e-Coops

This is such a great topic. It reminds me of the joke we used to tell as kids, “How can you immediately double your money? Fold it in half and put it back in your pocket!” So how can you make a lot of money as a franchisee? At the risk of sounding trite, the easiest way is to start by selecting a franchise opportunity that is capable of making a lot of money.

Actually, there are a number of things you can do to increase your chances of making good money as a franchisee. Though picking the right opportunity where others are making a lot of money is a good start, it is no guarantee you will do the same. The keys to making as much money as possible include:

1. Starting with the right definition. This goal begs the question, “What is a lot of money?” Many people think of this answer first in absolute terms such as making a fixed amount like $100,000 per year. I think it is wiser to define “a lot of money” in terms of return on investment. If you can invest $5,000 and get a return of $25,000 per year, I’d contend you’re making a lot of money on that investment by any reasonable standard of measure.

2. Starting with the right opportunity. It’s essential to select an opportunity that matches up well with you, in which you are willing and capable of performing the primary role of the franchisee.

As just one example, I know of a franchise that cleans public restrooms. This can be an intensely profitable business with a great return on investment, but many people simply wouldn’t want to be involved in such a business. Their reluctance would probably mean they wouldn’t make a lot of money, because they couldn’t project the excitement and enthusiasm necessary to sell a prospective customer on the value of a sparkling urinal.

3. Keeping the investment size reasonable. A host of franchises can produce a great return on investment. Make sure you focus on ones where the per-unit investment is reasonable given your net worth and the liquid capital you have available to invest. Remember what your mom told you about not putting all your eggs in one basket.

4. Reinvesting to achieve your absolute goal. If you find an opportunity that fits well for you and has a great return on investment, and you’ve got your first unit up and making a lot of money, you can reach your absolute number goal by acquiring additional units. This can either be done through further out-of-pocket investment or through the reinvestment of the profits you’re making into growing the business.

I have a good friend who owns more than 40 haircutting franchises. The return on investment in each unit is great, but the absolute dollars in any one unit don’t meet his overall total income goal. He found that by adding additional units over time through the reinvestment of profits, he could realize a total income far in excess of what his absolute goals were when he started the business. In the example mentioned in the first point, if you want to make $100,000 per year, make four of the $5,000 investments and you’re there.

5. Following the system. The biggest reason to get a franchise, as opposed to starting an independent business, is to acquire the rights to use a proven system to achieve predictable results. A good franchise company has developed its systems through extensive trial and error and should be able to tell a new franchisee exactly what to do to make a lot of money. All you should have to do is execute the system well to achieve the success you want. If you want to make a lot of money, don’t be an innovator–just pick a great system and execute it well, and you’ll get your wish.

6. Capitalizing your business properly. This is a corollary point to the one about making sure the size of the investment for each unit is reasonable for you. There are many ways to capitalize your new business, including using all cash or using some portion of your cash combined with loans or leases to come up with the total investment. Most franchisees use a combination approach. When you’re evaluating how to capitalize your business, keep in mind that the service costs of loans or leases will reduce the amount of money you’ll have for other purposes. Too much leverage can be very dangerous and get in the way of making a lot of money.

7. Working with a good accountant. One of the hard lessons of life is that there can be a big difference between the money you make and the money you have. The difference is taxes, and they take many forms. One of the most important steps to making money that stays in your pocket is to use a good accountant to help you structure your business entity and ongoing activities in a manner that reduces the tax bite whenever possible.

The entity selection can help you avoid double taxation of earnings- and/or business-specific taxes like B & O tariffs. In terms of your business activities, some techniques can be as simple as the timing of investments and major purchases or the type of capital structure you use. It’s typically well worth paying some accounting fees to ensure you’re minimizing the tax bite if your goal is to make a lot of money in your franchise.

Finally, keep in mind that in any successful franchise system, many people have traveled the path before you. Whether they are other franchisees or the franchisor, take advantage of their experience by asking for advice whenever you have doubts or your results aren’t what you expected, especially when you’re first starting out. They’ll be happy to help you, and you can return the favor to other new franchisees in the future.

This entry was posted on Friday, June 1st, 2007 at 8:08 pm and is filed under Finance. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

Change in Ratings

Benchmark Electronics (BHE) downgraded by Bear Stearns. Rating lowered to Peer Perform from Outperform. 2007 EPS estimates lowered to $1.73 from $1.81. Introduces 2008 EPS estimates of $1.86. Price target was removed.

Morgan Stanley upgrades Broadcom (BRCM) from equalweight to overweight with a $40 price target.

Ceradyne (CRDN) was upgraded from Underperform to Market Perform, Friedman Billings Ramsey said. Stock has come down 13% over the past month, and the 2008 defense budget should favor the company. $50 price target.

Cisco (CSCO) was upgraded from Neutral to Outperform, Robert Baird said. $32 price target. Growth rates are accelerating, and the current margins appear sustainable.

CSCO numbers raised at UBS. Price target upped to $33 from $32. 2007 EPS estimates bump up to $1.21 from $1.17. Reiterates Buy rating.

CommScope (CTV) initiated with Buy rating at Jefferies. Price target starts at $37.50. 2007 EPS estimates set at $1.95.

Goldman said it is upgrading Earthlink (ELNK) to Neutral from Sell based on valuation. Believe floor has emerged due to buybacks near $7, and potential for restructuring event such as LBO. Price target raised to $7 from $6.60.

Globalstar (GSAT) downgraded to Hold rating from Buy at Jefferies. Price target drops to $11.50 from $17.00. Revenue and EPS estimates for 2007 holds at $175.2 million and $0.39, respectively.

Illumina (ILMN) was upgraded from Hold to Buy, Deutsche Bank said. $45 price target. Stock has already pulled back enough to represent the post-earnings disappointment. Company has market leading technology, bolstered by the Solexa purchase.

St. Joe (JOE) was downgraded to Underperform, Wachovia said. Customer traffic continues to soften. Estimates also cut.

JOE was downgraded from Buy to Hold, BB&T Capital said. Company reported a strong quarter but should continue to trade at a discount to its NAV.

Marriott International (MAR) upgraded to Buy rating from Hold, AG Edwards said. Price target set at $56 with 2007 EPS estimates at $1.96.

Goldman said it is upgrading Pharmaceutical Product Dev. (PPDI) to Buy from Neutral based on strong trends in new business and likely continued strength in clinical market. Price target at $44.

Tractor Supply (TSCO) was upgraded from Neutral to Outperform, Robert Baird said. $55 price target. 2007 numbers are now low enough that they’re beatable. Stock has also been a laggard over the past year, though the upcoming investor meeting should help rebuild investor confidence.

Deutsche Bank downgrades Tyco International (TYC) to hold on valuation, price target remains $33. Stock Comments/EPS Changes

Target on Emerson Electric (EMR) raised to $50 from $49, Goldman said. Company delivered first-quarter results inline with expectations, showing continued strength in late-cycle and international markets. Maintained Neutral rating.

Goldman said it is increasing its 2007 estimates on IAC/InterActiveCorp (IACI) by 8 cents to $1.83 based on solid fourth-quarter results announced yesterday. See lower tax rate and greater share buybacks in 2007 and 2008. Price target raised to $38 from $36 and maintained Neutral rating.

Credit Suisse said it is raising its target price on Lincoln Financial (LNC) to $71 from $64 following better than expected Q4 results. Maintained Neutral rating.

Goldman said it is cutting its 2007 estimates on Las Vegas Sands (LVS) to $1.70 from $1.90 based on later openings for Venetian Macau and Palazzo Las Vegas. Maintained Buy rating and $106 price target.

MGM Mirage (MGM) numbers raised at Jefferies. Price target jumps to $88 from $71 and 2007 EPS estimates raised to $2.73. Reiterates Buy rating.

Myriad Genetics (MYGN) numbers raised at UBS. Price target lifts to $44 from $38. 2007 EPS estimates raised to loss of ($1.26) from loss of ($1.36). Reiterates Buy rating.

Target on National Oilwell Varco (NOV) upped to $81 from $74 following positive fourth-quarter earnings surprise. Goldman believes too much focus being put on new orders and not enough focus on earnings potential of orders already in backlog. Maintained Buy rating.

Credit Suisse said it is lowering its 2007 EPS estimates on TransCanada (TRP) to $2.03 from $2.13 following larger-than-expected equity issue that is being used to fund acquisition. Maintained $45 target price.

This entry was posted on Friday, February 16th, 2007 at 11:32 am and is filed under . You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

In recent years, the weak dollar has helped boost the appeal of foreign stocks and bond funds, as the returns generated by these securities look even better when converted into dollars and cents. But there’s also growing interest in a relatively new investment category: funds that invest directly in foreign currencies.

Currency funds can provide investors with exposure to international markets without the risk of the individual companies that issue stocks and bonds — which could be particularly appealing now that foreign stock and bond funds have had such a strong run. They also can be used to hedge specific holdings that are particularly exposed to currency shifts.

The first few offerings in this category were open-end mutual funds, but over the past year or so, a number of exchange-traded funds that track currencies have been launched, providing some low-cost options for investors who are active traders.

While there are reasons to believe the dollar will remain weak, given America’s imbalance of trade with the rest of the world and the relatively stable outlook for interest rates here, exchange rates can be volatile.

PowerShares, a unit of Amvescap (AVZ) , is getting ready to roll out two ETFs based on the Deutsche Bank U.S. Dollar Index Future Excess Return Index. The PowerShares Deutsche Bank U.S. Dollar Index Bullish Fund, which will list on the American Stock Exchange under the symbol UUP, will track the value of the dollar in relation to a basket of six major currencies — the euro, the yen, the British pound, the Canadian dollar, the Swedish krona and the Swiss franc — while the PowerShares Deutsche Bank U.S. Dollar Index Bearish Fund, which will trade under the ticker UDN, will be negatively correlated with the index.

Both the bullish and the bearish dollar funds will use futures contracts (or short positions in futures contracts) linked to the six currencies. They will also hold U.S. Treasuries and other high credit-quality, short-term fixed-income instruments. According to a prospectus filed with the Securities and Exchange Commission, these bond holdings are expected to generate interest income of about 5.08% per year.

The total expense ratio for both funds will be 0.55%, or 55 cents for every $100 invested.

PowerShares already runs an ETF, the DB G10 Currency Harvest Fund (DBV) , that tracks a basket of nine currencies, the euro, yen, Swiss franc, British pound, Norwegian krone, Swedish krona and the Canadian, Australian and New Zealand dollars. The underlying index is designed to exploit the trend that currencies associated with relatively high interest rates, on average, tend to rise in value relative to currencies associated with relatively low interest rates. Launched in September, the fund has pulled in $195 million of assets to date.

Rydex has been rolling out a number of ETFs, called CurrencyShares, designed to track movements in single currencies. The first, and most successful is the CurrencyShares Euro Trust (FXE) , which launched in December 2005 and has about $940 million in assets.

The other six, which launched in June, include the CurrencyShares British Pound Sterling Trust (FXB) , CurrencyShares Canadian Dollar Trust (FXC) , CurrencyShares Australian Dollar Trust (FXA) , CurrencyShares Swiss Franc (FXF) , CurrencyShares Swedish Krona (FXS) and CurrencyShares Mexican Peso Trust (FXM) .

Rydex also has a CurrencyShares ETF in registration that will track the yen. It is expected to launch Feb. 13.

Steve Sachs, director of trading at Rydex, says currency ETFs offer investors another way to add international exposure with a single security, as opposed to picking a portfolio of foreign stocks or bonds.

And because CurrencyShares provide a basic level of yield, based on a country’s overnight interest rate, they can sometimes outperform hard assets denominated in foreign currencies, he says.

Also, because exchange-traded funds, which are baskets of securities that trade throughout the day on an exchange, can be sold short, they also are good for hedging. Open-end funds can’t be sold short.

“As far as the ETF business goes, I believe there are still a couple of areas of innovation and growth. Currency is one, commodities is the other,” says Sachs.

Both Rydex and ProFunds have open-end funds that follow a riskier strategy of using leverage to amplify the rise or fall of the dollar. The Rydex Dynamic Strengthening Dollar (RYSBX) and the ProFunds Rising U.S. Dollar (RDPIX) track 200% of the performance of the U.S. Dollar Index, while the Rydex Dynamic Weakening Dollar Fund (RYWBX) and the ProFunds Falling U.S. Dollar (FDPIX) track 200% of the inverse performance of the index.

These funds have relatively high investment minimums — $25,000 for the Rydex funds and $15,000 for the ProFunds funds — and are probably more appropriate for professional investors.

The oldest currency fund is the Franklin Templeton Hard Currency (ICHHX), an open-end fund that was launched in 1989 and has $384 million in assets. It invests primarily in high-quality, short-term money market instruments and forward currency contracts denominated in currencies of foreign countries and markets that historically have experienced low inflation rates.

Another open-end offering, the $54 million Merk Hard Currency Fund (MERKX), invests in hard currencies from countries with strong monetary policies in order to protect against the depreciation of the U.S. dollar relative to other currencies.

This entry was posted on Friday, February 16th, 2007 at 1:53 am and is filed under . You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

Susan Bies, a member of the Federal Reserve’s Board of Governors, plans to resign from her post effective March 30.

Bies, 59, has been a member of the board since Dec. 7, 2001. She is a voting member of the Federal Open Market Committee, the policymaking arm of the Fed that’s responsible for setting the target fed funds rate.

The Fed said Bies doesn’t plan to attend the March 20-21 meeting of the FOMC.

“Sue’s invaluable contributions to both monetary and regulatory policy at the Federal Reserve have been aided by her unique perspective as both an economist and a banker,” said Fed Chairman Ben Bernanke in a statement Friday. “Her leadership at the board was most evident in guiding our efforts in banking policy and community affairs. I will miss her counsel and wish her all the best in her new endeavors.”

Her term was set to expire Jan. 31, 2012. Before joining the Fed’s Board of Governors, Bies served in various positions at First Tennessee National and was a member of the Emerging Issues Task Force of the Financial Accounting Standards Board.

Earlier in her career, she taught economics at Rhodes College and at Wayne State University and served as an economist at the Federal Reserve Bank of St. Louis.

This entry was posted on Friday, February 9th, 2007 at 5:24 pm and is filed under . You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

Susan Bies, a member of the Federal Reserve’s Board of Governors, plans to resign from her post effective March 30.

Bies, 59, has been a member of the board since Dec. 7, 2001. She is a voting member of the Federal Open Market Committee, the policymaking arm of the Fed that’s responsible for setting the target fed funds rate.

The Fed said Bies doesn’t plan to attend the March 20-21 meeting of the FOMC.

“Sue’s invaluable contributions to both monetary and regulatory policy at the Federal Reserve have been aided by her unique perspective as both an economist and a banker,” said Fed Chairman Ben Bernanke in a statement Friday. “Her leadership at the board was most evident in guiding our efforts in banking policy and community affairs. I will miss her counsel and wish her all the best in her new endeavors.”

Her term was set to expire Jan. 31, 2012. Before joining the Fed’s Board of Governors, Bies served in various positions at First Tennessee National and was a member of the Emerging Issues Task Force of the Financial Accounting Standards Board.

Earlier in her career, she taught economics at Rhodes College and at Wayne State University and served as an economist at the Federal Reserve Bank of St. Louis.

This entry was posted on Friday, February 9th, 2007 at 5:24 pm and is filed under . You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

This is such a great topic. It reminds me of the joke we used to tell as kids, “How can you immediately double your money? Fold it in half and put it back in your pocket!” So how can you make a lot of money as a franchisee? At the risk of sounding trite, the easiest way is to start by selecting a franchise opportunity that is capable of making a lot of money.

Actually, there are a number of things you can do to increase your chances of making good money as a franchisee. Though picking the right opportunity where others are making a lot of money is a good start, it is no guarantee you will do the same. The keys to making as much money as possible include:

1. Starting with the right definition. This goal begs the question, “What is a lot of money?” Many people think of this answer first in absolute terms such as making a fixed amount like $100,000 per year. I think it is wiser to define “a lot of money” in terms of return on investment. If you can invest $5,000 and get a return of $25,000 per year, I’d contend you’re making a lot of money on that investment by any reasonable standard of measure.

2. Starting with the right opportunity. It’s essential to select an opportunity that matches up well with you, in which you are willing and capable of performing the primary role of the franchisee.

As just one example, I know of a franchise that cleans public restrooms. This can be an intensely profitable business with a great return on investment, but many people simply wouldn’t want to be involved in such a business. Their reluctance would probably mean they wouldn’t make a lot of money, because they couldn’t project the excitement and enthusiasm necessary to sell a prospective customer on the value of a sparkling urinal.

3. Keeping the investment size reasonable. A host of franchises can produce a great return on investment. Make sure you focus on ones where the per-unit investment is reasonable given your net worth and the liquid capital you have available to invest. Remember what your mom told you about not putting all your eggs in one basket.

4. Reinvesting to achieve your absolute goal. If you find an opportunity that fits well for you and has a great return on investment, and you’ve got your first unit up and making a lot of money, you can reach your absolute number goal by acquiring additional units. This can either be done through further out-of-pocket investment or through the reinvestment of the profits you’re making into growing the business.

I have a good friend who owns more than 40 haircutting franchises. The return on investment in each unit is great, but the absolute dollars in any one unit don’t meet his overall total income goal. He found that by adding additional units over time through the reinvestment of profits, he could realize a total income far in excess of what his absolute goals were when he started the business. In the example mentioned in the first point, if you want to make $100,000 per year, make four of the $5,000 investments and you’re there.

5. Following the system. The biggest reason to get a franchise, as opposed to starting an independent business, is to acquire the rights to use a proven system to achieve predictable results. A good franchise company has developed its systems through extensive trial and error and should be able to tell a new franchisee exactly what to do to make a lot of money. All you should have to do is execute the system well to achieve the success you want. If you want to make a lot of money, don’t be an innovator–just pick a great system and execute it well, and you’ll get your wish.

6. Capitalizing your business properly. This is a corollary point to the one about making sure the size of the investment for each unit is reasonable for you. There are many ways to capitalize your new business, including using all cash or using some portion of your cash combined with loans or leases to come up with the total investment. Most franchisees use a combination approach. When you’re evaluating how to capitalize your business, keep in mind that the service costs of loans or leases will reduce the amount of money you’ll have for other purposes. Too much leverage can be very dangerous and get in the way of making a lot of money.

7. Working with a good accountant. One of the hard lessons of life is that there can be a big difference between the money you make and the money you have. The difference is taxes, and they take many forms. One of the most important steps to making money that stays in your pocket is to use a good accountant to help you structure your business entity and ongoing activities in a manner that reduces the tax bite whenever possible.

The entity selection can help you avoid double taxation of earnings- and/or business-specific taxes like B & O tariffs. In terms of your business activities, some techniques can be as simple as the timing of investments and major purchases or the type of capital structure you use. It’s typically well worth paying some accounting fees to ensure you’re minimizing the tax bite if your goal is to make a lot of money in your franchise.

Finally, keep in mind that in any successful franchise system, many people have traveled the path before you. Whether they are other franchisees or the franchisor, take advantage of their experience by asking for advice whenever you have doubts or your results aren’t what you expected, especially when you’re first starting out. They’ll be happy to help you, and you can return the favor to other new franchisees in the future.

This entry was posted on Friday, February 9th, 2007 at 2:02 am and is filed under . You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

Change in Ratings

Benchmark Electronics (BHE) downgraded by Bear Stearns. Rating lowered to Peer Perform from Outperform. 2007 EPS estimates lowered to $1.73 from $1.81. Introduces 2008 EPS estimates of $1.86. Price target was removed.

Morgan Stanley upgrades Broadcom (BRCM) from equalweight to overweight with a $40 price target.

Ceradyne (CRDN) was upgraded from Underperform to Market Perform, Friedman Billings Ramsey said. Stock has come down 13% over the past month, and the 2008 defense budget should favor the company. $50 price target.

Cisco (CSCO) was upgraded from Neutral to Outperform, Robert Baird said. $32 price target. Growth rates are accelerating, and the current margins appear sustainable.

CSCO numbers raised at UBS. Price target upped to $33 from $32. 2007 EPS estimates bump up to $1.21 from $1.17. Reiterates Buy rating.

CommScope (CTV) initiated with Buy rating at Jefferies. Price target starts at $37.50. 2007 EPS estimates set at $1.95.

Goldman said it is upgrading Earthlink (ELNK) to Neutral from Sell based on valuation. Believe floor has emerged due to buybacks near $7, and potential for restructuring event such as LBO. Price target raised to $7 from $6.60.

Globalstar (GSAT) downgraded to Hold rating from Buy at Jefferies. Price target drops to $11.50 from $17.00. Revenue and EPS estimates for 2007 holds at $175.2 million and $0.39, respectively.

Illumina (ILMN) was upgraded from Hold to Buy, Deutsche Bank said. $45 price target. Stock has already pulled back enough to represent the post-earnings disappointment. Company has market leading technology, bolstered by the Solexa purchase.

St. Joe (JOE) was downgraded to Underperform, Wachovia said. Customer traffic continues to soften. Estimates also cut.

JOE was downgraded from Buy to Hold, BB&T Capital said. Company reported a strong quarter but should continue to trade at a discount to its NAV.

Marriott International (MAR) upgraded to Buy rating from Hold, AG Edwards said. Price target set at $56 with 2007 EPS estimates at $1.96.

Goldman said it is upgrading Pharmaceutical Product Dev. (PPDI) to Buy from Neutral based on strong trends in new business and likely continued strength in clinical market. Price target at $44.

Tractor Supply (TSCO) was upgraded from Neutral to Outperform, Robert Baird said. $55 price target. 2007 numbers are now low enough that they’re beatable. Stock has also been a laggard over the past year, though the upcoming investor meeting should help rebuild investor confidence.

Deutsche Bank downgrades Tyco International (TYC) to hold on valuation, price target remains $33. Stock Comments/EPS Changes

Target on Emerson Electric (EMR) raised to $50 from $49, Goldman said. Company delivered first-quarter results inline with expectations, showing continued strength in late-cycle and international markets. Maintained Neutral rating.

Goldman said it is increasing its 2007 estimates on IAC/InterActiveCorp (IACI) by 8 cents to $1.83 based on solid fourth-quarter results announced yesterday. See lower tax rate and greater share buybacks in 2007 and 2008. Price target raised to $38 from $36 and maintained Neutral rating.

Credit Suisse said it is raising its target price on Lincoln Financial (LNC) to $71 from $64 following better than expected Q4 results. Maintained Neutral rating.

Goldman said it is cutting its 2007 estimates on Las Vegas Sands (LVS) to $1.70 from $1.90 based on later openings for Venetian Macau and Palazzo Las Vegas. Maintained Buy rating and $106 price target.

MGM Mirage (MGM) numbers raised at Jefferies. Price target jumps to $88 from $71 and 2007 EPS estimates raised to $2.73. Reiterates Buy rating.

Myriad Genetics (MYGN) numbers raised at UBS. Price target lifts to $44 from $38. 2007 EPS estimates raised to loss of ($1.26) from loss of ($1.36). Reiterates Buy rating.

Target on National Oilwell Varco (NOV) upped to $81 from $74 following positive fourth-quarter earnings surprise. Goldman believes too much focus being put on new orders and not enough focus on earnings potential of orders already in backlog. Maintained Buy rating.

Credit Suisse said it is lowering its 2007 EPS estimates on TransCanada (TRP) to $2.03 from $2.13 following larger-than-expected equity issue that is being used to fund acquisition. Maintained $45 target price.

This entry was posted on Thursday, February 8th, 2007 at 7:02 am and is filed under . You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

Change in Ratings

Benchmark Electronics (BHE) downgraded by Bear Stearns. Rating lowered to Peer Perform from Outperform. 2007 EPS estimates lowered to $1.73 from $1.81. Introduces 2008 EPS estimates of $1.86. Price target was removed.

Morgan Stanley upgrades Broadcom (BRCM) from equalweight to overweight with a $40 price target.

Ceradyne (CRDN) was upgraded from Underperform to Market Perform, Friedman Billings Ramsey said. Stock has come down 13% over the past month, and the 2008 defense budget should favor the company. $50 price target.

Cisco (CSCO) was upgraded from Neutral to Outperform, Robert Baird said. $32 price target. Growth rates are accelerating, and the current margins appear sustainable.

CSCO numbers raised at UBS. Price target upped to $33 from $32. 2007 EPS estimates bump up to $1.21 from $1.17. Reiterates Buy rating.

CommScope (CTV) initiated with Buy rating at Jefferies. Price target starts at $37.50. 2007 EPS estimates set at $1.95.

Goldman said it is upgrading Earthlink (ELNK) to Neutral from Sell based on valuation. Believe floor has emerged due to buybacks near $7, and potential for restructuring event such as LBO. Price target raised to $7 from $6.60.

Globalstar (GSAT) downgraded to Hold rating from Buy at Jefferies. Price target drops to $11.50 from $17.00. Revenue and EPS estimates for 2007 holds at $175.2 million and $0.39, respectively.

Illumina (ILMN) was upgraded from Hold to Buy, Deutsche Bank said. $45 price target. Stock has already pulled back enough to represent the post-earnings disappointment. Company has market leading technology, bolstered by the Solexa purchase.

St. Joe (JOE) was downgraded to Underperform, Wachovia said. Customer traffic continues to soften. Estimates also cut.

JOE was downgraded from Buy to Hold, BB&T Capital said. Company reported a strong quarter but should continue to trade at a discount to its NAV.

Marriott International (MAR) upgraded to Buy rating from Hold, AG Edwards said. Price target set at $56 with 2007 EPS estimates at $1.96.

Goldman said it is upgrading Pharmaceutical Product Dev. (PPDI) to Buy from Neutral based on strong trends in new business and likely continued strength in clinical market. Price target at $44.

Tractor Supply (TSCO) was upgraded from Neutral to Outperform, Robert Baird said. $55 price target. 2007 numbers are now low enough that they’re beatable. Stock has also been a laggard over the past year, though the upcoming investor meeting should help rebuild investor confidence.

Deutsche Bank downgrades Tyco International (TYC) to hold on valuation, price target remains $33. Stock Comments/EPS Changes

Target on Emerson Electric (EMR) raised to $50 from $49, Goldman said. Company delivered first-quarter results inline with expectations, showing continued strength in late-cycle and international markets. Maintained Neutral rating.

Goldman said it is increasing its 2007 estimates on IAC/InterActiveCorp (IACI) by 8 cents to $1.83 based on solid fourth-quarter results announced yesterday. See lower tax rate and greater share buybacks in 2007 and 2008. Price target raised to $38 from $36 and maintained Neutral rating.

Credit Suisse said it is raising its target price on Lincoln Financial (LNC) to $71 from $64 following better than expected Q4 results. Maintained Neutral rating.

Goldman said it is cutting its 2007 estimates on Las Vegas Sands (LVS) to $1.70 from $1.90 based on later openings for Venetian Macau and Palazzo Las Vegas. Maintained Buy rating and $106 price target.

MGM Mirage (MGM) numbers raised at Jefferies. Price target jumps to $88 from $71 and 2007 EPS estimates raised to $2.73. Reiterates Buy rating.

Myriad Genetics (MYGN) numbers raised at UBS. Price target lifts to $44 from $38. 2007 EPS estimates raised to loss of ($1.26) from loss of ($1.36). Reiterates Buy rating.

Target on National Oilwell Varco (NOV) upped to $81 from $74 following positive fourth-quarter earnings surprise. Goldman believes too much focus being put on new orders and not enough focus on earnings potential of orders already in backlog. Maintained Buy rating.

Credit Suisse said it is lowering its 2007 EPS estimates on TransCanada (TRP) to $2.03 from $2.13 following larger-than-expected equity issue that is being used to fund acquisition. Maintained $45 target price.

This entry was posted on Thursday, February 8th, 2007 at 3:52 am and is filed under . You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

In recent years, the weak dollar has helped boost the appeal of foreign stocks and bond funds, as the returns generated by these securities look even better when converted into dollars and cents. But there’s also growing interest in a relatively new investment category: funds that invest directly in foreign currencies.

Currency funds can provide investors with exposure to international markets without the risk of the individual companies that issue stocks and bonds — which could be particularly appealing now that foreign stock and bond funds have had such a strong run. They also can be used to hedge specific holdings that are particularly exposed to currency shifts.

The first few offerings in this category were open-end mutual funds, but over the past year or so, a number of exchange-traded funds that track currencies have been launched, providing some low-cost options for investors who are active traders.

While there are reasons to believe the dollar will remain weak, given America’s imbalance of trade with the rest of the world and the relatively stable outlook for interest rates here, exchange rates can be volatile.

PowerShares, a unit of Amvescap (AVZ) , is getting ready to roll out two ETFs based on the Deutsche Bank U.S. Dollar Index Future Excess Return Index. The PowerShares Deutsche Bank U.S. Dollar Index Bullish Fund, which will list on the American Stock Exchange under the symbol UUP, will track the value of the dollar in relation to a basket of six major currencies — the euro, the yen, the British pound, the Canadian dollar, the Swedish krona and the Swiss franc — while the PowerShares Deutsche Bank U.S. Dollar Index Bearish Fund, which will trade under the ticker UDN, will be negatively correlated with the index.

Both the bullish and the bearish dollar funds will use futures contracts (or short positions in futures contracts) linked to the six currencies. They will also hold U.S. Treasuries and other high credit-quality, short-term fixed-income instruments. According to a prospectus filed with the Securities and Exchange Commission, these bond holdings are expected to generate interest income of about 5.08% per year.

The total expense ratio for both funds will be 0.55%, or 55 cents for every $100 invested.

PowerShares already runs an ETF, the DB G10 Currency Harvest Fund (DBV) , that tracks a basket of nine currencies, the euro, yen, Swiss franc, British pound, Norwegian krone, Swedish krona and the Canadian, Australian and New Zealand dollars. The underlying index is designed to exploit the trend that currencies associated with relatively high interest rates, on average, tend to rise in value relative to currencies associated with relatively low interest rates. Launched in September, the fund has pulled in $195 million of assets to date.

Rydex has been rolling out a number of ETFs, called CurrencyShares, designed to track movements in single currencies. The first, and most successful is the CurrencyShares Euro Trust (FXE) , which launched in December 2005 and has about $940 million in assets.

The other six, which launched in June, include the CurrencyShares British Pound Sterling Trust (FXB) , CurrencyShares Canadian Dollar Trust (FXC) , CurrencyShares Australian Dollar Trust (FXA) , CurrencyShares Swiss Franc (FXF) , CurrencyShares Swedish Krona (FXS) and CurrencyShares Mexican Peso Trust (FXM) .

Rydex also has a CurrencyShares ETF in registration that will track the yen. It is expected to launch Feb. 13.

Steve Sachs, director of trading at Rydex, says currency ETFs offer investors another way to add international exposure with a single security, as opposed to picking a portfolio of foreign stocks or bonds.

And because CurrencyShares provide a basic level of yield, based on a country’s overnight interest rate, they can sometimes outperform hard assets denominated in foreign currencies, he says.

Also, because exchange-traded funds, which are baskets of securities that trade throughout the day on an exchange, can be sold short, they also are good for hedging. Open-end funds can’t be sold short.

“As far as the ETF business goes, I believe there are still a couple of areas of innovation and growth. Currency is one, commodities is the other,” says Sachs.

Both Rydex and ProFunds have open-end funds that follow a riskier strategy of using leverage to amplify the rise or fall of the dollar. The Rydex Dynamic Strengthening Dollar (RYSBX) and the ProFunds Rising U.S. Dollar (RDPIX) track 200% of the performance of the U.S. Dollar Index, while the Rydex Dynamic Weakening Dollar Fund (RYWBX) and the ProFunds Falling U.S. Dollar (FDPIX) track 200% of the inverse performance of the index.

These funds have relatively high investment minimums — $25,000 for the Rydex funds and $15,000 for the ProFunds funds — and are probably more appropriate for professional investors.

The oldest currency fund is the Franklin Templeton Hard Currency (ICHHX), an open-end fund that was launched in 1989 and has $384 million in assets. It invests primarily in high-quality, short-term money market instruments and forward currency contracts denominated in currencies of foreign countries and markets that historically have experienced low inflation rates.

Another open-end offering, the $54 million Merk Hard Currency Fund (MERKX), invests in hard currencies from countries with strong monetary policies in order to protect against the depreciation of the U.S. dollar relative to other currencies.

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