New Maserati aces crash test, but it hurts to see

Italian automaker Maserati says its Ghibli sedan has just received a Top Safety Pick rating from the Insurance Institute for Highway Safety.

Maserati is hoping the Ghibli can broaden its appeal and pull it from the outskirts of the auto market and more into direct competition with the likes of BMW and Mercedes-Benz. For that, it needs mainstream credibility. The good crash-test scores are a step in that direction.

Maserati requested the crash tests, the IIHS says, and the trade group picked at random from the Italian assembly line.

When an automaker asks for tests, it reimburses IIHS for the costs, including the price of the cars.

The automaker cannot censor the results. IIHS publishes the scores, good or bad. If an automaker makes significant changes, it can request a re-test.

TEST RESULTS: Ghibli gets top 'good' rating on all tests IIHS performed

The Ghibli, which went on sale in the U.S. in September, is a low-price model by Maserati standards, starting at about $66,000 for the rear-drive model with twin-turbocharged V-6 and about $76,000 for the Q4 all-wheel-drive model. Engines are from corporate affiliate Ferrari. Fiat owns Ferrari, Maserati and most of Chrysler Group.

The brand's main U.S. model is the Quattroporte, a four-door sedan that's about $104,000. A sleeker coupe model starts at about $126,000. Ghibli is 11 inches shorter than the Quattroporte flagship, but still is considered a full-size car.

Maserati has priced Ghibli to directly take on BMW 5-Series and Mercedes-Benz E-Class.

Maserati says the Ghibli ushers in "a new era of accessibility for the legendary Italian brand" and the Top Safety Pick rating should help make the Ghibli "a 'top pick' for sport sedan buyers."

But as good a rating as that is, it is a cut below the IIHS top score -- Top Safety Pick +. The "plus" is awarded only to vehicles pass the menu of IIHS crash tests and also perform well in the demanding "small overlap" front crash test.

The car pictured ab! ove went through the "moderate overlap" test, which is somewhat less demanding. Despite the fearsome damage, it would have protected occupants well, and got a top score.

The small overlap test slams 20% of the car's width, on the driver's side, into a barrier to see how much protection the passenger compartment gets when the impact is outside the frame and other impact-absorbing parts of the structure.

The IIHS website shows no results for that test. The results listed by IIHS for all the other test it performed on the Ghibli are "good," which is the best rating possible.

Analysis: NSA’s data grab ought to boost privac…

SEATTLE -- The latest revelation of how government spies tap into the personal data that U.S. consumers so blithely place into the control of the Internet's advertising giants is the most profound yet.

The Washington Post today outed an National Security Agency data snooping program, code-named MUSCULAR, that copies all traffic flowing between two of the largest online advertising giants: Google and Yahoo.

In the latest installment of revelations from Edward Snowden, the Post is reporting that NSA partnered with its British counterpart, GCHQ, to carry out MUSCULAR.

"This is the first real evidence of deep intrusions by NSA and GCHQ into the internal netwokrs of major internet companies," says Dave Jevans, chief technology officer of mobile security firm Marble Security. "By essentially copying all traffic that flows through these networks, the intelligence agencies can see everything that happens at these companies."

MUSCULAR appears to give government snoops access to not just contact lists and address books – last week's Snowden revelation – but all e-mail and business documents, including Google docs which is used by hundreds of thousands of companies.

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It's unlikely the government does any data mining beyond the narrow parameters of ferreting out terrorists plots; NSA chief, Gen. Keith Alexander has said the surveillance programs that tap in commercial Internet traffic has helped curtail 54 terrorists attacks.

Yet the steady flow of revelations from the Snowden document may be having the effect of keeping convenience-minded consumers more attuned to the intensive harvesting of their every online move by Google, Yahoo, Facebook, Instagram, LinkedIn, Micorosoft, AOL and other major and minor players treating consumer privacy as a free profit-making resource.

Consumers and companies should not take this lightly. "We can assume a! whole new level of threat," Jevans says. "The NSA and GCHQ must have insiders either working at Google and Yahoo, or in the datacenters where their servers are housed."

Global companies could be susceptible to similar government snooping and should assess the security of data transfers between various datacenters. "This is going to add significant cost to the operation of these datacenters," Jevans says.

The large-scale collection of data that is happening through the MUSCULAR program would be illegal in the United States, but the operations take place overseas, where the NSA is allowed to presume that anyone using a foreign data link is a foreigner, the Washington Post explained.

Google and Yahoo did not immediately respond to requests for comment

Baig: Lenovo's Motorola deal a bold play

NEW YORK — In 2005 a then relatively unknown Chinese company named Lenovo grabbed the venerable ThinkPad laptop brand from IBM, as part of its acquisition of the latter's personal computer business. Today Lenovo is the world's largest PC maker. In acquiring the Motorola Mobility brand from Google for nearly $3 billion, Lenovo is attempting to duplicate the success it had with PCs in the hotly contested smartphone space.

It remains to be seen if Lenovo is up to that task, but to suggest it won't be easy is an understatement. Motorola may retain an iconic brand name, but the time when its sexy Razr phone was the envy of every tech lover's eye was long ago, back in the middle of the last decade when American consumers as it happened were just getting to know Lenovo.

NEWS: Google agrees to sell Motorola to Lenovo for $2.91B

More recently Motorola, under what will turn out to be a rather brief Google ownership, hasn't come close to matching the success of global rivals Apple and Samsung, even with the company's Moto X flagship phone generating mostly positive reviews, including from yours truly.

I suppose Google can shrug this whole Motorola chapter off as a failed experiment, but in making this deal with Lenovo it holds onto most of Motorola's patent portfolio, which is supposedly what it wanted in the first place. And Google also retains the advanced research group that is led by Regina Dugan, former head of the federal Defense Advanced Research Projects Agency (DARPA).

Motorola never got most-favored nation status from Google anyway, which was of course the way it had to be — Google is invested in the success of all of its Android partners, including of course Samsung.

But the deal does appear to make sense for Lenovo, which has had designs on the North American phone market for awhile, even as its been slow to bring versions of the phones it already sells overseas to the States. As recently as this past fall, Lenovo was reportedly interested in BlackBerry.

S! o yes, the challenges for a Lenovo-led Motorola are substantial. But given Lenovo's past success with well-known U.S. brands, I wouldn't bet against them.

Energy Favorites

Despite impressive gains this year, leading energy stocks remain cheap relative to other market sectors, suggests Robert Rapier. Rather than focus on one specific stock, the editor of The Energy Strategist offers a package of favorite ideas in various energy sub-sectors.

Given the likelihood of continued strength in energy commodity prices, 2014 should prove another fruitful year for these underappreciated overachievers. Below are stock recommendations predicated on our outlook for the energy patch next year.

Natural Gas prices surged recently to an 18-month high, as a cold snap gripping much of the US spurred big withdrawals from storage.

Supply, meanwhile, is constrained by the fact that, even at the current elevated price, few gas projects outside of the bountiful Marcellus shale can compete with the returns available in crude oil. Our favorite Marcellus drillers are Cabot Oil & Gas (COG) and Antero Resources (AR).

Among the alternatives to oil and gas, solar has flashed the most promise of late; coal remains buried in a painful slump, nuclear continues to be dogged by safety issues in the wake of Fukushima, and biofuels remain too unproven and risky as an investment.

We're big fans of solar pioneer First Solar (FSLR), which continues to drive down the cost of photovoltaic cells, to win new business from US utilities.

The coming year looks auspicious for selected refiners. The domestic margin for the refining industry will likely depend on the continuation of recently encouraging US demand trends, and on that score, many refining stocks appear to have priced-in quite a bit on the potential good news.

Our recommended stocks in the camp are HollyFrontier (HFC), Valero (VLO), and Western Refining (WNR).

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ETFs ‘Just in the Third Inning’

Advisors who have watched the disruption ETFs brought about in their early days, and their explosive growth since, may be wondering if a market that in 2013 reached past $1 trillion in assets is now ready to slow down.

“Indexing has not run its course. We’re just in the third inning,” comes the reply from Nasdaq’s John Jacobs, who, in a highly-caffeinated phone interview with ThinkAdvisor, embodied the notion that ETFs won’t be slowing down if he’s in a position to do anything about it.

And, as the head of the exchange’s information products division, which creates and licenses indexes, Jacobs offers a key position in the ETF universe. He also manages to keep busy.

 “Two years ago I had 2,000 products; today I have 41,000. We rolled out 13,000 last week [in the global equities space],” says Jacobs.

So what does he see, from his perch atop the Nasdaq, that gives him confidence we’re just a third of the way through the game?

“We still have huge international markets to go. We have not exhausted asset classes outside of equities — in fixed income, currency and commodities. We haven’t penetrated defined contribution yet — there are only a handful of 401(k) plans that accept ETFs today. And pension plans and other asset owners who traditionally have had a consultant come in to manage the money are now demanding a combination of active and passive strategies — and we provide the passive,” Jacobs exuberantly details.

Nasdaq OMX is one of the titans of the indexing business, but its size has not slowed it down.

“We are probably the fastest growing of the major indexers," Jacobs says, noting a recent news report that its rival Standard & Poor’s expanded by a whopping 43% last year, but helpfully adding that Nasdaq’s exchange-traded product assets increased over 68%, from $54.9 billion to $92.3 billion, in 2013.

Nasdaq, whose claim to fame more than a decade ago was its QQQ index of the top 100 stocks on its high-tech-oriented exchange, has gone from that single index to 151 exchange-traded products today.

Within that large product pool, founded on traditional market-cap-weighted beta products, Jacobs says Nasdaq’s greatest growth has been in the smart beta area.

“This past year, one of the hot areas for us [has been in the] the dividend achievers,” he says. “We saw explosive growth as people were looking for yield. It’s a huge opportunity and that’s going to continue,” he says, citing Vanguard and PowerShares ETFs as licensees of these indexes, which group stocks with at least 10 consecutive years of increasing annual dividend payments.

Another growth area, also for yield-hungry investors, was its launch last year of BulletShares, an innovative fixed maturity corporate bond indexes.

“Say an investor wants a corporate bond with a 20-20 expiration,” Jacobs explains. “A single bond involves huge risk. These are 200 bonds that all have 20-20 expiration. You get same exposure you wanted, but it’s far more diversified, which is the true value of an index.”

Altogether, the Nasdaq’s dividend and income indexes increased over 68% last year.

While the exchange’s indexing chief is generally buoyant about ETF opportunities, the one area he was less than excited about was actively managed ETFs.

“I don’t think it’s going to grow so big; it’s not going to get a big foothold,” which, despite their rapid growth, remain at around $7 billion out of the more than $1 trillion in exchange-traded product assets.

Looking ahead into 2014, the index provider has about 40 new ETFs in its pipeline (both in the U.S. and abroad).

Jacobs is not saying what they’ll be — he doesn’t want to get ahead of his index partners like PowerShares, Vanguard, BlackRock and FirstTrust who will market the products — but he hints that “demand for nontraditional indexes is not abating at all.”

He also predicts that indexing aficionados will likely see some movement in the defined contribution area in the later part of the year.

With all this index issuance, it is interesting to note that Jacobs gives financial advisors some key credit for ideas.

“One-third of the ideas that end up in the marketplace come from indexers like us [through staff researchers]; one-third from our partners [e.g. BlackRock, ProShares]; and one-third from our customers—the financial advisors, the RIAs who say ‘I need this ETF.’

“We believe the financial advisor is one of the key target audiences for our indexes," Jacobs says. "They take the strategy and make them comprehensible and applicable for clients…They are the ultimate converter of thoughts about strategy into an index.”

---

Check out Just One Word, Ben: Robotics on ThinkAdvisor.

OECD: Who Needs China?

The Organization for Economic Co-operation and Development (OECD) released its “Interim Economic Assessment” for 2013. The agency expects modest growth in global gross domestic product (GDP), a point of view held by many economists. What is unexpected in the report is that its authors downplay the importance of China. It is no longer the most critical aspect of worldwide expansion.

The document was marked by two statements:

Growth in the second quarter in the major advanced economies as a whole was stronger than forecast. The United States continued to recover, despite headwinds from sharp fiscal consolidation,and the Japanese economy rebounded in the first half of the year under more expansionary policies. Euro area GDP in the second quarter bounced back from a period of exceptional weakness in late 2012 and the first quarter of 2013, ending six quarters of contraction, although several countries remained in recession. In the United Kingdom, growth picked up momentum through the first half of the year.

Based on recent indicators, growth for the major advanced economies as a whole in the second half of 2013 is forecast to continue at the improved rate seen in the second quarter.

And:

Growth in China has seemingly already passed the trough and looks set to recover further in the second half of 2013, although the expansion is still expected to be more subdued than in earlier cycles.

In other words, China will no longer grow at double-digit rates. One probable cause is that its middle class has stopped expanding at earlier rates. This likely is because its manufacturing activity has slowed, as recent PMI data show. Also, wages have not spiked up at past rates, probably because manufacturing growth inside China will not support it. Consumer activity by China’s huge middle class, often numbered at 250 million, will not offset a drop in exports.

In the advanced economies, the damage of the recession was historically severe. However, in the eyes of the OECD, America may stage a significant recovery, if it can dodge headwinds. The U.S. deficit has to be counted among these because it has caused a move toward government austerity, which could slow GDP as a whole. On the other side of the argument is ongoing quantitative easing (QE) from the Federal Reserve, which may drop off, but will be a major economic force for at least a year. Unemployment remains too high but continues to come down. European Union improvement also will help export activity.

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Europe has started to escape the darkest economic period of the past eighty years. The recovery has centered in Germany, which because of its size is critical. Even Spain has shown a flicker of improvement. The situations in France and Italy may be relatively bad, but they have not gotten worse in the past month or so. Government policy in Japan, particularly the Bank of Japan, already has begun to shake the nation from its GDP growth doldrums.

The prescriptions the OECD has given for a full recovery worldwide look very like those of the International Monetary Fund (IMF). Government reforms must be put in place to improve employment and prevent another financial meltdown. The benefits of austerity were never present. Economic stimulus is a much more likely path to recovery. Put another way, politicians will decide the improvement of global GDP more than bankers or businesses. The OECD’s headline conclusions indicate as much:

While the improvement in growth momentum in OECD economies is welcome, a sustainable recovery is not yet firmly established and important risks remain. It is necessary to continue to support demand, including through unconventional monetary policies, in order to minimise the risk of the recovery being derailed. Meanwhile, both advanced and emerging economies face the challenge of slower trend growth.Therefore, reforms to boost growth, rebalance the global economy and reduce structural impediments to job creation re main vital

The assessment may not be unique, but the modest presence of China in the process is.

Profiting In Bear And Bull Markets

Both bear markets and bull markets represent tremendous opportunities to make money, and the key to success is to use strategies and ideas that can generate profits under a variety of conditions. This requires consistency, discipline, focus and the ability to take advantage of fear and greed. This article will help familiarize you with investments that can prosper in up or down markets.

Ways to Profit in Bear Markets
A bear market is defined as a drop of 20% or more in a market average over a one-year period, measured from the closing low to the closing high. Generally, these market types occur during economic recessions or depressions, when pessimism prevails. But amidst the rubble lie opportunities to make money for those who know how to use the right tools. Following are some ways to profit in bear markets:
Short Positions: Taking a short position, also called short selling, occurs when you sell shares that you don't own in anticipation that the stock will fall in the future. If it works as planned and the share price drops, you must buy those shares at the lower price to cover the short position. For example, if you short ABC stock at $35 per share and the stock falls to $20, you can buy the shares back at $20 to close out the short position. Your overall profit would be $15 per share.
Put Options: A put option is the right to sell a stock at a particular strike price until a certain date in the future, called the expiration date. The money you pay for the option is called a premium. As the stock price falls, you can either exercise the right to sell the stock at the higher strike price or sell the put option, which increases in value as the stock falls, for a profit (provided the stock moves below the strike price).
Short ETFs: A short exchange traded fund (ETF), also called an inverse ETF, produces returns that are the inverse of a particular index. For example, an ETF that performs inversely to the Nasdaq 100 will drop about 25% if that index rises by 25%. But if the index falls 25%, the ETF will rise proportionally. This inverse relationship makes short/inverse ETFs appropriate for investors who want to profit from a downturn in the markets, or who wish to hedge long positions against such a downturn. Ways to Profit in Bull Markets
A bull market occurs when security prices rise faster than the overall average rate. These market types are accompanied by economic growth periods and optimism among investors. Following are some appropriate tools for rising stock markets:
Long Positions: A long position is buying a stock or any other security in anticipation that its price will rise. The overall objective is to buy the stock at a low price and sell it for more than you paid. The difference represents your profit.
Calls: A call option is the right to buy a stock at a particular price until a specified date. A call option buyer, who pays a premium, anticipates that the stock's price will rise, while the call option seller anticipates it will fall. If the stock price rises, the option buyer can exercise the right to buy the stock at the lower strike price and then sell it for a higher price on the open market. The option buyer can also sell the call option in the open market for a profit, assuming the stock is above the strike price.
Exchange-Traded Funds (ETFs): Most ETFs follow a particular market average, such as the Dow Jones Industrial Average (DJIA) or the Standard & Poor's 500 Index (S&P 500) and trade like stocks. Generally, the transaction costs and operating expenses are low, and they require no investment minimum. ETFs seek to replicate the movement of the indexes they follow, less expenses. For example, if the S&P 500 rises 10%, an ETF based on the index will rise by approximately the same amount. How to Spot Bear and Bull Markets
Markets trade in cycles, which means that most investors will experience both in a lifetime. The key to profiting in both market types is to spot when the markets are starting to top out or when they are bottoming. Following are two key indicators to look for:
Advance/Decline Line: The advance/decline line represents the number of advancing issues divided by the number of declining issues over a given period. A number greater than 1 is considered bullish, while a number less than 1 is considered bearish. A rising line confirms that the markets are moving higher. However, a declining line during a period when markets continue to rise could signal a correction. When the line has been declining for several months while the averages continue to move higher, this could be considered a negative correlation, and a major correction or a bear market is likely. An advance/decline line that continues to move down signals that the averages will remain weak. However, if the line rises for several months and the averages have moved down, this positive divergence could mean the start of a bull market.
Price Dividend Ratio: This ratio compares the stock's share price with the dividend paid out over the past year. It is calculated by dividing the current stock price by the dividend. A decline in the ratio of 14-17 could indicate an attractive bargain, while a reading above 26 may signal overvaluation. This ratio and its interpretation will vary by industry, as some industries traditionally pay high dividends, while growth sectors often pay little or no dividends. Conclusion
There are many ways to profit in both bear and bull markets. The key to success is using the tools for each market to their full advantage. In addition, it is important to use the indicators in conjunction with one another to spot when both bull and bear markets are beginning or ending.

Short selling, put options, and short or inverse ETFs are just a few bear market tools that allow investors to take advantage of the market weakness, while long positions in stocks and ETFs and a call option are suitable for bull markets. The advanced decline line and price dividend ratio will allow you to spot market tops and bottoms.

UPS warns about profit; cites delivery delays

All those delayed holiday packages last delivered bad news to UPS' bottom line, along with eager gift recipicents. The company warned Friday that its fourth-quarter profit won't be as big as it expected.

UPS said its U.S. results were hard hit by a shortened holiday season and an unprecedented level of online shopping.

STOCKS FRIDAY: How markets are doing

UPS shares were down about 1.6% to about $99 in mid-day trading.

The company said that it used 85,000 temporary employees, 30,000 more than planned and that December weather weighed on results. Snowstorms slowed deliveries in many areas.

On Dec. 23, UPS said it delivered more than 31 million packages, the most eve,r and 13% over the prior-year peak day. This year's highest delivery day occurred six days later than expected and was 7.5% greater than planned.

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Despite its fourth quarter performance, the company said it is confident of its 2014 outlook and that it expects its 2014 earnings per share to grow in line with its long term targets of 10-to-15%, compared to 2013 adjusted results.

UPS quarterly earnings will be released on Jan. 30.

Apple settles with FTC over in-app purchases

Apple has reached a $32.5 million settlement with the Federal Trade Commission over unauthorized purchases made within smartphone and tablet apps.

The settlement requires Apple -- makers of the iPad and iPhone -- to offer full refunds "for any charges by a minor that are unauthorized," says FTC Chairwoman Edith Ramirez in a press conference Wednesday.

The deal also mandates Apple updates its billing practices to ensure it has express content from users before charging them for content within apps.

"This settlement is a victory for consumers harmed by Apple's unfair billing, and a signal to the business community: whether you're doing business in the mobile arena or the mall down the street, fundamental consumer protections apply," said Ramirez.

The deal stems from purchases made within apps by kids using a smartphone or tablet. In most cases, the purchases are racked up without their parents' consent.

Many mobile games and apps offer items such as in-game currency that users can buy from within the app instead of Apple's App Store. The price of these in-app purchases range from 99 cents to $100.

Ramirez cites the example of one consumer whose daughter spent $2,600 on in-app purchases from the game Tap Pet Hotel.

The FTC complaint also claims Apple does not inform consumers of a 15-minute window opened after a user enters that password that allows for unlimited purchases on the App Store or within apps.

In an employee memo obtained by several tech sites including Re/code, Apple CEO Tim Cook says emails were sent last year to 28 million App Store customers, and sent refunds off 37,000 claims.

"It doesn't feel right for the FTC to sue over a case that had already been settled," reads an excerpt of Cook's memo. "To us, it smacked of double jeopardy. However, the consent decree the FTC proposed does not require us to do anything we weren't already going to do, so we decided to accept it rather than take on a long and distracting legal fight."

Follow ! Brett Molina on Twitter: @bam923.

JPMorgan Profit Beats Estimates, Despite Madoff Penalties

Kathy Willens/AP JPMorgan Chase reported a better-than-expected adjusted quarterly profit as the biggest U.S. bank kept a lid on costs and set aside less money to cover bad loans. The bank, which agreed last week to pay $2.6 billion to settle government and private claims over its handling of accounts of fraudster Bernie Madoff, said fourth-quarter net income fell 7.3 percent to $5.28 billion, or $1.30 a share. Adjusted for special items, the company earned $1.40 a share, beating the average analyst estimate of $1.35, according to Thomson Reuters I/B/E/S. The results took into account gains from the sale of Visa (V) shares and One Chase Manhattan Plaza and legal expenses related to the Madoff settlements. JPMorgan (JPM), which agreed to pay nearly $20 billion in 2013 to settle assorted legal claims, had estimated that settlement of the Madoff claims would subtract $850 million from fourth-quarter earnings. "It was in the best interests of our company and shareholders for us to accept responsibility, resolve these issues and move forward," Chairman and Chief Executive Officer Jamie Dimon said in a statement Tuesday. JPMorgan shares, which have been trading this month at their highest levels since 2000, were up 0.5 percent at $58 before the opening bell on the New York Stock Exchange. The stock rose 33 percent in 2013, in line with the 35 percent rise in the KBW Bank index and slightly ahead of the 29 percent gain in Standard & Poor's 500 stock index. Special items highlighted by the bank subtracted 10 cents a share from fourth-quarter earnings, compared with a two-cent boost in the same quarter of 2012. The special items included a benefit of 21 cents a share from the sale of Visa shares and 8 cents from the sale of One Chase Manhattan Plaza and an expense of 27 cents a share from legal bills, including the Madoff settlements. Three months ago, JPMorgan reported its first quarterly loss under Dimon after recording after-tax expenses of $7.2 billion to settle government and private investigations. The allegations involved, among other things, shoddy dealing in mortgage instruments before the financial crisis, derivatives trading in London and pricing in electric power markets, as well as failing to report suspicions of wrongdoing by Madoff. Investors have been looking for reassurance from the company that the worst of its legal expenses are behind it. Assets Shrink Noninterest expenses fell 3 percent to $15.55 billion during the quarter, while provisions for bad loans fell 84 percent to $104 million. JPMorgan said its assets shrank to $2.42 trillion at the end of December from $2.46 trillion three months before and $2.36 trillion a year earlier, but it remains the biggest U.S. bank by that measure. Equity underwriting revenue soared 65 percent to $436 million. But investment banking fees were pulled down by lower debt underwriting, where revenue declined 19 percent, and advisory fees, which fell 7 percent. Altogether, investment banking fees declined 3 percent. The bank's market share in equity underwriting rose to 8.3 percent in 2013, moving it to second place in the industry from fourth. Goldman Sachs Group (GS) led with 11.4 percent. Higher interest rates on home mortgage loans weighed on JPMorgan, like the rest of the banking industry. JPMorgan lost $274 million, pre-tax, making mortgage loans, compared with a profit of $789 million a year earlier as margins declined and as the company was unable to reduce expenses as quickly as lending volumes declined. The bank said it expected to lose money making mortgages again in the first quarter of this year. Reflecting a slowdown in loan refinancing, total U.S. home mortgage borrowing was down 50 percent at the end of December compared with a year earlier and down by a quarter from the end of September, according to the Mortgage Bankers Association. -.

Swiss bank UBS blames a rogue trader at its London office for a $2.3 billion loss that is Britain's biggest-ever fraud at a bank. Kweku Adoboli, the 32 year old trader, is sentenced to seven years in prison. Britain's financial regulator fines UBS after finding its internal controls were inadequate and allowed Adoboli, a relatively inexperienced trader, to make vast and risky bets.

Best Tech Stocks To Watch For 2014

LONDON -- The shares of�Smiths Group� (LSE: SMIN  ) were flat at 1,336 pence during early London trade this morning after the detection technology firm confirmed its revenues and underlying profits were higher in the last nine months than last year's corresponding period.

Smiths Group owns John Crane, the world's leading producer of industrial seals, which represents around a third of Smiths' business. The seal specialist enjoyed�"sustained underlying revenue growth"�for the period, with operating margins benefiting from improved pricing and productivity.

John Crane's order book meanwhile was bolstered beyond last year's volumes, and as a result, Smiths raised its sales outlook for the division to�"ahead of the same period last year".

The company's most lucrative segment, Smiths Medical, sells health care equipment predominantly in the United States. Smiths restated today that the division's profitability would be hurt this year by the US Medical Device tax introduced in January.

Best Tech Stocks To Watch For 2014: SS&C Technologies Holdings Inc.(SSNC)

SS&C Technologies Holdings, Inc. provides software products and software-enabled services to financial services providers primarily in the United States, Canada, Europe, the Asia Pacific, and Japan. Its software products and services allows its clients to automate and integrate front-office functions, such as trading and modeling; middle-office functions, including portfolio management and reporting; and back-office functions comprising accounting, performance measurement, reconciliation, reporting, processing, and clearing. The company?s products and services comprise management/accounting, real-time trading systems, treasury operations, financial modeling, loan management/accounting, property management, money market processing, and training products. Its software-enabled services consist of financial data acquisition, transformation, and delivery services; and business process outsourcing investment accounting and investment operations, hosting of its application softw are, automated workflow integration, automated quality control mechanisms, and interface and connectivity services. The company also offers on- and offshore fund administration services; outsourced administration services and software; real-time trade matching utility and delivery instruction database; securities data services; and broker-neutral and platform-neutral connectivity services. It serves institutional asset management, alternative investment management, and financial institutions vertical markets, as well as commercial lenders, corporate treasury groups, insurance and pension funds, municipal finance groups, and real estate property managers. The company was formerly known as Sunshine Acquisition Corporation and changed its name to SS&C Technologies Holdings, Inc. in June 2007. SS&C Technologies Holdings, Inc. was founded in 1986 and is headquartered in Windsor, Connecticut.

Advisors' Opinion:

• [By Evan Niu, CFA]

  What: Shares of SS&C Technologies (NASDAQ: SSNC  ) have skyrocketed by as much as 10% today after the company posted record first-quarter results.

Best Tech Stocks To Watch For 2014: OmniVision Technologies Inc.(OVTI)

OmniVision Technologies, Inc. designs, develops, and markets semiconductor image-sensor devices. The company offers CameraChip image sensors, which are single-chip solutions that integrate various functions, such as image capture, image processing, color processing, signal conversion, and output of a processed image or video stream for use in various consumer and commercial mass-market applications; and CameraCube imaging devices that are image sensors with integrated wafer-level optics. It also provides companion chips used to connect its image sensors to various interfaces, including the universal serial bus and other industry standard interfaces; and companion digital signal processors that perform compression in standardized still photo and digital video formats. In addition, the company designs and develops software drivers for Linux, Mac OS, and Microsoft Windows, as well as for embedded operating systems, such as Blackberry OS, Palm OS, Symbian, Windows CE, Windows Embedded, and Windows Mobile. Its products are used in mobile phones, notebooks, Webcams, digital still and video cameras, commercial and security and surveillance, and automotive and medical applications, as well as in entertainment devices. The company sells its products directly to original equipment manufacturers and value added resellers, as well as indirectly through distributors worldwide. OmniVision Technologies, Inc. was founded in 1995 and is based in Santa Clara, California.

Advisors' Opinion:

• [By Anders Bylund]

  Shares of OmniVision Technologies (NASDAQ: OVTI  ) jumped as much as 23% overnight, driven by a rock-solid fourth quarter report. The stock set a fresh 52-week high, but remains far below the $36 high-water mark that was set in 2011 when OmniVision's back side illumination, or BSI, camera chips seemed set to rule the smartphone world.

• [By Paul Ausick]

  Stocks on the move: Apache Corp. (NYSE: APA) is up 8.9% at $85.66 after a $3.1 billion asset sale to Sinopec. OmniVision Technologies Inc. (NASDAQ: OVTI) is down 16.1% at $15.45 after warning on earnings due to lower sales of smartphones. E-Commerce China Dangdang Inc. (NYSE: DANG) is down 10.1% at $7.80 on a downgrade from JPMorgan.

• [By Evan Niu, CFA]

  Once upon a time, I was also an OmniVision (NASDAQ: OVTI  ) bull, thinking the image sensor specialist's lead in backside-illuminated technology gave it a substantial leg up against the competition. When OmniVision lost the iPhone 4S primary camera spot to Sony,�that was just the first sign that things may never be the same. The company subsequently lost the iPhone 5 primary sensor, also to Sony. HTC has gone with STMicroelectronics�for the "UltraPixel" sensor in its One flagship (OmniVision sources the secondary sensor), which lends to the idea that BSI sensors are becoming commoditized. Goodbye, pricing power. I gave up on OmniVision long ago.

Hot Dividend Companies To Watch For 2014: FairPoint Communications Inc.(FRP)

FairPoint Communications, Inc. provides communications services in rural and small urban communities primarily in northern New England. The company offers an array of services, including high speed data, Internet access, voice, television, and broadband product offerings to residential, business, and wholesale customers. It provides local calling services, such as basic local lines, local private lines, and switched data services; data services comprising private line special access, fast packet, optical, Ethernet, and IP services; and Internet services, including IP addresses obtaining services, basic Web site design and hosting, domain name, content feeds, and Web-based email services, as well as carrier Ethernet services. In addition, the company offers network transport services, such as access services, which primarily include DS-1 and DS-3 services; and high speed digital services that primarily comprise Ethernet-based services provisioned over fiber and copper facil ities. Further, it provides billing and collection services for interexchange carriers; directories, which offer white page, yellow page, and community information listings; public (coin) telephone, and the sale and maintenance of customer premise equipment; and video services to its customers by reselling DirectTV content, and cable and IP TV video-over- digital subscriber lines. As of December 31, 2011, the company operated approximately 1.3 million access line equivalents in 18 states. It provides cellular backhaul connectivity to approximately 1,600 towers. FairPoint Communications, Inc. is headquartered in Charlotte, North Carolina.

Best Tech Stocks To Watch For 2014: Innovative Solutions and Support Inc.(ISSC)

Innovative Solutions and Support, Inc. engages in the design, manufacture, and sale of flat panel display systems, flight information computers, and advanced monitoring systems in the United States and internationally. The company offers flat panel display systems, which can replace conventional analog and digital displays used in a cockpit to display information; and engine and fuel displays to convey information with respect to fuel and oil levels and engine activity, such as oil and hydraulic pressure and temperature. It also provides air data systems and components, including digital air data computers, integrated air data computers and display units, altitude displays, airspeed displays, and altitude alerters used to calculate and display various measures, such as aircraft speed, altitude, and rate of ascent and descent. The company offers its products to the Department of Defense, Department of the Interior, government agencies, defense contractors, airlines, commerc ial air transport carriers, aircraft modification centers, various original equipment manufacturers, as well as to corporate/general aviation markets. Innovative Solutions and Support, Inc. was founded in 1988 and is based in Exton, Pennsylvania.

Best Tech Stocks To Watch For 2014: Spire Corporation(SPIR)

Spire Corporation develops, manufactures, and markets engineered products and services in the areas of PV solar, biomedical, and optoelectronics. It offers specialized equipment for the production of terrestrial photovoltaic modules from solar cells; and photovoltaic systems for application to powering buildings with connection to the utility grid, as well as supplies photovoltaic materials. It also provides surface treatments to manufacturers of orthopedic, cardiovascular, and other medical devices; and performs sponsored research programs into practical applications of biomedical and biophotonic technologies. In addition, the company offers custom compound semiconductor foundry and fabrication services to customers involved in biomedical/biophotonic instruments, telecommunications, and defense applications. Its services comprise compound semiconductor wafer growth, other thin film processes, and related device processing. Further, the company provides materials testing s ervices; and performs services in support of sponsored research into practical applications of optoelectronic technologies. The company offers its products primarily through its sales personnel in the United States, Europe, Africa, and Asia. Spire Corporation was founded in 1969 and is headquartered in Bedford, Massachusetts.

Best Tech Stocks To Watch For 2014: Teledata (SINGAPORE)

Teledata (Singapore) Limited operates as an information technology systems integrator and communications services company. The company specializes in IP-based communications network, and security and surveillance systems. It provides technical, advisory, consultancy, and agency services in the areas of management information systems, information technology, and telecommunication. In addition, the company is involved in the importation, distribution, installation, system integration, and maintenance of voice, data, telecommunication equipment, and video communications equipment, software, and supplies, as well as sale of digital marketing solutions and services. It serves large and small enterprises, and telecommunication carriers. The company operates primarily in Singapore, Indonesia, Thailand, and the Philippines. Teledata (Singapore) Limited was founded in 1976 and is headquartered in Singapore.

Best Tech Stocks To Watch For 2014: MediSwipe Inc (MWIP.PK)

MediSwipe Inc., formerly Cannabis Medical Solutions Inc., incorporated in February 18, 1997, offers a transaction processing and security solutions for the medical and healthcare industries, using traditional, Internet Point-of-Sale (POS), e-commerce and mobile (wireless) payment solutions. The Company's electronic payment processing suite of services will enable clients to accept all credit cards, in store or online, debit and automated teller machine (ATM) cards and ACH check drafts for payment whether a retail, service, mail-order or Internet merchant. The Company�� card-based processing services enable merchants to process both traditional card-present, or swipe, transactions, as well as card-not-present transactions. The Company also operates online payment processing services, gift and loyalty card program programs and prepaid debit cards for consumers through 800 Commerce Inc., the Company's subsidiary, under the domain name www.800Commerce.com .

T he Company offers MasterCard prepaid cards branded with corporations��brands. The Company offers a line of merchant services for the healthcare sector, including, Visa, MasterCard and merchant accounts, debit & credit card transaction processing, cash advance, gift/loyalty card programs and POS terminals through its��private banking network. 800 Commerce electronic payment processing and additional services enables the Company's clients to accept all credit cards, as well as debit and ATM cards for payment whether a retail, service, mail-order or Internet merchant. The 800 Commerce Suite of e-Commerce Services Include Merchant Processing Customized Solutions; Private Label Gateway; Credit Card Acceptance; Debit/ATM Card Acceptance; Private Label Debit Card Issuance; Internet Processing; Gift, Payroll and Loyalty Cards; Check Services; Wireless/Mobile Payment Platforms; Web Development and consulting, and ACH.

The Company competes with First Data Corporation, Total System Ser! vices, Global Payments, Authorize.net and B! ank of America's BA Merchant Services.

Best Tech Stocks To Watch For 2014: Accelrys Inc.(ACCL)

Accelrys, Inc. develops and commercializes scientific business intelligence software and solutions in the United States, Europe, and the Asia Pacific. The company offers Pipeline Pilot, Accelrys enterprise R&D platform, which allows users to aggregate, integrate, and mine structured and unstructured scientific data, such as chemical structures, biological sequences, and complex digital images; and filters, normalizes, and performs statistical analysis on the scientific data and provides visual reports to scientists and scientific managers. It also provides computer aided design modeling and simulation software that allows scientists to perform computations of chemical, biological, and materials properties to simulate, visualize, and analyze chemical and biological systems, as well as communicate the results to other scientists; and data management and informatics software to capture, store, manage, and mine scientific data information. In addition, the company offers Enter prise Lab Notebook, which provides a digital environment to plan, execute, record, store, back-up, and share daily research activities; lab execution systems; and content databases to support research activities through a collection of factual databases and reference works. Further, it provides software wrappers that allows customers to run their own algorithms on the company?s R&D platform; enterprise-wide informatics systems, which integrate customers? internal systems with software from various vendors; contract research services; onsite training and implementation, Web-based training, and data migration services; and support services. The company serves pharmaceutical, biotechnology, agricultural, energy, chemicals, aerospace, consumer packaged goods, and industrial product industries, as well as government and academic entities through direct sales force, telesales, and distributors. Accelrys, Inc. was founded in 1993 and is headquartered in San Diego, California.

Advisors' Opinion:

• [By Seth Jayson]

  Calling all cash flows
  When you are trying to buy the market's best stocks, it's worth checking up on your companies' free cash flow once a quarter or so, to see whether it bears any relationship to the net income in the headlines. That's what we do with this series. Today, we're checking in on Accelrys (Nasdaq: ACCL  ) , whose recent revenue and earnings are plotted below.

Ford shakeup at top sets table for Mark Fields

The retirement of three top, well-respected Ford executives and the promotion of their successors is viewed as a precursor to the eventual ascension of Mark Fields as CEO.

The Dearborn automaker said Tuesday that top labor negotiator Marty Mulloy, design chief J Mays and North American manufacturing chief Jim Tetreault all will retire Jan. 1, although they all are in their 50s. The reshuffling follows the retirement in September of Ken Czubay, Ford's marketing and sales vice president.

Moving up are Moray Callum, the new vice president of design; Bruce Hettle as North American manufacturing chief, and Bill Dirksen as vice president of labor affairs.

"I think the main thing behind this is Mark Fields is putting his stamp on the organization," said Michelle Krebs, senior analyst for Edmunds.com.

"This is a huge change. It covers manufacturing, labor relations and design," Dave Sullivan, an automotive analyst with Auto Pacific, said of the executive retirements. "All of these are core characteristics of the entire company."

Mulloy, Tetreault and Mays each worked in the automotive industry for more than 30 years, but they are at least nine years younger than current CEO Alan Mulally, who is 68.

Earlier this year Ford's board of directors promoted Fields from president of the Americas to chief operating officer, a step regarded as a strong signal that he is likely to succeed Mulally, who has said he wants to served through 2014 at least.

Mulally, who still owns a home in the Seattle area, has been mentioned as a possible successor to Microsoft CEO Steve Ballmer, 57, who plans to step down in the next year. Last month, Mulally evaded direct questions about talks with Microsoft and would only say that the succession plans at Ford have not changed.

Ford spokesman Jay Cooney said that the retirement announcements have nothing to do with Mulally's eventual retirement. "This is a planned and orderly transition, underscoring that our succession planning process is work! ing well."

Mulloy, 57, led contract negotiations with the UAW in 2007, 2009 and 2011. UAW Vice President Jimmy Settles, who leads the union's Ford department, described Mulloy as a problem-solver and a man of his word.

Mulloy grew up in Gary, Ind., with a father who was a millworker at U.S. Steel for 45 years.

"He understood working people. He really, really understood them," Settles told the Free Press. "Sometimes it is difficult for us in the union to applaud company people because they are supposed to be adversaries, but it is very difficult for me to give any negatives about Marty."

Mays, 59, was vice president and chief creative officer. One of his crowning achievements is the elegant new styling of the current Ford Fusion that some have likened to an Aston Martin. He was also a leading designer of Volkswagen's revived Beetle before he came to Ford.

Tetreault, 58, was vice president of North America manufacturing and oversaw the recent expansion of several assembly plants to meet increased demand for certain vehicles.

"Jim's strong leadership and attention to detail will be missed," Joe Hinrichs, Ford's president of the Americas, said in a statement. "He has brought out the best in people and in our global manufacturing process across two continents."

Krebs said Ford is blessed with a deep bench of talented executives.

Callum was executive director of design, Hettle was was executive director, global vehicle operations manufacturing engineering and Dirksen was executive director of U.S. labor affairs.

Dirksen steps in as the UAW is preparing to elected a new president in 2014. Dirksen played a key role in 2011 contract negotiations with the UAW. He will lead negotiations in 2015.

The Case for a Correction in Stocks

BALTIMORE (Stockpickr) -- Up, up and away has been Mr. Market's modus operandi in recent months, shoving its way to new all-time highs as this past year came to a close. And all the way up, the bulls and bears have been arguing over why the rally was justified -- or why it wasn't.

So far, the bulls have been right. Very right.

But that doesn't mean that now's the time to jump into stocks. Instead, markets look overdue for a meaningful move lower this month.

Yes, I realize those two ideas sound contradictory. How can stocks be headed lower if they're also headed higher? But bear with me, and I'll show you how a correction this month could provide a big opportunity for your long-term stock portfolio.

Expecting long-term upside isn't the same thing as saying that stocks are going straight up from here ad infinitum. Corrections are a necessary part of a healthy market rally, as risk-averse early investors take gains off the table, and later investors jump into shares at relative lows.

And right now, there are a handful of fundamental and technical factors that point to a correction happening sooner rather than later.

Stocks Are Expensive-ish

When investors talk about stocks being cheap or expensive, it's not an absolute term. Obviously, with the big indices sitting at new highs, stocks in general cost more than ever before. But what makes a stock cheap or expensive is its cost relative to what you get for that price tag: metrics such as earnings or assets.

With a price-to-earnings ratio of 18.88 in the S&P 500, stocks still aren't truly expensive. But they are starting to look expensive-ish.

In the last year, the P/E ratio for the more growth-oriented Nasdaq 100 Index has increased 31%. Basically, that indicates that investors are paying a lot more for the same earnings power than they were just 12 months ago. Two things can happen to make stocks look cheaper again based on P/E: either share prices drop, or earnings increase.

It's important to remember that, on a historical basis, the P/E ratios on the market averages aren't at insane levels right now. The S&P would need to rally to 3,115 tomorrow to reach the peak P/E ratio the index hit during the dot-com bubble. 


But valuation metrics have moved far enough and fast enough to warrant a correction.

As I mentioned, the other side to that valuation equation is earnings -- and with earnings season officially kicking off this week, there's a big multi-month catalyst that could help take some of the froth off of valuations in 2014. If stock prices let off some steam and earnings best analysts' expectations, stocks could suddenly look cheap again.

Technical Time to Correct

While the fundamentals can tell us a lot about whether stocks look cheap or expensive right now, aren't as useful at timing where and when important price changes are likely to occur. For that, we need to add technicals into the equation.

From a technical analysis standpoint, it doesn't get much more textbook than the rally we've seen in the S&P 500 for the last year and change. Take a look:

The S&P has been bouncing higher in an uptrending channel, with corrections that came down to test support in between each rally leg. It's notable that we haven't seen a full correction back down to trendline support since all the way back in October -- the most recent leg down stopped at the 50-day moving average thanks to a Santa Claus rally and intervention from the Fed. That makes this the second-longest stretch since this rally began in 2012 where we haven't had a pullback to the bottom of the channel.

Even though the S&P hasn't touched trendline resistance yet, shares have remained in the upper-third of the channel long enough to warrant a return to support.

This is very much a "buy the dips" market. Jumping into stocks at each test of support has been a lucrative strategy all the way up -- and it's likely to remain that way as we get deeper into 2014. That fact makes a correction in the S&P a critical buying opportunity for investors waiting for a good chance to get in.

A break of the RSI uptrend line is likely to be an early warning sign that we're going to get our correction. A timing model I've been using with success for the last year and change puts the correction this month. Barring some catalyst that surprises the market in the next few weeks, a push to new highs before the month is out looks unlikely.

The next buy signal for stocks comes on a bounce off of trendline support.

How to Win When Stocks Correct

You don't have to just hang on and take downside as the S&P heads into corrective mode. Instead, it makes sense to actively position yourself to profit from it.

Why bother re-allocating your portfolio if a stock correction is likely to only last a few weeks? In short, it's because the names that thrive during pullbacks are the same ones that rocket when equities go back into rally mode.

But there's nothing wrong with defense. After all, that covers the fundamental side of the correction equation. And believe it or not, there are still some names on the market today that you can buy at a big discount.

Look at Garmin (GRMN) for example. The GPS maker currently trades for a P/E ratio of 15.2, but that number does a poor job of conveying just how cheap GRMN is right now. It doesn't factor in the $2.79 billion in cash and investments on Garmin's balance sheet (and zero debt), which is enough to pay for nearly 32% of GRMN's outstanding shares at current price levels. Take out cash from that P/E ratio, and it suddenly drops to a measly 10.

Better, Garmin's dividend yield currently comes in at more than 4%. Calling Garmin a defensive name is an understatement.

Most people think that the best way to position yourself for downside is by focusing on defensive names -- but that's not the only way to cut downside risks. Statistically, it's the momentum names, not the defensive ones, that provide the most upside potential.

When the big indices are correcting, relative strength becomes the single most important metric in your toolbox. Relative strength is the ratio between a stock's price and its benchmark. When the line is rising, the stock is outperforming.

More important, rising relative strength statistically tends to lead to more stock outperformance. In other words, it's the gauge that tells you which stocks are going to work the best.

Big relative strength names right now include Micron Technology (MU), Alcatel-Lucent (ALU) and Herbalife (HLF). What most relative strength winners lack in deep value, they make up for in upside momentum. After all, who cares if a stock is expensive as long as it gets more expensive before you sell it? Just remember to keep tight stops in place.

So don't fear the coming correction. Owning a combination of defensive names and stocks with uptrending relative strength puts you best positioned for the pullback that's on the way. This is still very much a "buy the dips market." We've just got to wait for the next dip.

-- Written by Jonas Elmerraji in Baltimore.

RELATED LINKS:

>>3 Big-Volume Chinese Stocks to Watch
>>3 Stocks Under $10 Making Big Moves
>>5 Stocks Rising on Unusual Volume

Follow Stockpickr on Twitter and become a fan on Facebook.

At the time of publication, author was long HLF.

Jonas Elmerraji, CMT, is a senior market analyst at Agora Financial in Baltimore and a contributor to TheStreet. Before that, he managed a portfolio of stocks for an investment advisory returned 15% in 2008. He has been featured in Forbes , Investor's Business Daily, and on CNBC.com. Jonas holds a degree in financial economics from UMBC and the Chartered Market Technician designation.

Follow Jonas on Twitter @JonasElmerraji

Priceline Could Beat Google to $1,000

It's been five months since I offered up four stocks that could get to $1,000 before Google (NASDAQ: GOOG  ) .

One of them went on to do exactly that. Two of the other three don't have much of a shot to hit four figures any time soon. However, then we get to priceline.com (NASDAQ: PCLN  ) .

It's going to be quite the footrace between these two.

The search engine leader continues to trade at a higher level than the fast-growing travel portal, but Priceline's making up ground here. Priceline stock has gone on to climb 29% to hit $888.63. Google -- with its 14% gain in that time -- closed at $905.09 yesterday.

I'm a fan of both companies, but I still believe that Priceline will be the first of the two dot-com darlings to break through the $1,000 barrier.

Priceline's latest move higher came on a 4% pop yesterday, with the Morgan Stanley analyst Scott Devitt boosting his rating from equal weight to overweight. Devitt also pushed his price target to $1,010, becoming the first of the nearly two dozen major analysts following Priceline to offer up a four-figure goal.

There are already a few analysts -- including Bernstein Research's Carlos Kirjner and CLSA Asia-Pacific Markets' James Lee -- perched at $1,000 price targets when it comes to Google.

Neither stock may seem cheap these days. Google is trading at 20 times this year's projected earnings and 17 times next year's forecast. Priceline's fetching pricier multiples of 23 for this year and 19 come 2014.

Both companies have earned their markups, though Priceline is growing faster. Wall Street's betting on 16% growth at Google for both this year and 2014. Analysts see Priceline growing at a healthy 23% clip in 2013 and a still respectable 20% rate next year.

The competitive climate may seem to give Google the leg up here given the cutthroat nature of travel portals and Google's safe standing as the global leader in search, but Priceline's been finding ways to grow a lot faster than its market for years.

Priceline is also in a slightly better position to build on its profitability if the global economy continues to gain traction. Google advertisers will naturally be willing to spend more if the economy's improving, but there should be a more dramatic uptick in the demand for corporate and leisure travel under that scenario to benefit Priceline.

Priceline and Google will both get to $1,000, and one or both may get there by the end of the year if the bullish trends continue. I see Priceline being the first one to cross that line, but the comment box below is waiting for you if you care to disagree.

There's a bigger race that doesn't end at 1k
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Wednesday's Top Upgrades (and Downgrades)

This series, brought to you by Yahoo! Finance, looks at which upgrades and downgrades make sense, and which ones investors should act on. Today, our headlines feature gun makers Sturm, Ruger (NYSE: RGR  ) and Smith & Wesson (NASDAQ: SWHC  ) -- both recipients of new buy ratings this morning. But the news isn't all good, everywhere. Before we get to those two, let's take a quick look at why ...

Ambarella just crashed
Following a Street.com report detailing insider selling at Ambarella (NASDAQ: AMBA  ) earlier this week, and a downgrade of the stock to hold by Needham & Co. earlier this morning, shares of the high-def "system-on-a-chip" semiconductor maker are plunging, down nearly 8% at last report. Should investors be worried?

Not necessarily -- but probably. On one hand, the fact that insiders at Ambarella are selling will certainly annoy investors, and maybe even shake them up a bit, suggesting as it does that insiders might "know something they don't." Keep in mind, though, that statutorily defined insiders still control 43% of the stock of this company. That's a heck of a lot of skin in the game, and the fact that this number got slightly smaller on Monday really shouldn't be too much cause for concern.

What is of more concern, to me at least, is the valuation on this stock. After rising some 40% in response to December's news that Ambarella has developed a new chip for use in wearable cameras, the shares are looking mighty pricey today at a valuation north of 40 times earnings, and nearly seven times sales. Free cash flow at the company is strong, but still lags reported earnings by a few percentage points. And with analysts projecting profits growth in the neighborhood of 22% annualized over the next three years, it's hard to see why a 40 times multiple to earnings, and an even higher multiple to FCF, would be justified.

Top 5 Penny Companies To Buy For 2014

Long story short, the stock's overpriced -- and Needham's right to downgrade it.

Have gun, will travel (up)
Moving on now to the day's happier news, shareholders of gunsmiths Sturm, Ruger, and Smith & Wesson are enjoying modest gains in their stocks in response to a pair of new "initiations at buy" from the analysts at CRT Capital.

According to CRT, shares of Smith & Wesson are bound to reach $16 by the end of this year, and Ruger could hit $85. If the analyst is right, that would work out to about a 14% gain for S&W shareholders, 7.5% for Ruger (plus a 3.4% dividend yield, so closer to 11% total). Personally, I think the analyst is likely right.

Valued at less than 11 times earnings today, Smith & Wesson shares look attractively priced for the 30% annualized profits growth that Yahoo! Finance is predicting. They're even cheap relative to the more modest 13% growth rate quoted on S&P Capital IQ.

Ruger, in contrast, costs a bit more than S&W at 14.5 times earnings -- and is growing either faster or slower than its rival depending on which analysts you choose to believe. (S&P Capital IQ, for example, projects 13.5% annualized earnings growth at Ruger. Yahoo! Finance doesn't hazard any guess at all.) Factor in the 3.4% dividend yield and Ruger also looks underpriced for its prospects.

Beware of misfires
Is there risk in the stocks? Of course there is. There always is. For one thing, free cash flow at both Ruger and S&W looks weak lately. Based on data from the firms' respective cash flow statements, Ruger is currently generating only about $0.68 in real free cash flow for every $1 in earnings it reports under GAAP. Smith & Wesson is likewise churning out $0.68 in cash profits for each $1 of net income it reports.

This fact suggests that neither stock is quite as profitable -- or as cheap -- as it looks, and bears careful watching to make sure that FCF catches up to reported earnings and not the other way around.

Also worth noting: Earlier this week, analysts at KeyBanc pointed out that NICS data on handgun background checks run by the FBI in December (indicative of handgun purchase activity in the U.S.) was down 32.5% year over year against December 2012. That means that as a whole, Q4 background checks were down about 19.4% year over year. Even worse, KeyBanc noted that it seems to be seeing "a heightened promotional environment (the likes of which have not been seen for several quarters now)" among gun sellers. This, in turn, suggests that profit margins on the few guns that were sold last quarter may not have been all that great.

While the KeyBanc warnings don't necessarily upset the buy case for S&W and Ruger stock, they do bear consideration. At the very least, investors considering putting money in these two stocks should make sure to be ultraconservative in deciding which analyst growth estimates to believe and base their buy/sell decisions upon. In other words, if given a 30% and a 13% growth rate for Smith & Wesson and then asked to choose one to believe in, err on the side of caution: Pick 13%.

Fool contributor Rich Smith has no position in any stocks mentioned. The Motley Fool recommends Ambarella. The Motley Fool owns shares of Ambarella. 

Today's 3 Best Stocks

The trend of weak economic data continued for a second straight day today, although this time, it got the better of the broad-based S&P 500 (SNPINDEX: ^GSPC  ) .

The U.S. Department of Labor Statistics certainly squashed investors' hopes earlier today when it reported that the Consumer Price Index for April fell 0.4% over the previous month. This measure of inflation would signal that the prices that consumers are paying for comparable baskets of goods is falling. This might appear to be great news, but is actually terrible news for businesses. Inflation is a tightly defined line: too much, and the consumer is in trouble; not enough, and businesses lose their pricing power.

Jobless claims also proved to be a sticking point, surging 32,000, to a seasonally adjusted 360,000 from the previous week's five-and-a-half year low. The job market has been demonstrating a slow-but-steady recovery, so this week's boost may not be too much to worry about. Then again, it's a reminder that the jobs market is still quite fragile.

Overall, the S&P 500 finished lower by 8.31 points (-0.50%), to close at 1,650.47. While the market may have finished lower, three companies flexed their muscles and headed much higher on the day.

Running away from the pack today was network equipment maker Cisco Systems (NASDAQ: CSCO  ) , which vaulted higher by 12.6% after reporting better-than-expected third-quarter results. Cisco delivered a 5% increase in sales, to $12.2 billion, on a 6% increase in EPS, to $0.51, as its gross margin expanded by 110 basis points. Comparatively speaking, Wall Street was anticipating just $0.49 in EPS. Also, Cisco's fourth-quarter forecast was, for a change, in line with the Street's forecasts. As my Foolish colleague Brian Pacampara pointed out, it signals undeniable strength in the networking market. Even after today's rally, Cisco is valued at a reasonable 11 times forward earnings, with a net cash balance in excess of $31 billion. To say that I feel it represents an intriguing value here would be an egregious understatement.

Sticking with the tech theme, network storage solutions specialist NetApp (NASDAQ: NTAP  ) advanced 6.2% after a report from Bloomberg noted that activist investor Elliott Management had taken a large stake in the company. The report also points out that Elliott Management would be expected to make changes to NetApp's board, and institute a cash return strategy to shareholders. While unconfirmed, the prospect of NetApp doing something with its $4.5 billion in net cash would definitely be a bonus for current shareholders. This is a situation that bears close monitoring.

Finally, fiber optic component supplier JDS Uniphase (NASDAQ: JDSU  ) gained 4.9% after announcing the early repayment of $160.6 million in notes with available cash on hand. I'd certainly consider this market-driving news, but I feel Cisco has more to do with JDS' move today than anything else. We're really starting to see a trickle-down effect from service providers like AT&T, which has committed $14 billion to its wireless networking expansion over the next three years. That expansion generates the need for faster data transmission via fiber optic cable, and pushes that capital further down the line to networking companies like Cisco, which are capable of handling and routing bigger and faster data loads. This entire supply chain looks like a great value at the moment.

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Why Hyperion Therapeutics Shares Shot Higher

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Hyperion Therapeutics (NASDAQ: HPTX  ) , a biopharmaceutical company focused on treatments for orphan diseases and hepatology, rose as much as 10% after receiving orphan drug exclusivity status for Ravicti from the Food and Drug Administration, and exercising an option to acquire two additional urea cycle drugs from Valeant Pharmaceuticals (NYSE: VRX  ) .

So what: Ravicti, Hyperion's urea cycle disorder drug that was approved in February, will now get a seven-year period of exclusivity in treating the rare disease. This secures Hyperion's revenue stream by making sure competitors won't be able to swoop in a few years from now with similar products.

In addition to this news, Hyperion exercised an option to acquire Buphenyl and Ammonul from Valeant. If Valeant chooses to keep Ammonul (it has 20 days to decide) it must pay Hyperion $13 million. If Valeant chooses to sell the drug, Hyperion owes Valeant $22 million.

Now what: To me it seemed like a foregone conclusion that Ravicti was going to eventually gain orphan drug approval. While this will certainly protect Hyperion's UCD drug, I'm not sure $100 million in peak sales estimates in the U.S. is enough to justify the company's $358 million market value as of this writing. I'll be certainly curious to see what Valeant does with Ammonul, but I don't think it's a big enough game changer to sway my opinion that Hyperion's valuation is a bit frothy.

Craving more input? Start by adding Hyperion Therapeutics to your free and personalized Watchlist so you can keep up on the latest news with the company.

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The iPad Mini's Latest Challenger

When research firm IDC put out its latest numbers on global tablet sales, it noted that "[o]ne in every two tablets shipped this quarter was below 8 inches in screen size." The firm believes that the shift to smaller devices will accelerate, making it little surprise that, according to The Wall Street Journal, Microsoft (NASDAQ: MSFT  ) is developing a 7-inch Surface tablet to be released sometime this year. IDC expects Google's (NASDAQ: GOOG  ) Android operating system to snatch the top market share position from Apple's (NASDAQ: AAPL  ) iOS. At this size, Microsoft is competing with the Google Nexus 7, the iPad Mini, and Amazon.com's (NASDAQ: AMZN  ) Kindle Fire HD. While this is stiff competition, getting in the fight is a critical step for Microsoft.

The tablet market
Not that there's any doubt as to how important the tablet market is, but the numbers are compelling. IDC raised its forecast for worldwide tablet shipments from 172.4 million units in 2013 to 190.9 million and expects that by 2017, 350 million units will be shipping each year. Apple and Google may rule the sandbox, but it's a big enough sandbox that carving out even a small corner can mean real and meaningful revenue for Microsoft. IDC expects that Microsoft, between its Windows OS and RT OS, account for a combined 10.1% by 2017. These projections don't include a smaller Surface, so the addition could prove to be meaningful.

Shifting markets
Earlier this week, IDC reported a 14% drop in PC sales for the most recent quarter, mirrored by an 11% drop reported by research firm Gartner. Microsoft is not a PC-maker per se, but falling numbers in this arena are a real blow to sales of Windows. This will be a critical number to watch this week as the company reports earnings on Thursday. As PC sales continue to slide, Microsoft's involvement in other areas continues to be of greater and greater importance.

What does a smaller Surface mean to the market?
Many will argue that the announcement of a smaller Surface tablet is a non-event because even the bigger Surface RT and Surface Pro have done little to disrupt the market. While this position is not without some merit, it misses the bigger picture of what I believe Microsoft is trying to achieve. As things currently stand, Apple makes the premium tablets on the market and uses this cachet to maintain its market share. Google makes the low-cost tablets on the market, using this appeal to drive its market share similarly to what it has achieved in smartphones.

Microsoft is not only trying to get its foot in the door but is also looking to change the very nature of the tablet market. Windows 8 has been widely criticized as being clunky and counterintuitive on a PC, even with a touchscreen. These reviews seem to assume that Microsoft is oblivious to this reality and failed to conduct any market research before launching the new product. I give the company that has controlled the software market for decades more credit. The only reason Microsoft would have moved forward with Windows 8 is if it has longer-term plans, like a paradigm shift in tablets.

Early versions of the Surface don't need to be perfect; they need to exist. They need to give the company a chance to perfect Windows in a new form factor and give it a chance to allow Microsoft to transform the tablet from the fun toys that Amazon and Apple sell, to business machines that Microsoft is known to support. Understanding the barrage of "Fortune 500 companies use iPads" that is coming, I believe Microsoft is aiming at this market in a quiet and astute way that warrants keeping the stock in your portfolio.

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Turkish Markets 'Ripe' For Early Polls Amid Political Turmoil

ISTANBUL–Turkey's embattled prime minister might call snap parliamentary elections to curb the political uncertainty that for two weeks roiled markets, investors and analysts said as the country's currency sank to fresh lows again on Friday.

Rising political risks prompted by a corruption investigation unveiled Dec. 17 are seen as the main driver behind the lira's 7% slump to a record low of 2.1769 per dollar and 3.0031 per euro.

Negative sentiment surrounding the Turkish markets remained even after Prime Minister Recep Tayyip Erdogan sacked 10 of his 26 ministers Wednesday in an effort to soothe mounting tensions, sending Turkey's borrowing costs from 8.92% to 10.16%, the highest in almost two years following an intraday peak of 10.24% on Aug. 27.

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"There's a disproportionately large political risk, which is very difficult to measure and is triggering panic sales. The market is now ripe for a decision to call early elections," said Bulent Topbas, portfolio manager at Strateji Securities in Istanbul. He added that Turkish assets could come under renewed pressure as international investors return from Christmas and New Year's holidays.

Fresh political manoeuvres amid power struggles within the ruling Justice and Development Party, or AKP, could trigger more short-term shocks in markets, but would ultimately increase clarity and help reduce risks in Turkey, analysts said.

"An early election would see Erdogan continue on as prime minister while sending a signal, both domestically and internationally, that he still enjoys the people's support. The markets would greet that positively in the short-run," said Atilla Yesilada, an Istanbul-based analyst at risk consultancy Global Source Partners.

Moving general elections ahead from June 2015 wouldn't change the make up of parliament much, and curb its market impact, said Istanbul-based Bosphorus Capital's General Manager Murat Salar.

Turkey’s Prime Minister Recep Tayyip Erdogan Associated Press

Turkey is at the cusp of an election cycle, which kicks off in March with local ballots widely seen as a litmus test for Mr. Erdogan's popularity. The first direct presidential elections are scheduled for August, followed by the general elections.

"Risk of early elections has started to increase, but Erdogan is unlikely to call them before he sees results of March local elections," said Naz Masraff, a London-based analyst at risk consultancy Eurasia Group. "If the AKP get a very poor result, for instance losing Istanbul, and if in the meanwhile Erdogan gets significantly damaged from current allegations, we would be looking at three elections in the next eight months."

Cracks within the ruling AKP surfaced with the graft investigations, which Mr. Erdogan calls a plot to topple his government. It has increased tensions between the premier and a former ally, Fethullah Gulen, who helped Mr. Erdogan win three consecutive terms.

Mr. Gulen, who lives in self-imposed exile in Pennsylvania, wields significant political power through millions of followers, including many in Turkey’s police and judiciary. The cleric and the prime minister have drifted apart in the past two years, and their public fight for influence broke out as prosecutors unveiled the corruption probe, which ensnared one minister and three others whose sons were involved.

"Mobilizing the AKP electorate could be used by the premier as a ‘show of force’ in the power struggle with Gulenists," said Wolfango Piccoli, managing director at risk consultancy Teneo Intelligence. "An early election scenario could materialize if the corruption probe involves Erdogan or anybody from his family. In this case, turmoil within the AKP could increase and by calling snap polls Erdogan could reassert his authority."

Vanguard Explorer Manager to Pass Baton; Good Tax News for Schwab ETFs

Fund giant Vanguard said early Monday that John “Jack” J. Granahan — a portfolio manager with the multimanaged $12.4 billion Vanguard Explorer Fund, the $1.3 billion Vanguard Variable Insurance Fund-Small Company Growth Portfolio and the Irish-domiciled $125 million Vanguard U.S. Discoveries Fund — will hand off management responsibilities at year-end.

His investment responsibilities will be taken on by other portfolio managers at the firm, including CEO Jane White and Chief Investment Officer Gary C. Hatton, who co-founded Granahan Investment Management with Granahan, now 77, in 1985. White and Hannon have been co-managers of the Explorer Fund since 2000 and 1998, respectively.

“I’d like to thank Jack on behalf of Vanguard and our shareholders,” said Vanguard CEO Bill McNabb, in a statement. “His wisdom, investment acumen, and experience greatly contributed to the success of our shareholders over four decades. As one of Vanguard’s longest-tenured managers, he leaves behind a great legacy and team, who we are confident will continue to serve our shareholders well.”

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The Vanguard Explorer Fund (VEXPX, VEXRX) has risen 37.1% so far this year vs. 27.7% for the S&P 500, while the Vanguard Variable Insurance Fund-Small Company fund has ticked up 37.1%, according to Bloomberg.

Before co-founding the firm that bears his name, Granahan managed the Explorer Fund during the 1970s at Wellington Management Co., where he also led the Vanguard Morgan Growth Fund.

Vanguard tapped Granahan Investment Management to manage the Vanguard Explorer II Fund when it was rolled out in 1985; it also retained the Grahanan fund-management team to run part of the Explorer Fund when it merged with the Explorer II Fund in 1990.

Granahan will remain chairman of the investment management group, which oversaw nearly $4 billion in assets as of Sept. 30, including $3.4 billion for Vanguard.

Other managers of the Explorer Fund are Century Capital Management, Chartwell Investment Partners, Kalmar Investment Advisers, Stephens Investment Management Group, Wellington Management and Vanguard Equity Investment Group. Vanguard says it uses a multimanager approach for 18 funds.

No Capital Gains Distributions for Schwab ETFs

Charles Schwab Investment Management (SCHW) said Monday that none of its 21 ETFs will have capital gains distributions in 2013 — a plus for investors looking to maximize their tax efficiency with these products, it noted.

Schwab ETFs, including the six Schwab Fundamental Index ETFs rolled out in August, had $16.1 billion in assets as of Nov. 29, nearly double their year-ago asset base. The six Fundamental Index ETFs have close to $170 million in assets.

“We’re very pleased to be maintaining our track record of tax efficiency across all Schwab ETFs, having never distributed capital gains since we launched our first ETFs in 2009,” said John Sturiale, vice president of product management for Charles Schwab, in a press release. “Every penny counts when evaluating a fund’s total costs, and tax efficiency is a critical component for investors.”

Several Schwab ETFs recently received awards for “best investor experience” over the past year from Morningstar, including Schwab U.S. Broad Market ETF (SCHB) for the U.S. ETF Large Blend category; Schwab Emerging Markets Equity ET (SCHE) for the U.S. ETF Diversified Emerging Markets category; Schwab U.S. Large-Cap Growth ETF (SCHG) for the U.S. ETF Large Growth category; and Schwab International Equity ETF (SCHF) for the U.S. ETF Foreign Large Blend category.

Schwab started offering commission-free online trading of its proprietary ETFs in November 2009.

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Check out 9 Tax Breaks Expiring at Year’s End on ThinkAdvisor.