Tuesday, April 29, 2014

Top Casino Companies To Own For 2015

The casino industry can be one of the most rewarding business segments for investors seeking high returns on capital and long-term profits. Investment gurus Andreas Halvorsen (Trades, Portfolio) and Ken Fisher (Trades, Portfolio) recently bought fair amounts of Las Vegas Sand Corp (LVS)�shares, probably due to the company�� strong performance in the past years. Sand Corp is the world�� largest operator of integrated resorts, with a blend of casino, hotel, entertainment, food, beverage, retail and convention centre operations. Some of the most famous company-owned venues include Sands Macao, Venetian Macao, Sands Cotai Central and Four Seasons Hotel Macao in China, as well as the Marina Bay Sands resort in Singapore and the Palazzo Las Vegas in the U.S.

The Asian Treasure Hunt

One of Sand Corp�� key growth catalysts is and continues to be its presence in the Asian market, which generates 85% of the company�� total revenue. China�� Macao Cotai Strip has been the firm�� focus for several years now, and given it�� the only place in China where gambling is legal, holding a market position is crucial. Today, Sands is one of six companies licensed casino operators, and owns 50% of all gambling tables on the Strip. Furthermore, the mass market growth is significant for the company�� profitability, as Sands China receives 75% of its cash flow from this segment. Projections for the future years are bright, as 2013 marked a 30% growth of the mass market, compared to the VIP market, which only registered 5% to 10% growth. Also, the company�� 25% market share of the Macao Strip will grow even more after 2015, when the Parisian resort opens its doors.

Top Casino Companies To Own For 2015: Wynn Macau Ltd (WYNMF)

Wynn Macau, Limited is a holding company. The Company, along with its subsidiaries, is a developer, owner and operator of destination casino gaming and entertainment resort facilities in Macau. Its operating subsidiary, Wynn Resorts (Macau) S.A. (WRM), owns and operates destination casino resort Wynn Macau in Macau. As of December 31, 2011, it had 265,000 square feet of casino space, offering 24-hour gaming with a range of games, and two luxury hotel towers with 1,008 spacious rooms and suites. It also offers eight casual and fine dining restaurants, 54200 square feet of stores and boutiques, such as Bvlgari, Chanel, Dior, Gucci, Hermes, Hugo Boss, Louis Vuitton, Miu Miu, Piaget, Prada, Rolex, Tiffany, Vacheron Constantin, Van Cleef & Arpels, Versace, Vertu and others, two health clubs and spas, a salon, a pool, and lounges and meeting facilities. As of December 31, 2011, its subsidiaries included Wynn Resorts International, Ltd., Wynn Resorts (Macau) Holdings, Ltd. and others. Advisors' Opinion:
  • [By MARKETWATCH]

    HONG KONG (MarketWatch) -- Hong Kong stocks sold off early Thursday after the Federal Reserve decided to further taper stimulus, and after a final reading of China's manufacturing PMI contracted. The Hang Seng Index (HK:HSI) sank 1.5% to 21,815.04 in holiday-shortened trading. Tech stocks retreated, as Chinese PC maker Lenovo Group Ltd. (HK:992) (LNVGF) dropped 5.3%, failing to get a lift from news that it plans to acquire the Motorola handset business from Google Inc. (GOOG) for $2.91 billion as Lenovo aims for a bigger presence in the U.S. market. Software developer Kingsoft Corp. (HK:3888) (KSFTF) fell 1.9% and Internet giant Tencent Holdings Ltd. (HK:700) (TCTZF) dropped 1.5%. Casino stocks also declined. Sands China Ltds. (HK:1928) (SCHYF) , the Hong Kong-listed unit of Las Vegas Sands Corp. (LVS) , slipped 0.2%, despite financial results that showed Sands China's net income increased 40% year-on-year to $467 million in the fourth quarter. Melco Crown Entertainment Ltd. (HK:6883) (MPEL) slumped 3.2%, and both Wynn Macau Ltd. (HK:1128) (WYNMF) and MGM China Holdings Ltd. (HK:2282)

Top Casino Companies To Own For 2015: Caesars Entertainment Corp (CZR)

Caesars Entertainment Corporation, incorporated on November 2, 1989, is a diversified casino-entertainment provider. The Company�� business is primarily conducted through a wholly owned subsidiary, Caesars Entertainment Operating Company, Inc. (CEOC), although certain material properties are not owned by CEOC. As of December 31, 2012, it owned, operated, or managed, through various subsidiaries, 52 casinos in 13 United States states and seven countries. The majority of these casinos operate in the United States, primarily under the Caesars, Harrah��, and Horseshoe brand names, and in England. In November 2012, the Company sold its Harrah's St. Louis casino to Penn National Gaming, Inc. In December 2012, the Company purchased all of the net assets of Buffalo Studios, LLC, a social and mobile games developer and owner of Bingo Blitz.

The Company�� casino entertainment facilities include 33 land-based casinos, 11 riverboat or dockside casinos, three managed casinos on Indian lands in the United States, one managed casino in Cleveland, Ohio, one managed casino in Canada, one casino combined with a greyhound racetrack, one casino combined with a thoroughbred racetrack, and one casino combined with a harness racetrack. The Company�� land-based casinos include nine in England, two in Egypt, one in Scotland, one in South Africa and one in Uruguay. As of December 31, 2012, its facilities had an aggregate of approximately three million square feet of gaming space and approximately 43,000 hotel rooms. In southern Nevada, Caesars Palace, Harrah�� Las Vegas, Rio All-Suite Hotel & Casino, Bally�� Las Vegas, Flamingo Las Vegas, Paris Las Vegas, Planet Hollywood Resort and Casino, The Quad Resort & Casino (formerly the Imperial Palace Hotel and Casino), Bill�� Gamblin��Hall & Saloon, and Hot Spot Oasis are located in Las Vegas and draw customers from throughout the United States. Harrah�� Laughlin is located near both the Arizona and California borders and draws customers primarily from! the southern California and Phoenix metropolitan areas and, to a lesser extent, from throughout the United States through charter aircraft. In northern Nevada, Harrah�� Lake Tahoe and Harveys Resort & Casino are located near Lake Tahoe and Harrah�� Reno is located in downtown Reno. These facilities draw customers primarily from northern California, the Pacific Northwest, and Canada.

The Company�� Atlantic City casinos, Harrah�� Resort Atlantic City, Showboat Atlantic City, Caesars Atlantic City, and Bally�� Atlantic City, draw customers primarily from the Philadelphia metropolitan area, New York, and New Jersey. Harrah�� Philadelphia (formerly Harrah's Chester) is a combination harness racetrack and casino located approximately six miles south of Philadelphia International Airport and draws customers primarily from the Philadelphia metropolitan area and Delaware. The Company�� Chicagoland dockside casinos, Harrah�� Joliet in Joliet, Illinois, and Horseshoe Hammond in Hammond, Indiana, draw customers primarily from the greater Chicago metropolitan area. In southern Indiana, it owns Horseshoe Southern Indiana, a dockside casino complex located in Elizabeth, Indiana, which draws customers primarily from northern Kentucky, including the Louisville metropolitan area, and southern Indiana, including Indianapolis. In Louisiana, the Company owns Harrah�� New Orleans, a land-based casino located in downtown New Orleans, which attracts customers primarily from the New Orleans metropolitan area. In northwest Louisiana, Horseshoe Bossier City, a dockside casino, and Harrah�� Louisiana Downs, a thoroughbred racetrack with slot machines, both located in Bossier City, cater to customers in northwestern Louisiana.

The Company owns the Grand Casino Biloxi, located in Biloxi, Mississippi, which caters to customers in southern Mississippi, southern Alabama, and northern Florida. Harrah�� North Kansas City dockside casino draws customers from the Kansas City metropolitan ar! ea. Harra! h�� Metropolis is a dockside casino located in Metropolis, Illinois, on the Ohio River, drawing customers from southern Illinois, western Kentucky, and central Tennessee. Horseshoe Tunica, Harrah�� Tunica, and Tunica Roadhouse Hotel & Casino, dockside casino complexes located in Tunica, Mississippi, are approximately 30 miles from Memphis, Tennessee and draw customers primarily from the Memphis area and, to a lesser extent, from throughout the United States through charter aircraft. Horseshoe Casino and Bluffs Run Greyhound Park, a land-based casino and pari-mutuel facility, and Harrah�� Council Bluffs Casino & Hotel, a dockside casino facility, are located in Council Bluffs, Iowa, across the Missouri River from Omaha, Nebraska. At Horseshoe Casino and Bluffs Run Greyhound Park, the Company owns the assets other than gaming equipment, and leases these assets to the Iowa West Racing Association (IWRA), a nonprofit corporation, and it manages the facility for the IWRA under a management agreement expiring in October 2024. The license to operate Harrah�� Council Bluffs Casino & Hotel is held jointly with IWRA, the qualified sponsoring organization.

The Conrad Resort & Casino located in Punta Del Este, Uruguay (the Conrad), draws customers primarily from Argentina and Uruguay. In November 2012, the Company announced that it had entered into a definitive agreement with Enjoy S.A. (Enjoy) to form a strategic relationship in Latin America. Under the terms of the agreement, Enjoy will acquire 45% of Baluma S.A., its subsidiary, which owns and operates the Conrad, and the Company will become a 10% shareholder in Enjoy upon consummation of the agreement. Upon the closing of the transaction, which is subject to certain conditions, including the receipt of all regulatory and governmental approvals, Enjoy will assume primary responsibility for management of the Conrad. Enjoy will have the option to acquire the remaining stake in Baluma S.A. between years three and five following closing. The cl! osing of ! the transaction remains subject to a number of conditions, including regulatory and governmental approvals in both Uruguay and Chile.

The Company owns four casinos in London: the Sportsman, the Golden Nugget, The Playboy Club London, and The Casino at the Empire. Its casinos in London draw customers primarily from the London metropolitan area, as well as international visitors. The Company also owns Alea Nottingham, Alea Glasgow, Alea Leeds, Manchester 235, Rendezvous Brighton, and Rendezvous Southend-on-Sea in the provinces of the United Kingdom, which primarily draw customers from their local areas. Pursuant to a concession agreement, it also operates two casinos in Cairo, Egypt, The London Club Cairo (which is located at the Ramses Hilton) and Caesars Cairo (which is located at the Four Seasons Cairo), which draw customers primarily from other countries in the Middle East. Emerald Safari, located in the province of Gauteng in South Africa, draws customers primarily from South Africa. It owsn and operates Bluegrass Downs, a harness racetrack located in Paducah, Kentucky.

The Company owns three casinos for Indian tribes: Harrah�� Phoenix Ak-Chin, located near Phoenix, Arizona, Harrah�� Cherokee Casino and Hotel, and Harrah�� Rincon Casino and Resort, located near San Diego, California. The Company manages Caesars Windsor, located in Windsor, Ontario, which draws customers primarily from the Detroit metropolitan area, Horseshoe Cleveland casino in Ohio, which it manages for Rock Ohio Caesars LLC (ROC), a venture with Rock Ohio Ventures, LLC (Rock Gaming), in which it has a 20% equity interest, and the Horseshoe Cincinnati casino in Ohio for ROC for a fee under a management agreement that will expire in March 2033. It also has a minority interest in Sterling Suffolk Racecourse, LLC (Suffolk Downs), which owns a horse-racing track in Boston, Massachusetts, and the right to manage a future gaming facility. The Company also owns ans operates a golf course on 175 acres of prime real! estate t! hrough a land concession on the Cotai strip in Macau.

Advisors' Opinion:
  • [By Rick Munarriz]

    Paula Deen has seen her future earnings prospects dim after her admission of using a racial slur. She lost her show. Several retailers have stopped stocking the celebrity chef's products. However, Deen has also lost lucrative endorsements with casino operator Caesars Entertainment (NASDAQ: CZR  ) and packaged pork products producer Smithfield Foods (NYSE: SFD  ) .

  • [By Jason Shubnell]

    Caesars Entertainment (NASDAQ: CZR) shares tumbled 6.83 percent to $19.64 after the company announced an offering of 7 million shares of common stock.

  • [By Travis Hoium]

    Gaming stocks have had a fabulous start to 2013, with each of the top five publicly traded U.S. companies beating the S&P 500. Caesars Entertainment (NASDAQ: CZR  ) is leading the pack after announcing the spinoff of its "growth assets," and the four companies with operations in Macau have made slow and steady gains.

Hot Insurance Companies To Invest In Right Now: NanoTech Entertainment Inc (NTEK)

NanoTech Entertainment, Inc. (NanoTech), formerly Aldar Group, Inc., is a provider of gaming technology for the coin-op arcade, casino gaming and consumer gaming markets. The Company operates as a manufacturer, developing technology and games, and then licensing them to third parties for manufacturing and distribution. As of June 30, 2009, the Company�� products included MultiPin, Xtreme Rally Racing, NanoNET Online System, Pinball Wizard, Mot-Ion Adapter, Opti-Gun Adapter and Retr-IO Adapter. In April 2009, the Company acquired NanoTech Entertainment, Inc. In July 2013, NanoTech Entertainment Inc completed the acquisition of Clear Memories, Inc. of Napa California. Effective August 9, 2013, NanoTech Entertainment Inc acquired Worldwide Global Entertainment, a developer of prepackaged software.

The Company�� physics engine and motion sensors allow MultiPin to accurately recreate the experience of a mechanical pinball machine, while providing players with a variety of classic and modern pinball games to choose from. Xtreme Rally Racing is a driving machine that features three modes of game play: Xtreme Off-Road-Race Head to Head against other players and the computer to checkpoints while driving anywhere on the map with no preset course; Timed Rally Stages-Classic Rally Racing on real world courses. Players will be able to race in five different countries on real world rally courses, and Xtreme Stadium Racing-Custom Stadiums designed for Xtreme racing, including a figure eight multi-lap course with huge jumps. NanoNET Online System is remote operator control of machines, including diagnostics, accounting reports, and automatic software updates and enhancements downloaded over the net.

The Company has created the input device designed to give the pinball players a way to experience real pinball controls on their personal computer. Based on the technology developed for the MultiPin product it has built a controller that lets people play pinball using traditional controls and! the ability to shake and nudge the table. The Mot-Ion adapter is a universal serial bus (USB) adapter that allows do it yourself Pinball enthusiasts to build their own cabinet using real pinball controls providing analog inputs for nudging and bumping. The OptiGun adapter is a USB adapter that allows players to connect Arcade Light Guns to any USB based system. The Retr-IO adapters provide a standard JAMMA interface for USB based systems.

Advisors' Opinion:
  • [By Bryan Murphy]

    Call them hunches (because that's all they are), but now would be a great time to get out of a NanoTech Entertainment, Inc. (OTCMKTS:NTEK) position and/or get into an ACADIA Pharmaceuticals Inc. (NASDAQ:ACAD). NTEK looks like its reached its maximum potential - for the time being - while ACAD looks like it's ready to start rolling higher again.

  • [By Peter Graham]

    Nyxio Technologies Corp (OTCMKTS: NYXO), COREwafer Industries Inc (OTCMKTS: WAFR) and NanoTech Entertainment, Inc (OTCMKTS: NTEK) are three small cap stocks in some very diverse industries. In fact, one of these stocks just bought a 3D ice sculpture business. So will investors see their investment melt with that small cap stock�along with the other two? Here is a closer look to help you decide for yourself:��

Top Casino Companies To Own For 2015: Pinnacle Entertainment Inc.(PNK)

Pinnacle Entertainment, Inc. owns, develops, and operates casinos, and related hospitality and entertainment facilities in the United States. It operates casinos, such as L'Auberge du Lac in Lake Charles, Louisiana; River City Casino and Lumiere Place in St. Louis, Missouri; Boomtown New Orleans in New Orleans, Louisiana; Belterra Casino Resort in Vevay, Indiana; Boomtown Bossier City in Bossier City, Louisiana; and Boomtown Reno in Reno, Nevada. The company also operates River Downs racetrack in southeast Cincinnati, Ohio. As of May 26, 2011, it operated seven casinos and one racetrack. The company was formerly known as Hollywood Park, Inc. and changed its name to Pinnacle Entertainment, Inc. in February 2000. Pinnacle Entertainment, Inc. was founded in 1935 and is based in Las Vegas, Nevada.

Advisors' Opinion:
  • [By Dan Radovsky]

    Pinnacle Entertainment (NYSE: PNK  ) has reached an agreement in principle with the Bureau of Competition of the Federal Trade Commission that would allow the company to complete its proposed acquisition of Ameristar Casinos (NASDAQ: ASCA  ) , Pinnacle announced today.

  • [By Travis Hoium]

    What: Shares of Ameristar Casinos (NASDAQ: ASCA  ) and Pinnacle Entertainment (NYSE: PNK  ) fell as much as 11% today after the government brought into question the merger of the two companies.

  • [By Sean Williams]

    Time to make the switch
    If I could name a sector that I'd certainly tread lightly around considering that consumers are tightening their wallets, it would be the casino sector. Casino companies rely on loose wallets and vacations to drive profits. This is why I feel it could be the time to say goodbye to casino and race track operator Pinnacle Entertainment (NYSE: PNK  ) near its 52-week high.

Top Casino Companies To Own For 2015: Penn National Gaming Inc.(PENN)

Penn National Gaming, Inc. and its subsidiaries own and manage gaming and pari-mutuel properties in the United States. It operates approximately 27,000 gaming machines; 500 table games; and 2,000 hotel rooms in 23 facilities in 16 jurisdictions, including Colorado, Florida, Illinois, Indiana, Iowa, Louisiana, Maine, Maryland, Mississippi, Missouri, New Jersey, New Mexico, Ohio, Pennsylvania, West Virginia, and Ontario. The company was formerly known as PNRC Corp. and changed its name to Penn National Gaming, Inc. in 1994. Penn National Gaming, Inc. was founded in 1982 and is based in Wyomissing, Pennsylvania.

Advisors' Opinion:
  • [By Will Ashworth]

    Famed investor Leon Cooperman sold his position in Penn National Gaming (PENN) in the fourth quarter of 2013, replacing it with a 2.2 million shares of GLPI, the real estate spinoff the casino operator took public through a 1-for-1 share distribution last November. Its first acquisition came one month later when it paid $140 million for a casino in East St. Louis. Pure-play REITs come in all shapes and sizes, but never before has there been one in the casino business.

  • [By Will Ashworth]

    Although Penn National Gaming (PENN) completed the spinoff of its real estate assets on Nov. 1, 2013, Gaming and Leisure Properties��(GLPI) shares have traded since mid-October. The only pure-play Casino REIT was created to provide PENN shareholders with two investments: gaming and real estate. Both businesses would be able to focus on what they do best with shareholders better off as a result. I can�� argue with the rationale.

  • [By Paul Ausick]

    Stocks on the Move: BlackBerry Ltd. (NASDAQ: BBRY) is down 16.4% at $6.50 after announcing that no buyout bid will be forthcoming. Penn National Gaming Inc. (NASDAQ: PENN) is down 76.7% at $13.75 after spinning-off its real-estate holdings into a REIT. Suntech Power Holdings Co. Ltd. (NYSE: STP) is up 15.5% at $1.53 following the acquisition of its major operations in Wuxi.

  • [By Lisa Levin]

    Penn National Gaming (NASDAQ: PENN) shares fell 1.71% to reach a new 52-week low of $12.05. Penn National Gaming is expected to report its Q4 results on February 6.

Top Casino Companies To Own For 2015: Bwin.Party Digital Entertainment PLC (BPTY)

bwin.party digital entertainment plc (bwin.party) is a holding company. The Company is an online gaming company. It operates in five segments: sports betting, casino & games, poker, bingo; and other (including network services, World Poker Tour, InterTrader.com, WIN.com, software services and the payment services business). Its sport betting segment includes bwin, betoto, Gamebookers, Gioco Digitale and PartyBets. It�� Casino & games segment includes PartyCasino, bwin and GD Casino. Its poker segment includes PartyPoker, bwin and GD Casino. Its Bingo segment includes Foxy Bingo, Cheeky Bingo, Gioco Digitale and Binguez. The Company�� subsidiaries include BES SAS, bwin Argentina SA, bwin Italia S.r.l., bwin.party Games AB and Cashcade Limited. Its subsidiaries are engaged in management and information technology (IT) services, marketing services, online gaming, transaction services, customer support services, marketing support services and Land-based poker events. Advisors' Opinion:
  • [By Namitha Jagadeesh]

    Bwin.Party Digital Entertainment Plc (BPTY) plunged 14 percent to 110 pence, the biggest drop since April 2011, after the online gaming company said 2013 sales will be 14 percent to 17 percent lower than last year�� figures. Analysts on average had forecast a sales drop of 9.2 percent.

Top Casino Companies To Own For 2015: PhilWeb Corp (WEB)

PhilWeb Corporation is a Philippines-based Internet gaming company. The Company focused its activities on building its Internet-based products and services. The Company is engaged in providing products and services within a particular economic environment. It operates in two geographical segments: domestic operations and foreign operations. Its subsidiaries include BigGame, Inc., operates Internet casino station operations; Premayo sa Resibo, Inc., develops and markets computer systems, applications, programs and operates gaming platforms; PhilWeb Casino Corporation, develops, engages and maintains gaming systems and applications for all types of casino operations; e-Magine Gaming Corporation, develops technology, and PhilWeb Leisure & Tourism Corporation, establishes, operates and maintains leisure and tourism-oriented activities. Effective December 13, 2013, ePLDT Inc, a wholly owned unit of Philippine Long Distance Telephone Co acquired a 27.283% interest in Philweb Corp. Advisors' Opinion:
  • [By Geoff Gannon]

    Always touchable money is cash. For individuals, there's little reason for it not to be a simple bank account, money market fund, etc. For most investors, you can just let this stock sit in your brokerage account. Many brokers will sweep unused cash into a money market account ��or other form of savings ��where it can earn a tiny amount of interest for you while staying totally liquid. One advantage of keeping cash in this form is that you can look at your cash and stock positions on the same (web)page any time you want. So, for example, if you know you want to keep 10% of your portfolio in cash ��you can see that you have $12,000 in cash as part of your $120,000 brokerage account and that means you are right on target with your liquidity goal.

Top Casino Companies To Own For 2015: Caribbean International Holdings Inc (CIHN)

Caribbean International Holdings Inc., formerly Caribbean Casino and Gaming Corporation, incorporated on February 12, 2009, is focused in the gaming and entertainment company. The Company has a gaming casino, located in the city of Sousa, in the Dominican Republic. In April 2012, it acquired exclusive rights to distribute Bionic Products' Energy Drinks throughout the Caribbean, South and Central America.

The Sosua Bay Grand Casino provides the gaming and entertainment experience to the Domincan Republic. It is equipped with a state of the art lighting and sound system.

Advisors' Opinion:
  • [By Peter Graham]

    Small cap stocks Caribbean International Holdings (OTCMKTS: CIHN), Blue Water Global Group Inc (OTCBB: BLUU) and Metrospaces Inc (OTCMKTS: MSPC) have been getting some attention lately in various investment newsletters and all three have focused their activities in the Caribbean or South America. However, all three have been the subject of paid promotions which have helped to get them mentions in various investment newsletters. With that in mind, will bets on the Caribbean or South America pay off big for these three small cap stocks and their investors? Here is a quick reality check:

    Caribbean International Holdings (OTCMKTS: CIHN) is All About Wings, Mechanical Bulls and Stem Cells

    Formerly known as Caribbean Casino & Gaming Corp, small cap Caribbean International Holdings operates as a holding company. On Friday, Caribbean International Holdings rose 8.39% to $0.0369 for a market cap of $315,400 plus CIHN is up 985.3% over the past year and up 7,280% over the past five years according to Google Finance.

Monday, April 28, 2014

Should Investors Consider FedEx?

With shares of Federal Express Corporation (NYSE:FDX) trading at around $100.28, is FDX an OUTPERFORM, WAIT AND SEE, or STAY AWAY? Let's analyze the stock with the relevant sections of our CHEAT SHEET investing framework:

C = Catalyst for the Stock's Movement

The future performance of FedEx comes down to one simple question: is there worldwide economic growth? With the United States, Japan, and the ECB easing monetary supply, the answer to that question would be yes. Whether this growth is real or artificial is a different question. And whether the growth is sustainable or not is the best question of all. However, these policies greatly increase the odds of stock appreciation around the world. Easy money and low interest rates have a chain reaction in almost every industry.

FedEx has seen steadily increasing revenues on an annual basis. This is a good sign, especially considering many companies saw revenue declines in 2012. FedEx has also seen steadily increasing earnings on an annual basis.

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In regards to FedEx vs. United Parcel Service (NYSE:UPS), UPS has been the recent winner in regards to stock performance. It also offers a higher yield of 2.80 percent. FedEx currently yields 0.60 percent. On the other hand, FedEx has outperformed UPS by a wide margin since 2000. FedEx also has stronger margins, better debt management (by a landslide), and its stock is much cheaper. In regards to the latter, FedEx is trading at 17 times earnings whereas UPS is trading at 98 times earnings.

When it comes to company culture, FedEx scores well above average. According to Glassdoor.com, employees have rated their employer a 3.6 of 5, and 75 percent of employees would recommend the company to a friend. In addition to that, 90 percent of employees approve of CEO Fred Smith.

The chart below compares fundamentals for FedEx and UPS.

FDX UPS
Trailing P/E 17.56 98.44
Forward P/E 13.39 15.60
Profit Margin 4.12% 1.61%
ROE 11.06% 15.15%
Operating Cash Flow 4.79B 6.69B
Dividend Yield 0.60% 2.80%
Short Position 1.20% 2.30%

Let's take a look at some more important numbers prior to forming an opinion on this stock.

T = Technicals Are Strong

FedEx has underperformed UPS over the past three years, and this isn’t a great performance considering recent broad market moves, but gains are gains.

1 Month Year-To-Date 1 Year 3 Year
FDX 4.10% 9.47% 14.95% 18.86%
UPS 6.04% 21.91% 19.80% 47.19%

At $100.28, Federal Express is trading above its averages.

50-Day SMA 95.97
200-Day SMA 97.09

 

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E = Equity to Debt Ratio Is Strong

The debt-to-equity ratio for FedEx is stronger than the industry average of 0.50. It’s also much stronger than the debt-to-equity ratio for UPS. UPS might have outperformed FedEx over the past three years, but FedEx is in a more manageable situation going forward, especially if interest rates increase.

Debt-To-Equity Cash Long-Term Debt
FDX 0.14 3.37B 2.24B
UPS 3.15 7.33B 12.72B

 

E = Earnings Are Strong

Earnings have steadily improved over the past three years; revenue has increased over the past two years.

Fiscal Year 2008 2009 2010 2011 2012
Revenue ($) in billions 37.95 35.50 34.73 39.30 42.68
Diluted EPS ($) 3.60 0.31 3.76 4.57 6.41

 

When we look at the last quarter on a year-over-year basis, revenue has increased and earnings have declined. Revenue and earnings have both declined on a sequential basis.

Quarter Feb. 29, 2012 May. 31, 2012 Aug. 31, 2012 Nov. 30, 2012 Feb. 28, 2013
Revenue ($) in billions 10.56 11.01 10.79 11.11 10.95
Diluted EPS ($) 1.65 1.735 1.45 1.39 1.13

Now let's take a look at the next page for the Trends and Conclusion. Is this stock an OUTPERFORM, a WAIT AND SEE, or a STAY AWAY?

T = Trends Might Support the Industry

UPS recently lowered guidance. This isn't necessarily a bad sign, but it's not going to boost investor confidence for the industry. Consumer confidence has been steady recently, but whether that confidence is sustainable or not is questionable. If the consumer weakens, then many of them will opt for a cheaper alternative, such as the USPS.

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Conclusion

Federal Express is an excellent company with strong historical stock performance. On the other hand, it's at the mercy of the consumer. That being the case, there has been no sustainable momentum in the stock price as of late. This pattern is likely to continue, making it a better trade than an investment. There are better investment opportunities available.

Sunday, April 27, 2014

4 Tips to Help 30-Somethings Handle Student Loan Debt

Couple working in home office with baby looking confused at the screenMark Bowden, Getty Images By the time most college graduates reach their 30s, they've been dealing with student loans for years. Yet increasingly, even 30-somethings still face big challenges from their outstanding college debts, and those challenges are affecting the way they manage the rest of their financial lives. Homeownership rates among 30-year-olds have fallen much more dramatically since 2008 for those with student loan debt than for those without it, according to a recent Federal Reserve Bank of New York study. Yet many people in their early 30s have either already started a family or plan to do so in the near future. That raises the question of how to balance your own financial needs against those of your children in order to reduce the odds that your kids will suffer under the crippling weight of excessive student loans of their own. Let's look at some tips for getting your own debt paid down and for preparing for potential family educational costs down the road. 1. Put Student Loans in Their Place. Many borrowers assume that they should always pay down their student loans as quickly as possible. Yet even though paying off those loans can give you a psychological boost, it's not necessarily the smartest move if you have other debt with less generous terms and higher finance charges. By understanding the terms of your student loans as well as credit-card agreements, car loans, mortgages, and other debt you might have, you can identify the highest-cost debt you have and prioritize getting that paid off first. Even if that means waiting longer to retire your student loans, doing so will still save you money in the long run. 2. Don't Skimp on Savings. Whether to put money toward savings and investing when you have outstanding student loan debt is a subject of debate, with good arguments on both sides. But to take advantage of the tax deductions and free employer-matching contributions you get from contributing to a retirement account, it's worth diverting extra money away from paying down student loans, especially those with low interest rates in the 3 percent to 4 percent range. As your income increases, you'll be able both to stay current on your loan obligations to set money aside for other important financial goals. 3. Make Your Employer Pay for More School. As you advance in your career, getting more education and boosting your skills might be a lucrative move. But once you're in the workforce, you don't necessarily have to pay for those classes yourself anymore. Many employers have recognized the value of investing in their employees through tuition reimbursement programs, which will pay you back for all or part of your costs. Availability and conditions differ from company to company, and typically, the education has to be connected to your job. But they're a great way to avoid adding to your student loan debt. 4. Don't Let Student Loan Debt Hit You Twice. As heavy a burden as today's young graduates carry, educational debt among their parents is also reaching epidemic levels. In 2011, parents received $10.6 billion in Parent PLUS loans, a 145 percent increase since 2000, even adjusted for inflation, according to a study from The Chronicle of Higher Education and ProPublica. And the size of average individual loan is up as well, by about a third to nearly $12,000 in constant dollars. If you have kids or plan to, you'll want to take steps to ensure you don't end up facing a huge loan burden a second time around. Put time on your side by setting up savings programs for their college educations now. As your income grows and you rise into higher tax brackets, the advantages of using a tax-favored college savings strategy such as a 529 plan increase in value. As with any market-based investment and saving strategy, 529 plans work best when you give them as much time as possible to produce strong returns. Moreover, 529 plans have very small minimum starting investments, so you can start a account without placing too big a burden on your finances.

2 Warren Buffett Stocks You Can Buy Today

Photo: HomeServicesAmerica

Berkshire Hathaway has over $100 billion in common stock investments. Much of that capital is tied up in Berkshire's top 4 holdings, but the company owns over 40 individual stocks, as of its last official filing.

The stocks Warren Buffett and Berkshire Hathaway are often looked at by countless investors hungry to ride the same ship as the Oracle of Omaha. In the following video, Motley Fool analysts David Hanson and Tyler Riggs breakdown two Berkshire-held stocks they believe are attractively priced today and poised to reward investors. Tyler details why he likes the business model at Verisk Analytics and why he is encouraged by the Verisk's organic growth, as well as its growth via acquisitions. Meanwhile, David pitches a much larger and well-known company in General Electric. Despite trailing the market over the past decade, David believes General Electric is making all the right moves by reducing its exposure to the financial industry and focusing on its manufacturing strengthens.

Warren Buffett just bought nearly 9 million shares of this company
Imagine a company that rents a very specific and valuable piece of machinery for $41,000… per hour (that's almost as much as the average American makes in a year!). And Warren Buffett is so confident in this company's can't-live-without-it business model, he just loaded up on 8.8 millionshares. An exclusive, brand-new Motley Fool report reveals the company we're calling OPEC's Worst Nightmare. Just click HERE to uncover the name of this industry-leading stock… and join Buffett in his quest for a veritable LANDSLIDE of profits!

Friday, April 25, 2014

Ford's Mulally: 'No change' in retirement plan

Ford CEO Alan Mulally says he is not leaving yet.

"No change to the plan," Mulally said this morning on a conference call with investors and media when asked about reports he is preparing to retire before year's end to pursue other interests.

When Mark Fields was named to the new position of chief operating officer in 2012, Mulally said he would remain as CEO through the end of 2014, if not longer.

Last year that premise was tested when Mulally's name was repeatedly mentioned as a top candidate to become CEO of Microsoft. The speculation, which was proving distracting at Ford by year's end, prompted Mulally to end his coy remarks and state plainly his intention was to remain with Ford through 2014.

Indications have arisen anew that Mulally will pass the baton to Fields sooner rather than later and clarity on the timing could be forthcoming next month.

"We don't comment on speculation and have no change to the plan," Mulally said repeatedly today.

He said he and Executive Chairman Bill Ford seven years ago put a high priority on developing a robust leadership team and strong succession plan.

Mulally made the comments on a call to discuss Ford first-quarter earnings. Ford reported a $989 million profit in the first quarter, down 39% from a year ago with some warranty charges and higher expenses as the automaker kicks off its most aggressive year of product launches in 50 years.

Top Computer Hardware Stocks To Invest In Right Now

As energy takes on more of a global focus, so do the stocks of the companies that produce it. With the increase in hydraulic fracturing, or fracking, places once thought of as flyover states are now booming industrial areas because of the new ability to uncover deep underground stores of oil and natural gas. There's a lot of room for excavation and discovery in these areas, and companies such as Chesapeake Energy (NYSE: CHK  ) , WPX Energy (NYSE: WPX  ) , and InterOil (NYSE: IOC  ) are taking full advantage.

Chesapeake Energy
Chesapeake, an Oklahoma-based oil and natural gas producer, has been putting up some strong numbers recently. Revenue has been climbing in the past two quarters, marking year-over-year growth of 40% and 32%, respectively. The company has also earned $0.30 per share over that period, beating estimates of $0.25.

Top Computer Hardware Stocks To Invest In Right Now: Fusion-io Inc (FIO)

Fusion-io Inc (Fusion) is a provider of datacenter solutions that accelerate databases, virtualization, cloud computing, big data, and the applications that help drive business from the smallest e-tailers to some of the largest data centers, social media leaders, and Fortune Global 500 businesses. The Company's integrated hardware and software platform enables the decentralization of data from legacy architectures and specialized hardware. The Company sells its solutions through a global direct sales force, original equipment manufacturers, or OEMs, including Cisco, Dell, HP, and IBM, and other channel partners. In August 2011, the Company acquired IO Turbine, Inc.,. Effective March 18, 2013, the Company acquired ID7.

Fusion-io's ioMemory hardware is a sub-system connecting a large array of industry-standard NAND Flash memory through the Company's data-path controller and its virtual storage layer, or VSL, software to create a high capacity memory tier that natively attaches to a server's PCI-Express peripheral bus (PCIe).

The Company's portfolio of storage memory products incorporates the Company's ioMemory hardware combined with its virtual storage layer (VSL) and caching software into its family of ioDrive, ioFX, and ioCache enterprise grade products. The Company's ioDrive products work in conjunction with the Company's directCache data-tiering software, ioTurbine virtualization software, ioSphere management system, and ION Data Accelerator software. The Company's latest ioDrive, ioFX, and ioCache product families are a line of PCIe standard form-factor storage memory platforms that combine one or more ioMemory sub-systems with the Company's VSL software.

The Company's directCache software extends the Company's ioMemory based platforms and permits interoperability with traditional direct-attached, network-attached, storage area network attached, and appliance attached backend storage systems. The Company's ioTurbine virtualization software extends the Company! 's ioMemory platform and permits host-based data acceleration to specifically address the demand for high-density, high-performance server, and desktop virtualization.

ioSphere is a suite of management software purpose-built for the Company's storage memory infrastructure and designed around its application acceleration platform. ioSphere software is accessible through a graphical user interface that enables datacenter administrators to centrally configure, monitor, manage, and tune all distributed ioMemory devices throughout the datacenter. In addition, this software offers real-time, predictive, and historical reporting of ioMemory's performance and wear.

The Company's ION Data Accelerator software transforms server platforms into application acceleration appliances that share Fusion ioMemory across applications. ION Data Accelerator delivers Fusion-io performance on open server platforms with software-defined storage, or SDS, for applications such as Oracle RAC, Microsoft SQL Server, MySQL, and SAP HANA, along with other applications where shared storage aids deployment. The Company's original equipment manufacturer�� (OEMs), including Cisco, Dell, HP, and IBM, sell branded storage memory solutions based on the Company's standard products as well as custom form-factor versions to fit specific applications.

The Company competes with EMC Corporation, Hewlett-Packard Development Company, L.P, Texas Memory Systems, Oracle, Adaptec, Inc., LSI Corporation, Sandisk, Corp, IBM, CA, Inc, Nagios Enterprises, LLC., Hitachi Data, Huawei Technologies, Co., Intel Corp., LSI Corporation, Marvell Semiconductor, Inc., Micron Technology, Inc., OCZ Technology Group, Inc., Samsung Electronics, Inc., SanDisk, Corp., Seagate Technology, STEC, Inc., Toshiba Corp., and Western Digital Corp.

Advisors' Opinion:
  • [By Evan Niu, CFA]

    What: Shares of Fusion-io (NYSE: FIO  ) soared by as much as 21% today after the company posted strong earnings with an encouraging outlook.

  • [By Selena Maranjian]

    Finally, Tocqueville's biggest closed positions included Gentex�and Ferro. Other closed positions of interest include Fusion-io (NYSE: FIO  ) , an enterprise storage company focused on technologies such as flash memory and solid-state drives. It already serves some rather major customers, such as Apple, but much of its revenue comes from just a few �key clients. The company recently posted strong earnings and an upbeat outlook, sending its shares up by double digits. Bulls also like its purchase of NexGen Storage, but bears worry about competitors looming�.

Top Computer Hardware Stocks To Invest In Right Now: Makism 3D Corp (MDDD)

Makism 3D Corp., incorporated on May 4 2010, is a three dimensional (3D) printer manufacturing company. The Company produces consumer and professional grade 3D printers. The Company�� flagship product, branded as the Wideboy family of printers, offers packaging designed to fit any office or professional space.

Its 3D printers utilize British and German engineered components. Its printers are assembled in Cambridge (United Kingdom).

Advisors' Opinion:
  • [By James E. Brumley]

    In retrospect, their pullbacks come as no real surprise. Neither Voxeljet AG (NYSE:VJET) nor Camtek LTD. (NASDAQ:CAMT) saw their shares soar on any news that was meaningfully sustainable, and after the "shoot first, ask questions later" market had a chance to start asking questions, it became clear that - even with the largest of glimmers of corporate progress unveiled a few weeks ago - CAMT and VJET both had been bid up more on hype and less on substance. Meanwhile (and this could be bitterly ironic to some), a small cap play in the same 3D printing space that (1) didn't beat the daylights out of its hype-drum, and (2) is actually much closer to bringing a revenue-bearing product to the market [per today's news - more on that below] isn't getting anywhere near the same attention. That company? Makism 3D Corp. (OTCBB:MDDD). The good news is, MDDD finally looks like it's revving its engine, while Camtek and Voxeljet AG shares continue to deteriorate.

Top 5 Financial Stocks To Buy Right Now: Logitech international SA (LOGI)

Logitech International S.A. (Logitech) is a holding company. Logitech develops and markets hardware and software products for digital navigation, music and video entertainment, gaming, social networking, audio and video communication over the Internet, video security and home-entertainment control. Logitech operates in two segments: peripherals and video conferencing. The Company�� peripherals segment includes design, manufacturing and marketing of peripherals for personal computers (PCs) and other digital platforms. Its products for the PC include mice, trackballs, keyboards, interactive gaming controllers, multimedia speakers, headsets, webcams, and lapdesks. Logitech�� Internet communications products include webcams, headsets, video communications services, and digital video security systems for a home or small business. Its digital music products include speakers, earphones, and custom in-ear monitors. On July 6, 2010, Logitech acquired all of the assets of Paradial AS. On March 31, 2011, the Company sold its equity interest in certain 3Dconnexion subsidiaries.

3Dconnexion subsidiaries are the providers of the Company�� 3D controllers, and its intellectual property rights related to the manufacture and sale of certain 3Dconnexion products. Paradial AS provides firewall and network address translation (NAT) traversal solutions for video communications. For home entertainment systems, Logitech offers the Harmony line of advanced remote controls, Squeezebox wireless music solutions and, in the United States, a line of Logitech products for the Google TV platform. For gaming consoles, the Company offers a range of gaming controllers and microphones, as well as other accessories. Logitech�� sells its peripheral products to a network of distributors and resellers and to other equipment manufacturers (OEMs). The Company�� worldwide retail network includes wholesale distributors, consumer electronics retailers, mass merchandisers, specialty electronics stores, computer and telecomm! unications stores, resellers and online merchants.

The Company�� video conferencing segment includes design, manufacturing and marketing of LifeSize video conferencing products, infrastructure and services for the enterprise, public sector and other business markets. LifeSize products include high-definition (HD) video communication endpoints, HD video conferencing systems with integrated monitors, video bridges and other infrastructure software and hardware to support large scale video deployments, and services to support these products. Logitech sells its LifeSize products and services to distributors, resellers, OEMs and direct enterprise customers. Logitech conducts its business through subsidiaries in the Americas, including North and South America; Europe, Middle East, Africa (EMEA), and Asia Pacific, including, among other countries, China, Taiwan, Japan, India and Australia.

Pointing Devices

Logitech offers a range of computer mice, sold through retail and OEM channels. Its mice products include M215, M310 and M305 wireless mice with advanced 2.4 gigahertz wireless connection and cordless universal serial bus (USB) plug-and-forget nano-receiver; Performance Mouse MX and Anywhere Mouse MX with Logitech Darkfield Laser Tracking; Marathon Mouse 750, and Wireless Trackball M570. Logitech�� mice products also include a line of gaming mice, including the Wireless Gaming Mouse G700, with 13 precisely placed, programmable controls to perform single actions and complex macros, full-speed gaming-grade wireless, and a quick-connect charging cable. In addition, the Company sells both corded and cordless mice designed specifically for OEM customers.

Keyboards and Desktops

Logitech offers a range of corded and cordless keyboards and desktops (keyboard-and-mouse combinations). The Company�� keyboards and desktops include Wireless Solar Keyboard K750; K800 Illuminated Wireless Keyboard; The diNovo Edge keyboard; Wireless Desktop MK320, and G! 19 Keyboa! rd for Gaming.

Audio

Logitech designs and manufactures a range of multimedia speakers, including Wireless Speaker Z515, The Laptop Z305 speaker, and The S-series line of portable iPod/MP3 docks, including the Rechargeable Speaker S715i and the Portable Speaker S135i. It also designs and manufactures The Z-623 2.1 THX certified speakers, the Z-506 5.1 Speakers, and the Z-906 5.1 Surround Sound speakers. Logitech offers a portfolio of network music systems. The Squeezebox Touch, with its 4.3-inch color touch screen, connects to existing stereo system and speakers and supports sampling rates of up to 24 bits at 96 kilohertz. The Squeezebox Radio is a compact network music player and alarm that allows to connect to home network, and access Internet radio, personal music collection or subscription services.

The Ultimate Ears product line offers a range of in-ear consumer or fit earphones for portable music enthusiasts, as well as custom stage earphones for musicians and sound engineers. Its line of earphones include Ultimate Ears 100 and 200 value-priced earphones, with silicone ear cushions in a durable sweat-resistant design; Ultimate Ears TripleFi 10 with triple armature speakers, and The Ultimate Ears 600 featuring single armature speakers, the Ultimate Ears 600vi, and the Ultimate Ears 700 featuring dual armature speakers. Its line of Ultimate Ears Custom Stage Earphones include Ultimate Ears In-Ear Reference Monitors co-designed with Capitol Studios for professional studio engineers and producers for use during recording, mixing and mastering original music content, the UE-18 Pro featuring a six-speaker design, the UE-7 Pro for live performance and stage use, and the UE-4 Pro featuring a dual speaker design for artists and audiophiles.

Logitech offers headsets and microphones designed for applications, such as PC voice communications, voice over Internet protocol (VoIP) applications and online gaming. Its products in this category include the ClearCha! t PC Wire! less headset, the Wireless Headset H760, the USB Headset H530, the G35 Surround Sound Headset for gaming, the Wireless Gaming Headset G930, the USB Desktop Microphone, and the OCS certified Logitech B-530 USB Headset.

Video

Logitech�� webcam offerings include Logitech HD Pro Webcam C910, Logitech Webcam Pro 9000, Logitech HD Webcam C510 and Logitech TV Cam for use with Logitech Revue. Logitech�� webcams works with video messaging applications, and provides up to HD 720p video calling in Skype, Windows Live Messenger and Logitech Vid HD. The Logitech Alert digital video security system is a complete home or small business video security system, with software that provides motion alerts and a live view from an Internet-connected computer, smartphone, tablet or Google TV system, including Logitech Revue.

Gaming

Logitech offers a range of game controllers for PC gamers, including joysticks, steering wheels, gamepads, mice and keyboards, and headsets, as well as gaming products for console platforms, such as PlayStation2, PlayStation3, PSP (PlayStation Portable), Xbox, Xbox 360 and Nintendo Wii. The Company�� gaming products include Logitech G700 Wireless Gaming Mouse; Logitech G13 advanced gameboard with a built-in LCD screen, 25 programmable keys and onboard memory; Logitech G27 Racing Wheel and Logitech G35 Surround Sound Headset.

Digital Home

The Company�� line of remotes includes Harmony One remote, Harmony 900 remote and Harmony 650. In October 2010, Logitech introduced its line of products for Google TV in the United States, including Logitech Revue and the Logitech Keyboard Controller; Logitech TV Cam and Vid HD service, and Logitech Mini Controller.

LifeSize Video Conferencing

LifeSize division offers HD video communication solutions, including HD video conferencing products, audio conference telephones, hardware infrastructure solutions, video management software, and services to support ! video and! audio communications and help users connect to any network securely and with ease. The LifeSize product line includes Passport, LifeSize Video Center, Express Series, Team Series, Room Series and LifeSize Bridge.

The Company competes with Microsoft Corporation, Plantronics, Inc., Altec Lansing LLC, Creative Labs, Inc., Bose Corporation, Sony Corporation, Royal Philips Electronics NV, Hewlett-Packard, Intec, Razer USA Ltd., Performance Designed Products, LLC (Pelican Accessories), Mad Catz Interactive, Inc., Universal Remote Control, Inc., Universal Electronics Inc., RCA, Apple Inc., Roku, Inc., Cisco, Radvision Ltd., Vidyo, Inc. and Polycom.

Advisors' Opinion:
  • [By Lisa Levin]

    Logitech International SA (NASDAQ: LOGI) rose 16.84% to $15.45 after the company reported strong FQ3 results and lifted its full-rear guidance.

    Fusion-io (NYSE: FIO) shares jumped 14.75% to $10.81 on stronger-than-expected quarterly results.

  • [By Louis Navellier]

    Logitech International�(LOGI) is a Swiss company that designs, manufactures, and markets hardware and software products that enable digital navigation, music and video entertainment, gaming, social networking, audio and video communication over the Internet, video security, and home-entertainment control.

  • [By Jake L'Ecuyer]

    Equities Trading UP
    Logitech International SA (NASDAQ: LOGI) shot up 16.94 percent to $15.46 after the company reported strong FQ3 results and lifted its full-rear guidance.

  • [By Eric Volkman]

    Logitech (NASDAQ: LOGI  ) is now on the hunt for a chief financial officer following the departure of Erik Bardman, who has joined the privately owned Roku to serve in the same position. Logitech said it is now searching for either an internal or external candidate to replace him after he formally leaves the company at the end of this month.

Top Computer Hardware Stocks To Invest In Right Now: Western Digital Corp (WDC)

Western Digital Corporation (WD) is a provider of solutions for the collection, storage, management, protection and use of digital content, including audio and video. Its principal products are hard drives, which are devices that use one or more rotating magnetic disks (magnetic media) to store and allow access to data. Its hard drives are used in desktop and notebook computers, corporate and cloud computing data centers, home entertainment equipment and stand-alone consumer storage devices. In addition to hard drives, its other products include solid-state drives and home entertainment and networking products. The Company operates as the parent company of its hard drive business, Western Digital Technologies, Inc. Effective March 8, 2012, the Company acquired Viviti Technologies Ltd. In May 2012, the Company completed the divestiture of certain 3.5-inch hard drive assets to Toshiba Corporation. As part of its deal with Toshiba, WD also completed its purchase of Toshiba Storage Device (Thailand) Company Limited (TSDT), which manufactured hard drives.

The Company offers a line of storage devices. Its hard drives include 3.5-inch and 2.5-inch form factors, capacities ranging from 80 gigabytes to three terabytes, nominal rotation speeds up to 10,000 revolutions per minute, and interfaces, such as Serial Advanced Technology Attachment (SATA) and Serial Attached SCSI (Small Computer System Interface) (SAS). In addition, the Company offers a family of hard drives specifically designed to consume less power than standard drives, utilizing its WD GreenPower Technology. Its solid-state drives include 2.5-inch and Compact Flash form factors, capacities ranging from 1 gigabyte to 256 gigabytes, and interfaces, such as SATA and PATA.

Client Compute Storage Products

Client compute consists of hard drives and solid-state drives for desktop and mobile personal computers (PC��). During the fiscal year ended July 1, 2011 (fiscal 2011), it shipped 151 million hard drive clie! nt compute unit. Its client compute storage products include WD Caviar, WD Scorpio and WD Silicon Edge. WD Caviar family of hard drives is designed for use in desktop PCs. WD Scorpio family of hard drives is designed for use in mobile PCs. WD Silicon Edge family of solid-state drives is designed for both read-intensive client/consumer applications and write-intensive original equipment manufacturer (OEM) applications.

Client Non-Compute Storage Products

Client non-compute consists of branded products and consumer electronics products. Its hard drive client non-compute unit shipments were 46 million, during fiscal 2011.

Branded Products

Branded products consists of hard drives embedded into WD-branded external storage appliances with capacities ranging from 250 gigabytes to 8 terabytes and using interfaces, such as Universal Serial Bus (USB) 2.0, USB 3.0, external SATA, FireWire and Ethernet network connections. Certain branded products models include software that assists customers with back up, remote access and management of digital content. Branded products also include its home entertainment and networking products. Its branded products include My Book and WD Elements Desktop family of storage appliances. My Passport and WD Elements Portable family of storage appliances include WD ShareSpace, WD TV and WD Livewire.

My Book and WD Elements Desktop family of storage appliances are designed to add external capacity to desktops and digital video recorders (DVRs), allow for the transfer and storage of videos directly from certain camcorders, and connect to networks to simplify storage for consumers. My Passport and WD Elements Portable family of storage appliances are designed for external portability weighing less than one-half of a pound and allow for the transfer and storage of videos directly from certain camcorders. WD ShareSpace is a network-attached storage system designed for home office or small office applications. WD TV m! edia play! ers connect to a user�� television or home theater system and play digital movies, music and photos from an integrated hard drive, network hard drives, any of its WD-branded external hard drives, other USB mass storage devices or content services accessed over the Internet. WD Livewire, which enables consumers to use their existing electrical outlets to extend Internet connections throughout the home.

Consumer Electronics Products

WD AV family of hard drives is designed for use in products, such as DVRs and audio and video applications. WD AV drives deliver the characteristics CE manufacturers.

Enterprise Storage Products

Enterprise consists of hard drives for traditional enterprise and nearline storage applications, as well as solid-state drives for embedded applications. Its hard drive enterprise unit shipments were 10 million, for fiscal 2011. Its enterprise storage products include WD S25 hard drive, WD VelociRaptor, WD RE and WD SiliconDrive. WD S25 hard drive is designed for mission-critical enterprise server and storage applications, such as data centers and data arrays. WD VelociRaptor hard drive is designed for enterprise server and storage applications. This hard drive is also used in the high-end desktop PC market for applications including gaming, servers and advanced computer-aided design/computer-aided manufacturing (CAD/CAM) systems. WD RE family of hard drives is designed for nearline storage enterprise applications. WD SiliconDrive family of solid-state drives features fast read/write speeds in high capacities and is designed for embedded system OEM applications.

The Company competes with Hitachi Global Storage Technologies, Intel Corporation, Micron Technology, Inc., Samsung Electronics Co. Ltd., Seagate Technology, STEC, Inc. and Toshiba Corporation.

Advisors' Opinion:
  • [By Rich Smith]

    Irvine, Calif.-based Western Digital (NASDAQ: WDC  ) has a new subsidiary.

    On Wednesday, Western Digital announced that it has acquired privately held I/O optimization software maker VeloBit for an undisclosed sum. Western Digital intends to incorporate its new holding into its HGST subsidiary.

  • [By Lee Jackson]

    Fusion-io Inc. (NYSE: FIO) was busy going nowhere until Virident was bought by disc drive giant Western Digital Corp. (NASDAQ: WDC). Then all eyes on Wall Street started to focus on which company may be the next acquisition target. Many think the odds are good that Fusion-io is that candidate. The consensus price target is posted at $15. The high target on Wall Street is a staggering $29.

  • [By Jonas Elmerraji]

    NetApp isn't the only computer storage stock that's flush with cash. Western Digital (WDC) is another.

    Western Digital is the largest hard drive maker in the world, thanks to last year's acquisition of Hitachi Global Storage Technologies. The firm's customers include enterprise IT departments and original equipment manufacturers as well as consumer technology retailers, who sell WDC's popular line of internal and external hard drives.

    The exact same growing demand for data that's boosting NTAP is providing tailwinds for Western Digital right now. On the consumer side, one of the biggest changes has been individuals' data needs. Today, more consumers than ever before carry around high-definition cell phone cameras capable of consuming gigabytes of storage capacity in minutes -- data that's generally backed up across multiple devices. As data needs continue to increase, WDC should continue to be one of the biggest beneficiaries.

    The transition to newer technologies like flash memory does pose some threats to WDC. But the firm is fighting back the best way. By using some of its $2.35 billion net cash position to acquire flash memory makers like Stec (STEC). The firm's hefty cash balance gives it the ability to ramp up its investments in flash to avoid falling behind as prices fall for the technology.

  • [By Daniela Pylypczak]

    Western Digital (WDC) announced on Wednesday that its chief financial officer, Wolfgange Nickl, is resigning.

    Nickl’s resignation from WDC will be effective November 17, 2013, when he becomes the new CFO at ASML Holding N.V. in the Netherlands. Nickl has served as CFO at Western Digital since August of 2010; prior to that, he served in several other positions within WDC’s finance and operations divisions. Western Digital has stated that it is in the process of searching for a new CFO.

    Western Digital shares traded 1.15% higher during Wednesday’s session. Year-to-date, the stock is up 48.90%.

Top Computer Hardware Stocks To Invest In Right Now: Imagination Technologies Group PLC (IGNMF.PK)

Imagination Technologies Group plc is engaged in multimedia and communication technologies. The Company operates in two segments: Technology business and the Pure business. The Company�� Technology business segment is engaged in the development of embedded graphics, video, display and multi-threaded processor and multi-standard broadcast receiver and connectivity technologies for licensing to semiconductor companies for incorporation into silicon devices. The Company�� Pure business segment is engaged in the development and marketing of consumer products to showcase the technologies of the Technology business and to develop markets for such technologies. In March 2012, Toumaz Ltd completed the exchange of Imagination Technologies Group plc's interest in Toumaz Ltd�� Toumaz Microsystems subsidiary. In February 2013, it acquired the operating business and certain patent properties of MIPS Technologies, Inc. Advisors' Opinion:
  • [By Ashraf Eassa]

    However, I expect that Intel is at risk of having a significant marketing problem trying to sell a dual core product into a world of quad core phones, even if the dual core part delivers better performance/watt. I further expect that from what is currently known about Bay Trail's GPU (4 EU Gen7 GPU), it is unlikely that -- unless Intel is either using Imagination's (IGNMF.PK) next generation PowerVR 6 or a beefed up Gen7 design for the "Merrifield" SoC -- it will be as competitive with the Snapdragon 800 on the GPU side of things, which could pose as an additional headwind to adoption. I also believe that the Q1 2014 launch curtails any hope that there will be a 14nm smartphone product launched in 2014 (although Mr. Krzanich's comments about "acceleration" could be a source of optimism here), which means that the company's process lead could ultimately prove to be ephemeral in this particular end market. Fortunately, product cycles in this space are short, so it may be okay to have Merrifield be reasonably short lived.

The 5 Best Stocks to Buy Around $5

Facebook Logo Twitter Logo LinkedIn Logo Google Plus Logo RSS Logo Jeff Reeves Popular Posts: 5 Dividend Stocks Yielding More Than 5%9 Cheap Stocks to Buy Now for $10 or Less10 Cheap Stocks to Buy Under $10 Recent Posts: The 5 Best Stocks to Buy Around $5 7 Big-Name Tech Stocks to Plug In Now 5 Dividend Stocks Yielding More Than 5% View All Posts

Finding a good investment for around $5 is not an easy task.

five The 5 Best Stocks to Buy Around $5After all, most publicly traded stocks with a low share price got that bargain valuation by running into trouble — as in, enjoying a share price of $10 or $20 several years ago and now trading at a deep discount thanks to pessimistic investor sentiment.

However, shrewd investors can find some good stocks to buy in the Wall Street bargain bin if they know where to look.

While the following stocks are admittedly a bit risky and have some issues, they all are established companies that are worth more than $300 million and are at worst breakeven. That means these bargain stocks to buy have no risk of going bankrupt anytime soon … even if they have admittedly faced some challenges in the last few years.

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Best Stocks to Buy for Around $5: Advanced Semiconductor Engineering (ASX)

asx logo The 5 Best Stocks to Buy Around $5Advanced Semiconductor Engineering (ASX) builds and distributes integrated circuits and other electronics. While that's not as sexy as other chipmakers that play to mobile, it's still a good business, considering the general demand for microchips in everything from cars to computers to TVs.

The Taiwan-based company is close to many Asian electronics manufacturers. And regardless of whether those manufacturers crank out something as hot as the iPhone from Apple (AAPL), ASX still will have a strong baseline simply because of how many high-tech devices exist in the world.

Moreover, ASX is not a chip designer, just a manufacturer. That means while it doesn't have the same big margins as the companies who create the next hot chip, it also doesn't have the same risk to get it right with R&D. Advanced Semiconductor's diverse business makes it a stable player for the long haul, and not as finicky as companies that rely heavily on laptops an desktops. That stability also is reflected in the form of a 3% dividend yield.

In a post-PC age, there are assuredly sexier tech plays out there. But ASX is up 35% in the last year and about 20% YTD. With a decent dividend, decent revenue and profit growth and momentum for share prices, ASX could be the best stock to buy for around the $5 mark right now.

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Best Stocks to Buy for Around $5: Aeropostale (ARO)

AEROPOSTALELOGO The 5 Best Stocks to Buy Around $5Specialty retailer Aeropostale (ARO) certainly wouldn't be categorized as a growth stock. The company has seen stagnant revenue for some time, and is currently operating in the red.

But after crashing over 60% in the last year, the collapse in ARO stock might now be a bit overdone. Sure, margins were pinched and sales have gone nowhere … but Aeropostale is on track to return to profitability this year as it closes about 50 stores in 2014 and might close more than a hundred more after that.

Furthermore, let's not act like ARO is alone. Many teen retailers including Gap (GPS) and Abercrombie & Fitch (ANF) have been hit by a horrible group of negative pressures in the last few years that include:

Weaker consumer spending thanks to the Great Recession Continued growth in e-commerce and declines in mall traffic Changing fashion tastes away from bigger brands, and big-time competition from smaller players

This undoubtedly has created challenges, but ARO is right-sized for the current environment and all the negativity has been priced in. Investors who buy this $5 stock now could see a big pop once the stock returns to profitability in a few quarters, and continued improvement on employment and spending data could bode well for retail sales across the board.

An added sweetener: There are rumors of an Aeropostale buyout by private equity to unlock value through cost cutting and restructuring. That certainly would come at a premium, perhaps at $7 or $8 a share, and result in a quick but substantial pop to any shareholders.

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Best Stocks to Buy for Around $5: Hercules Offshore (HERO)

Hercules Offshore1 The 5 Best Stocks to Buy Around $5Oil stocks haven't really been all that kind to investors over the last few years as weak pricing coupled with weaker energy demand in emerging markets has hurt the bottom line.

But one area of the energy sector worth looking at is offshore oil drillers, including leader Hercules Offshore (HERO). While oil prices are soft, the bottom line is that the world's easy oil is gone and energy companies are increasingly turning to harder-to-access offshore oil and gas fields in order to bolster reserves … and that means big business for servicers like HERO.

Now, Hercules’ stock price sits at roughly half of its 2013 peak and has run into trouble since its largely shallow-water business hasn't been booming. But the company divested a number of barge-based rigs in 2013, and is about breakeven right now.

While it's unlikely that we will see a surge in oil prices leading to a surge in drilling contracts, the good news is that HERO appears to be right-sized now for the current market environment and has decent upside potential if investment in oil and gas drilling stays strong.

After a big drop during the past few years, much of the negativity has been priced into the energy sector broadly and this sub-$5 stock in particular.

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Best Stocks to Buy for Around $5: Office Depot (ODP)

OfficeDepot The 5 Best Stocks to Buy Around $5While the office supply game surely isn't what it used to be thanks to e-commerce and online orders, there is hope for fallen giant Office Depot (ODP).

Office Depot merged with the struggling OfficeMax last year, which will generate big cost savings in the coming year; in 2014, the company is expected to return to profitability once more.

Look, nobody is impressed by ODP’s performance in the last few quarters. Consider this quote from Office Depot CEO Roland Smith in February after bad quarterly numbers: "While (fourth-quarter) results were clearly disappointing, they shouldn't be a big surprise." Furthermore, Office Depot warned that it expects sales to decline in 2014 as it restructures and closes underperforming stores.

The Office Depot-OfficeMax merger, however, changes the story here. The company is still battered based on its past history, and trading at a deep discount to its future sales and profits. Consider that ODP has about $1 billion in cash on hand and won't see most of its debt come due until 2019, giving it a pretty nice cash cushion.

The downside in Office Depot appears limited now that the office space has consolidated and the pressures of e-commerce have been baked in. A secular recovery could increase hiring and business spending, and result in better sales for ODP as a result.

This still is a risky $5 stock, to be sure, but the worst does appear over for Office Depot.

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Best Stocks to Buy for Around $5: Gramercy Property Trust (GPT)

GramercyPropertyTrustGPT185 The 5 Best Stocks to Buy Around $5Gramercy Property Trust (GPT) is a real estate investment trust that manages mainly industrial and office properties across the U.S. As of last year, GPT controlled more than 110 buildings with about 4.2 million square feet of office space and 1.5 million square feet of industrial space.

Right now, GPT is struggling to break even on the heels of five new property acquisitions in 2013. However, in March, GPT paid its first dividend since 2007, so things are looking up.

Compared with other REITs, the roughly 3% yield isn't amazing … and besides, you have to annualize the 4-cent payout and trust it's going to be there in the coming quarters. Also, shares are down about 7% so far in 2014 despite the reinstated payouts.

However, a recovery in the broader U.S. economy could lift demand for business real estate and result in bigger revenue and profit for GPT.

If you're looking for a cyclical way to play the recovery and want to get in on a good long-term dividend investment, Gramercy Property might be among the best stocks to buy right now.

GPT stock is down about 80% from its 2007 peak, and its dividends remain a fraction of past payouts.

Still, even if Gramercy only gets part of the way back to where it was several years ago, investors will be rewarded handsomely.

Jeff Reeves is the editor of InvestorPlace.com and the author of The Frugal Investor's Guide to Finding Great Stocks. As of this writing, he did not hold a position in any of the aforementioned securities. Write him at editor@investorplace.com or follow him on Twitter via @JeffReevesIP. 

Thursday, April 24, 2014

Can Microsoft Use Windows 8.1 to Springboard Search?

While much ink has been spilled regarding Microsoft's (NASDAQ: MSFT  ) release of Windows 8.1, the latest version of the operating system is targeting more than fixes to existing problems. Through a new feature called "smart search," users will be given search results from both the Internet and the local machine. This is significant for the company, because it will allow Bing ads to be returned as well, giving the company the ability to target search terms even more precisely.

In the following video, Fool.com contributor Doug Ehrman discusses the ramifications of this new feature for both users and the company, as well as why investors should care.

Search is just one of the areas that more and more players are becoming interested in as a basis of differentiation. It's incredible to think just how much of our digital and technological lives are almost entirely shaped and molded by just a handful of companies. Find out "Who Will Win the War Between the 5 Biggest Tech Stocks" in The Motley Fool's latest free report, which details the knock-down, drag-out battle being waged among the five kings of tech. Click here to keep reading.

Wednesday, April 23, 2014

David Einhorn: 'We Are Witnessing Our Second Tech Bubble in 15 Years'

Hedge-fund manager David Einhorn just joined the growing list of market watchers warning about a market bubble.

“There is a clear consensus that we are witnessing our second tech bubble in 15 years,” said Mr. Einhorn of Greenlight Capital Inc. “What is uncertain is how much further the bubble can expand, and what might pop it.”

He described the current bubble as “an echo of the previous tech bubble, but with fewer large capitalization stocks and much less public enthusiasm.”

There are three reasons he cited in an investor letter that back his thesis: the rejection of “conventional valuation methods,” short sellers being forced to cover positions and big first-day pops for newly minted public companies that “have done little more than use the right buzzwords and attract the right venture capital.”

He didn’t specify which companies he felt met that criteria.

Mr. Einhorn isn’t the first investor to warn of a bubble. Pricey stock valuations, record high levels of margin debt and a near record number of money-losing companies going public have made some investors nervous that the market has rallied far beyond what the fundamentals dictate.

Some of the market's biggest momentum plays, such as biotech, Internet and social-media stocks, have been hit hard since early March amid concerns that they have gotten too pricey. Many of those names have recovered some of those losses over the past week and a half.

Without disclosing specific names, Mr. Einhorn said he has shorted a basket of so-called momentum stocks. He highlighted the risk of such a move: “We have repeatedly noted that it is dangerous to short stocks that have disconnected from traditional valuation methods,” Mr. Einhorn said. “After all, twice a silly price is not twice as silly; it’s still just silly.”

But now that there is “a clear consensus” that tech stocks are in a bubble, he said he is more comfortable shorting a basket of these high-flying stocks.

“A basket approach makes sense because it allows each position to be very small, thereby reducing the risk of any particular high-flier becoming too costly…When the prices reconnect to traditional valuation methods, the de-rating can be substantial,” he said. “There is a huge gap between the bubble price and the point where disciplined growth investors (let alone value investors) become interest buyers.”

The last time the Internet bubble burst in the early 2000s, Cisco Systems dropped 89% and Amazon.com Inc. fell 93%, he said. “While we aren’t predicting a complete repeat of the collapse, history illustrates that there is enough potential downside in these [momentum] names to justify the risk of shorting them,” Mr. Einhorn said.

Greenlight Capital lost 1.5% in the first quarter, the New York hedge fund said Tuesday. The firm said it lost money on its bets against Keurig Green Mountain Inc.(GMCR) and Chipotle Mexican Grill Inc.(CMG), among other wagers, while making money on Micron Technology Inc.(MU)

Canada’s Disinflation Woes Are Over

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Shortly after last year's worry about what Canada's persistent disinflation might portend, the country's inflation rate started rising faster than expectations. Indeed, Canada's consumer price index (CPI) has now surpassed the consensus forecast for three consecutive months.

Although consumers often dread the prospect of rising prices, disinflation, or even outright deflation, can wreak far more havoc on an economy than inflation. And when a country is emerging from a period of economic weakness, inflation can be one of the first signs that an economy is revving up again.

According to Statistics Canada (StatCan), non-seasonally adjusted inflation rose 0.6 percent month over month, surpassing the consensus forecast by a substantial two-tenths of a percentage point, which was the same margin in each of the two prior months.

While Canada's inflation may be perking up, on a year-over-basis it's still toward the low end of the 1 percent to 3 percent target range that the Bank of Canada (BoC) uses to guide its monetary policy. The CPI rose 1.5 percent year over year in March, which was one-tenth of a point better than projected.

The goal of the BoC's monetary policy is to target the midpoint of the aforementioned range, though the CPI has not increased at a rate anywhere near 2 percent since April 2012. Instead, it's occupied the low end of the BoC's control range, even dipping below the 1 percent threshold seven times since November 2012, hence the central bank's concern about persistent disinflation.

Meanwhile, the core CPI, which excludes volatile items such as food and energy, climbed 1.3 percent year over year, which was in line with the consensus.

StatCan observed that the rise in CPI was led by energy prices, which climbed 4.6 percent year over year. In the BoC's latest Monetary Policy Report, the central bank said that the total CPI will likely outpace core CPI ! in the coming quarters due to higher energy prices at the consumer level.

Gasoline prices were up 1.4 percent, while the natural gas index increased 17.9 percent, following a 5.5 percent rise in February. Prices for electricity rose 5.0 percent, while prices for fuel oil increased 9.1 percent.

Of the eight major CPI components, six posted price gains on a year-over-year basis, particularly shelter, transportation and food.

Shelter costs were up 2.7 percent, after climbing 2.2 percent the previous month. StatCan notes that the increase in March was the largest since December 2010.

Prices for transportation rose 1.7 percent year over year, following a 0.4 percent rise in February.

And food prices were up 1.5 percent versus a year ago. Economists with CIBC World Markets expect food prices will continue to head higher in the coming months because key food-producing regions were disrupted by extreme winter weather. And the fact that Canada imports much of its food means that consumers will pay more due to the lower exchange rate.

The aforementioned BoC report was published just prior to the latest CPI data. However, the central bank's projections still seem in line with what the latest data suggest. While the bank believes core inflation will remain well below 2 percent at year end, it expects the total CPI to come much closer to its 2 percent target.

Even so, the BoC's near-term growth expectations have become somewhat more muted as of late, with its forecast for full-year 2014 gross domestic product (GDP) growth revised slightly lower to 2.3 percent from 2.5 percent.

The good news is that the lower estimate is largely the result of the unusually harsh winter's effect on first-quarter growth, rather than something more ominous. In the four quarters thereafter, the bank projects the economy will grow at a 2.5 percent rate, or even slightly higher.

In fact, the bank's forecast for full-year 2015 is for GDP growth of 2.5 percent. That's si! gnificant! because this rate was previously identified as the minimum growth necessary to remove excess capacity from the economy.

So Canada's economy is sustaining its upward trend, even if growth isn't quite as robust as we'd like it to be.

Tuesday, April 22, 2014

Barnes & Noble's Tablet Failure Claims a Casualty

Someone's head had to roll. Just weeks ago, Barnes & Noble (NYSE: BKS  ) finally gave up its ambitions in the tablet market. The surrender came amid slow unit sales for its Nook device and the Nook segment, which includes content sales, saw revenue fall by 34%. B&N ate an inventory charge of $133 million related to the heavy discounting it did to get units moving, and the company said that it was changing its strategic plans as a result of the indigestion.

Nook's failure has now claimed a casualty in CEO William Lynch, who has just resigned effective immediately. Lynch had spearheaded B&N's digital and tablet strategy, after becoming CEO in early 2010. The company made no mention of a replacement CEO, but instead divvied up responsibilities among other executives, all of which will report directly to Executive Chairman and founder Leonard Riggio.

Source: SEC filings.

Michael Huseby, who joined up as CFO just over a year ago, will become the CEO of the Nook Media subsidiary. He'll be the leader held accountable to minority investors Microsoft and Pearson if the digital-only business similarly stumbles. On one hand, getting out of tablet hardware will help Barnes & Noble reduce its losses. On the other hand, the company's adoption of Google Play as a content store concedes that B&N isn't happy with digital sales through its own Nook platform.

In fairness, digital content sales performed better than unit sales. Digital content sales were up 16.2% for the full year, and the company had said weak hardware sales contributed to an 8.9% decline in content sales in the fourth quarter. B&N was also facing a tough Q4 comparison, since last year was particularly strong thanks to the The Hunger Games and Fifty Shades of Grey trilogies that sold well a year prior.

Nook's future is up in the air. Co-branded Nook tablets made by third-party OEMs are a curious possibility, since manufacturers have more promising platforms like Android to partner with. Growing a Nook content platform that's secondary to other platforms is also an uphill battle. Nook may have claimed its first casualty, but it might not be the last.

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

Monday, April 21, 2014

Why Life Time Fitness's Earnings May Not Be So Hot

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

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

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

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

Over the past 12 months, Life Time Fitness generated $13.2 million cash while it booked net income of $114.0 million. That means it turned 1.1% of its revenue into FCF. That doesn't sound so great. FCF is less than net income. Ideally, we'd like to see the opposite.

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

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

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

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

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

With questionable cash flows amounting to only 1.9% of operating cash flow, Life Time Fitness's cash flows look clean. Within the questionable cash flow figure plotted in the TTM period above, stock-based compensation and related tax benefits provided the biggest boost, at 3.3% of cash flow from operations. Overall, the biggest drag on FCF came from capital expenditures, which consumed 94.9% of cash from operations.

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

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

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

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The Baristas Coffee Ball is Rolling (SBUX, BCCI)

It's certainly no Starbucks Corporation (NASDAQ:SBUX), but that doesn't mean Baristas Coffee Co. (OTCMKTS:BCCI) isn't a compelling trading opportunity. Indeed, BCCI could be entering a high-growth phase that makes SBUX look ill in comparison. Just don't stay married to it for too long, as the best thing Baristas Coffee has going for it is its shtick... a shtick that Starbucks would likely never employ.

If the name seems vaguely familiar, it may be because yours truly took a look at BCCI back on March 15th of last year when the stock and the company's story started to make waves. And make no mistake - the underlying story is the kind that makes waves. See, while the baristas (the people who brew the coffee) at Starbucks are great coffee-makers, the baristas at Baristas Coffee stand are... scantily, provocatively-dressed young females.

Needless to say, the presentation draws a crowd. It may draw a crowd that Starbucks Corporation isn't necessarily trying to attract, but it still draws a crowd. And, that crowd is getting bigger.

Although the OTC-listed stock isn't a reporting company, there's more than enough circumstantial evidence that the company is growing. The most important of that evidence has materialized just within the past couple of months.

One of those nuggets of evidence is Baristas Coffee Co. being featured by Bloomberg as the "under the radar" pick of the week, and maybe even the year, in early March. Later in the same month, BCCI was named one of Inc. Magazine's "Most Exciting Franchises of 2014". Between the two media sources, the company was injected with a certain amount of credibility that it just never had up until then. It's still no Starbucks, but it was a big leap forward for the budding company.

Yes, it was that media attention that pushed the stock into rally mode, though in retrospect it's not as if the company - or the stock - had nothing else going for it. It just couldn't garner the kind of attention it needed to sustain the kind of interest it needed to keep the stock going. With that task now taken care of, it looks as if there's little else to hold the stock back... at least as long as the publicity ball keeps rolling. And, if BCCI is like most other companies, now that the media ball is rolling it's not apt to slow for a while. Nothing draws a crowd like a crowd.

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