprise for HP CEO Meg Whitman, since it was widely anticipated by analysts and did not happen overnight.

Market research firm Gartner cited Lenovo’s acquisition of IBM‘s (IBM) personal computer unit seven years ago as a crucial source of its success. Lenovo captured 15.7% of sales in the last quarter, as compared to Hewlett-Packard’s 15.5%, according to a Gartner’s report.

Hewlett Packard’s sales slump is widely attributed to the decline in the demand of PC units after the sudden emergence of smartphones and other mobile devices like the iPad. Reigning since 2006, Hewlett-Packard has been unable to compete against Lenovo in developing markets.

Lenovo gained mostly in the less-developed countries – its planned acquisitions and high penetration in the emerging markets are outpacing the developed ones. Pacific Crest Securities analyst Brent Bracelin said, “It’s a whole new bigger trend coming, not just Lenovo.”

Don’t Pay Premiums in Troubled Sectors

Many firms in the personal computer ecosystem are seriously threatened by the evolution of consumer computing. Stock investors must demand a discount in the form of low valuations before even considering investing in these firms. To continue reading, click here.

The market is set up for fuel prices to relax from their highs. This is good news for travel-related stocks. We will review online travel search as a business model and consider which of these stocks is most attractive.

Clicks Vs. Bricks

Hotels and airline companies compete against their peers on price. Online search companies compete against each other based on the attractiveness of their platforms. The platform with the most vendors and traffic provides the best environment for search. Online search sites do not compete for vendors, banner ads, or users primarily based on the prices they charge participants. Hotel and airline vendors are more concerned about making sure their prices are seen and purchased by a large number of potential consumers.

In addition to sidestepping head-on price competition, the online search business model requires less capital expenditure. This is great news for investors, who should vehemently hate cash outflows. Since this newer business model is more attractive, investors should be willing to pay higher valuations for online search stocks.

The Case for Travel Stocks: Oil Price Decline and Economic Recovery

Gas prices might be at their 2012 peak in the U.S., but according to analyst estimates they could drop to their yearly lows by the end of 2012. This price drop would rest on dormant oil refineries starting production again. The onset of winter will also decrease miles driven, leading to lower demand.

Prices at oil service stations could fall by as much as 6.3% per gallon, which translates to a final price of about $3.54. To continue reading, click here.

Product differentiation between competitors has long been a strategy of most businesses. Setting itself apart through product functionality, price, or simply just the ‘look and feel’ is a trend that usually proves effective. Strategy differs when companies reach a certain size. Some companies are big enough to diversify their own products so as to ‘hedge their bets’, so to speak.

Take for example Microsoft (MSFT). This company seems to be waiting to see which operating system consumers will grab hold of by rolling out tablet devices with either the Windows 8 or Windows RT.

Alternatively, some companies show such confidence in their products as to bet the farm on a solid performer. This seems to be the case with Intel (INTC), which is looking squarely at its new Atom processor used in several cross-market devices.

The key to this processor is its universality. It can be used in both desktop devices and tablets without sacrificing performance. As many traditional PC users are slow in migrating from desktop to tablet, it would seem this bet could pay off.

Whenever anyone mentions the word “tablet” in conversation, that conversation will probably include praise for Apple’s (AAPL) iPad. Since its inception, the domination of the tablet market has been largely based on the hitherto unmatched combination of cost-effectiveness and high functionality.

It is mindboggling how the iPad can continue almost unrivaled, save a few attempts at imitation rather than improvement. To continue reading, click here.

Aggression was once a huge positive for SandRidge Energy, Inc. (SD), but it seems that this has started to backfire for the company. SandRidge Energy continues to grow through its mid-continent focus, but its stock is being held back by what many investors are viewing as an overly optimistic goal sheet compared to several months ago. Its three major priorities are to bring EBITDA to $2 billion or above, fund its expenditures entirely within cash flow, and improve its credit standings overall. These are strong goals, but SandRidge intends to accomplish all three within the next three years. This has its followers wondering whether these will come at the expense of growth, or become missed targets, in which case the company’s stock could sink.

Thanks to an August bond offering, SandRidge fully funded its 2012 spending. However, its 2013 program will only be funded by taking on further debt written into its plan after exhausting its anticipated cash flow. Although substantially less leveraged than it was even two quarters ago, when its debt stood as high as 4.3 times EBITDA and uncomfortably close to competitor Chesapeake Energy Corporation‘s (CHK), its pro forma debt for the second quarter of 2012 was 2.9 times EBITDA. This is just low enough to avoid scaring off investors in large numbers, but high enough to be a concern. Additionally, for the current forecast, SandRidge intends to keep its leverage around 3 times EBITDA, meaning substantial relief is far in the future.

To continue reading, click here.

People have been clamoring for smartphones ever since Apple (AAPL) introduced the iPhone in 2007. Today, thousands of people carry smartphones or tablets. Now, soon the military may too.

Military operations require dependable information on locations, a way for communicating efforts and a way to share information in real-time – sounds like a regular Saturday night for most people as they use their smartphones or tablets to get directions, meet up with friends, and share pictures of the festivities.

Of course, the military versions of these items are considerably “hardened” and developed specifically for military usage by the Defense Advanced Research Projects Agency (DARPA), but many of the apps carry similarities to those used by civilians, such as DARPA’s custom application that sports Google-like maps based on satellite images.

“Darpa, the defense research arm that contributed to the development of the Internet, has launched an effort called Transformative Apps under which it has developed a few dozen smartphone applications that work on a number of mobile devices it is evaluating,” reports the Wall Street Journal. “In addition to mapping, the apps can do things like identify explosives and weapons and help navigate parachute drops” and they have shown marked success.

“During a battle in a village near Kandahar, Afghanistan, Lt. Kevin Pelletier used a tablet computer with a custom map application to direct soldiers’ movements,” continues the paper. “As thousands of rounds flew through the village near Kandahar, Lt. To continue reading, click here.

China presents a wealth of opportunities for growth in online commerce. While it has censorship restrictions and more government monitoring of traffic than exist in the Western world, there is fertile ground for companies that provide search engines, online commerce, advertising, content and mobile applications. Baidu (BIDU) is the Google (GOOG) of China and has captured over 80% of the market share.

Baidu’s logical comparison is Google. Baidu is the predominant search engine in China. It has more than 50 communities and services online that include search, maps and mobile OS. It provides the platform for 740 million web pages, 80 million images and 10 million multimedia files. It is number four in the world for traffic and number one in China. Of 64 billion search requests in China, 53.5 billion of them are done through Baidu. It controls 83.6% of searches in China against Google’s 11.1%. Notably, Google scaled back its plans for expansion in China due to government restrictions. How much bigger can Baidu get?

The company had a great second quarter 2012 and is looking to expand its reach by providing services to and assessing all opportunities in the mobile internet and cloud sectors.

Baidu’s second quarter earnings of $858.8 million were 59.8% higher than the same period in 2011. Operating profit increased 51.5% from the same period in 2011 to $443.1 million. The company has $2.88 billion in cash and $447.5 million in debt. Its current ratio is 4.69 and book value per share is $9.03. The float is 78.9% owned by institutions. Baidu’s common stock trades around $109. To continue reading, click here.