Mick Weinstein The Week's Best Stock Blogs

Q: How do you know we're in the midst of quarterly earnings season?
A: Business sections of papers and mainstream websites are filled with regurgitated press releases, copycat journalism and lame sell-side analyst comments.

Market bloggers shine during earnings season. These are the critical information windows when investors receive new data on their holdings and hope to hear informed opinions from others with skin in the game. That's what the best blogs provide - analysis not of what an earnings report was, but what it means for one's portfolio. Here's a roundup of some of the best straight talk in two key sectors over the past week - as always, click though to get the full item:

Financials

The large banking indexes have seen a major move up since mid-July, sparked by better than expected earnings reports (well, mostly losses that weren't as bad as some feared). In the wake of the move, Trader Mark quipped that here's something you would never have imagined saying just a short time ago: "Thank god for financials and homebuilders - without them my portfolio would be a disaster."

Yet from an investor's point of view, the key question is if the bottom is in - or if this is just a headfake, and one's better off waiting for the credit crunch to ease and sector fundamentals to noticeably improve. Financial planner Gregg Feirman says "I can't see a sustained rally in the financials until the performance of their books starts to stabilize and look up."

But veteran fund manager and analyst Tom Brown of Bankstocks.com makes a compelling point: If you wait for fundamentals to fully improve at banks, you'll likely miss the bulk of the move back up. Brown believes that last Tuesday marked "capitulation day" for financial services investors, and that currently "the companies are extraordinarily undervalued."

Banking giant Bank of America's (BAC) shares soared following its Monday report that beat lowered expectations. Yet Money Morning points out that B of A's seemingly attractive dividend yield is "almost certainly not" secure. "It's just a matter of time before this dividend gets whacked." Research firm Bespoke Investment Group added that though B of A announced that it intends to buy back shares, that's still a 62% decrease in the number of shares it initially intended to buy. But here's a dividend-focused investor who owns BAC and considers it one of three stocks that can be held "to infinity and beyond."

Wachovia (WB) was truly wild one. The bank reported a huge $8.86 billion loss on Wednesday, yet by the end of that session its stock had jumped more than 27%. The following day, Tate Dwinnell found Wachovia CEO Robert Steel had purchased over $10 million of his company's stock: "That's one heck of a gutsy move and it will probably pay off in a few years." But personally, Dwinnell's waiting "for at least a 50% retracement of this move in financials to do some shopping."

The Simplified Investor, who owns Wachovia stock, finds the reason for Wednesday's "WB mystery" is that CEO Ronald Steel is promising to make concessions to angry investors by getting the bank out of the mortgage business: "It's all about confidence on Wall Street, and investors are behind Steel and the direction he's taking at Wachovia."

American Express (AXP) posted a 38% drop in second quarter profits due to slowed consumer spending and increased unpaid loans. Ian Cooper called this move ahead of time and now believes: "If you must own a credit card stock, buy Visa or MasterCard. They [unlike AmEx] do not have exposure to consumer debt."

Economist Robert Salomon comments that "if there was ever a company that speaks to the general health of our economy, it is American Express. Amex is a consumer and business finance company, and scrutinizing the behavior of its customers can provide insight into the direction of the broader economy. Moreover, I now expect conditions similar to those experienced by Amex to spillover to a broader swath of corporations, not limited to housing, finance, and consumer discretionary."

According to investment advisor Marvin Clark, if defaults are rising in AmEx, the "best-of-breed of American credit card issuers...then any remaining doubters or non-believers of this crisis' intensity should perform a financial autopsy on one of America's signature haute cove for the affluent for confirmation." Graham Summers, who believes that the big rally in financials "was largely the work of the SEC crushing shorts," concurs - he finds AmEx's results point to broader ongoing trouble, and he's "looking around for more shorts in the financial sector."

But veteran investment manager David Merkel is convinced that "not all financials are poison." He's still avoiding banks or any other "entities where the primary business is credit risk," but sees particular opportunity in insurance stocks. Merkel names eight stocks that he currently holds and believes "are cheap... I have a reasonable expectation of significant book value growth at all of them."

Technology

Apple (AAPL) shares took a nosedive after earnings were released Monday afternoon. The company beat current quarter expectations, but a lukewarm outlook for the current quarter - and some concerns over Steve Jobs' health - brought the stock down sharply. What do investors think?

Stephen Rosenman, who owns Apple stock, finds that not only are the company's traditionally conservative earnings forecasts "pointless," but actual earnings reports are also not so helpful - they have "absolutely nothing to do with reality...These days, Apple's earnings tell you less and less about how the company is doing...That's because iPhone sales are not accounted for at the time they are sold. That means, for instance, the colossal selling of one million iPhones over three days barely will budge next quarter's earnings."

On Apple's conference call with analysts, CFO Peter Oppenheimer responded to an analyst's question on Steve Jobs' health: "Steve loves Apple. He serves as the CEO at the pleasure of Apple's board and has no plans to leave Apple. Steve's health is a private matter." Henry Blodget of Silicon Alley Insider wasn't satisfied: "It's also a matter of supreme importance to Apple shareholders. We know of no big company, in fact, in which the CEO's health is a more critical consideration for shareholders than it is at Apple."
Money manager Jason Schwarz, who is also long Apple, disagrees: "Let Mr. Jobs have some space. Investors have made too big a deal of his health and not a big enough deal about the one million iPhones that sold out in on opening weekend. This disconnect has created a classic buying opportunity."

But here's the contrarian take from Ben Shuleva, who shorted Apple into earnings and has done very well with that position. Shuleva nailed it a week ago, stating: "Based on Apple investors' characteristics, the current market sentiment, and my EPS projections I expect a significant selloff of AAPL on the 21st." And Michelle Leder, who pores through SEC filings for statements of particular interest to savvy investors, finds Apple's filing using "stark new language to describe the state of the economy."

Internet giant Google (GOOG) released earnings that didn't satisfy anyone, and led to a major sell-off. Shareholder David Gordon isn't selling: "Any way you slice it, with the exception of the 'whisper' game, Google's earnings report is phenomenal... From my perspective, Google still qualifies as a buy."

Amazon (AMZN) was one of the few companies with good news, posting numbers that slightly beat expectations. Shares jumped. The reason? The e-tailer may be benefiting from high gas prices due to its free shipping deals. Larry Dignan liked comments from Amazon CEO Jeff Bezos, who noted that a slowing economy is making the e-tailer a better choice than driving 10 miles to a store, which "seemed to allay any of those concerns about one-time gains and gross margins" that could've brought the share down.