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Chesapeake Midstream Partners will head to market later next week, and will attempt to raise $425 million from its scheduled IPO. Morningstar analyst Avi Feinberg believes the firm has some competitive advantages stemming from its assets and long-term contracts, and he thinks the high end of its proposed offer range (at $21 per share) is the floor for his fair value estimate. He estimates the fair value of the firm at $21-$25 per share, and gives his full take on Chesapeake below:

“Chesapeake Midstream (CHKM) follows in the footsteps of Quicksilver Gas Services (NYSE:KGS – News) and Western Gas (NYSE:WES – News) as a midstream master limited partnership with fee-based contracts spun off from an independent producer. We like CHKM’s stable cash-flow profile and think it fits well with the MLP model, thanks to the relatively mature production profile in its gathering areas and its 20-year fixed-fee contracts with Chesapeake (NYSE:CHK – News) and Total (NYSE:TOT – News).

“CHKM also benefits from a 2.0%-2.5% annual fee escalation built into its contracts, which promote slight growth even if volumes are flat. While we don’t expect rapid volume growth in the near term from Chesapeake’s Barnett and Mid-Continent assets, where CHKM operates, we think CHKM’s long-term growth prospects remain bright. Chesapeake continues to plow capital into midstream infrastructure to support its Haynesville, Marcellus, and Fayetteville shale drilling programs with the intent to eventually drop the midstream assets down to the partnership. This strategy makes a lot of sense to us; by maintaining greenfield development at the parent level, Chesapeake takes on the more capital-intensive stages of midstream development, dropping down the assets only after their cash flows have ramped up enough to support a stable distribution.

“CHKM’s risk profile also closely mirrors those of KGS and Western Gas. The biggest risk is CHKM’s concentrated dependence on Chesapeake, which provided 95% of CHKM’s volumes in 2009. Financial distress at Chesapeake would almost certainly filter down in the form of weaker volumes. CHKM also faces indirect commodity exposure, as persistently low gas prices would likely slow Chesapeake’s pace of drilling. While CHKM does have minimum volume guarantees, these cover less than a third of 2009 throughput. Another risk, common to all MLPs, is CHKM’s dependence on the capital markets to finance growth projects. Finally, CHKM will face the typical midstream operating risks of leaks, fires, explosions, or other environmental impacts.

“We think CHKM deserves a narrow moat rating based on its assets, long-term contracts, acreage dedications, and sponsorship from a strong producer with a growing trove of potential drop-downs. Chesapeake cannot direct its production in dedicated areas of the Barnett and Mid-Continent to any other gatherer, but equally important, Chesapeake wouldn’t want to as the general partner and holder of the incentive distribution rights of CHKM. We note that with production of 1.5 billion cubic feet per day in 2009, CHKM is among the largest pure-play gas gatherers in the industry, and Chesapeake may be the largest gatherer including its other midstream assets. We think this scale could help CHKM attract third-party volumes in its gathering areas, but CHKM’s lack of processing capabilities limits the benefits of this scale.

“In terms of valuation, we’d estimate that CHKM units are worth roughly $21-$25 each based on similar multiples and yield to those implied by our fair value estimates for KGS and Western Gas. We think the comparison to Western Gas is especially relevant, as CHKM and Western Gas have similarly low debt levels and bright growth prospects thanks to visible drop-down opportunities. We thus assume CHKM’s enterprise value is worth about 9.5-11.5 times the company’s estimated $300 million of EBITDA for the 12 months ending June 30, 2011. To arrive at our equity value, we subtract 10% of this enterprise value to account for the general partner’s claim on future cash flows, similar to our GP valuation for both KGS and Western Gas.

“Our valuation range would imply an annualized yield between 5.4% and 6.6% based on CHKM’s minimum quarterly distribution of $0.3375 per unit. It makes sense to us that the yield is a bit lower than the yields for KGS and WES at our respective fair value estimates, as CHKM has no debt, and thus the greatest ability to speed up distribution growth through accretive debt-funded projects. We expect that over time CHKM will migrate its capital structure toward the midstream MLP industry standard of 50/50 debt/equity.”

This report is made available compliments of Morningstar IPO Research Services. For more information on Morningstar IPO Research, please contact Marc DeMoss at marc.demoss@morningstar.com or +1 312 384-4052.

CHARLESTON, S.C.–(BUSINESS WIRE)–Hampden
Clothing – a fashion retailer focused on emerging designers and
client relationships announced that it has expanded its Charleston, SC
presence by doubling their square footage from 1550 square feet
to 2800 square feet. Hampden Clothing is a premier shopping
destination that is taking Charleston in a new fashion direction.

“We value our relationships with both our designers
and our clients.”

With a minimalist approach to décor, Hampden
Clothing is finished with stained
concrete floors, antique tin-tile ceilings, and sleek chrome fixtures
allowing the client to shop individual collections and take-in the
designer’s vision for the season. Having branched out from other
retailers in style and designer assortment, Hampden Clothing has managed
to keep the sophisticated, personal, welcoming, southern charm of South
Carolina in this dynamic retail space.

Open for 3 ½ years, Stacy
Smallwood, owner & buyer felt this new space was an opportunity not
to be missed. “We are constantly evolving our brand. Fashion is about
change and thinking ahead, so when I saw this beautiful space come
available I immediately envisioned how I could keep growing Hampden.
This new environment was key to bringing in new collections for Fall
2010 such as Helmut
Lang, Cacharel,
Acne, Opening
Ceremony, Yigal
Azrouel, and Chris Benz,” Smallwood says.

In addition, during the expansion, the company upgraded its website and
expanded online shopping functionality and features at www.hampdenclothing.com.
The new website is updated daily and features Hampden
Clothing’s entire designer assortment as well as Look
Books, Staff
Picks, and an editorial
column.

Smallwood commented, “We value our relationships with both our designers
and our clients.” With individual touches that have long been forgotten
– or even considered – by others, Hampden Clothing makes each visit an
experience with:

• complimentary water, wine, and even champagne
• a lounge with a flat screen tv for the husband or boyfriend
• a handwritten thank you note for each purchase

“We live in a fast pace world where clients want to look great but may
not have time to do the research. That is where we bridge the gap and
view it to be our responsibility to know the latest designers, trends,
and looks that would be relevant to our client’s lifestyle,” Smallwood
says. Whether you prefer perusing the racks alone or don’t know where to
start with this season’s trends, a personal stylist is available to
offer advice on a complete look or even simple basics.

Smallwood, a South Carolina native, has an extensive background in
buying, merchandising, marketing, and client services. As an assistant
buyer at Neiman
Marcus and department manager for the Neiman Marcus Dallas, TX
flagship store, Smallwood established herself in the fashion industry.
Merging her corporate background with her own unique vision, Smallwood
brings her passion to every aspect of the business as she attends the
runway shows in New York, views the collections in the showroom, and
ultimately personally styles and consults with the customer in the
dressing room.

About Hampden Clothing

Hampden
Clothing is a nationally recognized, cutting-edge retail destination
with boutique stores located in Charleston and Greenville, SC. With a
niche for high-end designer and contemporary clothing, owner Stacy
Smallwood brings extraordinary lines of emerging designers to her
one-of-a-kind stores in the south. Constantly changing and evolving,
Hampden Clothing is an unparalleled
shopping experience where men lounge and watch ESPN on a flat screen TV
and a stocked refrigerator awaits everyone perusing the store floor.
Featuring more than 50 of the best designers, Hampden Clothing offers
a personal NY-worthy shopping destination with charm and southern
finesse attracting customers around not only the southeast but also the
world.

For more information about Hampden Clothing’s designers, stylist picks
for the season, and special fashion events, visit www.hampdenclothing.com,
call +1 (843) 693-2363, or join our Facebook
and Twitter
communities.

This is a transcript of top stories presented by China’s CCTV Business Channel as produced by CNBC Asia Pacific.

Hello and welcome to “Asia Market Daily”.

I am Saijal Patel reporting from CNBC’s Asia headquarters and here’s our look at the top stories in Asia today.

Most markets across the region gained, reaching a one-month high during the trading day.

News that most European banks passed the stress tests, boosted optimism over the health of the global economy and that help kick start Asia’s trading week.

Sentiment improved further on reports that South Korea’s second-quarter economic growth and Japan’s exports in June exceeded expectations.

Nikkei 225 gained, closing higher by 0.77 percent

The yen fall to a seven-week low against the euro boosted the exporters.

Traders are expecting a good week for the Nikkei as Japan’s corporate earnings season starts tomorrow.

All eyes are on blue chips like Sony, Mizuho and Sumitomo Mitsui Financial, where hopes are for positive numbers.

(SOT) Mark Konyn, CEO, RCM Asia Pacific:

“Therefore as earnings come through, we do see, both in the US and in this region, earnings maintaining momentum. We therefore see strong cash flows, underlying cash flows, on behalf of institutions and individual investors, we do see markets performing better in the second half when compared to the first half of the year.”

Over in Korea, KOPSI closed higher by 0.6 percent.

Further south in Australia, markets also on the up, gaining 0.58 percent at the end of trading day.

Mining shares in the spotlight with BHP and Rio Tinto making gains.

Further north, China markets bucked the trend and were mostly in negative territory during the trading day.

But some investment managers like Erwin Sanft from BNP Paribas are looking longer term and still positive on mainland companies.

(SOT) Erwin Sanft, Head of China and HK Research, BNP Paribas Securities:

“The big piece of good news to look forward to for the China market is that the first quarter next year, we’re going to see quite strong year-on-year growth and cash flow, even though reported earnings are not going to be exciting. And the reason for that is the first quarter just gone, we had a big decline, 65% year-on-year drop in cash flow, so as we roll into next year, cash flows will be looking a lot better. The large caps do have earning stability, so construction is one area where we’ve got visibility and growth through to 2012, for the big railway construction firms, banks likewise. The ride offs of any bad landing that’s been done at least is going to be very small. Overall, bank earnings are still going to grow.”

We take a closer look now at growth numbers out of South Korea today.

Latest data show the economy grew faster than expected in the second quarter.

Gross domestic product increased 1.5 percent on quarter.

Economists were only expecting an improvement of 1.3 percent.

On year, the economy grew 7.2 percent.

This brings South Korea’s first half GDP numbers to 7.6 percent, posting its fastest expansion in a decade.

As economic growth picks up, expectations for higher interest rates follow.

Rajiv Biswas from The Economist Group.

(SOT) Rajiv Biswas, Director, Southeast Asia, The Economist Group:

“I think clearly they need to continue to pursue their exit strategy. Further rate rises, withdrawal of fiscal stimulus. One of the reasons we saw very strong growth in Q1 was the fiscal stimulus aspect, so I think now we see that reducing and private sector taking much of the role in driving future growth.”

The Bank of Korea will be meeting on 12th August to deliberate on its monetary policy.

Meantime, the Reserve Bank of India started its 2-day meeting, and will unveil the quarterly review its monetary policy tomorrow. A rate rise is also on the cards.

(SOT) Rajiv Biswas, Director, Southeast Asia, The Economist Group:

“The Indian central bank really needs to raise rates again, by probably about another 25 basis point, at least, this week, because inflation in India is running at over 10%. Their comfort zone, their target range is around 5-and-a-half, so they’re well behind the curve there, so clearly they need to act. They don’t want to be too drastic in their actions, so I think we’ll just see a step-by-step process for the remainder of this year.”

Beijing is under pressure to let the yuan rise.

In the U.S., regulators are preparing for a hearing to study China’s progress.

There’s also talk about taking the case to the WTO.

But the World Trade Organization’s Director-General, Pascal Lamy says this is not a case for the WTO, it’s a case for the IMF.

He speaks to Cheng Lei in an exclusive CNBC interview.

(Package starts)

Lamy: Now if you look at the WTO agreement, which we administered there is an article in there, which has been in there since 1947, and which roughly says that once you’ve taken trade opening commitments within the GAAT you cannot frustrate this commitment through currency policy. There is a place where this link between implementing sincerely your trade opening commitments and your currency policy is related.

Lei: But you’ve said that China is abiding by its WTO commitments, so that means its not frustrating

Lamy: It’s not for that I’m saying that for overall china is abiding by its WTO commitments, but if on the specific case. Your asking me the question on indigenous innovation, on securing the prices, on intellectual property rights, the moment you go into specifics I have to retreat because it’s not for me to prejudice a possible dispute will say. I am forbidden to pre-empt any interpretation or determination. The moment one WTO member starts saying publicly we can start litigating against country X or whatever, I have to shut up, otherwise the risk is that I would be seen as departing from my normal neutrality.

(Package ends)

Well, that wraps up today’s Asia Market Daily from CNBC.

I’m Saijal Patel.

Join me again tomorrow evening.

All Rights Reserved. A Division of NBC Universal.

“It’s like it came straight out of The Onion.” That was one of my colleagues’ comments as he held up an article about a new ETF that focuses on lithium. Extra-reminiscent of the satirical publication was this quote from the CEO of the firm behind the lithium ETF: “What everybody wants to achieve is to build the best and most representative index for lithium.”

Yes, you read that correctly–lithium, the stuff that goes into batteries and mood-stabilizing drugs. But in case you might think this ETF isn’t diversified enough, rest assured that it buys battery producers, too.

As product launches like this one illustrate, we’ve entered a brave new world of investing. Not only can you buy funds and ETFs that track ever-more obscure commodities, industries, and geographic regions, but you can also more easily execute sophisticated trading strategies with them–shorting, trading intra-day, or employing stop-loss orders.

Choice is good. But just because you have a huge assortment of investment vehicles and strategies from which to choose doesn’t mean you should necessarily take advantage of them. Some of you will call that view overly paternalistic and hopelessly old-fashioned, and I’ll allow that some of the more arcane vehicles and strategies might be appropriate for a sliver of investors in a small sliver of situations. But Morningstar’s Investor Return data casts doubt on the ability of investors to manage highly volatile investment products well, and I think you could logically extend that concept to volatility-producing strategies, too.

Perhaps more important is that the more you delve into the arcana of investing, the greater the odds that you’ll have to take your eyes off the basics, the “big stuff” I discussed in this article. Those basics are complicated enough–setting an appropriate asset allocation, taking advantage of tax-saving wrappers like IRAs and 401(k)s, and saving enough. With all that to worry about, do you really need to clutter your brain with complicated investment products and strategies?

I’ve written on a few occasions about investment types most investors don’t need, but I’ve broadened my purview for this article to encompass strategies as well as actual products. Feel free to disagree with me or suggest other products and strategies that are prone to abuse; that’s what the “Comment” field below this article is for.

1. Niche funds and ETFs.
The advent of low-cost sector- and region-specific exchange-traded funds has eliminated what had been one of my main problems with these offerings: high costs. (Even though the active versions of these funds are often run by more junior managers than diversified funds, fund companies have historically been able to get away with charging more because, ooh, they’re more specialized.) I’ll also concede that for people who are investing based on the headlines without conducting due diligence, a sector- or region-specific ETF can represent a better option than delving into a single stock. But being the lesser of two evils does not a compelling investment option make.

My issues with sector- and region-specific funds are twofold. First, if your portfolio is diversified, the sector- and region-specific fund is likely to duplicate something you already own; there’s also a chance that just as you’re layering on additional exposure to a sector or geographic locale, so is your active manager. And because sector- and region-specific funds lack diversification and are often more volatile than diversified mutual funds, there’s a greater risk that investors will buy and sell them at inopportune times, as our research into Investor Returns shows.

2. Short-selling a market or market segment.
While shorting–essentially, betting that a stock or market sector will go down–is a way to hedge away the risk of an overinflated asset, it’s a risky practice unto itself, because the loss potential is unlimited if the asset goes up and up. (For an example of the math behind shorting, check out this excellent Investing Classroom lesson.) And short-selling whole markets or market sectors, as one can do with a number of traditional funds and ETFs, carries its own baggage.

While it may be possible to get your arms around what a company should sell for–our stock analysts do it every day–calculating the value of an entire market index or sector is much more complicated. Yet short-selling an entire market or market sector requires you to do just that–otherwise you’re simply speculating. There’s also the not-insignificant issue of how inverse ETFs reflect the reverse of the market’s return on a given day. That makes them appropriate only for day traders, not those looking to make a longer-term bet against a market segment, as my colleague Paul Justice discusses in this article.

3. Stop-loss orders.
While the risks of shorting are right out there on the table, stop-loss orders offer the intuitively appealing proposition of limiting your losses. If a security’s price drops below a given level, you’re automatically a seller. Yet the flash crash in May showcased that this trading mechanism can have unintended consequences: As the market cratered in a short period of time, stop-loss orders kicked in, triggering selling at prices way below what many investors had intended. My colleague John Gabriel discusses the problems with stop-loss orders on ETFs in this article.

My key concerns about stop-loss orders are twofold. First, they institutionalize investors’ worst behavioral tendencies to panic and sell when an investment has dropped a lot in a short period of time. And when an investor feels the need to use a stop-loss order on an ETF tracking a whole market index or sector, there’s probably a mismatch between that investor’s time horizon and the investment. If short-term losses in your stock ETF would create an imminent financial hardship, or even a sleepless night or two, you’re in the wrong investment.

4. Trading frequently.
Exchange-traded funds have a lot going for them as investment vehicles. Their costs are often lower than competing traditional mutual funds, their setup lends itself to good tax efficiency, and now investors on many of the major platforms can execute commission-free trades, removing what had been one of the key drawbacks of ETFs for smaller investors. But investors who see commission-free trades as an impetus to trade a lot could end up winning the battle but losing the war if their timing is off, as I outlined in this article. ETFs aren’t the only vehicle where investors can do themselves a disservice by buying and selling frequently. If you’re paying a commission to execute your trades and/or trading within a taxable account and generating capital gains, the case against rapid trading grows even stronger.

5. Preferred stock/funds.
Although there’s a case to be made for focusing on income-producing investments for at least a portion of your portfolio, as several Morningstar.com users cogently argued in this lively thread, current income doesn’t count for a lot if you erode your capital in the process. A classic case in point is preferred stock. Yields can be attractive–often in line with junk-bond funds or even higher. But the more I know about these securities, the less I like them. There’s the sector-specific risk–most preferreds are issued by financial firms–as well as the fact that preferreds are generally issued by heavily leveraged companies, making them vulnerable in a weakening economic environment. In the recent bear market, for example, preferred stocks’ losses were even greater than the S&P 500 Index’s and twice as high as the losses incurred by the typical junk-bond fund. And whether interest rates are rising or falling, preferreds have an unattractive “heads they win, tails you lose” quality, as I discussed in this article.

We’re still sifting through the SEC’s ambitious rules proposals for mutual fund distribution fees; our initial thoughts follow, and we’ll have more on this in the weeks to come.

First a little background. The fund industry has developed a rather odd fee setup over the decades, which differs from the more straightforward commissions you see with ETFs and stocks. One key feature is that the fund company collects broker commissions along with its own fees at the same time. If you buy a stock or an ETF, the per-share commission goes directly to the broker, not through the corporation or ETF provider. In addition, stock commissions were once mandated, but that was dropped in the 1970s. Today there’s competition, and commission size is based on the level of service.

In the fund world, the fund company collects broker commissions along with its own fees at the same time. Then, the fund company deducts fees from your fund assets and funnels continuing service fees to brokers. The sales load is the same everywhere; brokers don’t have to compete. Nor do they compete for the service fee, the 12b-1, which stays the same no matter the size of the fund, size of the investor, or level of service. Fee-based planners represent a notable exception to this system: They set their price and charge clients directly outside of the fund’s fee structure.

Meanwhile, fund supermarkets such as Schwab and Fidelity add to the fee layers because they charge fund companies between 30 and 40 basis points to be included on their no-transaction fee platforms. Some funds pay part of this cost with a 12b-1 fee, and others pay it from their management fee. The supermarkets prohibit fund companies from offering the same fund for a lower price to retail investors elsewhere. Thus, even if you buy directly from the fund company, you’re paying a fee that has the supermarket’s services baked in. It’s a clever trick that means investors have no incentive to go directly to a fund company that’s in an NTF plan. It also boosts fees artificially for those direct sold shares.

This complicated web of payments between funds and intermediaries has played a large role in keeping expense ratios largely unchanged even though the fund industry has grown by trillions of dollars over the past 20 years. In 1989, the asset-weighted average expense ratio was 0.93% and in 2009 it was 0.89%. The industry’s assets under management grew more than tenfold and it produced only 4 basis points of benefit to investors. Economies of scale are real in the finance world–just look at the tools and low commissions available for online stock trading compared with what was available 10 years ago, but middlemen have limited competition in the fund world.

The SEC’s Fix
The SEC’s more than 250-page proposal seeks to fix a long-standing problem with 12b-1 fees–they are considered marketing fees and must be approved by the fund’s board of directors after the trustees determine that the fees are in fund investors’ best interests. They are neither true marketing fees, nor are they in shareholders’ best interests. The 12b-1 fee is used to pay for servicing accounts and as a primary way to pay brokers and some advisors their services. So, it takes a lot of mental and legal contortions to justify approving them under the current rules.

The proposal aims to fix the 12b-1 in three ways: cap the amount any fund can charge as a sales charge, improve fee transparency, and open the door for increased competition.

Setting a Maximum Sales Charge
The SEC proposal would ensure sales charges paid would be capped at the lower rate of 6.25% or the highest level charged in a different share class of the same fund. For example, if a fund offers A shares with a 5.25% front load, other classes of that fund that spread the sales charges out over time couldn’t charge more than 5.25% in aggregate. This would impact C class shares that charge sales and distribution fees in the range of 0.75% to 1.00% each year with no expiration date. Under the proposal, after an investor has paid the maximum sales charge, the investor’s C shares would be converted into a fund share class with no continuing sales charge.

Under the proposal, 12b-1 fees would be renamed “marketing and service fee.” These fees would be limited to 0.25% of fund assets per year. Any distribution-related expense above that would be considered a sales charge and fund directors would be spared the gymnastics needed to sign off every year.

Truth in Labeling
The proposals take a step toward truth in labeling of fund costs but they stop well short of accurate accounting that tells fund investors where their money is going. On the plus side, this rule would require that sales charges and service/marketing fees are tracked for and disclosed to each investor. So, for the first time, investors would see the dollars and cents they pay for their fund’s sales and marketing activities. This is a welcome boost in disclosure.

The waters are still muddied, however. In March, the Supreme Court ruled on Jones v. Harris, a fund fee case that took issue with the management fee portion of funds’ expense ratios. The case highlighted the problems caused by throwing a wide range of miscellaneous charges in the management fee for mutual funds. That makes it hard for investors and even fund directors to know what’s being spent managing the funds. It also makes any comparisons between retail funds and institutional funds difficult. We’d like to see an accurate accounting of costs in which actual costs are labeled correctly. When invited to participated in an SEC roundtable on this topic a few years ago, Morningstar’s Don Phillips suggested that fees be divided into three simple buckets: management, sales/distribution, and administrative overhead.

Investors have the right to know how their dollars are being spent. Funds that spend big bucks selling and skimp on management have different prospects than those that don’t. Stock investors are given that level of detailed information by reviewing standard corporate accounting. Fund investors should have it, too.

It’s Time for Some Competition
The new proposals don’t stop at tweaking 12b-1 fees. They also aim to open the door for brokers to compete on the sales charges they levy clients. Currently, all brokers are required to charge the same sales fee, but under this proposal, some could negotiate lower fees and offer better deals to their clients.

If these changes are enacted and embrace by brokers, the distinction between load and no-load funds might go away. Fees beyond the basic fund management level and servicing fees would depend on the level of service investors wanted. That would be healthy competition and that makes for a more compelling offering from the fund industry.

The proposals now move to a comment period in which investors, industry mouthpieces, and advisors will get to weigh in. Then, the SEC will decide what form the final rules should take.

CHICAGO–(BUSINESS WIRE)–Four free stock picks are being made available today on Zacks.com. The
industry’s leading independent research firm highlights one Zacks #1
Rank Strong Buy or a Zacks #2 Rank Buy stock for each of the four main
styles of investing: Aggressive Growth, Growth & Income, Momentum, and
Value.

“earnings
estimate revisions are the most powerful force impacting stock prices.”

The four highlighted picks are: Packaging Corporation of America
(NYSE: PKG),
Hasbro (NYSE: HAS),
AO Smith Corp. (NYSE: AOS)
and CSX Corporation (NYSE: CSX).

Today, Zacks is promoting its ”Buy” stock recommendations. Four daily
picks are offered free at http://at.zacks.com/?id=88

Zacks #1 Rank Stocks have nearly tripled the S&P 500 since 1988,
producing an average annual return of +26%. Performance has been notable
even during volatile and down times. For example, during the last bear
market, 2000-2002, the market tumbled -37.6% – but Zacks #1 Rank stocks
gained +43.8%.

Here is a summary of today’s selected stocks that are now highly
rated by Zacks:

Aggressive Growth – Packaging
Corporation of America (NYSE: PKG)

Packaging Corporation of America recently beat earnings expectations and
provided a bullish outlook for the third quarter. Shares and estimates
jumped on the news.

Zacks Guide to Aggressive Growth Investing (free!): http://at.zacks.com/?id=4309

Growth & Income – Hasbro
(NYSE: HAS)

Hasbro’s revenues have declined from 2009 because of last year’s strong
sales from the Transformers: Revenge of the Fallen and GI Joe:
The Rise of Cobra movies.

Zacks Guide to Growth & Income Investing (free!): http://at.zacks.com/?id=4310

Momentum – AO
Smith Corp. (NYSE: AOS)

AO Smith Corp. has jumped higher over the last few days on a 22%
earnings surprise that has shares trading within a few Dollars of the
multi-year high at $56.64. Even though estimates are on the rise, shares
still trade at a discount to their peers, providing plenty of upward
momentum for this Zacks #1 rank stock.

Zacks Guide to Momentum Investing (free!): http://at.zacks.com/?id=4311

Value – CSX
Corporation (NYSE: CSX)

CSX Corporation recently reported another solid quarter as the recovery
continues on the rails. CSX trades at 13x forward earnings, well under
its peers which trade at 16x.

Zacks Guide to Value Investing (free!): http://at.zacks.com/?id=4312

How to Regularly Access Top Zacks Rank Picks for Free: http://at.zacks.com/?id=7154

Underlying the four free stock picks is a simple truth that first
appeared in a Financial Analysts Journal article published in
1979. Leonard Zacks, a Ph.D. in Mathematics from M.I.T. found that “earnings
estimate revisions are the most powerful force impacting stock prices.”
Zacks #1 Rank is awarded to a stock when analysts sharply upgrade their
estimates of what the company will earn.

Today, Zacks is promoting its stock recommendations by offering four
daily picks free to those who register at http://at.zacks.com/?id=7155

About Zacks

Zacks.com is a property of Zacks Investment Research, Inc., which was
formed in 1978 by Len Zacks. The company continually processes stock
reports issued by 3,000 analysts from 150 brokerage firms. It monitors
more than 200,000 earnings estimates, looking for changes.

Then, when changes are discovered, they’re applied to help assign more
than 4,400 stocks into five Zacks Rank categories: #1 Strong Buy, #2
Buy, #3 Hold, #4 Sell, and #5 Strong Sell. This proprietary
stock-picking system continues to outperform the market by a nearly
3-to-1 margin.

More Free Stock Picks

Each weekday, new Zacks #1 Rank or Zacks #2 Rank stock picks are
released on the free email newsletter, Profit from the Pros.
Investors are invited to register for their free subscription at http://at.zacks.com/?id=91

Follow us on Twitter: http://twitter.com/zacksresearch

Join us on Facebook: http://www.facebook.com/home.php#/pages/Zacks-Investment-Research/57553657748?ref=ts

Zacks Investment Research is under common control with affiliated
entities (including a broker-dealer and an investment adviser), which
may engage in transactions involving the foregoing securities for the
clients of such affiliates.

Disclaimer: Past performance does not guarantee future results.
Investors should always research companies and securities before making
any investments. Nothing herein should be construed as an offer or
solicitation to buy or sell any security.

Visit http://www.zacks.com/performance
for information about the performance numbers displayed in this press
release.

For Immediate Release

Chicago, IL – July 23, 2010 – Four free stock picks are being made available today on Zacks.com. The industry’s leading independent research firm highlights one Zacks #1 Rank Strong Buy or a Zacks #2 Rank Buy stock for each of the four main styles of investing: Aggressive Growth, Growth & Income, Momentum, and Value.

The four highlighted picks are: Packaging Corporation of America (NYSE: PKG – News), Hasbro (NYSE: HAS – News), AO Smith Corp. (NYSE: AOS – News) and CSX Corporation (NYSE: CSX – News).

Today, Zacks informs investors of its ”Buy” stock recommendations. Four daily picks are offered free at http://at.zacks.com/?id=5607.

Zacks #1 Rank Stocks have nearly tripled the S&P 500 since 1988, producing an average annual return of +28%. Performance has been notable even during volatile and down times. For example, during the last bear market, 2000-2002, the market tumbled -37.6% – but Zacks #1 Rank stocks gained +43.8%.

Here is a summary of today’s selected stocks that are now highly rated by Zacks:

Aggressive Growth – Packaging Corporation of America (NYSE: PKG – News)

Packaging Corporation of America recently beat earnings expectations and provided a bullish outlook for the third quarter. Shares and estimates jumped on the news.

Zacks Guide to Aggressive Growth Investing (free!): http://at.zacks.com/?id=4309

Growth & Income – Hasbro (NYSE: HAS – News)

Hasbro’s revenues have declined from 2009 because of last year’s strong sales from the Transformers: Revenge of the Fallen and GI Joe: The Rise of Cobra movies.

Zacks Guide to Growth & Income Investing (free!): http://at.zacks.com/?id=4310

Momentum – AO Smith Corp. (NYSE: AOS – News)

AO Smith Corp. has jumped higher over the last few days on a 22% earnings surprise that has shares trading within a few Dollars of the multi-year high at $56.64. Even though estimates are on the rise, shares still trade at a discount to their peers, providing plenty of upward momentum for this Zacks #1 rank stock.

Zacks Guide to Momentum Investing (free!): http://at.zacks.com/?id=4311

Value – CSX Corporation (NYSE: CSX – News)

CSX Corporation recently reported another solid quarter as the recovery continues on the rails. CSX trades at 13x forward earnings, well under its peers which trade at 16x.

Zacks Guide to Value Investing (free!): http://at.zacks.com/?id=4312

How to Regularly Access Top Zacks Rank Picks Free: http://at.zacks.com/?id=7156

Underlying the four free stock picks is a simple truth that first appeared in a Financial Analysts Journal article published in 1979. Leonard Zacks, a Ph.D. in Mathematics from M.I.T. found that “earnings estimate revisions are the most powerful force impacting stock prices.” Zacks #1 Rank is awarded to a stock when analysts sharply upgrade their estimates of what the company will earn.

Today, Zacks releases stock recommendations by offering four daily picks free to those who register at http://at.zacks.com/?id=7157

About Zacks

Zacks.com is a property of Zacks Investment Research, Inc., which was formed in 1978 by Len Zacks. The company continually processes stock reports issued by 3,000 analysts from 150 brokerage firms. It monitors more than 200,000 earnings estimates, looking for changes.

Then, when changes are discovered, they’re applied to help assign more than 4,400 stocks into five Zacks Rank categories: #1 Strong Buy, #2 Buy, #3 Hold, #4 Sell, and #5 Strong Sell. This proprietary stock-picking system continues to outperform the market by a nearly 3-to-1 margin.

More Free Stock Picks

Each weekday, new Zacks #1 Rank or Zacks #2 Rank stock picks are released on the free email newsletter, Profit from the Pros. Investors are invited to register for their free subscription at http://at.zacks.com/?id=5642

Follow us on Twitter: http://twitter.com/zacksresearch http://www.facebook.com/home.php#/pages/Zacks-Invest ment-Research/57553657748?ref=ts

Join us on Facebook:

Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.

Disclaimer: Past performance does not guarantee future results. Investors should always research companies and securities before making any investments. Nothing herein should be construed as an offer or solicitation to buy or sell any security.

Zacks.com

Aggressive Growth Stocks:

Contact: Bill Wilton

Phone: 312-265-9277

or

Growth & Income Stocks:

Contact: Rob Plaza

Phone: 312-265-9442

or

Momentum Stocks:

Contact: Michael Vodicka

Phone: 312-265-9226

or

Value Stocks:

Contact: Tracey Ryniec

Phone: 312-265-9232

Email: pr@zacks.com

Visit: www.zacks.com

Visit http://www.zacks.com/performance for information about the performance numbers displayed in this press release.

Zacks Investment Research

Jul 23, 2010 – 07:27 AM

By:

If you’re like me, you’re getting more and more worried about where the economy and the stock market might go next. One consolation is investing in stocks that pay nice dividends. Why? I’ll give you five powerful reasons …

1. Dividend stocks pay you. So if you’re waiting for the market to find its feet and go up again, it’s nice to be paid to wait. Dividends cushion losses during bear markets — potentially providing a source of revenue during bad times — and they add to returns when stocks go up again.

2. Dividends don’t lie. Wall Street can lie about many things — just look at the latest headlines about the sleazy shenanigans of the bankster crowd. But a company can’t fake a dividend. A company also can’t fake a record of dividend growth. So, dividends are Wall Street’s lie detectors.

3. Dividends are where the money is. Over the past 80 years, stocks have returned almost 10% annually. Here’s the interesting part: Dividends accounted for approximately 40% of average annual returns.

4. Dividends beat inflation. Over that same 80-year time frame, inflation has averaged 3%. Dividend-paying stocks provide a nice inflation hedge since their revenues and net income should go up with overall prices.

5. Dividends can outperform in any kind of markets. Look at this data from Ned Davis Research, which shows what would happen to $100 invested in 1972 in a range of dividend payers, dividend growers, and non-dividend paying stocks in the S&P 500 index …

The best performers of all were companies GROWING their dividends. They turned $100 into $2,945 over the length of the study, while an investment in non-dividend payers turned into just $165. Still, the Ned Davis study also shows you have to be careful with dividends. An investment in companies that cut dividends ended up losing money.

These are all good reasons to invest in the right dividend-paying stocks — the kind of stocks we target in Crisis Profit Hunter. My Crisis Profit Hunter picks tend to be in natural resources, and they’re doing well. Oil prices are rising. China just passed the U.S. as the world’s biggest energy consumer, so the upward trend in energy prices should continue.

Today, I’m going to tell you about three stocks that should be on every dividend investor’s watch-list. I’ve cast my net wide to find three picks that are “stealthy” dividend plays — providing value and opportunity that is hidden at first glance.

Pick #1: The Dividend Doubler

Walgreen Co (WAG) is the nation’s largest drugstore chain, with more than 6,900 drugstores in all 50 states. It only has a dividend of 2.4% — so why would an investor want to pick it up for its dividend? Well, despite the low yield, Walgreen has a lot going for it:

• The company has paid dividends for more than 76 years and consistently increased payments to common shareholders every year for 35 years.
• On July 14, the company raised distributions by 27.3% (to 17.50 cents per share). The dividend is payable September 11 to shareholders of record August 19.
• Now here’s something really interesting. The company has also grown their dividend at a compound rate of 24.3% over the past six years. That means it is doubling its dividend every three years. Looking back at historical data to 1972, Walgreen has actually managed to double its dividend payment every six years on average. So, the pace of its dividend rises is increasing.

Not everything is rosy for this stock. Over the past 10 years, Walgreen’s share price has gone down by 1%. But the fact that it is a dividend grower, it’s in a business that should be recession proof, and it is trading at just 14.3 times trailing earnings and 12 times forward earnings makes it worth considering.

Pick #2: Betting on Overseas Growth

Air Products and Chemicals (APD) is a diversified company that provides industrial gasses, medical and specialty gases, chemicals, electronics and services to a customer base worldwide. It dishes up a dividend yield of only 2.8%. So why should it be on your radar? This company is making huge inroads into emerging markets, most recently India and the Middle East. If those regions of the world continue to grow while the U.S. stagnates — a definite possibility for the rest of 2010 and potentially 2011 — Air Products will deliver both price appreciation and dividend growth.

• The market for industrial gas increases at double the rate of the global economy. The International Monetary Fund recently raised its forecast for global economic growth to 4.6%.
• Air Products’ dividend payments have increased by an average of 10.3% since 2000. A 10% growth in dividends translates to the dividend doubling every seven years. The company hiked its dividend by 8.9% in February, for the 28th year in a row.
• Going forward, the company is expected to increase its dividend by 7.9% over the next three years.

The stock recently traded at 17.3 times trailing earnings and 12.6 times forward earnings.

Pick #3: Rising Dividend AND a Potential Boost from Energy Prices

Crude oil grabs all the headlines, so many people don’t notice that natural gas is putting in a bottom, too. That should be a big boost for ONEOK (OKE), an integrated natural gas company that also has an energy marketing and trading business. The company distributes gas all over the Kansas and Oklahoma, as well as the Austin and El Paso areas of Texas. It also owns 42% of ONEOK Partners, a natural gas gathering, processing, storage and transportation company. And OKE recently paid a 4% dividend yield.

• This month, the company raised its quarterly dividend by 2 cents to 46 cents a share. The dividend is payable August 13 to shareholders of record at the close of business July 30.
• ONEOK’s dividend is expected to keep growing by 8.55% over the next three years.
• Rising natural gas prices should also boost the company’s share price.

ONEOK recently traded at 14.4 times trailing earnings and 14.3 times forward earnings.

These are just three examples of the kind of stocks that should be on your dividend watch-list. Their dividends aren’t huge, but they all have plenty of potential — immune to a recession while at the same time growing dividends rapidly (Walgreen) or leveraged to the booming overseas economies (Air Products) or leveraged to energy prices (ONEOK). Stealthy stocks like this can fly under the radar, and wise investors will pick them up for potential long-term price appreciation.

Yours for trading profits,

Sean

P.S. My newest issue of Crisis Profit Hunter comes out today, and its portfolio is packed with dividend picks that can help cushion you against the market’s big dips — while dishing up extraordinary price potential over time. PLUS, with your subscription, you get FOUR bonus reports. And now, for a very short time, I’m offering a special subscription price — just $89 for one year. Get yours today!

This investment news is brought to you by Uncommon Wisdom. Uncommon Wisdom is a free daily investment newsletter from Weiss Research analysts offering the latest investing news and financial insights for the stock market, precious metals, natural resources, Asian and South American markets. From time to time, the authors of Uncommon Wisdom also cover other topics they feel can contribute to making you healthy, wealthy and wise. To view archives or subscribe, visit http://www.uncommonwisdomdaily.com.

© 2005-2010

Comments

Investors have been divided over BP’s (NYSE:BP – News) prospects after the April 20 Deepwater Horizon accident in the Gulf of Mexico. Has the disaster put the company’s future in jeopardy, or has market overreaction created a unique opportunity to buy the oil giant at a discount?

At the Morningstar Conference last month, the general tone tilted toward caution, and several managers noted that they could not satisfactorily determine the extent to which BP’s stock slide was justified. Daniel O’Keefe of Artisan International Value Investor (NASDAQ:ARTKX – News), for instance, said he looked at BP because of the dramatic value destruction but hadn’t purchased it because he could not evaluate the extent of the losses from the spill. Another value-minded manager, Philippe Brugere-Trelat of Mutual Global Discovery (NASDAQ:TEDIX – News), said he dipped a toe into BP because the stock fell so substantially but that he has kept it to a very small position because he remains concerned about future fines, penalties, and unknowns.

Estimating costs requires making assumptions about several factors, including not only direct cleanup costs, but also civil penalties that will be determined through the court system during the next several years. Morningstar analyst Catharina Milostan predicts civil penalties could range broadly, from $4 billion to $46 billion. The extent to which BP will be able to contain the oil also remains unclear–a full solution is not expected until relief wells are completed in mid-August.

However, a look at our Shareholders data shows some mutual funds are sticking their necks out and loading up on BP shares. Meanwhile, other funds are cutting their losses and selling. The bets come amid continued uncertainty regarding the extent of BP’s liabilities.

Funds Buying BP Most Aggressively
Including funds with portfolio data from April 30 or later:

To see the related chart, click here:

http://news.morningstar.com/articlenet/article.aspx?id=344846

BP was a new holding for three of the top five biggest recent BP purchasers, while the other two increased their holdings substantially, by approximately 60% and 80%.

Fidelity stands out as a firm betting in favor of BP, having purchased 5,679,400 shares between Fidelity Diversified International (NASDAQ:FDIVX – News), Fidelity Europe (NASDAQ:FIEUX – News), Fidelity Series Large Cap Value (NASDAQ:FLVSX – News), and Fidelity Dividend Growth (NASDAQ:FDGFX – News). It’s interesting that Fidelity Dividend Growth got in on the action, adding BP as a new position despite the fact that BP has suspended its dividend for the rest of the year at a minimum. Five other Fidelity funds also purchased significant amounts of BP: Fidelity VIP Contrafund (NASDAQ:VPCAX – News), Fidelity Balanced (NASDAQ:FBALX – News), Fidelity Equity-Income (NASDAQ:FEQIX – News), Fidelity Value (NASDAQ:FDVLX – News), and Fidelity Series International Value (NASDAQ:FINVX – News) added between 257,600 and 389,800 shares each. BP was a new holding for Fidelity Equity-Income and Fidelity Value.

It’s worth noting that a handful of Vanguard funds, including Vanguard Wellesley Income (NASDAQ:VWINX – News) and Vanguard Wellington (NASDAQ:VWELX – News), had loaded up on BP shares as of their March 31 portfolios (the most recent available data), increasing their shares by 30% and almost 10% from their prior portfolios, respectively. There is no way of knowing if the funds have adjusted their holdings in response to the spill because funds are only required to report holdings quarterly.

Funds Dumping BP in the Largest Quantities

To see the related chart, click here:

http://news.morningstar.com/articlenet/article.aspx?id=344846

BlackRock Global Allocation (NASDAQ:MDLOX – News) wasted no time limiting its BP exposure–it sold more than 1 million shares and eliminated 86% of its BP holdings by the end of April. Hartford, meanwhile, sold 631,600 shares across two portfolios–not surprising given that Hartford Dividend & Growth (NASDAQ:IHGIX – News) and Hartford Equity Income (NASDAQ:HQIAX – News) are dividend-focused.

Are you thinking about investing in BP yourself? Read Morningstar director of personal finance Christine Benz’s recent article about important considerations before jumping into BP or other mega-cap names after big share-price drops.