Best Stocks To Watch For 2013

The price of gold reached an all-time high of nearly $1,610 an ounce this week as new buyers continue to stream into the market, seeking safe haven from the U.S. dollar and a shaky global economy.

Data from the U.S. Commodity Futures Trading Commission (CFTC) continues to show a surge in gold buying from large financial institutions and money managers, despite record prices.

But while gold continues to shine in the limelight, silver has been the real moneymaker...

The price of silver has surged over 50% since the beginning of the year, making it the single best performing major commodity of 2013 so far.

Best Stocks To Watch For 2013:HopFed Bancorp Inc. (HFBC)

 HopFed Bancorp, Inc. operates as the holding company for Heritage Bank that provides various banking products and services primarily in western Kentucky, and middle and western Tennessee. The company offers a range of deposit products, including demand deposits, time deposits, money market accounts, passbook savings accounts, individual retirement accounts, and certificates of deposit. Its loan portfolio comprises one-to-four family residential loans, multifamily residential loans, construction loans, nonresidential loans, commercial real estate loans, and land and land development loans, as well as loans secured by deposits, other consumer loans, and commercial loans. The company, through its subsidiary, Fall and Fall Insurance Agency, sells life and casualty insurance products to individuals and businesses. HopFed Bancorp offers its products and services through its branch offices located in Hopkinsville, Murray, Cadiz, Elkton, Fulton, Calvert City, and Benton, Kentucky; and in Clarksville, Pleasant View, Ashland City, Kingston Springs, and Erin, Tennessee. The company was founded in 1879 and is headquartered in Hopkinsville, Kentucky.

Best Stocks To Watch For 2013:The Cushing MLP Total Return Fund (SRV)

 Cushing MLP Total Return Fund is a closed-end mutual fund launched by Swank Capital, LLC. The fund is managed by Swank Energy Income Advisors L.P. It invests in the public equity and fixed income markets across the globe with a focus in United States. The fund typically invests in MLPs, Other Natural Resource Companies, and global commodities. It primarily invests in the securities of MLPs, other equity securities, debt securities, and securities of non-U.S. issuers employing a fundamental analysis. Cushing MLP Total Return Fund was formed on May 23, 2007 and is domiciled in Dallas.

Best Stocks To Watch For 2013:Citizens South Banking Corporation (CSBC)

 Citizens South Banking Corporation operates as the holding company for Citizens South Bank that provides various commercial banking services to local customers in the United States. The company offers a range of retail products, commercial banking services, and mortgage lending services. It provides retail deposit products, such as checking, savings, negotiable order of withdrawal, and money market accounts, as well as time deposits and individual retirement accounts. The company also offers commercial analysis deposit accounts, business checking accounts, and repurchase agreements for business customers. In addition, it provides various consumer and commercial loans, including business, real estate, residential, and consumer loans. Further, the company offers consumer and business credit cards, debit cards, commercial letters of credit, and safe deposit box rentals, as well as electronic funds transfer services, including automated clearing house and wire transfers. Additionally, it provides online banking, remote deposit capture, cash management, bank-by-phone capabilities, and ATM services. The company also acts as a broker in the sale of uninsured financial products. As of March 31, 2011, it operated through 21 branch offices located in North Carolina, South Carolina, and Georgia. The company was founded in 1904 and is headquartered in Gastonia, North Carolina.

Best Stocks To Watch For 2013:Consolidated Edison Company of New York Inc. (ED)

 Consolidated Edison, Inc., through its subsidiaries, provides electric, gas, and steam utility services in the United States. It provides electric service to approximately 3.3 million customers and gas service to approximately 1.1 million customers in New York City and Westchester County, as well as provides steam service to office buildings and apartment houses in parts of Manhattan. The company also provides electric service to approximately 0.3 million customers in southeastern New York and in adjacent areas of northern New Jersey, and northeastern Pennsylvania; and gas service to approximately 0.1 million customers in southeastern New York and adjacent areas of northeastern Pennsylvania. In addition, Consolidated Edison involves in the sale and related hedging of electricity to wholesale and retail customers; operation of generating plants; participation in other infrastructure projects; and provision of energy-efficiency services, including the design and installation of lighting retrofits, high-efficiency heating, ventilating and air conditioning equipment, and other energy saving technologies to government and commercial customers. It serves residential, industrial, and large commercial customers. The company was founded in 1884 and is based in New York, New York.

Best Stocks To Watch For 2013:WD-40 Company (WDFC)

 WD-40 Company engages in the production and sale of consumer products. The company offers a multi-purpose maintenance product, which acts as a lubricant, rust preventative, penetrant, cleaner, and moisture displacer under the WD-40 brand name; multi-purpose drip oil and spray lubricant products, and other specialty maintenance products under the 3-IN-ONE brand name, which are used by household consumers for locksmithing, HVAC, marine, farming, construction, and jewelry manufacturing applications; and line of industrial grade, specialty maintenance products that includes lubricants, penetrants, degreasers, and cleaners designed specifically for the needs of industrial users under the Blue Works brand name. It also provides homecare and cleaning products, such as mildew stain remover and automatic toilet bowl cleaners under the X-14 brand name; long-lasting automatic toilet bowl cleaners under the 2000 Flushes brand name; room and rug deodorizers sold as powder, aerosol foam, and trigger spray products under the Carpet Fresh brand name; an aerosol carpet stain remover and a liquid trigger carpet stain and odor eliminator under the Spot Shot brand name; carpet and household cleaners and rug and room deodorizers under the 1001 brand name; and heavy-duty hand cleaner products, which are sold in bar soap and liquid form under the Lava and Solvol brands. The company markets its products in approximately 160 countries worldwide through mass retail and home center stores, warehouse club stores, grocery stores, hardware stores, automotive parts outlets, and industrial distributors and suppliers. WD-40 Company was founded in 1953 and is headquartered in San Diego, California.

Best Stocks To Watch For 2013:Concho Resources Inc. (CXO)

 Concho Resources Inc., an independent oil and natural gas company, engages in the acquisition, development, and exploration of producing oil and natural gas properties in the United States. Its operations are focused in the Permian Basin of Southeast New Mexico and West Texas. The company also has acreage positions in the Bakken/Three Forks play in North Dakota. As of December 31, 2010, Concho Resources had estimated proved reserves of 323.5 million barrel of oil equivalent. The company is headquartered in Midland, Texas.

Best Stocks To Watch For 2013:Cash America International Inc. (CSH)

 Cash America International, Inc. provides specialty financial services to individuals primarily in the United States and Mexico. The company operates in three segments: Pawn Lending, Cash Advance, and Check Cashing. The Pawn Lending segment offers pawn loans through its pawn lending locations, which operate under the names Cash America Pawn and SuperPawn in the United States, and Prenda Facil in Mexico. This segment also sells previously-owned merchandise acquired from customers who do not redeem their pawned goods, as well as sells items purchased from third-parties or customers. The Cash Advance segment offers unsecured cash advances in selected lending locations that are operated under the names Cash America Payday Advance and Cashland in the United States; and short-term cash advances over the Internet under the names CashNetUSA in the United States, QuickQuid in the United Kingdom, and DollarsDirect in the Canada and Australia. This segment also involves in arranging loans for customers with independent third-party lenders through a credit services organization program; providing marketing and loan processing services for a third-party bank issued line of credit on certain stored-value debit cards that the bank issues; and purchasing a participation interest in certain line of credit receivables originated by the bank. The Check Cashing segment provides check cashing and other financial services, such as stored-value cards, money orders, and money transfers. This segment operates its check cashing locations under the Mr.Payroll name. As of December 31, 2009, it operated 676 pawn lending locations, including 667 company-owned units and 9 unconsolidated franchised units; 246 cash advance locations; and 120 unconsolidated franchised and 6 consolidated company-owned check cashing locations. The company was founded in 1984 and is headquartered in Fort Worth, Texas.
Advisors' Opinion:

• By Cutler At 2012-2-23
  This chain of pawnshops is a backdoor way to play an increase in gold prices. Pawnshops have now replaced mainstream banks as the lender to the sub-prime community. Not only that, when people borrow from a pawnshop, they often hand over gold as collateral. As gold rises, so do the asset values sitting in the pawn shop. At nine times earnings, this one is cheap going into 2012. I own it.

Best Stocks To Watch For 2013:Eli Lilly and Company (LLY)

 Eli Lilly and Company develops, manufactures, and sells pharmaceutical products worldwide. It offers neuroscience products to treat schizophrenia, manic episodes, and bipolar maintenance; depression and diabetic peripheral neuropathic pain; attention-deficit hyperactivity disorder in children, adolescents, and adults; bulimia nervosa and obsessive-compulsive disorders; and bipolar depression and treatment-resistant depression. The company?s endocrinology products are used for diabetes; type 2 diabetes; osteoporosis in postmenopausal women; osteoporosis in postmenopausal women and men at high risk for fracture; and human growth hormone deficiency and pediatric growth conditions. It also provides oncology products to treat malignant pleural mesothelioma; pancreatic, metastatic breast, non-small cell lung, ovarian, and bladder cancers; and colorectal cancers, as well as offers cardiovascular products to treat erectile dysfunction and pulmonary arterial hypertension, for the reduction of thrombotic cardiovascular events in patients with acute coronary syndrome, as an adjunct to percutaneous coronary intervention, and to treat adults with severe sepsis at high risk of death. In addition, the company offers animal health products, such as cattle feed additives; antibiotics to treat respiratory and other diseases in cattle, swine, and poultry; leanness and performance enhancers for swine and cattle; protein supplements to improve milk productivity in dairy cows; anticoccidial agents; antibiotics to control enteric infections in calves and swine; parasiticides for use on cattle and premises; products to treat canine separation anxiety; and products that prevents flea infestations on dogs, as well as other pharmaceutical products to treat staphylococcal infections and bacterial infections. Eli Lilly distributes its products through independent wholesale distributors, as well as directly to pharmacies. The company was founded in 1876 and is based in Indianapolis, Indiana.
Advisors' Opinion:

By Tom Hutchinson At 2011-9-20 Eli Lilly and Co. (NYSE: LLY) has been around since 1876. The company makes top drugs in a variety of areas, including antidepressant drug Prozac and neurological drug Zyprexa. Lilly is truly a global powerhouse, with product sales in 143 countries. Lilly faces steep patent expirations in the next two years on drugs accounting for about 40% of sales. But this problem seems well reflected in the stock, which sells for about seven times earnings, well below the market (15.4) and industry (13) averages. Like Bristol, Lilly is ambitiously trying to fill the looming patent hole. The company acquired biotech giant Imclone in 2008 and has been investing heavily in its internal pipeline of new drugs. Lilly has also built a war chest of $6 billion and is in a good position to make more acquisitions to boost earnings. In the meantime, the drug giant pays a 5.7% dividend yield that's strongly supported by a 41% payout ratio.

Best Wall St. Stocks Today: CHS,LTD,WMT,KSS,DIO,ANN

Chico?s FAS (NYSE: CHS) said its growth story remains intact, even though consumer spending is expected to remain soft. Additionally, despite falling margins at its flagship stores and rising inventories, the women?s clothing retailer is taking few steps to preserve cash.

Founded in 1983 as a small boutique selling Mexican folk art and cotton sweaters on Sanibel Island in Florida, Chico?s now operates more than 1,200 outlets and boutiques throughout the U.S., selling casual-to-dressy apparel and related accessories under the Chico?s brand, White House/Black Market and Soma Intimates names, catering mostly to women over the age of 35.

Although net sales for the third quarter ended October 29 increased 11.5% year-over-year to $539 million, the Fort Myers, Fla.-based retailer posted quarterly earnings of 16 cents per share, lower than the consensus analyst estimate of 20 cents. Absent traffic, the company was forced to increase promotional activities and offer aggressive discounts to move merchandise, especially at its namesake stores. Gross margin fell 100 basis points to 56% and inventory increased 38% to $247 million.

Though gross margin is forecast to fall 100 to 200 basis points in the fourth quarter (reflecting a need to push-out end-of-year merchandise through discounting), management insists the decline is not related to execution problems. Chief executive officer David Dyer pointed out on the third-quarter 2011 conference call with analysts that the White House and Soma brands ?delivered record sales and margins in the third quarter, thanks to a more fashionable mix of lingerie, dresses and beauty.?

?It?s the economy, stupid!? ~ Democratic strategist James Carville

All four brands — from dinner party fashions at Boston Proper to pajamas and ?Vanishing Back? bras available at Soma Intimates — are resonating with shoppers, said chief financial officer Pamela Knous on the earnings call. ?And I am proud to say,? declared Knous, that the 11.5% increa! se in sa les ?represents the tenth consecutive quarter of positive comparables.?

What Knous did not say was that consolidated sales comparables grew only 3.7%. Her double-digit growth comment reflected increases from new store openings — not actual organic growth at locations open more than one year!

Even more troubling, although new traffic was up for the combined Chicos and Soma Intimates brands, which accounted for 66% of quarterly revenue, comparables grew only 0.6%, compared to sales growth of 3.6% last year. Knous said the slowdown reflected the Chico?s customer?s ?cautious purchasing behavior in light of continuing uncertain economic conditions.?

?When I see a bird that walks like a duck and swims like a duck and quacks like a duck, I call that bird a duck.? ~ American poet James Whitcomb Riley (1849 – 1916)

Notwithstanding, the Chico?s namesake brand, average dollar sales and transaction counts are supposed to be up across all other brands, according to management. Why, then, will the company not break out segment profit and loss (P&L) statements?

Looking to extend its customer?s experience to intimate apparel, a $13.5 billion market (led by Victoria?s Secret?s commanding 25% share), Chico?s has grown the Soma label from 10 stores in 2005 to more than 200. Given the company?s ambitions are no longer ?a secret,? why should the brand?s contribution to P&L still be considered such — unless discount pricing is driving sales growth — and eating into profits?

Management contends that there is space for another specialty lingerie brand. Though sales and profits are sizzling these days at industry bellwether Victoria?s Secret, owned by Limited Brands (NYSE: LTD), the playing field is not level for an upstart like Chico?s: Soma Intimates does not have the real estate. With just one-fifth as many stores, the company cannot similarly leverage product campaigns (do not expect an NBC runway show in primetime anytime soon). Additionally, deep-! discount ers like Wal-Mart Stores (NYSE: WMT) and Kohls (NYSE: KSS), with respective market shares of 17% and 8%, are battling for the budget-constrained pocketbooks of shoppers (looking for bargains) too. Ergo, Chico?s promulgations of full pricing and fashion parading hand-in-hand at Soma Intimates, in my opinion, is just fantasy talk.

On the earnings call, Nomura retail analyst Paul Lejuez was ignored when he specifically asked Dyer or Knous to detail the P&L impact of Soma Intimates on quarterly income. The company did not return my call seeking comment, too.

Troubling Trends Ahead

There are stormy headwinds blowing toward Chico?s, which management — whether deliberately or blithely — refuses to address:

    * ?Excluding $3.5 million of non-recurring, after-tax Boston Proper acquisition and integration cost, earnings per diluted share were $0.18 compared to $0.16 last year, a 13% increase,? said Knous. ?Our best third quarter earnings per share results since 2006.? If this is Chicos? best — I?d hate to see ?average? performance. The quality of the company?s earnings is suspect. Actual net?income year-on-year fell 8.2% to $26.46 million, according to?regulatory filings. Share-net income received an artificial boost because actual (weighted) share count outstanding fell by 10 million in the last year due to open-market stock repurchases.
    * In total, the company should exit the year at 1,250 stores, an increase of about 8% in square footage. However, in-store inventory is up some 17% per square foot, which suggests a continued reliance on aggressive promotions to push out seasonal merchandise — and a delay in margin turnarounds.
    * Further evidence of a disconnect with female shoppers is found in days inventory outstanding (DIO), a performance metric that measures how long it takes?inventory to be replaced on store shelves. In the third quarter, DIO rose year-over-year from 73.5 days to 81 days. Part of the cash conversion cycle, an ! increase in DIO whispers a liquidity crisis could be in the wind, as Chico?s inventory accounts for almost 46% of current assets (of $543.5 million).

?The best offense is having the right product for the customers.? ~ Chicos CEO David Dyer

Management believes that Chico?s has sufficient capital — cash flow from operations and existing cash and marketable securities balances — needed for the 100 (plus) new store openings in 2012 ($100 – 120 million), plus continued investment associated with the Soma brand, store remodel/expansions and cash required for inventory levels associated with this growth. Additionally, the company has no long-term debt and, if necessary, an untapped bank credit-line totaling $70 million.

Cash and equivalents totaling $195 million plus year-to-date operations that threw off $181 million suggest that liquidity should be sufficient to weather more of the same soft retail environment predicted for 2012 (including continued pressure on margins from promotional activities). That said, the company is spending money like a drunken sailor: $212 million acquisition of Boston Proper last fall, $70 million in dividend payouts, $176 million stock repurchases of 13.7 million shares (since August 2010) and the just-announced $200 million new stock buyback program.

Strong quarterly results at Limited Brands and Ann Inc (NYSE: ANN), parent company of Ann Taylor and LOFT brands, demonstrate that even in a weak economy customers will pay ?full-price? for the right products. However, in my opinion, the company has overestimated its own pricing power. Consequently, if trouble follows the company into 2013, build-outs planned for Boston Proper and Soma could grind to a halt. As the share price of Chico?s FAS is down some 36% from its 52-week high of $16.60, consensus among investors would be to agree — and flee.

David J Phillip