Look Who Else Is Flying Delta These Days

Delta Air Lines (NYSE: DAL  ) is one of the largest and most successful U.S. airlines today. In 2012, the company carried more than 100 million passengers on the way to earning an adjusted profit of $1.55 billion. This strong momentum has led to enviable gains for shareholders: Delta stock has nearly doubled since the beginning of December.

Delta Stock Chart, 12/3/12-6/14/13, data by YCharts

Among the many passengers flying Delta last year, one may have escaped notice: top competitor United Continental (NYSE: UAL  ) . United, which has performed far worse than Delta recently -- it earned an adjusted profit of just $589 million in 2012 despite being similar in size to Delta -- has nevertheless managed to ride Delta's coattails to stock greatness in the last six months.

Delta vs. United Continental Stock Performance, data by YCharts

While United's stock has not performed quite as well as Delta's, a 65% gain is nothing to sneeze at. Clearly, Mr. Market is extrapolating from Delta's success and assuming that United will be able to achieve similar profitability soon, particularly now that it has nearly finished integrating United and Continental. However, Mr. Market (and United investors) may be in for a surprise, because while Delta is the real deal, United's results will not be able to support its high stock price.

Disappointment ahead
United's stock has been soaring despite a weak performance in the first half of 2013. The company posted an adjusted loss of $0.98 per share in Q1. Capacity reductions drove a healthy 5.9% unit revenue increase, but this was more than offset by a 6.5% increase in unit costs. Cost growth has moderated in Q2 as jet fuel prices have fallen, but unit revenue has simultaneously taken a turn for the worse, decreasing 0.5% in April and a similar amount in May.

Coming into Q2, industry analysts expected United to return to strong profit growth, but they have since been forced to backtrack due to the company's weak revenue performance. The average analyst EPS estimate for Q2 has dropped precipitously from $1.98 60 days ago (around the time of United's Q1 earnings report) to $1.42 today.

Strangely, while lowering their estimates for this quarter, analysts have actually raised their estimates for Q3 EPS from $2.21 to $2.31 over the past 60 days. Q4 EPS estimates have risen even more sharply, to approximately $0.65, which would be a big swing from last year's $0.58 per share loss in the fourth quarter.

In essence, Wall Street analysts are softening the blow of lower earnings expectations for the current quarter by raising expectations for future quarters. However, this is just likely to lead to an even bigger disappointment for investors down the road. In order to meet full-year earnings expectations, United would need to achieve nearly 500 basis points of year-over-year margin growth in the second half of 2013.  This is not likely to happen.

Based on United's cost projections, unit cost growth may reverse in the second half of this year if fuel prices continue to retreat. However, the company would still need robust unit revenue growth to generate 500 basis points of margin expansion. Yet whereas United cut capacity by 4.9% in Q1 and is on pace to cut capacity by more than 2% in Q2, the company plans to increase capacity somewhat in the second half of the year. While this is helping reduce unit costs, it will also create a unit revenue headwind.  This will prevent anything beyond modest unit revenue growth.

Be careful out there!
Analysts are still projecting a fairly rosy profit scenario for United this year, despite its continuing weak performance. While Delta recently projected a Q2 adjusted operating margin of 10%-11% -- a healthy improvement from last year's 9.1% result -- United appears poised to duplicate its 7.9% adjusted operating margin from Q2 2012.

Delta's margin advantage of 200-300 basis points over United appears sustainable based on the company's lower, projected-cost growth and its strategic initiatives to boost its corporate revenue share, particularly in New York. That margin advantage is equivalent to roughly $1 billion per year in additional profit for Delta!

United stock has been able to log big gains in the past six months, largely thanks to Delta's success, but ultimately United will have to produce higher profitability to keep the stock afloat. However, the company has no clear path to replicating Delta's superior margins. As a result, United's stock looks very vulnerable over the next year or so.

With the American markets reaching new highs, investors and pundits alike are skeptical about future growth. They shouldn't be. Many global regions are still stuck in neutral, and their resurgence could result in windfall profits for select companies. A recent Motley Fool report, "3 Strong Buys for a Global Economic Recovery" outlines three companies that could take off when the global economy gains steam. Click here to read the full report!

Last Week's Worst-Performing Dow Components

As we're now just days away from the next Federal Reserve meeting, fear, concern, and, most importantly, uncertainty ran rampant this past week on Wall Street, causing the three major indexes to fall lower over the past five trading sessions. The Dow Jones Industrial Average (DJINDICES: ^DJI  ) lost 177 points, or 1.16%, and now sits at 15,070, after it briefly dipped below the 15,000 mark this week during intraday trading. The S&P 500 finished the week lower by 1.01%, while the Nasdaq was the big loser, after it declined by 1.31%.

A number of mixed economic data points were released during the week, which didn't give investors any true indication of whether the economy is any better than it was before the last Fed meeting, or whether the central bank will now begin slowing its stimulus programs.

Before we hit the Dow losers, for the second consecutive week the index's biggest winner was Pfizer (NYSE: PFE  ) . After gaining 3.78% two weeks ago, the stock rose another 3.11% this past week. The main catalyst for the move higher was the announcement that Pfizer and Takeda had come to a settlement agreement with Teva Pharmaceutical and Sun Pharmaceutical relating to a patent infringement case. The settlement amount came to $2.15 billion, of which Pfizer will receive the lion's shares of and the rest will go to Takeda. This settlement is for more money than both Teva and Sun made on the sale of their drugs that infringed on the patent, so this should help keep the generic-pharmaceutical companies at bay for some time.  

The big losers
The worst-performing Dow component of the week was American Express (NYSE: AXP  ) , which lost 5.24% of its value. The stock probably moved lower for a number of reasons this week, including a stock downgrade, a poor initial stock rating from another firm, a weak consumer sentiment number, and rioting in the Middle East. The downgrade came from Barclays, which lowered the rating from "overweight" to "equal weight" but increased the price target from $72 to $82 per share. Oppenheimer also gave the company a less than stellar rating, as it initiated coverage on American Express this week and rated the stock a "perform." The weak Thomson Reuters/University of Michigan Consumer Sentiment Index may indicate that Americans will cut back on spending and the use of credit, which will have a negative effect on American Express and the other credit card companies. And lastly, the rioting in Turkey this week may hurt American Express, as it earns a great deal of revenue from the tourism industry, and with Istanbul being such an important tourist destination, revenues may take a hit.  

DuPont (NYSE: DD  ) ended the week lower by 4.83% after the company released an updated earnings forecast for the remainder of 2013. Management announced that earnings will probably come in at the lower end of its previous forecast of $3.85 to $4.05 per share. The company made a number of excuses for the lower profit, and one that gained the most attention from analysts and critics was the unusual weather so far this year. Analysts had been expecting 2013 profits to hit $3.89, so we may see that number slowly move lower in the coming weeks. Furthermore, Bank of America/Merrill Lynch downgraded the stock this past week from "buy" to "neutral." That move also probably put downward pressure on the share price.  

Shares of Microsoft (NASDAQ: MSFT  ) ended the week as the third worst performing Dow stock, after it lost 3.61% of its value. On Thursday, the stock declined after the company announced that its new Xbox One won't be available in the Asian markets until sometime during late 2014, as opposed to a late 2013 release date here in the United States. With Sony's PlayStation 4 due to hit shelves before the Christmas shopping season this year all around the world, Microsoft will probably lose some market share in the regions of the world where its gaming console isn't available.  

A few other Dow losers this week:

Alcoa, down 1.2% Boeing, down 0.19% Cisco, down 0.61% Chevron, down 0.51% General Electric, down 0.92% Home Depot, down 3.18% Coca-Cola, down 2.24% Travelers, down 1.15% Wal-Mart, down 1.71% Walt Disney, down 1.46% United Technologies, down 0.33% IBM, down 1.59% JPMorgan Chase, down 1.54% Merck, down 1.01% Hewlett-Packard, down 0.2% ExxonMobil, down 0.77% Caterpillar, down 0.6% Bank of America, down 2.01%

More Foolish insight
It's been a frustrating path for Microsoft investors, who've watched the company fail to capitalize on the incredible growth in mobile over the past decade. However, with the release of its own tablet, along with the widely anticipated Windows 8 operating system, the company is looking to make a splash in this booming market. In a new premium report on Microsoft, a Motley Fool analyst explains that while the opportunity is huge, so are the challenges. The report includes regular updates as key events occur, so make sure to claim a copy of this report now by clicking here.

Why Lululemon Is Poised to Keep Pulling Back

Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, yoga gear retailer lululemon athletica (NASDAQ: LULU  ) has received a distressing two-star ranking.

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

Lululemon facts

Headquarters (founded)	Vancouver, Canada (1998)
Market Cap	$9.8 billion
Industry	Apparel
Trailing-12-Month Revenue	$1.4 billion
Management	Founder/Chairman Dennis Wilson CFO John Currie
Return on Equity (average, past 3 years)	35.5%
Cash/Debt	$590.2 million/$0
Competitors	Adidas AG Nike Under Armour

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

On CAPS, 24% of the 1,369 members who have rated Lululemon believe the stock will underperform the S&P 500 going forward.

Just yesterday, one of those Fools, sikiliza, succinctly summed up the bear case for our community:

The problem with fads is that they come to an end. Granted, Lululemon targeted an existing and fast growing core market of yoga enthusiasts who were not afraid to talk it up but over time, the company's growth depended more and more on the ordinary lady picking up a pair of well-fitting yoga pants for everyday wear. This might have signaled one of two things: 1) That the core market was saturated or 2) That the initial allure and exclusivity of the product was now broken.

Product issues aside, management has not been stellar and I see an [Aeropostale (NYSE: ARO  ) ] situation brewing where a good company with great products gets distracted by management side-shows.  

Lululemon has the potential to grow its sales by 10 times if it can penetrate other markets like it has in Canada, but the competitive landscape is starting to increase. Can Lululemon fight off larger retailers and ultimately deliver huge profits for savvy investors? The Motley Fool answers these questions and more in its most in-depth Lululemon research available. Thousands have already claimed their own premium ticker coverage; gain instant access to your own by clicking here now.

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Harsh Weather Hurt DuPont’s Q1

DuPont (DD) slipped on Thursday after its first quarter missed analysts' estimates.

The conglomerate said it earned $1.44 billion or $1.54 a share; excluding one-time items, per-share earnings were $1.58 a share, up two cents from the year-ago period but a penny below the $1.59 consensus.

Revenue slipped 2.7% to $10.1 billion, also below the $10.45 analysts were expecting.

The company noted that the extraordinarily harsh winter in many parts of the country hurt the results, to the tune of seven cents a share, as farmers delayed buying seeds and other agricultural products. Political uncertainty also disrupted sales in Ukraine, one of the world's largest corn and wheat exporters.

S&P Capital IQ's Christopher Muir was downbeat about the prospect of DuPont's outlook improving in the near term, lowering his rating on the stock to Sell from Hold, and lowered his target price by $1 to $64. "We negatively view the 3.4% year-over-year drop in sales, though the drop was more than offset by strong cost control efforts. Q1 recurring EPS of $1.58, vs. $1.56, missed our $1.76 estimate and the $1.59 Capital IQ consensus. The shares are yielding 2.7%.

By contrast, Citigroup's P.J. Juvekar reiterated a Buy rating and $78 price target, noting that the company executes as well as could be expected in poor weather conditions, and that its full-year guidance and share repurchase plan are positives: "DD reported 1Q14 EPS of $1.58 vs. our $1.56 and consensus of $1.58. The company explicitly called out a 7c/share impact from adverse weather conditions in 1Q, reflecting a combination of higher operating costs and lost sales. 2014 EPS guidance of $4.20-$4.45 was reaffirmed, with an estimated 70% of FY14 EPS expected in 1H. DD repurchased ~$1B of stock in 1Q, more than we anticipated, and is well-positioned to complete the targeted $2B of stock this year. The Perf Chemicals separation is on track for mid-2015, with physical separation of manufacturing sites underway and initial regulatory filings expected in 4Q14."

3 Stocks Breaking Out on Big Volume

DELAFIELD, Wis. (Stockpickr) -- Professional traders running mutual funds and hedge funds don't just look at a stock's price moves; they also track big changes in volume activity. Often when above-average volume moves into an equity, it precedes a large spike in volatility.

>>5 Rocket Stocks for a Tumbling Market

Major moves in volume can signal unusual activity, such as insider buying or selling -- or buying or selling by "superinvestors."

Unusual volume can also be a major signal that hedge funds and momentum traders are piling into a stock ahead of a catalyst. These types of traders like to get in well before a large spike, so it's always a smart move to monitor unusual volume. That said, remember to combine trend and price action with unusual volume. Put them all together to help you decipher the next big trend for any stock.

>>5 Stocks Insiders Love Right Now

With that in mind, let's take a look at several stocks rising on unusual volume recently.

Lamar Advertising

Lamar Advertising (LAMR) operates as an outdoor advertising company in the U.S. This stock closed up 5.2% at $52.45 in Wednesday's trading session.

Wednesday's Volume: 6 million

Three-Month Average Volume: 1.22 million

Volume % Change: 384%

From a technical perspective, LAMR ripped sharply higher here back above its 50-day moving average of $51.51 with heavy upside volume. This move is quickly pushing shares of LAMR within range of triggering a big breakout trade. That trade will hit if LAMR manages to take out some near-term overhead resistance levels at $53.35 to its 52-week high at $54.12 with high volume.

Traders should now look for long-biased trades in LAMR as long as it's trending above its 50-day at $51.51 or above Wednesday's low of $49.62 and then once it sustains a move or close above those breakout levels with volume that's near or above 1.22 million shares. If that breakout hits soon, then LAMR will set up to enter new 52-week-high territory, which is bullish technical price action. Some possible upside targets off that breakout are $60 to $65.

Lydall

Lydall (LDL) designs and manufactures specialty engineered products for the thermal/acoustical, filtration/separation and bio/medical applications worldwide. This stock closed up 3.7% at $22.98 in Wednesday's trading session.

Wednesday's Volume: 181,000

Three-Month Average Volume: 67,511

Volume % Change: 183%

From a technical perspective, LDL jumped higher here with above-average volume. This stock has been consolidating and trending sideways for the last month, with shares moving between $21.50 on the downside and $23.62 on the upside. Shares of LDL are now starting to bounce higher above the lower-end of its range and the stock is quickly moving close to triggering a big breakout trade above the upper-end of its sideways trading chart pattern. That trade will hit if LDL manages to take out Wednesdays' high of $23 to its 52-week high at $23.62 with high volume.

Traders should now look for long-biased trades in LDL as long as it's trending above $22 or above its 50-day at $21.03 and then once it sustains a move or close above those breakout levels with volume that's near or above 67,511 shares. If that breakout hits soon, then LDL will set up to enter new 52-week-high territory, which is bullish technical price action. Some possible upside targets off that breakout are $28 to $30.

Union Pacific

Union Pacific (UNP) provides rail transportation services in the U.S. This stock closed up 1.4% at $188.15 in Wednesday's trading session.

Wednesday's Volume: 3.63 million

Three-Month Average Volume: 2.13 million

Volume % Change: 82%

From a technical perspective, UNP rose modestly higher here right above its 50-day moving average of $182.95 with above-average volume. This stock has been uptrending strong for the last six months, with shares moving higher from its low of $147.75 to its recent high of $190.48. During that move, shares of UNP have making mostly higher lows and higher highs, which is bullish technical price action. This spike higher on Wednesday is now starting to push shares of UNP within range of triggering a big breakout trade. That trade will hit if UNP manages to take out Wednesday's high of $188.54 to some more near-term overhead resistance levels at $190 to its 52-week high at $190.48 with high volume.

Traders should now look for long-biased trades in UNP as long as it's trending above its 50-day at $182.95 or above its recent low of $180.72 and then once it sustains a move or close above those breakout levels with volume that's near or above 2.13 million shares. If that breakout triggers soon, then UNP will set up to enter new 52-week-high territory above $190.48, which is bullish technical price action. Some possible upside targets off that breakout are $200 to $210.

To see more stocks rising on unusual volume, check out the Stocks Rising on Unusual Volume portfolio on Stockpickr.

-- Written by Roberto Pedone in Delafield, Wis.

RELATED LINKS:

>>2 Oversold Stocks Ready to Bounce Higher

>>5 Stocks Set to Soar on Bullish Earnings

>>5 REIT Trades Worth Buying in April

Follow Stockpickr on Twitter and become a fan on Facebook.

At the time of publication, author had no positions in stocks mentioned.

Roberto Pedone, based out of Delafield, Wis., is an independent trader who focuses on technical analysis for small- and large-cap stocks, options, futures, commodities and currencies. Roberto studied international business at the Milwaukee School of Engineering, and he spent a year overseas studying business in Lubeck, Germany. His work has appeared on financial outlets including

CNBC.com and Forbes.com. You can follow Pedone on Twitter at www.twitter.com/zerosum24 or @zerosum24.

Your Take: Mustang's 50th birthday revs up…

Vrooming into a fifth decade of production, Ford Mustang celebrates its 50th anniversary today and Your Take decided to join the party.

We asked contributors to fire up their cameras and share some of their favorite Mustang memories with us.

Here are some of the best of our submissions!

Mustangs come to those who wait.(Photo: Jimbob Baird, Your Take)

"I met my wife while still in High School in 1968 – the same year I bought my Chevelle Super Sport convertible instead of a Mustang. I've wanted a Mustang ever since and finally got one in 2014. Still have the same wife." -Jimbob Baird

Signed (by Carroll Shelby), sealed, delivered. This Mustang is Jeff Shreck's!(Photo: Jeff Shreck, Your Take)

"This is my pride and joy. Modeled after the 1967 Shelby GT350 Mustang, this car was viewed, approved and then signed on the dash by (car designer) Carroll Shelby himself. This also has a special place in the my heart as it was the topic of the first conversation by my wife and I when we first met." -Jeff Shreck

Love is stronger than a Mustang.(Photo: Randy Kegley, Your Take)

"My wife had breast cancer in her early 30's. (She went through) surgery, chemotherapy, reconstruction, hair loss – all the bad stuff. I told her t! o stay strong, fight hard and when she recovers we will get a old Mustang to fix up for her. This is it, we built it together." -Randy Kegley

Baby's first Mustang!(Photo: Hashimoto Hirotaka, Your Take)

"(I) bought and shipped this 2012 Mustang V6 premium to Tokyo few weeks before my son was born. (Now, I) would like to share the very first family photo!" -Hashimoto Hirotaka

A Mustang, 25 years in the making!(Photo: Tommy Youmans, Your Take)

"(I) got my wife one for our 25 years together and liked it so much I went and got me one." -Tommy Youmans

@yourtake@USATODAY my only full longterm relationship! #mustang50anniversarypic.twitter.com/qBKrJfPKek

— Mohamad Ali Harissi (@aleeharissi) April 15, 2014

@yourtake in 1970, 2 of my Uncles returned home from Vietnam with a load of hazard pay. Both bought '70 Mach 1's. one Clev. One Windsor.

— Rob Reddington (@Rredd88) April 15, 2014

@yourtake when I was a little kid, my Aunt the nurse, bought a '64 pony. It was cream colored/pale yellow. I clearly remember it.

— Rob Reddington (@Rredd88) April 15, 2014

OptionsXpress Sued by Life Settlements Group for Naked Short Selling

Life Partners Holdings (LPHI) said Wednesday that it has filed suit in Illinois against optionsXpress, the company's ex-chief financial officer, and one of its top customers for issuing and selling counterfeit shares of Life Partners Holdings’ stock.

The Chicago-based options brokerage firm is now owned by Charles Schwab (SCHW), which says it “did not own optionsXpress at the time of the trading at issue and was not named in the complaint.”

Life Partners based its case on last year’s SEC proceedings, which concluded that optionsXpress, then-CFO Thomas E. Stern and client Jonathan I. Feldman “committed securities fraud by engaging in the sales of hundreds of millions of dollars in counterfeit-phantom stock passed off as the genuine stock of 25 public companies, including almost $5.5 million of counterfeit-phantom stock of Life Partners Holdings Inc.,” the life-settlements group says in a press release.

The SEC’s case involved five customers, including Feldman, who used this strategy, known as naked short selling, from late 2008 to early 2010 on about 25 stocks, including Sears (SHLD) and AIG (AIG), according to regulators.

In 2009, for instance, they bought about $5.7 billion of securities and sold about $4 billion of options. Feldman’s trades involved some $2.9 billion of purchases and $1.7 billion of options; they took place between July 2009 and March 2010.

The judge in the 2013 case ordered optionsXpress to pay some $3.6 million and Feldman to pay nearly $4.7 million. Stern, who was fired in 2012, was asked to pay $75,000; he was banned from the securities industry. 

Charles Schwab agreed to buy optionsXpress in March 2011 for $1 billion. The deal closed in September 2011.

The San Francisco-based company says Life Partners’ allegations related to the issuing and selling of counterfeit shares of Life Partners Holdings stock are “completely unfounded and without merit. OptionsXpress intends to vigorously defend against the lawsuit and expects to win.”

Options of Life Partners’ security were traded, and shares were purchased “in the normal course of business on registered securities exchanges,” adds Schwab, in a statement. “An SEC expert who already looked at the trading in this matter has testified that the type of trading done by the optionsXpress customer had no adverse impact on share price.”

Life Partners, though, insists that optionXpress’ activities have hurt Main Street. “Individual investors need to know that the stock they are buying is real and not phantom stock cooked up by Wall Street insiders. Without a stock certificate, we've seen how easy it is for Wall Street to pass off counterfeit stock in your account as legitimate and we want to put a stop to it," said CEO Brian Pardo, in a press release.

---

Check out SEC Charges OptionsXpress in Naked Short Selling Scheme on ThinkAdvisor.

Russia sees 'serious capital flight,' economy…

Russia's economy has taken a hit as the Ukraine crisis has sent worried investors scrambling to pull money out of the country, media reports quote a government minister as telling the Russian parliament Wednesday.

Economy Minister Alexei Ulyukayev told parliament that growth was only 0.8% in the first quarter — far short of the ministry's earlier prediction of 2.5% — because of "the acute international situation of the past two months" as well as "serious capital flight," the Associated Press reports.

The Wall Street Journal reports Ulyukayev said about $63 billion left Russia in net capital outflow in the first quarter and gross domestic product contracted by 0.5% on the quarter in seasonally adjusted terms.

The crisis has decimated the ruble, leading nervous investors to postpone projects and convert rubles into foreign currencies.

In the first three months of 2014, capital investment shrank by 4.8% compared with a year ago, Ulyukayev said, according to the Journal.

Another official, Finance Minister Anton Siluanov, told a government meeting Tuesday that Russia could see zero growth this year, according to RT.com, a state-owned TV channel in Russia. At the start of the year, the government had forecast 2.3% growth.

Investors' chief concerns are that the U.S. and European Union might escalate their sanctions against Russia to affect trade, particularly in the valuable energy market. Europe, Russia's largest trading partner, buys more than three-quarters of Russia's crude oil and natural gas exports. Russia's energy revenue in turn funds about half the government budget.

The Ukrainian crisis threatens to increase the Russian economy's challenges, the World Bank said in March. Its 1.3% growth rate in 2013 was the lowest in 13 years after a slump in 2009 caused by the global financial crisis.

The World Bank predicted the economy could shrink by 1.8% this year if instability over Ukraine continues and Russia is hit with more Western sanctions! , according to the Associated Press.

Cloud Power: Intel Squeaks By Earnings On Data Centers, Internet Of Things

As the computing business moves from the desktop to the cloud, Intel Intel and companies like it will have to execute a rapid transition. So far they seem to be doing alright.

Intel's first quarter earnings edged out Wall Street's projection: $0.38 per share over the consensus estimate of $0.37. Revenue actually just missed, with $12.76 billion in sales vs. $12.81 billion estimated.

But the real story is the rise of cloud services and other post-PC businesses. While Intel's biggest business sector is PC client revenue ($7.9 billion), that declined 1% from the first quarter of 2013. The growth came from the data center group, which grew 11% year over year to $3.1 billion, and the "Internet of Things" group, which includes embedded chips for a variety of new smartwatches and other non-traditional computer devices. The Internet of things revenues were only $482 million, but that's up 32% year over year. That category was newly broken out by the company this quarter.

Intel shares, which nudged up 0.79% during the day, initially surged about 3% in after hours trading, then receded. As of 4:30pm EST, shares were up 0.86% after hours.

Follow Brian on Facebook and Twitter.

World's Largest Data Centers

Ford hints at new infotainment system

NEW YORK — A top Ford executive hinted today of a new infotainment system that eventually will replace the much criticized and sometimes confusing MyFord Touch screen that has dragged down the company's performance in quality surveys.

"There are software limitations with the current system that we want to break through so we can offer more capability," Joe Hinrichs, Ford president of the Americas, said at the NADA/J.D. Power Automotive Forum, prelude to the New York Auto Show. "Like anything with technology, there is a lot of evolution in capability, speed, memory, all kinds of things."

Ford's customer satisfaction scores have been taking big hits since MyFord Touch was introduced four years ago.

In February, Ford ended a partnership with Microsoft that created the smartphone-like system and agreed to work with unit to refine software underlying Ford's Sync infotainment system. Sync's next generation is expected to enable people to control their smartphones and other devices by voice command.

"When we are ready, we will have more to say," Hinrichs said when asked directly if an all-new system is in the works.

The complex system — now on more than 5 million vehicles — has befuddled many buyers since it debuted in 2010. They complain the touch screen is not intuitive enough and sometimes distracting from the act of driving because they have to watch the screen instead of feeling the changes through a traditional knob or button.

Hinrichs said Ford has solved most of the problems and that consumers now rate it as good or better than competing systems. Nevertheless, Ford isn't satisfied and continues to seek improvements.

"Consumers want the system to work seamlessly and in an intuitive way. People are expecting touch screens in their vehicles," Hinrichs said. "And they want to be able to control their music, their navigation and their phones with voice controls, and we want to make sure that is done in the simplest and best way possible."

Pier One Climbs As Barclays Sees 25%+ Upside

Pier One Imports (PIR) was jumping 3% Tuesday after an upgrade from Barclays.

Analysts Alan Rifkin and Sam Reid upgraded the stock to Overweight from Equal Weight, and boosted their target price by $4, to $23, writing that the stock has suffered "perfect storm" of one-time operational headwinds that has masked its potential long-term performance.

They write that this year should finally bring the payoff of years of "significant investment" in personnel and technology, and more normalized sales and margins will replace its previous high levels of capital expenditure.

Given that the stock is off more than 20% in the past year, they also write that the selloff has gone too far, and it is a "compelling buying opportunity" at current levels, which represent a meaningful discount to peers. Although the company just reported an upbeat fourth quarter last week, they expect the current first quarter to be a catalyst for the stock, as it will provide an opportunity "for management to begin to demonstrate this renewed momentum."

More from their note:

Supporting top-line growth, we note: (1) E-comm investments have likely peaked; accelerating e-comm growth (to 10% in 2015) should be highly supportive of both top-line (and EBIT). We do not believe forward valuation fully reflects this. (2) A sequential acceleration in comps is highly likely. We are looking for 5% comps for 2014 (vs. 2.4% in 2013), which should yield productivity per square foot of ~$215. (3) PIR's merchandising strategy remains on track. We think differentiation relative to peer offerings is an underappreciated positive. (4) PIR should benefit from attractive housing industry fundamentals in 2014-15. Collectively, these four growth engines should support both occupancy and SG&A leverage. We also note that (5) the accelerated buyback underscores management's conviction in an operating performance rebound. After repurchasing 5% of total shares in the first six weeks of 1Q, we conservatively estimate a total of 8-9% of shares will be bought back in 2014. Additionally, PIR's new $200M senior secured facility supports further buybacks.

Other home furnishings retailers, including Bed, Bath & Beyond (BBBY), Restoration Hardware (RH) and Kirkland's (KIRK) were trading down in afternoon trading.

Despite Doubts, Tim Horton Is Still in the Game

Largest quick-service restaurant in Canada Tim Hortons Inc. (THI) has been recently drawing some attention as to its recent performance. With almost 3,600 units in Canada, and 850 units in the U.S., Tim Hortons generates revenue mainly through franchise royalties and rent payment, company-owned stores and distribution sales to franchisees. Indeed the company's brand is strong and has built some appealing intangible asset, along with a cohesive franchisee system and highly scalable business model. The franchisee model typically allows companies to perceive an annuity-like stream of rent and royalty payment, stabilizing the business against macroeconomic fluctuations and cyclicality.

Nevertheless, this industry is distinctive for its low entering barriers and its competitive pressures, and Tim Hortons is likely to be affected by the increased consolidation of the quick service restaurant industry in Canada. However, this restaurateur is stiff in its position, and with its big scale and strong brand perception holds some competitive advantages as to cope with immediate competition. Moreover, management has been developing an increased brand awareness strategy along with other improvements like the enhancing of guest experience in its restaurants, product innovations in take-home and single-serve coffee products, as well as improved use of technology.

Analysts' recurrent position has been to disincentivize an investment in Tim Horton based in risks driven by strong competition, market saturation and the challenges presented in a U.S. expansion. Nevertheless, the firm has a long growth runway and is planning to continue doing so, as chief executive Marc Caira announced at Tim Horton's annual investor conference in February. Returns on invested capital have always been in the high teens for the company, and as it controls interest in 83% of its full-service system restaurants, it stands in a better position than its peers.

Potential Improvements

Improving unit-level productivity at Canadian locations, with a greater daypart penetration outside the breakfast and coffee categories, introducing product innovations, such as Dark Roast Coffee and Frozen Green Tea, along with re-imaging efforts and the development of mobile payment capabilities are part of the company's effort towards achieving a more leveraged brand. Moreover, speed is being increased through double order stations and additional drive-thru capacity, while expanding through urban areas with "Tims Express" locations. The focus on increasing productivity levels is a key objective for Tim Hortons in the U.S., and management's plan centers on daypart expansion and increasing average check size, along with the pursuing of area development agreements and master licensing agreements in new markets, such as St. Louis, Youngstown, Fort Wayne and Fargo/Minot.

As a result of these efforts, analysts are anticipating approximately a 4% revenue growth in 2014 driven by system sales growth and franchise openings in Canada and the U.S. as well as an expansion of operating margins by 90 basis points in 2014.

Competition in the Market

Companies within the retail-restaurant industry are always susceptible to cyclical and competitive headwinds. The increased competition from larger players such as McDonald's (MCD) and Starbucks (SBUX) might affect Tim Horton's same-restaurant traffic and same-store sales growth. The company's position in Canada is strong, but Tim Horton could reach saturation sooner than expected while struggling to expand within the U.S. market, a much more competitive one. Moreover, the quick service restaurant chains will compete for market share on the basis of price and product differentiation, as the marketplace has low switching cost. Nevertheless, Tim Hortons is likely to defend market share over the medium term, and restaurant productivity increase in focus is expected to push up operating margins.

Bottom Line

Tim Horton holds a strong business, with a spotless franchisees system and a strong brand perception, along with a great track record of rewarding shareholders, increasing its distribution at a 25% compounded annual clip over the past five years. Furthermore, since 2009 the company has repurchased $2 billion in outstanding shares. The firm controls 75% of traffic of Canada's QSR caffeinated beverage sales and accounts for 42% of QSR traffic. An increased average check with an enhanced menu and more complex beverages are likely to have a positive impact on same-store sales. Still, the industry is fiercely competitive and the macroeconomic instability might affect the company's performance. Nevertheless, the coffee maker is well positioned to keep its business growing and further within the U.S.

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

About the author:Damian IlliaA fundamental analyst at Lonetreeanalytics.com constantly looking for value and income investments.

Visit Damian Illia's Website

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Getting a big tax refund may not be a good thing

Eagerly awaiting your big tax return?

Well, according to some experts, your big payday this April may not be anything to take pride in.

"Often the very people who celebrate receiving a refund are those who are most in need of extra money in their pocket each month," said Gail Cunningham, a spokesperson for the National Foundation for Credit Counseling.

According to a February NFCC poll, 56% respondents "plan to always receive a refund each year," compared to just 28% who intentionally plan to "intentionally plan to never receive a refund."

NEED TAX HELP: Get the latest news and advice

Cunningham points out that a refund of $3,000 adds up to about $250 in extra taxes each month – cash that may make the difference between missing a car payment or bouncing a rent check for many lower-income Americans.

And if you're not living paycheck to paycheck, you're still giving the Internal Revenue Service what amounts to an interest-free loan instead of putting your money to work by paying down debt or investing it so that cash grows.

"Why would you not maximize any asset that could work for you?" asks Chris Woehrle, an Assistant Professor of Taxation at The American College of Financial Services.

Costs vs. Benefits of a Big Return

Of course, Woerhle says he understands why people rely on tax refunds as "enforced savings."

"Most people find it difficult to pay themselves 5%, 10% or any percent," he said. He also added that for those fearing any additional bills, overpaying is preferable to getting a surprise obligation in the spring when the balance of their taxes are due.

But Cunningham of the NFCC says the costs far outweigh the benefits. There are a host of other methods to ritualize saving, many of which are much more flexible than overpaying Uncle Sam and waiting for your April tax refund.

After all, the IRS won't send out the check early if your car breaks down.

Cunningham recommends visiting the withholding calculator on IRS.gov, i! nputting a little information about your income and family situation, and then adjusting your taxes on form W-4. That will ensure that you don't overpay on your taxes in the current tax year.

CAN'T MAKE APRIL 15: Should you ask for an extension on filing taxes?

As for 2013 taxes, if you're too late to prevent a big refund there are still responsible things you can do with that check.

"The overarching answer is to put the money toward what is putting you most at risk," Cunningham said.

She advises:

First, catch on bills. "For instance, if you're about to be evicted from your home, or your car is about to be repossessed, use the money to resolve those immediate problems," Cunningham said.

Next, pay down debt. Your "debt utilization ratio" is the second highest weighted element of the credit scoring model, says Cunningham, so having a line of credit near the maximum is a big ding on your credit score. If no account is near the limit, then focus on the highest interest rate or highest balance loan that "is doing you the most financial harm."

Build savings. Most finance experts recommend three to six months of salary saved up for emergencies. If you don't have this nest egg, Cunningham said, you can build one quickly with your tax refund.

Think ahead. Rather than wait for the car to break down or the roof to start leaking, use the tax refund while you have it to perform overdue maintenance on your car or home, Cunningham said.

Invest in Yourself: Taking a course to learn new job skills can be money well spent.

Lastly, Do Something Fun!: If all these financial ducks are in a row, Cunningham said, don't hesitate to spend it. "After all, it's your money, the money you worked all year to earn, and Uncle Sam is simply giving it back to you," she said.

Jeff Reeves is the editor of InvestorPlace.com and the author of The Frugal Investor's Guide to Finding Great Stocks.

Telecoms Lag the Market's Gains on Threat From Google

Stock markets surged higher this morning on stronger-than-expected economic data. The S&P/Case-Shiller 20-city composite index showed a 10.9% rise in home prices over the past year -- the largest jump since April 2006. Further, the Consumer Confidence Index also jumped to a five-year high of 76.2 in May from 69 last month. These two indicators are extremely important to the economy and should help drive economic growth in the second half of the year. 

Stocks surged in early trading after the data was announced, but markets cooled off slightly as the day went on. As of 3:20 p.m. EDT the Dow Jones Industrial Average (DJINDICES: ^DJI  ) is up 0.75%, while the S&P 500 (SNPINDEX: ^GSPC  ) has advanced 0.65%.

Microsoft (NASDAQ: MSFT  ) is one of the Dow's leaders today, rising 1.8%. IDC released a report predicting a 7.8% drop in PC sales this year, but it didn't predict an outright disaster for the PC in the long term. In 2014, shipments are expected to fall 1.2% from 321.9 million this year, but volume is expected to recover to 333 million units in 2017. The PC refresh cycle has changed dramatically in recent years because PCs last longer than ever before. That's keeping consumers from upgrading to Windows 8, but in the long term, IDC doesn't think they'll give up PCs altogether. 

It's been a frustrating path for Microsoft investors, who have watched the company fail to capitalize on the incredible growth in mobile over the past decade. However, the company is looking to make a splash in this booming market. In a new premium report on Microsoft, a Motley Fool analyst explains that while the opportunity is huge, so are the challenges. The report includes regular updates as key events occur, so be sure to claim a copy of this report now by clicking here.

Two giant telecoms are lagging the Dow by a wide margin as Google attempts to upend the market. AT&T (NYSE: T  ) and Verizon (NYSE: VZ  ) are down 1.2% and 0.9%, respectively, as Google Fiber gains more attention from investors and analysts. Analyst Carlos Kirjner at Bernstein said today that while AT&T and Verizon don't have to worry about their dominant positions being upended in the near term, Google Fiber could eventually upend the entire industry.

I think we're making a mountain out of a mole hill today, and until Google sees success in its initial markets, neither AT&T nor Verizon has anything to worry about. We've seen market-changing promises like free Internet from Google before, but they have yet to hit the market with a wildly successful product. It will take a lot to overthrow the established telecom industry, and my money is on the entrenched players until Google proves its worth in fiber.