Goldman Sachs Upgrades Royal Dutch Shell to “Buy” (RDS-A)

Goldman Sachs reported on Monday that it has raised its rating on Royal Dutch Shell plc (RDS-A).

The firm has upgraded Shell from “Sell” to “Buy,” and has raised the company’s price target from $69 to $71. This new price target suggests a 7% upside from the stock’s current price of $65.88.

An analyst from the firm noted: “We believe that the underlying business is sound and highly cash generative, with higher exposure than peers to long-lived assets and slightly better production/cash flow growth in the coming years. TOTAL's 15% outperformance since indicating a capex reduction and upside to disposals shows in our view how eager the market is for improvements in capital efficiency, and we believe that Shell's new management is most likely to steer the market in that direction from very low expectations.”

Royal Dutch Shell shares were mostly flat during pre-market trading Monday. The stock is down 4% YTD.

Investors as Pirates - Bargains as Booty

The English word "pirate" is traced back to Greek origins, meaning "I attempt," surely the same watchwords of bold investors taking a dare. Pirate was also originally related to peril, the milieu of the market. Today's piracy theme may relate to these four companies selling at a bargain price, and are further prequalified by billionaire stakeholders. Check out this possible "booty," a word that originates in Europe around 500 years ago, with meanings of treasure, exchange and looting. Take a look to decide if you want to attempt to share in the spoils of these companies that have dropped in price since recent buys by billionaires.

Of special interest, Hertz Global is up 31% year-to-date, and seven billionaire investors made new buys in the second quarter of 2013.

Hertz Global Holdings Inc. (HTZ) - Yield 0.00%

Hertz Global Holdings Inc. is up 61% over 12 months. The current share price is around $21.61, down 11% since John Burbank made a new buy as of June 30, 2013.

He bought 210,000 shares at an average price of $24.36 for a loss of 9.5%.

His current shares stand at 210,000.

Incorporated in 2005, Hertz Global Holdings Inc. serves as the top-level holding company for the consolidated Hertz business. The company owns worldwide airport general use car rental brand and equipment rental businesses in the U.S. and Canada.

The company has a market cap of $8.85 billion; its trades with a P/E ratio of 28.50 and a P/B ratio of 4.00.

Tracking historical share pricing, revenue and net income:

[ Enlarge Image ]

Sixteen Gurus hold HTZ as of June 30, 2013, and there is very active insider trading.

Ethan Allen Interiors Inc. (ETH) - Yield 1.30%

Ethan Allen Interiors Inc. is up 27% over 12 months. The current share price is around $27.71, down 11% since Joel Greenblatt made a new buy as of June 30, 2013.

He bought 44,786 shares at an average price of $30.98 for a lo! ss of 10..4%.

His current shares stand at 44,786.

Incorporated in 1989, Ethan Allen Interiors Inc. is a manufacturer and retailer of quality home furnishings and accessories, offering home decorating and design solutions through home furnishing retail networks.

The company has a market cap of $800.8 million; its trades with a P/E ratio of 25.00 and a P/B ratio of 2.40.

Tracking historical share pricing, revenue and net income:

[ Enlarge Image ]

Four Gurus hold ETH as of June 30, 2013, and there is very active insider selling.

StealthGas Inc. (GASS) - Yield 0.00%

StealthGas Inc. is up 38% over 12 months. The current share price is around $9.40, down 11% since John Keeley made a new buy as of June 30, 2013.

He bought 60,000 shares at an average price of $10.55 for a loss of 10.9%.

His current shares stand at 60,000.

Incorporated in 2004 in the Republic of the Marshall Islands, StealthGas Inc. owns a fleet of liquefied petroleum gas or LPG carriers providing international seaborne transportation services to LPG producers and users, as well as crude oil and product carriers chartered to oil producers, refiners and commodities traders.

The company has a market cap of $300.8 million; its trades with a P/E ratio of 7.80 and a P/B ratio of 0.60.

Tracking historical share pricing, revenue and net income:

[ Enlarge Image ]

Four Gurus hold GASS as of June 30, 2013, and there is no insider activity.

Yamana Gold Inc. (AUY) - Yield 2.30%

Yamana Gold Inc. is down 45% over 12 months. The current share price is around $10.35, down 11% since Seth Klarman made a new buy as of June 30, 2013.

He bought 3,255,500 shares at an average price of $11.67 for a loss of 9.9%.

His current shares stand at 3,255,500.

Yamana Gold Inc. is a Canadian-based gold producer with ! significan! t gold production, gold development stage properties, exploration properties, and land positions in Brazil, Argentina, Chile, Mexico and Colombia. The company's portfolio includes seven operating gold mines.

The company has a market cap of $7.9 billion; its trades with a P/E ratio of 23.90 and a P/B ratio of 1.00.

Tracking historical share pricing, revenue and net income:

[ Enlarge Image ]

Eleven Gurus hold AUY as of June 30, 2013, and there is no insider activity.

Check out the GuruFocus Guru Bargains feature to discover more stocks priced at around 20% off since billionaires last bought.

Check out the Guru Focus special feature 52-week low screener to find the stocks hitting new lows but are still held by top investor Gurus and Insiders.

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Annuities changes puzzle advisers

Though variable annuities were helpful for the most nervous clients during the financial crisis, advisers admit that insurers still have room for improvement when it comes to this product line.

A panel of financial advisers from the Chicago area spoke at the Insured Retirement Institute's annual conference Tuesday. Though these advisers are skilled in the use of annuities, they admitted that keeping up with perpetually changing product features and investment menus has been no easy feat.

“I have a responsibility to make sure [clients] understand it, but it's a trust level: They come to me because they trust me; they trust that five or six years down the road, I'll build the bucket of money that they need,” said Lisa Schomer, an adviser with LPL Financial LLC.

Products that are too difficult to understand might get short shrift, even if they're a good fit for the client. “If the clients don't understand it, we may be more apt to not present it, even if it's a complete fit,” Ms. Schomer added. “They may not want it because they don't understand it, and we may be reluctant to say down the road that the product has changed.”

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How advisers have been able to stay on top of those updates varies.

Gus Stathapoulos, a vice president at Morgan Stanley Wealth Management, noted that he used to have an annuity coordinator at his branch — an adviser who was dedicated to providing feedback and answering advisers' questions on products.

“I think having that point person in the branch with that experience can give [advisers] some insight,” Mr. Stathapoulos said.

Of all the changes to annuity products, advisers are most concerned about changing investment options, especially those involving hedging strategies to mitigate volatility.

Not only do advisers want to understand how these work, but they worry about now those investment options will affect clients' return.

“Those types of strategies are very difficult for us to understand and explain to a client,” said Paul Fousek, an adviser at Horizon Wealth Management LLC. The biggest fear is that those clients will “underperform so much in the next two to three years that they're not making any money,” he added. “We don't know how these things work; they don't have a track record.”

Advisers noted that while clients are placing more emphasis on getting a reliable income stream in retirement rather than getting outsized gains from their annuities, insurers ought to consider establishing inflation hedges to protect retirees' income stream.

“The products are geared toward [account] step-ups if mark! ets do well,” said Mr. Stathapoulos. “Everything is tied to the account value stepping up, and if you don't get that, you don't get a raise.”

“I'd like something more of an inflation hedge,” he added. “You get a 2% raise for the next 20 years.”

JP Morgan Reportedly Facing Lawsuit from U.S. Government (JPM)

According to Reuters, JP Morgan Chase (JPM) will be getting sued by the U.S. Department of Justice over mortgage bonds sold by the company prior to the 2008 housing crash.

Reuters left its sources anonymous, but stated that the lawsuit could come early this week. This latest lawsuit news comes on the heels of JP Morgan agreeing to a $920 million fine over the “London Whale” case, and after the banking giant announced in August that it was under investigation by Californian prosecutors for reasons related to its mortgage securities.

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JPM shares were down $1.34 at market close on Monday. YTD, the company’s stock is up more than 18%.

Why Does Apple Let That Dump Walmart Discount iPhones?

NEW YORK (TheStreet) -- The last time Bruce Springsteen sweated on me at a concert, I didn't wash my arm for a month. The last time I stepped into a Walmart (WMT), I bathed thrice a day for a month straight.

I'm tired of beating around the bush.

While not all Walmart stores are dumps, quite a few are. They're soulless, uninspiring environments packed with so many mutants the People of Walmart Website can't possibly process all the worthy content it receives fast enough.

Now, hold your fire. This doesn't mean you're a loser if you shop at Walmart. It's no sin to save a buck or accept convenience. Plus, depending on where you live, you might not have many options like hoity-toity Manhattanites or self-righteous West Coasters. And let's face it, picking on Walmart has become a national pastime (not to mention the most accurate set of stereotypes ever perpetuated). It's all fun and games until somebody gets offended or a greeter gets trampled by a mob of holiday shoppers. Simply stated, you just shouldn't be able to buy Apple products at Walmart. It's a complete joke. And, ultimately, the joke's on Apple (AAPL). Throw all of these big box retailers into a pile -- Walmart, Best Buy (BBY) and the somewhat more tolerable Target (TGT). They'll sell just about anything (unless, of course, it has offensive lyrics) if there's a chance you'll buy it. It's mind-boggling. Why would Apple want to be a part of this on any level? I hit on this Thursday in my 5-point plan to keep Apple great, but I beat this horse as early as January of this year. We can't ask for answers on this enough. And this isn't even a Tim Cook thing. Steve Jobs allowed it to happen as well. Let's consider some points and possibilities.

I haven't been able to get a definitive answer, but let's assume (I think safely) these third-party arrangements look like this.

Apple sets a minimum sales price that Walmart and others must abide by. That almost certainly has to be the case. I would hope that Apple also controls the ability for these third parties to discount. In other words, Walmart didn't come up with the idea to sell the new iPhones for $10 less than everybody else (with a two-year contract) on its own. They either came up with it and Apple approved or it was some sort of joint decision. If Walmart has carte blanche to discount, which I doubt they do, we really have problems.

Particulars, however, are irrelevant. No matter how it comes to be, it's bad for Apple. And it's not a numbers thing. Even if Walmart eats that $10 discount, who cares? It's not about the money. In fact, I would be willing to give up the revenue these relationships generate (I haven't seen a reliable breakdown of Apple retail sales via third parties) to protect and rebuild the part of Apple's image that has eroded.

Again, no skirting the issue with euphemisms and niceties. Fair or not, elitist and snobby or not, Walmart is the butt of too many jokes. There's not a soul in this audience -- or any other for that matter -- who hasn't made a joke about everything from the Walmart experience to some of the people who frequent the place. Walmart has built its brand on being the place to get cheap stuff. Everybody likes a bargain, but Walmart took the notion to an extreme. This is the place people load up on the staples when they get their check at the end of the month. It's well-chronicled in pop culture. Maybe it's urban myth. I don't know. But, as we discussed earlier this week in Apple Laughs When it Realizes Google Makes Computers, perception equals reality and it is reality. Why Apple wants to be as close to the bottom of the retail barrel as you can get -- short of selling stuff at a swap meet or flea market -- is beyond me. Follow @rocco_thestreet --Written by Rocco Pendola in Santa Monica, Calif.

Rocco Pendola is a columnist and TheStreet's Director of Social Media. Pendola makes frequent appearances on national television networks such as CNN and CNBC as well as TheStreet TV. Whenever possible, Pendola uses hockey, Springsteen or Southern California references in his work. He lives in Santa Monica.

Jim Cramer's Top Stock Picks: IP NFLX BBY GME TRIP AWAY

Search Jim Cramer's "Mad Money" trading recommendations using our exclusive "Mad Money" Stock Screener.

NEW YORK (TheStreet) -- Here are some of the hot stocks Jim Cramer talked about on Monday's "Mad Money" on CNBC:

IP data by YCharts

International Paper (IP): The economy has turned and the paper industry has consolidated, said Cramer, and that makes International Paper the best-of-breed player in a terrific sector.

NFLX data by YCharts

Netflix (NFLX), Best Buy (BBY), GameStop (GME) and TripAdvisor (TRIP): The fourth quarter is almost here, said Cramer, and that means fund managers will be piling into these big winners for 2013.

AWAY data by YCharts

HomeAway (AWAY): HomeAway is revolutionizing the way vacation properties are rented, said Cramer, and its new business model makes it an even bigger buy.

To read a full recap of "Mad Money" on CNBC, click here.

To sign up for Jim Cramer's free Booyah! newsletter with all of his latest articles and videos please click here. To watch replays of Cramer's video segments, visit the Mad Money page on CNBC. -- Written by Scott Rutt in Washington, D.C. To email Scott about this article, click here: Scott Rutt Follow Scott on Twitter @ScottRutt or get updates on Facebook, ScottRuttDC

At the time of publication, Cramer's Action Alerts PLUS had no position in stocks mentioned. Jim Cramer, host of the CNBC television program "Mad Money," is a Markets Commentator for TheStreet.com, Inc., and CNBC, and a director and co-founder of TheStreet.com. All opinions expressed by Mr. Cramer on "Mad Money" are his own and do not reflect the opinions of TheStreet.com or its affiliates, or CNBC, NBC Universal or their parent company or affiliates. Mr. Cramer's opinions are based upon information he considers to be reliable, but neither TheStreet.com, nor CNBC, nor either of their affiliates and/or subsidiaries warrant its completeness or accuracy, and it should not be relied upon as such. Mr. Cramer's statements are based on his opinions at the time statements are made, and are subject to change without notice. No part of Mr. Cramer's compensation from CNBC or TheStreet.com is related to the specific opinions expressed by him on "Mad Money." None of the information contained in "Mad Money" constitutes a recommendation by Mr. Cramer, TheStreet.com or CNBC that any particular security, portfolio of securities, transaction, or investment strategy is suitable for any specific person. You must make your own independent decisions regarding any security, portfolio of securities, transaction, or investment strategy mentioned on the program. Mr. Cramer's past results are not necessarily indicative of future performance. Neither Mr. Cramer, nor TheStreet.com, nor CNBC guarantees any specific outcome or profit, and you should be aware of the real risk of loss in following any strategy or investments discussed on the program. The strategy or investments discussed may fluctuate in price or value and you may get back less than you invested. Before acting on any information contained in the program, you should consider whether it is suitable for your particular circumstances and strongly consider seeking advice from your own financial or investment adviser. Some of the stocks mentioned by Mr. Cramer on "Mad Money" are held in Mr. Cramer's Action Alerts PLUS Portfolio. When that is the case, appropriate disclosure is made on the program and in the "Mad Money" recap available on TheStreet.com. The Action Alerts PLUS Portfolio contains all of Mr. Cramer's personal investments in publicly-traded equity securities only, and does not include any mutual fund holdings or other institutionally managed assets, private equity investments, or his holdings in TheStreet.com, Inc. Since March 2005, the Action Alerts PLUS Portfolio has been held by a Trust, the realized profits from which have been pledged to charity. Mr. Cramer retains full investment discretion with respect to all securities contained in the Trust. Mr. Cramer is subject to certain trading restrictions, and must hold all securities in the Action Alerts PLUS Portfolio for at least one month, and is not permitted to buy or sell any security he has spoken about on television or on his radio program for five days following the broadcast.

Goldman Sachs Upgrades Consolidated Edison to “Neutral” (ED)

Early on Wednesday, analysts at Goldman Sachs upgraded utility company Consolidated Edison, Inc. (ED), noting that rate case concerns are already priced into the stock’s current valuation.

The analysts upgraded ED from “Sell” to “Neutral” and see shares reaching $57, up from the previous target of $55. This new price target suggests a slight upside to the stock’s Tuesday closing price of $55.28.

“While ED faces a challenging rate case in New York, we see this risk as well understood by the market now,” Goldman Sachs analyst Michael Lapides said.

Con Edison shares were inactive during pre-market trading on Wednesday. The stock is down a fraction year-to-date.

Ammunition Giant ATK Scores Bolt-On Bushnell Deal in Scopes and Optics

Alliant Techsystems Inc. (NYSE: ATK) is making what may be a game-changing acquisition. The reality is that it is a simple bolt-on merger for the company, but it opens up the company to even more business that does not simply revolve around government contracts for military orders. By purchasing Bushnell, Alliant is making its number one position in ammunition now a leader in optics and other optical accessories as well.

ATK has entered into a definitive agreement to acquire Bushnell Group Holdings for its branded sports optics, outdoor accessories and performance eyewear. If you have ever gone looking for scopes or eyewear or other optical devices for hunting or for recreational shooting, you have likely run across Bushnell as one of the key choices. With Alliant now behind the company, this likely will become an even more prominent brand.

Bushnell’s product portfolio includes laser rangefinders, trail cameras, scopes for rifles, binoculars and other hunting and shooting sports accessories. ATK is set to pay $985 million in cash, subject to customary post-closing adjustments, and this is roughly at about 10 times the projected 2013 EBITDA. ATK said that Bushnell’s projected sales for the calendar year of 2013 are roughly $600 million, yet ATJ’s expected current year sales are expected to be about $4.2 billion. The earnings boost is what matters for ATK shareholders:

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ATK expects the acquisition to result in FY14 earnings per share dilution due to the stub period, transaction expenses and purchase accounting. ATK expects the acquisition to be accretive to EPS in its first full year of operations (FY15), including impacts associated with transition expenses, and estimates FY16 EPS accretion of approximately $1.00.

Now look at what the largest ammunition maker is getting for its purchase. ATK will get to acquire more than 10,000 customer accounts in over 90 countries. Again, this is not just governmental supply contracts. Bushnell has 19 outdoor brands in sports optics, outdoor accessories and performance eyewear: the Bushnell brand itself plus Primos, Bollé, Hoppe’s, Uncle Mike’s, Butler Creek and Serengeti.

What ATK investors need to consider here is that this acquisition is after the company announced in June the acquisition of Savage Sports Corp. ATK already has ammunition brands such as Federal Premium, CCI, Fusion, Speer, Estate Cartridge and Blazer. ATK also already has accessories brands BLACKHAWK!, Alliant Powder, RCBS, Champion targets and shooting equipment, Gunslick Pro and Outers gun-care products, and Weaver optics and mounting systems.

If ATK is adding $1.00 per share in earnings in 2016, that is on top of almost $9.00 per share expected in its March-2015 fiscal year. This is one of those acquisitions that just makes sense, and it helps to consolidate an industry that literally has hundreds of gear and outfit suppliers.

ATK is up 1.5% at $98.72 in early trading on Thursday, against a 52-week range of $48.67 to $103.77. Acquirers generally see their stocks drop when they announce a buyout. The $985 million compares to a current market cap of about $3.1 billion. The consensus analyst price target is only $101.82 for ATK, but our take is that this target price will ratchet up considerably based on this deal. The highest price target is $121, and that may be ratcheting higher as well.

"Insidious Chapter 2" Had Better Thank Netflix

Some sequels are better off left unmade. 

Yes, I'm talking to you, Grown Ups 2. Don't think you're getting a free pass, Speed 2: Cruise Control. If the original entry was critically panned -- cough, cough, Grown Ups -- there's no reason to keep going. If a movie works under the outrageous premise that a bus will blow up if it slows down, there's no need to whisk Sandra Bullock onto a cruise ship for a sequel to Speed.

This brings us to Insidious Chapter 2. The followup to 2011's Insidious hits a multiplex near you next weekend, and it certainly wasn't the kind of box-office smash that would send studios scrambling for a sequel. The supernatural horror flick about a family coping with a demon-possessed son took in just a little more than $54 million in its domestic theatrical run. 

However, the movie has been well reviewed. Netflix (NASDAQ: NFLX  ) users have bestowed it a rating of 3.7 stars out of five, and that's a pretty good rating on the leading video service. The movie was available for streaming on Netflix until this past May, when a licensing deal ran out, and its success there probably played a major part in the decision to for FilmDistrict to go ahead with a sequel. 

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Nearly 1.8 million Netflix subscribers have rated the movie. That's huge for a movie that was seen by fewer than 7 million moviegoers when it was playing on the big screen (dividing $54 million in box office receipts by the average ticket price in 2011 of $7.93). We've seen Netflix build an audience for TV shows including Mad Men and, more recently, Breaking Bad. But now we have a good example of Netflix streaming as an asset to a theatrical franchise if the sequel manages to beat out the original. 

Source: FilmDistrict.

It also helps that supernatural movies have been storming back to life this year. Time Warner's (NYSE: TWX  ) The Conjuring has raked in more than $134 million in ticket sales this summer. That's not too shabby for a movie with a $20 million production budget. Mama's $71 million take earlier this year wasn't as impressive, but it still fared better than Insidious.

Let's hope that the producers of Insidious Chapter 2 keep this all in mind as the next few weeks play out. Thanking Netflix -- and The Conjuring -- won't happen. The Netflix licensing deal went away four months ago. Time Warner's creepy movie is the competition. However, it would be the right thing to do.

"It will take what you love most," is the film's tag line, but it's those two factors that helped bring it back.

If you want to see something really scary, check out the price of oil these days
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Video: How Would the Markets React to a Syria Attack?

There's a great deal of uncertainty about whether there will be a Syria attack from the United States - but investors want to know how markets would react to such a strike.

Secretary of State John Kerry has said a Syria attack - when and if it comes - would be "extremely limited and targeted," and support for an attack is far from ironclad.

Despite all this uncertainty, the Dow Jones Industrial Average is up about 150 points so far today.

Would the markets "like" an attack on Syria, or would they pull back? And could an attack mean even more stimulus and bond buying for Bernanke?

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Money Morning Chief Investment Strategist Keith Fitz-Gerald speaks with FOX Business' Stuart Varney of "Varney & Co."and gives the surprising answers to these questions.

 

You can take advantage of the "calm before the storm" in Syria, and make some serious energy profits on the "Syrian premium." Dr. Kent Moors of our Energy Advantageservice shows you what to do before the shooting starts. Click here for how to play the "Syrian Premium."

Credit Suisse Highlights Stocks That Avoid Smoke and Mirror on Earnings

The second-quarter earnings parade has all but come to a end. One conclusion that is painfully obvious to the equity strategy team at Credit Suisse is that many companies beat earnings only by using some accepted tricks of the trade. In fact, 35% of all Russell 1000 companies that beat earnings took a special charge in the second quarter.

Companies that took special charges or were buying back large amounts of their own stock made up an astonishing 50% of the companies that beat earnings expectations. Here is another worrying statistic to the Credit Suisse team: only 62% of companies that beat earnings estimates were able to surprise on revenue as well. The bad news is that investors may be getting hoodwinked on earnings reports, which may be lulling them into a false sense of security. The good news is that Credit Suisse has a list of top stocks to buy that reported outstanding, quality earnings reports. By sector, here are the names on that list that had the largest percentage earnings per share beats.

Consumer Discretionary: CBS Corp. (NYSE: CBS) beat earnings estimates by a solid 5.3%. The company is still locked in a dispute with Time Warner Cable Inc. (NYSE: TWC) over fees, and the problem seems to have no end in sight. With the NFL season quickly approaching, it seems that cooler heads may want to prevail. The Thomson/First call price target for the network ratings leader is $63. Investors receive a 0.9% dividend.

Consumer Staples: CVS Caremark Corp. (NYSE: CVS) surprised by a small 1%. However on almost every metric that stock is extremely cheap and continues to gain share across the United States. The forward five-year price-to-earnings/growth (PEG) ratio is an extremely low 1.05, which bodes well for patient investors. The consensus price target is $66. Shareholders are paid a 1.6% dividend.

Energy: Schlumberger Ltd. (NYSE: SLB) crushed earnings by an astonishing 50.9% last quarter. With Mexico changing its policy on oil exploration, the oil field services leader may see continued strong earnings growth in the years ahead. The consensus price target for the stock is posted at $96. Investors are paid a 1.5% dividend.

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Financials: Goldman Sachs Group Inc. (NYSE: GS) mauled earnings estimates by a strong 29.6%. The Wall Street powerhouse announced yesterday that it put four senior technology specialists on administrative leave after a programming error caused the investment bank to send faulty stock-options orders last week. The consensus price target for the stock is $165, and investors are paid a 1.4% dividend.

Health Care: Eli Lilly & Co. (NYSE: LLY) posted earnings that beat expectations last quarter by 14.4%. The drug giant is also one of the top holdings in billionaire Jim Simons’ Renaissance Technologies hedge fund, which currently holds more than 12 million shares of the company in its portfolio. The consensus price target for the stock is placed at $59. Investors are paid a solid 3.7% dividend.

Industrials: Deere & Co. (NYSE: DE) smashed earnings expectations by a stellar 17.8% and continues to see strong growth, especially on its growing overseas markets. With companies around the world increasing their borrowing for industrial and agricultural equipment, Deere looks to be in a sweet spot. The consensus price target is at $87, and investors are paid a 2.4% dividend.

Information Technology: MasterCard Inc. (NYSE: MA) beats earnings expectations in the second quarter by a strong 10.9%. The stock has been on fire in 2013 and may be a candidate for a stock split. The Thomson/First Call price target for the credit card giant is $695. Investors are paid a small 0.4% dividend.

Despite the strong market rally this year, some investors wanting to stay invested may feel that they are at a crossroads. Do they continue to hold stocks and risk a market sell-off, or sell some stock now to cash in some profits while looking for a better entry point. The Credit Suisse stocks that boasted quality earnings may be good additions to portfolios looking to swap or add new names.

Will Royal Dutch Shell Stock See a Recovery?

With shares of Royal Dutch Shell (NYSE:RDSA) trading around $64, is RDSA an OUTPERFORM, WAIT AND SEE, or STAY AWAY? Let's analyze the stock with the relevant sections of our CHEAT SHEET investing framework:

T = Trends for a Stock’s Movement

Royal Dutch Shell operates as an independent oil and gas company worldwide. The company explores and extracts crude oil, natural gas, and natural gas liquids. It also converts natural gas to liquids to provide fuel and other products, as well as engages in manufacturing, supplying, and shipping crude oil. The company holds interests in approximately 30 refineries, 1,500 storage tanks, and 150 distribution facilities.

Royal Dutch Shell reported earnings yesterday, posting a 60 percent drop in profit for the quarter. The company faced a $2 billion write-down on shale oil drilling ventures in North America, showing that Shell's drilling efforts have come up much shorter than expected. The company's earnings were also negatively affected by expensive exploration efforts, and disruptions to oil production in Nigeria. In addition, the company also recently appointed a new CEO, Ben van Beurden, after Peter Voser decided to leave the company.

T = Technicals on the Stock Chart are Weak

Royal Dutch Shell stock has not done very well in the last several years. The stock is now trading near lows for the year, and may need some time to recover. Analyzing the price trend and its strength can be done using key simple moving averages.

What are the key moving averages? They are the 50-day (pink), 100-day (blue), and 200-day (yellow) simple moving averages. As seen in the daily price chart below, Royal Dutch Shell is trading below its key averages, which signals neutral to bearish price action in the near-term.

(Source: Thinkorswim)

Taking a look at the implied volatility (red) and implied volatility skew levels of Royal Dutch Shell options may help determine if investors are bullish, neutral, or bearish.

	Implied Volatility (IV)	30-Day IV Percentile	90-Day IV Percentile
Royal Dutch Shell Options	18.26%	73%	70%

What does this mean? This means that investors or traders are buying a very significant amount of call and put options contracts, compared to the last 30 and 90 trading days.

	Put IV Skew	Call IV Skew
August Options	Steep	Average
September Options	Steep	Average

As of today, there is average demand from call buyers or sellers, and high demand by put buyers or low demand by put sellers, all neutral to bearish over the next two months. To summarize, investors are buying a very significant amount of call and put option contracts, and are leaning neutral to bearish over the next two months.

On the next page, let’s take a look at the earnings and revenue growth rates, and what that means for Royal Dutch Shell’s stock.

E = Earnings Are Increasing Quarter-Over-Quarter

Rising stock prices are often strongly correlated with rising earnings and revenue growth rates. In addition, the last four quarterly earnings announcement reactions can help gauge investor sentiment on Royal Dutch Shell’s stock. What do the last four quarterly earnings and revenue growth (Y-O-Y) figures for Royal Dutch Shell look like, and more importantly, how did the markets like these numbers?

	2013 Q2	2013 Q1	2012 Q4	2012 Q3
Earnings Growth (Y-O-Y)	-43.85%	-7.86%	1.82%	1.79%
Revenue Growth (Y-O-Y)	-4.00%	-6.67%	2.92%	-8.36%
Earnings Reaction	-5.75%*	N/A	N/A	N/A

Royal Dutch Shell has seen mixed earnings and mostly declining revenue figures over the last four quarters. From these numbers, the markets are not pleased with Royal Dutch Shell’s recent earnings announcement.

* As of this writing

P = Weak Relative Performance Versus Peers and Sector

How has Royal Dutch Shell stock done relative to its peers, Exxon Mobil (NYSE:XOM), Chevron (NYSE:CVX), BP (NYSE:BP), and the overall sector?

	Royal Dutch Shell	Exxon Mobil	Chevron	BP	Sector
Year-to-Date Return	-6.29%	6.74%	16.64%	0.43%	4.81%

Royal Dutch Shell has been a poor relative performer, year-to-date.

Conclusion

Royal Dutch Shell is focused on oil and gas exploration and distribution, with operations all around the world. The company recently reported earnings that are not sitting well with investors. The stock is now trading near lows for the year, and it may need some time to recover. Over the last four quarters, earnings have been mixed, while revenue figures have been declining. Relative to its peers and sector, Royal Dutch Shell has been a poor year-to-date performer. WAIT AND SEE what Royal Dutch Shell does this coming quarter.

Hong Kong Bourse Says Second-Quarter Profit Up 10 Percent

Hong Kong Exchanges & Clearing Ltd. (388), the world's second-biggest bourse operator by market value, said profit climbed 10 percent last quarter as trading volumes rose.

Net income increased to HK$1.17 billion ($151 million) in the three months through June 30 from HK$1.07 billion in the same period a year earlier, according to a statement today. The profit compares with the HK$1.15 billion average estimate of seven analysts surveyed by Bloomberg.

Led by Chief Executive Officer Charles Li, the bourse acquired the London Metal Exchange, the largest platform for trading industrial-metals futures, for $2.2 billion in December to expand into commodities. The benchmark Hang Seng Index fell 0.5 percent this year through Aug. 13, the only decline among developed markets tracked by Bloomberg, as economic expansion in China slowed and amid speculation the U.S. Federal Reserve will pare stimulus as global growth shows signs of improving.

"With the gradual recovery of the global economy, trading activities at HKEx in the first half of 2013 were better than those in the corresponding period last year," Chow Chung Kong, Hong Kong Exchanges chairman, said in the statement. "Looking forward, the global financial market remains challenging, in particular with the anticipated unwinding of the liquidity easing policy in the U.S."

Shares Drop

Hong Kong Exchanges shares dropped 4.3 percent in 2013 through Aug. 13, with trading scrapped yesterday as a typhoon hit the city. The Bloomberg World Exchanges Index rose 17 percent this year through yesterday. The bourse operator's stock fell 0.4 percent at the midday break to HK$125.80 ahead of the earnings announcement.

The U.S. central bank, led by Chairman Ben S. Bernanke, will probably reduce its $85 billion in monthly bond purchases at its meeting on Sept. 17-18, according to 65 percent of economists surveyed by Bloomberg from Aug. 9 to Aug. 13. The Fed has said any reduction in stimulus would be tied to sustained economic recovery.

The Hong Kong bourse's equity rating was upgraded to overweight from neutral this week at JPMorgan Chase & Co. on expectations of increased trading volume in coming months, while the June 2014 price target was cut to HK$135 from HK$155.

"We expect volumes to improve by 10 percent in the next three months, before subsiding in December," JPMorgan analysts Harsh Wardhan Modi in Singapore and Josh Klaczek in Hong Kong wrote in a note dated Aug. 12. "This pick-up in volumes should lead to the stock price moving up in tandem."

Revenue Increases

Revenue increased 17 percent in the second quarter to HK$2.2 billion, Hong Kong Exchanges said. Operating expenses climbed 37 percent to HK$672 million.

The average daily volume of LME metals contracts traded rose 13 percent, compared with a 5 percent gain in the first three months of the year. The LME contributed about 11 percent of Hong Kong Exchanges' HK$2.33 billion profit in the first half of the year, according to the statement.

The commodities exchange is considering three candidates to replace Chief Executive Officer Martin Abbott, who plans to leave at year-end, two people familiar with the process said this month. LME is also fending off an antitrust lawsuit in the U.S. on allegations the company conspired with banks to drive up costs to restrain aluminum supplies.

'In Line'

"As far as the operations of Hong Kong Exchanges go, it's pretty much in line with what I expected," Matthew Smith, an analyst at Macquarie Capital Securities Singapore Pte, said after the earnings were announced. "It will be interesting to see what they say, if anything, about the LME-related law suits in the U.S."

Hong Kong Exchanges executives will speak to media and analysts later today.

"LME management's initial assessment is that the suits are without merit and LME will contest them vigorously," the bourse said in today's statement.

The daily average value of shares traded in Hong Kong rose 20 percent to HK$68.3 billion in the first half from the same period last year, according to the statement. That compares with a 130 percent surge on Japan's Topix Index and a 32 percent jump in Singapore, according to data compiled by Bloomberg. Average daily turnover in Australia rose 16 percent.

Funds raised through initial public offerings in Hong Kong jumped 29 percent in the first six months of the year to HK$39.7 billion, while futures and options turnover reached a record on June 25, Hong Kong Exchanges said. The exchange operator this month introduced contracts linked to the CES China 120 Index, which tracks the most liquid shares listed in both Hong Kong and the mainland.

Broker Bonus Plan: Death by Delay?

The Financial Industry Regulatory Authority’s decision to postpone considering an updated rule to require that brokers’ recruitment compensation be disclosed when they switch firms has one industry attorney speculating the rule may be on the chopping block.

FINRA CEO Richard Ketchum said in late May that FINRA’s broker bonus disclosure plan would be brought up at the self-regulator’s July 11 board meeting. However, a FINRA spokesperson said Wednesday that “due to scheduling considerations,” the rule had been pushed to a later date.

Securities lawyer Patrick Burns (right) says the delay is “questionable,” and that FINRA provided no clear explanation for tabling the broker bonus rule. He questions whether “the rule is going to get killed through delays.”

FINRA’s board did decide at its July 11 meeting, however, to allow FINRA to file with the SEC proposed amendments to FINRA Rule 8312, which would require that nonregistered firms and reps be included in its BrokerCheck database as well as approved a rule to require that debt analysts disclose the conflict-of-interest information they reveal to equity investors. The rule must be ratified by the Securities and Exchange Commission before it takes effect.

FINRA’s broker bonus proposal states that “customers would benefit from being told the material conflicts arising from a registered person being paid recruiting incentives to change firms.” Under the plan, brokerage firms would have to inform customers about any special incentive package given to a recruit that totals more than $50,000.

In early March, Burns told AdvisorOne that with SIFMA’s support, “a rule in this area seems to be a foregone conclusion,” with “the only thing to be worked out is the details of the rule.” Even three of the top wirehouses—Merrill Lynch, Morgan Stanley and UBS—gave their OK to FINRA’s plan.

However, FINRA may have postponed the rule in order to iron out any potential kinks.

The SEC also approved in late June amendments to FINRA Rule 8313, which allows the self-regulator to air more information about brokers who are the subjects of disciplinary actions and complaints.

FINRA can now release on its Disciplinary Actions online database a copy of any disciplinary complaint or decision it issues, bringing it in line with the practices of other federal regulators.

As the SEC’s approving order states, allowing FINRA to publicly post its disciplinary complaints and decisions “would better align FINRA’s publication standards with the practices of the SEC and other regulators. The SEC publishes on its website copies of enforcement actions, including administrative proceedings and complaints filed in federal court, regardless of the type or nature of sanctions imposed. FINRA believes that to avoid confusion, the availability of disciplinary information generally should not differ among regulators.”

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