Saturday, May 11, 2013

Why Bank of America Is Up Big This Week

With the stock up 5.20% for the week on the last day of trading, Bank of America (NYSE: BAC  ) investors deserve a five-day run like this after last week's traumatic post-earnings crash.

Big-four roundup
Here's a look at where B of A's peers are shaking out on the week:

Citigroup (NYSE: C  ) is up 3.22%. JPMorgan Chase (NYSE: JPM  ) is up 2.85%. Wells Fargo (NYSE: WFC  ) is up 2.52%.

Nature may hate a vacuum, but it really loves a herd
All these banks had a terrible time of it last week, and are now in recovery mode. Again, it was all down to B of A's April 17 earnings report. Given the negative way the Big Four banks and the markets overall reacted, you would have thought it was awful news, but it really wasn't. Just the opposite, in fact.

B of A had a good first quarter by almost any measure, with net income up nearly 300% year over year and total revenue up 5% year over year. Deposits were up 5% year over year as well, which is vitally important to consumer-oriented B of A.

What mattered to the markets, though, was its earnings per share, which missed analyst expectations by $0.02. That's what caused B of A's plummet. And the Citi, JPMorgan, and Wells plummet. And the overall market plummet.

And this week, you're seeing the bounce-back. Investors finally figured out that nothing had fundamentally changed in B of A or any of the companies they had investments in, so money is rushing back into the each of the Big Four banks. Nature hates a vacuum, I suppose. But our own natures make us prone to follow the herd, occasionally off a cliff.

So B of A investors have made back the money they lost last week, and then some. And that's the way things go in the stock market, at least in the short term. But remember, Fools, you're in this for the long term. And as long as the companies in your portfolio have solid fundamentals, have faith that your money is in the right place. 

Looking for in-depth analysis on Bank of America?
Check out this Motley Fool premium report, expertly researched and written by top Motley Fool banking analysts Anand Chokkavelu and Matt Koppenheffer. They'll help you lift the veil on the bank's operations and give you three reasons to buy and three reasons to sell along the way. For immediate access to this eye-opening report, simply click here now. 

Why Electronic Arts Was the Top Stock on the S&P 500 Last Week

Let's play a game.

I'm going to tell you a story, and then it's your job to identify what's wrong with it.

On May 7, this past Tuesday, video-game maker Electronic Arts (NASDAQ: EA  )  reported earnings for its fiscal fourth quarter and full year ended March 31. Its revenue for the quarter was $1.209 billion, equating to a 11.6% decline compared with the same quarter last year. And for the year, its sales came in at $3.797 billion, or 8.4% less on a year-over-year basis. On the heels of this news, shares of the company ended the week higher by 27.2%, making it the top-performing stock on the S&P 500 (SNPINDEX: ^GSPC  ) .

According to EA Executive Chairman Larry Probst: "As we enter a new fiscal year, EA is well positioned for dynamic growth on next generation consoles, PCs, and mobile platforms. With world-class games, a rapidly growing digital business, and top-notch creative talent, we are excited about EA's strategy for FY 2014 and beyond."

So, to get back to our game, what (if anything) is wrong with this?

If you think there's a disparity between its actual performance and the reaction of the market, then you're not alone. How is it possible that a company that manufactures products to sell could be rewarded in the market for recording a double-digit decline in year-over-year quarterly revenue? That's not a rhetorical question; I'm actually curious. 

To be fair, EA did report growth in its bottom line. For the 12-month time period, it earned $0.31 in diluted earnings per share compared with $0.23 the preceding year. However, and this is an important point, all of the growth came in the previous three quarters, as its fourth-quarter diluted EPS was actually less by 13.2% on a year-over-year basis. 

The catalyst for the move in its stock, in turn, clearly had nothing to do with its performance. The dramatic uptick was predicated rather on future expectations (that's a nice way of saying "hopes and dreams"). 

In the first case, the company raised its guidance for fiscal year 2014. It now expects to earn $1.20 in non-GAAP diluted EPS. That compares with an average analyst estimate of $1.08 per diluted share. And in the second case, the company announced a partnership with Disney (NYSE: DIS  ) , under which EA now has the rights to create games based on the Star Wars franchise, though -- and this, too, is a critical point -- the financial terms of the deal have not been disclosed (use your imagination about who had the negotiating leverage here).

So here's what I would say: We've learned time and again that company forecasts and analyst estimates should be taken with a grain of salt. Quite simply, neither has an incentive to tell the truth, and neither is punished for a lack of accuracy. And with respect to the Disney partnership, there very well could be something to this. But there also may not be. And if there is, as I intimated in the previous parenthetical, it's not as if EA will keep all, or even the lion's share, of the spoils. 

My point is this: After the price move, EA now trades at 41 times earnings. That's expensive. And it presupposes significant growth based on little more than castles in the air.

Looking for more insight on EA?
While Activision Blizzard and Microsoft have been taking the headlines when it comes to console gaming, investors following the gaming sector would do well to also keep tabs on Electronic Arts. We can help. The Motley Fool's special report breaks down the risks and opportunities facing the company to help you decide if EA is right for your portfolio. Click here to get your copy now.

4 Gift Ideas for Mom and the Stocks Behind Them

With Mother's Day just around the corner on May 12, most of us are still in shopping mode for the moms in our lives. Below are four gift ideas that may help get you started in your search for the perfect gift, each from companies whose stock looks like an attractive investment at current levels. While we each want to find something special and unique for Mom, these companies offer gifts we can all benefit from.

Barnes & Noble (NYSE: BKS  )  
With the company's recent announcement that its Nook tablet will now include the full complement of Google Android applications, the device looks more attractive than ever. With a starting price of $199, the Nook is competitive with other similarly equipped tablets, while offering one of the best displays on the market. As for the stock, while Google may be the real winner, B&N should be reinvigorated by this new partnership and become more competitive in the tablet market. Furthermore, with the company potentially up for sale, the stock has the potential to pop from here.

Source: Barnes & Noble.

Apple (NASDAQ: AAPL  )
For ease of use and simplicity, it is hard to beat an Apple iPad Mini for Mom on her special day. Starting at $329, the iPad Mini is more pricey than the Nook, but if Mom is already a part of the Apple ecosystem, the ease with which she will be able to add the device to her daily routine is impossible to match. As an investment, while Apple shares have taken a beating over the past few quarters, the combination of the company's solid business and recently announced share buyback and dividend increase make shares very attractive at current levels.

Source: Apple.

Macy's (NYSE: M  )
From perfume to a treat for the kitchen, Macy's gives you the flexibility to pick something for your mom that is special for her. With countless retail locations and the option to shop online, this is the best broad option on the list. From an investment perspective, Macy's has been slowly grinding higher all year, beating the return of the overall market and showing no signs of slowing down. With a dividend yield of 1.7%, the stock offers the income element of U.S. Treasuries and plenty of upside beyond that.

Coach (NYSE: COH  )
It is hard to beat a Coach bag or accessory for showing Mom that you have both good taste and the willingness to spend a little extra for her special day. With this in mind, Coach has made a big push lately to offer purses at a wider range of price points in order to attract more shoppers. The company was able to beat analysts' expectations at its most recent earnings release, leading to a 10% bump in the stock. Even with the move, the stock has a long way to go to climb out of the hole it has built for itself, so if it can reach former highs, the upside looks quite nice. Finally, with a dividend yield of 2.1%, there is no lack of income offered by the stock.

Ultimately, choosing a Mother's Day gift that fully captures what we love about the moms in our lives is a very personal choice, but these are some ideas that should get those creative juices flowing. The bonus that each comes from a company that offers an attractive investment option just makes the process more appealing. Whatever you choose, this Fool wishes all moms a great day this Mother's Day.

The Apple of her eye
There's no doubt that Apple is at the center of technology's largest revolution ever, and that longtime shareholders have been handsomely rewarded with over 1,000% gains. However, there is a debate raging as to whether Apple remains a buy. The Motley Fool's senior technology analyst and managing bureau chief, Eric Bleeker, is prepared to fill you in on reasons to buy and reasons to sell Apple, and what opportunities are left for the company (and your portfolio) going forward. To get instant access to his latest thinking on Apple, simply click here now.

[4] [7] [9] [13] [16] [17] [20] Hot Managed Healthcare Stocks To Watch Right Now

tags:NYSE, BP  ,,Managed Healthcare,Financial,GKK,RCI.AX,Penny,HAV,

LONDON -- The FTSE 100 has been erratic this week, boosted by positive earnings, buoyed by hopes of further economic stimulus measures from the Federal Reserve and the European Central Bank but dampened by worse-than-expected U.S. jobs data. But if capital gains from the index are unpredictable, at least there are dividend gains to be had: Forecasts suggest an overall yield from the FTSE 100 of about 3.2%.

And there has been news of dividends from a number of companies this week. Let's look at two boosts and one cut.

BP (LSE: BP  ) (NYSE: BP  )
On Tuesday, BP announced a rise in its first-quarter per-share dividend from $0.08 to $0.09 after reporting a $17 billion first-quarter profit. That did include an accounting gain of $12 billion from the sale of BP's TNK-BP interest, and underlying profit for the three months amounted to $4.2 billion.

Hot Managed Healthcare Stocks To Watch Right Now: Gramercy Capital Corp (GKK)

Gramercy Capital Corp. operates as an integrated commercial real estate investment and asset management company in the United States. Its Gramercy Realty division manages commercial properties leased primarily to regulated financial institutions and affiliated users. The company�s Gramercy Finance division manages whole loans, bridge loans, subordinate interests in whole loans, mezzanine loans, preferred equity, commercial mortgage-backed securities, and other real estate securities, which are financed through three non-recourse collateralized debt obligations. Its portfolio consists of 2 sub-portfolios, including the core portfolio comprising 67 assets located in 10 states; and the held-for-sale portfolio comprising 48 assets located in 13 states. Gramercy Capital Corp. has elected to be taxed as a real estate investment trust under the Internal Revenue Code of 1986. As a result, it would not be subject to corporate income tax on that portion of its net income that is di stributed to shareholders. The company was founded in 2004 and is headquartered in New York, New York.

Hot Managed Healthcare Stocks To Watch Right Now: Rocklands Richfield PCI Ltd(RCI.AX)

Rocklands Richfield Limited engages in the exploration and development of coalfields in Australia. It primarily explores for coking coal in the Bowen Basin region of Queensland. The company holds a 100% interest in the Hillalong mineral development license comprising approximately 3,189 hectares located in the northeastern section of the Bowen Basin; a 60% interest in the Rocklands project comprising 150 square kilometer exploration permit located in the central part of the Bowen Basin; and a 60% interest in the Richfield coal projects located in the Bowen Basin region. Rocklands Richfield Limited is based in South Perth, Australia.

5 Best Income Stocks To Own For 2014: Helios Advantage Income Fund Inc. (HAV)

Helios Advantage Income Fund, Inc. is a close ended fixed income mutual fund launched and managed by Brookfield Investment Management Inc. The fund invests in the fixed income markets of the United States. It invests a majority of its assets in below investment grade debt securities, which are bonds rated Ba1 or lower by Moody's Investors Service, Inc., BB+ or lower by Standard & Poor's Ratings Group. The fund benchmarks the performance of its portfolio against the Barclays Capital U.S. Corporate High Yield Index and the Barclays Capital Ba U.S. High Yield Index. It was formerly known as RMK Advantage Income Fund, Inc. Helios Advantage Income Fund, Inc. was formed on November 8, 2004 and is domiciled in the United States.

Capital Opportunity: Low-cost growth

Mark SalzingerVanguard reopened its Capital Opportunity Fund (VHCOX) in April. This is good news for Vanguard investors seeking an aggressive, low cost, actively managed growth fund.

Capital Opportunity had been closed for about nine years. It now becomes the only PRIMECAP advised fund at Vanguard to be open to new investors.

Capital Opportunity has had an especially good year so far. Through April, the fund was up 19.1%. Over the past 12 months, the fund's gain of 29.4% was among the very best of all the funds we track.

Long-term performance has also been excellent: 12.2% annualized over the past 10 years, for example, versus 8.1% for the S&P 500.

Nevertheless, the fund has lagged at times, even for as long as a couple of years. Case in point: in 2010, the fund's gain of 11.1% trailed the S&P 500 by four percentage points, while its 6.2% loss in 2011 stung next to the index's 2% gain.

PRIMECAP Management has a long-term investment perspective, so PRIMECAP managed funds tend to keep holdings for many years. In fact, the portfolio turnover ratio of Capital Opportunity has averaged about 10% annually over the past decade, perhaps the lowest we've seen with an actively managed fund.

This benefits the funds when the holdings are in strong, multiyear uptrends. However, it can hurt during the inevitable periods when such holdings pause for breath, or even fall due to lofty valuations on current earnings or simply to changes in investor tastes.

Also, the funds are undiversified by sector. PRIMECAP Management goes wherever it sees the best long-term values among stocks with multiyear growth opportunities. So, they may be very 'overweight' in certain sectors of the market, while having virtually nothing in many other sectors.

Historically, the broad information technology and healthcare sectors have accounted for the majority of the assets of Capital Opportunity. Today, this positioning is even more pronounced, with these sectors accounting for 34% and 39%, respectively, of assets.

Within information technology, several industries are represented, including Internet search (e.g., Google), network security (e.g., Symantec), semiconductors (e.g., Texas Instruments), software (e.g., Microsoft and Adobe) and data storage (e.g., EMC).

If there are common threads among the information technology holdings, it's that they have decent to excellent opportunities for long-term growth, along with large cash holdings on their balance sheets and fairly low valuations.

In healthcare, the managers include significant exposures to large pharmaceutical companies (e.g., Roche and Novartis), biotechnology firms (e.g., Amgen) and medical device makers (e.g., Medtronic), but also to various companies engaged in using the human genome to develop targeted treatments.

Capital Opportunity has nothing (or close to it) in consumer staples, energy, financial services, telecommunication services and utilities, and very little in cyclical stocks generally.

PRIMECAP Management stresses individual decision making. Instead of one manager or one team running the fund, PRIMECAP employs a multiple counselor system, in which each fund's assets are divided among four or five senior portfolio managers.

Capital Opportunity recently included about 120 stocks, the top 10 of which accounted for 38% of assets as of March 31. Foreign holdings (mainly large foreign pharmaceutical companies) accounted for less than 15% of assets.

The fund's expense ratio of 0.48% is minuscule for an actively managed stock fund; combined with the fund's low turnover and strong tax efficiency, this makes it one of the most efficient funds around.

Friday, May 10, 2013

Will These Latest Numbers Hurt Apple Stock Investors?

Apple (NASDAQ: AAPL  ) investors may already be on edge as of late, with the company's stock down about 20% from a year ago, and profit down over $2 billion this past quarter, year over year. Although Apple recently announced share repurchases, and boosted its dividend by 15%, many Apple stock investors aren't satisfied.

To top it all off, the latest numbers from Canalys show that Apple's arch rival, Samsung, shipped 82.2 million smart devices in Q1 2013, taking up 26.6% of the worldwide smart device market, while Apple took 19.3%. Surprisingly, Microsoft (NASDAQ: MSFT  ) took the No. 3 spot with 18.1%, mainly becuase Canalys considers smart devices to be smartphones, tablets, and notebooks.

The numbers aren't exactly detrimental to Apple, but they should still concern investors. For a while, Apple held tablet and smartphone dominance, but its grip is starting to wane.

On the tablet front, Apple has lost some of it luster, but still maintains a 46.4% market share. The problem is that the iPad lost ground to Android units for the third consecutive quarter, even while Apple's tablet sales have increased 65% from its previous quarter. The iPad Mini is driving the increased sales, but with the product already firmly in the market, its hard to imagine where Apple is going to make significant gains in tablet market share in the near future. The Mini's $329 price allows other companies to severely undercut Apple in price, and gobble up more market share.

In the all-important smartphone segment, Samsung managed to grow its unit volumes by 64.3% compared to Apple's 6.7% growth – Apple's smallest smartphone shipment growth since the original iPhone launch. All of this increased Samsung's smartphone market share to 32%, leaving Apple with about 17%. Yes, Apple shipped 37 million iPhones in the quarter, but declining market share isn't something to be ignored. 

Over the past few years Apple has experienced a huge increase in premium smartphone competition, and with the recent Galaxy S4 launch, Samsung has shown no signs of easing the pressure. 

What Apple needs
Apple is obviously still an extremely important player in mobile, and it's not even close to being pushed out of the smartphone and tablet space. But these latest numbers show that global consumers have warmed to other device makers, and Android's iron grip is getting stronger – with the OS accounting for 59.5% of all smart devices shipped.

The combination of Samsung's increase in shipments outpacing Apple's, along with Apple's falling margins and mobile market share, isn't welcoming news for investors. For Apple to reverse the trend, it's going to need a major change with the iPhone ­– meaning an overhaul and a cheaper version – so it can win back some its lost market share. The tablet market won't be as easy to gain ground in, unless Apple decides to lower the price of the iPad Mini and squeeze out some of the competition. It's certainly not out of the realm of possibility, but with the Mini's lower margins, it's not a move that Apple would take lightly.

With smart devices all around us, it's incredible to think just how much of our digital and technological lives are almost entirely shaped and molded by just a handful of companies. Find out "Who Will Win the War Between the 5 Biggest Tech Stocks?" in The Motley Fool's latest free report, which details the knock-down, drag-out battle being waged by the five kings of tech. Click here to keep reading.

Disney's Biggest Risk

The following video is from Friday's Motley Fool Money roundtable discussion, in which host Chris Hill, and analysts Jason Moser, James Early, and Matt Koppenheffer discuss the top business and investing stories of the week.

Disney (NYSE: DIS  ) reported a 32% increase in second-quarter profits. The entertainment giant reported strong results from its parks division, media division, and studios division. Disney CEO Bob Iger has produced big returns for investors. Will the magic continue when Iger steps down? In this installment of Motley Fool Money, our analysts discuss the future of Disney.

It's easy to forget that Walt Disney is more than just the House of Mouse. True, Disney amusement parks around the world hosted more than 121 million guests in 2011. But from its vast catalog of characters, to its monster collection of media networks, much of Disney's allure for investors lies in its diversity, and The Motley Fool's premium research report lays out the case for investing in Disney today. This report includes the key items investors must watch, as well as the opportunities and threats the company faces going forward. So don't miss out -- simply click here now to claim your copy today.

The relevant video segment can be found between 11:43 and 14:16.

For the full video of today's Motley Fool Money, click here .

The News Stock Market Bulls Don't Want to Hear

Oil Sinks on China Manufacturing and U.S. Supplies

NEW YORK (AP) -- The price of oil dropped by nearly 3 percent Wednesday following disappointing economic news from the world's two biggest oil-consuming nations, and U.S. crude supplies grew much more than analysts expected.

Benchmark oil for June delivery was down $2.72, or 2.9 percent, to $90.74 a barrel in morning trading on the New York Mercantile Exchange.

Oil fell initially after data from China showed a slowdown in manufacturing growth. An industry group in China released data Wednesday showing that manufacturing grew at a slower pace in April and export orders had been declining steadily.

"This ongoing trend of slowing Chinese economic growth will translate to some additional downward revisions in global oil demand expectations" when OPEC, the International Energy Agency, and the U.S. Energy Department issue monthly reports next week, said Jim Ritterbusch, president of energy consultancy Ritterbusch and Associates, in a note to clients.

The sell-off continued as weak U.S. economic data came in and the Energy Department said U.S. crude inventories expanded by 6.7 million barrels last week, nearly five times the increase analysts expected. The nation's oil production, at 7.3 million barrels per day, is the highest it's been in 20 years. Imports of foreign crude increased last week, adding to bulging supplies.

Elsewhere, data pointed to weaker demand for oil. The Institute for Supply Management's monthly report showed the manufacturing sector expanded in April for the fifth consecutive month, but at the lowest rate of the year.

The Commerce Department said construction spending fell 1.7 percent in March compared with February, as government spending cuts affected some projects. Still, construction activity was 4.8 percent higher than a year ago at a seasonally adjusted $856.7 billion, as home building continued to increase.

Payroll processor ADP said that private employers added just 119,000 jobs last month. And March's hiring was slower than first thought. The survey shows just 131,000 jobs added, down from an initial estimate of 158,000.

Markets will also be paying attention to the Federal Reserve's policy statement coming out later Wednesday. Expectations are that the Fed will sustain its easy monetary policy to stimulate economic growth. Oil prices are seen benefiting from loose monetary policies because higher growth translates into added oil demand and because ample money supply weakens the dollar and makes crude cheaper for traders using other currencies.

Brent crude, which is used to set prices of oil from the North Sea used by many U.S. refiners, was down $2.93, or 2.9 percent, to $99.44 per barrel on the ICE Futures exchange in London.

In other energy futures trading on the New York Mercantile Exchange:

Wholesale gasoline fell 9 cents to $2.71 a gallon. Heating oil retreated by 5 cents to $2.78 a gallon. Natural gas rose 7 cents to $4.41 per 1,000 cubic feet.

Thursday, May 9, 2013

Whole Foods Stock: Still Worth Every Penny

In the depths of the Great Recession, many people thought Whole Foods (NASDAQ: WFM  ) was done for. I didn't agree with those folks, and I backed that assertion up two years ago -- when I pledged  to buy $4,000 worth of Whole Foods stock for my retirement portfolio.

Over that time frame -- especially given yesterday's earnings beat -- the stock has performed exceptionally well. My original investment is now worth $6,612, or $1,540 more than if I had invested in the SPDR S&P 500 ETF.

WFM Total Return Price Chart

WFM Total Return Price data by YCharts.

Today, I'm going to spell out why Whole Foods remains as must-have holding for my retirement portfolio.

An undeniable trend
One of the most disturbing side effects of the industrial revolution is that people like you and me became completely disconnected from where we get our food. That oversight is now front and center in many Americans' psyches -- as diabetes and obesity rates reach alarming levels.

That helps explain why the market for organic food has been on fire for the past 15 years, and doesn't show signs of stopping anytime soon.


Total Food Sales

Organic Food Sales

Organic Penetration


































Source: Organic Trade Association. CAGR = compound annual growth rate. All numbers in millions.

Think about these numbers for a second. For as much press as healthy food gets, and as much space that's been cleared for organic foods in traditional grocers, it still only made up 4% of all purchases in 2010.

Even if organic food is destined to only make up 20% of our diet in the future, that's still a fivefold increase from the penetration it was at a little over two years ago. Whole Foods stock stands to benefit tremendously from this, as the company only has 349 of its expected 1,000 stores open in North America, and has the strongest brand when it comes to organic food.

Not as expensive as you'd think
"Whole Paycheck" -- that's the moniker many give the grocer because of its high prices. But if we were really to compare apples to apples, we'd see that's not necessarily the case. When it comes to the price of organic food, Whole Foods isn't outrageously priced at all.

Earlier this week, I went to grocery stores in my northern Chicago neighborhood to do some research. I visited Whole Foods, along with Dominick's, Mariano's Fresh Market, and Jewel/Osco, which was recently sold by SUPERVALU to Cerebrus Capital Management.

Focusing on some staple items, here's what I found:


Whole Foods




1 lb. organic chicken





Dozen organic eggs





Half-gallon organic milk





1 lb. organic strawberries





1 lb. organic carrots











Source: Author's visits to northern Chicago and Evanston locations on May 8, 2013. N/A = not available

When I performed this experiment two years ago, Whole Foods had a much bigger lead over Dominick's. But Safeway (NYSE: SWY  ) , which operates the Dominick's chain, made a conscious decision to go head-to-head against Whole Foods in the increasingly popular organic-food segment. With its O Organics brand, Safeway has been better able to compete against the natural-foods giant.

Meanwhile, Mariano's is relatively new. It's operated by Roundy's (NYSE: RNDY  ) , representing that company's attempt to move beyond its more traditional grocery stores to try to capture its share of the organics and natural-foods market.

But there's more to it...
So, it's pretty clear that Whole Foods isn't expensive comparing apples to apples. But even if other grocers are catching up, they lack the singular focus that Whole Foods does -- and that makes it such a strong brand among conscientious shoppers.

From my visits to these stores, I can tell you that the selection of organic products is far greater at Whole Foods. The company also goes above and beyond to let consumers know exactly where products came from, and the environmental impact they have -- from food to laundry detergent.

It is that type of differentiation that leads me to believe Whole Foods is a stock to buy and hold for the long term.

How to go about buying this grocer
There's no doubt that, given a P/E of 37, shares of Whole Foods aren't cheap. But the best companies almost never trade for cheap. If you're convinced that Whole Foods stock belongs in your portfolio, I suggest investing a little now, and buying more as you get to know the business better.

One way to become more familiar with Whole Foods is to check out our premium report on the company. We'll walk you through the key must-know items for every Whole Foods investor, including the main opportunities and threats facing the company. So make sure to claim your copy today by clicking here.

Why Ctrip Shares Soared

[1] [4] [8] [11] [13] [16] [20] Top 10 Sliver Stocks To Own For 2014

tags:NASDAQ, AAPL  ,NYSE, WEC  , COH  ,,Sliver,Healthcare,WMGI,Basic Materials,Chemicals - Commodity,PFBOF,Industrial Goods,FBF.V,Financial,UBFO,KMGB,MNM.V,ONTY,Services,ACTG,China,Chinese,HTHT,STEL,

The following video is from Friday's Motley Fool Money roundtable discussion, with host Chris Hill, and analysts Ron Gross, James Early, and Charly Travers.

Our analysts share why they're keeping a close eye on Apple (NASDAQ: AAPL  ) , Wisconsin Energy (NYSE: WEC  ) �and Coach (NYSE: COH  ) .

There's no doubt that Apple is at the center of technology's largest revolution ever, and that longtime shareholders have been handsomely rewarded with over 1,000% gains. However, there's a debate raging as to whether Apple remains a buy. The Motley Fool's senior technology analyst and managing bureau chief, Eric Bleeker, is prepared to fill you in on both reasons to buy and reasons to sell Apple, and what opportunities are left for the company (and your portfolio) going forward. To get instant access to his latest thinking on Apple, simply click here now.

Top 10 Sliver Stocks To Own For 2014: Wright Medical Group Inc.(WMGI)

Wright Medical Group, Inc., an orthopedic medical device company, engages in the design, manufacture, and marketing of devices and biologic products for the extremity, hip, and knee repair and reconstruction. The company also provides surgical solutions for the foot and ankle market. The reconstructive devices are used to replace knee, hip, and other joints and bones that are deteriorated or damaged through disease or injury; and biologics are used to replace damaged or diseased bone to stimulate bone growth and to provide other biological solutions for surgeons and their patients. Wright Medical Group, Inc. offers products in the extremity reconstruction, biologics, knee reconstruction, and hip reconstruction market sectors. It sells its products primarily through a network of employee sales representatives and independent sales representatives in the United States, as well as through a combination of employee sales representatives, independent sales representatives, and stocking distributors in Europe, the Middle East, Africa, Latin America, Asia, Australia, and Canada. The company was founded in 1950 and is headquartered in Arlington, Tennessee.

Top 10 Sliver Stocks To Own For 2014: PFB Corporation (PFBOF)

PFB Corporation (PFB) is a Canada-based company. The Company, together with its subsidiaries, is engaged in the manufacturing of insulating building products made from expanded polystyrene (EPS) materials and marketing these products in North America. Its main brands include PlastiSpan EPS Product Solutions; Advantage ICFS, Insulspan SIPS, Riverbend Timber Framing and Precision Craft. Expandable polystyrene resin is manufactured at PFB�� polymer plant located in Crossfield, Alberta, for use in downstream EPS manufacturing operations. Plasti-Fab EPS Product Solutions supply the EPS foam core material used to manufacture Insulspan SIPS. Riverbend Timber Framing structures are typically sold with an accompanying Insulspan SIPS enclosure package. Advantage ICF Systems are insulating concrete forming systems that are employed to build insulated foundations and walls from concrete in both residential and commercial markets. On February 1, 2011, the Company acquired Precision Craft Group. Advisors' Opinion:
  • [By Tom Konrad]

    PFB is a leading North American manufacturer of expanded polystyrene (EPS, aka "Styrofoam") building products such as insulated concrete forms and structural insulated panels.  The stock trades infrequently, and did not trade at all on December 28th, so I will be using the midpoint of the bid and ask for the purpose of measuring its return over the coming year.  At $5.53, PFB pays a 5.75% annual yield.

    The stock price has fallen significantly after the planned purchase of NOVA Chemicals' Performance Styrenics business as a move towards vertical integration with the acquisition of the EPS manufacturer.  This deal fell though, and many investors sold the stock, driving it down from the mid $7 range to the mid $5 range where it is today.   Already a good value, PFB stands to gain from continued recovery in the housing market or any increase in investor recognition.  However, since the stock is so illiquid, larger investors will probably want to substitute one of my upcoming alternative picks for PFB, while small investors should limit themselves to good-til-cancelled limit orders to avoid paying over the odds for their shares.

Hot Bank Companies To Watch In Right Now: Fab-Form Industries Ltd. (FBF.V)

Fab-Form Industries Ltd. develops, manufactures, and distributes fabric-based technology to form concrete footings, foundations, and walls for building structures. The company manufactures forming products using poly membranes to form and damp-proof concrete. Its products include Fastfoot footing forms, Fastbag point load footing forms, and Fast-Tube column forms. The company operates in Canada and the United States, and Europe. Fab-Form Industries Ltd. was incorporated in 1995 and is headquartered in Surrey, Canada.

Top 10 Sliver Stocks To Own For 2014: United Security Bancshares(UBFO)

United Security Bancshares operates as the bank holding for United Security Bank that provides a range of commercial banking services primarily to the business and professional community, and individuals in California. Its deposit products comprise personal and business checking accounts and savings accounts, interest-bearing negotiable order of withdrawal accounts, money market accounts, and time certificates of deposit. The company?s loan portfolio consists of real estate mortgage, commercial and industrial, and real estate construction loans, as well as agricultural, lease financing, and consumer loans with a focus on short and medium-term obligations. In addition, it offers a range of specialized services, which include online banking, safe deposit boxes, ATM services, payroll direct deposit, cashier's checks, traveler's checks, money orders, and foreign drafts; and various specialized financial services, including wealth management, employee benefit, insurance, and l oan products, as well as consulting services. As of December 31, 2009, United Security Bancshares operated 11 banking branches, 1 construction lending office, and 1 financial services office in Fresno, Madera, Kern, and Santa Clara counties. The company was founded in 1987 and is headquartered in Fresno, California.

Top 10 Sliver Stocks To Own For 2014: KMG Chemicals Inc.(KMGB)

KMG Chemicals, Inc., through its subsidiaries, engages in the manufacture, formulation, and distribution of specialty chemicals in the United States and internationally. The company offers electronic chemicals that include high purity wet process chemicals, such as sulfuric, phosphoric, nitric, and hydrofluoric acids; and ammonium hydroxide, hydrogen peroxide, isopropyl alcohol, and various blends of chemicals that are used to clean and etch silicon wafers in the production of semiconductors. It also provides wood treating chemicals, including penta blocks, flakes, and solutions, as well as a byproduct of penta production that are used primarily to treat electric and telephone utility poles, protecting them from mold, mildew, fungus, and insects; and creosote products, which are used as wood preservatives for railroad crossties and utility poles. The company markets its animal health products under the trade names of Zymace, Lactomace, Protomace, Proxitane, Avenger, Rabon, Ravap, Patriot, and Annihilator. KMG Chemicals, Inc. was founded in 1992 and is based in Houston, Texas.

Top 10 Sliver Stocks To Own For 2014: Magellan Minerals Ltd (MNM.V)

Magellan Minerals Ltd., a mineral exploration company, engages in the exploration and development of mineral properties, primarily gold in Brazil. Its primary gold exploration projects include the Coringa project comprising 23,554 hectares and the Cui煤 Cui煤 project with mineral exploration licenses totalling approximately 44,000 hectares, both located in the state of Par谩 in northern Brazil, as well as the Pocon茅 property located in southern Mato Grosso state. The company also holds interests in a gold exploration property in Nevada. Magellan Minerals Ltd. was incorporated in 2004 and is headquartered in Vancouver, Canada.

Top 10 Sliver Stocks To Own For 2014: Oncothyreon Inc .(ONTY)

Oncothyreon Inc., a clinical-stage biopharmaceutical company, focuses on the development of therapeutic products for the treatment of cancer. Its primary product candidate, Stimuvax is in two phase III clinical trials for the treatment of non-small cell lung cancer. The company is also developing PX-866, a small molecule that is in phase II trials for various cancer indications. In addition, it engages in the preclinical development of ONT-10, a cancer vaccine; and ONT-701, a pan-inhibitor of the B-cell lymphoma-2 family of anti-apoptotic proteins. The company operates primarily in the United States and Canada. Oncothyreon Inc. was founded in 1985 and is headquartered in Seattle, Washington.

Top 10 Sliver Stocks To Own For 2014: Acacia Research Corporation(ACTG)

Acacia Research Corporation, through its subsidiaries, acquires, develops, licenses, and enforces patented technologies in the United States. It assists patent owners with the prosecution and development of their patent portfolios; protection of their patented inventions from unauthorized use; generation of licensing revenue from users of their patented technologies; and enforcement against unauthorized users of their patented technologies. The company owns or controls the rights to approximately 200 patent portfolios, which include the United State?s patents and foreign counterparts covering technologies used in various industries. Acacia Research Corporation was founded in 1992 and is based in Newport Beach, California.

Top 10 Sliver Stocks To Own For 2014: China Lodging Group Limited (HTHT)

China Lodging Group, Limited, together with its subsidiaries, develops, operates, and manages a chain of hotels in the People?s Republic of China. It operates HanTing Express Hotel that targets knowledge workers and value-conscious travelers; HanTing Seasons Hotel, which targets mid-level corporate managers and owners of small and medium enterprises; and HanTing Hi Inn for budget-constrained travelers. As of March 31, 2011, the company had 473 hotels consisting of 259 leased-and-operated hotels and 214 franchised-and-managed hotels; and 162 hotels under development, including 74 leased-and-operated hotels and 88 franchised-and-managed hotels. China Lodging Group, Limited was incorporated in 2007 and is headquartered in Shanghai, the People?s Republic of China.

Top 10 Sliver Stocks To Own For 2014: StellarOne Corporation(STEL)

StellarOne Corporation operates as the bank holding company for StellarOne Bank that provides various retail and small business banking, commercial banking, consumer lending, mortgage banking, and wealth management services to individuals, and small and middle-market businesses in Virginia. It generates various deposit products, including demand and time deposit accounts, money market accounts, checking accounts, certificates of deposit, and savings accounts. The company?s loan portfolio comprises consumer and commercial real estate loans, real estate and construction loans, commercial lines of credit, commercial term loans, home equity loans, consumer loans, and commercial, financial, and agricultural loans. It also provides credit cards, automated teller machine networks, and telephone and Internet banking, and online bill payment services. In addition, the company provides various wealth management and personal trust services, including estate administration and employ ee benefit plan administration, and planning specifically addressing the investment and financial management needs of its customers. As of December 31, 2009, StellarOne Corporation operated 56 financial centers, 1 loan production office, and approximately 60 automated teller machines in New River Valley, Roanoke Valley, Shenandoah Valley, and central and north central Virginia. The company was formerly known as Virginia Financial Group, Inc. and changed its name to StellarOne Corporation in February 2008. StellarOne Corporation was founded in 1911 and is headquartered in Charlottesville, Virginia.

Why Akorn Shares Were Crushed

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Akorn (NASDAQ: AKRX  )  -- a hybrid generic and branded drug developer -- shed as much as 15% of their value after the company reported disappointing first-quarter results.

So what: For the quarter, revenue rose 43% to $73.9 million as EPS more than tripled to $0.10 from the year-ago period despite a 680 basis point drop in gross margin to 53%. Although revenue was more or less in-line with estimates, EPS fell $0.03 shy of forecasts. Akorn blamed the unplanned shutdown of its Somerset, N.J., facility for production delays and slower sales of drugs launched recently for the weakened results. Looking ahead, Akorn lowered its full-year revenue guidance to a range of $305 million to $315 million and EPS to $0.53-$0.55 as compared to current Street estimates of $333.6 million in revenue and $0.61 in EPS.

Now what: Akorn certainly delivered some pretty uninspiring results, so it's pretty easy to see why shareholders are a bit disappointed today. However, I feel Akorn is one of the better risk-versus-reward pharmaceutical companies you can buy. As a hybrid, it can take advantage of the stability and demand of generic sales while also enjoying the exclusivity and high margins associated with branded drugs. Considering that the Somerset shutdown was weather-related and not under Akorn's control, I can't exactly fault the company for that. With some 39 drugs expected to come to market between this year and 2015, I see plenty of upside potential for Akorn.

Craving more input? Start by adding Akorn to your free and personalized watchlist so you can keep up on the latest news with the company.

While you can certainly make huge gains in pharmaceuticals like Akorn, the best investing approach is to choose great companies and stick with them for the long term. The Motley Fool's free report "3 Stocks That Will Help You Retire Rich" names stocks that could help you build long-term wealth and retire well, along with some winning wealth-building strategies that every investor should be aware of. Click here now to keep reading.

Wednesday, May 8, 2013

Why the Street Should Love Gardner Denver's Earnings

Although business headlines still tout earnings numbers, many investors have moved past net earnings as a measure of a company's economic output. That's because earnings are very often less trustworthy than cash flow, since earnings are more open to manipulation based on dubious judgment calls.

Earnings' unreliability is one of the reasons Foolish investors often flip straight past the income statement to check the cash flow statement. In general, by taking a close look at the cash moving in and out of the business, you can better understand whether the last batch of earnings brought money into the company, or merely disguised a cash gusher with a pretty headline.

Calling all cash flows
When you are trying to buy the market's best stocks, it's worth checking up on your companies' free cash flow once a quarter or so, to see whether it bears any relationship to the net income in the headlines. That's what we do with this series. Today, we're checking in on Gardner Denver (NYSE: GDI  ) , whose recent revenue and earnings are plotted below.

Source: S&P Capital IQ. Data is current as of last fully reported fiscal quarter. Dollar values in millions. FCF = free cash flow. FY = fiscal year. TTM = trailing 12 months.

Over the past 12 months, Gardner Denver generated $234.8 million cash while it booked net income of $254.1 million. That means it turned 10.4% of its revenue into FCF. That sounds pretty impressive. However, FCF is less than net income. Ideally, we'd like to see the opposite.

All cash is not equal
Unfortunately, the cash flow statement isn't immune from nonsense, either. That's why it pays to take a close look at the components of cash flow from operations, to make sure that the cash flows are of high quality. What does that mean? To me, it means they need to be real and replicable in the upcoming quarters, rather than being offset by continual cash outflows that don't appear on the income statement (such as major capital expenditures).

For instance, cash flow based on cash net income and adjustments for non-cash income-statement expenses (like depreciation) is generally favorable. An increase in cash flow based on stiffing your suppliers (by increasing accounts payable for the short term) or shortchanging Uncle Sam on taxes will come back to bite investors later. The same goes for decreasing accounts receivable; this is good to see, but it's ordinary in recessionary times, and you can only increase collections so much. Finally, adding stock-based compensation expense back to cash flows is questionable when a company hands out a lot of equity to employees and uses cash in later periods to buy back those shares.

So how does the cash flow at Gardner Denver look? Take a peek at the chart below, which flags questionable cash flow sources with a red bar.

Source: S&P Capital IQ. Data is current as of last fully reported fiscal quarter. Dollar values in millions. TTM = trailing 12 months.

When I say "questionable cash flow sources," I mean items such as changes in taxes payable, tax benefits from stock options, and asset sales, among others. That's not to say that companies booking these as sources of cash flow are weak, or are engaging in any sort of wrongdoing, or that everything that comes up questionable in my graph is automatically bad news. But whenever a company is getting more than, say, 10% of its cash from operations from these dubious sources, investors ought to make sure to refer to the filings and dig in.

With questionable cash flows amounting to only 3.8% of operating cash flow, Gardner Denver's cash flows look clean. Within the questionable cash flow figure plotted in the TTM period above, other operating activities (which can include deferred income taxes, pension charges, and other one-off items) provided the biggest boost, at 2.3% of cash flow from operations. Overall, the biggest drag on FCF came from changes in accounts payable, which represented 21.5% of cash from operations.

A Foolish final thought
Most investors don't keep tabs on their companies' cash flow. I think that's a mistake. If you take the time to read past the headlines and crack a filing now and then, you're in a much better position to spot potential trouble early. Better yet, you'll improve your odds of finding the underappreciated home-run stocks that provide the market's best returns.

Looking for alternatives to Gardner Denver? It takes more than great companies to build a fortune for the future. Learn the basic financial habits of millionaires next door and get focused stock ideas in our free report, "3 Stocks That Will Help You Retire Rich." Click here for instant access to this free report.

We can help you keep tabs on your companies with My Watchlist, our free, personalized stock tracking service.

Add Gardner Denver to My Watchlist.

Will the New Xbox Be Bigger Than You Think?

We're now just days away from Microsoft's (NASDAQ: MSFT  ) May 21 unveiling of the new Xbox, but a leaked document suggests that the new gaming console may be a category killer of an entertainment appliance.

A leaked email is making the rounds in cyberspace and tech news site Ars Technica is reporting that in it the company admits that the new Xbox won't necessarily need an online connection for single-player games, playing Blu-ray discs, or streaming live TV. A rumor earlier this year claimed that the new Xbox would have to always be tethered to the Internet to work.

That will come as a relief to folks with spotty connectivity, but the email -- if legitimate -- also points to following Sony into embracing Blu-ray as the high-def optical disc platform of choice. Then we get to the "live TV" component, which suggests that Microsoft will work with your current cable provider but possibly result in Microsoft putting out its own TV service.

Ever since Netflix CEO Reed Hastings left Microsoft's board of directors last year, it's been speculated that Mr. Softy was readying a play for a premium video service of its own.

In this video, longtime Fool contributor analyzes the nuggets in the reportedly leaked email and concludes that Microsoft may redefine the home theater experience if it aims well this time.

It's been a frustrating path for Microsoft investors, who've watched the company fail to capitalize on the incredible growth in mobile over the past decade. However, with the release of its own tablet, along with the widely anticipated Windows 8 operating system, the company is looking to make a splash in this booming market. In a new premium report on Microsoft, a Motley Fool analyst explains that while the opportunity is huge, so are the challenges. The report includes regular updates as key events occur, so make sure to claim a copy of this report now by clicking here.


[2] [3] [7] [9] [10] [12] [14] [18] [19] [22] Top 5 Low Price Companies To Invest In Right Now

tags:NYSE, JCP  ,,Low Price,Penny,India,Cheap,Industrial Goods,CPST,MINI,Services,MOVE,Financial,SASR,

When sales don't work, there's always begging -- at least that's what J.C. Penney (NYSE: JCP  ) seems to think with a new advertising campaign that pleads with shoppers to return to the department store.

Although I think former CEO Ron Johnson's idea to go with an everyday-low-pricing strategy wasn't a bad one, the outcome was disastrous. Shoppers fled to rivals Macy's�and Kohl's,�and Penney's earnings were a disaster as it lost $985 million in 2012.

The strategy shift was based on the premise that consumers were smart enough to see through the shenanigans of raising prices only to lower them for a "sale." Johnson thought shoppers would prefer being able to shop anytime in his store and get a low price every day. He was wrong.

So Johnson was unceremoniously ousted and Penney is back to playing the same game as everyone else. Now it's offering up a cloying mea culpa of sorts to customers: We changed, you didn't like it, so we changed back -- please, please, please come back to us!

Top 5 Low Price Companies To Invest In Right Now: Sterlite Industries(India)

Sterlite Industries (India) Limited operates as a non-ferrous metals and mining company in India and internationally. It engages in the smelting and processing of copper and production of copper byproducts. The company?s primary products consist of copper cathode and continuos cast rods, as well as by products comprise sulphuric acid, phosphoric acid, hydrofluoro silicic acid, gypsum, ferro sand, and slime. It also owns the Mt. Lyell copper mine at Tasmania in Australia, as well as owns various zinc assets, including Skorpion Zinc in Namibia; Black Mountain Mines in South Africa; and Lisheen Mines in Ireland. In addition, the company produces aluminum from its bauxite mines. Its aluminum products include aluminum ingots and wire rods; rolled products, such as coils and sheets; and vanadium sludge as a by-product. Further, the company smelts and produces lead and zinc, as well as produces and sells sulphuric acid to fertilizer manufacturers and other industries; and silver ingots primarily to industrial users. It operates three lead-zinc mines in the state of Rajasthan, northwest India. Additionally, it involves in power generations business. As of March 31, 2011, the company had a power generation capacity of 1,041 MW from its thermal power plants and wind power plants. The company was formerly known as Sterlite Cables Limited and changed its name to Sterlite Industries (India) Limited in 1986.The company was incorporated 1975 and is based in Mumbai, India. Sterlite Industries (India) Limited is a subsidiary of Vedanta Resources plc.

Top 5 Low Price Companies To Invest In Right Now: Capstone Turbine Corporation(CPST)

Capstone Turbine Corporation develops, manufactures, markets, and services turbine generator sets and related parts for use in stationary distributed power generation applications. Its stationary distributed power generation applications include cogeneration combined heat and power (CHP), integrated (CHP), resource recovery, and secure power, as well as combined cooling, heat, and power; and its products are used as battery charging generators for hybrid electric vehicle applications. The company primarily offers microturbine units, subassemblies, and components. It also provides various accessories, including rotary gas compressors with digital controls, heat recovery modules for CHP applications, dual mode controllers that allow automatic transition between grid connect and stand-alone modes, batteries with digital controls for stand-alone/dual-mode operations, power servers for multipacked installations, and protocol converters for Internet access, as well as frames, ex haust ducting, and installation hardware. Further, it remanufactures microturbine engines; and provides after-market parts and services, scheduled and unscheduled maintenance, and factory and on-site training services. The company?s microturbines can be fueled by various sources, including natural gas, propane, sour gas, landfill or digester gas, kerosene, diesel, and biodiesel. It primarily sells its products directly to end users, as well as through distributors in North America, Asia, Australia, Europe, the Russian Federation, and South America. Capstone Turbine Corporation was founded in 1988 and is based in Chatsworth, California.

Advisors' Opinion:
  • [By Louis Navellier]

    Capstone Turbine Corp. (NASDAQ: CPST) develops, manufactures, markets and services microturbine technology solutions. The stock has gained 88% year to date, compared to just 6% for the S&P 500 Index. It should also be mentioned that CPST posted quarterly revenue growth of 51%, year over year, last quarter.

Top Bank Stocks To Buy For 2014: Mobile Mini Inc.(MINI)

Mobile Mini, Inc. provides portable storage solutions in North America, the United Kingdom, and the Netherlands. It offers a range of portable storage products in varying lengths and widths with various features, such as its patented locking systems, premium doors, and electrical wiring and shelving. The company?s products include remanufactured and modified steel storage containers, steel security office/storage combination and security office units, wood mobile office units, and steel records storage containers, as well as non-core storage units consisting of van trailers and other manufactured storage products. Mobile Mini also provides its products on lease basis to its customers. Its customers use its products for a range of storage applications, including retail and manufacturing supplies, inventory and maintenance supplies, temporary offices, construction materials and equipment, documents and records, and household goods. The company serves large and small retaile rs, construction companies, medical centers, schools, utilities, manufacturers and distributors, the United States and the United Kingdom military, government agencies, hotels, restaurants, entertainment complexes, and households. As of December 31, 2011, it operated a lease fleet of approximately 237,600 portable storage units through 109 branches in the United States, 4 branches in Canada, 19 branches in the United Kingdom, and 1 branch in the Netherlands. The company was founded in 1983 and is headquartered in Tempe, Arizona.

Top 5 Low Price Companies To Invest In Right Now: Move Inc.(MOVE)

Move, Inc., together with its subsidiaries, operates an online network of Websites for real estate search, finance, and moving and home enthusiasts in North America. The company operates, a Web site that offers property listings and neighborhood profiles; and consumers information and tools designed to assist the customers in understanding the value of their home, preparing the home for sale, listing and advertising the home, home affordability, the offer process, applying for a loan, understand the mortgage options available, closing the purchase, and planning the move. provides showcase listing enhancements; display ad products; and a series of template Websites primarily for agents and brokers. The company also offers 8i solution, a Web-based customer relationship management software application for real estate agents. In addition, it provides Market Snapshot and Market Builder products that allow real estate professionals to offer real-time mult iple listing services market updates and trend analysis to their online prospects and clients; and Move Rentals that displays rental listings. Further, the company provides graphical display advertisements, text links, sponsorships, and directories for advertisers for mortgage companies, home improvement retailers, moving service providers, and other consumer product and service companies. Additionally, it offers quotes from moving companies, truck rental companies, and self-storage facilities, as well as other move-related information on Website. Move, Inc. also operates as an online real estate listing syndicator and provider of performance reporting solutions for the purpose of helping to drive an online advertising program for brokers, real estate franchises, and individual agents. The company was formerly known as Homestore, Inc. and changed its name to Move, Inc. in June 2006. Move, Inc. was founded in 1993 and is headquartered in Westlake Village, Californi a.

Top 5 Low Price Companies To Invest In Right Now: Sandy Spring Bancorp Inc.(SASR)

Sandy Spring Bancorp, Inc. operates as the holding company for Sandy Spring Bank, which offers a range of commercial banking, retail banking, and trust services to individuals and businesses in Maryland. It accepts various deposit products consisting of demand, money market savings, regular savings, and time deposits, as well as interest-bearing and non interest-bearing deposits. The company?s loan portfolio includes residential real estate development and construction loans; commercial loans comprising commercial real estate loans, commercial construction loans, equipment leases, and other commercial loans; and consumer loans, including home equity loans and lines, installment loans, personal lines of credit, marine loans, and student loans. It also offers personal trust, and investment and wealth management services. In addition, the company provides equipment leasing services for small to medium sized businesses through vendors, and to end-users located primarily from New Jersey to Florida. Further, it offers annuities as an alternative to traditional deposit accounts; provides general insurance services in the areas of commercial, personal, and medical liability lines; and provides investment management and financial planning to individuals, families, small businesses, and associations, including cash flow analysis, investment review, tax planning, retirement planning, insurance analysis, and estate planning. As of July 13, 2011, Sandy Spring Bancorp operated 44 community offices in Anne Arundel, Carroll, Frederick, Howard, Montgomery, and Prince George's counties in Maryland, as well as Arlington, Fairfax, and Loudoun counties in Virginia. The company was founded in 1868 and is headquartered in Olney, Maryland.

Gannett Shareholders Re-Elect Board, Support Executive Pay

Not only did Gannett  (NYSE: GCI  ) shareholders re-elect its board, ratify its public accountants, and approve a say-on-pay measure at the media conglomerate's annual meeting yesterday, but the board of directors also declared the company's second-quarter dividend of $0.20 per share, the same rate it's paid for the past five quarters.

All nine directors standing for election received at least 96.6% of the votes cast, allowing them to serve for an additional one-year term that will end at Gannett's next annual shareholders meeting. Ernst & Young was ratified as the company's independent accounting firm.

Investors also overwhelming approved, with 92.97% of the ballots cast, an advisory resolution supporting the compensation of the company's named executive officers. The so-called say-on-pay measure is non-binding on management.

Shareholders defeated a proposal by the Teamsters union to try and change management compensation in the event of a change in control of the company. The union had sought to prohibit the acceleration in the vesting of options awarded to executives should Gannett be sold.

The new dividend payout annualizes to $0.80 per share and yields 3.9% based on the closing price of Gannett's stock on May 7.

Gannett CEO Gracia C. Martore said: "We are confident we have set the right course for Gannett as we move forward with our multi-year strategy, taking every opportunity to expand and evolve the ways we engage with our audiences. This dividend reflects our commitment to share the results of our strong performance with our shareholders."

GCI Dividend Chart

GCI Dividend data by YCharts.


[2] [4] [7] [10] [12] [16] [18] [19] [20] Hot Warren Buffett Stocks To Invest In Right Now

tags:NYSE, KO  , PEP  , DPS  ,NASDAQ, SODA  ,,Warren Buffett,Financial,INDB,USA,Consumer Goods,Packaging & Containers,Packaging&Containers,OI,VITI.MI,QLTY,Technology,QLGC,

We'd all like to invest like the legendary Warren Buffett, turning thousands into millions or more. Buffett analyzes companies by calculating return on invested capital, or ROIC, to help determine whether a company has an economic moat -- the ability to earn returns on its money above that money's cost.

In this series, we examine several companies in a single industry to determine their ROIC. Let's take a look at Coca-Cola (NYSE: KO  ) and three of its industry peers to see how efficiently they use cash.

Of course, it's not the only metric in value investing, but ROIC may be the most important one. By determining a company's ROIC, you can see how well it's using the cash you entrust to it and whether it's actually creating value for you. Simply put, it divides a company's operating profit by how much investment it took to get that profit. The formula is:

Best Diversified Bank Stocks To Invest In 2014: Vittoria(VITI.MI)

Vittoria Assicurazioni S.p.A., together with its subsidiaries, provides various life and non-life insurance products to individuals, families, and businesses in Italy. Its life insurance products comprise savings insurance products; protection policies covering risks of death, disability, and non-self-sufficiency; supplementary pension plans, including individual pension schemes and open-ended pension fund; and unit-linked financial policies. The company?s non-life insurance products include accident, health, and fire and natural events insurance; other asset damage insurance, which covers the risks of theft and burglary, hail, damage to electronic equipment, and technological damage; general third party liability, pecuniary loss, and legal protection insurance; credit and bond insurance; aircraft and watercraft hulls insurance; railway rolling stock insurance; and goods in transit insurance. It also offers motor insurance products, such as third-party liability for motor vehicles and watercraft, land motor vehicle hulls, and assistance; and outward and inward reinsurance products. In addition, the company engages in the real estate trading; and real estate management, brokerage, and promotional activities. As of December 31, 2010, it offered its products through 318 general agencies and 551 professional sub-agencies. The company was formerly known as The Victory Insurance and changed its name to Vittoria Assicurazioni S.p.A. in 1968. Vittoria Assicurazioni S.p.A. was founded in 1921 and is based in Milan, Italy.

Hot Warren Buffett Stocks To Invest In Right Now: QLogic Corporation(QLGC)

QLogic Corporation engages in the design and supply of storage networking, high performance computing networking, and converged networking infrastructure solutions. It offers various host products, including fiber channel and Internet small computer systems interface (iSCSI) host bus adapters; fiber channel over Ethernet (FCoE) converged network adapters; and intelligent Ethernet adapters. The company also provides network products, which consist of fiber channel switches, including stackable edge switches, bladed switches, virtualized pass-through modules, and high-port count modular-chassis switches; Ethernet pass-through modules; and storage routers for bridging fiber Channel, FCoE, and iSCSI networks, as well as for migrating data between storage devices. In addition, it offers silicon products comprising fiber channel, iSCSI, converged network, and Ethernet controllers. Further, the company involves in the design and development of application-specific integrated circ uits, adapters, and switches based on fiber channel, iSCSI, FCoE, and Ethernet technologies. Its products are used in server, workstation, and storage subsystem solutions that are used by small, medium, and large enterprises with various business data requirements. The company sells its products to original equipment manufacturers and distributors worldwide. QLogic Corporation was founded in 1992 and is headquartered in Aliso Viejo, California.

Why Catamaran Is Poised to Keep Sailing

Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, health care IT services specialist Catamaran (NASDAQ: CTRX  ) has earned a respected four-star ranking.  

With that in mind, let's take a closer look at Catamaran and see what CAPS investors are saying about the stock right now.

Catamaran facts

Headquarters (founded)

Lisle, Ill. (1993)

Market Cap

$10.7 billion


Health care services

Trailing-12-Month Revenue

$11.4 billion


Chairman/CEO Mark Thierer
CFO Jeffrey Park

Return on Equity (average, past 3 years)


Cash / Debt

$311.4 million / $1.1 billion


Caremark Pharmacy Services
Express Scripts

Sources: S&P Capital IQ and Motley Fool CAPS.

On CAPS, 95% of the 384 members who have rated Catamaran believe the stock will outperform the S&P 500 going forward.

Just yesterday, one of those Fools, TMFInnovator, succinctly summed up the Catamaran bull case for our community:

Classic disruptor that has been successful. There is a lot to like in this business.

-Transparent business model is disruptive to the traditional PBM market.
-CTRX's technology is superior to competitors.
-Now that they are established in difficult customer segments (public-sector institutions and state Medicaid claims), there are high switching costs for customers to leave.

-Healthcare reform is putting a lot of pressure on Managed Care Organizations to take costs out of the system (which would reduce costs to the final consumers).
-The flood of generics into pharmaceuticals offers opportunity for PBM's to take additional costs out.

Reducing costs is a huge opportunity for Catamaran. Their fixed-price, transparent business model is aligned with the direction the industry appears to be heading. If they can upsell to larger clients, they could go from disruptor to the industry standard.  

If you want market-thumping returns, you need to put together the best portfolio you can. Of course, despite a strong four-star rating, Catamaran may not be your top choice.

We've found another stock we are incredibly excited about -- excited enough to dub it "The Motley Fool's Top Stock for 2013." We have compiled a special free report for investors to uncover this stock today. The report is 100% free, but it won't be here forever, so click here to access it now.

Should I Buy BT Group or J Sainsbury?

LONDON -- The FTSE 100 is the U.K.'s blue-chip stock index, but surprisingly few of these companies earn the majority of their profits in the U.K.

Two companies that do are BT Group  (LSE: BT-A  ) (NYSE: BT  ) and J Sainsbury  (LSE: SBRY  ) (NASDAQOTH: JSAIY  ) .

Both shares offer the potential for rising earnings and dividends over the medium term, but which of these two household names would be the better buy for my portfolio?

BT vs. Sainsbury
I'm going to start with a look at a few key statistics that can be used to provide a quick comparison of these two companies, based on their results from the last 12 months:


BT Group

J Sainsbury

Price-to-earnings ratio



Dividend yield



5-year avg dividend growth



5-year avg EPS growth



Based on these figures, Sainsbury looks like a far more reliable and consistent performer, with a five-year history of solid earnings and dividend growth.

Sainsbury's 4.3% trailing dividend yield is also superior to BT's 3.1% yield, which is no better than the FTSE 100 average -- but far more risky, since it comes from a single share.

However, it is worth remembering that BT's management has plans to increase the pace of dividend growth, and this year's interim payout was 15% higher than last year's.

What's next?
Although Sainsbury's track record over the last five years is better than BT's, I'm not sure whether the supermarket's growth can continue at this rate, especially if Tesco's turnaround plan starts to deliver.

Analysts' forecasts are notoriously unreliable, but FTSE 100 companies generally get the benefit of the most comprehensive analysis and tend to deliver fewer surprises than smaller companies.

With that in mind, let's take a look at some forward-looking numbers for BT and Sainsbury. These apply to the companies' 2012/13 financial years:


BT Group

J Sainsbury

Forecast P/E ratio



Forecast dividend yield



Forecast dividend growth



Forecast adj. earnings growth



BT's adjusted earnings are expected to dip this year, before rising gradually again next year. The firm is struggling to deal with falling revenues, while also investing heavily in network upgrades and its forthcoming television service.

In contrast, Sainsbury is expected to deliver steady earnings growth and a dividend increase that should stay above inflation, boosting its prospective dividend yield to 4.4%.

Which share should I buy?
Sainsbury's steady earnings and dividend growth and its above-average dividend yield look appealing to me. Although the supermarket's shares aren't quite as cheap as they were, their yield makes the price worthwhile, in my opinion.

I'm less keen on BT, as I believe the firm's recovery is still uncertain and its profits -- and dividend payout -- remain substantially lower than they were in 2007. If you're interested in BT, then it might be worth waiting until its full-year results are published on May 10. I will certainly be taking a close look at them.

The best FTSE 100 dividends?
Sainsbury is a tempting income buy, but there are a number of other attractive, high-yielding alternatives elsewhere in the FTSE 100 you may also want to consider.

Indeed, I can tell you that Sainsbury's wasn't chosen by The Motley Fool's team of analysts for its latest special report, "5 Shares to Retire On." If you would like to know the identity of these five top-rated dividend investments, click here now to download your copy of this report -- it's free, but availability is strictly limited, so don't delay.


Tuesday, May 7, 2013

A Hidden Reason Wright Medical Group's Future Looks Bright

Here at The Motley Fool, I've long cautioned investors to keep a close eye on inventory levels. It's a part of my standard diligence when searching for the market's best stocks. I think a quarterly checkup can help you spot potential problems. For many companies, products that sit on the shelves too long can become big trouble. Stale inventory may be sold for lower prices, hurting profitability. In extreme cases, it may be written off completely and sent to the shredder.

Basic guidelines
In this series, I examine inventory using a simple rule of thumb: Inventory increases ought to roughly parallel revenue increases. If inventory bloats more quickly than sales grow, this might be a sign that expected sales haven't materialized. Is the current inventory situation at Wright Medical Group (Nasdaq: WMGI  ) out of line? To figure that out, start by comparing the company's inventory growth to sales growth. How is Wright Medical Group doing by this quick checkup? At first glance, pretty well. Trailing-12-month revenue decreased 5.3%, and inventory decreased 10.1%. Comparing the latest quarter to the prior-year quarter, the story looks decent. Revenue shrank 5.0%, and inventory shrank 10.1%. Over the sequential quarterly period, the trend looks OK but not great. Revenue dropped 2.5%, and inventory grew 0.4%.

Advanced inventory
I don't stop my checkup there, because the type of inventory can matter even more than the overall quantity. There's even one type of inventory bulge we sometimes like to see. You can check for it by examining the quarterly filings to evaluate the different kinds of inventory: raw materials, work-in-progress inventory, and finished goods. (Some companies report the first two types as a single category.)

A company ramping up for increased demand may increase raw materials and work-in-progress inventory at a faster rate when it expects robust future growth. As such, we might consider oversized growth in those categories to offer a clue to a brighter future, and a clue that most other investors will miss. We call it "positive inventory divergence."

On the other hand, if we see a big increase in finished goods, that often means product isn't moving as well as expected, and it's time to hunker down with the filings and conference calls to find out why.

What's going on with the inventory at Wright Medical Group? I chart the details below for both quarterly and 12-month periods.

Source: S&P Capital IQ. Data is current as of latest fully reported quarter. Dollar amounts in millions. FY = fiscal year. TTM = trailing 12 months.

Source: S&P Capital IQ. Data is current as of latest fully reported quarter. Dollar amounts in millions. FQ = fiscal quarter.

Let's dig into the inventory specifics. On a trailing-12-month basis, work-in-progress inventory was the fastest-growing segment, up 22.4%. On a sequential-quarter basis, work-in-progress inventory was also the fastest-growing segment, up 22.4%. Wright Medical Group seems to be handling inventory well enough, but the individual segments don't provide a clear signal. Wright Medical Group may display positive inventory divergence, suggesting that management sees increased demand on the horizon.

Foolish bottom line
When you're doing your research, remember that aggregate numbers such as inventory balances often mask situations that are more complex than they appear. Even the detailed numbers don't give us the final word. When in doubt, listen to the conference call, or contact investor relations. What at first looks like a problem may actually signal a stock that will provide great returns. And what might look hunky-dory at first glance could actually be warning you to cut your losses before the rest of the Street wises up.

Is Wright Medical Group the best health care stock for you? Learn how to maximize your investment income and "Secure Your Future With 9 Rock-Solid Dividend Stocks," including one above-average health care logistics company. Click here for instant access to this free report.

Add Wright Medical Group  to My Watchlist.

Diplomats: Brazil Wins Race for Next WTO Director

GENEVA (AP) -- The World Trade Organization has settled on Roberto Azevedo of Brazil, a well-known diplomat and consummate insider in Geneva circles, to serve as its director general for the next four years, officials said Tuesday.

The directorship is chosen by consensus in a complex and secretive process, and the runner-up is expected to concede afterward. Diplomats emerged from consultations Tuesday to rush past journalists out of the building, barely acknowledging that Azevedo had defeated Mexican former trade minister Herminio Blanco in the final round.

Two diplomats confirmed Azevedo's selection to journalists on condition of anonymity because they were not authorized to reveal the winner ahead of the formal announcement, but Azevedo also retweeted that he has been chosen for the job and comments from various trade circles began trickling in.

A formal announcement on his selection is not expected until Wednesday.

In Washington, Jack Colvin, a vice president of the National Foreign Trade Council, said Azevedo's selection reflects "his extensive experience and deep familiarity with international trade institutions and processes on behalf of Brazil and the focus he has placed on consensus-building in Geneva."

Under WTO rules, a meeting of member-nations must be convened no later than May 31 to formally appoint Azevedo. The selection -- not an election -- spanned months of consultations among ambassadors from all 159 members, most of them nations but also some territories such as Hong Kong and Macau.

Azevedo is to take over the organization on Sept. 1 from Pascal Lamy of France, who has been the director-general for eight years.

He is poised to become the first Latin American to head the Geneva-based trade organization since its creation in 1995. He won out in a field that originally had nine candidates at the start of this year.

Azevedo will be taking over an organization whose role as a multilateral forum for negotiations is, according to insiders and observers, in growing doubt.

In recent years, the WTO has been used more as forum to settle trade disputes and monitor policy than as a host for serious trade negotiations. That tendency reflects the rise of regional and bilateral trade negotiations among the major powers.

Azevedo, who has insider knowledge of the WTO's workings, calls himself a consensus-builder between developed and developing countries. He says he will set aside his Brazilian hat to take on the global role.

But it has been no secret during the selection process that member nations wanted the next director to come from a developing nation after having a director from one of Europe's major economies.

The original nine candidates also included contenders from Ghana, Costa Rica, Indonesia, New Zealand, Kenya, Jordan, and Korea.

First Solar Fails to Impress Wall Street

First Solar (NASDAQ: FSLR  ) didn't knock anyone's socks off with first-quarter earnings and today investors are punishing the stock. Revenue of $755.2 million was ahead of the $725 million estimate from Wall Street but $0.69 per share in earnings was below the $0.75 estimate and investors sold in bulk this morning.

To be fair, First Solar did reiterate 2013 guidance it gave in April so the thesis hasn't changed overnight. At the time, it didn't give quarterly guidance so analysts just got the timing of earnings wrong. I don't think the miss is worth the 10% drop we're seeing in the stock today, but I also thought the euphoria after guidance in April was overdone as well.

A look into the numbers
There are three things I want to highlight from last night's earnings report. First, backlog dropped another 100 MW during the quarter from 2.6 GW to 2.5 GW. Since First Solar is a systems driven business this is key and doesn't give investors confidence in future earnings. Management did say it has another 5.5 GW of projects in development but they're not booked and backlog is shrinking every quarter, not a good sign for a company that counts on systems.

Second, gross margin dropped to 22.4%, a steady decline from 28.4% in Q3 2012. This margin is in line with what SunPower (NASDAQ: SPWR  ) reported last week, a huge turn of events for these companies. My investing thesis has long been that SunPower's high efficiency modules would eventually become more valuable as module prices fell, putting pressure on First Solar. That appears to be playing out right now as the companies head in opposite directions.

Finally, module conversion efficiency was flat last quarter at 12.9% and cost per watt was up a penny. Manufacturers have to either improve efficiency or cut costs to survive in solar and First Solar didn't do either one in the quarter. Management expects to exit 2013 with efficiency over 14% but I'd like to see more progress early in the year.  

First Solar's one big advantage
I think First Solar is in a tough position with low efficiency modules but it still has a strong balance sheet with $450 million in net cash, which shouldn't be overlooked. Most solar companies are attempting to get into the systems business and their balance sheets will play a role in the financing they can line up.

In China, LDK Solar (NYSE: LDK  ) and Yingli Green Energy (NYSE: YGE  ) are trying to grow in systems but with billions of dollars in debt and extremely low margins they can't compete with First Solar. So, even their higher-efficiency modules put them behind the curve.

If First Solar is going to stay ahead of SunPower, LDK, and Yingli it will be because of its balance sheet and technology improvements over the next few years. It's a long haul and not a sure bet, but this is still one of the best companies in solar.

A deep dive into First Solar's future
Investors and bystanders alike have been shocked by First Solar's precipitous drop over the past two years. The stakes have never been higher for the company: Is it done for good, or ready for a rebound? If you're looking for continuing updates and guidance on the company whenever news breaks, The Motley Fool has created a brand-new report that details every must know side of this stock. To get started, simply click here now.

Netflix Is Changing Fast

Netflix (NFLX) is an interesting business to investigate, as its revenue and stock price have been quite volatile. A look into the Q1 2013 results for Netflix NFLX shows that their three avenues of business (domestic streaming, international streaming and domestic DVD) have changed quite a lot over just the past year. And while in the past NFLX concentrated on their domestic markets (streaming and DVD), it is now also working hard to bring its international streaming revenue up to scratch. We can see that there is now a clear trend of declining domestic DVD revenues, increasing domestic streaming revenues, and increasing international streaming revenues.

Domestic Streaming Revenue Growth

(click to enlarge)

In regards to its domestic streaming segment, it would appear that NFLX has been making all the right moves lately. In Q1 2013, for the first quarter ever, profits from domestic streaming ($131 million) exceeded profits from domestic DVD's ($113 million). This could partly be attributed to NFLX's exclusive content (especially the new show House of Cards) that brought in many new members, and improved member satisfaction as NFLX continues to improve their service. I believe that making a multi-year deal with Time Warner (TWX) for new shows will be a large driving force for retaining members and attracting new members and we will see numerous shows available for streaming on NFLX in future, including Revolution (NBC), The Following (Fox), Longmire (A&E) and Political Animals (USA). NFLX management predicts that domestic streaming revenue will continue to increase in Q2 2013.

International Streaming Revenue Growth

(click to enlarge)

The newest segment for NFLX, international streaming represents an enormous new market, as roughly only 10% of the world's ~2.4 ! billion total internet users are based in the USA. NFLX has been aggressively marketing their international streaming service and has grown their international streaming revenue very quickly: in Q1 2012, international revenue was only $43 million, whereas in Q1 2013 it was $142 million. Perhaps most importantly, the losses for international streaming have declined, with $77 million lost in Q1 2013 compared to $103 million lost in Q1 2012. It is to be expected that losses will take place during the early stages of a new service being introduced - NFLX was, in fact, losing money for a long time before they reached profitability with their main domestic services. But if the trend for international streaming continues, we could see this segment of NFLX become profitable within the next couple of years, and then it could become one of the main money-makers for NFLX. NFLX management forecasts losses of $65 million to $81 million for international streaming in Q2 2013, and I expect this to decline in further quarters.

Domestic DVD Revenue Growth

(click to enlarge)

The domestic DVD segment of NFLX enjoys very high profit margins (in Q1 2013 the contribution margin for Domestic DVD was 46.6%, representing contribution profit of $113 million) compared to domestic streaming. But while domestic DVD is a very important segment for NFLX that has brought in very healthy profits, it has very clearly declined over the past year, and it seems very likely that it will continue to decline (NFLX management forecasts domestic DVD contribution profit of $100 million to $112 million in Q2 2013). I cannot think of how NFLX could improve this segment of their business and turn the trend around to bring up domestic DVD revenue to its previous highs.

What's In Store For NFLX?

The numbers for NFLX tell a very clear story - streaming is growing, while the older domestic DVD segment is declining. I believe ! technolog! y is the main cause for this shift. Broadband internet has become far more common since NFLX first started, and consumers now have access to far cheaper internet plans with faster speeds and higher data allocations. That allows them to stream television shows with ease, and watch shows immediately. Having a DVD sent in the mail is, by comparison, slow, expensive and cumbersome. We have already seen how the internet has affected traditional video-rental stores such as Blockbuster from DISH Network (DISH). Just like the music industry (where record stores and album sales were dominant before internet use was widespread), the industry for NFLX has changed substantially since its inception, and NFLX has to recognize these changes and adapt.

For NFLX investors, the most exciting segment of the business to watch for the remainder of 2013 and beyond will be international streaming. This will represent the strongest growth potential compared to the already relatively mature domestic streaming and DVD revenues. NFLX is present in Latin America, Europe and Canada, and these markets should supply millions of new customers in the coming years. But just as how it took many years for its domestic streaming and domestic DVD segments to become profitable, international streaming is very unlikely to become a huge success for NFLX in the short term. NFLX shareholders will therefore need to remain patient as international streaming grows for NFLX and slowly begins to add to its bottom line.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. (More...)