Saturday, July 20, 2013

Apple Innovates Back to Even at WWDC

While many of the advances that Apple (NASDAQ: AAPL  ) announced at the 2013 Worldwide Developers Conference represent significant product enhancements for the iUniverse, most do little to surpass the functionality that already exists on other platforms. This is not to suggest that Apple has not successfully put the Cupertino gloss on iOS 7, iTunes Radio, iWork for iCloud, and the new MacBook Air, but much of what makes these releases new -- beyond the aesthetic -- are available in other places. Ultimately, the new offerings from Apple are good news for investors, but if the brand that Jobs built is to truly return to the top, it will need to awe us soon.

The new releases and where else to find them
iOS 7: Of the myriad new features that will be included in the new iOS, two notable ones include a control center and enhanced multitasking capability. The control center is available by swiping your finger up from the bottom of the screen to pull up some of the most commonly used controls. The multitasking will allow iOS 7 to run more apps simultaneously -- currently only a few apps can be run in the background. These are great features to be sure, but the control center concept was been included on Google (NASDAQ: GOOG  ) Android devices for some time; both the Motorola RAZR MAXX and HTC One have this feature. Furthermore, extensive multitasking has been a part of Android for quite some time.

iTunes Radio: This new foray into the services side of the business for Apple is meant to compete with music services like that offered by Pandora (NYSE: P  ) . The service will be ad-supported and allow users to select from as many as 200 stations as well as build custom stations. Users that choose to pay $25 iTunes Match will get an ad-free version . The big enhancement -- it would seem -- is the ability to listen to music that is "trending" or gaining hype. The interplay between this option and Pandora will be critical in Pandora's long-term viability.

iWork for iCloud: Can we say Google Docs? The new service allows users to store documents on iCloud and then access them across both devices and even operating systems and browsers. The existence of Google Docs has already driven Microsoft (NASDAQ: MSFT  ) to introduce Office 365, which takes the functionality of the productivity suite into the cloud. When Google Docs was first introduced, Microsoft foolishly assumed it was not a legitimate competitor until its business was affected; for business purposes the two options are considered legitimate competitors. Google Docs may be cheaper, but the functionality of Office is still, in my experience, superior for users who need to do any heavy lifting. While it may seem early to begin thinking about iWork as an enterprise option -- Apple is playing catch-up -- the blogosphere is already there and underestimating Apple would be an unwise move for Google and Microsoft.

Real advances
Despite the seeming imitative nature of many of these releases, there are some subtle areas in which Apple has made progress. With iTunes Radio, for example, the ability of users to buy songs they like on the radio right from iTunes might cause real trouble for Pandora. The online radio leader has a loyal user base, but the ease with which iTunes Radio may allow you to jump back and forth between the radio and purchased music may be attractive to users. From the company's perspective, Apple may be better able to monetize adopters of the service.

Similarly, the advance in iWork has the advantage of accessibility for iPhone users. For most of us, technology starts with our smartphones. While the iPhone 5 has not set the market on fire with its innovation, the iPhone nation is still strong. According to a report by Good Technology, 75% of mobile activations for enterprise were on iOS in the first quarter of 2013. Furthermore, with 27% of workplace activations on tablets, the shift toward tablets for business-productivity needs is clear. iPhone users will naturally prefer other iDevices, and if iOS can become a more legitimate enterprise option, just as Google has become a real option in this arena, so might Apple.

The real advance here is that Apple is getting into the game. If this trend continues, the availability of iWork has the potential to erode both Google and Microsoft's business. This is very good news for Apple investors who are waiting to see the company take a few big steps forward. Ultimately, while none of the advances are going to change the way we think about technology, they're an important step for Apple. The reception of these releases -- expected at various times, with iOS 7 coming this fall -- will be telling. Drawing even with the competition is much better than being behind.

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Asian Stocks Little Changed as China Risk Counters U.S. Stimulus

Asian stocks ended the week almost unchanged as the International Monetary Fund said risks of a slowdown in Chinese growth are increasing while the Federal Reserve allayed concern the U.S. is planning to curb stimulus.

GCL-Poly Energy Holdings Ltd. (3800) surged 13 percent for the week on speculation tariffs on polysilicon shipped to China will cut supplies from the U.S. and South Korea, boosting earnings at the world's largest maker of materials used in solar panels. Taiwan Semiconductor Manufacturing Co. (2330), the world's largest contract manufacturer of chips, slumped 11 percent in Taipei after forecasting sales that trailed analyst estimates. Nissan Motor Co., a Japanese carmaker that gets about 80 percent of sales abroad, climbed a third week as the yen weakened against the dollar.

The MSCI Asia Pacific Index ended the week at 134.93, up from 134.88 on July 12, to continue its longest streak of gains since the week ending March 15. Chairman Ben S. Bernanke told a House committee there was no preset course for the U.S. central bank's asset purchases, tempering speculation the Fed would begin to trim its $85 billion-a-month bond-buying program as early as September.

"The chances are that we see growth in the U.S. economy strengthening over the next 12 months," David Cassidy, the Sydney-based head of equity strategy for Australia at UBS AG, said by phone. "There's scope for equities to move higher with earnings growth and a gradual economic recovery."

Gains Limited

Gains on the benchmark regional equities gauge were limited to 4.3 percent this year, compared with an 18 percent surge on the Standard & Poor's 500 Index, as concern mounted that a manufacturing slowdown in China and the worst cash shortage in a decade may curb earnings growth. The MSCI Asia Pacific Index is trading at 13.2 times average estimated earnings compared with 15.3 for the S&P 500 and 13.4 times for the Stoxx Europe 600 Index, according to data compiled by Bloomberg.

China's economy, the world's second-largest, expanded 7.5 percent in the three months to June 30, a report showed July 15. That matched the median forecast of 45 economists surveyed by Bloomberg.

The International Monetary Fund said July 17 risks are increasing that China's economic growth will fall short of the institution's 7.75 percent annual forecast as it urged the nation to follow through on reforms to sustain expansion. Premier Li Keqiang said this month restructuring should proceed as long as growth and employment stay above unspecified limits.

'Earnings Interest'

"There appears to be very little to stop the growth slowdown in China," said Matthew Sherwood, head of investment markets research in Sydney at Perpetual Investments, which manages about $25 billion. "The earnings season is taking on renewed interest as companies which have rallied strongly are having to prove their recent surge is justified."

China in March stepped up a three-year campaign to cool housing speculation, and has studied expanding property-tax trials after implementing them in Shanghai and Chongqing. China's June new home prices rose in 69 of 70 cities the government tracked from a year earlier, a report showed July 18.

Developers trading in Hong Kong fell for the week amid concern measures to curb rising property prices will remain intact. China Resources Land Ltd., which gets all of its revenue on the mainland, lost 9.6 percent to HK$19.72. China Overseas Land & Investment Ltd. (688) sank 3.7 percent to HK$20.75, and Agile Property Holdings Ltd slid 2.2 percent to HK$7.91.

'Targeting Developers'

"The Chinese government has been targeting developers for at least three and a half years now, so they're not operating in a friendly environment," said Alex Wong, a Hong Kong-based director at Ample Capital Ltd. "You can not expect any easier environment for them in the near term."

Hong Kong's Hang Seng Index added 0.4 percent and China's Shanghai Composite Index fell 2.3 percent. South Korea's Kospi advanced 0.1 percent. Taiwan's Taiex index dropped 1.9 percent, as Taiwan Semi fell. The chipmaker is the largest company on the measure, comprising 11 percent of the benchmark.

Australia's S&P/ASX 200 Index ended the week little changed as the Reserve Bank of Australia said the currency's decline and interest-rate cuts meant its policy setting was appropriate even as it maintained room for future reductions, according to minutes of its July 2 meeting. New Zealand's NZX 50 Index fell 0.7 percent.

The Topix climbed 0.8 percent this week, a fifth straight weekly gain. That's the biggest such advance since April 2009 and the longest winning streak since February. The measure extended gains this year amid optimism Prime Minister Shinzo Abe will push through economic reforms after tomorrow's upper house elections.

Biggest Gains

Japanese shares have topped gains this year among 24 major developed equity markets tracked by Bloomberg News. The Topix index surged 41 percent and the Nikkei 225 Stock Average soared 40 percent in 2013 as Abe and Bank of Japan Governor Haruhiko Kuroda pushed to stoke the nation's inflation rate to 2 percent.

Japanese exporters climbed as the yen declined to 100.65 per dollar, from 99.22 per dollar at the end of last week. Nissan climbed 2.4 percent to 1,121 yen, a third week of gains. Honda Motor Co. (7267) advanced 1.8 percent to 3,875 yen.

Victory tomorrow would give Abe's Liberal Democratic Party-led coalition the strongest grip on power since 2007, strengthening its ability to carry out the three-pronged plan of monetary easing, fiscal stimulus and structural reform known as Abenomics. The LDP and partner New Komeito are on track to secure a majority, according to a poll published in the Nikkei newspaper on July 17.

GCL, Taiwan Semi

GCL soared 13 percent to HK$1.96. The Chinese ruling is "positive" for domestic polysilicon manufacturers such as GCL-Poly because it may reduce supplies from abroad, boosting prices for the raw material in China, Timothy Lam, a Hong Kong-based analyst at Citigroup Inc. wrote in a report July 18. Importers of raw material to make solar panels into China must pay the duties beginning July 24.

Taiwan Semi tumbled 11 percent to NT$98.20 as the Hsinchu, Taiwan-based firm joined Intel Corp. predicting third-quarter sales below analyst expectations. The company forecast third-quarter sales of as much as NT$164 billion ($5.5 billion) in the three months ending September, compared with the NT$164.5 billion average of 25 analyst estimates compiled by Bloomberg before the announcement.

Tencent Holdings Ltd. (700), operator of China's No. 1 mobile messaging application, jumped 7.8 percent to a record HK$333.80 as the State Council pledged to upgrade telecommunications and Internet infrastructure. Tencent is the best-performing stock on the Hang Seng Index (HSI) this year.

Treasury Wine Estates Ltd., the world's second-biggest listed winemaker by revenue, slumped 18 percent to A$4.77 in Sydney after saying it would write off A$160 million ($145 million), greater than the company's expected net income this year. The decision was made to address excess stock in the U.S., Treasury Wine's largest division by sales, the company said.

Friday, July 19, 2013

Hot Tech Stocks To Invest In Right Now

From the impact of Obamacare to cutting-edge research, biotech buyouts to Big Pharma court battles, The Motley Fool's health-care team sits down each week�to discuss the most fascinating developments in health care, and their implications for long-term investors. In this week's edition, the team talks about Novartis' patent dispute, stocks that have both popped and plummeted, and companies our analysts will be watching in the coming days.

In the following segment, health-care analyst David Williamson discusses the recent outbreak of avian flu in China. Should viewers be concerned? And what stocks hold the cure for investors' portfolios?

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Hot Tech Stocks To Invest In Right Now: Manhattan Associates Inc.(MANH)

Manhattan Associates, Inc. develops, sells, deploys, services, and maintains supply chain software solutions for the planning and execution of supply chain activities. It offers Manhattan SCOPE and Manhattan SCALE, which are platform-based supply chain software solutions. The company?s Manhattan SCOPE is a portfolio of supply chain solution suites that include event and schedule tracking; alerts and notifications; inventory, order, and shipment visibility; cost monitoring and tracking; leading-edge analytics; and reporting with graphical depictions of critical supply chain performance metrics. Manhattan SCOPE also includes X-Suite solutions comprising flow management and extended enterprise management. The company?s Manhattan SCALE is a portfolio of logistics execution solutions that offer trading partner management, yard management, optimization, warehouse management, and transportation execution services. Manhattan Associates, Inc. also offers professional services, in cluding planning and implementation services; and customer support, software enhancement, and training services. In addition, it sells computer hardware, radio frequency terminal networks, radio frequency identification chip readers, bar code printers and scanners, and other peripherals. The company serves retailers, distributors, wholesalers, manufacturers, grocery stores, life sciences companies, government, and other organizations. It operates in the Americas, Europe, the Middle East, Africa, and the Asia Pacific. Manhattan Associates, Inc. was founded in 1990 and is headquartered in Atlanta, Georgia.

Hot Tech Stocks To Invest In Right Now: SK Telecom Corporation Ltd.(SKM)

SK Telecom Co., Ltd. provides wireless telecommunications services using code division multiple access (CDMA) and wide-band CDMA technologies. It offers cellular voice services, such as wireless voice transmission services; and wireless global roaming services. The company also provides wireless data transmission services, such as wireless Internet access services, which allow subscribers to access online digital contents and services, as well as to send and receive text and multimedia messages. In addition, it offers broadband Internet and fixed-line telephone services, such as video-on-demand and IP TV services; and local, domestic, and international long-distance fixed-line telephone services to residential and commercial subscribers. Further, the company provides wireless entertainment-related contents and services, wireless finance-related contents and m-commerce services, and wireless news and search services; and international calling services, such as direct-dial, pre and post paid card calling services, bundled services for corporate customers, voice services using Internet protocol, Web-to-phone services, and data services. Additionally, it offers satellite digital media broadcasting services; telematics services; and fixed-line and online community portal services. The company also operates 11th Street, an online shopping mall; and T Store, an online open marketplace for mobile applications. As of March 31, 2011, SK Telecom Co. had 26 million wireless subscribers. It has strategic alliances with Bridge Alliance; Orange SA; Telecom Italia Mobile S.p.A.; T-Mobile International AG & Co; and Teliasonera Mobile Networks AB. The company was formerly known as Korea Mobile Telecommunications Co., Ltd. and changed its name to SK Telecom Co., Ltd. in March 1997. SK Telecom Co., Ltd. was founded in 1984 and is based in Seoul, South Korea.

Best Stocks To Invest In 2014: ViaSat Inc.(VSAT)

ViaSat, Inc. designs, produces, and markets satellite and other wireless communication, and networking systems for government and commercial customers. The company?s Government Systems segment offers network-centric Internet protocol (IP) based government communications systems, including tactical radio and information distribution systems that enable real-time collection and dissemination of video and data using transmission links between command centers, communications nodes, and air defense systems; information security and assurance products, which enable military and government users to communicate information securely over networks, and that secure data stored on computers and storage devices; and government satellite communication systems, such as portable, mobile, and fixed broadband modems, terminals, network access control systems, and antenna systems. The company?s Commercial Networks segment provides various satellite communication systems and ground networki ng equipment. It offers satellite network infrastructure and ground terminals to access high capacity satellites; antenna systems for terrestrial and satellite applications, such as geo-special imagery, mobile satellite communication, Ka-band gateways, and other multi-band antennas; enterprise very small aperture terminal networks and products; and mobile broadband satellite communication systems. This segment also provides satellite networking systems design and technology development, including the analysis, design, and specification of satellites and ground systems, ASIC and MMIC design and production, and wide area network compression for enterprise networks. The company?s Satellite Services segment provides wholesale and retail satellite-based broadband Internet services, as well as managed network services for the satellite communication systems of its consumer, enterprise, and mobile broadband customers. ViaSat, Inc. was founded in 1986 and is headquartered in Carlsb ad, California.

Hot Tech Stocks To Invest In Right Now: Diodes Incorporated(DIOD)

Diodes Incorporated, together with its subsidiaries, designs, manufactures, and supplies application specific standard products within the broad discrete, logic, and analog semiconductor markets primarily in Asia, North America, and Europe. Its products portfolio consist of diodes, rectifiers, transistors, MOSFETs, protection devices, functional specific arrays, single gate logic, amplifiers and comparators, transient voltage suppressors, silicon wafers, drain inverters, and Hall-effect and temperature sensors. The company also provides power management devices, including LED drivers, and DC-DC switching and linear voltage regulators; and special function devices comprising USB power switches, load switches, voltage supervisors, and motor controllers. It sells its products to consumer electronics, computing, communications, industrial, and automotive industries through direct sales and marketing personnel, independent sales representatives, and distributors. The company wa s founded in 1959 and is headquartered in Plano, Texas.

Intuitive Surgical Earnings: Down on da Vinci

Intuitive Surgical (NASDAQ: ISRG  ) officially announced its second-quarter earnings results on Thursday after giving preliminary figures last week. The news isn't any better for the robotic surgical systems maker. Shares dropped 13% following the earnings announcement.

Unsurprising numbers
On July 8, Intuitive said that it expected to report quarterly revenue of around $575 million and earnings of around $160 million. The company mentioned that while sales of instruments and accessories increased by 18%, sales of its da Vinci surgical systems fell by 6%. Intuitive said that this drop stemmed from "increased economic pressure on hospitals" and to "moderating growth" in benign gynecologic procedures.

Thursday's announcement confirmed most of the earlier information. Revenue for the second quarter came in at $579 million, a little higher than the preliminary figure given but still well below initial expectations. The figures provided last week for increases in instruments and accessories sales and declining da Vinci surgical systems sales were on target.

Intuitive reported earnings of $159 million, or $3.90 per diluted share. That's a paltry 2.8% increase year over year in earnings, but the per-share figure reflects a higher 4% jump due to share repurchases by the company. The average analysts' estimate was $4.04 per share.

Doubling down
Although the revenue and earnings numbers weren't a surprise to anyone, Intuitive Surgical stock still fell nearly as much as it did following the sneak peek last week. Why another drop on results that everyone knew were coming?

The primary reason stems from Intuitive's guidance for the rest of the year. Previous guidance given by the company called for full-year da Vinci procedure growth of 20% to 23% The company now expects 15%-18% growth. Due largely to this slower growth, Intuitive projects full-year revenue will be flat to 7% higher than revenue for 2012.

Another factor is a warning letter that Intuitive received from the U.S. Food and Drug Administration on Wednesday. Earlier in the second quarter, the FDA conducted an on-site audit and issued four observations. At the time, Canaccord Genuity analyst Jason Mills talked with Intuitive management and said that the issues were "primarily administrative in nature" and that each issue was "thoroughly addressed."

Now, though, the FDA is asking Intuitive Surgical to take additional steps to address two of the four issues. CEO Gary Guthart says that the issues are addressable and that Intuitive is taking all necessary steps for resolution.

Looking ahead
Clearly, the environment that Intuitive Surgical faces today is quite different from what it has encountered over the past few years as it grew rapidly. A company that grew revenue at a 25% annual rate over the past five years is now projecting possibly flat growth?

The reality is that Intuitive Surgical isn't a growth stock any longer -- at least not for now. As such, it doesn't deserve growth stock price-to-earnings multiples. That's why shares have plummeted so much.

Management doesn't expect the situation to improve significantly this year. Unless something changes, though, shares aren't likely to move back up to any major extent.

Having said that, this is still a good company in my view. I think the value of its products will win out over the long run. Intuitive certainly has some public relations issues to address with the da Vinci systems, but I think that it will overcome those hurdles. The FDA issues will be resolved. Life will go on.

After the latest sell-off, shares are trading well below even the lowest price target of 13 different analysts polled by Thomson/First Call. Analysts can be wrong -- and often are. I don't think they're all misjudging Intuitive, though. My view is that Intuitive will find its way again, but I'm not sure how long it will take to do so.

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Verizon Scores Big in Second Quarter

Verizon (NYSE: VZ  ) reported double-digit earnings growth in both operating income and earnings per share for the second quarter, compared to the same period last year, the company announced today.

The company's non-GAAP adjusted earnings of $0.78 per share was a 14.1% increase; total operating revenues rose 4.3% to $29.8 billion; and operating income increased by 16%, to $6.6 billion year over year.

Verizon's total second-quarter wireless revenues were up 7.5%, to $20 billion, and its operating income margin increased from 30.8%, to 32.4%, over the same period last year.

Verizon's wireline segment showed an increase in FiOS Internet and video connections, 12.2% and 12.6%, year over year. Total FiOS revenues increased 14.7% year over year.

The company also announced it has "substantially completed deployment of its 4G LTE network, covering more than 99 percent of its current 3G network footprint." Verizon's LTE network is available in 500 markets in all 50 states, and covers more than 95% of the U.S. population, according to the company.

Thursday, July 18, 2013

Does The Street Have United Parcel Service Figured Out?

United Parcel Service (NYSE: UPS  ) is expected to report Q2 earnings on July 23. Here's what Wall Street wants to see:

The 10-second takeaway
Comparing the upcoming quarter to the prior-year quarter, average analyst estimates predict United Parcel Service's revenues will increase 1.8% and EPS will decrease -1.7%.

The average estimate for revenue is $13.59 billion. On the bottom line, the average EPS estimate is $1.13.

Revenue details
Last quarter, United Parcel Service chalked up revenue of $13.43 billion. GAAP reported sales were 2.3% higher than the prior-year quarter's $13.14 billion.

Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures may vary to maintain comparability with estimates.

EPS details
Last quarter, non-GAAP EPS came in at $1.04. GAAP EPS of $1.08 for Q1 were 8.0% higher than the prior-year quarter's $1.00 per share.

Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.

Recent performance
For the preceding quarter, gross margin was 23.2%, 20 basis points better than the prior-year quarter. Operating margin was 11.4%, 50 basis points worse than the prior-year quarter. Net margin was 7.7%, 30 basis points better than the prior-year quarter.

Looking ahead

The full year's average estimate for revenue is $55.89 billion. The average EPS estimate is $4.78.

Investor sentiment
The stock has a four-star rating (out of five) at Motley Fool CAPS, with 1,607 members out of 1,821 rating the stock outperform, and 214 members rating it underperform. Among 492 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 450 give United Parcel Service a green thumbs-up, and 42 give it a red thumbs-down.

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on United Parcel Service is outperform, with an average price target of $89.00.

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Add United Parcel Service to My Watchlist.

Is Kimberly-Clark Earnings Growth Slowing?

Top Gold Companies To Invest In Right Now

This series, brought to you by Yahoo! Finance, looks at which upgrades and downgrades make sense, and which ones investors should act on. Today, our headlines include upgrades for both Denny's (NASDAQ: DENN  ) and Green Dot (NYSE: GDOT  ) . But stocks can reach buy ratings in ways other than actual upgrades. So before we get to those two, let's first take a quick look at why ...

Hudson Square just rang up T-Mobile
Deutsche Telekom announced today that the merger of its T-Mobile USA subsidiary with MetroPCS Communications is complete -- and the newly merged company will now begin trading on the NYSE as T-Mobile US (NYSE: TMUS  ) . No sooner had it done so than out came Goldman Sachs with a buy recommendation.

According to Goldman, the new T-Mobile "is likely to attract ... interest" from potential entrants into the U.S. communications market looking to buy a company. What's more, explains that Goldman is also looking at T-Mobile as "a business emerging from its trough on a number of metrics, with several positive inflections ahead," and therefore buying in its own right, and not just as a potential buyout target. But is Goldman right?

Top Gold Companies To Invest In Right Now: First Majestic Silver Corp.(AG)

First Majestic Silver Corp. engages in the production, development, exploration, and acquisition of mineral properties with a focus on silver in Mexico. The company owns interests in La Encantada Silver Mine comprising 4,076 hectares of mining rights and 1,343 hectares of surface land located in Coahuila; La Parrilla Silver Mine consisting of mining concessions covering an area of 69,867 hectares; and San Martin Silver Mine comprising approximately 7,841 hectares of mineral rights and approximately 1,300 hectares of surface land rights located in Jalisco. It also holds interests in Del Toro Silver Mine consisting of 393 contiguous hectares of mining claims and an additional 129 hectares of surface rights located in Zacatecas; Real de Catorce Silver Project comprising 22 mining concessions covering 6,327 hectares located in San Luis Potosi state; and Jalisco Group of Properties consisting of mining claims totalling 5,240 hectares located in Jalisco. The company was founded in 1979 and is headquartered in Vancouver, Canada.

Advisors' Opinion:
  • [By Goodwin]

    The shares closed at $88.19, down $1.1, or 1.23%, on the day. Its market capitalization is $77.08 billion. About the company: Siemens AG manufactures a wide range of industrial and consumer products. The Company builds locomotives, traffic control systems, automotive electronics, and engineers electrical power plants. Siemens also provides public and private communications networks, computers, building control systems, medical equipment, and electrical components. The Company operates worldwide.

Top Gold Companies To Invest In Right Now: Agnico-Eagle Mines Limited(AEM)

Agnico-Eagle Mines Limited, through its subsidiaries, engages in the exploration, development, and production of mineral properties in Canada, Finland, and Mexico. The company primarily explores for gold, as well as silver, copper, zinc, and lead. Its flagship property includes the LaRonde mine located in the southern portion of the Abitibi volcanic belt, Canada. The company was founded in 1953 and is based in Toronto, Canada.

Advisors' Opinion:
  • [By Vatalyst]

    With headquarters in Canada, Agnico-Eagle is a gold producer that has been around for a while with operations in Canada, Finland and Mexico and the United States that has paid a cash dividend for 29 consecutive years. AEM gained 25% over the year and reported 83.5% growth in quarterly earnings. It has a market capitalization of $11.4 billion and a trailing P/E ratio of 34x with expectations of earning $0.55 per share. AEM, like other operators like it, are likely a better bet than ETF trust options like SPDR Gold Shares (GLD).

Top Stocks For 2014: Newmont Mining Corporation(Holding Company)

Newmont Mining Corporation, together with its subsidiaries, engages in the acquisition, exploration, and production of gold and copper properties. The company?s assets or operations are located in the United States, Australia, Peru, Indonesia, Ghana, Canada, New Zealand, and Mexico. As of December 31, 2009, it had proven and probable gold reserves of approximately 93.5 million equity ounces and an aggregate land position of approximately 27,500 square miles. The company was founded in 1916 and is headquartered in Greenwood Village, Colorado.

Top Gold Companies To Invest In Right Now: Golden Star Resources Ltd(GSS)

Golden Star Resources Ltd., a gold mining and exploration company, through its subsidiaries, engages in the acquisition, exploration, development, and production of gold properties. It owns and operates the Bogoso/Prestea gold mining and processing operation that covers approximately 40 kilometers of strike along the southwest-trending Ashanti gold district in western Ghana; and the Wassa open-pit gold mine located to the east of Bogoso/Prestea in southwest Ghana. The company also has an 81% interest in the Prestea underground gold mine located in Ghana. In addition, it holds interests in various gold exploration projects in Ghana, Sierra Leone, Burkina Faso, Niger, and Cote d?Ivoire, as well as holds and manages exploration properties in Brazil in South America. The company was founded in 1984 and is based in Littleton, Colorado.

Advisors' Opinion:
  • [By Curtis]

    Golden Star Resources, Ltd Com (AMEX:GSS): This equity had 10,766,183 shares sold short as of Aug 31st, as compared to 9,400,663 on Aug 15th, which represents a change of 1,365,520 shares, or 14.5%. Days to cover for this company is 3 and average daily trading volume is 3,419,976. About the equity: Golden Star Resources Ltd. is a mid-tier gold mining company. The Company’s operating mines are situated along the Ashanti Gold Belt in Ghana, West Africa.

Top Gold Companies To Invest In Right Now: CME Group Inc.(CME)

CME Group Inc. operates the CME, CBOT, NYMEX, and COMEX regulatory exchanges worldwide. The company provides a range of products available across various asset classes, including futures and options on interest rates, equity indexes, energy, agricultural commodities, metals, foreign exchange, weather, and real estate. It offers various products that provide a means of hedging, speculation, and asset allocation relating to the risks associated with interest rate sensitive instruments, equity ownership, changes in the value of foreign currency, credit risk, and changes in the prices of commodities. CME Group owns and operates clearing house, CME Clearing, which provides clearing and settlement services for exchange-traded contracts and counter derivatives transactions; and also engages in real estate operations. Its primary trade execution facilities consist of its CME Globex electronic trading platform and open outcry trading floors, as well as privately negotiated transact ions that are cleared and settled through its clearing house. In addition, the company offers market data services comprising live quotes, delayed quotes, market reports, and historical data services, as well as involves in index services business. CME Group?s customer base includes professional traders, financial institutions, institutional and individual investors, corporations, manufacturers, producers, and governments. It has strategic partnerships with BM&FBOVESPA S.A., Bursa Malaysia Derivatives, Singapore Exchange Limited, Green Exchange, Dubai Mercantile Exchange, Johannesburg Stock Exchange, and Bolsa Mexicana de Valores, S.A.B. de C.V., as well as joint venture agreement with Dow Jones & Company. The company was formerly known as Chicago Mercantile Exchange Holdings Inc. and changed its name to CME Group Inc. in July 2007. CME Group was founded in 1898 and is headquartered in Chicago, Illinois.

Top Gold Companies To Invest In Right Now: Iamgold Corporation(IAG)

IAMGOLD Corporation, together with its subsidiaries, engages in the exploration, development, and production of mineral resource properties worldwide. It primarily explores for gold, silver, zinc, copper, niobium, diamonds, and other metals. The company holds interests in eight operating gold mines, a niobium producer, a diamond royalty, and exploration and development projects located in Africa and the Americas. Its advanced exploration and development projects include the Westwood project in Canada; and the Quimsacocha project, which consists of 3 mining concessions covering an aggregate area of approximately 8,030 hectares in Ecuador. The company was formerly known as IAMGOLD International African Mining Gold Corporation and changed its name to IAMGOLD Corporation in June 1997. IAMGOLD Corporation was founded in 1990 and is based in Toronto, Canada.

Advisors' Opinion:
  • [By Christopher Barker]

    Although I have not shed my long-standing contention that Yamana Gold offers one of the more deeply discounted vehicles for long-term gold exposure, lately my outlook for IAMGOLD has turned particularly bullish. With a looming spin-off of a 10% to 20% stake in the company's reliably profitable Niobec niobium mine, and the recent sale of its interest in a pair of high-cost gold operations in Ghana for $667 million, IAMGOLD finds itself in terrific financial shape to execute an aggressive $1.2 billion expansion imitative at existing operations.

    Considering the $1.6 billion net asset value (after tax) that IAMGOLD recently assessed for the Niobec mine alone, and a presumed hoard of more than $1.2 billion (in cash, cash equivalents, and gold bullion held for investment), at a market capitalization of $6.9 billion I find extreme comfort in the market's resulting valuation for IAMGOLD's 15.2 million ounces of attributable gold reserves.

Winmark Beats on Both Top and Bottom Lines

My '10% Solution' For Increasing Your Chances Of Becoming A Millionaire

Do you want to become a millionaire?

That's obviously a rhetorical question... the majority of us would love it. But what's your plan for achieving that goal?

 If your plan is to make that sort of wealth in the stock market, then what's your strategy? Blue-chip stocks, index funds, or do you want to watch your "daily paychecks," as my colleague Amy Calistri would say, roll in by the truck load? 

All of these strategies are great. There's nothing wrong with them and they'll probably make you money in the long run.


But while investing in just steady-eddy, mature companies may keep the income flowing in, it isn't going to make you a millionaire anytime soon.

They're not going to give you those "knocked-out-of-the-park" returns that you've heard about since you first learned of the stock market.

No, I'm convinced that if your goal is to reach a seven-figure bank account, you need to add a "swing for the fences" element to your overall portfolio strategy...

I call it the "10% solution."

The idea behind it is simple. If your goal is to become a millionaire in the market, then you need to dedicate a portion of your portfolio to aggressive growth stocks.

Let me explain...

My daughter is in private school. She will eventually go to college and will need cars, trips and -- someday -- perhaps a wedding.

For her and the rest of my family, I've allocated 90% of my portfolio to safe and reliable assets. The kind of assets I know will allow me to meet my comfort level and feel confident knowing I can adequately provide for my family.

But the other 10%? That's different. 

This portion is dedicated to the "Game-Changers." These are the types of stocks that have the potential to move the needle on not only the balance of my account, but on the life I live. 

You see, most investors are stuck in the slow lane, passively accepting the market's returns and failing to use equities as the supercharging force they can be.

While it's important to have the bulk (90%) of your portfolio tied to dependable assets, I think a portion -- the other 10% -- needs to go toward investments with the potential to knock the cover off the ball.

You should know that for more aggressive investors, I actually recommend a "20% solution" -- with one-fifth of investor portfolios going toward "swing for the fences" plays -- but for simplicity's sake and for investors who aren't w! illing to take on that much risk, we'll stick with the "10% solution" today.

Here's how the 10% solution works...

I'll start this example with a modest amount to show you how it works. Assume you start with a $25,000 portfolio that tracks the broader market. The average annual return from 2002 through 2012 for the S&P 500 was a measly 4% (with dividends). That means $25,000 turns into $38,789.29 in 11 years. 

But things can change dramatically when you add in the potential for just a few big winners.

Let's say you invest 90% of your $25,000 portfolio, or $22,500, in the broader market to achieve that 4% return. Then you allocate the remaining 10%, or $2,500, to a collection of "game-changing" picks -- stocks with the potential to snag major gains.

 If that part of the portfolio averages 30% a year, then the initial $2,500 grows into $65,086.40 after 11 years.

Add in the $22,500 and its market return, which has grown to $34,910.36 and you've got a pretty nice nest egg of $99,996.76 -- nearly triple the other portfolio -- all thanks to where you put just 10% of your money. 

(Note: You'll notice that this return isn't $1 million, but the results are fully scalable. You can simply start with more capital to reach your goal.)

I've made the comparison in the chart to the right. Would you rather have Column A, or would you rather end up with Column B, which uses the 10% solution?

I think the answer is obvious.

Now you may be asking, if the 10% solution seems to work so well, why not dedicate 50% or 100% of your portfolio to it?

Simple answer: It's always important to be diversified, so putting all of one's eggs into a single basket is never a good idea, no matter how spectacular the potential for return! s. 

I can sleep at night knowing that most of my money -- the majority of my equity portfolio -- is invested so as to expose it only to general broad-market risk. Only a small percentage is allocated to game-changing plays with return potential that could move the needle on the overall portfolio.

The fact is, if you pick a few winners over time with a small subset of your portfolio, then it can make an enormous difference. And 10% can do the trick nicely. It's enough to make a difference, but not enough to keep you up at night.

Don't get me wrong though, I'm not guaranteeing my system will make you a millionaire. There are no guarantees when it comes to investing. I also believe that safe and reliable dividend payers are still the backbone of any successful portfolio. 

Action to Take --> But if you want to maximize your earning potential, you owe it to yourself to put a portion of your portfolio into investments that "swing for the fences."

P.S. -- To help you get started, I've released a new report, "The 11 Most Shocking Investment Predictions for 2014" outlining the investments that I think will be the biggest "Game-Changers" in the months to come. In the past, my annual predictions have found stocks that returned 291%... 340%... even 390%. Just imagine how that could improve your overall portfolio's returns. To learn more about my predictions for 2014, click here.

Wednesday, July 17, 2013

McDonald's to Open First Vietnam Restaurant in 2014

The Golden Arches are ready to serve up hamburgers in Vietnam.

On Tuesday, McDonald's  (NYSE: MCD  ) announced plans to open its first location in Ho Chi Minh City by early next year. To make sure the location is a hit, the Illinois company chose to partner with Henry Nguyen, a Vietnamese businessman. While McDonald's has sought a Vietnamese partner for years, Nguyen seemed to be an easy choice. 

"As we grow our presence in the Asia region, we are looking for partners with a blend of strong business acumen and a unique understanding of our Brand," said Dave Hoffmann, president of the McDonald's Asia Pacific, Middle East, and Africa region. "Henry Nguyen is that ideal business partner who has an impressive business background and proven track record in driving new business ventures in Vietnam."

Currently, Nguyen is the managing general partner of IDG Ventures Vietnam -- the country's first venture capital firm -- and he's the son-in-law of Vietnam's prime minister, Nguyen Tan Dung, according to CNN. Before that, he worked as an Associate at Goldman Sachs' technology group in New York and helped form a medical training-focused publishing company. He holds degrees from Harvard and Northwestern.

"I have been a big fan of McDonald's my whole life and have had so many wonderful experiences there, including one of my first jobs when I was a teenager," Nguyen said. "I have dreamed of one day opening a McDonald's restaurant in my native country ever since my return to Vietnam more than a decade ago. I have been in contact with McDonald's over the years sharing the opportunity that exists in our country."

Developments are already under way. Nguyen's local team is currently preparing and training McDonald's first managers and crew in Vietnam. The restaurant menu will include international favorites such as the Big Mac, cheeseburgers, and French fries. 

McDonald's has more than 34,500 locations in 100 countries that serve more than 69 million customers each day. Vietnam will be the company's 38th Asian country.

Top China Companies To Own For 2014

There's an ironic trend occurring among big multinational corporations.

For most of the last decade, investors scooped up stocks that had big international exposure with the idea that they would provide a hedge against a weakening dollar. Companies that do most of their business overseas, like Coca-Cola (NYSE: KO  ) (73% overseas), Philip Morris International (NYSE: PM  ) (all overseas), and Intel (NASDAQ: INTC  ) (85% overseas), looked compelling as a hedge against the U.S. economy's faults.

But now the dollar is strengthening.

And Europe is a mess.

And China's economy is slowing.

What's it mean for the economy, and for sectors with big international exposure?

Last week I asked Liz Ann Sonders, chief investment strategist at Charles Schwab. Here's what she had to say (transcript follows).

Top China Companies To Own For 2014: Abacus Mining & Exploration Cor (AME.V)

Abacus Mining & Exploration Corporation, an exploration stage company, engages in the acquisition, exploration, and development of mineral properties in Canada. The company, through a 20% interest in KGHM Ajax Mining Inc., holds a 20% interest in the feasibility stage Ajax copper-gold project located near Kamloops, British Columbia. Abacus Mining & Exploration Corporation was founded in 1983 and is based in Vancouver, Canada.

Top China Companies To Own For 2014: Airgas Inc.(ARG)

Airgas, Inc., through its subsidiaries, distributes industrial, medical, and specialty gases, as well as hardgoods in the United States. The company offers various gases, including nitrogen, oxygen, argon, helium, and hydrogen; welding and fuel gases, such as acetylene, propylene, and propane; and carbon dioxide, nitrous oxide, ultra high purity grades, special application blends, and process chemicals. Its hardgoods products comprise welding consumables and equipment, safety products, and construction supplies, as well as maintenance, repair, and operating supplies. The company also engages in the rental of gas cylinders, cryogenic liquid containers, bulk storage tanks, tube trailers, and welding and welding related equipment. In addition, the company manufactures and distributes liquid carbon dioxide, dry ice, nitrous oxide, ammonia, refrigerant gases, and atmospheric merchant gases. It serves repair and maintenance, industrial manufacturing, energy and infrastructure co nstruction, medical, petrochemical, food and beverage, retail and wholesale, analytical, utilities, and transportation industries. The company operates an integrated network of approximately 1100 locations, including branches, retail stores, packaged gas fill plants, specialty gas labs, production facilities, and distribution centers. Additionally, it provides retail solutions to retail customers, such as florists, grocers, restaurants and bars, tire and automotive service centers, and others. The company markets its products through multiple sales channels, including branch-based sales representatives, retail stores, strategic customer account programs, telesales, catalogs, e-business, and independent distributors. Airgas, Inc. was founded in 1982 and is based in Radnor, Pennsylvania.

Advisors' Opinion:
  • [By Tom Bishop]

    Airgas Inc. (NYSE:ARG) was also the subject of a takeover bid, this one a little unwelcome. The company received a bid from Air Products (NYSE:APD) at $60 per share, a 38% premium from where the stock had been trading.

    Airgas rejected the offer claiming that the offer "very significantly undervalues Airgas and its future prospects and is not in the best interests of Airgas stockholders." Airgas finished up 39% in February 2010, and is currently trading at $65 per share as the market is anticipating a possible higher bid.

Top Stocks For 2014: Power Integrations Inc.(POWI)

Power Integrations, Inc. designs, develops, manufactures, and markets proprietary, high-voltage, analog, and mixed-signal integrated circuits (ICs) in the United States and internationally. The company offers alternating current to direct current power conversion products, including TOPSwitch, TinySwitch, and LinkSwitch that addresses power supplies ranging from less than 1 watt of output up to approximately 50 watts of output. These products are used in mobile-device chargers, consumer appliances, utility meters, liquid crystal display monitors, standby power supplies for desktop computers and televisions, and other consumer and industrial applications. It also provides various products for use in applications up to approximately 500 watts of output, such as Hiper family power-conversion and power-factor-correction products for high-power applications, including main power supplies for desktop computers, televisions, and game consoles, as well as light emitting diode stre et lights; CapZero and SenZero, which are designed to enhance the energy-efficiency of power supplies and reduce standby consumption by eliminating particular sources of power waste within a power supply; and high-voltage diodes comprising Qspeed diodes. In addition, the company offers high-voltage DC-DC products comprising The DPA-Switch family of products that are monolithic high-voltage power conversion ICs for use in power-over-Ethernet powered devices, such as voice-over-Internet protocol phones and security cameras, as well as network hubs, line cards, servers, digital PBX phones, DC-DC converter modules, and industrial controls. It serves communications, consumer, computer, and industrial electronics markets. The company sells its products to original equipment manufacturers and merchant power supply manufacturers through direct sales staff and a network of independent sales representatives and distributors. Power Integrations, Inc. was founded in 1988 and is based in San Jose, California.

Housing Starts Unexpectedly Fall in June

Make no mistake about it, the housing recovery is under way. But that doesn't mean it's going to be a smooth ride.

The Commerce Department announced this morning that privately owned housing starts fell last month by 9.9% compared to May. The brunt of the damage was felt in the multifamily sector, which experienced a 26.7% sequential decline. Single-family housing starts fell by a comparatively modest 0.8%.

"As construction ramps up, we're bound to have some hiccups along the way," a market strategist told Bloomberg News. "I don't think this one data point is immediately concerning. The housing markets are going to be a driver of economic growth."

There were nevertheless two positive takeaways from the most recent round of data. First, permits for single-family construction projects increased in June by 4,000 to a seasonally adjusted annual rate of 624,000. This is a leading indicator of housing starts, as permits are a necessary predicate to the actual construction project.

And second, as you can see in the chart below, June marked the 21st consecutive month of year-over-year improvements in single-family housing starts, growing at a seasonally adjusted annual rate of 61,000 over the same month last year. While the 591,000 starts in June remain roughly half of where they would be in an otherwise healthy economy, things are nevertheless headed in the right direction.

The latter developments have been confirmed by the earnings reports of the nation's largest private homebuilders. As I noted yesterday, Toll Brothers (NYSE: TOL  ) , the nation's largest luxury homebuilder, said that its unit deliveries in the second quarter were up by 33%, while Lennar (NYSE: LEN  ) , the third largest builder by units, reported a 39% improvement.

And the same is true at the nation's two largest homebuilders by units delivered. D.R Horton's (NYSE: DHI  ) deliveries shot up by 33% in the most recent quarter over the same three-month period last year, and PulteGroup's (NYSE: PHM  ) were up by 23%.

More expert advice from The Motley Fool
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Tuesday's Top Upgrades (and Downgrades)

This series, brought to you by Yahoo! Finance, looks at which upgrades and downgrades make sense, and which ones investors should act on. Today, our headlines focus on the restaurant sector, where one analyst has just downgraded shares of Buffalo Wild Wings (NASDAQ: BWLD  ) , while a second analyst has initiated coverage on... just about everybody else. Let's dig right into the details, beginning with the new coverage.

Good (and not so good) eatin'
Tuesday was a big day for restaurant stock investors, as investment banker Stifel Nicolaus "initiated coverage" on everyone who is anyone (and a few companies who aren't anyone) in the casual dining segment. Panera, Ruby Tuesday, Brinker -- pretty much every restaurateur out there got a rating of some sort or other. Only a handful got actual buy ratings from Stifel, however. And as we're about to see, even those few didn't deserve the buy ratings...

Let's focus in on a couple of the higher-profile plays on eating out: Pizza Hut operator Yum! Brands (NYSE: YUM  ) and Cheesecake Factory (NASDAQ: CAKE  ) . Taking them one at a time...

Yum! Brands
According to the financial number-crunchers at, Yum! sports a 23.4 P/E ratio. Finviz's assertion that Yum! costs nearly 66 times free cash flow, however, is a bit off. In actual fact, S&P Capital IQ data confirm that the stock's only trading for about 34 times its annual cash profits.

But even so -- that's a higher valuation than the P/E makes things seem. And given that Yum! only pays a 1.9% dividend yield, and is only expected to grow its earnings at about 11% annually over the next five years, any way you look at it, the price on this stock looks much, much higher than it should be to offer investors a decent chance at earning a profit from investing in it.

Long story short, I'm going to have to disagree with Stifel. Yum! Brands is fully as overpriced as I said it was earlier this month.

Cheesecake Factory
At first glance, Cheesecake Factory bears a similar valuation to Yum!'s. Its P/E is almost a mirror image of Yum!'s at 23.4 times earnings. The Factory has a couple of things working in its favor, however, that Yum! Brands lacks.

For one thing, it's generating more free cash flow than it reports as net income under GAAP, rather than less. $114 million in cash profits generated last year gives Cheesecake Factory a more palatable 20-times-FCF valuation on its stock.

Cheesecake Factory is also growing faster than Yum!, with an expected growth rate approaching 14%. And Cheesecake Factory has no net debt, versus the $1.5 billion more debt than cash on Yum!'s balance sheet.

All in all, I find Cheesecake Factory a tastier investing proposition than Yum!. It's still not cheap enough to entice me personally, but I like it a lot more than Stifel's Yum! pick.

Buffalo Wild Wings
Now, let's wrap up with the big restaurant downgrade of the day. R.W. Baird cut its rating on Buffalo Wild Wings one notch, to "neutral," this morning. It also clipped $7 off its targeted stock price, lowering that to $105. That's the good news. The bad news is that while Baird was right to downgrade, it didn't cut Buffalo Wild far enough.

Costing more than 34 times earnings today, Buffalo Wild is, on its face, too expensive for the 18% earnings growth estimates that Wall Street assigns it. With no dividend to redeem it, the shares are clearly overpriced.

Even worse than the lack of a dividend at Buffalo Wild, however, is the lack of any free cash flow whatsoever with which to pay a dividend. Over the past 12 months, this restaurant chain reported earning more than $55 million. But its cash flow statement clearly shows that the firm actually burned through more than $10 million in free cash flow.

Put another way, its business ate cash, rather than serving it up to shareholders. To my mind, that's no way to run a business. It's no way to run a restaurant, either. And it means Baird was right to downgrade this stock... and probably should have downgraded Buffalo Wild Wings even more steeply than it did.

Fool contributor Rich Smith has no position in any stocks mentioned. The Motley Fool recommends and owns shares of Buffalo Wild Wings and Panera Bread.

Tuesday, July 16, 2013

Tesla Motors: 3 Numbers to Watch

Tesla retail store in Frankfurt, Germany. Source: Tesla Motors.

In the first quarter of 2013, Tesla Motors (NASDAQ: TSLA  ) stepped into the limelight. Reporting its first profitable quarter and sales of 4,900 vehicles, this electric-vehicle manufacturer is now a formidable competitor to U.S. luxury-auto manufacturers. Meanwhile, the market has taken notice. Tesla's stock is up about 275% year to date. Expectations are undoubtedly very high. In order to meet these expectations or (even better) outperform them, this electric-car manufacturer is going to need to succeed internationally.

Unfortunately, tracking Tesla's international potential is still a work in progress. But, for investors attempting to gauge the company's opportunity in international markets early on, here are three numbers to watch.

International store openings
After Tesla's success in the U.S., it has proven to offer consumers -- or at least a large number of early adopters -- a convincing value proposition. So an international presence in a country with an affluent population would be, by itself, a definite driver of international sales.

In fact, word of mouth alone should work as an important growth driver for the Model S internationally. As the company noted in its Q1 letter to shareholders, "We are seeing orders in a particular region increase proportionate to the number of deliveries, which means that customers are selling other customers on the car. Given that we have not yet delivered any customer cars outside of North America, there would appear to be significant upside potential in Europe and Asia."

Therefore, store openings that signal Tesla's intention to enter a particular market, combined with word of mouth, should serve as definite drivers of growth for international sales.

At the end of Q1, Tesla had 34 stores and galleries around the world and intends to open 15 more this year, with about half of them in Europe and Asia. This is an obvious indication that Tesla is taking its international expansion in these two regions seriously.

International sales numbers
Very little meaningful information regarding Tesla's success in Europe has surfaced yet, but multiple reports indicate that the company is on schedule to begin deliveries in Europe this month, and to ramp up Asia deliveries in July. A March 5 comment from Tesla CEO Elon Musk indicated a bullish outlook from the company regarding sales in Europe, potentially signaling strong orders in the region: "The European market is very well suited to the design intent behind our vehicles. Our focus is to combine design, engineering and performance with a forward-looking influence toward clean energy and sustainability."

One number did surface, however, that pointed to meaningful demand in Hong Kong. A July 5 Bloomberg report said that Tesla has "received hundreds of orders for its new Model S sedan in Hong Kong, enough to double the number of electric cars in the city." Kenneth Lui, Tesla Hong Kong sales manager, explained: "Our number is over all electric cars in Hong Kong combined." According to an April report from Hong Kong's Transport Department, Hong Kong had 303 registered private electric cars. This means Tesla has already received about 300 orders for the new Model S sedan several quarters before deliveries begin.

As these numbers continue to roll out, Tesla investors should keep a close eye.

Production rate
In the first-quarter letter to shareholders, Tesla noted that it was producing 400 vehicles per week, with an expectation to produce about 21,000 vehicles for the full year of 2013. Great, right? Not really. Trading at about 15 times sales, Tesla is going to need to ramp up production rapidly to meet investor expectations.

The company recently told Bloomberg that it is very confident that it will get to 800 vehicles per week by late 2014. This makes for about 38,400 vehicles annually -- still far from the several hundred thousand vehicles per year the company expects to produce someday after it releases the $30,000 model that Musk asserts will come to the market in about three to four years.

Investors should keep a close eye on the company's comments regarding current and projected weekly production rates. Obviously the farther out the projection, the less useful it is, but a projection of production rates one year out is definitely a useful indicator of the company's interpretation of its global demand.

The Model S is going global
For Tesla, 2012 was the year of the Model S. And 2013? "This year, we are on a journey to expand the presence of the Model S and turn profitable," states Tesla's 2012 annual letter to shareholders.

With the stock trading at a significant premium, obvious drivers of growth, such as Tesla's opportunities in Europe and Asia, are mostly already priced in. So the company's international expansion definitely should not be the sole merit behind a decision to invest in the stock, but it's definitely an area to watch closely.

Trends in store openings, international sales, and production rates should appear exponential in order for the company to have a shot at growing into its valuation. Next quarter, in particular, will be a very important quarter for these three numbers as the company begins to accept orders and make deliveries in international markets. Tesla's projections for these three areas will help investors gauge the company's internal interpretation of its international opportunity.

Is Tesla stock to hot for you?
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Top Cheap Companies For 2014

The stock market can be a wonderful thing, helping you grow your wealth and enjoy a comfortable retirement. But it can also fry your precious nest egg if you're not careful. My colleague Morgan Housel has noted that the financial industry "is dominated by cranks, charlatans, and salesmen" -- but very often, we're the ones who most endanger our portfolios and our financial futures with our reckless investment ideas. Permit me to review just a few.

"Wow, this cheap stock is only $0.13 per share! I can buy 10,000 shares for just $1,300!"
Penny stocks -- those trading for less than about $5 per share -- are usually very bad investment ideas, as they can be easily manipulated and are often tied to shaky, unproven companies. Sure, they entice us with their seemingly cheap prices, and the thought of owning 10,000 shares of something is somehow more exciting than owning far fewer shares. But a low price isn't necessarily a cheap price. A $200 stock can be undervalued and more likely to rise than fall while a $0.13 stock can be worth much less than that and be more likely to fall than rise.

Top Cheap Companies For 2014: Hewlett-Packard Company(HPQ)

Hewlett-Packard Company and its subsidiaries provide products, technologies, software, solutions, and services to individual consumers and small- and medium-sized businesses (SMBs), as well as to the government, health, and education sectors worldwide. Its Personal Systems Group segment offers commercial personal computers (PCs), consumer PCs, workstations, calculators and other related accessories, and software and services for the commercial and consumer markets. The company?s Services segment provides consulting, outsourcing, and technology services to infrastructure, applications, and business process domains. Its Imaging and Printing Group segment provides consumer and commercial printer hardware, supplies, media, and scanning devices, such as inkjet and Web solutions, laser jet and enterprise solutions, managed enterprise solutions, graphics solutions, and printer supplies. The company?s Enterprise Servers, Storage, and Networking segment offers industry standard s ervers, business critical systems, storage platforms, and networking products, including switches, routers, wireless LAN, and TippingPoint network security products. Its HP Software segment provides enterprise IT management software, information management solutions, and security intelligence/risk management solutions. The company?s HP Financial Services segment offers leasing, financing, utility programs, and asset recovery services; and financial asset management services for enterprise customers, as well as specialized financial services to SMBs, and educational and governmental entities. Hewlett-Packard Company also provides business intelligence solutions that enable businesses to standardize on consistent data management schemes, connect and share data across the enterprise, and apply analytics, as well as licenses its specific technology to third parties. The company was founded in 1939 and is headquartered in Palo Alto, California.

Advisors' Opinion:
  • [By Smart Money]

    Forward P/E: 9.2.


    Five-year average forward P/E: 13.8.

    Discount to five-year average: 33%.

    As the world's biggest maker of personal computers and printers, Hewlett-Packard (HPQ) has two knocks against it -- neither of its major markets is particularly attractive these days, says Kim Caughey, senior analyst at Fort Pitt Capital Group in Pittsburgh.

    "In the PC market, HP is fighting deflation," Caughey says. "Next year's hardware is always going to be faster, better, cheaper."

    The Palo Alto, Calif., company's printer and printing business is suffering as companies downsize, she says; fewer workers translates into less printing.

    Even worse is what could happen to HP's margins as demand grows for tiny, cheap netbook computers. "I'm looking into people's pockets and I believe they will be sending their kids back to school with netbooks," says Caughey. "The (profit) margin on netbooks is terrible."


    That's part of the bigger problem with a company as consumer-focused as HP. If folks don't have the money, they can't spend it. For that reason, Caughey thinks Hewlett-Packard's shares, while valued at a low multiple, are unattractive.

  • [By Jon C. Ogg]

    Hewlett-Packard Co. (NYSE: HPQ) was the worst story of all 30 DJIA stocks in 2013. Unfortunately, what was bad is expected to get worse in 2013. With a downside price target of $13.53, HP shares are now expected to fall just over 5%, even with this yielding 3.5% now. HP’s woes do not stop with the Autonomy acquisition woes. Meg Whitman has fired many employees but warned that a real turnaround might not take hold until all the way into 2016. We expect more asset sales and ultimately more layoffs. HP’s position was not helped out after it became known that famous short sellers are continuing to bet against this PC and IT-services giant.

Top Cheap Companies For 2014: Corporation(LOCM) Corporation operates as an Internet search advertising company that enables businesses and consumers to find each other and connect locally. Its Owned and Operated business unit manages its flagship online property and a proprietary network of approximately 20,000 local Websites that reach approximately 15 million monthly unique visitors. The company places various display, performance, and subscription advertisement products on its and proprietary network. Its Network business unit operates a private label local syndication network of approximately 1,000 U.S. regional media Websites; 80,000 third-party local Websites; and its own organic feed of local businesses plus third-party advertising feeds that focus primarily on local consumers to a distribution network of hundreds of Websites. The company?s Sales and Ad Services business unit provides approximately 45,000 direct monthly subscribers with Web hosting or Web listing products. The compan y was formerly known as Interchange Corporation and changed its name to Corporation in November 2006. Corporation was founded in 1999 and is headquarters in Irvine, California.

Best Stocks To Buy For 2014: TranSwitch Corporation(TXCC)

Transwitch Corporation designs, develops, and supplies semiconductor and intellectual property solutions for voice, data, and video communications equipment. The company provides integrated multi-core network processor system-on-a-chip (SoC) and software solutions for fixed, 3G and 4G mobile, VoIP, and multimedia infrastructures. It offers converged network infrastructure products, including infrastructure VoIP processors comprising Entropia series of processors for wire-line and wireless carrier equipment; EoS/EoPDH mappers and framers for formats and data speeds in the access portion of the network; tributary switches that enable traffic to be switched or re-arranged; and carrier Ethernet solutions consisting of Ethernet controllers and switches, as well as circuit emulation and clock recovery devices. The company also provides FTTx protocol processors, such as mustang, a system-on-chip solution for EPON optical network unit equipment; COLT processor, a system-on-chip so lution for the optical line terminator equipment; and Diplomat-ONT product, an integrated SoC solution for GPON ONU applications, as well as access VoIP processors and access controllers. In addition, it offers broadband customer premises equipment, including multi-service communications processors comprising Atlanta processor, a multi-service SoC for customer premises equipment that supports toll-quality telephone voice, fax, and routing functionality; and HDMI, displayport, HDP, and Ethernet IP cores for consumer electronics, home network equipment, and industrial and automotive applications. The company serves public network systems OEMs, WAN and LAN equipment OEMs, Internet-oriented OEMs, and communications test and performance measurement equipment OEMs, as well as government, university, and private laboratories. It sells its products through direct sales force, independent distributors, and sales representatives. The company was founded in 1988 and is headquartered in Shelton, Connecticut.

Advisors' Opinion:
  • [By Michael Brush]

    If you find yourself craving more high-definition video on your smartphone or tablet computer or if you've been checking out 3D televisions -- the next big trend -- you already know why TranSwitch (TXCC) stock should be a winner over the next few years.

    Once a techmania darling, trading at more than $500 a share, TranSwitch crashed and burned along with so many other Internet stocks. It has been all but left for dead since. Wall Street analysts are predicting the stock will actually have fallen to $2 a year from now, from recent levels of around $2.60, according to Thomson Reuters.

    What they're missing is that TranSwitch has revamped its chip offerings so they support high-definition video connections in TVs, PC and game monitors, smartphones, tablets and video cameras. This exposes the company to some big consumer trends. Another new product line supports gear that connects homes, offices and smartphones to the Internet.

    Those analysts and other investors don't put much faith in these new products. So why should you? Because the right kinds of insiders have been accumulating stock. Many of the new products are scheduled to hit the market over the next three months and generate meaningful sales by the fourth quarter. So now is the time to buy.

    Of course, we don't know for sure that TranSwitch's new products will catch on. But behind the scenes, they've been licensed by the likes of Intel (INTC), International Business Machines (IBM), Texas Instruments (TXN) and Analog Devices (ADI),  Ted Chung, the TranSwitch vice president of global business development, tells me. That suggests TranSwitch may work its way into the Apple (AAPL) iGadget ecosystem, says Northland Capital Markets analyst Richard Shannon. That would be a game-changer for tiny TranSwitch, but the markets for its new products are so big that it probably can win even without such an advantage. 

  • [By Michael Brush]

    If you find yourself craving more high-definition video on your smartphone or tablet computer or if you've been checking out 3D televisions -- the next big trend -- you already know why TranSwitch (TXCC) stock should be a winner over the next few years.

    Once a techmania darling, trading at more than $500 a share, TranSwitch crashed and burned along with so many other Internet stocks. It has been all but left for dead since. Wall Street analysts are predicting the stock will actually have fallen to $2 a year from now, from recent levels of around $2.60, according to Thomson Reuters.

    What they're missing is that TranSwitch has revamped its chip offerings so they support high-definition video connections in TVs, PC and game monitors, smartphones, tablets and video cameras. This exposes the company to some big consumer trends. Another new product line supports gear that connects homes, offices and smartphones to the Internet.

    Those analysts and other investors don't put much faith in these new products. So why should you? Because the right kinds of insiders have been accumulating stock. Many of the new products are scheduled to hit the market over the next three months and generate meaningful sales by the fourth quarter. So now is the time to buy.

    Of course, we don't know for sure that TranSwitch's new products will catch on. But behind the scenes, they've been licensed by the likes of Intel (INTC), International Business Machines (IBM), Texas Instruments (TXN) and Analog Devices (ADI), Ted Chung, the TranSwitch vice president of global business development, tells me. That suggests TranSwitch may work its way into the Apple (AAPL) iGadget ecosystem, says Northland Capital Markets analyst Richard Shannon. That would be a game-changer for tiny TranSwitch, but the markets for its new products are so big that it probably can win even without such an advantage

Top Cheap Companies For 2014: 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.

Weak Earnings and Future Inflation Fears Pull Stocks Lower

The major U.S. markets are moderately lower this afternoon. As of 12:50 p.m. EDT the Dow Jones Industrial Average (DJINDICES: ^DJI  ) is down 42 points, or 0.27%, while the S&P 500 has lost 0.45% and the Nasdaq is 0.33% lower. Earlier today it was reported that homebuilder confidence is now at its highest level in seven and a half years and that industrial production rose in June. But investors are now seeing signs that the economy may not be as strong as it seems and may face serious challenges in the future. A few earnings reports (more on those below) and inflation concerns are sending stocks lower today. The Bureau of Labor Statistics released its Consumer Price Index today, reporting that prices rose 0.5% in June. While the bulk of the increase owed to higher energy prices, which rose 3.4%, the CPI is up 1.6% over the past year, and when you take out food and energy, the core CPI rose 0.2% in June. 

On to earnings
As earnings season marches on, two Dow components released results this morning. Coca-Cola (NYSE: KO  ) reported earnings of $0.63 per share when excluding one-time items, which is in line with expectations, but it missed Wall Street's estimated revenue of $12.95 billion, posting sales of $12.75 billion. The company cited "bad weather" as a reason for its weakness. Its overall volume rose, even as its key product, sodas, realized a 4% volume decline. Shares of Coke are down 1.4% at the time of writing. 

Johnson & Johnson (NYSE: JNJ  ) also delivered quarterly results, beating estimates on both the top and bottom lines -- yet shares are nonetheless flat this afternoon. Johnson posted ex-item earnings of $1.48 per share on revenue of $17.88, topping expectations of $1.39 in EPS and $17.72 billion in revenue. But despite beating the Street, the management team did note a number of times during the conference call that the company is experiencing pricing pressure from the government and insurance payers. Additionally, the company cited changes in the "dynamic global macroeconomic environment" as a reason to be concerned about revenue growth. 

Although Disney (NYSE: DIS  ) has not yet announced second-quarter earnings -- they're scheduled to be released on Aug. 6 -- shares are down 1.3% today. The drop may be a continuation of yesterday's decline; the stock lost 1.6% on to lead the Dow's laggards yesterday after The Lone Ranger's second weekend at the box office turned out to be a massive disappointment. The movie, which is estimated to have cost the studio about $250 million, has only brought in just more than $70 million after two weeks in theaters. 

That may sound like a big hit to Disney's bottom line, but don't forget that Disney is a veritable empire of successful brands and businesses, including networks like the highly profitable ESPN. However, the television landscape is changing quickly, with new entrants like Netflix and disrupting traditional networks. The Motley Fool's new free report "Who Will Own the Future of Television?" details the risks and opportunities in TV. Click here to read the full report!

Top Companies To Own For 2014

For companies that have oil sands assets, it hasn't been a good year so far. Marathon Oil (NYSE: MRO  ) just announced that the company couldn't get any takers for a 25% interest in its oil sands project. Not that it keeps Marathon from trying again, but it will be difficult. In the past year, three major oil sands exploration companies have either shelved expansion projects or have completely pulled out of the region.�

With oil sands trading at a deep discount to other North American oil sources, exploration companies aren't seeing the value in oil sands today. In this video, contributors Tyler Crowe and Aimee Duffy discuss the woes of oil sands and what it will take to get them going again.

Oil sands may not be the place right now for investors, but there are many different ways to play the energy sector, and The Motley Fool's analysts have uncovered an under-the-radar company that's dominating its industry. This company is a leading provider of equipment and components used in drilling and production operations and is poised to profit in a big way from it. To get the name and detailed analysis of this company that will prosper for years to come, check out the special free report: "The Only Energy Stock You'll Ever Need." Don't miss out on this limited-time offer and your opportunity to discover this company before the market does. Click here to access your report -- it's totally free.

Top Companies To Own For 2014: Goldcliff Resource Corporation(GCN.V)

Goldcliff Resource Corporation, a junior exploration company, engages in the acquisition and exploration of mineral properties in Canada. It holds 100% interests in the Panorama Ridge gold project covering an area of 8,980 hectares, located in the Nickel Plate mining district, Osoyoos Mining Division, British Columbia; and the Ainsworth silver project that covers an area of 10,280 hectares, located in the Kootenay mining district, Slocan Mining Division, British Columbia. The company also holds 100% interests in the Tulameen copper project comprising 26,333 hectares, located in the Princeton mining district, Similkameen Mining Division, British Columbia. Goldcliff Resource Corporation was founded in 1986 and is based in Vancouver, Canada.

Top Companies To Own For 2014: Cullen Resources Ltd(CUL.AX)

Cullen Resources Limited explores for mineral properties in Australia. It focuses its exploration activities on gold, iron, copper, nickel, uranium, tungsten, lead, zinc, coal, and other base metals. The company primarily holds interest in the Catho Well Channel Iron deposit in the West Pilbara of Western Australia, as well as in properties located in New South Wales, Queensland, and Northern Territory. The company is based in South Perth, Australia.

Top 10 Consumer Service Stocks For 2014: MHI Hospitality Corporation(MDH)

MHI Hospitality Corporation, a real estate investment trust (REIT), engages in the ownership and operation of upper upscale and midscale hotels in the mid-Atlantic and southeastern United States. As of March 15, 2006, the company operated seven upper upscale and midscale hotels with 1,673 rooms under the brand names ?Hilton? and ?Holiday Inn?. It also owns leasehold interests in the commercial spaces of the Shell Island Resort, a condominium resort property. The company has elected to be treated as a REIT for federal income tax purposes. As a REIT, it would not be subject to federal income tax, provided it distributes at least 90% of its taxable income to its shareholders. MHI Hospitality has strategic alliance agreement with MHI Hotels Services LLC. The company was founded in 1957 and is based in Williamsburg, Virginia.

3 Stocks With Heavy Insider Interest

Does a rising tide lift all boats? No, but it does lift most of them. 

Some stocks aren't getting much attention in this surging bull market, and it's often up to insiders to help these stocks get attention. 

Here are three stocks with recent solid clusters of insider buying. (All data is courtesy of

Calamos Asset Management (Nasdaq: CLMS)
I've come across this asset management firm on several occasions in recent months, as it has appeared on my screens regarding companies with share buybacks, strong free cash flow yields, solid dividend yields and a valuation near book value.

Now you can add insider buying to that list. Company founder John Calamos Sr., who launched the firm in the 1970s, has been actively buying shares for two straight months. In that time, he's picked up more than 300,000 shares at an average price of around $10.50 a share. That's boosted his entire ownership stake above 1.5 million shares, which now makes him the largest shareholder, along with Alpine Investment Management.

This buying comes after shares have slid 25% over the past two years, at a time when the S&P 500 has risen 25%. And you can chalk that underperformance up to a slump in Calamos' domestic stock funds, which has caused some investors to flee. Assets under management fell from $36 billion in March 2012 to $29 billion in March 2013. The heavy recent insider buying suggests that the bleeding has ended and that a pair of recently launched funds is gaining traction. Keep an eye out for these trends when quarterly results are released in early August, as the deep value metrics for this stock could help attract fresh investor attention.

Lionbridge Technologies (Nasdaq: LIOX)
"We need to grow and shrink." That was the seemingly mixed message put forth on a recent conference call by executives at Lionbridge. They were referring to the need to hire an outside executive to help drive top-line growth -- while also implementing plans to shave $5 million to $7 million from its cost structure.

You can understand their reasoning by glancing at Lionbridge's income statement. Sales of $457 million and operating income of $10 million were identical to figures posted back in 2007. Yet a look at this company's business model suggests that growth and operating margins should be more impressive.

Lionbridge provides a variety of language translation services to large enterprises. The company employs legions of bilingual translators to help with documents, meetings and other corporate functions and also provides automated language translation tools that companies can use on their websites. Considering the speed with which companies are entering new global markets. Lionbridge should be seeing strong demand. The company attributes the lack of sales growth to ongoing weakness in Europe, where major companies are holding back on discretionary spending.

If you dig into the transcript of Lionbridge's recent conference call, however, you'll see the seeds of a rebound. Microsoft (Nasdaq: MSFT), for example, is utilizing the company's services in many of its foreign markets as it rolls out Windows 8, which exemplifies the company's desire to get away from specific short-term one-off projects and instead participate in longer-term business development programs.

The bullish tone of the quarterly discussion was enough to spark the interest of Glenhill Capital, which began aggressively buying the stock in May and now owns more than 10% of the company, qualifying this investment management firm as an "insider." 

To justify Glenhill's purchases, Lionbridge will need to start generating firmer profit margins, either through those planned cost cuts or through organic revenue growth. If margins do strengthen, many other investors will take note of the sub-$200 million market value for a firm that has a revenue base exceeding $400 million.

Synta Pharmaceuticals (Nasdaq: SNTA)
After plunging from $10 in April to a recent $5.20, insiders have been actively buying up shares of this cancer-focused biotech drug developer. The bulk of the purchases, representing seven different insiders and more than 2 million shares, have come in the $4.50 to $5 range.

Synta has been testing ganetespib, which targets non-small cell lung cancer (NSCLC). Shares tumbled after the release of Phase II testing that showed decent though unspectacular levels of efficacy. Biotech investors often need to see robust Phase II data if they are to stick around through several more years of clinical trials.

Yet the insider buying seems to corroborate the sentiment of several analysts that ganetespib still holds a great deal of promise, since it did extend patients' lives by several months and had a fairly solid safety profile. 

"The bottom line is that this trial is not yet completed," noted analysts at MLV & Co. "We believe that this drug will eventually show substantial clinical benefit." 

Later in the third quarter (or early in the fourth quarter), Synta is expected to reveal deeper data sets for the current Phase II trials, and presumably positive ongoing data regarding patient survival rates is the factor behind the strong level of insider buying.

Risks to Consider: These insiders appear to be pegging their hopes on improved data in coming months, and if that doesn't happen, shares will continue to languish.

Action to Take --> We'll get a clear read on how these companies are progressing in coming months, but the recent heavy insider buying at each company could signal that the worst has passed and better days lie ahead.

P.S. -- Insiders are expecting big things from these little-known companies. My colleague Andy Obermueller has similar expectations for a tiny soda company that's threatening to supplant Coke and Pepsi. You can find the name of this company -- and 10 other bold investment calls -- in his new report, "The 11 Most Shocking Investment Predictions For 2014." 

Monday, July 15, 2013

Can Earnings Push Johnson & Johnson to New Heights?

Johnson & Johnson (NYSE: JNJ  ) is scheduled to release its quarterly earnings report tomorrow, and as a huge health-care conglomerate with a strong presence in consumer health-care products, medical devices, and pharmaceuticals, the company has drawn investors' interest throughout 2013, gaining about 30% year to date. Even as its competitors -- including some of its compatriots among the Dow Jones Industrials (DJINDICES: ^DJI  ) -- have looked to break themselves into smaller parts, J&J has thus far held itself together as a giant in the industry.

As J&J's share price has risen, though, so too have concerns that the company's stock may be getting ahead of its fundamental growth prospects. With economic challenges facing the company throughout the world, can it produce enough earnings growth to make investors happy? Let's take an early look at what's been happening with Johnson & Johnson over the past quarter and what we're likely to see in its quarterly report.

Stats on Johnson & Johnson

Analyst EPS Estimate


Change From Year-Ago EPS


Revenue Estimate

$17.71 billion

Change From Year-Ago Revenue


Earnings Beats in Past 4 Quarters


Source: Yahoo! Finance.

How can Johnson & Johnson make its earnings grow faster?
Analysts have grown somewhat more optimistic about Johnson & Johnson's earnings prospects in recent months, keeping their quarterly estimates stable but adding a penny per share to their full-year 2013 estimates and $0.02 per share to next year's earnings consensus. The stock has continued its run, rising more than 10% since early April.

J&J has plenty of things going for it to justify shareholders' enthusiasm about the stock. The company has strong brands across its three major segments, and it's one of few companies that have maintained a triple-"A" bond rating.

In particular, J&J's pharmaceuticals division has shown a lot of potential lately. The pharma giant had its Invokana treatment for type 2 diabetes approved in late March, and J&J hopes it will be able to knock Merck's (NYSE: MRK  ) Januvia off its pedestal in the diabetes space. Studies showed Invokana to be superior to Januvia, and if current long-term safety trials confirm the drug's safety and effectiveness, then it could seriously diminish Januvia's blockbuster-sales status. When you add Invokana to other drugs approved in the past few years, including the promising TNF-alpha inhibitor Simponi and prostate cancer drug Zytiga, J&J has the potential to lift the success of its newer drugs immensely in the next year.

Yet J&J isn't satisfied with what it already has. Last week, the company joined with Pharmacyclics (NASDAQ: PCYC  ) to seek approval for their lymphoma drug ibrutinib. J&J will get a 50% share of any profit from the venture, and J&J cited a Piper Jaffray estimate that just one of its indications could produce sales of more than $4 billion.

Still, J&J faces plenty of competition. In addition to obvious players in the pharma and medical-device space, conglomerate 3M (NYSE: MMM  ) has also sought to use its reputation for innovation to come up with advances in the health-care space. Yet even though 3M generates plenty of revenue from its products, which include everything from pathogen testing and health-information management systems to adhesive surgical tape, J&J has done a good job of holding back the potential rival by serving the widest variety of health-care needs.

When Johnson & Johnson announces its earnings, watch closely for signs of how the company's consumer segment is doing. With pharma being somewhat more volatile in terms of approvals and rejections that can have a big immediate impact on results, J&J must solidify its hold on its bread-and-butter consumer-products sales. Taking that business for granted would be a big mistake for J&J.

One area that will definitely affect J&J in the future is Obamacare, but many people still don't understand exactly what the program will do to them and their own portfolios. The Motley Fool's special report, "Everything You Need to Know About Obamacare," takes a 360-degree look at how the law may impact your taxes, health insurance, and investments. Click here to grab your free copy today.

Click here to add Johnson & Johnson to My Watchlist, which can find all of our Foolish analysis on it and all your other stocks.