$500 Million in Share Buybacks Could Send This Stock Soaring

In 1905, Charles Henry Robinson spotted a unique opportunity.

After moving west with his family to the North Dakota town of Grand Forks, he soon realized that settlers were in need of supplies. He founded a transportation company with the goal of delivering perishable products to consumers before they spoiled -- a difficult challenge in the horse-and-buggy days.  

The company Robinson founded changed with the times, taking advantage of historic advances in the transportation industry. These advances included the first refrigerated truck (without ice) in 1939, the construction of the interstate highway system beginning in 1945, and the deregulation of the trucking industry in 1980.

Deregulation allowed the company freedom in setting its own rates. It also freed up the types of cargo that could be carried and the geographical areas in which the company could operate.

As it's known today, C.H. Robinson (Nasdaq: CHRW) has again changed with the times.

Unlike transportation industry titans FedEx (NYSE: FDX) or UPS (NYSE: UPS), C.H. Robinson does not own a fleet of trucks that transport goods. Instead, it specializes in logistics. Other companies hire C.H. Robinson to make their transportation services more efficient.

Because the company doesn't have to spend a bundle on equipment and maintenance, its return on invested capital averages more than 30 % -- the highest in the shipping industry.

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	The sheer size of the company's network is difficult to compete with or replicate, giving C.H. Robinson "wide moat" status.

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On Aug. 26, C.H. Robinson's board of directors said the company will begin a $500 million accelerated share buyback program. This will include the repurchase of 15 million shares. Combined with an earlier authorization, the total repurchase agreement now stands at 23.7 million shares.

As regular StreetAuthority readers know, we're big fans of share buybacks. By shrinking the pool of outstanding shares, buybacks provide investors with a "tax-free dividend."

Here's what StreetAuthority expert Elliott Gue said recently about share buybacks in his Top 10 Stocks advisory:

In a way, buybacks are better than dividends...

I love to see dividends hit my account as much as the next investor. But in a regular brokerage account, dividends create a taxable event. Depending on where that cash was sourced from and your marginal tax rate, you could lose up to 39.6% of the dividend to Uncle Sam.

On the other hand, when a buyback happens, the tax man doesn't care. Instead, the value created by the buyback can continue to grow until you sell the shares. At that time you will only be responsible for the capital gains, which max out at 20% for investments held more than a year.

C.H. Robinson's announcement that it's increasing its share buybacks makes a great company even more attractive. But there are other reasons to like CHRW.

Earnings per share (EPS) have grown every year over the past nine years, from $0.67 per share in 2003 to $3.67 in 2012. This is a remarkable feat considering the turbulence the market has weathered in that time. During the height of the Great Recession in 2008 and 2009, C.H. Robinson managed to increase net income and its dividend while most companies in its industry were decimated by falling demand.

The sheer size of the company's network is difficult to compete with or replicate, giving C.H. Robinson "wide moat" status. The company has a customer base of more than 40,000 shippers, and its size allows it to negotiate lower transportation rates than small shipping companies could obtain on their own.

The company's network also gives it access to over 56,000 physical (asset-based) carriers. This represents an enormous advantage, as shipping continues to become more complex due to globalization and myriad international regulations.

The current dividend yield of 2.4% may seem underwhelming, especially with the yield on the 10-year Treasury closing in on 3%. But C.H. Robinson's combination of steady dividend increases combined with share buybacks make the stock a good investment for the long haul. 

Compared with the overall market this year, CHRW has been lackluster, losing 9%. With a forward price-to-earnings (P/E) ratio of 18, the company is not in bargain territory, but it is in line with the S&P 500. 

Risks to Consider: At 6, the price-to-book ratio is a little high for my taste, but it is only slightly higher than the industry average. There has recently been increased competition in non-asset transportation logistics. Increased competition, especially from FedEx and UPS, could cut into C.H. Robinson's market share.

Action to Take --> Because of its longevity, commitment to shareholder value, wide moat and cost-efficient business model, C.H. Robinson is the kind of company that should have a place in any long-term investor's portfolio.

P.S. -- Stocks like CHRW are similar to a special group of securities we call "Forever" stocks. These are world-dominating companies that dig a deep moat around their business to fend off competitors and buy back massive amounts of stock, boosting the value for the rest of the shares. They're solid enough stocks to buy, forget about and hold -- "Forever." To learn more about these stocks -- including some of their names and ticker symbols -- click here.

Gold prices rebound after three-day slump

SAN FRANCISCO (MarketWatch) — Gold prices climbed Wednesday, rebounding after a three-session loss of nearly 4% as uncertainty surrounding the U.S. budget and debt ceiling lured some investors back to the precious metal.

December gold (GCZ3)  rose $17.60, or 1.3%, to $1,333.90 an ounce on the Comex division of the New York Mercantile Exchange. After losing $10.70, or 0.8%, on Tuesday, prices had tallied a three-session loss of 3.9%.

AFP/Getty Images Gold futures head higher after a three-session drop.

Jeffrey Wright, managing director at H.C. Wainwright LLC, said gold found support Wednesday from short covering, a weaker dollar (DXY)  and the "looming U.S. fiscal scenario" that's weighing on the dollar and boosting gold.

Treasury Secretary Jacob Lew has said that the nation's debt ceiling would be reached on Oct. 17.

So far, "there is still no workable legislation that could pass both houses of Congress and be signed into law," said Wright.

And the "likelihood of a U.S. government shutdown is increasing by the day" with Congress and Obama Administration "very far apart on any deal to continue funding the government," he said. Without new spending in place before Oct. 1, the government would partially shut down for the first time since 1996.

"In the end, I think all of these factors are attracting buyers to gold today and I would anticipate through the end of the week as it looks like a budget deal will come down to the last possible minutes once again," Wright said.

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Also contributing to gold's strength was the fact that prices managed to hold firm at a key technical support level on Tuesday — at around $1,305, said Gene Arensberg, editor of the Got Gold Report.

"The sell down attempt stalled and found good support on the Comex at "precisely where one would expect it to and that is giving gold bulls a cup of courage today."

Meanwhile, the dollar edged lower against many of its currency rivals Wednesday as data showed U.S. sales of new homes rebounded in August. Weakness in the greenback often boosts prices for dollar-denominated commodities.

New home sales rose 7.9% to a seasonally adjusted annual rate of 421,000 in August, rebounding after a large drop in July. Separate data also showed that orders for durable goods edged up 0.1% in August, defying expectations for a decline.

For now, other metals on Comex traded mostly higher along with gold.

December silver (SIZ3)  tacked on 30 cents, or 1.4%, to $21.88 an ounce and December copper (HGZ3)  traded at $3.27 a pound, up almost 2 cents, or 0.5%.

January platinum (PLF4)  rose $11, or 0.8%, to $1,433.10 an ounce, while December palladium (PAZ3)  inched up by $3.45, or 0.5%, to $723.45 after a 0.3% climb a day earlier.

Week ahead

Looking ahead to next week for gold, "there's little cause to expect a lot of heavy trading either way," said Adrian Ash, head of research at BullionVault in London. "This weekend marks the end of the third quarter (or very nearly), so expect few new positions from hedge-fund traders."

Monday and Tuesday will then see the London bullion market "decamp to Rome for its annual conference," he said. "But again, don't expect dealing through the world's physical center to be anything like as heavy as the pasta being ordered on this year's jolly."

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Also next week, China will start its Golden Week holidays. "Bullion already shipped ahead of this auspicious celebration will no doubt be snapped up by eager investors and shoppers," said Ash. But import demand from the world's new No.1 gold-buying nation will also take a break as wholesalers take a holiday.

So that leaves U.S. payrolls data to "set the pace," he said, when they're released on Oct. 4.

Among equities Wednesday, the Philadelphia Gold and Silver Index (XAU)  climbed 2.4%, tracking gains in metals prices. The gold-backed SPDR Gold Trust exchange-traded fund (GLD)  added 0.9% and the iShares Silver Trust (SLV)  rose 0.8%.

Profile of Jim Chanos - The Fraud Detective

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On a muggy Thursday in the dog days of August 2011, the news broke that the American technology giant Hewlett-Packard was about to acquire British software maker Autonomy Corp. The offer price represented a 64 percent premium on the previous day's close. At his office in mid-Manhattan, hedge fund manager Jim Chanos '80 did not rejoice.

Only a few weeks earlier, his firm, Kynikos Associates, had put together a report on Autonomy, calling its chief operating officer unqualified, its customers unenthusiastic, its market share and growth numbers questionable, its financial disclosures "very poor," and its margin profile "suspiciously high."

"We thought this was one of the great shorts of all time," says Chanos, who specializes in ferreting out corporate bad behavior and then short-selling the companies that indulge in it. (That is, he borrows shares in a company and sells them at the current price, in the expectation that he will be able to pay back the loan, or "cover the short," with shares purchased at a much lower price when the truth comes out. See boxes, pages 41 and 43.) Autonomy was the firm's largest short position in Europe. So Hewlett-Packard's decision to more than double the value of the company was—and here Chanos laughs—"very painful."

Chanos passed along a copy of his Autonomy analysis to a friend who had friends on the board at HP, saying, "You should look at this. This is going to be a disaster." The deal closed anyway, and Chanos was soon shorting HP as enthusiastically as he had shorted Autonomy. Thirteen months later, in November last year, HP management woke up, said there were "serious accounting improprieties" at Autonomy—and handed shareholders an $8.8 billion loss on the deal. (Autonomy's ex-CEO denied the charge.) By then, Chanos had already covered most of his shor! t, pocketed the profits, and moved on.

You would think that by now financial types would stop to listen when Chanos says "Uh-oh." He has been raising the red flag on companies—from the merely troubled to the outright fraudulent—for more than 30 years, often while corporate executives and Wall Street analysts were still eagerly flogging those companies to gullible buyers. "He's been pretty much right about everything," says Nell Minow, a leading advocate for responsible corporate governance. "He's a smart guy." The investments he has shorted constitute a nearly complete chronicle of bad business behavior in our time. The most famous among them landed Chanos on the cover of Barron's in 2002 as "The Guy Who Called Enron." But the list of his targets stretches from Michael Milken's junk bond empire through the real estate boom of the late 1980s, the telecom bubble of the late 1990s, Dennis Kozlowski's Tyco and Bernie Ebbers's WorldCom at the turn of the century, subprime mortgage lenders and homebuilders in 2007, and most recently an entire nation. (China, he says, is "on an economic treadmill to hell.")

Chanos has inevitably also been wrong about some companies—or right, but too soon, as with his first go-round on Autonomy. He has taken losses, sometimes for years on end, that, according to a longtime friend, would make an average man "go out and shoot himself." Even so, he has managed not only to survive but to prosper and put an exuberant face on a notoriously treacherous line of work. "Jim Chanos," International Business Times declared in 2011, "is the best short-seller in the world." In certain circles, this is a bit like saying he is the world's best agent of Satan. But Chanos turns out to be a more complex character than the labels "hedge fund manager" and "short-seller" might suggest.

"I hope you are here," Chanos tells a packed classroom at the Yale School of Management, on a Monday afternoon in March, "for 'Finan! cial Frau! d through History: A Forensic Approach' and not for 'How to Run a Hedge Fund 101.'" He's just flown up from a weekend in Florida. His hair, still sand-colored at 55, sweeps down over his forehead. He wears thick-lensed rimless eyeglasses and a blue blazer over a purple cashmere sweater, which make him look at first like an Episcopalian minister gone astray. But he quickly shows himself a confident guide to the topic he will be covering for three hours once a week over the next eight weeks—"the rogues and charlatans" who have cheated investors through history.

Chanos has been teaching this class for three years, starting soon after he mentioned to then–Yale president Richard Levin '74PhD that his fantasy was to come back to New Haven to earn a graduate degree in history. As an undergraduate, Chanos had been a student of Levin's. ("He says the only reason I uncovered Enron was because of what I learned" in his class.) Levin countered that Yale's fantasy was to have Chanos teach. Then, says Chanos, Levin heard the course description and joked that he'd had second thoughts: "He said, 'You're not going to teach them how to commit fraud, are you?'"

That's not the plan, Chanos tells the class. But it is "almost inevitable that you will come across fraud in the course of your careers." It has already happened to a former student, whose first job confronted him with a discrepancy that ended up in the corporation counsel's office. Corruption is everywhere in the business world, he warns, citing a survey in which 45 percent of chief financial officers said their CEOs had asked them to falsify financial results.

The point of the class, Chanos says, is always to look beyond face value and to spot the fudging and the fraud in time to protect their employers, as well as their own wallets and reputations. Just such a moment of recognition, early in his own career, set him on a thin line between finding his calling and getting fired.

Chanos grew up ! in a Milw! aukee suburb, in a Greek immigrant family that operated a chain of dry-cleaning shops. He helped pay his way through college with a summer job as a union steel worker. At Yale, he majored in economics and political science. His non-academic credentials included lightweight crew and two years as social chairman at Davenport College, where his roommate, Keith Allain '80, now coach of the Yale hockey team, once inadvertently slapped a puck through the window of the master's house. (Allain has described his former roommate as "one of those special guys who could light the candle at both ends and never get burned." He had Chanos go inside to explain the puck.)

After college, Chanos got his start as a bottom-rung analyst for Blyth Eastman Dillon in Chicago, working 80-hour weeks at $12,500 a year. It began to dawn on him, he says, that "I could've made more money shoveling snow in Milwaukee." But when a group of partners split off to start their own firm, Gilford Securities, they took Chanos along. And there Baldwin-United Corp. entered his life.

Continue reading here.

Canada Stocks Rise on Wireless Carrier Rally, BlackBerry Deal

Canadian stocks rose, halting a two-day slide, as phone stocks gained after foreign competitors signaled no intention to join a wireless-spectrum auction and BlackBerry Ltd. pared declines after agreeing to a buyout.

BlackBerry was unchanged, erasing earlier losses of as much as 8.2 percent, after saying it has a deal to sell itself for $4.7 billion to a group led by Fairfax Financial Holdings Ltd. Rogers Communications Inc. rose 1.2 percent as Canada's three largest phone carriers placed deposits to bid in a spectrum auction that is not expected to attract a foreign competitor. National Bank of Canada climbed 0.9 percent to pace gains among the nation's lenders. Catamaran Corp. dropped 3.5 percent after Morgan Stanley cut its rating on the stock.

The Standard & Poor's/TSX Composite Index rose 4.71 points, or less than 0.1 percent, to 12,811.18 at 4 p.m. in Toronto. The benchmark Canadian equity gauge has surged 5.6 percent this quarter and is up 3 percent in 2013. Trading volume was 3.3 percent above the 30-day average.

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"The big news event today was BlackBerry," said John O'Connell, chief executive officer with Davis Rea Ltd. in Toronto. The firm manages about C$600 million. The gains among phone stocks show "the markets were overreacting to the threat of an entrance from foreign telecoms," he said.

The S&P/TSX traded little changed for most of the morning session before the BlackBerry announcement sent the index up by as much as 0.2 percent. The company's shares erased an earlier drop to turn as high as 4.1 percent before finishing the day unchanged at C$9.08.

$4.7 Billion

That's roughly in line with the $9 a share offered by a group led by Fairfax, its largest shareholder, in a tentative deal. The deal values BlackBerry at a 3.1 percent premium over its closing price last week.

The stock plunged 16 percent Sept. 20 after the company released second-quarter earnings on that fell short of analysts' estimates. The Waterloo, Ontario-based company also said it's cutting 4,500 jobs and taking a writedown of as much as $960 million for unsold inventory of its Z10 phone -- a touch-screen device unveiled in January as its answer to the iPhone.

The acquirers will have six weeks to scrutinize BlackBerry's books, a span in which the smartphone maker can seek other takeover offers. Fairfax, a financial services holding company, added 1.1 percent to C$420.45.

Wireless carriers rallied after the industry's largest domestic players applied to bid in a wireless spectrum auction on Jan. 14, according to a list on Industry Canada's website.

Incumbents Rally

Rogers Communications, Canada's largest wireless carrier, increased 1.2 percent to C$45.36 and BCE Inc. added 1.3 percent to C$44.51. Telus Corp. jumped 2.5 percent to C$35.44.

The roster of applicants doesn't appear to include major foreign players. Verizon Communications Inc. said Sept. 3 it wouldn't enter the Canadian market after saying earlier in the summer it was exploring the idea.

It's "good for incumbents," Greg MacDonald, an analyst in Toronto at Macquarie Capital Markets, said in an e-mail, referring to the three largest companies.

Financial firms advanced. National Bank rose 0.9 percent to C$85.78 and Canadian Imperial Bank of Commerce gained 0.8 percent to C$83.47. Royal Bank of Canada, the nation's largest lender, added 0.5 percent to C$66.26.

Materials producers declined as prices for metals from gold to copper slumped amid speculation the U.S. Federal Reserve will reduce fiscal stimulus, outweighing data from China showing a preliminary manufacturing index gauge climbed more than expected in September.

Catamaran Slide

Iamgold Corp. retreated 4.2 percent to C$4.99 and Osisko Mining Corp. tumbled 5.6 percent to C$5.11. Silver Standard Resources Inc. dropped 7.5 percent to C$6.57.

Catamaran, a pharmacy benefits management company, slumped 3.5 percent to C$49.29, the lowest close since May. The stock has lost 14 percent since customer Walgreen Co. said on Sept. 17 it is moving staff into a private health exchange. Analysts with Morgan Stanley today lowered Catamaran's rating to equal weight, the equivalent of a hold.

Agrium Inc., North America's third-largest fertilizer producer, lost 3.1 percent to C$89.49, the biggest drop since July 30. The company said earnings will fall in its wholesale unit this quarter because of declines in sales volumes of as much as 30 percent compared with a year earlier.

Prices for potash, a major fertilizer used to strengthen crops, have declined since OAO Uralkali, the world's biggest producer, pulled out of a trading venture with Belarus in July and said it would sell its product at a lower price.

A Well-Rooted Retail Investment

NEW YORK (TheStreet) -- Here is a concept that is very important in the market, and I saw it at work just last week when the Dow Jones Industrial Average finally kicked out three old duds.

Many times I look at portfolios that are transferred to me and see a similar situation -- I see a portfolio that is full of stocks of yesteryear. Well, I personally would rather own the "Best Stocks Now," not of yesteryear!

Look at Wal-Mart (WMT), the behemoth out of Bentonville, Ark. There's probably a Wal-Mart within driving distance of your home and you've probably visited it within the last 30 days. Wal-Mart is everywhere! The problem is, it's gotten so big it became a math problem.

Now I'm a number cruncher. I'd much rather see the numbers of a company than a CEO flapping his mouth, telling me how good his company is. My point is that at one time Wal-Mart was a great stock. But today it is no longer a double-digit grower. It is a single-digit grower. Wouldn't you have liked to have bought Wal-Mart in the early days? I look for companies today that are like WMT was in its early days. For instance, Dollar Tree (DLTR). Dollar Tree is a stock that I wrote about back in 2011 in my book Best Stocks Now! Companies. It is still performing way better than everyone else and it's still undervalued. Stocks like this may never end up in the Dow, but if it can -- from its current market cap of $12.8 billion to $20 billion -- I would be OK with that. I have already made 142% in the stock once. Data from Best Stocks Now App The first time around with DLTR, I more than doubled my money. Then the shares started to cool off and I moved on. Well, it started heating up again earlier this year so I got back in and it's on the move once again. DLTR is a stock that I currently own in my conservative growth accounts. It is a $12 billion company -- a little, tiny, large-cap stock. By contrast WMT is a mega-cap stock at $244 billion.

Performance

Let's take a quick look at the performance of DLTR by looking at my Best Stocks Now! App. Over the last five years, DLTR has averaged 35% returns to investors per year. Over the last three years DLTR has delivered 32% per year. Over the last 12 months DLTR is up 19% and it's starting to outperform the market again.

Data from Best Stocks Now App Now let's go back to 2008 when the market was down 38.5%. DLTR was up 61% that year! So what ranking do you think it would have had in 2008 (my app wasn't functional then)? I know that it would have been a top-rated stock that year. It is all relative. Valuation DLTR's performance has been sensational. Now, just for fun, let's compare its performance with that of Wal-Mart. Over the last one, three and five years, DLTR has been cranking out returns of about 30% to 35% to investors. WMT, on the other hand, has been cranking out only about 6% per year. It's all about earnings growth. Earnings growth translates into stock price appreciation. When earnings start to slow down at a company and it's no longer hitting double digits, no matter who you are, the stock price appreciation is going to follow right along. This is why you have to be invested in the Best Stocks NOW!, not big recognizable names of yesteryear. Data from Best Stocks Now App Wal-Mart was once a Dollar Tree -- it was growing rapidly. And now you ask yourself 'Why didn't I get on the Wal-Mart bandwagon in the early days?' Well, I'm giving you all these stocks on a daily basis that are in the early days now. Too many people follow the rule of avoiding stocks that are hitting a new highs. In fact, just the other day someone asked me why I would buy a stock (like DLTR) that is just hitting new highs. Well, DLTR has been hitting new highs for the last 10 years. You'd never buy this stock if you followed that rule. I would rather own a stock that is hitting new highs than one that is going sideways.

I would rather own a stock that is hitting new highs than one that is going down.

I would rather own a stock that is hitting new highs that one that is hitting new lows!

This is where valuation comes into play.

Data from Best Stocks Now App Dollar Tree is currently trading at 17 times forward earnings, which is a slight discount to the market. It's expected to grow those earnings by 17%, so it has a PEG ratio of 1.01. All things equal, you should get 17% per year in returns on DLTR going forward. It's simple math, but that doesn't necessarily mean there's a guarantee. You still have to babysit that holding every day to make sure it's staying on track. Now every once in a while, the stock is going to be derailed a little bit. But as long as it stays on course, stay with it. You want big gains in the market. If it goes, of course, you sell. Dollar Tree is currently a stock that is exhibiting to those of Wal-Mart many years ago. Stock Chart So would I buy a stock that is hitting a new all-time high? So far we've discussed the performance and valuation of DLTR, but the last part is checking that stock chart. Courtesy of StockCharts.com Wednesday, DLTR broke out to a new all-time high. If the valuation justifies it, and in DLTR's case it does, I would absolutely buy a stock that's hitting a new high. So, it's your choice -- you could own a big, stodgy, old stock of yesteryear, or you could drop down a notch into the second or third tier and shop around the aisles of the stock market that still offer big potential. DLTR comes in at #83 out of 3,546 stocks. Clients of Gunderson Capital Management are currently long the stock. Data from Best Stocks Now App At the time of publication, Gunderson was long DLTR. Follow @billgunderson This article was written by an independent contributor, separate from TheStreet's regular news coverage.

Should You Start Buying Argentinean Utilities?

For over 10 years, Argentina's government has held inconsistent energy policies in place. Residential and industrial electric and gas prices were well below marginal costs. As a result, companies such as Edenor (EDN) and its parent, the diversified energy holding Pampa Energia (PAM), lost millions. Low tariffs were simply not high enough to cover total operational costs.

But the outlook seems to be changing. After losing primary parliamentary elections about a month ago, the party that has been the major political force in Argentina since 2003 is preparing itself to leave the government as soon as 2015, when presidential elections are to be held. Moreover, the presidential candidates with real chances for 2015 are far more market-friendly than the current administration. Hence, energy policies should turn for the best, and companies such as Edenor, Pampa and even Transportadora de Gas del Sur (TGS), which is still making money despite low tariffs, should soar.

The question is: Should you go long now?

The Ultimate Argentinean Electricity Holding

Pampa Energia owns 51.5% of Edenor, the largest distributor of electricity in Argentina, with more than 2.7 million customers. Pampa also participates in the electricity generation business (with assets such as Central Loma de la Lata) and controls the transmission business in the country through its controlling stake in Transener, which transports 95% of electricity in Argentina.

Under current conditions, Pampa's results have been consistently poor. Second quarter results are a good example of this. With revenues at around $300 million for the six months ended in June (taking into account the blue chip swap exchange rate), the company produced negative EBITDA results of about $30 million. Even with the stock up by 26% year-to-date, the company trades at 37% its book value. Some investment houses such as Ruane Cunniff have already seen value in the stock and hold it in their portfolio.

Edenor, which is held by Renaissan! ce Technologies, is my favorite play among Argentinean electricity assets. The reason is simple: I always rather own pure plays to diversified holdings such as Pampa Energia. During the second quarter, the company could slightly re-negotiate electricity tariffs with the federal government in order to increase its top line by as much as 15%. That said, Edenor still suffered an operating loss for the quarter of $45 million. Nevertheless, the government has been partially recognizing the losses the company has been suffering through periodical transfers of funds. This is the reason to explain Edenor's highly positive net income figure for the second quarter – Edenor reported a net income gain of $194 million. Edenor, which is up by 48% ytd, trades at 39% of its book value and should soar in price as soon as sustainable energy policies come back to Argentina.

Bottom Line

Clearly, the situation in Argentinean utilities is unsustainable over time. Utility companies should always produce predictable earnings in order to incentivize necessary infrastructure investments. When the current government came into power in 2003, Argentina, a resource-rich country, was self-sufficient in oil, gas and electricity. As a result of poor policies, the country is today a net importer of oil, gas and electricity. Naturally, at the currently negative rates of return, no company is ready to invest as much as necessary to bring the country back to self-sufficiency. My bet is that a new administration will make the necessary changes in order to produce the much-needed investments.

Investors Fret Over Apple Pre-Order Figures (AAPL)

Just as investors had anxiously awaited the new iPhone devices from Apple (AAPL), so too are they waiting on the important iPhone 5c pre-order figures.

Typically, Apple releases its pre-order results once a device actually goes on sale; the iPhone 5S debuts on Friday and is not available for pre-order. Investors are more fixated on the iPhone 5C and its pre-order figures, as the device looks to break the tech firm into a key emerging market. Until the numbers for the 5C are released, the market sits on eggshells, as does Apple’s stock.

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Shares of Apple have been sliding since the new iPhones were announced, but with the recent China Mobile deal, revenues could see a nice increase as the company’s overall reach takes a big leap forward.

Apple shares were down $14.78, or 3.28%, at Monday’s close. The stock is down over 15% this year.

Tuesday Closing Bell: Stocks Open Higher, Hold Onto Gains

September 3, 2013: U.S. markets opened higher on Tuesday morning following Monday's Labor Day holiday with an upbeat reaction to European and Asian PMI reports. ISM data for the U.S. rose unexpectedly and July new construction spending also rose more than expected. House Speaker John Boehner's statement of support for President Obama's call to action in Syria cut into early gains, but did not wipe them out.

European markets closed mixed today, while Asian markets closed higher and Latin American markets closed lower.

Wednesday's calendar includes reports from automakers on August sales, speeches by Minneapolis Fed President Narayana Kocherlakota and San Francisco Fed President John Williams, and the following data releases and events (all times Eastern):

7:00 a.m. – Mortgage Bankers Association purchase applications 8:300 a.m. – International trade 10:00 a.m. – Quarterly services survey 11:30 a.m. – 4-week bill auction 2:00 p.m. – Beige Book

Here are the closing bell levels for Tuesday:

S&P500 1,639.75 (+6.78; +0.42%) DJIA 14,833.73 (+23.65; +0.16%) NASDAQ 3,612.61 (+22.74; +0.63%) 10YR TNOTE 2.858% (-0.5625) Gold $1,412.00 (+15.90; +1.1%) Euro/Dollar: 1.3176 (-0.0016; -0.12%)

Stocks on the move: Nokia Corp. (NYSE: NOK) is up 31.5% at $5.13 on the announcement that Microsoft Corp. (NASDAQ: MSFT) will acquire the Finnish firm's mobile phone business for $7.2 billion. Chinese solar energy stocks are getting a boost again today, with Hanwha SolarOne Co. (NASDAQ: HSOL) up more than 15.9% and ReneSola Ltd. (NYSE: SOL) up 14.9%.

Big Deals: Verizon Communications Inc. (NYSE: VZ) will pay $130 billion for the 45% stake in Verizon Wireless by Vodafone Group plc (NASDAQ: VOD) in one of the three largest acquisitions ever. Vodafone was involved in two of them.

In all, 49 stocks put up new 52-week highs today, while 55 stocks posted new lows.

Emerging Stocks Seen Overbought as Jump Spurs Brazil Bull

The biggest rally in developing-nation stocks in a year is showing signs of reversing to analysts following technical indicators.

The MSCI Emerging Markets Index rose 6.3 percent in the last six days, the most for the period since September 2012, as prospects for an imminent U.S. strike on Syria eased and economic data improved in China. The relative strength index for the gauge touched 70 -- the threshold that signals a security is poised to decline -- for the first time since Jan. 14. That level preceded an 18 percent slump in five months.

While developing-nation shares advanced 12 percent from their 2013 low in June and Brazil's Ibovespa entered a bull market this week, stocks are still down 6 percent this year. The MSCI gauge is headed to its biggest annual underperformance since 1998 versus the developed-nation index, which is up 15 percent in 2013. Emerging-market stocks traded at 10.6 times estimated earnings on Sept. 10, the highest since May.

"Investors are pausing for a breather," Joseph Dayan, the London-based head of markets at BCS Financial Group, the biggest trader of stocks in the Moscow Exchange, said by e-mail. "There is not much more than that at this point."

The MSCI Emerging Market Index breached the upper boundary of its Bollinger band on Sept. 10, another technical indicator signaling it could be due for a reversal, data compiled by Bloomberg show. The developing-nations gauge fell less than 0.1 percent to 991.75 at 8:51 a.m. in London.

'Some Correction'

Declines provided an opportunity for "profit taking" for "short term players who bought in the last week or so," Julian Mayo, who helps manage $2.5 billion in emerging-market assets as the co-chief investment officer at Charlemagne Capital Ltd. (CCAP) in London, said by e-mail. "After a 5 to 10 percent gain in some emerging markets in such a short time, some correction is always likely."

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The latest economic data from China to Brazil point to improved growth conditions in developing economies and should help bolster demand for emerging-market assets, according to Regis Chatellier, a strategist at Societe Generale SA in London.

China's factory production rose 10.4 percent from a year earlier, while the country's exports climbed more than estimated in August and inflation stayed below a government target, helping Premier Li Keqiang sustain a rebound in the second-largest economy from a two-quarter slowdown.

Brazil GDP

Brazil's gross domestic product expanded 1.5 percent during the April to June period, or an annualized 6 percent, the national statistics agency said on Aug. 30. That was the most since the first quarter of 2010 and more than all 44 forecasts from analysts surveyed by Bloomberg, whose median estimate was 0.9 percent.

"Until recently, the U.S. was clearly leading the way on the growth front, with little signs that the backdrop in EM was improving," Chatellier said in an e-mail yesterday. "This is still early days, but this has changed."

Even as Chinese economic fundamentals improve, boosting the outlook for the country's stock market, emerging-market volatility should remain high as the Federal Reserve scales back monetary stimulus, according to Saharat Chudsuwan, the Bangkok-based senior vice president at Tisco Asset Management Co., which has about $4.7 billion of assets. The MSCI Emerging Market Index's 90-day volatility reached 17.5 yesterday, the highest level in about a year.

Fed Stimulus

"Emerging-market equities will still have high volatility in the next few months," Chudsuwan said by phone on Sept. 11. "I am still overweight shares of developed markets such as the U.S. and Japan, where the economies show sustainable growth and monetary policies facilitate domestic consumption."

The MSCI index has lost 5.4 percent since May 22, when the Fed signaled its asset-buying program could be trimmed if the U.S. economy showed a sustained recovery. Investors withdrew about $44 billion from emerging-market stock and bond funds since the end of May, Cambridge, Massachusetts-based EPFR Global, which tracks money flows, said Aug. 23.

In India alone, foreign funds pulled $3.7 billion from the stock market in the three months to August, the most since the global financial crisis in 2008. Standard & Poor's reiterated last week it may cut India's BBB- credit rating to junk because of the government's failure to tackle its fiscal and current-account deficits.

More Stress

Fed policy makers will resume a debate on when to pare $85 billion in monthly bond purchases on their Sept. 17-18 meeting. The U.S. central bank is likely to reduce asset purchases to $75 billion this month, according to a Bloomberg survey of 34 economists.

Even after their tumble this year, emerging-market stocks still aren't more attractive than equities in developed nations, according Marc Desmidt, the head of alpha strategies for Asia Pacific at BlackRock Inc., the world's largest asset manager.

"It's a reality that some of these markets have been oversold, probably pessimism does look a little bit high," Desmidt said in a Sept. 11 interview on Bloomberg Television in Hong Kong. "It's not surprising to see some bounces there. But more generally I think there is probably more stress for EM."

Business Confidence in Germany Hits Highest Level in Almost Two Years

Germans, buoyed by an improving economy in Europe, and likely a modest recovery of the U.S. economy, have become spectacularly confident about business prospects. According to official statistics bureau Ifo:

The Ifo Business Climate Index for industry and trade in Germany continued to rise. Companies are more satisfied with their current business situation. Their optimism regarding future business developments – although slightly cautious – also grew. The German economy moved up a gear.

The Business Climate index rose to 105.7 from 106.2 in August. The Business Situation Index reached 112 up from 110.1 in July, and the Business Expectations Index rose to 103.3 from 102.4.

The improvement was spread across most industries.

According to Kai Carstensen Director of the Ifo Center for Business Cycle Analysis and Surveys:

The business climate indicator in manufacturing rose significantly to its highest value since April 2012. Assessments of the current business situation were considerably better than last month. Business expectations also continued to brighten. Firms expect stronger impulses from export business.

The business climate index in retailing edged downwards. This is primarily due to somewhat less positive assessments of the current business situation, while business expectations brightened slightly. In wholesaling, on the other hand, the business climate improved significantly. Wholesalers are far more satisfied with their current business situation. Furthermore, business expectations are positive for the first time since April 2012.

In construction the business climate index fell, but nevertheless remains above its long-term average. Assessments of the current business situation are slightly less favourable than last month. Contractors are more cautious about future business development

Why Salesforce Should Buy Concur Technologies

The beauty of software companies is their ability to scale, untethered to the drudgery and expense of human labor, or much in the way of plant and equipment for that matter, selling the same bundles of code over and over again.

Little wonder, then, these companies trade at an exalted price to sales valuation.

CRM Price / Sales Ratio TTM data by YCharts

Add in the fashionable word "cloud" – it means the software resides on the seller's server, not the customer's – and you might as well stop reading the financials and start shopping for a yacht.

CRM data by YCharts

Or at least that's the ideal. As we've written repeatedly, economies of scale somehow seem to have eluded the cloud computing company Salesforce.com (CRM), where sales and marketing costs over time have risen faster than revenue and now account for about 50% of revenue. Customers, it seems, are putting up one hell of a fight, even though we're certain Salesforce software is absolutely fabulous.

Salesforce stock seems to trade entirely on revenue growth. And so, it's not surprising that it periodically makes acquisitions. As we wrote recently, buying its Mini-Me, ExactTarget (ET), for $2.5 billion, will boost sales but dilute non-GAAP earnings per share (Salesforce hasn't any GAAP earnings per share).

The two companies — in their love of non-GAAP accounting (let's not talk about soaring stock-based compensation expense, or the pesky amortization of intangible assets like goodwill taken on in pricey acquisitions); in their ability to continually push up sales and stock price despite substantial net losses — are remarkably similar.

Which has us wanting to dial up Salesforce CEO Marc Benioff, who we hear throws one hell of a party, and suggest he buy Concur Technologies (CNQR). Concur, too, has an outsized ardor for non-GAAP accounting. We noted previously that one frustrated short seller had taken to counting the number of uses of the term "non-GAAP" in Salesforce earnings releases: 32 by our count for the first-quarter release. Concur lapped the field, using "non-GAAP" some 81 times in its release for the second quarter ended March 31.

One can't blame Steve Singh, CEO of Concur, for dreaming: a non-GAAP, pre-tax profit for the first six months of fiscal 2013 of $30.8 million sure beats a loss of $19.7 million for the period, when taking into account GAAP (generally accepted accounting principles) rules.

But where Singh's Concur really fits the Salesforce mold is in expanding costs faster than revenue, exhibiting dis-economies of scale in an industry that is supposed to enjoy widening profit margins alongside growth. And we're not talking start-up growth pains, folks. Concur has been around since 1994.

CNQR Revenue TTM data by YCharts

CRM Revenue TTM data by YCharts

Concur's fiscal year revenue from 2008 to 2012, a five-year period, grew an impressive 104% to $439.8 million. To get there, however, Concur larded up its employee rolls by 158%, to 2,400. It spent its way to a 193% rise in sales and marketing expense, to $175.5 million. And it saw sales and marketing expense as a percentage of sales hit about 40%, from 28% five years earlier.

With a record like that, why isn't Singh running IBM (IBM)?

Oh, Concur's software automates the corporate travel and entertainment function, from making travel reservations to paying vendors to filing the dreaded expense reports. From the cloud, no less. Salesforce automates the sales function and allows your team to communicate a lot. ExactTarget automates digital marketing – stuff like those annoying emails and texts you've been getting.

Jeff Bailey, The Editor of YCharts, is a former reporter, editor and columnist at the Wall Street Journal and New York Times. He can be reached at editor@ycharts.com. You can also request a demonstration of YCharts Platinum.

McJobs Malaise: McDonald’s Budgeting Tool Highlights Low-Wage Woes

An online McDonald’s budgeting tool set up to help its employees actually highlights the difficulty of living on McJob wages.

The McDonald’s sample monthly budget plan for its lowest-paid workers looks like this: $1,105 in income from a first job and $955 in income from a second job. On the expenses side, the first item listed is savings, at $100, followed by $600 for mortgage or rent, $150 for a car payment, $100 for car and home insurance, $20 for health insurance and $50 for heating.

McDonald’s “Practical Money Skills for Life” site also offers employees a pay card and calculators along with a 27-page budget journal PDF that includes the sample monthly budget (see chart below).

On the face of it, McDonald’s appears to be offering its employees a thoughtfully prepared package of financial planning tools. But according to Anthony Ogorek, a Buffalo, N.Y.-based certified financial planner and fee-only advisor, the McDonald’s monthly budget is completely unrealistic for American life in the 21st century.

“It’s actually sort of a silly exercise,” said Ogorek, who serves as director of the national board of the National Association of Personal Financial Advisors (NAPFA). “When you look at monthly expenses in the real world, one of the greatest expenses is food. There’s no food line item here, just monthly spending money. It’s silly that the No. 1 item is savings. A car payment of $150 is minuscule. We would all love to pay health insurance for $20, but I don’t know where that happens. In Buffalo, we would love to pay $50 a month for heat.”

McDonald’s Offers a Monthly Budget Plan for Workers

The McDonald’s monthly budget plan (left), which includes income from a second job, reflects a serious problem in the U.S.: many American workers aren’t earning enough to be the sort of consumers who can drive the economy forward. Indeed, Friday’s employment report shows that U.S. job growth may be on the upswing, but it also underlines a disturbing trend: most of the new jobs created these days are McJobs.

Friday’s good news was that the U.S. added 162,000 jobs in July and brought the unemployment rate down to 7.4% from 7.6% in June, according to the Department of Labor. The bad news was that 85,000 of those new jobs came from retail trade, food services and drinking places, which usually pay by the hour.

Glassdoor.com, which offers an inside look at McDonald’s wages posted anonymously by employees, reports average hourly salaries as low as $7.68 per hour for crew members and as high as $10.44 per hour for assistant managers as of July 30. In comparison, Friday’s Department of Labor report shows that average earnings for hourly workers currently total $23.98. (The federal minimum wage has been $7.25 per hour since July 24, 2009, according to the DOL.)

That means that a McDonald’s crew member who works 40 hours a week for 50 weeks would earn an annual salary of $15,360, or $1,280 per month. U.S. Department of Health and Human Services guidelines set the poverty level for 2012 at $23,050 in total yearly income for a family of four. With those kinds of wages on offer, it’s perhaps no surprise that thousands of fast-food workers in seven cities including New York and Chicago last week went on strike to demand a pay raise to $15 an hour.

To be sure, low-paying service jobs make planning a monthly budget look like a near impossibility, and never mind planning for big purchases or retirement investments.

NAPFA’s Ogorek (left) didn’t see how a family of four could live on McDonald’s wages, and he added that even the many teenagers and college students the company employs would be hard pressed to make the numbers work. Rather, Ogorek said that the company’s motivation for offering the “Practical Money Skills for Life” site had more to do with marketing than with true financial planning.

“There are a raft of web sites out there about financial planning that can help you do a better job than this, so my sense is that this is just a throwaway to fill out their website,” Ogorek said. “I think this is a co-branding strategy between two mega-corporations rather than an attempt to provide financial education to young people. Visa is pitching their paycheck payroll card. If you look at the photos on the McDonald’s web page, everyone is very young, so what I believe they’re trying to do is establish brand recognition and establish a relationship with young people who will be consumers for a half century or more. People don’t know what Comerica is, but they sure do know what Visa and McDonald’s are.”

McDonald’s officials didn’t return a request for comment on the sample monthly budget by publication time. But a McDonald’s spokesperson provided a statement to ThinkProgress.org, a progressive website that criticized the company for underscoring “exactly how hard it is for a low-paid fast food worker to get by.”

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“In an effort to provide free, comprehensive money management tools, McDonald’s first used the Wealth Watchers International budgeting journal when this financial literacy program launched in 2008,” the statement said. “The samples that are on this site are generic examples and are intended to help provide a general outline of what an individual budget may look like.”

Company Costs for Raised Wages

Conservative news outlet FoxBusiness also took McDonald’s to task for its financial advice website and planning tool.

“In an attempt to help its workers, McDonald’s may have just hurt its own brand…[and] it may have inadvertently hinted its employee pay isn’t adequate,” Kate Rogers reported for FoxBusiness, pointing to the sample monthly budget’s wages from two jobs. “Some say the tool may have implied McDonald’s workers need a second job in order to make ends meet.”

If McDonald’s does indeed raise worker pay to $15 an hour, the higher wages would cost the McDonald’s corporation and franchises $8 billion in added payroll costs, according to 24/7 Wall Street. And as for the price of a Big Mac, ABC News published an estimate predicting it would rise 68 cents to $4.67 to $3.99.

At year-end 2012, McDonald’s (MCD) reported a 2% rise in earnings, at $5.36 per share versus $5.27 in 2011, on a 2% rise in revenues totaling $27.6 billion. The company returned $5.5 billion to shareholders through dividends and share repurchases.

Read Tepid Job Growth Spreading to Developing Economies at ThinkAdvisor.