Confused? Bad News Sends the Dow Higher

Ever since the Federal Reserve announced its preliminary plans to exit its quantitative-easing program, investors have changed their previous views that the Fed wouldn't do anything that would allow the economy to slip back into recession. Today, though, some of the old enthusiasm came back into the market after first-quarter GDP was revised from 2.4% down to 1.8%, inspiring confidence that the Fed won't start tapering its bond-buying program as soon as many had feared. With the old "bad news is good news" paradigm seemingly back in effect, the Dow Jones Industrials (DJINDICES: ^DJI  ) has posted a triple-digit gain in early trading, up 106 points at 10:55 a.m. EDT.

Among Dow stocks, Boeing (NYSE: BA  ) has powered the Dow's gains, rising more than 2% after customer British Airways took delivery of its first Dreamliner aircraft. Even with the time frame for Dreamliner deliveries having been derailed by the aircraft's battery problems, airline companies appear to remain committed to the fuel savings and other efficiency benefits that Boeing's newer aircraft offer. With trillions of dollars of new orders expected in the coming 20 years, Boeing only needs to demonstrate its ability to make good on its order backlog in order to reap huge gains.

Some stocks aren't taking part in the rally, though. Alcoa (NYSE: AA  ) is down 1%, suffering along with the commodity-metals markets. Gold and silver have plunged again, hitting three-year lows in the face of perceived pressure from changing central-bank policy. For Alcoa, meanwhile, low commodity prices mean sustained plant closures and capacity underutilization, forcing impatient investors to wait even longer for a long-hoped-for cyclical upturn.

Finally, outside the Dow, for-profit education company Apollo Group (NASDAQ: APOL  ) has sounded alarm bells once more, falling 5.4% after reporting disappointing enrollment figures. New enrollment dropped by nearly a quarter, and investors ignored earnings that topped expectations after accounting for one-time items. Given the regulatory attention that Apollo and its peers have gotten lately regarding their marketing practices and concerns about students' ability to repay student loans, the entire industry seems trapped by pessimism. The fact that Apollo is getting kicked out of the S&P 500 only adds insult to the injury of its plunging stock price in recent years.

If you're looking for some long-term investing ideas, you're invited to check out The Motley Fool's brand-new special report, "The 3 Dow Stocks Dividend Investors Need." It's absolutely free, so simply click here now and get your copy today.

10 Best Growth Stocks For 2014

As energy takes on more of a global focus, so do the stocks of the companies that produce it. With the increase in hydraulic fracturing, or fracking, places once thought of as flyover states are now booming industrial areas because of the new ability to uncover deep underground stores of oil and natural gas. There's a lot of room for excavation and discovery in these areas, and companies such as Chesapeake Energy (NYSE: CHK  ) , WPX Energy (NYSE: WPX  ) , and InterOil (NYSE: IOC  ) are taking full advantage.

Chesapeake Energy
Chesapeake, an Oklahoma-based oil and natural gas producer, has been putting up some strong numbers recently. Revenue has been climbing in the past two quarters, marking year-over-year growth of 40% and 32%, respectively. The company has also earned $0.30 per share over that period, beating estimates of $0.25.

10 Best Growth Stocks 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.

10 Best Growth Stocks For 2014: Sara Lee Corporation(SLE)

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

• [By Carlson]

  Director of Sara Lee Corp., James S Crown, bought 37,500 shares on 9/12/2011 at an average price of $17.5. Sara Lee Corporation is a global manufacturer and marketer of high-quality, brand-name products for consumers throughout the world. Sara Lee Corp. has a market cap of $10.24 billion; its shares were traded at around $17.5 with a P/E ratio of 19.9 and P/S ratio of 1.2. The dividend yield of Sara Lee Corp. stocks is 2.7%.
  
  On August 11, Sara Lee Corp. reported earnings for the fourth quarter 2011. The fourth quarter included an 8% increase in adjusted net sales from continuing operations to $2.3 billion; 9% reported net sales increase, 40% increase in adjusted operating income to $189 million; and reported operating income increase of 19%.
  
  Last week, Director James S Crown bought 37,500 shares of SLE stock. Executive Chairman Jan Bennink bought 58,400 shares in August.

Top 10 Warren Buffett 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.

10 Best Growth Stocks 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.

10 Best Growth Stocks 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.

10 Best Growth Stocks For 2014: Waste Management Inc.(WM)

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

Advisors' Opinion:

• [By Tom Konrad]

  The only household name in this year's list, Waste Management is coming back for an encore performance in 2013.  WM is the North American leader in recycling and renewable biogas among waste and environmental services companies.  The industry has been in a cyclical downturn, and WM's well-covered 4.2% dividend makes it a solid anchor for this portfolio of small and micro-cap clean energy stocks.

• [By Sam Collins]

  Houston-based Waste Management Inc. (NYSE: WM) is the largest trash hauling/disposal company in the United States. This company is a model for steady growth with earnings increasing steadily over many years.?

  S&P has a “four-star buy” on WM with a 12-month target of $42. WM pays an annual dividend of $1.36 for a yield of 3.7%.?

  Technically, the stock is in a powerful bull channel with support at $36 and resistance at $39. Buy WM as a long-term growth opportunity.

10 Best Growth Stocks For 2014: TrueBlue Inc.(TBI)

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

Advisors' Opinion:

• [By McWillams]

  TrueBlue, Inc. is a provider of temporary blue-collar staffing. Its EPS forecast for the current year is 0.69 and next year is 1.1. According to consensus estimates, its topline is expected to grow 8.96% current year and 10.03% next year. It is trading at a forward P/E of 15.76. Out of 10 analysts covering the company, six are positive and have buy recommendations and four have hold ratings.

10 Best Growth Stocks For 2014: Eastern Insurance Holdings Inc.(EIHI)

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

10 Best Growth Stocks For 2014: Buffalo Wild Wings Inc.(BWLD)

Buffalo Wild Wings, Inc. engages in the ownership, operation, and franchise of restaurants in the United States. The company provides quick casual and casual dining services, as well as serves bottled beers, wines, and liquor. As of July 26, 2011, it had 773 Buffalo Wild Wings locations in 45 states in the United States, as well as in Canada. The company was founded in 1982 and is headquartered in Minneapolis, Minnesota.

Advisors' Opinion:

• [By Fabian]  

  While Chipotle has captured most of the attention among the restaurant stocks, Buffalo Wild Wings (BWLD: 56.62 0.00%) could be 2011’s big winner. Wall Street is expecting 19% earnings growth from Buffalo Wild Wings in 2011 which is only slightly lower than Chipotle’s 20% growth rate. However, BWLD trades at only 18x consensus 2011 estimates while CMG trades at a pricey 40x. On an EBITDA basis, Chipotle trades at over 20x, while Buffalo Wild Wings trades at less than 9x.

10 Best Growth Stocks For 2014: Intuitive Surgical Inc.(ISRG)

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

Advisors' Opinion:

• [By Jim Lowell]

  Intuitive Surgical (ISRG: 329.49 0.00%) is an expensive stock and their stock price is currently well below the $400 level that it flirted with in April. However, the stock is a compelling growth story with revenues and earnings expected to climb 19% in 2011. The company faces little competitive pressure and 2011 is likely the year that consumers opt for procedures that they delayed in 2009-10. That could produce some blowout earnings results for ISRG in 2011.

What Is China's Real Growth Rate?

The news from China continues to push stocks both higher and lower so Moneyshow's Jim Jubak assesses what he thinks is their real growth rate.

The official target for growth for 2013 in China remains at 7.5%.  That’s where the government set it.  That’s where all the votes of various bodies were in and it’s still the official target, but you can see its sliding.  We’ve had a couple of instances in the last few weeks, where people say, you know, officials have come out—officials who are in the know, so it’s not really a mistake---they’ve come out and started talking about 7%, and then finally, you had Premier Lee come out and say, oh, okay, we’re really not talking about a range.  Acceptable range is 7 to 7.5%, but we absolutely will not go below 7.  This is a big shift.  I don’t know how much of this is embedded in the price of commodity stocks, but my guess is that they were really thinking that 7.5% would be a bottom.  If 7% is now the bottom, you’re going to see some kind of rejiggering of the prices of those stocks.  The real danger, though, in that sector, would be if we start to move below 7. 

Now it looks like the Chinese government really wants to defend seven on the same day as Premier Lee came out and said 7% is our bottom, he also said, well, you know, we’re going to speed up our spending on construction on railroads in Southern and Western China.  It’s significant that he wasn’t talking about new money; just talking about speeding up the spending of already allocated money, budget is set.  So, really, it’s a very limited kind of stimulus.  To the degree that there are any analysts out there all trying to put numbers on this, the consensus is well, that we really might see net stimulus from the central government of about $25 billion of 2013.  That’s a big contrast to the stimulus after the global financial crisis, when China was really trying to stop an economy in free fall and stimulus then was $586 billion-$586,25; you can see the difference.  The ideological difference is that you’ve moved from a period where the government seemed to be really fearful of breaking through 7-1/2, because they were afraid that it was going to produce social unrest or the consequences to the connected people in the party, and their pocketbooks were going to be too high.  7% now seems to be acceptable, because the government has really ratcheted up its concern about the need to reform the Chinese economy. 

If the Chinese economy is going to grow at a decent rate going forward, certain things have to happen.  The financial system has to have certain reforms.  There have to be changes in the way that banks do loans.  Strangely enough, you’ve got a runaway loan credit demand situation in China, but medium-sized and small-sized companies in China can’t raise any money.  All the money’s going to the big state-connected institutions and you’ve got a real credit crunch in the small and medium size part of the economy, so there’s a sense that it’s crucial for these reforms to happen and if China needs to sacrifice a half percentage point of growth to do that, that’s fine.  The question really is—the big question is not so much whether we’ll get 7%, because I don’t know that—no one really does.  I mean, how do you judge where you’re going to be able to stop a locomotive as big as China.  The question is well, if we go below seven, if you move toward 6-1/2 or 6.7, what does the government do?  Does the government decide that that’s okay, if we’re going to get the reforms that we need out of that, or is the government going to say, okay, that’s unacceptably low.  It’s too risky.

We’re going to stimulate again, and really throw the reforms out the window.  So that’s the crucial thing.  7% has implications for all Chinese stocks and all commodity stocks around the world, but it’s really what happens below that, that’s important going forward, and we won’t know what that is until we get there. 

How To Invest Like John Paulson

Why salesforce.com's Price Drop Makes No Sense

salesforce.com's (NYSE: CRM  ) earnings announcement didn't sit well with investors. With its stock down over 6% since sharing its fiscal 2014 Q1 results, you'd think Salesforce had either missed estimates by a mile, provided a poor outlook for the balance of its fiscal year, or both. But this is where things get interesting: Neither occurred. When you look at non-GAAP results (in other words, removing one-time items), Salesforce grew revenue and operating cash flow, and raised guidance for the year. So, what's the problem?

A few specs
It seems Salesforce has always traded like a growth stock: With a non-GAAP price-to-earnings ratio in the 85 to 90 range, investors and analysts alike have been content to focus on revenue growth and future prospects in its core customer relationship management market and cloud solutions. So Salesforce's 28% jump in revenue compared to last year, up to $893 million this past quarter, would appear to be a win. Incidentally, the $893 million in revenue beat average analyst expectations for the quarter by $6 million.

Both deferred revenue and unbilled deferred revenue were also up significantly, 30% and 33% year-over-year, respectively. Toss in a 33% increase in operating cash flow and non-GAAP earnings of $0.10 a share this quarter -- meeting expectations -- and the sell-off of Salesforce shares makes even less sense. And what a sell-off it was, with nearly 21.58 million shares traded the day after Salesforce's May 23 earnings announcement, compared to its daily average of 5.54 million shares.

After raising revenue expectations for fiscal 2014 to $3.835 billion to $3.875 billion, a 26% to 27% improvement from last year, Salesforce now expects non-GAAP EPS in the $0.47 to $0.49 range for the year, compared to $0.49 average estimates from analysts. The problem? An analyst at Pacific Crest Securities said it all, "The guidance is just in line, and we're used to seeing these guys raise."

What's changed?
Some grumblings you'll hear relating to Salesforce include its move toward expanding via acquisition in lieu of strictly organic growth. That can be an expensive proposition to be sure, and is expected to impact Salesforce's GAAP numbers this year by an estimated $86 million.

A legitimate concern for Salesforce, just as it's always been, is growing competition in both the CRM and cloud computing markets. German-based SAP (NYSE: SAP  ) and CRM up-and-comer Microsoft (NASDAQ: MSFT  ) and its Dynamic CRM are certainly not to be trifled with.

Microsoft's Dynamics CRM generates about $500 million annually; a pittance compared to its total revenue, but its integration with Office 365 could change that going forward. Like Microsoft, SAP isn't reliant on CRM revenue -- it currently accounts for about 11% of total IFRS sales -- and diversified business lines are rarely a bad thing. For both SAP and Microsoft, revenue diversification gives them time to grow their respective solutions, while Salesforce is heavily reliant on its CRM suite to drive revenue. With that said, Salesforce deserves some credit; it became the No. 1 CRM provider as measured by revenue in 2012 according to Gartner, replacing SAP.

From here
Given Salesforce's $3 billion in cash and equivalents, improving operating cash flow and revenue, and its strong presence in the explosive cloud market, Salesforce is positioned well for future growth, just as it was prior to its recent earnings announcement.

About the only thing different about Salesforce today compared to last week is its stock price. If Salesforce made sense at price-to-earnings multiples of 85 or 90 prior to its earnings announcement, then it still does. If you're a growth investor, Salesforce was already a solid long-term opportunity. Now, it's even better.

Five enter, one leaves
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Mobile Commerce: 1 Company Dominating This $41 Billion Industry

The good news: China's mobile commerce industry is growing at a tremendous pace – meaning there's an opportunity for you to profit as an investor.

The bad news: The one company crushing mobile commerce also dominates the country's $177 billion e-commerce industry. Unfortunately, that's the one company you can't invest in because it's private. Of course, I'm talking about China's dominant e-tailer, Alibaba.

Nonetheless, you'd better keep your eye on this company. Not only may Alibaba IPO soon, but it's also shutting Amazon.com (NASDAQ: AMZN  ) and Dangdang  (NYSE: DANG  ) -- an e-tailer of small-ticket and media items -- out of China. Here's what you need to know about China's competitive e-commerce landscape.

The numbers: How badly is Alibaba crushing the competition?
You may know already that Alibaba is gigantic. It so dominates the overall e-commerce industry that you might think it's a monopoly.

Currently, the company commands 40% of the $177 billion industry. While you may think Amazon would be able to translate its U.S. experience to success in China, it hasn't happened. After years of working in the country, Amazon owns just 2.2% of the market. More surprisingly, Dangdang -- the so-called "Amazon of China" with geographic, informational advantages -- hasn't even been able to mimic Amazon's business model successfully to compete with Alibaba. It has only 1.6% of the e-commerce market share.

The picture gets even worse for Amazon and Dangdang when you look only at the mobile commerce industry.

Company

Total E-Commerce Market Share

Mobile Commerce Market Share

Alibaba	39.9%	75.1%
Amazon	2.2%	0.4%
Dangdang	1.6%	1%

Sources: We Are Social and Tech in Asia. 

Amazon and Dangdang seem like they're barely holding on. If you've invested in either, you should be scared.

How much money are we talking about exactly here? Last year, the mobile commerce industry was worth $7.8 billion. But by 2015, research firm iResearch estimates that number will grow to $41.4 billion. That's growth of 530% over three years! And if Alibaba continues to reign, it may be lights out for Amazon and Dangdang in China. 

Do Amazon, Dangdang, and others have a chance in China?
Now, you may think that Amazon and Dangdang have time to grow their market share -- the mobile commerce industry is still young, right? Well, you'd be dead wrong.

Right now, more Chinese have access to the Internet through mobile than they do on desktop: Internet penetration on desktop is 44% versus 82% on mobile. Looking deeper into the numbers, 59% of China's smartphone users have already used their devices to shop online.

So what are the takeaways here? Mobile is already here.

Because Alibaba already has such a head start in mobile commerce, it seems like it will remain in a dominant position. Alibaba's market share will probably decrease as other e-tailers launch and build up their mobile stores. But, if the (relative) desktop market share numbers at all hold for mobile, then you can still say that Alibaba is crushing the competition.

There's a good chance the numbers will play out well for Alibaba. As The Economist notes, Alibaba's marketplace is so big that its websites get the most eyeballs. In turn, this drives more sellers to list more goods for sale -- which then attracts more buyers. More so than any other e-tailer, Alibaba has this virtuous cycle that keeps raking in profits.

It's for all these reasons that Microsoft (NASDAQ: MSFT  )  decided to partner with Alibaba. Acknowledging that it needs to drive Windows 8 device sales in China, the two launched Microsoft's online store in China. It's a smart move, as Alibaba has the eyeballs and Microsoft distributes the OS only through downloads and pre-installed devices.

Even Google (NASDAQ: GOOG  ) recognizes Alibaba's dominance. Last December, Google shut down Google Shopping in China because it wasn't "providing businesses with the level of impact we had hoped" -- in other words, it wasn't making any money. There's no need for a product search engine when people buy straight from your website.In short, even the big G wasn't able to translate a popular U.S. product abroad and successfully venture into the Chinese e-commerce industry. 

While another gigantic competitor could take on Alibaba, it probably won't happen. After years, Baidu  (NASDAQ: BIDU  ) finally launched its product search engine. And you might think that with a $1.5 billion war chest, it could unseat Alibaba's dominance. But that's not likely. Baidu doesn't even register on e-commerce market share reports. More importantly, Alibaba is actually moving into Baidu's space. To get closer to shoppers, Alibaba is developing a smartphone and mobile operating system. So Baidu seems like it'll need that money to beat back Alibaba.

Should you sell your shares in Chinese commerce?
If you're looking to get rich off of China's growing mobile commerce industry, I'd be hesitant to bet against Alibaba. Given the company's juggernaut status in the industry, it doesn't seem as if it's going down anytime soon. Seeing that Google has resigned itself to Alibaba's dominance, I'd do the same. Sell your bets in Chinese commerce before your investments turn to zero.

However, that doesn't mean you should wait to invest for your retirement. As the best investing approach is to invest in great companies over the long term, we've got you covered. The Motley Fool's free report "3 Stocks That Will Help You Retire Rich" names stocks that could help you build long-term wealth and retire well, along with some winning wealth-building strategies that every investor should be aware of. Click here now to keep reading.

Is Occidental Petroleum Destined for Greatness?

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

What we're looking for
The graphs you're about to see tell Occidental's story, and we'll be grading the quality of that story in several ways:

Growth: Are profits, margins, and free cash flow all increasing? Valuation: Is share price growing in line with earnings per share? Opportunities: Is return on equity increasing while debt to equity declines? Dividends: Are dividends consistently growing in a sustainable way?

What the numbers tell you
Now, let's take a look at Occidental's key statistics:

OXY Total Return Price data by YCharts

Passing Criteria

Three-Year* Change

Grade

Revenue growth > 30%	44.9%	Pass
Improving profit margin	(16.0%)	Fail
Free cash flow growth > Net income growth	(68.6%) vs. 21.7%	Fail
Improving EPS	22.2%	Pass
Stock growth + 15% < EPS growth	17.6% vs. 22.2%	Pass

Source: YCharts. * Period begins at end of Q1 2010.

OXY Return on Equity data by YCharts

Passing Criteria

Three-Year* Change

Grade

Improving return on equity	(12.8%)	Fail
Declining debt to equity	115.1%	Fail
Dividend growth > 25%	68.4%	Pass
Free cash flow payout ratio < 50%	127.6%	Fail

Source: YCharts. * Period begins at end of Q1 2010.

How we got here and where we're going
Occidental could be doing a little better today, as it's only mustered four out of nine possible passing grades. A big source of that weakness is the company's falling free cash flow, which has diverged markedly from its net income over the past two years, and which may not be able to support its current dividend payouts if this trend continues. Will Occidental be able to move ahead, or are rising drilling costs going to undermine its long-term potential? Let's dig a little deeper to find out.

Occidental plans to sell some assets in the Middle East, Asia, and North Africa to repurchase shares in 2014. The total estimated assets are worth $25.7 billion, with total production capacities of approximately 270,000 barrels of oil equivalent per day. Despite these divestitures, Occidental retains significant assets under development or in current production. Its Permian holdings produced roughly 150,000 barrels per day at the end of last year.

Qatar Petroleum and Occidental's Qatari subsidiary are also moving forward with a development plan for a major Qatari offshore field. This plan, first devised in the mid-90s, involves drilling over 200 wells, and also requires the installation of facilities required to support the additional wells. The development activities are expected to necessitate investments of over $3 billion. The work has already begun, and will add about 100,000 barrels per day to Occidental's bottom line over the next six years.

Investors might be in for some upheaval beyond the major asset sales, as CEO Steve Chazen has made some noise about breaking the company up into smaller parts. The company is somewhat in the middle of the pack valuation-wise, which indicates that investors see some growth, but not much, when compared to its peers. Splitting up the company could drive gains as each sector will be freed for more aggressive moves, but it also poses a bit of a risk -- the energy economy is littered with the corpses of smaller oil and gas drillers who pushed too far, too fast just before prices moved in the wrong direction.

Putting the pieces together
Today, Occidental has some of the qualities that make up a great stock, but no stock is truly perfect. Digging deeper can help you uncover the answers you need to make a great buy -- or to stay away from a stock that's going nowhere.

If you're on the lookout for some currently intriguing energy plays, check out The Motley Fool's "3 Stocks for $100 Oil". For FREE access to this special report, simply click here now.

Bank of America Faces an Uphill Battle Today

Bank of America's (NYSE: BAC  ) stock is taking a beating this morning, in a startling turnaround from last week's rally that buoyed the share price above $13, where it hovered all weekend. Unfortunately, it looks as if the great news of the bank's settlement with monoline insurer MBIA (NYSE: MBI  ) , which brought an unpleasant legal skirmish to an end, has worn off with the advent of Monday morning.

Bank of America's peers aren't looking too perky, either. Both Wells Fargo (NYSE: WFC  ) and JPMorgan Chase (NYSE: JPM  ) are down so far, as is Citigroup (NYSE: C  ) . Of course, JPMorgan has a right to be depressed, as the legal and political problems mount, both for the bank and for CEO Jamie Dimon himself. The others have legal problems bubbling up, too: Wells, along with B of A, is being sued by New York's Attorney General for mortgage settlement abuses, and Citi faces an action over a secretary it provided to William Salomon, of the late-but-not-so-great Salomon Brothers investment firm.

Bank of America, however, is experiencing especially heavy trading activity this morning, which makes me think things could go wrong very quickly for the megabank. So far, less than two hours into the trading week, the big guy has managed to bring its head up above water, just this moment breaking past its opening price of $13.02. Will the plucky bank be able to keep its gains of last week? Possibly so -- but it will likely be a struggle, hopefully one it will be able to win.

Will Bank of America be able to pull the big banks out of the hole they have fallen into? Regardless of the ups and downs these stocks experience today, keep in mind that it is the overall performance of a stock that really counts. As Foolish, long-term investors, we recognize the fact that one-day changes in share price don't make or break an investment. Even stocks have good days and bad days, so it's important to realize that sometimes they're not portents of dire news, but merely squiggles that we can safely ignore.

Bank of America's stock doubled in 2012 -- and, there may be more yet to come. With significant challenges still ahead, though, it's critical to have a solid understanding of this megabank before adding it to your portfolio. In The Motley Fool's premium research report on B of A, analysts Anand Chokkavelu, CFA, and Matt Koppenheffer, Financials bureau chief, lift the veil on the bank's operations, including detailing three reasons to buy and three reasons to sell. Click here now to claim your copy.

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More Expert Advice from The Motley Fool

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Honeywell Stock Soars in Powerful Earnings

In stark contrast to industrial and aerospace rivals General Electric (NYSE: GE  ) and Textron (NYSE: TXT  ) , both of which disappointed investors pretty badly last week, Honeywell (NYSE: HON  ) ... didn't.

To the contrary, with Honeywell stock up 3.8% in response to earnings, it appears investors were actually pretty pleased with the numbers Honeywell put up. But should they be?

On one hand, the numbers themselves certainly argue in the affirmative. Last quarter, Honeywell produced a 16% improvement in per-share earnings (to $1.21) on essentially flat sales (up just 0.2% to $9.3 billion). Operating margins increased 120 basis points, and going forward, Honeywell promised to deliver full-year pro forma profits of at least $4.80 -- that's a nickel higher than their earlier prediction -- and perhaps as much as $4.95 per share.

On the other hand, though, General Electric produced nearly as much in profits growth as Honeywell did, and on about the same growth in revenues -- i.e., zilch growth in revenues. But if that's the case, then what was it about GE's numbers that disappointed investors so mightily, and how did Honeywell stock avoid GE's fate?

The answer is "free cash flow." Honeywell had it. General Electric (almost) didn't.

Whereas GE on Friday had to own up to a 90% plunge in cash from operations, Honeywell could crow over a 74% increase. Even after making sizable investments in capital spending, this left Honeywell with 9% better cash profits -- free cash flow -- than it had generated a year ago. GE, on the other hand, appears likely to have burned cash. (GE didn't give detailed cash-flow information in its earnings release, and it hasn't filed its 10-Q with the SEC yet, so we can't be sure.)

To my Foolish eye, that's the key differentiator between the quarter Honeywell turned in, and the disaster that was GE. And why did it happen?

GE explained its near-lack of cash production by the need to stock up on inventory to fulfill orders received in Q1 that won't be delivered until later in the year. In contrast, Honeywell CEO Dave Cote described how his company "balanced [its] portfolio of both short- and long-cycle businesses" in a manner that "continues to drive our outperformance." 

That was true for Honeywell's cash machine last quarter. And it was true for Honeywell's stock performance last week.

For GE, the recent financial crisis struck a blow, but management took advantage of the market's dip to make strategic bets in energy. If you're a GE investor, you need to understand how these bets could drive this company to become the world's infrastructure leader. At the same time, you need to be aware of the threats to GE's portfolio. To help, we're offering comprehensive coverage for investors in a premium report on General Electric, in which our industrials analyst breaks down GE's multiple businesses. You'll find reasons to buy or sell GE today. To get started, click here now.

Another Fishing Expedition on Fracking

If the EPA won't stop fracking, then maybe the Justice Department will step in and do the job for them. 

Baker Hughes (NYSE: BHI  ) and Halliburton (NYSE: HAL  ) , two of the three biggest companies involved in providing services for hydraulic fracturing, announced last week they received civil investigative demands, or CIDs, from Justice regarding a probe into alleged "anticompetitive practices involving pressure-pumping services performed on oil and gas wells."

CIDs require recipients to produce documents, respond to interrogatories, or provide sworn deposition testimony and are used by the government before litigation has actually commenced. The area Justice is investigating, pressure pumping, is the main step in the fracking process and involves injecting water, chemicals, and other fluids under high pressure into a well to fracture the rock formations trapping the oil and gas deposits. 

Once the rock is fractured, proppants, typically sand or ceramic beads, are then used to prop open the fissures (hence their name) to allow the gas and oil to flow freely.

It has been the development of the hydraulic fracturing process that has created the natural gas boom we're in the midst of. The U.S. is awash in natural gas and will soon become a major exporter through Cheneire Energy's (NYSEMKT: LNG  ) Sabine Pass facility in Louisiana.

Environmentalists have opposed fracking, however, accusing the procedure of causing everything from groundwater contamination to flaming faucets and earthquakes. Spurred on by these activists, the EPA began conducting tests to prove it was fracking behind drinking water contamination, as the theory was that fracking fluids were seeping into the aquifers. Yet as Nuverra Environmental Solutions  (NYSE: NES  ) explained, these fluids are pumped into wells thousands of feet below the ground, far below the aquifers, and the fluids seep down, not up. Nuverra is one of the leading suppliers of water and fluids-management services used in fracking for the oil and gas industry.

The EPA injected tracer chemicals into the fluids that were pumped into the wells at around 10,000 feet below the surface and monitored them at the 5,000-foot level. To the chagrin of the agency and the environmentalists, they found nothing. The regulatory agency ultimately punted on its study, which was originally supposed to be peer-reviewed, turning responsibility for its completion over to state authorities and high-tailing it out of town.

The Energy Department, meanwhile, conducted its own tests and just concluded a landmark study determining that fracking isn't responsible for contaminating groundwater supplies at all. As for the flaming faucets, it was a condition known in the area for years before drilling ever occurred there. Whether fracking causes earthquakes is still a matter of conjecture.

But with two agencies seemingly giving the procedure a green light to continue, the Justice Department is stepping in to investigate supposed anticompetitive practices. Halliburton (NYSE: HAL  ) , the favorite whipping post of environmental activists, is the industry leader, with an estimated 29% share of the pressure pumping market, while Baker Hughes had a 4% share. Schlumberger (NYSE: SLB  ) , which is the second biggest services provider with a 21% share, hasn't said whether it's received any inquiries from the government.

Yet it's a strangely timed investigation, since the onshore pressure pumping market peaked a few years ago, and like the industry they service, the pressure pumpers have seen margins fall as a glut of equipment flooded the market. While there is an offshore market for pressure pumping, it's tiny by comparison, and analysts are left scratching their heads wondering what the Justice Department is actually trying to accomplish, particularly as both Halliburton and Schlumberger develop new technologies that minimize pressure pumping a a whole.

A stalled initiative by activists at the EPA and a clean bill of health by Energy could give some indication of why Justice is now involved, but while investigations don't always lead to charges, this fishing expedition can still serve to make mischief. 

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Why Endocyte Is Poised to Pull Back

Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, biopharmaceutical company Endocyte (NASDAQ: ECYT  ) has received a distressing two-star ranking.

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

Endocyte facts

Headquarters (founded)	West Lafayette, Ind. (1995)
Market Cap	$590.7 million
Industry	Pharmaceuticals
Trailing-12-Month Revenue	$49.2 million
Management	Co-Founder/CEO Ron Ellis Co-Founder/Chief Scientific Officer Philip Low
Return on Equity (average, past 3 years)	(35.3%)
Cash/Debt	$134.8 million / $62.1 thousand
Competitors	Nektar Therapeutics Sunesis Pharmaceuticals

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

On CAPS, 10% of the 20 All-Star members who have rated Endocyte believe the stock will underperform the S&P 500 going forward.

Just last week, one of those Fools, zzlangerhans, touched on the stock's seemingly unsustainable price run:

Kudos to those who saw the opportunity when Endocyte was beaten down, as the share price rebounded once it became clear that the company would submit vintafolide for accelerated European approval regardless of the negative OS data and partnered the drug with Merck globally on very favorable terms. The stock has gapped up at regular intervals and the latest may be occurring as I write. Nevertheless, I think the valuation has become excessive given the possibility that CHMP might not wish to give a favorable opinion with the topline PFS data from the PROCEED phase III trial of vintafolide expected in H1 2014. Even if CHMP issues a favorable opinion, PROCEED will have to yield positive PFS and likely OS data to maintain approval and have a strong commercial impact. I missed the easy money here but those more fortunate would be wise to take at least some of their profits off the table.

While you can certainly make quick gains in speculative biotech stocks, the best investing approach is to choose great companies and stick with them for the long term. The Motley Fool's free report "3 Stocks That Will Help You Retire Rich" names stocks that could help you build long-term wealth and retire well, along with some winning wealth-building strategies that every investor should be aware of. Click here now to keep reading.

Ford's 2013 Fusion Is a Game Changer

It's been a long time since any analyst could seriously say a Ford (NYSE: F  ) vehicle could compete with one of rivals Toyota (NYSE: TM  ) or Honda (NYSE: HMC  )  in terms of quality and value. That's what makes the Fusion a welcome addition to the world in 2013 – finally there's a domestic vehicle that can compete. It's clear by looking at the numbers that the Fusion is taking market share away from Toyota's Camry; that's great news as long as it continues to deliver on quality and value. Let's take a look at what critics have to say, how it's selling, and what it means for Ford as an investment.

Critics
The Fusion beat out five other models from Toyota, Mazda, and Dodge to take home this year's "Green Car of the Year" award from the Los Angeles Auto Show. Kelley Blue Book called this year's Fusion the "Best Redesigned Vehicle" of the year, noting that its style hints from Ford's previously owned Aston-Martin brand is refreshing in a typically bland segment. U.S. News & World Report crowned the Fusion with the 2013 "Best Cars for Families" award and it has won the best mid-size car category for three straight years. In addition, U.S. News dubbed Ford's ride the "Best Car for the Money" giving it credibility to compete on terms of value – a welcome change for Ford buyers.

Sales
Toyota's Camry has long dominated the segment but Ford's Fusion is clearly taking market share away recently. To get a better idea of how the gap has been closed, look at the graph below:

 

While Toyota seemingly bounced back last year, the story isn't the same five months into 2013. The Camry still has sold more vehicles but is down 6.8% in sales compared to last year. Meanwhile, the Fusion is up 25.4% compared to last year – closing the gap even further. 

Why it's important
If you're a Ford investor, or potentially one, you already know that the most important segment is full-size trucks because it brings home the profits. That said, the Fusion is part of what Ford calls the "super segment", a combination of the subcompact, compact, midsize sedan, and small utility segments. Consider that those segments accounted for 35% of vehicle sales in 2004 but now represent more than half. Looking toward the future trends, where consumers are anticipated to continue to downsize vehicles, Ford expects market growth to surge in this "super segment". Ford is focusing its efforts there with newly designed or refreshed models and the result should improve the company's top-line revenue and sales figures.

Bottom line
I think the 2013 is a game changer, and not just because it has the potential to capture the Camry's leading position, but because it represents the change Ford has made as a company. Ford recognized it would no longer be a profitable company that warranted our investing dollars with the vehicles it produced 10 years ago. Since then, its efforts have created a lean operation to improve profitability and is now producing vehicles that can compete with its Japanese rivals. The Fusion represents those two points exactly. Ford announced that its Fusion production plants are running at 114% capacity, and that it plans to add more capacity as soon as this summer. When that happens, look for the Fusion to bring home even higher sales numbers – much to the delight of Ford investors.

The best investing approach is to choose great companies and stick with them for the long term. The Motley Fool's free report "3 Stocks That Will Help You Retire Rich" names stocks that could help you build long-term wealth and retire well, along with some winning wealth-building strategies that every investor should be aware of. Click here now to keep reading.

Why Smithfield Foods Shares Popped

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

What: Shares of Smithfield Foods (NYSE: SFD  ) were smoking today, gaining as much as 31% after a Chinese company agreed to buy the meat processor for $7.1 billion.

So what: Shuanghui International Holdings reached a deal with the pork seller, paying $34 a share for Smithfield. The stock traded as high as $33.96 today. The deal, which includes debt, also marks the largest buyout of an American company by a Chinese one. Shuanghui controls China's largest meat processor, and today's move will give it ownership of the world's largest pork producer, further strengthening its positioning in the meatpacking industry.  In a statement, Shuanghui said, "The combination creates a company with an unmatched set of assets, products, and geographic reach."

Now what: Smithfield CEO Larry Pope also touted the deal, calling it a "great transaction for all Smithfield stakeholders," and saying it will not affect Smithfield's operations. The deal is on track to close in the second half of the year, but still needs to be approved by Smithfield shareholders and the Committee on Foreign Investment in the United States, which regulates acquisitions of U.S. companies. The acquisition would put pressure on competitors such as Tyson Foods and Pilgrim's Pride as Shuanghui should gain further pricing power with the move.

Stay on top of Smithfield to see if the deal goes through as expected. Add the company to your Watchlist here.

Department of Defense Needs These Companies to Succeed

The high gas prices of summer 2008 may be a distant memory to you by now, but the Department of Defense has not been so quick to forget. A combination of dependence on internationally sourced energy and exposure to volatility in the markets has nudged Uncle Sam to pursue renewable energy at a furious pace in recent years. That is probably a good idea: More than 93% of fuel consumed by the federal government can be chalked up to the DoD, according to a strategic review (link opens PDF) published by the U.S. Navy in 2010.

Dozens of companies with the capacity to produce next-generation renewable fuel -- fuels may or may not be the primary focus of each -- have answered the call. The latest comes from industrial biotech company Gevo (NASDAQ: GEVO  ) , which has begun supplying the U.S. Coast Guard with initial quantities of renewable isobutanol-blended gasoline for maritime vessels. This comes after an earlier collaboration with the U.S. Air Force in 2011, an extension of which calls for an additional 45,000 gallons of isobutanol-derived jet fuel to be supplied by the end of October. What do these partnerships with Uncle Sam mean for the future of the company?

What you need to know
Gevo is supplying finished 16.1% renewable isobutanol-blended gasoline under a 12-month operational study with the U.S. Coast Guard R&D Center, Honda, and Mercury. The same Gevo fuel was used in Honda engines for eight hours a day for three months earlier this year. The engines were dismantled after testing to inspect wear and tear associated with isobutanol. Mike Coleman, U.S. Coast Guard project manager for the study, said he was pleased with the initial tests and that he expects a decision on the suitability of isobutanol-fuel blends for the Coast Guard's gasoline-fueled crafts to be made following the completion of the current 12-month study.

The Coast Guard will be testing Gevo's fuel in this 38-foot special purpose craft and a smaller 25-foot response boat. Source: U.S. Coast Guard

Can it succeed? No fuel is perfect, but isobutanol is a rather suitable blendstock that has several major advantages over ethanol.

 

Ethanol

Isobutanol

Blend Reid Vapor Pressure (RVP)	18-22 psi	4.5-5.5 psi
Blend octane	112	102
Energy content (% gasoline)	65%	82%
Water solubility	Fully miscible	Limited miscibility (8.5%)
Oxygen content	35%	22%

Source: Gevo White Paper, May 2011

Without getting too technical, a fuel's RVP determines the blending costs refiners must pay. The higher the value, the costlier the blending process. The lower the value, the more costs that can be eliminated. Additionally, higher energy content and limited water solubility (leads to corrosion of pipelines, engines) of isobutanol compared to ethanol makes it a superior blendstock.

Don't forget about...
Gevo may be a promising renewable fuel partner for Uncle Sam, but it isn't the only one. Solazyme (NASDAQ: SZYM  ) began extensive testing on three of its fuels -- two renewable diesels and one renewable jet fuel -- with the U.S. Navy in 2009. The company supplied 600,000 gallons of fuels between 2011 and 2012 under various programs. Similarly, Amyris (NASDAQ: AMRS  ) is working with DARPA under The Living Foundries program to build a quickly scalable industrial biotechnology platform. While it could one day be used for fuels or chemicals, vaccines or nutritionals, such a breakthrough would certainly catch the eye of the petroleum-guzzling DoD. Outside of the project, the company is working toward supplying commercial quantities of renewable jet fuel with partner Total by 2014 and already supplies renewable diesel in Brazil.

Both Solazyme and Amyris -- as well as other next-generation fuel manufacturers -- offer drop-in renewable fuels at blends greater than Gevo's 16.1% renewable isobutanol-blended gasoline. The important thing to remember is that there is no silver bullet for replacing petroleum -- multiple renewable fuels will flourish in their respective niche. Should the Coast Guard approve Gevo's fuel for use in gasoline-powered vessels, investors sure as heck wouldn't complain. The market, even for smaller gasoline-powered crafts, is huge.

Foolish bottom line
Is this a big deal for Gevo? Let's preface the answer to that question by saying that the company's commercial success hinges on production metrics from its first isobutanol biorefinery in Luverne, Minn., where operations were restarted this summer, and which is expected to produce 18 million gallon per year. Announcements regarding the retrofit of the Redfield Energy facility (capacity of 50 million gallons per year) should also be on your investing radar in the next several quarters. Nonetheless, industrial biotech companies will be looking to throw their limited initial capacity behind the highest-margin products. Fuels are not necessarily the best option out of the gate.

That being said, the armed forces represent a massive opportunity for the industry. This could very well be the collaboration that puts isobutanol-blended gasoline on the map, but it is still a developing story. Until Gevo receives Uncle Sam's approval, investors will want to keep an eye on capacity additions and revenue ramping. At a market valuation of less than $100 million -- below realistic revenue totals for 2015 -- I can see patient investors reaping significant long-term gains.

Industrial biotech has offered plenty of headaches in its brief existence, but the best investment strategy is to pick great companies and stick with them for the long term. The Motley Fool's free report, "3 Stocks That Will Help You Retire Rich", not only shares stocks that could help you build long-term wealth, but it also offers winning strategies that every investor should know. Click here to grab your free copy today.

Is BMW Making a Mistake Keeping Apple Out of Its Cars?

In a competition that pits BMW's iDrive against Apple's (NASDAQ: AAPL  )  "iOS in the Car," the luxury automaker is taking a pass on fully embracing Cupertino's solution to in-car entertainment. Whereas Apple believes that allowing its devices to become fully integrated in your car's multimedia system will streamline things for users, BMW has already invested heavily in this area and prefers to remain autonomous. Ultimately, the struggles between these two industries is probably just heating up.

In the video below, Fool.com contributor Doug Ehrman discusses the decision by BMW to shun iOS in the Car, as well as the ramifications of the decision.

Apple has a history of cranking out revolutionary products... and then creatively destroying them with something better. Read about the future of Apple in the free report, "Apple Will Destroy Its Greatest Product." Can Apple really disrupt its own iPhones and iPads? Find out by clicking here.

PetroLogistics Beats Estimates But Has a Big Earnings Drop

PetroLogistics (NYSE: PDH  ) reported earnings on July 24. Here are the numbers you need to know.

The 10-second takeaway
For the quarter ended June 30 (Q2), PetroLogistics met expectations on revenues and beat expectations on earnings per share.

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

Gross margins dropped, operating margins grew, net margins increased.

Revenue details
PetroLogistics logged revenue of $159.4 million. The two analysts polled by S&P Capital IQ expected to see revenue of $159.9 million on the same basis. GAAP reported sales were 18% lower than the prior-year quarter's $193.8 million.

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 $0.27. The four earnings estimates compiled by S&P Capital IQ averaged $0.25 per share. Non-GAAP EPS of $0.27 for Q2 were 41% lower than the prior-year quarter's $0.46 per share. GAAP EPS were $0.30 for Q2 compared to -$0.27 per share for the prior-year quarter.

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

Margin details
For the quarter, gross margin was 30.3%, 710 basis points worse than the prior-year quarter. Operating margin was 27.0%, much better than the prior-year quarter. Net margin was 26.0%, much better than the prior-year quarter. (Margins calculated in GAAP terms.)

Looking ahead
Next quarter's average estimate for revenue is $193.2 million. On the bottom line, the average EPS estimate is $0.37.

Next year's average estimate for revenue is $729.7 million. The average EPS estimate is $1.40.

Investor sentiment
The stock has a five-star rating (out of five) at Motley Fool CAPS, with 25 members out of 28 rating the stock outperform, and three members rating it underperform. Among 10 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), nine give PetroLogistics a green thumbs-up, and one give it a red thumbs-down.

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on PetroLogistics is outperform, with an average price target of $15.90.

Looking for alternatives to PetroLogistics? It takes more than great companies to build a fortune for the future. Learn the basic financial habits of millionaires next door and get focused stock ideas in our free report, "3 Stocks That Will Help You Retire Rich." Click here for instant access to this free report.

Add PetroLogistics to My Watchlist.

GM Beats Estimates as New Product Push Begins

GM headquarters in Detroit. Photo credit: General Motors Co.

General Motors (NYSE: GM  ) said on Thursday morning that it earned a net profit of $1.2 billion in the second quarter, fueled by strong pickup sales in the U.S. and reduced losses in Europe.

Profit before taxes and special items was $0.84 a share, down from $0.90 in the year-ago quarter but well ahead of Wall Street's $0.77 estimate. Revenues of $39.1 billion beat the $38.6 billion Wall Street estimate, according to Bloomberg.

It's a good result, one that shows incremental progress for GM around the world – especially in Europe, which has long been a money pit for GM. Let's take a closer look.

Strong results in most of GM's regions
The best way to understand GM's results is to look at earnings from each of its global divisions in turn. Note that all of these profit and loss numbers are what GM calls "EBIT-Adjusted", meaning before taxes and interest charges. Because those vary from time to time, leaving them out makes it easier to compare today's results with past (and future) GM earnings statements.

North America earned just under $2 billion, up a bit from $1.9 billion in the year-ago quarter. Sales in the U.S. have been growing, and an industrywide boom in pickups has helped GM's profits a great deal here. GM is in the process of rolling out all-new pickups, and selling off the last of the old ones; high demand for pickups has meant that GM can clear out old stock without having to boost incentives, and that helped GM's operating margin growto 8.4% from 6.2% in the first quarter. But the costs of rolling out those new pickups also weighed on earnings somewhat, and will weigh again next quarter. South America made $54 million, up from $16 million a year ago. As we saw with Ford's earnings on Wednesday, tough economic conditions in some South American countries together with exchange-rate pressures and stiff low-cost competition have made profits tough to come by in the region for GM. But competitive products have helped GM boost prices (or put another way, reduce discounts) despite the tough environment, and that had a lot to do with the gains in this region. Europe, a problem area for GM for over a decade, lost $110 million, down from $394 million a year ago. This is a very significant result: Auto sales in Europe are at 20-year lows, and GM has been losing ground for months and months. GM executives have said that they hope to get to break-even in Europe by the end of 2015. But a huge restructuring last year that cut GM's costs has already had more of an effect than most analysts expected. A couple of hit new products, like the Opel Mokka SUV, are just icing on the cake. International operations earned $228 million, down from $627 million a year ago. The problem here isn't China, where sales have been strong. It's a combination of increased investment in new facilities and weaker sales in markets like India, where sales of all but the lowest-cost vehicles have suffered recently. GM Financial, the company's in-house financing arm, earned $254 million, up from $217 million a year ago. The income here rises and falls to some extent with the rhythm of GM's leasing business; it's a fine result.

Gearing up for a big global push
GM ended the quarter with $24.2 billion in cash, down just a bit from $24.3 billion in the first quarter, and total "automotive liquidity" – cash plus available credit lines, not counting GM Financial – of $34.8 billion.

Any time profits fall versus a year-ago result, investors get concerned, but there's a good story here. GM is in the early stages of a major product overhaul, launching a slew of new vehicles both at home and abroad. The costs of those launches were a drag on GM's second-quarter profits, and will be a drag for a few more quarters, but profits should go up as more and more of those new products hit dealers.

GM's latest products have been very strong. Last year's Cadillac ATS sedan was hailed as one of GM's best-ever products, and the new Chevy Impala just got a top review from Consumer Reports. Early reviews on the new Chevy Silverado and GMC Sierra pickups have also been quite favorable as well.

All of that bodes very well for GM's upcoming products, and it also bodes well for GM's profits: An automaker with very competitive products can get better prices for them, and that will improve its profits. That was a lesson that GM took a long time (and a bankruptcy) to learn; let's hope it's one that sticks.

GM leads China's auto market, the world's largest – but is GM stock the best way to play China's auto boom? A recent Motley Fool report, "2 Automakers to Buy for a Surging Chinese Market", names two other global auto giants that may be even better-positioned to benefit as China's new-car sales continue to surge. You can read this report right now for free – just click here for instant access.

2 Reasons to Love Ford Stock

Ford's factory's are running at a high capacity, improving profitability. Photo Credit: Ford.

There's many reasons to be optimistic as a Ford (NYSE: F  ) investor, even after the recent run up from $9 a share to nearly $17. June had the highest seasonally adjusted annual rate, or SAAR, in over five years and with a gradually improving economy some analysts have raised their SAAR estimates for the next couple of years – a great sign for automotive sales. Ford has become America's champion for not taking a taxpayer-fueled bailout, as crosstown rivals General Motors (NYSE: GM  ) and Chrysler did, but there are many more reasons to love Ford as an investment. Here are two great ones.

Super segment
Let's first make it clear that Ford is years ahead of GM in terms of consolidating platforms, operating margins, and profitability in North America. GM's is years ahead with its global reaching vehicle portfolio, luxury lineup, and top-line revenues. Ford's strength in its bottom line allows it to make more profit off less vehicles sold. Each company would like to improve on their weaknesses, and what better way for Ford to accomplish that than to aim its new vehicles toward the fastest-growing segments – something Ford has named the "Super Segment".

"Our gains for the Ford brand in the U.S. are driven by our new products," said Joe Hinrichs, Ford president of the Americas in a Ford press release. "We are absolutely committed to continuing the aggressive introduction of new products throughout our showroom." 

Those new products have been largely aimed at the quickly growing super segment which is represented by the Focus, Fusion, Fiesta, and Escape. The Fusion and Escape sales are up an impressive 17.8% and 23.2% year to date versus last year. Both are selling especially well on the coasts, which has helped increase Ford's market share more than any competitor this year. Ford's success in the super segment is going to help the company boost its sales and top-line revenues. In addition to that, there's more good news.

"What's so encouraging is the quality of our share gains," said Jim Farley, executive vice president, global marketing in a Ford press release. "Customers are increasingly choosing highly equipped vehicles such as our Titanium models." 

That means that in addition to growing its sales numbers, its top-line revenues will see an even bigger boost from the Titanium's higher transaction prices. The next reason to love Ford's stock is an often overlooked aspect, but it shouldn't be underestimated.

Ford Motor Credit
In case those consumers opting for the Titanium model need a little extra help to complete the purchase, Ford has just the thing: Ford Motor Credit. Ford's finance division is something its competitors largely lack, and it gives the company a very strong competitive advantage.

Ford takes on huge loans at low interest rates and then dishes them back out to consumers, much like a regular bank, at higher interest rates to make a profit. Consumers no longer have to get loans from banks; they can get them right from Ford.

Using an auto loan calculator with inputs for a 3% APR, 60 months, paying $500 a month, Ford would stand to make an additional $1,739.80 in revenue in addition to the standard transaction. That adds up quickly – for 2012 Ford Motor Credit brought in $1.7 billion of Ford's $7.7 billion pre-tax profits, a nice chunk of change. 

What's more, if we see another credit crunch – which is unlikely anytime soon – Ford will already have its own stable credit line that it can lure consumers with because it would be more difficult to get loans from other banks.

Bottom line
Ford is already years ahead of GM and Chrysler it making its operations leaner and more profitable. Every additional point of market share, or increase in sales makes Ford a much more profitable company than its domestic counterparts. With its recent success and hit designs in the fastest-growing segments here in the U.S., you can bet Ford's profits will continue to impress in the years ahead. As that happens, expect Ford Motor Credit to improve its profitability as well – a virtuous cycle for one of America's best companies right now. 

Ford is very profitable here in the U.S., but can export that strategy to the worlds largest and fastest growing market to become an extremely profitable investment? A recent Motley Fool report, "2 Automakers to Buy for a Surging Chinese Market", names two global giants poised to reap big gains that could drive big rewards for investors. You can read this report right now for free – just click here for instant access.

Where's the Cash Coming From at Avnet?

Time to Buy Apple?

The Worst-Performing Biotech Stocks of the Last Decade

Suppose we filled a jar with slips of paper with the names of biotech companies that have been around for at least 10 years and with a market cap of at $500 million or more written on them. The chances are quite good that if we pulled a random slip of paper out of that jar, the selected biotech's stock performed reasonably well over the last decade. Of course, the concept of survival of the fittest plays a big factor.

Not every biotech we picked would be a winner, though. Even with an incredible run in recent years for biotech stocks in general, several biotech stocks have lagged well behind their peers. Here are three of the worst performing biotech stocks of the last decade.

1. Lexicon Pharmaceuticals (NASDAQ: LXRX  )
Lexicon experienced its heyday in the first few years of the 21st century, but it's pretty much been downhill since then. Shares of the biotech have dropped more than 60% in the past 10 years.

Although it has no commercialized drugs to generate revenue, Lexicon has been able to keep going through the years by forming relationships with larger organizations. For example, Lexicon and Merck (NYSE: MRK  ) have worked together for several years to develop biotherapeutic drugs. The partnership with Merck has netted Lexicon $52.5 million in revenue for development.

For much of the last decade, Lexicon wouldn't have met our $500 million market cap threshold. That changed in 2010 as investors began to see potential in the company's pipeline, particularly with its lead drug candidate telostristat etiprate. The experimental drug received orphan status in the U.S. and Europe as a treatment for the rare disease carcinoid syndrome. It also obtained fast-track status in the U.S. that allows an expedited review process.

Lexicon's hopes of improving upon its dismal performance from the last decade depend on telostristat etiprate and other drugs in its pipeline, including diabetes drug LX4211 and irritable bowel syndrome drug LX1033. Shares are up 11% year-to-date as these drugs advance in clinical trials, but Lexicon still has a long way to go to make up for the last 10 years.

2. Sequenom (NASDAQ: SQNM  )
Sequenom and Lexicon have similar stories in one respect. Sequenom also started off roaring in 2000 only to fizzle out in subsequent years. Over the last decade, the genetic analysis company has seen shares decline by 54%.

There were bright spots during those years, though. In part of 2008 and 2009, Sequenom traded at levels four times higher than the current share price. The bottom fell out of the stock shortly afterwards. First, Sequenom failed in its hostile takeover attempt of rival Exact Sciences. A few months later, the company disclosed mishandling of test data for prenatal diagnostics studies. Sequenom's stock still hasn't recovered.

Now, investors interested in Sequenom focus on the growth prospects for the company's MaterniT21 PLUS laboratory-developed test for Down syndrome. Sequenom reported solid numbers for the test in the first quarter of 2013. Many eagerly await the second-quarter results to see if Sequenom can regain momentum.

3. Dendreon (NASDAQ: DNDN  )
If the 10-year period we were looking at ended in 2011, Dendreon would come out looking really good. For the last decade, though, that's not the case at all. Shares slumped 26% over the past 10 years.

The good, the bad, and the ugly for Dendreon all tie back to Provenge, the company's prostate cancer drug. Back in 2010, one analyst predicted peak annual sales for Provenge of up to $4 billion. That kind of forecast can pump air beneath a biotech stock's wings (and did so for Dendreon). Unfortunately, analysts' forecasts can be dead wrong.

As it turned out, physicians were reluctant to prescribe Provenge primarily because they weren't confident that payers would cover the expensive drug. Sales got off to a slow start and didn't ramp up to expected levels even as more time went by. Dendreon's stock went into a free fall.

Long-suffering shareholders see hope now that the Committee for Medicinal Products for Human Use, or CHMP, has recommended that Provenge be approved for sale in Europe. However, Dendreon faces stiff competition in marketing Provenge against Medivation's Xtandi and Johnson & Johnson's Zytiga. Analysts expect both drugs to eventually hit annual sales of around $2 billion. Only time will tell if these targets are right -- and if Dendreon can mount a comeback.

The decade ahead
Could the next 10 years be better than the last decade for these three biotechs? Sure. However, the prospects vary for each company.

I think Lexicon's pipeline and partnerships with big players like Merck -- and its horrible performance over the past several years -- make it the most likely to improve. It wouldn't be too surprising if Lexicon or Sequenom caught the eye of a larger company looking to make an acquisition. Dendreon has a formidable challenge, though. I'm more pessimistic about its chances, but anything is possible.

While biotech has its big winners and its bombs, the best investing approach in any decade is to choose great companies and stick with them for the long term. The Motley Fool's free report "3 Stocks That Will Help You Retire Rich" names stocks that could help you build long-term wealth and retire well, along with some winning wealth-building strategies that every investor should be aware of. Click here now to keep reading.

Hot Cheap Stocks To Own Right Now

Remember that time when everyone called for indefinitely cheap natural gas? Yeah, scratch that idea -- the cost of futures contracts has doubled from the year-ago period, which is bad news for nitrogen fertilizer companies that purchase their supplies on the spot market. As the most important input for nitrogen fertilizer production, nothing has as big of an effect on the bottom line as natural gas prices. When prices hit 10-year lows in 2012, fertilizer companies captured record profits. Now the trend is abruptly reversing. ��

Since many companies in the fertilizer industry are adored for their incredibly high payouts, and those payouts are dictated by the bottom line, investors have good reason to worry. The market has reacted by sending fertilizer stocks down in the first four months of 2013. Should you abandon ship in anticipation of deflating bottom lines and shrinking payouts? If you're looking for high payouts but are wary of rising natural gas prices, there is still one stock you can buy. CVR Partners (NYSE: UAN  ) �produces high-priced nitrogen fertilizers without using�one iota of natural gas.

Hot Cheap Stocks To Own Right Now: S&P Smallcap 600(PH)

Parker Hannifin Corporation manufactures fluid power systems, electromechanical controls, and related components worldwide. Its Industrial segment offers pneumatic and electromechanical components, and systems; filters, systems, and instruments to monitor and remove contaminants from fuel, air, oil, water, and other liquids and gases; connectors that control, transmit, and contain fluid; hydraulic components and systems for builders and users of industrial and mobile machinery and equipment; critical flow components for process instrumentation, healthcare, and ultra-high-purity applications; and static and dynamic sealing devices. This segment sells its products to original equipment manufacturers (OEMs) and their replacement markets in the manufacturing, transportation, and processing industries. The company?s Aerospace segment provides flight control systems and components, including hydraulic, electrohydraulic, electric backup hydraulic, electrohydrostatic, and electro -mechanical components for precise control of aircraft rudders, elevators, ailerons, and other aerodynamic control surfaces. It also provides electronics thermal management heat rejection systems, and single-phase and two-phase heat collection systems for radar, ISAR, and power electronics. This segment markets its products primarily to OEMs in the commercial, military, and general aviation markets, as well as to end users. Its Climate and Industrial Controls segment offers systems and components primarily for use in the mobile and stationary refrigeration, and air conditioning industry; and in fluid control applications in various industries, such as processing, fuel dispensing, beverage dispensing, and mobile emissions. This segment serves OEMs and their replacement markets. Parker-Hannifin Corporation markets its products through direct-sales employees, independent distributors, wholesalers, and sales representatives. The company was founded in 1918 and is headquartered i n Cleveland, Ohio.

Advisors' Opinion:

• [By Putnam]

  Parker Hannifin (PH) operates in a broadly diversified engineering industry with peers such as General Electric (GE) and 3M Company (MMM). Its products serve aerospace, commercial, mobile and industrial markets.

  The 2011 fiscal year was stellar for Parker. An all time record of $12.3 billion in sales was reached, a 23.5% increase. Net income increased a whopping 90%.

  The common stock currently trades at a price to earnings ratio of 10.5, below the industry average of 14.8 and historical average of 14. Price to book ratio is 2.02 with price to cash flow being 7.3.

  Making comparisons in a broadly diversified industry is difficult, since products and service offerings vary greatly between businesses. Therefore, the peer company’s business lines and products were used as the main selection criteria for peer analysis.

Hot Cheap Stocks To Own Right Now: Express-1 Expedited Solutions Inc.(XPO)

XPO Logistics, Inc. provides third-party logistics services using a network of relationships with ground, sea, and air carriers in the United States, Mexico, and Canada. It operates in three segments: Express-1, Concert Group Logistics, and Bounce Logistics. The Express-1 segment offers ground expedited surface transportation services for freight. It operates a fleet ranging from cargo vans to semi tractor trailer units. The Concert Group Logistics segment provides domestic and international freight forwarding services through a network of independently owned stations. Its domestic freight forwarding services include air charter, expedites, and time sensitive services, as well as cost sensitive services comprising deferred delivery, less than truckload, and full truck load services; and international freight forwarding services consist of on-board courier and air charters, time sensitive services, less-than-container and full-container-loads, and vessel charters. This segm ent also offers documentation on international shipments, customs clearance and banking, trade show shipment management, time definite and customized product distributions, reverse logistics and on site asset recovery projects, installation coordination, freight optimization, and diversity compliance support services. The Bounce Logistics segment provides premium freight brokerage services for truckload shipments. The company serves approximately 4,000 retail, commercial, manufacturing, and industrial customers through 6 U.S. operations centers and 22 agent locations. It offers its services to the automotive manufacturing, automotive components and supplies, commercial printing, durable goods manufacturing, pharmaceuticals, food and consumer products, and high tech sectors. The company was formerly known as Express-1 Expedited Solutions, Inc. and changed its name to XPO Logistics, Inc. in September 2011. XPO Logistics, Inc. was founded in 1989 and is based in Buchanan, Michi gan.

Advisors' Opinion:

• [By Skousen]

  There is nothing exciting about the shipping business except that the growth in this industry can be exponential in an economy that is barely improving. Business conditions for shippers improve much more dramatically than the overall economy, and that’s exactly why you want to own shipping stocks in an economy emerging from recession — like we are right now — and avoid them in a slowing economy. Of all the shipping and transport companies out there right now, I like -1 Expedited Solutions Inc. (AMEX: XPO) the best because it grows faster from a tiny revenue base.

  In November, XPO announced Q3 results that beat by 150%, coming in at 5 cents per share versus an analyst estimate of 2 cents. Revenue rose by 70% to $44.4 million, up from $26.1 million in the same quarter of last year. The stock soared flowing the report and should continue to gain as shipping and freight companies are the first to rebound in an economic recovery. Buy XPO below $3.

Top Stocks To Own Right Now: Uranium Resources Inc.(URRE)

Uranium Resources, Inc. engages in the acquisition, exploration, development, and mining of uranium properties, using the in situ recovery or solution mining process. It owns developed and undeveloped uranium properties in South Texas; and undeveloped uranium properties in New Mexico. The company?s primary customers include utilities who utilize nuclear power to generate electricity. Uranium Resources, Inc. was founded in 1977 and is based in Lewisville, Texas.

Advisors' Opinion:

• [By Louis]

  Uranium exploration, mine development and production company Uranium Resources Inc.(URRE) has watched its stock value skyrocket 179% in the past 12 months -- and it is still trading for less than $2 per share! This is even more impressive when you consider that investors fled the sector in March after the nuclear power plant crisis in Japan, causing URRE to lose close to 50%. Since its March 16 low, shares have climbed 38% to $1.92. With a 52-week trading range of 38 cents to $3.98, look for shares to make their way higher as the sector continues to rebound.

Hot Cheap Stocks To Own Right Now: LifePoint Hospitals Inc.(LPNT)

LifePoint Hospitals Inc., through its subsidiaries, operates general acute care hospitals in non-urban communities in the United States. The company?s hospitals provide a range of medical and surgical services comprising general surgery, internal medicine, obstetrics, emergency room care, radiology, oncology, diagnostic care, coronary care, rehabilitation services, and pediatric services, as well as specialized services, such as open-heart surgery, skilled nursing, psychiatric care, and neuro-surgery. Its hospitals also offer outpatient services, including one-day surgery, laboratory, x-ray, respiratory therapy, imaging, sports medicine, and lithotripsy. As of December 31, 2009, LifePoint Hospitals owned or leased 47 hospitals with a total of 5,552 licensed beds in 17 states. The company was founded in 1997 and is headquartered in Brentwood, Tennessee. Lifepoint Hospitals Inc. (NasdaqNM:LPNT) operates independently of HCA Inc. as of May 11, 1999.

Advisors' Opinion:

• [By Vatalyst]

  Life Point Hospitals (LPNT) operates general acute care hospitals in growing, non urban areas in the US. It looks to acquire hospitals where it will be the sole provider to the community.

  On the earnings front, it had a good first quarter, beating analyst estimates. The common stock currently trades at a price to earnings ratio of 10.1, well below its 10 year historical average of 13.5. Its price to book ratio stands at 0.82 with price to cash flow being 5.1.

Hot Cheap Stocks To Own Right Now: MEDIWARE Information Systems Inc.(MEDW)

Mediware Information Systems, Inc., together with its subsidiaries, engages in the design, development, and marketing of software solutions targeting specific processes within healthcare institutions. The company offers software systems consisting of company's proprietary application software, and third-party licensed software and hardware. It licenses, implements, and supports clinical and performance management, blood donor, and blood and biologic management products in the United States; and medication management solutions in the United States, the United Kingdom, Ireland, and South Africa. The company?s blood and biologics management solutions include HCLL Transfusion and HCLL Donor, which address blood donor recruitment, blood processing, and transfusion activities for hospitals and medical centers; BloodSafe suite of hardware and software that enable healthcare facilities to store, monitor, distribute, and track blood products; LifeTrak software for blood centers; a nd BiologiCare, a bone, tissue, and cellular product tracking software. Its medication management products comprise WORx, a pharmacy information system to manage inpatient and outpatient pharmacy operations; MediCOE, a physician order entry module; MediMAR, a nurse point-of-care administration and bedside documentation module; MediREC, which assists in achieving compliance with a Joint Commission mandate; and pharmacy management and electronic prescribing systems. The company?s performance management products include InSight software that tracks performance metrics to assist healthcare managers to manage performance. It also provides software installation and maintenance services, as well as billing and collection services to home infusion and home/durable medical equipment markets. The company markets its products primarily through its direct sales force. Mediware Information Systems, Inc. was founded in 1970 and is headquartered in Lenexa, Kansas.

Advisors' Opinion:

• [By Chris Stuart]

  Mediware Information Systems(MEDW), which has a market value of $88 million, sells blood- and biologics-management products and services to hospitals, surgery centers and other health-care facilities. The stock is down nearly 13% in the past three months, but the company has released little news. The stock is thinly traded, with only 17,000 shares of average daily volume, and with only 8 million shares outstanding, it doesn't take much to move the needle.

  Despite the drop in price, management reported impressive results in the most recent quarter, with revenue and earnings up 7% and 57%, respectively, from a year earlier. Mediware should continue to benefit from government stimulus money earmarked to improve health-care technology over the next few years.

  CEO Kelly Mann, formerly with 3M's(MMM) health-information division, has made great strides since his arrival nearly four years ago. Return on equity has improved to 10%, up from the low single digits three years ago.

  From a valuation standpoint, the shares look cheap, trading at just 6 times trailing EV/EBITDA and 15 times forward earnings. Plus, Mediware has no long-term debt and $30 million in cash. TheStreet Ratings has a $15 price target on Mediware.