2014 Top Stocks Market, Best Stocks Investment In 2014, Top Stocks For 2014: 3/31/13

Unlock the Power of Your Fitness Trackers

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Illustration by Serge Bloch; F. Martin Ramin for The Wall Street Journal, Styling by Anne Cardenas (2)

Click to view interactive.

WHEN GEOFF BARTAKOVICS , CEO of the food-and-drink e-newsletter Tasting Table, decided he wanted to bulk up his "skinny-guy" physique, he approached the challenge the same way he would a business decision: with gobs of data.

Along with implementing a workout regimen, he started using a high-tech scale called the Fitbit Aria to keep tabs on his weight and body mass index; he tracked his physical activity with the Jawbone UP, a popular motion-sensing bracelet; and, at his trainer's urging, he ordered an Omegawave, a clinical-grade ECG monitor that tells him how strenuous of a workout he should undertake on any given day.

What appeals to Mr. Bartakovics (who has added 2 pounds of muscle and brought his body fat down to 10% in the past month) is how effortless the process is. "I wear the bracelet during the day and step on the scale in the morning. The apps do all the tracking," he said. "Once a week, I spend a few minutes looking at the metrics to determine whether what I'm doing is working."

Mr. Bartakovics isn't unique in his data-driven approach; he's a fairly typical member of the "Quantified Self" movement, which has been growing at a steady clip since the term was popularized by writer Gary Wolf back in 2007. (The term might be new, but the practice is not; Benjamin Franklin famously charted his life for decades.) Quantified Selfers now organize meetups in over 80 cities around the world.

As health-tracking gadgets get less expensive and better looking, more people are jumping on board. The Pew Research Center estimates that nearly 70% of adult Americans now track some aspect of their health or that of a loved one, whether using an old-fashioned notebook or a cutting-edge gizmo. In fact, collecting data is now the easy part; what's difficult is making sense of it.

No matter what gadget you use, the basic approach is the same. Here are five key steps to ensure you get the most traction with your trackers.

1. Zero in on a goal

Self-improvement is best approached with a goal, not a gadget, according to Buster Benson, a dedicated quantified selfer and creator of the popular goal-setting site 43things.com. "What most people get wrong is that they start tracking steps, calories or sleep before they come up with a question that they're trying to answer or a problem that they're trying to solve."

2. Find the tool

No matter how specific the health-related metric, odds are there's a device or app to track it. Check out quantifiedself.com/guide for a comprehensive list (it has a dizzying 505 entries). While trackers work well solo, integrating the data from multiple devices can be especially revealing. The trio pictured in the interactive, for example, will give you a read on everything from sleep quality to body mass index to what days of the week you tend to be happiest.

3. Establish a base line

So you've got your fancy new tracker and are ready to embark on your healthier lifestyle. Hold your horses. "I usually advise patients to not change anything for the first few weeks they're tracking," advises Paul Abramson, a San Francisco-based physician who goes by the moniker "The Quantified Doctor." Establishing a base line sets a marker against which you can measure future progress.

4. Make incremental change

Resist the temptation to tweak too many aspects of your lifestyle once you start tracking, suggests Dr. Abramson. Instead, conduct controlled experiments. If you're trying to improve your sleep, don't institute pre-bedtime yoga while also dropping carbs from your diet�at least not if you want to be able to tell which is having the most effect. Mr. Benson advocates setting manageable objectives (for example, splitting a goal to lose 20 pounds into two 5-pound projects, then a 10) and tracking for 30 to 60 days at a time�enough to figure out if a lifestyle change is working, but not so long that you'll get demoralized if it isn't.

5. Aggregate the data

Here's where it gets interesting. Most devices encourage you to view the data they collect using their proprietary apps or websites; while these can be helpful for goal setting, they aren't ideal for figuring out how the more disparate aspects of your lifestyle affect each other. A single, unified dashboard has long been the holy grail for Quantified Selfers, which is why Tictrac ( tictrac.com ), a free Web service, has been getting so much buzz. It not only pulls info from your scale and various activity trackers but can also loop in stats from your email inbox, calendar, social-media accounts and about 50 other data streams. Most important, it lets you compare metrics by dragging and dropping your data, which the website then assembles in beautifully rendered charts and graphs. Does tweeting late at night affect your sleep quality? What effect does your email volume have on your weight? Tictrac makes uncovering trends�and relationships among them�easier and more intuitive than ever.

FB Rising: ‘Home’ Software on HTC ‘First’ on AT&T April 12

event by tiernantech, on Flickr" href="http://www.flickr.com/photos/8786051@N03/8620009648/">We’re settling in for
Facebook‘s (FB)
media event at its headquarters, which is expected to reveal
technologies for Google‘s (GOOG)
Android operating system, reportedly
through a partnership with handset maker
HTC (2498TW).
Youcan follow along via webcast on the company’s site, where
you can also replay the whole event following its conclusion.
Facebook shares are up 26 cents, or 1%, at $26.51. Facebook
CEO Mark Zuckerberg is on stage. In
fact, it is not a new phone, and it is not an operating system for
phones, says Zuckerberg. It is an application you can install on
your Android phone called “Home.” The
program takes over the home screens of Android phones, with its own
arrangement of icons for the apps on the phone, and something
called “cover feed” with a focus on
updates from Facebook contacts, allowing you to swipe through
full-screen updates from individuals. “If your phone is designed
around people, not apps, then your notifications should be too.”
“It’s just one swipe away from the home screen and
the lock screen,” says Zuckerberg. Something called
“chat heads” allow you to move icons
of your individual contacts into and out of the focus of the
device. They hover above everything else you’re doing, to make
friends’ communiques always visible. Demo time. The application has
lots of the same functions of
“launcher” programs on Android phones,
such as roaming through screens of icons and placing individual app
icons on pages. Executive Joey Flynn comes up to talk more in-depth
about the messaging functions. He’s
talking about the eternal dilemma of whether to respond to a
message in the middle of doing another task on the phone. tiernantech, on Flickr" href="http://www.flickr.com/photos/8786051@N03/8618929287/"> “You should really be able
to respond to a friend in the middle of whatever you’re doing on
the phone. This is the idea of chat heads. With chat heads, You can
talk to whoever, where you are on the phone.” The software will
become available via a prompt in existing Facebook apps for
Android, which take you to the Google “Play Store,” to download the
software. The software will come to tablet computers “in several
months,” the company says. Home will be updated once a month with
new features. The company emphasizes it has no intention to
“fork” the Android OS, that the
software is beneficial because it’s “open.” The software is part of
Facebook’s new “mobile first” focus. In closing remarks, Zuckerberg
says the company is “reall proud about Home. How natural and smooth
all the interactions are. We think this is the best version of
Facebook there is.” And it’s video time! Guy on an airplane. As he
browses strange stuff on the phone in Cover Feed, those very same
strange people, and cats, pop up in the aisle of the plane.
First release will be available on
April 12th. But … there’s
one more thing. “Phone makers come to
us all the time and ask us to put Facebook on their phones. We want
to empower them. We’ve established the Facebook Home program.
Before even announcing Home, a lot of the best phone makers and
carriers have already signed up. Today, I want to highlight two,
AT&T (T)
and HTC. They’ve worked together to build the first set of phones
with Home on them.” Home, April 2013 by tiernantech, on Flickr" href="http://www.flickr.com/photos/8786051@N03/8618984245/"> He invites up Ralph de
La Vega, president and CEO of AT&T’s
mobility unit, and Peter Chou, CEO of
HTC. Facebook 'Home', April 4th, 2013 by tiernantech, on Flickr" href="http://www.flickr.com/photos/8786051@N03/8618983607/">'Home', April 4th, 2013" width="220" height="244" />Chou introduces the “HTC First,” the only phone with
Facebook Home pre-loaded. It will run on AT&T’s
LTE network, he says. De la Vega comes
on, says “You will have a great Facebook experience with a device
designed from the get go for that. It’s simple, it’s elegant, it’s
not designed to be a big phone, but a phone that feels good to
you.” De la Vega says it is the most “immersive” phone he’s ever
used. The phone will be available April 12th for
$99.99 exclusively at AT&T.
AT&T is taking pre-orders
today att.com/facebookhome. However, neither that URL, nor
www.facebookhome.com, are currently coming up if you punch them
into a Web browser. Facebook shares are up 86 cents, or 3%, at
$27.11. Zuckerberg says the HTC First will be coming to other
carriers such as Orange in Europe. And
that’s it.

Ferguson: Out-Pigging the PIIGS

[Note: My colleague Dimitra DeFotis, who attended yesterday's Ira Sohn conference with me, prepared the following write-up of remarks by Niall Ferguson, Laurence A. Tisch professor of History at Harvard University, prolific author, and sometime contributor to the Financial Times. Thanks, Dimitra.]

While he admitted to having absolutely no experience as an investment manager, historian Niall Ferguson told investors at the Ira Sohn conference Wednesday to offset exposure to emerging markets, and their potential to slow, with assets in places like Canada and Sweden that have addressed financial crisis in the past and are, therefore, considerably better off today.

The prolific author and professor of history and business at Harvard U. also tipped his hat to natural resources.

He also weighed in on the state of America, which has �unsustainable fiscal policies with no way to address them.� He struggles �to see how the U.S. can achieve fiscal contraction through radical reform,” and that taxes will be consumed by the interest on debt in the years ahead. “We are out-pigging the PIIGS,� he said.

While expressing sympathy for the Germans’ disgust with the �Mediterraneans,� (suck in cheeks and crinkle brow here), he proclaimed the real issue is the triple-digit percentage of debt to GDP in the U.S. and the U.K. �Yes, we can print our way out of this, but that doesn�t make me feel better,� Ferguson said.

If you want to make the dear professor feel better, his latest book is already half-price on Amazon. Titled �The Ascent of Money: A Financial History of the World,� it looks to history for examples of finance as the foundation of human progress.

- Dimitra DeFotis, staff writer, Barron�s

Will Earnings Doom the Stock Rally?

My colleague Johanna Bennett has a great piece out today (sub required) looking at the impact a middling earnings season could have on the stock market:

Initial reports from�FedEx�(FDX) and�Oracle�(ORCL), both industry bellwethers, missed the mark. And corporate guidance has also grown cautious, according to figures from FactSet.

During the past three months, 86 companies warned investors to expect a first-quarter earnings shortfall, while 24 firms issued positive guidance. That comes to 3.58 negative updates for every positive, the highest ratio since FactSet began tracking the data seven years ago.

Nevertheless, investors have embraced stocks. As of Wednesday’s close, the S&P 500 index has levitated almost 15% since Nov. 15, when the current rally started. The Dow Jones Industrial Average has climbed 16%. And the Nasdaq Composite has risen 13.4%.

Johanna sums up Wall Street views on earnings, with a sense that full-year estimates are perhaps still on the high side. There are of course plenty of reasons to worry: The increasingly long-in-the-tooth nature of the bull market, Europe’s unsolvable troubles, and higher taxes and government spending cuts here in the U.S.

But there are also reasons to be hopeful, for example�Monsanto�(MON) raised full-year outlook on upbeat fiscal second-quarter earnings yesterday, companies are still hoarding cash, and the overall economy does look to be finally coming out of the doldrums.

We’ll know more, of course, once Alcoa (AA) kicks earnings season off on Monday — as Johanna says, what we see may be a key indicator for the market’s (eventual) direction:

Many strategists argue that as a stock-market catalyst, earnings have taken a back seat to the accommodative Federal Reserve.

But eventually, earnings will resume their role as the engine driving the stock market. And that engine needs some gas.

Stock of the Week

The following video is part of our "Motley Fool Conversations" series, in which analyst Jason Moser and advisor Charly Travers discuss topics around the investing world.

Charly and Jason look to a global mining-equipment maker for their stock of the week. The International Energy Agency forecasts a 65% increase in global coal usage by 2035, particularly for developing economies such as China and India. And Joy Global (NYSE: JOY ) is poised to benefit big time. Make sure to follow along as they keep score on CAPS at TMFStockotheWeek.

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Top Stocks To Buy For 4/4/2013-5

Health Care REIT, Inc. (NYSE:HCN) achieved its new price of $54.63 where it was opened at $54.26 UP 0.13 points or +0.24% by closing at $54.40. HCN transacted shares during the day were over 1.19 million shares however it has an average volume of 1.71 million shares.

HCN has a market capitalization $9.62 billion and an enterprise value at $13.43 billion. Trailing twelve months price to sales ratio of the stock was 12.18 while price to book ratio in most recent quarter was 1.71. In profitability ratios, net profit margin in past twelve months appeared at 16.37% whereas operating profit margin for the same period at 39.85%.

The company made a return on asset of 1.96% in past twelve months and return on equity of 1.30% for similar period. In the period of trailing 12 months it generated revenue amounted to $789.63 million gaining $5.82 revenue per share. Its year over year, quarterly growth of revenue was 75.70% holding 2.30% quarterly earnings growth.

According to preceding quarter balance sheet results, the company had $2.67 billion cash in hand making cash per share at 15.09. The total of $6.15 billion debt was there putting a total debt to equity ratio 90.76. Moreover its current ratio according to same quarter results was 10.18 and book value per share was 31.76.

Looking at the trading information, the stock price history displayed that its S&P500 52 Week Change illustrated 21.98% where the stock current price exhibited up beat from its 50 day moving average price $52.39 and remained above from its 200 Day Moving Average price $51.23.

HCN holds 176.76 million outstanding shares with 175.74 million floating shares where insider possessed 0.54% and institutions kept 71.60%.

FTI Consulting Passes This Key Test

There's no foolproof way to know the future for FTI Consulting (NYSE: FCN ) or any other company. However, certain clues may help you see potential stumbles before they happen -- and before your stock craters as a result.

A cloudy crystal ball
In this series, we use accounts receivable and days sales outstanding to judge a company's current health and future prospects. It's an important step in separating the pretenders from the market's best stocks. Alone, AR -- the amount of money owed the company -- and DSO -- the number of days' worth of sales owed to the company -- don't tell you much. However, by considering the trends in AR and DSO, you can sometimes get a window onto the future.

Sometimes, problems with AR or DSO simply indicate a change in the business (like an acquisition), or lax collections. However, AR that grows more quickly than revenue, or ballooning DSO, can, at times, suggest a desperate company that's trying to boost sales by giving its customers overly generous payment terms. Alternately, it can indicate that the company sprinted to book a load of sales at the end of the quarter, like used-car dealers on the 29th of the month. (Sometimes, companies do both.)

Why might an upstanding firm like FTI Consulting do this? For the same reason any other company might: to make the numbers. Investors don't like revenue shortfalls, and employees don't like reporting them to their superiors.

Is FTI Consulting sending any potential warning signs? Take a look at the chart below, which plots revenue growth against AR growth, and DSO:

Source: S&P Capital IQ. Data is current as of last fully reported fiscal quarter. FQ = fiscal quarter.

The standard way to calculate DSO uses average accounts receivable. I prefer to look at end-of-quarter receivables, but I've plotted both above.

Watching the trends
When that red line (AR growth) crosses above the green line (revenue growth), I know I need to consult the filings. Similarly, a spike in the blue bars indicates a trend worth worrying about. FTI Consulting's latest average DSO stands at 105.3 days, and the end-of-quarter figure is 98.9 days. Differences in business models can generate variations in DSO, and business needs can require occasional fluctuations, but all things being equal, I like to see this figure stay steady. So, let's get back to our original question: Based on DSO and sales, does FTI Consulting look like it might miss its numbers in the next quarter or two?

I don't think so. AR and DSO look healthy. For the last fully reported fiscal quarter, FTI Consulting's year-over-year revenue grew 2.2%, and its AR grew 0.0%. That looks OK. End-of-quarter DSO decreased 2.1% from the prior-year quarter. It was down 14.5% versus the prior quarter. Still, I'm no fortuneteller, and these are just numbers. Investors putting their money on the line always need to dig into the filings for the root causes and draw their own conclusions.

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Add FTI Consulting to My Watchlist.

Microsoft to Offer Bing Ads in Australia and New Zealand

Microsoft (NASDAQ: MSFT ) is preparing to launch Bing Ads in Australia and New Zealand, the company announced last night on its Bing Ads blog.

Microsoft will partner with Australian digital media company Mi9 to bring search ads to the two countries. Bing will offer search ads to Mi9's existing end-to-end advertising offerings.

The company said Bing Ads have already launched in more than 20 markets around the globe and the latest expansion will bring the service to the 5.5 million monthly Bing users in Australia.�The post said that online users searching for goods and services on Bing typically spend 136% more than average searchers.

link

Lear Agrees to Boost Share Repurchases

In an effort to generate additional value, Lear (NYSE: LEA ) and two of its primary shareholders, Marcato Capital Management and Oskie Capital Management, have worked out a deal to accelerate Lear's existing $1 billion share buyback program, according to a press release issued Monday. The company also approved a new two-year share repurchase authorization of $750 million.

Representatives of Marcato and Oskie, in addition to other Lear shareholders, worked with Lear's board of directors to structure the updated share repurchase program.

The new agreement calls for Lear to repurchase an additional $750 million of its stock, immediately following the completion of the existing $1 billion buyback program, which Lear expects to complete in the next 12 months. (It's already repurchased $200 million of common stock in the first quarter under the $1 billion authorization.)

The updated $1.75 billion commitment is in addition to $500 million in shares Lear repurchased through the end of 2012, bringing the total to $2.25 billion since 2011.

With the new deal, Marcato and Oskie have agreed to rescind their nominees for Lear's board, and will support Lear's board nominations at the 2013 annual meeting, slated for May 16. Additionally, Lear has agreed to expand its existing board of directors from eight to nine members. The new board member will be nominated "as soon as practical" following Lear's annual meeting.

link

Ares Capital to Float New Stock Issue

Ares Capital (NASDAQ: ARCC ) is making a new attempt to expand its capital base. The company will float a 16.65 million share common stock issue in an underwritten public offering. The firm also plans to offer its underwriters an option to purchase up to an additional 2.4975 million common shares collectively.

Ares Capital said it intends to use the proceeds of the issue to pay down debt and for "general corporate purposes, which may include investing in portfolio companies in accordance with its investment objective."

The joint book-running managers of the issue are Bank of America's�Merrill Lynch, JPMorgan Chase unit J.P. Morgan, UBS, and Morgan Stanley. Ares Capital did not specify the time frame for the offering.

Merz Pharma Outbids Valeant for Obagi

Oops. Did we say that "Montreal-based Valeant Pharmaceuticals (NYSE: VRX ) is buying Long Beach, Calif.-based specialty pharma company Obagi Medical Products (NASDAQ: OMPI ) for about $344 million" -- a price of only 2.9 times sales, versus Valeant's own 6.2 P/S ratio?

What we meant to say was that Valeant was hoping it could get the shares at such a nice discount. Turns out, though, that someone else is willing to bid quite a bit more for Obagi. That someone emerged this morning, when Germany's Merz Pharmaceuticals sent Obagi's board a letter offering to buy the same stock for 11% more -- $22 a share.

Merz calls its offer a "superior proposal" to the one Valeant tendered last month. Merz says it's also ready to buy right away, needs to perform no additional due diligence, and has the cash in hand to make the buy "immediately" -- all of which has to make this a very tempting offer for Obagi.

For its part Obagi's board confirmed this morning that it's received Merz's offer and will "evaluate" it with the understanding that "time is of the essence." Expect a reply soon.

American Superconductor Takes Another Step Back From the Brink

American Superconductor's (NASDAQ: AMSC ) slow and painful recovery from the Sinovel debacle took a small step forward yesterday. Management said its fiscal fourth quarter, which ended on March 31, was slightly better than expected and the stock is moving higher today.

Revenue is expected to be $19 million-$20 million, which is better than the $18 million minimum set earlier this year. That's up from $17.4 million in the fiscal third quarter, solid progress for the company. �

Maybe more important is that management expects to have cash between $49 million and $50 million at the end of the quarter, which is above a previous $48 million estimate. The real fear for investors is that the company will run out of cash because of mounting losses, so this is progress on that front. �

What is less encouraging is management's projection that it will be cash flow positive by the end of fiscal 2014, two years from now. Revenue of at least $180 million is needed to achieve that goal -- the company has a long way to go to get there.

What to watch for
American Superconductor separates its business into the wind and grid categories and I'll be watching closely how grid performed during the fourth quarter. This business grew 58% in the first three quarters; for the long term, I think it's a better business than wind, so we need to see more progress in the fourth quarter.

The challenge is that American Superconductor is going up against fierce competition that has a better balance sheet. Power-One (NASDAQ: PWER ) is one of the biggest players in the solar inverter market -- it's where AMSC would like to be -- and it has the product depth and the balance sheet to hold the company off. Right now, Power-One is definitely the better investment, but if American Superconductor can survive until it reaches positive cash flow then patient investors could be rewarded.

An energy stock to buy today
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Benefits Of A Debt Management Plan (DMP) Or An IVA

There are benefits to one taking up a debt management plan or an IVA. The benefits are enjoyed by both the finance provider and also the borrower. The borrower gets an easy way to repay the amount of money that they owe while the financier gets a way to earn some money.The mutual benefit is therefore the driving force in this case.

By using this plan, one is able to accomplish a task that can be said to be hard in some quarters. It is very difficult to clear a large amount of money that may be owed to people all at once. This is where this particular type of management process comes in.

An agreement is of importance to all the people. It is especially binding where one has to sign the agreement. The signature is what certifies that it is legal and therefore non compliance is defaulting on the agreement. This will usually mean that the other party can take the defaulting party to court and sue for damages.

The normal amount of time that this plan takes is five years. Five years is enough time to enable one to be able to cater for all the obligations that they have. It is also enough time to comply with all the agreements that they may have.

This can change when the amount that the borrower takes home changes. This can either increase or reduce. It depends on how the economic situation is at the moment. The changes have to factor all this into the agreement.

The salary is used to determine the amount of money that the borrower will take to the lender at any moment. These are the premiums that one has to make. Normally this is done in consultation with the borrower. It ensures that it is fair to all concerned.

These two plans are for different people all together. This is because the amount and the nature of the amount owed vary from one individual to the next. The nature of the liability is therefore one of the things that the provider has to consider.

Debt management plan or an IVA was designed with the sole purpose of enabling people take care of all their obligations. Owing money to people is an obligation that has to be met. It should however not leave one broke or without even a little money to cater for their expenses.

Want to find out more about DMPs? Try Payplan for a complete assessment of your situation.

Reach Your Real Estate Goals with Filters that Clarify Your Targets

There are different strategies that you can apply to make money in good or bad markets, with short-term buys or longer ones. We follow a conservative style of investing or a ‘residential buy and hold strategy’ — nothing fancy here.

Real estate cycles and to a lesser degree, market timing play roles in where and what type of property you’ll purchase. Once you have used those first filters, you can start using the other filters to analyze a potential area or property. The #1 constant filter is cash flow from day one.

Filters To Consider

Type of investment property and exit strategy: How long do you expect to be in the market, what exit strategies can you employ?

Financing options for this type of investment property: Is conventional financing possible - 50%, 35%, 20%, 5% down payment? Are their incentives such as grants or ‘purchase plus improvement’ strategies that you can leverage?

Your ROI target: After all expenses what is your minimum target return within your elected time frame? Is this realistic and achievable in the current market?

Management options: Who will look after your property? If it is you, what succession plan do you have in place to remove you from management when the time comes?

Is your system scalable: Can you create a template and duplicate success?

Exit:

Every time I consider adding a property to my portfolio I establish the type of deal and how/who I will eventually sell it on to. Some properties may be a short-term renovation/resale of 6 months. Others may be keepers that I don’t intend to sell for 20+ years. Is my exit buyer a fellow investor, a first time homebuyer or a retiring couple?

Financing:

I very rarely want to use the smallest down payment possible. More often I look to buy properties that stress-test (a system we use to run interest rate hikes and rent drops to test the property’s breaking point; a shock test to determine the buffer we need to build in) with a LTV of 75%. Instead of going too skinny into a property I will look for ways to add value (equity) by financing renovations or buying with an advantage like dividing a lot, adding a suite, garage or other source of income. Of course, buying under value is also good but that doesn’t mean that I use all my time chasing distressed properties or desperate sellers.

ROI:

I run my properties through various filters and stress-tests (as above). Income after all expenses equals Net Positive Cash Flow (NPCF). I factor in the expenses below, but remember you may have additional expenses that you need to add too. There are property specific costs such as mortgage, tax, insurance, condo fees, property management, vacancy, repairs, advertising, bookkeeping, yard care and tenant incentives. When I do up a pro-forma I look at my selling costs as well as what my return on equity and appreciation are. My main focus here is to establish my NPCF and determine if the overall ROI is inline with similar property metrics in my target area.

Property Management:

If you are self managing there will come a time when you want to hand the reins over to an experienced manager so factor these costs in. While you are self-managing you need to identify your cost be it time or money, because it will likely be both.

Scalable Systems:

First you need to establish your goal as a property investor. This may mean a dollar amount of NPCF, a lifestyle shift or creating generational wealth for your family. Refine your goal and the number of properties you need to reach it. Then look at capital, financing, time and energy needed to reach your goal – is it duplicable? Do you need to buy 3 single-family homes or 3 x100 units? Quite often you will find that you need less doors to reach your goal than you initially thought.

Remember that every plan grows and mutates. Along the way you’ll identify what works best for your skill set and in your area. You may tweak your plan to better compensate your lifestyle; grow with it.

Is Honeywell a Cash King?

As an investor, it pays to follow the cash. If you figure out how a company moves its money, you might eventually find some of that cash flowing into your pockets.

In this series, we'll highlight four companies in an industry, and compare their "cash king margins" over time, trying to determine which has the greatest likelihood of putting cash back in your pocket. After all, a company can pay dividends and buy back stock only after it's actually received cash -- not just when it books those accounting figments known as "profits."

Today, let's look at Honeywell International (NYSE: HON ) and three of its peers.

The cash king margin
Looking at a company's cash flow statement can help you determine whether its free cash flow actually backs up its reported profit. Companies that can create 10% or more free cash flow from their revenue can be powerful compounding machines for your portfolio. A sustained high cash king margin can be a good predictor of long-term stock returns.

To find the cash king margin, divide the free cash flow from the cash flow statement by sales: cash king margin = free cash flow / sales

Let's take McDonald's as an example. In the four quarters ending in December, the restaurateur generated $6.97 billion in operating cash flow. It invested about $3.05 billion in property, plant, and equipment. To calculate free cash flow, subtract McDonald's investment from its operating cash flow. That leaves us with $3.92 billion in free cash flow, which the company can save for future expenditures or distribute to shareholders.

Taking McDonald's sales of $25.5 billion over the same period, we can figure that the company has a cash king margin of about 14% -- a nice high number. In other words, for every dollar of sales, McDonald's produces $0.14 in free cash.

Ideally, we'd like to see the cash king margin top 10%. The best blue chips can notch numbers greater than 20%, making them true cash dynamos. But some businesses, including many types of retailing, just can't sustain such margins.

We're also looking for companies that can consistently increase their margins over time, which indicates that their competitive position is improving. Erratic swings in margins could signal a deteriorating business, or perhaps some financial skullduggery; you'll have to dig deeper to discover the reason.

Four companies
Here are the cash king margins for four industry peers over a few periods:

Company	Cash King Margin (TTM)	1 Year Ago	3 Years Ago	5 Years Ago
Honeywell International	7%	5.6%	11.1%	9.1%
BorgWarner (NYSE: BWA )	6.6%	4.4%	4.5%	5.8%
Johnson Controls (NYSE: JCI )	0.7%	(1.7%)	5%	3.2%
Exide Technologies (NASDAQ: XIDE )	(1.9%)	(3.1%)	(1%)	(3.5%)

Source: S&P Capital IQ

None of these companies meets our 10% threshold for attractiveness. Honeywell comes the closest, but its current cash king margins are more than two percentage points lower than they were five years ago. BorgWarner has the next highest margins at 6.6%, and its current margins are the highest they have been in the years shown. Johnson Controls' margins are less than 1%, and while they are up from last year, they are lower than they were five years ago. Exide consistently put up cash king margins in the negative numbers over these past few periods.

Components manufacturer Honeywell performed well in 2012 due to its involvement in strong areas of an overall weak economy. Some of its worries for the upcoming year relate to problems one of its major clients, Boeing, is facing. Between its labor dispute with its engineers and problems with its 787 Dreamliner, some worry that it may not be able to meet its commitments, which would spell trouble for Honeywell and other suppliers like General Electric and Spirit Aerosystems. However, Honeywell's position as a supplier to Textron helps create a safety net in case things go south with Boeing.

Auto components manufacturer BorgWarner is the leading producer of automotive engine solutions. Its existing supplier relationship with large automakers like Ford put it in a strong position. However, to remain competitive the company has to keep up with the technological innovations put up by Honeywell and other component manufacturers working in the same space in addition to keeping costs down.

Johnson Controls�manufactures building control and HVAC systems in addition to automotive components. In the auto components space, Johnson Controls serves huge auto companies like Ford and General Motors. While Johnson Controls benefits from these relationships, it also has to look forward to new opportunities as these businesses lose market share. The company has also faced some setbacks in its struggle to acquire A123 Systems' assets after bankruptcy, as Chinese company Wanxiang America won the auction for those assets and gained approval of the deal from the Committee on Foreign Investment. However, Johnson Controls' failure here is competitor Exide Technologies' gain, since it denies Johnson Controls assets that would improve its competitive position.

The cash king margin can help you find highly profitable businesses, but it should only be the start of your search. The ratio does have its limits, especially for fast-growing small businesses. Many such companies reinvest all of their cash flow into growing the business, leaving them little or no free cash -- but that doesn't necessarily make them poor investments. Conversely, the formula works better for slower-growing blue chips. You'll need to look closer to determine exactly how a company is using its cash.

Still, if you can cut through the earnings headlines to follow the cash instead, you might be on the path toward seriously great investments.

This space has gathered a lot of investor interest, but what is the best way to play it? The Motley Fool answers this question and more in our most in-depth Johnson Controls research available for smart investors like you. Thousands have already claimed their own premium ticker coverage, and you can gain instant access to your own by clicking here now.

Top Stocks For 4/2/2013-1

Crown Equity Holdings Inc. (OTCBB:CRWE) announced recently that it has launched its crwenewswire.fr website to provide news in France’s native language. Crown Equity Holdings Inc. had previously launched its German website crwenewswire.de and is launching its Canadian website crwenewswire.ca shortly.

“The new website is one step in many towards the company goal of expanding its footprint internationally, ” commented Kenneth Bosket, President and CEO of Crown Equity Holdings Inc. “Our goal for 2010 is to have all CRWE’s clients’ press releases, articles and news content published in every major financial country’s native language, as well as within cities of every state of our country,” stated Mr. Bosket.

Crown Equity Holdings Inc. is a consulting organization which provides and assists small business owners with the knowledge required in taking their company public, and has re-focused its primary vision with its aligned group of independent website divisions to providing media advertising services, as a worldwide online media advertising publisher, dedicated to the distribution of quality branding information, as well as search engine optimization for its clients.

The Bank of Nova Scotia (NYSE:BNS) subsidiary Scotiabank is committed to supporting the communities in which we live and work, both in Canada and abroad. Recognized as a leader internationally and among Canadian corporations for its charitable donations and philanthropic activities, in 2009 the Bank provided about $39 million in sponsorships and donations to a variety of projects and initiatives, primarily in the areas of healthcare, education, social services and arts and culture.

Wheels will be spinning and heads will be turning as five Hamilton Scotiabank employees get personal “coaching” and encouragement from former Hamilton Tiger Cats receiver, Mike Morreale at tomorrow’s Juvenile Diabetes Research Foundation’s 2010 Ride for Diabetes Research.

Having raised more funds than any other Hamilton area Scotiabank team, the Scotiabank employees won the opportunity to have Morreale provide on-the-spot coaching at tomorrow’s fun-filled charity challenge.

Barnes & Noble, Inc. (NYSE: BKS), the world�s largest bookseller, announced the October line-up for the �More in Store� program for NOOK, the Barnes & Noble eBook Reader. Available only in Barnes & Noble stores and only on NOOK, the free More in Store program offers NOOK customers new, exclusive content from bestselling and new authors, special offers and savings, and weekly bestseller and new release lists.

Barnes & Noble�s free in-store Wi-Fi service makes access to More in Store content easy. With just a simple tap of the NOOK �shop� button, customers can explore content from authors such as Nigella Lawson, Tom Franklin and James Swanson, and in-store promotions including special savings and free caf� offers. More in Store is updated weekly and each new feature is available for four weeks on a rolling basis. Once a customer downloads the content to their NOOK, it is saved to their digital locker and can be accessed at any time.

Barnes & Noble, Inc., the world’s largest bookseller and a Fortune 500 company, operates 717 bookstores in 50 states.

Barnes Group Inc. (NYSE:B) third quarter 2010 results will be made public on Friday, October 29, 2010, before the market opens, and that the third quarter 2010 results conference call will begin at 8:30 a.m. EDT on that day.

Barnes Group Inc. is a diversified global manufacturer and logistical services company focused on providing precision component manufacturing and operating service support. Founded in 1857, the 4,900 dedicated employees on four continents worldwide are committed to achieving consistent and sustainable profitable growth.

Is Kadant Going to Burn You?

There's no foolproof way to know the future for Kadant (NYSE: KAI ) or any other company. However, certain clues may help you see potential stumbles before they happen -- and before your stock craters as a result.

Why might an upstanding firm like Kadant do this? For the same reason any other company might: to make the numbers. Investors don't like revenue shortfalls, and employees don't like reporting them to their superiors.

Is Kadant sending any potential warning signs? Take a look at the chart below, which plots revenue growth against AR growth, and DSO:

Source: S&P Capital IQ. Data is current as of last fully reported fiscal quarter. FQ = fiscal quarter.

The standard way to calculate DSO uses average accounts receivable. I prefer to look at end-of-quarter receivables, but I've plotted both above.

Watching the trends
When that red line (AR growth) crosses above the green line (revenue growth), I know I need to consult the filings. Similarly, a spike in the blue bars indicates a trend worth worrying about. Kadant's latest average DSO stands at 75.6 days, and the end-of-quarter figure is 72.5 days. Differences in business models can generate variations in DSO, and business needs can require occasional fluctuations, but all things being equal, I like to see this figure stay steady. So, let's get back to our original question: Based on DSO and sales, does Kadant look like it might miss its numbers in the next quarter or two?

The numbers don't paint a clear picture. For the last fully reported fiscal quarter, Kadant's year-over-year revenue shrank 19.5%, and its AR dropped 0.9%. That's a yellow flag. End-of-quarter DSO increased 23.1% over the prior-year quarter. It was up 2.2% versus the prior quarter. That demands a good explanation. Still, I'm no fortuneteller, and these are just numbers. Investors putting their money on the line always need to dig into the filings for the root causes and draw their own conclusions.

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1 Reason to Expect Big Things from Resolute Forest Products

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 Resolute Forest Products (NYSE: RFP ) out of line? To figure that out, start by comparing the company's inventory growth to sales growth. How is Resolute Forest Products doing by this quick checkup? At first glance, not so great. Trailing-12-month revenue decreased 5.3%, and inventory increased 14.7%. Comparing the latest quarter to the prior-year quarter, the story looks potentially problematic. Revenue dropped 1.7%, and inventory expanded 14.7%. Over the sequential quarterly period, the trend looks OK but not great. Revenue dropped 2.2%, and inventory grew 1.9%.

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 Resolute Forest Products? I chart the details below for both quarterly and 12-month periods. (Resolute Forest Products reports raw materials and work-in-progress inventory combined.)

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, raw materials inventory was the fastest-growing segment, up 19.1%. On a sequential-quarter basis, raw materials inventory was also the fastest-growing segment, up 4.0%. Although Resolute Forest Products shows inventory growth that outpaces revenue growth, the company may also 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.

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

Add Resolute Forest Products �to My Watchlist.

G.I. Joe Conquers Easter Weekend Box Office

The military took over America's movie theaters this past weekend, in the form of an old but durable franchise. G.I. Joe: Retaliation, the latest in the action figure-to-live action movie series, was the highest-grossing film during the period, according to figures compiled by industry tracker Box Office Mojo. In its debut, the action movie -- distributed by Viacom's (NASDAQ: VIA ) (NASDAQ: VIAB ) Paramount -- brought in $40.5 million in domestic ticket sales.

That performance was good enough to push last week's champion, DreamWorks Animation's (NASDAQ: DWA ) The Croods down to No. 2. According to Box Office Mojo, the movie reaped $26.7 million, a 39% drop from its first-week gross. It's currently in its second week of release.

Rounding out the top three was the freshly released Tyler Perry's Temptation: Confessions of a Marriage Counselor. The brooding relationship drama took in $21.6 million over the weekend, said Box Office Mojo. That film is distributed by Lions Gate (NYSE: LGF ) .

3 Stock Market Lessons for the Rest of 2013

To begin the second quarter, stocks were unable to hang on to the new record high achieved last Thursday, at the S&P 500 (SNPINDEX: ^GSPC ) fell 0.45% on the day, while the narrower, price-weighted Dow Jones Industrial Average (DJINDICES: ^DJI ) lost just 0.04%.

Reflecting the losses, the VIX (VOLATILITYINDICES: ^VIX ) , Wall Street's fear gauge, rose 7% to close at 13.58. (The VIX is calculated from S&P 500 option prices and reflects investor expectations for stock market volatility over the coming 30 days.)

The rest of the year starts now
Q1 is in the books, and it contains three interesting lessons for investors as we look out toward the rest of the year:

1. A euro is still a euro, except in Cyprus
The Cypriot debacle has taught us not only that the eurozone crisis is alive and well, but also that eurozone leaders haven't lost their touch when it comes to misjudging the market's attitude and to botched crisis management. That they initially approved a bailout package that had small depositors losing money beggars belief!

Bottom line: Cyprus, although economically insignificant, is the most recent, most glaring evidence of the internal contradictions that exist within the eurozone. Even if we were to rule out the possibility of the breakup of the euro, my base-case scenario for Europe is an extended (read: multiyear) period of economic stagnation, Japan-style (though probably not as severe). That's good neither for Europe nor the United States.

2. At age 4, this rally now looks sturdy on its feet
Stocks bottomed more than four years ago, on March 9, 2007. Since then, they've had a phenomenal run, with the S&P 500 up 131% so far. While it has suffered periodic corrections along the way, recently, it has shrugged off macroeconomic concerns with uncharacteristic ease, whether they be related to the "fiscal cliff" and other budgetary concerns or to Cyprus. Although I'm concerned that this bull market serves at the pleasure of the chairman of the Federal Reserve, its new resilience is chipping away at my skepticism and turning me into a believer. One element, however, is keeping me from becoming an unabashed convert.

3. Stocks still look expensive on long-term measures of value
With the S&P 500 trading at 22.7 times its cyclically adjusted earnings-per-share, stocks don't look cheap on this long-term measure of value (cyclically adjusted earnings are the average of trailing-10-year inflation-adjusted earnings). In fact, the current ratio is 38% higher than its long-term historical average. While this has no implications for stocks' short-term performance, this ratio is a good, though not infallible, indicator of long-term returns.

In summary: Significant risks remain, but I think the environment is favorable to stocks as investors' risk aversion continues to abate. However, for long-term success, you're best off focusing on stocks that still offer a margin safety, either directly, because the shares trade at a discount to their intrinsic value, or via the quality of the business franchise.

If you're ready to invest based on competitive advantage, long-term value creation, and margin of safety, The Motley Fool's chief investment officer has selected his No. 1 stock for the year. Find out which stock it is in the brand-new free report: "The Motley Fool's Top Stock for 2013." Just click here to access the report and find out the name of this under-the-radar company.

The Apologetic Apple

This makes two. Apple (NASDAQ: AAPL ) has now apologized directly to consumers twice in the past six months for various reasons. There are many ways that Tim Cook has made his mark on Apple, and here's another: Apple is more apologetic now than ever before.

Back in September amid backlash over Apple Maps, Cook posted a letter on Apple's site directly addressing the criticism and admitting that the company "fell short" of its own quality expectations. The debacle was also a contributing factor in then-iOS chief Scott Forstall's ouster, since he had reportedly refused to put his name on the apology even though Maps fell under his umbrella at the time. The good news was that Maps didn't seem to affect iPhone sales at all.

Cook has now posted another apology�, but this time for the company's Chinese consumers. Apple has been taking heat over its warranty policies in the Middle Kingdom lately. State-controlled media outlets have been bashing the iPhone maker as the government has been trying to undermine foreign companies in favor of local companies.

China Central Television alleged that Apple's warranty policies differed in China and put Chinese consumers at a disadvantage relative to other countries. Apple's initial response before Cook's letter was that its warranties all over the world are "more or less the same."

Consumers weren't pleased about iPhone repair policies, and Cook has now implemented numerous changes in response to customer feedback. In addition, Apple is outlining its warranty policies for all of its major products to boost transparency.

Apologies from Apple were rare under Steve Jobs. The Apple co-founder inked an apology letter after Apple dropped the original iPhone's price by $200 just months after launching in 2007, offering a $100 credit to placate early adopters. After Jobs initially downplayed the 2010 Antennagate scandal by simply saying, "Just avoid holding it in that way," the iPhone maker eventually bit the bullet and offered a free case alongside an apology.

Apple is much more talkative under Cook, and that also means that the company is more willing to say it's sorry when it needs to. Maybe next Cook will apologize to investors for having to wait so long for that inevitable dividend boost.

Apologies aside, there is a debate raging as to whether Apple remains a buy. The Motley Fool's senior technology analyst and managing bureau chief, Eric Bleeker, is prepared to fill you in on both reasons to buy and reasons to sell Apple, and what opportunities are left for the company (and your portfolio) going forward. To get instant access to his latest thinking on Apple, simply click here now.

TIBCO Software CFO Departs

TIBCO Software (NASDAQ: TIBX ) �is about to lose its top financial executive. CFO Sydney Carey will leave the company to work for a privately held technology firm, whose name was not disclosed. She will stay through April 19, and will certify TIBCO's Q1 2013 results.

She will be replaced on an interim basis by COO Murray Rode, who was the company's CFO from late 2005 through 2008. TIBCO plans to find a permanent replacement.

In the press release announcing the change, Carey says that "while I believe TIBCO has a very bright future, I look forward to this new and different challenge of growing a private, pre-IPO company."

Fortinet Q3 profit falls 4% amid charges

Fortinet Inc.'s FTNT third-quarter earnings fell 4% on stock-based compensation charges and other items as the network-security company reported its first year-to-year profit decline in more than a year.

Shares were down 11% at $22 in recent after-hours trading. Through Tuesday's close, the stock is up 25% in the past 12 months.

Fortinet, the maker of FortiGate products, has posted stronger revenue for more than two years.

Fortinet reported a profit of $17.2 million, or 10 cents a share, down from $17.9 million, or 11 cents a share, a year earlier. Excluding stock-based compensation, asset sales and other items, earnings were up at 14 cents from 13 cents. Revenue increased 17% to $136.3 million.

The company in July expected per-share earnings of 14 cents on revenue of $134 million to $137 million.

Gross margin fell to 72.3% from 73.3%.

Operating expenses rose 23%.

Billings were up 22% at $145 million.

Subscribe to WSJ: http://online.wsj.com?mod=djnwires

Irony of the Cyprus Bailout

The nation of Cyprus saw its banking sector come crashing down over the last two weeks. The final consequences are still unknown, but the episode is sure to leave its economy in ruin.

There is a tremendous amount to learn from the crash. One lesson is the value and accuracy of stress tests that regulators impose on banks.

In this video, Fool analysts Matt Koppenheffer and Morgan Housel show how 2011's stress tests of European banks completely backfired.

�

Many investors are scared about investing in big banking stocks after the crash, but the sector has one notable stand out. In a sea of mismanaged and dangerous peers, it rises above as "The Only Big Bank Built to Last." You can uncover the top pick that Warren Buffett loves in The Motley Fool's�new report. It's free, so click here to access it now.

Why Research In Motion May Be About to Take Off

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 Research In Motion (Nasdaq: BBRY ) out of line? To figure that out, start by comparing the company's inventory growth to sales growth. How is Research In Motion doing by this quick checkup? At first glance, pretty well. Trailing-12-month revenue decreased 39.9%, and inventory decreased 41.3%. Over the sequential quarterly period, the trend looks worrisome. Revenue dropped 1.8%, and inventory grew 31.9%.

What's going on with the inventory at Research In Motion? 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, each segment of inventory decreased. On a sequential-quarter basis, work-in-progress inventory was the fastest-growing segment, up 57.2%. Research In Motion may display positive inventory divergence, suggesting that management sees increased demand on the horizon.

Internet software and services are being consumed in radically different ways, on increasingly mobile devices. Does Research In Motion fit in anymore? Check out the company that Motley Fool analysts expect to lead the pack in "The Next Trillion-dollar Revolution." Click here for instant access to this free report.

Add Research In Motion �to My Watchlist.

Top Stocks For 12/15/2012-7

SAN ANTONIO, Aug. 5 /CRWENewswire/ — Verify Markets has just released a market research report on the global residential water treatment market. The market is expected to show remarkable growth especially in Asia and Latin America. The key factors driving sales in these regions are increasing awareness levels about poor water quality, rising disposable incomes, GDP growth, higher visibility through change in distribution channels, industrialization and urbanization.

Within Latin America, the Brazilian market continues to be dominated by local participants like Europa, Lorenzetti and Hoken. Multinational companies, such Whirlpool and Philips, have recently entered in this market.

The U.S., Western Europe, and Japan are ahead of the rest of the world in terms of maturity and technical expertise. In 2009, the largest markets were Japan, U.S., China, South Korea and India with revenues of $2.22 billion, $1.85 billion, $1.13 billion, $716 million and $588.1 million, respectively. China and India are expected to see a double-digit growth over the next 7 years.

The U.S. and Western Europe were the largest markets for point-of-entry(POE) products in 2009. Verify Markets forecasts that market revenue for POE products will remain flat in the coming years. The largest markets for point-of-use (POU) systems are currently in the USA, Japan, South Korea and China. Countertop (CT) units are the most popular units in most regions, globally. Followed closely by Under-the-Sink (UTS) units.

Regional markets tend to be dominated by local participants, with the exception of U.S. based Amway. For example, WoongjinCoway and ChunghoNais dominate the South Korean market and the companies do not operate anywhere else.

In countries like India and China, a large population base is still poor and cannot afford ultra-violet or reverse osmosis water purifiers. In order to cater to this lower middle class population several companies are launching gravity based water purifiers. One such example is the launch of Aquasure by Eureka Forbes. According to Eureka Forbes, Aquasure, the bromine-based purifier, has been able to enter close to half a million homes in 2009. Similarly, Tata Group launched an affordable water purifier known as Tata Swach, which requires no energy or running water to operate.

A complete analysis of select markets within the global residential water treatment market can be obtained at www.verifymarkets.com. Regional and country-specific studies are also available.

Contact: Haley Rico
Phone: 210-595-9687
Email: haley@verifymarkets.com

Google Deepens Solar Investments With Ivanpah

Google announced April 11 it was taking yet another step down the path of alternative energy with $168 million in equity financing for BrightSource Energy, Inc., a California renewable energy company.

That, reported Bloomberg News, coupled with a $1.6 billion loan guarantee from the U.S. Department of Energy, are targeted toward the construction of what will be the world’s largest solar energy plant.

The Ivanpah project, which will provide 392 megawatts in southern California, consists of three separate plants, and is already under construction; that was begun by Bechtel Corp. in October. Mirrors known as heliostats are part of the BrightSource solar thermal system, and focus sunlight on boilers that are mounted on top of towers. The system generates temperatures of more than 1,000°F (538°C) to produce steam in the boilers; that is then piped to a power-generating turbine.

This isn’t Google’s first toe in the alternative energy stream; it’s invested more than $250 million in projects to produce renewable energy. Google.org, its investing unit, took part in a financing round with BrightSource worth $115 million that closed in 2008. Rick Needham, Google’s director of green business operations, said in a statement of this latest venture, “We’re helping to deploy the first commercial plant of a potentially transformative solar technology able to deliver clean energy at scale.” He continued, “Ivanpah will be the largest solar-power tower project in the world.”

The timing may be perfect. Last year was marked by the BP oil disaster in the Gulf of Mexico, its full effects still unknown but its very occurrence giving pause to the thought of more deep drilling lest new crises occur. While natural gas from the Marcellus Shale has tempted investors, continuing reports about ground water contamination and other dangers of fracking (the method used to extract natural gas from shale wells) have brought calls for more caution.

And this year, in the wake of Japan’s triple crisis of earthquake, tsunami, and nuclear disaster, wariness of the hazards of nuclear energy have resulted in many nations calling a halt to their own nuclear projects till safety concerns can be reevaluated. Rising oil prices

caused by unrest in the Middle East/North Africa (MENA) region complicate the matter, as markets try to deal with increased costs for production and transportation. Yet energy needs remain.

What’s an investor to do? Check out ETFs that invest in alternative energy sources, for one thing. These have been doing well this year when other energy investments have lagged, and have drawn some $243 billion in new investments in 2010, up 30% from 2009, according to Green Investing 2011: Reducing the Cost of Financing, a report released on Apr. 1 by the World Economic Forum in collaboration with research firm Bloomberg New Energy Finance.

Some ETFs that explore energy from a new angle include:

iShares S&P Global Clean Energy Index Fund (ICLN) With 40% of its investments in technology and another 40% in utilities, this fund offers a spectrum of 31 securities that are divided up among the U.S., China, Spain, and Brazil.
PowerShares Global Wind Energy Portfolio (PWND) The top two holdings in this ETF are Vestas Wind Systems and Iberdrola Energias Renovables, both from Spain; in fact, nearly 30% of this fund’s holdings are Iberian in origin.
Market Vectors Solar Energy ETF (KWT) There are approximately 30 companies in this fund, leaning toward mid and small cap, and companies include First Solar, Inc. (FSLR), MEMC Electronic Materials (WFR), and Trina Solar Limited ADR (TSL).
Guggenheim Solar ETF (TAN) This fund includes among its top 10 holdings First Solar, Inc., Trina Solar Limited Sponsored A, SOLARWORLD, and Yingli Green Energy Holding Company (YGE).
PowerShares WilderHill Clean Energy Portfolio (PBW) With top 10 holdings that include Tesla Motors, Inc. (TSLA) and Cree, Inc. (CREE), which includes among its products LEDs, this fund looks to improved technology for energy savings.

More good news is that alternative energy projects have thus far escaped government budget cuts, according to a Barron’s report. Not just BrightSource, but also SunPower Corp.has benefited from an Energy Department federal program, to the tune of some $1.18 billion in loan guarantees. Perhaps alternative energy is an investment whose day has finally dawned.

Fabrinet Goes Red

Fabrinet (NYSE: FN ) reported earnings Feb. 6. Here are the numbers you need to know.

The 10-second takeaway
For the quarter ended Dec. 30 (Q2), Fabrinet beat expectations on revenues and beat expectations on earnings per share.

Compared to the prior-year quarter, revenue increased and GAAP earnings per share dropped to a loss.

Margins shrank across the board.

Revenue details
Fabrinet reported revenue of $186.3 million. The three analysts polled by S&P Capital IQ expected to see revenue of $177.5 million. Sales were 48% lower than the prior-year quarter's $173.7 million.

Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions.

EPS details
Non-GAAP EPS came in at $0.45. The four earnings estimates compiled by S&P Capital IQ averaged $0.42 per share on the same basis. GAAP EPS were -$0.96 for Q1 against $0.46 per share for the prior-year quarter.

Source: S&P Capital IQ. Quarterly periods. Figures may be non-GAAP to maintain comparability with estimates.

Margin details
For the quarter, gross margin was 9.2%, 360 basis points worse than the prior-year quarter. Operating margin was -37.9%, 4,750 basis points worse than the prior-year quarter. Net margin was -34.4%, 4,300 basis points worse than the prior-year quarter.

Looking ahead
Next quarter's average estimate for revenue is $76.7 million. On the bottom line, the average EPS estimate is -$0.42.

Next year's average estimate for revenue is $557.6 million. The average EPS estimate is $0.33.

Investor sentiment
The stock has a two-star rating (out of five) at Motley Fool CAPS, with 23 members rating the stock outperform and three members rating it underperform. Among seven CAPS All-Star picks (recommendations by the highest-ranked CAPS members), four give Fabrinet a green thumbs-up, and three give it a red thumbs-down.

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Fabrinet is hold, with an average price target of $18.38.

Over the decades, small-cap stocks, like Fabrinet, have provided market-beating returns, provided they're value priced and have solid businesses. Read about a pair of companies with a lock on their markets in "Too Small to Fail: Two Small Caps the Government Won't Let Go Broke." Click here for instant access to this free report.

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Is Berry Petroleum Working Hard Enough for You?

Margins matter. The more Berry Petroleum (NYSE: BRY ) 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 Berry Petroleum's competitive position could be.

Here's the current margin snapshot for Berry Petroleum over the trailing 12 months: Gross margin is 65.3%, while operating margin is 37.5% and net margin is 17.6%.

Unfortunately, a look at the most recent numbers doesn't tell us much about where Berry Petroleum 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 Berry Petroleum 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 66.3% and averaged 62.3%. Operating margin peaked at 37.5% and averaged 17.2%. Net margin peaked at 17.9% and averaged 6.5%.
TTM gross margin is 65.3%, 300 basis points better than the five-year average. TTM operating margin is 37.5%, 2,030 basis points better than the five-year average. TTM net margin is 17.6%, 1,110 basis points better than the five-year average.

With recent TTM operating margins exceeding historical averages, Berry Petroleum looks like it is doing fine.

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Verint Systems Crushes Earnings Estimates

Verint Systems (Nasdaq: VRNT ) reported earnings on March 27. Here are the numbers you need to know.

The 10-second takeaway
For the quarter ended Jan. 31 (Q4), Verint Systems beat slightly on revenues and crushed expectations on earnings per share.

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

Margins increased across the board.

Revenue details
Verint Systems logged revenue of $230.1 million. The seven analysts polled by S&P Capital IQ predicted revenue of $226.3 million on the same basis. GAAP reported sales were 8.0% higher than the prior-year quarter's $212.0 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 $0.91. The eight earnings estimates compiled by S&P Capital IQ averaged $0.75 per share. Non-GAAP EPS of $0.91 for Q4 were 21% higher than the prior-year quarter's $0.75 per share. GAAP EPS of $0.43 for Q4 were 26% higher than the prior-year quarter's $0.34 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 70.0%, 310 basis points better than the prior-year quarter. Operating margin was 18.7%, 260 basis points better than the prior-year quarter. Net margin was 11.3%, 320 basis points better than the prior-year quarter. (Margins calculated in GAAP terms.)

Looking ahead
Next quarter's average estimate for revenue is $202.9 million. On the bottom line, the average EPS estimate is $0.51.

Next year's average estimate for revenue is $901.7 million. The average EPS estimate is $2.76.

Investor sentiment

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Verint Systems is outperform, with an average price target of $35.07.

Software and computerized services are being consumed in radically different ways, on new and increasingly mobile devices. Many old leaders will be left behind. Whether or not Verint Systems makes the coming cut, you should check out the company that Motley Fool analysts expect to lead the pack in "The Next Trillion-dollar Revolution." Click here for instant access to this free report.

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What Sequester? Stocks Rally on Deadline Day

After our esteemed leaders in Washington failed to reach a compromise yesterday, the so-called sequester has officially taken effect. Starting today, $85 billion in across-the-board spending cuts are set to take effect, impacting the defense department and other discretionary programs. Yet the market is up, with the Dow Jones Industrial Average (DJINDICES: ^DJI ) trading higher by 17 points, or 0.12%, about an hour before the market close. What gives?

As with the boy who cried "wolf" one too many times, fewer and fewer people are paying mind to our politicians' thinly veiled, self-interested shenanigans. As my colleague Travis Hoium noted yesterday:

For more than five years, Wall Street has dealt with brinksmanship in Washington, and the act is getting old. The bank bailout failed until investors panicked and markets plunged. The economy tanked, and even then a stimulus package was like pulling teeth. There was the debt ceiling debate, then the original sequester, the fiscal cliff, and now the actual sequester.

When Washington has actually gotten something done, it has always been a last-minute patch-up, rather than a structural overhaul. So the market has come to expect little more from Washington. As we head toward the sequester, investors have looked past what is or isn't being negotiated between the White House and the houses of Congress, choosing to focus on more important things.

Analysts and investors have chosen instead to focus on the fundamentals today. And those don't look quite so bad compared to the growing embarrassment that is Washington.

Today was a particularly busy day for financial news, with six economic releases published this morning -- click here to see how each report measured up to expectations. On the positive side, January consumer spending and February consumer sentiment rose over the comparable time period. Data from the Department of Commerce showed that Americans increased their spending by 0.2% in the first month of this year compared with December's 0.1% growth. And the University of Michigan index of consumer sentiment came in at 77.6 for February, well above the previous month's 73.8.

On the negative side, both personal incomes and construction spending have taken a turn for the worse. According to the Department of Commerce, consumer income dropped by 3.6% in January; economists had forecast a 2.6% drop. And construction spending declined in January by 2.1%, while analysts had expected 0.7% growth.

Helping to fuel today's rally was upbeat news out of the auto industry. The world's major car-manufacturers released sales figures this morning for the just-concluded month of February. Sales at Ford (NYSE: F ) were up 9%, General Motors' (NYSE: GM ) were up 7%, and Toyota's (NYSE: TM ) were up by just more than 4%. GM's sales were spurred on by its Chevrolet Silverado pickup, which saw demand accelerate by 29%. Ford experienced substantial upticks across the board: Sales of its F-Series pickups rose 15%, sales of Fusions sedans were up 28%, and Escape SUV sales soared 29%. Shares of GM are higher in afternoon trading while Ford and Toyota are nevertheless down.

Finally, in terms of Dow stocks, shares of Bank of America (NYSE: BAC ) are leading the blue-chip index higher in afternoon trading, up by 1.9%. Sticking with today's paradoxical theme, the nation's second-largest bank by assets is rallying despite facing a new investigation related to the origination, sale, and servicing of mortgages by the ill-reputed Countrywide Financial, which B of A acquired in 2008.

As my colleague John Grgurich noted:

Maybe nothing will come of this latest crisis-related B of A eruption. Maybe New York's attorney general will find that all of the bank's books are in perfect order. Speaking of New York, if you believe that, I have a bridge you might be interested in buying.

To read more about B of A's legal woes, check out this in-depth series I wrote on the issue.

Want to learn even more about Bank of America?
Bank of America's stock doubled in 2012. Is there more yet to come? With significant challenges still ahead, it's critical to have a solid understanding of this megabank before adding it to your portfolio. In The Motley Fool's premium research report on B of A, analyst Anand Chokkavelu, CFA, and financials bureau chief Matt Koppenheffer lift the veil on the bank's operations, including three reasons to buy and three reasons to sell. Click here now to claim your copy, and as an added bonus, you'll receive a full year of free updates and expert guidance as key news breaks.

As Fiduciary Debate Returns, Advisors Share Attitudes and Practices

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Proxy Voting RIAs are not required to vote proxies on behalf of their clients. However, when an RIA does assume responsibility for voting proxies, the firm�s policies and procedures should help to ensure that votes are cast in the best interest of clients.
Disaster Recovery Plans and Succession Planning RIAs owe a fiduciary duty to clients to prepare for disasters and other contingencies. If an RIA does not have a disaster recovery plan, clients’ financial well-being may be jeopardized. RIAs should also engage in succession planning, ensuring a smooth transaction if an owner or principal leaves.

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The word “sequester” might be on many Americans’ minds, but for advisors, “fiduciary” is the elephant issue inside the beltway. As the SEC and the Department of Labor consider their separate rulemakings on the fiduciary issue, AdvisorOne is partnering with fi360 to gauge the attitudes and real-world practices of advisors of all kinds when it comes to the fiduciary standard.

The 2013 Fiduciary Survey can be taken here, and all advisors, regardless of business or compensation model, are urged to make their voices heard on the fiduciary standard, whether in the area of retirement planning (the DOL) or in more general financial planning advice (the SEC).

The survey is open now and will remain available through the end of March 2013. Respondents can maintain their anonymity in taking the survey, but the findings in aggregate will help inform the discussion on this crucial topic.

The findings of the 2013 Survey will be published on AdvisorOne and presented at fi360’s annual conference in April.

AdvisorOne’s Melanie Waddell has kept her ear to the ground on the progress of both bodies on the fiduciary issue.

Melanie reported that acting SEC Chairwoman Elisse Walter (right) testified before the Senate Banking Committee that the commission was “giving serious consideration” to its proposed rule to put brokers under a fiduciary mandate, the study of which was mandated under the Dodd-Frank Act, Section 913. She also confirmed previous reports that the agency will move forward with a request for public input on the rule. The response to Walter’s Feb. 14 testimony from Sen. John Tester, D-Mont.: "I think this [rulemaking] should be a priority because it is a benefit to investors. You should push it."

As for Phyllis Borzi and the DOL’s redefinition of fiduciary under ERISA, in Investment Advisor’s cover story for March 2013, Borzi reiterated that the new version of the Department’s fiduciary rule will prove the Employee Benefits Security Administration has listened to industry concerns over its proposed rule. “When people see the reproposal, reasonable people with open minds will say DOL listened, that DOL addressed the legitimate issues that were raised in the long comment process,” Borzi said again. “The reproposal will be better, clearer, more targeted and more reasonably balanced.”

Since a “concept release” on the fiduciary standard could come from the SEC by early summer, while the DOL fiduciary redraft is scheduled to be released in July, now is the time for advisors’ unfiltered voices to be heard on the subject by taking the 2013 Fiduciary Survey.

You can read the findings on AdvisorOne of the 2012 Fiduciary Survey, and you can take this year’s 2013 Fiduciary Survey here.

Is EA the Worst Company in America?

Electronic Arts hasn't been winning any friends with its customer-service snafus recently, and the shoddy behavior has landed the company in The Consumerist's bracket for "The Worst Company In America" -- yet again.

But the real question is how this poor sentiment translates to investor returns. In the following video, Jeremy Phillips and Austin Smith reflect on what the poor service means for shareholders, and their conclusions aren't good.

While Activision Blizzard and Microsoft have been taking the headlines when it comes to console gaming, Electronic Arts has been languishing. If you're wondering how to play the new landscape of gaming, we can help. Our new special report breaks down the risks and opportunities facing the company to help you decide whether EA is right for your portfolio. Click here to get your copy now.

Top Stocks To Buy For 2/21/2013-4

ExlService Holdings, Inc. (NASDAQ:EXLS) achieved its new 52 week high price of $26.46 where it was opened at $25.68 down -0.09points or -0.35% by closing at $25.89. EXLS transacted shares during the day were over 154,834 shares however it has an average volume of 69,320 shares.

EXLS has a market capitalization $768.18 million and an enterprise value at $655.77 million. Trailing twelve months price to sales ratio of the stock was 2.84 while price to book ratio in most recent quarter was 2.95. In profitability ratios, net profit margin in past twelve months appeared at 10.82% whereas operating profit margin for the same period at 10.16%.

The company made a return on asset of 6.06% in past twelve months and return on equity of 12.26% for similar period. In the period of trailing 12 months it generated revenue amounted to $271.17 million gaining $9.22 revenue per share. Its year over year, quarterly growth of revenue was 33.80% holding 48.70% quarterly earnings growth.

According to preceding quarter balance sheet results, the company had $115.71 million cash in hand making cash per share at 3.90. The total of $611.00K debt was there putting a total debt to equity ratio 0.24. Moreover its current ratio according to same quarter results was 3.99 and book value per share was 8.80.

Looking at the trading information, the stock price history displayed that its S&P500 52 Week Change illustrated 6.60% where the stock current price exhibited up beat from its 50 day moving average price $23.21 and remained above from its 200 Day Moving Average price $21.86.

EXLS holds 29.67 million outstanding shares with 15.69 million floating shares where insider possessed 48.54% and institutions kept 52.00%.

Kroger Faces Range-Bound Strategy

By David Russell

Kroger's (KR) volatility has spiked since late April, and one trader is looking for the grocery stock to return to its slow-moving ways.

optionMONSTER's tracking systems detected the sale of 9,100 October 20 puts and 9,100 October 24 calls, more than 13 times open interest in each strike. Both priced for about $0.85, resulting in a credit of $1.70.

The trade, known as a short strangle, is designed to generate income from the shares remaining trapped in a range. It came after KR's implied volatility surged to about 30 percent from 23 percent about two weeks ago, which drove up option premiums. (See ourEducation section)

The stock fell 0.18 percent to $22.12 yesterday. It's been tanking and experiencing greater volatility since April 29, when rival Safeway reported weak earnings and issued disappointing guidance.

Given the credit the trader earned from selling the calls and puts, he or she will a make money as long as KR remains between $18.30 and $25.70 on expiration.

The transaction pushed overall options volume in the stock to eight times greater than average.

(Chart courtesy of tradeMONSTER)

Your 2011 Stock Market Leaders

Stocks drifted quietly in the past week, seemingly satisfied with the status quo and in no hurry to get to their next destination. The Dow Jones Industrial Average, Standard & Poor's 500 Index and Nasdaq Composite Index all clocked in tandem for a loss or gain of +0.1% to -0.1%.

Overseas stocks were the only major winners, with developed markets outside the United States up 1.4% and emerging markets up 2.2%.

Looking back at all of 2010, here are a few stats that stick out:

-- The Dow Jones Industrials rose 11%, a second straight year of double-digit upside. The best five stocks were Caterpillar Inc. (NYSE: CAT) (+68%); E.I. du Pont de Nemours & Co. (NYSE DD) (+48%); McDonalds Corp. (NYSE: MCD) (+27%); Home Depot Inc. (NYSE: HD) (+25%); and General Electric C o. (NYSE: GE) (+24%).

-- The S&P 500 rose 13%, also the second straight year and the first time recording back-to-back double-digit gains since 2003-2004. The best stocks that started the year in the index: Cummins Inc. (NYSE: CMI) (+142%), American International Group Inc. (NYSE: AIG) (+92%), Qwest Communications International Inc. (NYSE: Q) (+91%), Huntington Bancshares Inc. (Nasdaq: HBAN) (+89%), Zions Bancorporation (Nasdaq: ZION) (+85%).

-- Developed markets outside the United States were up 12%, and emerging markets were up 16%. The best performing emerging markets included Peru, Thailand, Colombia, and Chile. And the biggest disappointments were Japan and Brazil.

-- Commodities were big, with gold futures up 30%, copper up 32%, silver up 82%, cotton up 96%, coffee up 65%, and crude oil up 15%. Disappointments were natural gas, down 21%, and chocolate, down 11%. Keep in mind, though, that shares of the gold, silver and copper miners tend to perform better than the physical commodity due to their advantage of operating leverage as prices rise.

-- The U.S. unemployment rate remained stuck on high at 9.8%, after closing 2009 at 10%.

The main good news in the past week was the jobless claims number, which was a bit shocking for those who believe the labor market stands no chance of improving. Jobless claims came in at 388,000, compared to the consensus 425,000. Let's hope that claims stay under the 400,000 level, as that will be a strong indication that companies are finally hiring again, as they should in the third year of a recovery. The big payrolls report will come on Jan 7.

Housing also provided a rare smile, as the U.S. Pending Home Sales Index rose 3.5%, compared to consensus expectations of a 1.5% loss. This index reflects contracts, with closings coming one to two months later. Due to its lag, the figure was taken to mean that December and January could be good months for home sales.

2011 Prognostications Now comes 2011. I'm not much of one for long-range forecasts, but just to be part of the predicatariat, here are a few thoughts:

-- Over the next year, I expect the faster growing medium-sized companies -- the ones in the iShares S&P Midcap 400 Growth Fund (NYSE: IJK) slice of the market capitalization and valuation pie -- to continue to dominate in the portfolios of the more successful fund managers. Smaller companies might outperform on a raw return basis, but with the sort of higher volatility that drives people crazy.

-- If the year is marked by modest growth then energy and materials stocks should find favor. Energy stocks of all stripes would work, running from oil and gas wildcatters to energy services providers and coal miners.

-- Another successful group should be companies focused on the mobile Internet, such as F5Networks (Nasdaq: FFIV), Google Inc.(Nasdaq: GOOG), Apple Inc. (Nasdaq: AAPL), Amazon.com Inc. (Nasdaq: AMZN), Cavium Networks Inc. (Nasdaq: CAVM), as well as virtualization companies like VMware Inc. (Nasdaq: VMW), Citrix Systems Inc. (Nasdaq: CTXS) and Red Hat Inc. (NYSE: RHT); security companies like Fortinet Inc. (Nasdaq: FTNT); and storage companies like EMC Corp. (NYSE: EMC) and NetApp Inc. (Nasdaq: NTAP).

This has been a theme of mine for three years, and I really think it is still accelerating, not maturing. Could Google finally break out again and show everyone it knows how to commercialize its amazing business reach? Sure, why not. Could Google reach $1,000 in 2011? It could.

-- Online shopping should continue to grow, far outpacing terrestrial chain stores. This has a worrisome implication for malls. Here's an interesting thought that I picked up from an interview on Bloomberg TV this week: If online shopping continues at its current rate of growth, then the country has way too many physical stores. We got a whiff of this with the big earnings miss at Best Buy Co. Inc.(NYSE: BBY) two weeks ago, and Sears Holdings Corp. (NYSE: SHLD), the largest department store chain, is in the dumps. Meanwhile, Charming Shoppes Inc. (Nasdaq: CHRS) said it would close 100 stores, Loehmann's filed for bankruptcy again, as did A&P supermarket, and Wal-Mart Stores Inc. (NYSE: WMT), which makes up 10% of total U.S. retail, has said it plans to build smaller stores. This could be big trouble for commercial REITs.

-- Banks are very cheap, and would not need much of a catalyst to get going. They really need a recovery in housing to strengthen materially, and housing needs an improvement in the labor market. It all goes hand in hand. Don't expect it to be obvious, though. Investors will sniff out a labor, housing and banking recovery before it hits the headlines, so if you want to play this group you will need to be willing to buy rising banks even if it does not appear to make logical sense at the time. One big cap to watch would be Bank of America Corp. (NYSE: BAC), which could advance back toward $20 a share.

-- An improving economy always features stunning comebacks from companies that went bankrupt, shed their debts, and have come back better than ever, with a chip on their shoulders. A few to watch in this regard are forestry products producer AbitiBowater Inc. (NYSE: ABH), and chemical makers LyonellBasell Industries NV (NYSE: LYB) and Chemtura Corp. (PINK: CHMT).

-- Brazil suffered through a relatively weak 2010, but some new political and economic developments bode well for the future. We avoided it all year, but we might well find it in our RiskTaker ETF list before too long now that it's had a nice long rest. Other surprise candidates for our ETF list would be some of the smaller developed nations of Asia, such as Taiwan and South Korea.

-- Dominating political headlines will be the way the Obama Administration works with a Congress that is hellbent to curb spending, or so they say. Investors will panic when it looks like Congress is going to pull the plug on spending, and relax when the U.S. Federal Reserve and White House ultimately win a technical knockout on points.

Bank On It
Financial stocks were the exciting leaders of the past week, led by beaten down insurers like AIG and capital market powerhouses like JP Morgan Chase & Co. (NYSE: JPM), with all flags waving. This divergence in favor of financials is important. If the bulls can resurrect the big banks at the same time that they have resurrected big oil companies like ExxonMobil Corp. (NYSE: XOM) they can really get something rolling in the new year and stick bears right in the eye.

Remember: The big banks like JPM tend to lead the market up and they tend to lead the market down. Look at the chart above. You can see that JPM started falling in early April well before the rest of the market tipped over, and its decline was unrelenting to the July bottom. Then it had a radically sharp rebound to an August high, leading the market again. Then it declined until bottoming in a five-day consolidation in the last week, which in turn led to a sharp advance in September.

JPM next topped with the market in early November and plunged into Thanksgiving week before stabilizing with another one of its patented five-day stabilizations. Then it ran higher into December ahead of the broad market.

And now what is JPM signaling? Well it broke out of an eight-month consolidation three sessions ago, and has been acting much stronger than the rest of the market, with a blustery 1.4% advance during an otherwise lackluster session on Monday. Volume was low, as it was for the whole market, but we'll give it a pass on that due to the storm.

The point is that JPM has been the pointer dog, or the LRRP, as soldiers in Vietnam used to say -- on "long range reconnaissance patrol". If the past pattern is to be believed, it is scouting out the enemy territory and as it moves forward, it shows whether the coast is clear. My expectation is that if JPM keeps up this pace, it is clearing the road for the rest of the market to follow.

There is no real resistance until $46, which is a staggering 7.8% higher than the current quote. If the rest of the S&P 500 were to advance the same amount, that would be the 1,335 level of the S&P 500. That would put the benchmark index back at its June 2008 level, which would be awesome and shock a lot of people. Don't forget the S&P Midcap 400 is already back to its October 2007 high and the Nasdaq is back to its December 2007 high.

It wasn't just the big banks clearing the path higher this week, either. Regional banks also rose, as did asset managers and brokerages such as Franklin Resources Inc. (NYSE: BEN), Charles Schwab Corp. (Nasdaq: SCHW) and Goldman Sachs Group Inc. (NYSE: GS). This is beginning to look like an important upside divergence during a time of stress or flatness. I should give that a fancy acronym. When one group rises at a time when many other groups are malingering, it is typically quite bullish for the outperforming group over a longer period of time.

The Week Ahead
[Editor's Note: Money Morning Contributing Writer Jon D. Markman has a unique view of both the world economy and the global financial markets. With uncertainty the watchword and volatility the norm in today's markets, low-risk/high-profit investments will be tougher than ever to find.

It will take a seasoned guide to uncover those opportunities.

Markman is that guide.

In the face of what's been the toughest market for investors since the Great Depression, it's time to sweep away the uncertainty and eradicate the worry. That's why investors subscribe to Markman's Strategic Advantage newsletter every week: He can see opportunity when other investors are blinded by worry.

Subscribe to Strategic Advantage and hire Markman to be your guide. For more information, please click here.]

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Money Morning: Commodities, Europe's Winter Storm and NIKE Inc. (NYSE: NKE) Hint to 2011 Market Trends