How to Play This Massively Disruptive Trend

The following video is part of our "Motley Fool Conversations" series, in which analyst John Reeves and advisor David Meier discuss topics across the investing world.

3-D printing has the potential to change the world, but it's still very early for this new technology. Stratasys and 3D Systems are two of the leading 3-D printer companies out there today for investors to consider. Over the long run, businesses and individuals will find more and more ways to get value out of 3-D printing, and that will make these two companies very valuable.

Big tech names might garner a lot of investor attention, but the truth is that they're playing second fiddle to an even larger revolution in technology. To better prepare investors for this new revolution, The Motley Fool has released a free report on mobile called "The Next Trillion-Dollar Revolution" that details a hidden component play inside mobile phones that also is a leader in the exploding Chinese market. Inside the report, we not only describe why the mobile revolution will dwarf any other technology revolution seen before it, but we also name the company at the forefront of the trend. Hundreds of thousands have requested access to previous reports, and you can access this new report today by clicking here -- it's free.

Please enable Javascript to view this video.

5-Star Stocks Poised to Pop: Berkshire Hathaway

Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, insurance and holding company Berkshire Hathaway (NYSE: BRK-B  ) has earned a coveted five-star ranking.

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

Berkshire facts

Headquarters (founded)	Omaha, Neb. (1889)
Market Cap	$207.3 billion
Industry	Conglomerates
Trailing-12-Month Revenue	$148.1 billion
Management	Chairman/CEO Warren Buffett (since 1970) Vice Chairman Charles Munger (since 1978)
Return on Equity (average, past 3 years)	8.3%
Cash/Debt	$37.8 billion / $61.8 billion
Competitors	Blackstone Group HM Capital Partners KKR

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

On CAPS, 98% of the 6,687 members who have rated Berkshire believe the stock will outperform the S&P 500 going forward.

Just last month, one of those bulls, TMFTheDoctor, tapped Berkshire as a particularly timely bargain opportunity:

The reasons for this as a long term holding are well known and need not be repeated here. The reason I'm pulling the trigger now at this entry point is largely because it is inches away from triggering [Warren Buffett's] 1.10 [price-to-book] buyback policy. Which is to say, there is extremely little downside risk.

If you want market-topping returns, you need to put together the best portfolio you can. Owning exceptional stocks is a surefire way to secure your financial future. Of course, despite its five-star rating, Berkshire may not be your top choice.

If that's the case, we've compiled a special free report for investors called "The 3 Dow Stocks Dividend Investors Need," which uncovers a few other juicy large caps. The report is 100% free, but it won't be around 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.

7 Stock Picks By A Pro: I Like Yahoo And Oracle

Paul Tudor Jones was born in Memphis, Tennessee, and went to college there before attending Memphis University School for high school. He then moved on to University of Virginia, where he obtained an undergraduate degree in economics in 1976 and a welterweight boxing championship.

In 1980, Jones set up Tudor Investment Corporation, which is nowadays a major asset management company located in Greenwich, Connecticut. The Tudor Group, which consists of Tudor Investment Corporation and its subsidiaries, is engaged in active trading, investing and research in the global equity, venture capital, debt, currency, and commodity markets. One of Jones' earliest and biggest successes was predicting Black Monday in 1987, tripling his capital during the event thanks to large short positions.

I reviewed Paul Tudor Jones' portfolio (via whalewisdom.com) and discovered that he picked some interesting stocks, like Yahoo (YHOO) and Oracle (ORCL). I will detail his holdings and the reason why I like some of his selections.

Liberty Media Int-A (LINTA)

Located in Englewood, Colorado, Liberty Interactive Corp. possesses a wide range of businesses, such as electronic retailing, online commerce companies, and interactive technology services. The company markets and sells several consumer products in the U.S. and abroad, mostly through televised shopping programs on its QVC networks and via the Internet through its domestic and international web sites. Liberty Media an e-commerce platform of diverse web sites. Liberty Interactive's online commerce sites provide service to numerous retail categories.

I like the fact that Liberty Interactive's QVC division has turned into the undisputed market ruler in the $8 billion TV home-shopping business. At present, QVC controls an expected 69% market share, far ahead of its closest rivals, HSN Inc. and ValueVision Media Inc. In addition, Liberty Interactive also has a 32% stake of HSN Inc. TV home-shopping business is defined as having a strongly solid customer base, comprising mainly women. QVC accounts for 11 million customers in the U.S., which is estimated to increase in the long term. Tudor Jones selected a leader in its segment with LINTA.

Other positive is that eCommerce business of Liberty Interactive is observing important growth year after year. For the first nine months of fiscal 2011, this segment's income grew by a massive $158 million in comparison to the prior-year period. Each of the firm's e-commerce business sites saw sales increase. Adjusted operating income before depreciation and amortization grew by $18 million in the first three quarters of 2011 like the prior-year period.

In terms of Valuation Ratios, LINTA is trading at a Price/Book of 1.7x, a Price/Sales of 1.2x and a Price/Cash Flow of 9.6x in comparison to its Industry Averages of 1.9x Book, 1.6x Sales and 10.8x Cash Flow. It is essential to analyze the current valuation of LINTA and check how is trading in relation to its peer group. The company is undervalued related to its peers, considering it has market leadership position.

Recently, Telsey Advisory Group raised its target to $23-25 from $20-22 in LINTA shares. With retail powerhouse QVC at its core (86.0% of its 2011 revenue and 95.1% of its adjusted EBITDA), it sees several catalysts for Liberty Interactive Corp's shares, including a growing proportion of online sales (more than 50.0% of 2014 revenue at its US QVC unit, versus 36.8% in 2011) and the separation of its non-core holdings into a separate tracking stock to more accurately reflect QVC's performance.

Devon Energy (DVN)

Devon Energy Corporation , located in Oklahoma City, Oklahoma, is an independent energy firm committed mainly in exploration, development and production of oil and natural gas. The company's oil and gas operations are mostly concentrated in the onshore areas of North America, as well as the United States and Canada.

DVN is quite an interesting pick from Tudor Jones. Devon Energy's deep and broaden portfolio, mainly composed of unconventional resources, shows important long-term growth potential. The firm devotes a considerable part of its capex budget to low-risk development projects in its vast North American assets, which give reliable and repeatable production and reserves incorporation.

Devon has managed to retain financial flexibility and liquidity by wisely managing its account. The company's solid performance and offshore divestiture successes during 2010 resulted in robust year-end liquidity levels. Since September 30, 2011, the company had $6.8 billion of cash and short-term investments, whereas its net debt to adjusted capitalization ratio dropped to 10%. Devon's working cash flow before balance sheet changes in the second quarter raised 6% year over year to reach $1.9 billion.

Shares of Devon are presently trading at 6.1x trailing 12-month cash flow per share, compared to the 25.7X average for the peer group and 11.8x for the S&P 500.

Recently, Devon Energy missed earnings by $0.37, while revenues rose 16.3% year/year to $2.5 bln vs the $2.77 bln consensus. Devon's first-quarter 2012 earnings were significantly affected by unusually wide Canadian oil price differentials. Following the end of the quarter, Canadian oil differentials have begun to normalize. I think Tudor Jones expects that DVN shares appreciate considering that normalization scenario.

Yahoo! Inc

The most important event around YHOO happened in May 21. The company and Alibaba Group announced they have entered into a definitive agreement for a staged and comprehensive value realization plan for Yahoo!'s stake in Alibaba. The first step is the repurchase by Alibaba of up to one-half of Yahoo!'s stake, or ~20% of Alibaba's fully-diluted shares. The purchase price will be based on a valuation of Alibaba to be established through equity financing that Alibaba intends to undertake to finance the transaction, subject to a floor valuation of approximately US$35 billion.

The agreement includes substantial financial incentives for Alibaba to raise the additional equity at a valuation higher than $35 bln. At the minimum price and assuming the initial repurchase of the full 20% stake, Yahoo! would receive from Alibaba consideration of ~$7.1 bln, composed of at least $6.3 bln in cash proceeds and up to $800 mln in newly-issued Alibaba preferred stock.

After that event happened, one of the leading Tech research houses issued a recommendation article of YHOO on which I agree. Oppenheimer analyzed that under a base-case scenario, the deal suggests a fair value for YHOO shares of $18, consistent with its target. What is important is that Openheimer considered that if YHOO is able to distribute in comparison of selling Alibaba shares post IPO, this would add another $1 upside. In a bull case scenario, if Alibaba saw asset appreciation of 20% by its IPO and YHOO is able to exit Yahoo Japan on favorable terms, this would yield a low-probability upside that would imply a valuation of $24.

Another very important development in YHOO shares is its recent change in Management. I also read a very interesting report from Stiefel financial about YHOO's new interim CEOs, Ross Levinsohn Interim CEO. Levinsohn is an extremely qualified executive, in Stiefel's view, and will serve as a calming force amid the recent management turmoil. He has a visceral understanding of what it takes to succeed in the media business. The research explained that under new leadership, Yahoo! is more likely to re-emerge as a premier, highly profitable online media company more quickly.

To sum up, the true vale in YHOO shares comes from the recent Alibaba agreement and the new CEO denomination. I think YHOO is a very compelling turnaround pick from Tudor Jones.

Timken Co (TKR)

Timken Company 's activities are divided into two principal segments. The first is anti-friction bearings and the other is steel. Timken is a leading international manufacturer of highly engineered bearings, alloy and specialty steels and components, as well as related products and services. The company also produces custom-made steel products including precision steel components for automotive and industrial customers.

I like Timken's focus in expanding its footprint in the higher-margin industrial sectors (including aerospace, wind, and heavy industry), as well as increasing its presence in Asia. Timken is willing to allocate capital to acquire market-leading positions in various industrial and aftermarket niches, as long as the opportunity would be accretive to earnings in year 1. I do not recommend this stock even is if the company's strategy is solid because I do not feel comfortable with the overall business model. Steel is a commodity and I am looking to buy brands and companies that sell products that are not subject to market prices.

I think steel stocks are not the ones I first look to buy. Steel prices and volume can be quite volatile, but I read that Timken is able to recoup input cost changes via surcharges linked to price changes of scrap steel, energy, and alloy metals that are published monthly. However, volume and prices sometimes drop. For example, Timken shipped 49% fewer tons of steel in 2009 compared with 2008, while prices fell precipitously.

Fluctuating volume can sometimes lead to low utilization rates at the company's steel mills and therefore can result in lackluster returns. In 2009, the steel mills' underutilization hurt operating earnings by $70 million compared with the prior year, resulting in an annual operating loss for the steel segment. Meanwhile, during 2011, the company's steel mills were running at capacity and placed customers on allocation. Consequently, the firm will likely increase its capacity in 2014

Different to other steel companies, Timken is financially healthy. The company ended 2011 in a net cash position. I find the debt maturity schedule to be manageable, with no maturities until 2014. Given its improving focus on return on capital, I believe the company will continue to be free cash flow positive over the course of the economic cycle.

Oracle Corp

Oracle is one of the big tech leaders I feel comfortable investing in. Oracle's long-term goal is to drive earnings growth through the sale of differentiated and high-value technologies. Oracle remains focused on expanding its margins further in the upcoming quarters, based on improving results from Sun's hardware platform. Oracle also expects gross and operating margins to benefit from the declining percentage of third party hardware (non-Sun) that it resells, going forward.

I like ORCL shares for a tactical long trade over the next 3-6 months. I think the market is currently not appreciating the strength of Oracle's core tech franchise and the seasonal strength of the business into F4Q. Since the beginning of the year, the shares have underperformed the software index by 8% and I think that trend will break as the market starts considering solid names in a highly volatile environment.

Other stocks that Tudor Jones likes

Tudor Jones initiated a new position in Becton Dickinson (BDX) and added to his position in Starbucks (SBUX) in the recent quarter.

BDX is a high quality medical stock. The company recently reported in line consensus estimate of $1.38 and revenues rose 3.6% year/year to $1.99 bln vs the $1.94 bln consensus. The most important thing is that BDX issued higher guidance for FY12 forecasting EPS of $5.68-5.73, excluding non-recurring items, vs. $5.66 Capital IQ Consensus Estimate. Similar to other of his picks, the stock has not appreciated since these recent developments.

The most important development in Starbucks is that the company entered the ready-to-drink market. SBUX opened its first retail store for Evolution Fresh and Seattle's Best Coffee and expanded its relationship with Green Mountain Coffee Roasters. Other positives were the announcement of the Verismo single-serve machine, the key strategic changes in the UK and France, and the introduction of new dessert items to be sold at retail.

I like both the SBUX and BDX picks.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

1 Reason Wynn Resorts Looks Attractive

Margins matter. The more Wynn Resorts (Nasdaq: WYNN  ) keeps of each buck it earns in revenue, the more money it has to invest in growth, fund new strategic plans, or (gasp!) distribute to shareholders. Healthy margins often separate pretenders from the best stocks in the market. That's why we check up on margins at least once a quarter in this series. I'm looking for the absolute numbers, so I can compare them to current and potential competitors, and any trend that may tell me how strong Wynn Resorts's competitive position could be.

Here's the current margin snapshot for Wynn Resorts over the trailing 12 months: Gross margin is 37.2%, while operating margin is 19.1% and net margin is 11.6%.

Unfortunately, a look at the most recent numbers doesn't tell us much about where Wynn Resorts has been, or where it's going. A company with rising gross and operating margins often fuels its growth by increasing demand for its products. If it sells more units while keeping costs in check, its profitability increases. Conversely, a company with gross margins that inch downward over time is often losing out to competition, and possibly engaging in a race to the bottom on prices. If it can't make up for this problem by cutting costs -- and most companies can't -- then both the business and its shares face a decidedly bleak outlook.

Of course, over the short term, the kind of economic shocks we recently experienced can drastically affect a company's profitability. That's why I like to look at five fiscal years' worth of margins, along with the results for the trailing 12 months, the last fiscal year, and last fiscal quarter (LFQ). You can't always reach a hard conclusion about your company's health, but you can better understand what to expect, and what to watch.

Here's the margin picture for Wynn Resorts over the past few years.

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

Because of seasonality in some businesses, the numbers for the last period on the right -- the TTM figures -- aren't always comparable to the FY results preceding them. To compare quarterly margins to their prior-year levels, consult this chart.

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

Here's how the stats break down:

• Over the past five years, gross margin peaked at 69.2% and averaged 55.2%. Operating margin peaked at 19.1% and averaged 14.4%. Net margin peaked at 11.6% and averaged 6.1%.
• TTM gross margin is 37.2%, 1,800 basis points worse than the five-year average. TTM operating margin is 19.1%, 470 basis points better than the five-year average. TTM net margin is 11.6%, 550 basis points better than the five-year average.

With TTM operating and net margins at a five-year high, Wynn Resorts looks like it's doing great.

Can your portfolio provide you with enough income to last through retirement? You'll need more than Wynn Resorts. Learn how to maximize your investment income and "Secure Your Future With 11 Rock-Solid Dividend Stocks." Click here for instant access to this free report.

• Add Wynn Resorts to My Watchlist.

iShares: The Low Cost ETF Issuer?

With more than 40% of the U.S. market, iShares has long been the leader in the U.S. ETF industry. But in recent years the competition has been gaining ground, thanks in part to more cost efficient products. According to the ETF Industry Association, Vanguard led all ETF issuers with almost $36 billion in cash inflows last year, handily exceeding the $28.8 billion iShares took in. Much of the difference in inflows between the two was related to a small group of ETFs linked to identical indexes but distinguished by cost differentials; the cheaper Vanguard funds drew significantly more interest than competing iShares ETFs. The biggest differential related to the emerging markets ETFs offered [see also The Ten Commandments of Commodity Investing]:

Ticker	ETF	Index	Expense Ratio	2011 Flows
VWO	Vanguard MSCI Emerging Markets ETF	MSCI Emerging Markets Index	0.22%	$7,808
EEM	iShares MSCI Emerging Markets Index Fund	MSCI Emerging Markets Index	0.69%	($6,773)

The difference was not quite as significant in the bond ETF space, but still pointed towards a move to low cost Vanguard funds:

Ticker	ETF	Index	Expense Ratio	2011 Flows
BND	Vanguard Total Bond Market ETF	BarCap U.S. Aggregate Bond Index	0.11%	$5,157
AGG	iShares Barclays Aggregate Bond Fund	BarCap U.S. Aggregate Bond Index	0.22%	$2,437

After losing ground to more cost efficient ETFs in 2011, iShares has come out in 2012 with a focus on taking market share from existing funds–using lower costs as one of the primary attractions. It appears that iShares is moving to aggressively compete on costs in popular corners of the market, introducing new, cost-efficient ETFs that will compete head-to-head with established multi-billion dollar funds. So far in 2012 iShares has been extremely active on the product development front, already rolling out 18 new funds in the first five weeks of the year. Several of the latest additions to the iShares lineup have been first-to-market products, but many will be going head-to-head with existing ETFs on the market and seem to be competing on the basis of cost efficiency [see also Fund Managers Turn Bullish As “Risk Appetite” Increases]:

• MSCI Australia Small Cap Index Fund (EWAS, 0.59%): This ETF will go head-to-head with the IndexIQ Australia Small Cap ETF (KROO), which has about $16 million in AUM and charges 0.69%.

• MSCI Canada Small Cap Index Fund (EWCS, 0.59%): This ETF targets a similar group of securities as the IQ Canada Small Cap ETF (CNDA), which has about $35 million in AUM and an expense ratio of 0.69%.

• MSCI Global Agriculture Producers Fund (VEGI, 0.39%): This ETF taps into the global agribusiness sector, an asset class already covered by the Market Vectors Agribusiness ETF (MOO), among others. MOO has an impressive $6 billion in assets, and iShares no doubt hopes to capture some of the dollars targeting this segment. VEGI will charge just 0.39% in annual expenses, which puts it well below the 0.56% charged by MOO. PAGG and CROP, two other ETFs targeting this space, both charge 0.75%.

• MSCI Global Silver Miners Fund (SLVP, 0.39%): This fund is the second to target silver mining stocks, joining the Global X Silver Miners ETF (SIL). That fund, which debuted in 2010, has about $370 million in AUM. The new iShares ETF will offer a much lower price tag; SLVP charges just 0.39%, compared to 0.65% for SIL. It should be noted, however, that SIL focuses more exclusively on “pure play” silver miners, whereas SLVP includes a number of stocks that derive earnings from other precious and industrial metals.

• MSCI Global Gold Miners Index Fund (RING, 0.39%): This new ETF represents perhaps the most exciting opportunity for iShares, since it will compete directly with the Market Vectors Gold Miners ETF (GDX has about $7.7 billion in AUM). Though the two ETFs have significant overlap–eight of the top ten holdings of GDX are also in the top ten of RING–the new iShares ETF has a big edge in expenses. RING charges an expense ratio of just 0.39%, compared to 0.53% for GDX.

• MSCI India Index Fund (INDA, 0.65%): This ETF targeting the popular emerging market charges just 0.65%, which puts it well below competing ETPs such as EPI (0.83%), PIN (0.78%), and INP (0.89%).

It should be noted that some of the new iShares ETFs are actually more expensive than similar products already on the market; NORW is slightly cheaper than ENOR, while GERJ has a slight edge over EWGS. But for the most part, iShares seems to be acknowledging the importance of cost efficiency to investors, and moving to take on several large, well established ETFs with cheaper alternatives [see also Alternatives To The 20 Most Popular ETFs].

That should be a significant positive for investors; lower fees result in investors keeping a larger percentage of bottom line returns.

Disclosure: No positions at time of writing.

Disclaimer: ETF Database is not an investment advisor, and any content published by ETF Database does not constitute individual investment advice. The opinions offered herein are not personalized recommendations to buy, sell or hold securities. From time to time, issuers of exchange-traded products mentioned herein may place paid advertisements with ETF Database. All content on ETF Database is produced independently of any advertising relationships.

Original post

AAII Sentiment Survey: Bullish Sentiment Falls 10.4 Points to 38.1%

Bullish sentiment fell 10.4 points in the latest AAII Sentiment Survey. Bullish sentiment, expectations that stocks will rise over the next six months, registered at 38.1%. This is a four-week low.

Neutral sentiment rebounded 5.8 points to 27.6%. Expectations that the market will remain relatively flat over the next six months rose for the first time in five weeks.

Bearish sentiment rose 4.6 points to 34.3%. The percentage of investors expecting stocks to fall is at a four-week high.

Individual investors, including those who are optimistic about stocks, are concerned that the market is overbought and a short-term pullback is coming. Last Friday's decline only served to heighten worries that the current leg of the rally is getting long in the tooth. It should be noted that though the drop in bullish sentiment was steep, optimism remains near its historical levels.

I have not received any feedback from our members that suggests the accusations against Goldman Sachs (GS) impacted sentiment. Our members simply want the financial industry to adhere to the law, follow regulations and conduct business in a transparent manner.

This week's special question asked members for their thoughts about oil trading above $80 per barrel. The majority of respondents said that crude prices were not influencing their investing decisions, except for making energy stocks more attractive. Many predicted that oil would continue to trade in a range of $70 to $100 per barrel over the foreseeable future. Some indicated that their opinion would change if oil were to rise above $100 per barrel, however.

The polling period for this week's survey ended Wednesday at midnight and the results are not impacted by this morning's market pullback.

This week's AAII Sentiment Survey results:

• Bullish 38.1%, down 10.4 percentage points
• Neutral 27.6%, up 5.8 percentage points
• Bearish 34.3%, up 4.6 percentage points

Long-term averages:

• Bullish: 39%
• Neutral: 31%
• Bearish: 30%

The survey and its results are available online here.

My Top Silver Play in the Market Right Now

An historic Federal Open Market Committee (FOMC) meeting is being held this week. The results of that meeting could have a significant impact on what the market does for the month of November and beyond.

We get the results of the meeting Wednesday afternoon, but the Federal Reserve has telegraphed it intends to put a lot of money into the market. Estimates range between $500 billion and $1 trillion. This is real money, although it is created out of thin air and should have a major impact on the market.

#-ad_banner-#With the Fed's QE2 ("quantitative easing", part two), the results of the mid-term elections and the jobs report this week, the market could see a lot of volatility. I suspect most of it will be to the upside.

My top silver trade for this week is Silvercorp Metals (NYSE: SVM). [To learn more how to get my free trading picks each week before the market opens, go here.]

If my forecast charts are correct and if the Fed continues to "juice" the market with hundreds of billions of dollars, then the odds are high that precious metals stocks will do well. And SVM is my top silver play in this market right now.

The fundamentals for Silvercorp Metals are strong. The fundamentals that had the largest impact on my systems include:

• The growth rate for total sales for the most recent quarter compared with the same quarter a year ago was +62.7%. This compares to the gold and silver industry's growth rate of +29.9%. The S&P 500's average growth rate for the same period was +9.9%.

• The total sales growth for the trailing 12 months compared with a year ago is +61.3%. The S&P 500's average growth rate during this time period is +9.10%.

• Earnings growth for the most recent quarter compared with a year ago is +85.3%. By comparison, the industry average is +16.69% and the S&P 500's growth rate is +27.7%.

• Earnings have grown +301.8% in the previous 12 months compared to a year ago.

• SVM's price-to-earnings ratio (P/E) of 34.2 makes it undervalued compared to its peers.

The technicals for are equally promising. Below are some specific technical observations for SVM:

• SVM trades in zone 2 and could be looking to trend higher.
   
• The average daily volume has been increasing for the last few months on increasing share price, which can be a good sign that momentum is building in this stock.

• Institutional ownership for this equity is about 25%. This is just below my sweet-spot range of +30% to +60%, but +25% is still very good. It often means that this is a good sign the large institutions have vetted this stock and believe it is a valuable component of their investment portfolios. I tend to believe that if the big institutions hold shares of a company, the future share-price trend is more likely to move higher.

Top Healthcare STock RadNet Climbs on Acquisition News, Q4 Results

RadNet Inc. (NASDAQ: RDNT) completed the acquisition of imaging centers in Brooklyn and Orchard Park, New York from Presgar Imaging and affiliated entities for cash consideration of $2.2 million plus the assumption of about $700,000 of debt. The acquired entities are located in Orchard Park and both are multimodality facilities offering a combination of MRI, CT, PET/CT, ultrasound, mammography, bone density and X-ray. The two centers are expected to add around $7 million of revenue to RadNet on an annualized basis.

The company also reported strong results for the fourth quarter as compared to last year, with record revenues, adjusted EBITDA and net income.�This improved performance was driven by its geographic clustering operating model, relative size and operational efficiency.

The company reported revenues of $145.3 million, an increase of $13.5 million as compared to same period last year. This quarter�s revenue compared with the first, second and third quarters of 2010, increased $21.1 million (17.0%), $6.4 million (4.6%) and $5.2 million (3.7%), respectively. The company reported adjusted EBITDA of $30.2 million, an increase of 11.8 as compared with last year. The adjusted EBITDA compared with the first, second and third quarters of 2010, increased $9.7 million (47.1%), $2.8 million (10.0%) and $2.1 million (7.6%), respectively. The net income was $3.3 million, or $0.09 per share as compared with net Income of $637,000, or $0.02 per share from last year’s period. The MRI volume increased 16.4%, CT volume increased 4.6% and PET/CT volume decreased 7.4% as compared to same period prior year.

For the full year, the company reported revenue, adjusted EBITDA and net loss of $548.5 million, $106.2 million and $(12.9) million, respectively.

The company expects revenue in the range of $575 million – $605 million for fiscal 2011. The adjusted EBITDA is expected in the range of $110 million – $120 million.

RadNet stock is currently trading at $3.65. The stock is up 5.18 percent from its previous close. RadNet shares touched the high of $3.70 and lowest price in today�s session is $3.38.

The company stock has traded in the range of $1.80 and $4.20 during the past 52 weeks. The company�s market cap is $134.24 million.

RadNet operates a group of regional networks comprising 180 diagnostic imaging facilities located in seven U.S. states.

� Want buy and sell signals? Premium newsletter, 15% off annual subscription – sign up today!

� Need fast service and cheap rates from a broker? Click here to see my favorite place to trade

RDNT

� Want more? Check out the message board buzz for RDNT

� See which newsletters are recommending this stock pick

� Get breaking news alerts on this stock: http://www.thestockmarketwatch.com/

4 Reasons Why Sprint Nextel Deserves the Call From Investors

The best turnaround investing opportunities can occur when a number of factors suggest the prospect of increased value. For that reason, it’s my opinion that investors should consider the case for Sprint Nextel (S).

First, sentiment is growing that while Sprint’s network is not yet on par with U.S. quality leader Verizon (VZ), it is significantly improved, keeping Sprint’s reputation solidly above quality laggard AT&T (T).1

Second, Sprint is developing its business for prepaid phones. 2 While pre-paid phones are not the “be-all end-all" of the mobile phone marketplace, this is an interesting development. Aside from being profitable, the pre-paid market could be a feeder for traditional contract customers through a pipeline of younger users and people who will get a regular plan when they get on their feet as the recession subsides.

Third, I believe that Sprint’s marketing campaign with CEO David Hesse making the pitch has finally shifted into a broadly effective message. Using top executives in advertising can work well if done right. Lee Iaccoca’s commercials for Chrysler arguably saved the company in the 80’s,3 though the pathetic YouTube video done by pre-bankruptcy General Motors [GM] CEO Rick Wagoner was a signal for prudent investors to abandon a sinking ship. 4 While the original Hesse commercials projected a detached persona that may not have connected with some viewers (I know it didn’t with me), 5 the new ones show Hesse as an executive who can acknowledge that Sprint’s products needed improvement while speaking with conviction about the quality of his team’s present offerings.6 Take a look yourself and see what you think. Equity analysts may be more comfortable with numbers than qualitative judgments like evaluating the effectiveness of an ad campaign, so if the Sprint ads are better than analysts are willing to assume, there may be hidden value.

Fourth, AT&T’s contract with Apple (AAPL) to be the exclusive U.S. wireless carrier for the iPhone runs out in 2012,7 and its expiration represents an opportunity that could help Sprint. It’s widely thought that the new scheme will let iPhone owners use Verizon, bowing to consumer demand for Verizon’s superior service. Whether or not that happens—Apple has been known to be unpredictable in its supplier decisions—the result is likely to hurt AT&T and ultimately handicap the company in its run against Sprint.

While it would be completely speculative to say that Sprint could become an iPhone carrier, Hesse’s public acknowledgement of the iPhone’s quality signals that it’s not outside the realm of possibility that Sprint could get in on the iPhone’s action if it can’t deploy a meaningful competitor.8

So while nothing is certain in investing, there’s a good case for giving the call to Sprint for those who can wait.

References:

Will Park, “AT&T customers log the most dropped call complaints, Verizon claims fewest,” IntoMobile.com, May 5, 2010, here; Harry McCraken, “Verizon vs. Sprint vs. AT&T,” June 29, 2009, here. [?]

Niraj Strern, “Spring Nextel Adds Prepaid Cellphone Brand,” Wall Street Journal, May 7, 2010, p. B5. [?]

A classic Iaccoca ad for the Chrysler LeBaron can be viewed here[?]

The video can still be viewed here. [?]

See this early Hesse ad, that says nothing about the Sprint network’s quality, here. [?]

See a March 2010 Hesse ad here. [?]

Bard Dybwad, “AT&T has iPhone exclusivity until 2012,” cnn.com, May 11, 2010, here. [?]

See Hesse’s praise of the iPhone and the Apple brand here. [?]

Disclosure: The author does not hold a securities position in Sprint (S), Verizon (VZ), AT&T (T) or Apple (AAPL)

Gold, Oil Rise But Dollar Sees Gains

The commodity complex strikes back!

Something, maybe the unexpectedly sharp rise in November producer prices, has pushed up fears of inflation, with oil futures for delivery in January rose $1.31 to $70.82 per barrel this morning, breaking a 9-day declining streak, while gold futures for delivery in January rose $3.20 to $1,126.60 an ounce.

Interestingly, the U.S. dollar index futures is holding its own, up 0.6% at 77.20. The dollar earlier this morning hit a two-month high against the Euro at $1.4551, Bloomberg notes.

The Fastest-Growing Stocks in the Market

A rising market and a still-slow economy have created a real conundrum. Should you focus on the increasingly smaller group of deep-value stocks, or should you step on the gas, searching for stocks that are set for very strong profit growth in the years to come?

  If you fall into the latter camp, then I've pulled together a great list to start your research. I've found 20 stocks that are poised to boost earnings per share (EPS) by at least 40% in 2012 and by at least another 40% in 2013.

I've excluded commodity stocks from the list. Who knows where oil, gas, copper or steel prices will be a year from now? If the underlying commodities fall in value, then there's no way these kinds of stocks can boost profits sharply in 2013.

I've also sorted out housing stocks from the group and put them in the table below. These stocks may boost profits sharply in coming years -- if the housing market picks up. And that's still a big "if."

On the bigger table later in this piece, you'll also spot Weyerhauser (NYSE: WY) and Potlatch (NYSE: PCH). Each of these firms is in the timber business and would surely benefit in the eventual upturn in new home construction.

I also sorted out technology stocks from the group. These companies are hoping for strong demand in 2012 and 2013, as IT budgets continue to slowly open up. Many corporate networks, along with global telecom networks, are being upgraded with the fastest chips and switches, which may be a boon for these companies, as you can see in the table below...

It's hard to spot a clear theme in the remaining stocks in this group. Profits are expected to rise at a fast pace on the heels of market-share gains, rebounding industry demand or financial engineering that is yielding margin gains.

A pair of stocks book-ending this table are also members of my $100,000 Real-Money Portfolio (Sign up here -- free for a limited time). Zipcar (NYSE: ZIP) and Cree (Nasdaq: CREE) appear set for solid top and bottom-line growth, though investors should brace for bumpy quarterly results on the path to firmer annual results. [Go here and here to view my original take on these stocks.]
 
You'll also spot Fuel Systems (Nasdaq: FSYS) on the list. Though the stock is up 33% since I recommended it three weeks ago, it still has a lot more upside if natural gas-focused legislation is enacted this year.

K12 (NYSE: LRN)
This company finds itself right in the middle a major national debate about our nation's academic standards and costs. The current education system has been characterized by high costs and poor test scores, which is why former President George W. Bush and President Obama have sought to shake things up through new systems of rewards and penalties to boost academic results.

K12 appears to be something of a solution to the problem. The company has developed an academic curriculum -- taught for home-schooling and charter schools -- that costs roughly 30%-40% less per student to administer than traditional public K-12 classrooms. It's not simply a path to cost-cutting: "Evidence suggests, year after year, virtual schools using the K12 curriculum continue to outperform on state test results, academic performance improves with tenure and more students are being accepted to top-tier colleges like Cornell, Princeton, Berkeley, Stanford, Michigan and Duke," note analysts at Barrington Research.

Parents and educators are surely taking note of K12's impressive results and costs. Enrollment surged 46% in the December quarter to 144,000 students compared with a year earlier. Revenue is expected to rise from $522 million in 2011 to nearly $700 million this year and more than $800 million by 2013. That's leading to robust profit gains as well, as noted in the table above.

Shares took a big hit in mid-December when The New York Times questioned the merits of the company's business model, citing concerns that the for-profit approach has undermined the quality of education. This has not led to any further scrutiny of the company's business model thus far, but there is a risk that legislators will eventually examine the company's claims of superior testing scores.

That concern aside, Merrill Lynch says the company has "significant top-line growth potential without taking into account expansion into new states." Their $30 price target is roughly 40% above current levels. Barrington Research's analysts are more bullish, predicting shares could rise to $35, noting that at less than nine times projected 2012 EBITDA, shares trade at a discount to similar stocks, despite the fact that K12 has superior projected growth rates.

Risks to Consider: These are all high-growth business models carrying high expectations. A weak quarter could cause shares to tumble.

> When searching for growth stocks, it's best to focus on companies with an extended runway, capable of several years of sustained growth. Many companies in the tables above appear to fit that bill and should be a fertile ground for further research into potential buys.

Monsanto Falls Despite Beating Estimates

Seed giant Monsanto (MON) slid 1.5% on Wednesday afternoon, even after beating analysts’ expectations. The company may have stolen is own thu8nder by announcing earlier in the quarter that seed sales looked strong — year to date, Monsanto is already up about 15%.

The company’s fiscal second quarter EPS of $2.28 beat analysts’ expectations by 16 cents. Seed sales jumped 15% as farmers planted crops earlier because of unseaonably warm weather.

Monsanto also raised its full-year EPS guidance to a range of $3.49 to $3.54 per share above prior projections for $3.39 to $3.44. To some analysts, the increase to its projection wasn’t bold enough.

“Monsanto only raised EPS guidance for the year by 10 cents, to a $3.49 to $3.54 range. We attribute this to early spring weather that pulled some seed deliveries forward,” wrote S&P Capital IQ analyst Kevin Kirkeby.

Earnings Season Preview: The Top Gambling Stocks to Watch This Earnings Season

Here at the Fool, we love our seasons: football season, flip-flop season, and our favorite -- earnings season. It's that wonderful time of year when we get to celebrate those picks that outperformed and be humbled by those that didn't.

Each quarter, we get to arm ourselves with a new set of expectations and estimates to better judge the economic landscape. We may not always nail our bets, but learning about the expectations for a given sector will place investors well ahead of many of their peers. Woody Allen put it best when he observed, "Eighty percent of success is showing up."

With that in mind, here is what you can expect to see out of some of the biggest names in gaming this earnings season just by showing up and staying engaged:

Source: S&P Capital IQ.

The consumer discretionary sector on a whole expects a 7.6% decrease over last quarter's performance, but a 12% increase over the same quarter last year. Considering the lingering sensitivity of consumer spending and the seemingly constant trend of economic fits and starts, this is a bold estimate. Then again, the sector as a whole has rebounded impressively from their consumer dog-day estimates from the last quarter of 2008 -- negative $0.37.

Let's see how some of the notable players in gambling are expected to perform and what to look for in these releases:

Company	Report Date�	Estimated Earnings	Earnings Estimate 90 Days Ago	Year-Ago Earnings�
Wynn Resorts (Nasdaq: WYNN  )	Oct. 19	1.18	0.92	0.39
Boyd Gaming (NYSE: BYD  )	Oct. 25	0.02	0.01	0.02
Pinnacle Entertainment (NYSE: PNK  )	Oct. 27	0.16	0.12	0.10
Las Vegas Sands (NYSE: LVS  )	Oct. 28	0.52	0.45	0.34
MGM Resorts (NYSE: MGM  )	Nov. 3	(0.15)	(0.13)	(0.21)
Melco Crown (Nasdaq: MPEL  )	Nov. 23	0.11	0.05	0.03

Sources: S&P Capital IQ and Yahoo! Finance.

As you can see, analysts are largely optimistic about this earnings season for gaming stocks. Wynn and Melco are slated to rake in earnings more than 200% higher than what they reported last year. By contrast, MGM is expected to continue its streak of losing quarters, with analysts predicting a $0.15 loss per share. What's behind these strikingly different tones?

Winners and losers
There are a lot of reasons to be bearish on MGM. It is overexposed to Las Vegas, particularly through its CityCenter project, but the city as a whole has had a choppy recovery and is on very shaky ground. MGM has an enormous amount of debt, $12.6 billion at last count, and doesn't have any promising growth on the horizon. Our gaming expert, Travis Hoium, covers these factors in better detail in his recent article.

By contrast, Las Vegas Sands is sitting pretty. Its brilliantly designed Marina Bay Casino is one of two allowed to operate in Singapore, which is quickly becoming one of the hottest gaming corners of the world. Singapore's two resorts are projected to take in $6.4 billion combined this year -- not far behind the Las Vegas Strip's $6.8 billion peak in 2007 -- and ahead of their current year projection of $6.2 billion. Furthermore, Las Vegas Sands owns the only new casino set to hit Macau in the foreseeable future, the Sands Cotai Central.

Melco is flying high on gaming expectations in Macau, the only market it operates in. And being a pure play in the largest gambling market in the world can be nice. Just recently Macau reported September revenue 39% higher than the same time last year. An investment in Melco at the end of September 2010 until September 2011 would have yielded 63%, compared with the S&P's less than 1%.

Source: S&P Capital IQ.

As you can see, Melco's return is something akin to a roller coaster ride, while the S&P is more like a wheelchair ramp. Depending solely on one market for growth can result in wild swings if anything in that market changes. As evidence, consider the recent speculation of a Chinese economic slowdown that sent Melco's stock tumbling.

When the chips are down
How should investors carry this information with them to earnings season? Personally, I'm going to be focusing on casino diversification by operators, specifically Las Vegas Sands. Operators that rely heavily on one market can see their fortunes change quickly, leaving them holding the bill on massively expensive properties. I'm going to be reading through the gaming industry's earnings to see which operators (if any) have plans to expand by putting up casinos in new markets. Rumor has it that Las Vegas Sands is looking at Miami for future growth.

With any luck, these companies will drop gems on investors by discussing their intentions for new opportunities. If you're looking for other gems be sure to consult this special free report from our Hidden Gems gurus: "Too Small to Fail: Two Small Caps the Government Won't Let Go Broke." These are the same analysts who identified Chipotle as a win in early 2009 and have rode it to more than 400% returns today. Fool on!

Wednesday FX Brief: Central Bankers Talk Down Inflation Warning

Once again the dollar is taking a pounding midweek as economists soften their views over the health of the recovery. Of particular concern are developments in the labor and housing markets where frustrations are building over the length of time it will take to fully wind back the clock to before the financial crisis. The euro is today rallying sharply even though several central bankers have attempted to wade into the budding inflation debate in order to defuse some of the tension.

Euro – With no Eurozone economic data to respond to in midweek trading, currency markets rounded up recent comments from ECB folk who have waded into the inflation debate. Last week President Trichet and council member Weber warned of medium-term threats to the inflation profile admittedly served up when December data breached the central bank’s inflation ceiling with a 2.2% jump. Weber yesterday noted that he expects medium-term inflation to remain below the ceiling and appeared to dumb down his comments of last week. Fellow member Nowotny underscored that the central bank had no need to alter its policy for the “foreseeable future,” while Orphanides also denied the Bank was trying to send an “overly hawkish” message pointing out that markets often like to overthink off the cuff remarks. But today’s attempt at softening earlier comments has failed to erase a gain in the euro, which earlier reached $1.3533 to trade at a two-month high. A rising euro has the potential to stifle export demand and could be harmful especially to cash-strapped nations feeling less of a recovery than in the core.

U.S. Dollar – December housing starts fell 4.3% from November and helped pull the rug from beneath the dollar this morning. Housing starts fell to an annualized pace of 529,000 units from 553,000 the prior month frustrating hopes for a recovery in the construction industry. Building permits, a forward looking indicator jumped to a higher than forecast reading of 635,000 to some extent countering the day’s bad news. However, the net effect was for a weakening of the dollar against a broad range of its major trading partners with the index down 0.8% to 78.35.

Japanese yen – The yen strengthened against the dollar to its highest since January 5 as demand for Asian alternatives to the greenback pushed the unit firmly towards ¥82.00 per dollar. Risk appetite continued to grow in the region as the Chinese once again permitted a strengthening in the yuan. Regional equities advanced buoyed by after-hours technology earnings in the U.S. The yen weakened against a rampant euro to trade at ¥111.00.

British pound – Swirling debate over inflation continues to raise questions over the line towed by the Bank of England. Data earlier in the week revealed a string of 10 inflation target breaches, admittedly brought on by rampant food and energy costs, but nevertheless alarming consumers faced with a rising cost of living. The pound rallied against the dollar dragged up by rising optimism over European sovereign debt while investors are sensing that the Bank of England might have to act at some point to counter price increases. The problem they face is whether to take such a firm tone with what they judge to be transitory price pressures at a time when growth is increasingly challenged by a round of budget-slicing spending cuts. The pound advanced to $1.6010 but eased against the euro, which buys 84.45 pence.

Aussie dollar – Demand for all things risky outweighed a slide in a widely-watched measure of sentiment lifting the local dollar well above parity with the dollar. A Westpac consumer confidence slid 5.7% to an index reading of 104.6 partly in response to concern over the economic outlook in light of the Queensland flooding. The Aussie buys $1.0054 U.S. cents following weaker U.S. housing data. The Aussie remained buoyant in advance of data due overnight likely to show a still-buoyant pace of GDP growth in China, its largest trading partner.

Canadian dollar – You can see a clear downwards spike upon the release of Wednesday’s U.S. housing data. We know well enough that the prospects for the Canadian economy are well and truly hitched to activity south of its border. At this week’s Bank of Canada monetary policy meeting the Bank sounded upbeat but sent a strong signal that further adjustments to policy must be really carefully dissected. The loonie is likely to feel the pressure of its relationship with the dollar in the event the greenback weakens further as investors fear the diminish afterglow of the recent rally in the dollar. The Canadian dollar today buys $1.0080 U.S. cents.

Energy Stocks: First Solar, Alpha dip as energy stocks shed gains

NEW YORK (MarketWatch) � Energy stocks fell into the red Wednesday for the tenth out of the last 11 sessions as lower crude oil prices continued to pressure the sector.

After trading into positive territory for most of the day, energy stocks fell back into the red with crude oil futures �moving below $93 a barrel for the first time since late 2011.

Energy stocks contained in the S&P 500 SPX �dropped 0.8%, on average, outpacing the 0.4% loss by the broad index.

Click to Play Facebook boosts IPO shares

A discussion of Facebook increasing its IPO shares to 421 million, and a look at the moves J.P. Morgan made in its $2 billion trading loss, and the startegy questions they raise.

Among the laggards, First Solar Inc. FSLR �dropped 8%, Alpha Natural Resources ANR �lost 4.4% and Chesapeake Energy corp. CHK �declined 4.2%.

On the plus side, Cabot Oil & Gas COG � rose more than 2%.

Checking the major energy sector benchmarks, the NYSE Arca Natural Gas Index XX:XNG �dipped 0.4%, the NYSE Arca Oil Index XX:XOI �moved down by 0.3% and the Philadelphia Oil Service Index OSX �declined 1%.

Setting a downbeat tone for the energy sector, the Dow Jones Industrial Average DJIA �fell about 34 points, with components Exxon Mobil Corp. XOM �and Chevron Corp. CVX �up 0.5% and 0.1% respectively.

A Small-Cap Biotech Set for Explosive Gains

Don’t be discouraged by the “down market.” Many investors are depressed or fearful today because share prices been beaten down across the board. Those investors don’t understand business cycles and the way to play them. Traders obsessed with short-term results have never been as successful as patient long-term investors. Get-rich-quick investment advice is a fantasy. Get-rich-slow is a validated strategy for real wealth.Today, it is more important than ever to keep the long-run perspective firmly in mind…Lest you’ve forgotten, world financial markets are in a state of unparalleled disorder. More capital has been drained from markets, thanks to the irresponsibility of politicians and the acquiescence of naive citizens, than at any time in modern history. The damage done by bombers and tanks in world wars has been matched by the unintended consequences of central planning and bureaucracies.Fortunately, however, the political and philosophical trend lines are all pointing to true long-term reform. The pendulum’s swing cannot be stopped, and the coming decades will be unmatched in terms of technological progress and wealth creation.This is exactly the time to be investing in the future. Metaphorically, and sometimes actually, there is blood in the streets. You’ve probably heard that Baron Rothschild, the famously successful 18th-century British investor, said, “The time to buy is when there’s blood in the streets.” In fact, some believe the original quote was, “Buy when there’s blood in the street, even if the blood is your own.”Remember, investors who bought and held a diversified portfolio of disruptive technologies before and during the Great Depression got rich. Those who lost confidence because they weren’t seeing the quarterly gains typical in bull markets missed their golden opportunity to “buy low.”This, I repeat, is a chance of historic magnitude to buy the companies that are going to change the world and power the recovery — like the one I am going to tell you about today.Producing Purified Stem Cell PopulationsOne company has accomplished a major milestone: The demonstration that the company can produce purified cell populations…As I’ve explained in discussions about other stem cell companies, the ability to produce pure cell populations is critical. The FDA is extremely concerned that the introduction of unpurified stem cells might cause inappropriate cell growths, or even cancers.Geron’s nonpurified stem cell lines did, in fact, produce microcysts in early tests.For liver or any other SC therapy, therefore, it is critical that the cells used in a therapy are only the type needed for that therapy.While I had little doubt that this company would solve this problem, I had no idea what the solution would be.I spoke to the leading researcher who helped me understand this breakthrough technology. Essentially, this company has discovered how to replicate a feature of early embryonic development that begins the process of cell differentiation. Known as the “primitive streak,” it is the initial division of undifferentiated embryonic cells into “bilateral symmetry.” Some bioethicists, in fact, consider this event the “ensoulment” or beginning of life.Regardless, the primitive streak has unique characteristics that provoke very specific movement of cells within the embryo.The important thing to know is that this company has created artificial primitive streaks. Therefore, they can provoke purified cells to migrate into purified cell populations.First American Donors for Cell BankThis company also enrolled the first U.S.-based donor in its program to establish the clinical-grade human parthenogenic stem cells capable of immune-matching most humans.They have already gone through the rigorous bureaucratic and regulatory process to assure that the cells created by these donor cells are acceptable to the FDA.Regulatory approvals were obtained from the Institutional Review Board (IRB) and the Stem Cell Research Oversight (SCRO) Committee. Cell lines have already been collected offshore, but the American side is critical to the company’s road map.HpSCs are not just effective replacement cells; they are young.

Obama names new labor board members

NEW YORK (CNNMoney) -- The White House announced Wednesday that President Obama plans to appoint three new members to the National Labor Relations Board, continuing his end-run around the Congressional approval process.

The White House said in a statement that Obama has tapped Sharon Block, Terence Flynn and Richard Griffin to fill seats on the board via recess appointments.

The NLRB, which is supposed to be governed by a five-member board, is down to three active members because Senate Republicans have opposed Obama's nominees. And one member, Craig Becker, will see his term end at the conclusion of the current session of Congress.

That's a problem, because the NLRB requires a three-member quorum to do anything, like set rules or consider a complaint. President Obama has made four nominations in the last two years, none of whom have come up for a confirmation vote in the Senate.

Obama originally nominated Flynn last January, and named Block and Griffin in December.

Wednesday's announcement came on the same day that Obama revealed plans to appoint Richard Cordray to be the first director of the Consumer Financial Protection Bureau.

Republicans including Senate Minority Leader Mitch McConnell have criticized Obama's recess appointments as legally dubious. Since May, Republicans have been using a little-known procedure to keep the Senate in session -- even when it hasn't really been conducting any business -- in an attempt to stop the president from making recess appointments.

"[W]hat the President did today sets a terrible precedent that could allow any future President to completely cut the Senate out of the confirmation process," McConnell said in a statement Wednesday.

Obama countered that Americans "deserve to have qualified public servants fighting for them every day - whether it is to enforce new consumer protections or uphold the rights of working Americans."

"We can't wait to act to strengthen the economy and restore security for our middle class and those trying to get in it," he said in a statement.

The typically low-profile NLRB has become a political hot potato since Obama took office, with Republicans charging that it's too beholden to union interests and is hurting job creation. 

Solar Shines As Obama Reiterates Commitment

The trade is favorable today in solar energy companies after President Obama this morning defended government subsidies for renewable energy, as reported by Reuters’s Roberta Rampton.

In the wake of the high-profile failure in August of Solyndra, a California firm whose federal backing has drawn a congressional investigation, the president remarked during a press conference, “We knew from the start that the loan guarantee program was going to entail some risk.”

Solyndra, which has ceased operations and plans to file for bankruptcy, has called into question the political will to continue to offer loan guarantees to solar firms for U.S. projects, a concern that has weighed on the shares of top solar names, including First Solar (FSLR).

Obama is in some sense defending the line of reasoning eloquently laid out by James Surowiecki in the latest issue of New Yorker magazine, namely, that investment by government involves risk, no different from investment by venture capitalists.

In any event, solar names are outperforming today. First Solar is up $3.65, or 6%, at $64.51; ReneSola (SOL) is up 29 cents, or almost 18%, at $1.93; JA Solar Holdings (JASO) is up 14 cents, or 7.4%, at $2.03; SunPower (SPWRA) is up 55 cents, or 7%, at $8.33; and Trina Solar (TSL) is up 59 cents, or almost 8%, at $8.12.

BioTime: A Track Record Of Broken Promises

Our extensive research has led us to conclude that BioTime (BTX) is grossly overvalued and that its shares should trade at a small premium to the company's cash balance - currently 45 cents per share. Both BioTime and its current CEO Michael West have a long track record of commercial failure. The company has inflated its valuation by selling an appealing story about the potential of stem cells.

Its marketing has been aided by overly optimistic rhetoric from investment newsletter writers who claim the company has cracked the DNA command code and that it can produce new cardiovascular systems on demand. BioTime has achieved no such thing; in fact, it does not even have any stem cell-derived products in the FDA pipeline.

Embryonic stem cells have failed to produce marketable drugs for more than a decade now. BioTime's CEO, Michael West, has previously headed two struggling stem cell-centered biotech companies. Even if stems cells were to become a viable source of new biotech drugs, BioTime's investors are unlikely to benefit, since BioTime has no drug candidates itself, and its stem cell products division has failed to ramp up revenue as expected.

MICHAEL WEST'S LONG HISTORY OF MONEY-LOSING VENTURES

I realized that it was simply not in my nature to accept death or be defeated by it. The call wasn't even a close one. I could never again resign myself to laying my loved ones down in the grave. It was crystal clear to me what I had to do. I had to defeat death.
- BioTime CEO Michael West in his book The Immortal Cell.

For two decades, Michael West has been trying to defeat death through pioneering research in stem cell therapies that could potentially alter the face of medicine as we know it. But although he has led many novel experiments and produced numerous papers and has written a book about stem cell-based medicine, his efforts have failed to generate any products that have successfully cleared FDA scrutiny and made it to the marketplace.

West left Geron (GERN), a stem cell company he founded, without having commercialized its research. His second company, Advanced Cell Technology Inc. (ACTC.OB), successfully created controversy over the ethics of cloning, but failed to generate long-term value for shareholders and lingers on the bulletin board today with its shares only worth a dime.

In 2007, West moved on from Advanced Cell and took over BioTime. At the time of his arrival, BioTime was a failing biotech company whose stock traded for pennies and whose one product, a blood product for wound victims, was a massive commercial flop. By 2007, just prior to West's arrival, BioTime had generated an accumulated shareholder deficit of more than $43 million, and its cash balance had fallen to a laughable $13,760. But through impressive salesmanship and breathless newsletter marketing, BioTime has been able to lift itself from being a nearly worthless penny stock all the way up to sporting a $200 million market cap presently.

But BioTime's clock is ticking. The stock has started to sag in recent months as the company's business performance continues to lag far behind the image of BioTime portrayed by stock newsletters and Mr. West's optimistic visions of the future. The company has been relentlessly releasing brazen press releases to try to boost its fading prospects. In the end, we are confident that betting on one man to conquer mortality is a fool's game. Just as Mr. West has failed at his last two companies, we believe he likely will also fail at BioTime.

Until Michael West's arrival at BioTime, the company appeared to be gradually fading into irrelevancy. The stock had fallen to 40 cents per share. The company's only product, Hextend, had failed to garner any significant market adoption. The company was running out of cash. But soon, under Mr. West's energetic leadership, shares began a stunning ascent, rising as much as 2500% to a peak of nearly $10.

This remarkable turnaround was due to West's ability to stoke investors' imaginations to the possibilities of stem cell research, just as he had been able to do, for a time, at both Geron and Advanced Cell. When West took over, he immediately switched the focus from BioTime's failed blood products strategy over to his stem cell-centered ambitions.

One key to BioTime's promotional strategy has been the creation of numerous subsidiaries. Typically, BioTime will announce the arrival of a new subsidiary with an exciting press release, set up a website for the subsidiary, and then watch the stock pop. After that, nothing happens. Nothing at all. Several of BioTime's subsidiaries, after their initial triumphant appearance in a heralded press release, have gone on to produce no further press releases, nor anything else indicating they serve any purpose other than to promote the stock price.

Take, for example, BioTime's subsidiary Cell Cure NeuroSciences Ltd. On October 10th, 2010, BioTime put out a press release stating that Cell Cure had entered into an agreement with Teva Pharmaceutical Industries (TEVA) to develop and commercialize Cell Cure's OpRegen product for the treatment of age-related macular degeneration. The company pointed to a potential marketplace of more than 9 million patients for the product. Investors were excited, sending shares up nearly 10% on the announcement, and shares would proceed to double within a few months of Cell Cure's agreement with Teva.

Fast forward 18 months to April 2012, and you'll be surprised to find out that since this press release, there has been no further developments regarding Cell Cure or OpRegen whatsoever. Cell Cure's website shows the October 10th, 2010 press release as the latest piece of news. Google searches reveal no additional mention of OpRegen since then. This whole subsidiary has gone silent ever since the press release announcing its creation, which was key to BioTime shares' magical run.

Or look at ES Cell International. BioTime acquired the company on May 3, 2010 for 1,383,400 shares of BioTime common stock and warrants to purchase an additional 300,000 shares. In the two years since the acquisition of ES Cell, it appears that the subsidiary has not accomplished much of anything. As of April 2012, BioTime's web site states:

BioTime acquired ESI in May 2010. We expect that the acquisition of ESI's clinical-grade hES cell bank will save years of development time and thereby accelerate the development of clinical-grade progenitor cells for potential use as research and therapeutic products."

Those words could have been written back in 2010. When will BioTime stop "expecting" and start doing something with its subsidiary? Since the acquisition of ES Cell two years ago, the subsidiary has produced no news whatsoever, other than that initial press release as shown on the ES Cell website:

click to enlarge

Just like Cell Cure, ES Cell is acquired with great fanfare and then virtually vanishes. Is BioTime acquiring subsidiaries simply to promote the stock price? In addition to acquiring do-nothing subsidiaries, it also creates them in-house. For example, witness BioTime Asia. BioTime created this subsidiary in September 2009 to develop and market stem cell products in China and other countries in Asia. Now, nearly three years later, the front page of BioTime Asia's website contains little more than a copy of the 2009 press release. Three years have passed and this subsidiary hasn't even updated its webpage:

Continuing on through the subsidiaries, we find ReCyte Therapeutics. In 2009, ReCyte Therapeutics (under its previous name, Embryome Sciences) entered into an agreement under which Millipore Corporation became a worldwide distributor of ACTCellerate™ hEPC lines, according to BioTime's 10-K. These ACTCellerate hEPC lines were the product of Mr. West's research at Advanced Cell.

This development led to great excitement among investors and newsletter writers who were promoting BioTime's stock, and played a large role in revitalizing BioTime's stock price and getting the company uplisted back off the bulletin board (although, of course, it's worth noting that ACT was not able to monetize ACTCellerate hEPC lines while Mr. West ran ACT).

Like the other subsidiaries, this excitement seems to have been misplaced. In BioTime's 2011 10-K, we find this statement: "In 2011, ReCyte Therapeutics intends to begin to build a near-term revenue business by offering a service to reverse the developmental aging of human cells, and to generate blood and vascular progenitors, for cell banking purposes." So, two years after causing a massive run-up in BioTime's shares, ReCyte has not yet produced meaningful results for shareholders and is still "intend[ing] to begin to build" a revenue-generating business.

However, to its credit, unlike other BioTime subsidiaries, ReCyte has not gone completely silent. In January, BioTime licensed a new gene which ReCyte Therapeutics "plan[s] to apply [..] in the development of innovative medical products for cancer and vascular diseases." However, there's no word yet on whether any of these "intentions" and "plans" will result in any ReCyte creating any products, revenues, or profit anytime soon.

BioTime's remaining subsidiaries are OrthoCyte, which has not produced any newsworthy events in the 11 months following its acquisition last year, OncoCyte, and LifeMap Sciences. These last two are involved in the current project du jour, the PanC-Dx cancer test. As we will discuss in future articles, the PanC-Dx cancer test has fairly long odds of ever generating meaningful revenues. We are curious to see if the PanC-Dx project simply seemingly disappears, as happened with Cell Cure and its OpRegen program now that PanC-Dx has already served its purpose of dramatically boosting BioTime's share price.

As we've demonstrated, these subsidiaries seem to have achieved little except creating short-term bursts of excitement. We are unsure why BioTime's subsidiaries do not achieve any meaningful results after they are created or acquired. Perhaps, with limited resources BioTime does not have a large enough budget to fund all its subsidiaries adequately to achieve the objectives it states in its initial enthusiastic press releases? Perhaps BioTime's management loses interest and wants to move on to new projects? Or perhaps BioTime creates the subsidiaries with the express desire of boosting the share price?

Disclosure: I am short BTX.

The Controversial Stock Pick That Spawned This Nasty Email

MyStock of the Month advisory is as simple as investing gets. It's just one pick each month. And I never hold more than 12 stocks in my portfolio at a time. I like a manageable number of holdings that I can watch like a hawk.

But there's a catch...

  I have a $100,000 real-money portfolio for my advisory. Along with providing my single-best investment idea each month, I put my money where my mouth is. I actually buy each one of my monthly picks.

I'm accountable for all of my investment recommendations. There are no "do-overs" or false starts. If I make a bad call, then it's there for everyone to see. As you can imagine, this gives me even more incentive to put a lot of thought, research, and analysis into my monthly picks.

And so in September, I did what I thought was best for my subscribers and my real-money portfolio. With the market looking shakier by the day, I went off the beaten path. Instead of a traditional stock idea like I normally recommend, my "stock of the month" was cash.

Little did I realize that my pick would be so controversial. A few weeks later, I got this email from a subscriber...

"I have cancelled my subscription and wanted to let you know the reason. I waited a month to see if I would calm down and get over it, but I'm still mad. Last month's "Stock of the Month" was CASH! Cash is not a stock. If I am paying for a premium stock-picking service I don't want to be told to hide it under the mattress. The least you can do is deliver one measly stock pick a month like you promise."

Out of privacy for the reader, I won't reveal his or her name. But to say the least, the comment took me by surprise.

What caught me off guard was the fact that the email came an entire month after I made the call -- a month in which the S&P 500 had fallern 7.2%. That's right... cash whipped the stock market in September.

I suspected that by picking cash I might raise a few eyebrows. After all, people are looking for ways to make money, not sit on it. But market conditions were unusually unforgiving. The major averages were fluctuating by multiple percentage points within a day -- sometimes within hours. I just didn't think it was right to recommend some "measly stock pick" that was vulnerable to that kind of frenetic price action. And in the market, avoiding a loss can be just as important as booking a gain.

Although I have since put more money to work in the market since September, I still have a prudent amount of cash in my portfolio. And I always recommend holding a little cash as an investment -- even after October's healthy rally.

I'm not suggesting you sell everything in your portfolio and run for the hills. But holding a little extra "dry powder" is never a bad thing. For one thing, it allows you to sleep a little better when the market roils, which may be a distinct possibility in the months ahead.

The rally might have boosted confidence, but there's still a lot of uncertainty floating around. Growth appears to be slowing in Asia, the United States is still lagging economically and then there are the seemingly endless problems in Europe.

So though October was a solid month for stocks, I'm still leery of diving back into the market head-first. Until there are stronger signs of a recovery, I'm going to continue to keep a portion of my portfolio on the sidelines in cash.

Of course, I am always looking for fundamentally sound investments to buy, and this sort of fear-driven environment can present a great chance to pick up good stocks at a cheap price.

If I see a security I like, I can easily let the volatility in the market get me a better purchase price.

And that's another advantage of having cash at the ready...

Bargains don't stay bargains for long. And I've always found that cash is hardest to raise when you need it the most. If there's not enough cash in your account to finance the trade, then you're out of luck... the opportunity is gone.

After all, the days of wild stock market swings are far from over. The global economy has a long way to go before I'm convinced things are "settled." And as I'm sure you're aware, this sort of rocky environment makes it difficult to navigate.

This Growing Company is Giving 2 Giants a Run for their Money

Whenever you hear that a company is a "growth-through-acquisition story," you should be cautious. Investors tend to shun these types of stocks, as acquisitions bring plenty of risk. The acquired company may not generate the revenue growth that management had been banking on, or hoped-for cost cuts or other synergies may simply never materialize.

But a knee-jerk dismissal of these types of companies is a mistake, and investors instead need to differentiate between the two types of deal-making.

Estee Lauder Earnings Up 100% Over 2010

Estee Lauder Companies Inc. (EL) posted robust results for the third quarter of fiscal 2011 with quarterly earnings of 71 cents per share. Earnings outpaced Zacks Consensus Estimate of 57 cents by 24.6% and shot 100% from 34 cents delivered in the prior-year quarter. Profit was recorded on extensive higher-margin product launches and effective advertising.

The results prompted the company to raise its full-year diluted earnings estimate to $3.55 to $3.65 per share.

However, the New York-based Estee Lauder fears that the Japan disaster will hamper the total company sales for the full fiscal by about half a percentage point. The company believes that such negative effects will linger at least for the next six to nine months pushing it to monitor the situation and reassess its estimates.

Net Sales and Operating Profit

Net sales for the quarter grew 16.0% year-over-year to $2.17 billion from $1.86 billion in the prior-year quarter. The top line growth was primarily driven by stronger overall business, particularly from the company’s major brands, coupled with a weaker U.S. dollar. The net sales reported by the company was well ahead of the (ahead of what?)

About $42 million was added to the quarter’s net sales owing to the additional orders from Europe on the back of implementation of ‘SAP’ in some of the affiliates of the company. Again about $31 million was contributed by the Company’s long-term perfumery strategy adopted in the Europe, the Middle East & Africa region.

The company posted sales gains in each of its geographic regions and major product categories. Further, strong sales growth came from the company’s international businesses, particularly in travel retail, Asia/Pacific and emerging markets.

For the full year fiscal 2011, net sales are expected to grow between 10% and 11% in constant currency. The company expects to massively increase global advertising spending with new initiatives and major product launches.

While gross profit rose 19% year over year to $1683.1 million, operating expense climbed 14% from the year-ago period to $1,474.0 million in the quarter. Operating income soared 66% to $209.1 million from the corresponding period a year ago.

Segments

By product categories – Skin Care product sales rose 14% to $933.4 million, Makeup sales jumped 24.0% to $878.2 million, Hair Care product sales inched 14.0% to $110.0 million and Fragrance product sales surged 4% to $232.0 million.

Makeup segments’ operating income increased over 100%, primarily reflecting improved results from certain of the company’s heritage brands and from its makeup artist brands. While income saw a sharp ascent in Skin Care segment, Fragrance segment’s operating loss slid, primarily reflecting higher net sales of designer fragrances and recent product launches, cost reductions.

However, Hair care operating results decreased, reflecting goodwill and other intangible asset impairment charges related to the Ojon brand.

By region – sales in The Americas rose 12.0% to $928.9 million; in Europe, the Middle East & Africa sales surged 20% to $794.7 million, whereas in the Asia/Pacific region, sales soared 19.0% to $442.8 million.

While operating income in all the regions experienced year-over-year growth, that in America requires special mention as it rose 100% reflecting the strong sales gains in the region.

Cash Flow and Balance Sheet

The company exited the quarter with net cash flows of $727.6 million compared with $798.2 million in the prior year. The decrease was primarily attributable to higher working capital requirements.

As part of a four-year strategic plan (fiscal year 2010-2013), which includes lessening of headcount, and realigning and optimizing the structure of the geographic regions, resulted in $48 million savings during the reported quarter. Management expects to realize savings of $190 million during fiscal 2011.

Estee Lauderwhich competes with Procter & Gamble Co. (PG) holds a Zacks #3 Rank, which translates into short-term Hold rating.

A High-Yield Play on General Electric

The following video is part of a special series in which Motley Fool analyst Andrew Tonner and "Options Whiz"�Jeff Fischer discuss how to make 2012 the year YOU master the market.

In this edition, Andrew and Jeff analyze General Electric, and Jeff explains an uncommon way to profit off of GE.

Please enable Javascript to view this video.

For more details on how to trade General Electric using similar options strategies with as much potential or more, just click here.

You'll be directed to the Motley Fool Options Whiz -- our interactive "Options U" designed to teach you to trade options sensibly, with a minimum of risk, and all the resources of The Motley Fool behind you -- all 100% FREE!

Toyota Boosts Rental and Corporate Sales in U.S. By 47%

Toyota (NYSE:TM), a company that traditionally shies away from the U.S. rental car industry and corporate fleet sales, boosted them by 47% last month, compared to last January. This strong start is due to pressure caused by falling sales over the past two years — the negative result of numerous safety recalls and shortages from last year�s devastating earthquake.

This rise in corporate customers also increased Toyota’s total U.S. sales by 7.5%. If not for this increase, total U.S. sales would have been up less than 1%.

Toyota’s U.S. sales chief Bob Carter says while fleet sales will perform similarly in February, they will fall to normal levels in March.

– Andrew Lander, InvestorPlace @andrewlander

For the full story, visit the Associated Press.

Berkshire Hathaway Shares — 3 Pros, 3 Cons

As expected, Warren Buffett had some great zingers at Berkshire Hathaway’s (NYSE:BRKA) annual shareholders meeting.� He dissed Johnson & Johnson�s (NYSE:JNJ) $21.5 billion deal for Synthes because it involved too much stock.� Oh, and Buffett said that it would be Congress� “most asinine act” if it did not raise the national debt ceiling (and yes, the institution has had many asinine acts!)

Of course, the hot topic at the event was about the controversy surrounding his former prot�g�, David Sokol, who resigned after the disclosure that he bought shares of Lubrizol (NYSE:LZ) before Berkshire announced the acquisition of the company.� Buffett said it was “inexplicable and inexcusable.�� Yet he did take some of the blame.

However, Buffett made no apologies about the performance of Berkshire.� It is one of the most financially solid companies in the world.

But what about its prospects?� Here�s a look at the pros and cons:

Pros

Buffett magic.� Yes, Warren Buffett is a financial genius.� Because of his investment prowess, he has amassed a fortune of $50 billion.� Along the way, he has made many others fabulously rich.�

While Buffett is disciplined in his approach, he realizes that he must be agile.� To this end, he has invested in highly regulated, capital-intensive businesses like utilities and railroads.� So far, the moves have been spot on.

Smart acquisitions.� With huge amounts of cash flow, Berkshire is nicely positioned for acquisitions.� A couple years ago, the company struck a $44 billion deal for Burlington Northern.� True, there was skepticism, but it has turned out to be a winner.

What�s more, Berkshire�s acquisition of Lubrizol was smart.� The company has good earnings power and a top management team.

Diverse platform.� Berkshire�s portfolio spans many key industries like food distribution, manufacturing, insurance, retail and so on.� The firm is also an all-in bet on the American economy.� And if history is any indication, it remains a good bet.

Cons

Succession. At 80 years old, Buffett still seems like he�s in his prime.� Unfortunately, there will be a time when he will no longer be at the helm.�

With the departure of Sokol, there is even more confusion as to who will eventually succeed Buffett.� At the annual meeting, he did extol his insurance maestro, Ajit Jain.� But it will be nearly impossible to replace someone like Buffett.

Losses.� Berkshire insures for catastrophic losses, such as earthquakes and hurricanes.� So long as there is strong risk management, the returns can be attractive.

But Mother Nature can be brutal.� Just look at the disaster in Japan, with its massive earthquakes and tsunami.� Because of this — as well as the storms in New Zealand — Berkshire suffered $1.67 billion in losses in the first quarter. This may be the first year that the firm will sustain underwriting losses in 10 years.

Organization.� Buffett takes a decentralized approach to managing his many far-flung businesses.� For the most part, it has worked.� But the problems with Sokol are raising concerns.� Should Berkshire have more controls?� Might there be too many potential risk exposures?

Verdict

In the financial crisis, Buffett showed his genius when he made investments in companies like General Electric (NYSE:GE) and Goldman Sachs (NYSE:GS).� The problem is that these investment opportunities are mostly gone.� Thus, over the next few years, returns are likely to be muted.

And yes, there is likely to be distraction from the Sokol affair, which may lead to changes in the organization, and there is still much lingering concern about succession.

When looking at these factors, it looks like the cons outweigh the pros on Berkshire for now.

Tom Taulli�s latest book is �All About Short Selling� and his Twitter account is @ttaulli.� He does not own a position in any of the stocks named here.

Top Stocks For 2012-1-12-14

DrStockPick.com Stock Report!

Thursday August 20, 2009

Benihana Inc. (NASDAQ: BNHNA; BNHN), operator of the nation’s largest chain of Japanese theme and sushi restaurants, today formally announced its Benihana Teppanyaki Renewal Program at its 2009 Annual Meeting of Stockholders. The 2009 Annual Meeting of Stockholders was held at the Marriott Doral Golf Resort and Spa, 4400 NW 87th Avenue, Miami, Florida 33178 at 10:00 a.m. ET this morning.

Johnson & Johnson (NYSE: JNJ) generated attention in the options pits on Wednesday, as traders responded to a mixed bag of news surrounding the firm. On the one hand, the Food & Drug Administration (FDA) issued a warning letter regarding JNJ’s antibiotic studies; on the other, the blue chip won a U.S. advisory panel’s support for its experimental hip implant.

Agilysys, Inc. (NASDAQ: AGYS), a leading provider of innovative IT solutions, announced the availability of the third chapter in an eBook from Agilysys which examines how virtualization is quickly becoming a standard in the Data Center as a tool to redesign computer infrastructures and eliminate inefficient systems.

American Defense Systems, Inc. (NYSE Amex: EAG), a leading provider of advanced transparent and opaque armor, architectural hardening and security products for Defense and Homeland Security, reported its physical security subsidiary, American Physical Security Group, LLC (”APSG”), has received “Qualified Anti-Terrorism Technology” designation and certification from the U.S. Department of Homeland Security (DHS) for its American Anti-Ram(TM) (AAR(TM)) vehicle barricade product line.

Bassett Furniture Industries, Inc. (Nasdaq:BSET) today announced that its triennial accounting review by the Securities and Exchange Commission (SEC) is close to being completed. As previously announced, Bassett had received comment letters from the Commission during the second and third quarters of 2009, relating to Bassett’s Form 10-K for the year ended November 29, 2008 and Form 10-Q for the quarter ended February 28, 2009. Due to the potential implications of these comments, the Company delayed its filing of its Form 10-Q for the quarter ended May 30, 2009.

ESCO Technologies Inc. (NYSE: ESE) today announced that TekPackaging LLC (Tek) has been awarded a production contract to be the exclusive manufacturer of Thermoscan(R) ear thermometer probe covers for distribution worldwide. Thermoscan is the market leader and healthcare industry standard for electronic thermometers.

Michael Moritz: The best advice I ever got

FORTUNE -- "Steve Jobs told me that you should never go to a meeting or make a telephone call without having a clear idea of what you're trying to achieve. And Don Valentine, the founder of Sequoia Capital, told me to trust my instincts, which lets you avoid getting dragged into conventional thinking and trying to please others.

"But the best advice I ever got came from Bill Deedes, who was editor of the Daily Telegraph and a grand old figure of Fleet Street. Prior to leaving college, my heart was set on working on Fleet Street. I went to see Bill one rainy day in his office. He said if he were in my shoes, he would go to America. That adjusted my compass. After that, I was hell-bent on going. At that point I would barely have been able to pick California off a map, and I certainly had no idea about anything called venture capital. I've worked for the past 30 years in Silicon Valley. There is nothing that comes close to this place. That's not an indictment of Britain, just a reflection on the wonderful benefits of living in America."

Michael Moritz

Age: 57

Job Experience: Sequoia Capital managing partner; current board member at LinkedIn (LNKD), Kayak, and Green Dot (GDOT); former board member at Google (GOOG, Fortune 500), Yahoo (YHOO, Fortune 500), and PayPal; former journalist and author

Claim to Fame: Legendary Silicon Valley dealmaker who backed investments for Sequoia in Yahoo, Google, PayPal, Zappos.com, and many others; correspondent for Time (owned by the parent of Fortune's publisher) early in his career, covering Silicon Valley; wrote 1984 book The Little Kingdom: The Private Story of Apple Computer 

Companies: In FDIC we trust

NEW YORK (CNNMoney) -- Jeff Cappelletti had his faith in the financial markets shaken in 2008, when he couldn't extricate about $1 million of his firm's overnight cash from the Reserve Fund, the world's largest money-market mutual fund.

As the treasurer and risk manager of the U.S. division of G4S Secure Solutions, a firm that provides private security guards to corporations, banks and airports in 125 countries, Cappelletti now puts some of his firm's cash in an area of the market he deems impenetrable: bank accounts insured by the FDIC.

"Now, if something happens to Bank of America and my cash is suddenly nowhere to be found, I have another pool of cash somewhere else," said Cappelletti. Bank of America (BAC, Fortune 500) is G4S's primary commercial bank.

Cappelletti has been working with New York private equity firm StoneCastle Partners over the past six months to divide and distribute about $7 million of G4S's overnight cash among a few dozen community banks.

StoneCastle has meted out these deposits in increments of less than $250,000 in order for the accounts to be backed by the FDIC.

In a sign of the intense fear gripping all corners of the financial system, G4S is part of a wave of large multi-national corporations seeking the shelter of FDIC insurance.

A year after launching this service, StoneCastle Partners has amassed $1.5 billion in deposits into its "Federally Insured Cash Account" (FICA) from major corporations like Starbucks (SBUX, Fortune 500), and Wakefern Food, which owns supermarkets including ShopRite and PriceRite, as well as non-profits like the United States Tennis Association.

Wakefern confirmed the practice, while Starbucks declined to comment for this story. USTA was unavailable for immediate comment.

Can Wall Street thrive again?

The corporate appetite for such de-risking appears almost insatiable, with StoneCastle's managing principal Josh Siegel saying it's been difficult to keep up with the demand. Conservatively, the firm expects a 10% growth rate in monthly deposits in 2012.

The firm now caps the total amount a single firm can hold in these accounts at $25 million but plans to increase that to $50 million by the end of 2012. It's also working to expand its network of 300 partner banks to 750 during the same time period.

With interest rates at historically low levels, Siegel says community banks can offer better yields on overnight cash. StoneCastle's corporate accounts yield about 0.3% -- nearly triple what corporations would earn in money market funds or U.S. Treasuries that mature in six months or less. StoneCastle takes about 0.15% for its administrative fee.

StoneCastle's accounts are a twist on a longstanding practice called "brokered deposits" that have been typically used by high net worth individuals. Until recently, they were rarely used by major corporations.

Historically, big brokerage shops like Merrill Lynch, Bank of New York (BK, Fortune 500) and Charles Schwab (SCHW, Fortune 500) created these brokered deposit funds for their wealthy clients by selling piles of loans to the community banks that promised customers the best interest rates.

Brokered deposits have been the lifeblood of community banks that need the funds to extend loans to the local community. The dark side is that they've also been a force behind some of the risky lending practices that caused community bank failures during the financial crisis.

Banks that take these deposits are willing to pay high rates. And in order to generate returns from those deposits, participating banks have often made more speculative and, thus higher-yielding, loans in areas like construction that suffered during the housing crisis.

"These deposits offer no risks for the banks and high rates of returns for investors, and the FDIC has been left holding the bag," said William Isaac, a former FDIC commissioner who ran the agency during 1980's savings and loan banking crisis. Isaac, who has been a public critic of brokered deposits, said such accounts were plentiful at nearly every bank that fell during the 1980s.

Most community banks that have failed since 2008 also had outsize proportions of brokered deposits. Still Siegel emphasizes that unlike traditional brokered deposits, StoneCastle doesn't shop for the best rates at community banks, just average rates. But even average rates are more attractive than what large banks offer on overnight accounts, he said.

Delta Trust & Bank Corp. CEO French Hill said StoneCastle's deposits simply help his Little Rock, Ark., bank fill the unusually high business loan demand in his area.

Brokered deposits fall into a regulatory gray area for the FDIC. Banks deemed undercapitalized by the FDIC or on the agency's troubled bank list are banned from accepting new brokered deposits. But the regulations governing the practice overall are murky.

The FDIC declined to comment on StoneCastle Partners.

Siegel said StoneCastle has received two contradictory opinions from the FDIC's legal department. One opinion called StoneCastle's accounts brokered deposits, while the second opinion said they are not.

Since it's up in the air, Siegel said that StoneCastle hews to the rules governing brokered deposits to be safe and generally tries to stay away from banks that his firm perceives as risky.

Still, should any bank fail, Siegel said the FDIC did confirm that all accounts under $250,000 are indeed protected.

G4S's Cappelletti said he has mixed feeling about the "moral hazard "of the FDIC backing, but likes the security it provides his company.

"I think everyone wants the government to provide security," he said. "As a taxpayer, I'm not thrilled about it, but as a user of the services, governmental backing is important. We're all moving towards a flight to security."