World Economic

My Barnes & Noble stock has been doing better, but what does the future hold?

In order to progress, the largest U.S. bookseller must cut costs as it launches new ventures such as e-books.

Not only is its industry dependent on the economy and "hit" book titles, but it must cope with price competition, low operating margins and slow-moving inventory.

To save money, Barnes & Noble eliminated about 100 corporate jobs earlier this year and then cut a handful more as it merged in-house publishing operations into its Sterling Publishing unit. It also sold its majority stake in the Calendar Clubs seasonal specialty stores.
To move forward, the firm is launching an e-reader bookstore in partnership with Plastic Logic, whose eReader device is due early next year. It will offer 700,000 titles as it battles Amazon.com’s Kindle and Sony’s Reader e-readers.

Shares of Barnes & Noble are up 59 percent this year following last year’s 54 percent drop. The company has a solid balance sheet with little debt.

While Barnes & Noble lost $2.7 million in its recent quarter as sales continued to slip, it raised its forecast for the year. It expects its future to brighten on strong book titles, the move into e-books and an eventual rise in consumer spending.

Among analysts covering Barnes & Noble stock, there are five "hold" recommendations and one "underperform" recommendation, according to Thomson Reuters.

Earnings are expected to decline 19 percent in its fiscal year ending in January and rise 1 percent the following year. The five-year annualized growth projection of 9 percent compares with 12 percent forecast for the specialty retail industry.

Please review Fidelity Small Cap Stock Fund. I am disappointed in its performance.

It is a relatively stable, low-cost fund operating in a volatile stock group.

This "go-anywhere" fund of about 160 stock names owns both growth and value stocks. It invests in a wide range of industries and includes foreign securities within its portfolio.

The $2.7 billion Fidelity Small Cap Stock Fund is down 15 percent over the past 12 months and has a three-year annualized decline of 2 percent. Both returns rank in the top one-fifth of small growth and value funds.

"If you’re looking for a fund that can cover the map of the small-cap universe and has a track record of outperforming its benchmark Russell 2000 index, this fund makes sense," said Jim Lowell, editor of the independent Fidelity Investor newsletter instant cash advance. "Because of the volatility in this stock group, I wouldn’t have 100 percent of my money in a fund like this, but an aggressive investor could have as much as 20 percent in it."

Andrew Sassine, portfolio manager for the past year, is running his first domestic stock fund. He had run Fidelity International Small Cap Opportunities Fund since 2005 and was an analyst before that. He puts half of this portfolio in stocks that fit his themes and the other half in those recommended by Fidelity’s small-cap analysts. He prefers companies that are leaders in their industries with prices substantially lower than their growth rates would indicate.

Financial services and technology hardware each represent about one-fourth of the fund’s assets. Top holdings were recently Alliance Data Systems, Fidelity Cash Central Fund, SL Capital, Micron Technology, SanDisk, Himax Technologies Inc., Janus Capital Group, Affiliated Managers Group, Assured Guaranty and Virgin Media.

This "no-load" (no sales charge) fund requires a $2,500 minimum initial investment and has a reasonable annual expense ratio of 0.95 percent.

Are Treasuries purchased directly from the government or do you have to use a broker?

You can buy U.S. Treasuries either from the Treasury Department or through a bank or broker.

With a government TreasuryDirect account, you can purchase and hold Treasury bills, notes, bonds, Treasury Inflation-Protected Securities and savings bonds. Minimum purchase is $100 for marketable securities, $25 for savings bonds.

An account can be opened on the www.treasurydirect.gov website and requires a Social Security number. There are no brokerage fees, additional transaction charges or account maintenance fees. The only potential fee is $45 if you sell a marketable security prior to maturity.

"You can access TreasuryDirect any time and can set up your purchases ahead of time," said Joyce Harris of the Treasury Department’s Bureau of the Public Debt in Washington, D.C. "The bond will be held electronically in your TreasuryDirect account, where you will receive interest payments, and you can link the account to your bank account."

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