Tesco CEO turns down $590,000 bonus

LONDON (Reuters) - Tesco (LSE:TSCO.L - News) boss Philip Clarke has opted not to take an annual bonus of about 372,000 pounds ($588,000) following a poor performance by the world's third-biggest retailer in its main British market.

Shares in Tesco, which issued a shock profit warning in January, have lost almost a quarter of their value this year and the company is now investing about 1 billion pounds in a bid to stem a declining market share in Britain.

A statement on Tesco's website on Tuesday, to coincide with the publication of the retailer's annual report, said its top 5,000 managers would receive a reduced annual bonus representing 16.9 percent of their maximum entitlement.

Executive directors will receive 13.5 percent of the maximum.

"I decided at the beginning of the year that I would decline my annual bonus for 2012," Clarke said in a statement emailed to Reuters.

"I wasn't satisfied with the performance in the UK and I won't take the bonus. I'm confident that we're tackling the right issues."

Clarke, a former Tesco shelf stacker, would have been entitled to a payout of about 372,000 pounds had he taken the 13.5 percent being paid to other executive directors.

The Tesco chief executive's decision comes amidst a round of high profile shareholder revolts over remuneration at companies like Barclays (BARC.L), Inmarsat (ISA.L) and Prudential (PRU.L) in a phenomenon dubbed the "shareholder spring".

Increasing investor resistance to executive pay rises at underperforming firms has also led Aviva (AV.L) boss Andrew Moss, and Sly Bailey, head of newspaper group Trinity Mirror (TNI.L), to quit this month.

In March, Clarke jettisoned the head of Tesco's UK operation, assumed his duties and is now directly in the firing line if his plans fail to halt a slide in sales.

Tesco shares were broadly flat at 5:35 a.m. EDT (0935 GMT) at 309.85 pence.

(Reporting by Paul Hoskins and Neil Maidment; Editing by Paul Sandle and Mark Potter)

Reuter

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Tesco pays Aeon to rid itself of Japan business

By Ritsuko Shimizu and James Davey

TOKYO/LONDON (Reuters) - Tesco (TSCO.L), the world's No.3 retailer, has ended a nine-year attempt to crack Japan's tough retail market by effectively paying Aeon Corp <8267.T>, the country's No.2 general retailer, to take its loss-making business there off its hands.

The deal, which will allow Tesco to focus on fixing its main British business after a shock profit warning in January, will inevitably re-heat speculation over the group's long-term commitment to its much larger loss-making Fresh & Easy business in the United States.

Many foreign retailers have struggled in Japan, hampered by fickle consumer tastes, a super-competitive landscape and prolonged, profit-sapping deflation. France's Carrefour (CA.PA) and Britain's Boots (ABAQUO.UL) are among the firms to have pulled out over the past decade.

The move is also the latest in a series by store groups exiting weaker markets as they struggle with sluggish demand in many developed economies. Carrefour announced a deal on Friday to pull out of Greece.

Tesco, which trails Carrefour and U.S. industry leader Wal-Mart (WMT.N) by annual sales, put the Japanese business up for sale last August, hiring Goldman Sachs (GS) to find a buyer.

Japan is the smallest of Tesco's 13 international businesses, consisting of 117 stores in greater Tokyo.

TWO STAGE EXIT

The deal with Aeon, first reported by Reuters, will see Tesco exit Japan in two stages.

In the first phase, it will sell 50 percent of its shares in Tesco Japan to Aeon for a nominal sum. This will result in the formation of a joint venture with Aeon.

Tesco will then invest 40 million pounds ($63 million) as a joint venture partner to finance restructuring, after which it will have no further financial exposure to the Japanese business.

"Given ongoing trading losses of about 30 million pounds after approaching a decade in the market, Tesco appears to our minds to have taken the correct approach with funded withdrawal," said Shore Capital analyst Clive Black.

He said it showed chief executive Philip Clarke is bringing greater focus and capital discipline to Tesco.

The deal will help Aeon, which trails Japan general retailer Seven & I Holdings (TYO:3382) in terms of market value, expand its reach in its home market as it tries to drive growth.

Prior to the Tesco purchase, Aeon had spent more than $775 million over the last five years, according to Thomson Reuters data, including taking stakes in Japanese supermarket chains Maruetsu and Marunaka.

Tesco's shares were up 0.5 percent at 302.65 pence at 0625 EDT, slightly outperforming the STOXX Europe 600 retail index (.SXRP). Aeon shares closed up 0.63 pence at 961 yen before the announcement.

FOCUS ON UK TURNAROUND

After a surprise profit warning in January, Tesco is focusing on turning around its British business, which accounts for over 70 percent of its trading profit. Last week the firm posted a drop in underlying first-quarter British sales as its recovery plan struggles to gain traction.

In April, Clarke rejected shareholder calls to pull the plug on Fresh & Easy but said he did not expect the chain to break even until its 2013/14 year, compared with the end of 2012/13 previously.

Last week Tesco reported underlying sales growth at Fresh & Easy slowed to 3.6 percent in its first quarter from 12.3 percent in the fourth quarter, prompting renewed calls for management to reassess its strategy for the U.S. business.

(Additional reporting by James Topham in Tokyo; Editing by Richard Pullin and Mark Potter)

Link:

Tesco pays Aeon to rid itself of Japan business

The Impact of Reinvesting Dividends

The chart shows the value over time of a $100 investment made in the S&P 500 in 1925 with dividends reinvested vs. dividends not reinvested.  It appears in the book pretty much as shown below.

It makes the difference between reinvesting dividends (the top line) and not reinvesting dividends (the bottom line) look pretty impresive, but it also makes it look like there isn't much difference until 50 years or so after the initial investment.  That's because the vertical scale is linear.

A more typical way to show compound growth such as this would be to use a semi-log chart, as shown next.  (A somewhat less serious problem with the chart above is that the horizontal scale distorts the amount of time at the beginning and end of the data.)

1. All that's really going on here is the difference between about 10.5% compound annualized growth (dividends reinvested, on the top line) and 5.7% compound annualized growth (dividends not reinvested, on the bottom line). 
 
2. The semi-log chart (with time properly represented on the horizontal scale) makes it clear that there is constant percentage growth in the value of the investment regardless of whether or not dividends are reinvested.  That's because the lines are straight (remember that straight lines on the semi-log chart indicate consistent compound growth).         
3. It also shows more clearly that reinvestment of dividends 

• affects the investment value right from the beginning and
  •  
• provides a consistently increasing benefit as more and more time passes.

What Is a Quality Growth Company? Just What Do We Mean by Growth?

What Is a Quality Growth Company?
To invest only in high quality growth companies, you will have to prospect for good candidates and then analyze and evaluate each.


Invest Only in Good Quality Growth Companies
Depending upon the size or maturity of the company, you should look for companies whose "monotonous excellence" produces consistent annual earnings growth of anywhere from 7% to as much as 20% compounded annually. As these companies grow, their share prices will ultimately follow, and your portfolio will reap the returns.

"Total Return" (the combination of both capital appreciation and divi-dend yield) is, certainly, the name of the game, but it‘s best to invest in companies whose growth, rather than dividend income, is going to provide the bulk of the return.

But it‘s not enough to simply invest in growing businesses. You should also set high standards of quality for the companies in which you invest. Companies of quality will outperform their peers, perform better in economic downturns, and/or see their share prices take large tumbles during the occasional stumble.


Just What Do We Mean by Growth?
As can be seen in the diagram above, a successful company will pass through several phases of growth:

• The startup phase when earnings are predictably below the break-even point. 
• A period of explosive growth when the percentage increase in sales and earnings can be spectacular.

• The mature growth period when revenue becomes so large that it is difficult to maintain a consistent increase in the percentage of growth.
• The period of stabilization, or decline for companies that do not continue to rejuvenate their product mix or expand their target markets.

You should invest only in companies that have a track record as a public company for at least five years and for which the data is readily available. We are therefore interested in investing in companies that are at least five years into their explosive growth periods but that have not gone past their primes. Obviously, the longer the company has had a successful track record—provided its management copes successfully with maturity—the more stable and risk-free it is apt to be.

Depending upon the size of the company, fundamental investors should expect growth rates that vary from a low of about 7% to a high of around 20%. 

• Hence, if the company is an established one with sales over the $5 billion mark, a growth rate of as little as 7% might be acceptable. (The Total Return of such a company should have a substantial dividend yield component.)
• At the other end of the spectrum, the newer company in its explosive growth period should show double digit growth. While we know that growth rates above 20% cannot be sustained forever, we look for higher growth rates as compensation for the increased associated risk.

The chart below provides a rough guideline for the kinds of growth rates that concept suggests. Anything in the light area is acceptable for companies whose revenues (sales) match the scale on the left side.



For example,

• if a company‘s sales for the current year are in the neighborhood of $300 million, we would look for a growth rate of better than 12%. 
• For a company with $1 billion in sales, we would want at least 8%. 

These are the standards of growth that we will seek for investment. Higher risk situations involving companies early in their life cycles are speculative and not of investment quality.

When and Why to sell. "Rules" for Selling a Stock

When and Why to sell
There is really no "time" to sell; however, there are certainly reasons to do so. Most investors, less successful than you will be, believe that you should watch for the price to rise "high enough" — whatever that means—and then sell it to take your profit. Successful fundamental investors know that "profit taking is often profit-losing."

"Rules" for Selling a Stock
The first rule for selling is . . . don‘t! . . . unless:
1) The company has had an adverse management change.
2) Profit margins are declining or the financial structure is deteriorating.
3) Direct or indirect competition stands to affect the company‘s long-term prosperity.
4) A company‘s success is too dependent upon a single product whose cycle is running out.
5) The company is in a cyclical industry and the cycle is about to start down.
6) You must, in order to maintain adequate diversification.
7) An issue of equal or greater quality offers more gain prospects on the upside and less risk on the downside.
8) The stock is way overpriced (at least 150% of the five-year Av-erage P/E) and the company‘s earnings are growing at 12% or less. Even then, you might consider holding-or selling only some of it.

Note that, of the eight reasons for selling listed above, only the eighth suggests that you might sell to take a profit-and then only if: a) the price is way above average; and b) the company is growing relatively slowly.

• The first five of the rules call for chucking losers.  (Defensive strategy)
• The sixth suggests "weeding and feeding" in order not to be grossly over weighted in any particular industry or market sector. 
• The seventh and eighth call for replacing a stock with a low potential only when you can find one as good or better with a greater possible return.   (Offensive strategy)

If some degree of mis-pricing exists in the stock market, it does not persist for long.

Market valuations rest on both logical and psychological factors.

The theory of valuation depends on the projection of a long-term stream of dividends whose growth rate is extraordinarily difficult to estimate.  Thus, fundamental value is never a definite number.  It is a fuzzy band of possible values, and prices can move sharply within this band whenever there is increased uncertainty or confusion.  Moreover, the appropriate risk premiums for common equities are changeable and far from obvious either to investors or to financial economists.  Thus, there is room for the hopes, fears, and favorite fashions of market participants to play a role in the valuation process.  

History provides extraordinary examples of markets in which psychology seemed to dominate the pricing process, as in the tulip-bulb mania in seventeenth century Holland and the Internet bubble at the turn of the twenty-first century.  It is doubtful that the current array of market prices ALWAYS represents the best estimate available of appropriate discounted value.

Nevertheless, the evidence suggest that stock prices display a remarkable degree of efficiency.  Prices adjust so well to important information.  Information contained in past prices or any publicly available fundamental information is rapidly assimilated into market prices.  If some degree of mis-pricing exists, it does not persist for long.

"True value will always out" in the stock market.  To paraphrase Benjamin Graham, ultimately the market is a weighing mechanism, not a voting mechanism.  

Stocks with Low PE Multiples Outperform those with High Multiples. Investors are warned repeatedly about the dangers of very high-multiple stocks that are currently fashionable.

In 1934, Dodd and Graham argued that "value" wins over time for investors.  To find value, investors should look for stocks with low PE ratios and low prices relative to book value, P/BV.  Value is based on current realities rather than on projections of future growth.  This is consistent with the views that investors tend to be overconfident in their ability to project high earnings growth and thus overpay for "growth" stocks.

Stocks with Low PE Multiples Outperform those with High Multiples
One approach of stock selection is to look for companies with good growth prospects that have yet to be discovered by the stock market and thus are selling at relatively low earnings multiple.  This approach is often described as GARP, growth at a reasonable price.  

Earnings growth is so hard to forecast, it's far better to be in low-multiple stocks; if growth does materialize, both the earnings and the earnings multiple will likely increase, giving the investor a double benefit.  Buying a high-multiple stock whose earnings growth fails to materialize subjects investors to a double whammy.  Both the earnings and the multiple can fall.  Therefore investors are warned repeatedly about the dangers of very high-multiple stocks that are currently fashionable.

There is some evidence that a portfolio of stocks with relatively low earnings multiples (as well as low multiples of cash flow and of sales) produces above-average rates of return even after adjustment for risk.  This strategy was tested and had been confirmed by several researchers who showed that as the PE of a group of stocks increased, the return decreased.

This "PE effect," however, appears to vary over time - it is not dependable over every investment period.  And even if it does persist on average over a long period of time, one can never be sure whether the excess returns are due to increased risk or to market abnormalities.

And low PEs are often justified.  Companies on the verge of some financial disaster will frequently sell at very low multiples of reported earnings.  The low multiples might reflect not value but a profound concern about the viability of the companies.  

6 Dangerous Moves For First-Time Investors

Thanks to online discount brokerages, anyone with an Internet connection and a bank account can be up and trading stocks within a week. This ease of access is great because it encourages more people to explore investing for themselves, rather than depending on mutual fundsor money managers. However, there are some common mistakes that first time investors have to be aware of before they try picking stocks like Buffett or shorting like Soros. (To learn more, see Billionaire Portfolios: What Are They Hiding?)


Jumping In Head First
The basics of investing are quite simple in theory – buy low and sell high. In practice, however, you have to know what is low and what is high in a market where everything hinges on different readings of a variety of ratios and metrics. What is high to the seller is considered low (enough) to the buyer in any transaction, so you can see how different conclusions can be drawn from the same market information. Because of the relative nature of the market, it is important to study up a bit before jumping in. (To learn more, see Stochastics: An Accurate Buy And Sell Indicator.)

At the very least, know the basic metrics such as book value, dividend yield, price-earnings ratio (P/E) and so on, and understand how they are calculated and where their major weaknesses lie. While you are learning, you can see how your conclusions work out by using virtual money in a stock simulator. Most likely, you'll find that the market is much more complex than a few ratios can express, but learning those and testing them on a demo account can help lead you to the next level of study. (Watching metrics like book value and P/E are crucial to value investing. Get acquainted with 5 Must-Have Metrics for Value Investing.)

Playing Penny Stocks
At first glance, penny stocks seem like a great idea. With as little as $100, you can get a lot more shares in a penny stock than a blue chip that might cost $50 a share. And, if the two blue chip shares you bought went up $1 you'd only make $2, whereas if 100 shares of a $1 stock went up a $1 you would double your money. Unfortunately, what penny stocks offer in position size and potential profitability has to measure against the volatility that they face. Penny stocks can shoot up. It happens all the time - but they can also crash in moments, and are exceptionally vulnerable to manipulation and illiquidity. Getting solid information on penny stocks can also be difficult, making them a poor choice for an investor who is still learning. (To learn more, read The Lowdown On Penny Stocks.)

Going All In with One Investment
Investing 100% of your capital in a specific market, whether it is the stock market, commodity futures, forex or even bonds is not a good move. Although you may eventually decide to throw diversification to the wind and put all your available capital into these markets once you are familiar with them, it is better to risk a little bit of capital at a time. This way, the lessons learned along the way are less costly, but still valuable. (Diversification entails calculating correlation, learn more about it by reading Diversification: Protecting Portfolios From Mass Destruction.) 

Leveraging Up
Leveraging your money by using a margin is similar to going all in, but much more damaging. Using leverage magnifies both the gains and the losses on a given investment. Some forms of leverage, such as options, have a limited downside or can be controlled by using specific market orders, as in forex. Learning to control the amount of capital at risk comes with practice, and until an investor learns that control, leverage is best taken in small doses (if at all). (Read more with Leverage's "Double-Edged Sword" Need Not Cut Deep.)

Investing Cash Reserves
Studies have shown that cash put into the market in bulk rather than incrementally has a better overall return, but this doesn't mean you should invest to the point of illiquidity. Investing is a long-term business whether you are a buy-and-hold investor or a trader, and staying in business requires having cash on the sidelines for emergencies and opportunities. Sure, cash on the sidelines doesn't earn any returns, but having all your cash in the market is a risk that even professional investors won't take. If you only have enough cash to invest or have an emergency cash reserve, then you're not in a position financially where investing makes sense. (To learn more about liquidity's importance, read Understanding Financial Liquidity.)

Chasing News
Trying to guess what will be the next "Apple," a revolutionary produce or a rumor of earth shaking earnings, investing on news is a terrible move for first time investors. The best case scenario is that you get lucky, and then keep doing it until your luck fails. The worst case scenario is that you get stuck jumping in late (or investing on the wrong rumor) time and time again before you give up on investing. Rather than following rumors, the ideal first investments are in companies you understand and have a personal experience dealing with. This connection makes it easier to stomach the time and research that investing demands. (For more on the psychology of trading, read How The Power Of The Masses Drives The Market.)

The Bottom LineWhen you are starting to invest, it is best to start small and take the risks with money you are prepared to lose. As you gain confidence and become more adept at evaluating stocks and reading the market sentiment, you can start making bigger investments. None of these investments are bad in and of themselves, but they do tend to be very unforgiving towards rookie mistakes. Leverage, penny stocks, news trading, etc. can all become part of your investing strategy as you learn, should you choose it. The trick is learning to invest in more stable markets before you jump into the wilder areas.

Read more: http://www.investopedia.com/articles/basics/11/dangerous-moves-first-time-investors.asp#ixzz1xvf9bm2F

Why should I invest?

Why should I invest?


One of the most compelling reasons for you to invest is the prospect of not having to work your entire life! Bottom line, there are only two ways to make money: by working and/or by having your assets work for you. 

If you keep your money in your back pocket instead of investing it, your money doesn't work for you and you will never have more money than what you save. By investing your money, you are getting your money to generate more money by earning interest on what you put away or by buying and selling assets that increase in value. 

It really doesn't matter how you do it. Whether you invest in stocks, bonds, mutual funds, options and futures, precious metals, real estate, your own small business, or any combination thereof, the objective is the same: to make investments that will generate more cash for you in the future. As they say, "Money isn't everything, but happiness alone can't keep out the rain." 

Whether your goal is to send your kids to college or to retire on a yacht in the Mediterranean, investing is essential to getting you where you want to be. 

Read more: http://www.investopedia.com/ask/answers/153.asp?ad=feat_invest101#ixzz1xvOolCKE


How does a person gain from an investment?
There are two main ways in which a person gains from an investment. The first is by capital gains, the difference between the purchase price and the sale price of an investment. The second is investment income, the money paid to the holder of the investment by the issuer of the investment. Depending on the type of investment, the source or mix of the total gain will differ. And in some cases, these different sources are taxed at different rates, so it is important to be aware of each. 

All stocks can generate a capital gain as the price of a stock is constantly changing in the market. This allows you to potentially sell for a higher price than what you bought the stock for originally. Some stocks also generate income gain through the payment of dividends paid out by a company from its earnings. For example, say that you bought a stock for $10 and the company pays off an annual dividend of $.50, and after two years of holding the stock you sell it for $15. Your capital gain is 50% ($5/$10) and your income gain is 10% ($1/$10) for a total gain of 60% ($6/$10).

Read more: http://www.investopedia.com/ask/answers/06/investmentgains.asp?ad=feat_invest101#ixzz1xvSiTT3n

20 Investments

Most people will find that their investment objectives change throughout their lives. Capital appreciation may be more important for the young investor, but once she enters her golden years, that same investor may place a greater emphasis on gaining income. Whatever your objective, knowing what investment options are out there is key.

Table of Contents

1. 20 Investments: Introduction
2. 20 Investments: American Depository Receipt (ADR)
3. 20 Investments: Annuity
4. 20 Investments: Closed-End Investment Fund
5. 20 Investments: Collectibles
6. 20 Investments: Common Stock
7. 20 Investments: Convertible Security
8. 20 Investments: Corporate Bond
9. 20 Investments: Futures Contract
10. 20 Investments: Life Insurance
11. 20 Investments: The Money Market
12. 20 Investments: Mortgage-Backed Securities
13. 20 Investments: Municipal Bonds
14. 20 Investments: Mutual Funds
15. 20 Investments: Options (Stocks)
16. 20 Investments: Preferred Stock
17. 20 Investments: Real Estate & Property
18. 20 Investments: Real Estate Investment Trusts (REITs)
19. 20 Investments: Treasuries
20. 20 Investments: Unit Investment Trusts (UITs)
21. 20 Investments: Zero-Coupon Securities
22. 20 Investments: Conclusion

Read more: http://www.investopedia.com/university/20_investments#ixzz1xvXipPW4

How Banks Create Money out of Thin Air

Things Just Got a Lot More Complicated in Europe

United they stand, divided they ____?

It's tough to say whether the eurozone as a whole is headed into recession, but I can't figure that the mixed results in the elections this weekend helped that cause. I've postulated before that prolonged recessions seem inevitable in Greece and Spain, and austerity measures designed to curb rapidly rising debt levels in France and Germany are likely to curb any economic strength. In short, the possibility of a Euro-recession is a real possibility.

The secret to survival over the next few months, until we get a better understanding of how these new governments will cooperate with one another, is to focus on strong cash flow businesses that tend to perform well even in stagnant times. This means telecom and health-care companies just might be your best shot at betting on a European recovery.

http://www.fool.com/investing/general/2012/05/07/things-just-got-a-lot-more-complicated-in-europe.aspx 

What does this mean for your money?

With many investors trading more on emotion than actual earnings results, it's likely we can expect more pressure on European-based businesses. The fallout in some companies can be, at least to some extent, justified as with large Spanish banks, Banco Santander (NYSE:STD  ) and Banco Bilbao Vizcaya Argentaria (NYSE: BBVA  ) . Both of these institutions are dealing with ridiculously high unemployment rates and commercial real estate portfolios littered with potential problem loans.

But we're also likely to see pressure on companies that won't be directly affected by austerity. Two such companies that may get lumped into the "guilty by association crowd" are France Telecom (NYSE: FTE  ) and U.K.-based oil services company BP (NYSE: BP  ) .

France Telecom has been on a steady downtrend over concerns that its mobile business may suffer as Europeans cut back on discretionary spending. What investors are failing to take notice of is France Telecom's strong international growth in Sub-Saharan Africa and even in troubled Spain.

As for BP, weakness in the stock makes little sense because so many of its oil assets are diversified throughout the world. There may be some give and take as emotional oil traders react to the unpleasant news out of Europe, but that's hardly a game-changer for a company that's putting its Gulf of Mexico PR nightmare in the rearview mirror.

Banco Bilbao Vizcaya Argentaria (NYSE: BBVA  ) .

 France Telecom (NYSE: FTE  )

 BP (NYSE: BP  ) .

It is interesting to review this old article 

December 10, 2010:    What Happened to Banco Santander?

How to Profit From the Great Greek Bankruptcy of 2012

Don't play a starring role in this big, fat Greek tragedy

So how can investors position themselves to profit from all this, if events play out according to plan? First and foremost: with patience. The Athens Stock Exchange Index has fallen far already -- down about 63% over the past year. But Russia's RTS took a pounding prior to its default, too, and that didn't save it from sliding further post-default.

The low P/E ratios on stocks like National Bank of Greece (NYSE: NBG  ) or Coca-Cola Hellenic Bottling (NYSE: CCH  ) may tempt investors today, but have no doubt: They could get even cheaper in the event of an official exit from the euro. A "Grexit" could likewise spark selling of foreign-listed but Athens-based shipping companies such as DryShips(Nasdaq: DRYS  ) , Diana Shipping (NYSE: DSX  ) , and Excel Maritime (NYSE: EXM  ) .

Long story short, there will be a time to profit from the great Greek bankruptcy of 2012. But that time is... not yet.

http://www.fool.com/investing/general/2012/06/06/how-to-profit-from-the-great-greek-bankruptcy-of-.aspx?source=ihpdspmra0000002&lidx=3

National Bank of Greece (NYSE: NBG  )

 Coca-Cola Hellenic Bottling (NYSE: CCH  ) 

 DryShips(Nasdaq: DRYS  )

 Diana Shipping (NYSE: DSX  )

Excel Maritime (NYSE: EXM  ) .

Stocks Near 52-Week Lows Worth Buying

Just as we examine companies each week that may be rising past their fair value, we can also find companies potentially trading at bargain prices. While many investors would rather have nothing to do with companies tipping the scales at 52-week lows, I think it makes a lot of sense to determine whether the market has overreacted to the downside, just as we often do when the market reacts to the upside.

Here's a look at a fallen angel trading near the 52-week lows that could be worth buying.

It's all about being greedy when others are fearful. 

Coca-Cola Hellenic (NYSE: CCH  ) , the second-largest bottling company in the world and the exclusive bottler of Coca-Cola (NYSE: KO  ) products in the region, exclusivelydistributes sparkling beverages, juices, and energy drinks in 28 countries. Because of weakness in the region and heavy investments into the company over the coming years, results haven't been fantastic, as is evidenced by the 2% drop in unit volume and its cash outflow of 32 million euros in the latest quarter.

However, investors need to keep in mind that barriers to entry remain extremely high in bottling. The Coca-Cola brand name when combined with Coke's marketing budget give Coca-Cola Hellenic incredibly strong pricing power. It's also worth noting that energy drinks and Coke Zero products showed strong year-on-year growth. At less than 10 times forward earnings, Coca-Cola Hellenic has a good mix of value and a strong brand name at its current price.

• Add Coca-Cola Hellenic to My Watchlist.
• Add Keynote Systems to My Watchlist.
• Add HudBay Minerals to My Watchlist.

http://www.fool.com/investing/general/2012/05/29/3-stocks-near-52-week-lows-worth-buying.aspx?source=itxsitmot0000001&lidx=6 

A Great Metaphor - The Stock Market can be likened to the Sea.

The stock market is indeed similar to the ocean because, just as a cork floating upon its surface is, the price of a stock is affected by many different influences at once.  And each of those forces can either add to or subtract from the effects of the others.

The broadest influence is, of course, the tide that ebbs and flows regularly and in some places rises 50 feet or more above its low point.

Upon the tide are the broad, rolling waves caused by the various disturbances at the sea bottom.  Then there are the large waves caused by storms and major changes in the atmosphere, and there are the various ripples and patterns caused by the whim of the local breeze that blows this way and that over a few square yards of the surface.

That cork is buoyed by a combination of all of these influences, some rising and some falling, all at the same time.   If you were to try to predict where that cork would be in relation to sea level in the next moment, you'd have a tough time of it.  You can't predict what a storm or even an underground earthquake will do to the cork at any given moment.  And if you add to that the effects of the winds and the little breezes, it's hopeless!

However, you would be able to forecast, in general, where your cork would be over the course of the day, instead of at a particular moment.  This is because the tides are influenced by the position of the moon, by gravity, and by a variety of other factors that are all scientifically predictable - so predictable, in fact, that almanacs are published that forecast the tides for years ahead, right to the minute.

The stock market is also governed by a diverse set of influences.  And just as the sea is, it is predictable over the long term but not over the short term.

What should you do if you find that the price or P/E is significantly above or below the historically fair price or fair P/E mark?

"It is better to buy a wonderful company at fair price than a fair company at wonderful price."

In general, if you can buy a quality stock today for a historically fair price or fair P/E, you should probably do so, provided the reward and risk are attractive.

However, what should you do if you find that the price or P/E is significantly above or below the historically fair price or fair P/E mark?

A low price or low P/E is probably your biggest concern, because it suggests that people who are buying the stock today might know something negative about the company that you don't know.

Think about it.  Why would investors pay less for the stock than it has typically sold for?

• Is there something in the news that you haven't heard about?  
• Has an analyst - or have a number of analysts - announced a reduced expectation of future earnings based upon something they know that you don't know?  
• Have you missed something in your quality analysis - or (shame on you!) recklessly jumped over that barbed-wire fence, failing to evaluate quality deliberately enough before moving on to look at the value considerations? 

(E.g. Transmile, KNM).

If the price or P/E is too low - move on to another company and forget about looking at the risk and reward.  You may miss a few good stocks, but you won't have to lose any sleep worrying about being wrong.



If the price or P/E ratio is too high, this tells you two things.

1. The first is that other investors appear to agree with you about the quality issues, because they are paying a healthy price for the stock.  
2. The second is that it may be too healthy a price.  

• You may want to put off buying it until the price becomes more reasonable.  
• Or, it may be worth the premium if the risk and reward are satisfactory.

(E.g. _____________)

Just know that, if you buy a stock whose price or P/E is too far above the fair price or fair P/E, when it later comes back down - which it usually will - the decrease in P/E can reduce your gain considerably.  Your chances of having a superior portfolio are far better if you select stocks for which you don't have to make any allowances.  


As you gain more experience, you'll find that you can make some intelligent exceptions in cases of high or low price or P/E, but for now, the advice for those who are just starting out, don't.