Jeff Farley submits:I have done some comparison work on Veeco Instruments (VECO) and Cree (CREE) (two leading LED plays). While CREE is great, the results suggest VECO has a LOT more upside potential from here.CREE has a market cap of $4.6 billion. This is 5x the June 2011 revenue estimate of $910 million. Revenue is expected to grow 22% next year. The June 2011 EPS estimate is $1.43…so the stock is trading at 31x earnings.VECO has a market cap of $800 million. This is just 1.5x the revenue estimate for next year (compared to 5x revenues for CREE). Revenues are expected to grow 45% next year (far higher than the 22% for CREE). If VECO were to trade at 5x revenues like CREE…the stock would be $80 per share. VECO EPS are expected to be $1.25 next year, so the PE is 19.6. If VECO were to trade at the same PE as CREE…the stock would trade at $39 (+60% from here).Comparing the valuations of CREE and VECO gives me a potential upside target for VECO of $50 next year…maybe more if they continue to beat estimates by such a wide margin.Disclosure: Long VECO.Complete Story »

  There is a current fixation on the U.S. deficit which has received mass media attention in recent weeks. The fear mongering has caused a frenzy in gold, commodities and other inflation protecting asset classes. Unfortunately, currencies do not trade strictly on the country’s ability to pay its debt or its government’s monetary policy. Instead, every currency trades against every other currency. These relationships make currency trades a tangled web of monetary policy/response and relative fiscal discipline. When placing a trade on the dollar, the trade is for the United State’s relative standing against every country in the world. This means that you cannot simply state that the United State’s negative current account balance, massive deficit, and loose monetary policy make the dollar weak because the situations of some other countries look even worse. With that as the backdrop, I would like to show why it seems that the current fear over the dollar is a bit overblown. The US government balance looks horrendous, but so do others. Source: IMFComplete Story »

  FINalternatives submits: Hedge funds had been on a roll. But that sweet run ended last week when hedge funds fell by 1.43%, erasing any gains for the month of October.According to analysts at Merrill Lynch, those losses were led by equity long/short hedge funds (-3.0%), macro hedge funds (-1.7%), and commodity trading advisers (-1.3%).Complete Story »

  Karl Denninger submits: It's a policy (according to Barney Frank) to lose money on purpose, right? Well then, Fannie Mae (FNM) ought to get some sort of award:Complete Story »

  Sean Hannon submits: After this morning's employment report, all of the hopefulness that surrounded an impending economic recovery is quickly eroding. With total jobs lost coming in at a worse than expected 190,000, and the unemployment rate finally jumping to 10.2% barrier, gloom and doom are reentering the scene. Those searching for glimmers of economic growth are once again scratching their heads and trying to determine when we will finally see the turn from contraction to growth. As easy as it is to allow ourselves to become enamored with these short-sighted views, as investors we are better served to take a long-term perspective. Economic data is often revised numerous times and the likelihood of this number standing as a definitive statement of the employment market is virtually zero.Complete Story »

  Brett Steenbarger submits: We've seen a rally off the recent market lows, but several areas of the market are lagging. Above we can see that bank ($BKX; bottom chart) and insurance ($KIX; middle chart) remain well off their highs. The financial sector is one I'm watching closely; it led the market meltdown and then led the risk rally since March. Its underperformance now is unsettling to the bull case.Complete Story »

  Ockham Research submits: “This seems to be the quarter when automakers are turning in a better than expected numbers. As with many other automakers, here is what Toyota had today, a surprise profit in its quarterly earnings released early this morning, mid morning in Japan, a profit of $242 million that’s down 84% from the quarter a year ago. Sales, $50 billion, down 24%.The thing to keep in mind with Toyota swinging to a profit is that it’s all largely based on government incentive programs around the world certainly helps. However, the strong yen continues to be a problem for it is offsetting the recovery that’s the reason why as Toyota was discussing its quarterly results, the company has said it has some concerns ahead of it. Toyota has cut its expected annual loss in half. Take a look at shares of Toyota. And again, like many of the automakers, benefiting from these incentive programs, boosting sales around the world. But Toyota has the added burden of the strong yen because it exports so many vehicles from Japan.” — CNBC’s Squawk Box 11/5/2009Complete Story »

  Tom Lydon (ETF Trends) submits: A group of utility companies have banded together to push for clean energy policies in the United States in response to the U.S. Chamber of Commerce’s stance on climate laws. They stand to gain from any new policies, which puts some ETF in a position to perform if ideas one day become reality. A group of utility companies have come together to create American Businesses for Clean Energy. Most of the companies joining the group stand to gain from new energy policies in the United States. Keith Johnson for The Wall Street Journal reports that this action comes in response to the U.S. Chamber of Commerce’s opposition to current legislation.Complete Story »

  Ockham Research submits: On Thursday, the media got word from the U.S. Air Force of successful testing of Lockheed Martin’s (LMT) new and improved long range missiles. The successful testing, in which 15 out of 16 missiles got the desired result, should clear the way for up to $4.4 billion in contracts through 2023 after a Pentagon review of the program in December. Back in June, an Air Force spokesman said that the program faced possible termination if these tests were unsatisfactory. The previous three tests were far less successful with just six out of ten missiles detonating on impact or hitting the desired target. Improvements to manufacturing processes and quality of inputs were likely the key to the new found success. “Lockheed has contracts so far to build 1,053 Joint Air-to- Surface-Standoff Missiles and has received about $600 million. The company would receive about $4.4 billion more from building the remaining 3,847 the service plans to buy.Complete Story »

  Tom Lydon (ETF Trends) submits: After years of being snubbed by the European Union, Turkey has turned to its immediate neighbors for economic enrichment. As a result, Turkey’s economy and ETF could continue to see gains next year.In the last couple of years, Turkey economy has been augmented by increased exports to its Middle East and north African neighbors, extending pipelines for transferring energy, more air traffic and a number of infrastructure projects, according to The Economist.Complete Story »

  Trade Radar Operator submits: On Monday I asked if semiconductors were a bargain yet. I proposed that very soon they would be and then the sector would be a clear Buy. Quite frankly, the sector didn't quite fall as far as I thought it would and now today, in the midst of a tech resurgence based on Cisco's better than expected results, semiconductors appear to running again.Complete Story »

  Tom Lydon (ETF Trends) submits: October 2009 resulted a much different, and much brighter, picture for the overall ETF industry.The National Stock Exchange reports that the total number of assets in U.S.-listed ETFs and exchange traded notes (ETNs) rose about 44% from October 2008. The number of assets in ETFs totaled $707.4 billion at the end of the month.Complete Story »

  Tom Lydon (ETF Trends) submits: Most ETFs track an index, but replication of the underlying index isn’t always perfect. There are 10 common events that can lead to tracking error.While ETFs aim to track their underlying indexes as closely as they can, it’s noted on fact sheets that they “seek to replicate, to the extent possible.” The subtext is that while they try to avoid this scenario, a host of events could prevent this from happening. And while the word “error” can have negative connotations, keep in mind that error can work in your favor.Complete Story »

  Tom Lydon (ETF Trends) submits: Prominent value investor Warren Buffett made a bet on the future of America with his purchase of Burlington Northern Santa Fe. While few are as rich as Buffett, it doesn’t mean you can’t play along with what he’s buying using ETFs.Warren Buffett’s company Berkshire Hathaway (NYSE: BRK.A) announced this week that it plans to buy Burlington Northern Santa Fe (NYSE: BNI) for $100 a share, writes Jack Hough for SmartMoney. Buffett named rail car loadings as his favorite economic indicator.Complete Story »