Boeing Drops 2%: Will Earnings Disappoint?

Boeing (BA) sits just 5.1% off its 52-week high. It’s releasing earnings this month Put the two together, and you have a recipe for weakness. Boeing has dropped 1.7% to $113.45 at 11:22 a.m., making it the biggest loser in the Dow Jones Industrial Average.

Bloomberg News

RBC Capital Markets’ Robert Stallard thinks the earnings report could help push Boeing’s shares higher. He writes:

After a strong share price run this year, we think the challenge for Airbus and Boeing is to maintain this momentum. The 3Q results could help, though any upside is likely to come from internal efforts on cash and margins, versus revenues. The strength in large jets is likely to remain in stark contrast with business jets, where we are expecting another weak quarter for demand in small cabin, with a steadier performance in the mid and large cabin segment. The NBAA show during the earnings season could see some interesting new product launches, which have historically helped stimulate demand.

As for Boeing specifically, Stallard explains why the quarter should look good:

We expect another good result from BCA after it delivered 170 aircraft in the quarter, one more than in 2Q13. We could see performance at BCA, not withstanding potential margin dilution from 787 deliveries, partially offset by DoD budget related declines in its defense business. However, the impact of the sequester is likely to remain muted until next year, and the impact will likely be more significantly felt in the defense order book. The focus has increasingly shifted to cash generation and deployment, so progress on that front would be welcome. We could see Boeing firming up or increasing its commitment to returning cash to shareholders via the buy back. Our "core" EPS estimate for 3Q13 has been increased from $1.48 to $1.55 on higher BCA deliveries.

Of course, the government shutdown and debt-ceiling showdown have impacted Boeing’s stock, as well as other defense contractors. Stallard explains how who could be affected:

With the debt ceiling looming next week, we could see investor nerves rattling as the deadline approaches – and some of this appears to have shaken sentiment in defense. This is likely to contrast with 3Q earnings, which we expect to be as resilient as those seen in the first two quarters of the year for late cycle contractors. By contrast, services are likely to have again been weak, and we are not getting our hopes up over bookings and any preliminary thoughts on 2014, especially for shorter cycle, less visible areas.

Stallard sees KEYW Holding (KEYW) and Textron (TXT) potentially missing earnings, while Honeywell (HON),  Alliant Techsystems (ATK), Lockheed Martin (LMT), Raytheon (RTN) and Wesco Aircraft (WAIR) could beat.

Housing Market's Unclear Improvement Really Affects Wood Makers

Mixed housing data, among rising interest rates are already hurting shares of companies related to the housing market. What's more, higher vitality and uncertainty related to the geopolitical risk in Syria affect the global financial markets. Let's analyze three stocks of companies directly related to the housing market through wood building products they make.

Highly Dependent on General Market Conditions And Particular Customers

Universal Forest Products Inc. (UFPI) is a holding company that provides capital, management and administrative resources to subsidiaries that design, manufacture and market wood and wood-alternative products. It currently consumes about 7 percent of North American softwood lumber production per year.

On the bright side, an increase in home improvement spending and national housing starts is likely to benefit the company. Management is focusing its energy on business expansion and new product initiatives, to gain market share. Last November they purchased Nepa Pallet assets that strengthened the company's position in the Northwest region of the US. What's more, in January they have also acquired Custom Caseworks that enabled growth of industrial business through new product offerings.

On the risky side, growth could be impaired by a high volatility in the cost of lumber products from primary producers. The price of lumber products depends not only on supply and demand in the market, but also on external factors like government and environmental regulations, weather conditions, economic conditions and natural disasters. An increase in lumber costs will increase cost of inventory and eat in margins on fixed priced lumber products.

Hedge fund gurus like Joel Greenblatt and Arnold Van Den Berg sold out the stock of their portfolios. Current trailing twelve month earnings multiple is 35.5 times, compared with 33.3 times for the peer group. Thus, a Neutral recommendation on the stock anticipates that the company will perform in line with th! e broader market.

Increase Demand for Pulpwood and Biomass for Power Generation and Biofuel Production.

Plum Creek Timber Co Inc. (PCL) owns 6.4 million acres of timberland across 19 states and manages timberland and manufactures wood products. The company is structured as a REIT (Real Estate Investment Trust), and so, it is not required to pay federal income taxes on earnings generated by timber harvest activities. Other earnings, like those from its wood products and real estate segments are subject to federal income tax.

Operating in a commodity market, Plum Creek lacks a low-cost production position and so struggles to exert some pricing power. Therefore, the company tries to diversify its natural resource businesses and also looks for opportunities for oil and natural gas production, rock and mineral extraction, as well as communication and transportation.

Among Plum Creek's primary risks we can mention a prolonged weakness in residential construction, the seasonality of the forest products industry and a failure to maintain its REIT qualification. In addition, an adverse environmental legislation, poor weather conditions and natural disasters. Furthermore, wood products face increasing competition from a variety of substitute products such as non-wood and engineering wood products. Consequently, the company is under severe stress to maintain profitability. Counterweighing the demand lost from paper consumption, is an increase demand for pulpwood and biomass for power generation and biofuel production.

Plum Creek has a trailing twelve month ROE of 19.8%, compared with the industry average of 15.8%, which implies that the company reinvests its earnings more efficiently than its industry peers. Hedge fund gurus like Pioneer Investments and Steven Cohen have recently added this stock to their portfolios. Thus, I would advise investors to Hold on Plum Creek shares at the time.

Most Productive and Valuable Timberland Among the Major Timber REITs

Weyerhaeuser Co ! (WY) oper! ates four primary business segments: timberlands (owns 6.6 million acres), wood products, cellulose fibers, and real estate. Like Plum Creek, Weyerhaeuser is also structured as a REIT and is not required to pay federal income taxes on earnings generated by timber harvest activities. Weyerhaeuser exports forest products to Europe and Asia. A strong recovery in some Asian nations, such as Japan, China and Korea, will boost its export businesses. However, this highly exposes the company to foreign exchange risks.

Basically, logs are a commodity, and so Weyerhaeuser faces intense competition. Building a moat in a commodity business typically requires a low-cost production position as the prime basis for competition is selling price. On a per-acre basis, Weyerhaeuser's timberlands are exceptionally productive and profitable. With an average EBITDA (Earnings Before Interest, Tax, Depreciations and Amortization) of $78 per acre from 2004 through 2012, much higher than peers Plum Creek ($36 per acre) and Rayonier ($54 per acre). In addition, Weyerhaeuser has a large Pacific Coast position that has the most productive tree-growing region in the country.

Weyerhaeuser's sustainable improvement in income will depend on a comprehensive recovery in housing starts. Currently trading at 26.1 times its trailing twelve month earnings multiple, compared with 24.4 times for the peer group. Hedge fund gurus like Third Avenue Management, Steven Cohen and Paul Tudor Jones added this stock to their portfolios, suggesting a Neutral recommendation and anticipating the company to perform in line with the broader market.

In Brief

Although increasing interest rates will keep on making home equity loans more expensive, homeowners continue to flock to do-it-yourself centers to buy up lumber and other goods. All three stocks are capitalizing on an improving, yet not clear, forecast of the housing market to the benefit of their shareholders. Returns are expected to be close to their market benchmark, so th! ese compa! nies do not look so alluring at the time.

Disclosure: Damian Illia holds no position in any stocks mentioned.

Related links:Third Avenue Management

Tesla Motors Inc (TSLA): Can Tesla Shares Recover From The Model S Burns?

Bears are haunting shares of Tesla Motors, Inc. (NASDAQ:TSLA) since the report of fire accident that damaged a Model S, triggering rumors that the vehicle's battery caused the incident. However, the company said that the particular Model S collided with a large metallic object in the middle of the road and caused significant damage to the vehicle.

It is unknown what actually happened, but this was enough to create panic selling among investors, dragging down the stock more than 6 percent and handing its steepest decline since mid-July 2013 when it fell 14 percent.

The accident (this is the first fire in a Tesla vehicle) comes after the National Highway Traffic Safety Administration (NHTSA) awarded Tesla's Model S the highest overall vehicle safety score ever, earning a new combined record of 5.4 stars.

The Model S, which is on-track to hit sales of over 20,000 units this year, is the best-selling U.S. electric car despite high starting price of $70,000 before a federal tax credit. The company sold 5,150 cars in the second quarter and expects to sell 21,000 cars this year.

The incident did some damage to Tesla's reputation of producing safe cars and doubts raised over its 85 kilowatt-hour lithium-ion battery, which is underneath the passenger compartment floor. The battery fire reminds investors of a similar issue with Boeing's new 787 plane.

Boeing Co. (NYSE:BA) still has not entirely come out of the fire risk in its ambitious plane that was grounded earlier this year as its lithium-ion batteries overheated or caught fire. Flights resumed four months later after a revamped battery system was installed. Last week, another Dreamliner was grounded after only a few weeks in service.

Even GM's Chevrolet Volt plug-in hybrid cars faced battery fires two years ago after crash-testing, but the regulators determined that the Volt was no  riskier than vehicles with conventional gasoline engines.

However, the incident dampened the Volt's reputation and reduced sales, whi! ch posted a recovery only recently. GM sold about 17,000 Volts through September.

Although Tesla has not completed a full analysis of the incident, they do believe that the battery pack was damaged in some way and was the cause of the fire. The company is expected to release a series of statements over the next few days, detailing their analysis and findings.

On the flip side, the negative news flow and investor concern over the impact to demand of this incident will put negative pressure on the stock in the near-term.

"These are meaningful concerns, as this is a new technology and one in which sensitivity to safety risk is very high," Deutsche Bank analyst Rod Lache wrote in a note to clients.

The fire happened after 83 million miles of Model S driving, 12 significant accidents, and extreme crash testing by U.S. Safety regulators. Although more details are needed on the exact reasons behind this incident, and it could certainly be best to eliminate the chance of a fire completely, Tesla believes that the frequency in which an accident propagates a fire is similar in an internal combustion vehicle.

Tesla's ability to monitor the vehicle systems remotely will enable a detailed report on the cause of the incident.

"If this had been a spontaneous incident with no catalyst (i.e. in someone's garage), the impact would be significantly worse, Given significant Roadster and Model S experience (6 years, tens of millions of miles driven) without a fire, we have confidence that this is an isolated incident that could happen to any vehicle," Lache said.

Like Lache, we hope  that this will be a one-off event for Tesla, and there should not be any repetitive incidents as is the case with Boeing.

Moreover, shares of Tesla had rallied 517 percent in the last one year limiting further upside unless there are some real catalysts to push the stock up. R.W. Baird analyst Ben Kallo, who downgraded the stock to "Neutral" from "Outperform," said that the company has "significa! nt milest! ones" to overcome in the next year and a half.

As a result, the stock could be pressured in the near-term unless Tesla gives a detailed explanation of the incident to the satisfaction of the Street.

Can Recent Positive News Offer HP a Boost?

With shares of Hewlett-Packard (NYSE:HPQ) trading around $22, is HPQ an OUTPERFORM, WAIT AND SEE, or STAY AWAY? Let's analyze the stock with the relevant sections of our CHEAT SHEET investing framework:

T = Trends for a Stock’s Movement

Hewlett-Packard provides products, technologies, software, solutions, and services to individual consumers, small and medium businesses, and large enterprises worldwide. The company offers commercial notebooks and desktops, consumer notebooks, desktops, software, and services for the commercial and consumer markets. The services segment provides consulting, outsourcing, and technology services to infrastructure, applications, and business process domains. The diverse technological products and services offered by Hewlett-Packard make it a leading provider that sees increased demand through global expansion.

Wells Fargo (NYSE:WFC) believes Hewlett-Packard's outlook is positive, noting that HP provided a full-year 2014 earnings per share guidance range with a higher-than-expected midpoint. Wells Fargo believes Hewlett-Packard's turnaround is progressing steadily, while its profits should grow following the 2014 fiscal year; the firm keeps an Outperform rating on the stock.

T = Technicals on the Stock Chart Are Mixed

Hewlett-Packard stock performed well over the last several months. The stock has recently pulled-back from highs for the year and it may still need time to consolidate. Analyzing the price trend and its strength can be done using key simple moving averages. What are the key moving averages? The 50-day (pink), 100-day (blue), and 200-day (yellow) simple moving averages. As seen in the daily price chart below, Hewlett-Packard is trading between its key averages, which signal neutral price action in the near-term.

(Source: Thinkorswim)

Taking a look at the implied volatility (red) and implied volatility skew levels of Hewlett-Packard options may help determine if investors are bullish, neutral, or bearish.

	Implied Volatility (IV)	30-Day IV Percentile	90-Day IV Percentile
Hewlett-Packard Options	38.28%	73%	71%

What does this mean? This means that investors or traders are buying a very significant amount of call and put options contracts as compared to the last 30 and 90 trading days.

	Put IV Skew	Call IV Skew
October Options	Steep	Average
November Options	Steep	Average

As of today, there is an average demand from call buyers or sellers and high demand by put buyers or low demand by put sellers, all neutral to bearish over the next two months. To summarize, investors are buying a very significant amount of call and put option contracts and are leaning neutral to bearish over the next two months.

On the next page, let’s take a look at the earnings and revenue growth rates and the conclusion.

E = Earnings Are Decreasing Quarter-Over-Quarter

Rising stock prices are often strongly correlated with rising earnings and revenue growth rates. Also, the last four quarterly earnings announcement reactions help gauge investor sentiment on Hewlett-Packard’s stock. What do the last four quarterly earnings and revenue growth (Y-O-Y) figures for Hewlett-Packard look like and more importantly, how did the markets like these numbers?

	2013 Q2	2013 Q1	2012 Q4	2012 Q3
Earnings Growth (Y-O-Y)	-14.00%	-31.25%	-13.70%	-3060.00%
Revenue Growth (Y-O-Y)	-8.23%	-10.14%	-5.58%	-6.73%
Earnings Reaction	-12.45%	17.09%	12.28%	-11.95%

Hewlett-Packard has seen decreasing earnings and revenue figures over the last four quarters. From these numbers, the markets have had mixed feelings about Hewlett-Packard’s recent earnings announcements.

P = Excellent Relative Performance Versus Peers and Sector

How has Hewlett-Packard stock done relative to its peers, Dell (NASDAQ:DELL), IBM (NYSE:IBM), Apple (NASDAQ:AAPL), and sector?

	Hewlett-Packard	Dell	IBM	Apple	Sector
Year-to-Date Return	55.37%	36.44%	-4.30%	-7.90%	19.90%

Hewlett-Packard has been a relative performance leader, year-to-date.

Conclusion

Hewlett-Packard is a software an technology bellwether that provides essential products and services to consumers and companies worldwide. Recent positive news from Wells Fargo in regards to Hewlett-Packard has investors upbeat about the company. The stock has been moving higher in recent months but is now consolidating after a pullback. Over the last four quarters, earnings and revenues have been declining, which has produced mixed feelings among investors. Relative to its peers and sector, Hewlett-Packard has been a year-to-date performance leader. Look for Hewlett-Packard to OUTPERFORM.

Kimberly-Clark Co. (KMB) Dividend Stock Analysis

Linked here is a detailed quantitative analysis of Kimberly-Clark Co. (KMB). Below are some highlights from the above linked analysis:

Company Description: Kimberly Clark Corp. is a global consumer products company's producing tissue, personal care and health care products. Its brands include Huggies, Pull-Ups, Kotex, Depend, Kleenex and Scott tissue.

Fair Value: In calculating fair value, I consider the NPV MMA Differential Fair Value along with these four calculations of fair value (see page 2 of the linked PDF for a detailed description):

1. Avg. High Yield Price
2. 20-Year DCF Price
3. Avg. P/E Price
4. Graham Number

KMB is trading at a premium to all four valuations above. The stock is trading at a 40.8% premium to its calculated fair value of $67.96. KMB did not earn any Stars in this section.

Dividend Analytical Data: In this section there are three possible Stars and three key metrics (see page 2 of the linked PDF for a detailed description):

1. Free Cash Flow Payout
2. Debt To Total Capital
3. Key Metrics
4. Dividend Growth Rate
5. Years of Div. Growth
6. Rolling 4-yr Div. > 15%

KMB earned one Star in this section for 3.) above. KMB earned a Star for having an acceptable score in at least two of the four Key Metrics measured. The company has paid a cash dividend to shareholders every year since 1935 and has increased its dividend payments for 41 consecutive years.

Dividend Income vs. MMA: Why would you assume the equity risk and invest in a dividend stock if you could earn a better return in a much less risky money market account (MMA) or Treasury bond? This section compares the earning ability of this stock with a high yield MMA. Two items are considered in this section (see page 2 of the linked PDF for a detailed description):

1. NPV MMA Diff.
2. Years to > MMA

KMB earned a Star in this section for its NPV MMA Diff. of the $1,188. This amount is in excess of the $500 target I look for in a stock that ha! s increased dividends as long as KMB has. The stock's current yield of 3.39% exceeds the 3.22% estimated 20-year average MMA rate.

Memberships and Peers: KMB is a member of the S&P 500, a Dividend Aristocrat, a member of the Broad Dividend Achievers™ Index and a Dividend Champion. The company's peer group includes: The company's peer group includes: Procter & Gamble Co. (PG) with a 3.1% yield, Colgate-Palmolive Co. (CL) with a 2.3% yield, and Clorox Corporation (CLX) with a 3.4% yield.

Conclusion: KMB did not earn any Stars in the Fair Value section, earned one Star in the Dividend Analytical Data section and earned one Star in the Dividend Income vs. MMA section for a total of two Stars. This quantitatively ranks KMB as a 2-Star Weak stock.

Using my D4L-PreScreen.xls model, I determined the share price would need to increase to $129.21 before KMB's NPV MMA Differential decreased to the $500 minimum that I look for in a stock with 41 years of consecutive dividend increases. At that price the stock would yield 2.2%.

Resetting the D4L-PreScreen.xls model and solving for the dividend growth rate needed to generate the target $500 NPV MMA Differential, the calculated rate is 4.1%. This dividend growth rate is below the 7.1% used in this analysis, thus providing a margin of safety. KMB has a risk rating of 1.75 which classifies it as a Medium risk stock.

KMB enjoys stable demand for its household and personal care products. General economic conditions in developed markets has not improved significantly over the past several years due to high levels of unemployment, uncertainty surrounding austerity measures and tax rates. In the future, sales growth should be helped by expansion in non-traditional categories and emerging markets.

The company's financials have slipped some some since it was last reviewed. At 61% (up from 58%) KMB's Free Cash Flow Payout is slightly above my acceptable level of 60%. Also, Debt to Total Capital at 60% (up from 55%) is well above the 45% m! aximum I ! look for. In addition, KMB is trading at a 41% premium to my calculated fair value of $67.96, so for now I will not be adding to my position.

Disclaimer: Material presented here is for informational purposes only. The above quantitative stock analysis, including the Star rating, is mechanically calculated and is based on historical information. The analysis assumes the stock will perform in the future as it has in the past. This is generally never true. Before buying or selling any stock you should do your own research and reach your own conclusion. See my Disclaimer for more information.

Full Disclosure: At the time of this writing, I was long in KMB (2.0% of my Dividend Growth Portfolio). See a list of all my dividend growth holdings here.

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Hot Gold Companies To Own For 2014

Just as we examine companies each week that may be rising past their fair value, we can also find companies potentially trading at bargain prices. While many investors would rather have nothing to do with companies tipping the scales at 52-week lows, I think it makes a lot of sense to determine whether the market has overreacted to the downside, just as we often do when the market reacts to the upside.

Here's a look at three fallen angels trading near their 52-week lows that could be worth buying.

One lustrous investment
If you hadn't guessed by now, I'm a big fan of gold and gold miners. There are multiple factors at the moment that I feel could usher in another rally in gold prices. These include weak global economies, which make gold an attractive safe-haven investment; low domestic interest rates, which make gold attractive relative to low-yielding CDs and bonds; copious U.S. money printing, which could lead to inflation; and a contrarian mentality to buy when others are fearful. That's why I think investors would be foolish to pass up on cost-efficiency mining expert Goldcorp (NYSE: GG  ) at its current levels.

Hot Gold Companies To Own For 2014: Iamgold Corporation(IAG)

IAMGOLD Corporation, together with its subsidiaries, engages in the exploration, development, and production of mineral resource properties worldwide. It primarily explores for gold, silver, zinc, copper, niobium, diamonds, and other metals. The company holds interests in eight operating gold mines, a niobium producer, a diamond royalty, and exploration and development projects located in Africa and the Americas. Its advanced exploration and development projects include the Westwood project in Canada; and the Quimsacocha project, which consists of 3 mining concessions covering an aggregate area of approximately 8,030 hectares in Ecuador. The company was formerly known as IAMGOLD International African Mining Gold Corporation and changed its name to IAMGOLD Corporation in June 1997. IAMGOLD Corporation was founded in 1990 and is based in Toronto, Canada.

Advisors' Opinion:

• [By Michael Blair]

  IAMGOLD (IAG) is one of my favorite gold stocks principally because it is a relatively high cost producer with long lived mines. That paradox arises since high cost producers have the most volatility when gold prices change. If they are operating close to break even, a relatively small rise in gold prices makes them quite profitable. Conversely, when prices fall they bleed all over the floor.

• [By Rich Duprey]

  IAMGOLD (NYSE: IAG  ) still has an interest in the�Quimsacocha gold mine it sold to INV Metals last year, which has an indicated mineral resource estimated at 3.3 million ounces gold. China's�Ecuacorriente is also pursing a major copper project at Panantza-San Carlos, and International Minerals will seek out gold and silver at Rio Blanco.

• [By Matt DiLallo]

  IAMGOLD (NYSE: IAG  )
  Canadian gold miner IAMGOLD pays a semiannual dividend of $0.125 per share, which equates to a current yield of about 4.45%. As the company's name would imply, its revenues are generated by its gold-mining operations. Currently, the company has six gold mines across three continents as well as several potential projects in the works. The company's current priorities given the slumping gold market include cash preservation, cost reduction, and disciplined capital allocation. While the dividend looks safe for now, given the company's stated policy of not jeopardizing is strong balance sheet, it could be reduced if gold prices fall further. �

• [By Eric Volkman]

  IAMGOLD (NYSE: IAG  ) might specialize in a precious metal, but it's continuing to pay its dividend in hard currency. The company has declared its latest semi-annual distribution at $0.125 per share of its common stock.

Hot Gold Companies To Own For 2014: NEW GOLD INC.(NGD)

New Gold Inc. engages in the acquisition, exploration, extraction, processing, and reclamation of mineral properties. The company primarily explore for gold, silver, and copper deposits. Its operating properties include the Mesquite gold mine in the United States; the Cerro San Pedro gold-silver mine in Mexico; and the Peak gold-copper mine in Australia. The company also has development projects, including the New Afton gold, silver, and copper project in Canada; and a 30% interest in the El Morro copper-gold project in Chile. The company was formerly known as DRC Resources Corporation and changed its name to New Gold Inc. in June 2005. New Gold Inc. was founded in 1980 and is headquartered in Vancouver, Canada.

Advisors' Opinion:

• [By Ben Levisohn]

  Even bad news has failed to dent the rise in gold stocks today. NewGold (NGD), for instance, has gained 1.8% to $7.49 despite the fact that the wall of one of its mines collapsed. The Wall Street Journal has the details:

• [By Ben Levisohn]

  One group of stocks not feeling the optimism today: Gold miners. With fewer concerns that a U.S. attack on Syria will be disruptive and more evidence that tapering will begin this month, the price of the precious metal has dropped 1.6% to $1,388.90 an ounce–and gold stocks are falling with it. New Gold (NGD), for one, has dropped 3% to $6.55, while Barrick Gold (ABX) has fallen 1.3% to $19.25.

• [By Ben Levisohn]

  Bridges favorite stocks include Goldcorp, Newmont, Eldorado Gold (EGO) and New Gold (NGD).

  Note, however, that these recommendations are all qualified in one way or another. Investors should keep that in mind before going all in on the gold miners.

Top 10 High Tech Stocks To Invest In Right Now: Claude Resources Inc.(CGR)

Claude Resources Inc. engages in the acquisition, exploration, and development of precious metal properties, as well as production and marketing of minerals in Canada. It primarily explores for gold in northern Saskatchewan and northwestern Ontario. The company holds interests in the Seabee gold mine located at Laonil Lake, northern Saskatchewan; and the Madsen property that consists of 6 contiguous claim blocks totaling approximately 10,000 acres, located in the Red Lake Mining District of northwestern Ontario. It also holds interest in the Amisk Gold project, which covers an area of 13,800 hectares in the province of Saskatchewan. The company was founded in 1980 and is based in Saskatoon, Canada.

Hot Gold Companies To Own For 2014: Agnico-Eagle Mines Limited(AEM)

Agnico-Eagle Mines Limited, through its subsidiaries, engages in the exploration, development, and production of mineral properties in Canada, Finland, and Mexico. The company primarily explores for gold, as well as silver, copper, zinc, and lead. Its flagship property includes the LaRonde mine located in the southern portion of the Abitibi volcanic belt, Canada. The company was founded in 1953 and is based in Toronto, Canada.

Advisors' Opinion:

• [By Holly LaFon]

  He increased his holdings in gold companies in the fourth quarter accordingly. Gold stocks he found attractive in the fourth quarter are: Novagold Resources (NG), Randgold Resources (GOLD), Iamgold Corp. (IAG), Barrick Gold Corp. (ABX), Agnico Eagle (AEM) and International Tower Hill (THM).

• [By Hebba Investments]

  Even with rising Q2 costs, GG still has lower true all-in costs than many of its larger competitors' Q1FY13 costs. Compared to Q1FY13 numbers of competitors such as Yamana Gold (AUY) (costs just over $1300), Kinross Gold (KGC) (costs above $1350), Silvercrest Mines (SVLC) (costs below $1100), Newmont Gold (NEM) (costs around $1300) Agnico-Eagle (AEM) (costs around $1400) and Barrick Gold (ABX) (costs around $1200).

• [By Dan Caplinger]

  In the longer term, IAMGOLD could potential challenges from higher taxes on some of its holdings. The Canadian province of Quebec is considering changing the current 16% profit tax either to what amounts to a gross revenue tax or to a more progressive profit tax with higher rates on high-margin mining operations. Under current conditions, those taxes might not have much effect either on IAMGOLD or rivals Agnico-Eagle (NYSE: AEM  ) and Goldcorp (NYSE: GG  ) , both of which also have projects in the province, but it's hard to predict how a changes might affect future results if they take effect.

Hot Gold Companies To Own For 2014: Golden Star Resources Ltd(GSS)

Golden Star Resources Ltd., a gold mining and exploration company, through its subsidiaries, engages in the acquisition, exploration, development, and production of gold properties. It owns and operates the Bogoso/Prestea gold mining and processing operation that covers approximately 40 kilometers of strike along the southwest-trending Ashanti gold district in western Ghana; and the Wassa open-pit gold mine located to the east of Bogoso/Prestea in southwest Ghana. The company also has an 81% interest in the Prestea underground gold mine located in Ghana. In addition, it holds interests in various gold exploration projects in Ghana, Sierra Leone, Burkina Faso, Niger, and Cote d?Ivoire, as well as holds and manages exploration properties in Brazil in South America. The company was founded in 1984 and is based in Littleton, Colorado.

Hot Gold Companies To Own For 2014: Newmont Mining Corporation(Holding Company)

Newmont Mining Corporation, together with its subsidiaries, engages in the acquisition, exploration, and production of gold and copper properties. The company?s assets or operations are located in the United States, Australia, Peru, Indonesia, Ghana, Canada, New Zealand, and Mexico. As of December 31, 2009, it had proven and probable gold reserves of approximately 93.5 million equity ounces and an aggregate land position of approximately 27,500 square miles. The company was founded in 1916 and is headquartered in Greenwood Village, Colorado.

Hot Gold Companies To Own For 2014: Thompson Creek Metals Company Inc.(TC)

Thompson Creek Metals Company Inc., through its subsidiaries, engages in mining, milling, processing, and marketing molybdenum products in the United States and Canada. The company?s principal properties include the Thompson Creek Mine and mill in Idaho; a metallurgical roasting facility in Langeloth, Pennsylvania; and a joint venture interest in the Endako Mine, mill, and roasting facility in British Columbia. It also holds interests in development projects comprising the Davidson molybdenum property and the Berg copper-molybdenum-silver property located in northern British Columbia; the Howard?s Pass property, a lead and zinc project situated in the Yukon territory-northwest territories border; and the Maze Lake property, a gold project located in the Kivalliq district of Nunavut. The company produces molybdenum products, primarily molybdic oxide and ferromolybdenum, as well as soluble technical oxide, pure molybdenum tri-oxide, and high purity molybdenum disulfide. As o f December 31, 2010, its consolidated recoverable proven and probable ore reserves totaled 462.2 million pounds of contained molybdenum in the Thompson Creek Mine and the Endako Mine. The company was formerly known as Blue Pearl Mining Ltd. and changed its name to Thompson Creek Metals Company Inc. in May 2007. Thompson Creek Metals Company Inc. is based in Denver, Colorado.

Advisors' Opinion:

• [By Jon C. Ogg]

  Thompson Creek Metals Co. Inc. (NYSE: TC) was at 54% discount to its book value of $8.30 per share at the time, and the stock price of $3.90 is up from $3.03 Deutsche Bank’s team nailed upside of more than 28% here. Its price target was $4 at the time versus a consensus target of $4.50 at the time. The 52-week range here is $2.42 to $4.55, but we would point out that the consensus price target is $3.93.

• [By Selena Maranjian]

  The biggest new holdings are Chesapeake Energy�puts, and shares of Discovery Communications. Other new holdings of interest include Halcon Resources (NYSE: HK  ) , and Thompson Creek Metals (NYSE: TC  ) . Oil and gas company Halcon, operating in the promising Bakken region, as well as Texas's productive Eagle Ford shale region, among others, is expected to grow by 30% annually over the coming years. It recently reported 2012 net daily production 128% higher than year-ago levels, and proven reserves up 417%. Halcon was recently one of my colleague Joel South's top two energy holdings, and analysts at Stifel recently upped its rating�from Hold to Buy.

• [By Jim Jubak]

  The stock market liked what it heard Wednesday, August 7, from Thompson Creek Metals (TC) after the close in New York. Second quarter adjusted net earnings of 8 cents a share crushed the Wall Street consensus of a penny a share. Revenue climbed 3.8% to $117.8 million versus expectations for revenue of just $1.3.8 million. The company also said that its new Mt. Milligan mine is on schedule with a start-up for the concentrator expected this month, with first ore-feed by mid-August. The company said it expects commercial production to begin in the fourth quarter of 2013, with production ramping to full capacity over the next twelve months.

Hot Gold Companies To Own For 2014: First Majestic Silver Corp.(AG)

First Majestic Silver Corp. engages in the production, development, exploration, and acquisition of mineral properties with a focus on silver in Mexico. The company owns interests in La Encantada Silver Mine comprising 4,076 hectares of mining rights and 1,343 hectares of surface land located in Coahuila; La Parrilla Silver Mine consisting of mining concessions covering an area of 69,867 hectares; and San Martin Silver Mine comprising approximately 7,841 hectares of mineral rights and approximately 1,300 hectares of surface land rights located in Jalisco. It also holds interests in Del Toro Silver Mine consisting of 393 contiguous hectares of mining claims and an additional 129 hectares of surface rights located in Zacatecas; Real de Catorce Silver Project comprising 22 mining concessions covering 6,327 hectares located in San Luis Potosi state; and Jalisco Group of Properties consisting of mining claims totalling 5,240 hectares located in Jalisco. The company was founded in 1979 and is headquartered in Vancouver, Canada.

Advisors' Opinion:

• [By Doug Ehrman]

  In terms of individual companies, there are several good choices, but these can behave very differently. Pan American Silver (NASDAQ: PAAS  ) , for example, missed revenue expectations and beat earnings expectations in its last earnings release. But despite the beat, EPS shrank considerably from a year earlier on a GAAP basis. The stock has been fairly flat ever since. Conversely, First Majestic (NYSE: AG  ) reported strong revenue growth and a small bump in profits, sending the stock higher since the announcement. First Majestic reported increased cash costs and tightening margins, largely driven by lower silver prices. Each of these companies faces pressure from increasing production costs and environmental concerns.

• [By Doug Ehrman]

  It is no secret that precious metals companies have been taking a pounding for some time now. The SPDR Gold Trust (NYSEMKT: GLD  ) and iShares Silver Trust (NYSEMKT: SLV  ) , the gold and silver ETFs, have been hard hit and operating companies like First Majestic (NYSE: AG  ) and Barrick Gold (NYSE: ABX  ) have been hit even harder. Through all of these struggles, and in some cases because of them, one precious metals company continues to look attractive for the long term: Silver Wheaton (NYSE: SLW  ) .

How To Profit From Resurgent Global Car Sales

Since the summer, we've advocated transitioning out of overvalued defensive sectors such as consumer staples in favor of cyclical groups such as industrials and consumer-discretionary names that stand to benefit from a strengthening U.S. economy.

Although the length of the government shutdown will affect U.S. economic growth in the fourth quarter, recent data points reinforce our confidence in this weighting and macro outlook.

Consider, for example, the recent strength exhibited by the Institute for Supply Management's (ISM) U.S. Manufacturing Purchasing Managers Index (PMI), and indicator has a long track record of signaling major inflection points in the domestic economy.

(Click to enlarge)

Source: Bloomberg

This index is based on a survey of managers at manufacturing companies. Readings greater than 50 indicate an expansion in manufacturing activity; PMI values less than 50 correspond with a contraction. As a rule of thumb, investors should be wary of a recession when the manufacturing PMI drops to 45 or 46.

Although PMI often spikes to between 55 and 60 when the economy springs to life after a recession, readings in this range are rare this far into a recovery. In this light, the September PMI value of 56.2 suggests that the U.S. economy has finally accelerated after muddling through period of subpar growth in 2011 and 2012.

Revving Up for Growth

After suffering through one of the most trying periods in its history, U.S. automakers have emerged financially stronger and stand to benefit from a number of tailwinds in the domestic market.

At the end of 2012, the median age of passenger vehicles still on the road in the U.S. touched a record high of 11.4 years, compared to about 9 years a decade earlier. This trend stems from the 2007-09 financial crisis and Great Rece! ssion, when sales of new cars and trucks collapsed from a pre-crisis range of between 15 and 18 million vehicles to less than 10 million at the height of the downturn.

(Click to enlarge)

Source: Bloomberg

Faced with the worst economic downturn since the 1930s, Americans put off purchasing new cars for a few extra years. Although total miles driven by passenger vehicles has declined by about 15 percent from pre-crisis levels, the average U.S. driver still puts between 12,000 and 14,000 miles on his or her car each year. Most vehicles have a useful life of 150,000 miles to 200,000 miles; the rising age of the U.S. automobile fleet implies that many of these cars will need to be replaced in coming years.

Not only should a strengthening U.S. economy and declining unemployment rate support the ongoing recovery in sales of new cars and trucks, but the rising price of used cars-up more than 20 percent since their 2008 low-should also encourage this trend.

(Click to enlarge)

Source: Bloomberg

The uptick in the price of used cars makes new vehicles more attractive to prospective buyers and limits the extent to which automakers need to discount the latest models to drive sales.

At the same time, a secular shift is under way in the types of vehicles that consumers prefer. Concerns about rising gasoline prices have boosted demand for fuel-efficient compact and midsized cars such as the Ford (F) Fusion, the Nissan (NSANY.OB) Altima and the Honda (HMC) Accord. All three models have sold well this year.

!
(Click to enlarge)

Source: Bloomberg

And although U.S. automobile inventories have ticked up from their 2008-09 low, the supply of new cars on dealers' lots is modest relative to pre-crisis norms. A glut of new cars usually forces dealers to discount aggressively, a trend that crimps automakers' profit margins. This headwind has yet to emerge in the current cycle.

(Click to enlarge)

Source: Bloomberg

Credit availability and affordability have also improved dramatically, which should continue to fuel sales of new cars. Although interest rates have ticked up slightly this year, the cost of financing the purchase of a new vehicle remains near a record low. Favorable lease terms have also attracted buyers; leasing agreements now account for more than one-quarter of all new-automobile sales.

(Click to enlarge)

Source: Bloomberg

Whereas the U.S. media tends to focus exclusively on the domestic automobile market, growing demand for new passenger vehicles in China and other emerging markets represent an important upside driver for carmakers.

Despite slowing economic growth in China, sales of new cars and trucks have remained robust in the world's largest automobile market, growing about 12 percent from a year ago through the first seven months of 2013.

This powerful, secular growth trend appears to have legs. China, for example, averaged 58 passenger vehicles per 1,000 people at the end of 2010, compared to almost 800 cars per 1,000 people in the US.

(Click to enlarg! e)

Source: Bloomberg

Pole Position

The only major U.S. automaker to avoid bankruptcy during the Great Recession, Ford Motor Company boasts the best-positioned product lineup to take advantage of improving automobile sales in the U.S. and long-term demand growth in China and other emerging markets.

Up until a few years ago, the carmaker had faced unwieldy (and increasingly underfunded) pension obligations as the legion of retired workers grew. These other post-employment benefits (OPEB) included generous health care packages for retirees and their spouses that lasted for the remainder of their lives.

The Big Three U.S. automakers-General Motors Company (GM), Ford Motor Company and Chrysler-in 2007 inked a new collective bargaining agreement with United Automobile Workers (UAW), the union that represents industry workers. This contract enabled the carmakers to shift their long-term health care liabilities into Voluntary Employee Beneficiary Associations (VEBA), trusts managed by a board of independent and UAW-appointed members.

Not only did this deal protect retirees' benefits against potential bankruptcy among the Big Three, but the agreement also effectively shifted these unfunded OPEB costs from the automakers' balance sheets.

Subsequent negotiations paved the way for a series of deals that established a two-tiered compensation structure whereby Ford Motor Company's new hires are paid on a lower scale than veteran workers. Second-tier employees start at $15.00 per hour and could earn up to about $20.00 per hour, while the hourly wage of longer-tenured autoworkers tops out at about $28.00 per hour.

Many of the new workers that the carmaker has hired this year to ramp up production of the popular Ford Fusion model are entry-level, second-tier workers that earn a lower hourly wage. In aggregate, tier-two employees account for as much as 20 percent of Ford Motor Company's workforce-a significant cost saver that enables the firm to better compete with f! oreign ca! rmakers.

Ford Motor Company won't need to worry about renegotiating this advantageous contract until the current deal with the UAW expires in 2015.

Although playing hardball with the union has enabled Ford Motor Company to lower its cost structure, our bullish investment thesis reflects a number of other company-specific developments.

For one, the restructuring plan designed and implemented under CEO Alan Mulally has simplified the firm's operations dramatically by reducing excess manufacturing capacity and paring its extensive portfolio of brands.

This so-called One Ford initiative involved the US$2.3 billion sale of Jaguar and Land Rover to Tata Motors (TTM) and the US$1.6 billion divestment of Volvo to Geely Automobile Holdings (GELYF.PK). After selling the majority of its stake in Mazda Motor Corp (MZDAY.PK) and discontinuing Mercury, Ford Motor Company's portfolio consists of its eponymous mass-market brand and the higher-end Lincoln.

Under Mulally's leadership, Ford Motor Company has rationalized the number of production platforms-each of which included unique parts or were specific to individual countries-to five core platforms that account for 80 percent of the firm's models. Management plans to transition the company to nine shared platforms that represent about 99 percent of the carmakers' automobiles.

This strategic move should improve the auto company's economies of scale by enabling the firm to negotiate quantity discounts on parts and minimizing costly factory retooling. Equally important, Ford Motor Company will be able to adjust production to meet changes in consumer taste and demand.

The use of common platforms has also allowed the carmaker to accelerate the introduction of new models. Over the next three years, Ford Motor Company will update each of its major models, keeping the average age of the car designs in its showroom at about 2.3 years-well under the industry average of about 2.7 years. As newer designs usually sell better and co! mmand hig! her prices than legacy models, the carmaker's commitment to maintaining a fresh product lineup should also bolster the firm's profit margins.

And Ford Motor Company's new lines of fuel-efficient cars, especially the Fiesta and Fusion, have proved popular with consumers. In July 2013, the average Ford Fusion sat on a lot for only 31 days before selling, an impressive sales rate that prompted the automaker to add 1,400 workers to the production plant in Flat Rock, Mich., that builds the car.

Outside the US, the carmaker has a number of initiatives under way to grow its sales in China, where the company plans to double its product lineup by year-end and continues to remodel and refresh its showrooms. Management expects its dealer network in China to expand to more than 900 locations by 2015 from 600 by the end of 2013. Robust demand for Ford Motor Company's new models in the second quarter bolstered the U.S. automaker's share of this key growth market by 150 basis points from a year ago, to 4.3 percent.

Ford Motor Company has also put its financial house in order, using the free cash flow generated by its increasingly popular lineup of cars and light trucks to reduce debt and return capital to shareholders. The carmaker has amassed a about $25 million in gross cash and has access a $10 billion unsecured revolving line of credit-in line with management's goal of maintaining $20 billion to $30 billion in excess liquidity as a safeguard against another downturn.

This company's strong balance sheet and improving growth prospects prompted the firm to double its dividend in the first quarter to $0.10 per share, equivalent to an indicated yield of 2.4 percent at the stock's current quote.

Ford Motor Company has also deployed some of its excess cash is to pay down its unfunded pension liability. Management addressed these obligations in a July 24 conference call to discuss second-quarter results, noting that the company has completed about 60 percent of the lump-sum program and i! ndicating! the this funding shortfall could be eliminated as soon as next year.

The company continues to reduce the risk of its pension portfolio, reducing its exposure to equities in favor of steadier, fixed-income securities. Although Ford Motor Company doesn't update its pension liability each quarter, the firm contributed $2.8 billion in the first half of 2013 and plans to allocate $5 billion this year. The carmaker should also benefit from the recent uptick in the benchmark U.S. interest rates; the company can assume a higher return when calculating its liabilities, effectively reducing its need to contribute capital to the plan.

Unfunded pension liabilities have weighed on Ford Motor Company and have been the subject of considerable discussion during quarterly conference calls. Resolving the firm's unfunded liability would be a significant upside catalyst for the stock.

Valuation

With a price-to-forward-sales ratio of 0.46, Ford Motor Company has one of the lowest multiples in the S&P 500; however, the stock's current price-to-sales ratio is in line with the 0.44 times sales that the shares fetched in the 1990s.

Fortunately, several factors suggest that the company should command a higher valuation in coming years.

First and foremost, the complete transformation of the U.S. auto industry should find favor among investors. The unfunded liabilities, inefficient manufacturing practices, excessive debt and bloated cost structures no longer plague the Big Three.

From 1997 to 2000, U.S. automobile sales stood at similar level to today. At the time, shares of Ford Motor Company traded at roughly 11 times to 12 times earnings, compared to the stock's current price to earnings level of less than 10. At a valuation of 12 times next year's estimated earnings, Ford Motor Company would be worth $21.00 per share. Given the company's improving profitability and the recovery in U.S. car sales, the carmaker's shares could be due for a major rerating.

U.S. automaker! s aren't ! the only way to gain exposure to the secular trends that are driving car sales. Roger Conrad and I will host a free webinar on Oct. 15, 2013, to discuss our favorite stocks and investment themes for 2014, including an industrial name that stands to benefit from the resurgence in global automobile sales and the ongoing push for improved fuel efficiency.

Source: How To Profit From Resurgent Global Car Sales

Disclosure: I am long F. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. (More...)

Debt Ceiling Wall of Worry Another Reason for Investing

The U.S. congressional standoff that shut down the government for the first time in 17 years is a buying opportunity for stock investors, if history is any guide.

The Standard & Poor's 500 Index (SPX) has risen 11 percent on average in the 12 months following a government shutdown, according to data compiled by Bloomberg on instances since 1976. That compares with an average return of 9 percent over 12 months. In all the cases, the U.S. equity benchmark was higher by the end of the next two years.

While the S&P 500 has fallen seven of the past eight days on concern the political deadlock over the U.S. budget and debt limit will hurt the economy, investors at Raymond James & Associates and PNC Wealth Management say equities will recover as profits rise. Analysts' forecasts show earnings will increase at the fastest pace in two years during the fourth quarter. More than 300 companies in the S&P 500 are scheduled to report results this month, according to data compiled by Bloomberg.

"I'm a buyer on weakness," Jeff Saut, the St. Petersburg, Florida-based chief investment strategist at Raymond James, said in a phone interview. He helps oversee about $400 billion. "Once it's in the rearview mirror along with the debt ceiling, the market will start to focus again on the improving economic numbers and improving earnings."

The S&P 500 rose 0.8 percent to 1,695.10 at 12:03 p.m. in New York, snapping a two-day drop.

Partially Closed

The U.S. government will be partially closed today with Congress deadlocked over whether to tie any changes to the 2010 health-care bill to an extension of government funding. Even if the budget fight is resolved, lawmakers would immediately move to the next fiscal dispute over raising the $16.7 trillion debt ceiling.

The S&P 500 slumped 0.6 percent to 1,681.55 yesterday, closing at a three-week low. The U.S. equity benchmark is still up 18 percent this year, on track for the biggest annual incre! ase since 2009. Treasury 10-year note yields fell one basis point to 2.61 percent yesterday, trading at an almost seven-week low, and the dollar weakened against the majority of its most-traded peers.

There have been 17 government shutdowns since 1976, with five of them occurring within three months of each other, according to data compiled by Bloomberg.

Debt Ceiling

The last time there was speculation about a U.S. government shutdown was in August 2011, when the S&P 500 fell more than 11 percent in three days. Stocks tumbled during the stalemate between President Barack Obama and Congress over whether to raise the debt ceiling and S&P stripped the U.S. of its AAA credit rating that month.

The losses were later reversed, as the Federal Reserve pledged to hold the benchmark interest rate near zero and maintain bond purchases to support the economy. The S&P 500 gained 25 percent in the 12 months through August 2012.

"If you go back to the 1990s and the last time we had a government shutdown, that was actually good for the stock market," said Martin Leclerc, founder of Barrack Yard Advisors LLC, in a phone interview from Bryn Mawr, Pennsylvania. His firm oversees $230 million. "It seems the market has climbed every wall of worry and every risk that's out there, the market has seemed to surpass."

Stock Swings

In the last government shutdown that started in December 1995, the S&P 500 rallied 21 percent in the following year, according to data compiled by Bloomberg. The U.S. equity benchmark was up 36 percent in the 12 months after a one-day closure in 1982. That was the biggest advance of the 12 instances.

Stock swings will widen during the shutdown, according to Kristina Hooper, a U.S. investment strategist at Allianz Global Investors in New York. The firm oversees $409 billion. The S&P 500 has declined an average of 0.59 percent during government shutdowns since 1976, according to data compiled by Bloomberg.

"We'll ! definitel! y see more volatility if there is a shutdown, because the majority of the market wasn't anticipating it as late as last week," Hooper said in a telephone interview yesterday. "The longer-term picture is positive. We'll likely work through this relatively quickly."

The Chicago Board Options Exchange Volatility Index (VIX) jumped 7.4 percent to 16.60 yesterday, the highest level in a month. It is still 18 percent below its average since 1990.

Fair Value

Stocks need to fall further before they become bargains, according to Kevin Caron, a Florham Park, New Jersey-based market strategist at Stifel Nicolaus & Co., which oversees about $150 billion. The S&P 500's valuation slid to 16.1 times reported operating earnings yesterday, from a three-year high of 16.5 on Sept. 18. The benchmark's multiple has increased 14 percent this year.

"We haven't seen a significant correction yet," Caron said in a phone interview. "We're right around what we would consider to be fair value for the market."

A shutdown of the U.S. government may reduce fourth-quarter economic growth as federal workers from park rangers to telephone receptionists are furloughed, according to Moody's Analytics Inc. Mark Zandi, chief economist at the firm, has estimated that a three-to-four week shutdown would cut growth by 1.4 percentage points. He projects a 2.5 percent annualized pace of fourth-quarter growth without a shutdown.

Earnings Growth

E. William Stone, chief investment strategist at PNC Wealth in Philadelphia, said the gridlock in Congress isn't likely to weaken the overall economy. Earnings for S&P 500 companies will increase 9.1 percent in the fourth quarter, the biggest expansion since the three months ending September 2011, according to more than 11,000 analyst estimates compiled by Bloomberg.

Profits have been climbing for the past four years and analysts forecast growth will continue in 2014 and 2015, when they rise more than 10 percent. For! the full! S&P 500, earnings expanded 1.8 percent last quarter, projections compiled by Bloomberg show. Alcoa Inc. (AA), Yum! Brands Inc. (YUM) and Safeway Inc. (SWY) are among the 316 companies in the S&P 500 scheduled to report in October.

"It certainly makes sense in our mind to take advantage of these kinds of selloffs," Stone said by phone yesterday. The firm manages about $119 billion. "At the end of the day you go back and say, does this whole fight really harm the long-term market or the underlying economic picture? And I don't think it will really have any true impact there."

Europe Is a Glass Half Full

In the latest of several reports indicating improvement, the European Commission recently said that its Economic Sentiment Indicator for the euro zone moved into positive territory this month for the first time in more than two years.

European stocks have been rising for more than a year. Many markets, including those of  Germany, France, Spain, the UK and Switzerland, hit new 52-week peaks just last week. They were finally joining US stocks, which have steadily reached higher levels this year, officially broadening the global bull market.

Another sign of reduced financial stress is that yields on government bonds of Italy and Spain, two troubled national economies that are respectively the third and fourth largest in the euro zone, are down sharply from last summer. Plus, the yield spreads compared with German government bonds have shrunk from more than five percentage points to about half that level.

Last year’s turning point came when European Central Bank President Mario Draghi, perhaps taking a cue from US Federal Reserve chairman Ben Bernanke, said: “Within our mandate, the ECB is ready to do whatever it takes to preserve the euro.”

The main step the ECB took at that time was to fund Europe’s banks with necessary cash via low-cost loans to banks to buy government bonds. This stemmed immediate fears of a euro collapse.

Amid considerable ongoing speculation about the health of European banks, Draghi this week pledged to pump more into the banks if that becomes necessary to avert a possible a credit crunch.

Now, at long last, growth is starting to turn positive. The latest forecast from the Organization for Economic Cooperation and Development (OECD) is that overall growth for the 17-nation euro zone will be negative again this year. But the OECD has raised its forecasts for several countries.

Germany, Europe’s biggest economy, should gro! w 0.7 percent in 2013, up from the May forecast of 0.4 percent, the OECD says. And France, the second largest, is seen on course for 2013 growth of 0.3 percent this year, compared with a projected contraction of 0.3 percent previously. Outside the euro zone, the UK is expected to grow 1.5 percent, up sharply from the previous 0.8 percent forecast.

Pimco, the world’s largest fixed-income investor, predicts that the euro zone overall will generate slightly positive inflation-adjusted growth in a range between zero and 0.5 percent over the next 12 months. That’s anemic, to put it generously. Nevertheless, it’s an improvement over the 0.5 percent decline in gross domestic product for the year ending in this year’s second quarter. Outside the euro zone, the UK economy is expected to grow 1.5 percent to 2 percent in the coming 12 months, which is downright robust by comparison.

Among other projections, Standard & Poor’s forecasts that the euro zone economy will shrink by 0.7 percent this year, before growing by 0.8 percent in 2014 and 1.3 percent in 2015. Goldman Sachs expects a 2013 contraction of 0.36 percent in 2013, and growth of 0.87 percent next year.

Another plus: While the euro zone has now had eight consecutive quarterly declines in employment, the latest was the smallest yet, with a drop of just 0.1 percent.

This very gradual economic improvement would still be inadequate to reduce the euro zone’s main problems, led by a record-high unemployment rate of 12.1 percent, hefty government debt, and uncompetitive labor costs, benefits and taxes.

What’s more, many uncertainties remain about even the sluggish growth that’s expected. For instance, new data from the ECB showed that bank lending to companies fell in all of the euro zone’s big countries in August.

Last Sunday, Angela Merkel was elected to her third term as German chancellor, also strengthening her position as Europe’s de facto leader.
Sometim! es referred to as “Frau Europa,” Merkel is the only major European leader to have weathered the financial crisis. Her center-right Christian Democratic Union party fell just short of an absolute majority, but no German chancellor has achieved that since 1957.

However, she may have to form a coalition with the opposition Social Democrats, who likely would demand an increased focus on domestic issues, possibly reducing Germany’s enthusiasm for spending more to bail out weaker euro zone neighbors.

Meanwhile, France, Italy and Spain all face significant economic challenges, with troubled political leadership.

So Europe is improving. Its blue-chip stocks generally are attractively valued and pay good income. But the road ahead will remain long and bumpy.

10 Best Low Price Stocks For 2014

Maxims can be the kiss of death in investing. "Always buy low P/E stocks." "Always look for low price-to-book." Holding fast to these supposedly bulletproof investment strategies -- good as they sound -- could cost you, says Fool contributor Tim Beyers in the following video.

The problem is context. A low price-to-earnings multiple is helpful only in those instances where earnings are growing at a faster pace than the low multiple implies. Look at for-profit educator Apollo Group (NASDAQ: APOL  ) , which has suffered a single-digit P/E ratio throughout the past year. Revenue and earnings fell consistently over the same period, and the stock is off 50%.

Low price-to-book stocks suffer from a similar problem. Who cares if the stock sells for a discount to its assets if the company can't earn a good return on said assets? United States Cellular (NYSE: USM  ) has seen its returns on assets and equity decline steadily since 2011. Thus, despite a history of trading near or below book value, the stock is down 22% since the beginning of last year.

Investment strategies are just that: strategies. Recognize that every company is different. Analyze the underlying strengths and weaknesses before you buy. Because the more you understand about what drives a business to grow, the more likely it is you'll pay a fair price to own a piece of it, Tim says.

Do you agree? Please watch the video to get Tim's full take, and then leave a comment to let us know which investment strategies have worked best for you.

10 Best Low Price Stocks For 2014: Ameron International Corporation(AMN)

AMN Healthcare Services, Inc. provides healthcare staffing and clinical workforce management solutions in the United States. The company?s Nurse and Allied Healthcare Staffing segment provides staffing solutions for hospitals and other healthcare facilities, including medical, surgical, specialty, licensed practical or vocational, and advanced practice nurses, as well as surgical technologists and dialysis technicians. This segment also offers allied health professionals under the Med Travelers, Club Staffing, and Rx Pro Health brand names to acute-care hospitals and other healthcare facilities, such as skilled nursing facilities, rehabilitation clinics, and retail and mail-order pharmacies. These allied health professionals include physical, surgical, respiratory, and occupational therapists, as well as medical and radiology technologists, speech pathologists, rehabilitation assistants, pharmacists, and pharmacy technicians. Its Locum Tenens Staffing segment places physic ians of various specialties, certified registered nurse anesthetists, nurse practitioners, and dentists on a temporary basis as independent contractors with various healthcare organizations, including hospitals, medical groups, occupational medical clinics, individual practitioners, networks, psychiatric facilities, government institutions, and managed care entities. The company?s Physician Permanent Placement Services segment provides permanent physician placement services to hospitals, healthcare facilities, and physician practice groups under the Merritt Hawkins and Kendall & Davis brand names. This segment also offers specialty offerings, including internal medicines, family practices, and surgeries. Its Home Healthcare Services segment provide home healthcare services to individuals with acute-care illness, long-term chronic health conditions, permanent disabilities, terminal illnesses, and post-procedural needs. The company was founded in 1985 and is headquartered in S an Diego, California.

10 Best Low Price Stocks For 2014: Leucadia National Corporation(LUK)

Leucadia National Corporation, through its subsidiaries, engages in manufacturing, land based contract oil and gas drilling, gaming entertainment, real estate, medical product development, and winery operations in the United States and internationally. Its manufacturing operations include remanufacturing, manufacturing, and/or distribution dimension lumber, home center boards for retailers, pine decking, and other specialty wood products; and manufacturing and marketing lightweight plastic netting used in building and construction, erosion control, packaging, agricultural, carpet padding, filtration, and consumer products. The company?s land based contract oil and gas drilling operations include the provision of drilling services to independent oil and natural gas exploration and production companies in the Mid-Continent region of the United States, including Oklahoma, Texas, Arkansas, Louisiana, and Kansas. As of December 31, 2010, it had 38 drilling rigs. The company?s g aming entertainment operations consist of owning the Hard Rock Hotel & Casino Biloxi located in Biloxi, Mississippi, which consists of 325 rooms and suites, 1,268 slot machines, 52 table games, 6 live poker tables, 5 restaurants, and spa. Its real estate activities include investment in commercial properties, residential land development projects, and other unimproved land. The company?s medical product development operations comprise the development of MP4OX that has completed a phase II proof of concept clinical trial and is a solution of cell-free hemoglobin, administered intravenously to provide oxygen delivery to oxygen deprived tissues. In addition, Leucadia National Corporation engages in the production and sale of wines; and investment and evaluation of gasification projects to convert various types of low grade fossil fuels into energy products. The company was founded in 1854 and is based in New York, New York.

Advisors' Opinion:

• [By David Hanson and Matt Koppenheffer]

  Jefferies, a subsidiary of Leucadia National (NYSE: LUK  ) , has come out to say that its revenue from fixed income trading is down 27% year over year. Will a "tepid and cautious" bond market drag down this revenue stream for the other big banks as well? In this clip, David talks about the fixed income market and how it could affect Wall Street as a whole.

Top 10 Biotech Stocks For 2014: First Financial Service Corporation(FFKY)

First Financial Service Corporation operates as the holding company for First Federal Savings Bank of Elizabethtown that provides various personal and corporate banking services. It offers a range of deposit instruments, including multiple checking accounts, NOW accounts, savings accounts, money market accounts, health savings accounts, individual retirement accounts, and certificates of deposit. The company?s loan portfolio comprises residential mortgage products; specialized financing programs; mortgages for multifamily real estate; commercial real estate loans; commercial loans to businesses, including revolving lines of credit and term loans; real estate development loans; construction lending; agricultural lending; and consumer loans, including home equity lines of credit, auto loans, recreational vehicle, and other secured and unsecured loans. It also provides merchant bankcard, electronic funds transfer, debit and credit cards, and telephone and Internet banking se rvices. In addition, the company offers various mutual funds, equity investments, and fixed and variable annuities, as well as personal investment financial counseling services. It operates 22 full-service banking centers and a commercial private banking center in Hardin, Nelson, Hart, Bullitt, Meade, and Jefferson counties in Kentucky, as well as Harrison and Floyd counties in southern Indiana. The company was founded in 1923 and is headquartered in Elizabethtown, Kentucky.

10 Best Low Price Stocks For 2014: Cornerstone Therapeutics Inc.(CRTX)

Cornerstone Therapeutics Inc., a specialty pharmaceutical company, engages in the acquisition, development, and commercialization of prescription pharmaceutical drugs for the hospital, niche respiratory, and related specialty markets. The company offers CUROSURF, a natural lung surfactant used for the treatment of respiratory distress syndrome in premature infants; and ZYFLO CR and ZYFLO, which are leukotriene synthesis inhibitor drugs used for the prevention and chronic treatment of asthma in adults and children. It also provides anti-infective products, such as FACTIVE, a fluoroquinolone antibiotic used for the treatment of acute bacterial exacerbation of chronic bronchitis (ABECB) and community-acquired pneumonia (CAP) of mild to moderate severity; and SPECTRACEF, a antibiotic used for the treatment of respiratory tract infections, pharyngitis and tonsillitis, uncomplicated skin and skin-structure infections, ABECB, and CAP. In addition, the company?s pipeline products include CRTX 080, a vasopressin receptor 2 antagonist lixivaptan used for the treatment of hyponatremia; CRTX 073, an anti-asthma product candidate used for the treatment of asthma; and CRTX 067, a cough/cold product candidate for the treatment of cough and cold. It serves drug wholesalers, retail drug stores, mass merchandisers, and grocery store pharmacies in the United States. The company was formerly known as Critical Therapeutics, Inc. and changed its name to Cornerstone Therapeutics Inc. as a result of its merger with Cornerstone BioPharma Holdings, Inc. in October 2008. Cornerstone Therapeutics Inc. was founded in 2000 and is headquartered in Cary, North Carolina.

10 Best Low Price Stocks For 2014: Croflight Minerals Inc (CML.TO)

CaNickel Mining Limited, a junior mining company, engages in the exploration, extraction, and processing of nickel-containing ore properties in Canada. The company owns and operates the Bucko Lake Mine located near Wabowden, Manitoba. It also holds interests in nickel, copper, and platinum group mineral projects in Thompson Nickel Belts, Manitoba and the Sudbury Basin, Ontario. The company was formerly known as Crowflight Minerals Inc. and changed its name to CaNickel Mining Limited in June 2011. CaNickel Mining Limited was founded in 1937 and is headquartered in Vancouver, Canada.

10 Best Low Price Stocks For 2014: eHealth Inc.(EHTH)

eHealth, Inc. offers Internet-based insurance agency services for individuals, families, and small businesses in the United States. The company also offers technology licensing and Internet advertising services. Its ecommerce platforms organize and present health insurance information in various formats, as well as enables individuals, families, and small businesses to research, analyze, compare, and purchase various health insurance plans. The company offers various medical health insurance coverage plans, such as preferred provider organization, health maintenance organization and indemnity plans, Medicare plans, short-term medical insurance, student health insurance, and health savings account eligible health insurance plans, as well as ancillary plans, such as dental, vision, and life insurance. Its customers access its ecommerce platforms through its Websites, including eHealth.com, eHealthInsurance.com, eHealthMedicare.com, and PlanPrescriber.com, as well as through a network of marketing partners. The company was incorporated in 1997 and is headquartered in Mountain View, California.

10 Best Low Price Stocks For 2014: (BAJAJ-AUT.NS)

Bajaj Auto Limited manufactures and sells scooters, motorcycles, and three wheeler vehicles and spare parts in India and internationally. It sells its two wheeler products under Avenger, Pulsar, Discover, Platina, and Ninja brands. The company also provides three wheeler commercial vehicles, such as goods and passenger carriers. It sells its products and services through a network of two-wheeler and three-wheeler dealers. The company was founded in 1945 and is headquartered in Pune, India. Bajaj Auto Limited operates independently of Bajaj Holdings & Investment Limited as of May 28, 2008.

10 Best Low Price Stocks For 2014: HMN Financial Inc.(HMNF)

HMN Financial, Inc. operates as the holding company for Home Federal Savings Bank that provides community banking services in Minnesota and Iowa. The company accepts deposits and originates or purchases loans. It offers various deposit products to retail and commercial customers, including passbook, negotiable order of withdrawal, money market, non-interest bearing checking, and certificate accounts, including individual retirement accounts. The company also provides one-to-four family residential, commercial real estate, and multi-family mortgage loans, as well as consumer, construction, and commercial business loans. In addition, it invests in mortgage-backed and related securities, the U.S. government agency obligations, and other permissible investments. HMN Financial serves the southern Minnesota counties of Fillmore, Freeborn, Houston, Mower, Olmsted, and Winona, as well as portions of Steele, Dodge, Goodhue, and Wabasha through its corporate office in Rochester, Min nesota and 10 branch offices located in Albert Lea, Austin, La Crescent, Rochester, Spring Valley, and Winona, Minnesota; and the Iowa counties of Marshall and Tama through its branch offices located in Marshalltown and Toledo, Iowa. The company was founded in 1933 and is based in Rochester, Minnesota.

10 Best Low Price Stocks For 2014: Coastal Constacts Inc (COA.TO)

Coastal Contacts Inc. operates as an online direct-to-consumer retailer of contact lenses, glasses, sunglasses, contact lens solutions, and vision care accessories in North America, Europe, and the Asia Pacific region. The company sells its products through proprietary Websites, including Coastal.com, ClearlyContacts.ca, ClearlyContacts.com.au, ClearlyContacts.co.nz, LensWay.se, LensWay.fi, LensWay.nl, LensWay.no, LensWay.co.uk, ContactSan.com, and LensWay.com.br, as well as through telephone and e-mail The company was founded in 2000 and is headquartered in Vancouver, Canada.

10 Best Low Price Stocks For 2014: Benvest New Look Income Fd (BCI.TO)

New Look Eyewear Inc. provides eye care products and services in eastern Canada. It offers high definition digital lenses, frames, and sunglasses, as well as contact lenses. The company also offers eye exams and other eye care services. As of March 31, 2012, it operated 69 corporately owned eye care stores, including 61 in Qu茅bec province and 8 in Ontario region; and an eyewear transformation laboratory. The company was formerly known as Benvest New Look Income Fund and changed its name to New Look Eyewear Inc. in March 2010. New Look Eyewear Inc. is headquartered in Montr茅al, Canada.

European stocks waver on Italy, U.S. debt fears

LONDON (MarketWatch) — European stock markets struggled for direction on Thursday as worries about renewed political instability in Italy and debt-ceiling negotiations in Washington partly offset better-than-expected U.S. jobless-claims data.

The Stoxx Europe 600 index (XX:SXXP)  ended at 313.02, the same closing level as Wednesday.

Click to Play Government shutdown looms

Overseas markets are worried about a potential U.S. gov't shutdown. Bed Bath & Beyond reports after the bell, and the S&P 500 looks to snap a five-day losing streak that may depend on the latest estimate for second-quarter U.S. . Photo: AP

"We're waiting for some directions to where to go from here. There is no point in worrying about the debt ceiling until we know what the implications are. We've been here before and it seemed like the market reaction in 2011 was a bit overdone," said Peter Dixon, strategist at Commerzbank in London. "It has the potential to cause the markets to take a leg down, but until we have the full information, markets don't want to move. If you sell now and nothing happens, you will just have to buy back into the market later at a higher price."

"In addition we're waiting for some definitive signals on where the economy is going," he added and said recent upbeat data from Europe shouldn't necessarily push the markets much higher from here because much of the good news is already priced in.

"I just don't feel like there's any appetite for a bull run right now. But who knows, once we start to move into the third-quarter earnings season," he said.

Shares of Ladbrokes PLC (UK:LAD)  posted the biggest drop in the index, off 7.6%, after the betting firm said 2013 operating profit for its digital division will fall below current market expectations.

"Our digital earnings have been disappointing, reflecting a lack of competitiveness in sportsbook, lower margins than planned and a greater disruptive impact than expected from the transition necessary to grow digital for the long term," Chief Executive Richard Glynn said in a statement.

On a more upbeat note, shares of Hennes & Mauritz AB (SE:HMB)  gained 6.7% after the Swedish fashion retailer reported a 22% rise in third-quarter profit and said sales in China had been particularly strong during the period.

U.S. data

More broadly, European stock markets briefly moved into positive territory in afternoon action after U.S. stocks opened higher on the back of upbeat jobless claims data. New applications for unemployment benefits fell by 5,000 last week to 305,000, beating expectations of a 327,000 print. Meanwhile, the Commerce Department said the U.S. economy grew by 2.5% in the second quarter, unchanged from a previous estimate.

The data came as U.S. lawmakers struggle to agree on a budget before the new fiscal year begins next week, with a failure to pass the bill possibly leading to a government shutdown. Read: What's next in the government shutdown saga

On Wednesday, the Senate took the first of several procedural votes to enact funding for the fiscal year, agreeing unanimously to debate a bill passed by the House that would remove funding of the 2010 Affordable Care Act. Democrats in the Senate aim to replace that bill with a stopgap measure that will maintain funding.

Additionally, Treasury Secretary Jacob Lew told legislators that he'll run out of options to avoid hitting or surpassing the debt limit by Oct. 17 or sooner. Moody's Investors Service warned on Tuesday that a failure to raise the debt limit would result in a worse outcome for financial markets than a government shutdown. The ratings agency argued that market participants would view a decision not to raise the debt limit as having a higher probability of sovereign default.

"The main risk to the U.S. economic outlook remains political. Our baseline outlook is that policy makers continue to avoid the government shutdown or interruption of debt payments that serve as threat points in the ongoing fiscal brinkmanship in the U.S. capitol," analysts at Barclays said in a note.

"But the perpetual conflict and political discord of recent years has led to increased uncertainty, sizable fiscal drags in the resolution (e.g., sequestration), and temporary market disruptions. In other words, recent experience tells us the risk need not be fully realized in order to affect financial markets; walking close enough to the edge is sufficient," they added.

Italian instability

In Europe, the instability in the Italian political system was back in the spotlight. Supporters of Silvio Berlusconi late Wednesday threatened to leave parliament if the former prime minister is ousted from senate due to a tax-fraud conviction, prompting a rebuke from President Giorgio Napolitano. The President on Thursday reportedly accused the Berlusconi supporters of undermining Italy's parliamentary system and said the threat—if carried out—could pressure him into dissolving parliament.

Getty Images Enlarge Image Silvio Berlusconi.

The FTSE MIB index (XX:FTSEMIB)  dropped 1.2% to close at 17,872.53.

Among other country-specific indexes in Europe, France's CAC 40 index (FR:PX1)  lost 0.2% to 4,186.72, and Germany's DAX 30 index (DX:DAX)  was slightly lower at 8,664.10. The U.K.'s FTSE 100 index (UK:UKX)  rose 0.2% at 6,565.59.

Providing support in London, shares TUI Travel PLC (UK:TT)  climbed 3.9% after the holiday firm said it had a strong summer season and raised its full-year guidance for underlying operating profit to growth of at least 11%, up from 10% expected previously.

Outside the major indexes, shares of Vestas Wind Systems AS (DK:VWS)  gained 7.9% after the wind-turbine maker said it has received a 400MW order in the U.S.

Shares of Mapfre SA (ES:MAP)  lost 3.1% in Madrid after Bankia SA (ES:BKIA) completed the sale of a 12% stake in the insurance firm. Bankia shares rose 1%.

Lockheed Martin and United Technologies Cut Layoff Plans

Lockheed Martin Corp. (NYSE: LMT), the world's largest defense contractor, had said on Friday that it would furlough some 3,000 employees as a result of the federal government shutdown. By Monday morning, the company had cut that number back to 2,400.

Another defense contractor, United Technologies Corp. (NYSE: UTX), cancelled its announced plan to furlough 2,000 employees due to the government shutdown.

The change was due to a decision by the U.S. Department of Defense over the weekend to begin calling back to work most of its own civilian staff. The Pentagon expects to recall more than 90% of the 350,000 civilian staff it placed on furlough last week.

Although no other defense or aerospace contractors had announced any layoffs or furloughs due to the government shutdown, the Aerospace Industries Association said last Friday that “tens of thousands” of employees at member companies would have to be furloughed if the shutdown continued. The group includes defense firms Northrop Grumman Corp. (NYSE: NOC), Raytheon Co. (NYSE: RTN) and General Dynamics Corp. (NYSE: GD) among its membership. None of these firms had announced plans to idle workers.

Lockheed’s shares were up about 0.7% at $123.35 shortly after opening Monday morning. The stock’s 52-week range is $85.88 to $131.60. When Lockheed announced its second-quarter earnings, it also raised its outlook for both revenues and earnings for the full year. The stock trades at about 12.7 times forward earnings.

Shares of United Technologies were down about 0.6% Monday morning, at $103.66 in a 52-week range of $74.44 to $112.46. Shares trade at about 15 times forward earnings.

How to develop 'sticky' clients

Advisers spend about five times as much to bring on a new client as they do to keep an existing one, creating a huge incentive to keep clients “sticky,” according to an adviser coach.

Clients stick with an adviser if they have deep personal relationships with them and feel like they are part of a community with other clients, said Dean Barber, founder of advisory firm Barber Financial Group and a coach to other advisers.

Surveys show clients typically leave their adviser because of a lack of communication and a feeling as though the adviser doesn't understand their situation.

“Many times financial advisers are so busy trying to bring on new assets that they lose track of the importance of maintaining their current clients,” Mr. Barber said.

Building deep relationships takes time, but certain actions can foster their development, including educational events like seminars on tax strategies, entertaining activities such as wine tasting, consistent and frequent communications, and regular financial reviews that focus on holistic planning, Mr. Barber said.

“We want to stay constantly in front of them — top of mind,” Mr. Barber said. “They know we're out there on top of the education scene, and that we appreciate them and what interests them.”

Barber Financial Group, which is headquartered in Lenexa, Kan., hosts a minimum of eight educational events per month on topics such as the latest in estate planning or retirement preparation, as well as special presentations. It also hosts a quarterly conference call to discuss capital markets and how client money is being managed within that market context, Mr. Barber said.

Barber Financial clients also receive a weekly e-mail to discuss what has gone on in the past week, and other nonfinancial pieces, including recipes, he said. They also receive a quarterly newsletter covering “the four pillars” of wealth management: taxes, insurance, investments and estate planning.

Clients also are invited to participate in at least two fun events a month, such as August's tequila tasting. Mr. Barber said the firm charges for the fun events, but not the educational ones.

Barber Financial even has its own travel club for clients, where it sets up trips to places such as the Greek Islands and Alaska, and brings in a travel agent to do a presentation on the location. Clients receive a small discount on the trip, and many times the adviser gets to go along for free. The next trip: an Australia/New Zealand cruise in January 2014.

“The idea is building a sense of community,&! #8221; Mr. Barber said. “Clients get to know each other and make new relationships.”

One Stock Type Stands Out

A recent investor conference highlighted the type of company that MoneyShow's Jim Jubak thinks will do well in the current environment and continue to improve in the future.

Okay, I think we're starting to get an idea for what might be the ideal kind of stock for the economy as we're looking at it, and if you look at the analyst state that Cummins—that's symbol (CMI), they're a diesel engine manufacturer—recently held on September 16, you get a sense of what that is. What they said hit a very good chord with Wall Street. You had people raising their target prices by $20 and $30 a share. Cummins trades at $135, so that's not quite as big as if you were talking about a $20 increase on a $50 stock, but still pretty impressive.

What Cummins said that really, I think, has resonated with Wall Street and investors is that, "Hey, we're going to be able to grow faster than GDP." I think this is the big challenge, and for Cummins, it's going to do it in two ways. One is, they're going to find, they're investing in new products, so they're coming out and that's going to give them better margins, new sales, and the others are taking market share.

What I think you're looking at if you're trying to figure out where you might want to put your money, if you can find another stock like Cummins, great, but Cummins is the model, and the reason is that you're looking at growth in the US, 2%, in Europe, a recovery to maybe 1%. You see growth falling in China, India, Brazil, all of those markets are not doing all that well, and it doesn't seem like it's a short term problem. It's not going to be fixed in one quarter, so if you'd really like somebody that's growing better than 2% or 4% or 5%, you've really got to find somebody who's investing in R&D. And that's what Cummins is doing, they're coming out with new products all the time, lower emissions to sell diesel engines into countries which are sort of tightening down on the emissions that diesels can put out. They've got a new line of natural gas powered engines coming out for buses, et cetera, so product innovation, as well as, they seem to be able to lower their costs and so they're gaining share from competitors. Those two things enabled them to grow faster than the market, and I think that's actually the kind of stuff you're looking for in this particular economy, and that is going to be rewarded by investors who know what this economy is like.

This is Jim Jubak for the MoneyShow.com video network.