GE continues to improve its internal workings and continues to improve its customer credit metrics in the GE Capital operations faster than most expected.  The company’s dividend hike came sooner than expected and this conglomerate is returning to normal sooner than expected even if the total portfolio changes is going to look like a decline in revenues on the surface.  While United Tech might have been the cheapest conglomerate, it was still General Electric which we included in the 24/7 Wall St. 2012 Model Dividend Portfolio.

GE was also listed as one of Jim Cramer’s 4 Favorite DJIA Stocks For 2012.

After a 0.7% rise on Thursday to $19.15, GE shares are up 6.9% year to date.  What is more impressive is that after you adjust for the dividend payment the stock of the conglomerate is up a massive 21.5% from the end of November and shares are up a massive 31.5% if you were lucky enough to buy shares on the day after Thanksgiving and hold them.

The manner in which GE is acting is that it wants to go well back over $20.00.  That is what its chart action is indicating at any rate.  At some point, it will take more continued good news of some sort from the company to make that sustainable.

In case GE manages to disappoint the street, the 50-day moving average is $16.89 and the 200-day moving average is $17.32.  The first support level would come in around $18.00 if any serious disappointment comes up and then down in the $17.60 area if the news is somehow much worse than investors are expecting.  Shares are now back up at levels not seen since last July and the historic 1-year chart shows that all sorts of resistance will come back into play in the $20.10 to $20.30 areas.

Thomson Reuters has a consensus (mean) price target objective of $21.21.

JON C. OGG

That decision, technically being made by the State Department, was practically forced on the President by Congressional Republicans, as we noted at the time. Obama needs to electrify his environmental supporters and rejecting the Keystone XL pipeline project is the most highly visible way to do this. We also pointed out in December that supporters of the pipeline were not likely to vote for Obama in any case, so he has more to gain politically by rejecting the Keystone XL.

The decision probably does not mean that the controversy or the Keystone XL is completely dead. Canada has a second option for delivering the synthetic crude from the Alberta oil sands — a pipeline to the British Columbia coast has been proposed by Kinder Morgan Inc. (NYSE: KMI). Because that pipeline is completely within Canada’s borders, the Obama administration has just turned the whole issue of oil sands development back over to the Canadians.

US protests over the pipeline focused on possible environmental damage to sensitive areas along the pipeline’s route. But the real issue has always been the development of the oil sands, and Canada is not going to kill what is now the country’s golden goose. The synthetic crude will find a way to the sea one way or another. But right now, it doesn’t look like that route will be to the US Gulf Coast.

Paul Ausick

As far as how this is impacting closed-end funds and ETFs, the moves are below and the 52-week ranges have been offered so that investors can see just how much pain has been there in the last year:

WisdomTree India Earnings (NYSE: EPI) is up 0.9% at $17.93 and the 52-week trading range is $15.44 to $25.58. 

PowerShares India (NYSE: PIN) is up 0.8% at $18.30 and the 52-week range is $15.96 to $24.59.

India Fund, Inc. (NYSE: IFN) is up 0.4% at $21.46 and the 52-week trading range is $18.61 to $33.99. 

Morgan Stanley India Investment Fund, Inc. (NYSE: IIF) is up 0.7% at $15.75 and the 52-week trading range is $13.59 to $24.57.

These are no ETFs nor closed-end funds but there are some key ARDs to watch:

Infosys Limited (NASDAQ: INFY) was recently butchered on its earnings and revenue warnings and shares are only up marginally at $52.00 versus a 52-week range of $46.12 to $74.52.

Tata Motors Ltd. (NYSE: TTM) is up 2.2% at $21.18 versus a 52-week range of $14.33 to $29.06.

ICICI Bank Limited (NYSE: IBN) is up only 0.25% at $30.95 against a 52-week range of $24.14 to $51.50.

Sterlite Industries (India) Limited (NYSE: SLT), which operates as a non-ferrous metals and mining company, is up 1% at $8.67 versus a 52-week range of $6.64 to $16.60.

$35 billion might not sound like much when you consider the U.S.-sized stimulus packages and when you consider that India has almost 1.2 billion people versus about 310 million in the U.S.  The 2010 GDP on a purchasing power parity was put at about $4.06 trillion and that comes to only about $3,500 in GDP per capita.

$35 billion matters, even if it is going to take more to jumpstart the economy after months and months of tightening and restive monetary measures as the nation fought inflation at the expense of growth.

JON C. OGG

The aluminum giant reported earnings of -$0.03 EPS and $5.99 billion in revenues.  Thomson Reuters had a consensus grouping of -$0.02 EPS and $5.74 in revenues.  Keep in mind that it was just a week ago that analysts were looking for $0.03 EPS and less than 3 months ago estimates were up around $0.20 EPS or so.

The loss was $199 million for the fourth quarter and if you include items the loss came in at -$0.18 EPS.  The company blamed “restructuring charges associated with the closure and curtailment of high-cost production capacity, lower aluminum prices, and continued market weakness.”

Alcoa had already been talking down its expectations when it was talking about capacity shutdowns.

As you would expect, The company is forecasting for 2012 global aluminum demand will grow 7% and it expects a global deficit in primary aluminum supply.  That is above the 6.5% projection per year that Alcoa has said is required for the aluminum market doubling in size by 2020. It sees 600,000 metric tonnes as the deficit for the industry in 2012. Global industrial use/growth is projected by Alcoa as follows:

• aerospace (10-11 percent),
• automotive (3-8 percent),
• commercial transportation (2-5 percent),
• packaging (2-3 percent),
• and building and construction (4-5 percent) markets.

Alcoa shares closed up 2.9% at $9.43 on the day and the 52-week trading range is $8.45 to $18.47.  Today’s news could have been worse and the stock was already very week ahead of earnings. Shares were above $11 on October 31, 2011.  Shares may trade lower on this news, but that is proof that the market’s ability to price in the known events is dead.  So much for the efficient market theory you learned about in college.

Read Also: Stocks Priced for 12% Gain to DJIA 13,678

JON C. OGG

The company’s stock has risen from lows again because China is slowing some exports of the rare earths metals needed by technology, medical and high-tech companies. The reason is due to environmental issues. Avalon Rare Metals Inc. (NYSE: AVL) is the far more speculative outfit, with no real history. And then there is the diversified but still speculative ETF called the Market Vectors Rare Earth/Strategic Metals ETF (NYSE: REMX).

Molycorp is not exactly a cheap stock. If you are basing the operations of today and the trailing 12-month period as the key, then it is even very expensive. What the company currently has is a near-monopoly in U.S. domestic assets for rare earth metals and minerals already in development. At $28.70, the 52-week trading range is $25.60 to $79.16. If any serious news were to come out that helps rare earths again or any positive income acquisitions were made, then we can easily see Molycorp rising on a wave of momentum into the $40s. As long as no bad news comes out, its downside in a stable equity market might only be in the low-$20s or mid-$20s.

No warning will be well-received, and it is very possible that Molycorp could settle lower if the rare earths hopes do not live up to par. Still, it is now fully funded and it effectively has its production capacity close to fully ordered.

Our biggest concern is that Thomson Reuters still has a consensus price target of $64.50. Our take is that this is far too high. We think it could easily run into the $40s, and if the news is sustainable then perhaps a tad higher … but nowhere close to $64.50. That high of a consensus price target might even be the result of some figures not being included or updated. This gives more room for analysts to downgrade the stock and/or to significantly lower expectations.

This trades at 19-times expected 2011 earnings, but only 9-times expected 2012 estimates. Dahlman Rose has said that rare earth prices will come down in 2012, so even if you take $2.50 EPS as a lower number, then Molycorp still only trades at 11.5-times expected 2012 earnings. It still trades at about 3-times book value, but we would expect that to improve a bit in the next year or two.

JON C. OGG

We overlaid some of the recent Fitch Ratings analysis after the individual MLPs.  The aim is to show how the MLPs are valued at today as well as how they compare to their Thomson Reuters consensus price target objective and 52-week trading ranges.  The individual MLPs we are including on our own are as follows: Enterprise Products Partners L.P. (NYSE: EPD); Kinder Morgan Energy Partners LP (NYSE: KMP); MarkWest Energy Partners, L.P. (NYSE: MWE); Plains All American Pipeline, L.P. (NYSE: PAA); Williams Partners L.P. (NYSE: WPZ); Magellan Midstream Partners, L.P. (NYSE: MMP); Buckeye Partners, L.P. (NYSE: BPL); and El Paso Pipeline Partners, L.P. (NYSE: EPB).

As the end of 2012 approaches rapidly, we wanted to take a year-end look into the sector to see where there is opportunity versus risk.  We have shown the basic fundamentals of some of our top go-to names in the MLP sector and have shown a chart of the key ETF in this sector.  A report from Fitch Ratings earlier this month called MLPs fairly well positioned against economic regulatory risks and has noted that the sector should generate stable operating performance and financial credit measures for 2012.  The belief was that these should remain consistent with recent past performance and the outlook includes natural gas pipelines as well as crude oil and refined products pipelines. 

Income and dividend investors have become more aggressively interested in MLPs after a couple of years of Treasury rates and CD rates not paying anything of substance any more for income.  Retirees need cash flow from their investments in order to live.  Even though these distributions paid to investors act as dividends, there is usually a mixed combination of income and a return of capital.  In short, not all of the distributions paid out are treated the same by the tax-man.

Our individual valuation analysis on some of the key individual MLPs is as follows:

Enterprise Products Partners L.P. (NYSE: EPD) is valued at $39.2 billion now and trades at $45.00, under its consensus target of $49.11 and it has a 52-week range of $36.00 to $46.70.  The implied distribution per year based on the last payout was about 5.5%.

Kinder Morgan Energy Partners LP (NYSE: KMP) is valued at $26.9 billion and trades at $81.00, above its consensus target of $76.11 and against a prior 52-week range of $63.42 to $80.52.  The implied distribution per year based on the last payout was 5.8%.

MarkWest Energy Partners, L.P. (NYSE: MWE) is valued at $4.6 billion.  This unit trades at $54.20, and is under the consensus target of $61.88 and it has a 52-week range of $39.00 to $56.82.  The implied distribution per year based on the last payout was 5.4%.

This morning came word that United Rentals is acquiring RSC Holdings, Inc. (NYSE: RRR), another equipment leasing outfit, for an enterprise value of $4.2 billion after the inclusion of $2.3 billion in net debt.  The cash-and-stock transaction values the company at $18.00 per share.  The boards of directors of both companies have also unanimously approved this buyout and are recommending that holders approve the proposed transaction.

If you look at the combined outfit, the claim is a more attractive business mix, with greater scale and with enhanced growth prospects. On paper, this is one of those mergers which actually seems to make sense if its cost savings and new growth segments can be executed upon.

United Rentals has a market cap of $1.6 billion before the effects of this deal and its $26.04 share price compares to a 52-week trading range of $12.81 to $34.78.  RSC Holdings, Inc. (NYSE: RRR) closed on Thursday at $11.37 and its 52-week trading range is $6.26 to $15.04 and its market capitalization was nearly $1.2 billion.  RSC briefly traded above $18.00 per share and went up to as high as $22.00 in 2007 before the recession kicked in.

JON C. OGG

The National Transportation Safety Board, usually referred to as the NTSB in public, is announcing a major safety recommendation related to “driver distractions caused by driver use of personal electronic devices.”   The NTSB Fact Sheet notes, “The NTSB has called on the 50 states and the District of Columbia to ban the nonemergency use of PEDs (other than those designed to support the driving task) for all drivers.”

Frankly, the new recommended ban has little chance of success in the current form, even if parts of this should proceed.  A call to ban all electronic devices in vehicles regardless of how they are used (except in cases of emergencies or integrated into the transportation needs) will not garner much public support as it is somewhat like stretching the limits of drunk driving blood levels all the way out to a new attempt of prohibition.

Still, this NTSB recommendation may be the start of a larger move to keep cellphones from being abused by drivers in many locations where no regulations exist.  Drivers who text often cross 50 feet to 50 yards of pavement in a shorter period of time than it takes to type in “lol” or even “driving.”  By the way, calling your friends to gossip about things or to see what is up for the night or weekend are not exactly ‘emergencies’ under this plan.

There could also be rules for teenagers that are different from adults.  Many cities already have curfews for minors and technically minors are not allowed the same liberties and rights as adults who have a bit more life experience under their belts.

You can expect an outright assault from the phone makers and headset makers, the wireless carriers, the tower operators, and even the communication infrastructure equipment to fight this recommendation if it were to gather any momentum. Also, keep in mind that the NTSB has zero power to enforce or even to propose any such bill to move into law.  All it can do is to make recommendations for safety regarding transportation activities.

Logitech International SA (NASDAQ: LOGI) is one headset maker that would severely if there was a nationwide ban on holding your cellphone but still allowed drivers to use cellphones if they have wireless or wired headsets for their mobile phones.  Verizon Communications Inc. (NYSE: VZ), AT&T Inc. (NYSE: T), and Sprint Nextel Corporation (NYSE: S) would all fight a total ban on cellphone use under any circumstances other than emergency use.

American Tower Corporation (NYSE: AMT) and Crown Castle International Corporation (NYSE: CCI) have spent billions of dollars putting in cellphone towers around the nation, including the highways, to make it so that drivers can stay connected on their cellphones whether those drivers need to or not.

The market does not consider this “recommendation” a serious threat. Not yet.  Frankly, for someone who does support a ban of texting and in-hand use of cellphones while driving, today’s recommendation by the NTSB is a disappointment.  The proposal is too broad and sweeping for the public to support it. If this seemed to be a true threat then these stocks would have traded lower by a significant amount.  Just do not be surprised when some legislator in Washington D.C. decides to take this cause up next year.

The NTSB pre-conference fact sheet is here.

JON C. OGG

We have overlaid some of the Fitch Ratings analysis after the individual MLPs because we wanted to show you what the MLPs are valued at today as well as how they compare to their Thomson Reuters consensus price target objective and 52-week trading ranges.  The individual MLPs we are including on our own are as follows: Enterprise Products Partners L.P. (NYSE: EPD); Kinder Morgan Energy Partners LP (NYSE: KMP); MarkWest Energy Partners, L.P. (NYSE: MWE); Plains All American Pipeline, L.P. (NYSE: PAA); Williams Partners L.P. (NYSE: WPZ); Magellan Midstream Partners, L.P. (NYSE: MMP); Buckeye Partners, L.P. (NYSE: BPL); and El Paso Pipeline Partners, L.P. (NYSE: EPB). 

Our individual valuation analysis on some of the key individual MLPs is as follows:

Enterprise Products Partners L.P. (NYSE: EPD) is valued at $40 billion now and trades at $46.10, under its consensus target of $49.11 and it has a 52-week range of $36.00 to $46.70.  The implied distribution per year based on the last payout was about 5.3%.

Kinder Morgan Energy Partners LP (NYSE: KMP) is valued at $26.1 billion and trades at $78.50, above its consensus target of $76.11 and against a 52-week range of $63.42 to $79.34.  The implied distribution per year based on the last payout was 5.9%.

MarkWest Energy Partners, L.P. (NYSE: MWE) is valued at $4.7 billion.  This unit trades at $55.80, and is under the consensus target of $58.38 and it has a 52-week range of $39.00 to $56.40.  The implied distribution per year based on the last payout was 5.3%.

Plains All American Pipeline, L.P. (NYSE: PAA) is valued at $10 billion, and its $67.30 price compares against a price target of $71.96 and its 52-week trading range is $54.90 to $67.74.  The implied distribution per year based on the last payout was 5.9%.

Williams Partners L.P. (NYSE: WPZ) is worth some $17.3 billion and its $59.65 price compares to a target of $60.81 and a 52-week range of $44.81 to $61.22.  The implied distribution per year based on the last payout was about 5%.

Magellan Midstream Partners, L.P. (NYSE: MMP) is worth $7.35 billion and its $6.30 price is just under the $66.64 consensus price target.  Its 52-week range is $51.00 to $65.92. The implied distribution per year based on the last payout was only about 4.9%.

Buckeye Partners, L.P. (NYSE: BPL) is valued at $5.95 billion and its $63.98 price is pretty far under the consensus price target of $70.25.  It has a 52-week range of $54.51 to $68.92. The implied distribution per year based on the last payout was 6.5%.

El Paso Pipeline Partners, L.P. (NYSE: EPB) is valued at $6.7 billion with a $32.60 share price.  That is one of the largest discounts to the consensus price targets of peers as its target is $39.00.  Its 52-week range is $31.34 to $38.36. The implied distribution per year based on the last payout was 6.1% based on today’s price.

Because many of the largest MLPs are so close to or above the consensus price targets, we recently gave the 24/7 Wall St. Model Dividend Portfolio some changes to focus more on the funds and ETFs (with payout rates based upon the average of the last two payouts): Kayne Anderson MLP Investment Company (NYSE: KYN) with a distribution of about 6.9%; JPMorgan Alerian MLP Index ETN (NYSE: AMJ) with a distribution of about 5.2%; and ALPS Alerian MLP ETF (NYSE: AMLP) with a distribution of about 6.3%.

In its new “Global Cloud Index and Methodology: 2010 – 2015,” Cisco points out the obvious. The growth of broadband and the amount of data that has to be moved from point-to-point has exploded, and it will continue to do so. Cisco has advice for how this can be done seamlessly. It comes as no surprise that the solution involves the use of Cisco products.

Cloud computing will be essential to the growth of data storage and traffic. The use of the cloud is already important to companies like Google (NASDAQ: GOOG), which has its applications available on its servers so that customers can access their information directly from nearly any point in the world. Consumer applications also have grown as firms such as Apple (NASDAQ: AAPL) make more of their multimedia products available on the cloud.

Cisco’s conclusion is that much of the internet’s structure and server centers are probably too immature to be ready for the world of IP use in 2015:

In terms of data center and cloud traffic, we are firmly in the zettabyte era. Global datacenter traffic will grow fourfold from 2010 to 2015 and reach 4.8 zettabytes annually by 2015. A subset of data center traffic is cloud traffic, which will grow 12-fold over the forecast period and represent over one-third of all data center traffic by 2015 . A key traffic driver as well as an indicator of the transition to cloud computing is increasing data center virtualization. The growing number of end user devices combined with consumer and business users preference or need to stay connected is creating new network requirements. The evolution of cloud services is driven in large part by users’ expectations to access applications and content anytime, from anywhere, over any network and with any device. Cloud-based data centers can support more virtual machines and workloads per physical server than traditional datacenters. By 2014, more than 50% of all workloads will be processed in the cloud.

From a cloud readiness perspective, the study covers the importance of broadband ubiquity. Based on the regional average download and upload speeds and latencies for business and consumer connections, all regions can support some level of cloud services. However, few regions’ average network characteristics are currently able to support the high-end advanced cloud apps.

Parts of the world will have to make hundreds of millions, if not billions, of dollars in upgrades to operate in the zettabytes world — a world that only a few people can imagine because the hardware and advance software needed will be so complex.

Few people know what a zettabyte is. It is a measure of internet traffic. Cisco is worried that the internet cannot hold the weight of the data rush that is coming. Cisco routers and server products might be the only solution. At least Cisco hopes so.

Douglas A. McIntyre