Hot High Tech Companies To Buy Right Now

Beer makers, big and small, are tapping into consumer willingness to experiment beyond traditional brews.

Bored with Budweiser? Crack open a new vanilla bourbon-flavored lager from the market leader's "Project 12" limited edition 12-pack, which debuted Monday and is available through the end of the year. Other twists on the traditional Budweiser lager within the pack (four bottles each of the three flavors): a darker, slightly stronger brew and a hoppier one made with Pacific Northwest hops.

Or if you prefer holiday spices, Blue Moon Brewing, which is owned by competitor MillerCoors, has a new Gingerbread Spiced Ale in its brewmasters winter sampler pack, out Saturday. ..

Seasonal and limited-edition beers are not new, but, typically, smaller, independent craft breweries have been the ones more likely to release them. Boston Beer Co., the largest U.S. craft brewery, has its own gingerbread-flavored beer, the Merry Maker stout, in individual 22 oz. bottles, and the cinnamon, ginger and orange peel-infused Winter Lager, in six packs and a winter variety pack, on the way to stores now.. Also just out, the brewery's Utopia, a blended and barrel-aged "extreme" (read: very high alcohol) beer -- only 12,000 bottles were made and each sells for $199.

Hot High Tech Companies To Buy Right Now: LRAD Corporation(LRAD)

LRAD Corporation engages in the design, development, and commercialization of directed sound technologies and products in North America, Europe, the Middle East, and Asia. The company develops and delivers directed acoustic products that beam, focus, and control sound over short and long distances. It offers Long Range Acoustic Device, which creates directed acoustic beam to communicate at operational ranges in high ambient noise environments, primarily for military applications. The company also provides SoundSaber thin film magnetic speaker technology that provides high clarity throughout the audio range for emergency and mass notification, public address, and other sound applications. Its SoundSaber hardened panels are used in acoustic environments, such as hangar bays, industrial buildings, airports, and other facilities. LRAD Corporation sells its products directly to government, military, large end-users, and defense-related companies. The company was formerly known as American Technology Corporation and changed its name to LRAD Corporation in March 2010. LRAD Corporation was founded in 1980 and is based in San Diego, California.

Advisors' Opinion:

• [By gurujx]

  LRAD (LRAD): CFO/Secretary Katherine McDermott Sold 38,204 Shares

  CFO/Secretary Katherine McDermott sold 38,204 shares of LRAD stock on Aug. 28 at the average price of $1.57. Katherine H McDermott owns at least 17,800 shares after this. The price of the stock has decreased by 10.19% since.

Hot High Tech Companies To Buy Right Now: Vonage Holdings Corp.(VG)

Vonage Holdings Corp. provides broadband communication services in the United States, Canada, and the United Kingdom. The company offers voice and messaging services through session initiation protocol (SIP) based voice over Internet protocol network. The company?s primary product offering is Vonage World, a residential plan with unlimited calling domestically and to approximately 60 countries, including India, Mexico, and China for a flat monthly rate. It also provides broadband telephone replacement services to residential, small office, and home office customers through various service plans with a range of basic features, including call waiting, caller ID with name, call forwarding, and voicemail. In addition, the company offers mobile services through mobile applications that can be downloaded for iPhone, iPad, iPod touch, and Android OS devices. Further, the company provides Vonage Mobile, a free downloadable mobile application that provides free calling and messagi ng between users who have the application, as well as traditional paid international calling to any other phone. It markets its services through in-bound telemarketing and online direct sales, as well as through regional and national retailers. As of December 31, 2011, the company had approximately 2.4 million subscriber lines. Vonage Holdings Corp. was incorporated in 2000 and is headquartered in Holmdel, New Jersey.

Advisors' Opinion:

• [By Jake L'Ecuyer]

  Equities Trading UP
  Vonage Holdings (NYSE: VG) was up early on in Thursday's session, gaining 15.74 percent to $3.53 after news broke that the company would acquire Vocalocity for $130 million.

• [By Rich Smith]

  Holmdel, N.J.-based Vonage (NYSE: VG  ) has a new Chief Financial Officer.

  On Friday, Vonage closed out the trading week with an announcement that it's hired away David T. Pearson from Deutsche Bank�to become its new Treasurer and CFO. At Deutsche, Pearson spent nine years working as a managing director and head of the bank's Global Media & Telecom Group. Before that, he worked in Goldman Sachs' Technology, Media & Telecommunications�group.

• [By Alex Planes]

  Investors love stocks that consistently beat the Street without getting ahead of their fundamentals and risking a meltdown. The best stocks offer sustainable market-beating gains, with robust and improving financial metrics that support strong price growth. Does Vonage Holdings (NYSE: VG  ) fit the bill? Let's take a look at what its recent results tell us about its potential for future gains.

Best Penny Companies To Own In Right Now: Colossus Minerals Inc (COLUF)

Colossus Minerals Inc. (Colossus) is a development-stage mining company. Colossus is focused on its Serra Pelada project into production. The Serra Pelada Project is located in the mineral prolific Carajas region in Para, Brazil, is host to high grade gold and platinum group metals deposit. The Company�� three mineral properties in Brazil: the Serra Pelada Project, the Rio Cristalino Property and the Cutia Property. The Serra Pelada Project is the only material property of the Company. The Company's subsidiaries include Colossus Mineracao Ltda., Mineracao Fazenda Monte Belo Ltda., Serra Pelada - Companhia de Desenvolvimento Mineral, and Grifo Geologia e Participacoes Ltda. In January 2012, the Company acquired Cutia Property from Cooperativa Mista do Garimpeiro de Cutia.

Hot High Tech Companies To Buy Right Now: Shear Wind Inc. (SWX.V)

Shear Wind Inc., a development stage company, engages in the exploration and development of renewable energy in Canada. It is developing various wind projects with a total generation capacity of approximately 1,200 mega watts located in Alberta, Saskatchewan, Nova Scotia, and New Brunswick. The company was formerly known as EW Power Services Ltd. and changed its name to Shear Wind Inc. in October 2005. Shear Wind Inc. was incorporated in 2004 and is headquartered in Bedford, Canada. As of November 22, 2012, Shear Wind, Inc. operates as a subsidiary of Sprott Power Corp.

Hot High Tech Companies To Buy Right Now: Taylor Wimpey(TW.L)

Taylor Wimpey plc operates as a homebuilding company primarily in the United Kingdom and Spain. Its product range includes high-rise condominiums, single family homes, townhomes, full service country club communities, apartments, and five bedroom houses. The company offers its products under Taylor Wimpey, George Wimpey, and Bryant Homes brands in the United Kingdom and Spain. Taylor Wimpey plc manages a portfolio of approximately 170,000 land plots across the United Kingdom and Spain. The company was founded in 1880 and is headquartered in High Wycombe, the United Kingdom.

Hot High Tech Companies To Buy Right Now: Old Second Bancorp Inc.(OSBC)

Old Second Bancorp, Inc. operates as a bank holding company for Old Second National Bank that provides commercial and retail banking services. It offers various consumer and commercial products and services, including demand, NOW, money market, savings, time deposit, individual retirement, and Keogh deposit accounts. The company also provides business loans comprising lines of credit for working capital and operational purposes; term loans for the acquisition of equipment; commercial and residential real estate loans; construction loans; and consumer loans, such as motor vehicle, home improvement, home equity, signature loans, and small personal credit lines. In addition, the company offers installment lending services comprising direct and indirect loans to consumers and commercial customers; and residential mortgages, which include conventional, government, and jumbo loans, as well as provides a range of trust, investment, agency, and custodial services for individual, c orporate, and not-for-profit clients. Further, it offers wealth management services; and additional services, such as the acquisition of the United States treasury notes and bonds, the sale of traveler?s checks, money orders, cashier?s checks and foreign currency, direct deposit, discount brokerage, debit and credit cards, and other special services. Additionally, the company provides electronic banking services that comprise Internet banking; and corporate cash management products consisting of remote deposit capture, investment sweep accounts, zero balance accounts, automated tax payments, ATM access, telephone banking, lockbox, automated clearing house transactions, account reconciliation, controlled disbursement, detail and general information reporting, wire transfers, vault services for currency and coin, and checking accounts. As of December 31, 2010, it operated 27 branches and 1 satellite facility in Illinois. The company was founded in 1982 and is headquartered i n Aurora, Illinois.

Watch Out for High-Priced Tech Stocks

Who could forget the late 1990s? Tech stocks sold for 100 times earnings and more, many companies had no profits, and some had no revenues. We all know how that party ended.

See Also: The 7 Deadly Sins of Investing

To say we're seeing a rerun of that lunacy today would be a gross overstatement. Most tech stocks are reasonably priced; in my view, many look attractive. But the valuations on a growing number of Internet stocks are just as nutty as they were in the '90s. These are stocks with price-earnings ratios of 50, 60 or even more than 100.

Just as in the '90s, most of these companies are working with promising, cutting-edge technologies. Some analysts project that their earnings will grow rapidly and long enough to justify the current high price-earnings ratios. But the odds of these companies growing into their stretched valuations are slim.

Consider LinkedIn (LNKD). It's a great company for job hunting and networking. It dominates its niche — and may well continue to for years to come. But its exorbitant share price already reflects a ton of wonderful growth. At $243.00, LinkedIn trades at 116 times the average of analysts' estimates for the coming 12 months. That price is also 23 times current sales. (All prices and related data are as of October 28.)

At the peak of the tech bubble, in March 2000, longtime bull Jeremy Siegel wrote a famous and uncharacteristically bearish piece for the Wall Street Journal. "History has shown that whenever companies, no matter how great, get priced above 50 to 60 times earnings, buyer beware," wrote Siegel, a finance professor at the University of Pennsylvania's Wharton School and a columnist for Kiplinger's Personal Finance magazine.

But here we go again — at least with some of today's sexiest companies. Not all of them fall into groups that are commonly considered to be tech. Look at Tesla Motors (TSLA), the hot new maker of green cars (see Tesla Take Off). At $162.86, it trades at 150 times estimated earnings for the coming 12 months and 14 times sales. It could turn out to be a transformative company, but it'll have to do a whole lot of transforming to ever support its current price.

Young companies, of course, often lose money, especially capital-intensive start-ups, such as Tesla. You can't run a car-assembly factory in your garage on a credit card. But start-ups are, by definition, high-risk; there are plenty of opportunities for the wheels to come off before a new company matures.

Top 5 Insurance Companies To Buy For 2014

Salesforce.com (CRM) is a fast-growing company that sells software and services that enable its customers to conduct business in the cloud. "Connect to your customers in a whole new way with our apps," the homepage promises. But at $53.49 a share, the stock trades at 140 times estimated earnings. The San Francisco-based business is promising; the stock price is outrageous.

Price-earnings ratios are a blunt tool for measuring value. They're far from perfect. For one thing, with cyclical companies — that is, companies that tend to rise and fall with the economic cycle — you typically want to buy when P/Es are high or even nonexistent (because the company is losing money) and sell when P/Es are low. But as a general rule, it makes sense for investors to start their search for value by looking at a stock's P/E.

Among the best-known stocks with a sky-high valuation is Amazon.com (AMZN). Publicly traded since 1997, the online retailer is beloved by both consumers and investors. Its shares, at $358.16, change hands at 90 times earnings.

Want some other examples? Facebook (FB) trades at 56 times earnings, Groupon (GRPN) at 46, Netflix (NFLX) at 77, Shutterfly (SFLY) at 101, WebMD Health (WBMD) at 56, and Zillow (Z) at 165. Outside of tech, Chipotle Mexican Grill (CMG) trades at 41 times earnings, and Live Nation Entertainment (LYV) at 293.

I'm not arguing that Tesla or LinkedIn or any of the others won't beat the odds and make money for investors. Some high-priced stocks are also profitable investments. But investing in such overpriced stocks is a sucker's bet.

Why do investors, particularly professionals, buy these stocks? A lot of the buying is driven by computers and is often based on momentum: You buy a stock that has risen, hoping it will rise a bit more before you unload it.

But individual investors shouldn't play the momentum game. Buying an overpriced stock and hoping to sell it to a greater fool is a dangerous game that almost always ends badly.

Steve Goldberg is an investment adviser in the Washington, D.C., area.

Will Sirius XM Radio See A Strong Bid?

With shares of Sirius XM Radio (NASDAQ:SIRI) trading around $3.46, is SIRI 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

Sirius XM Radio broadcasts its music, sports, entertainment, comedy, talk, news, traffic, and weather channels in the United States on a subscription fee basis through its two satellite radio systems. Subscribers can also receive its music and other channels over the Internet, including through applications for mobile devices. Audio entertainment has always pleased consumers and is a medium that is growing in popularity. Sirius XM Radio is looking to expand its audio entertainment channels to every audio medium possible, which will surely translate to rising profits. As consumers continue to adopt this technology, look for Sirius XM Radio to gain market share.

NEW! Discover a new stock idea each week for less than the cost of 1 trade. CLICK HERE for your Weekly Stock Cheat Sheets NOW!

T = Technicals on the Stock Chart are Strong

Sirius XM Radio stock has been on a strong surge higher since establishing lows during the 2008 Financial Crisis. The stock is now coasting higher and sees no signs of slowing. 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, Sirius XM Radio is trading slightly above its rising key averages which signal neutral to bullish price action in the near-term.

(Source: Thinkorswim)

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

	Implied Volatility (IV)	30-Day IV Percentile	90-Day IV Percentile
Sirius XM Radio Options	37.89%	66%	62%

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

	Put IV Skew	Call IV Skew
July Options	Flat	Average
August Options	Flat	Average

As of today, there is an average demand from call buyers or sellers and low demand by put buyers or high demand by put sellers, all neutral to bullish over the next two months. To summarize, investors are buying a significant amount of call and put option contracts and are leaning neutral to bullish 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 Improving 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 Sirius XM Radio’s stock. What do the last four quarterly earnings and revenue growth (Y-O-Y) figures for Sirius XM Radio look like and more importantly, how did the markets like these numbers?

	2013 Q1	2012 Q4	2012 Q3	2012 Q2
Earnings Growth (Y-O-Y)	0%	104.8%	-50%	1500%
Revenue Growth (Y-O-Y)	11.52%	13.87%	13.74%	12.51%
Earnings Reaction	5.86%	1.26%	0.35%	4.54%

Sirius XM Radio has seen improving earnings and revenue figures over the last four quarters. From these numbers, the markets have been upbeat about Sirius XM Radio’s recent earnings announcements.

NEW! Discover a new stock idea each week for less than the cost of 1 trade. CLICK HERE for your Weekly Stock Cheat Sheets NOW!

P = Poor Relative Performance Versus Peers and Sector

How has Sirius XM Radio stock done relative to its peers, Pandora (NYSE:P), Cumulus Media (NASDAQ:CMLS), CBS (NYSE:CBS), and sector?

	Sirius XM Radio	Pandora	Cumulus Media	CBS	Sector
Year-to-Date Return	14.88%	56.32%	34.83%	26.99%	28.34%

Sirius XM Radio has been a poor relative performer, year-to-date.

Conclusion

Sirius XM Radio provides a wide variety of audio entertainment channels to excited consumers in the United States. The stock has been on strong surge higher over the last several years and seems to be poised to continue this trend. Over the last four quarters, earnings and revenue figures have improved, which has really helped maintain investors upbeat about the company. Relative to its peers and sector, Sirius XM Radio has been a poor performer, year-to-date. WAIT AND SEE what Sirius XM Radio does this coming quarter.

Sirius XM Refinances Debt At Attractive Rates

Sirius XM (SIRI) announced today its intention to borrow $600 million at a rate of 5.70%. The bonds will be sold outside the United Sates, and will be used along with cash on hand to retire higher interest notes which are due in 2015. The notes being retired carry an interest rate of 8.75%. The new notes are due in 2021.

Sirius XM has $800 million tied to the notes due in 2015. The new debt offering will cover the bulk of that, with cash covering the rest. Essentially, the company is removing $171 million in debt and lowering the interest rate on the remaining debt by over 3 basis points.

This news is very positive. It helps improve free cash flow by a lower principle amount in combination with less interest. It is interesting that these bonds were specifically designed for sale outside the United States. It would indicate that the company has some attractive fundamental characteristics that appear attractive to an investor or group of investors.

One thing that the company has expressed is that they want to maintain a debt to EBITDA ratio of 3.5 to 1. Currently, excluding the untapped $1.25 billion credit facility, the company sits at a ratio of just under 3. The potential debt picture, using an assumed EBITDA of $1.37 billion in 2014 and assuming that the credit facility is fully used, the ratio would be just over 3. Essentially, that means there is room to take on more debt if needed. Such debt could be used to increase the share buyback program. The current $2 billion dollar share buyback program has about 3 months left if the pace of buybacks remains the same.

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(click to enlarge)

While many people do not consider debt as good, smart debt can be a very effective tool. With the types of rates Si! rius XM is garnering these days, this borrowed money is cheap. The next debt issue that will likely be addressed in some manner is the 2014 debt which is often referred to as toxic because the notes can convert into about 273 shares. That is due to happen in 2014. The company has, in the past, offered to take these notes out, but there were few takers. Once the 8.75% notes and the converts are taken out, the highest interest rate notes will be the 7.625% notes due 2018. Certainly the company may get aggressive with those notes as well at some point.

For investors this new bond issue is yet another positive on the fundamental story that is Sirius XM. Combined with a record setting quarter and increasing auto sales, this company is setting up for quarterly reports that are even more impressive than the most recent. Stay Tuned.

Source: Sirius XM Refinances Debt At Attractive Rates

Disclosure: I am long SIRI. 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...)

Jack Daniel’s battles small Ky. distiller

LOUISVILLE, Ky. (AP) — A white whiskey named for a famed Appalachian moonshiner started out being sold in Mason jars, to honor its roguish roots, but switched to square-shaped bottling. That new look has the upstart distiller embroiled in a trademark infringement fight with Jack Daniel's Tennessee whiskey.

The legal feuding pits an industry blue blood against a tiny distiller that proudly claims to carry on the tradition of moonshiner Marvin "Popcorn" Sutton. The irascible Sutton wrote a paperback called "Me and My Likker" and recorded videos on how to make moonshine.

Sutton, known for his long gray beard and faded overalls, took his own life in 2009 rather than go to prison for making white lightning.

Now, the whiskey maker he inspired is facing its own legal problems.

The owner of the Jack Daniel's trademark sued the Nashville, Tenn.-based distiller of Popcorn Sutton's Tennessee White Whiskey. The lawsuit claims the bottling and labeling for the Popcorn Sutton product is "confusingly similar" to the ubiquitous packaging for Jack Daniel's.

The suit filed in Nashville wants the Popcorn Sutton bottle removed from the market. It says the new packaging hit the shelves in either late 2012 or early 2013.

"Defendants' use of the new Popcorn Sutton's trade dress in connection with their Tennessee white whiskey is likely to cause purchasers and prospective purchasers of the product to believe mistakenly that it is a new Tennessee white whiskey product in the Jack Daniel's line," the lawsuit said.

The suit was filed by California-based Jack Daniel's Properties Inc., a subsidiary of Brown-Forman Corp.

Jack Daniel's is the flagship brand of Louisville-based Brown-Forman, which sold 11 million cases of the Black Label Tennessee Whiskey in the fiscal year that ended April 30. Jack Daniel's whiskey is produced in Lynchburg, Tenn.

Named as defendants are J&M Concepts LLC and Popcorn Sutton Distilling LLC, which operate in Nashville.

The defendants did no! t respond to phone calls and emails seeking comment Friday.

The small distillery's website says Popcorn Sutton's white whiskey is currently available in Tennessee, Kentucky, Arkansas and Georgia.

The suit notes what it said are the similarities between the packing for Jack Daniel's and the Popcorn Sutton spirit. Both bottles are square shaped with angled shoulders and beveled corners, with white-on-black labeling color schemes, the suit said. Even the font style of the Popcorn Sutton labeling is reminiscent of the Jack Daniel's label, it said.

Except for minor tweaks, the Jack Daniel's packaging has been "a consistent commercial impression" for decades, the suit said. That packaging is part of "one of the oldest, longest-selling and most iconic consumer products" in U.S. history, it said.

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The suit said the defendants' master distiller, Jamey Grosser, cited Sutton for inspiring the makeover for his brand's look. Grosser noted that Sutton wanted to sell his moonshine in eye-catching packaging once he could afford to do so. The old moonshiner would say: "My whiskey is too good to be in a damn jar," the suit said.

Nick Reifsteck, manager of Old Town Wine and Spirits in Louisville, said the Popcorn Sutton's whiskey seemed more popular in its simpler bottle.

"When it was in the Mason jars, it was a better seller, more of a curiosity," he said Friday.

Jack Daniel's last year released its own white spirit — an unaged rye. So far, the company has produced about 100,000 bottles for sale in the U.S., Brown-Forman said.

The lawsuit seeks an injunction to stop the defendants from using their current bottle. It also asks for unspecified damages.

For Jack Daniel's, it's the latest round of legal fighting in its vigilance to protect its trademark, its parent company said.

"We've taken action against many individuals and comp! anies all! over the world for infringing in the Jack Daniel's trademark," Brown-Forman spokesman Phil Lynch said Friday. "We are vigorous in our defense of all our trademarks, and especially Jack Daniel's."

4 Stocks Under $10 Making Big Moves

DELAFIELD, Wis. (Stockpickr) -- At Stockpickr, we track daily portfolios of stocks that are the biggest percentage gainers and the biggest percentage losers.

>>5 Big Stocks to Trade for Big Gains

Stocks that are making large moves like these are favorites among short-term traders because they can jump into these names and try to capture some of that massive volatility. Stocks that are making big-percentage moves either up or down are usually in play because their sector is becoming attractive or they have a major fundamental catalyst such as a recent earnings release. Sometimes stocks making big moves have been hit with an analyst upgrade or an analyst downgrade.

Regardless of the reason behind it, when a stock makes a large-percentage move, it is often just the start of a new major trend -- a trend that can lead to huge profits. If you time your trade correctly, combining technical indicators with fundamental trends, discipline and sound money management, you will be well on your way to investment success.

>>5 Sin Stocks to Protect Your Portfolio

With that in mind, let's take a closer look at a several stocks under $10 that are making large moves to the upside today.

Top 5 Dividend Companies To Invest In 2014

Anthera Pharmaceuticals

Anthera Pharmaceuticals (ANTH) is a biopharmaceutical company focused on developing and commercializing products to treat autoimmune diseases. This stock closed up 7.4% to $3.76 in Thursday's trading session.

Thursday's Range: $3.46-$3.76

52-Week Range: $3.11-$9.36

Thursday's Volume: 224,000

Three-Month Average Volume: 109,798

>>5 Hated Earnings Stocks You Should Hate

From a technical perspective, ANTH soared higher here back above its 50-day moving average of $3.67 with above-average volume. This move also pushed shares of ANTH into breakout territory, since the stock closed just above some near-term overhead resistance at $3.75.

Traders should now look for long-biased trades in ANTH as long as it's trending above its 50-day at $3.67 or above Thursday's low of $3.46 and then once it sustains a move or close above Thursday's high of $3.76 with volume that hits near or above 109,798 shares. If we get that move soon, then ANTH will set up to re-test or possibly take out its next major overhead resistance levels at $4.25 to $4.26. Any high-volume move above those levels will then give ANTH a chance to tag its next major overhead resistance levels at $4.49 to $4.60.

NetSol Technologies

NetSol Technologies (NTWK) designs, develops, markets and exports proprietary software products to customers in the automobile finance and leasing, banking, health care and financial services industries internationally. This stock closed up 4.8% to $7.59 in Thursday's trading session.

Thursday's Range: $7.27-$7.64

52-Week Range: $5.70-$14.01

Thursday's Volume: 232,000

Three-Month Average Volume: 222,998

>>3 Hot Stocks on Traders' Radars

From a technical perspective, NTWK ripped higher here right off some near-term support at $7.20 with above-average volume. This stock has been downtrending badly for the last two months, with shares dropping sharply from its high of $12.10 to its recent low of 7.03. During that downtrend, shares of NTWK have been consistently making lower highs and lower lows, which is bearish technical price action. That move has pushed shares of NTWK into oversold territory, since is relative strength index reading recently dipped well below 30. This spike higher on Thursday could be signaling that the downside volatility for NTWK could be over in the short-term.

Traders should now look for long-biased trades in NTWK as long as it's trending above its recent lows of $7.20 or $7.03 and then once it sustains a move or close above Thursday's high of $7.64 with volume that hits near or above 222,998 shares. If we get that move soon, then NTWK will set up to re-test or possibly take out its next major overhead resistance levels a $8.71 to its 50-day moving average of $9.43.

U.S. Auto Parts Network

U.S. Auto Parts Network (PRTS) is a distributor of aftermarket auto parts and accessories. This stock closed up 3.2% to $1.93 in Thursday's trading session.

Thursday's Range: $1.78-$1.99

52-Week Range: $0.91-$3.18

Thursday's Volume: 108,000

Three-Month Average Volume: 197,578

>> 4 Big Stocks to Trade (or Not)

From a technical perspective, PRTS trended higher here right off some near-term support at $1.80 with lighter-than-average volume. This stock has been consolidating and trending sideways since pulling back off its recent high of $3.18, with shares moving between $1.60 on the downside and $2.20 on the upside. Shares of PRTS are now starting to move within range of triggering a big breakout trade above the upper-end of its recent sideways trading chart pattern. That breakout will hit if PRTS manages to take out some near-term overhead resistance levels at $2 to $2.20 with high volume.

Traders should now look for long-biased trades in PRTS as long as it's trending above some near-term support at $1.60 and then once it sustains a move or close above those breakout levels with volume that hits near or above 197,578 shares. If that breakout triggers soon, then PRTS will set up to re-test or possibly take out its 52-week high at $3.18.

Kratos Defense & Security Solutions

Kratos Defense & Security Solutions (KTOS) is a specialized national security technology business providing mission critical products, services and solutions for U.S. national security priorities. This stock closed up 1.2% to $8.66 in Thursday's trading session.

Thursday's Range: $8.46-$8.69

52-Week Range: $4.08-$9.16

Thursday's Volume: 257,000

Three-Month Average Volume: 532,474

>>5 Stocks Insiders Love Right Now

From a technical perspective, KTOS trended modestly higher here right off its 50-day moving average of $8.31 with lighter-than-average volume. This stock has been trending sideways and consolidating for the last two months, with shares moving between $7.95 on the downside and $9.16 on the upside. Shares of KTOS are now starting to push within range of triggering a major breakout trade above the upper-end of its recent range. That breakout will hit if KTOS manages to take out some near-term overhead resistance levels at $8.80 to $8.86, and then once it takes out its 52-week high at $9.16 with high volume.

Traders should now look for long-biased trades in KTOS as long as it's trending above its 50-day at $8.31 or above more near-term support at $7.95 and then once it sustains a move or close above those breakout levels with volume that hits near or above 532,474 shares. If that breakout hits soon, then KTOS will set up to enter new 52-week-high territory above $9.16, which is bullish technical price action. Some possible upside targets off that breakout are $10 to $11, or even $12.

To see more stocks that are making notable moves higher today, check out the Stocks Under $10 Moving Higher portfolio on Stockpickr.

-- Written by Roberto Pedone in Delafield, Wis.

RELATED LINKS:

>>4 Stocks Rising on Unusual Volume

>>5 Stocks Under $10 Set to Soar

>>Do You Own These Blue-Chips? Sell Them!

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.

Under Armour’s Beat and Raise Not Enough as Shares Drop 5%

Let’s say you’re Under Armour (UA). You’ve just reported a profit of 68 cents, topping analyst forecasts for 66 cents. Your revenue also topped expectations and you raised your full year revenue guidance above your previous range. Your shares should be heading higher, right?

ZUMAPRESS.com

Not quite. Sure the numbers looked good, but Under Armour’s stock had gained nearly 70% this year and sometimes good just isn’t good enough.

The Buckingham Research Group’s John Zolidis and Patrick O’Grady note that Under Armour’s revenue raise only brought the company’s guidance in-line with what analysts were already expecting, and its EPS guidance when to $1.40 to $1.42, from $1.37 to $1.42, below forecasts for $1.45.

Their conclusion: “…shares are ahead of themselves at current prices.” They write:

We believe the company has created an aspirational brand and is developing a product pipeline and strategy that will allow it to continue to grow at robust rates over the foreseeable future. However, we believe this outlook is more than factored into analyst estimates and the stock's valuation at current levels (47x FY14 EPS). We advise investors to be patient and wait for a better entry point.

Zolidis and O’Grady offer a better choice, too: Dick’s Sporting Goods (DKS), which is Under Armour’s largest wholesale customer.

Shares of Under Armour have dropped 5.2% to $79.59 at 1:21 p.m., while Dick’s has dropped 0.8% to $51.32. Nike (NKE) is little changed at $75.58, Skechers USA (SKX) has dropped 2.2% to $28.53 and Columbia Sportswear (COLM) has declined 0.1% to $62.75.

Apple and Samsung Fortify Their Strongholds

The smartphone market continues to be increasingly dominated by Apple (NASDAQ: AAPL  ) and Samsung, who are viciously battling to hold down their forts while grabbing share from each other. Kantar Worldpanel ComTech has released its most recent estimates for the three months ending in May, and each company is playing strong defense.

Samsung now has over half of the European market, which has helped drive Google (NASDAQ: GOOG  ) Android's platform market share up to 70.4%. Android posted the biggest gain of all operating systems within the five biggest European markets, or EU5. Apple's market share in Europe slipped to 17.8%.

Apple has long enjoyed a strong user base in the U.S., much like other developed economies that utilize the subsidy model. Apple grabbed 41.9% of the market during the three months, its biggest slice of all the countries measured. The news comes after data that 57% of all smartphones activated on the top three domestic carriers in the first quarter were iPhones.

Kantar cites the addition of T-Mobile (NYSE: TMUS  ) as an iPhone carrier in helping Apple grow its domestic presence. The No. 4 carrier launched the iPhone in mid-April, meaning it was on sale for about half of the time frame in question. Kantar's data shows that 28% of T-Mobile customers are planning to by an iPhone for their next upgrade. T-Mobile's subscriber base may be smaller than its three larger rivals, but the pent-up demand from its customers are an incremental positive for Apple.

Corroborating data from IDC, Microsoft (NASDAQ: MSFT  ) has overtaken BlackBerry (NASDAQ: BBRY  ) as the No. 3 platform in numerous geographical segments. That includes the U.S., Europe, and Australia. Windows Phone's European market share of 6.8% is now well above BlackBerry's estimated 2.5%. Kantar estimates that BlackBerry's U.S. position has declined to just 0.7%, while Windows Phone now grabs 4.6% of the market.

The switch comes as no surprise considering BlackBerry's disappointing smartphone volumes and Nokia's rising Lumia shipments. Nokia is also helping Microsoft gain in the Mexican market with entry-level Windows Phones, although BlackBerry still has a firm lead over Microsoft south of the border.

It's incredible to think just how much of our digital and technological lives are almost entirely shaped and molded by just a handful of companies. Find out "Who Will Win the War Between the 5 Biggest Tech Stocks?" in The Motley Fool's latest free report, which details the knock-down, drag-out battle being waged by the five kings of tech. Click here to keep reading.

Ask Matt: Time to worry if dividends top profit?

USA TODAY markets reporter Matt Krantz answers a different reader question every weekday. To submit a question, e-mail Matt at mkrantz@usatoday.com.

Q: Is it a problem if a stock's dividend is greater than earnings?

A: When a dividend seems too good to be true, it probably is.

Investors are wise to compare the amount of cash being paid out by a company and compare that to the company's earnings. Dividends are paid out of the company's cash horde. That cash horde increases during the normal course of business if the company generates profit that exceeds the dividends it's paying out, not to mention other cash it is't using to pay for things such as stock buybacks.

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Companies can temporarily afford to pay out dividends that are larger than profits, but that doesn't last long without resorting to unusual action. Eventually the dividend will need to be cut or suspended if it tops a company's profit. How long that will take, though, depends on how much cash the company has and how much larger the dividend is than the profit. Some companies may also look to sell stock or borrow money to keep up a dividend it cannot afford from profit.

Top 10 Undervalued Companies To Watch For 2014

Generally, most companies can afford to pay larger dividends. The payout rate of companies in the Standard & Poor's 500 is 33%, meaning companies are paying out a third of their profit as dividends. That's low by historic standards, well below the 52% average over time, says Howard Silverblatt of S&P Dow Jones Indices.

In your e-mail, you asked about the dividend at Williams Partners (WPZ). The company pays a 6.6% dividend yield. It paid 86 cents a share in the form a dividend in the August quarter, which was greater than the 62 cents a share it earned during the second quarter. But that's likely a temporary s! ituation: the company earned $3.60 last year, which exceeded the $3.14 a share it paid in dividends in 2012.

A Once-in-a-Lifetime Opportunity for British American Tobacco

LONDON -- With governments across the world enacting various pieces of legislation aimed at reducing the number of people who smoke, many investors are questioning the merits of investing in the tobacco sector.

Indeed, even the second-biggest cigarette market in the world, Russia, recently banned smoking in some public places. This follows Australia's plain-packaging law in December, which required all cigarettes to be sold in identical, dark-green packets.

The tide, it seems, is turning against tobacco companies such as British American Tobacco  (LSE: BATS  ) (NYSEMKT: BTI  ) .

However, while smoking tobacco may be a declining activity, a new and supposedly healthier variant could be the answer to the industry's prayers. 

Indeed, BAT announced earlier this year that it has appointed its former group operations director, Des Naughton, as managing director of its Next Generation Products division.

Alongside him will flow substantial investment, with the company expecting approval for a new "tobacco inhalation device" (which is not an electronic cigarette) by the end of this year. Furthermore, BAT hopes the product will launch by the end of 2014 and will be the change that is needed to offer a viable long-term future for the industry.

As mentioned, worldwide cigarette volumes are currently in decline, although with the world population forecast to hit 9 billion by 2050, a falling proportion of smokers may not equate to a decline in the total number of smokers. Whether lower cigarette volumes is due to government policies is debatable but, in any case, companies such as BAT are feeling the pinch.

As a result, tobacco firms are having to increase prices and reduce costs to deliver earnings per share (EPS) growth, but such measures cannot continue indefinitely, with growing revenue being a prerequisite of long-term survival for the industry. 

Top 10 Bank Stocks To Watch For 2014

Therefore, new products such as BAT's tobacco inhalation device could be the structural shift that encourages more people to smoke, thereby arresting the current decline in cigarette volumes.

Of course, BAT not only offers long-term potential but the chance to make short-to-medium-term gains, too. 

With a P/E of 15.4 and annual EPS growth of around 9%, the shares do not seem to be overly expensive, especially when compared to the tobacco sector P/E of 16.3. A yield of 3.9% is above the FTSE 100 average of 3.4%, too.

As ever, government regulation remains a factor in the industry, but instead of viewing it as a negative, I would urge you to look upon it as a positive catalyst for change and quite possible as a once-in-a-lifetime opportunity for tobacco shareholders. 

Perhaps it is a push from governments that will, ironically, lead to the long-term survival and profitability of not only BAT but the entire industry.

Let me finish by adding that if you already hold BAT shares and are looking for alternative opportunities in the FTSE 100, this exclusive wealth report reviews five other attractive possibilities.

Indeed, all five blue chips offer a mix of robust prospects, illustrious histories, and dependable dividends, and have just been declared by The Motley Fool as "5 Shares You Can Retire On."

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5 Best Value Stocks To Watch Right Now

Looking at the stock market today, you'll find major market benchmarks like the Dow and S&P 500 trading at all-time highs. That has many investors reluctant to get into the market, fearing that they're paying too much for stocks. But just because the market is setting records doesn't mean that value investors have to give up on stocks entirely. In fact, by some measures, today's stock market is quite reasonably priced.

Looking at market multiples
Fundamentally, what determines a stock's value is what the company expects to earn in the future. When earnings prospects are good and growth appears strong, investors are willing to pay higher multiples to current earnings in order to buy shares. When future earnings become more uncertain, then shareholders aren't willing to pay as much today for what could be slower growth tomorrow.

With the Dow and S&P having soared between 125% and 140% since their 2009 lows, it'd be reasonable to assume that their earnings valuations would be somewhat lofty right now. But that's far from the case:

5 Best Value Stocks To Watch Right Now: Tupperware Corporation(TUP)

Tupperware Brands Corporation operates as a direct seller of various products across a range of brands and categories through an independent sales force. The company engages in the manufacture and sale of kitchen and home products, and beauty and personal care products. It offers preparation, storage, and serving solutions for the kitchen and home, as well as kitchen cookware and tools, children?s educational toys, microwave products, and gifts under the Tupperware brand name primarily in Europe, Africa, the Middle East, the Asia Pacific, and North America. The company provides beauty and personal care products, which include skin care products, cosmetics, bath and body care, toiletries, fragrances, nutritional products, apparel, and related products principally in Mexico, South Africa, the Philippines, Australia, and Uruguay. It offers beauty and personal care products under the Armand Dupree, Avroy Shlain, BeautiControl, Fuller, NaturCare, Nutrimetics, Nuvo, and Swissgar de brand names. The company sells its Tupperware products directly to distributors, directors, managers, and dealers; and beauty products primarily through consultants and directors. As of December 26, 2009, the Tupperware distribution system had approximately 1,800 distributors, 61,300 managers, and 1.3 million dealers; and the sales force representing the Beauty businesses approximately 1.1 million. The company was formerly known as Tupperware Corporation and changed its name to Tupperware Brands Corporation in December 2005. The company was founded in 1996 and is headquartered in Orlando, Florida.

Advisors' Opinion:

• [By John Udovich]

  Everyone is familiar with�the Tupperware brand from�consumer products stock Tupperware Brands Corporation (NYSE: TUP) and you are probably familiar with the brands�of mid cap stock Jarden Corp (NYSE: JAH) along with small cap stocks Libbey Inc (NYSEMKT: LBY) and Lifetime Brands Inc (NASDAQ: LCUT); but what about the stocks themselves? Chances are, their brands or products are right under your nose at home and you probably don�� know anything about the mid cap or small cap stock behind them.

• [By Dan Caplinger]

  Where growth will come from
  One area that Newell Rubbermaid still has to tap fully is emerging markets. The company has done a good job of expanding overseas, with 17% annual growth in Latin America. But with barely a quarter of its sales coming from outside the U.S. and Canada, the company has a lot further to go. Storage rival Tupperware (NYSE: TUP  ) gets fully 60% of its total revenue from emerging markets, and it too has seen impressive gains in South America as well as the Asia-Pacific region.

• [By Eric Volkman]

  Tupperware Brands (NYSE: TUP  ) is reaching into its corporate bowl for a fresh payout to shareholders. The company has declared a quarterly dividend of $0.62 per share. This will be paid on July 8 to stockholders of record as of June 19. That amount matches the firm's previous distribution, which was paid in early April. Prior to that, Tupperware Brands was rather less generous, handing out $0.36 per share.

5 Best Value Stocks To Watch Right Now: Schlumberger N.V.(SLB)

Schlumberger Limited, together with its subsidiaries, supplies technology, integrated project management, and information solutions to the oil and gas exploration and production industries worldwide. The company?s Oilfield Services segment provides exploration and production services; wireline technology that offers open-hole and cased-hole services; supplies engineering support, directional-drilling, measurement-while-drilling, and logging-while-drilling services; and testing services. This segment also offers well services; supplies well completion services and equipment; artificial lift; data and consulting services; geo services; and information solutions, such as consulting, software, information management system, and IT infrastructure services that support oil and gas industry. Its WesternGeco segment provides reservoir imaging, monitoring, and development services; and operates data processing centers and multiclient seismic library. This segment also offers variou s services include 3D and time-lapse (4D) seismic surveys to multi-component surveys for delineating prospects and reservoir management. The company?s M-I SWACO segment supplies drilling fluid systems to improve drilling performance; fluid systems and specialty tools to optimize wellbore productivity; production technology solutions to maximize production rates; and environmental solutions that manages waste volumes generated in drilling and production operations. Its Smith Oilfield segment designs, manufactures, and markets drill bits and borehole enlargement tools; and supplies drilling tools and services, tubular, completion services, and other related downhole solutions. The company?s Distribution segment markets pipes, valves, and fittings, as well as mill, safety, and other maintenance products. This segment also provides warehouse management, vendor integration, and inventory management services. Schlumberger Limited was founded in 1927 and is based in Houston, Texas.

Advisors' Opinion:

• [By WALLSTCHEATSHEET.COM]

  Schlumberger is best of breed in its industry, but the industry�� potential might not be as strong as advertised. There is a theory that decreasing energy prices will lead to increased demand, but that�� like saying someone flushed the toilet and then went to the bathroom. The truth is that global demand is on shaky ground, and if it falters, it will lead to a chain reaction that won�� benefit Schlumberger. In a somewhat related matter of importance, Schlumberger�� stock was hit hard during the financial crisis. The fact that it was deemed the financial crisis isn�� important in this case. What�� important is that it was a deflationary environment and Schlumberger couldn�� maintain its strength in that�environment. If the Federal Reserve removed all monetary stimulus, would a deflationary environment present itself once again? Nobody knows for sure, but it�� a possibility. In the meantime, potential rewards outweigh downside risks for Schlumberger. Therefore, Schlumberger is an OUTPERFORM.

• [By WALLSTCHEATSHEET.COM]

  Schlumberger provides essential energy products and services to consumers and companies operating around the world. The stock has not see much movement in recent years but may be getting ready to head higher. Earnings and revenue figures have mostly been increasing but investors have grown to expect more from the company. Relative to its peers and sector, Schlumberger has been an average performer. WAIT AND SEE what Schlumberger stock does this coming quarter.

• [By David Smith]

  A promising partnership
  Total outlays for subsea facilities were slightly more than $25 billion in 2011. That number is expected to rocket to about $130 billion by 2020. Among several companies that will benefit from this nearly five-fold growth are Schlumberger (NYSE: SLB  ) and Cameron International (NYSE: CAM  ) .

Best Energy Stocks To Watch Right Now: Caterpillar Inc.(CAT)

Caterpillar Inc. manufactures and sells construction and mining equipment, diesel and natural gas engines, industrial gas turbines, and diesel-electric locomotives worldwide. It operates through three lines of businesses: Machinery, Engines, and Financial Products. The Machinery business offers construction, mining, and forestry machinery, including track and wheel tractors, track and wheel loaders, pipelayers, motor graders, wheel tractor-scrapers, track and wheel excavators, backhoe loaders, log skidders, log loaders, off-highway trucks, articulated trucks, paving products, skid steer loaders, underground mining equipment, tunnel boring equipment, and related parts. It also manufactures diesel-electric locomotives; and manufactures and services rail-related products and logistics services for other companies. The Engines business provides diesel, heavy fuel, and natural gas reciprocating engines for Caterpillar machinery, electric power generation systems, marine, petrol eum, construction, industrial, agricultural, and other applications. It offers industrial turbines and turbine-related services for oil and gas, and power generation applications. This business also remanufactures Caterpillar engines, machines, and engine components; and offers remanufacturing services for other companies. The Financial Products business provides retail and wholesale financing alternatives for Caterpillar machinery and engines, solar gas turbines, and other equipment and marine vessels, as well as offers loans and various forms of insurance to customers and dealers. It also offers financing for vehicles, power generation facilities, and marine vessels. The company markets its products directly, as well as through its distribution centers, dealers, and distributors. It was formerly known as Caterpillar Tractor Co. and changed its name to Caterpillar Inc. in 1986. Caterpillar Inc. was founded in 1925 and is headquartered in Peoria, Illinois.

Advisors' Opinion:

• [By David Sterman]

  It's mining giant Caterpillar (NYSE: CAT).

  Gates started building a position in Caterpillar before the financial crisis, but he became a very aggressive buyer once the crisis hit and shares had fallen by half. Yet remarkably, Gates has kept on buying, even as shares steadily rebounded to previous peaks.

5 Best Value Stocks To Watch Right Now: Dollar Tree Inc.(DLTR)

Dollar Tree, Inc. operates discount variety stores in the United States and Canada. Its stores offer merchandise primarily at the fixed price of $1.00. The company operates its stores under the names of Dollar Tree, Deal$, Dollar Tree Deal$, Dollar Giant, and Dollar Bills. Its stores offer consumable merchandise, including candy and food, and health and beauty care, as well as household consumables, such as paper, plastics, household chemicals, in select stores, and frozen and refrigerated food; variety merchandise, which includes toys, durable housewares, gifts, party goods, greeting cards, softlines, and other items; and seasonal goods, such as Easter, Halloween, and Christmas merchandise. As of April 30, 2011, it operated 4,089 stores in 48 states and the District of Columbia, as well as 88 stores in Canada. The company was founded in 1986 and is based in Chesapeake, Virginia.

Advisors' Opinion:

• [By Rising Dividend Investing]

  Falling Stock Correlation: What It Says About Consumer Spending

  As we mentioned in the Take Aways from the August 26th Investment Policy Committee meeting, the correlation index has been steadily declining. In 2008-09, macroeconomic events drove nearly every stock downwards. Specific sectors and stocks moved in tandem with one another. Today, stocks and sub-industries within each sector are performing very differently – which indicates a return to a more normal stock market environment.
  The Consumer Discretionary (also known as Consumer Cyclicals) sector is an example of an industry that has been rewarded for its fundamental success over the past 12 months. As a whole, the sector grew sales 6.1% and earnings 9.2% in the second quarter - much better than the 1.4% sales and 3.3% earnings growth of the S&P 500. While the overall sector did well in the second quarter, the table below shows how differently the 5 sub-categories of Consumer Discretionary performed:
  
  (click to enlarge)
  As we drill down even further, sub-categories of sub-sectors differ even more dramatically. Below is a snapshot of the Retailing sub-sector and its notable components:
  
  (click to enlarge)
  Specific stocks within each sub-category are varying in performance as well. General Merchandise retailers were significantly differentiated in the second quarter. Target’s (TGT) adjusted EPS were up 6.1% from 2012, while Dollar General (DG) and Dollar Tree’s (DLTR) earnings were up nearly 12% and 9%, respectively.
  The differences in sales and earnings growth amongst these different industries tell a story. The economy is not improving enough that people feel like they can let go and spend money on pure pleasures, but it is improving enough that they can afford to replace their cars and fix the doors on their houses. As these items wear out and need to be replaced, we expect the pent up demand will drive increased economic activity from cons
• [By Demitrios Kalogeropoulos]

  Costly market share gains
  The problem is that Family Dollar has had to pay up for its increasing market share and sales levels. The company's gross profit margin fell by more than a full percentage point, to 34.7% last quarter. In contrast, Dollar Tree (NASDAQ: DLTR  ) booked an expansion of profits, to 35.2%, continuing a trend that's seen it pull away from Family Dollar.

• [By Mani]

  Dollar Tree, Inc. (NASDAQ:DLTR) is one of the companies that are set to exploit the ongoing trend of consumers' increasing focus on value with significant opportunity to grow its store base, and expand margins.

Buyback favorites in finance-sector

Our portfolio -- based on stocks that have announced share buyback programs --  is beating the S&P 500 by more than 77% since its inception  in 2000.  

Two of our latest additions to this portfolio are in the financial sector -- Discover Financial Services (DFS), where anagement has reduced shares outstanding by 6.2% in the last 12 months, and State Street Corp. (STT), whose management has reduced shares outstanding by 6.4% over the last year.

Top 10 Cheap Stocks To Buy Right Now

Discover Financial is a direct banking and payment services company with one of the most recognized brands in U.S. financial services. We last bought the stock in October 2012 and sold it two months later for a small gain.

Begun in 1986, the company has become one of the largest card issuers in the U.S., operating the Discover card, loans (home, private student and personal), online savings accounts, certificates of deposit and money market accounts through its direct banking business.

Its payment businesses consist of Discover Network, PULSE (a leading ATM/debit network) and Diners Club International, a global payments network in more than 185 countries and territories.

Discover has a market cap of $22.5 billion, a P/E ratio of 10.3, below the S&P 500 P/E ratio of 17.7. Shares are up about 19% year to date, and analysts praise it for  revenue growth, solid stock price performance, growth in earnings per share, increase in net income and expanding profit margins.

Discover Financial is up more than 396% since the end of 2008, far outpacing the 97% gain in the S&P 500 over the same time.

Highlights from the recent quarter (comparisons are year over year): Net operating revenue grew 10%; net interest income grew 9%; card receivables grew 5%; private, student, and personal loans grew 10% as a whole; EPS grew 10% driven primarily by loan growth and share repurchases.

Financial holding company State Street provides investment servicing and investment management services to institutional investors worldwide. It has a market cap of $27.5 billion.

It hit a 52-week high Monday, and shares are up 28% year to date. The company has a P/E ratio of 13.9, below the S&P 500 P/E ratio of 17.7.

Analysts like its solid stock price performance, impressive record of earnings per share growth, increase in net income, attractive valuation levels and expanding profit margins.

State Street said its first-quarter net income on an operating basis rose 8% to $443 million, or 96 cents a share, from a year earlier.

Joseph Hooley, State Street's chief executive officer, has shifted his focus over the past two years away from acquisitions to returning capital to shareholders. He has raised the company's quarterly dividend by 44 % in the past 14 months and stepped up share repurchases.

Dow Burdened by Uncertainty and Low-Powered Tech

Without much new economic news today, the uncertainty over the FOMC's plan for the continuation of its monetary policy is still wreaking havoc on the Dow Jones Industrial Average (DJINDICES: ^DJI  ) this morning. Down 55 points as of 11 a.m. EDT, the index is struggling to gain some forward momentum as investors weigh the evidence from Fed Chairman Ben Bernanke and others about what the committee will do in the coming days, weeks, or months.

Change in policy
The standing commentary from Bernanke and others in the FOMC is that if the economy shows signs of continued improvement, then the committee will start paring back its current rate of bond repurchases -- the mechanism it has been using to effect the quantitative easing. Since the stock market has benefited from the current policy, this of course is causing a great stir among investors worried that the markets will start to slide once the committee makes a change.

One of the biggest signs the FOMC is looking for is a positive trend in the labor market. And with yesterday's jobless claims report showing another decline in new unemployment claims, investors feared that may have been the sign. So instead of the positive reaction investors have given previous positive jobless reports, yesterday's caused some unsettling within the market.

Today's news
The one piece of economic news we have today is an increase in durable goods. The Commerce Department reported a 3.3% increase in orders for long-lasting manufactured goods, which signals that the contraction in the factory sector may have run its course.

Inside the Dow
As of this writing, Cisco (NASDAQ: CSCO  ) is the lone tech component stock in positive territory for the index. And with a meager 0.08% gain, that could change very quickly. The tech company is likely enjoying the positive feedback from its recently completed acquisition of Ubiquisys, a U.K.-based firm that develops 3G and long-term evolution (LTE) small-cell technologies, allowing service providers connectivity along mobile networks.

After a heady run yesterday following its better-than-expected earnings report, Hewlett-Packard (NYSE: HPQ  ) is leading the tech sector lower, with a 1.65% loss. The tech manufacturer gained 17% yesterday, but investors may now be taking a closer look at the company's results after the initial excitement wears off. The company's most important (and largest) segment, personal systems, was off by 20% in revenue compared to the prior year. Even though HP has developed some well-received new devices, it's still losing ground.

Intel (NASDAQ: INTC  ) is right behind HP, with a 1.62% drop as of this writing. Intel may be on the receiving end of the negative backlash against HP, since the device maker's recently introduced new line of laptops uses Intel processors. Otherwise, the chip maker has been getting a variety of positive news. Its battle with ARM Holding (NASDAQ: ARMH  ) is looking like it might finally swing in Intel's favor, as ARM's stranglehold on the mobile and tablet markets may finally be loosening. Intel is providing the processors and chips for a variety of new devices that will push it further into the market, eating away at ARM's dominance.

When it comes to dominating markets, it doesn't get much better than Intel's position in the PC microprocessor arena. However, that market is maturing, and Intel finds itself in a precarious situation longer-term if it doesn't find new avenues for growth. In this premium research report on Intel, a Motley Fool analyst runs through all of the key topics investors should understand about the chip giant. Click here now to learn more.

SUPERVALU Meets on the Top Line, Misses Where it Counts

SUPERVALU (NYSE: SVU  ) reported earnings on April 24. Here are the numbers you need to know.

The 10-second takeaway
For the quarter ended Feb. 23 (Q4), SUPERVALU met expectations on revenues and missed expectations on earnings per share.

Compared to the prior-year quarter, revenue contracted significantly. Non-GAAP earnings per share contracted to a loss. GAAP loss per share grew.

Margins dropped across the board.

Revenue details
SUPERVALU booked revenue of $3.89 billion. The three analysts polled by S&P Capital IQ predicted a top line of $3.91 billion on the same basis. GAAP reported sales were 53% lower than the prior-year quarter's $8.23 billion.

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

EPS details
EPS came in at -$0.14. The seven earnings estimates compiled by S&P Capital IQ anticipated $0.08 per share. Non-GAAP EPS were -$0.14 for Q4 against $0.38 per share for the prior-year quarter. GAAP EPS were -$6.67 for Q4 against -$2.00 per share for the prior-year quarter.

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

Margin details
For the quarter, gross margin was 14.1%, much worse than the prior-year quarter. Operating margin was -5.4%, 830 basis points worse than the prior-year quarter. Net margin was -36.3%, much worse than the prior-year quarter. (Margins calculated in GAAP terms.)

Looking ahead
Next quarter's average estimate for revenue is $5.10 billion. On the bottom line, the average EPS estimate is $0.09.

Next year's average estimate for revenue is $16.96 billion. The average EPS estimate is $0.27.

Investor sentiment
The stock has a three-star rating (out of five) at Motley Fool CAPS, with 770 members out of 855 rating the stock outperform, and 85 members rating it underperform. Among 222 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 196 give SUPERVALU a green thumbs-up, and 26 give it a red thumbs-down.

Top Bank Companies To Buy For 2014

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on SUPERVALU is hold, with an average price target of $3.43.

Is SUPERVALU the right retailer for your portfolio? Learn how to maximize your investment income and "Secure Your Future With 9 Rock-Solid Dividend Stocks," including one above-average retailing powerhouse. Click here for instant access to this free report.

Add SUPERVALU to My Watchlist.

What goes into picking a small business name?

Your first name? Last name? A made-up moniker? Or perhaps a clever use of wordplay associated with your product?

Selecting a name for a small business can be fun -- as well as frustrating and time-consuming.

If an entrepreneur accidentally picks a designation already in use by a competitor, or even a name that is close, the other firm's lawyer may send a cease-and-desist demand. Yet if a small business owner makes up a word to brand the business, there's the chance that potential customers won't understand it, will mispronounce it or won't remember it at all.

For the entrepreneur who needs a bit of naming assistance, the Small Business Administration suggests considering these questions:

How will it will look on a website, as part of a logo and on social media? Does it accurately reflect your business philosophy and culture? Is it too corporate or not corporate enough? Will it appeal to your market?Is it unique?

Top Financial Stocks For 2014

SMALL BUSINESS START-UP: Six secrets to a strong small business name

In this installment of USA TODAY's Smart Small Business series, the four participants talk about what inspired them to come up with their company names.

MEET THE ENTREPRENEURS: These small business owners get a taste of success

SOCIAL MEDIA: Digital tools play big role in small business growth

In future Smart Small Business videos, the participants will weigh in on these questions:

If you could go back in time and change one thing you did as you were launching your business, what would it be?

Where do you go for business advice? Is there one person, one website, one networking group or even one book that really helped you?

Stock futures surge amid shutdown saga

U.S. stock futures surged Thursday as investors were encouraged by talk of a deal that may avert a U.S. government default.

President Barack Obama will meet with top House Republicans at the White House to seek a path beyond a confrontation that has left the government shuttered for close to two weeks.

House Republican leaders appear to be ready to advance a short-term debt limit increase that would prevent the first default on U.S. debt next week.

Dow Jones industrial futures are up 0.7% and the S&P futures gained 0.9%. Nasdaq futures are up 0.9%.

All major U.S. averages have taken a beating this month as a partial shutdown of the U.S. government dragged on and the risk of a possible default on its debt increased.

"I think investors are facing what has become an all too familiar but nevertheless difficult task of correctly pricing in the risk of the U.S. reaching its debt ceiling," said Ric Spooner, chief of CMC Markets in Sydney.

FIDELITY: Sheds government bonds

Wall Street rose slightly on Wednesday. The Dow rose 0.2% to close at 14,803. The S&P 500 rose 0.1% at 1,656. The Nasdaq fell 0.5%, to 3,677.

WEDNESDAY: Stocks close with small gains; Nasdaq drops

In Asia Thursday, Japan's Nikkei rose 1.1% to 14,194.71. Benchmarks in Europe traded higher. Britain's FTSE 100 index added 0.8% and France's CAC 40 index shot 1.6% higher. German stocks also saw strong gains.

Benchmark crude for November delivery was up 2 cents to $101.63 per barrel in electronic trading on the New York Mercantile Exchange. The contract fell $1.88 to close at $101.61 a barrel on the Nymex on Wednesday.

Contributing: Associated Press

Get comfortable meeting with clients virtually if you want to compete

Financial advisers who cannot conduct virtual client meetings may be hurting their own competitiveness.

"Every year, more and more clients are adopting the idea that we don't need to meet face to face," Alan Moore, founder of Serenity Financial Consulting LLC, said at the National Association of Personal Financial Advisors' national conference in Philadelphia last Thursday.

Conducting client meetings online, where clients can view the adviser and the adviser's computer screen, is more efficient than in-person meetings, which require one or more participants to travel to the meeting spot, Mr. Moore said.

The efficiency and flexibility make it easier to get busy clients to meet via their computers, advisers said.

For instance, Mr. Moore has a client who lives three miles away from him whom he's never met face to face. The client is a stay-at-home dad who doesn't want to pay $50 for a babysitter just to come into the office.

"This isn't taking a step back in client service," Mr. Moore said. "I can give clients the same, if not better, client experience using virtual technologies."

Mr. Moore is attracting the type of clients with whom he prefers to work — those who are "lifestyle-focused" and value their free time and family time. Many clients like it so much, he said, that "now I can't get them to come to my office."

Clients love not needing to travel and they cancel virtual meetings less often than face-to-face meetings because of the flexibility they allow, said Michael Kitces, partner and director of research at Pinnacle Advisory Group Inc., at the NAPFA conference on Friday.

"When we started doing video chat, our clients were like ‘Thank God,’ because all of their other professionals were already doing it,” he said. “Clients who work love it.”

Financial adviser Rick Kahler of Kahler Financial Group said he works remotely with about 50% of his clients — and not just younger people, he said, noting that the average age of his clients is about 58.

"More and more clients are going to expect you to offer this service," he said.

Advisers often use free Skype software to connect with clients because many older clients use this technology to communicate with their grandkids. Mr. Kahler said he has found Skype to be too unreliable, choosing instead to pay about $50 a month for GoTo Meeting. He said many clients don't even turn their webcam on during meetings because they don't want to be seen, "but they want to see us."

Mr. Moore said Google hangout is the most reliable free technology for online conversations. He also uses another free serv! ice, Join.me, for screen sharing. Advisers can direct clients to Join.me and give them an access code to make them privy to the adviser's computer screen.

Adviser Chris Jones, founder of Sparrow Wealth Management, said he uses Sharefile to send files to clients securely. He praised virtual meetings for providing "a lot of flexibility in your practice."

Mr. Jones, who meets with about 97% of his clients remotely, said that because his clients were accustomed to virtual meetings he was able to pick up his business and move to Las Vegas to be closer to his children, who live with his ex-wife.

He said it was harder to get long-standing clients used to virtual meetings than it was to bring new clients on board with it. Even today, he takes a couple of trips a year to Eastern Pennsylvania, where he has some clients who still want to see him face to face once a year.

And there are certain clients with whom virtual meetings just won't work, advisers said.

For example, Mr. Jones had to give up his biggest client, for whom he managed $20 million, when he moved to Las Vegas, because that client wanted almost weekly in-person meetings.

Mr. Jones said that because he uses virtual meetings, his clients also are likely to refer more of their friends to him because it doesn't matter where those friends live.

Certainly, the younger advisers of NAPFA, a group known as NAPFA Genesis, believe that virtual meetings increasingly will be demanded by clients. They are investigating ways for the NAPFA search function to identify which advisers offer virtual meetings, said Mr. Moore, who is chairman of NAPFA Genesis. He said that more than half of his clients come from adviser searches through the NAPFA website.

Jefferies Gets Negative on Gold Miners, with an Interesting Pairs Trade Idea

Given the dramatic decline in share prices, some investors may perceive gold equities as inexpensive. The analysts at Jefferies strongly disagree. In their opinion, gold equities rarely have been more expensive, when current gold prices are incorporated. Despite a quintupling of the commodity price from 2003 to 2011, the gold mining majors generated little to no free cash flow. The Jeffries analysts feel the majors likely will generate negative free cash flow over the next several years.

The one thing that is appealing to the team at Jefferies is the volatility in gold. They believe higher interest rates will be the key to force gold prices modestly lower. Regardless of whether the Federal Reserve tapers its efforts or the market raises interest rates by itself, they analysts believe interest rates will go modestly higher. Therefore, they are sticking with a long-term forecast of $1,250 an ounce. They do have an interesting avenue for investors, should they want to put a gold trade on.

The trade is called a pair trade, and it is a common strategy used by portfolio managers on Wall Street. It involves being long and short stocks that are in the same category or sector. In this case, the Jefferies team has put together a trade that involves being long the actual physical gold, while being short the gold miners. Here is how the trade is constructed.

SPDR Gold Trust ETF (NYSEMKT: GLD) is bought as a long position. This is the exchange traded fund that serves as a vehicle for holding the physical gold itself. Typically in a pair trade, the portfolio manager will match the dollar amount of the long and short positions. So investors seeking to put the pair trade on buy the GLD in their account.

Barrick Gold Corp. (NYSE: ABX), Goldcorp Inc. (NYSE: GG), Kinross Gold Corp. (NYSE: KGC) and Newmont Mining Corp. (NYSE: NEM) are all sold short in the account, in equal lots of 25% each. This provides the investor with the basket of stocks that make up the other part of the trade.

The main idea behind the trade is that while physical gold prices often can spike on inflation threats, geopolitical risk and headlines, the actual gold miners are in far bigger trouble from a profit standpoint. Gold mining is an extremely capital intensive and expensive business. Given the short reserve lives, rising costs, rising political risks and a stagnant commodity price, the Jefferies analysts believe an argument could be made that gold equities should trade at valuation discounts to other resource equities. Instead, they continue to garner valuation premiums. So, that continues to make the risk/reward for the North American gold group very unattractive.

For investors wanting just to be either long or short the gold trade, Jefferies does have specific recommendations in its report.

Freeport-McMoran Copper & Gold Inc. (NYSE: FCX) is the favorite name in the space. The company announced Friday that its Indonesian union workers are expected to sign a new contract within two weeks after reaching an agreement over wages. Freeport Indonesia employs about 24,000 workers, including contractors and staff. About three-quarters are union members. This puts one of its top copper mines back in production. The Thomson/First Call price target for the stock is $37.50. Investors are paid a very solid 3.7% dividend. Freeport closed Thursday at $33.01.

Newmont Mining Corp. (NYSE: NEM) is the stock to focus on if investors are looking for a specific gold mining stock to sell short. The stock was hit hard this week on speculation the company would bid for a large copper mine in Peru. The Jefferies target for the stock is $18, and it has an Underperform or Sell rating on the stock. The consensus price target is $32. Investors are paid a 3.6% dividend. Remember, in a short sale the seller is responsible to pay the dividend. Newmont closed Thursday at $26.96.

Gold stocks remain very expensive in Jefferies’ opinion. The analysts believe the only way they make sense is if gold prices rise materially. They also expect the gold equity multiple to continue to compress. The analysts are very in the pair trade that is long gold and short gold equities. This may be a smart way for investors to play what has become a very tricky sector, after a long upward move.

Burger King to give away free Satisfries

Burger King may have figured how to get gobs of folks to try its new Satisfries: give 'em away.

The burger giant this Saturday and Sunday -- during business hours when fries are normally sold -- will hand out free Satisfries to all consumers. No strings attached.

No coupons. No ID cards. No questions. There is, however, a one-per-customer limit.

Burger King figures the best way to get consumers hooked on its new lower-calorie, lower-fat fries is simple: let 'em try 'em. While millions of consumers already have tried the new, crinkle-cut fries that rolled out last week, many millions more have not.

Opinion: 'Satisfries' won't satisfy for a number of reasons

"And if you haven't tasted them, you're missing out." says Alex Macedo, Burger King's President of North America. "We invite guests to bring family and friends."

The freebie will be the so-called "value" size Satisfries, which normally sell for $1.29. Burger King expects to give away upwards of 10 million orders, says Macedo. A massive, multi-media advertising campaign for the effort will begin airing on Thursday.

Fries: What's in those fries that have fewer calories, less fat?

The fries have 30% less fat and 20% fewer calories than Burger King's current fries. A small serving of BK's Satisfries weighs in at 270 calories and 11 grams of fat vs. 340 calories and 15 grams of fat for a small serving of its classic fries. As a result of a slight change in the recipe for the fries -- but with no change in actual ingredients -- the fries absorb less oil ,so they have fewer calories.

Burger King also says Satisfries have 40% less fat and 30% fewer calories than McDonald's fries.

Name change: Burger King hasn't changed its name to Fries King

Free is not new. Virtually every fast-food chain from McDonald's to Starbucks to Dunkin' Donuts has offered new product freebies. What's most unusual here, however, is that the promotion will stretch over most of an entire weekend.

BK k! eeps reaching up its sleeve to get consumers engaged with its new fries. Last week, it issued a mock press release claiming it had changed its named from Burger King to Fries King. It also changed the signage at a few stores to reflect that.

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Its PR efforts seem to be working. Burger King has seriously improved its positive social media buzz as well as word-of-mouth buzz since the roll-out, says YouGov BrandIndex, a consumer perception research service.

Burger King's "buzz score" among health-focused consumers peaked at 19.3 from 14.9, within days of the roll-out. And it's "buzz score" among parents rocketed to 28.4 from a low of 1.4 just 10 days before the Satisfries introduction, says BrandIndex.

For Burger King, it's a full-scale assault on arch-rival McDonald's in the one area where McDonald's has historically appeared to be least-vulnerable: fries. BK has re-jigged its fries several times over the past few decades -- with mixed results, at best.

Burger King is hoping, this one's the game-changer.

Alkaline Water Company Gets Digital (PRMW, AMZN, WTER)

The initial thought may be that it's a bit of an awkward sales venue. The more one thinks about it - and digs - the more this relationship makes sense. And if you did really deep into the details (into a philosophical level), a "whole is greater than the sum of its parts" scenario surfaces. What's this not-really-unusual relationship? The Alkaline Water Company Inc. (OTCBB:WTER) is now selling its Alkaline88 brand of water through Amazon.com, Inc. (NASDAQ:AMZN). Take that Primo Water Corporation (NASDAQ:PRMW)!

But isn't Amazon.com supposed to be a place where you can get great deals on electronics, apparel, toys, and of course, books? What are groceries doing on the menu? Well, you can still get all of those traditional, physical and durable goods through Amazon, but the site has a surprisingly robust (and growing) grocery business too that may end up creating something of a boon for the Alkaline Water Company.

If you've not heard of AmazonFresh yet, it may be because you live outside of Seattle, where Amazon.com is not only headquartered, but where it's been testing a home-delivery program for some basic grocery items like eggs and meat. The company announced a few weeks ago it would add two more such local-delivery venues this year, and as many as 20 new cities to its delivery circles next year.

Make no mistake, however. While Amazon's internal grocery business is still budding, its third-party food and consumer goods resellers have already made groceries and consumables something of a mini-hit, complete with a cult-like following of customers. After it acquired a company called Quidsi - which operates a variety of websites that sell everything from dog food to detergent - saw its sales from diapers.com alone soar from $2 million per year before Amazon.com acquired it to $90 million per year after Amazon purchased the company. Moreover, experts also believe online grocery sales could reach $9.5 billion by 2017. Given Amazon's existing position in the online-shopping world, it's only natural that they should lead the charge... and lead the market.

It's not just the advent of online grocery shopping that's making this such a big opportunity for the Alkaline Water Company Inc., however. It's the merging of two distinct trends at the right time and the right place that could continue propelling WTER shares.

While bottled water has been around for years, it's only just now starting an evolution into its second generation of quality and benefit. Purified spring water was good enough "then", but now, consumers are demanding fortified bottled water, enriched with minerals, vitamins, and now, alkaline. It's a health-oriented idea that competitors like Dasani or Aquafina might not get around to acknowledging until it's too late to catch up with the likes of The Alkaline Water Company.

Better still, the online venue gives WTER an edge on the Primo Water Corporation by doing what Primo Water can't possibly do... supply water online. Primo's "shtick" is offering refills of five-gallon jugs of (admittedly nice) spring water. It's possible Primo could initiate an online ordering and refilling option, but with a five gallon jug of water weighing 40 pounds, delivery will be expensive, and a hassle. (Five gallon jugs aren't exactly small either.) Alkaline88 water, on the other hand, is available in a much handier one-gallon container that can be disposed of - recycled - once emptied. Point being, as the only fortified/enriched mineral water available online in a bulk size, The Alkaline Water Company is in a niche all by itself... online, as well as offline. The Amazon.com venue could end up being a very big deal.

For more on the Alkaline Water Company, visit the SCN research page here.

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.

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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, f! orecast of the housing market to the benefit of their shareholders. Returns are expected to be close to their market benchmark, so these companies do not look so alluring at the time.

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

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