Lear Corp: Who are You Calling Expensive?

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Shares of Lear Corp. (LEA) have returned 66% including reinvested dividends. Has that run made Lear’s stock expensive?

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That depends on whom you ask. For Deutsche Bank’s Rod Lache it has, despite the solid earnings numbers that have helped drive Lear higher. He writes:

Lear's Q3 EPS of $1.45 was meaningfully better than our $1.26 est. and cons. of $1.33. Looking at LEA's divisions, the Seating margin came in slightly better than we projected, at 5.4% vs. our 5.2% est. but still down vs. 6.1% in Q3'12. EPMS drove most of the upside with an op. margin of 10.9% vs. 7.5% in 3Q12 (including a 50 bp nonrecurring positive). LEA's overall corp. op. margin came in at 5.4% vs. our 4.7% est. While we were impressed by Lear's Q3, we are lowering our recommendation to Hold based on valuation.

Not so fast, says Citigroup’s Itay Michaeli. He writes: 

In our view, Lear's valuation remains appealing for two core reasons: (1) Lear sports structurally lower capex/sales vs. peers (< 3% vs. ~4+% for peers). That means that for a given EBITDA multiple, Lear will generate higher unlevered FCF than its peers, all else equal. Our 6.0x '14E EBITDA target multiple = ~8% unlevered FCF yield, including restructuring. That Lear's revenue is outpacing the industry while margins are expanding is evidence that capex is appropriately sized. We estimate Lear's '14 unlevered FCF yield is comfortably above peer average; (2) Lear's EPMS segment appears to have crossed the threshold to becoming a double-digit EBITDA margin earner with clear secular growth attributes. We think a 7.5x EBITDA multiple is appropriate based on public peers (Delphi (DLPH)) and past connector M&A. 

Shares of Lear have gained 0.2% to $77.32 at 2:24 p.m. on a day when most auto-part companies are not doing much of anything. Delphi Automotive, the big loser, has dropped 1.1% to $57.39, Johnson Controls (JCI) has fallen 0.2% to $42.94 and Borg Warner (BWA) has risen up 0.4% to $106.70. The big winner: Tenneco (TEN), which has jumped 3.3% $54.65 after reporting better than expected earnings.

Pentagon Announces Massive $960 Million IT Contract

The U.S. Department of Defense awarded nine new contracts on Monday worth some $1.121 billion in aggregate. The largest of these awards, however, swallowed more than 85% of the funds on offer. Split among five publicly traded companies, and one privately owned, this monster IT contract envisions paying out $960 million over the course of time to contractors:

Lockheed Martin (NYSE: LMT  ) Raytheon (NYSE: RTN  ) Harris  (NYSE: HRS  ) L-3 Communications (NYSE: LLL  ) TYBRIN Corp., a subsidiary of Jacobs Engineering Group (NYSE: JEC  ) SRA International

The multiple award, indefinite- delivery/indefinite-quantity (IDIQ) contract was awarded under the U.S. Air Force's Network-Centric Solutions-2 (NETCENTS-2) Application Services program, which the Air Force describes as being one of its primary vehicles for purchasing "sustainment, migration, integration, training, help desk support, testing and operational support" services. Over the course of the contract, the six named contactors will be the only ones entitled to bid (against each other) for task orders awarded under the umbrella IDIQ contract.

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This contract is slated to run for an initial three-year base term, followed by four optional year-long extensions -- options that appear likely to be exercised, given that the Pentagon noted expressly that the period of performance of the contract is "seven years." 

Why Middleby's Warranty Is Such a Game-Changer

In the following video interview, Motley Fool CEO Tom Gardner speaks with Middleby CEO Selim Bassoul. Since becoming CEO in 2000, Bassoul has led a remarkable transformation at Middleby, the cooking equipment maker, turning the stock into a nearly 50-bagger over that time. In the video, Bassoul discusses the importance of Middleby's warranty to his customers and to his company's innovation. 

Middleby is one of Tom Gardner's favorite stocks, but you can never have too many great companies in your portfolio. If you're looking for more ideas, our chief investment officer has selected a different stock as his favorite for this year. Find out which stock it is in the free report: "The Motley Fool's Top Stock for 2013." Just click here to access the report and find out the name of this under-the-radar company.

Tom Gardner: So let's talk about the no-quibble warranty. What is itm and what does it mean for your customers?

Selim Bassoul: Well, it's most probably the biggest game-changer for us. I wish more businesses adopted that. I have adopted this no-quibble warranty from Costco, and I know, I understand. I saw the video of Jim Sinegal sitting here. Jim Sinegal affected and Costco affected me personally more than any other business executive. I had the chance to visit Costco. In fact, everything I wear here, except the belt and the shoes, are Costco -- the shirt, the pants, the socks. Underneath those, the pants and the shirt, are all Costco products.

I like the way they run their businesses. They are frugal. They take care of their customers, and they stand behind a phenomenal -- they have the best warranty in the industry, in retail, bar none. You can return any product. You can even return flowers. I have seen people return flowers because they didn't last two weeks and they wanted them to last more than two weeks. So I adopted that, and I say I need to take our quality to that level.

We started in 1997 with the no-quibble warranty, where we allow customers for 90 days to take a product, and if they don't like it, they return it. Two years ago, we extended that to a year. Remember, we are selling $100,000 kitchens. By the time we take it back, it's all pretty damaged and banged up and scratched, so we can't resell it. But what happened is it gave us three things. That no-quibble warranty, which has not been emulated by any of our competitors. We are the only one worldwide in this industry to create a no-quibble warranty that's in writing. It's clear. It's simple.

It gives us three things. One, it allows our customers to experiment with new technology without fear. So we can roll out a lot faster -- new products a lot faster than anything else. For example, we're rolling out with a major chain a waterless steamer. Think of it. A steamer without water. We'll talk about it in a few minutes. Well, they adopted it because they have a guarantee from us.

Number two, it allows us to make sure that our quality is perfect, because if it's a division that gets a lot of returns, it means that there's something wrong. I give you an example. Many years ago, when we acquired Blodgett, in 2001, we instituted a no-quibble warranty, so Blodgett ended up selling to a new chain, and it's a convection oven similar to the one sitting behind me that has glass. And the glass gets hot, and every time that chain was rolling in the food into that oven, they used a stainless steel cart, and sometimes the cart was pushed against the glass door, and it broke the glass.

And the Blodgett people at the time said, "Well, it's not our fault. The customer is using a stainless steel cart with sharp edges." So we will get -- there's a no-quibble warranty, we'll get all those ovens back. And the management of Blodgett said, "But Selim, this is abuse! This is neglect! This is not how the oven works! It's not our fault." I said, "Well, let's go and create a better mousetrap. Let's get a glass oven that does not break." And today we have a glass door that doesn't break.

Gardner: If a company that is selling $100,000 kitchens can give a 100%, one-year refund, think about what would happen if every company did that. In fact, what would happen? What would happen is people would buy with a little bit more reckless abandon knowing that they could experiment and try things out and return them if they didn't work. It would also lower the defect rate, as you said, so people's quality standard would go up. It would be completely transformative and revolutionary if literally everything that you could buy was 100% warrantied.

Bassoul: Tom, you are totally right. It will change the United States. It will change the way our quality gets better. I think we'll probably beat the Japanese and the Germans on our quality if we adopted that.

Number two, I think it gives a significant warranty and guarantee for people to experiment, and I think that sometimes we are not willing to venture because we say, "Well, what happens if it doesn't work?" Now in my experience, I love the Costco experience because they allow the return, even better than Target or Wal-Mart.

And I love something else: I buy all my cars from a dealership in Chicago called Motor Works. Fascinating. Motor Works taught me another example. I ended up buying from them many, many years ago an E-Class Mercedes, which is diesel. I wanted to save money, and diesel was running 35 miles per gallon, and they were giving a discount on diesel because they couldn't sell them. So the owner of that dealership said to me, "Selim, don't worry about it. Try it. You'll be happy with it, and if you don't like it for a month, return it." So I bought that car in 2004, which I am still driving now. And my father was visiting from Beirut, Lebanon. So my father stopped and filled up, and instead of putting diesel he put in regular gasoline. So within half a mile, that car stopped. And what's fascinating is, I called the dealership. I said, "My father made a mistake." They took the car back and said, "Don't worry about it. It's our problem. The manufacturer should have made sure that you could not put a fuel nozzle that's regular versus diesel."

So I learned a lot from those two experiences, and I said I'm going to adopt the same. Today, every car -- all my employees, almost, buy their car from Motor Works because of that experience. They connected with me.

The Deal: Jeff Bezos and the Amazon Post

NEW YORK (TheDeal) -- Jeff Bezos closed the purchase of the Washington Post on an auspicious news day. 

The change in control on Oct. 1 coincided with the shutdown of the Federal government and the debut of the health insurance exchanges created by the Affordable Care Act. As a news story, political discord plays well in the Washington Post's local audience and among the readers outside the Beltway who make up 90% of its online audience. 

The dual local-national nature of the Washington news market presents a dilemma for Bezos and the paper's leadership. 

Should the Washington Post focus on the attractive markets in Washington,  Maryland and Virginia, or devote the resources to develop national coverage and advertising, which it has attempted to do in the past?  There is more for the Amazon.com Inc. (AMZN) founder and CEO to contemplate. Bloomberg LP and Politico LLC have introduced custom information services  in Washington that bill thousands of dollars a year.  Their success on the Washington Post's home field underscores the opportunity to provide lucrative information services to lobbyists, contractors and others who do business in Washington.  The speculation about how the e-commerce tycoon will remake the paper has been boundless since Bezos announced his $250 million investment this Summer. Basic questions about geographic emphasis and the application of technology to consumer or professional audiences provide a starting point for contemplating the Amazon Post.  "They need to decide what they are going to be," said Merrill Brown, director of Montclair State University's School of Communication and Media, who was the founding editor-in-chief of MSNBC.com and a Washington Post reporter.  In addition to chasing stories, Brown suggests, the editorial mission would include product development and collaboration with the business side of the paper. Changing the news model likely will involve rethinking such fundamental journalistic principles as the church-state division, which could create profitable news formats but could also produce newsroom turmoil. Especially since Bezos is known equally as much for his volcanic temper as for his business vision.  "The most important thing to do there is to really create a different culture," Brown said of the newspaper. Gannett Co.'s  (GCI) appointment of MarketWatch founder Larry Kramer as the publisher of USA Today could serve as an example of an online-minded overhaul.  "The reality is there isn't a deep bench of great digital thinking there," he said of the Washington Post.  Bloomberg and Politico have demonstrated the market for high-priced digital products in Washington. In early 2011, the former introduced Bloomberg Government and the latter, Politico Pro. Lobbyists, congressmembers, staffers, association executives, contractors and others pay thousands of dollars a year for subscriptions to the real-time news services.  "That market was just taken away from the Post," said Ken Doctor, a consultant with Outsell Inc. in Burlingame, Calif. "Under Bezos, they could contest that market."  The Amazon founder's deep pockets will help. Doctor said Bezos would be more open to exploring new markets and formats than the prior ownership, which remained committed to the newspaper model. 

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Bloomberg Government charges $5,700 annually per subscriber. Don Baptiste, who co-founded and heads the unit, led the development of the service in 2009 and 2010, and conducted market research with potential subscribers. 

"We asked them some pretty simple questions," he said. "What do you like? What don't you like? If you could have anything you want what would it be," he said. 

Baptiste said that people cited "the usual suspects for information here in Washington" when asked about their reading habits. 

The Washington Post topped many lists. Many subscribed to Congressional Quarterly, National Journal and the Leadership Directories Inc., or to specialty publications such as Jane's Defense Weekly.  In addition to traditional news, Bloomberg Government provides legislative tracking alerts, Congressional Research Services reports, transcripts of hearings, updates from a data team that watches the floor of the House and Senate and other formats of news and information.  "When a law is passed we link all the regulations that come out of it," Baptiste said.  Bloomberg Government also maintains a database of contractors and has a new "partner finder" app that helps subscribers identify potential collaborators for bids.  When Politico introduced its high-priced professional service in February 2011, General Electric Co.  (GE) sponsored the launch. The Fairfield, Conn., manufacturing and financial services company was Politico Pro's sole advertiser in its first quarter.  The service includes news alerts and perks such as briefings with editors and events. Initially, Politico Pro focused on energy, healthcare reform and technology. In 2012 it added defense, financial services, tax and transportation. Earlier this year it added trade, agriculture and education.  Parent Allbritton Communications Co. will have ample funds to develop Politico and Politico Pro, pending completion of the $985 million sale of eight television station to Sinclair Broadcast Group.  Politico Pro would not disclose the price of a subscription, though it reportedly exceeds $3,000 per year. The company said in March it had 7,000 users at more than 1,000 organizations, with a 96% renewal rate.  "What Politico has proven is you can be a general news organization and a B-to-B custom house at the same time," Outsell's Doctor said.  The Washington Post covers subjects like the nexus of healthcare and politics, Doctor said, "but it covers them like a newspaper."  Washington regulatory lawyer Andy Lipman of Bingham McCutchen LLP suggested that targeted professional services would have been "a natural progression" for the paper, but that management may have been concerned about cannibalizing its readership. The Washington Post or others could develop services that track news across regulatory bodies, or that follow diplomatic missions in Washington.  Lipman also suggested Amazon-like features could be integrated into the Washington Post's content. "You're reading a news report about a particular agency," he said, "and you can have the underlying legislation or the relevant case law sent to you." 

For Amazon.com and other online retailers, location can be an abstract concept. Amazon's ubiquity and scale have a lethal effect on retailers from mom-and-pop, neighborhood shops to big-box chains. The company has also tried to cultivate a local touch by setting up drop-off boxes in stores and offering customers local deals. An investment in urban marketing site LivingSocial Inc. exemplifies this focus. 

"The Washington Post has a very strong local footprint," Doctor said. "It is number one, it is Tier 1, in the D.C. area." 

The company committed to local coverage after Watergate, he said. "The Times invested in plants around the country and became an national paper," Doctor explained. "The Post decided to double down in D.C." 

The paper, though, has made efforts to expand nationally. In 1962 the Post and the Los Angeles Times established a joint news wire.  "Washington Post content was carried in newspapers all over the country and overseas as well," Doctor said.  The paper set up national bureaus in Chicago, Denver, Los Angeles, Miami and New York, and published The Washington Post National Weekly Edition.  It came to an end in 2009, however, when the company disbanded the partnership with the L.A. Times, closed the last of its national bureaus and ceased publication of the weekly.  Bezos could revisit the national market, and the automotive, travel and image advertising accounts that go with it.  "Today more than 80% of uniques come from outside the D.C. area," Doctor said.  "There is a possibility of monetizing that audience," he added. "But it has been difficult for newspapers to monetize a nonlocal audience."  There is a Coke and Pepsi factor that comes into play in the advertising market. In terms of nationwide audience, the Washington Post trails the Wall Street Journal, New York Times and USA Today.  Cuts to the editorial staff don't help. Doctor said the Washington Post's newsroom is about half the size of the one that produces The New York Times, putting it at a disadvantage. "Especially on the Internet you want to be No. 1 or No. 2," Doctor said, "otherwise there is very little money."  The Alliance for Audited Media reported that the Wall Street Journal and New York Times had the top daily newspaper readership in March 2013, with average print and online circulation of 2.4 million and 1.9 million, respectively.  USA Today came next, with a blended print and online daily circulation of 1.7 million. The Los Angeles Times, New York Daily News and New York Post had higher print-online numbers than the Washington Post, which scored a daily circulation of 475,000 for print and digital.  The Wall Street Journal and New York Times grew 12.3% and 17.6% for the year ended March 2013, respectively, while the Washington Post declined 6.5%.  Peter Krasilovsky of BIA/Kelsey said that developing local bureaus throughout the country would be costly.  "The New York Times went through this 15 or 20 years ago," he said, when the company invested in various bureaus.  Partnerships with foundations or local news organizations could be an appealing alternative.  The New York Times has made content deals with the Bay Citizen in San Francisco and Austin, Texas-based Texas Tribune. The deal with the Bay Citizen ended in 2012, but the Texas Tribune provides content to the Times.  Krasilovsky suggested that Bezos would also "leverage the Post brand in the Washington, D.C., area to make it more of a local commerce hub."  The Washington Post has already developed local initiatives such as Service Alley, a social media site that provides information on home-related services.  Though the deal closed in October, there is no sign that a dramatic Amazonification of the Washington Post is imminent. The newspaper and a representative for Bezos declined to comment for this article.  "They regret that Politico happened elsewhere," Brown said. "They should similarly be apprehensive that Bloomberg and others are spending an enormous amount of money to cover Washington."  Part of the challenge is that the Washington Post is an existing institution, whereas Politico Pro and Bloomberg Government are new ventures.  Imagining ways that the Washington Post could be laboratory for the delivery of news has real allure.  Gauging the cultural issues, such as the collaboration of newspaper business and editorial departments, and how that could affect reporting, is more difficult but are an equally important part of the experiment.

Written by Chris Nolter

Dell Deadline Looms to Win Over Investors on Buyout Deal

Michael Dell's planned buyout of the personal-computer maker he founded isn't in the bag yet.

A fifth of Dell's shares are held by investors including Southeastern Asset Management Inc. and activist Carl Icahn, who oppose the deal, even after the $24.4 billion buyout proposal from Chief Executive Officer Dell and partner Silver Lake Management LLC got a surprise endorsement yesterday from Institutional Shareholder Services Inc. Two other shareholder-advisory firms followed suit.

That leaves Michael Dell just 10 days until a July 18 vote to win over undecided investors whose support could tip the deal in his favor. A special committee of Dell's board overseeing the transaction is meeting with major shareholders to seek backing for the buyout, and encouraging the CEO to do the same, a person familiar with the situation said. A failure to clinch a vote for the offer could send Dell's shares plunging and cloud the company's future.

"There are still several possibilities and there is a risk that the deal falls through," said Bill Kreher, an analyst at Edward Jones & Co. in St. Louis who has a hold rating on Dell shares.

Those hurdles were underlined yesterday when Icahn and Southeastern repeated their opposition to the buyout, which they said undervalues the PC maker. They were joined by another Dell shareholder, Yacktman Asset Management Co., which said it supports an alternative proposal from Icahn and Southeastern.

Majority Vote

The $13.65-a-share buyout proposal from Dell and Silver Lake requires a majority of votes to pass, excluding the CEO's own 16 percent stake in the Round Rock, Texas-based company.

Icahn, Southeastern and others opposed to the deal own more than 20 percent of Dell shares, according to a separate report yesterday from shareholder adviser Glass, Lewis & Co., which also backed the Silver Lake-led buyout proposal. Investors who owned Dell stock as of June 3 are eligible to vote their shares.

Getting to a majority vote may require some lobbying from Michael Dell and Silver Lake. While Dell's special committee is meeting with shareholders and has asked CEO Dell to do so as well, Silver Lake has declined to take part in those meetings because it regards itself as a minority investor in the buyout effort, according to a person familiar with the situation, who asked not to be identified because these meetings are private.

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Dell's special committee declined to comment on what it will take to win the vote. In a statement yesterday, the committee said it was pleased ISS and other advisory firms had endorsed the buyout offer and said "a sale of Dell for $13.65 per share in cash will provide certainty of value at a substantial premium, and is therefore in the best interests of shareholders."

Dell shares dropped less than 1 percent to $13.36 at the close in New York.

In its recommendation, ISS cited a 25.5 percent premium to Dell's unaffected share price before the transaction was proposed and the certainty of value provided by an all-cash offer. The buyout plan would also shelter shareholders from risks tied to the deteriorating PC business, ISS said in its report.

"The alternative to accepting the buyout offer is to continue holding equity in a publicly traded Dell, with continued exposure to the risks and rewards of ownership," ISS said.

The ISS backing provides more ammunition to Michael Dell, who according to people familiar with the matter wasn't planning to sweeten the bid.

Delaware Hearing

Already last month, a Delaware Chancery Court declined a request by Icahn and other investors to block the deal, which they argued was the result of a flawed sales process.

"I do not see any plausible, conceivable basis in which to conclude that it is a colorable possibility that you could deem the choices made by this board to be unreasonable with all the different safeguards," Judge Leo Strine said at June 19 hearing.

If Michael Dell's deal was mispriced, a higher buyout offer would have emerged, Strine said, and Icahn's alternative proposal isn't a full takeover.

Close Race

"Icahn had momentum last week," said Brian White, an analyst at Topeka Capital Markets who recommends buying Dell shares. "Now with ISS coming back and supporting Dell, it's a closer race."

In response to the ISS decision, Icahn and Southeastern said, "We continue to believe that Dell's owners deserve better and can achieve more by voting against" the buyout. Icahn and Southeastern own a combined 12.8 percent stake in Dell, according to data compiled by Bloomberg.

That view was backed by Yacktman Asset Management, owns less than 1 percent of Dell's shares, according to data compiled by Bloomberg.

"We find it ironic that when a Dell management that has historically overpaid for acquisitions finally attempts to make a large acquisition at a price we find attractive, it is at the expense of Dell shareholders," Yacktman said in a statement yesterday.

Officials at another Dell shareholder, Pzena Investment Management Inc. (PZN), which has opposed the buyout, didn't return calls seeking comment.

Alternative Proposal

Michael Dell has said taking the company private will let him rebuild it as a supplier of data-center equipment and software to curb reliance on the flagging PC market after years of lackluster growth.

Under an alternative proposal, Icahn has pressed Dell to buy back about 1.1 billion shares at $14 apiece, while leaving the remainder of the company public. Icahn has said Dell has a brighter future ahead and current shareholders should have the chance to participate in a turnaround. Last week, Icahn said he obtained $5.2 billion in debt financing to support his latest effort to derail the proposed buyout.

For Icahn's own plan to succeed, however, he must convince shareholders to reject Dell's buyout. Then, Icahn needs them to back his efforts to gain control of the board in a proxy contest in which Michael Dell's vote will count.

Dell's woes have been compounded as the PC market has declined. PC shipments plummeted 14 percent in the first quarter, the steepest decline since market researcher IDC began tracking data in 1994. IDC, which projects that shipments will tumble 7.8 percent this year, is scheduled to release second-quarter PC market results July 10.

Dorm Room

Dell, who founded the company in his University of Texas dorm room in 1984 and took it public four years later, rose to become the world's top PC maker with a manufacturing system that turned out the machines faster and more cheaply than competitors. As the computing market has shifted toward mobile devices like tablets and smartphones, Dell has struggled to remake itself.

Sales in fiscal 2012 declined 8.3 percent to $56.9 billion and net income tumbled 32 percent to $2.37 billion. This year, Dell is expected to earn $1.44 billion, less than half seen in 2005, according to the average of analysts' estimates compiled by Bloomberg.

Time To Bring The 'Cat' Back In?

TV Old timers probably remember the scene at the end of the Flintstones where Fred threw the sabertoothed tiger out of the house at nightfall. Turning the tables, the nasty critter jumps through the window, tosses Fred through the front door, and locks him out.

A different feline ticker symbol, Caterpillar (CAT), has been thrown out of a lot of investors' portfolios in recent months. Today's quarterly EPS of $1.45 (most analysts, such as Value Line and Yahoo Finance, expected closer to $1.68) and nearly 20% decline in revenues will keep this "cat" in the doghouse for a while.

But should it? Given the worldwide troubles in the mining sector, the decline in revenues was widely expected. But sales in China were a bright spot, up a sprightly 20% so far in 2013.

More importantly for long term investors, the steady drumbeat of bad news over the last three quarters has so far been unable to push the stock to new lows. Long term investors (and of course short term traders) should always be on the lookout for

stocks that refuse to advance in the face of strong earnings. The market is signaling that those shares are fully valued.stocks that refuse to decline in the face of weak earnings. In this case, the market may be signaling that CAT shares are undervalued.

Sure: Caterpillar shares are down over 5% today. But there is a solid floor of support for the shares just a few dollars below current levels.

(click to enlarge)

source: bigcharts.com

Investors who wait for an earnings recovery before buying this stock will surely end up paying a far greater price: notice how shares began to surge in 2009 almost five quarters before profitability turned around. The base forming at $80 suggests smart money is acquiring shares at this level: notice how on-balance volume has been stronger in the last few months even as share prices have tread water.

! Seeking Alpha readers are well acquainted with VIX, the market "fear index" based upon the implied volatility of S&P500 index options. A similar index can be calculated for companies such as CAT based upon the implied volatility of their options.

The chart below shows that the overall level of fear of owning this company's shares has trending downward over the last year.

(click to enlarge)

source: www.ivolatility.com

Thus I believe the market already expects the worst for CAT and is "looking across the valley" of earnings weakness in the near term, to the recovery that should appear in 2014. Where might this recovery come from? Europe appears to have turned the corner; China revenue growth, as mentioned before, is very strong even as that nation's economy slows a bit; and more clarity on the U.S. Federal Budget for 2014 (now that the shutdown has been terminated) has tempered the Federal Reserve's prospects for higher interest rates. All bode well for companies selling capital goods, especially infrastructure related goods which are this company's forte.

At current prices the shares yield a handsome 2.8%. Not only is the dividend well covered, it has nearly tripled in the last decade and was not cut even in the dark days of the crash. I recommend investors place a stop order to buy the shares at $80 (to allow for additional weakness) with a stop loss at $76 a share.

Shaving Value Line's estimate of $7.15 for 2014 a bit to reflect recent weakness, and applying the current P/E ratio of 13x to an estimate of $7.00, we get a price target of $91. A cash flow multiple of 8x applied to next year's estimate of nearly $12 (also from Value Line) leads to a very similar target price ($96). Taking the lower end of the range of $92 a share, this represents nearly a 15% gain in the share price, if you can pick them off at their lower levels. While yo! u would b! oast nearly a 10% gain if you secured them at their current price, such a gain would not be satisfactory given the above average risk in these shares.

The Red Sox and Cardinals, this years World Series contenders, can tell you the importance of "waiting for a good pitch to hit." It is much the same with CAT at the moment: be patient and try to get the shares at a slightly better price. You will be well rewarded: at that level the steadily growing dividend will give you a current yield of 3.0%

Source: Time To Bring The 'Cat' Back In?

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Disclosure: I am long CAT. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. (More...)

Additional disclosure: I own Caterpillar through my holdings in ETFs

Apple's Long Road to Break Even

It has been quite a year for Apple Inc.(AAPL) shareholders.

After Monday’s 3% rally ahead of Tuesday’s expected iPad event, the stock is closer to breaking even for 2013, a mark that seemed out of reach just a few months ago.

A combination of slowing growth and rising competition has taken a toll on the stock price since it hits peak in September 2012.  Shares have recently built some positive momentum and optimism is building ahead of Tuesday’s iPad event.

The iPad Mini is the world’s best-selling tablet computer, and is estimated to account for nearly two of every three iPads sold, as WSJ’s Daisuke Wakabayashi and Ian Sherr reported. It plays a central role in the company’s strategy for the post-PC era. Its latest batch of iPads will square off against a number of rivals from the likes of Samsung Electronics, Amazon.com Inc.(AMZN) and Microsoft Corp. that are chipping away at Apple’s lead.

“We believe this will be the most important refresh of the iPad franchise” since the product debuted about three-and-a-half years ago, says Brian White, an analyst at Cantor Fitzgerald. He estimates a new iPad will be about 15% thinner, anywhere in the range of 7% to 10% narrower and at least 20% to 30% lighter. It could also come in new colors, similar to the iPhone 5S released last month.

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Apple shares hit $524.19, the highest level since January. The stock price started the year at $532.17, meaning it is coming close toward breaking even for 2013.

In addition, billionaire investor Carl Icahn disclosed in August that he had built a significant stake in the iPhone and iPad maker when the stock was trading at about $465. Shares have since risen 13%.

To be sure, it isn’t time to start cheering Apple’s feat just yet. The company still significantly lags both the S&P 500, up 22% this year, and the tech-heavy Nasdaq Comp, up 30%.

And Apple has a long way to go in its comeback effort. Shares remain down 25% from the record high above $700 reached in September 2012.

Consider the recent move a baby step in the right direction. Shares traded south of $400 as recently as the end of June before mounting the latest rally.

Top Oil Stocks To Invest In 2014

For investors in search of high yields, master limited partnerships have been the place to go. This unique business structure has been especially appealing to midstream oil and gas companies. With stable,�predictable�cash flows that aren't as affected by commodity prices as other parts of the oil and gas industry, midstream companies are able to return big sums of cash to shareholders. The business structure is so popular that several larger�companies�are looking to spin off their midstream assets into MLPs.

This past quarter, Phillips 66 (NYSE: PSX  ) , Valero (NYSE: VLO  ) , and Devon Energy (NYSE: DVN  ) have each expressed interest in a midstream MLP spin-off, and some expect to finish the process by the end of the year. In this video, Fool.com contributor Tyler Crowe looks at what these new midstream companies will mean to the MLP space and how investors should digest the news.

The growing production of natural gas from hydraulic fracturing and horizontal drilling is flooding the North American market and resulting in record-low prices for natural gas. Enterprise Products Partners, with its superior integrated asset base, can profit from the massive bottlenecks in takeaway capacity by taking on large-scale projects. To help investors decide whether Enterprise Products Partners is a buy or a sell today, click here now to check out The Motley Fool's brand-new premium research report on the company.

Top Oil Stocks To Invest In 2014: Occidental Petroleum Corporation(OXY)

Occidental Petroleum Corporation, together with its subsidiaries, operates as an oil and gas exploration and production company primarily in the United States. The company operates in three segments: Oil and Gas; Chemical; and Midstream, Marketing, and Other. The Oil and Gas segment explores for, develops, produces, and markets crude oil, natural gas liquids, and condensate and natural gas. Its domestic oil and gas operations are located in Texas, New Mexico, California, Kansas, Oklahoma, Utah, Colorado, North Dakota, and West Virginia; and international oil and gas operations are located in Bahrain, Bolivia, Colombia, Iraq, Libya, Oman, Qatar, the United Arab Emirates, and Yemen. As of December 31, 2010, this segment had proved reserves of approximately 3,363 million barrels of oil equivalent. The Chemical segment manufactures and markets basic chemicals, including chlorine, caustic soda, chlorinated organics, potassium chemicals, and ethylene dichloride products; vinyls, such as vinyl chloride monomer and polyvinyl chloride; and other chemicals comprising chlorinated isocyanurates, resorcinol, sodium silicates, and calcium chloride products. The Midstream, Marketing, and Other segment gathers, treats, processes, transports, stores, purchases, and markets crude oil that includes natural gas liquids and condensate, as well as natural gas and carbon dioxide. This segment also involves in the power generation; and trades around its assets comprising pipelines and storage capacity, as well as oil and gas, other commodities, and commodity-related securities. Occidental Petroleum Corporation was founded in 1920 and is based in Los Angeles, California.

Advisors' Opinion:

• [By Achilles Research]

  Marathon Oil has been doing well for shareholders with the second best performance in the peer group. Anadarko Petroleum (APC), which I have rated as a Sell recently because the share price has run away from its fundamentals, has returned 186% over five years. Marathon Oil achieved 124%, Occidental Petroleum (OXY) 105%, Suncor Energy (SU) 63%, Apache Corp. (APA) 20% and Devon Energy (DVN) 14%. As a value investor with a contrarian tilt I naturally look at underperformers because they often offer the best risk/reward ratio and asymmetric pay-off profiles. I also just recently added to my positions in Devon Energy and Apache Corp. as they are just too cheap to ignore (thesis here and here). Apache was extraordinarily hit on overblown fears of potential oil production interruptions in Egypt and corresponding asset sales.

• [By Jonas Elmerraji]

  The past quarter has been pretty so-so for shareholders in Occidental Petroleum (OXY). Despite a strong start to 2013, shares of the $70 billion oil and gas exploration firm have stalled out for the last few months, churning sideways since May.

  But that hasn't kept OXY off of fund managers' buy lists. All told, institutions picked up more than 3 million shares of the firm last quarter, upping their stakes by more than 15%. So does it make sense to follow that lead?

   

  Well, there's no question that OXY goes against the grain when it comes to finding growth in the energy sector. Unlike the bigger-names in the field, Occidental is a pure play on exploration and production, the more lucrative side of the oil and gas business. The firm doesn't own refinery assets, and it doesn't own gas stations. But in many ways, that's a good thing -- refining and retail are lower-margin components of the business for integrated supermajors. With oil prices quietly creeping their way higher this year, it's a mistake to count OXY out.

  Because OXY doesn't own the downstream assets that similarly-sized firms do, it's better able to scale down production when prices are less favorable -- that price elasticity means that OXY can react quickly to market conditions. The firm's financial wherewithal also means that investors can lay claim to a 2.9% dividend yield right now. OXY isn't the biggest or most visible name in the energy sector, but as oil and gas prices remain on the high end of their historic range, it makes sense to own it.

• [By Dividend]

  Occidental Petroleum (OXY) has a market capitalization of $68.80 billion. The company employs 12,300 people, generates revenue of $24.253 billion and has a net income of $4.272 billion. Occidental Petroleum�� earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $13.802 billion. The EBITDA margin is 56.91 percent (the operating margin is 30.47 percent and the net profit margin 17.61 percent).

• [By Tyler Crowe, Taylor Muckerman, and Joel South]

  For investors, what this translates to is that consumers of natural gas will be looking to do business with companies that have strong balance sheets, and that will be around for the long term. When thinking about strong balance sheets,�Occidental Petroleum (NYSE: OXY  ) certainly comes to mind. The company's debt-to-equity ratio below 20% makes it one of the most debt averse of all producers out there right now, which just happens to translate into a respectful 2.5% dividend.

Top Oil Stocks To Invest In 2014: Bankers Petroleum Ltd (BNK.TO)

Bankers Petroleum Ltd. (Bankers) is engaged in the exploration for and oil in Albania. The Company generates all of the oil revenue from its operations in Albania, which is located northwest of Greece in South Eastern Europe. In Albania, Bankers operates and has the rights to develop the Patos-Marinza and Kucova oilfields pursuant to License Agreements with the Albanian National Agency for Natural Resources (AKBN) and Petroleum Agreements with Albpetrol Sh.A (Albpetrol), the state-owned oil and gas corporation. The Patos-Marinza oilfield is an onshore oilfield in continental Europe, holding approximately 5.1 billion barrels of original-oil-in-place (OOIP). The Company also has rights to exploration Block F (adjacent to the Patos-Marinza oilfield), an 185,000 acre oil and gas prone exploration field. The Company�� subsidiaries include Bankers Petroleum Albania Ltd. (BPAL), Bankers Petroleum International Limited (BPIL) and Sherwood International Petroleum Ltd (Sherwood).

Hot Undervalued Companies For 2014: Schlumberger N.V.(SLB)

Schlumberger Limited, together with its subsidiaries, supplies technology, integrated project management, and information solutions to the oil and gas exploration and production industries worldwide. The company?s Oilfield Services segment provides exploration and production services; wireline technology that offers open-hole and cased-hole services; supplies engineering support, directional-drilling, measurement-while-drilling, and logging-while-drilling services; and testing services. This segment also offers well services; supplies well completion services and equipment; artificial lift; data and consulting services; geo services; and information solutions, such as consulting, software, information management system, and IT infrastructure services that support oil and gas industry. Its WesternGeco segment provides reservoir imaging, monitoring, and development services; and operates data processing centers and multiclient seismic library. This segment also offers variou s services include 3D and time-lapse (4D) seismic surveys to multi-component surveys for delineating prospects and reservoir management. The company?s M-I SWACO segment supplies drilling fluid systems to improve drilling performance; fluid systems and specialty tools to optimize wellbore productivity; production technology solutions to maximize production rates; and environmental solutions that manages waste volumes generated in drilling and production operations. Its Smith Oilfield segment designs, manufactures, and markets drill bits and borehole enlargement tools; and supplies drilling tools and services, tubular, completion services, and other related downhole solutions. The company?s Distribution segment markets pipes, valves, and fittings, as well as mill, safety, and other maintenance products. This segment also provides warehouse management, vendor integration, and inventory management services. Schlumberger Limited was founded in 1927 and is based in Houston, Texas.

Advisors' Opinion:

• [By Arjun Sreekumar]

  Not surprisingly, the industry's annual capital spending has more than tripled over the past decade, coming in at $550 billion in 2011, according to oil-field services firm Schlumberger (NYSE: SLB  ) . Yet despite shelling out all that money, the industry as a whole has been unable to secure enough new reserves to offset production.

• [By Lee Jackson]

  Energy: Schlumberger Ltd. (NYSE: SLB)�crushed earnings by an astonishing 50.9% last quarter. With Mexico changing its policy on oil exploration, the oil field services leader may see continued strong earnings growth in the years ahead. The consensus price target for the stock is posted at $96. Investors are paid a 1.5% dividend.

• [By David Smith]

  A promising partnership
  Total outlays for subsea facilities were slightly more than $25 billion in 2011. That number is expected to rocket to about $130 billion by 2020. Among several companies that will benefit from this nearly five-fold growth are Schlumberger (NYSE: SLB  ) and Cameron International (NYSE: CAM  ) .

• [By David Smith]

  Another angle
  Without taking hindsight issue with that statement, I'm forced to compare it to the assessment of the same subject on the same day by Schlumberger's (NYSE: SLB  ) CEO Paal Kibsgaard, who observed during his company's call that "... the main concern in North America land remains the pricing, where the downwards trend in drilling, wireline, and coiled tubing seen in the fourth quarter continued in Q1. In addition, we also saw further downward pricing pressure on a number of hydraulic fracturing bids during the quarter, adding further uncertainty to the North America land market outlook."�

Top Oil Stocks To Invest In 2014: Carnival Corporation(CCL)

Carnival Corporation operates as a cruise and vacation company. It provides cruises to various vacation destinations with a portfolio of cruise brands comprising Carnival Cruise Lines, Holland America Line, Princess Cruises, and Seabourn in North America; and AIDA Cruises, Costa Cruises, Cunard, Ibero Cruises, and P&O Cruises in Europe, Australia, and Asia. The company also involves in operation of hotels, as well as offers tour and transportation services. It operates approximately 98 ships, as well as owns and operates 15 hotels or lodges that include 3,420 guest rooms; 395 motorcoaches; and 20 domed rail cars. The company sells its cruises through travel agents, including wholesalers and tour operators. Carnival Corporation was founded in 1974 and is headquartered in Miami, Florida.

Advisors' Opinion:

• [By Shauna O'Brien]

  On Monday, Credit Suisse reported that it has cut its estimates on cruise and vacation company Carnival Corporation (CCL).

  The firm has lowered its price target on CCL to $30, suggesting a 7% drop from the stock’s current price of $32.25. Analysts have also reduced estimates on the company to reflect industry pricing pressures.

  Carnival shares were mostly flat during pre-market trading Monday. The stock is down 12% YTD.

• [By Corinne Gretler]

  Nordea Bank AB slid 2.6 percent as Sweden sold its remaining stake in the Nordic region�� largest lender. Carnival Corp. (CCL), the world�� biggest cruise-ship operator, slumped 6.7 percent for the biggest drop in the Stoxx Europe 600 Index. ThyssenKrupp AG rallied 3.7 percent as Cevian Capital AB boosted its holding in the German steelmaker.

• [By Geoff Gannon]

  I should point out that this is a different issue than reported earnings vs. owner earnings. For example, Carnival (CCL) reports earnings that are high relative to owner earnings because of the way it accounts for depreciation. Basically, it owns long-lived tangible assets in a world with inflation so it does not depreciate these assets enough over their lives to account for the higher nominal replacement cost of the asset in the future. It�� a common problem for railroads, etc. But it doesn�� have to do with return on investment. It has to do with accounting.

• [By Alex Planes]

  The Cunard line was acquired by Carnival (NYSE: CCL  ) , which now operates Cunard as a traditional British-style luxury brand. Cunard presently operates three liners, the Queen Mary 2, the Queen Victoria, and the Queen Elizabeth, the latter of which was built beginning in 2007, and the former of which is the largest ocean-going cruise liner in the world.

Top Oil Stocks To Invest In 2014: New Concept Energy Inc (GBR)

New Concept Energy, Inc. (New Concept), incorporated on May 30, 1991 in, owns and operates oil and gas wells in Ohio and West Virginia. The Company, through its wholly owned subsidiaries Mountaineer State Energy, Inc. and Mountaineer State Operations, LLC. operates oil and gas wells and mineral leases in Athens and Meigs Counties in Ohio and in Calhoun, Jackson and Roane Counties in West Virginia. As of March 30, 2012, the Company had 159 producing gas wells, 27 non-producing wells and related equipment and mineral leases covering approximately 20,000 acres. The Company operates in two primary business segments: oil and gas operations and retirement facilities.

During the year ended December 31, 2011, the Company had drilled eight wells. New Concept focuses on North American onshore oil and natural gas drilling and exploration. The Company's properties are concentrated in the Appalachian Basin, Fort Worth Basin, and the Arkoma Basin. The Company leases and operates Pacific Pointe Retirement Inn (Pacific Pointe) in King City, Oregon. Pacific Pointe has a capacity of 114 residents and provides community living with basic services, such as meals, housekeeping, laundry, 24/7 staffing, transportation and social and recreational activities.

Top Oil Stocks To Invest In 2014: Phillips 66 (PSX)

Phillips 66 is a holding company. The Company is engaged in producing natural gas liquids (NGL) and petrochemicals. The Company operates in three segments: the Refining and Marketing (R&M) segment, the Midstream segment and the Chemicals segment. The Refining and Marketing (R&M) segment purchases, refines, markets and transports crude oil and petroleum products, mainly in the United States, Europe and Asia, and also engages in power generation activities. The Midstream segment gathers, processes, transports and markets natural gas, and fractionates and markets NGL, predominantly in the United States. The Chemicals segment manufactures and markets petrochemicals and plastics on a worldwide basis. The Company�� operations encompass 15 refineries with a gross crude oil capacity of 2.8 million barrels per day, 10,000 branded marketing outlets and 7.2 billion cubic feet per day of gross natural gas processing capacity.

R&M

The Company�� R&M segment primarily refines crude oil and other feedstocks into petroleum products (such as gasolines, distillates and aviation fuels); buys, sells and transports crude oil; and buys, transports, distributes and markets petroleum products. This segment also engages in power generation activities. R&M has operations in the United States, Europe and Asia.

The Company�� Bayway Refinery is located on the New York Harbor in Linden, New Jersey. The refinery produces a high percentage of transportation fuels, such as gasoline, diesel and jet fuel, as well as petrochemical feedstocks, residual fuel oil and home heating oil. Its Trainer Refinery is located on the Delaware River in Trainer, Pennsylvania. Refinery facilities include fluid catalytic cracking units, hydrodesulfurization units, a reformer and a hydrocracker. The Alliance Refinery is located on the Mississippi River in Belle Chasse, Louisiana. The single-train facility includes fluid catalytic cracking units, hydrodesulfurization units and a reformer and aromatics unit. Alli! ance produces a percentage of transportation fuels, such as gasoline, diesel and jet fuel. Other products include petrochemical feedstocks, home heating oil and anode petroleum coke.

The Lake Charles Refinery is located in Westlake, Louisiana. Its facilities include crude distillation, fluid catalytic cracker, hydrocracker, delayed coker and hydrodesulfurization units. The refinery produces a percentage of transportation fuels, such as gasoline, off-road diesel and jet fuel, along with home heating oil. It owns a 50% interest in Excel Paralubes, a joint venture which owns a hydrocracked lubricant base oil manufacturing plant located adjacent to the Lake Charles Refinery. The Sweeny Refinery is located in Old Ocean, Texas, approximately 65 miles southwest of Houston. Refinery facilities include fluid catalytic cracking, delayed coking, alkylation, a continuous regeneration reformer and hydrodesulfurization units. It produces a percentage of transportation fuels, such as gasoline, diesel and jet fuel. Other products include petrochemical feedstocks, home heating oil and coke.

The Company�� Merey Sweeny, L.P. (MSLP) owns a delayed coker and related facilities at the Sweeny Refinery. Fuel-grade petroleum coke is produced as a by-product and becomes the property of MSLP. The Company owns 50% operating interest in Sweeny Cogeneration, a joint venture, which owns a simple cycle, cogeneration power plant located adjacent to the Sweeny Refinery. The plant generates electricity and provides process steam to the refinery, and it also provides merchant power into the Texas market.

The Company�� Wood River Refinery is located in Roxana, Illinois, about 15 miles northeast of St. Louis, Missouri, at the convergence of the Mississippi and Missouri rivers. Operations include three distilling units, two fluid catalytic cracking units, hydrocracking, coking, reforming, hydrotreating and sulfur recovery. The refinery produces a percentage of transportation fuels, such as gasoline,! diesel a! nd jet fuel. Other products include petrochemical feedstocks, asphalt and coke. Its Borger Refinery is located in Borger, Texas, in the Texas Panhandle, approximately 50 miles north of Amarillo. The refinery facilities consist of coking, fluid catalytic cracking, hydrodesulfurization and naphtha reforming, in addition to a 45,000-barrels-per-day NGL fractionation facility. It produces a percentage of transportation fuels, such as gasoline, diesel and jet fuel, as well as coke, NGL and solvents.

The Ponca City Refinery is located in Ponca City, Oklahoma. It is a high-conversion facility, which includes fluid catalytic cracking, delayed coking and hydrodesulfurization units. It produces a range of products, including gasoline, diesel, jet fuel, liquefied petroleum gas (LPG) and anode-grade petroleum coke. The Billings Refinery is located in Billings, Montana. Its facilities include fluid catalytic cracking and hydrodesulfurization units. The Ferndale Refinery is located on Puget Sound in Ferndale, Washington, approximately 20 miles south of the United States-Canada border. Facilities include a fluid catalytic cracker, an alkylation unit, a diesel hydrotreater and an S-Zorb unit. The Los Angeles Refinery consists of two linked facilities located about five miles apart in Carson and Wilmington, California. The San Francisco Refinery consists of two facilities linked by a 200-mile pipeline. The Santa Maria facility is located in Arroyo Grande, California, about 200 miles south of San Francisco.

As of December 31, 2011, the Company marketed gasoline, diesel and aviation fuel through approximately 8,250 marketer-owned or -supplied outlets in 49 states. At December 31, 2011, its wholesale operations utilized a network of marketers operating approximately 6,875 outlets that provided refined product offtake from its refineries. In addition to automotive gasoline and diesel, it produces and markets aviation gasoline, which is used by smaller piston engine aircrafts. As December 31, 2011,! aviation! gasoline and jet fuel were sold through dealers and independent marketers at approximately 875 Phillips 66-branded locations in the United States.

The Company manufactures and sells automotive, commercial and industrial lubricants, which are marketed worldwide under the Phillips 66, Conoco, 76 and Kendall brands, as well as other private label brands. It also manufactures Group II and import Group III base oils and market both globally under the respective brand names Pure Performance and Ultra-S. It manufactures and markets graphite and anode-grade petroleum cokes in the United States and Europe for use in the global steel and aluminum industries. It also manufacture and market polypropylene to North America under the COPYLENE brand name. Its ThruPlus Delayed Coker Technology, a process for upgrading heavy oil into higher value, light hydrocarbon liquids, was sold in June 2011. In October 2011, it sold Seaway Products Pipeline Company to DCP Midstream. In December 2011, the Company sold its 16.55% interest in Colonial Pipeline Company and its 50% interest in Seaway Crude Pipeline Company. The Company manufactures and sells a variety of specialty products, including pipeline flow improvers and anode material for high-power lithium-ion batteries. Its specialty products are marketed under the LiquidPower and CPreme brand names.

The Company owns four refineries outside the United States: the Humber Refinery, Whitegate Refinery, Melaka Refinery and Wilhelmshaven Refinery. The Humber Refinery is located on the east coast of England in North Lincolnshire, United Kingdom. It is an integrated refinery, which produces a high percentage of transportation fuels, such as gasoline and diesel. Humber�� facilities encompass fluid catalytic cracking, thermal cracking and coking. The refinery has two coking units with associated calcining plants, which upgrade the heaviest part of the crude barrel and imported feedstocks into light oil products and graphite and anode petroleum cokes.

!

Th! e Whitegate Refinery is located in Cork, Ireland. The refinery primarily produces transportation fuels, such as gasoline, diesel and fuel oil, which are distributed to the inland market, as well as being exported to Europe and the United States. It also operate a crude oil and products storage complex consisting of 7.5 million barrels of storage capacity and an offshore mooring buoy, located in Bantry Bay, about 80 miles southwest of the refinery in southern Cork County.

The Mineraloelraffinerie Oberrhein GmbH (MiRO) Refinery, located on the Rhine River in Karlsruhe in southwest Germany, is a joint venture in which it owns an 18.75% interest. Facilities include three crude unit trains, fluid catalytic cracking, petroleum coking and calcining, hydrodesulfurization units, reformers, isomerization and aromatics recovery units, ethyl tert-butyl ether (ETBE) and alkylation units. MiRO produces a percentage of transportation fuels, such as gasoline and diesel. Other products include petrochemical feedstocks, home heating oil, bitumen, and anode- and fuel-grade petroleum coke. The Wilhelmshaven Refinery is located in the northern state of Lower Saxony in Germany, and has a 260,000 barrels-per-day crude oil processing capacity.

As of December 31, 2011, the Company had approximately 1,430 marketing outlets in its European operations, of which approximately 900 were Company-owned and 330 were dealer-owned. It also held brand-licensing agreements with approximately 200 sites. Through its joint venture operations in Switzerland, it also has interests in 250 additional sites.

Midstream

The Midstream segment purchases raw natural gas from producers, including ConocoPhillips, and gathers natural gas through pipeline gathering systems. Its Midstream segment is primarily conducted through its 50% investment in DCP Midstream. DCP Midstream also owns or operates 12 NGL fractionation plants, along with propane terminal facilities and NGL pipeline assets. It has a 25% inte! rest in R! ockies Express Pipeline LLC (REX).

Chemicals

The Chemicals segment consists of its 50% investment in CPChem. As of December 31, 2011, CPChem owned or had joint-venture interests in 38 manufacturing facilities. CPChem�� business is structured around two primary operating segments: Olefins & Polyolefins (O&P) and Specialties, Aromatics & Styrenics (SA&S). The O&P segment produces and markets ethylene, propylene, and other olefin products, which are primarily consumed within CPChem for the production of polyethylene, normal alpha olefins, polypropylene and polyethylene pipe. The SA&S segment manufactures and markets aromatics products, such as benzene, styrene, paraxylene and cyclohexane, as well as polystyrene and styrene-butadiene copolymers.

Advisors' Opinion:

• [By Tyler Crowe]

  As much as we like to believe that American companies would not let foreign demand drive domestic prices, ask yourself this question: If you were a major manufacturer and saw that your product commanded a much higher price overseas than domestically, then you would probably sell to that market, right? The same can be said for oil. Refining specialist�Phillips 66 (NYSE: PSX  ) currently aims to export about 375,000 barrels per day of finished products from its refineries across the U.S. because there is much greater opportunity in markets overseas.

• [By Tyler Crowe]

  This past quarter, Phillips 66 (NYSE: PSX  ) , Valero (NYSE: VLO  ) , and Devon Energy (NYSE: DVN  ) have each expressed interest in a midstream MLP spin-off, and some expect to finish the process by the end of the year. In this video, Fool.com contributor Tyler Crowe looks at what these new midstream companies will mean to the MLP space and how investors should digest the news.

Top Oil Stocks To Invest In 2014: Valero Energy Corporation(VLO)

Valero Energy Corporation operates as an independent petroleum refining and marketing company. The company operates through three segments: Refining, Ethanol, and Retail. The Refining segment engages in refining, wholesale marketing, product supply and distribution, and transportation operations. It produces conventional gasoline, distillates, jet fuel, asphalt, petrochemicals, lubricants, and other refined products. This segment also offers conventional blendstock for oxygenate blending, reformulated gasoline blendstock for oxygenate blending, gasoline meeting the specifications of the California Air Resources Board (CARB), CARB diesel fuel, low-sulfur and ultra-low-sulfur diesel fuel. The Ethanol segment produces ethanol and distillers grains. The Retail segment sells transportation fuels at retail stores and unattended self-service cardlocks; convenience store merchandise and services in retail stores; and home heating oil to residential customers. Valero Energy Corpora tion markets its refined products through bulk and rack marketing network; and sells refined products through a network of approximately 6,800 retail and wholesale branded outlets under the Valero, Diamond Shamrock, Shamrock, Ultramar, Beacon, and Texaco names in the United States, Canada, the United Kingdom, Aruba, and Ireland. As of December 31, 2011, it owned 16 petroleum refineries with a combined throughput capacity of approximately 3.0 million barrels per day; and operated 10 ethanol plants with a combined nameplate production capacity of approximately 1.1 billion gallons per year. The company was formerly known as Valero Refining and Marketing Company and changed its name to Valero Energy Corporation in August 1997. Valero Energy Corporation was founded in 1955 and is based in San Antonio, Texas.

Advisors' Opinion:

• [By Dan Caplinger]

  Lately, though, domestic crude has seen its cost advantage almost disappear, creating a potential reversal of the profit bonanza. Valero (NYSE: VLO  ) said last week that it expects discounts for domestic crude to return, restoring its long-term benefits, but in the meantime, its profits dropped 44% in its second-quarter report compared to year-ago levels.

• [By Chad Tracy]

  Some analysts have postulated that the crude could be shipped by rail. But Greg Gentry, Valero Energy's (NYSE: VLO) general manager in Port Arthur, Texas, disagrees, saying Canadian producers "would have to drop the price of their crude" if they were to ship by rail, according to the New Yorker article.

• [By Dan Dzombak]

  Today's oil and gas stocks leaders were all refiners. Last Friday, the EPA announced new rules for gasoline that include a 67% reduction in sulfur in an effort to improve air quality. On Tuesday, the sector was crushed after a spokesman for Valero (NYSE: VLO  ) said the company expected the new EPA rules for gasoline would cost it $300-$400 million over the next few years. That announcement sent the stock down 6% on Tuesday, and the sector as a whole fell with it. The decline continued yesterday, as the market was also down.

• [By Tyler Crowe]

  For refiners, though, that spread in price led to very lucrative refining margins. As that spread has narrowed, so too has margins for refiners.

  Refining Margins Q4 2012� Q2 2013 Valero (NYSE: VLO  ) $12.27 $9.26 Phillips 66 (NYSE: PSX  ) � $13.67 $9.88 HollyFrontier (NYSE: HFC  ) $24.00 $20.28 CVR Refining (NYSE: CVRR  ) $28.08 $20.30

  Source: Company Earnings releases

Top Oil Stocks To Invest In 2014: Grid Petroleum Corp (GRPR)

Don't Get Too Worked Up Over Weyco Group's Earnings

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 Weyco Group (Nasdaq: WEYS  ) , 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, Weyco Group generated $12.1 million cash while it booked net income of $18.3 million. That means it turned 4.2% of its revenue into FCF. That sounds OK. However, FCF is less than net income. Ideally, we'd like to see the opposite.

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).

Hot Biotech Companies To Watch In Right Now

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 Weyco Group 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 20.5% of operating cash flow coming from questionable sources, Weyco Group investors should take a closer look at the underlying numbers. Within the questionable cash flow figure plotted in the TTM period above, other operating activities (which can include deferred income taxes, pension charges, and other one-off items) provided the biggest boost, at 13.4% of cash flow from operations. Overall, the biggest drag on FCF came from capital expenditures, which consumed 43.2% of cash from operations.

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 Weyco Group. 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 Weyco Group to My Watchlist.

Amazon Shares Hit All-Time High as Analyst Upgrades

NEW YORK (AP) -- Shares of Amazon reached a new all-time high today as a UBS analyst raised the online retailer's rating and price target, saying it has a chance to speed up revenue growth heading into the holiday season.

The spark: Eric Sheridan of UBS lifted Amazon.com to "Buy" from "Neutral" and increased its price target to $385 from $305.

The analysis: Sheridan said in a client note that Amazon should be able to speed up its revenue growth in the fourth quarter and beyond in part because it should benefit from the rollout of new video games and gaming consoles, such as Sony Corp.'s Playstation 4 and Microsoft Corp.'s Xbox One -- which are expected to launch in November.

The analyst said that Amazon is well-positioned going forward, as it has worked hard this year on bringing together its hardware and software through actions such as hardware launches, software improvements, streaming content additions and its Amazon Payments system.

Sheridan anticipates an in-line quarter for Amazon when it reports financial results on Thursday. He noted that the near-term may be volatile for online businesses, given eBay's comments this week about expectations for a sluggish holiday season for the U.S. online business and potential impact of the temporary government shutdown.

Share action: The stock climbed $14.18, or 4.6%, to $324.95 in midday trading. Earlier, it touched $325.64 -- a fresh all-time high. Many technology-oriented companies are trading higher Friday. Google's strong third-quarter results sent its stock past $1,000 per share for the first time since it went public nine years ago.

Bayer HealthCare consolidates, opens new U.S. base

WHIPPANY, N.J. — The maker of Bayer Aspirin and Alka-Seltzer has located its new U.S. headquarters here, a short drive from Gov. Chris Christie's house.

And New Jersey's governor joined state and local officials Wednesday for the ceremonial ribbon-cutting at Bayer HealthCare's new campus.

STORY: Bausch + Lomb moving HQ to N.J. from N.Y.

"When I was asked to be here this morning, it was an easy yes," Christie said. "And not just because it's 20 minutes from my house although that didn't hurt."

Christie touted the ribbon-cutting as an example of government working with business to retain good jobs, a decision for Bayer that was made easier because of more than $35.1 million in business incentive grants to keep the international drugmaker not only in the Garden State but in Morris County.

In turn, Bayer invested $250 million into its new 700,000-square-foot facility here that originally served as a base for Bell Labs. It took about a year for the company to gut two campus buildings, connect them with a five-story glass atrium and transform them into a modern workplace for 2,400 workers.

Those workers, gathered from Bayer sites in Morris Township, Montville and Wayne, N.J.; and Tarrytown, N.Y., began moving July 1 into their new offices about 30 miles east of New York City.

The new building, which has a Leadership in Energy and Environmental Design certification pending from the U.S. Green Building Council, features an open design that includes a training center, medical suite, mother's room, company store, a cafe with indoor and outdoor dining and more than 2 miles of fitness paths inside and outside the building.

A floating staircase in Bayer HealthCare's U.S. headquarters in Whippany, N.J., goes up to ! an open area.(Photo: Bob Karp, (Morris County, N.J.) Daily Record)

"There's only a few concrete walls left from what used to be here," said Marjin Dekkers, chairman of the Bayer AG Group, which is celebrating its 150th anniversary.

Calling it one of the most impressive new buildings he has seen in New Jersey, Christie said, "I think it represents the corporate culture in the design, and the type of corporate culture that we want across this country and around the world. The openness, a collaboration of bringing a people together, something that our country needs more right now than ever before.

"So maybe you can set an example for those people in Washington," he said.

MGIC Investment Gains 14% on Surprise Profit

MGIC Investment (MTG) was not to supposed to turn a profit during the quarter. If the analysts were right, the mortgage insurer’s second-quarter profit was supposed to be a blip and MGIC would return to its money-losing ways.

Associated Press

That’s not quite what happened. MGIC reported a profit of 4 cents a share versus forecasts for a loss of 10 cents, according to FactSet and MGIC’s shares popped 14% to $8.29.

Its big day has also boosted other insurers. Radian Group (RDN) has risen 7.2% to $14.39, while Old Republic International (ORI) has advanced 2.1% to $15.24, Genworth Financial (GNW) is up 3.6% at $13.41 and MBIA Inc. (MBI) has jumped 4.3% to $10.76.

Top 10 Clean Energy Companies For 2014

Susquehanna’s Jack Micenko credits a better economy with boosting earnings:

The beat was driven by lower loss reserving – $180 mln versus our estimate of $225 and the consensus estimate of $240, as favorable economic trends helped drive their default book claim rate and severity lower…

Micenko expects MGIC’s shares to hit $13, a 57% gain from its current price.

Wal-Mart (WMT) Unveils Ambitious FY2015 Guidance

NEW YORK (TheStreet) -- Wal-Mart  (WMT) executives presented a positive long-term outlook at the company's 20th annual investors conference on Tuesday. Among the details discussed, the retailer said in 2014 it intends to add 33 to 37 million net retail square feet, more than half within the U.S., to its current assets.

The retailer will turn its focus to small format openings and e-commerce fulfillment centers, though Wal-Mart's superstores will be mainstay. The retailer is also investing in technology to make store processes more efficient. For example, by year-end, almost two-thirds of Wal-Mart stores will offer the self-checkout option.

The shifting retail approach is expected to address a downward trend in Wal-Mart same-store sales. In the second quarter ended July 31, comparable sales declined 0.3% while a quarter earlier they dropped 1.4%. Though the rate of decline is slowing, Wal-Mart sales continue to reflect challenges facing the greater retail environment.

"We're in a tough and unpredictable global economy," said President and CEO Mike Duke. "Near-term execution is critical for us." He remained positive, however, telling the audience, "No matter what environment we're in -- today, a year from now, five years from now -- we are driven to win." Wal-Mart shares closed 0.42% lower to $74.37, leading the S&P 500 which was down 0.71%. In after-hours trading, shares have gained 0.93% to $75.06. Wal-Mart will report third-quarter earnings on November 14. TheStreet Ratings team rates Wal-Mart Stores Inc as a Buy with a ratings score of A. TheStreet Ratings Team has this to say about their recommendation: "We rate Wal-Mart Stores Inc (WMT) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, notable return on equity, good cash flow from operations, growth in earnings per share and increase in net income. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself." Highlights from the analysis by TheStreet Ratings Team goes as follows: WMT's revenue growth has slightly outpaced the industry average of 2.5%. Since the same quarter one year prior, revenues slightly increased by 2.3%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share. Wal-Mart Stores Inc has improved earnings per share by 5.1% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, Wal-Mart Stores Inc increased its bottom line by earning $5.02 a share vs. $4.55 a share in the prior year. This year, the market expects an improvement in earnings ($5.20 vs. $5.02). The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. When compared to other companies in the Food & Staples Retailing industry and the overall market, Wal-Mart Stores Inc's return on equity exceeds that of the industry average and significantly exceeds that of the S&P 500. Net operating cash flow has slightly increased to $6,357 million or 3.18% when compared to the same quarter last year. In addition, Wal-Mart Stores Inc has also modestly surpassed the industry average cash flow growth rate of -5.65%. The net income growth from the same quarter one year ago has exceeded that of the Food & Staples Retailing industry average, but is less than that of the S&P 500. The net income increased by 1.3% when compared to the same quarter one year prior, going from $4,016 million to $4,069 million. You can view the full analysis from the report here: WMT Ratings Report Written by Keris Alison Lahiff.

Social Security Rise to Be Among Lowest in Years

Bradley C. Bower/AP WASHINGTON -- For the second straight year, millions of Social Security recipients, disabled veterans and federal retirees can expect historically small increases in their benefits come January. Preliminary figures suggest a benefit increase of roughly 1.5 percent, which would be among the smallest since automatic increases were adopted in 1975, according to an analysis by The Associated Press. Next year's raise will be small because consumer prices, as measured by the government, haven't gone up much in the past year. The exact size of the cost-of-living adjustment, or COLA, won't be known until the Labor Department releases the inflation report for September. That was supposed to happen Wednesday, but the report was delayed indefinitely because of the partial government shutdown. The COLA is usually announced in October to give Social Security and other benefit programs time to adjust January payments. The Social Security Administration has given no indication that raises would be delayed because of the shutdown, but advocates for seniors said the uncertainty was unwelcome. Social Security benefits have continued during the shutdown. More than one-fifth of the country is waiting for the news. Nearly 58 million retirees, disabled workers, spouses and children get Social Security benefits. The average monthly payment is $1,162. A 1.5 percent raise would increase the typical monthly payment by about $17. The COLA also affects benefits for more than 3 million disabled veterans, about 2.5 million federal retirees and their survivors, and more than 8 million people who get Supplemental Security Income, the disability program for the poor. Automatic COLAs were adopted so that benefits for people on fixed incomes would keep up with rising prices. Many seniors, however, complain that the COLA sometimes falls short, leaving them little wiggle room. David Waugh of Bethesda, Md., said he can handle one small COLA but several in a row make it hard to plan for unexpected expenses. "I'm not one of those folks that's going to fall into poverty, but it is going to make a difference in my standard of living as time goes by," said Waugh, 83, who retired from the United Nations. "I live in a small apartment and I have an old car, and it's going to break down. And no doubt when it does, I'll have to fix it or get a new one." Since 1975, annual Social Security raises have averaged 4.1 percent. Only six times have they been less than 2 percent, including this year, when the increase was 1.7 percent. There was no COLA in 2010 or 2011 because inflation was too low. By law, the cost-of-living adjustment is based on the Consumer Price Index for Urban Wage Earners and Clerical Workers, or CPI-W, a broad measure of consumer prices generated by the Bureau of Labor Statistics. It measures price changes for food, housing, clothing, transportation, energy, medical care, recreation and education. The COLA is calculated by comparing consumer prices in July, August and September each year to prices in the same three months from the previous year. If prices go up over the course of the year, benefits go up, starting with payments delivered in January. This year, average prices for July and August were 1.4 percent higher than they were a year ago, according to the CPI-W. Once the September report, the final piece of the puzzle, is released, the COLA can be officially announced. If prices continued to slowly inch up in September, that would put the COLA at roughly 1.5 percent. Several economists said there were no dramatic price swings in September to significantly increase or decrease the projected COLA. That means the projection shouldn't change by more than a few tenths of a percentage point, if at all. Polina Vlasenko, a research fellow at the American Institute for Economic Research, projects the COLA will be between 1.4 percent and 1.6 percent. Her projection is similar to those done by others, including AARP, which estimates the COLA will be between 1.5 percent and 1.7 percent. The Senior Citizens League estimates it will be about 1.5 percent. Lower prices for gasoline are helping to fuel low inflation, Vlasenko said. "In years with high COLA's, a lot of that had to do with fuel prices and in some cases food prices. Neither of those increased much this year," Vlasenko said. "So that kept the lid on the overall increase in prices." Gasoline prices are down 2.4 percent from a year ago while food prices are up slightly, according to the August inflation report. Housing costs went up 2.3 percent and utilities increased by 3.2 percent. Advocates for seniors say the government's measure of inflation doesn't accurately reflect price increases older Americans face because they tend to spend more of their income on health care. Medical costs went up less than in previous years but still outpaced other consumer prices, rising 2.5 percent. "This [COLA] is not enough to keep up with inflation, as it affects seniors," said Max Richtman, who heads the National Committee to Preserve Social Security and Medicare. "There are some things that become cheaper but they are not things that seniors buy. Laptop computers have gone down dramatically but how many people at 70 are buying laptop computers?" The cost of personal computers dropped by 10.6 percent over the past year, according the CPI-W. That's a small consolation to Alberta Gaskins of the District of Columbia, who said she is concerned about keeping up with her household bills. "It is very important to get the COLA because everything else you have in your life is on an upward swing, and if you're on a downward swing, that means your quality of life is going down," said Gaskins, who retired from the Postal Service in 1989.

Top Performing Stocks To Buy For 2014

Wall Street watchers may have been getting dizzy today as the Dow Jones Industrial Average (DJINDICES: ^DJI  ) moved more than 100 points for the third day in a row. Today, however, two strong economic reports sent the blue chips higher, as the index gained 180 points, or 1.2%. Initial unemployment claims beat expectations with last week's new jobless tally hitting just 334,000, compared to the 350,000 analysts had expected, and 346,000 the week before. The figure helps increase confidence that the job market is improving after last week's new jobs numbers for May also beat expectations.

May retail sales also came in ahead of expectations, jumping 0.6% versus the consensus estimate at 0.3%. �The total was the fastest growth rate in three months, and a 4.3% increase over a year ago, indicating that consumer spending continues to improve despite government spending cuts and a higher payroll tax. �

Caterpillar (NYSE: CAT  ) took the cake today among Dow stocks, gaining 2.3%, as the construction-equipment maker bumped up its quarterly dividend 15%, to $0.60, or a 2.9% yield. It was the company's third consecutive annual dividend increase and, on a bullish day, that was enough to push the macro-economically sensitive stock up over 2%. Caterpillar has been one of the worst-performing on the Dow this year as it has actually fallen 5% in 2013. Given its sluggish performance recently, the stock may be due for a gain.

Top Performing Stocks To Buy For 2014: Forest Laboratories Inc (FRX)

Forest Laboratories, Inc. (Forest), incorporated on April 11, 1956, develops, manufactures and sells branded forms of ethical drug products, most of which requires a physician's prescription. The Company also focuses on the development and introduction of new products, including products developed in collaboration with licensing partners. Its products include those developed by the Company and those acquired from other pharmaceutical companies and integrated into its marketing and distribution systems. The Company�� principal products include Lexapro, its selective serotonin reuptake inhibitor (SSRI) for the treatment of major depressive disorder (MDD) in adults and adolescents and generalized anxiety disorder (GAD) in adults; Namenda, its N-methyl-D-Aspartate (NMDA) antagonist for the treatment of moderate and severe Alzheimer's disease; Bystolic, its beta-blocker for the treatment of hypertension; Savella, its selective serotonin and norepinephrine reuptake inhibitor (SNRI) for the management of fibromyalgia and its newest marketed product Teflaro, a broad-spectrum hospital-based injectable cephalosporin antibiotic for the treatment of adults with community-acquired bacterial pneumonia. On April 13, 2011, the Company acquired Clinical Data Inc. (Clinical Data), a specialty pharmaceutical company.

Aclidinium

In June 2011, the Company ahs submitted a New Drug Application (NDA) to the Food and Drug Administration (FDA) for aclidinium (aclidinium bromide), a long-acting antimuscarinic agent developed as an inhaled therapy for the maintenance treatment of chronic obstructive pulmonary disease (COPD). When given by inhalation, aclidinium leads to bronchodilation by inhibiting airway smooth muscle contraction. Aclidinium is rapidly hydrolyzed in human plasma to two major inactive metabolites. Aclidinium is administered to patients using a multi-dose dry powder inhaler (MDPI). This inhaler was designed with a feedback system which, through a ��olored control window��and an a! udible click, helps confirm that the patient has inhaled correctly. It contains multiple doses of aclidinium, includes a visible dose-level indicator, and also incorporates features such as an anti-double dosing mechanism and an end-of-dose lock-out system to prevent use of an empty inhaler.

Linaclotide

Linaclotide is being investigated for the treatment of constipation-predominant irritable bowel syndrome (IBS-C) and chronic constipation (CC). Linaclotide is an agonist of the guanylate cyclase type-C receptor found in the intestine and acts by a mechanism. Linaclotide increases fluid secretions leading to increased bowel movement frequency and reduces abdominal pain. Linaclotide is administered orally but acts locally in the intestine with no measurable systemic exposure at therapeutic doses and is intended for once-daily administration.

Viibryd

As a result of its acquisition of Clinical Data, Inc. (Clinical Data) completed in April 2011, the Company obtained worldwide rights to develop and market Viibryd (vilazodone HCl) a selective serotonin reuptake inhibitor and a 5-HT1A receptor partial agonist developed by Clinical Data for the treatment of adults with major depressive disorder (MDD). Viibryd became available to patients during the June 2011 quarter and was formally launched in the U.S. in late August 2011.

Daliresp

In February 2011, the Company received approval from the United States Food and Drug Administration (FDA) for the marketing of Daliresp (roflumilast). Daliresp is once-daily, orally administered, selective phosphodiesterase 4 (PDE4) enzyme inhibitor, developed by its partner, Nycomed GmbH (Nycomed), as a treatment to reduce the risk of exacerbations in patients with severe chronic obstructive pulmonary disease (COPD) associated with chronic bronchitis and a history of exacerbations.

Namenda

Namenda (memantine HCl) is an N-methyl-D-Aspartate (NMDA) receptor agonist for the treatmen! t of mode! rate and severe Alzheimer�� disease. In June 2010, Namenda XR was approved by the FDA for the treatment of moderate to severe dementia of the Alzheimer�� type. Namenda XR is a 28 milligrams once-daily extended-release formulation of Namenda. The Company has obtained the exclusive rights to develop and market memantine in the United States by license agreement with Merz Pharma GmbH & Co. KgaA (Merz) of Germany, the originator of the product.

Bystolic

Bystolic is a beta-1 selective beta-blocker with vasodilating properties. Bystolic decreases heart rate and myocardial contractility and suppresses rennin activity. The Company licensed exclusive United States and Canadian rights to Bystolic from Mylan Inc. (Mylan).

Savella

Savella (milnacipran HCl) is the Company�� selective serotonin and norepinephrine inhibitor (SNRI) for the management of fibromyalgia. Fibromyalgia is a chronic condition characterized by widespread pain and decreased physical function. The Company licensed the United States and Canadian rights to develop and commercialize Savella from Cypress Bioscience, Inc. (Cypress). Its license agreement includes two patents covering the use of Savella for the management of fibromyalgia.

Teflaro

In October 2010, the Company received marketing approval from the FDA for Teflaro (ceftaroline) for the treatment of adults with community-acquired bacterial pneumonia, including cases caused by Streptococcus pneumoniae bacteremia and with acute bacterial skin and skin structure infections, including cases caused by methicillin-resistant Staphylococcus aureus. Teflaro is a spectrum, hospital-based injectable cephalosporin antibiotic with activity against Gram-positive bacteria and common Gram-negative bacteria. Teflaro is a member of the cephalosporin class of antibiotics. The worldwide rights (excluding Japan) to Teflaro are in-licensed on an exclusive basis from Takeda Pharmaceutical Company (Takeda). Teflaro is als! o covered! by two United States patents that relate to the ceftaroline formulation that expire in 2021 and that may provide additional exclusivity.

Avibactam

Avibactam is designed to be co-administered with select antibiotics to enhance their spectrum of activity. The Company received the exclusive rights to administer avibactam with ceftaroline as a combination product in North America. Avibactam is a beta-lactamase inhibitor designed to be co-administered with select antibiotics to enhance their spectrum of activity by overcoming beta-lactamase-related antibacterial resistance.

Lexapro

Lexapro�� is a SSRI for the treatment of MDD in adults and adolescents and GAD in adults. Lexapro�� (escitalopram oxalate) single isomer version of citalopram HBr, for the treatment of MDD in adults and adolescents and GAD in adults.

Cariprazine

Cariprazine is an oral D2/D3 partial agonist. Cariprazine is also undergoing Phase III trials for schizophrenia and acute mania associated with bipolar depression, bipolar depression and as an adjunct treatment for MDD.

Levomilnacipran

Levomilnacipran is a once-daily, selective norepinephrine and serotonin reuptake inhibitor, two neurotransmitters known to play an essential role in regulating mood, and is being developed for the treatment of MDD.

GRT 6005

In December 2010, the Company entered into a license agreement with Grunenthal GmbH for the co-development and commercialization of GRT 6005 and its follow-on compound GRT 6006, small molecule analgesic compounds being developed by Grunenthal for the treatment of moderate to severe chronic pain. GRT 6005 and GRT 6006 are compounds with pharmacological and pharmacokinetic profiles that may enhance their effect in certain pain conditions. GRT 6005 has completed initial proof-of-concept studies in nociceptive and neuropathic pain with further Phase II studies planned prior to initiation of Phase III s! tudies.

TTP399

In June 2010, the Company entered into a license agreement with TransTech Pharma, Inc. (TransTech) for the development and commercialization of TTP399, a functionally liver selective glucokinase activator (GKA) discovered and developed by TransTech for the treatment of Type II diabetes. Early Phase I testing suggests that pharmacological enhancement of glucokinase activity may lower blood glucose in diabetic patients.

Azimilide

In April 2011, the Company entered into an agreement with Blue Ash Therapeutics, LLC (Blue Ash) pursuant to which it acquired the worldwide rights to azimilide, a class III antiarrhythmic agent developed by Proctor & Gamble Pharmaceuticals. Based on its mechanism of action and results of clinical trials, azimilide was determined to be suited for use in patients with a history of life-threatening ventricular arrhythmias and who have an implantable cardioverter defibrillator. In 2010, the FDA agreed to one additional Phase III study to support a regulatory submission for azimilide in the U.S.

RGH-618

RGH-618 involves a series of compounds that target metabotropic glutamate receptors and are agonists, which represent potential agents for the treatment of anxiety, depression and other central nervous system (CNS) conditions. In March 2012, the Company initiated a Phase I study in healthy volunteers of RGH-618.

Advisors' Opinion:

• [By Sean Williams]

  So what: Take that phrase "better than expected" with a grain of salt, because when you're a growing biotechnology company with a newly approved drug, Wall Street tends to cut you some slack. For the quarter, Ironwood recorded a 34% decline in revenue to $9.7 million as its loss widened to $0.57 per share. Comparatively speaking, though, this was far better than the $0.70 loss per share on $6.2 million in revenue that the Street had expected. Furthermore, Ironwood backed its full-year sales and marketing expense guidance for its lead drug, Linzess, that it co-markets with Forest Laboratories (NYSE: FRX  ) . According to Forest Labs, sales of the drug, which is used to treat irritable bowel syndrome with constipation and chronic idiopathic constipation in adults, totaled $28.8 million for the second quarter.

Top Performing Stocks To Buy For 2014: Hudbay Minerals In Com Npv (HBM.TO)

HudBay Minerals Inc., an integrated mining company, engages in the exploration and development of copper, zinc, and precious metals mines in North and South America. It primarily produces copper concentrates containing copper, gold, and silver; and zinc metal. The company principally owns underground 777 mine that covers an area of 4,400 hectares and is located in Flin Flon, Manitoba. It also owns ore concentrators and a zinc production facility in northern Manitoba and Saskatchewan. The company was founded in 1992 and is based in Toronto, Canada.

Top Safest Companies To Buy For 2014: Hotel Grand Central Ltd (H18.SI)

Hotel Grand Central Limited owns, operates, and manages hotels in Singapore, Malaysia, Australia, New Zealand, and China. It is also involved in the provision of marketing, support, and management services; and property investment activities. The company is based in Singapore.

Top Performing Stocks To Buy For 2014: Westar Energy Inc.(WR)

Westar Energy, Inc., an electric utility company, engages in the generation, transmission, and distribution of electricity. It produces electricity through various sources, including coal, wind, nuclear, natural gas, oil, and diesel. As of October 26, 2011, it served approximately 687,000 residential, commercial, and industrial customers in Kansas; and had approximately 7,100 megawatts of generating capacity, as well as operated and coordinated approximately 34,000 miles of electric distribution and transmission lines. Westar Energy, Inc. also engages in energy marketing, and in the purchase and sale of electricity. It serves public streets, highways, electric cooperatives, municipalities, and other electric utilities in central and northeastern Kansas, including the cities of Topeka, Lawrence, Manhattan, Salina, and Hutchinson. The company was founded in 1924 and is headquartered in Topeka, Kansas.

Advisors' Opinion:

• [By Brian Pacampara]

  Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, electric utility Westar Energy (NYSE: WR  ) has earned a respected four-star ranking.

Top Performing Stocks To Buy For 2014: Visa Inc.(V)

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

Advisors' Opinion:

• [By Chris Hill]

  Visa (NYSE: V  ) and Under Armour (NYSE: UA  ) hit new all-time highs. General Motors (NYSE: GM  ) appears to be turning the corner in Europe. And second-quarter profits for Crocs (NASDAQ: CROX  ) fell a whopping 43%. In this installment of Investor Beat, Motley Fool analysts David Hanson and Jason Moser discuss four stocks making moves on Thursday.

• [By Chris Hill]

  Shares of Visa (NYSE: V  ) rose to an all-time high this week after the company reported stronger-than-expected second-quarter earnings. Earlier in the week, Mastercard (NYSE: MA  ) reported a 12% increase in first-quarter profits, but shares fell on lower-than-expected revenues. In this installment of Motley Fool Money, our analysts discuss Visa, MasterCard, and the future of electronic payments.

• [By Associated Press]

  NEW YORK (AP) -- The National Retail Federation on Tuesday urged a federal judge to reject a proposed $7.2 billion settlement with Visa (NYSE: V  ) and MasterCard (NYSE: MA  ) over alleged fee-fixing.