Is the Dow Approaching Bubble Territory?

If the market finishes the day where it is now, it will mark the eighth straight session in which blue-chip stocks have climbed. With roughly an hour left in the trading session, the Dow Jones Industrial Average (DJINDICES: ^DJI  ) is clinging to a one-point gain.

Given this run into record territory, many analysts are now beginning to ask the inevitable question: Are stock prices approaching bubble territory? Leaving little to the imagination, a headline on Yahoo! Finance reads, "The Stock Market Is a Debt-Fueled Bubble." According to an economist interviewed therein: "Nothing can accelerate forever. At some point the acceleration stops, and when it does the market breaks."

Not surprisingly, however, there's another side to this story. David Tepper, the founder of hedge fund Appaloosa Management, has purportedly predicted that the S&P 500� could rise an additional 20% or more through the end of this year. Citing a person "familiar with his thinking," Kate Kelly of CNBC said Tepper is confident in the U.S. economy and is expecting gross domestic product to grow by 2.25% for the first three months of the year.

Either way, today's rally is based in large part on the fundamentals.

This morning, the Department of Commerce released data showing that retail sales in the United States jumped last month -- "a sign that consumers are gaining confidence and spending more despite higher taxes and gasoline prices," according to The Wall Street Journal. More specifically, seasonally adjusted sales of retail and food services rose by 1.1% over January and 4.6% on a year-over-year basis. This was more than double the 0.5% advance that economists surveyed by Bloomberg had predicted.

The results were great news for both McDonald's (NYSE: MCD  ) and Wal-Mart (NYSE: WMT  ) , both of which are up in afternoon trading. While these companies have seen their stocks gain this year -- McDonald's by nearly 10% and Wal-Mart by 6.3% -- it hasn't been a smooth ride for either. Among other things, same-store sales at the fast-food giant fell by 1.5% last month, as the prior-year period included an extra day for the leap year. And Wal-Mart has been working to stem the tide leak of emails about severely lagging sales at the nation's largest retailer.

Meanwhile, shares of Bank of America (NYSE: BAC  ) are trading higher in anticipation of tomorrow, when the nation's largest banks learn whether or not they'll be allowed to increase their dividend payouts and/or repurchase more shares. As I discussed, I believe the chances are good -- and it seems the market does, too. The same can be said for JPMorgan Chase (NYSE: JPM  ) , the nation's largest bank by assets.

The question is largely a function of capital -- Tier 1 common capital, that is. Banks with excess capital beyond regulatory minimums will presumably be given the green light to return more of that capital to shareholders, while those not similarly situated will be denied the opportunity.

In B of A's case, at the end of the third quarter of last year, its Tier 1 common capital ratio was 11.4%, or more than twice the regulatory minimum of 5%. By means of comparison, once the stress test's "severely adverse" economic scenario was taken into consideration, B of A's ratio declined to 6.8% -- still 180 basis points higher than necessary. CEO Brian Moynihan has refused to admit what exactly the bank has requested from the Fed in this regard, but most analysts are expecting the bank's now-nominal dividend to double or more. Click here to read more about the likelihood that B of A will increase its dividend.

And JPMorgan fared similarly. While its Tier 1 common capital ratio fell by nearly 40% from 10.4% down to 6.3%, it nevertheless emerged with a 130 basis-point buffer that could be used to pad its shareholders' pockets. A report last week from the Financial Times said the lending giant will seek $7.5 billion in buybacks, and the consensus estimate is that it's looking to increase its dividend by $0.06 per share. To read more about this, click here.

If you haven't picked up on it already, this is a big week for banks. With this in mind, click here to access our comprehensive report on B of A and here for our report on JPMorgan.

Northwest Natural Gas Earnings Up Next

Northwest Natural Gas (NYSE: NWN  ) is expected to report Q4 earnings on March 1. Here's what Wall Street wants to see:

The 10-second takeaway
Comparing the upcoming quarter to the prior-year quarter, average analyst estimates predict Northwest Natural Gas's revenues will decrease -1.3% and EPS will grow 0.9%.

The average estimate for revenue is $118.4 million. On the bottom line, the average EPS estimate is $1.10.

Revenue details
Last quarter, Northwest Natural Gas booked revenue of $49.9 million. GAAP reported sales were 3.8% lower than the prior-year quarter's $93.3 million.

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

EPS details
Last quarter, non-GAAP EPS came in at -$0.29. GAAP EPS were -$0.39 for Q3 against -$0.31 per share for the prior-year quarter.

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

Recent performance
For the preceding quarter, gross margin was 25.9%, 250 basis points better than the prior-year quarter. Operating margin was -5.3%, 60 basis points better than the prior-year quarter. Net margin was -11.8%, 290 basis points worse than the prior-year quarter.

Looking ahead

The full year's average estimate for revenue is $379.2 million. The average EPS estimate is $2.39.

Investor sentiment
The stock has a five-star rating (out of five) at Motley Fool CAPS, with 141 members out of 147 rating the stock outperform, and six members rating it underperform. Among 39 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 37 give Northwest Natural Gas a green thumbs-up, and two give it a red thumbs-down.

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Northwest Natural Gas is hold, with an average price target of $49.33.

Can your portfolio provide you with enough income to last through retirement? You'll need more than Northwest Natural Gas. Learn how to maximize your investment income and "Secure Your Future With 9 Rock-Solid Dividend Stocks." Click here for instant access to this free report.

• Add Northwest Natural Gas to My Watchlist.

Rubicon: Sterne Agee Launches With Sell; Sees Huge Downside

Sterne Agee analyst Andrew Huang this morning launched coverage of Rubicon Technology (RBCN) with a Sell rating and a $10 price target – less than half of yesterday’s close at $20.41. Huang writes in a research note that the bearish stance reflects his view that gross margins will come under pressure in 2011 as “significant capacity comes online.”

Rubicon providers sapphires and other crystalline products for producing LEDs.

Huant says sapphire ingot capacity will increase by 100% next year, while the installed base of MOCVD tools for producing LEDs will increase 80%, and demand for LED chips is expected to rise 70%. “Further driving the potential for oversupply is the onslaught of new entrants to the market, which should contribute to supply in the back half of 2011,” he writes.

RBCN is down $1.04, or 5.1%, to $19.50.

Bernanke bump: Stocks tend to rally on testimony

MARKETWATCH FRONT PAGE

With Federal Reserve Chairman Ben Bernanke providing his two-day testimony before Congress next week, the semiannual event has helped out stocks more often than not. See full story.

Stocks to Watch: Lowe�s, Autodesk, Hertz

Among the companies whose shares are expected to see active trade in Monday�s session are Lowe�s, Autodesk and Hertz. See full story.

Smoke signals for economy harder to read

The U.S. economy is sending hazy signals again and the picture is unlikely to clear up very much this week. Conflicting reports are likely to suggest that growth remains ho-hum. See full story.

The 10 best U.S. cities to retire in

Topretirements.com has just published its seventh annual list of the 100 most popular places in the U.S. to retire, and it offers clear proof that the Sunbelt�s retirement popularity continues: 76 of the top 100 positions are held by towns in the Sunbelt. Florida dominates the list of best places to retire, taking 25 of the spots. See full story.

10 things 401(k) plans won�t tell you

A comfortable retirement is a mainstay of the American dream. Yet we aren�t particularly good at socking money away, and our complicated retirement savings system isn�t helping. See full story.

MARKETWATCH PERSONAL FINANCE

With some finagling, getting away from it all during spring break can also mean bypassing the hordes of partying college students. See full story.

Joy Global CEO to Step Down

Joy Global (NYSE: JOY  ) is to lose its chief executive in the very near future. CEO Michael Sutherlin will relinquish his position at the end of this year when he enters retirement. The company's board has designated Edward Doheny II as his replacement.

The 66-year old Sutherlin will formally retire next February 1, but Joy Global said that he will fully transfer responsibilities to Doheny by December of this year following the release of the firm's fiscal 2013 results.

Doheny, 50, has been the COO of the company's underground mining equipment unit since 2006. Prior to that, he worked for 20 years at Ingersoll-Rand in numerous executive positions.

How Samsung Is Undermining Android

Thanks to Google (NASDAQ: GOOG  ) Android, Samsung has climbed to become the largest smartphone vendor in the world by market share. The open-source platform has proved critical to the South Korean company's success in recent years, which has also greatly benefited the search giant, too.

Surprisingly, this partnership is just waiting to go sour, because ultimately Samsung and Google's interests aren't entirely aligned, even though the pair are still on their honeymoon.

Conflict of interests
Samsung's goal in life is to sell hardware, and to it, Android is merely a means to an end. On the other hand, Google just wants more people on the Internet using its services and seeing its ads.

Over the years, Samsung has had countless software partners, and Google is just its latest flame. Samsung's rise to power presents a unique threat to Android and Google, one that Google has already taken note of. If the company wrangles even more sway in the Android ecosystem, it could leverage higher ad-sharing agreements or other bargaining chips at Big G's expense. Now-former Android chief Andy Rubin had internally voiced concerns over this distinct possibility.

In the extreme, Samsung could entirely fork Android for its own benefit, much like Amazon.com (NASDAQ: AMZN  ) has done with the Kindle Fire family or what most Chinese smartphone OEMs are wont to do. To be clear, Samsung would greatly benefit from a forked version of Android, because it would be an important point of differentiation from other Android OEMs -- much more potent than the current practice of customized interfaces like TouchWiz.

The main thing stopping Samsung from doing this right now is that it lacks the content and services that Google brings to the table. This is precisely how Amazon was able to fork Android very successfully, because it has plenty of content and services, and even has its own Android Appstore.

During Samsung's Galaxy S4 unveiling Thursday night, though, it was very apparent that the company is trying to undermine Android.

Slowly cutting Android out
There's no avoiding the fact that the Galaxy S4 is an Android device. However, what Samsung can and did do last night is highlight all of its new apps, services, and software features, while decidedly not emphasizing Google's popular services.

Instead of talking about Google Play and all the types of content available from the search giant's repository, it showed off Samsung Hub, an integrated storefront for digital content like music, videos, books, games, and more. The new S Translator is exactly what it sounds like, and can potentially replace Google Translate. Forget Google Now and spoken turn-by-turn directions in Google Maps, that's what the new Galaxy S Voice Drive is for.

That's not to say that Google's services are gone, just that Samsung is clearly pushing its own instead. These are just some of many examples where Samsung is actively replicating Google offerings (sound familiar?), and are the first signs that Samsung isn't exactly happy with the status quo and wants more control of the customer relationship and experience than it currently has.

At this rate, Samsung will eventually be able to strip Android to little more than the bare bones for its operating system platform, while it loads up its own features, services, and content on top. Google will always have search, but that's just one aspect of its broader Android strategy; Big G's other services are also crucial to its moat-building goals.

Perhaps a trial separation is in order
In addition, Samsung is legitimately trying to add entirely new features to Android for further differentiation, such as its Air View and Smart Scroll features. These are relatively new and don't seem to work as well in practice as they do in theory, judging by early hands-on reviews.

Samsung is also actively targeting enterprise customers with its new Knox security certification. The South Korean company is positioning Galaxy devices with Knox within its broader Samsung For Enterprise, or SAFE, initiative. That puts it in the same enterprise market with Apple�and BlackBerry, while leaving the rest of the Android army behind. Samsung now characterizes its own Galaxy Nexus, "all other Google Nexus," and "all other Android tablets and phones" as "not safe for work" (emphasis mine).

Put it all together and what you get is an increasingly tense relationship between the largest smartphone OEM by volume and the provider of the dominant mobile operating system that powers all those devices. Loveless marriages simply aren't built to last.

As one of the most dominant Internet companies ever, Google has made a habit of driving strong returns for its shareholders. However, like many other web companies, it's also struggling to adapt to an increasingly mobile world. Despite gaining an enviable lead with its Android operating system, the market isn't sold. That's why it's more important than ever to understand each piece of Google's sprawling empire. In The Motley Fool's new premium research report on Google, we break down the risks and potential rewards for Google investors. Simply click here now to unlock your copy of this invaluable resource.

Nvidia Slips: FYQ4 Revenue In-Line, EPS beats; Q1 Rev View Light

Chip vendor Nvidia (NVDA) this afternoon reported fiscal Q4 revenue in line with consensus and profit per share that easily surpassed analysts’ estimates. The revenue view this quarter was lower, however.

Revenue in the three months ended in January rose to $1.11 billion, yielding EPS of 35 cents.

Analysts had been modeling $1.1 billion and 24 cents.

Gross margin in the quarter rose slightly to 53.2% from 53.1% in the preceding quarter and 52.5% in the year-earlier period, on a non-GAAP basis.

For the current quarter, the company sees revenue of about $940 million, give or take 2%, which is below the average $1.07 billion estimate of analysts.

Nvidia shares are down 17 cents at $12.20 in late trading.

Why Westport Innovations Is Making Big Moves

As natural gas becomes a more and more viable energy option �for the U.S., companies associated with gas have been the subject of much �discussion�. One of those companies at the forefront of the movement is Westport Innovations (NASDAQ: WPRT  ) .

The Canadian company is a leader in designing engines that can run solely on natural gas. Westport has teamed up with car, truck, railroad, and even heavy-machinery companies to form joint ventures to provide engines that can run on cheaper, cleaner natural gas.

A big spike
Over the past two trading days, shares of Westport have risen by as much as 12.5%, �despite no substantial news from the company.��

Instead, it seems that some within the industry are hearing whispers that Westport may be a buyout candidate�. The name mentioned more than any other as a potential buyer is engine maker Cummins (NYSE: CMI  ) .

A purchase by Cummins would actually make quite a lot of sense, as the two companies have been working together for years on their Cummins Westport joint venture, which focuses on designing and manufacturing natural gas engines for long-haul trucks.

One of the biggest threats that Westport faces is the fact that it only designs -- and does not manufacture -- the engines used by customers. If any manufacturer were to develop its own method of building natural gas engines, Westport could be left out in the cold.

Cummins has made no secret�of the fact that it will be designing its own separate 15-liter natural gas engine for truckers while maintaining its joint venture with Westport. A purchase of Westport could accelerate Cummins' ambitions.

That being said, speculation is just that: speculation. JPMorgan�has already come out and said that any takeover by Cummins is "highly unlikely."

Instead of following rumors, you'd be better off digging into the company itself. �Westport has a big goal: to lead the world in transitioning away from traditional oil-based fossil fuels in favor of abundant, cheap, and clean natural gas. The Motley Fool has just released a brand-new premium report breaking down the company's opportunities, competitive advantages, and risks. To get started, simply click here now for instant access.

Federal Reserve Gives Wells Fargo Approval to Hike Dividend

After the closing bell yesterday, the Federal Reserve released the results of its 2013 comprehensive capital analysis and review, or CCAR. Unlike last week's stress tests, which were designed to ascertain whether the nation's 18 largest banks could survive a severe economic downturn, the purpose of the CCAR is largely to determine which of the same banks should be allowed to increase the amount of capital that they return to shareholders via dividends or share buybacks.

While there were notably few surprises, yesterday's announcement wasn't entirely void of them. The biggest shock, for example, was that the tried-and-true regional lender BB&T (NYSE: BBT  ) had its 2013 capital plan rejected by the Fed. To be fair, however, the reason for the rejection wasn't entirely clear at first. As my colleague David Hanson discussed:

Although the Fed did not object to the Winston Salem, NC-based bank's continuation of its increased dividend from the first quarter of 2013, the bank recently disclosed that it reevaluated its process related to calculating risk-weighted assets because of regulatory guidance. The change in methodology was not reflected in the Fed's numbers, prompting the objection and necessary revision.

Fortunately, a similar surprise wasn't in the cards for shareholders of the nation's fourth largest bank by assets,�Wells Fargo (NYSE: WFC  ) . As it did during the stress tests, the California-based mortgage giant seemingly sailed through the CCAR process with little to no trouble. According to a press release issued soon after the results were made known, the bank confirmed that its 2013 capital plan includes a proposed dividend rate of $0.30 per share for the second quarter of 2013, and a proposed increase in common stock repurchase activity for 2013 compared with 2012. Both of which, of course, are contingent upon approval by the company's board of directors. By means of comparison, JPMorgan Chase (NYSE: JPM  ) has proposed a 26.6% dividend increase, while Bank of America (NYSE: BAC  ) is contenting itself with a $5 billion buyback -- click here to read more about JPMorgan's decision, and here for B of A's.

Source: Company press release.

As you can see in the chart above, Wells Fargo currently pays a $0.25 per share dividend each quarter -- equating to an annual payout of $1. The increase, in turn, would raise the annual payout by 20% to $1.20 and translate into a 3.25% yield at yesterday's closing price, making it one of the better-yielding banks in the market. In prepared remarks, CEO John Stumpf said that "We are extremely pleased to be able to reward our shareholders with increased distributions for 2013." Suffice it to say, shareholders are probably equally pleased.

Beyond this, the performance of Wells Fargo's capital base throughout both processes should give investors in California-based bank further reason to rest easy at night. At the end of the third quarter, the bank sported a Tier 1 common capital ratio of 9.9% -- or nearly twice the requisite 5% minimum. After being subjected to the Fed's "severely adverse" economic stress-test scenario, the rate fell to 7%. Although this amounted to a decline of 290 basis points, the hypothetical output was still 200 basis points above the benchmark figure. And once you remove the capital that Wells Fargo intends to distribute this year, the rate settles at 5.9% -- yet again above the necessary level.

Source: Comprehensive Capital Analysis and Review 2013: Assessment Framework and Results.

The biggest remaining question concerns the bank's plans for share buybacks. Unlike the dividend increase, which Wells Fargo clearly spelled out, it was much more coy about the size and timing of buybacks, saying only that the bank's proposal also included an "increase in common stock repurchase activity for 2013 compared with 2012." Last year, the bank's board approved the repurchase of 200 million shares of common stock. Consequently, it seems safe to assume that the same amount, if not more, will be approved this year, barring some unforeseen intervening catastrophe. But lest you get too excited about this, it's important to note that these buybacks are principally conducted to "cover shares repurchased to meet team member benefit plan requirements." In other words, don't expect the outstanding share count to go down anytime soon.

Following on the heels of a stellar year, Wells Fargo's performance in the Fed-administered tests over the last two weeks serves as evidence that not infrequently, the best bank investments are also the most boring.

Want to learn more about Wells Fargo?
Wells Fargo's dedication to solid, conservative banking helped it vastly outperform its peers during the financial meltdown. Today, Wells is the same great bank as ever, but with its stock trading at a premium to the rest of the industry, is there still room to buy, or is it time to cash in your gains? To help figure out whether Wells Fargo is a buy today, I invite you to download our premium research report from one of The Motley Fool's top banking analysts. Click here now for instant access to this in-depth take on Wells Fargo.

With Speech, Cardinal Set Path to Papacy

VATICAN CITY�It took Jorge Mario Bergoglio four minutes to convince fellow cardinals he was their leader.

Enlarge Image

Close Associated Press

Cardinal Bergoglio, right, with Canada's Cardinal Ouellet on March 6.

Speaking in the Paul VI grand hall of the Vatican, the Argentine cardinal warned the Catholic Church against focusing too much on matters close to home�advice that came against the backdrop of a papacy that had been consumed by infighting among Vatican officials, a dwindling flock in Europe and secular trends in the West.

The 76-year-old Father Jorge, as he is known back home, said Roman Catholicism needed to shift its focus outward, to the world beyond Rome�rather than being "self-referential," he said. Its core mission was humility, dignity and justice. It should help the poor.

It was a week before the secret conclave to elect the new pontiff would begin. But the speech sowed the seeds of one of Catholicism's boldest moves�the election of a pope from the New World, a man likely to steer the church's focus toward social justice and the problems of the world's periphery, rather than on the intrigue and controversy of its central administration.

U.S. Boosts Defense From North Korea

The Pentagon is preparing to strengthen its missile defense systems on the West Coast in response to increased threats from North Korea and rising tensions on the Korean peninsula. Julian Barnes and Michaela Dodge, Heritage Foundation defense policy analyst, join The News Hub. Photo: AP/KCNA.

WASHINGTON�The Pentagon will spend $1 billion to expand the West Coast-based missile-defense system in a direct response to provocations by North Korea and rising tensions on the Korean peninsula, officials said Friday.

By 2017, Defense Secretary Chuck Hagel said the U.S. would install 14 additional ground-based missile interceptors at Fort Greely, Alaska, representing an increase of nearly 50% over the 30 interceptors now located both there and in California.

The move accentuates new worries that North Korea has accelerated progress in its intercontinental ballistic missile program.

Enlarge Image

Close Getty Images

U.S. Secretary of Defense Chuck Hagel Friday said the U.S. plans to boost its missile defense system due to concerns about the possible nuclear capabilities of North Korea.

Korea Real Time

• North Korea Complains of Cyberattacks

The precise ranges of North Korea's missiles are uncertain. Defense officials currently believe that North Korean missiles can reach Hawaii as well as Alaska, but not the continental U.S. At the same time, U.S. officials don't believe North Korea has developed a miniaturized nuclear warhead that could be mounted on any missile.

Mr. Hagel didn't specify when U.S. military and intelligence analysts believe Pyongyang will have an ICBM capable of carrying a nuclear warhead. The purpose of Friday's announcement was to keep ahead of Pyongyang's military developments, Mr. Hagel said.

KeyCorp Announces Buyback, Bigger Dividend on the Way

The Comprehensive Capital Analysis and Review results are in, and not surprisingly, KeyCorp (NYSE: KEY  ) has been given the go-ahead by the Federal Reserve to institute its share buyback program. Considering how well the bank performed on the stress tests, investors likely expected some sharing to be coming their way.

KeyCorp easily beat the Fed's minimum requirement of 5% for a stress scenario ratio that included proposed dividend and buyback actions. This means that KeyCorp will be paying a 10% larger dividend very soon:

Though the dividend is less than last year, when the bank hiked its payout from $0.12 on an annualized basis, to $0.20. KeyCorp will be embarking upon a share repurchase program, however -- and it's a much larger one than the $344 million buyback that KeyCorp instituted last year.

It's all about planning
One thing that came through loud and clear regarding CCAR is the fact that planning matters. The Fed looked most kindly on banks that had plump capital cushions post-scary scenario, as well as an airtight capital plan. For those without that dynamic duo, the result was a thumbs-down from regulators.

Just ask Goldman Sachs (NYSE: GS  ) and JPMorgan Chase (NYSE: JPM  ) . These big banks didn't get an outright objection from the Fed, but they were instructed to submit new capital plans by the end of October to fix weaknesses the Federal Reserve found in their original plans.�

For BB&T (NYSE: BBT  ) , the news was much worse: an outright objection. Why? Detail are fuzzy, but the Fed notes that it may object to either "qualitative or quantitative concerns" it has about a bank's plan, based on specifics about that particular bank, or the general economy. For BB&T, which came through the stress tests with a 9.4% Tier 1 ratio, as well as a 7.76% final, post-severe stress grade, the issue appears to be a change the bank recently made in the way it assesses its risk-weighted assets. Since this value features prominently in the Fed's formula, BB&T failed the test.

Onward and upward for KeyCorp
KeyCorp's performance on the Federal Reserve tests, combined with�the bank's outstanding loan growth, net interest margin expansion, and rise in book value have obviously made investors grin. The stock is trading near its 52-week high and will likely continue its upward trajectory. Once again, a regional bank shows that it can hold its own against the big boys.

With big finance firms still trading at deep discounts to their historic norms, investors everywhere are wondering if this is the new normal, or if finance stocks are a screaming buy today. The answer depends on the company, so to help you figure out whether BB&T should be on you radar, I invite you to read our premium research report on the company. We'll fill you in on both reasons to buy and reasons to sell BB&T, and what areas that BB&T investors need to watch going forward.�Click here now for instant access!

American Science & Engineering Picks a New CEO

Backscatter X-ray pioneer American Science & Engineering (NASDAQ: ASEI  ) , bane of body-shy airport travelers across the nation, announced Thursday that after Chief Executive Officer Anthony Fabiano retires, after 10 years at the company's head, he will be replaced April 8 by ex-Tyco exec Charles P. Dougherty.

Dougherty joins AS&E at a tricky point in the company's business cycle. In February, the company reported fiscal Q3 earnings that showed order bookings up 9% year over year, and backlog up 5%. Sales and profits were both down, however. And at the time, Fabiano said global economic uncertainties continue to impact spending in our sector -- affecting us and our competitors with lower business volumes for products," and forcing the company to adopt "cost-saving measures."

According to an SEC filing, the company's agreement with Dougherty includes a base salary of $550,000 with a possible annual bonus equal to 100% of the base salary.

link

Naked Face-Off: Long and Short of Banning Shorts

CNBC this afternoon offers up a point/counterpoint on Germany’s ban on naked short-selling and the general principle of forbidding sales of securities one doesn’t own or hasn’t borrowed.

Naked shorting is wrong, says Bill Spiropoulos, CEO of CoreStates Capital Advisors, and should be stopped. “When you see stocks get blasted with flash trading, it destroys the entire confidence in markets,” he said on air. “And the roller coaster activity makes people run to the sidelines and they have no interest whatsoever in investing.” The flash crash of May 6 being a prime example of casinos in his mind.

Short-selling is good, asserted Barry Ritholtz, head of FusionIQ. “Outlawing short-selling is a mistake,” he tells CNBC, because “If you go back over the last few decades, every major fraud [Enron and WorldCom] has been uncovered by short-sellers.” Now, Ritholtz doesn’t seem to address naked selling specifically, but he doesn’t seem to have any sympathy for Europe’s desire to avoid the naked shorts. The European markets’ problems are “an excuse for something that was due to happen anyway.” Ritholtz would like to see more focus on the ratings agencies, the real problem in the financial crisis, in his view, and on the normalization of derivatives, which are trading separate from every other kind of trade.

Report: Emerging Markets Will Drive Telecom Growth

It will only be two more years before mobile communications revenue generated in emerging markets will finally exceed those produced in the developed world, according to a report by communications industry research company Pyramid Research. The growth rate in mobile communications in developing markets will be fives times greater in 2013 than that in the developed markets.

Pyramid expects revenues in Asia, Central and Eastern Europe, and Latin America to hit $720 billion, a 7.1% increase over 2012. That stands in stark contrast to Pyramid's expectations of only 1.4% growth in 2013 in the developed world to $1.1 trillion after a 0.2% contraction in 2012.

By 2026, emerging-market revenue for all telecommunications services -- i.e., wireless, wireline, and pay TV -- will exceed that of the developed world.

Asian markets, such as in India, China, Indonesia, and Thailand, will produce the greatest rate of telecom growth, at a rate almost three and a half times that of the developed world by 2018.

Bravo Brio Restaurant Group Beats Analyst Estimates on EPS

Bravo Brio Restaurant Group (Nasdaq: BBRG  ) reported earnings on Feb. 25. Here are the numbers you need to know.

The 10-second takeaway
For the quarter ended Dec. 30 (Q4), Bravo Brio Restaurant Group met expectations on revenues and beat expectations on earnings per share.

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

Gross margins increased, operating margins increased, net margins dropped.

Revenue details
Bravo Brio Restaurant Group recorded revenue of $112.0 million. The nine analysts polled by S&P Capital IQ hoped for a top line of $112.4 million on the same basis. GAAP reported sales were 17% higher than the prior-year quarter's $95.7 million.

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

EPS details
EPS came in at $0.35. The nine earnings estimates compiled by S&P Capital IQ anticipated $0.33 per share. Non-GAAP EPS of $0.35 for Q4 were 40% higher than the prior-year quarter's $0.25 per share. GAAP EPS of $0.22 for Q4 were 8.3% lower than the prior-year quarter's $0.24 per share.

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

Margin details
For the quarter, gross margin was 20.1%, 10 basis points better than the prior-year quarter. Operating margin was 8.8%, 20 basis points better than the prior-year quarter. Net margin was 4.0%, 110 basis points worse than the prior-year quarter.

Looking ahead
Next quarter's average estimate for revenue is $103.3 million. On the bottom line, the average EPS estimate is $0.18.

Next year's average estimate for revenue is $434.7 million. The average EPS estimate is $0.95.

Investor sentiment
The stock has a two-star rating (out of five) at Motley Fool CAPS, with 33 members out of 38 rating the stock outperform, and five members rating it underperform. Among 12 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 10 give Bravo Brio Restaurant Group a green thumbs-up, and two give it a red thumbs-down.

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Bravo Brio Restaurant Group is outperform, with an average price target of $17.60.

Does Bravo Brio Restaurant Group have what it takes to execute internationally? Take a look at some American restaurant concepts that are generating profits in all over the globe in, "3 American Companies Set to Dominate the World." It's free for a limited time. Click here for instant access to this free report.

• Add Bravo Brio Restaurant Group to My Watchlist.

Cynosure Beats on Both Top and Bottom Lines

Cynosure (Nasdaq: CYNO  ) reported earnings on Feb. 12. Here are the numbers you need to know.

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

Compared to the prior-year quarter, revenue expanded significantly and GAAP earnings per share grew significantly.

Margins grew across the board.

Revenue details
Cynosure booked revenue of $42.7 million. The three analysts polled by S&P Capital IQ foresaw revenue of $41.0 million on the same basis. GAAP reported sales were 25% higher than the prior-year quarter's $34.1 million.

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

EPS details
EPS came in at $0.27. The four earnings estimates compiled by S&P Capital IQ anticipated $0.23 per share. GAAP EPS of $0.27 for Q4 were 200% higher than the prior-year quarter's $0.09 per share.

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

Margin details
For the quarter, gross margin was 58.1%, 300 basis points better than the prior-year quarter. Operating margin was 9.9%, 690 basis points better than the prior-year quarter. Net margin was 9.5%, 630 basis points better than the prior-year quarter.

Looking ahead
Next quarter's average estimate for revenue is $39.8 million. On the bottom line, the average EPS estimate is $0.17.

Next year's average estimate for revenue is $176.6 million. The average EPS estimate is $0.85.

Investor sentiment
The stock has a two-star rating (out of five) at Motley Fool CAPS, with 369 members out of 384 rating the stock outperform, and 15 members rating it underperform. Among 91 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 84 give Cynosure a green thumbs-up, and seven give it a red thumbs-down.

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Cynosure is outperform, with an average price target of $34.00.

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

• Add Cynosure to My Watchlist.

1 Reason to Expect Big Things from Heartware International

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

Basic guidelines
In this series, I examine inventory using a simple rule of thumb: Inventory increases ought to roughly parallel revenue increases. If inventory bloats more quickly than sales grow, this might be a sign that expected sales haven't materialized. Is the current inventory situation at Heartware International (Nasdaq: HTWR  ) out of line? To figure that out, start by comparing the company's inventory growth to sales growth. How is Heartware International doing by this quick checkup? At first glance, pretty well. Trailing-12-month revenue increased 34.0%, and inventory increased 20.1%. Comparing the latest quarter to the prior-year quarter, the story looks decent. Revenue grew 41.6%, and inventory increased 20.1%. Over the sequential quarterly period, the trend looks healthy. Revenue grew 42.9%, and inventory dropped 0.5%.

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

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

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

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

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

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

Let's dig into the inventory specifics. On a trailing-12-month basis, work-in-progress inventory was the fastest-growing segment, up 50.6%. On a sequential-quarter basis, raw materials inventory was the fastest-growing segment, up 22.9%. Heartware International seems to be handling inventory well enough, but the individual segments don't provide a clear signal. Heartware International may display positive inventory divergence, suggesting that management sees increased demand on the horizon.

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

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

• Add Heartware International �to My Watchlist.

Broken Trusts: The Man Who Married His Wife Six Times

There once was a wealthy man who married and divorced his wife six times because he loved to throw lavish parties and travel to exotic locales—and because the family trust that named him as beneficiary didn’t stipulate against multiple marriage, says Tom Rogerson, Boston-based senior managing director and family wealth strategist with Wilmington Trust.

The moral of the story is that parents may very well devise strategies to motivate their children, but those strategies can backfire if they fail to communicate across the generational divide. That helps explain why family governance has become an increasingly popular tool for high-net-worth grandparents, parents and children to work together to set rules on their wealth, Rogerson says.

“Years ago, it started with this concept called incentive trusts,” Rogerson told AdvisorOne in a recent interview. “Families would say things like, ‘If you earn a dollar, we’ll pay you a dollar out of the trust, or if you get married, we’ll pay for the wedding and the honeymoon.’ The problem was that there were tremendous unintended consequences, like the guy who remarried the same woman six times and had all these wonderful weddings and honeymoons paid for because the trust simply didn’t stipulate anything different.”

Manipulative parents, conditional love and hostile children create the conditions for incentive trusts that don’t work, as the case of the six-marriage man makes clear. But as the field of family estate planning has developed, wealth managers are learning that well-designed plans aren’t only about wills, taxes and property. Now they are looking to the field of family governance, which involves regular intergenerational meetings to agree on a written set of values and shared goals. And yes, behavior and psychology figure into the equation.

‘You Never Would Have Been Good Enough’

Rogerson (right), a big advocate of family governance, joined Wilmington Trust in 2011 after serving BNY Mellon Wealth Management as managing director of family wealth services. He credits Harvard University’s former senior philanthropic advisor Charles Collier for teaching him the importance of asking high-net-worth people the essential questions about what they want to preserve beyond wealth and for introducing him to “the grandfather” of family governance, James Hughes, an attorney and author of Family Wealth: Keeping It in the Family, who recommends that families write a mission statement and mentor one another through peer review.

In addition, Rogerson participates in the attorney John Warnick’s Purposeful Planning Institute national conferences and twice-monthly conference calls to share best practices for legacy families and families in business. For example, while Warnick’s “Seven Secrets of a Purposeful Legacy” says that trusts are usually named after their tax identity, such as a marital or dynasty trust, clients should be encouraged to give their trust a symbolic name with emotional content to promote family harmony, such as “unity trust,” according to Investment Advisor contributor Olivia Mellan.

“Remember,” Rogerson says, “high-net-worth parents are often Type A entrepreneurs who are very successful financially, and they hear about trusts and think, ‘Great, I’ll put this all together and then tell my children what they are going to do.’ That’s more a symptom of the problem than the solution. If you are the beneficiary of a trust that was set up by your parents, who have now been dead for 10 or 20 years, and you’re still living under these rules and regulations, doesn’t it seem as if they’re saying, ‘I’ve had to take care of you even though I’m dead. You would never have been good enough’?”

The Grandson Who Preserved His Family’s Trust

Rogerson then points to a story with a happy ending involving a three-generation meeting he attended with an ultrahigh-net-worth family from the Midwest whose grandfather wanted to set up a long-term, generation-skipping dynasty trust. Prior to the meeting, Rogerson had encouraged the entire family to read Hughes’ family wealth book.

As Rogerson recalls, the grandfather told his family, “Look, I want to set up a trust. How should I design it so that instead of distributing to you, it would invest in you? The reason I’m concerned about this is because my parents set up a trust for my family when I was young, and I think the reason my younger brother is so demotivated and entitled and never did anything with his life is because this trust did it to him, and I’m really concerned about setting up anything in my will that would do the same thing to you.”

The man’s grandson, a philanthropically minded young man in his early 20s, listened and thought about his grandfather’s wishes and what Hughes wrote, and said: “Why don’t we set up this particular trust as an endowment, and if somebody wants money from this trust, why don’t they apply for it?”

All three generations agreed, and now the family’s $50 million-plus trust requires that a family member who seeks funds must apply for the money based on an application that considers one of four criteria:

1) How is this an investment in my human capital?

2) How is this an investment in my intellectual capital?

3) How is this an investment in my social capital?

4) How is this an investment in my financial capital?

“Originally, they started off with the grandparents reviewing the applications, but within a year or two, the grandparents said, ‘Since this trust is going to be around after we’re gone, it really makes sense for you guys to come up with a process as a family,’” Rogerson recalls. “So they came up with a family council, and from that, they’ve gotten into all kinds of things. They plan family vacations, family meetings, but what started this whole thing off was this particular conversation around how to set up this trust.”

Many families continue to set up trusts in the traditional way, Rogerson says, but he believes that conventional wisdom is unhealthy for unconventional levels of wealth.

“If you have $50 million or $100 million, there’s enough there that you can really damage people,” he concludes. “If you’ve got a child with a problem—psychological, emotional, drugs, spousal abuse—would dumping $2 million in their laps solve the problem? It might not only not solve it, but make it 10 times worse.”

----------------------

Read Cameron Thornton’s thoughts on family governance and heritage planning at AdvisorOne.

How we’ll know when Google Play really has caught up to the iOS App Store - 03:18 PM

(gigaom.com) -- Apple pioneered the modern mobile app market, made smartphone apps massively popular and created a new industry. But it’s not alone at the top anymore: Bloomberg Businessweek  posted a good feature Tuesday showing how in recent years Android has largely caught up to iOS in a number of important metrics. Through smart hires on the Google Play team, outreach to developers and improvements on the technical side of Android’s developer framework, mobile developers are focusing more on Android than ever before.

But there’s also some important stuff not mentioned.

• Print

More from gigaom.com

• Gates Foundation-backed InBloom frees up data to personalize k-12 education
• Microsoft shows it gets the cloud by integrating products and focusing on mobile
• Isis: Salt Lake City mobile wallet users average 5 transactions a week

• Subscribe to gigaom.com

The post notes that developers’ Android revenues are climbing rapidly (but it doesn’t actually say how far behind Android still is) and that the number of apps available is essentially even — in October both Google Play and iOS App Store claimed 700,000 apps for sale. As a result, several developers are quoted saying that while Apple’s App Store is still preferable for a variety of reasons, it’s the rate at which Android is growing that is catching their eyes.

While the ability for developers to make money from Androidis indeed catching up to that of iOS, it’s still behind. And that’s a big metric: as BW notes in the post, iOS app sales still generate 3.5 times as much revenue as Android apps.

But most importantly, there were no specific examples of appmakers choosing or preferring Android in place of iOS — or launching on Android first instead of iOS. There is a reference to Ngmoco, maker of popular iPhone games like Rolando and Star Defense, “in some cases developing for Google first.” But a few paragraphs later, the CEO of Ngmoco says, “We treat Android and Apple the same. They are equal partners to us and we put equal amounts of resources toward both platforms.”

This is good news for Android, and is part of the shifting dynamic between the two leading mobile platforms over the last year. Big developers just can’t overlook Android, as Ngmoco, Major League Baseball, and the other makers of popular apps quoted in the story make clear.

However, the piece doesn’t really discuss smaller or unknown teams of developers. The iOS App Store is littered with examples of highly regarded apps that are still either picking iOS first or developing for both but prioritizing iOS — rolling features out there first, hiring more iOS developers, etc. It’s not universal though: A quick poll on Twitter brought up some good examples of mid-size developer teams doing the opposite and going Android first, like Out of Milk and Any.DO (the latter of which has received funding from Innovation Endeavors, whose co-founder is Google Chairman Eric Schmidt) and then building the app for iOS users.

But those two examples aren’t exactly megahits. Where is Android’s Angry Birds? Or its Instagram?

Yes, obviously the game and the photo app are both on Android now. But where’s Android’s killer, break-out (non-Google, for obvious reasons) app that explodes on the platform and leaves iOS users clamoring for it? Vine, for instance, is the buzzy mobile app of the moment, and as is par for the course for these things, it’s iOS only. This tweet (excuse the indelicate language) shows that when it comes to the biggest app launches, Android still isn’t first for a lot of the most important mobile companies.

Why the fuck isn't there a Vine app for Android yet? Its only the majority of the smartphone market.—
Brett Putman (@brettthemonster) February 05, 2013

When we start seeing the inverse of that tweet, and the big name developers — that don’t have any direct business interest in Google — are bypassing iOS in favor of Android, that’s when we’ll know that Android has reached true parity.

This post was updated at 3:25 p.m. PT. to note that Any.DO is backed by Innovation Endeavors, not Google Ventures, as previously stated.

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

• Analyzing the wearable computing market
• Is Android broken and if so, will Google fix it?
• A look back at mobile in Q1

• Print

Why Bank of America Investors Are Stressed Out

Bank of America (NYSE: BAC  ) shares began the week trading at $12.05. About midway through the day they're trading at $12.16, making for a barely noticeable uptick of 0.91%. Not what you'd call a big week. Chalk it up to stress -- investor stress -- over the Fed's stress tests.

The tale of the tickers
But before we stress out over that, here's a quick look at where the superbank's peers stand on the week:

• Citigroup moved a bit more than B of A, with an uptick of 2.1%.
• JPMorgan Chase (NYSE: JPM  ) is up a sluggish 1.32%.
• Wells Fargo (NYSE: WFC  ) didn't even make it up a percentage point, with a gain of just 0.85%.

No reason to stress
Today, at around 4:30 p.m. ET, the Federal Reserve is going to release the second set of results from its 2013 stress tests, officially known as the Comprehensive Capital Analysis and Review.

The CCAR runs the country's biggest 18 banks through a simulated, severe economic downturn and measures -- most importantly -- what's called the Tier 1 common capital ratio. This ratio looks at the bank's capital reserves in relation to its risk-weighted assets. Last Thursday, the Fed made public what each bank's common ratios were.

B of A did well -- much better than last year, the first year the Dodd-Frank mandated stress tests were run. For 2013, the superbank had an actual common ratio of 11.4% and a stressed minimum common ratio of 6.8%. Last year, B of A had an actual common ratio of just 8.7% and a stressed minimum of only 5.7%.

The median performance for this year was 7.7%. The Fed considers 5% the lowest stressed minimum a bank should have.�As such, B of A comfortably passed its 2013 stress test, and also performed well in comparison to its peers.

For 2013, JPMorgan had an actual Tier 1 common ratio of 10.4% and a stressed minimum of 6.3%. Wells Fargo posted numbers of 9.9% and 7%, respectively. Given the drubbing B of A took in the financial crisis, and the fact it didn't even pass its stress test last year, its performance this year should be lighting up the faces of investors everywhere.

Foolish bottom line
So, why the lackluster share-price performance this week, then? Put simply, investors are awaiting the Fed's announcement later today, which will reveal what each bank's proposed capital plans are regarding dividend increases or share buybacks. Specifically, today's news will let investors know whether or not the Fed will allow each bank to proceed with their capital return schemes (if they have any) as planned.

B of A did well enough on its stress test that the Fed will likely approve any reasonable plan put forward. And investors are hungry for any kind of action that will return capital to them in one form or another. After last year's B of A stress-test failure, investors got neither a dividend increase nor share buybacks.

Expect some sort of welcome news on this front by COB today, and expect a jump in share price as the market opens tomorrow.

But always remember, Foolish investors, that no matter what your stocks are doing on a day-to-day, week-to-week, or even month-to-month basis, you're in this for the long haul. Short-term share-price spikes and drops are a part of life for any investor, but so long as the companies you're invested in have solid fundamentals, don't worry: Your money is in the right place.�

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

link

Will GM Ever Repay Taxpayers?

Earlier this week, the U.S. Treasury Department disclosed�that it had raised $489.9 million from the sale of General Motors (NYSE: GM  ) shares in February.

The Feds didn't disclose exactly how many shares they had sold, but given GM's share prices in February, it's a considerable number � at least 17 million shares, possibly 18 million or a bit more.

Clearly, the government is serious about its plan to exit GM, announced last December. And while that seems like good news for the General, it could create some interesting complications.

Will the Feds ever recoup their "investment" in GM?
Back in December, Treasury agreed to a deal in which it would sell 200 million of its remaining 500 million shares of General Motors directly to GM, in exchange for $5.5 billion � and would sell its remaining shares gradually, on the open market, over the following 15 months or so.

That deal left the Feds with 300 million shares. Those shares are the last major legacy of GM's controversial 2009 "bailout", in which the government took a stake in GM in exchange for financing the battered auto giant's high-speed restructuring via bankruptcy.

The financing provided by the Treasury for GM's restructuring � its "investment" in GM, as it has been termed on occasion�� totaled some $49.5 billion. Of that, GM has now "repaid" � directly or indirectly � a bit less than $30 billion:

• $6.7 billion in cash, the last of which was paid in April of 2010 (when then-CEO Ed Whitacre declared that GM's debt had been "paid in full")
• $13 billion via GM's IPO, when the government sold about 45% of its stock holdings
• $2.1 billion when GM bought back some preferred stock from the Treasury in late 2010
• $5.5 billion when GM bought back those 200 million shares from the Treasury in December of 2012
• $646.3 million in sales of GM stock by the Treasury in January and February of 2013
• The remainder in interest and dividends on loans and preferred stock.

That leaves the Treasury short about $20 billion � and with something like 277 million shares left to sell. The math on that doesn't work out well for taxpayers: The Feds need to get something like $72 a share in order to break even on their "investment".

GM is trading at a bit over $28 as I write this on Thursday. Clearly, the Feds aren't likely to recoup their money any time soon � at least, not by selling their remaining GM stock.

How is that going to work out for GM?

The "Government Motors" stigma still isn't fading
It has been nearly four years since GM emerged from bankruptcy, but the hard feelings over GM's taxpayer-funded bailout haven't yet faded. I hear it from readers all the time: GM will never again compete with old rival Ford (NYSE: F  ) in their eyes, because Ford was able to finance its own turnaround without government intervention.

That's certainly true, and it doesn't help that Ford's turnaround has been a shining success while GM continues to muddle through what seems like a never-ending overhaul.

So how can GM get past the "Government Motors" stigma? Making consistently great cars and trucks (like � I hate to say it � Ford is doing) would certainly help, and although GM's progress on that front hasn't been unequivocal, GM's best recent products really are excellent. With a slew of new models on the way over the next couple of years, GM should � should � be able to regain more of its former customers.

But I think GM will need to do more to bring its "Government Motors" chapter to a close.

Will GM step up and really pay taxpayers back?
At current prices, the Treasury's remaining shares are worth a bit less than $8 billion � a long way from the $20 billion that remains unpaid from the bailout.

The Treasury is expected to have sold the last of its GM shares about a year from now, in March of 2014. At that point, GM's remaining "debt" to taxpayers could become a big issue, a PR thorn in GM's side.

GM had $26.1 billion in cash on hand at the end�of 2012. Writing a big check to the Treasury to square accounts once and for all would put a sizable dent in that cash hoard � but it could end up being the right thing to do to help restore GM's reputation. Will GM CEO Dan Akerson decide to go there? Stay tuned.

It's true that decades of mismanagement of General Motors led to a painful bankruptcy in 2009, but�it emerged a leaner, stronger company. GM's turnaround, however, is still a work in progress. Investors around the world are wondering if GM has what it takes to reclaim its former glory. To help you sort fact from fiction, I've put together a new premium research report telling you what you really need to know about GM and its turnaround. If you own or are thinking about owning GM, then you don't want to miss this report. Click here now to get started.

U.S. stocks rebound to trim weekly losses

NEW YORK (MarketWatch) � U.S. stocks extended gains on Friday after better-than-expected results from personal-computer maker Hewlett-Packard Co. and an upbeat report on German business confidence.

The Dow Jones Industrial Average DJIA rallied 107 points, or 0.8%, to 13,987.24 in afternoon trade, with H-P HPQ �leading the gains a day after the company projected a second-quarter profit and reported quarterly revenue that topped estimates. Shares of H-P surged more than 12%, accelerating gains in afternoon trade. See more on H-P�s signs of revival..

Wall Street also found support from a survey of German business executives showing sentiment in February rose to its highest reading since April. Read more about how data prompts rise in European stocks..

Recovering some of the losses sustained during the past two sessions�its worst two-day drop since early November�the Standard & Poor�s index SPX �climbed 9.72 points, or 0.7%, to 1,512.17.

Click to Play Week ahead: sequester deadline

The sequester spending cuts will go into effect next Friday, and Apple holds a shareholder meeting. Photo: Getty Images

Materials and technology led gainers among its 10 major industry groups.

�The general advice is to watch for a shorter-term correction, but recognize we may not be there yet. This market may not be ready yet to give up the ghost,� said Bruce McCain, chief investment strategist at Key Private Bank.

McCain is among the market strategists who believe equities are in need of a pullback to digest recent gains, saying a return by the S&P 500 SPX to 1,400 or below would be reasonable, and which would allow the benchmark index to move on to yearly gains of 10% to 15%.

The Nasdaq Composite COMP gained 23 points, or 0.7%, to 3,154.

For every stock sliding, two rose on the New York Stock Exchange, where 298 million shares traded as of 1:15 p.m. Eastern. Composite volume exceeded 1.8 billion.

The exchange-traded funds DIA SPY QQQ that track the benchmark indexes also gained.

The underlying trend for equities in the U.S. and globally is anticipating what monetary authorities will be doing, according to McCain and other market strategists.

INVESTING
� Bear correction or bull capitulation?
�'Death cross' isn't gold's only problem
� Icahn's stock picks for 2013
� How Berlusconi could crash the markets
� More markets commentary in Trading Deck �
/conga/story/misc/investing.html250568

�We�re back to reading Federal-Reserve tea leaves, trying to figure the amount of money they are going to pump in both here and overseas,� said McCain.

Federal Reserve Chairman Ben Bernanke brushed off talk the central bank�s ultra-easy monetary policy is creating asset bubbles, Bloomberg News reported Friday, citing unnamed people who went to a meeting Bernanke held this month with dealers and investors. Read more on Bernanke reportedly brushing off bubble talk..

Bernanke�s reported comments to the 15-member Treasury Borrowing Advisory Committee dismiss a key concern coming out of the minutes of the last Fed meeting, namely varying views that hinted �our Fed is going to ease up on its easing,� said McCain, who discounted such a move anytime this year.

Bernanke will testify on monetary policy to Congress next week.

Friday�s rise follows two straight days of declines that had the Dow industrials losing 155.05 points, or 1.1%, its biggest two-day drop since late December.

The Dow is currently on track to finish the week little changed, erasing weekly losses.

For the week, the S&P 500 is off 0.5% and the Nasdaq has lost 1.2%. A weekly drop would halt the S&P 500�s winning streak at seven consecutive weeks, its longest such stretch since the one that ended Jan. 14, 2011.

JPMorgan: The Stress Test and Dividends

Last week, the Federal Reserve reported that 17 of the nation's 18 largest banks passed this year's round of stress tests. Among those making the grade was JPMorgan Chase (NYSE: JPM  ) . The question this week is whether the Fed will allow JPMorgan to return more capital to shareholders by means of a higher dividend or share buyback program. In the video below, Motley Fool contributor John Maxfield discusses why he thinks the chances of this are good.

With big finance firms still trading at deep discounts to their historic norms, investors everywhere are wondering if this is the new normal, or whether finance stocks are a screaming buy today. The answer depends on the company, so to help figure out whether JPMorgan is a buy today, I invite you to read our premium research report on the company today. Click here now for instant access!

Top Stocks To Buy For 3/14/2013-3

Poniard Pharmaceuticals, Inc. NASDAQ:PARD opened at $0.61 and with a fall of 11.32% closed at $0.54. Company’s fifty days average price is $0.47 whereas it has a market capitalization $26.10 million.
The total of 1.24 million shares was transacted over last trading day.

GenVec, Inc. NASDAQ:GNVC opened at $0.59 and with a fall of 7.20% closed at $0.55. Company’s fifty days average price is $0.52 whereas it has a market capitalization $70.99 million.
The total of 1.60 million shares was transacted over last trading day.

Evergreen Solar, Inc. NASDAQ:ESLR opened at $ 0.64 and with a fall of 6.25% closed at $0.60. Company’s fifty days average price is $0.83 whereas it has a market capitalization $125.35 million.
The total of 2.62 million shares was transacted over last trading day.

Magic Software Enterprises Ltd. NASDAQ:MGIC opened at $6.82 and with a fall of 5.40% closed at $6.31. Company’s fifty days average price is $4.88 whereas it has a market capitalization $202.44 million.
The total of 1.07 million shares was transacted over last trading day.

Jones Soda Co. (USA ) NASDAQ:JSDA opened at $1.20 and with a fall of 5.38% closed at $1.23. Company’s fifty days average price is $1.16 whereas it has a market capitalization $35.23 million.
The total of 1.48 million shares was transacted over last trading day.

Has Fusion-io Become the Perfect Stock?

Every investor would love to stumble upon the perfect stock. But will you ever really find a stock that provides everything you could possibly want?

One thing's for sure: You'll never discover truly great investments unless you actively look for them. Let's discuss the ideal qualities of a perfect stock, then decide if Fusion-io (NYSE: FIO  ) fits the bill.

The quest for perfection
Stocks that look great based on one factor may prove horrible elsewhere, making due diligence a crucial part of your investing research. The best stocks excel in many different areas, including these important factors:

• Growth. Expanding businesses show healthy revenue growth. While past growth is no guarantee that revenue will keep rising, it's certainly a better sign than a stagnant top line.
• Margins. Higher sales mean nothing if a company can't produce profits from them. Strong margins ensure that company can turn revenue into profit.
• Balance sheet. At debt-laden companies, banks and bondholders compete with shareholders for management's attention. Companies with strong balance sheets don't have to worry about the distraction of debt.
• Money-making opportunities. Return on equity helps measure how well a company is finding opportunities to turn its resources into profitable business endeavors.
• Valuation. You can't afford to pay too much for even the best companies. By using normalized figures, you can see how a stock's simple earnings multiple fits into a longer-term context.
• Dividends. For tangible proof of profits, a check to shareholders every three months can't be beat. Companies with solid dividends and strong commitments to increasing payouts treat shareholders well.

With those factors in mind, let's take a closer look at Fusion-io.

Factor	What We Want to See	Actual	Pass or Fail?
Growth	5-year annual revenue growth > 15%	333.1%	Pass
�	1-year revenue growth > 12%	47.8%	Pass
Margins	Gross margin > 35%	58%	Pass
�	Net margin > 15%	(0.3%)	Fail
Balance sheet	Debt to equity < 50%	0%	Pass
�	Current ratio > 1.3	7.24	Pass
Opportunities	Return on equity > 15%	(0.3%)	Fail
Valuation	Normalized P/E < 20	156.53	Fail
Dividends	Current yield > 2%	0%	Fail
�	5-year dividend growth > 10%	0%	Fail
�	�	�	�
�	Total score	�	5 out of 10

Source: S&P Capital IQ. Total score = number of passes.

Since we looked at Fusion-io last year, the company gained a point as it established a nearly five-year track record of growth. But shares haven't been so lucky, losing nearly half their value over the past year.

Fusion-io has taken the data storage industry by storm. With its focus on flash memory and solid-state storage, Fusion-io is taking aim at old-style hard-disk drive makers, seeking to provide better speed and functionality to enterprise customers.

But one major problem that Fusion-io has is that its products are apparently too good. At the end of January, Fusion-io said that revenue for its fiscal third quarter would come in more than 40% below where analysts had expected, with the full-year 2013 shortfall amounting to as much as $100 million. The company said that timing of purchases from its two main customers, Facebook (NASDAQ: FB  ) and Apple (NASDAQ: AAPL  ) , would push back future sales. Facebook and Apple both rely heavily on Fusion-io, together accounting for half of Fusion-io's revenue, but if their data centers work so well that they won't need further orders from the flash-memory technology provider, then Apple's and Facebook's gain is Fusion-io's loss.

Fusion-io also faces competitive threats. Rather than accepting obsolescence, hard-drive maker Seagate Technology (NASDAQ: STX  ) has been rumored to be looking at buying Fusion-io rival OCZ Technology (NASDAQ: OCZ  ) , which is also a solid-state drive maker. The combination could force Fusion-io to find its own partner or else face a behemoth competitor that could potentially crush it with its industry relationships.

For Fusion-io to improve, it needs to take its revenue gains and convert them into profits. That's a tall order in a highly competitive market, but it's absolutely necessary if Fusion-io has aspirations to become a perfect stock.

Keep searching
No stock is a sure thing, but some stocks are a lot closer to perfect than others. By looking for the perfect stock, you'll go a long way toward improving your investing prowess and learning how to separate out the best investments from the rest.

It seems like when you're talking about state-of-the-art technology, it always comes back to Apple. Find out whether Apple is still the stock to buy�-- even after its recent plunge -- by reading the latest premium research report from Motley Fool senior technology analyst Eric Bleeker. Eric's ready to tell you everything you need to know about the company, with bull and bear arguments for you to consider. To get instant access to his latest thinking on Apple, simply click here now.

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

Top Stocks For 3/14/2013-14

Majestic Gold Corp. (TSX.V:MJS) (FSE:MJT) generated gold revenue of $1,730,392 derived from the sale of 1,531.8oz of their gold reserves.
Subsequent to recommencing mining operations at Dahedong Smelter mills at their designed capacity of 1,400 tpd, Majestic signed an agreement to acquire the remaining 40% of Yantsai Zhongia Mining Enterprise (�JVCo�).

Majestic is currently fast tracking operation at the Song Jiagou Mine through expansion of milling capacity, improving infrastructure, and developing pit models, mine plans and pre-feasibility studies based on its recently announced revised resource estimate, which will be used to initially expand production to 5,000 tpd.

The latest official trade data from Hong Kong, Asia�s biggest bullion trading center and a main conduit for gold flows into the mainland, showed its gold exports to the mainland in the first nine months of the year more than doubled from a year earlier to 88.06 tonnes. On an annualized basis, that would translate into 117 tonnes of gold from Hong Kong alone in 2010.

Majestic is just beginning to add to the China Gold mine operations, and apparently has a ready, willing and able buyer for its Mined Gold.

For More Information On Majestic Gold: www.majesticgold.net

PTS, Inc. (OTC.BB:PTSH) announced that through its ThinLine division, it has signed a 3 year IT Services deal with United Power.

United Power (www.unitedpowerinc.com) is acknowledged experts on the resale of products especially suited for medium voltage power distribution, in addition to providing a wide portfolio of products for other aspect of the electrical utility business. United Power has been serving electrical utility Customers within Georgia continuously since 1976. They have developed a reputation for customer sensitivity, fair dealing and exceptional quality during this time.

United Power required an IT solution that would allow them to contact one source for all of their IT needs.

“United Power is a well-established and quality company that has been a leader in their field for decades” stated Raj Kalra CEO of PTS. “They were looking for a one stop shop that would be able to handle their IT, disaster recovery and hardware needs without making more than one phone call. ThinLine’s managed IT solution was designed for this task. We look forward to working with the team at United Power and I am always excited to add a quality client to our growing portfolio of managed It customers,” added Raj Kalra.

Nike Inc. (NYSE:NKE) announced that its Board of Directors has declared a quarterly cash dividend of $0.31 per share on the company�s outstanding Class A and Class B Common Stock. The $0.31 quarterly dividend, which is payable on December 30, 2010 to shareholders of record at the close of business on December 6, 2010, represents a 15 percent increase over the previous quarterly rate of $0.27 per share.

NIKE, Inc. designs, develops, and markets footwear, apparel, equipment, and accessory products for men, women, and children worldwide. The company offers footwear in the categories of running, training, basketball, soccer, sport-inspired casual shoes, and kids’ shoes. It also provides footwear for aquatic activities, baseball, cheerleading, football, golf, lacrosse, outdoor activities, skateboarding, tennis, volleyball, walking, wrestling, and other athletic and recreational uses.

Triumph Group, Inc. (NYSE:TGI) announced that its Board of Directors has declared a regular quarterly dividend of $0.04 per share on its outstanding common stock. The dividend is payable December 15, 2010 to shareholders of record as of December 1, 2010. Triumph Group, Inc., headquartered in Wayne, Pennsylvania, designs, engineers, manufactures, repairs and overhauls a broad portfolio of aerostructures, aircraft components, accessories, subassemblies and systems. The company serves a broad, worldwide spectrum of the aviation industry, including original equipment manufacturers of commercial, regional, business and military aircraft and aircraft components, as well as commercial and regional airlines and air cargo carriers.

Triumph Group, Inc., through its subsidiaries, engages in the design, engineering, manufacture, repair, overhaul, and distribution of aircraft components in the United States and internationally. The company operates in two segments, Aerospace Systems and Aftermarket Services.

Air Products & Chemicals Inc. (NYSE:APD) announced that Paul Huck, senior vice president and chief financial officer, will be presenting at Citi�s Third Annual Basic Materials Symposium in New York City on Tuesday, November 30, 2010 at 10:15 a.m. EST. Huck will present an overview of Air Products, discuss the company�s financial performance and provide a business outlook.

Air Products and Chemicals, Inc. offers atmospheric gases, process and specialty gases, performance materials, and equipment and services worldwide. The company’s Merchant Gases segment sells atmospheric gases, such as oxygen, nitrogen, and argon; process gases, including hydrogen and helium; and certain medical and specialty gases for the metal, glass, chemical processing, food processing, healthcare, steel, general manufacturing, and petroleum and natural gas industries.

Coming Soon: AGCO Earnings

AGCO (NYSE: AGCO  ) is expected to report Q4 earnings on Feb. 5. Here's what Wall Street wants to see:

The 10-second takeaway
Comparing the upcoming quarter to the prior-year quarter, average analyst estimates predict AGCO's revenues will expand 3.4% and EPS will wane -31.9%.

The average estimate for revenue is $2.60 billion. On the bottom line, the average EPS estimate is $0.98.

Revenue details
Last quarter, AGCO reported revenue of $2.30 billion. GAAP reported sales were 9.3% higher than the prior-year quarter's $2.10 billion.

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

EPS details
Last quarter, EPS came in at $0.96. GAAP EPS of $0.96 for Q3 were 10% higher than the prior-year quarter's $0.87 per share.

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

Recent performance
For the preceding quarter, gross margin was 21.4%, 200 basis points better than the prior-year quarter. Operating margin was 6.1%, 70 basis points better than the prior-year quarter. Net margin was 4.1%, 10 basis points better than the prior-year quarter.

Looking ahead

The full year's average estimate for revenue is $9.86 billion. The average EPS estimate is $5.22.

Investor sentiment

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on AGCO is outperform, with an average price target of $54.94.

The rich are different than you and me: They might not notice the moneymaking stories right under our noses. In our new report, "Middle-Class Millionaire-Makers: 3 Stocks Wall Street's Too Rich to Notice," we give you three Peter Lynch-inspired buy-what-you-know stocks for the 99%. Click here for instant access to this free report.

• Add AGCO to My Watchlist.

1-Star ETFs Poised to Plunge: ProShares UltraShort Health Care?

Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, the ProShares UltraShort Health Care ETF (NYSEMKT: RXD  ) has received the dreaded one-star ranking.

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

RXD facts

Inception	January 2007�
Total Net Assets	$4.5 million
Investment Approach	Seeks daily investment results that correspond to two times the inverse (-2x) of the daily performance of the Dow Jones U.S. Health Care Index. The index measures the performance of the health-care sector of the U.S. equity market.
Expense Ratio	0.95%
1-Year / 3-Year / 5-Year Returns	(37.3%) / (29.7%) / (24.7%)
Alternatives	ProShares UltraShort Dow30 (NYSEMKT: DXD  ) ProShares UltraShort Financials (NYSEMKT: SKF  ) ProShares UltraShort S&P 500 (NYSEMKT: SDS  )

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

On CAPS, 96% of the 194 All-Star members who have rated RXD believe the ETF will underperform the S&P 500 going forward.

Just last month, one of those Fools, TerryHogan, succinctly summed up the RXD bear case for our community:

First of all [UltraShorts] are just plain crap for long-term holdings. Second, I like health care in the U.S. I think Boomers, Obamacare, and [obesity] ... will be good for the health care industry in the states for the next 20-30 years.

If you want market-thumping returns, you need to protect your portfolio from any undue risk. Luckily, our special report on ETFs highlights three funds that are poised to soar in the next recovery. It's 100% free, but won't last 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.

4 Stocks Making Moves

The following video is from Wednesday's Investor Beat, in which host Chris Hill and analysts Joe Magyer and Matt Argersinger dissect the hardest-hitting investing stories of the day.

In this segment, SINA (NASDAQ: SINA  ) reported higher-than-expected earnings and shares of the Chinese microblogging company rose. Shares of JPMorgan Chase (NYSE: JPM  ) slipped as investors as investors called for Chairman and CEO Jamie Dimon to split his roles in two. Garmin (NASDAQ: GRMN  ) tumbled after fourth-quarter profits fell by double digits. And Harvest Natural Resources (NYSE: HNR  ) lost ground after a planned sale of assets in Venezuela was terminated.

With big finance firms still trading at deep discounts to their historic norms, investors everywhere are wondering if this is the new normal, or whether finance stocks are a screaming buy today. The answer depends on the company, so to help figure out whether JPMorgan Chase is a buy today, read our premium research report on the company. Click here now for instant access!

The relevant video segment can be found between 3:24 and 4:50.

Top Stocks For 3/14/2013-14

Majestic Gold Corp. (TSX.V:MJS) (FSE:MJT) generated gold revenue of $1,730,392 derived from the sale of 1,531.8oz of their gold reserves.
Subsequent to recommencing mining operations at Dahedong Smelter mills at their designed capacity of 1,400 tpd, Majestic signed an agreement to acquire the remaining 40% of Yantsai Zhongia Mining Enterprise (�JVCo�).

Majestic is currently fast tracking operation at the Song Jiagou Mine through expansion of milling capacity, improving infrastructure, and developing pit models, mine plans and pre-feasibility studies based on its recently announced revised resource estimate, which will be used to initially expand production to 5,000 tpd.

The latest official trade data from Hong Kong, Asia�s biggest bullion trading center and a main conduit for gold flows into the mainland, showed its gold exports to the mainland in the first nine months of the year more than doubled from a year earlier to 88.06 tonnes. On an annualized basis, that would translate into 117 tonnes of gold from Hong Kong alone in 2010.

Majestic is just beginning to add to the China Gold mine operations, and apparently has a ready, willing and able buyer for its Mined Gold.

For More Information On Majestic Gold: www.majesticgold.net

PTS, Inc. (OTC.BB:PTSH) announced that through its ThinLine division, it has signed a 3 year IT Services deal with United Power.

United Power (www.unitedpowerinc.com) is acknowledged experts on the resale of products especially suited for medium voltage power distribution, in addition to providing a wide portfolio of products for other aspect of the electrical utility business. United Power has been serving electrical utility Customers within Georgia continuously since 1976. They have developed a reputation for customer sensitivity, fair dealing and exceptional quality during this time.

United Power required an IT solution that would allow them to contact one source for all of their IT needs.

“United Power is a well-established and quality company that has been a leader in their field for decades” stated Raj Kalra CEO of PTS. “They were looking for a one stop shop that would be able to handle their IT, disaster recovery and hardware needs without making more than one phone call. ThinLine’s managed IT solution was designed for this task. We look forward to working with the team at United Power and I am always excited to add a quality client to our growing portfolio of managed It customers,” added Raj Kalra.

Nike Inc. (NYSE:NKE) announced that its Board of Directors has declared a quarterly cash dividend of $0.31 per share on the company�s outstanding Class A and Class B Common Stock. The $0.31 quarterly dividend, which is payable on December 30, 2010 to shareholders of record at the close of business on December 6, 2010, represents a 15 percent increase over the previous quarterly rate of $0.27 per share.

NIKE, Inc. designs, develops, and markets footwear, apparel, equipment, and accessory products for men, women, and children worldwide. The company offers footwear in the categories of running, training, basketball, soccer, sport-inspired casual shoes, and kids’ shoes. It also provides footwear for aquatic activities, baseball, cheerleading, football, golf, lacrosse, outdoor activities, skateboarding, tennis, volleyball, walking, wrestling, and other athletic and recreational uses.

Triumph Group, Inc. (NYSE:TGI) announced that its Board of Directors has declared a regular quarterly dividend of $0.04 per share on its outstanding common stock. The dividend is payable December 15, 2010 to shareholders of record as of December 1, 2010. Triumph Group, Inc., headquartered in Wayne, Pennsylvania, designs, engineers, manufactures, repairs and overhauls a broad portfolio of aerostructures, aircraft components, accessories, subassemblies and systems. The company serves a broad, worldwide spectrum of the aviation industry, including original equipment manufacturers of commercial, regional, business and military aircraft and aircraft components, as well as commercial and regional airlines and air cargo carriers.

Triumph Group, Inc., through its subsidiaries, engages in the design, engineering, manufacture, repair, overhaul, and distribution of aircraft components in the United States and internationally. The company operates in two segments, Aerospace Systems and Aftermarket Services.

Air Products & Chemicals Inc. (NYSE:APD) announced that Paul Huck, senior vice president and chief financial officer, will be presenting at Citi�s Third Annual Basic Materials Symposium in New York City on Tuesday, November 30, 2010 at 10:15 a.m. EST. Huck will present an overview of Air Products, discuss the company�s financial performance and provide a business outlook.

Air Products and Chemicals, Inc. offers atmospheric gases, process and specialty gases, performance materials, and equipment and services worldwide. The company’s Merchant Gases segment sells atmospheric gases, such as oxygen, nitrogen, and argon; process gases, including hydrogen and helium; and certain medical and specialty gases for the metal, glass, chemical processing, food processing, healthcare, steel, general manufacturing, and petroleum and natural gas industries.

Is AV Homes a Cash Machine?

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

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

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

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

Over the past 12 months, AV Homes burned $16.6 million cash while it booked a net loss of $49.1 million. That means it burned through all its revenue and more. That doesn't sound so great.

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

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

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

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

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

With 89.8% of operating cash flow coming from questionable sources, AV Homes investors should take a closer look at the underlying numbers. Within the questionable cash flow figure plotted in the TTM period above, other operating activities (which can include deferred income taxes, pension charges, and other one-off items) provided the biggest boost. Overall, the biggest drag on FCF came from capital expenditures, which consumed 26.1% of cash from operations.

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

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

• Add AV Homes to My Watchlist.