Attention: Tax Procrastinators!

Ok. Some of us (me included!) just hate doing our taxes, and we are perennially late filers, seeking extensions each year. Although the IRS has given us two extra days to file this year (until April 17), many taxpayers still need more time to gather their papers together, or to muster their courage, and just can’t make the deadline.

Fortunately, the IRS has made provisions for us procrastinators!

The IRS provides three ways to request an automatic extension of time to file your tax return.

http://www.irs.gov/pub/irs-pdf/f4868.pdf1.

1.     Electronically. You can file Form 4868 (Application For Automatic Extension of Time To File U.S. Individual Tax Return) on your computer by accessing IRS e-file, or you can have your accountant do it for you. If you file this way, you will receive an acknowledgement or confirmation number from the I.R.S. and you do not need to mail in Form 4868.  If you owe additional taxes, you can pay through an outside service provider or through e-file. 

You can also use the IRS’ Free File program to file electronicallyhttp://www.irs.gov/freefile. But make sure you have a copy of last year's tax return, as you’ll need your Adjusted Gross Income for taxpayer verification.

2.     Use your credit or debit card to pay your estimated income tax due, by using the Electronic Federal Tax Payment System (EFTPS). The IRS has contracted with several outside payment companies to assist you. Pay Taxes by Credit or Debit Card, but note that you will be charged a convenience fee.

3.     File a paper Form 4868. Extension of Time To File Your Tax Return

One last caveat: An extension of time to file is NOT an extension of time to pay, so if you don’t pay what you think you owe, you will be charged a penalty.

Just make sure you file something, or you’ll be sorry!

My 2 Favorite Stocks for Next Week

The markets lost a little ground this week, taking a bit of a breather, although most economic reports were pretty good. I think there’s some concern over the increasing cacophony of “Sell in May, and go away”, but I also believe wise investors should ignore that advice.

I’ll spend a little time next week, commenting on that—as well as some other adages—that are mostly outdated, in a column next week. But today, I want to reiterate that the economy is improving and there is no reason why the markets cannot continue to rise.

This week’s economic reports included a rise in factory orders, fewer job cuts, declining unemployment claims (although I’ll concede they weren’t as good as estimated), and an unemployment rate that has fallen to 8.2%.

So let’s forget about the naysayers for now. I don’t believe that every single stock is going to jump through the stratosphere, but I do think it’s a good time to be a stock picker, searching for companies that have fabulous potential. This week, I even narrowed my criteria a bit more, and still came up with 22 companies who look very enticing.

Here are my two favorites:

What will you do with your Tax Refund?

My parents were working people, with five children (deductions!), which meant they received a nice little check each year after filing their taxes. They didn’t have the benefit of a good tax adviser and didn’t understand that it was their money that Uncle Sam was returning to them, year-after-year. In fact, they were giving the U.S. government a tax-free loan!

Imagine what that $1,000 or so they received, annually, could have turned into had they been putting it away, instead of being so generous to Uncle Sam.

But that was then, and my folks weren’t any different than most people on our block, who didn’t benefit from a good tax advisor. But in today’s world, with so much good (and often free!) advice, there’s almost no excuse for letting Uncle Sam have free use of your money. All it takes is a little calculation to determine how much less you should be paying in throughout the year so that you just about break-even by December 31.

For many people, it’s this simple: Let’s say you are receiving about $1,000 back every year from your tax refund. Divide that by 12, and you get $83.33—the amount you should reduce your paid-in taxes by each month. Just call your payroll department and they’ll give you the right form. Wouldn’t it be better to have that $83.33 in your own pocket, instead of lending it to the government each month?

That’s a great strategy for 2012. But if you are expecting a refund this year, from your 2011 taxes, let’s look at the worst and best ways to spend that windfall:

The 5 Worst Things to do with your Tax Refund

Is Franchising for You?

You know the economy is getting better when you begin hearing “buy a franchise” ads every day on the radio!

I’ve been taking notes. So far—just this week—I’ve heard spiels for these franchise types: Smoothies, men’s fitness, yogurt shops, men’s hair salons, and hamburger joints.

So I thought I’d do a little research to find out the current state of the franchise industry.

First of all, let’s define franchising as essentially adopting someone else’s successful (or at least hyped as successful) business model. Franchising has grown tremendously—especially in good economies—as it is promoted as easier and less costly than building your own business.

You may be surprised to know—according to Wikipedia—that Isaac Singer, the fellow who improved sewing machines, began one of the first franchises in the U.S. in the 1850s. But it is said that franchising goes much further back—maybe as far as 200 B.C. in China.

As of 2011, Statista.com says there were some 735,571 franchises operating in the U.S. That’s pretty amazing, isn’t it? It sounds like a great idea—walking right into an already-successful business strategy. And you only have to look at the multi-millionaire franchisees who were smart enough to sign on with McDonalds (whose franchises currently cost from $1.07M - $1.89M ) when they began franchising, back in 1953—or the many who joined in with the following Top 5 American franchises—to see that, indeed, franchising can be the ticket to riches.

FRANCHISE	START-UP COSTS
Hampton Hotels	$3.75M - $13.11M
Subway	$84.8K - $258.8K
7-Eleven, Inc.	$30.8K - $611.1K
Servpro	$132.05K - $180.45K
Days Inn	$202.17K - $6.76M

Source: http://www.entrepreneur.com/franchise500/index.html

And since the economy—as I’ve been saying for months—is definitely on the upswing, it’s no surprise to see new momentum in both business start-ups as well as the franchise world.

So far in 2012, here are the most popular new franchises:

The IRS has a Deal for You!

Normally, when the government says, “I’m here to help you”, I would advise you to run like heck! But the IRS’ Fresh Start initiative looks like it may actually bring some needed relief to unemployed folks, as well as those who have hit upon hard times.

If you meet these criteria, you can get a little extra time to pay, and can eliminate some of the more heinous penalties the government usually docks you if you file late:

·         If you’ve been unemployed for at least 30 consecutive days during 2011 (or during 2012, up to the April 17 tax deadline)
·         If you are self-employed and have experienced a reduction in business income of 25% or more in 2011 (primarily as a result of the economy)
·         Your adjusted gross income must be less than or equal to $100,000 ($200,000 if married filing jointly). Your 2011 balance due must be less than or equal to $50,000

If you meet these parameters, the IRS will give you an extra 6-months (to October 15) to pay your taxes, and…while you will be charged interest on your unpaid taxes, Uncle Sam will not charge you a “failure-to-pay penalty), if you pay your tax debt in full by October 15, 2012.

As well, the IRS is giving taxpayers several options for payment, including:

·         Short-Term Extension of Time to Pay, if you can pay within 120 days
·         Installment Plan Agreement, for taxpayers who owe $50,000 or less (note, there are some provisions for those who owe more than $50,000)
·         Offer in Compromise, for taxpayers who have endured significant financial upsets, who seek a settlement (a compromise) on the tax debt they owe

The most important thing for you to know: Don’t let April 17 go by without contacting your tax preparer or the IRS to make arrangements for payment. If you ignore the deadline, you will find yourself steeped in penalties that will make a bad situation worse. My advice: Take advantage of this unusual generosity of the IRS

My 2 Favorite Stocks for Next Week

My 2 Favorite Stocks for Next Week

The stock markets continued their upward trend this week, with just a little volatility. Indexes were aided by the great numbers posted by Michigan Sentiment, which came in at 76.2, compared to the 74.3 forecast.

As well, GDP (third estimate) remained steady at 3%, and personal spending rose. While unemployment claims were a bit higher than expected, they weren’t too far off the mark. Result: A decent end to the week.

Sector-wise, technology ruled the roost, with an average return of1.07% for the week, followed by Healthcare, at 0.90%.

The market continues to look undervalued to me, and my search this week found more than 40 companies that were worth a second look. Here are two of my favorites:

Glu Mobile (Nasdaq: GLUU) develops mobile games for the global market. Titles include: Big Time Gangsta, Blood & Glory, Bug Village, Contract Killer, Contract Killer: Zombies, Eternity Warriors, Frontline Commando, Gun Bros, Men vs. Machines, Stardom: The A-List, Super K.O. Boxing and Toyshop Adventures.

Price: $4.80

Market cap: $314.44 million
Target: $7.00 (conservative estimate)

Why I Like It: Discounted value, takeover candidate, and new analyst interest.

Merge Healthcare (Nasdaq: MRGE) sells software solutions that automate healthcare data and diagnostic workflow.

Price: $5.85
Market cap: $534.23 million
Target: $8.75

Why I Like It: Reported a good quarter, forming new business divisions, in a quick-growing sector, due to the need to create electronic patient records.

These stocks are both small-cap, so please understand that investing in them may entail more risk than buying shares in their larger competitors. Consequently, if you decide to purchase them, please make sure that they constitute only a small portion of your portfolio.

Note: I intend to establish a portfolio of similar picks, some 25-30 stocks that I’ll update on a regular basis. I will discuss them from time-to-time in my blog and on this web site, but a full analysis of each stock—as well as detailed updates—will be available only via subscription. If you’d like more information, just contact me directly, at nzambell@frontiernet.net

My 2 Favorite Stocks for Next Week

We’ve had a bit of a rest in the stock markets this week, but I expect the upward momentum to continue very soon. And although we have recently lost a little speed, we have seen growth in all 11 Morningstar sectors so far this year.

Year-to-date, consumer cyclicals is the winner, with stocks averaging an 18.3% gain, followed by technology (16.8%), financial services (15.6%), and industrials (12.1%). Even the worst return—5.1%--posted by utilities, is pretty darn good!

As I said at the beginning of the year, I fully expect that momentum to continue into the foreseeable future, due to significant improvements in our economy. Rising corporate profits, reduced unemployment, a more active housing environment, and still-low interest rates, are all contributing to a more positive mindset from consumers and investors.

And with that in mind, I’ve decided to begin publishing “my two best stock picks” weekly. I’ll give you some basic information as to why I think they have room to grow—including how much potential I believe they have. Then you can do your own research to see if they fit in with your investing goals.

My screening criteria are basically fundamentally-oriented, asking the question: Is this a strong, well-run company? A few of my primary screens are: Good cash flow, low debt, low P/E, and increase in institutional interest. Those parameters are augmented by a few technical indicators, such as moving averages and momentum factors, which tell us if this is a good time to buy (or sell).

When I ran my screens this week, I came up with a whopping 37 companies! Here are two with the most potential:

Spectrum Pharmaceuticals (Nasdaq: SPPI) is a biotech company, operating primarily in hematology and oncology.

Price: $13.44
Market cap: $791.55 million
Target: $20

Why I Like It: Discounted value, focuses on two fields that are growing phenomenally, with the ability to be a takeover candidate for a larger pharma, as well as a buyer of its smaller competitors.

FSI International (Nasdaq: FSII) operates in the microelectronics industry, offering surface conditioning equipment that uses wet, cryogenic, and other chemistry techniques to clean, strip, or etch the surfaces of silicon wafers; and refurbished microlithography products to deposit and develop light sensitive films

Price: $5.14
Market cap: $200.96 million
Target: $8

Why I Like It: The semiconductor sector is on an upswing, along with FSII, which just reported a very good quarter. I also like the company’s cutting-edge technology—a good indicator of a business that might also make a great takeover candidate. And I think the company is undervalued.

These stocks are both small-cap, so please understand that investing in them may entail more risk than buying shares in their larger competitors. Consequently, if you decide to purchase them, please make sure that they constitute only a small portion of your portfolio.

Note: I intend to establish a portfolio of similar picks, some 25-30 stocks that I’ll update on a regular basis. I will discuss them from time-to-time in my blog and on this web site, but a full analysis of each stock—as well as detailed updates—will be available only via subscription. If you’d like more information, just contact me directly, at nzambell@frontiernet.net