But in June, when we still believed the credit crisis was just going to mean a couple of years of unpleasant quarterly reports from the financial sector, The Hershey Company (NYSE:HSY) was hitting a 52-week low. The company bottomed at $32.31 as analysts (and the rest of us, too) speculated on the company’s profit margins, what with the rising cost of commodities like cocoa, sugar and soy lecithin.

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Hershey insisted it still saw a 3%-4% sales growth, which, at the time, we didn’t believe. But the company has kept on target with an 11% increase in prices, and a lot of penny-pinching in the production side. Hershey renewed the faith of its followers by holding its dividend at 30 cents in August. And HSY saw a nice pop from rumors it was in talks to sell to Swiss mega-brand Nestle (OTC:NSRGY).

The stock is on a nice dip right now, making it the perfect time to snap up shares on the cheap. But if you do buy in, watch the price carefully. If HSY falls below its most recent bottom of $36.09, sell out. Dipping below its adjusted bottom means its momentum is no longer strong enough to defy the market.

With that being said, Hershey may end up being the perfect recession investment. Chocolate is still cheaper than alcohol, and you won’t get fired for consuming an entire container of Kisses at work.

Source: Hershey (HSY): Kisses Sweeten the Recession

Gazprom has said its decided to push its borders a bit and wants to trade chunks of its prized Russian natural gas fields for foreign assets. But it hasn’t actually made much progress, including today’s deal.

E.On was planning to give away a piece of its Hungarian gas trading-and-storage business and power utility, but the two energy companies couldn’t agree on value (or, less diplomatically:  Gazprom kept demanding a higher return for a cut in the gas field as oil prices moved up this summer, and E.On didn’t want to pay. And then that whole war-in-Georgia thing made the Germans a little less comfortable sitting across the table from the state-controlled Gazprom’s execs everyday.).

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It seems European companies (and others, but mostly the Europeans. Gazprom does loom large on their eastern front.) aren’t too sure about selling stakes in their resources to Gazprom. And the company’s strong-arm tactics don’t exactly go over well in foreign boardrooms.

So what did Gazprom get out of the deal with E.On? 2.93% of its own stock. E.On still holds 3.5%. Ouch.

Gazprom is claiming the Hungarian assets were inadequate and that it couldn’t miss the chance to buy back shares at such low prices.

But in reality (Sorry for using a phrase popularized by MTV, but other options are much less, um, tasteful.) Gazprom got served.

Source: E.On (EONGY) Grabs Gazprom’s (OGZPY) Gas Field

This is great news for value investors.

Stephanie Grimmett says Tyco (NYSE:TYC) is a prime example of a company caught up in short-term market panic. But its dividend and fiscal outlook are relatively strong.

And its security business will remain stable — and perhaps even benefit — in a recession.

This from Today’s Financial News:

Tyco (NYSE:TYC) has lost 26% in the last two weeks. In fact, it’s even done worse than the Dow. But the company is raising its dividend and increasing its earning per share. This is a strong candidate, according to the Omaha Principle.

It’s been following the market almost exactly, rising and falling with the Dow, until two weeks ago, when shares of Tyco began a headlong crash, plummeting more than 26% in less than 11 trading days.

If you’re looking for a news-related collapse, you won’t find one here. The only thing Tyco has done in the last month was register to sell “from time to time an indeterminate amount of debt securities, preference shares, common shares, purchase contracts, depositary shares, warrants, units and guarantees of debt securities” (thank you, Dow Jones and Reuters for the quote).

That’s hardly incendiary.

Trading volume has remained steady throughout the fall, and the company’s fundamentals are still solid. Tyco just raised its quarterly dividend 33%. And the company actually moved up its fiscal-2008 guidance about 10% in July.

Tyco owns international alarm security company ADT (to be fair, I have to tell you that we’ve used their alarm system in our apartment for the last two years, but that has little to do with the share price.).

The company sells fire protection products (fire alarms, sprinkler systems and specialty fire extinguishers, among other things) and commercial security devices (closed-circuit TV cameras, ink tags for store merchandise and building keycard entry systems) in a collection of eight other subsidiaries.

The security and protection racket isn’t going to suffer from a recession. In fact, as crime rises (which happens in a recession), so do the number of home security systems and building alarms.

This stock shouldn’t stay down for long. It’s been trading at between $40 and $50 for the last year. And according to the Omaha Principle, this is exactly when we should be buying shares: TYC is a steal at $30 (but give it a few days, you may be able to get in even cheaper).

Tyco is another example of good shares gone bad because of market influences. The company is solid. The share price will return to normal levels.

And I’m not the only one who thinks so. Zacks, Fitch and Standard and Poor’s have all rated Tyco as undervalued in the last month. So as soon as the stock looks like it’s found a bottom, grab shares and be in as Tyco returns to its former glory.

Source: The Omaha Principle: Tyco (TYC) is Waaaaay Undervalued

Fortis (Brussels:FORB), the Dutch bank that already suffered the humiliation of being propped up by, not one, but three different governments, just lost its deal with one of China’s largest insurers. And the company’s commercial banking sale to Deutsche Bank (NYSE:DB) has been put on hold by regulators until further notice.

Earlier this week, Fortis had to go begging to the government, but it didn’t just get aid from its native Dutch government. It also sold itself to the Belgian and Luxembourg governments. Each of the trio bought 49% of the bank’s units inside their respective borders. And now it has three masters, four, if you count the investors who drove up its price 12% today.

We saw the result of this action ripple through Fortis’s joint venture partners on Monday, when it shook down Royal Bank of Scotland (NYSE:RBS) for 24% of its stock price.But that wasn’t the end of it. Today, Fortis had to cancel the sale of half of its asset-management wing to Ping An Insurance (Pink Sheets:PNGAY) (you may remember it from it’s IPO) for 2.15 billion euros ($3.03 billion).

Ping An has designs to become a full-service financial company, but the deal was made in March, before Fortis became a bargain-basement seller, and would have required an immediate writedown on Ping An’s part.

Fortis has also been thwarted by the Dutch Central Bank in the sale of it’s commercial banking assets to Deutsche Bank.

And despite the fact that Fortis can’t even give itself away, the stock is up nearly 12% today… I wouldn’t trust that gain too much.

Source: Fortis (FORB) up 12%, despite setbacks

Three days before the Xstrata (London:XTA) bid deadline, and Lonmin (London:LMI) has rolled over into the corporate equivalent of the fetal position.

Lonmin CEO Brad Mills bowed out of his position today by “mutual consent” according to the company, which Mills led for the last four and a half years through safety stoppages, labor strikes and power outages in its South African platinum mines.

Whether culpable or not, Mills has been blamed for a 29% decrease in output at Lonmin’s mines, and the market is expecting even worse numbers coming from the miner soon. It’s fiscal year ends tomorrow, and things are looking grim.

The former CEO said Xstrata’s $9.1 billion bid for his company undervalued Lonmin, but the market would beg to differ. Currently, LMI shares are running around 21 pounds ($38.00) about a third less than the all-cash offer of 33 pounds ($59.51) per share.The market is certainly betting against the buyout, but it would be the best thing to happen to Lonmin. The company can’t seem to get production up without help. It’s watched the price of platinum fall 52% since March, and it’s liabilities are mounting against any possible profits.

Lonmin’s new CEO, Ian Farmer, is a chartered accountant who joined the company in 1986 and worked as a director and chief strategic officer before taking the CEO position. Doesn’t he already sound like a good subsidiary president for Xstrata?

But the real question now is not whether Lonmin will accept the offer, but whether Xstrata will make the offer at all. Will Xstrata walk away or rescue Lonmin from oblivion? We’ll have to wait and see.

Source: Will Xstrata (XTA) fill vacuum left by Lonmin (LMI) CEO?

Wait, that can’t be right, but I guess it is. Pacific Ethanol (NASDAQ:PEIX) fell 28% in the first moments of trading, with nothing but good news on the reports.

PEIX spiked to $2.08 late yesterday (pretty close to 4:30 p.m.), but the stock fell to $1.80 at open. And it’s currently around $1.63. That’s 28% down from Monday’s ebullient close.

The company’s Port of Stockton plant just came online, which means Pacific Ethanol will be making another 60 million gallons of ethanol in the next year, bringing total production for Pacific Ethanol up to 220 million gallons per year.

This should have been good news, enough to send the stock up significantly, and it did, if you look beyond yesterday’s overly jubilant closing price. Monday’s open price was only $1.36, meaning the stock has gained a nice 20%, despite the depression of the overall markets.

The reaction today wasn’t a statement about ethanol producers. Although investors are starting to question the profits available to alternative energy producers in a recession, but that can’t explain a pop this high. Pacific Ethanol’s spiking was simply an excited correction in an extremely volatile market.

Source: Pacific Ethanol (PEIX) Down 28% in First Hour

Despite Bush’s best efforts the National Retail Federation says US retailers will see their slowest holiday sales growth this year since 2002.

But it isn’t all doom and gloom in the retail world. Stephanie Grimmett says Japan’s Fast Retailing (PINK:FRCOF) has ambitious growth plans in fast-growing emerging markets. FRCOF’s share price is on a down trend. But it will likely bottom soon.

This from Today’s Financial News:

While the rest of the retail world is whimpering, writhing and contracting in pain, Japan’s Fast Retailing (PINK:FRCOF) is shopping around for a good takeover candidate.

Last year, the company, listed on the Tokyo Stock Exchange and traded on the Pink Sheets in the U.S., tried to take over Barney’s New York, but that failed attempt at expansion hasn’t thwarted the Japanese megabrand.

Fast Retailing operates the Uniqlo (as in, “unique-clothes,” I think.) chain, a store and clothing line as ubiquitous in Japan as The Gap is in the U.S., although Uniqlo’s design aesthetic is definitely younger, cheaper and more trend-conscious than its U.S. counterpart.

The company has 750 Uniqlo stores in Japan. And Fast Retailing plans to more than double the number of stores outside Japan to 125 outlets in the next two years.

When sales began to slip last year, chief executive Tadashi Yanai, who built Fast Retailing from a small family business, returned to oversee day-to-day operation. And the change was definitely felt in this year’s sales figures. Same-stores sales grew 2.9% in Japan, which is quite a coup in a saturated market with an aging population… not to mention the fact that retail isn’t exactly booming anywhere right now.

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And now that retail in general is suffering, Yanai is shopping the sale aisle for local and international companies that can help push Fast Retailing’s revenues to 1 trillion yen (about $9.5 billion) by 2010.

Yanai is planning for new acquisitions to meet a quarter to a third of that goal. But he’s seen a slow start to his takeover fever. It’s been years since Fast Retailing announced it was on the buyout warpath, and yet, no buyouts have resulted. All we’ve seen is the loss of Barney’s in a bidding war and the failed attempt to snap up Hong Kong’s Giordano International. Still, that $1.4 billion sitting collecting dust is enticing for investors in a market where most of retail is shrinking instead of growing.

Fast Retailing is currently on a down trend as investors cash out their profits from the last six months. But keep an eye on the stock, as soon as you see it find a bottom, consider grabbing shares of your own.

Source: Japan’s Retail Champ: Buy Fast Retailing (FRCOF)

I’m betting this will have tree-huggers (the literal kind, not just any hippy who might be around) screaming for blood: Did you know that there’s a global paper glut? We’re producing too much of it. And no one’s buying, which means papermills are slowly dying.

Here at the TFN office, we’re almost completely paperless, and I’m sure email and web 2.0 interventions have cut down on the paper you use at your office as well. Oh, and don’t forget China.

Unfortunately for papermills in Europe and the U.S., the Chinese have figured out that, unlike coal and iron ore, they can actually create more trees to fill their needs. And the country that used to be one of the strongest markets for Western papermills has become a net exporter (I can hear the executives at Finland’s Stora Enso (OTC:SEOAY) and Sweden’s Svenska Cellulosa (Pink Sheets:SVCBF) complaining about the fact that the Chinese suddenly learned how to grow trees).

The net result of paperless offices in the West and a China with trees in the East is the collapsing share price of Europe’s papermills.

Stock prices for paper companies have been eroding for more than a year. But a recent bump upward could mean the mills might rise again. Check out this Wall Street Journal article for an argument on that bent.

Personally, I think paper is a relic of the past. We like to send each other birthday and Christmas cards made of it. We like to scribble our adolescent, self-absorbed thoughts into journals full of it. And coming from the perspective of a writer, nothing will ever fully replace the delicious feeling of a really good pen scratching across thick, heavy paper.

But business, government and art will continue to move away from paper and into the electronic medium in the next few decades. And those industries, currently the major consumers of paper in the world, will leave papermills to languish in disuse.

That doesn’t mean you can’t make some money on paper in the meantime. But the logic that papermill stocks will rise because the companies are cutting back on production is lost on me. Perhaps the paper companies should stop cutting back on production and start thinking about consolidation. You might be able to find some very short term profits in the the paper sector, but avoid it long term.

Source: Can You Profit from Paper Stocks?

This is when I’m glad I’m lactose intolerant… and only buy American-made soy milk.

Last week, Cris Sholto Heaton advised readers to avoid the milk craze in China. And boy, did he turn out to be prescient.

The milk industry in China is in shambles because at least three of the country’s major producers have been watering down their products. That’s not very scandalous. In fact, we have a name for that milk in the U.S. It’s called skim. But these Chinese producers were using a toxic chemical to mask their watery dairy products.

Melamine, a chemical used to make fire retardants, glues and plastic countertops, and one that can give false readings of protein levels, was floating around in the milk cartons of China Mengniu Dairy (Hong Kong:2319), Inner Mongolia Yili Industrial Group (Shanghai:600887) and Bright Dairy & Food (Shanghai:600597), among others, and its presence in baby formula has already been blamed for the deaths of at least four infants.

The scandal already has its scapegoat in the form of Tian Wenhua, chairman at Sanlu Group, whose baby formula had the highest levels of melamine of those tested. Tian Wenhua was fired from her post at Sanlu. She’s lost her Communist Party position and the police brought her in for questioning earlier this week.

Anyone who remembers the tainted toys (and pet food, and toothpaste…) scandal of last year will also remember China’s swift “justice” in the situation. The country’s drug minister Zheng Xiaoyu was arrested for accepting bribes, tried for murder and executed within the span of a few months. And Zheng Xiaoyu’s specter is probably floating before the former Sanlu chairman’s eyes as you read this.

Perhaps what should most distress the Chinese, Taiwanese, Hong Kongers (according to Wikipedia, that’s what they’re called), Singaporeans and anyone else who drinks milk produced in China, is the revelation that many of China’s milk producers have official, government-sanctioned “inspection free” status.

It makes chills run up my spine. But there it is: The milk manufacturers didn’t have any oversight because their products were perishable and they had a good track record for health standards.

The government has officially removed the tainted milk companies from its inspection-free list. But that provides little comfort, and just leaves most of us wondering which food producers are still on that list and how can we avoid them.

Thankfully, back in his pre-scandal Chinese milk article, Cris recommended a soy drink company that’s based in Hong Kong and receives international inspection certification. The Chinese will be drinking a lot more of the company’s products now that milk is off the menu. And it’s definitely a good time to take a look at his alternative.

Source: China’s Killer Milk Leads to Soy Profits

This from Today’s Financial News:

If only Boeing were Brazilian. In 1995, oil workers at Brazil’s state-controlled Petrobras (NYSE:PBR) decided to go on strike (because the government was reorganizing the company in advance of partial privatization, which has only made union workers more money).

After unsuccessful negotiations and a drastic slide in oil and gas production that threatened not only Petrobras’s profits, but the daily lives of Brazil’s citizens who had no gas to heat their homes or cook their meals, the country’s then-president did what many a company executive dreams about. He sent soldiers into the Petrobras refineries where workers were protesting, and “suggested” that the oil workers return to work immediately. And it worked.

It would make things so much easier if U.S. companies could threaten unions with military intervention, but unfortunately, private ownership and America’s pesky non-partisan stance between management and labor prevents Boeing (NYSE:BA) from getting the Army involved in its negotiations, no matter how “vital” the airline industry is to commerce or how many federal mediators the negotiations involve.

And unfortunately, the company’s machinists know Boeing has no real fangs when it comes to threatening them. So they figure an 11% raise, signing bonuses and cost-of-living adjustments (When was the last time you got an 11% raise on top of your cost-of-living raise for nothing more than showing up to work on Monday?) aren’t enough to entice them back to the negotiation table.

The machinists know they hold all the cards. And to prove it, they went on strike this weekend.Why not? It worked last time (in the 2005 strike, which was also the last time machinist contracts were up for negotiation), why not try it again and see what they can squeeze out of the company? In fact, strikes are starting to look like standard operating procedure when it comes to Boeing’s machinist union.

And the fair balance of power between management and labor envisioned by high-minded union organizers more than a century ago is devolving into a form of corporate terrorism. In the world of unions, strikes are supposed to be a big, bad threat, not a normal step in the negotiation process. If you’re striking everytime you’re negotiating, something’s wrong.

Personally, I think this strike has less to do with giving machinists a fair shake and more to do with the union bosses showing Boeing who’s in charge.

Instead of trusting union leaders to present its offer fairly at a vote (and with the union’s strike-happy history, who can blame the company?), Boeing tried to circumvent bosses by posting its new machinist contract offer directly on its website for all employees to read for themselves. It seems like a logical idea, in this post-interent age of freely disseminated information, to provide every union member with the unadulterated form of Boeing’s offer.

But even today, unions can tend more toward fifedoms than chat rooms. And I’m sure Boeing’s attempt to bring the individual machinists back into the equation angered at least a few megalomaniacal (uh, I mean humble and selfless) union leaders.

The last time Boeing’s machinists striked (or the last time they had cotract negotiations, which is one and the same thing), they halted work for nearly a month and cost Boeing a pretty penny. We’ll have to wait and see whether Boeing will call the machinists’ bluff or if they’ll win the day again.

Source: Boeing strike looks more like corporate terrorism