Bruce Berkowitz Has 26% of the Fairholme Fund in AIG – Don’t You Think You Should at Least Consider It for Your Portfolio?

This week GuruFocus provided us with a copy of the 2011 Bruce Berkowitz / Fairholme Fund letter to his shareholders.

What an awful year for Berkowitz. Not just was performance horrible, down 32.42%, but his investors have also been abandoning him like rats on a sinking ship with his assets decreasing from $21 billion at the start of 2011 to under $7 billion by year end.

Isn't it amazing that in one year Berkowitz has gone from being crowned the manager of the decade by Morningstar in 2010, to someone you are afraid to entrust your money to?

I just don't buy that Berkowitz has lost it. The mistake that Berkowitz has made in my opinion is that he has invested the fund's money the way he would invest his own money. He is taking a concentrated portfolio approach and trying to make as much money as he can, without risking permanent impairment of capital.

In doing this he has ignored the impact that volatility will have on the loyalty of his investors. Unlike Berkowitz, most investors can't handle paper losses.

I think there are going to be a lot of people regretting giving up on Berkowitz at exactly the wrong time.

Because the Berkowitz's portfolio has been beaten down there could be some very attractive opportunities. And the one that I just can't ignore is AIG (AIG). Berkowitz has an astonishing 26% of the Fairholme Fund in AIG. To me that says either he thinks this is one of the greatest opportunities he has ever been presented with or he has gone completely off the deep end.

So when I saw the video below which is a discussion with the AIG chairman I sat up and paid attention. If there is any company that has more stink on it than AIG I don't know what it is. As the poster boy for the financial panic in 2008, AIG has been left for dead, and may very well present a great opportunity.

Some key points:

- Taxpayers still own 70% of AIG

- AIG is ready to grow and return capital

- AIG is done playing defense and is ready! to go on the offensive

- AIG has excess capital and is repurchasing shares

- AIG is going to pay back shareholders by growing the business and may make acquisitions

- AIA may well become one of those acquisitions

- AIG is not rolling over and dying in a liquidation, the future is growth



Now here is what Berkowitz most recently had to say about AIG:

AIG common stock and warrants are by far the largest issuer holding of The Fairholme Fund and the company is worthy of a Dickens novel. Started in Singapore by U.S. citizen C.V. Starr in the 1930's, built into a shining example of how America can compete and win around the world by an imperial M.R. Greenberg, torn apart by a ruthlessAG Spitzer, and now rising from the ashes of a great tragedy. The company's book value of $45 per share is heading to $55 in the near future and yearly earnings power of $4 per share will further propel shareholder value. Yet, AIG's market price plummeted to less than half of book value due to what we can only surmise as a belief that the United States Treasury will sell its 77% ownership stake below the Department's $29 cost. Why this is negative for long-term investors we do not know.

My problem with AIG is that it is far too complex for me to fully understand it. I owned it for most of the month of October and sold with a very quick and lucky gain. I'm considering buying again, but am aware that if I do I'll be doing so more because of Berkowitz and his conviction than anything I know.

Another Red Robin Outlet in Maryland - Analyst Blog

Casual dining restaurant operator, Red Robin Gourmet Burgers Inc. (RRGB), is set to unveil a new restaurant in Baltimore, MD shortly. This is the sixth outlet of the company's targeted opening of 20 outlets in 2013 and bears evidence to its strategy of expanding in the lucrative domestic market.

The restaurant will be located at the famous Waugh Chapel Shopping Center. Red Robin's value offerings and the contemporary ambience will drive its sales, going ahead.

As per the National Restaurant Association, Maryland's restaurant industry contributes considerably to the state's revenues. According to the research organization, Maryland's restaurants are expected to record $10.3 billion in sales in 2013. High demand and high spending ability in Maryland are favorable to the sector's growth.

Maryland's capital, Annapolis, and its largest city, Baltimore, already boast a host of renowned restaurant operators like The Wendy's Company (WEN), McDonald's Corp. (MCD) and Burger King Worldwide, Inc. (BKW).

Currently, Red Robin operates only 13 units in Maryland, which makes it a relatively newer market for the company as compared with California which has as many as 70 Red Robin restaurants. Hence, the company has decided to further expand in Maryland.

The Colorado-based restaurateur is also exploring development opportunities in several underpenetrated markets such as Florida, New York, New Jersey, Chicago and Texas to further strengthen its presence in the U.S. Recently, the company opened a unit in Chicago which has strong growth prospects and potential to record $21.7 billion in sales 2013.

Moreover, this Zacks Rank #3 (Hold) company, which currently boasts more than 470 restaurants across the United States and Canada, is keen on establishing the presence of its smaller prototype restaurants, Red Robin's Burger Works. The company's smaller format restaurants will likely accelerate its growth in non-traditional locations and also improve return on ! invested capital, going ahead.

10 Best Performing Stocks To Own Right Now

Most of us go to the doctor for a checkup once per year. Many of us visit our dentists twice per year. How frequently should our stocks receive a checkup? Frequently, but let's go with monthly for a start. With that in mind, this is our May checkup for Abbott Laboratories (NYSE: ABT  ) stock. Let's look at three important signs for Abbott's stock health.

Performance
The easiest way to evaluate a stock's health is to simply look at how shares are performing. In Abbott's case, 2013 is looking to be a pretty good year so far.

ABT data by YCharts.

Abbott is beating the S&P 500 index for the year. However, May hasn't been quite as kind to the stock. Shares are down slightly, while the S&P 500 is up a little for the month so far.

10 Best Performing Stocks To Own Right Now: Celeste Mining Corp.(C.V)

Celeste Mining Corp., a junior natural resource company, engages in the acquisition, exploration, and development of mineral properties in Chile. It primarily explores for tin, copper, gold, and silver ores. The company holds an option agreement to acquire a 100% interest in seven exploration concessions, Celeste IV�X, covering approximately 2,765 hectares located in the Cabeza de Vaca mineral district, Chile. It also holds three exploration concessions in the Manto Medio district of Chile. The company was formerly known as Celeste Copper Corporation and changed its name to Celeste Mining Corp. in November 2012. Celeste Mining Corp. was incorporated in 2007 and is based in Calgary, Canada.

10 Best Performing Stocks To Own Right Now: Maximus Resources Ltd(MXR.AX)

Maximus Resources Limited engages in the exploration and development of mineral properties in Australia. The company primarily explores for gold, uranium, iron ore, and base metals. Its principal properties include the Sellheim alluvial gold project located in north Queensland; the Adelaide Hills gold project situated in South Australia; and the Narndee base metals project located in the Mt Magnet region of Western Australia. The company also holds exploration tenements in Western Australia that are prospective for nickel, and base metals. Maximus Resources Limited was founded in 2004 and is based in Norwood, South Australia.

Hot Bank Companies To Watch In Right Now: Genworth Financial Inc (GNW)

Genworth Financial, Inc., a financial security company, provides insurance, wealth management, investment, and financial solutions in the United States and internationally. The company offers various insurance and fixed annuity products, including life and long-term care insurance products; payment protection insurance products for consumers primarily to meet specified payment obligations; and wealth management products, such as managed account programs with advisor support and financial planning services. It also provides mortgage insurance products and related services to insure prime-based, individually underwritten residential mortgage loans or flow mortgage insurance; and mortgage insurance on a structured or bulk basis, as well as offers services, analytical tools, and technology that enable lenders to operate and manage risk. In addition, the company provides institutional products consisting of funding agreements, funding agreements backing notes, and guaranteed in vestment contracts. Genworth Financial, Inc. distributes its products and services through financial intermediaries, advisors, independent distributors, affinity groups, and sales specialists. The company was founded in 2003 and is headquartered in Richmond, Virginia.

10 Best Performing Stocks To Own Right Now: Vectren Corporation (VVC)

Vectren Corporation, through its subsidiaries, provides energy delivery services to residential, commercial, and industrial and other contract customers in Indiana and west central Ohio. It offers natural gas distribution and transportation services, and electric distribution services; and owns and operates coal-fired and gas-fired electric generating facilities with an installed generating capacity of 1,298 megawatts. The company�s electric transmission system consists of 989 circuit miles of 345, 138, and 69 kilovolt lines, and 35 substations; and distribution system comprises 4,281 pole miles of lower voltage overhead lines and 372 trench miles of conduit containing 1,999 miles of underground distribution cable, 96 distribution substations, and 54,000 distribution transformers. In addition, it provides gas marketing, gas portfolio optimization, and other portfolio and energy management services to municipalities, utilities, industrial operations, schools, and healthcar e institutions; mines and sells coal; offers underground construction and repair, performance contracting, and renewable energy services; and invests in energy-related opportunities and services, real estate, and leveraged leases. Further, the company engages in transmission pipeline construction and maintenance; pump station, compressor station, terminal, and refinery construction; and hydrostatic testing services. It serves the automotive assembly, parts, and accessories; feed, flour, and grain processing; metal castings; aluminum products; polycarbonate resin and plastic products; gypsum products; electrical equipment; metal specialties; glass; steel finishing; pharmaceutical and nutritional products; gasoline and oil products; ethanol; and coal mining industries. As of December 31, 2011, it supplied natural gas services to approximately 993,300 customers; and electric services to approximately 141,600 customers. Vectren Corporation was founded in 1912 and is headquartere d in Evansville, Indiana.

Advisors' Opinion:

• [By Richard Young]

  My price chart shows the strong bullish trend developing in Vectren shares. The recent breakouts above its 50-day moving average and the psychologically important $30 mark show strong bullish sentiment for Vectren. The next resistance level for the stock is at its 2008 peak price of $32.10.

10 Best Performing Stocks To Own Right Now: iGATE Corporation(IGTE)

iGATE Corporation provides outsourced information technology (IT) and IT-enabled operations solutions and services worldwide. The company offers various services that include development and maintenance of software application; implementation and support of enterprise applications; package evaluation and implementation; re-engineering; data warehousing; business intelligence; analytics; data management and integration; software testing; IT infrastructure management; business and technology consulting; and enterprise software and systems integration, as well as quality assurance services and product engineering services. It also provides business process outsourcing, transaction processing, and customer interaction services. The company serves various industries, including insurance and healthcare, manufacturing, retail and logistics, banking and financial services, communications and utilities, media and entertainment, life sciences, and product engineering. It has India, Canada, the United States, Europe, Mexico, Singapore, Malaysia, Japan, Australia, the United Arab Emirates, South Africa, Turkey, South Korea, China, Switzerland, and the United Kingdom. iGATE Corporation was founded in 1996 and is headquartered in Fremont, California.

10 Best Performing Stocks To Own Right Now: Take-Two Interactive Software Inc.(TTWO)

Take-Two Interactive Software, Inc. publishes, develops, and distributes interactive entertainment software, hardware, and accessories worldwide. The company develops and publishes software titles for various gaming and entertainment hardware platforms, including PlayStation3 and PlayStation2 computer entertainment systems, PlayStation Portable system, Xbox 360 video game and entertainment system, and Wii and DS systems, as well as for the personal computer and games for Windows. It offers products through its wholly owned labels Rockstar Games and 2K, which publishes titles under 2K Games, 2K Sports, and 2K Play. The company, through its subsidiary, Jack of All Games, also distributes software, hardware, and accessories in North America. Its proprietary brand franchises include Grand Theft Auto; Sid Meier's Civilization; Max Payne; Midnight Club; Manhunt; Red Dead Revolver; Bully; BioShock; Sid Meier's Railroads!; Sid Meier's Pirates!; Carnival Games; and Top Spin, as wel l as licensed brands comprise the sports games Major League Baseball 2K; NBA 2K; and NHL 2K. The company sells its software titles to retail outlets through direct relationships with large retail customers and third party distributors. Its customers include mass merchandisers, specialty retailers, video stores, electronics stores, toy stores, national and regional drug stores, and supermarket and discount store chains. The company was founded in 1993 and is headquartered in New York, New York.

Advisors' Opinion:

• [By David Sterman]

  This video game developer has a pair of catalysts in the near future. The first involves the release of Max Payne 3, the latest title in the Max Payne action video game series, slated for launch in March 2012. This has led some analysts, including Brean Murray's Arvind Bhatia, to modestly raise EPS estimates for the current fiscal year that ends in March 2012.
  
  The real catalyst, however, is the fiscal 2013 release of Grand Theft Auto V that has analysts salivating. This title is expected to be a blockbuster, which could singlehandedly push EPS from about $0.20 this year to the $2 to $3 range in fiscal 2013. It's not clear when in 2012 the game will be released, but shares have typically started to move up well in advance of major releases. Though the actual catalyst is a few quarters away, anticipation of the event makes this stock much more timely.

10 Best Performing Stocks To Own Right Now: Vecima Networks In Com Npv (VCM.TO)

Vecima Networks Inc. engages in the design, manufacture, and sale of products that enable broadband access to cable, wireless, and telephony networks in the United States, Canada, Thailand, and internationally. The company�s hardware products incorporate embedded software to meet the requirements of next generation high-speed digital networks. The company offers its products for converged wired solutions and broadband wireless markets. Its products for converged wired solutions market includes a family of upconverters and modulators that process data from routers and convert it to higher frequencies for transmission over cable to subscribers; and gigabit network edge devices, EdgeQAM modulators, and transmodulators, which accepts high bit rate video streams from central servers and transmit them to subscribers. The company�s products for converged wired solutions market also comprise return path demodulators for processing communications between subscribers and the digit al cable infrastructure; and the Terrace family of last-mile gateway products to deliver premium and tailored content, as well as to preserve traditional analog services. Its products for Broadband Wireless market include transmitters and transceivers that process data from routers, switches, and modems for communicating to subscribers over a wireless environment. The company sells its products directly and through distributors to original equipment manufacturers, system integrators, multiple systems operators, cable operators, and other service providers. Vecima Networks Inc. was founded in 1988 and is headquartered in Victoria, Canada.

10 Best Performing Stocks To Own Right Now: Lon.fin & Inv Grp(LFI.L)

London Finance & Investment Group PLC, together with its subsidiaries, operates as an investment finance and management company. It primarily invests in smaller U.K. quoted companies, which are balanced by a general portfolio that consists of investments in U.K. and European equities. The general portfolio includes interest in food and beverage, oil, natural resources, chemicals, and tobacco sectors. The firm is based in London, the United Kingdom.

10 Best Performing Stocks To Own Right Now: China BAK Battery Inc.(CBAK)

China BAK Battery, Inc., together with its subsidiaries, engages in the manufacture, commercialization, and distribution of various standard and customized lithium ion rechargeable batteries. The company offers various products, including aluminum-case prismatic, cylindrical, lithium polymer, and high-power lithium battery cells. Its battery cells are the principal component of rechargeable batteries used to power cellular phones and smart phones; notebook computers, tablet computers, and e-book readers; portable consumer electronics, such as digital cameras, portable media players, portable gaming devices, personal digital assistants, camcorders, and Bluetooth headsets; and electric bicycles, light electric vehicles, hybrid electric vehicles, cordless power tools, and uninterruptible power supplies. The company serves battery pack manufacturers, original equipment manufactures, and replacement battery manufacturers primarily in the People?s Republic of China, Taiwan, Hon g Kong, India, the United States, the Middle East, Italy, Germany, and Turkey. China BAK Battery, Inc. was founded in 2001 and is based in Shenzhen, China.

10 Best Performing Stocks To Own Right Now: Quaterra Resources Inc. (QTA.V)

Quaterra Resources Inc., an exploration stage company, engages in the exploration and development of mineral properties in North America. It primarily explores for gold, silver, copper, uranium, molybdenum, and precious metals in the United States and Mexico. The company was formerly known as Aquaterre Mineral Development Ltd. and changed its name to Quaterra Resources Inc. in October 1997. Quaterra Resources Inc. was incorporated in 1993 and is headquartered in Vancouver, Canada.

Top 5 Growth Companies For 2014

LONDON -- Shares in�Wolseley� (LSE: WOS  ) dipped 3% this morning, shedding over 拢1, as it released its third-quarter figures.�

The fall comes off the back of a decline in its European business, despite the the world's No. 1 distributor of heating and plumbing products seeing good growth in both the U.K. and the U.S.

Like-for-like revenue declined by 7.3% in the Nordic region, 9.2% in France and 4.6% across Central Europe, as construction markets and consumer sentiment remained very weak.�However, the U.K. saw climbs of 5.2%, the U.S. 8.3%, while Canada remained flat.

Chief executive Ian Meakins�commented:

Wolseley continued to make decent progress in the third quarter...�We held our gross margin overall and controlled costs to generate 7.9% trading profit growth in the ongoing business.

Top 5 Growth Companies For 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.

Advisors' Opinion:

• [By Michael]

  OK, so Checkpoint (CKP: 13.80 0.00%) probably isn’t going to see its stock price double in 2011. However, the stock gained 35% in 2010 with earnings expected to climb 13%. Next year, Wall Street sees earnings growth accelerating to 25%. Despite the impressive growth rate, the stock trades at only 16x next year’s earnings estimates and analysts have a $25 price target for CKP.

Top 5 Growth Companies For 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.

Advisors' Opinion:

• [By Paul]  

  They’re back! Two years ago everyone was convinced that Crocs (CROX: 23.33 0.00%) was just a fad, but their stock price exploded in 2010 gaining 206%. Revenues are expected to climb 20% this year and analysts are looking for 27% earnings growth in 2011. That type of growth could make Crocs a hot item again in 2011, especially if they can continue to top Wall Street’s estimates each quarter.

Top 5 Safest Companies To Buy For 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 Kevin1977]

  Director of Nordstrom Inc., Felicia D Thornton, bought 1,140 shares on 9/09/2011 at an average price of $47.89. Nordstrom, Inc. is one of the nation's fashion specialty retailers, with stores located in a number of states, including full-line stores, Nordstrom Racks, Faconnable boutiques, and free-standing shoe stores. Nordstrom Inc. has a market cap of $10.44 billion; its shares were traded at around $47.89 with a P/E ratio of 15.7 and P/S ratio of 1.1. The dividend yield of Nordstrom Inc. stocks is 2% Nordstrom Inc. had an annual average earnings growth of 27.3% over the past 10 years. GuruFocus rated Nordstrom Inc. the business predictability rank of 3.5-star.
  
  On August 11, Nordstrom Inc. reported net earnings of $175 million, or $0.80 per diluted share, for the second quarter ended July 30, 2011. This represented an increase of 20 percent compared with net earnings of $146 million, or $0.66 per diluted share, for the same quarter last year.Second quarter same-store sales increased 7.3 percent compared with the same period in fiscal 2010. Net sales in the second quarter were $2.72 billion, an increase of 12.4 percent compared with net sales of $2.42 billion during the same period in fiscal 2010.
  
  Last week, Director Felicia D Thornton bought 1,140 shares of JWN stock.
  
  Executive Vice President Ken Worzel and Director Philip G Satre bought shares in August.

Top 5 Growth Companies For 2014: CNO Financial Group Inc. (CNO)

CNO Financial Group, Inc., through its subsidiaries, engages in the development, marketing, and administration of health insurance, annuity, individual life insurance, and other insurance products for senior and middle-income markets in the United States. The company markets and distributes Medicare supplement insurance, interest-sensitive and traditional life insurance, fixed annuities, and long-term care insurance products; Medicare advantage plans through a distribution arrangement with Humana Inc.; and Medicare Part D prescription drug plans through a distribution and reinsurance arrangement with Coventry Health Care. It also markets and distributes supplemental health, including specified disease, accident, and hospital indemnity insurance products; and life insurance to middle-income consumers at home and the worksite through independent marketing organizations and insurance agencies. In addition, the company markets primarily graded benefit and simplified issue life insurance products directly to customers through television advertising, direct mail, Internet, and telemarketing. It sells its products through career agents, independent producers, direct marketing, and sales managers. CNO Financial Group, Inc. has strategic alliances with Coventry and Humana. The company was formerly known as Conseco, Inc. and changed its name to CNO Financial Group, Inc. in May 2010. CNO Financial Group, Inc. was founded in 1979 and is headquartered in Carmel, Indiana.

Top 5 Growth Companies For 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.

Advisors' Opinion:

• [By McWillams]

  Wall Street is expecting Thoratec’s (THOR: 30.70 0.00%) growth rate to accelerate to 15% next year with earnings growth of over 20%. That type of growth has Wall Street analysts bullish on the medical device stock. The stock has a consensus price target of $38 and some analysts think THOR could go to $50.

Better Margins Can't Hide Merck's Growth Challenges

In spite of pretty weak top-line results, pharma companies like Merck (NYSE:MRK), Pfizer (NYSE:PFE), and Bristol-Myers (NYSE:BMY) have benefited from a relatively bullish sentiment on healthcare stocks. That sentiment may be petering out, though, and that could make it harder for Merck's stock to outperform. I believe that this company's pipeline strategy (significant quantity, but not necessarily many stars) leads to investors underestimating its potential, but I wouldn't go so far as to think it's a tremendously cheap stock today.

Another Pharma Quarter Built On Margins
Not unlike Pfizer, which also reported on Tuesday morning, Merck's quarter saw weak top-line performance compensated by relatively stronger margin results.

SEE: Pfizer Looking A Little Tired

Revenue fell 11% as reported, or 8% on an operational basis, leading to a minor (2%) miss. Pharmaceutical revenue declined 12% as reported, with slight weakness in Januvia/Janumet (up 5%) and Remicade (up 2%). Although the Januvia franchise is a significant component of revenue (more than 15%), as is the combined Vytorin/Zetia businesses (more than 11%), Merck has relatively fewer big contributors than many of its peers. Outside of drugs, animal health was down 2% and consumer health was down 11%, though the underlying performance there was actually stronger than it appears.

Although Merck recaptured some lost financial momentum with better than expected margins, the absolute performance wasn't great. Gross margin declined 150 basis points, with operating income declining 22% from the year-ago period. Operating margin did beat expectations by about a point, but that would seem to be due in part to lower R&D spending – not exactly a high-qualty beat for a drug company.

Important Data Read-Outs On The Way
Merck gets a lot of flack for its pipeline, but a couple of high-profile data releases could bring a bit more positive attention. Phase 1 data on lambro (the anti-PD1 drug lambrolizumab) in lung cancer should come out in the fall, and positive data here is expected to further clarify the multi-billion dollar potential of this drug outside of melanoma. As a reminder, Bristol-Myers and Merck are early leaders in the PD-1 space, with Roche (Nasdaq:RHHBY) a little further behind but still very much in the race.

Merck is also expected to report interim data on its BACE inhibitor MK-8931 in Alzheimers late this year, and almost any Big Pharma Alzheimers drug garnering a lot of attention.

Are Valuations Keeping Merck On The Sidelines?
Earlier this year, Merck management had talked in such a way that it seemed further licensing deals or acquisitions were very much on the radar as a way of supplementing the near-term business and the long-term pipeline. Not all that much has actually happened in the interim.

Given the bull market in biotech, this isn't entirely surprising. There are certainly companies out there that could make sense – Onyx (Nasdaq:ONXX), Allergan (NYSE:AGN), and Celldex (Nasdaq:CLDX) come to mind – but valuations have gotten pretty step and it's likely a great deal more difficult to find and structure deals today that generate worthwhile long-term returns.

The Bottom Line
I don't think Merck management needs to be in any particular hurry. When the inevitable tumble in biotech valuations arrives, there will be plenty of worthwhile candidates for Merck to pick through, though I do expect some competition from other pharma rivals looking to improve their long-term growth prospects.

SEE: Evaluating Pharmaceutical Companies

In the meantime, Merck is like most pharma companies – relatively weak top-line growth prospects, but still with some potential incremental margin improvement. I do believe the Street is likely too skeptical about the company's pipeline potential, but then I also believe the Street is too bullish about Januvia. All told, I'm looking for very low revenue growth over the long term (but with the potential for upside), as well as very modest free cash flow growth. With the shares worth about $50 today, I wouldn't be in a rush to buy, but there could still be some upside for patient holders.

Disclosure – As of this writing, the author owns shares of Roche.

Hot Performing Stocks To Watch For 2014

On Monday, I explained to readers how a simple trading tool could have shown investors when to sell American Capital Agency (Nasdaq: AGNC) near its peak back in September 2012. And before that I showed readers how the same trading tool could have been used to sell Apple (Nasdaq: AAPL) before its crash started in November.

Today, I want to show you a stock you can buy right now according to the same indicator...

But first, let me explain a little more about this trading tool. It's called relative strength, or RS. I know for many individual investors that may sound overly technical, but it's really very simple.

 

Relative strength is a factor I use to find stocks that are outperforming the market now. You see, value investors often pride themselves on patience. Relative strength helps eliminate the need for this virtue.

Hot Performing Stocks To Watch For 2014: Synta Pharmaceuticals Corp.(SNTA)

Synta Pharmaceuticals Corp., a biopharmaceutical company, focuses on the discovery, development, and commercialization of small molecule drug candidates for treating severe medical conditions, including cancer and chronic inflammatory diseases. The company has two drug candidates in clinical trials for treating multiple types of cancer and various drug candidates in the preclinical stage of development. Its oncology product portfolio includes Ganetespib, an Hsp90 inhibitor in various phase 1, 2, and 3 clinical trail programs for various types of cancers, including non-small cell lung cancer, gastrointestinal stromal tumors, hematologic cancers, colorectal cancer, gastric cancer, small cell lung cancer, ocular melanoma, pancreatic cancer, prostate cancer, breast cancer, hepatocellular cancer, and solid tumors; Elesclomol, a mitochondria-targeting agent in phase 2 clinical trails for non-small cell lung cancer and ovarian cancer, as well as in phase 1 clinical trail for acut e myeloid leukemia; STA-9584, a vascular disrupting agent in preclinical development stage for prostate cancer; and various Hsp90 inhibitors in preclinical development stage for cancers. The company?s inflammatory diseases product portfolio includes calcium release activated calcium modulator (CRACM) channel inhibitors in preclinical development stage for autoimmune diseases, respiratory conditions, and transplantation; and IL-12/23 inhibitors in lead optimization stage for autoimmune diseases. It has a license agreement with Hoffman-La Roche for the development and commercialization of compounds from CRACM. Synta Pharmaceuticals Corp. was incorporated in 2000 and is based in Lexington, Massachusetts.

Hot Performing Stocks To Watch For 2014: Mines Mgt Inc Com Usd0.01 (MGT.TO)

Mines Management, Inc., together with its subsidiaries, engages in the acquisition, exploration, and development of mineral properties, primarily silver, and associated base and precious metals. It principally owns the Montanore property comprising 355 acres and a 5-acre patented mill site consisting of 2 patented mining claims and approximately 825 unpatented mining claims located in Sanders and Lincoln counties in northwestern Montana, the United States. The company also holds working interest royalty in various oil producing wells situated in Kansas. Mines Management, Inc. was founded in 1947 and is based in Spokane, Washington.

5 Best China Stocks To Invest In 2014: ChinaEdu Corporation(CEDU)

ChinaEdu Corporation, together with its subsidiaries, provides educational services to the online degree programs of universities in the People?s Republic of China. It also offers online tutoring services to primary and secondary school students; operates primary and secondary schools; and markets international English language curriculum programs to established learning institutions, as well as international polytechnic programs to vocational schools in China. The company?s online degree programs offer associate and bachelor?s degree programs, including accounting, marketing, finance, business administration, international business, law, civil engineering, education, computer science, literature, project management, marketing, and administrative management. These online degree programs primarily target working adults. Its services also include academic program development, technology services, enrollment marketing, recruiting, student support services, and finance operati ons. The company provides technical, recruiting, and other services for the online degree programs of 27 universities; and technology support services to 7 additional universities that are awaiting regulatory approval to launch their online degree programs. As of December 31, 2010, it served approximately 311,000 online degree programs students, as well as approximately 51,450 students in other businesses. ChinaEdu Corporation was founded in 1999 and is based in Beijing, the People?s Republic of China.

Hot Performing Stocks To Watch For 2014: Nadlan Ord 0.25p(NAD.L)

Namakwa Diamonds Limited, an integrated diamond resource company, through its subsidiaries, engages in the exploration, evaluation, development, and mining of diamond properties. Its flagship project is the kimberlite project covering 19.8 hectares located in Lesotho. The company also maintains alluvial assets in the North West Province of South Africa, as well as exploration and development assets in the Northern Cape of South Africa (alluvial) and Namibia (marine). Namakwa Diamonds Limited was founded in 1979 and is based in Hamilton, Bermuda.

Hussman: Gonna Party Like It’s 1929

Worries about the Federal Reserve retreating from monetary stimulus make little sense as a cause of the market’s recent slide, suggesting other factors are at play, according to John Hussman in his current comment to Hussman Funds shareholders.

Rather, the portfolio manager and former finance manager suggests that sentiment has shifted from risk seeking to risk aversion and reiterates his long-held view that current market conditions match those that have preceded panics and crashes of the past.

Hussman (left) ridicules the view that a hawkish Fed is the cause of the market’s doldrums, saying the Fed actually confirmed its dovishness and that investors “just got a handwritten, perfumed note from Bernanke to keeping buying.”

All the Fed chairman actually said was that, despite a balance sheet that is leveraged nearly 60 to 1 against its capital, “the Fed might possibly reduce the rate at which it expands that position…There was no talk of risks. Not a whisper about diminishing benefits….While QEternity will become QEventualTaper, the Bernanke Fed does not actually contemplate stopping until the unemployment rate comes down.”

Consequently, Hussman argues that other factors—such as credit strains in China or expectations of disappointing earnings—may be spooking investors. “But whatever the reason, investors appear to be shifting from risk seeking to risk aversion,” he says.

And that new mood is consonant with Hussman’s longstanding warning that market history is not on the side of stock market buyers today.

Besides today, Hussman sees just four other times—1929, 1987, 2000 and 2007, none joyous for investors—marked by a combination of deterioration in interest-rate securities, “overvalued, overbought, overbullish conditions” and a broad deterioration in market internals.

Indeed, the former finance professor and fund manager’s reputation got a boost from just such a warning in his July 30, 2007, market comment.

“To believe that the present instance is a good time to accept significant market risk, one has to rely on the premise that this time is different,” Hussman says in his current note, adding that valuations today are “near or above every historic bull market peak except 1929, 2000 and 2007.”

A difference between those crashes and today, however, is that the Fed was tightening whereas today it merely hints of tapering.

Hussman is unimpressed with this distinction:

“The Fed is unlikely to raise its policy rates (Fed funds, discount rate) for years, but it seems unlikely that this will be sufficient to forestall the course of normal bull-bear market cycles. Ask Japan.”

Despite the vulnerability he sees for stocks, the portfolio manager actually put in a good word for bonds, saying their recent sell-off may make them a reasonable investment, “particularly if yields rise further.”

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Check out 4 Ways to Hedge Against a Stock Market Correction on AdvisorOne.

The Wonders Of Convertible Bonds

Top 5 Tech Companies To Watch In Right Now

A convertible bond is a hybrid security that combines features of debt and equity instruments. As the name implies, it is basically a bond that can be converted into common stock of the issuer under certain conditions. A convertible bond (or "convert") can be considered to be a combination of a bond plus a call option on the underlying stock of the issuer. The primary advantage of a convertible bond to an investor is that as a debt instrument, it has a lower level of volatility and a higher degree of safety than the underlying common stock, while retaining some of the upside potential of the common stock. Convertible bonds and convertible debentures are synonymous, since the only difference between a bond and debenture is that the latter is backed by the general creditworthiness of the issuer rather than by any specific assets or collateral.

Why Do Companies Issue Convertible Bonds?
Companies issue convertible bonds or debentures for two main reasons:
To lower the coupon rate on debt – Investors will generally accept a lower coupon rate on a convertible bond, compared with the coupon rate on an otherwise identical regular bond, because of its conversion feature. This enables the issuer to save on interest expense, which can be substantial in the case of a large bond issue. For example, Intel (Nasdaq:INTL) issued $1.6 billion of convertible debentures in December 2005 with a coupon rate of 2.95%, maturing in December 2035. The chip giant notes in its 2012 annual report that the effective interest rate – which is the rate for a similar instrument that does not have a conversion feature – is 6.45%. The convertible debenture therefore saves Intel $56 million in annual interest expense, or a staggering $1.68 billion over the debenture's 30-year life.
To delay dilution: Raising capital through issuing convertible bonds rather than equity allows the issuer to delay dilution to its equity holders. A company may be in a situation where it prefers to issue a debt security in the medium term (partly since interest expense is tax-deductible), but is comfortable with dilution over the longer term because it expects its net income and share price to have grown substantially over this time frame. In this case, it can force conversion at the higher share price (assuming the stock has indeed risen past that level). Convertible Bond Terms
All convertible bonds have common terms that can best be explained with the help of an example. Let's use the example of the Intel debenture mentioned earlier.
Conversion ratio or conversion rate – This is the number of common shares that can be obtained upon conversion of each $1,000 (or $100) of principal amount (or par value) of the convertible issue. The conversion ratio or rate is stipulated in the bond prospectus or indenture. The conversion ratio may be fixed for the life of the bond, or it may vary in accordance with certain conditions as specified in the prospectus. The effective price at which the common shares are obtained is called the conversion price. Conversion price = $1,000 / conversion ratio. The Intel issue had an initial conversion rate of 31.7162 shares per $1,000 principal amount of the debenture, for a conversion price of approximately $31.53 per common share. This conversion rate is adjusted for certain events set out in the prospectus, such as quarterly dividend payments in excess of 10 cents per share to holders of common stock. Thus, the conversion rate was 32.94 (i.e. conversion price = $30.36) on December 31, 2011 and 33.86 (conversion price = $29.53) on December 31, 2012. The conversion rate as of August 2013 was 34.2385 (conversion price = $29.21).
Intrinsic value (or parity) – The intrinsic value of a convertible issue is simply the conversion ratio times the current price of the common stock. Continuing with the Intel example, based on its share price of $22.70, the intrinsic value of the 2.95% convertible issue is $777.21 (based on a principal amount of $1,000). If the principal amount or par value being used was $100 instead of $1,000, the intrinsic value would be $77.72.
Premium – Premium for a convertible issue is the difference between the price at which the convertible bond or debenture can be purchased in the open market (i.e. the ask price) and the issue's intrinsic value. It is calculated both in dollar and percentage terms.The Intel convertible debenture is offered at $106.25 (for $100 par value) or $1062.50 (for $1,000 par value) in 2013. Based on a principal amount or par value of $1,000, the premium in dollar terms is $285.29 ($1,062.50 - $777.21) or about 36.7%.
Cashflow payback – Cashflow payback is expressed in years, and it represents the time period needed to recover the premium paid for the convertible issue, as opposed to investing in the common stock. It is calculated by dividing the conversion premium (in dollars) by the difference between (a) the annual interest income on $1,000 of the convertible bond and (b) the annual dividend income on $1,000 worth of the underlying common shares. Intel pays a quarterly dividend of 22.5 cents, or 90 cents annually in 2013. Based on the stock price of $22.70, Intel has an indicated dividend yield of 3.96%. The cashflow payback in the case of the 2.95% convertible debenture is therefore calculated as follows:

Interest income on $1,000 of the 2.95% convertible debenture = $29.50
Dividend income on $1,000 worth of Intel common shares = ($1,000 / $22.70) x $0.90 = $39.65

Cashflow payback = $285.29 / ($29.50 - $39.65) = -28.1 years

The cashflow payback in this instance is negative because Intel's common stock has a higher yield (3.96%) than the 2.95% convertible debenture (which has a current 2.78% yield or a 2.58% yield-to-maturity). This is a somewhat anomalous situation that is caused by Intel's relatively high dividend yield on the common stock and the low yield on the convertible debenture.

If Intel only paid an annual dividend of 20 cents on its common stock, the cashflow payback calculation would look materially different = $285.29 / ($29.50 - $8.81) = 13.8 years. This figure of almost 14 years represents the amount of time it would take an investor to recover the premium paid for the convertible issue if Intel's common stock only paid an annual dividend of 20 cents.
Call features – This refers to the circumstances under which the issuer can redeem or "call" the convertible issue. In the case of the Intel 2.95% debentures, as of December 15, 2012, the company can redeem all or part of the outstanding issue at 100% of the principal amount of the debentures to be redeemed only if the following condition is satisfied. The common stock price should be at least 130% of the present conversion price for at least 20 trading days during any 30 consecutive trading-day period before the date on which Intel provides notice of redemption. Based on the conversion price of $29.21 in 2013, this means that if Intel trades above $37.97 (130% of $29.21) for at least 20 trading days within a 30-day period, the company can redeem the issue at par. But the odds of Intel reaching that threshold appear rather slim as of 2013, since the stock has traded below $28 for almost the entire time since the debentures were issued except for a brief period in April 2012. Factors That Influence Valuation
The following factors influence the valuation of a convertible bond: Conversion price – the nearer the price of the underlying stock to the conversion price, the more expensive the convertible bond. As the stock approaches the conversion price, the embedded call option becomes more valuable. If the stock is trading far above the conversion price, the convertible will trade in line with the underlying stock. Conversely, if the stock is trading far below the conversion price (in which case the issue is known as a "busted convert"), the convertible will trade as a straight bond, since the embedded call option will have close to zero value. Volatility of the underlying stock – Just as higher volatility increases the price of a call, if the underlying stock is volatile, the embedded call option will increase in price and push up the price of the convertible. Credit rating changes – Since a convert is basically a debt instrument, credit rating changes are directly related to its price, especially if the issue is a busted convertible. Credit rating upgrades will increase the price of the convertible issue, while credit downgrades will lead to a price decline. Changes in interest rates – Similar to conventional bonds, convertibles display an inverse relationship with changes in interest rates. Applications of Convertible Bonds
Hedge funds and sophisticated investors employ a common arbitrage strategy that involves buying the convertible bond and shorting the underlying stock. This enables them to pocket the difference in yields between the bond and the stock, while hedging much of the risk. Of course, this strategy would not work if the yield differential is negative, as was the case with the Intel example cited earlier.

Convertible bonds are also suitable for investors who want a debt instrument that retains an element of equity upside. While convertible bonds and debentures are generally junior or subordinate to senior debt, they still rank higher than common equity in terms of claims on a company's assets. The major source of their appeal is that they perform well when equities are in a bull market, but mitigate downside risk during equity bear markets because of their bond characteristics.

Major drawbacks of convertible issues are that they are somewhat complicated to evaluate, and many of them are issued by companies with less-than-stellar credit ratings. It is also difficult to make a case for them during periods of abnormally low interest rates, when numerous stocks have bond yields that are lower than their corresponding dividend yields.

Conclusion
While most convertible issues are traded on an exchange in Canada, they generally trade over-the-counter in the U.S. Convertible bonds have a place in most diversified portfolios because of their hybrid nature that combines debt and equity features.

Bank RD good investment tool for short term: Optima Money

According to him, with around 9% annual returns on these deposits, it can be a very good instrument for accruing assured return. Along with this, an investor can strengthen the portfolio with a certain amount of money in gold savings funds.

Below is the edited transcript of the interview on CNBC-TV18.

Q: Investor wants to invest Rs 10,000 per month for two years. She has got a short time horizon. What's the advice?

A: Because you want to invest only for two years, I will not recommend you to invest in equity mutual funds. If your goal is child education after two years, you need some assured return instrument. I advise you to invest in bank recurring deposits because banks are nowadays offering around 9% annual return on a two year term.

Out of Rs 10,000, if you invest Rs 7,000 in bank RD and Rs 3,000 in a gold saving fund, though mutual fund returns are not assured, still if you expect an average return of 10% from your portfolio you can accumulate around Rs 265,000 in two years.

As you said, your goal is around Rs 500,000. For that, you will have to invest around Rs 19,000 per month. Since the time horizon is very small, you should avoid equity and if you are not comfortable due to any reason in bank RD etc. then some bond funds can be a choice.

Q: Would you want to make some specific names of funds to her?

A: Yes, in gold saving funds she can invest in Reliance Gold Savings Fund or Kotak Gold Fund . But if she wants to take a decision on bond fund then it maybe SBI Dynamic Bond Fund .

Q: Investor wants to invest a lump sum of Rs 200,000. He is expecting returns of 20-25%. He has two years timeframe. That's a tall order. Will that be manageable?

A: No. For 20-25% returns I cannot suggest any instrument. He can just try in the stock market. Maybe some good stocks where he can expect some good returns, in stocks which are undervalued.

It's a different thing, but my suggestion is if he wants a good investment instrument for two years, he can go for some mutual fund fixed maturity plan.

Q: That is what 11%, what would you get in that?

A: With around 10% per annum on fixed maturity plan for two years horizon, in the next two years he can get a CAGR of 10%. But, he is saying over 24%. I think he expects 24% in one year. That is something which is not possible.

Whenever these come, it is in the name of fixed maturity plans only and any mutual fund which launches. For example, if it's HDFC then it will be HDFC Fixed Maturity Plan. It will be series A, B, C, D or 1, 2, 3, 4 something like that. These are close-ended funds. He can buy whenever these are offered.

Texas Instruments Just Out Of The Starting Blocks

I'm not going to say that every part of the semiconductor space is back on track, but the earnings and guidance that coming suggests that things are getting better outside of consumer electronics and PCs. That's good news for Texas Instruments (NYSE:TXN), particularly as the company is seeing stronger conditions in industrial and auto markets and better margins in the wake of moving on from wireless. Although the stock does not look cheap on a cash flow basis, I do believe the company's margin leverage, and subsequent improvements in ROE, are likely to send the shares higher over the next 12 to 24 months.

On Target In Q2, But With Some Positive Underlying Drivers
Given that Texas Instruments provides mid-quarter updates, big surprises in reported earnings are relatively rare for Texas Instruments, and this quarter was no exception. That said, there were some positive details to note, and guidance sounded pretty encouraging to me.

Revenue fell 9% from the year-ago level, but rose 6% sequentially. Analog sales fell 3% and rose 6% over those periods, while embedded revenue rose 7% and 10%. It's too bad that Texas Instruments doesn't break out its end-market revenues, but management did indicate that there was strength in HPA, SVA, and MCU in the industrial market and ASSP, OMAP, and DLP in automobiles.

SEE: Semiconductor ETFs For 2013

I think it's important to take note of the margins that Texas Instruments reported. Between improving utilization and the run-off of the lower-margin wireless business, gross margin improved two points from last year and almost four points sequentially, and I believe that with Analog Devices (NYSE:ADI), Texas Instruments has a lot to gain from margin leverage. On the operating side, TI reported that operating income rose 52% and 129%, with operating margin improving almost 12 points and 16 points.

Is It The Markets Or The Products?
TI's results, particularly in industrial and autos, should be encouraging for other companies like Atmel (Nasdaq:ATML), Linear (Nasdaq:LLTC), Analog Devices, Freescale (NYSE:FSL), and NXP (Nasdaq:NXPI). The one "but" I would offer is the question of market share growth. TI management believes that the company has been gaining share in growing auto chip markets like radar (blind spot detection), and some industrial categories as well.

Nevertheless, I do believe the auto and industrial markets are recovering, though various consumer markets remain a little weak. At the end of it all, TI did report 6% sequential order growth and a book-to-bill above 1 (1.03), so I do believe the recovery is starting.

Stepping Away From Wireless
As mentioned before, TI has largely moved out of the wireless business, as the company found the growth and margins available in the market to be comparatively unattractive. Going a step further, the company announced that it had reached an agreement to transfer some wireless connectivity IP to one of its former chip customers. There was no mention of the acquiring company, but the rumors seem to center on Apple (Nasdaq:AAPL), though that could simply be a result of the fact that most rumors seem to eventually involve Apple. If it is Apple, that's not exactly good news for Broadcom (Nasdaq:BRCM), but I don't think it's a major thesis-changing event.

The Bottom Line
I do believe that TI has the opportunity to see significant gross margin expansion over the next year or two, as improving chip end markets lead to higher utilization. With that, I see most of the gross margin leverage flowing through to the operating line and free cash flow, so I believe TI's free cash flow could accelerate relatively rapidly.

Assessing that in terms of the stock is more challenging. On a discounted cash flow basis, even the assumption of a new peak in free cash flow margin isn't really enough to get the fair value much above $35 unless you believe the semiconductor market is somehow going to become non-cyclical again.

Turning to a different, more controversial methodology, the company's ROE and price-book suggest that the shares could still have room to run. There is a pretty good correlation over time between ROE and P/B, and as TI's margins improve, so too will the ROE. Assuming that TI's ROE can move into the low-to-mid 20%'s in the coming years, the P/B ratio could move to around 5x, suggesting meaningful upside for the shares during this rebound/recovery.

I realize that many readers will scoff at the idea of valuing a tech stock on the basis of price/book, but I would ask them to run their own historical correlation studies among S&P 500 and Nasdaq 100 stocks and see if they don't see similar relationships. As a result, while it's hard for me to say that Texas Instruments is a "traditional buy", I do see a way for the shares to continue to appreciate from here.

HSIC to Shed Unprofitable Stake - Analyst Blog

5 Best Safest Stocks For 2014

Leading global distributor of healthcare products and services, Henry Schein Inc. (HSIC) disclosed the divestiture of its investment in a dental wholesale distributor in the Middle East. This reflects the company's strategy to focus on areas with high growth potentials.

The Middle Eastern wholesale distributor served as an importer for Henry Schein that supplied offerings to other distributors. The company anticipates a one-time charge of $11-$13 million (13-15 cents) in the third quarter of 2013 from the divestment of its unprofitable, non-controlling interest in the entity.

Henry Schein will accordingly report third-quarter results after adjusting the impact of the one-time expenses associated with the divestment. The current Zacks Consensus Estimate is pegged at $1.20 per share, reflecting growth of 11.53% year over year.

As an entity that supplies healthcare products and services to office-based dental, medical and animal health practitioners worldwide, Henry Schein believes that the divestment will increase focus to office-based practitioners that serves as the company's primary customer base.

This underscores Henry Schein's commitment to serve the needs of office-based dental practitioners, schools and other institutions, its target market. We expect the company to sharpen focus on other high-growth geographies like the U.S., Australia and New Zealand. However, the European economy remains an overhang for Henry Schein.

Henry Schein continues to focus on its core dental business. Last month, the company's U.S. dental franchise Henry Schein Dental entered a distribution partnership with Carl Zeiss Meditec Inc. to distribute the well-regarded portfolio of ZEISS dental microscopes and loupes.

Henry Schein should be aware of similar advances made by peers in the industry. Recently, Patterson Companies Inc. (PDCO) inked a strate! gic distribution agreement with Sirona Dental Systems Inc. (SIRO). Henry Schein needs to take note of moves made by such strong rivals. The industry is plagued by pricing pressure and competitive tussle for market share gains.

Henry Schein carries a Zacks Rank #3 (Hold). Other stocks such as Align Technology Inc. (ALGN), carrying a Zacks Rank #2 (Buy) is likely to do well.

Best performing asset classes of 2012: Equity or currency?

Here is a quick look:

Equities: The kind of fund flows amounting to USD 23.5 billion makes the Nifty as an outperformer. In absolute terms of rupee Nifty has moved 27-28 percent (in 2012) and 22 percent in dollar terms. That is seconded by MSCI Asia Ex-Japan which has gained about 21 percent. This is not a year of divergence where emerging markets have outperformed and developed markets have been behind. As you can see the Nikkei has been on the radar for the last few sessions because of the Bank of Japan (BOJ) easing prospects, but on 2012 basis in terms of dollars Nikkei is up only 7 percent.

Currencies: The USD-JPY has given a return of 10 percent. So that is something you need to factor in. In terms of the Euro-Dollar we have seen a marginal gain, it is just about 1.5 percent. The Dollar Index has actually slipped about 0.5 percent or largely in flat territory, but USDINR after a huge move last year seen another weakening of about 4 percent this time around.

Lucky 13! Stocks that can cheer your portfolio next year

Bond Markets: Aside of equities if there was potential in something giving you very good returns; it was those high risk bond markets which actually gave you a lot of rally. ML High Yield Bonds are giving 19 percent, that gives even developing market (DM) equities a run for money. Next up is German 10 year bond that is 8.5 percent and the Spanish 10 year bonds despite all the concerns are giving an 8 percent returns. In comparison the US bond market gave a 4 percent return whereas the Japanese 10 year bond for obvious reasons is giving a negative return of about 5.5 percent.

Commodities: Commodities have been in focus but it has been a slightly range bound year. The CRB Index itself is down 4 percent because of soft commodities this time around. This time gold is still up 6 percent despite all the fall in terms of dollars, although it has broken down on the range. Copper is up 3 percent while Brent Crude very flat, up just 1 percent at this point.

Why Clients Fire Financial Advisors

Best China Stocks For 2014

Rita Gunther McGrath, an
 Associate Professor
 at the Columbia University Business School, knows a thing or two about numbers and performance. When she didn't like the numbers and performance she was seeing from her financial advisor, she took a simple, direct step – she fired her advisor.

"It was really all about poor performance," McGrath says. "I was with them for seven years and ended up with less money than I had sent to them. Honestly, I'd have been better off leaving it sitting in a bank account."

McGrath said her advisor had a poor understanding of her needs. "I'd go to these meetings with them and it was all pie charts and mumbo jumbo about portfolio diversification, investment horizons and technical stuff."

"What I needed (and eventually found) was someone to relate the financial side of life to ... well, life! Things like what our goals are, what are the big decisions that need to be made, have you taken care of your estate plans, can you get my husband and I in a room to have sometimes-difficult conversations, that sort of thing."

Not an Isolated Case
There are no hard and fast numbers on how often clients fire their financial advisors, but it's an issue on the radar screen of financial services professionals and certainly on the radar screen of their investment clients. But what are the primary drivers that cause clients to pull a Donald Trump on their investment advisors? McGrath adds lack of proactivity and lack of candor to the mix.

"After years of losses, do you think they would call me and have a conversation?" she asked. "No, it was radio silence for years. I decided enough already. And when I finally pulled my account and cited the poor performance, the response was 'but your husband's account did well …' instead of acknowledging the under-performance in my account and being forthright about it," she adds.

Kalen Holliday, communications director at Covestor, a marketplace for investors to find the right financial advisor, says she hears from dissatisfied financial advisory clients all the time – mostly after they just fired their advisor. "We hear it all," she says. "People complain about opening an account and then never hearing from the advisor, or feeling like they were overlooked for "only" having $500,000 in investment funds."

If investors have these experiences and if they feel like they're being spoken down to, or worse not listened to, they'll let that advisor go, says Holliday. "The bottom line is people want personal attention, plus decent performance and when they lack one or the other or both, they should fire their advisor," she adds. "If you haven't heard from your advisor recently, what are you paying him for?"

The Top Reasons Investors Fire Their Financial Advisors
Covestor.com offers a list of primary "deal breakers" that cause investors to pull the plug on their advisors: Performance: Clients are sick and tired of paying high fees for lousy performance and they aren't going to take it anymore.
Lack of Attention from Advisors: They don't call, they don't write, they pretty much evaporate when the Dow is down.
Fees: When clients are getting high returns, high fees won't make them wince. In today's economic environment, people are looking to cut costs; firing an adviser who isn't providing what they promised, is an obvious choice. Human interaction is another big reason why clients take a walk, says Jason Laux, vice president of Synergy Financial Group, a Pittsburgh-based investment advisory firm. "The primary reason clients fire a financial advisor is lack of personal touch," Laux explains. "Clients can tolerate the ups and downs of the market, changing economic whirlwinds and an erratic interest rate environment if, and only if, they feel that their advisor is monitoring the situation and keeping them informed."

But nobody wants to be in the dark when it comes to their money, especially in troubling times. "Just knowing a plan is in place and that they are being cared for will provide the reassurance needed to maintain and build a strong working financial relationship," he says.

Importance of Realistic Expectations
Gregory Gallo, Co-Founder of The Opus Group, a Red Bank, N.J advisory company, says another big reason why clients fire their advisors is "overselling" their abilities. "Overpromise and under deliver, that's a big one," he offers.

"In my 16 years in the business, I have heard many advisors in an effort to "win" business, make statements to prospective clients that ultimately prove too good to be true." The obvious example, he says, is performance; telling a prospect that he will outperform the "market" is just setting the client up for disappointment. "When a client feels like they have paid good money for that underperformance, they simply leave," he says.

Other investment experts agree with that sentiment, adding that setting unrealistic expectations are linked to poor communication skills among advisors. "Promising investors returns that are way above market, and then not delivering on them, is a surefire way to lose clients," says Bill Hammer, Jr., a principle founder of the Hammer Wealth Group, a Melville, New York wealth management firm.

The Bottom Line
Failing to communicate with clients is the underlying problem, Hammer says. "Clients don't necessarily fire advisors only because of performance, but rather because the advisor never communicates with them. Failure to communicate leads to poor investor behavior (like buying/selling at wrong time) as well as a feeling that the advisor is "asleep at the wheel". Hammer adds that during inevitable disappointing periods of performance, it is crucial for advisors to communicate with their clients, even though many pass on that advice and risk losing their clients in the process – Donald Trump-style.

Is Bing Really Better Than Google Search?

With shares of Microsoft Corporation (NASDAQ:MSFT) trading at around $34.85, is MSFT an OUTPERFORM, WAIT AND SEE or STAY AWAY? Let's analyze the stock with the relevant sections of our CHEAT SHEET investing framework:

C = Catalyst for the Stock's Movement

Google.com is the most visited website in the world. On Alexa.com, it ranks #1 globally and #1 in the United States. Bing.com ranks #16 globally and #6 in the United States. That's probably higher than most readers would have expected.

There's a good chance that you have seen commercials for Bing It On. In these commercials, someone approaches a stranger on the street and asks them to compare Google and Bing search engines. Of course, the strangers can't see which site is which when they make their choices. After wondering if these commercials were legit, and since a Microsoft article was on deck, it made sense to take an individual stab at Bing It On. It's set up as a split screen. You type in a search term and two different sets of results come up. You then select which search result you felt was more informative, or simply which search result you liked better. The left and right search results don't always belong to the same search engine. In other words, Google won't always be on the left. The results are mixed so the person taking the challenge won't notice which site is which and then keep voting that way due to favoritism. You type in five different search terms and then choose which search results you prefer. As far as individual results go, Bing won 4-1. Pretty impressive! However, Google's numbers are still much stronger.

According to Alexa.com, Google's average pageviews-per-user is 16.01, average time-on-site is 15:25, and average bounce rate (only one page viewed per visit) is 16.80 percent. These numbers are outstanding. Over the past three months, pageviews-per-user has increased 7.02 percent, time-on-site has increased 4 percent, and the bounce rate has declined 1 percent.

Bing's average pageviews-per-user is 4.64, average time-on-site is 3:20, and average bounce rate is 40.4 percent. Over the past three months, pageviews-per-user has increased 1.50 percent, time-on-site has declined 2 percent, and the bounce rate has declined 2 percent. Overall, these are good numbers. They're just not as good as Google. That said, Bing has been gaining at least a little ground. Bing’s traffic has consistently increased over the past two years.

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Microsoft has revealed its Xbox One, which is aimed for living room dominance. It's an all-in-one entertainment system that can allow you to:

Play games Watch television Use voice command Make Skype video calls

It's a great concept, but Microsoft's strategy is missing something. It's understood that the company is aiming for a young audience in order to hook that audience on its products for years to come, but using a gaming console to rule the living room simply isn't going to lead to phenomenal potential. For instance, would your aunt want a gaming console as the main source of entertainment for her living room? She would likely be turned off by the idea.

Now let's get to some numbers. Below is a chart comparing fundamentals for Microsoft, Apple Inc. (NASDAQ:AAPL), and Google Inc. (NASDAQ:GOOG).

	MSFT	AAPL	GOOG
Trailing P/E	17.98	10.49	27.14
Forward P/E	11.35	9.96	17.06
Profit Margin	21.58%	23.46%	20.92%
ROE	22.58%	33.34%	16.36%
Operating Cash Flow	30.61B	55.26B	16.56B
Dividend Yield	2.60%	2.80%	N/A
Short Position	1.30%	4.40%	1.50%

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Let's take a look at some more important numbers prior to forming an opinion on this stock.

T = Technicals Are Strong

Microsoft has outperformed its peers year-to-date.

	1 Month	Year-To-Date	1 Year	3 Year
MSFT	17.90%	32.48%	20.71%	40.77%
AAPL	14.51%	-15.48%	-19.15%	87.27%
GOOG	13.39%	28.22%	47.69%	92.13%

At $34.85, Microsoft is trading well above its averages.

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50-Day SMA	31.46
200-Day SMA	28.58

E = Equity to Debt Ratio Is Strong

The debt-to-equity ratio for Microsoft is stronger than the industry average of 0.30. Microsoft has always managed debt well. This is often underappreciated by investors.

	Debt-To-Equity	Cash	Long-Term Debt
MSFT	0.19	73.79B	14.76B
AAPL	0.00	39.14B	0.00
GOOG	0.10	50.10B	7.38B

E = Earnings Suffered a Setback

Earnings had been improving until there was a setback in 2012. However, earnings are a lot easier to fix than revenue. As far as revenue goes, it has consistently improved on an annual basis. The rate of growth has been sporadic, but the direction has been consistent.

Fiscal Year	2008	2009	2010	2011	2012
Revenue ($) in millions	60,420	58,437	62,484	69,943	73,723
Diluted EPS ($)	1.87	1.62	2.10	2.69	2.00

When we look at the last quarter on a year-over-year basis, we see improvements in revenue and earnings.

Quarter	Mar. 31, 2012	Jun. 30, 2012	Sep. 30, 2012	Dec. 31, 2012	Mar. 31, 2013
Revenue ($) in millions	17,407	18,059	16,008	21,456	20,489
Diluted EPS ($)	0.60	-0.06	0.53	0.76	0.72

Now let's take a look at the next page for the Conclusion. Is this stock an OUTPERFORM, a WAIT AND SEE, or a STAY AWAY?

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Conclusion

Microsoft is currently trading at about 18 times earnings while the industry average is 26 times earnings. As always, margins are solid and cash flow is strong. The 2.60 percent yield wouldn't make any sane investor complain, and the stock has even outperformed Apple and Google year-to-date. Analysts like the stock: 17 Buy, 19 Hold, 2 Sell.

LINN Energy Is Close to Closing Its Massive Oil Deal

Investors in LINN Energy (NASDAQ: LINE  ) have been rattled lately as bears have been bashing the company's units. To top it off, those units were hit again last week as rumors began to surface that the complex deal with its affiliate LinnCo (NASDAQ: LNCO  ) to buy Berry Petroleum (NYSE: BRY  ) was being delayed. The big concern is that the deal might fall apart, which would be a major blow to the company.

To alleviate these concerns the three companies put out a joint press release last week which updated investors on the timing of the deal. Instead of closing by June 30 as originally planned, the closing is being pushed back into the third quarter. One of the delays is due to the Registration Statement Form S-4 remaining under review by the Securities and Exchange Commission. LINN, LinnCo, and Berry needed to file a second amendment to that Form S-4, which was just filed June 4.

Once the registration statement is approved by the SEC it will bring LINN, LinnCo, and Berry one step closer to completing the $4.3 billion deal. Following that, investors of all three companies will need to vote on a number of items, including approving the deal. Once the deal is approved by investors, the companies can complete this multi-step process.

This is an important deal for LINN to close; not only is this the company's largest one so far, but it's the first time LINN has attempted to purchase a C-Corp. The company has made it clear that it intends to use LinnCo's shares as acquisition currency to pursue additional purchases of C-Corps in the future. If the deal derailed now it would certainly be a big setback for LINN's acquisition growth plans.

Not only that, but Berry Petroleum adds premium assets to LINN's portfolio. Berry has about 1.65 trillion cubic feet of natural gas equivalent of proved reserves. About 67% of its reserves is oil, 26% is natural gas, and the rest is natural gas liquids. Further, about half of Berry's production is in California, while just under 20% of its production is in the oily Uinta Basin, which is a new operating area for LINN. Finally, there is substantial upside to Berry's portfolio as probable and possible reserves are estimated at 3.8 trillion cubic feet of natural gas equivalent.

The current uncertainty in the market for LINN and LinnCo offers investors a pretty compelling buying opportunity. While the Berry deal is being delayed by a few weeks, I have no doubt that it will close. Once it does, LINN will have a better understanding of how to use the deal as a template to further consolidate mature oil and gas assets. As it does, the company can grow its secure – soon to be monthly – payout to investors. 

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LINN reminds me of another MLP that offers investors multiple ways to invest: Kinder Morgan. Kinder Morgan is a midstream operator, one that investors should commit to memory due to its sheer size – it's the third-largest energy company in the U.S. – not to mention its enormous potential for profits. In The Motley Fool's premium research report on Kinder Morgan, we break down the company's growing opportunity – as well as the risks to watch out for – in order to uncover whether it's a buy or a sell. To determine whether this dividend giant is right for your portfolio, simply click here now to claim your copy of this invaluable investor's resource.

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Why Bank of America's Continued Rise May Spark New Improvements

Yesterday saw Bank of America (NYSE: BAC  ) touch a new two-year high after it rose 2.6% in trading, while the KBW Bank Index (DJINDICES: ^BKX  ) rose only half that. This morning, the bank is on the rise again, with a gain of 0.7% just after 10:30 a.m. EDT. A few legal developments have not held back the bank in its trek skyward, but without any new opportunities to distract investors from the ongoing courtroom battles, the bank may not hold on to these gains much longer.

New York state of mind
B of A just got news that it needs to head back to the New York court system to face an ongoing legal dispute with U.S. Bancorp (NYSE: USB  ) . Though the case involves a small number of loans that Countrywide sold to U.S. Bancorp and will likely be settled, its just one more example of the financial crisis haunting the bank.

This week was supposed to be a big one for the bank, as a hearing was scheduled to review the terms of an $8.5 billion settlement with investors in a case that could cost B of A much, much more if the settlement is rejected. But unfortunately for the bank and its investors, who would like to get this matter resolved, the hearing date has been rescheduled for Monday.

And if those two matters aren't enough, there's more activity coming out of the NY Attorney General's office regarding allegations against B of A and Wells Fargo (NYSE: WFC  ) that the banks violated terms of last year's $25 billion mortgage settlement. At this point, the bank may be wishing for some way to just make these messes disappear.

Incentives
Part of today's rise may stem from CEO Brian Moynihan's steadfast vow to increase cross-selling within the various branches of Bank of America's operations. As a way to increase exposure to customers and generate more revenue, cross-selling would be an opportunity for the bank to continue its climb back to full operating strength.

But Moynihan's plan is seeing opposition from within as Merrill Lynch money managers are weary of sending their clients into the bank's main division for services like a mortgage, only to be denied or become subject to B of A's world famous customer service. Since the cross-selling will now have an effect on the Merrill Lynch branch managers' annual bonuses, there may be more efforts to reign in the negative reputation of B of A's service and focus on improvements, but so far, previous efforts haven't worked. Maybe since there's money on the line for someone within the bank, the problem will finally get the kick in the pants it needs.

Another day
With more legal troubles hovering over the bank, it's a wonder that the share price continues to rise. But as a long-term investor, you know that the pressing matters in court neither dictate the performance of the bank, nor affect its fundamentals. With that in mind, the bank's improvement since the financial crisis warrants the type of market attention its been receiving. And Moynihan's new pressure to make cross-selling work could help boost the bank even further. 

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What's Getting Hacked Now? Your Phone, Your TV and Your Toilet

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Blend Images, John Lund/Getty Images Think you're immune from hackers just because you've got an updated antivirus program on your computer? Well, think again. Hackers are regularly finding new and innovative ways to break into the various connected devices in your life. And security researchers are always publishing research demonstrating strange new methods that a determined hacker could use to invade your life. Here are a few of the terrifying threats we've come across lately. Hacking Your TV to Spy on You In the wake of revelations about the NSA's domestic surveillance programs, some observers expressed concern that the agency could compel Microsoft to use the camera attached to the new Xbox One to spy on users in their living rooms. But it turns out you don't need to be a government spook to watch people through their TVs. At last month's Black Hat security conference, researchers showed vulnerabilities in Samsung "Smart" TVs (which have Internet connectivity, webcams and other computers-like features) that could allow a hacker to take control of the television. And on Sunday, Sen. Chuck Schumer (D-NY) called for security standards to make sure that hackers couldn't use the built-in webcams to watch you while you watch TV. So if you don't want hackers watching you sit on the couch in your underwear, take the advice that the Black Hat researchers gave Mashable: "When in doubt, there's always a piece of tape or a post-it you can put on the camera." Hacking Your Phone Through a Charger If you've ever been stuck in an airport with your phone battery reading 10 percent, the sight of a charger plugged into a wall can look like an oasis in a desert. But wait! Is that really a charger? Not necessarily. Another demonstration at Black Hat showed an iPhone charger that was actually a micro-computer in disguise.

Plug in your iPhone and the tiny computer could upload a fake Facebook app that looks like the real thing but is capable of accessing your contacts and stealing your passwords, among other mayhem. Apple has promised to fix the vulnerability -- but not until its next operating system, iOS 7, comes out sometime this fall. In the meantime, be wary of any chargers you see lying around. Hacking Your Toilet OK, probably not toilet, assuming you have a regular toilet that relies entirely on pipes and water and doesn't have electrical components. But one brand of pricey, high-tech toilet is apparently prone to being hacked and remotely controlled. For some reason, the Satis Toilet has a mobile app that can control certain functions of the toilet over Bluetooth -- raising and lowering the lid, flushing, and even operating the bidet. But it turns out that the app isn't password protected, which means anyone in the vicinity of your toilet who has the app could make the toilet go crazy. Since there's no apparent financial benefit to flushing someone else's toilet, we're guessing hackers aren't lining up to take advantage of this. Still, turning on the bidet while your roommate is sitting on the toilet would be a great prank.

Profiting From the Battle for the Future of Television: Part 2

As more and more people are cutting the cord when it comes to home entertainment, competition in the industry has never been more intense. Broadcast gave way to cable before satellite became an option, and now technology is driving the fight and offering an increasing number of choices. Four identifiable segments are beginning to emerge: cable and satellite, streaming video, TV enhancement, and advanced options.

In Part 1 of this series, I examined the traditional players -- including cable and satellite providers, as well as communications companies that have begun to get into the game. Today, I'll examine the various streaming video options. There is some overlap in certain cases, but by understanding each segment individually, you'll get a clearer picture of the overall industry.

The streaming video players
Netflix (NASDAQ: NFLX  ) : As the first mover in streaming video, Netflix has a clear advantage over its competitors. Netflix stock has taken investors on a roller-coaster ride over the past few years. In 2011, shares were trading just below $300 when the company announced the massive price increase and the bifurcation of the DVD business. Netflix stock became a case study in how to kill the golden goose, seeing the stock drop to just over $60 last fall. The stock is now knocking on $250 again.

As a first mover, Netflix has the ability to not only continue build a significant subscriber base but also to forge critical strategic partnerships and iron out glitches. Recently, Netflix announced user profiles that will allow as many as five users per account to customize recommendations and preferences. The company is working toward constantly improving the user experience.

What CEO Reed Hastings is really doing right, and another reason Netflix is strongly positioned among streaming video competitors, is producing original content. In the entertainment business, content is king. While some critics have observed that Netflix has had mixed success with its original shows, it's moving in the right direction. Furthermore, the move by Hastings indicates that the CEO understands the importance of content in the long-term success of streaming video.

Amazon.com (NASDAQ: AMZN  ) : Amazon Prime is currently the most significant competitor to Netflix in the streaming space, and this year saw the fight intensify. Not only did Amazon aggressively go after some of the licensing deals that had once belonged to Netflix -- remember, Amazon has a significantly larger balance sheet to play with -- but it has also ramped up its own original production effort. Amazon recently announced that it's putting six more pilots into production, most with a focus on kids' programming -- including a pilot aimed at 6- to 11-year-olds and a first-ever live action show.

According to a recent study from NPD Group, Amazon has made real inroads: In the first quarter of 2012, Netflix had 76% of single-subscription households; that number fell to 67% in the first quarter of 2013. The study also found that 10% of households now have subscriptions to both Netflix and Amazon Prime. Furthermore, Amazon has added 11,000 titles in 2013 to bring its library to roughly 41,000 titles.

One of the advantages for Amazon, and its customers, is that the $79-per-year membership gives you free two-day shipping on most Amazon products. This means that Amazon can appeal to consumers for reasons beyond home entertainment. When mixed with the depth of its wallet, Amazon is well positioned to push Netflix.

Redbox Instant: This joint venture between Outerwall (NASDAQ: OUTR  ) and Verizon (NYSE: VZ  ) is the newest addition to the streaming video battle. The new service gives you access to a distinct number of rentals at Redbox kiosks plus access to the 5,000 titles currently available. CEO Scott Di Valerio explains that where Redbox is the outer wall of old video stores (where new releases were displayed), the streaming service fills in the center of the store (older titles). While the service is in its infancy, one angle that could be a game-changer for Redbox Instant is mobile. With Verizon as a JV partner, you can imagine that Redbox Instant could be the first streaming video player to truly make the jump to mobile. Netflix, for example, is available on most mobile devices, but the data usage is significant. If Verizon chooses to offer Redbox Instant to its wireless customers, while giving them a break on data, this could change the landscape.

But how do you profit?
All three of these options offer a solid investment outlook and could be worth owning -- each for different reasons. Netflix is ahead of the pack, although the stock seems like it's getting pricey at current levels. Longer-term, however, it's adding subscribers, and that's the key. Amazon has the balance sheet to "steal" content from its competitors, so watching key licensing battles will be critical. Redbox Instant is still early in the game, but the Verizon angle has potential. Until a clear winner emerges, a balanced allocation to all three options is the most conservative approach. Long term, it will be key to watch the content issue to determine whether streaming video profits can hold up.

Please look soon for the next parts of this series that will focus on the other two segments, and then consider the industry as a whole.

As the battle for the future of television continues, you should learn all you can about each of the companies involved and how each differentiates itself. Beyond following this series, you may want to check out The Motley Fool's shocking video presentation that reveals the secret Steve Jobs took to his grave and explains why the only real winners are these three lesser-known power players that film your favorite shows. Click here to watch today!

The Gory Details on Windstream's Double Miss

Windstream (Nasdaq: WIN  ) reported earnings on May 9. Here are the numbers you need to know.

The 10-second takeaway
For the quarter ended March 31 (Q1), Windstream missed slightly on revenues and missed estimates on earnings per share.

Compared to the prior-year quarter, revenue dropped slightly. Non-GAAP earnings per share dropped significantly. GAAP earnings per share contracted significantly.

Gross margins were steady, operating margins shrank, net margins shrank.

Revenue details
Windstream chalked up revenue of $1.50 billion. The 13 analysts polled by S&P Capital IQ expected to see revenue of $1.53 billion on the same basis. GAAP reported sales were the same as the prior-year quarter's.

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

EPS details
EPS came in at $0.10. The 17 earnings estimates compiled by S&P Capital IQ predicted $0.11 per share. Non-GAAP EPS of $0.10 for Q1 were 23% lower than the prior-year quarter's $0.13 per share. GAAP EPS of $0.09 for Q1 were 18% lower than the prior-year quarter's $0.11 per share.

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

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Margin details
For the quarter, gross margin was 54.4%, much about the same as the prior-year quarter. Operating margin was 16.4%, 150 basis points worse than the prior-year quarter. Net margin was 3.5%, 70 basis points worse than the prior-year quarter. (Margins calculated in GAAP terms.)

Looking ahead
Next quarter's average estimate for revenue is $1.53 billion. On the bottom line, the average EPS estimate is $0.10.

Next year's average estimate for revenue is $6.11 billion. The average EPS estimate is $0.43.

Investor sentiment

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Windstream is hold, with an average price target of $9.73.

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