Thursday, February 28, 2013

If you're a stock or mutual-fund investor, then you probably know that investments held for more than a year and sold for a profit are subject to lower tax rates as long-term capital gains. Generally speaking, if you're in the 25% tax bracket or higher, you will owe 15% of your profits to the Internal Revenue Service. If you're in the upper-income category, you may owe the maximum 20% rate for 2013 and beyond.

But what you might not realize is that more than just stock and mutual-fund shares are eligible for favorable capital-gains tax treatment. If you sold, say, your vacation time share or your country-club membership, then you just might be pleasantly surprised to discover you'll owe only 15%, or at most 20%, on the gain (assuming that you held the asset for more than a year).

Here's a list of some of the most common types of assets potentially subject to these lower rates:

1. Securities options (as in puts and calls) held as personal investments.

2. Stock of closely-held corporations.

3. Collectibles held as personal investments, like baseball cards, stamps, rare coins, art, etc. In this case, a 28% (not 20%) maximum federal tax rate applies.

4. Personal residences (including vacation homes). In this case, the 15% or 20% rate generally applies to gains beyond what you can exclude (not pay tax on) under the $250,000/$500,000 home-sale gain exclusion privilege. However, a 25% maximum rate applies to gains triggered by certain depreciation deductions claimed against your property.

5. Vacation time-share interests.

6. Country-club memberships.

7. Personal autos (that aren't collectibles). Keep in mind, this means that you've sold your car at a profit, which is unlikely.

8. Personal-property items (that aren't collectibles) in general -- such as jewelry, furniture, a lawn mower and so on.

9. Rental real estate owned by an individual, partnership, limited-liability company or S corporation. (The standard 20% maximum rate applies, but gains from, property, depreciation, deductions may be taxed at up to 25%.)

10. Land held as an investment by an individual, partnership, limited-liability company or S corporation.

11. Your ownership interest in a partnership or a limited-liability company. In this case, the 20% maximum rate usually applies, although depending on the assets of the partnership or limited-liability company, part of your gain may be taxed at higher rates of up to 39.6%.

12. Land used in a business owned by an individual, partnership, limited-liability company or S corporation. This could be the actual land that your small business is located on, or it could be land held by your small business, such as an apple orchard.

13. Options to buy investment land when the option is owned by an individual, partnership, limited-liability company or S corporation. This is the option to buy land at a certain price over a set period of time. It could be, for example, that you've purchased the option to buy a plot of land that you think is going to appreciate because of future development in the area.

14. The right to receive money for release of a restrictive covenant in a land deed when the deed is owned by an individual, partnership, limited-liability company or S corporation.

15. The right to a condemnation award when the right is owned by an individual, partnership, limited-liability company or S corporation. This would apply if, say, your property were condemned by the city so that it could take over the land and build a civic building.

16. The right of a tenant to receive a lease-cancellation payment when the tenant is an individual, partnership, limited-liability company or S corporation. This would apply if you were renting property and your landlord cancelled your lease.

17. Contract rights owned by an individual, partnership, limited-liability company or S corporation. For example, you might own a license giving you the right to use a software program. If you can sell that license to someone else for a gain, it will be taxed at no more than 20%.

18. Most other intangible business assets (such as intellectual property, trade secrets, goodwill and so on) owned by an individual, partnership, limited-liability company or S corporation. In these cases, the 20% maximum rate generally applies. However, if the business intangible was amortized, gains attributable to the amortization deductions are taxed at your regular rate (up to 39.6%).

19. A stock-exchange membership owned by an individual, partnership, limited-liability company or S corporation. Obviously, there aren't too many of these, but this does apply to regional exchanges as well.

20. Depreciable or amortizable assets used in business -- provided the asset is owned by an individual, partnership, limited-liability company or S corporation. Gains attributable to depreciation or amortization deductions are generally taxed at your regular rate (up to 39.6%). The 20% maximum rate generally applies to the balance of the gain.

3 Stocks to Get on Your Watchlist

I follow quite a lot of companies, so the usefulness of a watchlist to me cannot be overstated. Without my watchlist, I'd be unable to keep up on my favorite sectors and see what's really moving the market. Even worse, I'd be lost when the time came to choose which stock I'm buying or shorting next.

Today is Watchlist Wednesday, so I'm discussing three companies that have crossed my radar in the past week -- and at what point I may consider taking action on these calls with my own money. Keep in mind that these aren't concrete buy or sell recommendations, nor do I guarantee I'll take action on the companies being discussed weekly. What I can promise is that you can follow my real-life transactions through my profile and that I, like everyone else here at The Motley Fool, will continue to hold the integrity of our disclosure policy in the highest regard.

SUPERVALU (NYSE: SVU  )
Last month SUPERVALU's many attempts to catch a fish worked as it reeled in a $3.3 billion consortium bid from private-equity firm Cerberus and other investors. In the deal, SUPERVALU gives up its Albertsons, Jewel-Osco, Acme, Shaw's and Star Market franchises. In return, shareholders get better business clarity, $3.2 billion of SUPERVALU's monstrous debt pile will be assumed by the purchasers, and SUPERVALU's business becomes much more focused on its wholesale business, as well as its remaining franchises, including Save-A-Lot.

Another aspect of the deal is up to a $250 million purchase of SUPERVALU's outstanding shares by a Cerberus-led group up to $4 per share. But, with its share price hovering near $4 already, there's little room left to the upside based on this secondary investment.

It's also worth noting that SUPERVALU is taking on an additional $2.4 billion in loans/revolving credit that will give the company a net reduction in debt of just $800 million.�

Even more pressing, while giving SUPERVALU more financial flexibility, it still puts the grocer light years behind its peers in remodels and convenience. Take Kroger (NYSE: KR  ) , for example. Kroger has already remodeled many of its stores, installed fueling stations for customer convenience, and introduced healthier organic and natural products into its stores, which helped boost its same-store sales figures to a gain of 3.2% in the third quarter over the year-ago period and allowed it to raise its full-year EPS forecast. SUPERVALU never had the capital to orchestrate a companywide remodel, and now that it does, it's going to take years to see the effects that Kroger is experiencing right now.

Personally, I see this as more of the same from SUPERVALU and will be looking for more downside.

Coldwater Creek (NASDAQ: CWTR  )
Speaking of retailing disasters, I'm not sure what's been going on with Coldwater Creek over the past few months, but its bottom-line results would suggest it's heading lower rather than higher. Coldwater, which sells mature women's apparel and accessories, has been in a multiyear, seemingly never-ending turnaround campaign that's resulted in store closures, more attention given to inventory assortments, and tight cost controls -- and yet it still keeps losing money.

The fourth quarter is the make-or-break time of the year for retailers as Christmas shopping tends to drive higher-margin products out the door. For Coldwater, mid-January was another chance to crush investors' dreams by guiding its own previous forecast for an EPS loss of $0.55 to $0.65 down to a loss of $0.70 to $0.80 per share. The company blamed weak store traffic in early November and December for steep price cuts, which hurt margins, but to me this sounds more like business as usual for Coldwater.

What I find really troublesome is how incredibly weak direct-to-consumer revenue has been. Coldwater is one of a very, very select few retailers whose online sales are actually falling! If people aren't buying online, and they clearly aren't buying in your stores (as evidenced by the January earnings warning), then there's a serious problem that needs correcting. This could mark the perfect time for a bet against Coldwater Creek.

Dole Food (NYSE: DOLE  )
I often shy away from paying much attention to analyst upgrades and downgrades, but a recent article from Barron's on Dole has me nodding my head in agreement that it could be headed higher in no time.

The big catalyst that Barron's notes is the $1.69 billion purchase of Dole's packaged fruit and fresh produce business in Asia by Itochu (NASDAQOTH: ITOCY  ) , with Itochu also getting exclusive trademark rights to the Dole brand name in Asia. The deal makes a lot of sense from an investing perspective because Dole had $1.69 billion in debt as of its most recent quarter and Itochu is paying entirely in cash (there's no coincidence there!). This means Dole could essentially be debt-free, or nearly debt-free, once this deal closes. As the Barron's article also points out, investors have drastically undervalued Dole's land assets, which are estimated to be worth about $500 million.�

The resulting company will boast operations in North America and Europe, and fruit will account for about 80% of total sales. Barring an unfavorable weather event that would affect crop prices, Dole is a cash-flow powerhouse that could soon be paying out a dividend to shareholders and could wind up trading at a much lower forward multiple than its peers. This deal skirted most people's radars, but Dole is a household name that may deserve a second look for your portfolio.

Foolish roundup
Is my bullishness or bearishness misplaced? Share your thoughts in the comments section below, and consider following my cue by using these links to add these companies to your free personalized Watchlist to keep up on the latest news with each company:

  • Add SUPERVALU to My Watchlist.
  • Add Coldwater Creek to My Watchlist.
  • Add Dole Food to My Watchlist.

Three great ways to play the retail sector
The retail space is in the midst of the biggest paradigm shift since mail order took off at the turn of last century. Only those most forward-looking and capable companies will survive, and they'll handsomely reward those investors who understand the landscape. You can read about the 3 Companies Ready to Rule Retail in our special report. Uncovering these top picks is free today; just click here to read more.

Top Stocks To Buy For 2/21/2013-1

Altera Corporation NASDAQ:ALTR declined 1.35%, closed at $36.12 and its overall trading volume was 5.79 million shares during the last session. The trailing twelve month return on investment remained 30.31% while its earning per share reached $2.13.

Seagate Technology PLC NASDAQ:STX plunged 0.07%, closed at $14.69 and its overall trading volume was 8.67 million shares during the last session. The trailing twelve month return on investment remained 35.19% while its earning per share reached $3.09.

NVIDIA Corporation NASDAQ:NVDA dropped 0.42%, closed at $14.31 and its overall trading volume was 8.60 million shares during the last session. The trailing twelve month return on investment remained 7.49% while its earning per share reached $0.36.

TriQuint Semiconductor NASDAQ:TQNT decreased 3.70%, closed at $11.45 and its overall trading volume was 5.81 million shares during the last session. The trailing twelve month return on investment remained 24.65% while its earning per share reached $1.03.

Akamai Technologies, Inc. NASDAQ:AKAM declined 3.34%, closed at $49.17 and its overall trading volume was 5.63 million shares during the last session. The trailing twelve month return on investment remained 7.98% while its earning per share reached $0.84.

1 More Way Samsung Is Beating Apple -- for Now

Quite a few commenters weren't keen on the idea of grouping smartphones, tablets, and traditional PCs all together in one big computing bucket. Well, I'm not the only one who looks at the computing landscape through this lens.

Market researcher IDC has now released its latest report on connected device shipments in 2012, with the definition of connected devices including smartphones, tablets, desktop PCs, and portable PCs. When looking at the big picture, there were a total of 367.7 million connected device units shipped in the fourth quarter, bringing the full-year total up to 1.2 billion.

That total represents 29.1% growth in connected devices for the year, with quite literally all of that growth coming from mobile form factors.

Stop me if you've heard this one before
With smartphones now dominating the landscape in unit terms, in part due to their lower price and broad use cases, Apple (NASDAQ: AAPL  ) and Samsung are the top two connected device vendors, much like how the frenemies are the top two smartphone vendors.

In the third quarter, Samsung had a wide lead over Apple, with a total 21.8% market share of connected devices. At the time, Apple was only able to garner 15.1% of the broader market since many consumers were putting off purchases in anticipation of Apple product launches in the fourth quarter such as the iPhone 5, which garnered no shortage of media attention.

By year's end, the iPhone 5 and iPad Mini helped Apple surge to close most of the gap and finished the year neck-and-neck with its South Korean supplier.

Connected Device Vendor

Q4 2012 Units

Q4 2012 Market Share

Samsung

77.9 million

21.2%

Apple

74.8 million

20.3%

Lenovo

24.3 million

6.6%

Hewlett-Packard (NYSE: HPQ  )

15.1 million

4.1%

Sony (NYSE: SNE  )

11.1 million

3%

Source: IDC.

That's less than a 1% lead that Samsung was enjoying in the fourth quarter of 2012, although it was still ahead of Apple by 2.6% for the entire year. What's so striking is that much on the smartphone operating system front, the hardware market is becoming a clear duopoly.

With mobile platforms, Google (NASDAQ: GOOG  ) Android and iOS now power 91% of smartphones shipped. With connected devices, Apple and Samsung were 41.5% of the market. That combined share is less, which is inevitable since the hardware industry is much more competitive than operating systems.

Sony has come out of left field and was able to rank within the top five smartphone vendors in the fourth quarter also, which was enough to earn it the No. 5 spot in the broader connected devices market. Even though its Xperia lineup of Android smartphones doesn't make headlines in the U.S., that doesn't mean they can't hold their own in emerging markets or in its home market of Japan.

Still, traditional PCs remain part of the picture, as evidenced by HP's ability to rank within the top five, despite lacking any meaningful mobile hardware offerings. HP may be about to step back into the tablet ring after its webOS debacle two years ago, as rumors continue to swirl that the PC giant is exploring an Android tablet. The shoe fits, since HP also recently launched its first Chromebook, so its relationship with Google is alive and well.

IDC doesn't believe that PCs can keep up with mobile device growth, in part because devices are cheaper and more expendable. Tablet average selling price, or ASP, fell 15% in 2012 to $461, which is undoubtedly a consequence of the consumer shift toward smaller form factors. That trend should continue into this year, especially with the introduction of the iPad Mini, as the iPad remains the dominant tablet out there.

With Apple and Samsung still locked in a heated battle for device supremacy, what could potentially tip the scales in favor of Cupertino? A low-cost iPhone. That's what.

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

Gold futures waver; firmer dollar adds pressure

LONDON (MarketWatch) � Gold futures struggled for direction on Thursday, with the nomination of Haruhiko Kuroda to the post of governor at the Bank of Japan feeding dovish monetary-policy hopes, while a firmer dollar added pressure on most metals prices.

Gold for delivery in April GCJ3 fell $4.30, or 0.3%, to $1,597.50, but swung between small gains and losses throughout the session.

Reuters Enlarge Image Japan has nominated Haruhiko Kuroda as the country�s new central bank chief.

Thursday�s subtle moves came as Japan Prime Minister Shinzo Abe submitted the government�s choice for Bank of Japan governor to a parliamentary committee. See: Tokyo nominates Haruhiko Kuroda as BOJ chief

Since he was elected late last year, Abe has been pressuring the central bank to take a more aggressive stance on deflation, and Kuroda recently stressed that the BOJ should increase and diversify its asset-buying program, its main policy tool with interest rates near zero.

The dollar gained a bit against the yen after the news, a move that could benefit gold, according to one strategist.

�Both the Japanese yen and the Swiss franc are historically viewed as safe-haven assets, and depreciation of the two may lead investors to choose bullion, a currency that cannot be printed, which is also regarded as a safe-haven asset,� said HSBC metal analyst James Steel.

Click to Play Will Rodman meet Kim Jong Eun?

Former Chicago Bull Dennis Rodman is in North Korea this week to film a documentary with members of the Harlem Globetrotters.

A firmer dollar also has the ability to weigh on dollar-denominated commodities, as they become more expense for other currency holders. The ICE dollar index DXY , which measures the greenback against a basket of six other currencies rose to 81.67 from with 81.552 in New York on Wednesday, adding pressure on the yellow metal. See: Dollar up as central bankers defend loose policies

Thursday�s gold weakness marked the second straight day of losses, but analysts at Commerzbank said they didn�t �believe the current weakness in the price of gold to be sustainable.�

�A number of aspects point towards higher gold prices: the Indian finance minister, for instance, announced no further hikes in gold import duties in his annual budget speech today. Coupled with the lower local prices of late, this could give rise to growing gold demand in India in future,� they said in a note.

Around the wider metals complex, May silver SIK3 �slipped 7 cents to $28.92 an ounce, erasing a gain from earlier in the session

�Silver is trading in no-man�s land, so it will most likely follow price action in gold, although there is some resistance seen around $29.60 to $29.90,� said Fawad Razaqzada, technical analyst at GFT Markets.

May copper HGK3 �traded 1 cent lower at $3.56 a pound.

Palladium for delivery in June PAM3 PAM3 erased $2 to $743.55 an ounce. Platinum for April delivery PLJ3 �shaved off $5.30 to $1,594.30 an ounce.

Top Stocks For 2/11/2013-6

NuEarth Corporation (NUEC.PK), a manufacturer and marketer of “Clean & Green” products and technology, has concluded its acquisition of AB Technology, SA of Lokeren, Belgium. (AB Tech). AB Tech is a Northern European provider of “green” biodegradable cleaners and paint strippers. AB Tech’s sales for 2009 were in excess of $4 million.

This merger of NuEarth and AB Tech marks a major milestone in the product offerings now available to their respective clients. Currently, a large number of industries, institutions and public sectors enhance their environments with solutions offered by the two organizations. Bringing them together provides a powerful platform for innovating and supporting the needs of their clients. The combined savings from the synergies will yield $2.1M to the bottom line while the addition product mix will add $7.5M to the top line”

“NuEarth Corporation is the US exclusive distributor of NuSoil; AquaSolv; Dustblock; and Roadbinder. Through this combination NuEarth now will become the exclusive distributor for ABTech’s line of biodegradable cleaners and strippers,” said Alfon Rosalini, Senior Vice President of NuEarth. “The combination will greatly strengthen NuEarth by accelerating the growth strategy and enhancing the brand portfolio of the company. This will clearly be a win for both companies’ customers while significantly enhancing value for all shareholders. We will have a total combined global footprint and the leading service organization in the industry capable of a major expansion to serve the needs of both our existing and future customers.”

The Dow Chemical Company (NYSE:DOW) will showcase its new solutions designed for photovoltaic manufacturers at this year�s 25th European Photovoltaic Solar Energy Conference and Exhibition (PVSEC) in Valencia, Spain (stand L3/H4/B4, Hall 4, Feria Valencia). Dow�s photovoltaic solutions can help increase solar cell efficiency and solar module durability, improve device performance at lower cost, and enable widespread adoption of solar energy. Solutions being showcased include:

Dow�s ENLIGHT cleaning, texturizing, imaging and metallization solutions to enhance performance in solar cell manufacturing,
Dow�s ADCOTE and MOR-FREE adhesives for module fabrication for long-term durability with improved environmental profile,
Dow�s new innovative ENLIGHT Polyolefin Encapsulant Films used as protective encapsulants help lower total module system costs and provide for improved productivity and extended reliability,
DOWTHERM and SYLTHERM heat transfer fluid solutions for solar grade silicon production,
Dow�s Polyglycol CF fluid for a higher quality experience in slicing silicon wafers.

Solar cell efficiency is the primary measure of device performance. Higher cell efficiencies translate into lower costs, which enable widespread adoption of this renewable energy alternative. Dow Electronic Materials business� ENLIGHT metallization, imaging, cleaning and texturizing materials enable improvements in solar cell efficiency, and lower the solar cell manufacturing cost. As the leader in front side metallization using plating chemistry, Dow�s products have successfully been used in commercial scale cell production.

Darling International Inc. (NYSE:DAR) reports net income of $11.4 million, or $0.14 per share, for the second quarter ended July 3, 2010. Sales and results of operations for the second quarter as compared to the same period of the prior year are as follows:

For the second quarter of 2010, the company reported net sales of $166.2 million as compared to $155.3 million for the second quarter of 2009. Higher finished product prices and increased raw material volume accounted for the majority of the $10.9 million increase.

Net income for the second quarter of 2010 was $11.4 million, or $0.14 per share, as compared to $11.7 million, or $0.14 per share, for the 2009 comparable period. The $0.3 million decrease in net income for the second quarter resulted from increased operating costs and depreciation / amortization expense related to acquisitions and the company’s investment into its renewable diesel joint venture project.

For the six months ended July 3, 2010, the company reported net income of $22.8 million, or $0.28 per share, as compared to $16.5 million, or $0.20 per share, for the 2009 comparable period. The $6.3 million increase in net income for the six months ended July 3, 2010, resulted primarily from higher finished product prices and increases in both volume and yield of raw material.

Darling International Inc. is the largest publicly traded, food processing by-products recycling company in the United States. The Company recycles used restaurant cooking oil and by-products from the beef, pork and poultry processing industries into useable products such as tallow, feed-grade fats, meat and bone meal and hides. These products are primarily sold to agricultural, leather, oleo-chemical and bio-diesel manufacturers around the world. In addition, the Company provides grease trap collection services and sells equipment to restaurants.

Zombie OS Invades Mobile World Congress

Amid the phablets and carrier complaints, LG Display (NYSE: LPL  ) surprised the crowd at this week's Mobile World Congress when it disclosed its purchase of the open-source webOS for building a smart TV platform. Hewlett-Packard (NYSE: HPQ  ) acquired webOS when it paid $1.2 billion for Palm in 2010, only to give away the OS as an open-source project two years later.

Is LG's acquisition of webOS a serious threat to incumbents Apple and Google? The Motley Fool's Alison Southwick asks Tim Beyers of Motley Fool Rule Breakers and Motley Fool Supernova for his perspective in the video below. Please watch, and then leave a comment to let us know what you think.

For further analysis of Hewlett-Packard, which some believe is one of the most underappreciated turnaround stories on the market today, check our newest premium research report. �Inside our technology analyst details everything you need to know to decide whether the stock is a fit for your portfolio. Click here now to get your copy today.

How to stop adding to the hype and make the internet of things a reality - 05:42 PM

(gigaom.com) -- The internet of things is an amorphous concept, much like the internet itself: People assume it’s a network of connected devices that will somehow let them do something or monitor something over the internet. But the folks trying to build the internet of things can’t be content with a mere concept; they need to refine it, so they can actually deliver on the awesome promise that the combination of connected devices, cloud computing and faster data analytics can offer.

Last night in San Francisco, five speakers at the GigaOM internet of things meetup hashed out a definition for the concept, called for better design associated with internet of things-based services and begged people to share their data. As for that definition, it wasn’t exactly definite; but all of the participants agreed that the connected device wasn’t the product, the service was.

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Ideally, the internet of things should fade into the background; what matters is what it allows people to do.

“Our current programming tools are rigid and deterministic,” said Mike Kuniavsky, a principal in the Innovation Services Group at PARC. He argued that developers are not prepared to program for a world where hundreds of connected devices will work in concert to deliver services. The industry can’t afford to fall back on the current pattern of binary decision making and still deliver a real-time experience, which means that programmers will start having to think about how to connect these tools using probabilistic logic: in which the computer, not a human, chooses the most likely outcome.

“We can’t afford command and control, and it fails when you move to hundreds or thousands of devices,” Kuniavsky said. “We need new tools that will help us shape the behavior of many devices asking for information simultaneously, working probabilistically rather than through increasing hardware.”

The other design elements that people must take into consideration are that these are not devices made for the screen, but devices that need to be integrated into everyday life, according to Roberto Tagliabue, executive director and software designer at Jawbone. It’s also important to think about the difference between a service and an app that might hope to have the user’s full attention.

“Ask when and how we can be relevant to the user,” Tagliabue said. “It’s not about their full attention, but now, how we can improve their life.”

Design and programming considerations aside, the talk at the meetup later shifted to what happens as the smartphone replaces a variety of physical objects. Merrill didn’t think the “big glass slab” replaces physical devices, but instead that our devices will get more tactile and design connectivity in for specific uses.

“Making the tool fit us and making it fit the task is super important,” he said. “Our hands have a lot of different things we can do and most are different from touching a screen.”

Several people in attendance wondered about the direction for the current internet of things. Usman Haque of Cosm outlined the ways that big companies like Philips, IBM and Samsung are talking about the internet of things as a way to boost convenience, but also as a way for people to abdicate their thought process to the dictates of connected devices. He also found efforts to consider security and privacy in our coming connected world as a threat to innovation, noting if the founders of the internet started their tinkering with worries about securing the network, it would never have evolved the way it did.

He ended with a call to action for the people in the room, asking them to have fun and to build devices that were open, sharing the data they collected with an eye toward actually connecting things and giving others the opportunity to build on top of their original designs. In that way, the business model for the internet of things will mirror that of an app store, where the hardware platform provider and the developers share in the wealth.

The visions and advice shared last night paint a utopian vision for our connected future, one that I hope comes to pass. But first, let’s get the definition of the internet of things spread far and wide. It’s about the services, not about devices.

Disclosure: Sifteo is backed by True Ventures. True Ventures is an investor in the parent company of this blog, Giga Omni Media. Om Malik, founder of Giga Omni Media, is also a venture partner at True.

This story was corrected to reflect Mike Kuniavsky’s title at PARC. He is a principal not the head of Innovation Services Group at PARC.

Wednesday, February 27, 2013

How to Make Money From the Great EHR Vendor Switch

Several electronic health record, or EHR, systems vendors might be getting the boot in 2013, according to Black Book Ranking's annual survey of almost 17,000 EHR users. Is there a way that investors could potentially profit off of what is being dubbed "the Great EHR Vendor Switch"?�Maybe. Here's how you just might make money from this possible EHR upheaval.

Survey says
First, we need to glean as much from the internals of the Black Book Ranking survey as possible. A surprisingly large number of EHR users want to change systems. A full 17% plan to do so within the next year.

Source: Black Book Rankings.

Some of those who want to switch systems apparently aren't too happy with their current technology platform. That's particularly true for customers with on-premises systems.

Source: Black Book Rankings.

By far, the biggest reasons for wanting a change stem from the platform not being a good fit. 80% of the users polled said that their system doesn't meet the needs of their practices. About the same amount stated that their practices didn't determine needs adequately before selecting the system that was implemented.

There were a few other clues in the survey responses that can help us in our quest. When asked what would disqualify a vendor as a replacement choice, 32% said mergers or acquisitions. Another 26% answered with "senior management in disarray."

Most likely to succeed -- and fail
These questions and responses should be helpful as we attempt to figure out which companies might be winners and losers in the EHR vendor shuffle. Of course, our candidates are narrowed down a lot, since we'll only consider publicly traded vendors that derive most of their revenue from EHR technology.

One premise that I would argue makes sense to adopt is that vendors that have seen increasing growth throughout the past year would be the least likely to be kicked out. The thought here is that word gets out on the street when other customers are unhappy and impacts new sales as prospects hear bad things from existing customers. With that in mind, let's look at sales growth for the following EHR companies: Allscripts (NASDAQ: MDRX  ) , athenahealth (NASDAQ: ATHN  ) , Cerner (NASDAQ: CERN  ) , Greenway Medical Technologies� (NYSE: GWAY  ) ,�and Quality Systems (NASDAQ: QSII  )

MDRX Revenue TTM data by YCharts.

Another factor to consider is recent customer rankings of EHR systems. We would expect that systems consistently ranked highly would be less vulnerable to losing customers and vice versa. Below is how our five publicly traded companies stack up.

Company



Medscape�Survey



Best in KLAS

1-10 Physicians

Best in KLAS

11-75 Physicians

Best in KLAS

Over 75 Physicians

Allscripts3.00

65.8

69.0

59.5
athenahealth3.44

86.9

82.8

N/A
Cerner3.15

71.2

73.4

68.6
Greenway3.0480.482.8N/A
Quality Systems (NextGen)2.8172.666.1N/A

Sources: Medscape, KLAS.�

If we consider all of the above criteria, athenahealth stands out as the vendor most likely to succeed. Revenue growth has been very strong and outpaced all the others. The company ranked highest in three of the four customer ranking categories shown above. With its software-as-a-service products, athenahealth should appeal to the 70% of EHR users who expressed preference for replacing their current system with a Web-based or hosted system.

The bottom two candidates are Allscripts and Quality Systems. However, I'd say that the vendor most likely to lose customers in 2013 probably is Allscripts. My hunch is that respondents had the beleaguered company in mind when they listed their top two reasons for not picking a new vendor as potential merger or acquisition and senior management in disarray. Allscripts is also the only one of the bunch that experienced revenue declines over the past year.�

The long and short of it
Investors could simply buy athenahealth with the assumption that it stands to gain the most with "the Great EHR Switch" this year.�You could sell Allscripts short. Alternatively, you could do both. As long as athenahealth outperforms Allscripts (even if both go down), you win. You could even use LEAP options with this approach to reduce the amount of money at risk.

Keep in mind that there is no guaranteed strategy. This one is no exception. Athenahealth's valuation is sky-high. Any hiccup could send shares falling. Allscripts could find a buyer in 2013, which would likely boost the stock. However, if you're looking for a way to profit from EHR fruit basket turnover, this could be a way to do it.

Want another great idea for making money in 2013? The Motley Fool's chief investment officer has selected his No. 1 stock for the year. Find out which stock it is in the brand-new free report: "The Motley Fool's Top Stock for 2013." Just click here to access the report and find out the name of this under-the-radar company.

Hewlett-Packard Announces Its First Chromebook

Hewlett-Packard (NYSE: HPQ  ) today announced its first Chromebook running Google's (NASDAQ: GOOG  ) Chrome OS. This expands the PC giant's portfolio lineup across operating systems, which it is emphasizing in order to provide consumers with more choices.

Source: HP.

The HP Pavilion 14 Chromebook will retail at $329.99, which is higher than the newest Chromebook offerings from Acer and Samsung, which are available for $199 and $249, respectively. It also carries a larger 14-inch display than those from Acer and Samsung. It will be powered by an Intel Celeron processor and come with 16 GB of storage.

Like other Chromebooks, the laptop will come with many of Google's services directly integrated.

link

Her Financial Goal: Cutting Back on an Online Shopping Habit

Everyone has things they want to improve about their financial lives -- even those of us who are paid to write and think about money on a daily basis. To that end, some of the editors at AOL and DailyFinance have shared their financial goals for 2013. In return, I reached out to some experts for tips that can help these folks -- and everyone who has a similar resolution -- step-by-step their way toward making these goals reality.

Krisanne Alcantara of AOL Real Estate wants to set aside 20 percent of every paycheck automatically in high interest online savings account. But her more challenging goal may be to curb her online shopping habit.

"Like most 26-year-old females, I've got Asos.com, and Net-a-Porter.com, and Shopbop.com, and Amazon.com, bookmarked for easy lunchtime retail therapy without leaving my desk," says Krisanne. "And while it's convenient and fun to shop online -- and on my iPhone -- retailers make it too easy to get sucked into impulse buys and overspending. I want to save money by actively curbing my online shopping expenditures, or at least learn how to shop more responsibly."

Here's what Jean had to say:

Step 1: To automatically deduct the 20 percent directly from your paycheck, you'll need to visit your company's HR department. This process is similar to the one you went through when you set up direct deposit to your checking account, says financial planner Stacy Francis, founder of SavvyLadies.com. "You'll need to give them the bank name, the bank address, routing number, and the savings account number," she says.

Step 2: Think about why you shop online in the first place. Do you visit Rue La La when you're bored? Sad? Angry? Maybe it's even simpler than that; maybe you shop because the emails you get from your favorite websites are too hard to resist. Unsubscribe! (That's what I did!). Then find another coping mechanism for emotions that lead you to shopping. Whether you pick running, yoga or kickboxing, chances are your new activity will be good for the wallet and the body.

Coming Thursday: A Photo Editor Hoping to Modify an Underwater Mortgage

Or, read the previous article in the series: Her Financial Goal: Win at the Refinancing Game

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Energy Stocks: Energy stocks gain; Range leaps after earnings

SAN FRANCISCO (MarketWatch) � Energy stocks rose on Wednesday, with Range Resources Corp. in the lead after it swung to a profit in the fourth quarter, beating analysts� expectations.

Range Resources Corp. shares RRC � advanced 3%. The company late Tuesday reported fourth-quarter profit of $53 million, or 32 cents a share, versus a loss of $3 million, or 2 cents a share, in the year-ago period.

Excluding certain one-off items, the company said earnings rose to 46 cents a share from 33 cents a share in the year-ago quarter. Analysts forecast earnings of 29 cents a share.

Click to Play Titanic II in the works

Clive Palmer, an Australian billionaire, is getting ready to build a new version of the Titanic that could set sail in late 2016.

Shares of Exxon Mobil Corp. XOM �gained 0.2%. Exxon won a reversal of $1.5 billion in punitive damages over a 2006 gasoline leak rural Maryland residents claimed tainted their water, Bloomberg News reported. Exxon will have a new day in court.

Chevron Corp. CVX �shares were up 0.5%. Shares of ConocoPhillips COP �added 0.2%.

Canacol Energy Ltd, a Calgary, Canada, firm that operates in Colombia, said Wednesday it will explore for shale oil with ConocoPhillips in Colombia�s Middle Magdalena basin, the Dow Jones Newswires reported.

ConocoPhillips will pay $13.5 million in cash and carry the cost of the drilling, completing and testing of up to 13 wells.

Canacol said in a statement the agreement calls for exploration and potential development of the Santa Isabel contract. ConocoPhillips will get 70% of any shale oil found in the deeper areas while Canacol would retain the other 30% and keep 100% of the rights of shallower reservoirs.

Canacol already has partnerships with Exxon and Royal Dutch Shell PLC.

Reuters Enlarge Image Protesters gather on the first day of the BP trial over the Deepwater Horizon oil rig spill.

U.S.-listed shares of BP PLC BP �declined less than 0.1%. The third day of the civil trial on the 2010 Deepwater Horizon accident was under way in New Orleans, with BP executive Lamar McKay resuming his testimony.

McKay, the president of BP America at the time of the accident, told jurors Deepwater Horizon, which BP leased from Transocean Ltd. RIG �to drill its ill-fated Macondo well, had a good safety record before it blew up, according to media reports. He said he believed safety at the well was a shared responsibility.

Transocean and Halliburton Co. HAL , which did some cement work in the well, are also defendants in the civil trial, which began Monday in New Orleans. Shares of Transocean rose 0.5%, while Halliburton shares advanced 0.8%.

McKay is currently the top executive at BP�s upstream unit.

The trial�s third day is also expected to include excerpts of a taped deposition by Tony Hayward, BP chief executive at the time of the accident.

Rig Deepwater Horizon exploded in April 2010, killing 11 workers and triggering the worst offshore spill in U.S. history.

On Tuesday, witness Robert Bea, an engineering professor, said BP�s internal investigation of the accident had been incomplete, and that BP had a culture of putting costs over safety.

Rackspace buys its way into MongoDB market with ObjectRocket - 02:00 AM

(gigaom.com) -- Rackspace is buying its way into the hot MongoDB database market with its acquisition of ObjectRocket, a year-old provider of cloud-based MongoDB services.

The deal, the terms were not disclosed, shows that major cloud infrastructure providers need to offer an array of database options — Rackspace already offers MySQL but Amazon Web Services offers a full slate of databases and managed databases. In December, Softlayer launched hosted MongoDB as a service it developed with 10gen.

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“Mongo is breaking away from the pack and our customers are asking for it,” said Pat Matthews, SVP of corporate development for Rackspace, San Antonio, Texas. He said the company could have built its own version of the open-source database or partnered with a MongoDB provider — but was impressed with the expertise of the ObjectRocket co-founders Chris Lalonde, Erik Beebe and Kenny Gorman who between them spent years at Ebay, Paypal, Shutterfly and AOL.

ObjectRocket characterizes its offering as MongoDB as a service, meaning that users don’t have to sweat a lot of the set-up nitty gritty. It competes with rivals like MongoHQ and MongoLab.

“The primary difference between us and other database-as-a-service companies is we built out our cloud rather than layer on top of general platforms,” Lalonde said in an interview. “We built a cloud platform from the ground up specifically for MongoDB, we went to Equinix and did our own hardware platform and tuned the OS and the rest of the stack for Mongo in a way that enables us to get great performance and also have a more highly available system.”

Of course that means integrating it into the Rackspace platform will take time, which is fine with Rackspace, according to Matthews. “The offering as it stands will exist for a while till we can figure out the best ways to integrate it. We will maintain or improve performance and we won’t rush to integrate it at the expense of what we have now.”

Critics could argue that Rackspace is late to this party given the database options Amazon Web Services has, but then again, we’re still pretty early in the cloud deployment game.

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

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Top Stocks To Buy For 2/27/2013-2

Cadence Design Systems, Inc. NASDAQ:CDNS advanced 0.48%, closed at $8.42 and its overall trading volume was 1.47 million shares during the last session. The trailing twelve month return on investment remained 14.67% while its earning per share reached $0.63.


FSI International, Inc. NASDAQ:FSII gained 9.67%, closed at $4.65 and its overall trading volume was 1.43 million shares during the last session. The trailing twelve month return on investment remained 19.38% while its earning per share reached $0.37.

Cirrus Logic, Inc. NASDAQ:CRUS increased 0.25%, closed at $16.26 and its overall trading volume was 1.37 million shares during the last session. The trailing twelve month return on investment remained 32.61% while its earning per share reached $1.15.

PMC-Sierra, Inc. NASDAQ:PMCS surged 0.24%, closed at $8.46 and its overall trading volume was 1.35 million shares during the last session. The trailing twelve month return on investment remained 8.49% while its earning per share reached $0.37.

Sapient Corporation NASDAQ:SAPE advanced 0.82%, closed at $12.26 and its overall trading volume was 1.24 million shares during the last session. The trailing twelve month return on investment remained 23.94% while its earning per share reached $0.72.

How Cambrex Corporation. is Bringing Bucks Home More Quickly

It takes money to make money. Most investors know that, but with business media so focused on the "how much," very few investors bother to ask, "How fast?"

When judging a company's prospects, how quickly it turns cash outflows into cash inflows can be just as important as how much profit it's booking in the accounting fantasy world we call "earnings." This is one of the first metrics I check when I'm hunting for the market's best stocks. Today, we'll see how it applies to Cambrex Corporation. (NYSE: CBM  ) .

Let's break this down
In this series, we measure how swiftly a company turns cash into goods or services and back into cash. We'll use a quick, relatively foolproof tool known as the cash conversion cycle, or CCC for short.

Why does the CCC matter? The less time it takes a firm to convert outgoing cash into incoming cash, the more powerful and flexible its profit engine is. The less money tied up in inventory and accounts receivable, the more available to grow the company, pay investors, or both.

To calculate the cash conversion cycle, add days inventory outstanding to days sales outstanding, then subtract days payable outstanding. Like golf, the lower your score here, the better. The CCC figure for Cambrex Corporation. for the trailing 12 months is 138.3.

For younger, fast-growth companies, the CCC can give you valuable insight into the sustainability of that growth. A company that's taking longer to make cash may need to tap financing to keep its momentum. For older, mature companies, the CCC can tell you how well the company is managed. Firms that begin to lose control of the CCC may be losing their clout with their suppliers (who might be demanding stricter payment terms) and customers (who might be demanding more generous terms). This can sometimes be an important signal of future distress -- one most investors are likely to miss.

In this series, I'm most interested in comparing a company's CCC to its prior performance. Here's where I believe all investors need to become trend-watchers. Sure, there may be legitimate reasons for an increase in the CCC, but all things being equal, I want to see this number stay steady or move downward over time.

Source: S&P Capital IQ. Dollar amounts in millions. FY = fiscal year. TTM = trailing 12 months.

Because of the seasonality in some businesses, the CCC for the TTM period may not be strictly comparable to the fiscal-year periods shown in the chart. Even the steadiest-looking businesses on an annual basis will experience some quarterly fluctuations in the CCC. To get an understanding of the usual ebb and flow at Cambrex Corporation., consult the quarterly-period chart below.

Source: S&P Capital IQ. Dollar amounts in millions. FQ = fiscal quarter.

On a 12-month basis, the trend at Cambrex Corporation. looks good. At 138.3 days, it is 3.4 days better than the five-year average of 141.6 days. The biggest contributor to that improvement was DSO, which improved 4.4 days compared to the five-year average. That was partially offset by a 0.8-day increase in DIO.

Considering the numbers on a quarterly basis, the CCC trend at Cambrex Corporation. looks good. At 141.9 days, it is little changed from the average of the past eight quarters. With both 12-month and quarterly CCC running better than average, Cambrex Corporation. gets high marks in this cash-conversion checkup.

Though the CCC can take a little work to calculate, it's definitely worth watching every quarter. You'll be better informed about potential problems, and you'll improve your odds of finding underappreciated home run stocks.

If you're interested in companies like Cambrex Corporation., you might want to check out the jaw-dropping technology that's about to put 100 million Chinese factory workers out on the street � and the 3 companies that control it. We'll tell you all about them in "The Future is Made in America." Click here for instant access to this free report.

  • Add Cambrex Corporation. to My Watchlist.

Yellow Cards vs. White Cards for MetroPCS Proxy Battle

MetroPCS (NYSE: PCS  ) filed its definitive proxy statement with the Securities and Exchange Commission today, notifying the commission of a special stockholders' meeting to vote on the company's proposed merger with T-Mobile USA.

In the filing is the letter to stockholders MetroPCS will send informing those not wanting to travel all the way to Richardson, Texas on March 28, to cast a vote for the proposal by sending in the enclosed yellow proxy card -- and to do it as soon as possible to make sure that vote is counted.

The letter also "urge[s]" stockholders "to discard any white proxy cards [indicating a vote against the proposal], which were sent to you by a dissident stockholder," and if, perchance, a stockholder had previously submitted a white proxy card, then submitting a yellow card now would revoke the earlier vote against.

The dissident stockholder referred to in the MetroPCS letter is P. Schoenfeld Asset Management, aka PSAM, an asset management company holding a 2% slice of MetroPCS shares.

PSAM also sent a filing to the SEC today, this one a preliminary proxy statement informing the commission of its position against the T-Mobile merger as it is structured.

Also in that filing is a copy of a letter to be sent to MetroPCS stockholders urging them to vote against the proposal and to do so by sending in the included white proxy cards.

"Your latest-dated proxy is the only one that counts, so you may return the WHITE proxy card even if you have already delivered any other proxy," the letter states. "Please do not return any yellow proxy card sent to you by MetroPCS. If you have already returned a yellow proxy card sent to you by MetroPCS, that card will be automatically revoked if you complete and return the enclosed WHITE proxy card."

So far, PSAM is the only large holder of MetroPCS shares to officially file a proxy statement opposing the merger proposal, but at least one other major shareholder is thinking about an opposition stand.

John Paulson's hedge fund, MetroPCS' biggest shareholder with 8.7% of its shares, may not go along with the company's plans. John Paulson himself sent an email to Bloomberg saying that the debt incurred from such a merger would not be in the shareholders' best interest.

"It may be more prudent for PCS to remain independent and explore other higher value alternatives," he wrote.

However the proxy battle turns out, there won't be a black-and-white resolution, only a yellow-and-white one.

Exterran Holdings Beats on Both Top and Bottom Lines

Exterran Holdings (NYSE: EXH  ) reported earnings on Feb. 26. Here are the numbers you need to know.

The 10-second takeaway
For the quarter ended Dec. 31 (Q4), Exterran Holdings beat expectations on revenues and beat expectations on earnings per share.

Compared to the prior-year quarter, revenue grew significantly. Non-GAAP earnings per share grew. GAAP loss per share contracted.

Margins grew across the board.

Revenue details
Exterran Holdings tallied revenue of $838.9 million. The five analysts polled by S&P Capital IQ anticipated revenue of $721.3 million on the same basis. GAAP reported sales were 19% higher than the prior-year quarter's $702.9 million.

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

EPS details
EPS came in at $0.09. The eight earnings estimates compiled by S&P Capital IQ predicted $0.01 per share. Non-GAAP EPS were $0.09 for Q4 against -$0.14 per share for the prior-year quarter. GAAP EPS were -$0.09 for Q4 compared to -$1.06 per share for the prior-year quarter.

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

Margin details
For the quarter, gross margin was 28.5%, 190 basis points better than the prior-year quarter. Operating margin was 5.5%, 400 basis points better than the prior-year quarter. Net margin was -0.7%, 880 basis points better than the prior-year quarter.

Looking ahead
Next quarter's average estimate for revenue is $695.6 million. On the bottom line, the average EPS estimate is $0.00.

Next year's average estimate for revenue is $2.94 billion. The average EPS estimate is $0.23.

Investor sentiment
The stock has a three-star rating (out of five) at Motley Fool CAPS, with 126 members out of 138 rating the stock outperform, and 12 members rating it underperform. Among 45 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 43 give Exterran Holdings a green thumbs-up, and two give it a red thumbs-down.

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Exterran Holdings is outperform, with an average price target of $26.40.

Is Exterran Holdings the right energy stock for you? Read about a handful of timely, profit-producing plays on expensive crude in "3 Stocks for $100 Oil." Click here for instant access to this free report.

  • Add Exterran Holdings to My Watchlist.

Retailers Moving Into Tech

BloombergOld school

Perhaps the biggest danger facing retail companies is new technology, as consumers find ways (not least by using using�Amazon (AMZN)) to meet their shopping needs that don’t involve going to their nearest Wal-Mart Stores (WMT) or Nordstrom (JWN) location.

So for fans of retail stocks, today’s Wall Street Journal story by Shelly Banjo brings some welcome news, suggesting the industry is alive to the change and won’t go down without fight:

Retailers have cut way back on opening new stores, and in some cases they have been closing locations. That frees up money for technology and other projects that aim to capture consumers’ online spending.

“Gone are the days where we’re building 50 to 200 stores a year,” says Hal Lawton, a senior vice president at Home Depot. “We’re shifting that capital to technology that can help us advance our business at a much faster pace.”

U.S. retailers spent $58.6 billion on technology in 2012, up 9% from the year before, according to Forrester Research. Online sales rose to $225.5 billion in 2012, up 15.8% from 2011, according to the U.S. Commerce Department.

It’s not just about launching online retail outlets, but simply seeing where the technology goes — @Walmart Labs being an example of the free-thinking approach many retailers are taking.

But as Banjo cautions, many of the strategies have yet to reap big rewards, and some simply haven’t worked out:

Evidence is mixed on whether these investments are paying off.�Best Buy
(BBY)�launched its venture-capital arm in 2008, but it has yet to see big payoffs from stakes in companies that make items ranging from electric motorcycles to in-home sleep-tracking devices, analysts say.

Nevertheless, you’d like to think that with enough time and investment a few of these bets will pay off. And if nothing else, it’s heartening to know that many of retail’s big beasts aren’t simply hunkering down and acting as if the old ways of doing business are all that matters.

Dow Futures Off on Import Prices, Jobless Claims

The market is set to sag, with Dow Jones Industrial futures falling 32 points for the June contract to 10, 844, as import and export prices show signs of inflation and jobless claims fail to fall as expected.

First-time claims for unemployment insurance were 444,000 last week, the U.S. Department of Labor reported, 4,000 more than expected and but below the upwardly revised 448,000 for the prior week.

U.S important prices, meanwhile, rose 0.9% in April from March, the Department said, ahead of expectations for a 0.7% increase. The rise showed a 2.3% increase in fuel prices, with everything else rising half a percent.

Happily, U.S. export prices also rose more than expected, by 1.2% versus the 0.7% expected.

S&P 500 futures, meantime, are down 3 points at 1,166.80.

Tuesday, February 26, 2013

Microsoft Is a Bum Magnet

Microsoft (NASDAQ: MSFT  ) has a thing for losers.

Barnes & Noble's (NYSE: BKS  ) Leonard Riggio is the latest disgruntled founder to want to privatize his struggling company. In an SEC filing yesterday, Riggio revealed that he aspires to acquire his company's flagship bookstore business.

Riggio wants the retail chain and the related BN.com website. He's the board's chairman and owns 30% of the outstanding stock, so one could reason that he knows the company pretty well. You know what he doesn't want? Riggio has no interest in acquiring the fledgling Nook and meandering campus bookstore business that Microsoft bought into last year.

Yes, Mr. Softy seems to be left holding the bag on the struggling e-book platform and a chain of college bookstores that's growing obsolete as schools turn to digital textbooks.

It's not the first time that Microsoft has shelled out big money for a laggard.

Earlier this month Microsoft agreed to kick in $2 billion in the proposed $24 billion deal to take PC giant Dell (NASDAQ: DELL  ) private.

One can always argue that Microsoft's investments were either opportunistic or tactical. Buying into the Nook could've swayed Barnes & Noble to abandon Android for its Nook tablets. It didn't. One can hope that Microsoft's investment in Dell will keep it from cranking out Android tablets and smartphones. It won't.

Previous 10-figure commitments have been tethered to conditions.

Microsoft agreed to reward Yahoo! handsomely in exchange for letting Bing take over the portal's search business. Microsoft has promised Nokia (NYSE: NOK  ) "billions" for its support of Windows Phone 8.

However, isn't this a pretty sad lot?

A portfolio of Barnes & Noble, Dell, Yahoo!, and Nokia may have been great in the 1990s, but all four companies have had rough years lately. Yes, some of them have rallied recently, but the four companies still lag their peers.

Why is Microsoft partying like it's 1999? Why is it getting fixed up on DotComBubbleMingle?

Yes, once in a while Microsoft does manage to make an early investment in a fresh market leader, but there are too many lovable losers on its list. The world's largest software giant needs a new matchmaker.

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

Dow Climbs Higher With Help From These Stocks

Wonderful housing numbers, strong consumer confidence, and perhaps even a few positive words from Ben Bernanke gave investors enough courage to pour cash back into the markets after yesterday's big late-day decline. The Dow Jones Industrial Average (DJINDICES: ^DJI  ) added 115 points or 0.84% today and now sits at 13,900. The S&P 500 and the Nasdaq both also closed in positive territory, though still slightly lower than the Dow. The S&P 500 gained 0.61%, while the Nasdaq rose by 0.43%. Six of the Dow's 30 stocks ended the session in the red, but eight closed up after gaining more than 1%, and nine others were up more than 0.8% for the day. So let's look at a few of the big winners during today's bullish rally.�

After the positive housing numbers this morning, it was a given that Home Depot (NYSE: HD  ) would be up today. But housing numbers alone wouldn't push shares higher by 5.69%. The company released earnings yesterday after the market closed in which EPS of $0.68 crushed last year's performance by 32% and topped analysts' estimates of $0.64 per share. Revenue performed similarly, as it was expected to hit just $17.7 billion and came in at $18.25 billion, an increase of 14% over the same quarter last year. �

Shares of Hewlett-Packard (NYSE: HPQ  ) were soaring high again today as well. The stock popped 3.78% during the regular trading session after CEO Meg Whitman said management will look into selling business units or projects that don't fit into management's plans, but that it will keep the major operating units. Just yesterday, HP announced that it was selling its WebOS operating system and its accompanying engineering staff. HP will now use the Android operating system for its new devices. �

Finally, shares of Intel (NASDAQ: INTC  ) rose by 1.73% today. Investors pushed the stock price higher after it was announced late yesterday that the company will develop chips for Altera. My Fool colleague Anders Bylund noted that it wasn't known how large of an order was placed, but Altera is a decent-sized company, and because of slowing demand for Intel's PC chips, any additional revenue the company can get right now is a good thing.�

When it comes to dominating markets, it doesn't get much better than Intel's position in the PC microprocessor arena. However, that market is maturing, and Intel finds itself in a precarious situation longer term if it doesn't find new avenues for growth. In this�premium research report on Intel, our analyst runs through all of the key topics investors�should understand�about�the chip giant. Better yet, you'll continue to receive updates for an entire year. Click here now to learn more.

1 Reason to Expect Big Things from Trinity Industries

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

Basic guidelines
In this series, I examine inventory using a simple rule of thumb: Inventory increases ought to roughly parallel revenue increases. If inventory bloats more quickly than sales grow, this might be a sign that expected sales haven't materialized. Is the current inventory situation at Trinity Industries (NYSE: TRN  ) out of line? To figure that out, start by comparing the company's inventory growth to sales growth. How is Trinity Industries doing by this quick checkup? At first glance, OK, it seems. Trailing-12-month revenue increased 39.3%, and inventory increased 26.6%. Comparing the latest quarter to the prior-year quarter, the story looks potentially problematic. Revenue increased 18.5%, and inventory expanded 26.6%. Over the sequential quarterly period, the trend looks worrisome. Revenue dropped 8.8%, and inventory grew 6.4%.

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

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

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

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

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

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

Let's dig into the inventory specifics. On a trailing-12-month basis, work-in-progress inventory was the fastest-growing segment, up 43.7%. On a sequential-quarter basis, work-in-progress inventory was also the fastest-growing segment, up 26.2%. Trinity Industries may display positive inventory divergence, suggesting that management sees increased demand on the horizon.

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

Is Trinity Industries the right retailer for your portfolio? Learn how to maximize your investment income and ""Secure Your Future With 9 Rock-Solid Dividend Stocks,"" including one above-average retailing powerhouse. Click here for instant access to this free report.

  • Add Trinity Industries �to My Watchlist.

The return of the European bogeyman

That old nemesis of shares � Europe � arose from the dead Monday, after an Italian election cast doubt on that nation's ability to implement austerity measures.

The selling was enough to saddle the Nasdaq Composite with its third distribution day, all major, in the past week. The S&P, for its part, notched its second.

Chart created using TradeStation. ©TradeStation Technologies, 2001-2013. All rights reserved.

A general rule of thumb is that three to five distribution days in a one-week period is enough to flash a sign of caution. Practically speaking, "a sign of caution" translates to a speculator raising some cash, or in some cases moving to an all-cash position. A lot depends on the action of the cycle's leading stocks.

With the S&P 500 off only 2.8% from last week's rally high and the Nasdaq Composite just 3.0%, it hardly seems a time to be running for the hills. That is, unless one is holding some of the speculative growth glamours.

As noted in Thursday's report, the somewhat curious aspect of this three-month advance in the averages has been that only a few growth titles with good liquidity have moved up more than 25% from breakout.

The ramification of this is that the more-modest post-breakout gains seen in growth leaders are scarcely enough to weather a 3%-5% short-term reaction in the averages, let alone an 8%-12% intermediate-term correction. As noted previously, growth issues tend to correct 1.5 to 2.5 times that of the averages, if not more, in many cases.

The current growth leadership is the type of generally lagging growth-stock performance that is consistent with the latter stages of a bull market. That cyclicals have led underscores this.

Meanwhile, the action of the past week is an example of how volatility is mean-reverting. A period of low volatility, such as what was seen in the seven days highlighted in yellow in the above chart, tends to lead to a high-volatility period, as seen in the last four days.

Increased volatility often signals a trend change. Following a trend change from down to up, it usually continues early into a new advance and also late in one.

The view here is that the mild reaction thus far is likely to extend longer than the four days already seen, and for two reasons: 1) the median decline from peak for a universe of 56 growth titles is close to three times that of the declines in the averages, and 2) the reaction to the Italian election was extreme in the currency market, reflective of a shoot-now, ask-questions-later type of sentiment among global participants.

Other concerns also persist.

For starters, the housing-related shares account for 25% of the leaders. Any serious dent to their charts would suggest an impairment to the economic expansion. In addition to the builders, which are off 8.6% on average...

Chart created using TradeStation. ©TradeStation Technologies, 2001-2013. All rights reserved.

Weyerhaeuser (WY), Louisiana Pacific (LPX), Eagle Materials (EXP), Nationstar Mortgage Holdings (NSM), Ocwen Financial  and Lumber Liquidators Holdings LL , et alia , come under pressure.

For a larger chart, please click here.

Chart created using MarketSmith. ©2013 MarketSmith Incorporated. All rights reserved.

For a larger chart, please click here.

Chart created using MarketSmith. ©2013 MarketSmith Incorporated. All rights reserved.

Can Akamai Technologies Meet These Numbers?

Akamai Technologies (Nasdaq: AKAM  ) is expected to report Q4 earnings on Feb. 6. Here's what Wall Street wants to see:

The 10-second takeaway
Comparing the upcoming quarter to the prior-year quarter, average analyst estimates predict Akamai Technologies's revenues will expand 17.7% and EPS will expand 8.9%.

The average estimate for revenue is $380.9 million. On the bottom line, the average EPS estimate is $0.49.

Revenue details
Last quarter, Akamai Technologies booked revenue of $345.3 million. GAAP reported sales were 23% higher than the prior-year quarter's $281.9 million.

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

EPS details
Last quarter, non-GAAP EPS came in at $0.43. GAAP EPS of $0.27 for Q3 were 17% higher than the prior-year quarter's $0.23 per share.

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

Recent performance
For the preceding quarter, gross margin was 68.1%, 120 basis points better than the prior-year quarter. Operating margin was 23.3%, 10 basis points better than the prior-year quarter. Net margin was 14.0%, 100 basis points worse than the prior-year quarter.

Looking ahead

The full year's average estimate for revenue is $1.38 billion. The average EPS estimate is $1.74.

Investor sentiment
The stock has a four-star rating (out of five) at Motley Fool CAPS, with 3,022 members out of 3,169 rating the stock outperform, and 147 members rating it underperform. Among 759 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 729 give Akamai Technologies a green thumbs-up, and 30 give it a red thumbs-down.

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Akamai Technologies is outperform, with an average price target of $39.05.

Internet software and services are being consumed in radically different ways, on new and increasingly mobile devices. Is Akamai Technologies on the right side of the revolution? Check out the changing landscape and meet the company that Motley Fool analysts expect to lead "The Next Trillion-dollar Revolution." Click here for instant access to this free report.

  • Add Akamai Technologies to My Watchlist.

Valeant Pharmaceuticals International Earnings Are on Deck

Valeant Pharmaceuticals International (NYSE: VRX  ) is expected to report Q4 earnings on Feb. 28. Here's what Wall Street wants to see:

The 10-second takeaway
Comparing the upcoming quarter to the prior-year quarter, average analyst estimates predict Valeant Pharmaceuticals International's revenues will grow 37.8% and EPS will grow 28.7%.

The average estimate for revenue is $948.4 million. On the bottom line, the average EPS estimate is $1.21.

Revenue details
Last quarter, Valeant Pharmaceuticals International reported revenue of $884.1 million. GAAP reported sales were 47% higher than the prior-year quarter's $600.6 million.

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

EPS details
Last quarter, non-GAAP EPS came in at $1.15. GAAP EPS of $0.02 for Q3 were 85% lower than the prior-year quarter's $0.13 per share.

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

Recent performance
For the preceding quarter, gross margin was 74.0%, 160 basis points better than the prior-year quarter. Operating margin was 25.8%, 170 basis points better than the prior-year quarter. Net margin was 0.9%, 590 basis points worse than the prior-year quarter.

Looking ahead

The full year's average estimate for revenue is $3.50 billion. The average EPS estimate is $4.41.

Investor sentiment
The stock has a three-star rating (out of five) at Motley Fool CAPS, with 194 members out of 219 rating the stock outperform, and 25 members rating it underperform. Among 74 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 67 give Valeant Pharmaceuticals International a green thumbs-up, and seven give it a red thumbs-down.

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Valeant Pharmaceuticals International is outperform, with an average price target of $65.38.

  • Add Valeant Pharmaceuticals International to My Watchlist.

Top Stocks To Buy For 2/26/2013-5

Qihoo 360 Technology Co Ltd (NYSE:QIHU) witnessed volume of 1.79 million shares during last trade however it holds an average trading capacity of 616,854.00 shares. QIHU last trade opened at $20.50 reached intraday low of $20.48 and went +2.59% up to close at $21.02.

QIHU has a market capitalization $2.59 billion and an enterprise value at $2.29 billion. Trailing twelve months price to sales ratio of the stock was 27.04 while price to book ratio in most recent quarter was 7.77. In profitability ratios, net profit margin in past twelve months appeared at -2.68% whereas operating profit margin for the same period at 0.73%.

In the period of trailing 12 months it generated revenue amounted to $93.32 million gaining $0.76 revenue per share. Its year over year, quarterly growth of revenue was 176.60% holding 411.50% quarterly earnings growth.

According to preceding quarter balance sheet results, the company had $309.43 million cash in hand making cash per share at 2.51. Moreover its current ratio according to same quarter results was 12.19 and book value per share was 2.63.

Looking at the trading information, the stock price history displayed that its S&P500 52 Week Change illustrated 8.61% where the stock current price exhibited up beat from its 50 day moving average price of $18.55 and remained below from its 200 Day Moving Average price of $22.60.

QIHU holds 123.44 million outstanding shares with 73.18 million floating shares.

American International Group Makes Analysts Look Bad

American International Group (NYSE: AIG  ) reported earnings on Feb. 21. Here are the numbers you need to know.

The 10-second takeaway
For the quarter ended Dec. 31 (Q4), American International Group met expectations on revenues and beat expectations on earnings per share.

Compared to the prior-year quarter, revenue shrank significantly. Non-GAAP earnings per share dropped significantly. GAAP earnings per share shrank to a loss.

Margins contracted across the board.

Revenue details
American International Group reported revenue of $8.61 billion. The seven analysts polled by S&P Capital IQ looked for net sales of $8.70 billion on the same basis. GAAP reported sales were 21% lower than the prior-year quarter's $17.43 billion.

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

EPS details
EPS came in at $0.20. The 17 earnings estimates compiled by S&P Capital IQ averaged -$0.07 per share. Non-GAAP EPS of $0.20 for Q4 were 76% lower than the prior-year quarter's $0.82 per share. (The prior-year quarter included $0.07 per share in earnings from discontinued operations.) GAAP EPS were -$2.68 for Q4 against $10.42 per share for the prior-year quarter.

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

Margin details
For the quarter, gross margin was 10.8%, much worse than the prior-year quarter. Operating margin was 2.6%, much worse than the prior-year quarter. Net margin was -28.6%, much worse than the prior-year quarter.

Looking ahead
Next quarter's average estimate for revenue is $8.61 billion. On the bottom line, the average EPS estimate is $0.84.

Next year's average estimate for revenue is $35.95 billion. The average EPS estimate is $3.46.

Investor sentiment
The stock has a three-star rating (out of five) at Motley Fool CAPS, with 2,795 members out of 3,367 rating the stock outperform, and 572 members rating it underperform. Among 717 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 619 give American International Group a green thumbs-up, and 98 give it a red thumbs-down.

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on American International Group is outperform, with an average price target of $39.77.

  • Add American International Group to My Watchlist.

More Expert Advice from The Motley Fool

After bringing the financial world to its knees, most investors are wary about owning a stake in AIG today. We'll help you sort fact from fiction to determine whether AIG is a buy at today's prices in our premium analyst report on the company. Just click here now for instant access.

Whoa! What Just Happened to My Stock?

Okay, maybe the Fed won't be stepping on the QE brake anytime soon after all. A day after the committee's minutes were released showing they were thinking about doing just that, St. Louis Fed president James Bullard said it's not the brake they're going to be stepping on,�but the gas! Because quantitative easing "packs a punch," he noted the Fed is going to be "very aggressive" with its easy money ways for a "long time."

That was enough to convince traders there's plenty of time to party hearty and they sent the Dow Jones Industrial Average soaring again, causing it to rise 119 points and putting it at 14,000 at Friday's close.

With almost three quarters of all stocks on the New York Stock Exchange advancing, the three stocks below were notable for rising by double-digit percentages. But resist the urge to high-five everyone in the cubicles next to you. Smart investors won't celebrate until they know why their stock surged, because�without a fundamental basis for the bounce, these stocks could just as quickly make the return trip down.�

Company

Gain

Shutterstock (NYSE: SSTK  )

17.2%

Hewlett-Packard (NYSE: HPQ  )

12.3%

YY (NASDAQ: YY  )

10.2%

Shake it like a Polaroid
Stock photo site Shutterstock isn't standing stock still. It reported fourth-quarter earnings that�exceeded analyst expectations by a wide margin as it continues to expand into new markets but finds North America growing ahead of the average rate of the entire company. It expanded well above 40% year over year compared to the low 30s in Europe.

Overall revenue in the quarter jumped 42% as downloads hit a record 21.4 million. Revenue retention remained around 100%, meaning that customers that contributed to its revenue in 2011 contributed, in the aggregate, just as much revenue in 2012 as they did in 2011. Shutterstock doesn't expect the pieces to always fall together as nicely as they have, but they have good visibility into their business and what they're seeing is a level of consistency in things like average revenue per customer and lifetime value that they were able to raise their guidance. Revenue is now expected to range from $213 million to $219 million, up from previous expectations of $204 million to $208 million.

With market researchers expecting the industry to grow to $6 billion by 2016, it seems Shutterstock has the big picture in hand and will be able to continue expanding its share.�

Big day for big data
If you want another reason why the Dow jumped on Friday, look no further than Hewlett-Packard, which posted quarterly results that beat analyst expectations but were also�below last year's efforts. However, the market was cheered that perhaps its new focus on the mobile arena and the realization the PC market will do less for it going forward meant it had finally turned the corner on its woes.

It's going to take more than a single quarter of positive developments to make a trend and with a lot of HP's gains driven by cost-cutting initiatives, there's only so far it will be able to take that avenue before it will need to show real growth. Its foray into business software and big data opportunities hold real potential, but with computers still a large part of its operations, even if it's looking in other directions, the risks remain if the market erodes further.

The 12% jump in HP's stock marks the largest one-day gain it's experienced in nearly five years and I'm not sure we should expect the tech giant to record many more such increases.

Why, oh why?
Like Shutterstock, Chinese social networking site YY recently went public, but unlike the photo site, YY has yet to figure out how to make money. Considering it's basing its revenue model on selling tokens players can use to buy virtual stuff for the web-based games featured on its platform, it seems like it's setting investors up for disaster. If Zynga and Glu Mobile�are finding it difficult to make a go of the freemium model, I don't see why YY will do any better. There is plenty of competition in China for social networking attention and there's nothing that distinguishes this player from the rest.

There was no real reason for yesterday's jump in value other than it announced it was planning on reporting quarterly results on March 7, and unless investors are expecting it to turn a profit ahead of forecasts, it seems like it will be a stock price gain that will have a hard time holding. I'll be heading over to Motley Fool CAPS to mark this one to underperform over the long haul.

Whoa, Nelly!
The massive wave of mobile computing has done much to unseat the major players in the PC market, including venerable technology names like Hewlett-Packard. However, HP's rapidly shifting its strategy under the new leadership of CEO Meg Whitman. But does this make HP one of the least-appreciated turnaround stories on the market, or is this a minor blip on its road to irrelevance? The Motley Fool's technology analyst details exactly what investors need to know about HP in our new premium research report. Just click here now to get your copy today.

Monday, February 25, 2013

Why Universal Display Shares Went Dark

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

What: Shares of Universal Display (NASDAQ: PANL  ) went dark today, down by as much as 16% after bearish comments from an analyst sparked competitive fears.

So what: Piper Jaffray analyst Jagadish Iyer believes that Universal Display's relationship with Samsung is under pressure, as the South Korean conglomerate may have tapped a second supplier for OLED emitter materials. Nippon Steel Chemical may have been able to cut in and earn some of Samsung's business, and Samsung's efforts to improve production efficiency could also translate into lower materials purchases.

Now what: Iyer still believes that Samsung will use UDC's ingredients for the OLED display expected in the next-generation Galaxy S IV, which is to be unveiled on March 14. That contrasts with rumors from SamMobile that the company may not be using OLED in the display due to challenges producing them at full HD resolutions. Iyer is maintaining a sell rating, while reducing his price target from $18 to $16. Universal Display reports earnings on Wednesday.

Interested in more info on Universal Display? Add it to your watchlist by clicking here.

Universal Display has a powerful patent portfolio behind OLEDs, a technology poised to dominate the displays of the future. Its placement at the center of OLEDs makes the company an underappreciated way to play the enormous sales growth in tablets and smartphones. However, like any new technology, there are plenty of risks to Universal Display. Motley Fool analyst Evan Niu, CFA, has authored a new premium report that dives into reasons to buy the company as well as the challenges facing it. For access to this comprehensive report, simply click here now.

Why Yandex Is Poised to Outperform

Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, Russian Internet search engine Yandex (NASDAQ: YNDX  ) has earned a respected four-star ranking.

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

Yandex facts

Headquarters (founded)

The Hague, the Netherlands (2004)

Market Cap

$7.7 billion

Industry

Internet software and services

Trailing-12-Month Revenue

$944.8 million

Management

Co-founder/CEO Arkady Volozh

Co-founder/Chief Technology Officer Ilya Segalovich

Return on Equity (average, past 3 years)

34%

Cash/Debt

$398.4 million / $0

Competitors

Google

Microsoft

Yahoo!

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

On CAPS, 92% of the 173 members who have rated Yandex believe the stock will outperform the S&P 500 going forward.

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

Over the next five years I expect this [company's] growth to explode. ... They've recently been trying to expand outside of native Russia, which would prove their ability to succeed outside of Russian-speaking countries, and make a step toward becoming a competitor to Google. ... Definitely a stock to watch. It has many of the characteristics of Google here in the US in terms of growth and potential, but the downside is the nightmare Russia brings for business.

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

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

Want to see how well (or not so well) the stocks in this series are performing? Follow the TrackPoisedTo CAPS account.