6 'Cheap' Stocks to Consider Shorting Sometimes what appears to be cheap really isn't. Here are a few companies Morningstar uncovered that fall into this category. they include Air France-KLM, Earthlink, Felcor Lodging Trust, Hertz, James River Coal and MEMC Electronic Materials. Six "Cheap" Stocks to Consider Shorting - Morningstar Stock Strategist 7 Bad Borrowing Strategies Just because you can, doesn't mean you should. Here are seven of the worst things you can do today if you need to borrow money. They include home equity loans, wedding loans, car title loans, payday loans and co-signing for somebody else's loan. 7 brainless borrowing behaviors -Bankrate.com
During the month, Ford was able to sell a total of 155,172 light vehicles, which was 3.6% below July's figures of 160,990, which was the worst month for U.S. car sales in the past 16 years.
As expected, truck sales really took a beating last month for the company. With consumers dealing with record high gasoline prices, truck sales have been weak for some time now, and last month the company saw truck off by more than 32%. Its car sales fell by nearly 9%.
General Motors Corp. (NYSE: GM) will offer customers wanting to buy its cars the same discounts as employees for another four weeks, according to Bloomberg News.
The incentives, on most 2008 and some 2009 models, were to have expired today but, according to Bloomberg, "GM will continue the deals through the end of the month because the initial two-week offer boosted sales."
Of course, this is great news for consumers, particularly the few who are confident enough in their economic circumstances to be in the market for a new car. Maybe it will encourage people leaning toward a Honda (NYSE: HMC) or some other foreign automaker to give GM a second look or even a third one. Chances are, though, it won't do much to help. As my colleague Michael Rainey noted earlier, imports accounted for 68% of all passenger car sales in the U.S., a new low for the Big Three. These are the vehicles that consumers stung by high gas prices are most interested in purchasing. Good luck in trading in your gas-guzzling SUV for a fuel-efficient hybrid. Many dealers are reportedly no longer interested in the big vehicles because their trade-in value has plummeted.
Sales of vehicles from Detroit's Big Three have been weak and getting weaker lately. But the bad news is even worse when you look at just basic passenger cars. According to a piece in BusinessWeek (appropriately titled "Car Sick"), American products accounted for less than a third of all car sales in July, a new low for the industry.
In July, imports grabbed 68% of passenger car sales in the U.S., leaving General Motors (NYSE: GM), Ford (NYSE: F) and Chrysler with only 32%. And some of that meager number include fleet sales to rental agencies, which produce very slim profits. Factoring those out, BusinessWeek estimates that Detroit's share of the American passenger car market is about 25%.
One stunning illustration of just how bad things are: in July, GM's entire Buick division sold just 6,000 cars. Compare that to just one Toyota model, the Camry, which sold over 42,000 units in the same period. And there are roughly 2,700 Buick dealers, about twice the Toyota figure, which means that on average each Buick dealer sold 2.2 cars during the month. You have to wonder how they manage to stay open.
It's no secret how this situation came about. The Big Three bet their collective house on trucks and SUVs in the 1990s, not cars, and now they are paying the price of that unwise gamble. Despite the arrival of decent (though hardly stellar) cars like the Chevy Malibu and the Ford Focus, American passenger cars have a long way to go before they can once again sustain the American auto industry.
U.S. stock futures were higher Tuesday morning as oil dropped $8 a barrel following little damage to oil rigs in the Gulf of Mexico from Gustav. Tuesday marks the return of many from the holiday weekend and the beginning of the school year. While oil will undoubtedly be the focus today, construction spending and ISM Index numbers are also due.
Korea Development Bank is in talks to buy a stake in Lehman Brothers Holdings Inc. (NYSE: LEH), Bloomberg reports. LEH shares are climbing over 5.5% in pre-market trading after CEO of the Korean bank confirmed the discussions. According to the Sunday Telegraph, KDB could inject as much as $6 billion of additional capital into Lehman. No doubt, this is something Fuld has been hoping for following the massive writedowns Lehman took. But is it something Americans wants as more foreign government-backed firms buy into Wall Street companies.
Meanwhile, the internet is abuzz over Google Inc. (NASDAQ: GOOG)'s introduction Tuesday of its own internet browser, Chrome, as it further butts heads with Microsoft Corp (NASDAQ: MSFT). While Microsoft has its Internet Explorer, other browsers exist, including the popular Mozilla's Firefox. Google claims its browser is designed better to show web applications and provide higher protection. GOOG shares are climbing over 1.5% in pre-market trading on the news.
Meanwhile, Alcatel-Lucent (NYSE: ALU) revamped its top management on Tuesday and named a former BT boss Ben Verwaayen as its new chief executive and Lagardere executive Philippe Camus as its new chairman. ALU shares are down about 1.5% in pre-market trading.
In that latest sign that the company is desperate for cash, General Motors (NYSE: GM) is suing some of its employees and retirees, alleging that they improperly granted the company's family discount to non-relatives, costing the company $450,000 in sales.
Now hold up: last month GM announced that it was extending the employee/family discount to everyone, and it's simultaneously suing a handful of employees for extending the discounts to friends. Cognitive dissonance, anyone?
Given all of the problems the company has -- like billions in losses and a rapidly deteriorating balance sheet -- you'd think they'd have better things to do than chase down workers for a few thousand dollars in discounts. And then there's the fact that it's unclear whether GM really lost anything: would people have bought the cars without the discount?
It's puzzling -- and amusing -- that GM is going after employees who did exactly what the company is doing, but on a much smaller scale.
But in the world of farce and inadvertent parody, GM is the gift that keeps on giving.
Our government has been doing its share of bailouts in the last year. It put $29 billion of taxpayer money at risk to finance the takeover of Bear Stearns. It stands ready to use $800 billion to bailout Fannie Mae (NYSE: FNM) and Freddie Mac (NYSE: FRE). And now General Motors (NYSE: GM) wants $50 billion in government guarantees to finance fuel efficient cars. I have been looking into the bailout issue and whether it is beneficial or a misuse of funds - and there is a lot of debate about this issue. These bailouts may make political sense but are they in the long-term economic interests of the country?
A colleague of mine who was a Budget and Cost Analyst for a top government agency has been thinking about the political aspect of bailouts and shared his thoughts with me. As he wrote, "It is a sure thing that either party could get votes from a bailout, but they might loose some as well. Where a party could really improve its position would be to support a bailout, but lose."
He suggests that this outcome would pay off in the short-run but could damage long-term economic outcomes. As he suggested, If the party supported a bailout but lost, "it could claim that it was trying to support the victims, but had been frustrated by the other party. And this could be used to promote the party for many years in efforts to get votes. While maneuvers of this sort may get short run votes, over the long term they might be hurtful of sound economic growth and performance."
Consumer confidence hit a five month high, according to a Reuters/University of Michigan survey. However, for those hoping for a recovery, that good news comes with a lot of negative.
General consumer spending dipped, probably in no small part to a dip in personal income of 0.7% in July, according to recent numbers. Also up, price increases that have pushed inflation to a 17-year high that has eroded consumer buying power. Both of these work to negate any impact consumer confidence might have.
Also adding weight to the market are worries and uncertainties surrounding the effect hurricane Gustav will have on oil production, ending a long run of lowering oil prices. Expect higher gas prices.
With all these worries on people's minds, here are today's unofficial closing bell levels:
Delphi was once the mighty parts operation at GM (NYSE: GM). It got to go out on its own with an IPO, and it has been trouble ever since. Because of contract obligations GM had with its former division, it has poured hundreds of millions of dollars into Delphi.
Delphi has been operating under Chapter 11 and trying, without success, to return to its role as an independent company. Now the collapse of the car business is likely to cause a liquidation of the entire firm.
According toThe Wall Street Journal, "Delphi's bankruptcy financing expires at year end, and there are indications that its current lenders may balk at renewing it." Analysts might find it easy to say that Delphi is a microcosm of the car industry and that car companies are heading in a similar direction. That is not true. Delphi has operated under Chapter 11 for some time.
On the other hand, "G.M.'s vice chairman, Robert A. Lutz, said the car companies need money to retool their plants but probably cannot raise enough capital on their own because of the tight credit markets," according toThe New York Times.That may be the first time that a top industry executive has indicated the industry may simply run out of cash.
The U.S. auto industry has not caught up to Delphi yet, but it is running toward the same place awfully fast.
Douglas A. McIntyre is an editor at 247wallst.com.
The New York Times reports that General Motors (NYSE: GM) wants a $50 billion bailout due to the credit crunch. It says it can't get the money it needs to build fuel efficient cars. But during the decade, when it was minting money from SUVs and trucks sales, GM could have invested those profits in fuel efficient products. Now that those profits have evaporated, it wants taxpayers to step in.
What kind of bailout does GM want? The Times reports it seeks $50 billion in government-backed loans to retool its plants to build fuel efficient cars. GM is not alone -- Detroit's automakers and the United Auto Workers (UAW) already requested Congress to "appropriate $3.75 billion to back the $25 billion in loans authorized last year." Now they want to double that amount and are "urging Congress to act by the end of September so that the money can be available next year." No doubt the industry is in trouble. The Times reports that "total sales for [August are forecast to be] 14.4 percent lower than a year ago and that G.M.'s sales [will drop] 27.5 percent."
But the economic logic for this taxpayer-funded bailout is tenuous. GM wants the government to leave it alone when it comes to fuel efficiency and it made huge profits on gas guzzlers before the price of oil shot up from $24 a barrel to $117. Thanks to GM's lack of investment in fuel efficient vehicles, its losses are soaring. Most recently it lost $4.4 billion and its revenues plunged 33% from $29.7 billion to $19.8 billion. It wants our money to make up for its bad management. Since its current CEO, Rick Wagoner, has taken over, GM's stock price has fallen 83%. But he still has the support of GM's board.
Toyota (NYSE: TM) has already said that 2008 will be a bad year. Now it has revised down its sales numbers for 2009. The cut is about 7% and takes the company's estimate to 9.7 million vehicle sales worldwide.
The news may be bad for Toyota, but the company has a good balance sheet and has maintained a low cost base for years. Europe and North America is where the Japanese company said it is sustaining the most damage. According to The Wall Street Journal,the firm is "bracing for a long slowdown as robust sales to developing markets are failing to offset huge losses in the crumbling U.S. market."
For General Motors (NYSE: GM) and Ford (NYSE: F) the news could not be worse. Both rely on the U.S. market for the lion's share of their sales. Both are counting on some recovery in 2009 to allow them to stop the bleeding out of cash that threatens their abilities to remain independent and solvent.
The two U.S. car companies were going to go to the capital markets to raise money. Whether debt or equity investors would give them money becomes more problematic as each month of poor sales goes into the record book.
The government is talking about a $50 billion bail-out for U.S. car companies. That may be the only capital they can get.
Douglas A. McIntyre is an editor at 247wallst.com.
Sometimes, it's hard to determine if major investors are being overly optimistic, outright daffy, or are simply seeing something that the rest of us just don't see.
In my view, the current course of events at Chrysler Corp. is one of those difficult to determine situations. On its face, it looks like it could be a case of basic business logic in action. But on closer examination, it just doesn't make sense, at least not to me.
Declaring a payoff horizon of ten years, Cerberus Capital Management has placed a great deal of faith in Chrysler, the American auto manufacturer which is best described these days as an also ran. The kicker is, the Cerberus ten year plan is being initiated at a time when auto industry profitability is near impossible. Consider also the fact that current Chrysler management openly admits that the company isn't in any condition to go it alone.
And there's more trouble in the mix. Cerberus said in a New York Times story that Chrysler is meeting "every financial metric." But Cerberus considers the world's current economic turmoil to be a temporary problem, not the economic world change that it actually is. Meanwhile, Chrysler CEO Bob Nardelli is smiling because Cerberus has given Chrysler lots of money, and he gets to cut heads.
The auto industry is deep in the weeds right now, particularly in the United States. American manufacturers are hemorrhaging money -- General Motors (NYSE: GM) alone has lost $30 billion in the last three years -- as high gas prices and an unofficial but very real recession forces consumers to abandon their American-made trucks and SUVs by the millions.
Even with the pronounced shift toward smaller and more efficient cars, the overall auto market in the U.S. is shrinking thanks to the poor economy, and most manufacturers are selling fewer vehicles. But one company stands out as an exception to the rule of declining sales: Honda Motor Ltd. (NYSE: HMC). In the first seven months of 2008, Honda increased its sales by over 3%. By comparison, Chrysler lost 22%, GM fell 17%, Ford (NYSE: F) lost 14% and even mighty Toyota (NYSE: TM) saw a decline of 7%.
An interesting quote in The New York Times from Tetsuo Iwamura, the president of Honda's North American operations, sheds light on how Honda has managed this impressive feat. Honda, Iwamura said, "is a philosophy-driven company." And what is Honda's philosophy? According to Iwamura, "we want to make Honda the company that society wants to exist."
From an American perspective, this is an extraordinary statement. American automakers have followed a very different philosophy for many years, one in which fat and easy profits from poorly designed and hopelessly wasteful SUVs take precedence over the long term health of both the auto industry and society as a whole. But Detroit is suffering now for its short-term approach, while Honda is showing both consumers and investors the value of planning for the long run. And at $32 a share and a P/E of 10, Honda looks like a good long-term buy.
Will the Volt provide the jolt that turns General Motors' (NYSE: GM) around?
In the interpretation of one critic, Chevrolet's Volt plug-in hybrid may end up being not so much a game-changer as an ice-breaker.
Stock Analyst C. Leonard Bauer, whose ownership of high-performance sports cars through the years has been exceeded only by, perhaps, Mario Andretti, says he doesn't expect the Volt, Chevrolet's extended-range electric vehicle, to overwhelm the public or generate rave reviews from critics, but those two conclusions still won't blot out Volt's positives.
"The key point, and one many have overlooked, is not the Volt, but the infrastructure behind the Volt," Bauer said. "The Volt as a model will most likely underwhelm, but the processes GM has put in place will pay dividends when advances occur." Bauer added that he does not own shares in or have a rating on any auto manufacturer.
Amped-up R & D
GM, Bauer says, has now committed a large amount of resources to electric and hybrid technologies, whereas previous commitments were modest. Moreover, "it would take an act of idiocy or $10 a barrel oil" for GM to dismantle its current research platform. Bauer expects neither, and as a result, he expects the 2nd, 3rd and 4th generations of Volt and its companions to achieve both battery power storage and power delivery advances not possible during GM's previous electric vehicle projects.
TheStreet.com's Jim Cramer says that even in lousy markets -- and this is one of them -- you can find stocks to buy.
When nothing's working, something's working. I know sounds counterintuitive. but there is simply no reason to think, as bad as this market is -- and it is really, really bad -- that there isn't something to buy.
But are they really hurting General Mills (NYSE: GIS) (Cramer's Take)? Can I see selling Procter & Gamble (NYSE: PG) (Cramer's Take) because of them? After we know the price increases are all baked in? And don't hit me with that strong-dollar stuff, because GIS doesn't have that much overseas exposure. Same with Pepsi (NYSE: PEP) (Cramer's Take): This is a national company with an international arm that is generating oodles of cash and doesn't have as much bad commodity exposure as it did a few months ago.
August was yet another tough month for American auto maker 
Sales of vehicles from Detroit's Big Three have been weak and getting weaker lately. But the bad news is even worse when you look at just basic passenger cars. According to a piece in 
U.S. stock futures were higher Tuesday morning as 
In that latest sign that the company is desperate for cash, 
The 
Sometimes, it's hard to determine if major investors are being overly optimistic, outright daffy, or are simply seeing something that the rest of us just don't see. 
The auto industry is deep in the weeds right now, particularly in the United States. American manufacturers are hemorrhaging money -- 
Will the Volt provide the jolt that turns 
Stocks have their worst week in six years
Why haven't the Republicans said much about the economy?
Chasing Value: Are you watching WaMu?
