Department of Defense contractor CYIOS Corp. (OTCBB: CYIO) announced in late December that it had completed the necessary changes business model to “decrease costs, ensure higher profits and prepare for new contract awards coming in the near future.” In that same announcement, CYIOS stated that it was awaiting new contract awards in excess of $180 million, “which will start at the opening of 2009.”
About a month later, CYIOS issued a news release projecting revenues to triple if not quadruple as new contracts execute. with EPS expected to reach $.08-$.15 by the end of the year. The Company earned $0.06 per-share last year.
Last week, CYIOS announced a comprehensive information technology support contract with the FBI valued at $175 million. The D.C.-based Department of Defense contractor will help design, develop, maintain, enhance, and provide operational support for automated systems.
Utilities stocks and ETFs usually weather a downturn in an economic cycle better than most other companies largely because of their predictable earnings.
Low interest rates are forcing investors to look beyond low yielding money market rates and bank CDs for income. To meet your income needs you need to use the right investment products.
Utility stocks and ETFs are an excellent choice to help you build the income portion or your investment portfolio. In many cases investors can net more income from the dividends paid by utility stocks and ETFs. Why? Because the qualified dividend income is taxed at a maximum rate of 15% (or to 5% for taxpayers in the lowest two tax brackets) whereas the taxable income from bonds is taxed at higher ordinary income rates. Even though most utility stocks and ETFs posted negative performance last year, they are among the best performing industry sectors so far in the early going of 2009.
Here are a few utilities buzz stocks and ETFs we’re watching:
1. Vanguard Utilities ETF (NYSEArca: VPU): VPU only fell 28% in 2008, compared to the S&P 500’s 38% drop. The 12-month yield is 3.9%, and the median market size of utilities stocks in the ETF is $10.7 billion. Holdings include: Exelon Corp. (NYSE: EXC), Southern Co. (NYSE: SO), FirstEnergy Corp. (NYSE: FE) and American Electric Power Co., Inc. (NYSE: AEP)
2. NRG Energy, Inc. (NYSE: NRG): Timing could be everything with this wholesale power generation company. Exelon Corp. offered $6.2 billion to buy NRG in late 2008. In an open letter to its shareholders, NRG stated that it would “support a deal with Exelon at a fair price but, at this point, we have no reason to believe they are willing to offer a fair price.” We expect Exelon to come back with an offer NRG can’t refuse. If this happens, NRG shareholders win.
3. Southern Co. (NYSE: SO): Smart grids–remember those words. They’re likely to pop up a lot over the next few months as stimulus dollars start pouring in. Smart grids combine special meters, wireless technology, sensors and software so customers can closely monitor energy use cut and back when the grid is stretched to its limit. Southern Co., which powers a lot of Alabama, Georgia, Florida and Mississippi, has been one of the early leaders of this technology. Shares of SO have been down about 15% over the past 12 months, more than half of the S&P’s decline. The company maintains a healthy 20% operating margin. John Quealy, an analyst with Canaccord Adams in Boston, told Reuters that the companies best positioned to benefit from the stimulus are those that are running pilot projects and have already started the change.
Here’s a cool video on why utility stocks rule (air date: November 25, 2008):
ETFs are a great way to go for anyone looking to plug holes in their portfolio. If you’re looking for more exposure to foreign markets or can’t decide which biotech stock to invest in, maybe an ETF is the way to go. A lot of experts are pointing to ETFs as a good way for investors to get back some of their lost gains.
Here are a few differences between an ETF and an index fund.
Taxes: The big buzz about ETFs is their tax efficiency. The big “tax event” for ETF shareholders happens when you sell your shares, hopefully at a profit, after which you’ll pay capital gains taxes.
Expense ratios: By construction, ETF investors have less exposure to capital gains taxes than mutual fund shareholders. That’s because fund managers frequently buy and sell the fund’s holdings — and ask investors to pick up the tab. ETFs occasionally shift shares, too, although much less than most mutual funds. Annual expenses for ETFs range between 0.1% and 0.65% and are deducted from dividends. Index mutual funds charge anywhere from 0.1% to more than 3%.
Minimum investment requirement: For investors with limited funds (say, less than $1,000) who want to get started in the stock market, ETFs offer a cheap entrée. Through your discount brokerage account, you can buy one single measly share if you choose. In comparison, many index mutual funds have high initial balance requirements. (Those with lower requirements often charge higher fees.)
Ease of use: Here’s the double-edged sword of ETF investing. They are easy to buy — you simply need a discount brokerage account (and that’s easy to get — and cheap). Consequently, they’re easy to trade. And trade and trade and trade.
Here are a few ETFs we think are worth keeping an eye on:
2. SPDR S&P Dividend (SDY): Dividend ETFs seem to be gaining a lot of interest lately. This investment seeks to replicate, before expenses, correspond generally to the price and yield of the S&P High Yield Dividend Aristocrats index. The fund uses a passive management strategy designed to track the price and yield performance of the Dividend index. It is nondiversified.SDY has been down almost 23% over the last 12 months. However, its holdings, which include Con Edison (NYSE: ED), FirstMerit Corp. (Nasdaq: FMER) and Vectren Corp. (NYSE: VVC), all of which we think are in sweet spots of the market.
3. WisdomTree LargeCap Dividend (DLN): Another dividend ETF. DLN’s holdings include Chevron Corp. (NYSE: CVX), Pfizer, Inc. (NYSE: PFE), and Wal Mart Stores (NYSE: WMT). he fund employs a passive management (or indexing) investment approach designed to track the performance of the WisdomTree LargeCap Dividend index. It attempts to invest all, or substantially all, of assets in the stocks that make up the Index. DLN generally uses a replication strategy to achieve its investment objective and generally will hold each stock in approximately the same proportion as its weighting in the index. It is nondiversified.
4. Market Vectors Intermediate Municipal (ITM): The fund invests at least 80% of total assets in fixed-income securities that comprise the index. It has adopted a fundamental investment policy to invest at least 80% of assets in investments suggested by its name.
Tech companies have lost their sizzle, thanks to a meteoric rise and crash, and maturity. Sure you can still make money investing in Microsoft (Nasdaq: MSFT), but you have to pick your spots–a new product launch, or big upgrade, for example.
Or buying more shares of Cisco (Nasdaq: CSCO) on weakness and fewer when the stock peaks, and making your money on dollar-cost averaging into the company’s steady 12% earnings growth, as Jim Jubak of MSN recently stated.
One of the buzz trends to keep an eye on is batteries, according to Jubak. Devices are getting smaller and more demanding. Lithium-ion batteries alone powered 50 million laptops, 800 million cell phones and 80 million digital cameras sold in 2005.
Here are a few battery buzz stocks you should keep your eye on:
1. China BAK Battery, Inc. (Nasdaq: CBAK): This company is poised to capitalize on the growing global market for batteries. Gross profit for the first quarter of FY 2009 increased nearly 50 percent, to $10.6 million, from $7.1 million a year earlier. Revenue for the quarter increased 30 percent to $68.1 million, from $52.8 million a year ago. The Company reported cash and cash equivalents of $37.2 million as of December 31, 2008, and gave revenue guidance of between $270 million and $300 million for FY2009–a 16 percent increase over 2008 at the midpoint range.
2. Ener1, Inc. (NYSE: HEV): No huge sales here–just a lot of great technology. Although the Japanese have traditionally led the battery market, Ener1 is a homegrown company with great ties to Japan. The company just announced a memorandum of understanding with ITOCHU Corporation, a highly diversified global trading company that leads the world market in distribution of specialized equipment and materials needed to produce lithium-ion battery cells. In addition to battery technology, Ener1 develops commercial fuel cell products through its EnerFuel subsidiary and nanotechnology-based materials and manufacturing processes for batteries and other applications through its NanoEner subsidiary. The company has about $18.6 million in cash, and is trading below its 50-day moving average.
3. mPhase Technologies, Inc. (OTCBB: XDSL): The company’s technologies are based on electrowetting, a unique way to store and manage power. In late January, mPhase announced that it was “getting close” to selecting a contractor to construct the company’s AlwaysReady Reserve Battery, that will be used in the AlwaysReady Emergency Flashlight. According to a recent news release, the AlwaysReady Reserve Battery is a manually activated lithium reserve cell with a minimum storage life prior to activation of 20 years. This is a promising, high-risk, micro-cap, penny stock.
