BP, Exxon Playing The Growing Dispute In Iraq Differently

The oil majors BP Plc. (BP) and Exxon Mobil (XOM) seem to be playing the growing dispute in Iraq between the Kurdistan regional government [KRG] and the central government quite differently. Exxon angered the central government by signing a more lucrative exploration agreement with the KRG and is in the process of wrapping up its operations in Southern Iraq. On the other hand, BP is sticking with the central government honoring its earlier agreement to develop Rumaila, Iraq’s largest oil field. In fact, recently it even agreed to develop the Kirkuk oil field, which lies in the swathe of land over which the Iraqi central government and the KRG are locked in a dispute. While Exxon is betting on higher control of the KRG over its oil reserves and exports, BP is sticking to its rather stable stream of cash from the central government, in the hope of better terms on future deals. However, both of them face huge operating risks in a country that holds ~10% of the global oil reserves [Statistical Review of World Energy 2013, bp.com].

The Growing Dispute Over Oil

Disagreements over the control of Kurdish oil reserves and export revenues is at the heart of a larger dispute between the Iraqi central government and the KRG. The central government believes that the semi-autonomous Kurdistan region has no legal authority to export oil or sign production agreements with oil companies. While the KRG maintains that Iraq’s constitution gives them the right to do so, and has already signed contracts with a number of multinational companies, including Chevron, Exxon and Gazprom.

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The Iraqi Kurdistan used to rely on a pipeline controlled by the central government to export its oil, as it does not have the required infrastructure to do so. However, since Baghdad denies the KRG the right to independently strike oil contracts, it has withheld most of the payments which the oil companies were promised by the regional gover! nment. As a result, the Kurds stopped using the Kirkuk pipeline for exporting oil last December. This not only put the oil companies operating in the region in a difficult situation, but it also stymied the development of the region’s abundant oil reserves.

But there is a ray of hope for the companies that have flocked to the semi-autonomous region in increasing numbers, in defiance of the central government. The Kurds are almost done with laying a new pipeline that will be able to carry the Kurdish oil directly to Turkey. It will have an initial capacity of exporting around 300,000 barrels of oil per day and is expected to become operational during the fourth quarter.

However, the central government has asked the KRG to link their new pipeline to the main government pipe at a metering station near the Turkish border, so that they can know the amount of oil being exported out of Iraq. It has also threatened to refuse the region’s 17% share in the federal budget if the KRG tries to bypass the central authorities and starts operating an independent oil pipeline. In a nutshell, there is no end in sight currently for this growing dispute between the two governments [Iraq Threatens to Cut Revenue to Kurds Over Pipeline, bloomberg.com].

KRG Offering Better Returns

The technical service contracts awarded by the Iraqi central government prevent oil companies from reporting their share of the production volume, which is a closely watched metric in the investor community. These contracts also do not allow the companies to gain from higher oil prices, which makes the return on these projects look less lucrative compared to the ones governed by production sharing contracts. Moreover, infrastructure bottlenecks, red tape and payment delays further reduce the rate of return on such tightly priced agreements. As a result, despite significant production ramp-up potential, there is little incentive for oil companies to develop the oil fields in southern Iraq.

On the other h! and, expl! oration companies have been lured to sign contracts with the KRG as it has offered attractive production sharing contracts, which allow companies to report their share of production volumes and gain from higher oil prices. The better security environment in Kurdistan also makes the region more lucrative to companies intending to set up local operations.

Despite these advantages, the risk of future amendments or the tightening of agreement terms is inherent to pursuing any deals with the KRG, as the central government does not recognize the validity of such regional contracts. There is also a risk of missing out on any lucrative deals with the central government in the future. Moreover, oilfields in southern Iraq hold proven reserves and are under a development process while there are exploration risks associated with the Kurdish agreements involving new acreage.

Exxon Betting On The Risky Kurdish Agreements

After Exxon’s contract with the KRG to explore six blocks in the semi-autonomous region was made public towards the end of 2011, the central government banned the oil major from participating in future rounds of bidding to develop new oil fields and removed it from the lead role in developing a multi-billion dollar water injection facility in southern Iraq. Voices within the government also threatened that Exxon could lose its contract to develop the massive West Qurna I field unless it relinquished its plans to explore Kurdistan. Towards the end of last year, Exxon informed the Iraqi central government of its wish to sell its entire stake in the West Qurna I development project.

The West Qurna I field is one of the largest conventional oil fields in the world, with estimated resources of around 8 billion barrels. Exxon entered into a technical service contract with the Iraqi government in 2010, to boost the production rate from the field to ~2.8 million barrels per day (MMBD) from ~0.25 MMBD. The field is currently producing over 0.5 MMBD and is expected to reach a ! level of ! 0.6 MMBD by the end of the year [Exxon Looks to Sell Part of Iraqi Project to PetroChina, wsj.com].

Last month, the Iraqi oil minister announced that Exxon Mobil will be selling out more than half of its stake in the West Qurna I project to China’s biggest energy firm, PetroChina and Indonesia’s Pertamina. The deal reflects Exxon’s declining interest in the project due to lower returns as well as ongoing issues with the Baghdad government. Going forward, the company might sell its residual stake in the project as well [Minister: ‘West Qurna 1 deal imminent’, upstreamonline.com].

BP Sticking With Relatively Stable Cash Flows

On the other hand, BP did not bid for any blocks in the Kurdistan region, honoring its long-term agreement with the central government to develop Rumaila that stipulated oil companies from entering into any pacts with the KRG. In fact, recently, it even signed a letter of intent to develop a disputed oil field in Kirkuk. This could potentially result in a long-term contract for the company similar to the technical service agreement that governs its operations at Rumaila [Iraq signs deal with BP to revive northern Kirkuk oilfield, reuters.com].

Although Kirkuk holds prospects of a relatively stable cash flow stream for BP, it falls in a swathe of land over which the Iraqi central government and the KRG are locked in a dispute. The KRG has opposed Baghdad’s deal with BP and maintained that any such deal would be unconstitutional as long as the dispute over sovereignty of the province continues. (See: BP Agrees To Develop A Disputed Field In Iraq)

Despite their different strategies, both the companies face huge uncertainties in Iraq, as the two governments are nowhere close to an agreement on a vast array of issues discussed above. While Exxon is betting on the KRG being able to manage its own oil reserves in the future without being dependent on or liable to the central government. BP is betting on the central gover! nment&rsq! uo;s tightly priced service contracts in hope of better deals in the future. The best-case scenario for both the companies would be if the KRG gets a conditional control over its oil reserves in return for the central government’s control over the Kirkuk oil field. On the other hand, an armed conflict would be the worst-case scenario as it would hamper investments in both the regions and will not benefit either of the private players.

Disclosure: No positions

Source: BP, Exxon Playing The Growing Dispute In Iraq Differently

Turnarounds in Homebuilding

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Turnaround expert George Putnam believes the pullback in homebuilding stocks is creating a buying opportunity; here, he looks at three ways to play the sector.

Steve Halpern: We're here today with George Putnam, editor of the Turnaround Letter. How are you doing, George?

George Putnam: Fine. Thanks, Steven.

Steve Halpern: You've been extremely successful over the past year with your call for a turnaround in the mortgage market. In fact, you had the top-performing stock in our annual survey, done in January. Are you still bullish on the mortgage stocks?

George Putnam: Yes we are, particularly the mortgage insurers. They were the most beat-up, and as a result, they've been bouncing back the fastest.

Steve Halpern: In your latest issue of the Turnaround Letter, you note that homebuilding stocks have pulled back to levels below where they were in early 2010, yet, at the same time, the housing market's been improving. Could you explain what accounts for that?

George Putnam: Well, I felt that the homebuilders were well ahead of themselves before, and now, people, I guess they're concerned about rising mortgage rates, which will put a bit of a crimp in the homebuilding market, but rates, by historical standards, are still very low.

And there's a huge amount of demand that has built-up over the last several years, and the rate of new homes being built is still way below long-term averages.

So I think there are amounts of upside in the homebuilding business, and with the stocks at these lower prices, I think they look better than they have for a long time.

Steve Halpern: When accessing the homebuilding stocks in general, you've suggested focusing on large geographically diverse builders, could you expand on that?

George Putnam: Yes, well, these smaller builders are still having a hard time raising financing to support their businesses, but the bigger companies don't have that problem, and different markets will be hot at different times, so it's good to buy stocks of the builders that have exposure to at least several different markets.

Steve Halpern: You have an exception to that rule, you look at a smaller home builder, M/I Homes (MHO), and you like that. Could you tell us why.

George Putnam: Well, it's smaller compared to the other large exchange-traded homebuilders, but it's still very sizeable, and it's still in a number of different markets.

I think they're in something like 12 or 13 different markets, spread around the country, and in most of the markets where they are, they're one of the top five builders in that market, and we like it because the valuation's a little bit lower.

It's trading at a lower multiple to expected earnings and to expected cash flow.

Steve Halpern: One of the large builders that you point to is Lennar (LEN). Is that an opportunity for investors?

George Putnam: I think it is. I think they're kind of the high-quality name in the field. They held up better when the industry was hurt a few years ago, and they bounced back pretty strongly, but the stock is off quite a lot over the last few months, so I think they will be the leader going forward, and I think that's a good stock to own.

Steve Halpern: Now, another company that you talk about is Toll Brothers (TOL), which focuses on the higher-end of the home market, as well as condominiums. Do you think there's still opportunity with TOL?

George Putnam: I think TOL is also something worth owning. The high-end has not hit as hard, and so it didn't go quite as low as some of the others.

But, I think it's bouncing back nicely and will continue to do well, and the high-end market is somewhat less sensitive to rates, so even if mortgage rates go higher, I think they will do fine.

Steve Halpern: Well, we really appreciate you joining us today, and thanks for your insights on the turnaround market.

George Putnam: Thanks for having me, Steven.

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The expert featured in this column, George Putnam, may or may not own positions in any investment vehicle mentioned here. The views and opinions expressed are his or her own.

When Regulation Spells Opportunity

The US health care industry is among the heaviest regulated in the nation. Most health care-related companies must answer to federal, state and, in many cases, local regulators.

That regulatory burden will only grow more complex, as myriad new rules under the Patient Protection and Affordable Care Act, or “Obamacare,” come into effect over the next few months. In just 22 days, the first insurance exchanges are supposed to come online. On January 1, the individual mandate and changes in coverage standards become effective.

Many health care businesses and organizations were dragging their feet in complying with Obamacare’s provisions, waiting to see how the Supreme Court would come down on the law. The court didn’t rule on Obamacare until June 2012, a decision in which it upheld the law almost in its entirety.

Given that delayed decision, a study conducted by the Government Accountability Office this past June found that only 44 percent of key activities required for full compliance had been completed, particularly where health insurance exchanges were concerned.

As a result, there’s a massive scramble underway to achieve minimum compliance levels with the law. But there’s a paucity of workers with the requisite knowledge of federal and insurance regulations required to help companies and state governments navigate the labyrinth of regulations.

That’s creating a lot of work for consultancies such as Huron Consulting Group (NSDQ: HURN), which focuses almost exclusively on the health care sector.

While the company also works in the legal, financial, education and life sciences arenas, it primarily helps hospitals, health systems and physician groups reduce costs, maximize reimbursements from both federal and private insurers and transition towards the value-based care mandated under Obamacare. In future years, reimbursements will transition towa! rds rewarding health care organizations that achieve results rather than just provide services.

As the pace of adaptation has picked up ahead of next year, Huron grew earnings 131.7 percent year-over-year in 2011 and 71.6 percent last year. In the second quarter, earnings were up 137.9 percent year-over-year, reaching $0.71 in earnings per share (EPS).

For full-year 2013, EPS is forecast to total $3.08 on revenue of $640 million, with a further 16.2 percent EPS gain to $3.58 in 2014 on $730 million.

In addition to a low debt-to-equity ratio of 0.3, Huron also throws off free cash flow of about $3.50 per share in an average year. Much of that free cash is being put towards retiring debt, with long-term debt falling from $257 million in 2011 to $194 million last year. That has left the company cash poor, with just $5 million on the balance sheet, representing one of the company’s few blemishes.

Despite being one the strongest business consulting companies, the company’s shares are currently trading at just 19.2 times trailing earnings versus an industry average of 27.2 times. The stock also trades at just 14.5 times forward earnings, although there isn’t a significant discount in terms of prices to sales or cash flow.

The rush to get health insurance exchanges up and running is also benefiting Towers Watson & Company (NYSE: TW).

The company is heavily involved in the health insurance business, although it provides a number of consultancy services that cover human resources issues such as talent recruitment and retention, as well as actuarial and risk management geared towards the insurance industry.

Several large pension plans, including most recently the one offered by IBM (NYSE: IBM), have found it increasingly expensive to provide health benefits to retirees through company-sponsored health plans.

Consequently, they have begun offering retirees a fixed sum of money to purchase their own health insurance. The pension plans the! n contrac! t with Towers Watson, which runs a private health insurance exchange known as OneExchange, to offer coverage options.

Federally mandated public health exchanges are encountering difficulties getting started, but the OneExchange network is an excellent example of how the private sector is filling the gap. That’s gotten the government’s attention, which recently contracted the company to help steer consumers into the 36 state health insurance exchanges that will be operated by the federal government.

For the company’s latest fiscal year ended in June, revenue was up 5.2 percent while EPS was up 24.2 percent year-over-year.

But like Huron, Towers Watson trades at a discount to its industry, commanding a price-to-earnings multiple of just 19 versus the average of 27.3 for its peers. That’s despite the fact that EPS is expected to reach $6.45 in fiscal 2014, for growth of 44.6 percent, and increase another 13.5 percent in fiscal 2015 to EPS of $7.32.

Wall Street is clearly still taking a wait-and-see approach to both Huron and Towers Watson given their lower multiples, but with Obamacare here to stay there are profits ahead.

Top 10 Oil Stocks To Own For 2014

 

Investors flee U.S. stocks at fastest pace since 2008

Bloomberg News

Domestic stock funds last week suffered their worst week since before the financial crisis as investors' fears over the Federal Reserve's plan to cut its asset- purchasing program spread to stocks.

More than $14 billion was pulled out of U.S. stock funds this week, the most in a single week since June 2008, according to Bank of America Merrill Lynch.

“The retail public still doesn't trust this rally,” said Jeffrey Saut, chief investment strategist at Raymond James & Associates Inc. “They think you need a feel-good environment to get a secular rally but the reality is when it's a feel-good environment, you're usually late to the game.”

The S&P 500 is down almost 3% since the beginning of August, although it's still up more than 15% year-to-date. The pullback gained steam, ironically, after a report that initial jobless claims had fallen to their lowest level since before the financial crisis. That fit in perfectly with the consensus opinion that the Fed would begin to taper its asset purchases at its September meeting.

The uncertainty surrounding tapering, both how it would work and when it would start, sent the interest rate of the 10-year U.S. Treasury to 2.89%, its highest level since August 2011.

The rise in interest rates sent bond investors rushing to the exits, pulling out more than $30 billion month-to-date through Aug. 19.

Greg Sarian, managing director at Sarian Group, a private wealth team at HighTower Advisors LLC, started talking to his clients about moving into cash in late July.

“When the market hit new highs in July, we thought it was time to pick the fruit while it's ripe,” he said. “It's been a good year. Clients are much more aware of protecting profits than ever before.”

Strategists agree there may not be a lot of good news coming from the stock market in the short term.

With earnings season over, sequestration starting to take a bite out of economic statistics, a jump in interest rates, and concerns coming from the emerging markets, there's not a lot to drive the market forward anytime soon.

“There is a dearth of catalysts right now,” Mr. Saut said. “The fact of the matter is, the market's internal energy is gone near-term.”

Scott Wren, a senior equity strategist at Wells Fargo Advisors LLC, agrees there's not a lot to get excited about over the next few months.

“We'd argue the gains are in for the year,” he said.

Mr. Saut said this current pullback could run as much as 10% in total, but he doesn't think tapering, if it is announced next month, will cause any kind of bear market.

“I personally think it's going to b! e a non-event,” he said. “Usually, when everyone's asking the same question, it's the wrong question.”

Mr. Wren is also still bullish over the long term. He has a target of 1,850 for the S&P 500 at the end of 2014. It closed at 1,656 on Aug. 22.

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With that in mind, he's using this pullback as an opportunity to push clients into stocks.

“We have lots of clients with a lot of cash who have missed a lot of this run,” Mr. Wren said. “We'd love to see the market pull back a little more and then we'll be in there pounding the table.”

Nokia Corporation (NOK) After Earnings: Where Do Investors Stand?

The latest earnings report from Nokia Corporation (NYSE: NOK) was a mixed bag for investors as there was some good news along with other news that wasn't so good or could even be considered bad. I should mention that we have Nokia in our SmallCap Network Elite Opportunity (SCN EO) portfolio and we are up over 12% since early May. Nevertheless, an investment here is not for the risk adverse. With that in mind, here is a quick rundown as to where investors stand after the Nokia earnings report:

The Latest Earnings Report: Good and Bad. The Nokia earnings report was a mixed bag for investors. For starters, Nokia shipped 7.4 million Lumia smartphones in the quarter for a 32% sequential rise, but that was fewer than the 8.1 million units analysts had expected according to a Reuters poll while sales of regular mobile phones were also weaker than expected at 53.7 million units verses expectations of 56.2 million units. Nokia's sales fell to 5.7 billion euros ($7.49 billion) from 7.5 billion euros for the same period last year, but cost cutting has helped the company to trim its net loss to 227 million euros verses a net loss of 1.41 billion euros a year earlier. However, sales of Lumia phones increased by 32% sequentially to 7.4 million handsets. Nokia's CEO Stephen Elop also said the mobile phones business unit started to demonstrate "some signs of recovery in the latter part of the second quarter following a difficult start to the year" and he added that the Lumia 520 has "enjoyed a strong start in markets like China, France, India, Thailand, the UK, the US and Vietnam." Finally, Nokia Siemens Networks, the network infrastructure company, was a clear bright spot as operating margins came in at 11.8%, well above the 5% the company had been expecting and much better than the negative 1.2% operating margins in the core handset division. Some Analysts Are Optimistic. Although Greger Johansson with research firm Redeye in Stockholm said he was worried about the rapid sales decline of the feature phones, noting that Nokia has to keep launching new Lumia models at a rapid pace to keep up client interest in the Windows phones, he also added that the company: 

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"…has a few more quarters to make it. They are now more or less breaking even, that's a good starting point. The company has to keep on releasing new, very attractive products to catch market share from Samsung and Apple. I think Nokia still does have pretty good chance of doing that."

Do Consumers Want an Third Mobile Platform? Needham & Co.'s Charlie Wolf would be among the bears as he called the Nokia earnings report "disappointing on virtually every dimension." He also added:

"Nokia's second quarter results raise the possibility that consumers are content with just two platforms. If so, this does not speak well for the Microsoft/Nokia duo going forward. It appears that the market is reaching the now-or-never moment for the Windows 8/Nokia duo. We expect Microsoft to throw enormous resources behind Windows 8 to prevent its demise. But with a single digit market share, the challenge will be enormous." 

At Least Its Not as Bad as BlackBerry. Things could be much worst though as while Nokia sold 7.4 million Lumia devices in the second quarter for the highest quarterly total since Nokia began making Windows Phones, that figure is more than the total number of BlackBerry devices sold in its most recently reported quarter. Specifically, 6.8 million BlackBerry devices were sold for the three months ended June 1. Share Performance. On Wednesday, Nokia rose 0.75% to $4.01 for a market cap of $15.02 billion. The stock is up 5.2% since the start of the year, up 134.5% over the past year and down 85.4% over the past five years for a rather ugly performance for long term investors:

Finally, here is the latest technical chart for Nokia:

Clearly, Nokia still has work to turn around the handset business and it might take a few more earnings reports for investors to get a clearer picture.

SmallCap Network Elite Opportunity (SCN EO) has an open position in NOK. To find out what other open positions SCN EO currently has, and to learn why so many traders and investors are relying on this premium subscription service, click here to find out more.

Top 10 Growth Stocks To Invest In 2014

In this segment of The Motley Fool's everything-financials show,�Where the Money Is, banking analysts Matt Koppenheffer and David Hanson discuss the continued surge of U.S. home prices and what it means for consumers and investors.

Matt and David talk about homebuilder stocks and the long-term outlook for the future of housing prices.

On the heels of the surging housing market, American markets are reaching new highs, and some investors 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!

Top 10 Growth Stocks To Invest In 2014: Checkpoint Systms Inc.(CKP)

Checkpoint Systems, Inc. manufactures and markets identification, tracking, security, and merchandising solutions for the retail and apparel industry worldwide. The company operates in three segments: Shrink Management Solutions, Apparel Labeling Solutions, and Retail Merchandising Solutions. The Shrink Management Solutions segment provides shrink management and merchandise visibility solutions. It offers electronic article surveillance systems, such as EVOLVE, a suite of RF and RFID-enabled products that act as a deterrent to prevent merchandise theft in retail stores; and electronic article surveillance consumables, including EAS-RF and EAS-EM labels that work in combination with EAS systems to reduce merchandise theft in retail stores. This segment also provides keepers, spider wraps, bottle security, and hard tags, as well as Showsafe, a line alarm system for protecting display merchandise. In addition, it offers physical and electronic store monitoring solutions, incl uding fire alarms, intrusion alarms, and digital video recording systems for retail environments; and RFID tags and labels. The Apparel Labeling Solutions segment provides apparel labeling solutions to apparel retailers, brand owners, and manufacturers. It has Web-enabled apparel labeling solutions platform and network of 28 service bureaus located in 22 countries that supplies customers with customized apparel tags and labels. The Retail Merchandising Solutions segment offers hand-held label applicators and tags, promotional displays, and queuing systems. The company serves retailers in the supermarket, drug store, hypermarket, and mass merchandiser markets through direct distribution and reseller channels. Checkpoint Systems was founded in 1969 and is based in Thorofare, New Jersey.

Top 10 Growth Stocks To Invest In 2014: Eastern Insurance Holdings Inc.(EIHI)

Eastern Insurance Holdings, Inc., through its subsidiaries, provides workers compensation insurance and reinsurance products in the United States. The company?s Workers Compensation Insurance segment provides traditional workers compensation insurance coverage products, including guaranteed cost policies, policyholder dividend policies, retrospectively-rated policies, deductible policies, and alternative market products to employers. This segment distributes its workers? compensation products and services through its independent insurance agents primarily in Pennsylvania, Delaware, North Carolina, Maryland, Indiana, and Virginia. Its Segregated Portfolio Cell Reinsurance segment offers alternative market workers compensation solutions comprising program design, fronting, claims administration, risk management, segregated portfolio cell rental, asset management, and segregated portfolio management services to individual companies, groups, and associations. Eastern Insurance Holdings, Inc. is headquartered in Lancaster, Pennsylvania.

Advisors' Opinion:

• [By Lauren Pollock]

  ProAssurance Corp.(PRA) agreed to acquire Eastern Insurance Holdings Inc.(EIHI) for about $205 million, expanding the insurance company’s casualty insurance offerings. Eastern Insurance is a domestic casualty insurance group specializing in workers’ compensation products and services, among other things. ProAssurance plans to pay $24.50 in cash for each outstanding Eastern share, a 16% premium over Monday’s closing price.

Top 5 Undervalued Companies To Watch In Right Now: MEDIFAST INC(MED)

Medifast, Inc., through its subsidiaries, engages in the production, distribution, and sale of weight management and disease management products, and other consumable health and diet products in the United States. The company?s product lines include weight and disease management, meal replacement, and vitamins. It also operates weight control centers that offer Medifast programs for weight loss and maintenance, customized patient counseling, and inbody composition analysis. The company markets its products under the Medifast and Essential brand names, including shakes, appetite suppression shakes, women?s health shakes, diabetics shakes, joint health shakes, coronary health shakes, calorie burn drinks, calorie burn flavor infusers, antioxidant shakes, antioxidant flavor infusers, bars, crunch bars, soups, chili, oatmeal, pudding, scrambled eggs, hot cocoa, cappuccino, chai latte, iced teas, fruit drinks, pretzels, puffs, brownie, pancakes, soy crisps, crackers, and omega 3 and digestive health products. Medifast Inc. sells its products through various channels of distribution comprising Web, call center, independent health advisors, medical professionals, weight loss clinics, and direct consumer marketing supported via the phone and the Web; Take Shape for Life, a physician led network of independent health coaches; and weight control centers. The company was founded in 1980 and is headquartered in Owings Mills, Maryland.

Advisors' Opinion:

• [By Jon C. Ogg]

  Medifast Inc. (NYSE: MED) saw its stock down 5% in evening trading on Tuesday after the weight loss player had soft sales and guided expectations lower. Shares were still indicated down about 5%, but volume has not yet started.

Top 10 Growth Stocks To Invest In 2014: TrueBlue Inc.(TBI)

TrueBlue, Inc. provides temporary blue-collar staffing services in the United States. It supplies on demand general labor to various industries under the Labor Ready brand; skilled labor to manufacturing and logistics industries under the Spartan Staffing brand; and trades people for commercial, industrial, and residential construction, and building and plant maintenance industries under the CLP Resources brand. The company also provides mechanics and technicians to the aviation maintenance, repair and overhaul, aerospace manufacturing, and assembly industries, as well as to other transportation industries under the Plane Techs brand; and temporary drivers to the transportation and distribution industries under the Centerline brand. It primarily serves small and medium-size businesses. The company was formerly known as Labor Ready, Inc. and changed its name to TrueBlue, Inc. in December 2007. TrueBlue, Inc. was founded in 1985 and is headquartered in Tacoma, Washington.

Top 10 Growth Stocks To Invest In 2014: Waste Management Inc.(WM)

Waste Management, Inc., through its subsidiaries, provides waste management services to residential, commercial, industrial, and municipal customers in North America. It offers collection, transfer, recycling, and disposal services. The company also owns, develops, and operates waste-to-energy and landfill gas-to-energy facilities in the United States. Its collection services involves in picking up and transporting waste and recyclable materials from where it was generated to a transfer station, material recovery facility, or disposal site; and recycling operations include collection and materials processing, plastics materials recycling, and commodities recycling. In addition, it provides recycling brokerage, which includes managing the marketing of recyclable materials for third parties; and electronic recycling services, such as collection, sorting, and disassembling of discarded computers, communications equipment, and other electronic equipment. Further, the company e ngages in renting and servicing portable restroom facilities to municipalities and commercial customers under the Port-o-Let name; and involves in landfill gas-to-energy operations comprising recovering and processing the methane gas produced naturally by landfills into a renewable energy source, as well as provides street and parking lot sweeping services. Additionally, it offers portable self-storage, fluorescent lamp recycling, and medical waste services for healthcare facilities, pharmacies, and individuals, as well as provides services on behalf of third parties to construct waste facilities. The company was formerly known as USA Waste Services, Inc. and changed its name to Waste Management, Inc. in 1998. Waste Management, Inc. was incorporated in 1987 and is based in Houston, Texas.

Advisors' Opinion:

• [By Helix Investment Research]

  We note that Keating Capital's co-investors in many of its portfolio companies are not simply other venture capital or existing investors, but strategic investors as well. Examples include Agilyx, where Waste Management (WM) is a co-investor, BrightSource, where Chevron (CVX) and BP (BP) are co-investors, Kabam, where Google (GOOG) and Intel (INTC) are co-investors, or Tremor Video (TRMR), where Time Warner (TWX) is a co-investor. As of the end of Q2 2013, 9 (excluding Jumptap) of Keating Capital's portfolio companies had unrealized gains, with an average gain of 25.6% (again excluding Jumptap, which had unrealized gains of 8% as of the end of Q2 2013). The remaining 6 companies had an average loss of 44.46%. However, on an overall basis, Keating Capital's portfolio currently has an average unrealized gain of 2.15%. While this is not a large gain, we note that the bulk of Keating Capital's profits are realized upon exiting an investment in conjunction with the portfolio company's IPO or sale. Furthermore, portions of Keating Capital's portfolio are defended by structurally protected appreciation clauses that the company has struck with its portfolio companies, clauses that are not reflected on its balance sheet. These clauses, which are negotiated between Keating Capital and its portfolio companies, allow the company to receive shares in the portfolio company's IPO at a discount, or grant it warrants to purchase additional shares in an IPO for a nominal price. Since inception, Keating Capital has negotiated structurally protected appreciation clauses in 11 of the 20 companies it has invested in. As of the end of Q2 2013, 6 of Keating Capital's 15 portfolio companies were protected by structurally protected appreciation clauses, representing $22 million in total capital (almost 43% of the company's invested capital), thereby entitling Keating Capital to a weighted-average aggregate value of 1.9x its investment at the time of an IPO.

Top 10 Growth Stocks To Invest In 2014: Sara Lee Corporation(SLE)

Sara Lee Corporation engages in the manufacture and marketing of a range of branded packaged meat, bakery, and beverage products worldwide. Its packaged meat products include hot dogs and corn dogs, breakfast sausages, sandwiches and bowls, smoked and dinner sausages, premium deli and luncheon meats, bacon, beef, turkey, and cooked ham. It also offers frozen baked products, which comprise frozen pies, cakes, cheesecakes, pastries, and other desserts. In addition, Sara Lee provides roast, ground, and liquid coffee; cappuccinos; lattes; and hot and iced teas, as well as refrigerated dough products. The company sells its products under Hillshire Farm, Ball Park, Jimmy Dean, Sara Lee, State Fair, Douwe Egberts, Senseo, Maison du Caf

Top 10 Growth Stocks To Invest In 2014: Thoratec Corporation(THOR)

Thoratec Corporation engages in the development, manufacture, and marketing of proprietary medical devices used for circulatory support. The company?s primary product lines include ventricular assist devices, such as HeartMate II, an implantable left ventricular assist device consisting of a rotary blood pump to provide intermediate and long-term mechanical circulatory support (MCS); and HeartMate XVE, an implantable and pulsatile left ventricular assist device for intermediate and longer-term MCS. Its ventricular assist devices also comprise Paracorporeal Ventricular Assist Device, an external pulsatile ventricular assist device, which provides left, right, and biventricular MCS approved for bridge-to-transplantation (BTT), including home discharge, and post-cardiotomy myocardial recovery; and Implantable Ventricular Assist Device, an implantable and pulsatile ventricular assist device designed to provide left, right, and biventricular MCS approved for BTT comprising hom e discharge, and post-cardiotomy myocardial recovery. The company also provides CentriMag, an extracorporeal full-flow acute surgical support platform that offers support up to 30 days for cardiac and respiratory failure. In addition, it offers PediMag and PediVAS extracorporeal full-flow acute surgical support platforms designed to provide acute surgical support to pediatric patients. The company sells its products through direct sales force in the United States, as well as through a network of distributors internationally. Thoratec Corporation was founded in 1976 and is headquartered in Pleasanton, California.

Top 10 Growth Stocks To Invest In 2014: Crocs Inc.(CROX)

Crocs, Inc. and its subsidiaries engage in the design, development, manufacture, marketing, and distribution of footwear, apparel, and accessories for men, women, and children. The company primarily offers casual and athletic shoes, and shoe charms. It also designs and sells a range of footwear and accessories that utilize its proprietary closed cell-resin, called Croslite. The company?s footwear products include boots, sandals, sneakers, mules, and flats. In addition, it provides footwear products for the hospital, restaurant, hotel, and hospitality markets, as well as general foot care and diabetic-needs markets. Further, the company offers leather and ethylene vinyl acetate based footwear, sandals, and printed apparels principally for the beach, adventure, and action sports markets; and accessories comprising snap-on charms. The company sells its products through the United States and international retailers and distributors, as well as directly to end-user consumers th rough its company-operated retail stores, outlets, kiosks, and Web stores primarily under the Crocs Work, Crocs Rx, Jibbitz, Ocean Minded, and YOU by Crocs brand names. As of December 31, 2010, it operated 164 retail kiosks located in malls and other high foot traffic areas; 138 retail stores; 76 outlet stores; and 46 Web stores. Crocs, Inc. operates in the Americas, Europe, and Asia. The company was formerly known as Western Brands, LLC and changed its name to Crocs, Inc. in January 2005. Crocs, Inc. was founded in 1999 and is headquartered in Niwot, Colorado.

Top 10 Growth Stocks To Invest In 2014: Intuitive Surgical Inc.(ISRG)

Intuitive Surgical, Inc. designs, manufactures, and markets da Vinci surgical systems for various surgical procedures, including urologic, gynecologic, cardiothoracic, general, and head and neck surgeries. Its da Vinci surgical system consists of a surgeon?s console or consoles, a patient-side cart, a 3-D vision system, and proprietary ?wristed? instruments. The company?s da Vinci surgical system translates the surgeon?s natural hand movements on instrument controls at the console into corresponding micro-movements of instruments positioned inside the patient through small puncture incisions, or ports. It also manufactures a range of EndoWrist instruments, which incorporate wrist joints for natural dexterity for various surgical procedures. Its EndoWrist instruments consist of forceps, scissors, electrocautery, scalpels, and other surgical tools. In addition, it sells various vision and accessory products for use in conjunction with the da Vinci Surgical System as surgical procedures are performed. The company?s accessory products include sterile drapes used to ensure a sterile field during surgery; vision products, such as replacement 3-D stereo endoscopes, camera heads, light guides, and other items. It markets its products through sales representatives in the United States, and through sales representatives and distributors in international markets. The company was founded in 1995 and is headquartered in Sunnyvale, California.

Advisors' Opinion:

• [By Joseph Hogue]

  Enter Intuitive Surgical (Nasdaq: ISRG) and Da Vinci, a robotic arm that allows surgeons to operate with just a single incision less than an inch in size.

Top 10 Growth Stocks To Invest In 2014: Nordstrom Inc.(JWN)

Nordstrom, Inc., a fashion specialty retailer, offers apparel, shoes, cosmetics, and accessories for women, men, and children in the United States. It offers a selection of brand name and private label merchandise. The company sells its products through various channels, including Nordstrom full-line stores, off-price Nordstrom Rack stores, Jeffrey? boutiques, treasure & bond, and Last Chance clearance stores; and its online store, nordstrom.com, as well as through catalog. Nordstrom also provides a private label card, two Nordstrom VISA credit cards, and a debit card for Nordstrom purchases. The company?s credit and debit cards feature a shopping-based loyalty program. As of September 30, 2011, it operated 222 stores, including 117 full-line stores, 101 Nordstrom Racks, 2 Jeffrey boutiques, 1 treasure & bond store, and 1 clearance store in 30 states. The company was founded in 1901 and is based in Seattle, Washington.

Advisors' Opinion:

• [By Marshall Hargrave]

  Worth noting is that the average remaining tenure for the Calvin Klein licenses is eight to nine years. Other tailwinds for GIII include:

  The team sports business is now a $100 million business and was nonexistent 5 years ago. Sales makeup is 50% sportswear and 50% coats. We see this business continuing to grow as the overall popularity of sports teams continues.Dresses from Eliza J continue to be a top seller at Nordstrom's (JWN) and other high-end retailers.Ivanka Trump showrooms will be opening in Q4. The line will be launching dresses, suit separates and swimwear.The biggest business for GIII remains outerwear and the company started shipping product at the end of Q2. GIII has approximately 30 licensed, owned and private label brands and a covers the entire spectrum of retailers from mass market to luxury.Vilebrequin was acquired in August of last year and the addition helped grow non-licensed revenues to $70 million in Q2 compared to $48 million last year without Vilebrequin. Vilebrequin sells swimwear, resort wear and related accessories through a network of company-owned and franchised shops. To grow Vilebrequin, the company will be adding footwear to its shops, in particular flip-flops in all of the stores by November. The company is planning to grow Vilebrequin's presence in the U.S. and has been adding buildouts in key department stores. Furthermore, Vilebrequin's e-commerce site should be live in the next 60 days.

  GIII's entry into the footwear market is well in line with its long-term plans to become a men's and women's head-to-toe apparel maker.

• [By Paul Ausick]

  Wal-Mart Stores Inc. (NYSE: WMT), Macy�� Inc. (NYSE: M), Kohl�� Corp. (NYSE: KSS), and Nordstrom Inc. (NYSE: JWN) have all already reported poor quarterly results that barely met expectations in most cases. There�� no reason to expect anything substantially different this week, except perhaps from Home Depot, which has history of being cautious with its estimates.

Pandora Earnings Can’t Calm Fears of New Competitors

Pandora Media Inc. (NYSE: P) reported second-quarter fiscal 2014 results after markets closed today. The Internet radio company posted adjusted diluted earnings per share (EPS) of $0.04 on revenues of $162 million, which includes $4.7 million in the company's subscription return reserve. In the same period a year ago, the company reported adjusted EPS of $0.01 on revenues of $33.5 million. Second-quarter results also compare to the Thomson Reuters consensus estimate for EPS of $0.02 on $156.35 million in revenues.

On a GAAP basis, the company reported a quarterly diluted EPS loss of $0.04. Adjusted earnings excluded $10.5 million in stock-based compensation expense.

For the third quarter, Pandora is guiding revenue non-GAAP revenue at $174 to $179 million and adjusted EPS in a range of $0.03 to $0.05. For the full 2014 fiscal year, Pandora raised its revenue guidance from a range of $615 to $635 million to a new range of $640 to $655 million and adjusted EPS in a range from breakeven to a profit of $0.05. The company lowered the top end of its EPS guidance by $0.03.

The company's CEO said:

Strong momentum in our mobile business, with non-GAAP total mobile revenue growing 92% year-over-year to $116 million, clearly demonstrates the leverage in Pandora’s business model. To drive future growth, we are accelerating investment in new technologies, channels and capabilities that maximize the value Pandora delivers.

Listener hours totaled 3.88 billion in the quarter up from 3.3 billion in the same period a year ago, but down from 4.18 billion in the first quarter.

Sequentially, quarterly ad revenues rose, from $105 million in the first quarter to $128.5 million. Subscription and other revenue rose as well, from $20.36 million to $28.84 million sequentially as well.

Pandora's lowered earnings outlook is likely due to expected Internet radio competition from both Apple Inc. (NASDAQ: AAPL) and Google Inc. (NASDAQ: GOOG). The third quarter EPS outlook is also well below the consensus estimate of $0.08.

Shares are trading down about 5.2% in the after-hours market, at $20.59 in a 52-week range of $7.08 to $21.98. The consensus target price for the shares was around $21.20 before today's report.

Top Heal Care Stocks To Watch For 2014

Adobe (NASDAQ: ADBE  ) is leaving permanent software licenses behind, and will deliver its creative tools exclusively via its cloud-based subscription hub. The company hailed this move as an "accelerated shift to the cloud."

In the video below, Fool contributor Anders Bylund explains why Adobe seems to be overstating the cloud component of this move. In fact, both Microsoft (NASDAQ: MSFT  ) and Google (NASDAQ: GOOG  ) sit a lot closer to true cloud-computing than Adobe does.

A Microsoft executive recently came close to promising Office users a choice between leasing or buying for the next decade or so, but his superiors soon pointed out that the future lies with subscription services, after all. And Google is nothing if not cloud-based. Your move, Adobe.

Top Heal Care Stocks To Watch For 2014: Dot Hill Systems Corporation(HILL)

Dot Hill Systems Corp. designs, manufactures, and markets a range of software and hardware storage systems for the entry and midrange storage markets worldwide. Its storage solutions consist of integrated hardware, firmware, and software products employing a modular system that allows end-users to add various protocol, performance, capacity, or data protection schemes. The company offers AssuredSAN products, a flexible line of networked data storage solutions for open systems environments, including fiber channel, Internet small computer systems interface, and serial attached small computer systems interface, or SAS storage markets. Its AssuredSAN product lines range from approximately 146 gigabyte to 192 terabyte storage systems. The company also provides RAID software for industry standard Windows and Linux servers, as well as storage management applications, which manage its storage system configurations. In addition, it sells DMS software products comprising AssuredSna p, AssuredCopy, AssuredRemote, and RAIDar. Further, the company offers standalone storage software products, such as AssuredUVS, a unified virtual storage appliance product; and AssuredVRA. It sells its products through original equipment manufacturers, systems integrators, distributors, and value added resellers. The company was founded in 1988 and is headquartered in Longmont, Colorado.

Top Heal Care Stocks To Watch For 2014: PC-Tel Inc.(PCTI)

PCTEL, Inc. provides propagation and optimization solutions for the wireless industry. It designs and develops software-based radios (scanning receivers) for wireless network optimization; and develops and distributes antenna solutions. The company?s scanning receivers, receiver-based products, and interference management solutions are used to measure, monitor, and optimize cellular networks. It offers various antenna products for worldwide interoperability for microwave access antennas, land mobile radio antennas, and precision global positioning systems antennas that serve applications in telemetry, radio frequency identification, WiFi, fleet management, and mesh networks. The company?s antenna solutions address public safety, military, and government applications; supervisory control and data acquisition, health care, energy, smart grid, and agricultural applications; and indoor wireless, wireless backhaul, and cellular applications. PCTEL, Inc. supplies its products to public and private carriers, wireless infrastructure providers, wireless equipment distributors, value added resellers, and original equipment manufacturers through distributors and direct sales force. The company was founded in 1994 and is headquartered in Bloomingdale, Illinois.

Top Dividend Companies To Buy For 2014: Seadrill Limited(SDRL)

Seadrill Limited, an offshore drilling contractor, provides offshore drilling services to the oil and gas industries worldwide. It also offers platform drilling, well intervention, and engineering services. As of March 31, 2011 the company owned and operated 54 offshore drilling units, which consist of drillships, jack-up rigs, semisubmersible rigs, and tender rigs for operations in shallow and deepwater areas, as well as in benign and harsh environments. Seadrill Limited was founded in 1972 and is based in Hamilton, Bermuda.

Top Heal Care Stocks To Watch For 2014: PCCW Ltd (8)

PCCW Limited is a Hong Kong-based holding company. Its subsidiary HKT provides telecommunications and related services, including local telephony, local data and broadband, international telecommunications, mobile, customer premises equipment sale, outsourcing, consulting and contact centers, primarily in Hong Kong, mainland China and elsewhere in the world. Media Business includes interactive pay- television (TV) services, Internet portal multimedia entertainment platform and the Company�� directories operations in Hong Kong and mainland China. Solutions Business offers Information and Communications Technologies services and solutions in Hong Kong and mainland China. Pacific Century Premium Developments Limited covers the Company�� property portfolio in Hong Kong and mainland China, including the Cyberport development in Hong Kong, and elsewhere in Asia. Other Businesses include the Company�� wireless broadband business in the United Kingdom and all corporate support functions.

Top Heal Care Stocks To Watch For 2014: Rofin-Sinar Technologies Inc.(RSTI)

Rofin-Sinar Technologies Inc., together with its subsidiaries, engages in the design, development, engineering, manufacturing, and marketing of laser-based products worldwide. The company offers laser macro products to machine tool and automotive markets for cutting and welding of metals. It also provides laser marking products to semiconductor and electronics markets for the marking of integrated circuits, wafers, solar cells, electronic components, and smart cards, as well as to automotive markets for the marking of labels and car components. In addition, the company offers laser micro products for fine welding, fine cutting, micro structuring, and drilling applications in medical devices, semiconductor and electronics, photovoltaic, dental, and jewelry markets; and for perforating and scribing of paper and foils in packaging and paper industries. Further, it provides components to laser industry. The company sells its products in approximately 65 countries to original e quipment manufacturers, systems integrators, and industrial end-users. Rofin-Sinar Technologies Inc. was founded in 1975 and is based in Plymouth, Michigan.

Top Heal Care Stocks To Watch For 2014: Dynavax Technologies Corporation(DVAX)

Dynavax Technologies Corporation, a clinical-stage biopharmaceutical company, discovers and develops novel products to prevent and treat infectious diseases. The company's lead product candidate includes HEPLISAV, a Phase 3 investigational adult hepatitis B vaccine designed to provide protection with fewer doses than current licensed vaccines. It also develops Universal Flu vaccine, a Phase 1b clinical trial vaccine for influenza prevention; SD-101, a Phase Ib clinical trial hepatitis C therapy; DV-601, a Phase Ib clinical trial hepatitis B therapy; AZD1419, a preclinical asthma therapy; and DV1179, a Phase 1 trial autoimmune and inflammatory disease therapy. Dynavax Technologies Corporation has strategic alliance with GlaxoSmithKline plc to discover, develop, and commercialize DV1179 and other endosomal toll-like receptor inhibitors for diseases, such as lupus, psoriasis, and rheumatoid arthritis; and develop a TLR8 inhibitor for the treatment of multiple autoimmune and i nflammatory diseases, as well as has research and license agreement with AstraZeneca to discover and develop TLR9 agonist-based therapies for the treatment of asthma and chronic obstructive pulmonary disease. The company was founded in 1996 and is based in Berkeley, California.

Top Heal Care Stocks To Watch For 2014: Hampden Bancorp Inc.(HBNK)

Hampden Bancorp, Inc. operates as the holding company for Hampden Bank that provides banking products and services to individuals, families, and businesses in Hampden county, Massachusetts. The company?s deposit products include checking, regular savings, and money market deposits, as well as time deposits, including certificate of deposit accounts and individual retirement accounts. Its lending portfolio comprises commercial real estate loans, residential real estate loans secured by one-to-four-family residences, residential and commercial construction loans, commercial and industrial loans, home equity lines-of-credit, fixed rate home equity loans, and other personal consumer loans. The company also engages in buying, selling, holding, and dealing in securities. It offers its services through nine offices located in Hampden county, Massachusetts, as well as through Internet. Hampden Bancorp, Inc. was founded in 1852 and is headquartered in Springfield, Massachusetts.

Top Heal Care Stocks To Watch For 2014: Rurban Financial Corp(RBNF)

Rurban Financial Corp. operates as the holding company for The State Bank and Trust Company that provides banking and financial services to individual and corporate customers in northwest Ohio and northeast Indiana. The company offers various deposit products, including checking accounts, passbook savings, money market accounts, time deposits, and certificates of deposit. Its loan portfolio comprises commercial, consumer, agricultural, and residential mortgage loans. The company also provides personal and corporate trust services, commercial leasing, bank credit card services, safe deposit box rentals, Internet and telephone banking, and other personalized banking services, as well as various financial services, including asset management and brokerage services. In addition, Rurban Financial Corp. provides software systems that offer a range of data processing and item processing services in an outsourced environment to community banks in Arkansas, Illinois, Indiana, Kansa s, Michigan, Missouri, Nebraska, Nevada, Ohio, and Wisconsin. As of April 7, 2010, it operated 19 banking centers in Allen, Defiance, Fulton, Lucas, Paulding, Williams, and Wood Counties, Ohio; and Allen County, Indiana, as well as operated a loan production office in Franklin County, Ohio. Rurban Financial Corp. has a strategic partnership with New Core Holdings, Inc. The company was founded in 1983 and is based in Defiance, Ohio.

This is Why Wall Street is So Last Century

By Hal M. Bundrick

NEW YORK (MainStreet) -- Wall Street is pass�. The real money is in that new app startup you just found out about -- or in a biotech breakthrough you really believe in. And with new crowdfunding investments set to explode, big upside deals will seem to be everywhere. Real estate, oil and gas, new media companies. These non-public investments are the kinds of opportunities more investors are seeking these days, particularly the young and wealthy, as they look beyond traditional public stock market offerings and choose to open the investment door marked "Private."

A recent survey conducted by iCrowd revealed that nearly half (49%) of high net worth investors under the age of 30 are currently invested in private placements. One-in-five wealthy investors between 45-60 years of age are, too.

But are they fully aware of the risks? The Financial Industry Regulatory Authority (FINRA) has issued a new investor alert to remind consumers that private placements are risky and "can tie up their money for a long time." While choosing to invest in a company not listed on a public stock exchange or registered with the Securities and Exchange Commission (SEC) may seem like an opportunity to make a profit the general public can't, there are barriers to entry. First, you need a fat wallet. In most cases, but not all, you must be what is defined as an "accredited investor" to buy into a private placement. "Investors should understand that many private placement securities are issued by companies that are not required to file financial reports, and investors may have problems finding out how the company is doing," says Gerri Walsh, FINRA's Senior Vice President for Investor Education. "Given the risks and liquidity issues, investors should carefully assess how private placements fit in with other investments they hold before investing." The details on these deals are usually listed in a private placement memorandum or other offering documents - sometimes laced with inaccuracies and omissions, according to FINRA. For investors looking into a private stock deal, FINRA says to consider the following: Find out as much as you can about the company's business and understand how and when you are allowed to liquidate your private placement securities. Such "restricted" stocks are often hard, if not impossible, to sell. Ask your broker what information he or she was able to gather about the issuing company and the private placement. Be extremely wary if you receive paperwork to sign about a private placement without having a discussion with your broker first about if such an investment is right for you. And use caution when considering private placements you hear about through spam emails or cold calling. They are very often fraudulent.

Mid-Morning Market Update: Markets Open Mixed; FedEx Posts Rise In Profit

Following the market opening Wednesday, the Dow traded down 0.11 percent to 15,512.41 while the NASDAQ surged 0.16 percent to 3,751.53. The S&P also rose, gaining 0.04 percent to 1,705.41.

Top Headline
FedEx (NYSE: FDX) reported a rise in its fiscal first-quarter profit.

FedEx's quarterly profit surged to $489 million, or $1.53 per share, versus a year-ago profit of $459 million, or $1.45 per share.

Its revenue gained 2% to $11 billion from $10.8 billion. However, analysts were estimating earnings of $1.50 per share on revenue of $11 billion.

Equities Trading UP
Adobe Systems (NASDAQ: ADBE) shot up 6.79 percent to $51.41 after the company reported that its subscription revenue climbed 73% to $299.4 million and its Creative Cloud service added 331,000 paying subscribers in the same quarter.

Shares of New Residential Investment (NYSE: NRZ) got a boost, shooting up 6.10 percent to $6.78 after the company declared a third quarter dividend of $0.175 per share.

FedEx (NYSE: FDX) was also up, gaining 2.02 percent to $112.92 after the company reported a rise in its fiscal first-quarter profit.

Equities Trading DOWN
Shares of Tower Group International (NASDAQ: TWGP) were down 24.53 percent to $10.46. Tower Group announced its plans to release its Q2 results during the week of October 7, 2013. FBR Capital downgraded the stock from Outperform to Market Perform.

Cracker Barrel Old Country Store (NASDAQ: CBRL) shares tumbled 2.50 percent to $104.32 after the company reported a 1.1% drop in its fiscal fourth-quarter earnings and issued a downbeat Q1 forecast.

Five Below (NASDAQ: FIVE) down, falling 4.02 percent to $46.55 after the company announced the secondary offering of 7.1 million shares by selling shareholders.

Commodities
In commodity news, oil traded up 0.46 percent to $105.90, while gold traded down 0.63 percent to $1,301.20.

Silver traded down 1.19 percent Wednesday to $21.53, while copper fell 1.32 percent to $3.27.

Eurozone
European shares were mostly higher today. The Spanish Ibex Index gained 0.53 percent, while Italy's FTSE MIB Index rose 0.29 percent. Meanwhile, the German DAX gained 0.28 percent and the French CAC 40 rose 0.37 percent while U.K. shares dipped 0.03 percent.

5 Best Financial Stocks To Buy Right Now

Economics
The Mortgage Bankers Association reported that its index of mortgage application activity rose 11.20% in the week ended September 13 versus the prior week.

US housing starts rose 0.9% to an annual rate of 891,000 in August. However, economists were expecting housing starts to reach an annual rate of 921,000.

The Federal Open Market Committee will announce its policy decision and economic projections at 2:00 p.m. ET.

Top 10 Blue Chip Stocks To Buy For 2014

With no compelling reason to be pessimistic today, Wall Street started the week off strong Monday, bidding stocks higher as Europe took further steps to stop the bleeding in Greece. Data today also show an abrupt jump in consumer borrowing, with Americans taking nearly $20 billion worth of debt in May, up sharply from the $10.9 billion more citizens borrowed in April. When all was said and done, the Dow Jones Industrial Average (DJINDICES: ^DJI  ) tacked on 89 points, or 0.6%, to end at 15,225.�

UnitedHealth Group (NYSE: UNH  ) led all blue chips higher Monday, adding 2.1%, as the health insurer enjoyed the benefits of a favorable article in Barron's, making the case for a 40% run-up in the stock over the next several years. The staggered rollout of Obamacare is cited as the major catalyst for the stock's potential in the bullish piece, which Wall Street clearly paid attention to. Shares even hit a 52-week high during trading today.

Top 10 Blue Chip Stocks To Buy For 2014: Apple Inc.(AAPL)

Apple Inc., together with subsidiaries, designs, manufactures, and markets personal computers, mobile communication and media devices, and portable digital music players, as well as sells related software, services, peripherals, networking solutions, and third-party digital content and applications worldwide. The company sells its products worldwide through its online stores, retail stores, direct sales force, third-party wholesalers, resellers, and value-added resellers. In addition, it sells third-party Mac, iPhone, iPad, and iPod compatible products, including application software, printers, storage devices, speakers, headphones, and other accessories and peripherals through its online and retail stores; and digital content and applications through the iTunes Store. The company sells its products to consumer, small and mid-sized business, education, enterprise, government, and creative markets. As of September 25, 2010, it had 317 retail stores, including 233 stores in the United States and 84 stores internationally. The company, formerly known as Apple Computer, Inc., was founded in 1976 and is headquartered in Cupertino, California.

Advisors' Opinion:

• [By Dan Moskowitz]

  Apple is one of the strongest brands in the world. With�quality leadership and an enormous amount of cash available, it should only be a matter of time before the stock begins to please investors. However, the key word in the previous sentence was ��hould�� The market has been slightly under the weather since Ben Bernanke hinted that he may begin to unwind monetary stimulus later this year. Is this yet another incredible buying opportunity for the market, or have the past few years been a facade and the wheels are about to come off? There are many opinions on both sides, but nobody knows the answer to that question with certainty. The market behaves in strange ways and often in ways the masses don�� expect. The point here is that there are increased risks due to external events. Even if the market continues its ascent, it�� too early for the iWatch excitement.

• [By Victor Mora]

  Apple strives to provide innovative products and services that consumers and companies �love to own. Activist investor Carl Icahn has revealed that he has a big stake in the company. The stock has been surging higher in recent years and is now breaking above a base that was formed this year. Over the last four quarters, earnings have been mixed while revenue figures have been rising which has led to mixed feelings among investors in the company. Relative to its peers and sector, Apple has been a weak year-to-date performer. Look for Apple to OUTPERFORM.

• [By Victor Mora]

  Apple is an innovative company that has been providing products and services that consumers and companies have been happy to purchase. The rumored products, as well as as the most recent positive earnings report, may generate some buzz for the company. The stock has not done very well in the last few months, but may be stabilizing around current prices. Over the last four quarters, investors in the company have had mixed feelings, as earnings have mostly been decreasing, while revenue has been rising. Relative to its peers and sector, Apple has been a weak year-to-date performer. WAIT AND SEE what Apple does this coming quarter.

• [By Victor Mora]

  Apple strives to provide innovative products and services that consumers and companies �love to own. The company has seen a flurry of news lately as activist investor Carl Icahn has revealed that he has a big stake in the company and the iPad is seeing stiff competition in China. The stock has moving higher over the last few years and is currently breaking above a solid base. Over the last four quarters, earnings have been mixed while revenues have been rising which has produced mixed feelings about investors in the company. Relative to its peers and sector, Apple has been a weak year-to-date performer. Look for Apple to OUTPERFORM.

Top 10 Blue Chip Stocks To Buy For 2014: McDonald's Corporation(MCD)

McDonald?s Corporation, together with its subsidiaries, operates as a worldwide foodservice retailer. It franchises and operates McDonald?s restaurants that offer various food items, soft drinks, coffee, and other beverages. As of December 31, 2009, the company operated 32,478 restaurants in 117 countries, of which 26,216 were operated by franchisees; and 6,262 were operated by the company. McDonald?s Corporation was founded in 1948 and is based in Oak Brook, Illinois.

Advisors' Opinion:

• [By Victor Mora]

  McDonald�� provides highly demanded food items to significant amounts of consumers who enjoy their items around the world. The stock has done very well for investors of the last several years and is now trading at all-time high prices. Earnings and revenue figures have done reasonably well, however, investors have expected a little more from the company. Relative to its strong peers and sector, McDonald’s has been a performance leader, year-to-date. Look for McDonald’s to continue to OUTPERFORM.

• [By Victor Mora]

  McDonald�� is a well-recognized company that fulfills cravings and demand for quick and delicious food choices that many consumers across the globe enjoy. The company continues to adopt new technologies in order to enhance their customer experience. The stock has been rising in recent years but is now pulling back a bit as investors book gains. Over the last four quarters, earnings and revenues have been on the rise, however, investors have expected a little more from the company. Relative to its peers and sector, McDonald’s has been an average year-to-date performer. WAIT AND SEE what McDonald’s does this quarter.

Best Low Price Stocks To Buy For 2014: Chevron Corporation(CVX)

Chevron Corporation, through its subsidiaries, engages in petroleum, chemicals, mining, power generation, and energy operations worldwide. It operates in two segments, Upstream and Downstream. The Upstream segment involves in the exploration, development, and production of crude oil and natural gas; processing, liquefaction, transportation, and regasification associated with liquefied natural gas; transportation of crude oil through pipelines; and transportation, storage, and marketing of natural gas, as well as holds interest in a gas-to-liquids project. The Downstream segment engages in the refining of crude oil into petroleum products; marketing of crude oil and refined products primarily under the Chevron, Texaco, and Caltex brand names; transportation of crude oil and refined products by pipeline, marine vessel, motor equipment, and rail car; and manufacture and marketing of commodity petrochemicals, plastics for industrial uses, and fuel and lubricant additives. It a lso produces and markets coal and molybdenum; and holds interests in 13 power assets with a total operating capacity of approximately 3,100 megawatts, as well as involves in cash management and debt financing activities, insurance operations, real estate activities, energy services, and alternative fuels and technology business. Chevron Corporation has a joint venture agreement with China National Petroleum Corporation. The company was formerly known as ChevronTexaco Corp. and changed its name to Chevron Corporation in May 2005. Chevron Corporation was founded in 1879 and is based in San Ramon, California.

Advisors' Opinion:

• [By Victor Mora]

  Chevron provides essential energy products and services to growing companies and consumers worldwide. The stock has been on a bullish run for many years that has taken it to all-time high prices. Over the last four quarters, earnings and revenue figures have been mixed, however, investors in the company have been mostly happy with earnings reports. Relative to its peers and sector, Chevron has been a year-to-date performance leader. Look for Chevron to OUTPERFORM.

• [By Victor Mora]

  Chevron is an oil and gas bellwether that provides essential energy products and services to consumers and companies worldwide. The company recently won a bid to explore�for shale gas in western Lithuania. The stock is currently bouncing off an upward sloping trendline and may continue to do so. Over the last four quarters, earnings and revenues have been mixed, which has produced mixed feelings among investors in the company. Relative to its peers and sector, Chevron has been a year-to-date performance leader. Look for Chevron to OUTPERFORM.

• [By Teresa Rivas]

  Shares of Chevron (CVX) were up 0.7% in recent trading, on the heels that it has reached a settlement with Brazilian prosecutors.

  Chevron and Transocean (RIG) were named in the $20 billion lawsuit over a 2011 oil spill off the southeast coast of the country, and both parties are expected to sign off on the deal today, reports The Wall Street Journal. Criminal charges against executives have already been dropped.

  The move comes at a delicate time for Brazil��hile many energy companies are eager to tap the nations resources and appetite, some criticized the government of overacting to the spill; the settlement should calm some ruffled feathers a month before the country will auction off rights to what ��s believed to be one of the largest oil fields ever discovered in deep ocean waters,��notes the Journal.

  However, Transocean didn�� get any bump from the news, and was trading down 1.5% at recent check.� Both names have lagged the index in the past year: While the S&P 500 has gained nearly 15% in the last 12 months, Chevron is up 5.7% and Transocean is up just 1.7%.

  Other oil majors like Exxon (XOM) and ConocoPhillips (COP) are also up today.

  Update: Reuters is reporting that Chevron� is considering bid for stake in a Brazil offshore oil prospect (via Briefing.com).

• [By GuruFocus] Tom Gayner initiated holdings in Chevron Corp. His purchase prices were between $114.81 and $126.43, with an estimated average price of $120.86. The impact to his portfolio due to this purchase was 0.18%. His holdings were 43,000 shares as of 06/30/2013.
  
  New Purchase: Brookfield Property Partners LP (BPY)
  
  Tom Gayner initiated holdings in Brookfield Property Partners LP. His purchase prices were between $19.57 and $23.64, with an estimated average price of $21.67. The impact to his portfolio due to this purchase was 0.13%. His holdings were 175,122 shares as of 06/30/2013.
  
  New Purchase: ONEOK, Inc. (OKE)
  
  Tom Gayner initiated holdings in ONEOK, Inc.. His purchase prices were between $41.16 and $52.13, with an estimated average price of $46.98. The impact to his portfolio due to this purchase was 0.1%. His holdings were 70,000 shares as of 06/30/2013.
  
  New Purchase: Blackstone Group LP (BX)
  
  Tom Gayner initiated holdings in Blackstone Group LP. His purchase prices were between $19.1 and $23.45, with an estimated average price of $21.2. The impact to his portfolio due to this purchase was 0.09%. His holdings were 116,900 shares as of 06/30/2013.
  
  New Purchase: BlackRock Inc (BLK)
  
  Tom Gayner initiated holdings in BlackRock Inc. His purchase prices were between $245.3 and $291.69, with an estimated average price of $267.9. The impact to his portfolio due to this purchase was 0.08%. His holdings were 9,100 shares as of 06/30/2013.
  
  New Purchase: KKR & Co LP (KKR)
  
  Tom Gayner initiated holdings in KKR & Co LP. His purchase prices were between $17.8 and $21.15, with an estimated average price of $19.85. The impact to his portfolio due to this purchase was 0.08%. His holdings were 115,000 shares as of 06/30/2013.
  
  New Purchase: Eni SpA (E)
  
  Tom Gayner initiated holdings in Eni SpA. His purchase prices were between $40.39 and $48.96, with an estimated average price of $45.85. The impact to his portfolio due to this purchase was 0.04%. His ! holdings were 30,000 shares as of 06/30/2013.
  
  New Purchase: Ross Stores, Inc. (ROST)
  
  Tom Gayner initiated holdings in Ross Stores, Inc.. His purchase prices were between $59.26 and $66.5, with an estimated average price of $64.05. The impact to his portfolio due to this purchase was 0.04%. His holdings were 18,000 shares as of 06/30/2013.
  
  New Purchase: Carlyle Group LP (CG)
  
  Tom Gayner initiated holdings in Carlyle Group LP. His purchase prices were between $24.19 and $32.87, with an estimated average price of $29.56. The impact to his portfolio due to this purchase was 0.02%. His holdings were 20,000 shares as of 06/30/2013.
  
  Sold Out: EOG Resources (EOG)
  
  Tom Gayner sold out his holdings in EOG Resources. His sale prices were between $113.44 and $137.9, with an estimated average price of $128.22.
  
  Sold Out: State Street Corp (STT)
  
  Tom Gayner sold out his holdings in State Street Corp. His sale prices were between $56.51 and $67.44, with an estimated average price of $62.2.
  
  Sold Out: Bunge Ltd (BG)
  
  Tom Gayner sold out his holdings in Bunge Ltd. His sale prices were between $66.4 and $73.51, with an estimated average price of $70.39.
  
  Added: UnitedHealth Group Inc (UNH)
  
  Tom Gayner added to his holdings in UnitedHealth Group Inc by 45.25%. His purchase prices were between $58.54 and $66.09, with an estimated average price of $62.22. The impact to his portfolio due to this purchase was 0.4%. His holdings were 569,800 shares as of 06/30/2013.
  
  Added: Liberty Media Corporation (LMCA)
  
  Tom Gayner added to his holdings in Liberty Media Corporation by 102.38%. His purchase prices were between $108.75 and $130.01, with an estimated average price of $119.32. The impact to his portfolio due to this purchase was 0.2%. His holdings were 85,000 shares as of 06/30/2013.
  
  Added: National Oilwell Varco, Inc. (NOV)
  
  Tom Gayner added to his holdings in National Oilwell Varco, Inc. by 40.44%. His purchase prices were bet! ween $64.! 14 and $71.57, with an estimated average price of $68.35. The impact to his portfolio due to this purchase was 0.14%. His holdings were 191,000 shares as of 06/30/2013.
  
  Added: Google, Inc. (GOOG)
  
  Tom Gayner added to his holdings in Google, Inc. by 86%. His purchase prices were between $765.914 and $915.89, with an estimated average price of $849.25. The impact to his portfolio due to this purchase was 0.13%. His ho

Top 10 Blue Chip Stocks To Buy For 2014: Visa Inc.(V)

Visa Inc., a payments technology company, engages in the operation of retail electronic payments network worldwide. It facilitates commerce through the transfer of value and information among financial institutions, merchants, consumers, businesses, and government entities. The company owns and operates VisaNet, a global processing platform that provides transaction processing services. It also offers a range of payments platforms, which enable credit, charge, deferred debit, debit, and prepaid payments, as well as cash access for consumers, businesses, and government entities. The company provides its payment platforms under the Visa, Visa Electron, PLUS, and Interlink brand names. In addition, it offers value-added services, including risk management, issuer processing, loyalty, dispute management, value-added information, and CyberSource-branded services. The company is headquartered in San Francisco, California.

Advisors' Opinion:

• [By Charles Sizemore]

  One of the “big picture” economic themes that I expect to play out over 2011 and beyond is the secular shift to a global cashless society.?Though the process is well on its way in the U.S. and Europe, roughly 40% of all transactions are still made with cash and paper checks according to Barron’s.

  This means that even in “boring” developed markets, there is ample room for growth in electronic payments. And there is no better company to benefit from this trend than credit card giant Visa (NYSE: V).

• [By Victor Mora]

  Visa facilitates transactions for consumers, companies, governments, and other entities around the world. The company recently reported earnings that have sat really well with investors. The stock has been steadily trending higher and is now trading near all-time high prices. Over the last four quarters, earnings and revenue figures have been increasing which has really pleased investors. Relative to its strong peers and sector, Visa has been an average year-to-date performer. Look for Visa to OUTPERFORM.

Top 10 Blue Chip Stocks To Buy For 2014: International Business Machines Corporation(IBM)

International Business Machines Corporation (IBM) provides information technology (IT) products and services worldwide. Its Global Technology Services segment provides IT infrastructure and business process services, including strategic outsourcing, process, integrated technology, and maintenance services, as well as technology-based support services. The company?s Global Business Services segment offers consulting and systems integration, and application management services. Its Software segment offers middleware and operating systems software, such as WebSphere software to integrate and manage business processes; information management software for database and enterprise content management, information integration, data warehousing, business analytics and intelligence, performance management, and predictive analytics; Tivoli software for identity management, data security, storage management, and datacenter automation; Lotus software for collaboration, messaging, and so cial networking; rational software to support software development for IT and embedded systems; business intelligence software, which provides querying and forecasting tools; SPSS predictive analytics software to predict outcomes and act on that insight; and operating systems software. Its Systems and Technology segment provides computing and storage solutions, including servers, disk and tape storage systems and software, point-of-sale retail systems, and microelectronics. The company?s Global Financing segment provides lease and loan financing to end users and internal clients; commercial financing to dealers and remarketers of IT products; and remanufacturing and remarketing services. It serves financial services, public, industrial, distribution, communications, and general business sectors. The company was formerly known as Computing-Tabulating-Recording Co. and changed its name to International Business Machines Corporation in 1924. IBM was founded in 1910 and is based in Armonk, New York.

Advisors' Opinion:

• [By Geoff Gannon] Wells Fargo (WFC) ��that only seem cheap if you believe in their franchises. These are far from Ben Graham bargains.
  
  And then other times, Buffett buys companies like Daehan Flour Mills. Or he buys into a liquidation like Comdisco. Or an arbitrage position like Dow Jones.
  
  How does Buffett choose between:
  
  路 A wonderful business at a fair price
  
  路 A fair business at a wonderful price
  
  路 A business that is liquidating
  
  路 An arbitrage opportunity?
  
  Very few successful investors buy stocks that fall into all these categories. Ben Graham did arbitrage, liquidations, and fair businesses at wonderful prices. But he never bought wonderful businesses at fair prices.
  
  Phil Fisher bought wonderful businesses at fair prices. But he never bought fair businesses at wonderful prices, or liquidations, or arbitrage.
  
  Is Buffett just combining Ben Graham and Phil Fisher?
  
  No.
  
  Buffett invested in GEICO ��in fact he put 75% of his net worth into GEICO ��while he was still taking Ben Graham�� class. GEICO is a great example of Warren�� departure from the Ben Graham approach. Buffett was departing from Graham�� approach from the moment he set foot in Graham�� class.
  
  How?
  
  He was focused on his return on investment. He was focused on compounding his wealth. Graham wasn��. Buffett was. That was the difference.
  
  And so Buffett immediately started buying the same stocks as Ben Graham ��but he focused on just the very best ideas in Graham�� portfolio. A great idea for Ben Graham would ��at most ��account for about 10% of his common stock portfolio. A great idea for Warren Buffett could be ��like GEICO was ��75% of his portfolio.
  
  When Buffett started his partnership, he had a 25% position size cap. But he removed that to allow for a 40% investment in American Express (AXP). Buffett made many investments of 10% to 20% of the partnership�� portfolio over the years. For Ben Graham, 10% to 20% was a real! ly big position. It wasn�� the kind of thing you bought every year.
  
  So a huge difference between Ben Graham and Warren Buffett was focus. Buffett was always focused on his best ideas. This is part of what makes Warren Buffett similar to Phil Fisher. And very different from almost all other investors.
  
  The other part of Warren Buffett�� approach that separates him from most investors is that he�� wedded to a very specific idea ��return on investment ��rather than a very specific style of investing.
  
  The only way Buffett can sort through a range of different ideas including good companies, mediocre companies, liquidations, and arbitrage ��is by looking at his return on investment.
  
  I wrote about this back in 2011 in an article entitled: ��arren Buffett: Mid-Continent Tab Card Company.��br>
  That article was based on Alice Schroeder�� description of Warren Buffett�� investment in Mid-Continent Tab Card Company.
  
  And it�� a good article to read if you want to know how Warren Buffett thinks about stocks. Because it includes such heretical ideas as: ���growth had the potential to be either an added kicker or the most serious risk to his investment��and ��ou build the margin of safety into each step. You don�� just slap a 40% discount on the intrinsic value estimate you get at the end.��br>
  But the most important statement in that article was:
  
  ��uffett doesn�� seem to make actual estimates. Alice Schroeder says she never saw anything about future earnings estimates in his files. He didn�� project the future earnings the way stock analysts do.��br>
  How is that possible?
  
  How can you sort through a variety of different investment options without using any explicit future estimates?
  
  You have to think in terms of return on investment.
  
  In fact, the reader who asked me the question that prompted the Mid-Continent Tab Card Company article actually got very close to identifying how Warren Buffett thinks about st! ocks:
  !
  ��ou wrote that Buffett just looked at the initial return (>15%) he was getting and the business�� own ROC. When you aid ��nitial��do you mean the 1st year? I think that sort of makes sense because his return of the subsequent years would be taken (from) the firm�� own ROC and sales growth. Is that how you see it?��br>
  Now, what did that reader get wrong? He came very, very close to describing how Buffett looks at a business. But he just missed.
  
  What variable isn�� being considered there?
  
  Is it really true that: ��is return of the subsequent years would be taken (from) the firm�� own ROC and sales growth��
  
  Let�� say a company has zero leverage. And its return on assets has been 10% a year for each of the last 100 years. You can bet on that 10% a year. Okay. Now, let�� say it is growing sales by 10% a year.
  
  How much is the business worth?
  
  And how much should an investor expect to make in that stock if he pays exactly tangible book value?
  
  Can the investor expect to earn 20% a year or 10% a year?
  
  Or something in between?
  
  Now, if you expect to hold the stock for a short-period of time your return will largely be based on what the market is willing to pay for each dollar of earnings the stock has in the future. So, you can certainly make over 100% a year if you buy a stock at 10 times earnings and sell it at 20 times earnings exactly one year from today.
  
  I�� not talking about that. Don�� worry about the resale value right now. Just look at the question of what the owner of a business can expect to make if the following facts are true:
  
  路 Total Assets: $100
  
  路 Annual Earnings: $10
  
  路 Future Annual Sales Growth: 10%
  
  Do you think you can answer that question?
  
  A lot of people think they can answer that question. But Warren Buffett would say you can�� answer that question.
  
  Not until you consider two possible future scenarios. Ten years from today, that same business cou! ld look l! ike:
  
  路 Total Assets: $260
  
  路 Annual Earnings: $26
  
  路 Future Sales Growth: ?
  
  Or it could look like:
  
  路 Total Assets: $100
  
  路 Annual Earnings: $26
  
  路 Future Sales Growth: ?
  
  Or it could look like anything in between. In fact, I�� simplifying. If you look at their 10-year records, quite a few businesses grew assets faster than earnings. So, the range of possible outcomes in terms of the ratio of change in earnings to change in assets is even wider than I just presented.
  
  If we look at two businesses each earning 10% on their assets, each unleveraged, and each growing at 10% a year ��we can imagine one future where assets have grown by $160 over 10 years. And we can imagine another future where assets haven�� grown at all over 10 years.
  
  Which is the better future for an owner?
  
  Obviously, the future with sales growth that far exceeds asset growth.
  
  That would allow the company to buy back stock, pay dividends, etc.
  
  So we can think of the combination of a company�� return on assets and its change in assets and sales as being like the total return on a stock. The total return on a stock includes both price appreciation and dividends.
  
  The total return on a business includes both the return on assets (from this year) and the growth in sales. But it does not include sales growth apart from asset growth. Rather, to the extent that assets and sales grow together ��growth is simply the reinvestment of more assets at the same rate of return.
  
  In other words, a business with a 10% ROA and 0% sales growth and a business with a 10% ROA and 10% sales growth could be more comparable than they appear. If the company with no sales growth pays out 10% of its assets in dividends each year, why is it worth less than the business with a 10% ROA and 10% sales growth?
  
  In the no-growth company, I get 10% of my initial investment returned to me. In the growth company, I get 10% of my initial investment reinv! ested for! me. If the rate of return on that reinvested cash is the same rate of return I can provide for myself on the cash paid out in dividends ��why does it matter which company I choose?
  
  Doesn�� an owner earn the same amount in both businesses?
  
  Now, I think there are qualitative reasons ��basically safety issues ��that would encourage me to prefer the growing business. Usually, companies try to grow. If a company isn�� growing, it could be a sign of something serious.
  
  So a lack of growth is sometimes a symptom of a greater disease. But growth is not always good.
  
  In more cases than people think, growth is actually a pretty neutral consideration in evaluating a stock.
  
  There is an exception. At unusually high rates of growth ��growth is almost universally good. This is a complex issue. But I can simplify it. Very few businesses that grow very fast do so by tying up lots of assets relative to the return they earn on those assets. Therefore, it is unnecessary to insist on high returns on capital when looking at very high growth companies. You��l get the high returns on capital ��at least during the company�� fast growth stage ��whether you ask for them or not.
  
  What do I mean when I say growth is often a pretty neutral consideration?
  
  Let�� use live examples.
  
  Here is Hewlett-Packard (HPQ)��br>
  10-Year Average Return on Assets: 3.2%
  
  10-Year Annual Sales Growth: 10.7%
  
  10-Year Annual Asset Growth: 14.5%
  
  And here is Value Line (VALU)��br>
  10-Year Average Return on Assets: 76.2%
  
  10-Year Annual Sales Growth: (8.2%)
  
  10-Year Annual Asset Growth: (11.1%)
  
  Whose assets would you pay more for?
  
  I have a problem with an 8% a year decline in sales. And worry that the future looks really, really grim for Value Line.
  
  But it�� hard to say Hewlett-Packard has gained anything through growing these last 10 years. The company has retained a lot of earnings. And it retained those earnings e! ven while! return on assets was low.
  
  The 10-year total return in Value Line shares has been (0.9%) a year over the last 10 years. The 10-year year total return in Hewlett-Packard has been a positive 4% a year.
  
  So it sounds like Hewlett-Packard has done much better. But all of that is attributable to investor perceptions of their industry. If you look at HP�� industry, total returns ��from 2002 to 2012 ��in the stocks of computer makers were around 14% a year. Meanwhile, publishers ��like Value Line ��returned negative one percent a year. So, Value Line�� underperformance relative to Hewlett-Packard is probably better explained by the miserable future prospects for publishers compared to the much more moderate future prospects for computer companies.
  
  Why does this matter in a discussion of Warren Buffett?
  
  Because it illustrates the one future projection I do think Buffett makes. I think he looks out about 10 years and asks himself whether the company�� moat will be intact, its growth prospects will still be decent, etc.
  
  In other words: will this stock deserve to sell at a fairly high P/E ratio 10 years from today?
  
  Warren Buffett doesn�� want to buy a stock that is going to have its P/E ratio contract over 10 years.
  
  To put the risk of P/E ratio contraction in perspective, consider that Value Line traded at over 5 times sales and nearly 25 times earnings just 10 years ago. Whatever the company�� future holds, it�� unlikely we��l see the stock at those kinds of multiples any time soon. Publishers just don�� deserve those kinds of P/E ratios any more.
  
  So, how much the market will value a dollar of earning power at in the future matters. And that is one place where projecting the future is probably part of Buffett�� approach. This is mostly a tool for avoiding certain companies rather than selecting certain companies.
  
  For example, Buffett was willing to buy newspaper stocks in the 1970s but not the 2000s. The reason for that was ! that in t! he 1970s he thought he saw at least a decade of clear sailing for newspapers. In the 2000s, he didn��.
  
  Today, I think Buffett sees at least a decade of clear sailing for the railroads and for IBM. In both cases, his perception of their future prospects was almost certainly the last puzzle piece to fall into place. It wasn�� an issue of IBM (IBM) getting to be cheap enough. It was an issue of Warren Buffett being confident enough to invest in IBM.
  
  By the way, let�� look at IBM�� past record:
  
  10-Year Average Return on Assets: 10.3%
  
  10-Year Annual Sales Growth: 2.8%
  
  10-Year Annual Asset Growth: 1.9%
  
  As you can see, IBM isn�� much of a growth company. But that doesn�� mean the shares can�� be growth shares. IBM has improved margins and bought back stock. That has led to a 20% annual increase in earnings per share compared to just a 3% annual increase in total revenue.
  
  So can we answer the question of why Warren Buffett is interested in companies like IBM and Norfolk Southern (NSC) rather than Hewlett-Packard and Value Line?
  
  Well, Value Line is obviously too small an investment for Buffett. But we��e using it as a stand in for all the publishers Buffett once loved but now shuns.
  
  Buffett is a return on investment investor. He isn�� exactly a growth investor or a value investor ��if by growth we mean total revenue growth and if by value we mean the company�� value as of today.
  
  Buffett wants to compound his money at the fastest rate possible. So he looks at how much of the company�� sales, assets, etc. he is getting. Basically, he looks at a price ratio. And then he looks into the company�� return on its own sales, assets, etc. When you take those two numbers together you get something very close to a rate of return.
  
  The last part you need to consider is the change in assets versus the change in sales (and earnings). Does the company need to grow assets faster than earnings?
  
  Or ��like See�� Candy �! �can it ! grow sales a little faster than assets?
  
  Let�� take a look at Norfolk Southern as a good example of the kind of railroad Buffett would own ��if he didn�� own all of Burlington Northern.
  
  Norfolk Southern
  
  10-Year Average Return on Assets: 4.9%
  
  10-Year Annual Sales Growth: 6.0%
  
  10-Year Annual Asset Growth: 3.6%
  
  Now, how much earning power do you get when you invest in Norfolk Southern?
  
  Total Assets are $28.54 billion. And the market cap is $21.28 billion. So, $28.54 billion / $21.28 billion = $1.34 in assets for every $1 you pay for the stock today.
  
  Now, Norfolk Southern�� return on assets has averaged a little less than 5% over the last decade. But I think that ��like he does with IBM ��Buffett believes the current returns on assets of the railroads are sustainable. So, we are talking something in the 5% to 7% range for a railroad like Norfolk Southern.
  
  On top of this, he sees that the railroads have grown sales faster than assets. Now, we could do an elaborate projection of future margins, returns on assets, etc. to try to figure out what the railroads of the future will look like.
  
  Or, we could just assume that over the last 10 years, Norfolk Southern has grown sales about 2.5% a year faster than it has grown assets. And Norfolk Southern can earn 5% to 7% on its assets. As a result, an investor in Norfolk Southern will see his wealth grow by about 7.5% to 9.5% of the company�� assets he owns. This doesn�� sound like much. But, railroads use leverage. And they often have price-to-book ratios lower than their leverage ratios. As a result, investors can often buy more than $1 in railroad assets for every $1 they spend
• [By Victor Mora]

  IBM is a global technology company that provides widely-adopted �products and services to companies and consumers. Recently, the company issued a positive earnings report for the last quarter. The stock has not made much progress this year, but is now seeing a post-earnings pop. Over the last four quarters, earnings have been decreasing, while revenue figures have been increasing, which has produced mixed feelings among investors. Relative to its peers and sector, IBM has been a weak year-to-date performer. WAIT AND SEE what IBM does in coming weeks.

Top 10 Blue Chip Stocks To Buy For 2014: Colgate-Palmolive Company(CL)

Colgate-Palmolive Company, together with its subsidiaries, manufactures and markets consumer products worldwide. It offers oral care products, including toothpaste, toothbrushes, and mouth rinses, as well as dental floss and pharmaceutical products for dentists and other oral health professionals; personal care products, such as liquid hand soap, shower gels, bar soaps, deodorants, antiperspirants, shampoos, and conditioners; and home care products comprising laundry and dishwashing detergents, fabric conditioners, household cleaners, bleaches, dishwashing liquids, and oil soaps. The company offers its oral, personal, and home care products under the Colgate Total, Colgate Max Fresh, Colgate 360 Advisors' Opinion:

• [By ChuckCarlson]

  Colgate-Palmolive Company (CL), together with its subsidiaries, manufactures and markets consumer products worldwide. The company has raised distributions for 48 years in a row. The 10 year annual dividend growth rate is 12.40%/year. The last dividend increase was 9.40% to 58 cents/share. Analysts are expecting that Colgate Palmolive will earn $5.52/share in 2012. I expect that the quarterly dividend will be raised to 64 cents/share in 2012. Yield: 2.60%

Top 10 Blue Chip Stocks To Buy For 2014: Philip Morris International Inc(PM)

Philip Morris International Inc., through its subsidiaries, engages in the manufacture and sale of cigarettes and other tobacco products in markets outside of the United States. Its international product brand line comprises Marlboro, Merit, Parliament, Virginia Slims, L&M, Chesterfield, Bond Street, Lark, Muratti, Next, Philip Morris, and Red & White. The company also offers its products under the A Mild, Dji Sam Soe, and A Hijau in Indonesia; Diana in Italy; Optima and Apollo-Soyuz in the Russian Federation; Morven Gold in Pakistan; Boston in Colombia; Belmont, Canadian Classics, and Number 7 in Canada; Best and Classic in Serbia; f6 in Germany; Delicados in Mexico; Assos in Greece; and Petra in the Czech Republic and Slovakia. It operates primarily in the European Union, Eastern Europe, the Middle East, Africa, Asia, Canada, and Latin America. The company is based in New York, New York.

Advisors' Opinion:

• [By Victor Mora]

  Philip Morris provides cigarette and tobacco products through established brands to an increasing consumer base around the world. The stock has done very well over the last few years and is now trading at all-time high prices. Earnings and revenue figures have been increasing and decreasing, in recent quarters, which has confused investors a bit. Relative to its strong peers and sector, Philip Morris has been an average year-to-date performer. Look for Philip Morris to OUTPERFORM.