Pentagon Awards 20 Contracts Worth $775.5 Million Thursday

The U.S. Department of Defense issued 20 new contracts Thursday, handing out awards totaling $775.5 million in total. Among the winners:

Northrop Grumman (NYSE: NOC  ) won a maximum $40.2 million firm-fixed-price, sole-source contract to supply the Defense Logistics Agency's Aviation department with "outer wing panels" for unspecified Navy aircraft. Delivery on this contract is due Jan. 31, 2017 . Boeing (NYSE: BA  ) won a cost-plus-fixed-fee contract worth up to $39.6 million to provide logistics support and fielding and training services for U.S. Army units being equipped with its CH-47F Chinook transport helicopter. Oceaneering International Inc (NYSE: OII  ) was awarded a $16.5 million cost-plus-fixed fee, cost-plus-incentive fee and firm-fixed-price contract to provide technical/maintenance services for a dry-deck shelter. DoD noted that the awarded contract contains "options" for additional work which, if exercised, would increase the value of this contract to $99.7 million. The base period of the contract calls for work to be completed by July 2014. Optional extensions could stretch the contract out through July 2018. SAP's (NYSE: SAP  ) Government Support and Services unit was awarded a time-and-materials, option-filled contract with a maximum value of $7.1 million to provide enterprise resource planning services to the Army.

Top Heal Care Companies To Watch For 2014

Stocks in Europe were little changed after three weeks of losses, as China�� export growth tumbled to a 10-month low while Japan�� economy expanded more than initially estimated. U.S. index futures and Asian shares gained.

Severn Trent Plc, the U.K.�� second-largest publicly traded water company, retreated the most in almost a year after rejecting a takeover offer. Anglo American Plc and Rio Tinto Group led mining companies lower as copper fell for a third day in London trading. Man Group Plc, the world�� biggest publicly traded hedge-fund manager, rebounded from last week�� slide.

The Stoxx Europe 600 Index rose 0.1 percent to 295.78 at 10:04 a.m. in London as three shares advanced for every two that fell. Standard & Poor�� 500 Index futures added 0.4 percent after the U.S. gauge jumped the most since April on June 7 as payrolls topped projections. The MSCI Asia Pacific Index gained 1.3 percent as Japan�� Topix (TPX) jumped 5.2 percent.

Top Heal Care Companies To Watch For 2014: CSP Inc.(CSPI)

CSP Inc. engages in the development and marketing of information technology (IT) integration solutions and high-performance cluster computer systems to industrial, commercial, and defense customers worldwide. The company operates in two segments: Systems, and Service and System Integration. The Systems segment designs and manufactures specialty, high-performance computer signal processing systems for the aerospace and defense markets. These systems are used on land, and in airborne and shipboard platforms for high-speed digital signal processing in radar, sonar, and surveillance applications. The Service and System Integration segment consists of the computer maintenance and integration services, and third-party computer hardware and software value added reseller businesses. It also provides professional IT consulting services, including maintenance and technical support; implementation, integration, configuration, and installation services; enterprise security intrusion p revention, network access control, and unified threat management services; IT security compliance services; custom software applications and solutions development and support; and monitoring, reporting, and management of alerts for the resolution and preventive general IT and IT security support tasks. This segment offers its solutions and services for IT environments, including storage and servers, unified communications solutions, IT security solutions, and consulting services. The company markets its products and services through direct sales force, distributors, and resellers. CSP Inc. was founded in 1968 and is headquartered in Billerica, Massachusetts.

Top Heal Care Companies To Watch For 2014: Southcoast Financial Corporation(SOCB)

Southcoast Financial Corporation operates as the holding company for Southcoast Community Bank that provides commercial banking services in South Carolina. The company offers deposit services, which comprise business and personal checking accounts, NOW accounts, savings accounts, money market accounts, various term certificates of deposit, individual retirement accounts, and other deposit services. It also provides secured and unsecured, short-to-intermediate term loans for commercial, consumer, and residential purposes. The company?s consumer loans include car loans, home equity improvement loans secured by first and second mortgages, personal expenditure loans, education loans, and overdraft lines of credit; commercial loans for businesses to provide working capital, expand physical assets, or acquire assets; loans secured by real estate mortgages for the acquisition, improvement or construction, and development of residential and other properties; residential real esta te loans; non-farm and non-residential loans; commercial real estate loans; real estate construction loans; and land development loans. In addition, it offers residential mortgage loan origination services, safe deposit boxes, business courier services, night depository services, telephone banking, MasterCard brand credit cards, tax deposits, and automated teller machine services. The company operates offices in Mt. Pleasant, Charleston, Moncks Corner, Johns Island, Summerville, Goose Creek, and North Charleston, South Carolina. Southcoast Financial Corporation was founded in 1998 and is headquartered in Mt. Pleasant, South Carolina.

Top Financial Companies To Buy For 2014: BLRDS Emerging Markets 50 ADR Index Fund (ADRE.W)

BLDRS Emerging Markets 50 ADR Index Fund (the Fund) is a unit investment trust designed to provide investment results that correspond generally to the price and yield performance of the publicly traded depositary receipts comprising The Bank of New York Emerging Markets 50 ADR Index. As of September 30, 2006, The BNY Emerging Markets 50 ADR Index included 50 component depositary receipts representing the securities issued by 50 of the most actively traded companies from the international and emerging markets having a free-float market capitalization ranging from approximately $3 billion to over $30 billion.

The Fund's portfolio consists of substantially all of the securities, in substantially the same weighting, as the component securities of The BNY Emerging Markets 50 ADR Index. The BNY Emerging Markets 50 ADR Index is a capitalization-weighted index.

Top Heal Care Companies To Watch For 2014: HRT Participacoes em Petroleo SA (HRTPY.PK)

HRT Participacoes em Petroleo SA, formerly BN 16 Participacoes Ltda, is a Brazil-based holding company engaged in the oil and gas industry. The Company is primarily involved in the exploration and production (E&P) of oil and natural gas in Brazil and Namibia. Through its subsidiaries, it is active in the geophysical and geological research, exploration, development, production, import, export and sale of oil and natural gas, as well as in the provision of air logistics services in transporting people and equipment related to oil and gas activities in the exploratory campaign in the Solimoes Basin. As of December 31, 2011, the Company had seven subsidiaries, including Integrated Petroleum Expertise Company Servicos em Petroleo Ltda (IPEX), HRT O&G Exploracao e Producao de Petroleo Ltda, HRT Netherlands BV, HRT America Inc, HRT Africa, HRT Canada Inc and Air Amazonia Servicos Aereos Ltda.

Top Heal Care Companies To Watch For 2014: Kansas City Life Insurance Company(KCLI)

Kansas City Life Insurance Company, together with its subsidiaries, operates as a financial services company that focuses on underwriting, selling, and administrating life and annuity insurance products in the United States. It offers individual insurance products, which include traditional insurance products, such as term insurance, whole life insurance, life disability, and accident and health products, as well as immediate annuity products, including various supplementary contract options; and interest sensitive insurance products that comprise universal life, variable universal life, fixed deferred annuities, variable annuities, and supplementary contracts without life contingencies. The company also provides group insurance products, such as life, dental, vision, and long-term and short-term disability products. In addition, it offers investment and broker-dealer services for proprietary and non-proprietary variable insurance products, mutual funds, and other securiti es. Kansas City Life Insurance Company markets its products through a sales force of independent general agents, agents, group brokers, and third-party marketing arrangements in 48 states and the District of Columbia. The company was founded in 1895 and is headquartered in Kansas City, Missouri.

Can You Trust the Cash Flow at American Midstream Partners?

Although business headlines still tout earnings numbers, many investors have moved past net earnings as a measure of a company's economic output. That's because earnings are very often less trustworthy than cash flow, since earnings are more open to manipulation based on dubious judgment calls.

Earnings' unreliability is one of the reasons Foolish investors often flip straight past the income statement to check the cash flow statement. In general, by taking a close look at the cash moving in and out of the business, you can better understand whether the last batch of earnings brought money into the company, or merely disguised a cash gusher with a pretty headline.

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

Source: S&P Capital IQ. Data is current as of last fully reported fiscal quarter. Dollar values in millions. FCF = free cash flow. FY = fiscal year. TTM = trailing 12 months.

Over the past 12 months, American Midstream Partners burned $3.5 million cash while it booked a net loss of $11.8 million. That means it burned through all its revenue and more. That doesn't sound so great.

All cash is not equal
Unfortunately, the cash flow statement isn't immune from nonsense, either. That's why it pays to take a close look at the components of cash flow from operations, to make sure that the cash flows are of high quality. What does that mean? To me, it means they need to be real and replicable in the upcoming quarters, rather than being offset by continual cash outflows that don't appear on the income statement (such as major capital expenditures).

For instance, cash flow based on cash net income and adjustments for non-cash income-statement expenses (like depreciation) is generally favorable. An increase in cash flow based on stiffing your suppliers (by increasing accounts payable for the short term) or shortchanging Uncle Sam on taxes will come back to bite investors later. The same goes for decreasing accounts receivable; this is good to see, but it's ordinary in recessionary times, and you can only increase collections so much. Finally, adding stock-based compensation expense back to cash flows is questionable when a company hands out a lot of equity to employees and uses cash in later periods to buy back those shares.

So how does the cash flow at American Midstream Partners look? Take a peek at the chart below, which flags questionable cash flow sources with a red bar.

Source: S&P Capital IQ. Data is current as of last fully reported fiscal quarter. Dollar values in millions. TTM = trailing 12 months.

When I say "questionable cash flow sources," I mean items such as changes in taxes payable, tax benefits from stock options, and asset sales, among others. That's not to say that companies booking these as sources of cash flow are weak, or are engaging in any sort of wrongdoing, or that everything that comes up questionable in my graph is automatically bad news. But whenever a company is getting more than, say, 10% of its cash from operations from these dubious sources, investors ought to make sure to refer to the filings and dig in.

With 16.3% of operating cash flow coming from questionable sources, American Midstream Partners investors should take a closer look at the underlying numbers. Within the questionable cash flow figure plotted in the TTM period above, stock-based compensation and related tax benefits provided the biggest boost, at 12.1% of cash flow from operations. Overall, the biggest drag on FCF came from capital expenditures.

A Foolish final thought
Most investors don't keep tabs on their companies' cash flow. I think that's a mistake. If you take the time to read past the headlines and crack a filing now and then, you're in a much better position to spot potential trouble early. Better yet, you'll improve your odds of finding the underappreciated home-run stocks that provide the market's best returns.

Can your retirement portfolio provide you with enough income to last? You'll need more than American Midstream Partners. Learn about crafting a smarter retirement plan in "The Shocking Can't-Miss Truth About Your Retirement." Click here for instant access to this free report.

We can help you keep tabs on your companies with My Watchlist, our free, personalized stock tracking service.

Add American Midstream Partners to My Watchlist.

4 Potential Suitors for Onyx

The "people familiar with the matter" are out in full force spouting off about who's bidding for Onyx Pharmaceuticals (NASDAQ: ONXX  ) , reports Reuters and The Wall Street Journal.

The insiders -- most likely Onyx's bankers -- release the confidential information to help drive up the price. You'll recall that Amgen (NASDAQ: AMGN  ) recently made an unsolicited bid for $120 per share that Onyx rejected before putting itself on the auction block. The more potential bidders, the higher Amgen has to raise its bid, assuming, of course, that Amgen believes what's reported in the press.

The news flow also encourages shareholders to hold the course; shares currently trade well above the $120 offer. The bidding process will take awhile, and if shares fall, it's easier for bidders to justify a lower final offer.

Here's a look at the potential suitors, assuming the bankers are telling the truth, of course.

Obvious
It's not surprising to see Amgen in the mix of bidders given its initial interest. With its oncology focus, Onyx would be a nice fit. At $10 billion, buying Onyx would be the largest purchase Amgen has made since it bought Immunex more than a decade ago. With more than $20 million in the bank, though, Amgen can certainly afford it.

Big pharma
The two big pharma being mentioned by the insiders, Pfizer (NYSE: PFE  ) and Bristol-Myers Squibb (NYSE: BMY  ) , are the two obvious choices given their focus on oncology.

Bristol has build much of its medicine bag and pipeline through acquisitions in a strategy it calls "string of pearls," so acquiring Onyx would just be adding another pearl -- albeit a rather large one. A knock on a big pharma company buying Onyx is that it would have to work with Onyx's partner, Bayer, co-marketing their cancer drug Nexavar, but that shouldn't phase Bristol given that it's worked with Sanofi selling Plavix and more recently hocking diabetes drugs with AstraZeneca.

Onyx would be an interesting fit with Pfizer. They're competitors of sorts since Pfizer's Sutent works in basically the same way as Onyx's Nexavar. But the companies have found separate niches with Sutent getting most of its sales from kidney cancer and Nexavar focused on liver cancer, even though it's also approved for kidney cancer. Onyx and Pfizer also have a partnership for another cancer drug in development, palbociclib, so buying Onyx would save Pfizer the having to pay the royalty if the drug is approved.

Dark horse
Gilead Sciences (NASDAQ: GILD  ) , the final name mentioned by the insiders, has been slowly building out its oncology franchise through multiple acquisitions and even an academic partnership.

Gilead has six oncology drugs in the pipeline, but hasn't gained FDA approval for an oncology drug yet. Purchasing Onyx would give it a couple of marketed products and thus a built in sales force.

Gilead doesn't have the cash to make the purchase, though. At the end of the first quarter, the biotech only had less than $2 billion in the bank. Of course, capital is still cheap, so issuing bonds to pay for the purchase is an option.

Buy?
I could see any of the companies mentioned eventually buying Onyx. Of all the companies, Gilead could benefit the most from purchasing Onyx, although I think it's probably the least likely to pull the trigger.

The concern for shareholders of the potential buyers isn't whether they should buy, but whether they'll overpay. Getting in a bidding war for a company that's already increased in value over 75% this year can be dangerous.

I think there's probably some room to go higher. My Foolish colleague Sean Williams did a good job breaking down Onyx's assets, coming up with a potential price of $145 per share based on 2.5 times peak sales, which seems reasonable to me, but whether a potential acquirer will see it that way remains to be seen. Jumping on for the 9% upside may not be worth the risk of acquirers deciding the valuation has gotten too steep.

A better 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 also winning strategies that every investor should know. Click here to grab your free copy today.

You'll Never Guess What Americans Consider the Least Concerning U.S. Problem

The average American has certainly had a full plate of concerns and problems to contend with over the past five years. The U.S. economy has thrown us the deepest recession in 70 years, complete with a housing bubble and credit crisis, all while the government lowered and then re-raised payroll taxes. In addition, if health-care coverage wasn't part of their everyday lives, then the Patient Protection and Affordable Care Act, known better as Obamacare, which is set to go into full effect for individuals on Jan. 1, will ensure that one way or another people obtain health insurance or pay an end-of-the-year penalty.

In sum, the past five years have resoundingly transformed a somewhat predictable economy into a cauldron of uncertainty.

Keeping this in mind, I was very intrigued with a Gallup poll conducted last week that questioned some 2,000-plus respondents on what they considered the top problem in the U.S. to be. The choices the respondents were given to select from were as follows (in no particular order):

Government/Congress/Politicians Federal deficit Economy in general Poor leadership/The president/Corruption/Abuse of power Health care Education Unemployment/Jobs Immigration Ethics/Moral-religious-family decline/Dishonesty

Now just imagine you were given this question: "What is the most important problem in the U.S. right now?" What would your answer be?

Here's how America responded :

What's the Most Important Problem in the U.S.?

% Respondents

Economy in general	23%
Unemployment/jobs	19%
Health care	11%
Government/Politics/Politicians	10%
Federal deficit	8%
Ethics/Moral-religious-family decline/Dishonesty	7%
Poor leadership/The president/Corruption/Abuse of power	6%
Immigration	6%
Education	5%

Source: Gallup. Figures do not add to 100% because of rounding.

This makes sense
Some factors here do make a lot of sense. Take, for instance, the "economy in general," which is still the biggest concern in the minds of Americans. Slow growth in consumer spending is still keeping many small businesses from ramping up expansion plans for fear of wasting their hard-earned money, and it's a primary factor that's keeping the economy from kicking into that next gear. Even with the Federal Reserve having targeted interest rates at historically low levels for years now, the American growth engine hasn't taken off.

Despite this big fear, worries about the economy have been abating on a steady basis since late 2008, when the same Gallup poll at the time noted 58% of respondents selecting the economy in general as America's top concern. One key component to that end has been the stabilizing power of the U.S. stock markets. The Dow Jones Industrial Average (DJINDICES: ^DJI  ) , an iconic symbol of American multinational companies, and the broader-based S&P 500 (SNPINDEX: ^GSPC  ) have both more than doubled from their lows set in March 2009. As a strong basis for investment in this country, these indexes have helped add credence in the psyches of investors to the belief the past can indeed stay in the past, and that investors should be focusing on the bright future.

It also hasn't hurt that the housing sector, which crippled so many family households, is finally on the mend, with home prices rising by 12% in the United States' 20 largest cities in June, according to the Case-Shiller Composite Index -- the fastest rate of growth since 2006.

But one particular answer among these respondents had me scratching my head, as it made little sense.

Source: White House on Flickr.

What's wrong with America?
Why, oh, why is education dead last among the problems that we need to address? I'm not in any way saying that Congress, immigration, health care, or any of the other issues listed above aren't important, so don't misconstrue my words; but the top two concerns smashed together -- the economy in general and unemployment/jobs -- can both be solved by improving education in this country.

In other words, you improve education and you essentially eradicate HALF of the problems in this country, according to the respondents of this survey (49%).

Just last week we examined the single biggest problem with America's labor force: underemployment. Based on U-6, a U.S. Department of Labor Statistics measurement that factors in the unemployment rate as well as workers who have accepted part-time employment but wish to work full-time, 14.3% of the American workforce, or one in seven, is currently underutilized!

The onus of wrongdoing as is related to underutilization isn't necessarily on the students here entirely, but on both employers and colleges as well for failing to prepare students for real-world challenges and guiding academia on what degrees they're currently looking for.

Before the recession, broad-based degrees helped establish versatility, which opened the door to multiple career paths for college grads. That isn't the case anymore, with enterprises looking for specialized skill sets in a very difficult full-time job environment. Your degree can mean the difference between finding a good-paying job quickly, or being forced to seek a paycheck in a situation where you'd be considered underemployed or overqualified.

Now for the good news
Whether you believe it or not, education -- be it a lack thereof or the wrong type of education -- is at the root of a majority of America's problems. But there's still hope.

A recent study conducted by Georgetown University's Center on Education and the Workforce highlighted some of the worst degrees in terms of unemployment but also pointed out in the process some of the most in-demand degrees. From an economic, investable, and personal perspective, boosting education and awareness in these degree areas would be beneficial for everyone involved.

Nursing: Nursing is a huge winner, with an unemployment rate of a mere 4.8% -- nearly 3% below the national average unemployment rate. Nursing demand is only expected to increase, with baby boomers beginning to hit retirement age and Obamacare set to shuffle millions of newly insured Americans into the health-care system. To put it another way, the medical system is going to have its hands full for decades to come, and it will need as many trained staff members as it can get.

UnitedHealth Group (NYSE: UNH  ) , the nation's largest health-care provider, for instance, has plans to hire close to 600 people in the Carolinas alone, with a good chunk of that hiring being nurses and nurse practitioners. These health-benefits organizations aren't hiding the fact that Obamacare will keep them busy, which should give colleges and the public a clue to start thinking in terms of nursing degrees. 

Marketing and market research: Just hearing about this degree makes me cringe, as it immediately brings up memories of telemarketers calling me at all hours of the night to sell me their wares. However, marketing has evolved far beyond just traditional cold-calling these days. With the world having gone global in scale over the past two decades thanks to the advent of the Internet and far better infrastructure in burgeoning emerging markets like China, Brazil, Russia and India, a degree in marketing can translate into something as simple as a strategic marketing or advertising job with a multinational corporation to something as complex as a financial market analyst with a Wall Street firm. Because of the diversity of the degree and the need for marketing even at the simplest of businesses, it's a degree with an unemployment rate of just 6.6%.

Last year, for examples, a Forbes report identified Sears Holdings (NASDAQ: SHLD  ) as one of the nation's largest companies seeking marketing help, with, at the time, 123 job openings in marketing -- far and away higher than any other major corporation. To me that isn't too surprising, as the struggling retailer needs fresh ideas and a new image to help transform it into a company that can once again attract younger consumers without having to get into pricing wars with its competition.

Veterinary medicine: For this last one I'm going rogue from Georgetown's list and introducing a third area of undermet educational needs with high growth potential -- veterinary medicine. I know this firsthand, since I was about halfway through a veterinary medicine degree in college 14 years ago before switching majors to economics. Between 2010 and 2020, veterinarian job growth is forecast to increase by 36% thanks to the growing acceptance of pets into the American household and as part of the family. To that end, veterinarians have an unemployment rate of just 0.6% (that's right ... zero point six percent!) according to U.S. News. 

We only need to look so far as PetSmart (NASDAQ: PETM  ) to see how transformative this change has been. PetSmart, which offers an array of retail pet products in its stores, as well as grooming and veterinary services, has delivered 126% revenue growth since 2003 -- consistently growing its top line every year, even when the economy hit a major roadblock in 2009. 

We've got college-educated people out there. Fix it!
Simply put, education should be a bigger emphasis in this country, but it's not. Within these studies we have the knowledge to exact change that will lower unemployment and underemployment and create a happier and more productive workforce. Ultimately, this should improve economic growth and boost the top-line results of big corporations that could lead to a sustainable long-term rally in the Dow Jones and S&P 500. Without a big shift toward correcting our underutilization and educational problems, I don't see this rally as sustainable for much longer.

Economic concerns isn't the only factor weighing on the American consumer. Tax increases that took effect at the beginning of 2013 affected nearly every American taxpayer. But with the right planning, you can take steps to take control of your taxes and potentially even lower your tax bill. In our brand-new special report "How You Can Fight Back Against Higher Taxes," The Motley Fool's tax experts run through what to watch out for in doing your tax planning this year. With its concrete advice on how to cut taxes for decades to come, you won't want to miss out. Click here to get your copy today -- it's absolutely free.

5 of Last Week's Biggest Losers

There's never a shortage of losers in the stock market. Let's take a closer look at five of this past week's biggest sinkers.

Company

May 24

Weekly Loss

National Bank of Greece (NYSE: NBG  )	$1.22	49%
Cirrus Logic (NASDAQ: CRUS  )	$17.36	22%
Whiting USA Trust (NYSE: WHX  )	$5.05	19%
Halcon Resources (NYSE: HK  )	$5.54	11%
Newcastle Investment (NYSE: NCT  )	$5.27	11%

Source: Barron's.

Let's start with National Bank of Greece. Greece's largest bank shed nearly half of its value ahead of reasonable quarterly results, while its thriving Turkish unit helped steer the financial services provider to a rare profit. The shares were halted on Friday as the bank prepares to complete a recapitalization plan in the coming days.

Cirrus Logic took a logical hit after warning that its margins will be contracting. Speaking at an investor conference, Cirrus Logic's CEO warned that the cutthroat nature of smartphone component providers will drop the company's gross margins from north of 50% today to mid-40% in the future as pricing pressures kick in.

Whiting USA Trust tumbled a week after going ex-dividend. It's not necessarily surprising to see investors move on a week after a high-yielding trust shells out a quarterly distribution. Whiting's units decreased in value 13% a week earlier, and half of that was in the form of the trust's payout. It's also not a shock to see Whiting in a perpetual state of decline. The units are backed by depleting assets, and the trust will terminate once a set amount of oil and gas has been sold. However, the 19% plunge is unusual even for a company that has already gone through 77% of its production rights and will probably terminate in two years.

Halcon Resources tumbled on Thursday shortly after providing a poorly received operation update on the production of its acreage in northeast Ohio and northwest Pennsylvania. Halcon expects decent natural gas production, but the drilling for oil hasn't proved as lucrative.

Finally, we have Newcastle taking a hit after an analyst downgrade. Keefe Bruyette downgraded its rating on the stock from "outperform" to "market perform." Newcastle is a real estate financing specialist that is now trading even more below its book value, which stood at $7.07 a share as of the end of March.

Ready for a bounce
If you owned some of these losers, how about following the smart money into winners?

With so much of the financial industry getting bad press these days, it may be time to get greedy when others are fearful. Not surprisingly, some of Warren Buffett's biggest investments are in the space. In the Motley Fool's free report "The Stocks Only the Smartest Investors Are Buying," you can learn about a small, under-the-radar bank that's too tiny for Buffett's billions. Too bad for him, because it has better operating metrics than his favorites. Just click here to keep reading.

How Long Can BlackBerry Piggyback on Google?

One of the shortcuts that BlackBerry (NASDAQ: BBRY  ) has been using to grow its app count for years has been ported Google (NASDAQ: GOOG  ) Android apps. It all started when the company announced that it would support ported Android apps on its PlayBook in 2011.

By embracing Android apps within BlackBerry's platform, the company could make it easier for developers to bring their content over with minimal effort. The new BlackBerry 10 platform currently includes an Android emulator, but the underlying Android version is 2.3 Gingerbread, which was originally released in 2010. That means that even ported Android apps are dated and don't have full access to any of the new features that Google has added in the past few years.

In February, BlackBerry said it would be upgrading its Android runtime to Android 4.1 Jelly Bean, and subsequently decided to go all the way up to the current 4.2.2 Jelly Bean. The company has now released the first software developer kit, or SDK, that includes support for Android 4.2.2 Jelly Bean and is encouraging developers to start testing their apps on the platform.

The update will add a slew of new features to the emulator, including things like hardware acceleration, among others. This is the first real tangible step toward getting Jelly Bean apps on BlackBerry 10, and could help boost BlackBerry's app count further, albeit with ported apps.

BlackBerry's Android strategy is a risky bet. Embracing Android too deeply runs the risk of the entire platform becoming little more than a wrapper for Android apps, but the move serves as a stepping stone for developers. They can quickly port their apps to test the waters, and if all goes swimmingly, they can then spend additional time and resources to go native for better performance. The company's BlackBerry World app store is now up to 120,000 total apps, including native and ported titles.

To BlackBerry's credit, the company is making progress with getting more native content. BlackBerry would prefer all apps to be native, but that's not entirely within its control. Only if a sufficient fraction of apps become native could BlackBerry even consider ditching Android support. How long can BlackBerry piggyback on Google?

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

Why CARBO Ceramics Shares Jumped

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 CARBO Ceramics (NYSE: CRR  ) got back on track today, jumping 14% after releasing earnings.

So what: Revenue dropped 13.5% from a year ago to $153.7 million, but came in well ahead of the $142.2 million estimate. Earnings of $0.71 per share were also $0.05 ahead of estimates, so investors cheered a much needed good quarter.  

Now what: Demand picked up in the quarter and so did margins, which may mean that the company's education campaign could be paying off. Management has been on a mission to display the advantages of CARBO's proppants versus lower quality Chinese products, and it's seeing fruits of that labor. The market is still challenging but, if the company can get back to growth, then its current P/E ratio of 20 won't look so expensive.

Record oil and natural gas production is revolutionizing the United States' energy position. CARBO Ceramics is one company that can benefit from this but there are more stable stocks that give investors exposure to energy right now. For this reason, the Motley Fool is offering a comprehensive look at three energy companies set to soar during this transformation in the energy industry. To find out which three companies are spreading their wings, check out the special free report, "3 Stocks for the American Energy Bonanza." Don't miss out on this timely opportunity; click here to access your report -- it's absolutely free. 

How TiVo Is Trying to Get Stickier

As Foolish investors, we're always looking for companies with some sort of competitive advantage, or moat.

TiVo (NASDAQ: TIVO  ) has operated in a cutthroat industry since its inception. As Verizon, DIRECTV, and others began to offer their own DVRs, TiVo's subscriber count plummeted.

One way management hopes to reverse that trend is by building a technological advantage over these cable and satellite operators. The company recently introduced improvements to its Apple iOS app with the addition of "What to Watch Now" -- available to owners of one of the TiVo Premiere DVRs. TiVo's Jim Denney chatted about the app with Motley Fool analyst Rex Moore at June's Cable Show in Washington, D.C. In part one of this series, Jim introduces the app demonstrates how it helps users find programming based on their preferences.

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HanesBrands to Acquire Maidenform in $575 Million Deal

HanesBrands (NYSE: HBI  ) has entered into a definitive agreement to acquire Maidenform Brands (NYSE: MFB  ) , Hanes and Maidenform  announced today.

Hanes is to pay $23.50 per share in cash, a 30% premium over the last 30 days' average closing price. The enterprise value of the transaction, according to Hanes, is approximately $575 million.

Hanes expects the synergies produced by combining the two intimate apparel companies to approach full value within three years and provide more than $500 million more in annual sales, and earnings per share of $0.60.

Hanes said the combination of Maidenform's bra business and Hanes' panty business will presents long-term growth opportunities. The deal would add brands like Maidenform, Flexees, and Self Expressions to the HanesBrands roster that includes Playtex, Bali, Champion, Wonderbra, and its namesake Hanes. HanesBrands anticipates being able to potentially lower the costs of Maidenform products for retailers and consumers. Currently Maidenform sources its products from third-party manufacturers. With the acquisition, HanesBrands said Maidenform will now be able to take advantage of HanesBrands' company-owned manufacturing, which is supplemented by third-party manufacturers.

"We look forward to adding Maidenform's exciting brands and deep product expertise," Hanes Chairman and CEO Richard A. Noll said in his company's press release. "This business is a natural fit into our core business ..."

Maidenform CEO Maurice S. Reznik said in his company's release that "Maidenform and Hanes are two companies that share rich histories, world-class and complementary brands, and promising futures."

The boards of both companies have approved the deal, but Maidenform shareholders must still give their approval, and it must pass regulatory scrutiny. If all goes well, the transaction will be finalized in the fourth quarter of this year.

-- Material from The Associated Press was used in this report.

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Markets Hit All-Time Highs: Don't Let It Stop You From Investing

The headlines say it all: "The S&P 500 closes at an all-time high." When you include dividends reinvested, an investment in a market ETF like SPDR S&P 500 ETF (NYSEMKT: SPY  )  is up a ridiculous 160% since March of 2009.

News like this has investors nervous. And if you think about it, they should be nervous -- a run like this is bound to come to an end, right?

Actually, no. The market should -- and does -- routinely hit all-time highs. Over long time frames, the market has gone up more often than it has gone down, so it only makes sense that we see all-time highs occur with regularity.

A historical perspective
If you go back to 1950, this point becomes clear. By taking the weekly closing price of the S&P 500  (SNPINDEX: ^GSPC  ) , we see that in 37 of the past 64 years, an all-time high was hit. In other words, there's a greater-than-50% chance that in any given year, an all-time high has been reached.

What happens when investors get nervous and sell out during these periods? From time to time, they save themselves from short-term pain, as in the dot-com bubble and the Great Recession. But over the long run, some stretches of huge appreciation are completely missed.

Don't believe me? The areas represent years when an all-time high was reached.

Source: Yahoo! Finance.

Further reinforcing this point, when all-time highs are reached in a given year, notice when they occur:

When All-Time High Occurred

% of the 37 Years When All-Time Highs Were Hit

Last Week of Year	24%
Last Month of Year	41%
Last Quarter of Year	70%

Source: Yahoo! Finance.

Does this mean we are guaranteed to hit an all-time high in the last quarter, month, or week of 2013?

Absolutely not. These are averages across more than half a century. What this means is that there's a reason the end of the year has more instances of all-time highs. Put simply, because the market tends to go up more than down, it makes sense that the market would be higher later in the year, rather than earlier.

If you're a long-term investor, there's no disputing the historical evidence that you've got nothing to worry about when the market hits an all-time high. Finding great companies selling for reasonable prices remains your surest bet to invest successfully. 

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Services Sector Index Slumps for June

The services sector experienced slower growth in June, according to an Institute for Supply Management report released today. The Institute's Non-Manufacturing Index dropped to 52.2%, down 1.5 points from May's 53.7%. Analysts were entirely off the mark, having expected expanding growth in June to 54.5%.

An above-50 rating signals overall expansion, and the services sector has managed to increase its economic activity for 42 consecutive months. The index is composed of 10 components, with five decreasing in June.

For May, the largest drop is also the most significant. New orders, a component that is interpreted as a proxy for economic expectations, plummeted 5.2 points to 50.8%, nearing the point of contraction. New export orders took a smaller 2.5 point dip but ended up in the red at 47.5%. As a sign of some longer-term optimism, the employment component registered a solid 4.6 point increase to 54.7%. 

Today's report comes after ADP announced that 161,000 services sector jobs were added to the market in June.

Jamba Follows Starbucks and Panera

You May Not Want to Hear It, but the Microsoft-Nokia Deal IS Working

Microsoft  (NASDAQ: MSFT  )  is the company everyone loves to hate. And it's not just Apple  (NASDAQ: AAPL  )  iFans that bemoan all things Microsoft; that goes back decades and isn't likely to change anytime soon. It seemed analysts and disgruntled investors alike blamed Microsoft when Windows 8 was rolled out for not single-handedly re-energizing the PC industry; as if that's even possible.

So it's not surprising the Microsoft naysayers were out in force expressing their displeasure when it teamed up with struggling Nokia (NYSE: NOK  ) to dive into the high-end smartphone market. Take on Apple? Samsung? Insanity. Thing is, with each passing quarter, the news for both Nokia and Microsoft keeps getting better, in spite of what some would have you believe.

A few highlights
Though Microsoft didn't quite go all-in with Nokia when it came to which manufacturer's smartphone would run Windows phone OS, it's working out that way, regardless. According to a report by AdDuplex, as of April, 80% of all Windows phones sold globally are made by Nokia, led by its flagship Lumia 920 device.

Google's (NASDAQ: GOOG  ) Android and Apple's iOS still rule the domestic smartphone OS marketplace of course, owning 51.7% and 41.4% through Q1 of this year, respectively. But interestingly, according to Kantar Worldpanel ComTech, iOS and Windows phone OS both grew faster than Android compared to the first quarter of 2012, with iOS leading the way up 2.3 percentage points, followed by Windows Phone's 1.8 percentage point gain.

Here's where it really gets good
The success Verizon had in Q1 of this year selling Lumia smartphones, particularly compared to the first quarter of last year, is a significant win for both Nokia and Microsoft. Sprint is also reaping the benefits of upgrading its smartphone offerings; enjoying a nice jump in sales thanks to Apple's iPhone.

Analyst Mary-Ann Parlato of Kantar said, "For Verizon, Windows' share rose from 0.2% in the three months ending April 2012 to 6.8% by the period ending April 2013. At Sprint, they continued to reap share increases thanks to their iOS offering- iOS sales share on Sprint grew from 33.4% to 38.4% over the last year."

The much-anticipated shift from feature phones to smartphones is complete after smartphones took over the No. 1 spot in sales compared to feature phones last quarter. And that's good news for Microsoft and Nokia. Of all the Windows phone OS sales in the past year, the majority of which are Nokia devices, 42% were feature phone users upgrading to smartphones, 25% swapped Windows devices, and 23% came from an Android smartphone. No word from Kantar on the remaining 10% of Windows OS sales.

The shift from feature to smartphones makes the number of users upgrading to Windows phone OS especially intriguing for Microsoft and Nokia fans. To put it in perspective, only 31% of Apple's iOS phone sales in the past year were from feature phone users stepping up to a smartphone. It's also worth noting that Microsoft is making inroads with younger smartphone buyers, "gaining share among those aged 25-34," according to Kantar's Parlato.

There's huge potential in the mobile phone upgrade market, and the data indicates Microsoft and Nokia are poised to take advantage of the shift. And with Apple reeling from a lack of new devices and questions regarding innovation, Microsoft and Nokia are primed to continue growing market share. Like it or not, the Microsoft and Nokia partnership appears to be working.

With the release of its own tablet, along with the widely anticipated Windows 8 operating system, Microsoft is making inroads in the booming mobile computing market. In a new premium report on Microsoft, a Motley Fool analyst explains that while the opportunity is huge, so are the challenges. The report includes regular updates as key events occur, so make sure to claim a copy of this report now by clicking here.

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More Expert Advice from The Motley Fool

The Motley Fool's chief investment officer has selected his No. 1 stock for the next year. Find out which stock in our brand-new free report: "The Motley Fool's Top Stock for 2013." I invite you to take a copy, free for a limited time. Just click here to access the report and find out the name of this under-the-radar company.

Bank of America Aims to Prove Its Supporters Right

In this video, Motley Fool banking analyst David Hanson breaks down the second-quarter earnings from Bank of America (NYSE: BAC  ) and highlights a few things to love, as well as a few things that concern him.

If B of A can continue to slowly make progress cleaning up legacy issues and effectively serving its customers, long-term investors may continue to be rewarded. Despite the bank's resurgence, one of the other big banks may be a better option. Our analysts break down what they believe to be the strongest bank in The Motley Fool's new report. It's free, so click here to access it now.

A full transcript follows.

Hey, Fools. David Hanson here. This morning, we saw Bank of America report second-quarter earnings. They're the last of the Big Four U.S. banks to report earnings this season, and it was a little bit of a mixed bag. We saw the bank report net income of roughly $4 billion, which seemed strong; however, if we look at it at a tangible book value per share basis -- that actually fell from first quarter, despite the bank raking in over $4 billion in net income plus doing $1 billion of share buybacks.

So, what does this mean? Why do we care that tangible book value per share fell? The reason tangible book value per share fell in the second quarter was this rise in interest rates. When interest rates rose, the bank made a little bit more money on the income that they're making off interest, on the securities that they're holding, but the value of the fixed-income securities that they hold on their balance sheet, those fell, so when interest rates rise, fixed-income securities fall in price.

Now, these aren't actually realized losses that affect net income, but the bank has to record and recognize these unrealized losses that totaled over $4 billion. So we had over $4 billion in unrealized losses and then around $4 billion in net income, so it essentially wiped that out completely to the common shareholder on a tangible book value basis.

So, that doesn't sound very good -- so why is the stock up this morning? There were certainly some things like in Bank of America's second quarter from a business perspective, not necessarily these accounting gimmicks -- not necessarily gimmicks, but these accounting entries that offset in different places.

Just when we look at Bank of America's business, there are certainly some things to like. The wealth-management business, the Merrill Lynch unit that they of course acquired in late 2008 at a very high price, is actually starting to look like a pretty good acquisition -- maybe they still overpaid, but it's performing very well. On the call this morning, banking analyst Mike Mayo was asking, "Is this the strongest margins we've seen in the wealth-management business since the heyday, since Merrill Lynch's old heyday?" [CEO Brian] Moynihan and Bruce Thompson, the CFO, didn't give a direct answer to that, but they certainly hinted that the Merrill Lynch wealth-management business is performing very, very well.

The trading business was also strong, and we just continue to see credit improvement in the consumer portfolios, in the commercial portfolios, that Bank of America holds on its books -- so there are certainly some things to like on the business perspective.

I also was encouraged by some of comments that Moynihan and Bruce Thompson said on the call this morning. Instead of skirting around these other unrealized losses on the security portfolio, they acknowledged these losses at the beginning of the call, instead of kind of shooing them off to the side, kind of like [JPMorgan Chase] did earlier in the week -- they didn't fully address these head-on at the beginning; some analysts had to bring it up, and then they addressed it. Bank of America, they addressed these losses upfront. They said "We made $4 billion in net income, but these were offset by unrealized losses," so they were upfront about that. They didn't try to hide it.

They also acknowledged the new leverage ratios, the proposal in capital requirements that some the banks will have to hold in the long run. They addressed those upfront. They told analysts where they stood on that. They weren't trying to be opaque and not address that upfront. So I was encouraged to see that. And then just the overall performance -- yes, the net income was wiped out by unrealized losses to some extent, but, but, the long-term view of Bank of America is why you'd buy it today is because ultimately their returns are going to get back to a normalized level when they get through these legal issues, when they get through credit losses. They can return to a double-digit return on equity, and they were close -- they were almost at a 10% return on tangible equity in the second quarter.

So, that's them trying to prove investors and analysts right. The people who bought their stock over the last year, the last couple years, despite making terrible net income results and terrible returns for shareholders, the view was Bank of America will ultimately return to a normalized earnings stream and slowly try to produce double-digit returns on equity, and that's where the real value is going to be for a Bank of America shareholder. So, they're trying to prove investors right. They're on the path to do that. There's still going to be some bumps in the road -- we still have legal settlements outstanding -- but the road looks like it's clearing a little bit for Bank of America, and it was a pretty positive quarter.

Again, this is David Hanson, and you can always read more on Fool.com.

These Are the Sort of Dips We Talk About Buying On

Here at The Motley Fool, we talk about "buying on the dip" when we see companies we like but would prefer to see a pull-back before we buy in. In the following video, Fool contributor Matt Thalman discusses a few recent opportunities in which investors could have bought into a few different blue-chip stocks had they been following the market and noticed the opportunity. The old saying that you should buy low and sell high may be easier said than done, though, as a lot of investors lack the patience and discipline to wait for good buying opportunities, and some opportunities can simply be overlooked. With the speed at which a few recent shares came back after falling, it's easy to see why although dips do occur, the average investor may miss them.

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Why Reinsurance Group Shares Dropped

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 life and health reinsurer Reinsurance Group of America (NYSE: RGA  ) sank 10% today after its quarterly results disappointed Wall Street.

So what: The stock has surged over the past six months on strong top-line and bottom-line growth, but today's second-quarter results -- net loss of $49.6 million versus a profit of $141.1 million in the year-ago period -- is forcing Mr. Market to sober up a bit. While revenue is still growing at a solid rate on strong net premiums, high costs from disability coverage in Australia is becoming an increasing cause for concern among analysts.

Now what: Management said it will be extra-cautious about its Australia operations going forward. "At this time, we are suspending all quoting activity in the Australian group total and permanent disability market indefinitely and will continue to be extremely selective in other aspects of that group market until it stabilizes and the products become more sustainable," said CEO A. Greig Woodring. Of course, with all of RGA's other geographic areas -- U.S., Canada, Europe, South Africa, and Asia -- performing quite favorably, Fools might want to use the Australian weakness to buy into the stock.  

Many investors are terrified about investing in financial stocks after the crash, but the sector has one notable standout. In a sea of mismanaged and dangerous peers, it rises above as "The Only Big Bank Built to Last." You can uncover the top pick that Warren Buffett loves in The Motley Fool's new report. It's free, so click here to access it now.

Thursday's Top Upgrades (and Downgrades)

This series, brought to you by Yahoo! Finance, looks at which upgrades and downgrades make sense, and which ones investors should act on. Today, as earnings season gets under way in earnest, analysts are busy tweaking their price targets to track changes in earnings and guidance. We'll be taking a look at three such tweaks today, for popular stocks: SanDisk (NASDAQ: SNDK  ) , Johnson & Johnson (NYSE: JNJ  ) , and HollyFrontier (NYSE: HFC  ) .

Good news first
Let's take these in order, beginning with SanDisk, which is up more than 2% today after reporting $1.06 per share in profits on $1.5 billion in revenues -- beating analyst estimates on both counts. Speaking of counts, the number of analysts upping their price targets on the stock had reached five at last count, with Needham & Co. leading the pack with a projection of $80 a share.

That target is close to $20 above where the shares now trade, suggesting a potential 31% profit in the stock. But can investors realistically hope to capture those profits?

Yes, it very well might. SanDisk turned in a truly magnificent quarter yesterday. Thanks to the beaucoup profits, the company's P/E ratio now stands just a hair below 21 -- versus the near-31 times earnings valuation still being shown on Yahoo! Finance's key statistics page. If the company succeeds in hitting the 28% annualized, long-term growth estimate that analysts have it pegged for, 21 times earnings is an absolute steal of a deal on this stock. Plus, with trailing free cash flow now clocking in at $940 million -- versus "only" $718 million in GAAP net earnings -- this stock's arguably even cheaper than it looks.

Fact is, at a price-to-free cash flow ratio of less than 16 today, I think SanDisk will be a great bargain if the stock even posts growth in the upper teens over the next five years. If it gets into the 20-percent range, though, look out ... above!

Paging Dr. Profit
In contrast, I'm less enthused about Johnson & Johnson, the buy rating Argus Research is still assigning it, and the new $104 price target Argus has suggested.

Don't get me wrong. Johnson & Johnson's report yesterday was fully as good as SanDisk's with revenues ($17.9 billion) and per-share profit ($1.32) both beating expectations. My objections to this stock center less on the success of the business, and more on the price that investors are being asked to pay to own a piece of that business.

Simply put, Johnson & Johnson shares cost too much. Based on the most recent data the company has provided us (which does not include free cash flow data, tsk, tsk), Johnson & Johnson shares now trade for nearly 20 times earnings. That's quite a lot to pay for a company that few analysts see growing earnings at much more than a 6% annualized rate over the next five years.

In fact, even Johnson & Johnson's generous 2.9% dividend yield isn't enough to entice me to buy these shares. As great a company it may be, Johnson & Johnson's stock price is a prescription for portfolio underperformance.

And speaking of underperformance...
One of the very few stocks getting hit with a reduction in price target today is oil refiner HollyFrontier. Over at Imperial Capital, analysts just cut $10 off their target price for Holly shares. (And Holly didn't even report earnings yesterday).

The reason: As Motley Fool Blog network writer Sarfaraz Khan recently pointed out, a marked contraction in the difference in prices between West Texas Intermediate (WTI) crude oil and that of Brent is putting the squeeze on refiners like Holly. In years past, these refiners have been able to buy WTI crude oil at steep discounts, refine them into gasoline and diesel, and sell them at prices more approaching to what other refiners had to charge after refining pricier Brent crude oil.

Those days are coming to an end, and with them, the tailwind that's been boosting HollyFrontier's profits. As a result, the P/E at Holly that today sits below 5.0 is expected to spike sharply upwards next year, giving the stock a forward P/E ratio of nearly 8.5. Indeed, already, we can see foreshadowing of this effect on the company's cash flow statement, where free cash flow numbers for the past 12 months ($1.3 billion) are coming in about half-a-billion dollars below reported net income numbers ($1.8 billion).

Mind you, despite cutting its price target on Holly, Imperial Capital isn't actually counseling selling. To the contrary, Imperial retains a buy rating on the stock, and the reason here is clear: Holly remains cheap, even if earnings falter a bit.

The stock costs only 6.5 times free cash flow today, and the company is sitting on $1.2 billion in net cash (reducing its valuation even further). If earnings aren't going to grow much -- or don't grow at all -- over the next few years, at least the stock is cheap enough to "price in" that risk. Meanwhile, we know that growth will return... eventually. At this point, investors may just want to sit back, cash their 2.8% dividend checks, and wait out the slump.

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

The Chain Reaction That May Just Save Yahoo!

Top 5 Cheap Companies To Own In Right Now

LONDON -- I believe that shares in�Reckitt Benckiser� (LSE: RB  ) (NASDAQOTH: RBGLY  ) are vastly overpriced and are overdue for a weighty correction. The stock has risen 19% since the turn of the year, and currently trades at a 35% premium to Canaccord Genuity's 3,425 pence target price.

The firm is a giant in the household cleaning product and non-prescription health-care space and whose global brands include�Dettol,�Clearasil, Nurofen, and�Durex, among others. But in my opinion, its loss of exclusivity on its�Suboxone drug --�which is used to combat narcotics addiction -- could harm revenues moving forward and sour investor appetite for the company.

Rivals gear up for assault
The U.S. Food and Drug Administration (FDA) halted Reckitt Benckiser's patent on the anti-addiction product, a move that will herald the entry of cheaper, generic rivals to the�Suboxone�brand and harm sales over the medium to long term.�Suboxone�tablet sales in the U.S. represented around 5% of the firm's total revenues last year, while film made up closer to 10% of group turnover.

Top 5 Cheap Companies To Own In Right Now: Horizon Lines Inc.(HRZ)

Horizon Lines, Inc., through its subsidiaries, provides container shipping and integrated logistics services. It ships a range of consumer and industrial items, such as refrigerated and non-refrigerated foodstuffs, household goods, auto parts, building materials, and other materials used in manufacturing. The company offers container shipping services to ports within the continental United States, Puerto Rico, Alaska, Hawaii, Guam, the U.S. Virgin Islands, and Micronesia. Its integrated logistics services comprise rail, truck brokerage, warehousing, distribution, expedited logistics, and non-vessel operating common carrier operations. Horizon Lines, Inc. also offers terminal services. The company operates terminals in Alaska, Hawaii, and Puerto Rico; contracts for terminal services in seven ports in the continental United States; and the ports in Guam, Yantian, and Xiamen, China, as well as Kaohsiung, Taiwan. In addition, it offers inland transportation services. As of Dec ember 20, 2009, the company owned or leased approximately 20 vessels and 18,500 cargo containers. Horizon Lines, Inc. serves consumer and industrial products companies, as well as various agencies of the U.S. government, including the Department of Defense and the U.S. Postal Service. The company was founded in 1956 and is based in Charlotte, North Carolina.

Advisors' Opinion:

• [By Hutchinson]

  Horizon Lines (NYSE: HRZ) is the largest oceangoing shipping company in the United States with a dominant market position along protected shipping lanes. One look at the steady resurgence in shipping demand, coupled with the company’s improving financials, and it seems the worst is behind them — making now the perfect time to scoop up this stock at a discount.

  HRZ is up almost 30% since September, and I expect it to continue moving higher. Recent data show more goods are being manufactured, and they need to be shipped. Horizon will be one of the biggest beneficiaries.

  Buy HRZ on pullbacks under $5.

Top 5 Cheap Companies To Own In 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.

10 Best Stocks To Invest In 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.

Top 5 Cheap Companies To Own In Right Now: Progress Software Corporation(PRGS)

Progress Software Corporation operates as an enterprise software company worldwide. Its products include Progress OpenEdge platform, which offers development tools, application servers, application management tools, and an embedded database; Progress Orbix to address enterprise integration problems with standards-based solutions; and Progress ObjectStore, an object data management system to store data faster than relational database management system or file-based storage system. The company?s products also comprise Progress Responsiveness Process Management suite for business users; Progress Control Tower, an interactive business control panel; Progress Sonic, which comprises an enterprise messaging system and the enterprise service buses; Progress Actional that provides operational and business visibility, root cause analysis, and policy-based security and control of services; Progress Apama, which offers tools for creating, testing, and deploying strategies for applicat ions, including algorithmic trading, market aggregation, smart order routing, market surveillance and monitoring, and risk management; Progress Savvion BusinessManager, a business process management software; and Fuse products that provide customers with access to professional open source integration and messaging software. In addition, it offers Progress DataDirect Connect products, which provide data connectivity components; Progress DataDirect Shadow to provide foundation architecture for standards-based mainframe integration; and Progress Data Services product set that offers data integration for distributed applications. Further, the company provides maintenance, consulting, training, and customer support services. Progress Software Corporation sells its products to independent software vendors, original equipment manufacturers, and system integrators through direct sales force and independent distributors. The company was founded in 1981 and is based in Bedford, Massac husetts.

Advisors' Opinion:

• [By Chris Stuart]

  Progress Software(PRGS) recently cut its outlook for the fiscal second quarter ended in May, saying execution problems at its EDS (enterprise data solutions) segment would lead to a shortfall.

  Mark Schappel from Benchmark Securities (which rates Progress a "buy" with a $31 target) says the shortfall is a speed bump in the company's ongoing transformation, and not a sign of a slump in infrastructure spending.

  TheStreet Ratings has a $34 price target on Progress Software.

Top 5 Cheap Companies To Own In Right Now: TranSwitch Corporation(TXCC)

Transwitch Corporation designs, develops, and supplies semiconductor and intellectual property solutions for voice, data, and video communications equipment. The company provides integrated multi-core network processor system-on-a-chip (SoC) and software solutions for fixed, 3G and 4G mobile, VoIP, and multimedia infrastructures. It offers converged network infrastructure products, including infrastructure VoIP processors comprising Entropia series of processors for wire-line and wireless carrier equipment; EoS/EoPDH mappers and framers for formats and data speeds in the access portion of the network; tributary switches that enable traffic to be switched or re-arranged; and carrier Ethernet solutions consisting of Ethernet controllers and switches, as well as circuit emulation and clock recovery devices. The company also provides FTTx protocol processors, such as mustang, a system-on-chip solution for EPON optical network unit equipment; COLT processor, a system-on-chip so lution for the optical line terminator equipment; and Diplomat-ONT product, an integrated SoC solution for GPON ONU applications, as well as access VoIP processors and access controllers. In addition, it offers broadband customer premises equipment, including multi-service communications processors comprising Atlanta processor, a multi-service SoC for customer premises equipment that supports toll-quality telephone voice, fax, and routing functionality; and HDMI, displayport, HDP, and Ethernet IP cores for consumer electronics, home network equipment, and industrial and automotive applications. The company serves public network systems OEMs, WAN and LAN equipment OEMs, Internet-oriented OEMs, and communications test and performance measurement equipment OEMs, as well as government, university, and private laboratories. It sells its products through direct sales force, independent distributors, and sales representatives. The company was founded in 1988 and is headquartered in Shelton, Connecticut.

Advisors' Opinion:

• [By Michael Brush]

  If you find yourself craving more high-definition video on your smartphone or tablet computer or if you've been checking out 3D televisions -- the next big trend -- you already know why TranSwitch (TXCC) stock should be a winner over the next few years.

  Once a techmania darling, trading at more than $500 a share, TranSwitch crashed and burned along with so many other Internet stocks. It has been all but left for dead since. Wall Street analysts are predicting the stock will actually have fallen to $2 a year from now, from recent levels of around $2.60, according to Thomson Reuters.

  What they're missing is that TranSwitch has revamped its chip offerings so they support high-definition video connections in TVs, PC and game monitors, smartphones, tablets and video cameras. This exposes the company to some big consumer trends. Another new product line supports gear that connects homes, offices and smartphones to the Internet.

  Those analysts and other investors don't put much faith in these new products. So why should you? Because the right kinds of insiders have been accumulating stock. Many of the new products are scheduled to hit the market over the next three months and generate meaningful sales by the fourth quarter. So now is the time to buy.

  Of course, we don't know for sure that TranSwitch's new products will catch on. But behind the scenes, they've been licensed by the likes of Intel (INTC), International Business Machines (IBM), Texas Instruments (TXN) and Analog Devices (ADI),  Ted Chung, the TranSwitch vice president of global business development, tells me. That suggests TranSwitch may work its way into the Apple (AAPL) iGadget ecosystem, says Northland Capital Markets analyst Richard Shannon. That would be a game-changer for tiny TranSwitch, but the markets for its new products are so big that it probably can win even without such an advantage. 

• [By Michael Brush]

  If you find yourself craving more high-definition video on your smartphone or tablet computer or if you've been checking out 3D televisions -- the next big trend -- you already know why TranSwitch (TXCC) stock should be a winner over the next few years.

  Once a techmania darling, trading at more than $500 a share, TranSwitch crashed and burned along with so many other Internet stocks. It has been all but left for dead since. Wall Street analysts are predicting the stock will actually have fallen to $2 a year from now, from recent levels of around $2.60, according to Thomson Reuters.

  What they're missing is that TranSwitch has revamped its chip offerings so they support high-definition video connections in TVs, PC and game monitors, smartphones, tablets and video cameras. This exposes the company to some big consumer trends. Another new product line supports gear that connects homes, offices and smartphones to the Internet.

  Those analysts and other investors don't put much faith in these new products. So why should you? Because the right kinds of insiders have been accumulating stock. Many of the new products are scheduled to hit the market over the next three months and generate meaningful sales by the fourth quarter. So now is the time to buy.

  Of course, we don't know for sure that TranSwitch's new products will catch on. But behind the scenes, they've been licensed by the likes of Intel (INTC), International Business Machines (IBM), Texas Instruments (TXN) and Analog Devices (ADI), Ted Chung, the TranSwitch vice president of global business development, tells me. That suggests TranSwitch may work its way into the Apple (AAPL) iGadget ecosystem, says Northland Capital Markets analyst Richard Shannon. That would be a game-changer for tiny TranSwitch, but the markets for its new products are so big that it probably can win even without such an advantage

Wal-Mart Slides Lower After Retail Sales Report

The major indexes all closed higher for the day, despite a weakening Chinese GDP growth rate and a mediocre retail sales report. The Dow Jones Industrial Average (DJINDICES: ^DJI  ) gained 19 points, or 0.13%, during the session and managed to set another all-time record closing high at 15,484. The S&P 500 rose 0.14%, and the Nasdaq increased by 0.21%, even as China's GDP growth fell to 7.5% during the second quarter of 2013, after hitting 7.7% during the first quarter.

The Commerce Department's retail sales report showed a 0.4% increase for June, but since economists were expecting a much better result, investors were disappointed by the data. That report also surely affected shares of Wal-Mart (NYSE: WMT  ) , which moved lower by 0.77%. Even more discouraging for Wal-Mart is that while computer and electronics sales were lower in June, so-called core retail sales rose by a measly 0.15%, the weakest showing since January. To make matters worse, many analysts believe this may only be the calm before the storm, because as gas prices inch higher, Americans will have less in their wallet to spend on core items at stores like Wal-Mart. 

Shares of General Electric (NYSE: GE  ) declined by 0.55% today, possibly fueled by predictions of what its second-quarter earnings release, scheduled for July 19, might look like. As my colleague Seth Jason recently noted, earnings per share are expected to come in 5.3% lower than they were during the second quarter of last year, while revenue is estimated to be off by 2.5%. Investors never want to see lower year-over-year revenue or earnings, especially not while the economy is still recovering from our recent recession.  

Finally, shares of UnitedHealth Group (NYSE: UNH  ) declined today, losing 0.56%. Like General Electric, UnitedHealth is expected to post lower earnings results this year than it did during the second quarter of last year. While economists are estimating that revenues will increase by 11.9%, they also predicted that EPS will fall 1.6%. UnitedHealth is scheduled to report its Q2 results on July 18, and with questions lingering about how the health-care exchanges will work under Obamacare and what effects the legislation will have on the overall health-care industry, investors need a beat -- or at the very least a match of estimates -- or else the stock could really tank at the end of the week.  

More Foolish insight
Obamacare will undoubtedly have far-reaching effects. The Motley Fool's new free report, "Everything You Need to Know About Obamacare," lets you know how your health insurance, your taxes, and your portfolio could be affected. Click here to read more. 

To Become a Better Investor, Think More Like a Scientist

Abbott Buying IDEV Tech for $310 Million

Don't look now, but Abbott Labs (NYSE: ABT  ) is about to buy itself a bit of growth.

On Monday, the Abbott Park, Ill.-based medical products giant announced that it has agreed to buy privately held medical device-maker IDEV Technologies for $310 million, net of cash and debt. In return, it will gain IDEV's portfolio of products that include, importantly, the SUPERA Veritas self-expanding nitinol stent system, used for opening blocked blood vessels. Approved for use in Europe, SUPERA Veritas has only limited approval for use in the U.S. but is in the process of seeking FDA approval for expanded usage.

Chuck Foltz, Abbott senior vice president for vascular products, said in a statement that "the acquisition of IDEV Technologies will expand and complement Abbott's existing peripheral technology portfolio of guidewires, balloon dilatation catheters, and stents, making it one of the most comprehensive and competitive portfolios in the industry."

A private company that is not required to disclose its financials, as of late last year, IDEV was not believed to be profitable. The company is on record, however, as saying it is experiencing "accelerated revenue growth." As for Abbott, IDEV's soon-to-be new parent earned $6.1 billion last year and is expected to grow earnings at close to 12% annually over the next five years.

These Dow Giants Aren't Necessarily the Bargains They Seem to Be

With the Dow Jones Industrials (DJINDICES: ^DJI  ) at a new record high, cautious investors are starting to pay attention to valuation more closely than ever on the stocks that interest them. Yet whenever you use simple measures to try to assess whether a stock is cheap or expensive, you need to understand that your conclusions are only as strong as the accuracy of the data. If you rely on numbers that might not be correct, then you could make mistakes in your evaluation of a stock's true value.

Book value is a great example of how financial numbers can be misleading. Let's look at the four cheapest stocks in the Dow in terms of price-to-book ratios and try to assess whether those stocks are actually good values at their current prices.

A valuation that's lighter than aluminum
Among Dow stocks, Alcoa (NYSE: AA  ) has the cheapest valuation based on price-to-book ratio, with shares fetching just 68% of book value. The aluminum industry overall is in terrible condition, and so peers such as Chinalco also trade at similar levels compared to book value. For its part, Alcoa has had to shutter some of its production facilities recently, strongly suggesting that its plant and equipment items on its balance sheet aren't necessarily producing as much profit as their book value would suggest.

Analysts have argued that Alcoa could get an immediate boost by splitting off some of its more specialty production divisions from its pure mining and smelting operations. Because products like aerospace studs and flat-rolled sheets made of aluminum carry big premiums to the price of raw metal, those divisions arguably deserve higher price-to-book ratios. So far, though, Alcoa hasn't shown any signs of considering such a move, and that stubbornness could be a reasonable basis on which to stay away from the stock.

Are financials finally trustworthy?
The other three Dow stocks trading at relatively low book values are financial stocks. Bank of America (NYSE: BAC  ) still trades more than 30% below book, while JPMorgan Chase (NYSE: JPM  ) has just a 5% premium to book value and Travelers (NYSE: TRV  ) weighs in at about 125% of book value.

For B of A and JPMorgan, the issue for a long time was whether the banks had an accurate view of the value of the assets on their balance sheets. With toxic assets having required huge writedowns during the financial crisis, it took a leap of faith to trust banks' own assessments of their overall book value, as nervous investors kept figuring that additional adjustments would be necessary.

But book value is imperfect even when you ignore clearly erroneous valuations of bank assets. Pure book value includes intangible assets like goodwill, which is a notoriously slippery financial concept that doesn't necessarily translate into real value. Even if you use tangible book value, though, judgment calls like how to value illiquid derivatives and other unusual assets introduce uncertainty into the equation.

Still, JPMorgan and B of A have had so much bad news already come out over the past five years that it seems likely that their financials have largely gotten cleaned out, increasing the chances that their book values more closely reflect reality. That could mean they each have further to rise, although the stocks have already booked some powerful performance recently.

Meanwhile, for Travelers, a price-to-book of 1.25 isn't necessarily all that cheap for an insurance company. With so much of its asset base representing premium reserves that haven't yet gotten paid out in loss claims, Travelers can't afford to get too aggressive with its investment portfolio, and so investors don't give the insurer much of a premium in valuing the stock in comparison to the relatively conservative assets on its balance sheet. Travelers has performed well recently, so it doesn't look like there's as much upside for the insurance giant as there once was.

Don't fall for cheap book values
By itself, book value is only one more measure of a company's value, and like any other valuation method, it has its strengths and weaknesses. By being aware of the pros and cons of book value, you can glean insight about a company without making bad conclusions about its future prospects.

There's one bank that trades well above book value but still looks promising. Among mismanaged and dangerous peers, it rises above as "The Only Big Bank Built to Last." You can uncover the top pick that Warren Buffett loves in The Motley Fool's new report. It's free, so click here to access it now.

Is "Pacific Rim" the Next "World War Z?"

Good news, Time Warner (NYSE: TWX  ) investors. After suffering a run of bad numbers, buzz is finally building for Pacific Rim, director Guillermo Del Toro's giant robots vs. monsters epic that cost as much as $200 million to make.

Plenty is it stake for Warner and financing partner Legendary Pictures, says Fool contributor Tim Beyers in the following video. Why? Both studios need a new franchise to bank on. The fact that 75% of critics who've seen Pacific Rim rate it as "fresh"-- better than the 67% accorded to surprise hit World War Z -- suggests the film could enjoy a decent run in theaters.

But will it be as big a winner as the zombie thriller? According to Box Office Mojo, Viacom's (NASDAQ: VIAB  ) Paramount Studios has earned more than $370 million in worldwide grosses from the film, which has enjoyed uncommon staying power after last weekend's gate drop of just 38%, when 50% or more is typical. Getting even within spitting distance of that performance would be a win for Del Toro, Legendary, and Time Warner investors, Tim says.

Do you like the odds of Pacific Rim outperforming? Please watch the video to get Tim's full take, and then leave a comment to let us know whether you plan to see the film.

And don't forget to invest! Don't know where to start? We'll teach you the basics of investing in the companies behind the brands and stories you love in our new special report, "Your Essential Guide to Start Investing Today." Let The Motley Fool's personal finance experts be your guide, and click here to get your report now -- it's absolutely free.

Hot Cheap Companies To Watch For 2014

Rare-earth materials have been in a slump and the companies in that sector are no different. Molycorp (NYSE: MCP  ) is down roughly 40% year to date, so the question remains: Is the stock finally cheap enough to buy. Furthermore, with the potential of a new rare-earth deposit in Wyoming going to competitor Rare Element Resources (NYSEMKT: REE  ) , Molycorp faces several challenges.

In the video below, Fool.com contributor Doug Ehrman discusses the current position of the stock and why, despite still qualifying as a highly speculative play, you may wish to consider the stock for your commodity portfolio.

Looking for more commodities-based ideas? Download the free report, "The Tiny Gold Stock Digging Up Massive Profits." The Motley Fool's analysts have uncovered a little-known gold miner they believe is poised for greatness; find out which company it is and why its future looks bright -- for free!

Hot Cheap Companies To Watch For 2014: Whole Foods Market Inc.(WFM)

Whole Foods Market, Inc. engages in the ownership and operation of natural and organic food supermarkets. The company offers produce, seafood, grocery, meat and poultry, bakery, prepared foods and catering, coffee and tea, nutritional supplements, and vitamins. It also provides specialty products, such as beer, wine, and cheese; body care and educational products, such as books; and floral, pet, and household products. As of February 9, 2011, the company operated 302 stores in the United States, Canada, and the United Kingdom. Whole Foods Market, Inc. was founded in 1978 and is headquartered in Austin, Texas.

Advisors' Opinion:

• [By Chris Stuart]

  Whole Foods Market(WFM) has turned in a lackluster performance over the past three months, with the shares down 6%, trailing the food-and-staples industry by over 7%. Investors, concerned about the sluggish economy, have avoided the company.

  But the news has been good, as the company issued a bright outlook for the remainder of 2011. At first glance, the shares don't look cheap. Based on the expectations from management for $1.87-$1.90 EPS for 2011, the stock trades at a P/E multiple of roughly 32 times 2011 earnings. But Bank of America-Merrill Lynch analysts argue the stock looks attractive and maintain a $68 price target.

  "We believe WFM's valuation is attractive given its strategy to improve its competitive price position and enhance its cost discipline, which broadens its growth prospects and supports an outlook for improving returns while lowering the company's operating risk profile," Merrill analysts say.

  TheStreet Ratings has a slightly more optimistic $77 price target on shares of Whole Foods Markets. Note that the shares jumped $4 on Tuesday, based on upbeat comments from the company's CEO, who said the natural-foods grocer is gaining market share and he is "feeling pretty bullish" about Whole Foods' future. Despite the gain, I would still consider an investment.

Hot Cheap Companies To Watch For 2014: Gold Reserve Inc(GRZ)

Gold Reserve Inc., an exploration stage company, engages in the acquisition, exploration, and development of mining projects. The company was founded in 1956 and is based in Spokane, Washington.

Advisors' Opinion:

• [By Louis]

  Last on the list is exploration-stage company Gold Reserve Inc.(GRZ). In the past 12 months, this penny stock has outperformed the broader markets to the tune of a 58% increase. More recently, GRZ is up 16% in the past six months, trading at $1.77.

• [By Michael]

  Based in South America,  a young exploration company, Gold Reserve Inc. (AMEX: GRZ). GRZ acquires, explores and develops mining projects in South America.  GRZ was alerted at a low price of $0.61 and has climb steadily to $2.25 as more discoveries are made, amounting to over a 200% gain in one year.

• [By Louis Navellier]

  Another exploration-stage mining company making the list is Gold Reserve Inc. (AMEX: GRZ), which has gained 18% in the last six months and 69% in the last 12 months. Buy this stock as it trades near its 52-week high of $1.95.

Top 10 Electric Utility Stocks To Buy For 2014: Merck & Company Inc.(MRK)

Merck & Co., Inc. provides various health solutions through its prescription medicines, vaccines, biologic therapies, animal health, and consumer care products. The company?s Pharmaceutical segment provides human health pharmaceutical products, such as therapeutic and preventive agents for the treatment of human disorders in the areas of bone, respiratory, immunology, dermatology, cardiovascular, diabetes and obesity, infectious diseases, neurosciences and ophthalmology, oncology, vaccines, and women's health and endocrine. This segment also offers human health vaccines, such as preventive pediatric, adolescent, and adult vaccines. Its Animal Health segment discovers, develops, manufactures, and markets animal health products. This segment offers antibiotics, anti-inflammatory products, vaccines, products for the treatment of fertility disorders, and parasiticides for cattle, swine, horses, poultry, dogs, cats, salmons, and fish. The Consumer Care segment develops, manufac tures, and markets over-the-counter, foot care, and sun care products. Its over-the-counter product line includes non-drowsy antihistamines; treatment for occasional constipation; decongestant-free cold/flu medicine for people with high blood pressure; nasal decongestant spray; and treatment for frequent heartburn. This segment?s foot care products comprise topical antifungal, and foot and sneaker odor/wetness products; and sun care products include sun care lotions, sprays and dry oils; and sunburn relief products. The company serves drug wholesalers and retailers, hospitals, government agencies, physicians, physician distributors, veterinarians, animal producers, and managed health care providers, as well as food chain and mass merchandiser outlets in the United States and Canada. Merck & Co., Inc. was founded in 1891 and is headquartered in Whitehouse Station, New Jersey.

Advisors' Opinion:

• [By McWillams]

  Merck & Co. Inc. (NYSE: MRK : 31.91, 0.05) reported net income of $2.02 billion, or 65 cents per share in its fiscal 2011 second quarter, compared to net income of $752 million or 24 cents a year ago. Analysts had estimated earnings of 95 cents per share for the firm. The company's revenue rose 7 percent to $12.15 billion, better than analysts' forecast of $11.82 billion. Shares closed Thursday's trading at $34.93.

• [By Smart Money]

  Forward P/E: 7.8.

   

  Five-year average forward P/E: 13.7.

  Discount to five-year average: 46%.

  The market's shift away from defensive stocks in sectors like pharmaceuticals and the Obama administration's proposed health care reforms are just a couple of issues weighing on Merck (MRK, news, msgs). Shares in the Whitehouse Station, N.J., company are also being hobbled by company-specific problems, such as disappointing sales of asthma treatment Singulair, its best-selling drug, as well as increased competition, patent expirations and a pipeline of drugs with poor prospects for Food and Drug Administration approval.

  Fortunately for Merck investors, the company's pending acquisition of Schering-Plough (SGP, news, msgs) should go a long way toward easing many of these problems, especially Merck's poor drug pipeline and its ability to remain competitive, says Morningstar analyst Damien Conover. "Merck greatly improved its long-term outlook by agreeing to acquire Schering-Plough," the analyst says.

Hot Cheap Companies To Watch For 2014: Popular Inc.(BPOP)

Popular, Inc., through its subsidiaries, provides a range of retail and commercial banking products and services primarily to corporate clients, small and middle size businesses, and retail clients in Puerto Rico and Mainland United States. It offers deposit products; commercial, consumer, and mortgage loans, as well as lease finance; and finance and advisory services. The company also offers trust and asset management, brokerage and investment banking, and insurance and reinsurance services. As of December 31, 2010, it owned and occupied approximately 94 branch premises and other facilities in Puerto Rico; and 119 offices, including 20 owned and 99 leased in New York, Illinois, New Jersey, California, Florida, and Texas. Popular, Inc. was founded in 1917 and is headquartered in San Juan, Puerto Rico.

Advisors' Opinion:

• [By Hilary Kramer]

  Popular (NASDAQ: BPOP) provides a range of retail and commercial banking products and services in Puerto Rico, the United States, Venezuela, the Dominican Republic, El Salvador and Costa Rica. The stock has dipped along with the entire banking sector, but as is often the case when sentiment is negative, I think investors have overreacted and knocked it down too much.

  Potential improvements in the Puerto Rican economy should help it bounce back, as well as clarity on the company’s recent decision to pull out of an agreement to sell non-performing construction loans. It’s important to note that Popular has already successfully sold a lot of its troubled loans, and the company’s capital levels are solid, which puts it in good position for a rebound once conditions improve.

• [By Philip]

  Shares of Popular, Inc. (BPOP), of Hato Rey, Puerto Rico, closed at $1.75 Friday, declining 44% year-to-date. Based on a consensus price target of $3.55, the shares have 103% upside potential.

  The company owes $935 million in TARP money.

  Popular had $11.6 billion in total assets as of Sept. 30 and announced third-quarter earnings to common shareholders of $26.6 million, or 3 cents a share, compared to second-quarter earnings of $109.8 million, or 11 cents a share, and third-quarter 2010 earnings of $494.1 million, or 48 cents a share, when the company booked a $531 million gain on the sale of a 51% stake in its Evertec subsidiary.

  Third quarter earnings declined sequentially because of a $32 million increase in provisions for loan losses and because the second-quarter results included "a tax benefit of approximately $59.6 million related to the timing of loan charge-offs for tax purposes."

  Third-quarter provisions increased because the company on September 29 "completed the sale of construction and commercial real estate loans with an unpaid principal balance and net book value of approximately $358 million and $128 million, respectively," the majority of which were nonperforming loans.

  Following the earnings announcement, Cantor Fitzgerald analyst Michael Diana reiterated his "Buy" rating on Popular, raising his price target for the shares to $2.50 from $2.25.

  All five analysts covering Popular rate the shares a buy.

Hot Cheap Companies To Watch For 2014: WebMediaBrands Inc(WEBM)

WebMediaBrands Inc., an Internet media company, provides content, education, and career services to media and creative professionals through a portfolio of vertical online properties, communities, and trade shows. The company operates mediabistro.com, a blog network that provides content, education, community, and career resources about media industry verticals, including new media, social media, Facebook, TV news, sports news, advertising, public relations, publishing, design, mobile, and the semantic Web. Its mediabistro.com also includes a job board for media and business professionals focusing on various job categories, such as social media, online/new media, publishing, public relations/marketing, advertising, sales, design, and television. The company also operates a network of online properties, including AdsoftheWorld, DynamicGraphics, LiquidTreat, BrandsoftheWorld, Graphics.com, StepInsideDesign, Creativebits, and GraphicsDesignForum that provide content, educatio n, community, career, and other resources for creative and design professionals. In addition, it offers community, membership, and e-commerce offerings comprising a freelance listing service, a marketplace for designing and purchasing logos, and premium membership services. Further, the company provides online and in-person courses, panels, certificate programs, and video subscription libraries for media and creative professionals. Additionally, it organizes various trade shows that include Semantic Technology Conference, Monetizing Social Media, Social Media Optimization Conference, Social Gaming Summit, and Virtual Goods Summit. The company was formerly known as Jupitermedia Corporation and changed its name to WebMediaBrands Inc. in February 2009. WebMediaBrands Inc. was founded in 1999 and is based in New York, New York.

Hot Cheap Companies To Watch For 2014: TII Network Technologies Inc.(TIII)

Tii Network Technologies, Inc., together with its subsidiaries, designs, manufactures, and sells products for use in the networks to service providers in the communications industry in the United States. It provides network interface devices (NID), including overvoltage surge protectors, digital subscriber line (DSL) service splitters, and customer bridge modules; building entrance terminals; and accessories comprising station protectors, customer wiring modules, electro-magnetic interference filters, and line test modules. The company also offers broadband products, such as DSL electronic products that include xDSL plain old telephone service splitters to isolate voice and data signals; Outrigger, an outdoor intelligent residential gateway; HomePlug technology that enables networking of voice, data, and audio devices through the consumers? AC power lines. In addition, it provides connectivity products consisting of connector block and terminal block products; voice over I nternet protocol products; switchable voice NID products; voice intercom systems for use in multi-dwelling units; and wire terminals and other connectivity products. Further, the company offers fiber optic products which comprise wall mount enclosures, rack mount enclosures, OSP fiber enclosures, cable assemblies, miscellaneous fiber accessories, and optic network terminals installation accessories. Additionally, it offers overvoltage surge protection products, including two and three electrode gas tubes; station overvoltage surge protectors; protector modules; and protector packs and cat 5 cat 6 protection products, as well as other surge protection products comprising a 75 ohm coaxial protector for cable networks; a 50-ohm coaxial protector for wireless service providers? cell sites; a gel-sealed Ethernet data protector; and power line/data line protectors for personal computers and home entertainment systems. The company was founded in 1964 and is headquartered in Edgewoo d, New York.

Advisors' Opinion:

• [By John Reese]

  Tii Network Technologies (NASDAQ: TIII) helps protect expensive telecom equipment with its overvoltage surge protection devices. This is especially useful during lightning strikes and power surges. Its Total Failsafe products offer modular station protectors, while its In-Line products protect broadband coaxial cables.

  Naturally, large telecom carriers like Verizon Communications (NYSE: VZ) are big customers and account for 34% of sales. DIRECTV (NASDAQ: DTV), Power & Telephone Supply and Tyco Electronics (NYSE: TEL) are also customers. With Verizon and other cell phone providers upgrading to 4G, Tii’s sales should remain very strong.

  The stock is a good buy, but it is thinly traded, so use a limit order within 10 cents of the previous day’s closing price. Buy TIII under $3.