In the first week of December, Chevron (CVX) announced that it will spend almost $37 billion in 2013 across the world. The increased capital budget spending will be used for oil exploration and building huge capital projects. The figure is a 12% increase from 2012 spending budget and an astonishing 70% increase since 2010. Based on my research, Chevron is taking the right steps to increase its profitability in the coming years. The increased capital spending will help Chevron to consolidate its existing assets and to discover profitable avenues which will increase the company’s revenue in the long run.

Of the $36.7 billion that is slated to be spent in 2013, $33 billion will be spent in exploration and production of oil and gas. Of the $33 billion, $7.5 billion will be spent in the U.S., $3.4 billion in West Africa and shale regions across the world, $2.7 billion for refining and other downstream operations and another $3.3 billion for expenditures of Chevron’s affiliates. Chevron will concentrate on Gulf of Mexico projects, operations in West Africa and the Gorgon LNG project in Australia, all of which are located in stable countries that do not have major risks.

The money that Chevron has decided to spend in 2013 will likely be used to build infrastructure and facilities that will help the company to transport what it drills. It is also important to note that Chevron wants to increase its worldwide oil and gas production to 3.3 million barrels per day by 2017. If Chevron wants to grow further, it will have to discover newer oil fields and consolidate existing oil fields, infrastructure and drilling facilities. To continue reading, click here.

The commodity bulls only tell half the story. They say that globalization and rising affluence with increase demand for commodities. This is true, but what they don’t mention is that globalization and rising affluence also increases the supply of commodities. A global community means a global network of investors now deploy capital to develop energy projects. More regions are starting to produce. Investors should fear supply instead of chasing demand.

Producers Pump Faster

Energy companies tried to cut production in response to low natural gas prices, but couldn’t stick to it. United States natural gas production for 2013 will match its 2012 year record levels. Active U.S. gas rigs drastically fell 49% this year and the number of gas rigs stood at 413. This is the lowest number of active rigs since June 1999. US prices this year are estimated only one third of its 2008 price levels.

Unfortunately for energy companies, these efforts have failed. The price of fuel started to fall last October 30 and dropped by 9.2% last November 12 from a record 44% price increase last September 10. “As the gas price goes down, it’s almost like they need to produce twice as much to keep their cash flow where it was,” said Mr. Edward Kallio, director of Calgary based gas consulting firm Ziff Energy Group. Gas stockpiles surged to an all-time high this month to around $15 billion using current spot prices. Oklahoma based Chesapeake Energy (CHK) reported third quarter gas production rose 9.8% from second quarter to 302 billion cubic feet.

Gas companies remain positive that a rise in gas prices would yield from diminishing number of gas rigs. To continue reading, click here.

One of the biggest deals in recent times was announced in October when SoftBank (SFTBF.PK) revealed a complex $20.1 billion deal to acquire majority control of Sprint Nextel (S). This transaction will combine Japan’s fastest-growing cellphone service provider with the troubled carrier which is the third-largest in the U.S. The rationale is to provide Sprint with a strong partner with deep pockets which can help finance its network upgrade while pursuing additional mergers to facilitate business growth. SoftBank, an internet and communications company is making a bet that it can break the dominance of Verizon (VZ) and AT&T (T) in the United States in a similar fashion to the duopoly that long ruled the Japanese market. The two companies combined would generate around $80 billion in revenues and $18 billion in earnings before interest and tax. Sprint’s customer base would nearly double to 96 million which would give it much larger economies of scale.

This is an unconventional transaction in which Softbank will acquire control of Sprint through a three-step process consisting of buying $3 billion in bonds that will be repaid with stock, $5 billion in new Sprint shares and $12 billion to buy out existing Sprint shareholders. After this is accomplished, Softbank will own 70% of Sprint, with the rest publicly traded. The buyer controlled by Masayoshi Son, an eccentric billionaire ranked by Forbes as Japan’s second-richest man, will add Sprint to a collection of different properties that include Japan’s third-largest mobile operator, a piece of Yahoo Japan. and a stake in Chinese e-commerce giant Alibaba Group Holding Ltd. 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.

With interest rates remaining at historical lows, REIT investors have been nicely rewarded with growing share prices and healthy dividend yields. In some instances, especially in light of the recovering real estate market, REIT shares have risen year to date by as much as 20% or more.

While both the current and expected performance of most REITs has been positive, there is one REIT in particular that I feel could be a real winner in terms of longer-term income and growth due to its diversified portfolio and income-generating strategies. In this article, I will discuss why Two Harbors Investment (TWO) is a great fit for REIT buyers.

Although Two Harbors recently cut its dividend, the company still offers a nice yield of over 12%. Over the past 12 months, Two Harbor’s sales growth has increased by more than 400%, with income growth in excess of 250%. The company feels that this is due in large part to its diversified asset portfolio that consists of both agency and non-agency mortgage-backed securities, as well as the firm’s purchase of foreclosed single-family properties from big banks that are subsequently rented out for income generation.

Upon purchase of these homes, Two Harbors rolls the properties into an entity named Silver Bay Realty Trust. This trust has recently registered for its own IPO. Although Silver Bay is a new offering, it has an advantage when seeking financing from lenders in that it is owned by Two Harbors.

Two Harbors has a P/E ratio of 9, which is actually below that of the real estate industry overall of closer to 10, and substantially lower than the P/E ratio of 17.7 for the S&P 500 index. To continue reading, click here.

Thanks to mortgage rates remaining at historical lows, mortgage REITs continue to reap the benefits while at the same time rewarding their investors with high dividend yields and growth of share price. In this article, I will discuss why American Capital Agency (AGNC) will continue providing its double-digit dividend at least through 2014.

Analyzing the Fundamentals

With its monthly dividend of $0.10 per share, American Capital has been paying out a dividend yield in excess of 17%. Although the company’s second-quarter 2012 financials were not as exhilarating as they were in 2011, or even in the first quarter of 2012, it is expected that this REIT industry leader will continue rewarding dividend-seeking investors with a yield between 10% and 14% in both the short and long run.

While using a great deal of leverage tends to increase the risk for investing in REITs, American Capital has reduced this risk in some areas by investing most of its assets in guaranteed U.S. government agency securities. Of late, American Capital has been providing investors with one-year returns of over 23%, and three-year annualized returns of approximately 30%. In addition, the company’s shares seem to be reasonably priced, with a book value of just under $29.50 per share.

Where Other REITs Stand in Comparison

Due to a recent decline in mortgage applications — primarily due to a slight hiccup in interest rates — many REITs have seen a slight lowering of share price. And, in a recent slew of downgraded ratings by FBR Capital Markets, even REIT industry leader Annaly Capital Management (NLY) was not immune. To continue reading, click here.

One great way to make money in equities is to find a growth company in a growth business, but do so before the company actually grows so the stock is dirt cheap. As for the business, it makes no sense to invest in a new and better sewing machine manufacturer, for instance, as sewing is not a growth industry. One industry that fits the bill for a true growth industry is mixed martial arts. As established sports leagues and events as popular as the National Football League and NASCAR have experienced actual drops in attendance these past few years, mixed martial arts bills itself, quite correctly, as the fastest growing sport in the world. That makes the arena of providing product and services to the mixed martial arts industry an attractive proposition to any company.

One company that is in a position to take advantage of both the growth of mixed martial arts and the fact that its primary target audience is persons under 35 years of age is Respect Your Universe (RYUN). It is a young company, with limited sales to date and no profits. It describes itself on its website as “a premium training apparel and equipment company rooted in and inspired by mixed martial arts.” Yet, when looking at any sort of developmental company, one must first look at the managers. When it comes to Respect Your Universe, I like what I see. Its Chief Executive Officer and Director, Christoper Martens, is formerly an executive at Nike (NKE), specifically serving as its General Manager and Merchandise Director. He served also as Global Director of Apparel for the Beijing Olympic Games in 2008. Prior to Nike, he served eleven years in the apparel division at Eastern Mountain Sports.

John Wood is President of Respect Your Universe, and also a board member. Prior to coming to his current position, he was Director of Customer Development at two major Las Vegas nightclubs, putting him in contact with many of the promoters and participants in Ultimate Fighting Championship events. He is also a martial arts expert on his own accord. His contacts make him the “point” man for Respect Your Universe’s efforts to become the “inside” apparel maker for the mixed martial arts community.

Steven Eklund is the Chief Financial Officer. He has decades of experience in finance with large consumer operations like Nike, General Mills (GIS), and Eddie Bauer. He is 64 years old, substantially older than the other officers, and will add a nice bit of seasoning to the management team.

The other director, Erick Siffert, is Chief Operations Manager. He too has decades of experience in operations, much of that for Nike. All told, this is an idea combination of experience, contacts, and energy for any developing company to be lucky to have. This team gives me great confidence that Respect Your Universe will have every chance to succeed.

Respect Your Universe purports to base its products on foundation beliefs in respect, strength, honor and sustainability. Its products all have special markings, taken from ancient Swahili iconography to designate it is a moisture wicking fabric “Air Weave”, a weather resistant fabric “Wind Weave”, thermal control fabric (Fire Weave), and environmentally friendly fabric (“Terra Weave”).

Respect Your Universe sells a wide variety of performance athletic and leisure wear for indoor and outdoor, competition and training. All its products either incorporate recycled materials, or organic fabrics. Offerings are for men and women, everything from performance shorts to hoodies and duffel bags. The bulk of its sales have been through its web site, but inroads have been made with national retailers also such as Von Maur department stores and Eastbay. Earlier this month, Respect Your Universe reached an agreement to open its first, and flagship, retail store in Las Vegas. It will be placed in an upscale mall, across from a Burberry (BURBY) store.

I do not know of any company as uncompromising to quality and environmentalism as Respect Your Universe purports to be. Its biggest downside is it has no real track record. It has a market capitalization of a little less than $40 million, and trailing 12 month revenue of $67,000 through March 31, 2012. At that time it held a little more than $2 million cash on hand, $0.5 million in inventory, $0.8 million in deposits, and $1.7 million in prepaid expenses. The company recorded a loss in the second quarter of the year of $1.94 million, and since the inception of the company in 2008 has recorded a cumulative loss of a little over $10 million. It carries virtually no long term debt.

This company bears all the hallmarks of a young company in its development stage. It will begin to receive real revenue in the current quarter through its new retail marketing partners and its web site, which only because operational in February of this year.

Perhaps the “grown up” company that most resembles what Respect Your Universe might someday be is Lululemon Athletica (LULU). This high cap ($8.8 billion market capitalization) company has achieved terrific growth without taking on long-term debt. Its operating margin of 28% is more than double Nike’s and Under Armour’s (UA). Its return on equity of 35% is outstanding in any sort of business. And best of all, it is selling at a lower 5 year PEG than Nike, Under Armour or Adidas (ADDYY). Lululemon has obtained this enviable record and position by securing a market, in its case the yoga market, and from that position it is chewing on the virtual heels of Nike and Under Armour in running and other athletic apparel. That, in my opinion, is the way for Respect Your Universe to sustain years of growth. Secure the mixed martial arts market, and then slowly make inroads in other athletic or fashion areas. Time will tell.

Transparency/Disclosure: I am not a registered investment advisor and do not provide specific investment advice. The information contained herein is for informational purposes only. Nothing in this article should be taken as a solicitation to purchase or sell securities. Before buying or selling any stock you should do your own research. I am a consultant to a third-party and have received one hundred fifty dollars for independent research. Always discuss investments with a licensed professional advisor before making any financial decisions. Statements made herein are often “forward-looking statements” as stipulated under Section 27A of the Securities Act of 1933, Section 21E of the Securities Act of 1934, and the Private Securities Litigation Reform Act of 1995. While I have researched this company thoroughly, my due diligence is not a substitute for your own.

It seems almost inevitable these days that banks will be in the news for legal issues. This is certainly true at the moment, and this will pull down several stock prices. Especially with larger cases, lawsuits can result in major losses that will limit the company’s cash flow. While a variety of banks have been in the news for legal trouble lately, I will focus more on five specific bank stocks for now. The legal news has been bad for JPMorgan Chase (JPM), U.S. Bancorp (USB), Royal Bank of Scotland Group (RBS), Barclays (BCS) and Wells Fargo (WFC). Some banks are in worse shape than others, but all will face some difficulty due to the recent legal news. In this article, I will focus on how these legal difficulties are affecting each bank, and what this means for investors currently holding or looking to buy these stocks.

JPMorgan is currently trading around $36, has an operating cash flow of $106.18 billion, and has a price/book ratio of 0.76 at the moment. While its stock price rose in the month of June, it has begun July poorly, and I believe this trend will continue.

As many already know, JPMorgan has been dealing with investigations related to its major trading loss. The Federal Reserve is still looking into the size of the growing loss, and some estimates are now as high as $9 billion. JPMorgan remains optimistic about the future, as it does not expect losses to continue in the future. To continue reading, click here.

Chesapeake Energy (CHK) is all set to announce its new chairman this week, a long awaited change. This change in leadership is nothing short of historical. The company, which was founded 23 years ago by Aubrey McClendon and Tom Ward, has never experienced a change in management once during that time. Perhaps that is part of the problem for the company’s current bad image. Perhaps still, an earlier change in leadership would have kept it from deteriorating as it has.

So it is widely agreed then that the company needs a change in leadership if it is to survive. However, I believe that the subtext that we can infer here is that the quality of the new leader needs to be such that he or she actually has the ability to make the required changes a reality. However, I do not think that there are many qualified individuals out there who would be willing to take Chesapeake on in its current state.

McClendon, whose strategies in the past were instrumental in making the company what it is today, has agreed to step down as chairman following an investigation that showed that he has secured huge amounts of money in personal loans using his shares in the company as collateral. This is an unacceptable abuse of power and has caused the entire management structure of Chesapeake to be called into question.

Consequently, the company has a bad name at the moment and will struggle to find a good leader willing to tarnish his or her name by associating with the company on such an intimate level.To continue reading, click here.

Intel (INTC) has switched some of its focus from its primary business as a chip maker to the smartphone industry, a move that could be highly beneficial or that could just as easily fall flat.

Intel has finally set its sights on the telecom industry. This is a smart move considering smartphones are what consumers want these days. Not to mention that it could use the diversity in its portfolio. However, I feel that Intel may have entered the market too late. In fact it is safe to say that Intel came literally out of nowhere when it announced its intention a little while ago to become a strong presence in the mobile phone industry. The change from chipmaker to mobile phone manufacturer seems to be a very sudden one for most investors to cope with. The company remains optimistic saying that its technology can help device manufacturers to improve their products. For the sake of the company, and in the hope that it will be able to make big enough of a splash to benefit investors, I hope that it is right.

Intel recently launched its first ever smartphone. The phone, which is known as the Xolo X900, was developed in partnership with Lava. Lava is an Indian based mobile phone manufacturer. India seems like a less than ideal place for a company such as Intel to launch its first ever phone, but you need to remember that the population of India is enormous and ever expanding, providing a big market for new products such as this one.To continue reading, click here.

Recently, Microsoft (MSFT) announced that it has finalized a cross government licensing framework with the New Zealand Government’s Department of Internal Affairs. The agreement will span for a period of three years.

The biggest advantage that this will have for the government is that it will save it a substantial amount of money. The total amount of money that the New Zealand government hopes to save through this collaboration is $119 million. In addition, it also provides a higher degree of flexibility as well as simplicity. It will also serve as a way for the New Zealand government to modernize its information technology and improve the efficiency of its systems. These advantages are all in line with the New Zealand government’s broader strategy. The new framework that Microsoft is introducing will cover new cloud based software as well as older and more traditional software. This is an important step forward for the New Zealand government as it has realized that improved technology is the way forward.

The new deal also serves to illustrate that Microsoft remains a force to be reckoned with when it comes to technological domain. It creates a big media splash which will likely impact Microsoft stock in a very positive way. The successful outcome of the New Zealand deal will show other countries that Microsoft can integrate its products smoothly into different business systems. The deal also improves Microsoft’s global image, making it more attractive as an investment.To continue reading, click here.