Questcor Pharmaceuticals (QCOR) is definitely one biotech company to be on the lookout for. Over the past few months, Questcor has been riding a single drug all the way to the bank, and even with signs of a slowdown, Questcor is still a major contender in the minor leagues of biotech companies.

Questcor’s drug Acthar is used in the treatment of a few different disorders, including multiple sclerosis, infantile spasms and nephrotic syndrome. Although Questcor did not see a rise equivalent, in dollar terms, to bigger name companies producing world changing drugs, it definitely saw a rise that would make any investor excited for gains.

After a quick fall that occurs after such an instantaneous jump, the stock rose again and eventually began to even out around $38. While growth may be slowing at this point, expect Questcor to hang around its current price as the market for Acthar gel is quite the niche. While this may seem like a downside, there are not many other options for the type of treatment that Acthar provides, so sales will hit an amount that will stay constant, allowing a regular source of income into Questcor that will assist in developing a lower leverage for future investments.

While all this is, of course, great for someone who already has Questcor, I would suggest avoiding purchasing stock in the company at the moment because its price is still high from the release of the drug. Wait until the stock is more stable to make a purchase, assuming the next drug that is in the future for the company has a good outlook. To continue reading, click here.

There are dozens of ideas being bandied about dealing with how Netflix (NFLX) should address increasing competition and rebuild a loyal following. That includes partnering with cable providers, which could bode well for the entertainment video giant that has long been seen as overvalued by investors.

When Netflix came onto the scene in 1997, it was a darling in the eyes of consumers and investors alike. It was rewarded with a fast-growing subscriber base, as also eager investors, that drove the stock above $300. However, as quickly as it rose, it fell, and now it is trying to redefine its self to its customers and to investors. To help it with these goals, Netflix should consider partnering with cable companies, according to a report released this week by Moody’s Investors Service.

As Moody’s correctly points out, such a partnership could open another sales channel that could lead to an increase in subscribers. I believe that Netflix is in dire need of having as many avenues as possible to deliver its service so a partnership can help it tap into a market of potential customers that it had not previously been able to access. This is imperative if it wants to increase its membership numbers. Netflix’s huge misstep last year with regards to running up its charges on subscribers resulted in a significant loss of customers.

The company increased subscription rates by as much as 60%, and simultaneously set the stage for the exodus of almost 1 million customers. To continue reading, click here.

Sprint (S) is the third largest wireless communications company in America in terms of wireless subscribers. It is also one of the largest providers of long distance services and largest carrier of internet connection in the country. Its corporate brand includes Sprint, Nextel, Virgin Mobile and Boost Mobile. Sprint saw a boost in growth at the end of 2011, but what does this say about the company’s outlook for 2012? Should investors be looking at Sprint as an investment opportunity this year?

Sprint saw a record level subscriber additions since 2005. The company reported that it served more than 55 million customers at the end of 2011. This is a growth of 10.24% compared to the same period last year. The growth is attributed to the prepaid segment, which grew 20% year on year and wholesale and affiliate segment at 59% growth. This is also the first time in 5 years that postpaid segment did not see any substantial losses. The reason is that there are new customers due to the recent iPhone launch. Moving forward, we expect total subscribers to increase from the strong sales of iPhone alone.

Revenue is growing, but why are earnings before interest and taxes (ebitda) down? Sprint reported that revenue increased 3% in 2011. This is the first time that the company recorded revenue growth since 2006. The revenue growth was due to strong performance in wireless service and equipment, despite a decline in traditional line.

Despite a turnaround in the top line, the company reported that operating income is down by 10% from higher equipment subsidy and incremental expenses associated with iPhone sales. To continue reading, click here.

Has automaker General Motors (NYSE: GM) finally recovered from its near extinction in the throes of the Great Recession and become a good buy? North American operations have been growing strongly despite the poor economic environment as the public has embraced a new generation of vehicles. Still, GM is a turnaround in progress. I looked at the companies fundamentals as well as its market outlook to see if it is time to move General Motors to the buy category.

The company has a recent share price of $27 which places it in the middle of its $19.05-$36.15 52-week trading range. It has a reported earnings per share of $4.57 which translates to a tiny 5.98 price to earnings ratio. The share value is definitely at depressed levels, with its price per sales of 0.46 and a price to book of 1.24. More enticing is the book value per share which comes out to be $21.96.

Its February 16 earnings announcement for 4th quarter 2011 showed healthy North American operations growth with those divisions pumping out $23.1 billion in revenues for $1.5 billion in pretax earnings, a cool $1 billion increase in year over year numbers. But despite those exciting numbers, the overall profit was only $0.39 a share, a number which missed analyst predictions by $0.02 for in fact North America was fine but the rest of the global operations was a quagmire.

The big loser was General Motor’s European Operation where the company bled over $700 million in losses. The Opel AG Division in particular was staggered by a number of restructuring costs and ended up in the red to the tune of $600 million by itself. GM has come out to say that it is moving to resolve the problems, but I cannot see how any significant progress will be made while the Euro credit crisis plays out, and the while some observers think 2012 will see a rebound I expect 2013 to be the earliest the European operations will come anywhere near to breaking even, or showing a small profit.

Meanwhile South American operations continue to underperform with a $200 million quarter loss. There is more of a vision for a positive future here though. General Motors’ product mix has been aging here and a number of new models are starting to hit show rooms and if the reaction is half as good as that seen in the North American run outs there should be some excellent 2012 results in Latin America.

Other international results, especially in China, have been positive, with earnings at over $400 million before taxes, a $100 million improvement year over year.

Taken together there were high points and lows, but management was only able to squeeze out a return on assets of a miserable 2.56%. Take that with the overall disappointing earnings report and it is little wonder that investors are skeptical. Worse, General Motors is still struggling with its pension plans legacy. Those pension plans are underfunded to a tune of around $24.5 billion, still rising in 2011 year over year despite agreements between the company and its union to mitigate the damage.

So, General Motors has an extremely cheap price with lots of upside, but it still has to show it can find a way through the many problems it has to turn the company to consistent profitability. It has to contend with Ford (NYSE: F) not only for customers but for investors too. The rival has a recent share price near $13 with a price to earnings ratio of 6.70 – similarly low priced to General Motors and it too has seen an underperforming European  division. But Ford has shown much more consistent improvement and in fact profits have stabilized so much that Ford reinitiated paying a dividend which now pays a 1.24% yield.

Of course the opposite end of the competitor scale is Toyota (NYSE: TM) which has a price near $84 with a price to earnings ratio of 41.70 – priced like an emerging tech stock. That is because Toyota’s earnings were shattered due to the Japanese earthquake fallout of 2011 and is only now starting to recover its production capacity. The problem is with the current price most of the potential growth is already priced into the stock and I see no opportunity here.

With current valuations General Motors is at an attractive price point. I have no doubt that the company will sort out its issues and return to a more aggressive profitability. My doubts are the timing, and I expect there will be more quarters of disappointment before General Motor’s turnaround is complete. I would want to watch a little longer before entering a position but investors with lots of patience probably can buy now. However, my preference is its competitor Ford, which has an almost identical price valuation, but is much farther along in establishing profits and dealing with its own problem areas.

This company has too slowly realized its need to seriously change its game to stay competitive. Lack of experience, leadership, and the forthcoming consequences from repeated false-starts will keep this company held down until another company takes them over or does it better.

What Is Happening

Groupon (GRPN) is a local e-commerce marketplace, a hub that connects merchants to consumers by offering goods and services at a discounted price. Traditionally, smaller and local businesses have tried to reach consumers and generate sales through a variety of methods, including newspaper, direct mail, radio, TV, and online advertisements. Groupon creates a new way for local merchants to attract customers and sell goods and services as well as provide consumers with savings.

A great idea, and one that could be profitable, if the system was functioning properly.

Groupon is sitting around $20 per share, and other than some dips and surges, has sat there since its $26 IPO valuation. Amid class-action lawsuits alleging improper expiration dates on its coupons, the company is trying everything it can, including releasing an updated look and new “thumbs up/thumbs down” scoring system for users in order to prevent a mass exodus to such rivals as LivingSocial, CheapToday.com, and Yuupon. While Groupon has successfully mimicked eBay (NASDAQ: EBAY), I don’t see its localized business deals expanding anytime soon.

What Has Happened

Prior to its IPO last November, the company drew criticism for unusual accounting practices, rising marketing costs and the loss of two chief operating officers in a six month span. IPO investors lost interest quickly, forcing Groupon to lower its anticipated valuation from $5 billion to around $3 billion.

Things didn’t get any better post-IPO. Groupon’s financials have been eerily similar to that of a 1990s dot-commer.  In 2010, the net loss was $389 million.  In 2011, it lost another $40 million, bringing the total losses since inception to nearly half a billion dollars. I don’t predict profits anytime soon, as Groupon has made it clear that its objective is top-line growth, meaning more spending.

This staggering number is coupled with a slow fizzle of customer acquisition. Last year, Groupon spent $179.9 million for online marketing.  If anything, the expenditures are likely to continue to spike.  After all, many of other competitors will also drive-up ad rates.

Loss of money and high spending is not the only thing keeping Groupon in the trenches. By its own actions, the company is essentially wearing down its own reputation by repeatedly teaming up with merchants that do more to hurt than help. Consumer complaints range from lack of product, wait time, and the aforementioned expiration date have all been blows to the daily-deal giant.

What Will Happen

Groupon will continue to chase its tail and put out fires. I think it will follow the path of true American tradition and attempt to spend its way out of the hole until funds run out completely. As reputation plummets, money dries up, and the young programmers-not-businessmen at the top lose their star status, it is possible someone might buy it out from underneath them, or viciously overtake them with a stronger business model and more business sense.

Why It Will Happen

Though this international empire is working hard at expanding trying to remain competitive, my prediction is that it will be unsuccessful for several reasons.

1)      Differentiation. Online daily deal businesses have been popping up almost weekly, some with a stronger business model than Groupon. Businesses differentiate themselves from competition via different ways: Product, Service, Cost, etc. Relying solely on cost to be the differentiating factor, it sets the business up for failure. Someone with deeper pockets will always be able to offer your product or service cheaper – or free.

2)      Leadership. I previously stated my opinion about how this company is run and by whom. It would seem current employees see the same. Citing Glassdoor.com, the management review by current employees is a paltry 2.0 out of 5. Employees see firsthand the “management not sure which direction to take” and the “inexperience of some of the higher-ups”.

3)      Business Model. I wholeheartedly agree with MSN Money’s assessment:

Groupon urgently needs to get its merchant mix right. focusing more on service-based businesses that will tangibly benefit from daily deals. Merchants also seem to be relatively unaware of the risks involved in running a daily deal, and Groupon must highlight these risks before striking a deal. The company may also need to compromise on the sales pressure it puts on merchants as more failing small businesses simply means more bad PR for Groupon.

4)      Finance Handling. Groupon raised a total of $946 million in two funding rounds last winter. It kept $136 million of it help run the money-losing company. The remaining $810 million was paid out, via stock purchases, to CEO Andrew Mason and some of his backers. Its first earnings report as a public company was also a glaring representation of poor management, losing $350 million overall and seeing $137 million in international operating losses due to moving almost 70 percent of its 10,000+ employees are now overseas.

5)      Reputation. Groupon seems content with allowing its reputation to wear away amid the assaults of consumers and media alike. Its focus has encouraged bargain hunting and not loyalty either for itself or its merchant affiliates. Mason remains either naively or incompetently hushed about the negatives, and has gone so far as to say, “There are big differences now in Groupon’s business in the U.S. versus internationally, but we’ve seen the model work wherever we take it.” This, combined with the almost non-stop negative press by media for its performance and consumers for its service, will

Summary

Don’t hold out hope that Groupon will recover and be your cash cow. I don’t see this stock performing any better than it has in the last three months. Even so, the service it provides is important, especially in today’s more convenience-focused, online-only world. Investors should keep their eyes peeled for a company with more powerful leadership and solid financial experience that will take this idea to where it ought to be.

The Chinese Internet stocks started out 2012 with a nice rally. The four stocks discussed here produced share price gains of 20% to 40% in the first six weeks of the year. However, the price gains were – in general – just a break in longer term down trends as these companies either try to maintain levels of profit growth to justify the share valuations or figure out how to grow profits along with growing revenues. Traders looking for short sale prospects should check if their analysis match the reasons below why these stocks are better short candidates than buy long investments.

Youku, Inc. (NYSE: YOKU) Youku is the Chinese answer to YouTube or Hulu in the U.S., offering Internet television and video services. Youku was a hot IPO in December of 2010 and the shares traded as high as $70 in early 2011. Then reality set in. The company has posted net losses every quarter for the last four and is expected to lose 38 cents per share when the 2011 fourth quarter results are released, putting the loss for the full year at a loss of $1.52 per share. The Wall Street analysts have been slashing their 2012 expectations: Ninety days ago the consensus estimate for 2012 was a loss of 10 cents per share. Currently the consensus is a loss of $1.42 with the most pessimistic analyst predicting a loss of $2.27. The most optimistic analyst expects a measly 15 cents per share profit. Price rallies on Youku, like the recent runup above $20 to $24 are short selling opportunities. Cover a short position at $15 and avoid being short during an earnings release announcement.

Sina Corporation (NASDAQ: SINA) Sina is the owner of a Chinese micro-blogging weibo website. Micro-blogging is a growth craze in China and Sina reported 250 million users at the end of 2011 and was adding 20 million per month. Unfortunately, Sina has suffered from the curse of social media companies as a business: How to generate profits in the face of growing expenses to support the growing number of subscribers? Sina earned $1.74 per share in 2010, saw usership increase exponentially in 2011 and the consensus earnings estimate for 2011 is 94 cents per share, a 50% decline. The company reports 2011 fourth quarter results on February 27. The earnings estimate for the quarter is a profit of 21 cents per share, less than half the 46 cents earned a year earlier. The Wall Street analysts as a group have a little more optimism about 2012, forecasting earnings of $1.41. Over the last several months, the consensus earnings have been declining and Sina is trading at 44 times very iffy forward earnings. It is hard to see a good reason to be long this stock, so short it.

Renren, Inc. (NYSE: RENN) Renren is the Chinese answer to Facebook. The company went public in May 2011 and after the $14 IPO the shares peaked at $21.93 on the IPO trading day. The share value has been mostly downhill ever since. The share price dropped below $10 in early August 2011. Since the end of summer the stock’s trading range has been $3.20 to $7. The share price popped 50% – from $4 to $6 – when the Facebook pending IPO was announced. As the forerunner to the Facebook IPO, Renren was not profitable who it went public, but was expected to soon turn profitable, after raking in that $700 million of IPO money. For 2012, the consensus earnings estimate is a loss of 7 cents per share with the most optimistic analyst forecasting a 4 cent profit. Sell Renren short above $5 and cover at $3.50.

Baidu.com, Inc. (NASDAQ: BIDU) Baidu is probably the most dangerous short selling candidate listed here. Baidu is the Chinese version of Google (NASDAQ: GOOG), receiving 75 percent of the country’s search results and is a large cap stock itself with a $47 billion market cap. Baidu operating profits were up 91% in 2011 and net income for the fourth quarter increased by 77%. The Wall Street consensus estimate has net income growing by 50% in 2012. So what are the reasons to short sell this growth stock?

• The stock is valued based on both the company’s and the China economy projected growth rates. Any stumble in either of these growth projections will lead to a price tumble.
• Baidu earns all of its revenue and profits in the Chinese currency with no viable outlet to invest that currency or earn revenue outside of the China economy. If the Yen is devalued, the Baidu share value will be hammered.

To short Baidu a trader can either wait for some bad news then ride the share price down until it bottoms or aggressively try to predict a slowing of the growth results. Keep those stops set tight.

These Chinese Internet stocks have mostly received positive press and share value forecasts over the recent past. Yet they all have vulnerabilities which could result in profits for short sellers. Traders who short sell often must go against the Wall Street crowd, which has a vested interest in stocks generally going up in value. As a final point, foreign stocks from a specific country often move in the same direction together. If a large company such as Baidu starts to lose value, many other Chinese tech stocks will follow along as investors sell of the country as a whole.

In this article, I analyze five stocks that could, when put together, form a diversified income-producing portfolio. I chose these stocks from stable sectors and identified them based on the discount at which they are selling relative to their peers on a discounted cash flow basis. The five sectors that I have focused on for this article are consumer staples, consumer discretionary, telecommunications, utilities and materials. As always, use my analysis as a starting point for conducting your own investigation and analysis prior to making any investment decisions.

Kimberly-Clark Corporation (KMB)

Operating in consumer staples, Kimberly-Clark manufactures and markets health care and personal care products worldwide and has a market cap of $28 billion. It has a 52 week trading range of $61 to $74.25 and is now trading at around $72, with a trailing PE of 17.

Kimberly-Clark pays a solid dividend yield of 4%, which is the fourth highest in its industry and higher than Colgate-Palmolive’s (CL) 3%, and Procter and Gamble’s (PG) 3%. It has a return on equity of 28%, which is lower than Colgate-Palmolive’s 87% and higher than Procter and Gamble’s 18.

Kimberly-Clark saw a 3% drop in third quarter 2011 earnings to $5 billion and net income drop by 7% to $401 million. For the same period Kimberly-Clark’s balance sheet strengthened with cash and cash equivalents rising 36% to $1.2 billion, with long-term debt remaining steady at $5.8 billion.

In addition, Kimberly-Clark’s dividend yield of around 4% is higher than both ten yea.To continue reading, click here.