Eddie Lampert owned more than 45 percent of Sears at the end of the fourth quarter. In January, he transferred roughly $159 million in Sears stock to his personal wealth from his hedge fund, ESL Investments. He also bought roughly $12 million in stock on the open market that month. After those purchases, he and his hedge fund together own about 59 percent of Sears.
Lampert purchased the shares after the stock had a steep decline from as high as $78 per share in November 2011 to roughly $30 in January 2012. The dip was primarily due to a profit warning the company released which said operating results were being significantly affected by a weak economy.
If Lampert purchased 12,000 shares at $30 in January, a total value of $360,000, he made approximately $720,000 at today�� stock price on that small investment alone. The recent increase has created little other profit, however. In the last five years, his average purchase price for shares was $96.7, meaning the stock would have to go much higher yet for him to gain.
Bruce Berkowitz of the Fairholme Fund, who owns 15.07 percent of Sears, is in a similar situation, but is closer to a profit. He has 16,208,492 shares, which he bought at an average price of $64.50 per share. The stock, which today trades at about $62 per share, has only to go slightly higher for him to receive a positive return on the investment. It has already significantly helped his fund, which lost 32.42 percent in 2011, compared to a gain of 2.11 percent for the S&P 500.
Whether they will ever see a gain re! mains in question. Eddie Lampert�� letter outlined plans to turn the company around, which may have recast it from a sinking ship to a promising turnaround story in the perception of many. Lampert also emphasized that Sears��problem was making money, not liquidity, and it had multiple options for meeting its financial obligations while it took measures to revive business. Presently Sears��$3.2 billion of liquidity consists of nearly $2.5 billion in domestic and Canadian revolving credit facilities and just $754 million cash.
To free up more cash, it plans to reduce expenses by close to $200 million, reduce peak inventory, separate Sears Hometown and Outlet businesses and hardware stores by transferring them to shareholders, which would raise $400 million to $500 million, and selling real estate for 11 stores to General Growth Properties (GGP) for $270 million. At the end of December, it said it would close as many as 120 stores.
Sales at Sears have declined every year since Lampert created it through the $11 billion merger of Sears and Kmart, then in bankruptcy, in 2005. In Sears Domestic�� comparable store fourth quarter sales declined 4.1 percent, and 3 percent for fiscal 2011. Kmart�� comparable store sales declined 2.7 percent in the fourth quarter and 1.4 percent for fiscal 2011. Sears Canada�� comparable store sales fell 7.5 percent in the fourth quarter and 7.7 percent for the fiscal year. Its adjusted earnings per diluted share from continuing operations for the fourth quarter were $0.54 in 2011 and $3.67 in 2010, and adjusted loss per diluted share from continuing operations for the full year were $4.52 in 2011 and $1.97 in 2010.
On its conference call, CEO Lou D��mbrosio said Sears��biggest problem in the quarter was margin rates. ��he largest margin decline was in apparel and related categories��several factors contributed to the decline in these categories. We saw significant increase in commodity costs, particularly cotton, high inventory levels led! to incre! ased mark downs and clearance, and unseasonably warm weather impacted several categories, such as Land�� End typically strong outerwear business.��
He added, ��here are actions we could have taken to mitigate the margin decline. Our five could have been executed better, in terms of quantity and assortment. Our promotional cadence should have been more surgical, and cost actions could have been taken earlier.��
With all of the challenges, much of the confidence about Sears lies in the abilities of Lampert himself. He has achieved an average return of 29 percent a year since 1988 on a string of successful endeavors and is often called ��he next Warren Buffett,��making it difficult to doubt his leadership. He is one of Bruce Berkowitz�� primary reasons for remaining planted in the stock. ��nvestors fled with this New Year�� greeting before Chairman Lampert purchased over $150 million of common for his personal account,��he said in his fourth-quarter letter. ��or many reasons, including management, we continue to believe the assets of this iconic brand to be a multiple of values implied by its current stock market price and continue to see the beginning of a new Berkshire Hathaway.��br>
Lampert concluded his fourth-quarter letter with his five-pillar business strategy, which has not changed since he began at the company.
Best Canadian Companies To Buy Right Now: Enbridge Inc(ENB)
Enbridge Inc. engages in the transportation and distribution of crude oil and natural gas primarily in Canada and the United States. Its Liquids Pipelines segment operates common carrier and contract crude oil, natural gas liquids (NGLs), and refined products pipelines and terminals. The company?s Gas Distribution segment distributes natural gas to residential, commercial, and industrial customers primarily in central and eastern Ontario, northern New York State, Quebec, and New Brunswick. Enbridge?s Gas Pipelines, Processing and Energy Services segment invests in natural gas pipelines, processing and green energy projects, and commodity marketing businesses, as well as performs commodity storage, transport, and supply management services. Its Sponsored Investments segment transports crude oil and other liquid hydrocarbons through common carrier and feeder pipelines, as well as transports, gathers, processes, and markets natural gas and NGLs; operates a crude oil and liqui ds pipeline and gathering system; and owns a 50% interest in the Canadian portion of Alliance Pipeline and partial interests in various green energy investments. The company was formerly known as IPL Energy Inc. and changed its name to Enbridge Inc. in October 1998. Enbridge Inc. was founded in 1949 and is headquartered in Calgary, Canada.
Advisors' Opinion:- [By Louis Navellier]
Enbridge Inc. (NYSE:ENB) is an energy transportation and distribution company separated into six segments: Liquids Pipelines, Gas Distribution, Gas Pipelines, Processing and Energy Services, Sponsored Investments and Corporate. Enbridge stock has gained 13% in 2011.
Best Canadian Companies To Buy Right Now: Cameco Corporation(CCJ)
Cameco Corporation operates as a uranium producer, supplier of conversion services, and fuel manufacturer. The company?s Uranium segment is involved in the exploration for, mining, milling, purchase, and sale of uranium concentrate. Its operating uranium properties include the McArthur River and Key Lake, and Rabbit Lake located in Saskatchewan, Canada; the Crow Butte located in Nebraska and the Smith Ranch-Highland located in Wyoming; and the Inkai uranium deposit located in Kazakhstan. Cameco Corporation?s Fuel Services segment engages in the refining, conversion, and fabrication of uranium concentrate; and the purchase and sale of conversion services. Its products include uranium trioxide, uranium hexafluoride, and uranium dioxide. This segment also manufactures fuel bundles, reactor components, and monitoring equipment to Candu reactors; and provides nuclear fuel and consulting services to Candu operators. The company?s Electricity segment engages in the generation and sale of nuclear electricity, through its 31.6% interest in Bruce Power L.P. This segment operates four nuclear reactors at the Bruce B generating station in southern Ontario, Canada. The company was founded in 1987 and is headquartered in Saskatoon, Canada.
Advisors' Opinion:- [By Mark]
Canada’s Cameco Corp. (CCJ) is a leading nuclear energy company. As the world’s largest low-cost uranium producer, Cameco satisfies almost 20% of the world’s demand. The company was founded in Saskatoon, Canada, in 1987 and has its roots in gold mining — which still contributes a bit to CCJ’s bottom line.
Though precious metals are the rage on Wall Street right now, the Cameco’s uranium business is what has the most potential in the current market. As global warming becomes increasingly important to governments around the world, emission-free nuclear power is once again returning to favor.
President Obama himself made a pitch for nuclear power in a Nevada press stop last week, saying the industry is clean, safe and could create thousands of new jobs. When the U.S. gets behind nuclear power in earnest, it’s sure to mean big things for uranium supplier CCJ.
Top Low Price Stocks To Own Right Now: Prestige Brand Holdings Inc.(PBH)
Prestige Brands Holdings, Inc., together with its subsidiaries, engages in marketing, selling, and distributing over-the-counter healthcare and household cleaning products primarily in North America. The company?s Over-The-Counter Healthcare segment offers a portfolio of OTC products under nine core OTC brands, including Chloraseptic sore throat remedies, Clear Eyes eye drops, Compound W wart removers, Dramamine motion sickness products, Efferdent and Effergrip denture products, Little Remedies pediatric healthcare products, Luden's cough drops, PediaCare pediatric healthcare products, and The Doctor?s brand of oral care products. This segment also provides other significant brands that include Dermoplast first-aid products, Murine eye and ear care products, NasalCrom allergy relief product, New-Skin liquid bandage, and Wartner wart removers. Its Household Cleaning segment markets household cleaning products, such as abrasive and non-abrasive tub and tile cleaner, scrubb ing pads and sponges, dilutables, anti-bacterial hard surface spray for counter tops, and glass cleaners under the Comet, Chore Boy, and Spic and Span brands. Prestige Brands Holdings distributes its products through various retail channels, including drug, food, dollar, and club stores, as well as supermarkets and mass merchandisers. The company was founded in 1996 and is headquartered in Irvington, New York.
Best Canadian Companies To Buy Right Now: Royal Caribbean Cruises Ltd.(RCL)
Royal Caribbean Cruises Ltd. operates in the cruise vacation industry worldwide. It owns five cruise brands, which comprise Royal Caribbean International, Celebrity Cruises, Pullmantur, Azamara Club Cruises, and CDF Croisi�es de France. The Royal Caribbean International brand provides various itineraries and cruise lengths with options for onboard dining, entertainment, and other onboard activities primarily for the contemporary segment. It offers surf simulators, water parks, ice skating rinks, rock climbing walls, and shore excursions at each port of call, as well as boulevards with shopping, dining, and entertainment venues. The Celebrity Cruises brand operates onboard upscale ships that offer luxurious accommodations, fine dining, personalized services, spa facilities, venue featuring live grass, and glass blowing studio for the premium segment, as well as resells computers and other media devices. The Pullmantur brand provides an array of onboard activities and serv ices to guests, including exercise facilities, swimming pools, beauty salons, gaming facilities, shopping, dining, complimentary beverages, and entertainment venues serving the contemporary segment of the Spanish, Portuguese, and Latin American cruise markets. The Azamara Club Cruises brand offers various onboard services, amenities, gaming facilities, fine dining, spa and wellness, butler service for suites, and interactive entertainment venues for the up-market segment of the North American, United Kingdom, German, and Australian markets. The CDF Croisieres de France brand offers seasonal itineraries to the Mediterranean; and various onboard services, amenities, entertainment venues, exercise and spa facilities, fine dining, and gaming facilities for the contemporary segment of the French cruise market. As of December 31, 2011, the company operated 39 ships with a total capacity of approximately 92,650 berths. Royal Caribbean Cruises Ltd. was founded in 1968 and is headqua rtered in Miami, Florida.
Advisors' Opinion:- [By Hawkinvest]
Royal Caribbean Cruises (RCL) is one of Carnival's competitors in the cruise industry. Royal does not have the same issues as Carnival in terms of the Costa Concordia incident, but it could be impacted by discounting in cruise fares, as well as higher fuel costs. Royal Caribbean shares were recently downgraded to a strong sell by Zacks Investment Research, and a recent analyst report states:
We are a bit doubtful about the cruising sector in the near term after Carnival's ship Costa Concordia ran aground in mid-January on Italy's west coast. The disaster hit the industry in the wake of the wave season between January and March. The recent tragedy resulted in subdued bookings. Royal Caribbean's overall booking volumes in North America came down. In Europe, where the incident took place, the cut in bookings has been steeper. Business in APMEA was also down slightly. The company expects a 20% decline in new bookings during the peak of wave season.
This stock was trading below $26 in early January, but it has rallied with the markets. With oil prices trending higher, and the stock at the high end of the recent trading range, the shares look vulnerable to a pullback.
Here are some key points for RCL:
Current share price: $29.89
The 52 week range is $18.70 to $45.45
Earnings estimates for 2011: $2.32 per share
Earnings estimates for 2012: $2.94 per share
Annual dividend: 40 cents per share which yields about 1.3%
Best Canadian Companies To Buy Right Now: Yamana Gold Inc.(AUY)
Yamana Gold Inc. engages in gold and other precious metals mining, and related activities, including exploration, extraction, processing, and reclamation. It also explores for copper, molybdenum, zinc, and silver metals. The company's portfolio includes 7 operating gold mines namely Chapada; El Pen Advisors' Opinion:
- [By Barker]
I believe I have touted Yamana Gold's clear prowess as a deep-value favorite from every possible angle. With arguably the lowest downside risk of any stock in the sector, I join fellow value hounds in waiting patiently for the market to recognize the full value of these shares.
Best Canadian Companies To Buy Right Now: Tim Hortons Inc.(THI)
Tim Hortons Inc. develops, franchises, and operates quick service restaurants primarily in Canada and the United States. Its restaurants serve coffee and other hot and cold beverages, baked goods, sandwiches, soups, and other food products. As of April 03, 2011, the company and its restaurant owners operated 3,169 restaurants in Canada and 613 restaurants in the United States under the Tim Hortons name; and had 274 primarily self-serve licensed locations in the Republic of Ireland and the United Kingdom Tim Hortons Inc. was founded in 1964 and is based in Oakville, Canada.
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