Sound judgement on political, economic and public policy trends in the BRICs (Brazil, Russia, India and China) has never been more vital.

After all, key emerging economies are driving global markets, not only via burgeoning exports and in the scramble for scarce raw materials, but also in their growing financial muscle, which promises to alter the balance of international financial power.

Quanta Services (PWR) is a contracting services company, delivering infrastructure network solutions for the electric power, natural gas, telecommunications and cable television industries. The company's services include designing, installing, repairing and maintaining network infrastructure nationwide. In other words, it is what one might uncharitably refer to as a “ditch digger”.

Next earnings report due: July/August.

Ceradyne (CRDN) develops, manufactures and markets advanced technical ceramic products and components for defense, industrial, automotive/diesel and commercial applications. It is a large supplier of ceramic body armor plates used to protect soldiers. It also makes high purity ceramic crucibles used in the manufacture of polycrystalline silicon for photovoltaic solar cells. This is definitely a growth area, but the market hasn’t tagged CRDN as an alternate energy stock as yet.

Next earnings report due: July

The difference between Morgan Stanley (MS),  Citi (C), Lehman (LEH) and Merrill (MER) is that CEO John Mack has not been running his mouth around town telling everyone "all is well". (Earnings Call Transcript)

"Given the turbulent environment this quarter, we stayed close to shore and continued strengthening the Firm’s capital and liquidity positions,” John J. Mack, Morgan Stanley’s chairman and chief executive, said in a statement. “The difficult market conditions and lower levels of client activity impacted our results, particularly in fixed income and asset management.”

Following last Friday's announcement that Alter NRG Inc.'s (ANRGF.PK) first plasma gasification retrofit in Somerset, Massachusetts had received a favorable recommendation from the Massachusetts Department of Environmental Protection [MDEP], the Conservation Law Foundation [CLF] said it will now bring its concerns about the retrofit to State Superior Court. 

The CLF appeal to the MDEP, of which a final decision is still pending, was made to prevent Alter NRG's partner, NRG Energy (NRG), from proceeding with the retrofit. The CLF believes that when completed, the retrofit will not adequately reduce CO emissions.

Recap of Jim Cramer’s comments on Stop Trading! Wednesday June 18.

Potash (POT), Mosiac (MOS), Agrium (AGU): Cramer says fertilizer stocks are taking a breather, but the sector has been “the most powerful trend I have seen in my career since DSC Communications in the '80s.” He thinks seeds provide more potential for energy development than oil, since Congressional Democratic majority leader Nancy Pelosi is against drilling.

Lehman Brothers (LEH): Those wanting to know Cramer’s opinion of Lehman Brothers should read the bank’s conference call, particularly the Q&A section featuring Deutsche Bank's Mike Mayo. Cramer says it is very clear the company has had a horrible vintage of mortgages and does not know what is in its portfolio.

Goldman Sachs (GS): Of the best-of-breed investment bank, Cramer said, “All I can tell you is that the stock is higher in a group that is so awful that you can't even look at your screen, it's that bad. It is the only one that has a business model right now.”

Best Buy (BBY): Best Buy’s second day decline after a decent quarter is the “kiss of death” for retail. Cramer doesn’t think any stock in the sector can be bought if Best Buy does poorly, and thinks the group is the second worst after the banks.

Crocs (CROX): Crocks has a new closed-toe loafer, but when Cramer’s daughter said, “Dad, you cannot go outside in those shoes,” he decided the stock is a loser.

General Mills (GIS), Panera Bread (PNRA): Cramer admitted he was shocked that General Mills and Panera Bread are doing so well in spite of rising food cost. He credits the companies’ proprietary products, strong brands and loyal customers for their ability to raise prices and maintain earning. Cramer is bullish.

This week, we continue with our list of favorite consumer stocks. Given the significant number of headwinds facing consumers (such as record-high gas prices, declining home values and the corresponding "wealth effect," and lingering credit concerns), we concede that this space may not be appropriate for all investor classes at the present time. That being said, we still believe there are a number of compelling investment ideas to be found in this sector.

Instead of a long-winded recap of the names, we've decided to release the names one-by-one and provide a brief summary. After we finish revealing our favorite stocks, we will pull together the list into an equal-weighted portfolio and compare our performance to a number of benchmarks over the next year. We may also adjust the list periodically, as there may be better investment opportunities that arise in the coming months.

Today, we add children's apparel retailer Gymboree (GYMB) to the list.

Investment Highlights

• Children's apparel has a necessary replacement cycle. By nature, children's apparel needs to be replenished several times a year, usually by a mature female demographic with a propensity to spend on their children. Yes, the Gymboree brand carries higher price points than its publicly-traded specialty competition - Carter's (CRI) and Children's Place (PLCE) - and the mass channel private labels. However, the average Gymboree customer represents a high-end audience with limited exposure to rising gas prices and other negative macroeconomic factors. We also expect a modest sales boost in coming years from baby boomer retirees who will likely have more time and resources to devote on their grandchildren. With the combination of established brands that resonate with mothers everywhere (Gymboree and Janie and Jack) and still-emerging brands (Crazy 8) , we anticipate robust sales growth (at least mid-teens) through the balance of the decade and likely beyond.
• Strong financial footing. When evaluating a consumer stock investment, the most important factors to evaluate are (1) top-line growth (including mature and new store growth), (2) the likelihood of sustained profitability and return on invested capital, (3) cash generation and flexibility, (4) debt requirements, and (5) inventory turnover. Gymboree generally passes the test on each of these considerations, with solid top-line growth, sector-leading operating margins and returns on invested capital (nearing 20%), ample cash on hand, a debt-free balance sheet, and inventory turnover over 4.0x (excellent for a mall-based apparel retailer).

Investment Risks

With oil prices romping to record highs almost daily, pressure is mounting for increased production. Fields once deemed too costly to operate are suddenly in demand, as are new technologies to extract oil out of difficult places and materials. The U.S. government is calling on producers around the world to pry their spigots wide open.

That’s been good news for shares of the upstream energy firms that dominate iShares Oil Equipment & Services ETF (IEZ). IEZ is up 44.7% since its May 2006 inception and nearly 58% since March 30, 2007. The fund invests in the stocks of about 50 companies that build and maintain the massive infrastructure that produces and distributes the world’s oil, such as rigs and pipelines.

This has been going around for a long time now so let's take a look because as the price falls and Sears' (SHLD) Chairman Eddie Lampert continues buying shares, some folks are claiming his goal is to take the company private and shareholders, except him, will get "screwed" for lack of a better term.

While Lampert may continue to buy shares and increase his ownership percentage, Sears is not "going private" for a number of reasons.

From the SEC Website:

If the transaction is initiated by an affiliate (an insider) of the company, or the company could be deemed to be making an acquisition of its own shares Rule 13e-3 of the Securities Exchange Act of 1934 requires the affiliate and/or the company to file a Schedule 13E-3 with the SEC. When Rule 13e-3 applies, the company is said to be “going private” under SEC rules. While SEC rules don't prevent companies from going private, they do require companies to provide information to shareholders about the transaction that caused the company to go private. The company also may have to file a merger proxy statement or a tender offer document with the SEC.

The filing of a Schedule 13E-3 is also required when issuer-initiated or affiliated transactions result in a company’s publicly held securities no longer being traded on a national securities exchange or an inter-dealer quotation system, such as Nasdaq.

The Schedule 13E-3 requires a discussion of the purposes of the transaction, any alternatives that the company considered, and whether the transaction is fair to all shareholders. The Schedule also discloses whether and why any of its directors disagreed with the transaction or abstained from voting on the transaction and whether a majority of directors who are not company employees approved the transaction.

Going private transactions require shareholders to make difficult decisions. To protect shareholders, some states have adopted corporate takeover statutes that provide shareholders with dissenter's rights. These statutes provide shareholders the opportunity to sell their shares on the terms offered, to challenge the transaction in court, or to hold on to the shares. Once the transaction is concluded, remaining shareholders may find it very difficult to sell their retained shares because of a limited trading market.

Gassing Up: XTO Energy (XTO), Southwestern Energy (SWN), El Paso (EP), Ultra Petroleum (UPL), Apache (APA), Anadarko (APC), Chesapeake Energy (CHK)

One mystery on The Street is that big oil names like Exxon have made only paltry gains while oil has risen from $100 to $130 in a heartbeat. Oil companies either are not able to drill more oil or were hedged on the prediction oil would go lower and lost, explained Cramer. But natural gas names, such as XTO Energy, Southwestern Energy, El Paso Ultra Petroleum, Apache, Andarko and Chesapeake are winning as they ramp up production. Cramer noted an historical six to one ratio between oil and natural gas; with oil sitting at $136, natural gas should be at $23 rather than $13. Cramer notes Chesapeake CEO, Aubrey McClendon has bought back $34 million of the company’s shares since May 30th, and if he believes in natural gas, so should investors.

Twice Blessed: Mosaic (MOS), Agrium (AGU), Potash (POT)

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