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DailyFinance.com has a great article on the new jobs outlook for the US that was reviewed by BloggingStocks.  I think that they only thing that is missing is the acknowledgement that is nearly impossible to get zero unemployment.  In fact, it would probably be bad for the economy to have zero unemployment!

What is the perfect unemployment rate? Ask 10 economists and you will likely get 12 answers.  Most of them will likely say a number between 4-7%. When the country gets below about 4% then entry level jobs become quite expensive and inflation is almost guaranteed to happen. Once you are above 7% then the country starts to feel real pain in that large ticket items are harder to purchase.

We are currently just under 10%, that means we are about 25-30% above our optimum level. While this is not great, it does have a significant advantage for those industries and businesses that rely on a large workforce to create product.

As the unemployment rate drops, pay a bit more attention to stocks of companies that create bigger ticket items (e.g. automobiles, planes, vacations, computers, homes). As long as the unemployment is a bit high, be careful of those big ticket items and look for companies that make low cost items or items of necessity or need a large, cheap workforce (restaurants, grocery, food production).

While I have not reviewed Kroger [stckqut]KR[/stckqut] on this site, it is a good example of a company that will slightly benefit from high unemployment or at least not be hurt as dramatically as others like Ford [stckqut]F[/stckqut]. Kroger recently released a fairly strong quarterly earnings report.

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Those that have known me and listened to my advice over the years know that I am not a big fan of Palm [stckqut]palm[/stckqut].  Now it looks like the Wall Street Journal is agreeing with me that this company may be on its death bed.

Aside from the fact that they cannot generate a profit (a sin in my opinion for a public company), their lack of growth over the years is atrocious. Only a speculator or a gambler should consider this a company to invest in. For those that want a company that you can CONFIDENTLY invest in – STAY AWAY FROM PALM!

You can click here to read more (may require a subscription) but below are a few highlights:

Some investors see a buying opportunity in the stock of the mobile-device maker, after a 55% plunge over the past six weeks amid weak sales of its new Pre smart-phone. Despite doubt about Palm’s ability to gain traction in the fast-growing and increasingly competitive smart-phone market, some are betting Palm will get acquired.

Even if such a deal materializes—far from a sure thing—it would have to do so quickly to justify the current stock price of around $6. The way the business is trending, six months from now, any buyer may only pay enough to cover Palm’s $388 million debt and the $376 million in preferred stock held by Elevation Partners. Common shareholders may get next to nothing.

Of course, it would depend on how many bidders show up. Palm’s most valuable asset, particularly for a new entrant to the smart-phone industry, is arguably the research and development sunk into the webOS operating system in the Pre. It is reasonable to assume that figure is around $600 million—what Palm has spent on R&D since 2007, when it last released a phone running on its old operating system. There also are carrier relationships, and Palm’s fading brand name. But absent a competing bidder, Palm may struggle to fetch more than one-time sales, which Morgan Joseph analyst Ilya Grozovsky estimates will be $1.2 billion this fiscal year, ending in May. That translates roughly to the current stock price.

What is more, Palm’s cash reserves will likely shrink in the coming months. Palm said last week it expected to finish February with $500 million in gross cash and equivalents, down from $590 million at the end of November. Assuming it continues to burn cash at this rate, it will exhaust its reserves in 18 months. Spending more on marketing could accelerate that.

Raising more cash from the public would be tough. After all, investors won’t soon forget that Palm sold shares at $16.25 last September, shortly after issuing the fiscal 2010 revenue projection that, it is now clear, was overly optimistic.

Palm may very well get acquired. But investors shouldn’t bank on a big payday.

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Zac Bissonnette over at Blogging Stocks has an article about Sardar Biglari of Steak ‘n Shake trying to emulate Warren Buffet and Berkshire Hathaway. He starts off the story with “done an admirable job of turning around operations at Steak ‘n Shake” which I have a hard time accepting.

By nearly every measure that matters for me to be confident in a company, SNS is bad.  I haven’t bothered to do an analysis of the company because they are at the bottom of every scale that I measure them on. In fact, as a company the only way they could score less is to not be profitable! Rather than do a reverse stock split to bump the price up to the hundreds, they should spend time running a business that is growing and profitable. While their revenue trend isn’t terrible, their earnings growth is a sin! I don’t invest in companies that cannot figure out how to grow.

Here are the first few thoughts that Zac shared. Click through to read the rest.

Sardar Biglari has done an admirable job of turning around operations at Steak ‘n Shake (SNS), but over the past few months, he’s made a few less-than-subtle efforts to imitate his idol Warren Buffett.

Back in December, he announced that he would do a 1-for-20 reverse split of the stock to boost the share price over $300 and “dissuade speculators.” “We are attempting to eliminate those who erroneously think that it is easier for a $10 stock to go to $20 than a $200 one to go to $400,” he wrote in a letter to shareholders.

The New York Post has called him a “wannabe Warren.” Last month he made headlines when he announced that he would be changing the name of the company to Biglari Holdings. C.L. King analyst Michael W. Gallo wrote that “While progress over the last couple of quarters has been encouraging, we believe the key determinant of value creation going forward will be the success of Steak ‘n Shake in transitioning into a conglomerate-like holding company similar to the Berkshire Hathaway model.”

Editor’s update: On April 8, 2010, Steak ‘n Shake changed its name to Biglari Holdings. I am not going to change the article as written but I am adding the tag for Biglari Holdings [stckqut]bh[/stckqut] so that readers can track this company. The stock symbol SNS no longer is associated with Steak ‘n Shake nor Biglari Holdings.

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Greg Sushinsky over at Investopedia had an article discussing the fundamentals of Potash.  I still think that POT [stckqut]POT[/stckqut] is a Good company and a good investment so I stand by my analysis of the numbers on February 15 but Greg has some interesting analysis that is worth reading.

Below is the first part of the article but you can click through here to read the entire opinion.

Potash Corp. (NYSE:POT) of Saskatchewan has seen its stock rise from a close of $104.49 per share to just over $115 per share last week. The fertilizer company’s stock has traded between $63.65 and $126.47 per share in the last 52-weeks. But is the stock a good buy on fundamentals?

A Dust Bubble Scattered?
A quick review of the last couple of years in the agriculture business found a startling commodity bubble in fertilizer. Not so long ago – 2008 in fact – Potash Corp. earned $11 a share for its fiscal year, but earnings fell to $3.25 a share in fiscal 2009. Prices for potash fertilizer had run up from a relatively stable $100 per ton in 2003-2004 to its current price of approximately $580. Potash Corp.’s stock price reflected these changes, as it shot from under $30 a share to the low $200s during the boom.

The Stock’s Fundamentals
The boom price in the $200s saw Potash Corp. trading at a PE of roughly 20. Now the multiple is about 35 times earnings, at over five times book value and an almost punitive dividend.

How about forward earnings? The company is calling for $4 to $5 earnings in 2010, less than the $6 analysts had expected. The forward multiple on this outlook would put the PE at 23 to 28.75, still pricey in a market where historical PEs have gone awry since the spate of negative earnings.

More important, this multiple exceeds the 20 PE multiple Potash Corp. carried at even its fullest earnings. So on the face of it, fundamental investors might want to simply say the stock is overvalued right now at its $115 market price. But things are not so simple.

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Does the news of Simon Property Group (NYSE:SPG)[stckqut]SPG[/stckqut] mean that we are really out of the economic downturn? There is no question that this is a good sign. When companies try to use their bankroll to take advantage of companies that are less fortunate, it means that they are setting themselves up for future growth and expansion.

I haven’t commented on Simon on this site but I wouldn’t buy the stock before this event. My rule on avoiding major M&A activity (more than 10%) now comes into play here, I would avoid Simon for at least a year.

Simon Property Group Inc, the largest U.S. real estate investment trust, made on Tuesday what it called a $10 billion offer for the bankrupt General Growth Properties Inc that would pay creditors back in full and end one of the largest U.S. bankruptcies on record.

Simon said it would offer $6 per General Growth share, or roughly $1.9 billion, plus a stake in property assets it valued at about $3 per share.

The offer would provide a 100 percent cash recovery of par value plus accrued interest and dividends to all General Growth creditors, an amount which totals about $7 billion.

Simon’s shares were roughly flat in premarket trading at $72.07 per share. They closed on Friday at $72 per share.