Why Pacific Ethanol, E-Commerce China Dangdang, and J.C. Penney Are Today's 3 Best Stocks

The S&P 500 rallies to a new all-time high on mixed economic data while stellar earnings reports send Pacific Ethanol, E-Commerce China Dangdang, and J.C. Penney soaring.

Feb 27, 2014 at 5:15PM

Surprise, surprise! No housing data on the docket and the broad-based S&P 500 (SNPINDEX:^GSPC) moves decisively higher yet again -- I think I'm beginning to notice a pattern.

Today's rise comes on the heels of generally positive corporate earnings data, as well as mixed economic data.


In the negative column, weekly initial jobless claims rose by 14,000 last week to a seasonally adjusted 348,000. Although this figure is still trending lower in recent years, we're likely going to need it to dip closer to 300,000 on an adjusted basis if we have any hope of unemployment rates dipping below 6%.

On the flip side, the 1% decline in January's durable goods orders including the transportation sector was slightly less than the 1.5% drop that economists had predicted, and much better than the 5.3% decline reported in December. In addition, core durable goods orders, excluding transportation, actually rose a seasonally adjusted 1.1% compared to expectations for a decline of 0.3%. This measure of heavy product sales growth is a good sign for the economy and a stark reversal of the worries we witnessed in the prior month.

By the end of the day, the S&P 500 had advanced by 9.13 points (0.49%) to close at 1,854.29, an all-time closing high. But if you thought these gains were impressive, you haven't seen the gains posted by today's three best stocks.

Topping the charts today is ethanol producer Pacific Ethanol (NASDAQ:PEIX) which gained a whopping 65.5% after announcing its fourth-quarter results after the closing bell last night, as well as declaring its intention to restart its Madera, Calif., plant. For the quarter, Pacific Ethanol reported a 9% increase in net sales to $215.3 million, which was due to increased gallons of ethanol sold, partially offset by weaker per-gallon pricing. The big difference was that Pacific Ethanol reported an adjusted earnings-per-share profit of $0.54 compared to a loss of $0.60 per share in the year-ago period. By comparison, Wall Street anticipated a $0.01 per share loss! Given its improved margins and the restart of the Madera plant, there's clear excitement from shareholders that Pacific Ethanol can deliver consistent profits moving forward. While I wouldn't deny Pacific Ethanol shareholders this move today, I'd still urge them to remain cautious as ethanol pricing is generally weak and there's only so much cost-cutting the company can undertake to reduce expenses.

China-based business-to-business provider E-Commerce China Dangdang (NYSE:DANG) also exploded higher, to the tune of 31.5%, after it reported better than expected fourth-quarter earnings results. For the quarter, E-Commerce China Dangdang delivered a 22% increase in total revenue to $325.7 million. It gained approximately 3.1 million new customers during the quarter and ended the fiscal year with 8.9 million active customers. The company also saw a 13% increase in total orders during the quarter to 18.1 million. The big surprise was the $0.04-per-share quarterly profit, which reversed a year-ago loss. Comparatively speaking, the Street had been looking for just $317 million in revenue and a loss of $0.07 per share. Furthermore, Dangdang's first-quarter revenue forecast calls for revenue of approximately $283 million, a 30% increase from the year-ago quarter and well ahead of the current $268 million consensus. I rarely throw my support behind companies that are only mildly profitable, but the way in which Dangdang is gaining new customers could lend additional upside in its share price.

Finally, struggling department store retailer J.C. Penney (NYSE:JCP) soared 25.3% after reporting fourth-quarter results that weren't nearly as bad as expected. J.C. Penney reported a decline in revenue of nearly 3% for the quarter, to $3.78 billion, as the company reported an improvement of 2% in its fourth-quarter same-store sales comparisons. More importantly, J.C. Penney's gross margin improved 460 basis points to 28.4% as it dramatically shrunk its loss to just $0.68 per share, from $1.95 per share in the year-ago period. In contrast, Wall Street had expected Penney s to report a much wider loss of $0.87 per share. Looking ahead, Penney anticipates first-quarter same-store sales growth of 3%-5% and fully expects to end the fiscal year with more than $2 billion in liquidity. While this is a start, I'd remind investors that Penney's is on step three of a 100-step turnaround process. Losses will be ongoing for some time and management has yet to outline a plan to actually grow the brand. I'm sticking to the sidelines when it comes to Penney's.

These three stocks certainly soared today, but they may be no match for this top stock in 2014
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Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.

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4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

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David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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