Bull & Bear’s

October 2012 VOL. 13 NO. 12

INSIDE...

Aurcana Expects Q4 Commercial Production for Shafter Mine and

Expands 43-101 at La Negra to 115 Million Oz. Ag

Also Featured...Berkeley Coffee & Tea, Inc.

Maderas Futuro, S.A.Teryl Resources Corp.

BacTech Environmental’s Bugs Eat Rocks

Option 3 (U.K.) Buys 19.9% of BacTech; Signs 5 Year Exclusive Agreement

By Kathy KristofKiplinger’s Personal Finance

If you asked fund managers to name the world’s best stocks a year ago, they would have bent your ear about dozens of companies in Europe and developing markets in Asia and Latin America. But slowing growth in emerging nations and continuing worries about the health of the euro zone have (with a few exceptions) left investment professionals looking to the U.S. for their best investing ideas.

To be sure, the domestic economy remains tenuous. But so, too, do economies in virtually every corner of the world. Meanwhile, the U.S. dollar continues to be considered a safe haven in a storm, and that’s a plus for domestically oriented companies that don’t have to fight the headwinds of declining currency values abroad.

That said, international sales play a key role in keeping today’s best companies competitive both today and into the foreseeable future. “I am not confident that I can predict currencies any better than the market,” says Mark Finn,

manager of the T. Rowe Price Value Fund. “But I am interested in owning companies that can grow in emerging economies.”

Here are ten companies that many seasoned experts consider among the world’s best. They’re poised to grow and prosper for years, if not decades, to come. And so are their stocks.

1. Air Lease (AL: $20.66). Air Lease has been publicly traded for less than two years, but that understates the experience of the Los Angeles aircraft leasing firm’s key players. Launched by Steven Udvar-Hazy and John Plueger – the dynamic duo that helped turn International Lease Finance Corp. into the industry behemoth in the 1980s – Air Lease already owns 137 planes and has signed agreements to lease them to 65 international airlines. Air Lease not only leases planes, it helps broker and manage them. Thus as U.S. airlines upgrade to more fuel-efficient planes, the company can broker their older models to airlines in developing countries, where

Continued on page 27

The World’sBest Stocks

Lucas Energy Anticipating Break-Out Year with Increase in Producing Oil Wells

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By Sy HardingStreet Smart Report

It’s been a most unusual – some say crazy – year for global stock markets, certainly including that of the U.S.

The global economic recovery from the 2007-2009 financial collapse stalled last year and continues to worsen this year, with the International Monetary Fund cutting its forecasts for global economic recovery yet again, including for the U.S., and warning four days ago that risks of the world dropping back into a global recession “are alarmingly high”, and that “no significant improvements appear in the offing.”

That certainly sounds like the IMF doesn’t have much confidence that the ‘Troika’ (the IMF, EU, and ECB) will be successful with the euro-zone rescue plans and stimulus measures announced a month ago.

Meanwhile the stock markets of China and Japan, the world’s second and third largest economies, are in serious bear markets due to their economic slowdowns and fears of the worsening global economic conditions. China’s stock market is down 40% from its peak in 2009. Japan’s market is down 22% from its 2010 peak and still 51% beneath its peak in 2007.

Clearly neither of those extremely important global economies have any more confidence than the IMF that improvements are in the off-ing.

U.S. corporations seem to be preparing for the possibility of unusually difficult times ahead. They have salted away a record $1.4 trillion in cash, refusing to invest it in their futures, earning near zero on it, the purpose for hoarding the cash rather than using it apparently being to make sure they can pay their bills and survive anything that might lie ahead.

The fear of corporate manage-ments could also be seen in the

way that corporate insiders did not agree with the optimism that created the big stock market rally off the June low. They sold into its strength at an unusually heavy pace. According to the latest Vick-ers Weekly Insider Report, their selling has continued even after the Fed announced its QE3 stimu-lus measures. Like the IMF, and China and Japan’s markets, they apparently have little confidence that the new rescue efforts by the ECB in Europe and the U.S. Fed, will produce economic improve-ment anytime soon.

Usually savvy hedge-fund man-agers likewise did not participate in the June rally, instead selling into it. According to the Wall Street Journal, that has them ex-periencing their worst year since 1997. The opinion of hedge fund Comstock Partners, revealed in a report this week, is that the econ-omy and stock market face “severe headwinds in the period ahead”. It cites “the ongoing European sovereign debt crisis, significant slowing of growth in China and emerging markets, ongoing prob-lems in Japan, an anemic U.S. recovery, dysfunction in Washing-ton, the coming fiscal cliff, and the first decline in S&P 500 earnings in three years.” Its conclusion is that “while these problems are fairly well-known, they have not been factored into the market since investors have been focus-ing on other factors they regard as highly bullish.” They cite those factors as mainly being investor confidence that the Fed has their backs and “will prevent anything terrible from happening.”

Private-equity funds are having a similar under-performing year, up on average of only 4%. As the Journal says, that is not what their investors planned on. The funds were also suspicious of the rally, and are sitting on close to $1trillion in cash.

However, U.S. investors remain bullish and confident as evidenced by the resilience in the U.S. stock market. For instance, while

China’s stock market is in a bear market and at a 4-year low, the S&P 500 reached a four-year high in mid-September, and has settled back less than 3% since.

That’s quite a contrast to the worsening worries of the IMF, Chi-na and Japan, U.S. corporations, company insiders, professional hedge fund and other institutional managers.

But it’s not just U.S. investors that are confident and bullish, but U.S. consumers as well.

The University of Michigan – Thomson Reuters Consumer Sentiment Index was released Friday. It shows that consumer confidence has jumped to 83.1 in October from 78.3 in September. That’s much better than forecasts that it would decline to 78.0.

And at 83.1, consumer confi-dence is getting close to the 87 level it averaged in the year prior to the 2008-2009 recession. That’s a lot more recovery than global economies have achieved, includ-ing that of the U.S.

Is it just due to the pixie dust being puffed out by Wall Street and the Fed, about to be blown away by the gathering storm others see coming.

Or has Main Street got it right this time, while the so-called ‘smart money’ is refusing to inhale the magic?

We are likely to soon know the answer.

Editor’s Note: Sy Harding is editor of the Street Smart Report, www.streetsmartreport.com, published by Asset Management Corp., 505 East New York Ave., Ste. 3, DeLand, FL 32724, 1 year, 17 issues, $275. Mr. Harding also publishes the FREE daily market blog, www.StreetSmartPost.com. You can follow him on Twitter @streetsmartpost.

Consumers and Investors ConfidentEven As Global Recession Threatens Anew!

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GLOBAL DYNAMICS LETTER19 Adams Pt. Rd., Barrington, RI 02806. 1 year, 4 issues, $100.

Likes alternative energy long-termR. K. Matthews: “We continue to like alternative

energy long-term. Combine that with a weak Euro and Total SA ADRs (TOT) and Siemens AG ADRs (SI) will probably look interesting for some time into the future. Both currently suggest a 20 to 25% per year trading range.”

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LOOKING FORWARD, published for clients of Friess Associates and Brandywine Funds shareholders, P.O. Box 576, Jackson, WY 83001.

Allstate exited high-risk policies building a stronger bottom line

Chris Aregood: “At the most basic level, an insurance company’s success is based on its ability to pay out less in claims than it takes in through policy premiums and investment returns. With investment income hard to come by, Allstate has addressed the other parts of the equation, walking away from unprofitable business and raising premiums on policies.

The Allstate Corp. (NYSE: ALL) is the largest publically held personal lines property and casualty insurer in the U.S. The company primarily sells auto and homeowners insurance products to individuals under the Allstate, Encompass and Esurance names through agencies, call centers and the Internet. Allstate also provides commercial products for small business owners and specialty insurance products for consumers. Its financial segment provides life insurance, retirement and investment, and voluntary accident and health insurance products.

Allstate grew June-quarter earnings to $0.87 per share from a loss of $1.23 a year ago, beating the consensus estimate by 71 percent. Lower catastrophe losses and margin improvements in the company’s personal property line drove results. After facing $3.8 billion in claims tied to natural disasters last year, Allstate exited hundreds of thousands of high-risk insurance policies in specific areas of the country. The company’s conservative approach to homeowner underwriting has helped its bottom line. At the same time, firming housing prices and better economic conditions have supported policy price increases.

On a recent conference call Chief Executive Tom Wilson reiterated the company’s focus on improving profitability in its homeowners insurance line. Allstate’s homeowners combined ratio was 104.9 for the second quarter, a significant improvement from

the combined ratio of 193.3 in the prior year quarter. Combined ratios under 100 indicate underwriting profitability.

The Friess Associates team bought Allstate at just eight times current 2012 estimates. Analysts expect the company to grow earnings 214 percent this year.

Over the next two years, U.S. health-care providers will face an expanded coding system for clinical procedures. The number of diagnosis codes is expected to increase from 17,000 to over 140,000. There will now be 480 codes for a fractured kneecap, up from just two in the current system. Nuance’s voice-recognition technology is expected to help manage the complexity.

Nuance’s Technologies Turn Speech Into Written Words

Nuance Communications Inc. (Nasdaq: NUAN) is the market leader in the voice-recognition field. More than two-thirds of Fortune-100 companies use its various technologies that enable the voice control of electronic devices and turn speech into written words. Revenue increased 23 percent in the 12 months through June to nearly $1.6 billion. June-quarter earnings grew 29 percent, beating the consensus estimate by 13 percent. Revenue increased 31 percent during the quarter, led by a 34 percent increase in the company’s mobile and consumer division. Major cellular phone, electronic-device and automobile manufacturers are incorporating more voice-enabled features in their products, allowing users to execute tasks and get information using voice commands.

Related to the new medical diagnostic coding, the company’s technology is being used in a system that captures highly specific clinical documentation in physician dictations needed to determine the correct diagnostic codes and insurance reimbursement rates. Nuance commands nearly 90 percent of the U.S. market for health care voice-recognition technology.

The Friess Associates team spoke with Chief Executive Paul Ricci regarding Nuance’s strengthening competitive position in health care. The company recently completed its acquisition of transcription services provider Transcend Services and announced it would buy Quantim, a developer of coding solutions for electronic health records.

We believe significant growth opportunities lie ahead given the company’s dominant market position and the recent launch of its latest voice-recognition software. The Friess Associates team bought Nuance at 13 times fiscal 2012 earnings estimates, which forecast 24 percent earnings growth.”

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Alan Newman’s Stock Market CROSSCURRENTS3280 Sunrise Highway #125, Wantagh, NY 117931 year, 12 issues, $189; 6 months, $100.

QQQ insiders still on sell rampageAlan Newman: “Our last analysis of insider activity

for the top constituents of the QQQ Nasdaq Trust was reported back in June. We typically do this exercise several time each year and given close to another

Stocks to Watch

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1000 Dow points to the upside we wonder if insiders were displaying as much confidence about the future as prices might indicate. Nope, not a chance.

Insider activity at the top QQQ issues remains solidly in the sell camp and the pace of selling is just as frantic as before. In fact, the stats are almost identical to more than three months ago. However, before we get into the phenomenon, wherein insiders flee from their own company’s stock as if another day of holding would ruin everything they’ve ever worked for, we’re going to cut into one of the most interesting pies ever tasted on Wall Street.

As of Sept. 21st, the top nine constituents of the QQQ Nasdaq Trust: Comcast (CMCSA), Amazon.com (AMZN), Qualcomm (QCOM), Intel (INTC), Google (GOOG), Oracle (ORCL), Microsoft (MSFT), Apple (AAPL) total $1.85 trillion in market cap, 10.6% of the nation’s total (roughly) $17.45 trillion in total stock market capitalization.

There are now thousands of hedge funds with over $2 trillion in assets and there is no way they can remain in business with average performance, thus they are all stock pickers. And it appears they are increasingly dependent on one stock. We learned that as of June 30th, 230 hedge funds were long Apple up by one-third from 173 at the end of the first quarter in 2011. Noting a near doubling in price, we would guess they’re happy.

However, if there’s one thing we have ever learned about Wall St., is that the common wisdom is not wisdom at all. Thus, the piling on board AAPL’s shares must be met at some point by a rush for the exits. Let’s state our case in several different ways. We doubt that AAPL’s present capitalization of $625 billion can fairly represent 3.6% of the stock market’s entire capitalization when revenues represent only 0.7% of GDP.

Yes, the company is huge. Everyone wants their products. But everyone wants their stock as well, meaning there are fewer and fewer buyers left on the sidelines. For comparison’s sake, Walmart’s (WMY) capitalization is 38% of Apple but revenues are more than quadruple that of AAPL.

Amazingly, since AAPL bottomed out in mid-June of 2011, it has accounted for 16.1% of the entire increase in U.S. stock market capitalization and 71.4% of the increase in capitalization for the top Nasdaq issues. Perhaps we could take some measure of comfort from these stats if those in the know – corporate insiders – were in a buying mood, but sadly, that’s not the case, not for AAPL and not for any of the other top Nasdaq issues either. We admit that one Director did indeed buy $1 million in AAPL shares last November at $375 per share. However, every other insider transaction listed for AAPL is a sale, and for a total of roughly $220 million, or 220 times as much as was bought. The amount of non-confidence show by the other eight top QQQ constituents we examined was far worse. Overall for the natty nine, there were 5 buys totaling just over 9,100 shares and 299 sells for more than 55 million shares, a stunning ratio of 6,066 shares sold for each share bought.

Another important factor is the following: despite the astonishing lack of confidence shown by insiders at these companies, analysts continue to pile on praise. Of all recommendations, 73.2% are either “buy” or “strong buy” and if you include those who still believe that prices are going higher, thus recommend “hold,” the percentage of those forecasting good times rises to 96.3%. Wow. Less than 3% of all recommendations are “sell” and only 0.7% are “strong sell.” Clearly, insiders are profiting handsomely from these forecasts, selling as much as they can while investors and speculators continue to pile on. Unloved and unwanted typically mean great value. Over loved and over owned should mean precisely the opposite.

It is clear that American investors have been headed to the sidelines for many, many months. Only one month is the last 16 has witnessed inflows for equity mutual funds and the inflow was minimal. We see no reason for these trends to change, thus our take on sentiment is going to stay contrary. The stock market’s bull phase, like Apple, is over owned and over loved. No one wants to see it end, even us. It always seems to end this way.

Perhaps the great love affair with Apple’s Computer (AAPL) shares is finally going to take a significant breather. While we absolutely love the company and its products, we believe the shares are way to popular. Important support is at the April high of $644. If that doesn’t hold, risk probably extends to under $600. Google Inc. (GOOG) has taken the play away and is up an astonishing 36.6% in only three months. Unfortunately, the shares are now overbought on almost every level and have left supports far behind. We see risk down to the September 12th low of $680.88.”

Editor’s Note: Alan Newman provides powerful commentary and unique perspectives in each issue of Alan Newman’s Stock Market Crosscurrents. For a 3-issue FREE trial visit www.cross-currents.net.

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© Copyright 2012 Monetary Digest. Reproduction in whole or in part without written permission is strictly prohibited. The Monetary Digest publishes investment news and comments of investment advisory newsletters whose thoughts are deemed of interest to subscribers. Neither the information, nor any opinion which may be expressed constitute a solicitation for the purchase or sale of any securities or investment referred herein.

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Android expands Google’s ad empire

Richard Moroney: “Forgive investors for being distracted by Google’s (GOOG: $744) cable-television ambitions, web glasses, web TVs, and self-driving cars. Like Apple (AAPL: $644), Google aspires to invent gadgets consumers never knew they wanted. But its core business remains advertising, which accounted for 96% of sales last year. Most of Google’s biggest strategic decisions support one objective: finding new ways to bring ads to consumers.

Google is one of just two S&P 500 Index companies that has grown cash provided by operations more than 15% in each of the last nine fiscal years, a streak that should stretch into 2012. In the first half of the year, Google’s operating cash flow climbed 19%, and the consensus projects 16% higher earnings per share in the last six months of 2012. At 18 times trailing earnings, the stock trades 32% below its five-year average and 8% below the median for S&P 1500 Internet stocks. Google is a Focus List Buy and a Long-Term Buy.

Business BreakdownGoogle first began delivering ads through its

namesake search engine in 1998. Today, it powers 86% of global searches and 93% of mobile searches, according to industry researcher NetMarketshare. Google said the number of mobile searches has quadrupled over the last year. By one estimate, mobile devices could account for 25% to 30% of all U.S. web searches in 2012.

The future of Google’s search business seems to lie in Android, the company’s mobile operating system. More than 500 million Android devices have been activated – versus about 327 million iPhones and iPads – and that total climbs by more than 1.3 million new accounts each day.

Apple’s patent victory over Samsung has caused some device makers to quietly explore other operating systems, potentially reducing Google’s access to the mobile market. But Google has one manufacturer, Motorola Mobility, in its hip pocket following a $12.5 billion acquisition in May.

Google must first turn around Motorola’s mobile-device unit, unprofitable in 14 of the past 16 quarters. Motorola’s slice of the U.S. mobile-phone market has shrunk to 11% from 20% two years earlier, according to comScore. The first crop of Motorola smartphones released on Google’s watch will arrive ahead of the holidays, and management intends to consolidate Motorola’s vast phone lineup, which featured 27 models last year. Google also plans to lay off 20% of Motorola’s work force.

Continuing its expansion into mobile services, in August Google paid $25 million for Frommer’s, a publisher of travel guides. Nearly 40% of smartphone users accessed travel content in July, says comScore.

ConclusionNet cash on the balance sheet has swelled to $43.12

billion, or nearly $112 per share, up tenfold over the last seven years. Credit that cash hoard to growth in free cash flow, up at least 9% in 24 of the past 28 quarters. In July, Google said it has no immediate plans to launch a dividend. But given trends among tech companies, it seems likely that Google will eventually pay a dividend. An annual report for Google Inc. is available at 1600 Amphitheatre Parkway, Mountain View, CA 94043; (650) 253-0000; investor.google.com.”

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AT&T: Buybacks and dividend increases expected to continue

A recent addition to Genia Turanova’s High-Yield Income portfolio is AT&T (T), the largest US telecommunication company. AT&T is a good example of how dominance in a business sector can pay off in both price appreciation and dividends.

“AT&T has a solid balance sheet, a stable business model, more than $125 billion in annual sales and nearly $4 billion in net income. With 250,000 employees, its operations are not limited to the US – it also has exposure to Latin America through a 9.5 percent stake in America Movil.

Going forward, we envision AT&T earnings per share growing at least at a mid-single digits rate, and quite possibly higher, based on several factors. One is the recent strength in its wireless business, where the company sees 2 percent growth in postpaid average revenue per user and a higher number of subscribers. Another is the expansion of its 4G LTE network, which will facilitate competitiveness and future growth. Also, its wireline business, both enterprise and consumer, has been stable.

AT&T is a free cash flow machine: management expects it to reach $15 to $16 billion for the year, with the firm’s capital budget remaining stable at about $20 billion. The natural uses for free cash flow are dividends and share buybacks, and AT&T excels at both. Most recently, in late July the company’s Board of directors increased its authorization of share repurchases by 300 million shares, about 5 percent of shares outstanding, doubling the existing authorization. Note that over the course of the last two quarters the company has already bought back about 143.5 million shares, having returned $4.6 billion to shareholders via buybacks. Plus, it paid more than $5 billion in dividends over that same period. This indicates that the company is not considering its current price too high for buybacks. Going forward, we expect both buybacks and dividend increases to continue. Yielding 4.7 percent, it’s a buy up to 40.”

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“Trading in the gaming sector is a lot like gambling itself. The past few years have seen a huge slump in US casino growth. Unemploy-ment tends to lag behind the worst of the recession. A full-fledged gaming operation also takes time due to high fixed costs and retali-ation from neighboring residents. With recent job growth optimism and new resort approvals, invest-ing in casinos is still risky,” says Freda Ding of Kapitall Wire.

“Play the gaming industry with caution”, advises Freda Ding. Here are her investing ideas.

The threat of web-based gaming is maturing. Zynga’s (Z) poker chief is leaving the company, a sign that the business has jumped the shark. That does not mean users are moving to real-life gaming though the casino market on the east coast is growing.

Las Vegas Sands Corp. (LVS) opened a site in Bethlehem 3 years ago which is generating healthy revenue streams, one of 11 in Pennsylvania. Casino ballot initiatives and openings are occurring in other states including Ohio, Oregon, Arkansas, Massachusetts, Rhode Island, and Maryland. New sites can only mean increased orders for actual games

Several of these initiatives have seen heated opposition. Though for others the appeal is potential job creation. Then there is the issue of tax revenue which can be redirected towards education spending.

One sign that there is still money to be made in gaming is the willingness of these gaming companies to protect licenses. Casinos in Maryland have spent $40 million on ad campaigns. And since the US market is spotting, you can always invest in vendors who are diversified internationally. (Prices as of Oct. 12th) Including:

1. Penn National Gaming

Inc. (PENN): Penn National Gaming, Inc. and its subsidiaries own and manage 25 gaming and

Risky Business: Play TheGaming Industry With Caution

pari-mutuel properties in the United States. Market Cap at $3.1B, most recent closing price at $40.78.

2. Las Vegas Sands Corp. (LVS): Develops, and operates various integrated resort properties primarily in the United States, Macau, and Singapore. Market Cap at $35.7B, most recent closing price at $43.96.

3. MGM Resorts Interna-tional (MGM): Operates casino resorts in the United States. The company’s resorts offer gaming, hotel, dining, entertainment, re-tail, and other resort amenities. It also owns and operates golf courses and a golf club. Market Cap at $5.0B, most recent closing price at $10.25.

Companies supplying gam-ing solutions and equipment that are trading lower:

4. WMS Industries Inc. (WMS,): Engages in the design, manufacture, and distribution of games, video and mechanical reel-spinning gaming machines, and video lottery terminals (VLTs) for the legalized gaming industry worldwide. Market Cap at $859.8M, most recent closing price at $15.79.

5. Shuffle Master Inc. (SHFL): Develops, manufactures, and markets technology and entertainment-based products for the gaming industry worldwide. Market Cap at $848.9M, most recent closing price at $15.16.

6. Bally Technologies, Inc.

(BYI): Designs, manufactures, operates, and distributes advanced technology-based gaming devices, systems, and server-based solutions worldwide. Market Cap at $1.9B, most recent closing price at $46.51.

7. Zynga, Inc. (ZNGA): pro-

vides social game services. The company develops, markets, and operates online social games as live services played over the In-ternet and on social networking sites and mobile platforms. It has approximately 240 million aver-age MAUs (monthly active users,) in approximately 175 countries. Market Cap at $1.8B, most recent closing price at $2.43.

Editor’s Note: Kapitall Wire offers free cutting edge investing ideas, lively commentary and timely analysis of companies enhanced by interactive tools. And the Investing 101 section breaks complex concepts down to their basics, offering education to novices that doubles as a refresher course for more seasoned investors. Kapitall Wire is a division of Kapitall Inc. For more information visit www.kapitall.com.

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Lucas Energy Anticipating Break-Out Year with Increase in Producing Oil Wells Lucas Energy’s Preliminary 2nd Quarter Fiscal Year 2013 Production is Up 22%

The Giddings Field is the largest oil field found in Texas during the last 50 years.

Lucas Energy’s key oil and gas properties are located on the Austin Chalk Trend of the Texas Gulf Coast which has an

estimated 6 billion barrels of oil reserves.

Fueled by anticipated new joint ventures in the development of its Texas oil and gas leases, Lucas Energy, Inc. (NYSE MKT: LEI) could well post significantly larger production numbers in the coming year, thereby sharply increasing the value of the company for its shareholders.

In the first two months of the 2nd quarter of fiscal year 2013, the Company had average gross production from operated wells of 439 BOPD (barrels of oil per day). This was a 22% increase in gross production over the 1st Quarter of fiscal year 2013 which was 360 BOPD. These numbers do not include oil and gas production from the two Eagle Ford wells operated by an affiliate of Marathon Oil Company.

The increase in gross operated production has been due to the improvement of older wells and not new drilling. Lucas plans to workover additional wells in the 3rd quarter of fiscal year 2013.

For the quarter ended June 30, 2012, gross operated production was over 30,000 bbls (barrels) of oil. This is a 70% increase in the production over the 1st Quarter

of fiscal 2012 which was just over 18,000 bbls of oil.

A Plan of Action for 2012: Financially, Lucas Energy is

solidly positioned for this major expansion which reflects from some of the key events underway for 2012.

The continued success is re-flected in January 2012 with a purchase and sale transaction with Hall Phoenix Energy, LLC (“Hall Phoenix”), whereby the Lu-cas Energy purchased all of Hall Phoenix’s right, title and interest in certain oil, gas, and mineral leases in the Eagle Ford/Eaglebine/Austin Chalk Trend located in Wilson, Leon and Madison Counties, Texas.

In April, Lucas Energy closed a $5.9 million equity financing and plans to use the net proceeds to pay down expenses related to drilling, lease operating, and workover activities and for general corporate purposes, including general and administrative expenses.

The Company recently entered into a joint venture agreement in August with Dolphin Oil Partnership, LP for the development of Austin Chalk properties located

in the Gonzales, Wilson, and Karnes Counties, the Texas area of the Eagle Ford/Austin Chalk Trend.

Build on Strategic Acquisitions and Joint

Venture Projects to Increase Future Growth and ValueLucas Energy’s core goal is to

acquire underperforming oil and gas assets in the targeted liquid-rich nature of the Eagle Ford/Shale formation that reflects a strong potential upside for in-creased future production.

Primarily, Lucas Energy ex-plores for, develops, produces and markets crude oil and to a much lesser extent, natural gas, from various known productive geological formations, including the Austin Chalk, Eagle Ford and Buda formations, primar-ily in Gonzales, Wilson, Karnes and Atascosa Counties south of the City of San Antonio; and the Eaglebine formation in Leon and Madison Counties north of the City of Houston in Texas.

Another core part of Lucas’s growth strategy is building a strong relationship with Joint

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Venture and Acquisition Partners in the areas of underdeveloped ma-ture oil fields having the potential to recover significant untapped oil reserves in this area of the Trend.

Lucas Energy’s continued focus of acquiring shut-in wells with high probability of addition-al recovery of reserves through our revitalization process or the drilling of new laterals indepen-dently or jointly with a venture partner has proved to be a great success.

As of June 30, 2012, the Com-pany had leasehold interests (working interests) in approxi-mately 27,000 gross acres. Total net developed and undeveloped acreage as measured from the sur-face to the base of the Austin Chalk formation was approximately 21,900 acres. The Company has approximately 5,900 net acres in the Eagle Ford (and lower depths) in the southern part of the Eagle Ford trend near San Antonio, Texas. Further, the Company has approximately 3,700 net acres in the Eaglebine area of the Eagle Ford trend to the north of Hous-ton, Texas.

At the end of June 2012, Lucas was producing approximately 430 BOPD (approximately 260 BOPD net) from 56 active well bores, of which 11 wells accounted for more than half of the production. The ratio between the gross and net production varies due to varied working interests and net revenue interests0 in each well. An affiliate of Marathon Oil Corporation oper-ates two Eagle Ford horizontal wells, in each of which we have a 15% working interest. The wells have produced a cumulative of approximately 120,000 barrels of oil through July 31, 2012 recently put on artificial lift.

“Lucas has now expanded its holdings on the Eagle Ford trend into the Eaglebine area,” says Sawyer. “We believe the purchase has made our Eagle Ford acreage, which we currently plan to monetize, more valuable.” The Company plans to sell the Eagle Ford and Eaglebine properties for projected estimated value price to further infuse the Company’s coffers with funds it will use to acquire yet additional properties on the Austin Chalk.

Lucas Energy Inc. has spudded (commenced drilling) the Hagen Ranch No.4H well in Gonzales County, Texas. The Hagen Ranch No.4H well will be a horizontal well in the Austin Chalk formation.

The well is on the same lease as the two Hilcorp Oil Company drilled, but now Marathon Oil Company operated, Hagen EF No. 1 H and

No.2H wells producing from the Eagle Ford formation. The Hagen Ranch No.4H well is being drilled with joint venture partners such as Seidler Oil and Gas.

Lucas Energy ended the 2012 fiscal year with approximately 5,900 net acres in the Eagle Ford trend and approximately 3,700 net acres in the Eaglebine trend.

PRODUCING OIL IN OIL-RICH TEXAS

Building on the Strength and Vision of Lucas Energy’s

Business Strategies:Lucas Energy continues to

benefit from the Eagle Ford’s increasing level of activity, value,

and attention as more companies move into the trend areas.

It was reported by the U.S. Energy Information Administra-tion (“USEIA”) on April 23, 2012, that the number of oil and natu-ral gas well starts in the Eagle Ford increased from around 50 in

10

January 2010 to approximately 350 in March 2012. We benefit from the increasing number of wells drilled and the correspond-ing data available from public and governmental sources. This activity and data have begun to define the geographic extent of the Eagle Ford formation, which we believe will assist us in evaluating future leasehold acquisitions and development op-erations. In addition, the leading operators in the Eagle Ford have developed drilling and comple-tion technologies that have significantly reduced production risk and decreased per unit drill-ing and completion costs.

Lucas Energy Riding Wave of Increased U.S. Oil Production

Lucas is operating in one of Texas’ hottest new drilling areas – the Austin Chalk formation, part of the 50-mile wide Eagle Ford Shale trend which crosses three states – Texas, Louisiana, and Mississippi. The area was first drilled in the 1920s. Many previously Austin chalk producing wells were shut down when the oil price was depressed in the 1990’s, but new horizontal drilling techniques have unlocked significant untapped oil reserves and the recent oil price of approximately $100 per barrel is making the area profitable to drill again.

Now, new drilling for oil on the Austin Chalk is a prime example of the increase in oil production in the U.S. – and Lucas Energy is part of that trend. Texas is still the country’s premier oil producing state, which saw total

2011 oil production climb back above 1 million barrels a day last year for the first time since 2001. Texas oil production increased 9.5 percent in February compared to the same period the previous year, and has increased three of the last four years, and could well reach 3 million or more barrels

per day by 2016, according to Texas Railroad Commissioner Barry Smitherman.

Investment Considerations

By staying true to a business plan that gives it an impressive 90% success rate in achieving base production, partnering with solid, established oil patch companies and continuing to leverage its property portfolio, Lucas could well be entering a break-out year.

The Company forecasts it will achieve net oil production of 52,000 barrels of oil in the current year (fiscal year 2013), and that with an anticipated price per barrel of $95, would result in $4.94 million in net revenue from base production alone. When combined with small, medium and large joint ventures, Sawyer says net revenue could jump to $14.8 million and future potential annualized revenues to $28.3 million.

“The main event for 2012 will be a growing number of new joint ventures on our key properties in Texas,” says Sawyer. “The sale of Eagle Ford will be icing on the cake.”

Disclaimer: This material is for distribution only under such circumstances as may be permitted by applicable law. It has no regard to the specific investment objectives, financial situation or particular needs of any recipient. It is published solely for informational purposes and is not to be construed as a solicitation or an offer to buy or sell any securities or related financial instruments. References made to third parties are based on information obtained from sources believed to be reliable but are not guaranteed as being accurate. Recipients should not regard it as a substitute for the exercise of their own judgment. The opinions and recommendations are those of the writers and are not necessary endorsed by The Bull & Bear Financial Report. Any opinions expressed in this material are subject to change without notice and The Bull and Bear Financial Report is not under any obligation to update or keep current the information contained herein. All information is correct at the time of publication, additional information may be available upon request. The companies featured have paid The Bull & Bear Financial Report a fee to provide investor awareness programs. Management of the companies have approved and signed off as “approved for public dissemination” all statements made herein. The directors and employees of The Bull & Bear Financial Report do not own any stock in the securities referred to in this report. The information contained herein may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, including statements regarding expected continual growth of the featured companies and/or industry. In accordance with the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, the publisher notes that statements contained herein that look forward in time, which includes everything other than historical information, involve risks and uncertainties that may affect the company’s actual results, developments, and business decisions to differ materially from those contemplated by any forward-looking statements. Factors that could cause actual results to differ include the size and growth of the market for the company’s products or services, the company’s ability to fund its capital requirements in the near term and long term, pricing pressures, etc. The Bull & Bear Financial Report is not a registered investment advisor or affiliated with any brokerage or financial company.

LUCAS ENERGY, INC.NYSE MKT: LEI

Contact: William A. Sawyer, President and CEO

3555 Timmons Lane, Suite 1550 Houston, Texas 77027Phone: 713-528-1881

Fax: 713-337-1510E-Mail: info@lucasenergy.com

Web Site: www.lucasenergy.comShares Outstanding: 26.1 million

Shares in Float: 21.7 million52 Week Trading Range:

U.S.: Hi: $3.24 • Low: $1.25

William A. SawyerPresident and CEO,

Lucas Energy

“We can sell as much oil as we want at world

market prices.”

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THE GRANVILLE MARKET LETTERP.O. Drawer 413006, Kansas City, MO 64141. 1 year, 46 issues, $250.

Review the Titanic sinking The stock market is going down

Joseph Granville: “Based on the April 1912 history of the sinking of that fabulous ship and the most entertaining 1997 movie, here is review of why the ship sank. It explains why the 2012 stock market will sink for the same reason. I refer to that scene in the movie that showed the builder Thomas Andrews with a map of the ship showing the number of flooded compartments. He was pointing out the fact that the ship would survive if all of the first four were flooded – but not the first five. He told Captain Smith the ship was going down and would be gone in an hour.

I contend that the stock market is going down and may have passed the point of safe return. I base my conclusion on the charts of hundreds of stocks which had passed the point of safe return as evidenced by the angle of decline. The Dow, always the last to top out, had thus far failed to heed the warnings of hundreds of stocks which had already collapsed below their red light disaster levels. Studying the daily lists of the top 25 decliners, I select two stocks to recommend as short sales each day. Studying long-term charts, showed the evidence that most of these were returning to where they began.

Ben Bernanke, chairman of the Federal Reserve, thinks that if enough money is thrown at a problem it will go away. Current evidence shows that all his stimulus moves are having periods of lessening success. Putting an open-ended program of buying Treasury bonds in force with lime limit will, drawing from the Titanic example, “flood the compartments” with an uncontrollable inflation with such visions of the 1923 German inflation. To knowingly create inflation would virtually be a great disservice to the American people and would ruin the value of the dollar and collapse the stock market.

Borrowing a lien from Ludwig von Mises, “We are going down a road that leads to the collapse of our currency, Our Financial policy has been reduced to one remedy: printing more and more paper money. There is almost no prospect that things will change in this respect.”

Short SalesJoseph Granville’s recent short sales are:“Arctic Cat (Nasdaq: ACAT; $41.41) peaked at

46.48 in late April 2012. Broke both trendlines in May zigzagged to a low at 31.967 in mid June. Regrouped and recorded a double top at 45.56 in early September. Now heading lower, stock is responding to September malaise. Its 50-day line is at 43.20 and its 200-day line is at 37.33. Anything lower projects to 31.00 and 25.00. Buy the December 37.50 puts. Place the buy stop at 47.50. Sell Short.

Blyth Inc. (NYSE: BTH; $26.11) Chart high was at 44.60 in late April 2012. Broke key support at 36.37 in mid May and zigzagged to its bottom at 31.00 in late July. Had just broken below both trendlines. Its 50-day line is at 37.33 and its 200-day line is at 35.36. Gapped sharply higher in August to a new high at 45.57. Fell vertically to 24.80 in late September.

Anything lower will go to 15.00. Buy the December 22.50 puts. Place the buy stop at 31.00. Sell Short.

Carmax Inc. (NYSE: KMX; $28.32) bottomed at 25.22 in late June 2012. Regrouped to record new highs at 34.34 in mid September. Now heading lower, stock broke key support at 28.60 signaling falls to 24.50 and 19.00. Its 50-day line is at 29.66 and its 200-day line is at 30.05. There is no other explanation for its downturn other than its major September decline. Buy the December 25.00 puts. Place the buy stop at 34.00. Sell Short.

Nu Skin Enterprises Inc. (NYSE: NUS; $41.65) peaked at 59.90 in late April 2012. Hit its low early at 40.22 in mid May and broke a critical angle of decline as well. A long-term downtrend was put in motion. Its 50-day line is at 43.01 and its 200-day line is at 48.04. Anything below 38.00 projects to 29.00 and 22.50. Buy the December 37.50 puts. Place the buy stop at 47.00. Sell Short.

Universal Stainless & Alloy Products Inc. (Nasdaq: USAP: $39.54) peaked at 47.60 in early May 2012. Steep plunge in July to 31.75 and downward shift in the angle of decline warned of the future for the stock and the market. Rallied back above both trendlines, but declining top and July sentence proved decisive. The 50-day line is at 36.43 and its 200-day line is at 39.44. Anything below 36.00 points to 25.00. Buy the 35.00 puts. Place the buy stop at 45.00. Sell Short.”

Editor’s Note: Recommended reading for all types of investors: Joseph Granville’s books, Granville’s New Strategy of Stock Market Timing for Maximum Profit, $95; After the Crash, $30; The Stock Market Teacher, $40; How to Read the Stock Market, $75. For more information visit the website, www.GranvilleLetter.com.

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HEARTLAND ADVISER5002 Dodge St., Ste. 302, Omaha, NE 68132. Monthly, 1 year, $150. www.russkaplaninvestments.com.

Universal Health Services rated a BuyRuss Kaplan’s most recent buy recommendation is

Universal Health Services (UHS) one of the largest health management companies in this country.

“All of this uncertainty about the Affordable Health Care Act is in my opinion bringing about great buying opportunities for us.

Universal Health Services owns and operates several types of hospitals (25 acute care and 198 behavioral health) throughout the United States. Alan Miller founded the company in 1978, and continues in his role as Chief Executive Officer.

The stock is trading at approximately $44 per share, but in late 2011 traded at $56.5. I believe this is largely a result of uncertainty.

Wall Street, in my experience hates uncertainty the most, because companies like United Health Services are resilient and can adapt to bad news. A big chunk of uncertainty will be resolved on November 6, Election Day.

Fortunately, Mr. Miller owns 322,560 shares of Universal Health Services, which gives him a long-term perspective, which let’s investors know that he does not plan on changing jobs anytime soon.

The stock pays a rather low dividend, so I would not recommend it for growth income oriented investors.”

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THE TURNAROUND LETTER1212 Hancock St., Ste. LL-15, Quincy, MA 02169 Monthly, 1 year, $195. www.TurnaroundLetter.com.

Telecommunications equipment makers: Finally ready to connect?

George Putnam, III: “Few industry groups have done as poorly over the past decade as the telecom equipment companies. Coming out of the tech telecom bust around the turn of the century, many of these stocks were considered very promising. Everyone was talking about the “triple play” (voice, data, and video) and 2G/3G/4G build-outs.

So what happened? Several things. Phone companies around the globe did not increase their capital spending as rapidly as expected. Moreover, a wave of mergers among the telecom service providers reduced the number of potential customers and gave them more clout in their purchasing. Probably the most significant factor is the emergence of strong competitors from China. Companies like Huawei and ZTE came on the global stage in the 1990’s. Initially they competed in low-end products largely on price. But they plowed their profits back into R&D an now have a wide range of technically advanced offerings.

Given this history, why would anyone want to buy telecom equipment makers now? They do have a few good things going for them. First of all, potential demand. The volume of wireless data continues to grow at a rapid rate. The number of 4G networks around the world is expected to triple this year compared to last year. And competitive pressures will likely lead to 5G and 6G networks before long. Secondly, the rate of consolidation among service providers could begin to slow. With global behemoths dominating the service landscape, there may be opportunities for nimble new entrants. Finally, while the Chinese competition is not going away, it is becoming more mature and may be losing some of its cost advantage.

The companies discussed below could benefit significantly if there is an upturn in the equipment sector. They are not without risk, but they have very substantial appreciation potential if they can get back on track.

Alcatel-Lucent (ALU: $1.10), formed via the 2006 merger between France-based Alcatel and U.S. based Lucent, was once considered the dominant player in the sector. But difficulties in integrating the two legacy entities and other management missteps have held the company back. Nonetheless, Alcatel-Lucent still has strong relationships with many global customers, as well as a vast storage of intellectual property. If management can finally get things right, the stock could go up several-fold.

Ciena’s (CIEN: $13.59) optical technologies are critical to increasing the speed of communications networks. The stock was hit in late August as quarterly results and management guidance proved disappointing. But Ciena is well positioned, particularly in 100 gigabytes per second (Gbps) products, to ride the wave of increasing demand being driven by cell phones, tablets computers and cloud

computing. Though acquisitions have leveraged the balance sheet a bit, operations have been throwing off positive cash flow in recent quarters.

Comtech Telecommunications (CMTL: $27.64) provides advanced communications technologies to the commercial telecom and defense sectors. It holds leading positions in several telecom transmission markets, such as satellite earth station modems, as well as strong positions in microwave amplifiers and communications services. The loss of a major defense contract in fiscal 2010 forced management to adjust the firm’s cost structure. While there are risks from potential further defense cuts, strong technologies, growing commercial markets, a decent dividend and strong balance sheet combine to make the stock look attractive.

Infinera (INFN: $5.48) is a niche player targeting cutting edge technology critical to building out faster communications networks. The company’s proprietary technology consolidates a number of activities onto a single photonic integrated circuit. The stock has performed poorly since the company went public in 2007, but the company has maintained its technology edge. Infinera is still subject to the buying whims of the large telecom service providers, but its debt-free balance sheet gives it plenty of staying power.

JDS Uniphase’s (JDSU: $12.38) optical products made it one of the technology darlings at the turn of the century. (Its stock traded above 1,000 on a split adjusted basis in early 2000!) More sober times have prevailed over the last decade, and the stock is decidedly more attractively valued today. The company has remained relevant as evidence by its product offerings for 100 GBPS networks. Management has aggressively managed the balance sheet by reducing long-term debt and paying cash for recent acquisitions. JDS’s prowess in fiber optic network technology positions it well to help satisfy the ever growing demand for bandwidth.

LM Ericsson (ERIC: $9.12) has been around for well over a century. Today, it stands as the world’s largest supplier of equipment and services to wireless networks. While currently not firing on all cylinders – its two joint ventures are struggling, and it is divesting an asset purchased just a few years ago – the company is well positioned for growth. The balance sheet is solid, and the stock is attractively valued.

Motorola Solutions (MSI: $50.55) is the surviving entity following the split up of Motorola in early 2011. About two thirds of revenues come from its government segment where it supplies communications equipment used by police and fire departments. The balance of sales comes from its business segment where it markets a range of products, including bar code scanners and RFID products. The company has recently picked up some momentum despite the sluggish economic conditions. Management is committed to returning value to shareholders through dividends and stock buybacks.

Nokia (NOK: $2.58) dominated the cell phone handset market for well over a decade. But the company’s recent products have been squeezed between high-end smartphones and low-cost production from China. Management, led by a new

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CEO in 2010, has been cutting costs, streamlining operations and partnering with Microsoft. The firm’s latest Windows-8 operating system smartphones – Lumia 820/920 – were just released in early September to good reviews. While Windows 8 systems still have a small market share, Nokia’s alliance with Microsoft could fuel future growth.

Symmetricom (SYMM: $6.97) makes precision timing devices that facilitate and sustain a wide range of communications, aerospace/defense and IT infrastructure applications. Fiscal 2012 (ended July 1) saw a good rebound in sales and earnings. Management eliminated debt from the balance sheet a couple of years ago, and now benefits from solid free cash flow. The stock has acted better in recent months, but appears to have plenty of further upside potential.

Tellabs (TLAB: $3.53) markets products that are critical to access and switching operations on optical networks. Tellabs is another company that thrived during the initial stages of the Internet rollout but is now fighting for market share and technology relevance. Though behind competitors in the rollout of 100 Gbps products, Tellabs is beginning to catch up. The financials are solid, with cash equaling $3.05 per share. Recent management changes and the presence of an activist shareholder may speed the turnaround at Tellabs.”

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THE MAJOR TRENDS, published for clients of Sadoff Investment Management, LLC, 250 West Coventry Ct., Ste. 109, Milwaukee, WI 53217.

International bank stocks exhibit upside breakout patterns

Ronald Sadoff: “Bank and financial stocks normally lead the stock market advance and business expansion on the upside. During this cycle loan write offs, capital impairment and huge losses weakened the entire banking system. These enormous problems (deleveraging) offset the Fed’s attempt to stimulate. It is no surprise the economy could not gain traction and that this expansion is still sputtering.

The good news is that a few of the top international bank stocks may now be pivoting into major uptrends. Potentially very bullish stuff. These upside breakouts by the “too big to fail” bank stocks could be signaling an improved tone for the next several years. If these breakouts extend, it suggests that the Fed’s aggressive monetary easing will begin to work.

It is still questionable whether these breakouts by Citigroup, Bank of America, Royal Bank of Scotland and National Bank of Greece are decisive or just a false breakout. Hopefully other banks stocks will also break out there by confirming this pivot is solid.

We track two measurements for each stock: the price of the stock and its relative strength line (the price dividend by the Standard and Poor’s 500 Index). A downtrend for the relative strength line depicts the stock is underperforming. An uptrend for the relative strength line confirms the stock is outperforming. A major pivot from a downtrend into an uptrend can result in a major buy signal. Major upside breakout patterns generally last for many years. Major uptrends for financial stocks generally parallel a bull

market and not business expansion.Citigroup (C) traded at over $500 per share

(adjusted for the 1 for 10 reverse split last year) six years ago. Now it trades near $35. It just broke above its respective downtrend lines suggesting a mega turnaround.

Bank of America (BAC) traded at $55 just a few years ago. Now it’s near $10. A major collapse! Recently it broke above its respective downtrend lines.

Royal Bank of Scotland (RBS) traded at $230 (adjusted for a 1 for 20 reverse split) five years ago. Now it’s at $9. A whopping freefall. It recently popped above is major downtrend lines.

National Bank of Greece (NBG) may have broken above its own price and relative strength downtrend lines. However its breakout is not yet decisive enough. The stock traded near $70 (adjusted for a 1 for 5 reverse split) six years ago. Now it’s a $2. Keep an eye on this stock because it is at the heart of a depression in Greece.

Once again, not all major international bank stocks have exhibited upside breakout patterns. Additional breakouts by more banks will further confirm that a significant turnaround is taking place.”

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THE PRIMARY TREND3960 Hillside Dr., Delafield, WI 53018. Monthly, 1 year, $80. Available free to shareholders of The Primary Trend Fundswww.primarytrendfunds.com.

Splitting up is hard to doBarry Arnold: “Finally, on October 2nd, Kraft

Foods, Inc. (former parent company with ticker symbol KFT) split into two separate publicly traded companies. What a discombobulated divorce, but one in that we find both new entities attractive investments going forward… for two different reasons.

Shareholders of the original KFT received 1 share of the new Kraft Food Group (KRFT: $45.42; 4.4%) for every 3 shares of KFT owned. Post-spinoff, KFT then changed its name to Mondelez International (MDLZ: $28.00; 1.9%)… is essence a 1-for-1 share exchange. The cost basis is assigned as follows: MDLZ = 65.43% and KRFT = 34.57%.

KRFT (headquartered in Northfield, IL) is the fourth largest consumer packaged food and beverage company in North America. Mondelez, meaning “delicious world,” is now one of the largest global snacks businesses concentrating on biscuits, chocolate, gum and candy. We believe both new core holdings in our portfolios are attractive long-term investments, with MDLZ providing higher growth worldwide and expected to pay a 2% dividend yield, while KRFT will provide slower growth with an expected above-average dividend yield of more than 4%. Both stocks have attracted investors’ money in its first week’s debut. We anticipate beefing up both holdings on price weakness. Hold KRFT and MDLZ common for continued gains.”

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STOCKS TO WATCH, a daily column by In-vestingDaily, a free website maintained by KCI Publishing, 7600A Leesburg Pike, West Bldg., Ste. 300, Falls Church, VA 22043.

Yum! Brands Surges on China Growth; India Up Next

Chad Fraser: “Yum! Brands (NYSE: YUM), the world’s largest restaurant operator, recently reported better-than-expected earnings.

In the company’s third quarter, which ended September 8, 2012, its profits jumped 23%, to $471 million, or $1.00 a share, from $383 million, or $0.80, in the third quarter of 2011. Without unusual items, the company earned $0.99 a share, up 19.3% from $0.83. That topped the consensus estimate of $0.97. Sales rose 9%, to $3.6 billion.

Due to the strong results, Yum! Brands raised its full-year outlook. It now forecasts earnings of $3.24 a share, up from its previous forecast of $3.22.

The company operates over 37,000 restaurants in 117 countries worldwide under the Taco Bell, Pizza Hut and KFC banners. Yum continues to increase its already vast international presence: in the third quarter, markets outside the U.S. accounted for 78% of its sales, up from 74.5% in the second quarter.

Yum! Brands Is Defying Gravity in ChinaThe company’s China division, which accounted

for 56% of its sales in the latest quarter, posted a 22% sales increase. That was largely the result of the company’s ongoing rapid expansion in the country: Yum! Brands opened its 4,000th KFC outlet in China in the quarter, and has plans to open 750 new restaurants in the country this year.

But even if you exclude the contribution from new restaurants, the company’s Chinese growth still looks impressive. Same-store sales, which track sales at outlets open for one year or more, rose 6%. That compares to a 2% gain in the rest of the world. Same-restaurant sales also rose 6% in the U.S., thanks to strong gains from the company’s Taco Bell chain, partly due to the popularity of its Doritos Locos Tacos.

The strong results come as China’s economy continues to slow. In the latest quarter, the country posted an economic growth rate of 7.6%, which is still very strong by developed country standards, but it’s well below the 9.2% growth the country posted in 2011 and a far cry from 2010’s 10.4% rate.

Even so, Yum! Brands remains upbeat about its Chinese prospects:

“Our China business is having another strong year,” said Yum Chairman and CEO David C. Novak in a recent Bloomberg Businessweek article. “But as I’ve said before, China is going to have its inevitable ups and downs … We now face a slowing economy. But that doesn’t change our long-term outlook in China one iota. Our annual performance has been pretty consistent, and I expect this to continue.”

Yum! Brands Is Looking to India for Its Next Big Growth Spurt

Now the company is looking to another emerging market, India, for future growth. Yum! Brands remains in a good position to capitalize on the country’s rapidly growing middle class. This is a market with huge

potential: according to research firm RNCOS, the fast-food industry is expected to post a combined annual growth rate of 34% in India from 2011 to 2014.

Yum’s India division continues to grow strongly. In the latest quarter, its sales jumped 29%, matching the 29% increase in the number of stores it operates there. But the sales gain wasn’t just the result of opening new restaurants: same-restaurant sales jumped 5% in India during the quarter, trailing China and the U.S., but ahead of the company’s restaurants in the rest of the world.

The company recently broke its Indian restaurants out as a separate division. Before, it reported their results as part of its Yum Restaurants International (YRI) division, which encompasses the entire world apart from the U.S. and China. The Indian business’s revenue of $25 million only accounted for 0.70% of Yum’s overall revenue, but that was up from $24 million, or 0.76%, in the previous quarter.

Yum now has 495 restaurants in India, which pulls it nearly even with Domino’s Pizza (NYSE: DPZ), which has the largest presence, at 500 outlets. McDonald’s (NYSE: MCD) is well behind with 271.

Swift Overseas Growth Has Risks, But Yum Is a Seasoned Pro

Yum does face some risks in India, however. For one, the country does not have a long tradition of dining out, with most Indians still preferring to eat at home. In addition, the company’s deep and growing reliance on overseas sales makes it vulnerable to fluctuating currency exchange rates. Yum also faces rising competition from McDonald’s, Domino’s and other fast-food chains that are aggressively expanding in emerging markets.

However, Yum’s long overseas experience helps mitigate some of that risk. The company was the first fast-food chain to enter China, in 1987, so it knows how to navigate the tricky terrain of building and growing a profitable business in a market that is completely different from the U.S.

Like Indians, Chinese tend to dine in more than citizens of Western countries. But Yum has learned to increase its appeal by adapting its menus to local tastes. It’s taking the same approach in India, adding items like Tandoori Paneer Pizza and more vegetarian items, like Veg Strips, to appeal to the large number of Indians who don’t eat meat. Its strong same-store sales growth in India attests to its success in this area.

Meanwhile, Yum’s Indian expansion is proceeding at full speed. The company recently said it will spend $100 million to grow in the country in the next four to five years, with the goal of expanding the number of outlets in India and surrounding nations to 1,000 by 2015.

“India is at the same point China was before it took off, in terms of macroeconomic parameters such as per capita income and export as a percentage of GDP,” Niren Chaudhary, president of Yum’s India division, recently told Reuters. “We’re an economy driven on the back of domestic consumption expenditure and therefore, as we have seen, we are likely to continue to be resilient even in the face of a global slowdown.”

Editor’s Note: Chad Fraser is a contributor to InvestingDaily.com, an online service of KCI Investing. Chad has also worked on some of Canada’s most respected investment publications, including Investor’s Digest of Canada and The Investment Reporter. To sign up for free reports and E-mail alerts visit www.InvestingDaily.com.

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Aurcana Expects Q4 Commercial Production for Shafter Mine and Expands 43-101 at La Negra to 115 Million Oz. Ag

Shafter Mine to Produce 3.8 Million Oz of Silver in its 1st Year, 8-10 Million Oz of Silver When Full Production is Achieved in late 2013

Aurcana’s Shafter Mine in Texas is poised to become the third largest silver producer in the U.S. with full production in late 2013. The Shafter Mine has an NI 43-101 measured and indicated resource of 24.6 million ounces of silver

and an inferred resource of 22.8 million ounces of silver.

Aurcana Corporation (TSX.V: AUN) is about to fly by mid-tier producer ranking and soar straight into the heady class of major primary silver producers.

The reason is clear – the company already has a strong and expanding mine producing silver in Mexico and has now begun operations at a second and potentially much larger silver mine in Texas.

In fact, once in production the Shafter Mine will quickly begin producing about 10% of all U.S. silver, and will rank the 8th largest silver producer in North America, but expects to become the 3rd largest producer when full production is achieved in late 2013, according to Aurcana President and CEO Lenic Rodriguez.

Aurcana’s performance to date is impressive, generating $21.7 million in 12 months of mining operations (as of June 2012). Since then, the company continued to set new production and revenue records – all just from its La Negra Mine in Mexico. Those numbers will more than triple when the Shafter Mine is fully operational. Add to that Aurcana’s considerable exploration upside at both projects and that the company is currently trading significantly below intermediate silver producers with similar production profiles, and it becomes clear that Aurcana is a company with a strong future.

Another major milestone for Aurcana is the recent NI 43-101 report of 115 million ounces of silver at La Negra. That represents a large increase from just 5 million compliant ounces of silver before the latest update. With the impressive increase in the life of mine and the increase in grade to 131 g/t, La Negra gets new focus and more respect as a mine that will produce for decades to come.

Record Silver ProductionIn its second quarter of 2012,

Aurcana posted the largest quarter of silver production at its La Negra Mine in the company’s history – 373,037 ounces – bringing the total for the last 12 months to more than 1.1 million ounces of silver. The company increased its silver equivalent production to just over 2 million ounces for the last 12 months, continually growing the silver production at La Negra and increasing grades to 80 g/t.

Opening of Shafter Mine to More than Triple Aurcana’s Annual Silver Production

In February, 2011, Aurcana began building its Shafter Mine and now that construction is complete. Shafter is now in the testing and commissioning phase. The company has begun

mining the stockpiled surface ore, grading between 2 and 4 ounces per ton. Processing of even higher grade underground ore – grading between 8 and 10 opt – will quickly increase the number of ounces mined at Shafter.

The Shafter mine ramp has reached the first resource block and has begun to mine from several locations on the block. Drilling through the first resource block has added the discovery of a thicker resource block than shown by historical drill results. The first silver pours have occurred at Shafter and commercial production is just around the corner.

The Shafter Mine is located in southwest Texas and encompasses the northeastern down dip exten-sion of the historic Presidio Mine which produced an estimated 35 million ounces of silver between 1883 and 1942. Gold Fields Min-ing acquired the mine in 1977

16

from Amax and spent over $20 million on exploration and mine development. Silver Standard acquired the property in 2000 and sold it to Aurcana in 2008. Silver Standard continues to hold 15 million shares in the company. The mine site benefits from an excellent infrastructure, including a major power line and a paved highway that crosses the property.

Currently, the Shafter Mine has an NI 43-101 measured and indicated resource of 24.6 million ounces of silver and an inferred resource of 22.8 million ounces of silver, using a 4.0 opt cut-off. The mine currently has a 10-year mine life and is expected to produce about 3.8 million ounces of silver by the end of 2013.

Shafter has an exploration budget of $3 million this year and the drilling plan was developed to encounter the feeder systems to the Shafter resource.

“The Shafter Mine is now in the testing and commissioning phase. We built the mine and mill ahead of schedule and about $1 million under budget,” says Rodriguez. “We are excited about announcing the first revenues on the Shafter Mine.”

La Negra Production Increasing and

New Resource of 115 Million Oz. Silver

Production at Aurcana’s La Negra is slated to increase in 2012 as the mine’s third expansion in consecutive years reaches to 2,500 tpd and continues up to 3000 tpd. The new 43-101 resource of 115 million ounces of silver makes La Negra one of the largest silver mines in Mexico. Adding the Copper, Zinc and Lead resources the silver equivalent is over 200 million ounces. Another exciting element of the report is the increase in silver grade to 131 g/t.

“The new 43-101 report at La Negra puts new focus on the mine and defines it as one of the premiere assets in Mexico. In the coming months we will be adding to the NI 43-101 report with new resources from the Northwest Trend where grades

AURCANA...AN EMERGING SENIOR SILVER PRODUCER

n Shafter Silver Mine forecasts 3.8M oz silver annually beginning by the end of 2012

n La Negra Mine produced over 1.1M oz silver equivalent for the first 6 months of 2012

SHAFTER MINE (100%)

n Production of 3.8 million ounces of silver in the first year at a cash cost of US$8.73 per ounce

n Potential to double mine life through in-fill drilling to upgrade the Inferred Resources

n Future investigation of extensions to the east and prospective geological targets to the west could add to resource categories

n Bulk sampling indicated grade improvements of 10-15% compared to diamond drill hole assays

LA NEGRA MINE (99.9%)

n New NI 43-101 reports 115M ounces of M&I silver at La Negra

n Over 1.1 million oz. silver produced in first 6 months of 2012

n Continuous expansion by four upgrades from 1,000 tons per day in 2009 to 3,000 tons per day in 2013

17

have typically been higher,” Rodriguez says.

The new report consolidated the ore bodies at La Negra into 13 distinct deposits. The deposits are still open at depth and are continuing to expand.

Most recently, Aurcana discovered new silver mineral-ization at depth at its La Negra Mine. This is the first time the company identified significant amounts of mineralization below the 1,920 meter level. Strong silver and copper values were encountered in several drill holes with the highest grades ranging from 120-200 gpt silver and over 1% copper. In the Northeastern Trend cop-per values increase with depth and in the Northwestern Trend silver values increase as we approach the surface.

Aurcana, which purchased the La Negra property in 2006, recently increased its owner-ship from 92% to 99.9%, at virtually no cost to the com-pany. The operating mine is located in Mexico’s Queretaro State and includes 70 kilometers of underground development, five main mining levels, a three-stage crushing plant and mill producing copper, silver and zinc concen-trates.

The mine was original ly discovered and developed by Industrias Peñoles S.A. de C.V. and was in production from 1970 until 2000. Historically, the mine produced 36 million ounces of silver, 323 pounds of zinc, 70 million pounds of copper and 161 million pounds of lead. At the time the mine was put on maintenance, Peñoles estimated (non compliant) it still contained 1.22 million tonnes grading at 116 gpt silver, 2.8% zinc, 0.94% copper and 0.88% lead. Explo-ration conducted by Aurcana is expanding and extending that resource to NI 43-101 compliant standards.

Aurcana increased its milling capacity at La Negra by 60%, a project completed March 31, 2012. By 2013 the company plans to increase the mill’s capacity to a 3000 tpd throughput, the cost of increasing La Negra’s capacity is

only $800,000. “The annual exploration

program at La Negra is 15,000 meters per year. Currently there are 6 drills and a team of geologists developing the additional resources in the mine which will ensure con-tinued growth well beyond the current resources.,” says Rodriguez.

Investment Considerations

Over the next year, Aur-cana’s Shafter and La Negra mines will have the capability of processing over 5,000 tpd of ore, an amount the company says it will process in late 2013. This translates to a production level of 6 million ounces of silver once Shafter is commissioned and the real possibility of approaching the company’s goal of an an-nual production rate of 8 to 10 million ounces of silver equivalent in late 2013.

Aurcana Corporation has a lot to offer investors. It is led by a proven and skilled

management team, is very well financed with C$15 million in cash on hand and has a production cash flow that is about to more than double as soon as the Shafter Mine is fully operational

The completed Shafter Mine, now in testing and commissioning phase, is just the latest success of Aurcana’s performance and business plan.

The company is debt free and looking for ways to invest its anticipated growing coffers. And with the recent lower valuations of most resource mining companies the opportunities for growing the company through acquisition have increased.

“Are we going to be rolling in money? I would say that is the case,” Rodriguez says. “We will use that money to expand the company through organic growth and acquisitions. We will be a mid-tier producer when Shafter is operating at commercial production levels and with the expected increase from 1500 to 2500 tpd in late 2013 Aurcana will be a major silver producer, surpassing all of our peers.”

Pouring Silver at the Shafter Mine in Texas

AURCANA CORPORATIONTSX.V: AUN

Contact: Gary Lindsey Investor Relations, StrataStar Group

720-273-6224Aurcana Corporation

1188 West Georgia St., Suite 1750, Vancouver, BC V6E 4A2

Toll Free: (866) 532-9333 Phone: (604) 331-9333

Fax: (604) 633-9179E-Mail: info@Aurcana.com

Website: www.Aurcana.comShares Outstanding: 477.5 million

52 Week Trading Range: Hi: C$1.26 • Low: C$0.65

Caution Regarding Forward-Looking Statements -- This article contains certain forward-looking statements, including statements regarding the business and anticipated financial performance of the Company. These statements are subject to a number of risks and uncertainties. Actual results may differ materially from results contemplated by the forward-looking statements. Factors that could cause actual results to differ materially from those in the forward-looking statements include unsuccessful exploration results, changes in metal prices, changes in the availability of funding for mineral exploration and development, unanticipated changes in key management personnel and general economic conditions. When relying on forward-looking statements to make decisions, investors and others should carefully consider the foregoing factors and other uncertainties and should not place undue reliance on such forward-looking statements. The Company does not undertake to update any forward-looking statements, oral or written, made by itself or on its behalf.

The reader should be cautioned the Company has not completed a feasibility study confirming the projected production capacity for La Negra and there is no certainty the Company’s plans will be economically viable.

ch_spokane2012_bull_bear_ad_7x9.8_CMYK_OTL_print.indd 1 12-08-30 11:33 AM

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THE KONLIN LETTER5 Water Rd., Rocky Point, NY 11778. Monthly, 1 year, $95. www.konlin.com.

Magal Security Systems a world leader in integrated security solutions

Konrad Kuhn: “Magal Security Systems Ltd. (Nasdaq GMS: MAGS; $3.55), a long-term favorite of The KonLin Letter, is a leading international solutions provider of security, safety, and site management solutions and products. With 42-yrs of experience and interaction with customers, MAGS has developed a unique set of solutions and products, optimized for perimeter, outdoor and general security applications. Their turnkey solutions are typically integrated and managed by sophisticated, modular command and control software, supported by expert systems for real-time decision support. MAGS’ broad portfolio of critical infrastructure and site protection technologies includes a variety of smart barriers and fences, virtual (volumetric) fences and gates, fence mounted detectors, buried and concealed detection systems and a sophisticated protection package for sub-surface intrusion. MAGS is a world class innovator in the development of closed-circuit television (CCTV) and has pioneered the use of Intelligent Video Analytics (IVA) and virtual fencing based on video motion detection technology for outdoor operations.

MAGS has successfully installed customized solutions and products in over 80 countries in some of the world’s most demanding locations, including national borders, military bases, power plants, airports, seaports, prisons, industrial sites, oil and gas facilities, refineries, Olympic villages and stadiums and municipalities, to protect their infrastructure, assets and personnel from intrusion, crime, sabotage or vandalism. For over the past two years, MAGS has focused its growth efforts on its historical primary markets of perimeter products and solutions and turnkey projects. By locating new channels to promote and market its products while maintaining technology leadership, investing in R&D and transitioning MAGS into a leader in delivering full-scale Homeland Security projects (recently received $4.5 mil. in Homeland Security orders), MAGS achieved an all-time record in revenues and net income.

Revenues for FY’11 leaped 78.3% to $88.6 mil., with net income surging back into the black with .78 per share vs. a loss of (.60) in 2010. Revenues for the 1st half of FY’12 increased 17.6% to $32 mil., with net income continuing its strong trend, or .06 per share vs. a loss of (.14) for the same period in the prior year. MAGS maintains an exceptionally strong balance sheet with $37.6 mil. in net cash, which opens many new growth avenues, enabling both organic investments and synergistic acquisitions. Of the 15.8 mil shares outstanding, 20% are held by insiders and 20.9% by institutions.

The stock was recommended by us last month at 3.70, jumping 18% before pulling back where you can still Add/Buy for a 1st target of 6.50-7.50 as MAGS offers the broadest portfolio of unique

home grown Perimeter Intrusion Detection Systems (PIDS). Also, MAGS intends to focus its presence in emerging markets like the BRIC countries, and recently established a new joint venture in India. Furthermore, the rapid introduction of digital communication and information technology into the security market provides them with the opportunity to consolidate safety and site management with security applications. This integration allows users from different departments within organizations to share the same information, allowing for improved communications and coordination, whether it’s a routine operation or a crisis situation. MAGS is well-positioned and is in the forefront of this emerging market opportunity. Ultimate target 9-10.”

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INVESTORPLACE MEDIA9201 Corporate Boulevard Rockville, MD 20850. www.InvestorPlace.com.

Santa Claus Will Be Bringing Us A Rally in 2012

Jeff Reeves: “Consumer spending, QE3 and flat-out having nowhere better to put our money should put some fuel behind a 2012 “Santa Claus rally”

The threat of an earnings slowdown in the current quarterly reporting season has many investors worried about what’s next for the stock market.

After all, you can’t cut your way to growth – and with the American economy chugging along at an anemic 1.3% annual rate, the turmoil in Europe, geopolitical strife in the Middle East and continued fear of a China slowdown… well, you can understand the general feeling of gloominess on Wall Street.

Of course, historically speaking, the fourth quarter tends to be very kind to investors. There are a host of reasons for this trend – from the logistical boost of year-end rebalancing activity to the psychological boost of the holiday season to the fiscal boost provided by consumer spending around Christmastime.

So we are at odds, it seems, in the fourth quarter. Poor earnings threaten to leave a lump of coal in our stockings … but will that ruin the overall “Santa Claus rally” that investors are used to as we approach a new year, or can we depend on seasonality even in these difficult times?

I just talked with Louis Navellier, editor of Blue Chip Growth among other stock-pick newsletters, and he is looking forward to a big seasonal bounce in the months ahead.

There are a few reasons for this – and not just the typical seasonality arguments:

Low Earnings Expectations: Oddly enough, the earnings gloom is one reason why Navellier is bullish. “When analysts are extra cautious you often have bigger surprises, and I expect the biggest surprises in consumer stocks,” Navellier told me. “It will be a good earnings season – well, a good surprise season. The only negative is that earnings are going to be a little more narrow.” He’s particularly bullish on consumer stocks like Whole Foods (Nasdaq: WFM),

Continued on page 19

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Resource Stocks

Mutual Funds

THE ADEN FORECASTP.O. Box 790260, St. Louis, MO 63179. Monthly, 1 year, $250. Includes Weekly Updates. www.adenforecast.com.

Gold loves negative real ratesMary Anne and Pamela Aden: “On the chart below

you’ll see the gold price above and the “real” T-Bill rate below. In other words, interest rates adjusted for inflation.

As you can clearly see, gold rises stron1gly when real interest rates are negative (below zero). That is, when rates are lower than the rate of inflation.

That was certainly the case in the 1970s. Interest rates and inflation were both soaring... but inflation was higher than the high rates. Real interest rates were negative and this provided the platform for gold to literally soar at that time over 2,000%.

The main reason why was because it wasn’t worth collecting interest. If you did, you were going into the hole and this made gold even more attractive.

Since gold pays no interest, there was no competition. On the contrary, it helped fuel gold’s appeal and the same thing has been happening in recent years.

Positives for GoldNote that with a couple of exceptions, real interest

rates have been negative since the early 2000s. And here again, this has helped fuel a strong rise in gold since then.

This time the opposite of the 1970s has been happening... low rates and low inflation, but the bottom line has been the same.

In fact, we’re even more certain now that real rates will stay negative. That’s because it’s essentially been confirmed.

This alone makes gold even more bullish.

The Fed’s latest actions guaranty the conditions for gold will stay bullish in the years ahead. The Fed’s going to keep interest rates super low and inflation will pick up. It’s already happening and this alone will keep real interest rates negative, making gold more attractive than anything we’ve seen so far.

Gold will remain very strong by staying above $1730. If $1800 is clearly surpassed, it’s more than likely that gold is in a C rise. If this happens, it could shoot up to the record high level above $1900.

And if the bull market is as strong as it seems, gold could reach new record highs above $2000- $2400 and then continue in a strong leg upward.

There are many wild cards brewing in the world today and any one of them could trigger a strong leg up! Be ready.

This is why we’ve been strongly recommending to buy, accumulate, especially during weakness, and just hold your positions.

Silver: Better Than GoldSilver has been on the bargain table, especially

during the weak Summer months. It’s now quickly jumped up, silver has much further to go.

Silver is very strong above $32 and once it closes clearly above $37, it will have the potential to shoot upward and test the highs.

Silver is also looking better than gold. Commodity hedge funds are the most bullish on

silver in months and investors’ holdings are expanding toward a record! Silver is poised to continue to outperform gold in the months and years ahead.

We recommend keeping both metals.

THE INTELLIGENT FUND INVESTOR26106 Tallwood Dr., N., Olmsted, OH 44070. Monthly, 1 year, $279. www.harloffcapital.com.

Market moving higher with hints of short-term top

Dr. Gary Harloff: “So far this year the equity markets have been stellar with S&P500 up 12% and NDX100 up 22%. Amazingly our newsletter average portfolio performance is up 47% this year.

Our analysis indicates a continued strong uptrending market that has not changed character very much in the last month. Some of our other analysis however, suggests that the market may be topping out. It may be prudent to lighten up equities somewhat.

At this time we like technology, wireless, biotech, precious metals, and small cap value funds.”

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Gold shares up from the deadGold shares came alive, bouncing up 36% from the

lows. They’re overdone short-term, but their rise is just getting started. Their indicators are telling us the upside is open to much higher prices.

The HUI index has now risen back above its 65-week moving average for the first time this year and it’s strong above 502. The bottom line is... gold and silver shares are still a good buy.”

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THE COMPLETE INVESTORP.O. Box 248, Williamsport, PA 17703. Monthly, 1 year, $199. www.completeinvestor.com.

Two golds, two approachesKuen Chan: “Osisko Mining’s (OSKFF) Canadian

Malartic gold mine appears to be getting back on track following a run of setbacks earlier in the year, including a fire and difficulties with new equipment. Rock-blasting mistakes by an explosives contractor further contributed to low production and high expenses. These issues have been resolved, and Osisko will seek compensation from the contractor.

The upshot was a weak second quarter in which Osisko produced just 92,000 ounces of gold, at a high cost of roughly $1,000 an ounce. Still, the company was profitable during the quarter. And more important, with Osisko taking the necessary steps to allow the mine to fulfill its enormous potential, production has been rising, and the outlook looks good. In July, Canadian Malartic produced 37,780 ounces, and the company, as planned, installed a second cone crusher. By the end of July throughput had reached 46,000 tons per day. Osisko intends to install a pebble crusher in the third quarter, and the mine should approach its design capacity of 55,000 tons per day by early next year. Malartic is projected to produce more than 600,000 ounces of gold in 2013 at a cash cost below $700 per ounce. We expect that by the second half of next year this world-class mine will be hitting its full stride.

Meanwhile one of our other gold-related picks has been on a roll. Since Franco-Nevada (FNV) joined FundFinds in April 2009, this gold-focused royalty company has returned roughly 160 percent (including dividends). And so far this year, while most gold stocks are underwater, Franco-Nevada has surged 40 percent.

The reason: as a pure royalty play, the company has no direct involvement in mine development or production. As a result, it avoids the risks – such as riding development and production costs, workforce disputes, and environmental and geopolitical concerns – that mining companies like Osisko face.

Instead, under its attractive business model, Franco-Nevada simply invests in mining companies under royalty agreements that are largely revenue-based. And this means when gold prices rise even if miners’ profits are constrained by rising costs.

Of course, Franco-Nevada isn’t totally immune to miners’ problems. If producing drops at a mine it has invested in, that particular revenue source shrinks. But the company is well diversified, with a portfolio of 43 currently producing assets and a total of more than 200 royalty-yielding assets. Some 81 percent of

revenues come from assets in business-friendly U.S., Canada, and Mexico so the geopolitical risk is small. And in some cases, minimum royalty clauses ensure some payment even with little or no production.

The balance sheet is terrific, with almost $1 billion in cash and cash equivalents as of the end of the second quarter and no debt, giving the company plenty of firepower to add more properties. Recently the company put some of that cash to use by investing in Inmet’s Mining’s major Cobre Panama project. In return for injecting $1 billion into the mine over three years, Franco-Nevada has the right to buy most of the mine’s gold and silver production at deep discounts throughout the mine’s projected better than 30-year life.

The mine is primarily a copper project that produces gold and silver as byproducts. It is expected to produce an average of 266,000 tons of copper, 87,000 ounces of gold, and 1.5 million ounces of silver per year. The agreement links gold and silver delivery to the mine’s copper production – the more copper produced, the more gold and silver Inmet must deliver to Franco-Nevada. This special twist aligns both companies’ interests and ensures Franco-Nevada will be handsomely rewarded for its investment. Once the mine hits full production, anticipated for 2017, it should contribute more than $100 million a year in revenue to Franco-Nevada. And, of course, that figure would rise if gold and silver prices continue to move higher.

Franco-Nevada is a well-run company that offers more leverage to gold than a gold ETF while mostly avoiding the risks inherent in mining companies. Despite its strong run it remains a buy.”

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UTILITY FORECASTER, 7600A Leesburg Pike, West Building, Ste. 300, Falls Church, VA 22043. Monthly, 1 year, $149. www.UtilityForecaster.com.

NV Energy generating free cash flowRoger Conrad: “A decade ago NV Energy Inc

(NYSE: NVE) was one bad move away from Chapter 11, squeezed by expensive power purchase contracts and hostile regulators.

That’s when management mended fences and set to work slashing debt and building power plants.

Today NV Energy produces 80 percent of its peak demand, twice what it did five years ago. Some 20 percent is from the state’s immense solar, wind and geothermal energy base, on target to meet a state goal of 25 percent renewables by 2025.

Annual customer growth has slowed from 5 percent to 6 percent to barely 1 percent. But Nevada’s once-booming real estate market is again showing signs of life. Automatic pass-through of fuel cost changes limits need for future rate hikes, and regulators support plans for smartmeters and a major transmission project linking southern and northern Nevada.

NV is also generating free cash flow to cut debt and raise dividends. The company’s cost of capital has fallen sharply, with 30-year debt yielding just 4.133 percent to maturity. Dividends were raised 41.6 percent the last 12 months, and management anticipates 10 percent annual growth the next several years.

Selling for just 1.24 times book value, NV Energy is a buy up to 19.”

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U.S. Global Investors, INVESTOR ALERT7900 Callaghan Road, San Antonio, TX 78229. www.usfunds.com.

Insiders buying resource stocksFrank Holmes: “Insider buying in resource stocks is

showing a positive trend. The latest insider stock trade reports compiled by Ink Research show that corporate executives and directors are buying 2.7 times as many stocks as they are selling in the basic materials sector, ranking it among the most undervalued sectors on the TSX. According to Ink Research, such readings tend to support increasing prices within a sector and may bode well for further gains this year.”

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VR SILVER newsletter, a daily update, published pre-market and post market from VRTRADER.com. Monthly, $55; Quarterly, $145/quarter. P.O. Box 1451, Sedona, AZ 86339.

Short-term risk factor for goldMark Leibovit: “There is a near-term bear case

out there, but it’s too early to be pounding the table. If Romney-Ryan can score an upset at the polls on November 6, a Republican White House is expected to back a “King dollar” approach to US-monetary policy, – meaning the end of QE. There will also be forensic audit of the Fed’s clandestine activities, and shutting down its intervention tactics in the stock index futures markets. It would herald a return to the playing field of “Free Markets, for Free Men & Women,” where stock prices are determined by the collective judgment of millions of individual investors, and not simply determined by a handful of politicians and their hand picked puppets at the Fed. Romney has also threatened to fire ‘B-52’ Ben Bernanke or at least not renominate him when his term expires one year later. Though the real reasons for owning gold and silver would not change, the perception that QE is the real reason for gold and silver’s advance could work against gold and silver as nervous traders and investors (possibly with the help of the U.S. Governments gold and silver suppression team) begin to sell. This is a short-term risk factor we cannot ignore.

But taking a bigger picture view, if you don’t own the precious metals, anytime is a good time to buy them. The expression goes: ‘Don’t wait to buy gold – buy gold and wait’! Dollar-cost averaging (a fixed amount of investment in at pre-scheduled times) is a highly recommended strategy when it comes to the physical metals.”

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INVESTOR’S DIGEST of Canada133 Richmond St. West, Toronto, ON M5H 3M8. 1 year, 24 issues, $137.

Yamana Gold continues to make good progress on its development projectsDigested from a recent report by analysts Ron

Stewart and Joseph Fazzini, Dundee Capital Markets.Messrs. Stewart and Fazzini continue to dig up

a “neural/high risk” recommendation for Yamana Gold (TSX: YRI; $15.33). They’re also handing it

a 12-month price target of $17 a share. They write:“For the second quarter, Yamana mined net earnings

of US$0.18 a share – $0.04 lower than our own estimate, as well as $0.03 shy of the consensus call.

Yamana also had cash flow of US$0.32 a share – $0.03 less than what we’d been hoping for, as well as $0.04 below the consensus call.

The lower-than-expected numbers reflect the absence of an Alumbrera distribution, as well as copper and gold equivalent output that was unsold during the quarter.

Excepting Alumbrera, production of 276,0000 ounces was five per cent below our forecast, while co-product costs of US$536 per gold equivalent ounce topped our estimate by 11 per cent.

The higher costs reflected lower grades of ore, as well as higher costs of inputs.

Yamana continues to pet its 2012 output between 1.2 million and 1.3 million gold equivalent ounces, with cash costs (net of by-products) of $250 per GEO.

We expect the company will meet the lower end of its full-year guidance, which implies a modest improvement in production in the second half of 2012.

In the meantime, Yamana continues to make good progress with its development projects.

Two of them – Ernesto/Pau-a-Pique, now 92 per cent complete, and C1 Santa Luz, now 89 per cent complete – are on track for initial production by year end and for commercial production in mid-’13.

Another project, Pilar, now 53 per cent complete, is also advancing towards a mid-2013 production startup. Indeed, the plant is being oversized to accommodate the development of Caiamar (a high-grade satellite deposit).

But we attribute only nominal value to two other Yamana assets – Suyai and Jeronimo – until we can learn more about their project parameters, as well as their probabilities for development.

Going further out, we look forward to receiving exploration updates from Yamana on targets such as Corpo Sul and Pampa Augusta Victoria, both of which continue to demonstrate promising results.

We figure that Yamana’s all-in costs rose to US$1,316 an ounce sold in the most recent period.

Not only do such costs include both on- and off-site operating expenses, they include exploration, administration, interest, and tax costs, along with sustaining capital to maintain current output levels.

Higher all-in costs largely reflect higher tax expenses, lower silver prices as well as elevated interest costs and general and administration expenses.

Given realized gold prices in the quarter of US$1,605 an ounce, along with our all-in cost estimate of $1,316 an ounce sold, we estimate a gold margin of $289 an ounce.

Over all, Yamana has established a reputation for delivering relatively stable production, has a robust balance sheet and is making progress in developing projects that are new, albeit modest.

That said, we don’t find its stock particularly cheap relative to the $17.42 a share we now estimate to be its net asset value.”

Editor’s Note: Headquartered in Toronto, Canada, Yamana Gold has properties in Brazil, Argentina, Chile and Mexico. In addition to gold, Yamana mines copper and silver from six principal operations while continuing to explore and advance various projects.

Continued on page 29

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BacTech Environmental’s Bugs Eat Rocks Option 3 (U.K.) Buys 19.9% of BacTech

Signs 5 Year Exclusive Agreement for Certain Former Soviet Countries

BacTech drills to test mineralization in concentrate stockpiled for over 50 years in Snow Lake, Manitoba prior to investigating feasibility of applying its proprietary bioleaching technology

to clean up the toxic site and reclaim up to $150 million in gold contained in the ore.

BacTech announced on October 3rd that it had closed a $1.455M financing with cleantech fund Option 3 of the U.K. Option 3 will nominate a director to the board and will also be a 50/50 partner with BacTech in a number of former Soviet Union (FSU) countries including Russia. The funds will be targeted initially at progressing the Snow Lake project towards construction in the Spring of 2013.

Almost 2 years ago, BacTech Mining was split into two com-panies: a pure mining company (REBgold; TSX.V: RBG) and a pure environmental cleanup com-pany (BacTech Environmental). The new BacTech then began investigating a number of mining reclamation projects throughout the world, and last year negoti-ated an exclusive agreement with Manitoba’s Department of Innova-tion Energy and Mines to clean up the Snow Lake arsenopyrite stock-pile, using the patented BACOX bioleaching technology.

The economic study shows positive cash flow and internal rate of return (see www.bactechgreen.com for a copy of the report). At $1675 gold the project has a cumulative cash flow of $34M, an IRR of 25% and an NPV of $23M (using 5% discount rate). The NPV equals ~$0.59 per share of asset backing.

“What is important to highlight is the fact we are processing a very low grade concentrate (~1/3 oz ) and we still make money. Imagine how effective this would be with a more normal grade of concentrate (>2/3oz). Our goal is to identify additional feeds that would enhance the grade at Snow Lake and we continue to look for them.”

As BacTech moves the Snow Lake reclamation project forward, the company is also examining similar projects in Mexico, Yellowknife, British Columbia, Peru, Bulgaria and Bolivia, among others. The Snow Lake project was selected from a list of projects examined in 2011 either sourced internally

or from interested parties. Key to the company’s selection process is the ability for a project to return a profit while also delivering an environmental benefit.

“The potential size of the recla-mation market we are addressing is truly very large,” says Orr. “Our mandate is to identify projects that add production and value in the short to medium term, keep-ing in mind that not all tailings projects are bioleach candidates. We must search for the wheat amongst the chaff.”

Snow Lake Mine Reclamation Project

Will Be BacTech’s First Commercial Bioleaching

Treatment Plant in North America

In late December, BacTech signed a definitive agreement to clean up the stockpile from the former Nor Acme Mine in Snow Lake, Manitoba. The former gold mine operated for nine years from 1949 to 1958,

24

mostly producing “free” gold that did not need the application of any liberation technology. About 15% of the mined gold was in the form of arsenopyrite that included very high levels of arsenic, which precluded using conventional technology at the time. The miners produced a float concentrate and stockpiled it on the site for later processing once a suitable technology could be identified that could deal with the high levels of arsenic.

The stockpile containing about 20% arsenic – and over 90,000 ounces of gold – is still there, slowly oxidizing and discharging acidic water contaminated with soluble arsenic into the local environ-ment. The stockpile contains about 300,000 tonnes of concentrate with an average grade of about 9.7 gpt gold (roughly 1/3 of an ounce).

BacTech’s bioleaching technology is ideally suited to freeing the gold while oxidizing the sulfides to eliminate acid discharges and stabilizing the arsenic as benign ferric arsenate. The project has the added attraction of not requiring construction of a flotation plant or facilities for crushing or grinding. Most other projects considered by BacTech involve tailings where the sulfides need to be separated from the waste rock to produce a concentrate for bioleaching. At Snow Lake the stockpiled ore is already in a concentrated form and ready for the bacteria.

Newalta Corporation’s par-ticipation in the Snow Lake project provided BacTech with needed capital while it proves up the valid-ity of the project. Under the terms of the agreement, Newalta will provide two engineers to join in the engineering study. Beginning with the publication of the eco-nomic study, Newalta will have 90 days to strike a deal with BacTech with respect to their participation at Snow Lake. BacTech is under no obligation to repay Newalta its $300,000 cash infusion.

Orr said the ideal arrangement for BacTech would be to enter a 50-50 partnership with Newalta or another capable partner to become the operator. Newalta currently operates over 85 plants in Canada and the U.S. The plant also will be capable of treating other refractory-type gold values

BacTech Environmental: Spurring a Revolution in Environmental Remediation

BacTech Environmental's core "bioleaching"technology employs naturally-occurring bacteria, harmless to both humans and the environment, to oxidize the sulphide materials left behind after years of mining. The tailings may contain ores and related materials contaminated by arsenic and other substances that are poisonous to humans and animals, as well as harmful to the local environment. The sulphides in the tailings react (oxidize) with the atmosphere to create an acidic solution called acid mine drainage (AMD), which leaches into the surrounding area over time. BacTech's bioleaching process can stabilize these toxins from minerals and prevent additional harmful AMD. The technology provides a "Garden of Eden" environment for the bacteria to thrive and multiply and permits them to achieve in 6 days what would normally take 20 years to occur naturally.

Why NOW is the Time for a Permanent SolutionThe worldwide contamination caused by abandoned mines is so widespread that it is neither quantified nor fully evaluated. It is generally accepted, however, that in countries with a long history of mining, the magnitude of the problem is considerable; these areas are generally laden with toxic chemicals that leach into the surrounding areas. There are tens of thousands of sites around the world that contain mining-related arsenic and other substances. The public is increasingly demanding that the governments and companies responsible address the contamination due to the negative consequences of such sites. These effects include polluted water, contaminated land, air pollution, loss of useful groundwater and land, and significant negative health consequences to humans and animals living in the area.

BacTech's approach is to "cure the patient", as opposed to treating the patient over many years. In other words, stop the creation of AMD by removing the sulphides from the tailings. Current practice in the industry calls for the treatment of long-term water discharge from the tailings, which is expensive and allows the possibility for future problems, as the sulphides remain in the tailings. In addition, where governments have been left with the legacy of past mining, BacTech endeavors to use the "no cost to the government" approach in which the company pays itself through the recovery of contained metals – such as gold, silver, cobalt and nickel – should it be determined to be economically viable. In effect, bioleaching is an environmental reclamation solution that also creates a profit.

and waste in the region once it completes the stockpile and could become a regional bioleaching facility for years to come. A recent trip to British Columbia uncovered gold tailings that could see the concentrates find their way to Snow Lake for processing thereby doubling the life of the plant, if a deal can be negotiated.

Best of all, under its agreement with Manitoba, BacTech can keep all the gold freed from the stockpiled ore in exchange for building the plant and treating the contained arsenic. BacTech will also pay the government a 2% NSR after its capital has been repaid. In addition BacTech will be contributing $5 for every ounce

recovered to the local town (approx. $50,000/yr) who have been great supporters of the project to date.

“This will be the first com-mercial bioleach facility in North America,” says Orr. “This is a major step forward for BacTech as we position ourselves as a leader in the field of tailings reclamation. It is a highly visible project whose success could lead to bioleaching playing a prominent role in future cleanups in North and South America. In the past 9 months we have been inundated with requests from people or govern-ments who have tailings issues. I always tell them that Snow Lake is priority #1 as it will be a great showpiece for us”.

25

BacTech Files Patent Using Bioleaching to

Produce Ferric Sulphate; Targets Waste Water

Treatment MarketBacTech Environmental holds

the sole and perpetual rights to the original company’s patented BACOX bioleaching technology for anything related to mine tailings– a process that uses bacteria to remove toxic chemicals from mining wastes while liberating gold and other met-als, both base and precious, for sale on the open market. BacTech, under the agreement with REBgold, can own any improvements or alternate applications of the technology de-veloped by the Company. In early June, BacTech filed a preliminary patent covering the production of ferric sulphate using bioleaching. The significance of this is onsite production of a product that is used extensively in the waste wa-ter treatment industry on a global basis. Currently most of the prod-uct is trucked in a diluted solution sometimes over great distances. Producing the product onsite, us-ing pyrite from old tailings, allows for inexpensive, secure source that will enable the end user to reduce operating costs.

BacTech’s completely modular bioleaching technology has been successfully used in the gold in-dustry for a number of years. It utilizes naturally occurring bac-teria that are harmless to both humans and the environment. The bacteria literally eat the rocks, breaking down sulfides in 5-6 days that normally would take over 20 years to occur naturally. The bioleaching process neutralizes the sulfide source of acid and stabilizes hazardous metals, including arse-nic into benign compounds. The bacteria effectively eliminate acid mine drainage at the source while liberating valuable metals, such as gold, silver, copper and other base metals. BacTech’s strategy is to retain those metals to fund its reclamation projects.

Investment Considerations

2011 was BacTech’s inaugural year as an independent company and 2012 is our year of major

according to Orr.BacTech is one of only two

companies in the world with a proprietary commercial tech-nology suitable for oxidizing sulphides. As BacTech Mining, BacTech helped to build several commercial bioleaching plants, one in China and 2 in Australia. Currently, there are about 20 facilities worldwide that treat arsenic-bearing gold ore, but BacTech is the only company that has identified environmental reclamation as a new market for bioleaching.

BacTech hopes to begin building a $21 million bioleaching processing plant at Snow Lake by next spring and be in actual production by the end of the second quarter 2013. The anticipated life of the project is about seven years with an additional 15 years for other feeds if they can be identified.

“We have done a lot in the past two years,” says Orr. “In our first year as a stand-alone environmental reclamation company, we have managed to identify, negotiate and sign our first project that will use bioleaching as a means to reclaim an historic problem. Our goal is to build one plant per year for the next five years. We have also filed a patent that sees us attacking a new industry but using technology that is already proven. Now if only the markets would calm down long enough for people to invest again. Is there anyone out there?”

Penoles, Mexico demonstration bioleaching plant built by BacTech

milestones. One hoped-for mile-stone in 2012 will be the ability to trade on a U.S. stock exchange, making it easier for existing and potential U.S. investors to become shareholders in this environmen-tally-focused company.

BacTech’s management team is focused on creating substan-tial cash flow by year-end 2013. Orr’s team of professionals have extensive experience in mining company management, metal-lurgy, and materials science, as well as minerals, biochemical and chemical engineering. If the team is successful in reaching its goal, the company will no longer be dependent on equity markets,

BACTECh ENVIRONMENTAL CORPORATION

CNSX: BACContact: Ross Orr, President & CEO

50 Richmond St. East, Ste. 300 Toronto, ON M5C 1N7, Canada

Phone: 416-813-0303, x 222 Fax: 416-596-9840

E-Mail: info@bactechgreen.com Website: www.bactechgreen.com

Shares Outstanding: 48.0 million 52 Week Trading Range:

Canada: Hi: C$0.24 • Low: C$0.05

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27

Continued from page 1

rising middle-class populations are fueling growth in air travel, says Matt Berler, chief executive of Osterweis Capital Management.

Oddly enough, the financial crisis in Europe has actually been good for Air Lease because fewer lenders are competing to finance planes, says Berler. “We don’t think the market understands the magnitude of the growth that’s now locked into the company,” he says.

Analysts see profits jumping a whopping 43% next year, to $1.71 per share, and they project earnings growth of more than 40% annually over the next three to five years. If Air Lease lives up to those lofty expectations, the stock is a steal today. 52-Week High: $26.47; 52-Week Low: $18.45. Consensus Rating for AL is Moderate Buy.

2. Apple (AAPL: $630.03). Apple is not exactly a newcomer to this listing. It led Kiplinger’s list of top stocks back in January 2011, when its share price was a mere $330. And at more than double that price today, Apple shares still appear to be bargain-priced. The company is poised to generate roughly 20% earnings growth in the fiscal year that ended September 30.

And the stock has a number of additional catalysts. The company just won a patent suit against arch rival Samsung that is likely to force Apple’s key competitors to revamp their handsets. The verdict couldn’t have come at a more opportune time. Millions of Apple loyalists are ready to upgrade to Apple’s new iPhone 5, introduced on September 12. Apple sold five million iPhone 5s in the opening weekend. Apple has barely cracked China’s market, which is likely to generate additional profit growth for years to come.

On an energy use note, the iPhone 5 requires a mere 41 cents annually to keep charged up for 1 year, iPads have been found to cost $1.36 a year to keep charged; desktop computers have been found to cost $43.60 per year

The World’s Best Stocksreports The Huffington Post.

Of course, Apple can’t maintain an astronomical growth rate forever. But even if the company can simply achieve analyst’s expectations for the next three to five years, you’ll want to have the stock in your portfolio for a long time to come. 52-Week High: $705.07; 52-Week Low: $363.32. Consensus Rating for AAPL is Strong Buy.

3. Boeing (BA: $71.70). Boeing benefits from some of the same factors fueling growth at Air Lease. Boeing, which along with Europe’s Airbus Industries dominates the market for large commercial jet-liners, saw revenues rise 25% over the first half of 2012, to $20 bil-lion, and it has a backlog of orders worth $374 billion. The backlog, which includes orders for 824 new Dreamliner 787 models, is roughly six times annual revenues.

Analysts project earnings growth of 11% annually over the next five years.

Despite Europe’s woes, Mark Finn, manager of the T. Rowe Price Value Fund, thinks Boeing will become a cash cow over the next decade (it will take seven to eight years to work off the backlog). Even if a deep global recession caused some customers to cancel, it’s hard to find a scenario in which the company doesn’t deliver steadily rising profits over the next five years.

Considering Boeing’s growth prospects, its stock looks like a good value. 52-Week High: $77.83; 52-Week Low: $61.33. Consensus Rating for BA is Strong Buy.

4. Cinemark Holdings (CNK: $22.99). The U.S. theater market may be relatively moribund, but growth prospects are good in emerg-ing markets, where more and more people are entering the middle class and heading to the movies for entertainment. Cinemark, head-quartered in Plano, Tex., is one of the primary beneficiaries. The company operates 461 multiplexes in the U.S., Mexico, Brazil and 11 other Latin American countries. Growth over the past five years has

been blistering. In the first half of 2012, revenues jumped 11%, to $1.2 billion, and profits jumped 43%, to $93.7 million.

Cinemark probably can’t keep up that pace, but the growth is far from over. The company says it plans to open 11 more theaters in 2012 and has signed agreements to open 16 more in 2013 and beyond. Analysts project that earnings will grow at a 12% annual rate over the next five years.

But what most impresses Osterweis’s Berler is that Cinemark is delivering solid results despite a strong dollar (which results in money earned overseas getting translated into fewer bucks). That speaks to the strength of its Latin American business. If the currency headwinds abate, Cinemark could clean up, Berler says. 52-Week High: $24.47; 52-Week Low: $17.93. Consensus Rating for CNK is Moderate Buy.

5. Coach (COH: $53.72). Shares of Coach recently went on sale after investors reacted nega-tively to quarterly earnings that were “only” 18% higher than the year before. Coach, which makes luxury leather handbags and shoes, as well as watches, jewelry and apparel, has been a stock market darling for decades, able to deliver strong profits even in the midst of a miserable economy. But market expectations were so high for the stock that its share price fell a whopping 18% on July 31, after the company said that it had engaged in some discounting in response to U.S. consumers’ reluctance to spend.

Analysts expect the New York City-based company to generate annual earnings growth of 14% over the next few years, so the stock looks like a bargain, says David Brady, president of Brady Investment Counsel, a Chicago money-management firm.

To be sure, Brady adds, econo-mies around the world look a bitshaky, which could create headwinds for makers of luxury goods. But Coach’s executives have handled tougher challenges and came out

Continued on page 28

28

Continued from page 27

smelling like fine Italian leather, he says. Brady thinks the recent retreat in the share price gives investors an attractive entry point to buy stock in a company they’ll want to own for decades. 52-Week High: $79.70; 52-Week Low: $48.24. Consensus Rating for COH is Moderate Buy.

6. Danaher Corp. (DHR: $55.91). Danaher was an indus-trial conglomerate made up of disparate cyclical businesses in 1990, when management decided it wanted to rationalize the com-pany’s structure and make it less vulnerable to the vicissitudes of the economy.

The company opted to restruc-ture to focus on five key areas in which it believed it could become a global leader. The wisdom of the strategy proved itself in 2009 as the nation struggled with the recession precipitated by the fi-nancial crisis, says Morningstar analyst Daniel Holland. Although revenues of many of its rivals were cut in half that year, Danaher saw its sales drop about 12% and bounce back nicely in 2010. Reve-nues and profits have continued to rise by double-digit percentages. Second-quarter profits and sales jumped 31% and 28% respectively from the year-earlier period.

Danaher’s corporate culture is dedicated to being both innovative and efficient, Holland says. He notes that the Washington, D.C., company’s growth is primarily fueled by acquisitions, which he says Danaher does unusually well. Danaher’s latest purchase, of Beckman Coulter last year, has not only proved profitable, it has put 40% of the company’s sales in the rapidly growing health care sector.

But Holland is most impressed by how well the company has diversified, both geographically and within industries. Cyclical companies usually have a weak spot – but not Danaher, he says. “There’s no one single bullet that can take them down.”

About 60% of the company’s revenues come from outside the

U.S., including about 25% from emerging markets. Analysts project earnings growth of 15% annually over the next five years. Danaher’s price-earnings ratio always tends to be higher than its peers’. “When you’ve got a rare item, it’s often expensive,” says Holland. 52-Week High: $57.15; 52-Week Low: $43.69. Consensus Rating for DHR is Strong Buy.

7. Electronics for Imaging (EFII: $16.76). Electronics for Imaging is a 25-year-old company that makes controllers for color printers, as well as printing soft-ware. Although not a household name, the company has many things going for it.

It sports a record of double-digit growth in both sales and earnings, to the windfall it’s about to reap from the sale of its headquarters building to Gilead Sciences. The $180 million deal, which is set to be completed in October, equates to roughly $8 per share on EFII’s balance sheet.

For the first half of the year, the company reported a 40% rise in earnings. And sales, up 15% in the first half, are likely to keep rising at a high single-digit pace for the unforeseeable future, says John Barr, manager of the Need-ham Aggressive Growth Fund. Analysts project earnings growth of 13% annually over the next five years. 52-Week High: $18.99; 52-Week Low: $12.71. Consensus Rating for EFII is Strong Buy.

8. Qualcomm (QCOM: $58.88). It doesn’t matter who wins the smart-phone wars. Qualcomm provides the technology that powers virtually every manufacturer’s 3G and 4G devices. And with Apple having unveiled its new iPhone 5 and an array of new tablets vying for shelf space, Christmas sales are likely to be strong enough to continue fueling another double-digit-percentage rise in Qualcomm’s earnings. During the company’s third fiscal quarter, which ended June 24, Qualcomm’s profits were up 17% from year-ago levels, and sales spiked 28%.

But the San Diego company also derives about one-third of its revenue from royalty payments on a series of patents pivotal to

our increasingly wired world. Standard & Poor’s Capital IQ analyst James Moorman thinks Qualcomm’s future growth will be fueled by China, where the rising middle class is increas-ingly turning to smart phones to communicate. Analysts project earnings growth of 15% annually over the next five years. Moorman thinks Qualcomm stock will hit $84 within a year. 52-Week High: $68.67; 52-Week Low: $49.78. Consensus Rating for QCOM is Strong Buy.

9. Schlumberger (SLB: $72.30). Energy-services giant Schlumberger is the prototypi-cal multinational. The Houston company derives roughly 85% of its revenues from overseas, includ-ing developing markets in Africa, Brazil and Asia.

With particular expertise in deep-water drilling, Schlumberger is well-positioned to compete in a world where oil is harder to find, says Argus Research analyst Philip Weiss. Admittedly, oil explo-ration is a cyclical business, driven largely by crude prices. And weak prices for natural gas have hit the company’s stock, Weiss says. But the price of natural gas has little to do with Schlumberger’s profits, so Weiss just sees this as an op-portunity to get the shares at a more reasonable price.

Analysts project earnings growth of 18% annually over the next five years. Weiss thinks the stock will trade for $85 within a year. 52-Week High: $80.78; 52-Week Low: $59.12. Consensus Rating for SLB is Strong Buy.

10. Copa Holdings (CPA: $86.30). U.S. airlines have to scratch and claw for every penny of profit they earn. Not so for Panama City-based Copa Holdings, says Bob McAdoo, airline analyst with Imperial Capital, a Los Angeles investment firm. With a hub in the Southern Hemisphere’s cross-roads, Copa has few direct rivals. That has allowed Copa to charge premium prices for its flights and register operating profit margins of 15% to 20% year after year. As economies in Brazil and the rest of Latin America continue to expand,

Continued on next page

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Copa is likely to benefit because it gives travelers the most convenient way to hop around the hemisphere.

Copa’s big advantage lies in the setup of Panama City’s airport, explains McAdoo. Panama knows that it’s a crossroads, so it treats connecting passengers as though they’re hopping on a domestic flight – no trip through customs unless you leave the airport. That saves time, and potentially the need to get a visa for a country you’re just passing through, making the airport the ideal hub for business travelers in a hurry.

Copa’s profits have been soaring. In 2011, they climbed 27%, to $6.98 per share. Analysts, on aver-age, forecast $8.00 per share in 2012, an increase of 13%. McAdoo expects the stock to reach $110 within a year. Analysts project earnings growth of 18% an-nually over the next five years. 52-Week High: $86.50; 52-Week Low: $57.57. Consensus Rating for CPA is Moderate Buy.

Editor’s Note: © Copyright 2012. Kathy Kristof is a contributing editor to Kiplinger’s Personal Finance and author of the book Investing 101.

Continued from page 22

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Puma Exploration an emerging silver, gold, copper play

James Rapholz: “A high-grade, potentially massive silver-gold deposit in the middle of an established, infrastructure-rich mining camp is about to put Puma Exploration (TSX.V: PUM) on investors’ maps as an emerging major silver-gold-copper play.

Puma has three highly prospective, advanced exploration projective in mining friendly Canada: Nicholas-Denys Silver Project, Turgeon Copper Project in New Brunswick, and Little Stull Lake Gold Project in Manitoba.

A new geological model at Flagship Nicolas-Denys Project suggests the equivalent of a 30 kilometer long mineralized structure and a potential world-class silver deposit.

Puma Exploration has a seasoned management team; and institutional investors.

“A bigger picture is now emerging for the Nicholas-Denys Project,” says Marcel Robillard, Puma’s President and CEO. “What we originally thought to be smaller individual deposits now appear to be connected links within multiple very large mineralized corridors, each about 10 kilometers long. We anticipate an exciting year of progress in 2012 in proving up what we believe is a world class silver deposit.”

For more information on Puma Exploration call 1-800-321-8564, Email: info@explorationpuma.com or visit the website at www.explorationpuma.com.”

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Teryl Resources Intent on Replicating Strategy of $15 Million Sale of the Gil Venture to Kinross Gold Teryl Resources Corp. holds interests in Gold & Silver properties in Alaska and Northern British Columbia, Canada. Teryl is an accomplished explorer with a track record of exploration,

development and marketing their properties profitably to majors. Las year, Teryl concluded the sale of its remaining 20% interest in the Gil property, Fairbanks Alaska, to its joint venture partner, Kinross, for $15-million from 1% of the NSR then ½ of 1% NSR for the life of the Mine. The company currently has several Alaskan gold prospects near the Kinross Fort Knox Mine, a 100% interest in the Westridge property; a 50% option on the Fish Creek property, adjacent to the Gil property; and a 10% net profit interest in the Stepovich claims, near the Fort Knox deposit; as well as a 40% interest in a silver property located in Northern B.C. adjacent to Silvercorp's silver lead zinc discovery, including a 10% NPI. Teryl has a small revenue interest in three producing oil and gas wells in Texas with Anadarko Petroleum as the operator. Teryl recently announced completion of the first phase of exploration on the Silverknife silver, lead, zinc prospect in British Columbia.

TERYL RESOURCES CORP.TSX.V: TRC • OTC BB: TRYLF

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ir@terylresources.comWeb Site:

www.terylresources.com

Berkeley Coffee & Tea Challenging Major Players in the Growing Chinese Coffee Market

Berkeley Coffee & Tea, Inc. is a growing horizontally-integrated gourmet coffee roaster and wholesaler targeting to capturing a significant portion of the world’s fastest growing coffee market: China. Berkeley is focused on developing a solid market share in the fast growing and wide open Chinese coffee drinking market which is gradually shifting from instant coffee towards gourmet whole bean and ground coffee products. Berkeley also

has its eyes on the world’s largest coffee market: the United States. Berkeley plans to begin marketing and selling its green coffee beans directly to coffee wholesalers, coffee brokers and coffee roasters in the U.S. The acquisition of DTS8 Coffee gives Berkeley immediate access into the domestic Chinese coffee market as a horizontally integrated coffee company with operations in two very different geographic markets: the United States and China. Berkeley is promoting its DTS8 Coffee brand across China to establish its image and reputation for quality within the wholesale and coffee services networks. Berkeley Berkeley is now strongly diversified to develop a new revenue stream from its roasted coffees.

BERKELEY COFFEE & TEA, INC.OTC BB: BKCT

Contact: Sean Tan President, CEO

Building B, #439, Jinyuan Ba Lu, Jiangqiao Town, Jiading District,

Shanghai, 201812, China

Phone: 011-86-15021337898

E-Mail: sean@dts8coffee.com or sales@dts8coffee.com

Web Sites: www.berkeleycoffeetea.com

www.dts8coffee.com

Privately Held Tropical Hardwood Ownership Provides Access to Top Performing Risk-Adverse Asset Class of the Past 30 Years

Maderas Futuro, S.A. (Future Woods in English) is a privately owned Central American company headquartered in Southern Nicaragua and specializing in the managed growth of precious tropical hardwoods for local and worldwide export markets. Unlike much of the timber that is grown in North America that ends up as pulp or standard building material, tropical hardwoods grown by Maderas Futuro are virtually immune to price fluctuations, in large part because worldwide demand is constantly greater than the supply. The lush tropical conditions enjoyed by Maderas Futuro’s

managed tropical hardwood plantations reduce the already risk-adverse nature of timber ownership to produce better than average returns. Maderas Futuro strictly follows reforestation best practices that not only save and protect endangered flora and fauna, but also guards the native wildlife and habitat. Maderas Futuro is well positioned to become one of Central America’s largest hardwood producers – with strategic partnerships in place with locally owned timberlands to add to the timber supply from its own privately owned plantations, and government forestry approvals in hand, the company has ensured its ability to meet future demand.

MADERAS FUTURO, S.A.For further information

on Maderas Futuro, S.A. and its private ownership

opportunities, Contact Alex Wilson

Phone: 949-204-3404, x 101Fax: 772-382-5910

E-Mail: awilson@maderasfuturosa.com

Website: www.maderasfuturosa.com

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