Tiffany Diamond Lawsuit Showcases an Unattractive Stock

Tiffany (NYSE: TIF  ) has accused Costco (NASDAQ: COST  ) of selling counterfeit Tiffany diamonds. It sounds rather shocking, but this isn't the first time either company has run up against the issue of counterfeit merchandise. However, the story also gives plenty of reasons to avoid Tiffany shares right now.

Tiffany chose a cute day to file its lawsuit (happy Valentine's Day, Costco), making heavy allegations about knock-off Tiffany engagement rings showing up under the fluorescent lights and warehouse ambience of Costco stores. Tiffany ponied up for one of the rings, and upon examination, found that the rock didn't include the luxury jeweler's microscopic brand it uses to identify its own diamonds, nor did the platinum band include the Tiffany trademark.

Although Costco discontinued the rings when Tiffany complained in December, Tiffany has still decided to go forward with the lawsuit, claiming the practice had gone on for many years. It's seeking $2 million in damages, as well as information including the number of fake Tiffany rings the retailer had sold and who supplied them so it can demand triple the profit Costco made on the fakes.

There are plenty of reasons for Tiffany to get sensitive right now, and investors should be paying attention to more than where the Tiffany brand may be showing up. The high-end jeweler's all-important holiday quarter recently fell short. That's not Costco's fault, but it should get Tiffany watchers worried. In January, American Express'�decision to lay off 5,400 workers implied a chilly prognostication that affects all luxury brands: higher-income consumers have been cutting back.

In even more difficult news, Tiffany said in its most recent 10-K that the engagement segment is "particularly and increasingly intense," and its edge is to convey quality. For some, that makes Tiffany look better than companies like Blue Nile (NASDAQ: NILE  ) , which is a more affordable option for engagement rings. Although Blue Nile also disappointed Wall Street's quarterly expectations in its most recent quarter, its engagement ring sales increased 31%. Maybe some engagement ring shoppers are trading down.

As far as Costco's concerned, it's got a reputation for selling high-end merchandise to eager bargain hunters for a relative steal. Other companies have accused Costco of similar violations. Crocs showed up in Costco stores without Crocs' knowledge in 2008, Calvin Klein accused the retailer of stocking fakes, and some companies have cried copyright infringement, too.

Tiffany rabidly defends its brand as a matter of course, since that is one of its key differentiators to begin with. The company went after eBay�in 2004 to try to convince the online auctioneer to get a handle on counterfeit Tiffany merchandise that showed up on the site. Interestingly, Tiffany actually lost the suit when the court put the onus on the manufacturer to keep an eye out for counterfeits on the market.

The precedent in the eBay case, and the fact that Costco has never been materially hurt in similar skirmishes over the years, tells me that Tiffany is barking up the wrong tree -- and that Tiffany investors are, too. The consumer spending environment is nasty, and that overall climate bodes far better for Costco than for Tiffany. Last but not least, when corporations file lawsuits it can be a sign of overall weakness. Regardless of what goes down with Costco, Tiffany shares simply don't have much allure right now.

With share prices near all-time highs, is the ride over for Costco investors? To answer that and more, we've compiled a premium research report with in-depth analysis on Costco.�Simply click here now to gain instant access to this valuable investor's resource.

Stocks Up Slightly; Time Warner Cable, PulteGroup Dropping

The leading indexes are up a slight fraction this morning, in early Thursday trading action.

On the move are shares of Time Warner Cable (TWC), down nearly 8% after its earnings report showed costs increasing 8.9% and the number of video subscribers fallingby 129,000 from the third quarter.

PulteGroup (PHM) is also down, falling 3% despite the homebuilder reporting a year-on-year fourfold rise in profit.

Demand for new houses is rising as inventories of existing properties tighten and mortgage rates hover near record lows. U.S. new-home sales jumped 20 percent last year to the highest since 2009. PulteGroup, the largest homebuilder by market value, has lowered costs to boost profitability as orders climb.

Rival DR Horton‘s (DHI) stock climbed more than 10% in the wake of its earnings on Tuesday, though it fell 3.2% yesterday and is down a fraction today.

There are some gainers this morning, however; among the biggest is Pitney Bowes (PBI), up 16% after its fourth-quarter profit and revenue beat estimates. The company also announced a quarterly dividend increase, to 37.5 cents per share for common stock holders.

Under Armour (UA) is up nearly 7% after it said itsfourth-quarter profit rose 54% and revenue grew 26%. The sports apparel maker also provided guidance that forecasts sales growth this year of about 20%.

 

Opinion: Michelle Obama: The Business Case for Healthier Food Options429 comments

For years, America's childhood obesity crisis was viewed as an insurmountable problem, one that was too complicated and too entrenched to ever really solve. According to the conventional wisdom, healthy food simply didn't sell�the demand wasn't there and higher profits were found elsewhere�so it just wasn't worth the investment.

But thanks to businesses across the country, today we are proving the conventional wisdom wrong. Every day, great American companies are achieving greater and greater success by creating and selling healthy products. In doing so, they are showing that what's good for kids and good for family budgets can also be good for business.

Take the example of Wal-Mart . In just the past two years, the company reports that it has cut the costs to its consumers of fruits and vegetables by $2.3 billion and reduced the amount of sugar in its products by 10%. Wal-Mart has also opened 86 new stores in underserved communities and launched a labeling program that helps customers spot healthy items on the shelf. And today, the company is not only seeing increased sales of fresh produce, but also building better relationships with its customers and stronger connections to the communities it serves.

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A Wal-Mart Neighborhood Market.

Wal-Mart isn't alone in discovering that healthier products sell. Disney is eliminating ads for junk foods from its children's programming and improving the food served in Disney theme parks. Walgreens is adding fresh fruits and vegetables to its stores in underserved communities. And restaurants around the country are cutting calories, fat and sodium from menus and offering healthier kids' meals.

These companies and so many others are responding to clear trends in consumer demand. Today, 82% of consumers feel that it's important for companies to offer healthy products that fit family budgets, according to the Edelman public relations firm. Meanwhile, a study conducted by Nielsen revealed that even when many families are operating on tight budgets, sales of fresh produce actually increased by 6% in 2012. And in 2011, the Hudson Institute reported that in recent years, healthier foods have generated more than 70% of the growth in sales for consumer packaged-goods companies�and when these companies sell a high percentage of healthier foods, they deliver significantly higher returns to their shareholders.

These trends don't just matter for businesses that produce and sell food. They matter for every business in America. We spend $190 billion a year treating obesity-related health conditions like diabetes and heart disease, and a significant portion of those costs are borne by America's businesses. That's on top of other health-related costs like higher absenteeism and lower worker productivity, costs that will continue to rise and threaten the vitality of American businesses until this problem is solved once and for all.

That's why American businesses are stepping up to invest in building a healthier future for our kids. In doing so, they are joining leaders from every sector across the country. Over the past few years, through Let's Move!�our nationwide campaign to help kids grow up healthy�we've seen teachers bringing physical education back into schools. We've seen mayors building safe spaces where children can play, faith leaders educating their congregations about healthy eating, and parents preparing healthier meals and snacks for their kids. And we've seen Republicans and Democrats working together in Congress to pass groundbreaking legislation to improve school lunches.

And we're starting to see real results. In Mississippi, obesity rates have dropped by 13% for elementary school-aged kids. States like California, and cities like New York and Philadelphia, have also seen measurable declines in childhood obesity.

So it's clear that we are moving in the right direction. But we also know that the problem is nowhere near being solved. We need more leaders from all across the country to step up, and I stand ready to work with business leaders who are serious about taking meaningful steps to forge a healthier future. We need every business in America to dig deeper, get more creative, and find new ways to generate revenue by giving American families better information and healthier choices. We know this can be done in a way that's good for our kids and good for businesses.

That's why, even though we still have a long way to go, I have never been more optimistic about our prospects for solving this problem. And I am confident that, with leadership from America's business community, we can give all our children the bright, healthy futures they so richly deserve.

Mrs. Obama is the first lady of the United States.

Some Numbers at Tower International that Make Your Stock Look Good

There's no foolproof way to know the future for Tower International (NYSE: TOWR  ) or any other company. However, certain clues may help you see potential stumbles before they happen -- and before your stock craters as a result.

A cloudy crystal ball
In this series, we use accounts receivable and days sales outstanding to judge a company's current health and future prospects. It's an important step in separating the pretenders from the market's best stocks. Alone, AR -- the amount of money owed the company -- and DSO -- the number of days' worth of sales owed to the company -- don't tell you much. However, by considering the trends in AR and DSO, you can sometimes get a window onto the future.

Sometimes, problems with AR or DSO simply indicate a change in the business (like an acquisition), or lax collections. However, AR that grows more quickly than revenue, or ballooning DSO, can, at times, suggest a desperate company that's trying to boost sales by giving its customers overly generous payment terms. Alternately, it can indicate that the company sprinted to book a load of sales at the end of the quarter, like used-car dealers on the 29th of the month. (Sometimes, companies do both.)

Why might an upstanding firm like Tower International do this? For the same reason any other company might: to make the numbers. Investors don't like revenue shortfalls, and employees don't like reporting them to their superiors.

Is Tower International sending any potential warning signs? Take a look at the chart below, which plots revenue growth against AR growth, and DSO:

Source: S&P Capital IQ. Data is current as of last fully reported fiscal quarter. FQ = fiscal quarter.

The standard way to calculate DSO uses average accounts receivable. I prefer to look at end-of-quarter receivables, but I've plotted both above.

Watching the trends
When that red line (AR growth) crosses above the green line (revenue growth), I know I need to consult the filings. Similarly, a spike in the blue bars indicates a trend worth worrying about. Tower International's latest average DSO stands at 55.4 days, and the end-of-quarter figure is 48.2 days. Differences in business models can generate variations in DSO, and business needs can require occasional fluctuations, but all things being equal, I like to see this figure stay steady. So, let's get back to our original question: Based on DSO and sales, does Tower International look like it might miss its numbers in the next quarter or two?

I don't think so. AR and DSO look healthy. For the last fully reported fiscal quarter, Tower International's year-over-year revenue shrank 17.3%, and its AR dropped 18.9%. That looks OK. End-of-quarter DSO decreased 1.8% from the prior-year quarter. It was down 14.5% versus the prior quarter. Still, I'm no fortuneteller, and these are just numbers. Investors putting their money on the line always need to dig into the filings for the root causes and draw their own conclusions.

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• Add Tower International to My Watchlist.

Solar: Raymond James Downgrades ENER, FSLR; Upgrades STP

Raymond James solar analyst Pavel Molchanov this morning cut his ratings on both Energy Conversion Devices (ENER) and First Solar (FSLR), while upgrading Suntech (STP). Meanwhile, Deutsche Bank analyst Eric Cheng also upgraded STP, while Brigantine Advisors analyst Ramesh Misra picked up coverage of FSLR, STP and SunPower (SPWRA).

“If you owned the best-performing U.S.-traded solar stock year-to-date Renesola (SOL), you�d be up 181%,” Molchanov notes in a research report. “If you had the worst-performingone � well, there are many candidates to choose from, and we try to be diplomatic, so let�s just point out that it would be a loss in excess of 40%. Quite simply, solar has been a stockpicker�s space in 2010, and we believe this will hold true in 2011 as well.”

Here’s a look a this morning’s various stock calls:

• ENER: Molchanov downgrades to Underperform, from Market Perform. “With ENER shares already down 53% year-to-date, this downgrade is, admittedly, rather late. That said, the outlook for amorphous silicon is looking more and more bleak. This simply does not seem like a [solar] technology that will be viable over the long run � a point on which our channel checks were unequivocal at last week�s Solar Power International conference.”
• FSLR: The Raymond James analyst downgrades the stock to Market Perform, from Outperform. “Whereas First Solar currently enjoys a virtual monopoly position in the global thin film market, we would be remiss if we did not point out the rapidly growing profile of CIGS thin film producers, as was very much on display at SPI last week,” he writes. “Virtually all are private, and none have First Solar’s scale as of yet, but when it comes to conversion efficiency some are giving First Solar a run for its money…Similarly, First Solar’s dominance in CdTe won’t last forever either, as at least one high-profile private competitor, Abound Solar, is aggressively scaling up production, supported by federal loan
  guarantees. Although First Solar remains a well-positioned blue chip in the solar space, the current valuation, along with a lack of visible catalysts and the aforementioned competitive pressures, has us moving to the sidelines for the time being.”
• FSLR 2: Brigantine’s Misra picks up coverage with a Buy rating. “With the strongest balance sheet in the industry, and an enviable record of solid execution, we believe First Solar is the most bankable supplier of solar modules and developer of solar projects,” he writes.
• STP: Raymond James analyst Molchanov raised his rating on Suntech to Market Perform from Underperform. “While we continue to be concerned about the company�s margin structure and balance sheet, the risk/reward has improved sufficiently for us to take a more neutral stance,” he writes.
• STP 2: Deutsche Bank’s Cheng raised his rating to Buy from Hold, asserting that “the stock now offers an attractive risk-adjusted reward return after a year of share under-performance and expect the company to secure new wafer capacity in the near term.”
• STP 3: Brigantine’s Misra is less bullish, launching with a Hold rating. “Suntech is the largest manufacturer of silicon based solar cells and modules,” he writes. “The company has increased production very rapidly over the last few years. However, to support this growth the company entered into multiple supply agreements for polysilicon wafers, and invested in some of these suppliers at a time when polysilicon was hitting all-time highs. We believe this could be a negative factor for Suntech for some time.”
• SPWRA: Misra starts the stock with a Buy rating. “The stock has been cheap due to accounting issues earlier in the year, and skepticism about the company�s ability to sell some of its Italian power projects; we think those concerns are over-done,” he writes.

In today’s trading:

• ENER is down 20 cents, or 4%, to $4.79.
• FSLR is down $3.08, or 2.1%, to $143.99.
• STP is down 47 cents, or 5%, to $8.97.
• SPWRA is down 34 cents, or 2.4%, to $13.75.

This Afternoon: GRPN Regroups, Mapping Apple Supplier Prospects

Here are some things going on this afternoon in your world of tech:

Shares of Groupon (GRPN) are recovering off of their worst levels of the session, currently $1.18, or almost 20%, at $4.80, but up from a low of $4.24, after the company last night slightly missed Q4 estimates, reporting revenue of $638 million and a loss of 12 cents, versus consensus for $640 million and profit estimates that ranged from a loss of a penny to profit of 3 cents per share, and projected this quarter's revenue at $560 million to $610 million, well below the consensus $650 million.

There have been three downgrades of the stock, thus far, that I can see, with Raymond James and Merrill Lynch analysts cutting their ratings to Underperform, while Wells Fargo cut the stock to Market Perform from Outperform. Wrote Raymond James's Aaron Kessler, “While we believe Groupon is taking the right measures in lowering take rates and moving consumers towards deal bank (vs. push email), in the near term we expect top- and bottom-line growth to be limited and expect the shares to remain pressured until growth and margins recover, likely not until late 2013 at the earliest.”

Piper Jaffray's Gene Munster, who last week raised his rating on the shares to Overweight, today sticks by that move, while declaring M&A culpa, and cutting his price target to $7 from $8, after cutting estimates, declaring “While the decrease in take rate was disappointing [...] the quarter did see some incremental progress internationally and continued NA growth (Rev +109%).”

“Specifically, Gross billings ex-goods grew 6% y/y, up from -13% in Sep-12, while direct revenue grew 31% q/q compared with -3% in Sep-12.”

Shares of organic light-emitting diode manufacturer Universal Display (PANL) are up $4.10, or almost 15%, at $32 after the company last night reported Q4 revenue of $28 million, topping the consensus for $26 million, but missed on the bottom line with a profit of 12 cents versus the 14 cents analysts were expecting, and forecast this year's revenue at $110 million to $121 million, less than the $125 million Street consensus. Bulls on the stock today may be lowering estimates, but they are also sticking to a view of “catalysts” to come.

Rob Stone of Cowen & Co., reiterating an Outperform rating, writes “The [Samsung Electronics] Galaxy S IV launch should drive demand and start the ramp of green emitter and host adoption.”

“New opportunities include TVs (volume shipments in 2014), lighting, flexible displays, and encapsulation.”

Shares of solar energy technology provider SunPower (SPWR) are up 68 cents, or almost 6%, at $12.36, after Citigroup's Shahriar Pourreza reiterated a Buy rating and raised his price target to $16, insisting that a more than doubling in the stock this year doesn't mean the shares can't go higher, writing that “If you go back just 18 months, SPWR shares still Expected share price return generate negative returns.”

“So while some of the recent outperformance is attributed to Expected dividend yield a bounce from relatively depressed levels, there are other forces at play [...] a noticeable pick-up ofinterest from our long only community as the sector outperforms, a general risk on mentality as investors begin to price in bottoming global solar fundamentals and, some exuberance from the emergence/expansion of 3rd party financing.”

A number of smartphone and chip analysts today were trying to figure out what to make of wireless chip provider Avago Technologies's (AVGO) announcement Tuesday of a quarterly forecast below expectations, and the departure of its CFO. There was some disagreement as to how it may reflect upon Apple (AAPL), a large customer of Avago's. Some suggest the outlook from Avago is a result of diminished prospects for the iPhone. But Raymond James's Tavis McCourt argues the news is “consistent with our expectation the iPhone 5S will launch a few weeks earlier than last year's iPhone 5.”

Apple shares today are up 80 cents at $445.37, bouncing back from a sell-off following yesterday's annual shareholder meeting, and despite an announcement from Samsung it plans to host a gigantic event in New York on March 14th for its next “Galaxy S” phone.

 

Markets Take a Breather After Three Wild Days

After three consecutive days in which the Dow Jones Industrial Average (DJINDICES: ^DJI  ) moved more than 100 points, investors seem content to let everyone to catch their breath today. As of 12:55 p.m. EST the Dow is up 16 points, or 0.12%, while the S&P 500 has improved by 0.27% and the NASDAQ has added 0.34%.

The modest moves follow a few positive economic indicators released this morning. The initial jobless claims for last week fell to 344,000 from a previous reading of 366,000. Economists were expecting claims to hit 360,000. With this new reading, the four-week average fell by 6,750 to 355,000.

Another sign that the economy is improving came from the Department of Commerce, which revised fourth-quarter GDP numbers. The previous release said the U.S. economy shrank by 0.1% during the last three months of the year, but that was changed this morning to a gain of 0.1%. With the new number, total GDP growth in 2012 was just slightly higher than 2%.

Today's Dow downers
Shares of Wal-Mart (NYSE: WMT  ) are down 0.18% after fresh internal documents painted a poor picture of the retailer that was once master of logistics. Bloomberg News has reported that the minutes from a company officers' meeting indicate that Wal-Mart is having difficulty keeping its shelves stocked. According to the minutes, CEO Bill Simon said, "We run out quickly and the new stuff doesn't come in." Later he was quoted as saying that "self-inflicted wounds" pose the "biggest risks" to the company. Wal-Mart has been attempting to fix this problem since 2011, and these minutes suggest that things have not improved with time.

Another company that can't get past a nagging problem is Boeing (NYSE: BA  ) . CEO Ray Conner met with Japanese officials today to discuss Boeing's solution to its 787 Dreamliner battery issue. While the details of the solution Boeing proposed to Japanese regulators are yet unknown, they are likely similar to what Boeing presented to the U.S. Federal Aviation Administration. That plan called for more insulation between the battery cells, which would stop any short-circuiting from spreading to the entire unit. Conner also told reporters today that the solution was not an interim fix, but a permanent one. This may have investors concerned that if the plan is rejected by either U.S. or Japanese officials, the 787 will have to start from scratch remain grounded for an extended period of time. Shares of Boeing are down 0.6% today.

Shares of American Express (NYSE: AXP  ) are down by 0.3% in afternoon trading. It looks as if the company may lose its Supreme Court case due to lack of information. The company is fighting retailers about the enforceability of routine arbitration agreements in which the credit card company is attempting to block retailers from bringing group claims against them. A lower-level court ruled against American Express, prompting the card company to push the case to the Supreme Court. If Amex losses this battle, it could face large liabilities down the road.

More foolish insight
For�Boeing, which is a major player in a multitrillion-dollar market, the opportunity is absolutely massive. However, the company's execution problems and emerging competitors have investors wondering whether Boeing will live up to its shareholder responsibilities. In this�premium research report, two of The Fool's best industrial-sector minds have collaborated to provide investors with the must-know info on Boeing. They'll update the report as key news hits, so be sure to claim a copy today by�clicking here now.

Gold Falls as Italy Fears Ease

Metal prices are lower after some investors decided that Italy's gridlock-inducing election might not be so worrisome after all.

On Wednesday�gold�for April delivery fell $19.80, or 1.2 percent, to $1,595.70 per ounce. Silver, palladium and platinum were all down 1 percent or more.

Oil prices were lackluster. Benchmark oil rose 13 cents to $92.76 a barrel on the New York Mercantile Exchange. The government reported that crude inventories increased less than expected.

Most agricultural commodities were flat.

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Will Nabors Industries Beat These Analyst Estimates?

Nabors Industries (NYSE: NBR  ) is expected to report Q4 earnings on Feb. 18. Here's what Wall Street wants to see:

The 10-second takeaway
Comparing the upcoming quarter to the prior-year quarter, average analyst estimates predict Nabors Industries's revenues will wither -4.6% and EPS will wither -44.2%.

The average estimate for revenue is $1.66 billion. On the bottom line, the average EPS estimate is $0.29.

Revenue details
Last quarter, Nabors Industries reported revenue of $1.67 billion. GAAP reported sales were 9.8% higher than the prior-year quarter's $1.61 billion.

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

EPS details
Last quarter, non-GAAP EPS came in at $0.42. GAAP EPS of $0.26 were the same as the prior-year quarter.

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

Recent performance
For the preceding quarter, gross margin was 35.7%, 90 basis points worse than the prior-year quarter. Operating margin was 12.9%, 170 basis points worse than the prior-year quarter. Net margin was 4.3%, 30 basis points worse than the prior-year quarter.

Looking ahead

The full year's average estimate for revenue is $6.88 billion. The average EPS estimate is $1.72.

Investor sentiment

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Nabors Industries is hold, with an average price target of $19.55.

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• Add Nabors Industries to My Watchlist.

Is Now the Time to Buy Rexam?

LONDON -- I'm always searching for shares that can help ordinary investors like you make money from the stock market.

So right now I am trawling through the FTSE 100 and giving my verdict on every member of the blue-chip index. Simply put, I'm hoping to pinpoint the very best buying opportunities in today's uncertain market.

Today I am looking at�Rexam (LSE: REX  ) to determine whether you should consider buying the shares at 507 pence.

I am assessing each company on several ratios:

• Price/Earnings (P/E):�Does the share look like a good value when compared against its competitors?
• Price Earnings Growth (PEG):�Does the share look like a good value factoring in predicted growth?
• Yield:�Does the share provide a solid income for investors?
• Dividend Cover:�Is the dividend sustainable?

So let's look at the numbers:

Stock	Price	3-Year EPS Growth	Projected P/E	PEG	Yield	3-Year Dividend Growth	Dividend Cover
Rexam	507p	7%	12	0.7	3.1%	22%	2.2

The consensus analyst estimate for next year's earnings per share is 42 pence (18% growth) and dividend per share is 18.5 pence (12% growth).

Trading on a projected P/E of 12, Rexam appears cheaper than its peers in the general industrials sector, which are currently trading on an average P/E of around 16.7.

Rexam's P/E and high double-digit growth rate give a PEG ratio of around 0.7, implying the share is significantly under-priced for the near-term earnings growth the firm is expected to produce.

Rexam supports a 3.1% dividend yield, which is slightly below the sector average of 3.3%. However, Rexam has a three-year compounded dividend growth rate of 22%, implying the yield could soon catch up to that of its peers.

Indeed, the dividend is more than two times covered by earnings, giving Rexam plenty room for further payout growth. In addition, Rexam recently returned �370 million to shareholders through a special dividend.

Furthermore, up until 2009 Rexam had raised its dividend every year for fifteen years. However, during 2009 Rexam had to cut its dividend to pay off debt.

Near-term growth is strong and the company trades at a discount to its peers
As I say, Rexam is currently trading at a discount to its peers and I believe the shares appear undervalued. You see, Rexam is an international manufacturer of aluminum drinks cans and plastic packaging, both of which are products that are always in demand.

In particular, Rexam is the sole producer of cans for the highly successful�Red Bull�energy drink.

That said, Rexam has had a tough few years since 2007. Back then, Rexam acquired a Russian can producer in an attempt to expand and improve revenues. However, the deal saddled Rexam with too much debt and the company had to undertake a rights issue during 2009.

Nonetheless, since 2009, Rexam has streamlined its business by selling off non-core assets and the company's net debt now stands at only �700 million, down from �2.6 billion in 2009.

Furthermore, Rexam is now seeking to expand and recently announced it was spending �150 million constructing a new state-of-the-art can manufacturing plant in Switzerland -- funded entirely from the company's 2012 profit.

Overall, based on the company's strong predicted growth and the valuation discount to peers, I believe now looks to be a good time to buy Rexam at 507 pence.

More FTSE opportunities
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You see, the blue chip in question offers a 5.7% income, its shares�might be worth 850pcompared to about 700 pence now -- and it has just been declared "The Motley Fool's Top Income Stock for 2013!"

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In the meantime, please stay tuned for my next verdict on a FTSE 100 share.

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Top Stocks For 2/28/2013-18

Xerox Corporation (NYSE:XRX) increased 0.51% to close at $11.83. XRX traded 6.55 million shares for the day and its earning per share remained $0.50. Xerox Corporation (Xerox) provides a portfolio of document systems and services for businesses of any size. This includes printers, multifunction devices, production publishing systems, managed print services (MPS) and related software. The Company also offers support and supplies, such as toner, paper and ink as part of its document technology offerings. It operates in three segments: Production, Office and Other.

Juniper Networks, Inc. (NYSE:JNPR) decreased 1.89% to close at $34.32. JNPR traded 6.19 million shares for the day and its earning per share remained $0.84. Juniper Networks, Inc. designs, develops and sells products and services that together provide its customers with network infrastructure that creates responsive and trusted environments for accelerating the deployment of services and applications over a single network. The Company�s infrastructure segment offers scalable routing and switching products that are used to control and direct network traffic from the core, through the edge, aggregation and the customer premise equipment level.

VeriFone Systems, Inc. (NYSE:PAY) increased 8.46% to close at $39.87. PAY traded 5.85 million shares for the day and its earning per share remained $0.77. VeriFone Systems, Inc., formerly VeriFone Holdings, Inc., is engaged in secure electronic payment solutions. The Company�s customers include primarily financial institutions, payment processors, as well as independent sales organizations. In January 2010, the Company announced that it has acquired the Clear Channel Taxi Media business from Clear Channel Outdoor Holdings, Inc.

United Continental Writes Labor Another Big Check

As United Continental (NYSE: UAL  ) merges the operations of its predecessors (United Airlines and Continental Airlines) the integration of its labor groups has been one of the toughest tasks. Full integration is necessary for United to realize the synergies it expects from the merger. While United's management originally hoped to complete integration in 12-18 months, significant work remains to be done more than two years after the merger was finalized on Oct. 1, 2010.

Two weeks ago, United took another step toward completing the integration of its labor groups. The company announced that it had reached a tentative agreement with the IAM union, which represents more than 28,000 fleet service workers, customer service agents, and storekeepers for United. While it is critical for United to complete these new labor contracts, it has only done so by writing big checks to its labor groups. These costs may be filed away as "special items" in United's earnings reports, but they are eating away at United's cash flow nonetheless.

Pilot payday
United completed a new labor contract with its pilots last year. The pilot agreement boosted pay by an average of 43.2%, but also included a $400 million lump sum payment: roughly $40,000 per pilot. Including other costs, the ratification of the agreement led United to take a $475 million charge last year. The primary justification for the lump sum payments is that they represent retroactive pay; in other words, they make up for raises that employees would have received while negotiations were occurring.

Deja vu
This month's IAM agreement will also include a significant amount of retroactive pay. The IAM states that the current contract ought to have been completed as early as 2010, and employees have lost substantial income (in the form of foregone raises) due to the delay. According to a preview of the agreement released by the IAM last week, workers will share a total of $130 million in retroactive pay. The wage raises included in the agreement are fairly modest (5%-10%), but workers will also receive additional protection against layoffs and perks like more vacation time.

The short-term costs of United's new labor agreements are significant, and it could take many� years for United to make up for these front-loaded costs in future savings. While United ended last year with plenty of unrestricted cash ($6.5 billion), that is down by $2.2 billion from the end of 2010, and is offset by United's heavy debt burden. The one-time costs of United's new labor agreements are just one reason why United is probably a value trap.

Encore?
Another major airline merger is on the horizon, with American Airlines (NASDAQOTH: AAMRQ  ) and US Airways (NYSE: LCC  ) having recently announced their intention to merge. There are plenty of reasons to believe merger integration will be very expensive for American and US Airways, just as it was for United and Continental. With labor groups at both carriers having earned much less than the industry average for a long time, "retroactive" pay bonuses could soon haunt American and US Airways, too.

High oil prices have been another factor haunting airlines in recent years.� If you're on the lookout for some currently intriguing energy plays to profit from the oil boom, check out The Motley Fool's "3 Stocks for $100 Oil." You can get free access to this special report by clicking here.

Why Ironwood Pharma Is Poised to Pull Back

Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, drug developer Ironwood Pharmaceuticals (NASDAQ: IRWD  ) has received an alarming one-star ranking.

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

Ironwood facts

Headquarters (founded)	Cambridge, Mass. (1998)
Market Cap	$1.6 billion
Industry	Biotechnology
Trailing-12-Month Revenue	$150.2 million
Management	Co-Founder/CEO Peter Hecht COO/CFO Michael Higgins
Return on Equity (average, past 3 years)	(58.7%)
Cash/Debt	$168.2 million / $569,000
Competitors	Shire Sucampo Pharmaceuticals Takedo Pharmaceutical

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

On CAPS, 27% of the 45 members who have rated Ironwood believe the stock will underperform the S&P 500 going forward.

Earlier today, one of those Fools, All-Star zzlangerhans, succinctly summed up the Ironwood bear case for our community:

Ironwood will likely continue to be a cyclical stock for the next few quarters as Linzess revenue optimism faces off against the anxiety engendered by large quarterly losses. Meanwhile, the company has initiated a phase II trial of GC-C agonist IW-9179 for functional dyspepsia, a condition which they claim affects a large proportion of Americans. Functional dyspepsia, however, is not a condition that is well-defined in the medical community. One might call it indigestion, and it is unclear how many people out there are actually requiring a chronic medication for this condition above and beyond antacids. For Ironwood to present it as a major source of morbidity in the US seems disingenuous.

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Future Risks for PotashCorp and Its Peers

Can all risks be predicted? No, of course not. However, monitoring those that you have identified is critical to investing success. That being said, there are a few that Motley Fool energy and materials analyst Taylor Muckerman covers in the video below. They include margin contraction, supply outstripping demand due to growth projects in place at both PotashCorp (NYSE: POT  ) and several of its competitors, and regional disruptions in a few key geographies. While this isn't an exhaustive list, it is at least a starting point for your due diligence process.

Opportunities, risks, and more are covered with equal attention in this report
With less and less arable land available around the world, increasing yields from existing plots will become vitally important to keep up with expected population growth. Cheap and effective fertilizers could be the key to achieving this goal. As the global leader in potash production, PotashCorp has several barriers to entry established that make it nearly impossible for competition to break through. Click here now to access The Motley Fool's new premium research report on PotashCorp, in which we cover precisely what these barriers to entry are and detail several other key reasons why this company presents such a compelling investment opportunity today.

DineEquity: Value With a (Possible) Dividend Check

There is a massive change about in the fast-casual restaurant (traditionally called the QSR, for "quick-service restaurant") industry. After years of dated designs, calorie-laden menus, and wait staff covered in cheeky buttons, the companies are taking a fresh look at what consumers want out of a low-cost, casual eatery. With that in mind, it may not be as surprising that Fast Company magazine named DineEquity's (NYSE: DIN  ) Applebee's the second most innovative company in food. To most, Applebee's is not known as a center of progressive cuisine and dining comfort, but things seem to be changing. On the corporate level, DineEquity may be offering investors attractive growth at low prices. Here is what value seekers should know going into DineEquity's fourth-quarter and full-year earnings.

Progressive business
According to the market, it's no secret that DineEquity is an attractive company -- the stock is riding near its 52-week high and has gained nearly 48% in the last 12 months. Though buoyed by the disposal of an asset and cost savings, the company was able to double its bottom line in the first nine months of the year compared to the prior year. For the fourth quarter of 2012, analysts are estimating $0.81 per share, down $0.09 from 2011's quarter. The company has come in ahead of estimates by at least 5% for the past four quarters.

It hasn't been pure sales growth that drove the business up in a year when competitors such as Darden Restaurants (NYSE: DRI  ) underperformed and ended the year near flat, but that doesn't mean the company can't sustain this pattern. DineEquity has been changing its restaurants from corporate-owned to franchise. I find this to be one of the most encouraging signs regarding the company.

Franchise away
The franchise model has proven to be most appealing for quick-service restaurants and even some retail stores. By becoming a pure royalty-collector and focusing on overall brand management and product-curating, a business shifts operational costs away from the parent company and generates more cash flow. For example, Sears Hometown and Outlet Stores (NASDAQ: SHOS  ) , the Sears Holdings spinoff whose share price has spiked since its IPO, has been wisely transitioning its hardware stores to franchise owners -- cutting operating costs and fattening margins on an otherwise low-margin business.

This has been DineEquity's plan for the last year, and it's working. It is also likely the reason that former Pershing Square senior partner Mick McGuire has taken such a strong interest in the company and acquired nearly 10% of the outstanding shares. If you take a look at many of Pershing's investments past and present, it is easy to identify favoritism toward franchise models and leveraging real estate.

Even more interesting regarding McGuire's involvement (and akin to Bill Ackman at Pershing) is the hedge fund manager's recent activism, which looks to be well received by company management.

Activist dining
Marcato manager McGuire is happy with the franchise model, as stated, but he thinks the company can now leverage that consistently growing cash flow. Specifically, McGuire met with the board of directors in December to give advice on how to maximize equity value. This includes the following:

• Keeping the leverage ratio at five times net debt/EBITDA, meaning the company should not currently focus on paying down its borrowings. According to him, this is not a good use of the free cash flow.
• Distributing an annual $6-per-share dividend. Another benefit of the franchise model is that the company can grow its cash without laying out tons of capital. The franchise owners are the ones who focus on boosting same-store sales and increasing their personal restaurant count. That means that DineEquity needs to do something with its cash pile, and it probably won't be R&D.

Another one of the investor's suggestions, and something that has already seen progress, is the refinancing of existing borrowings. McGuire believes the company's bank facility was creating a "mandatory cash flow sweep" and should be either renegotiated or switched to a new lender. The company recently announced that its effective term loan rate is now 3.75%, down from 4.25% last year and 6% before that.

Appealing to all
Income investors may want to pay close attention to DineEquity going forward. A $6 dividend, if implemented, would create an attractive return, especially when coupled with capital appreciation. In my opinion, DineEquity remains an attractive value play as further steps to enhance equity value and free up cash flow should generate substantial shareholder returns. This is further buoyed by the dividend income.

On a P/E basis, DineEquity may appear more expensive (forward P/E of 17.3) than Darden, which trades at 12.5 times forward earnings. However, the company is better positioned with its still-recent franchise model to generate more cash flow per share and a chunky dividend.

�

More from The Motley Fool
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Mixed Signals Give Gold Investors Whiplash

What is going on with gold? While it is normal for opinion to be divided on the merits of an investment—that’s why there are buyers and sellers—sharply contrasting trends seem to be giving gold investors whiplash.

The price of gold Wednesday is hovering over $1,600 an ounce, having fallen more than 1% on the day. Investors may be reacting to a Goldman Sachs report released Monday that declared the 12-year run the commodity has enjoyed to be finally over.

The influential investment firm cut its 3-month forecast steeply to $1,615 an ounce from $1,825, and its 12-month price target to $1,550 from $1,800, Bloomberg reports.

Yet gold futures had a banner day Tuesday, soaring nearly 2%, their biggest gain of the new year—a day after Goldman issued its report. Did investors not believe the behemoth bank but are having second thoughts today?

Recent mixed signals may account for the zigzagging. Gold tends to rise on bad economic news, and fall on positive news.

The Goldman report was all about a strengthening of the economy and also placed particular emphasis on the minutes of the Federal Open Market Committee’s meeting last month, which were made public last week.

Several committee members advocated a slowing of Federal Reserve asset purchases. The Fed, as part of its third round of quantitative easing, is buying bonds at a rate of $85 billion a month.

Wrote the Goldman report’s authors, analysts Damien Courvalin and Jeffrey Currie:

“Our economists believe that the downside risks to their forecasts have diminished while the uncertainty about the size of QE3 is high. We believe that a shift has occurred over the past few months with conviction in holding gold waning quickly.”

Yet, despite this warning, and the report’s noting that large investors like George Soros have cut their gold ETF holdings, Fed chairman Ben Bernanke did not play along.

In testimony before a Senate panel Tuesday (and again before a House committee Wednesday), Bernanke offered a full-throated defense of monetary easing, buoying equity and gold prices Tuesday (though just equity prices on Wednesday.)

As one investment executive told Reuters, "It doesn't matter what the Fed minutes tell you, he [Bernanke] is going to keep refilling the punch bowl until we get unemployment down below 6%."

So, on the one hand, Goldman Sachs issued a bearish report declaring “the turn in the gold cycle has likely already started.” That report cited rising consumer confidence, a recovery of the long-battered real estate market and other upbeat economic trends.

On the other hand, the Fed chairman reaffirmed his commitment to monetary stimulus to support a still-weak economy while elections in Italy brought to power an anti-austerity coalition, signaling the possibility of renewed economic crisis in Europe, both of which are bullish for gold.

While Goldman’s viewpoint went beyond short-term market movements, boldly declaring an end to the secular run-up in the precious metal, for every seller there is always a buyer. On the same day Goldman issued its report, U.S. Global Investors’ Frank Holmes wrote in his weekly commentary about Macquarie Research’s finding that the correlation between the Fed’s balance sheet and the price of gold is quite high, at 0.93.

“The firm found that for every $300 billion expansion in the balance sheet of the U.S. government, there was a $100 an ounce increase in the price of gold," Holmes writes. "When you factor in the Fed’s current bond purchases totaling $85 billion per month for the next nine months, the central bank will be adding $765 billion in new assets…By this measure alone, gold would rise approximately 16% over the next several months.”

ITT Misses Where it Counts

ITT (NYSE: ITT  ) reported earnings on Feb. 27. Here are the numbers you need to know.

The 10-second takeaway
For the quarter ended Dec. 31 (Q4), ITT beat expectations on revenues and missed estimates on earnings per share.

Compared to the prior-year quarter, revenue grew. Non-GAAP earnings per share increased. GAAP earnings per share expanded.

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

Revenue details
ITT logged revenue of $554.3 million. The six analysts polled by S&P Capital IQ predicted revenue of $538.7 million on the same basis. GAAP reported sales were 108% lower than the prior-year quarter's -$6.65 billion.

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

EPS details
EPS came in at $0.37. The eight earnings estimates compiled by S&P Capital IQ forecast $0.38 per share. Non-GAAP EPS of $0.37 for Q4 were 2.8% higher than the prior-year quarter's $0.36 per share. (The prior-year quarter included $4.76 per share in earnings from discontinued operations.) GAAP EPS were $0.35 for Q4 versus -$5.38 per share for the prior-year quarter.

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

Margin details
For the quarter, gross margin was 31.3%, 380 basis points better than the prior-year quarter. Operating margin was 8.3%, 270 basis points worse than the prior-year quarter. Net margin was 5.8%, 170 basis points worse than the prior-year quarter.

Looking ahead
Next quarter's average estimate for revenue is $608.7 million. On the bottom line, the average EPS estimate is $0.45.

Next year's average estimate for revenue is $2.42 billion. The average EPS estimate is $1.89.

Investor sentiment
The stock has a four-star rating (out of five) at Motley Fool CAPS, with 332 members out of 356 rating the stock outperform, and 24 members rating it underperform. Among 102 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 96 give ITT a green thumbs-up, and six give it a red thumbs-down.

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on ITT is hold, with an average price target of $24.06.

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• Add ITT to My Watchlist.

Growing Workforce? Shrinking Jobs? Fed Adviser Finds Silver Lining

You’d think a larger labor force with no jobs would be a problem. Not in the long term, according to Bloomberg.

The news service noted on Monday that while the growing labor force currently being seen will slow the fall in unemployment in the short run, in the longer run, “a bigger supply of labor is good news because it swells the pool of Americans available and willing to work, enhancing the economy’s potential to grow.”

Citing Julie Hotchkiss, a policy adviser at the Federal Reserve Bank of Atlanta, the news service pointed to an additional silver lining for investors: “The gradual fall in unemployment will allow policymakers to keep monetary policy looser for longer without having to worry about igniting a wage-driven rise in inflation.”

It’s the epitome of a “goldilocks economy,” Bloomberg reported, meaning it’s “not too hot to get the Fed worried about inflation and not too cold to have investors fretting about a relapse into recession.”

The result is a Fed policy of continuing to do exactly what it’s been doing; the central bank continuing to buy debt at an $85-billion-per month clip in 2013 and then extending its purchases through next year, albeit at a reduced pace.

“The Fed’s first interest-rate increase won’t come until the beginning of 2016, when unemployment finally dips below the central bank’s threshold of 6.5%, Jan Hatzius, chief economist at Goldman Sachs Group in New York, told the news service.

Joblessness will drop to 7.5% by December and 7% by December 2014, according to economists at the San Francisco Fed. The cumulative 0.8 percentage-point decline they foresee this year and next follows a 1.5-point reduction in the past two years.

The U.S. economy unexpectedly shrank from October through December 2012, the first quarterly drop since 2009, and unemployment numbers ticked slightly higher in January. Consumer confidence also hit a four-year low.

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Read Fed Minutes Show Worries About Bond Purchases on AdvisorOne.

Addus HomeCare Selling Assets to LHC Group for $20 Million

On Thursday, Addus HomeCare (NASDAQ: ADUS  ) announced that it has entered into a definitive agreement to sell "substantially all" of its home health division's assets to LHC Group (NASDAQ: LHCG  ) for $20 million in cash.

Among the assets being sold are 19 home health agencies and two hospice agencies in five states, with a combined annual revenue of $36.7 million.�Addus is holding onto 10% interests in its operations in Illinois and California. The transaction will bump LHC Group's operations to more than 300 locations in 23 states.

The purchase price implies that LHC will be paying about 0.54 times annual sales for the Addus assets, a slight discount to LHC's own valuation of 0.58 times� sales. For Addus, the deal will yield enough cash to pay off nearly all of its $22.4 million in debt, and the company says it will use at least some of the cash for this purpose. The transaction is expected to close by Feb. 28.

link

As Fiduciary Debate Returns, Advisors Share Attitudes and Practices

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• Proxy Voting RIAs are not required to vote proxies on behalf of their clients. However, when an RIA does assume responsibility for voting proxies, the firm�s policies and procedures should help to ensure that votes are cast in the best interest of clients.
• Disaster Recovery Plans and Succession Planning RIAs owe a fiduciary duty to clients to prepare for disasters and other contingencies. If an RIA does not have a disaster recovery plan, clients’ financial well-being may be jeopardized.  RIAs should also engage in succession planning, ensuring a smooth transaction if an owner or principal leaves.   

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The word “sequester” might be on many Americans’ minds, but for advisors, “fiduciary” is the elephant issue inside the beltway. As the SEC and the Department of Labor consider their separate rulemakings on the fiduciary issue, AdvisorOne is partnering with fi360 to gauge the attitudes and real-world practices of advisors of all kinds when it comes to the fiduciary standard. 

The 2013 Fiduciary Survey can be taken here, and all advisors, regardless of business or compensation model, are urged to make their voices heard on the fiduciary standard, whether in the area of retirement planning (the DOL) or in more general financial planning advice (the SEC). 

The survey is open now and will remain available through the end of March 2013. Respondents can maintain their anonymity in taking the survey, but the findings in aggregate will help inform the discussion on this crucial topic.

The findings of the 2013 Survey will be published on AdvisorOne and presented at fi360’s annual conference in April. 

AdvisorOne’s Melanie Waddell has kept her ear to the ground on the progress of both bodies on the fiduciary issue.

Melanie reported that acting SEC Chairwoman Elisse Walter (right) testified before the Senate Banking Committee that the commission was “giving serious consideration” to its proposed rule to put brokers under a fiduciary mandate, the study of which was mandated under the Dodd-Frank Act, Section 913. She also confirmed previous reports that the agency will move forward with a request for public input on the rule. The response to Walter’s Feb. 14 testimony from Sen. John Tester, D-Mont.: "I think this [rulemaking] should be a priority because it is a benefit to investors. You should push it."

As for Phyllis Borzi and the DOL’s redefinition of fiduciary under ERISA, in Investment Advisor’s cover story for March 2013, Borzi reiterated that the new version of the Department’s fiduciary rule will prove the Employee Benefits Security Administration has listened to industry concerns over its proposed rule. “When people see the reproposal, reasonable people with open minds will say DOL listened, that DOL addressed the legitimate issues that were raised in the long comment process,” Borzi said again. “The reproposal will be better, clearer, more targeted and more reasonably balanced.”

Since a “concept release” on the fiduciary standard could come from the SEC by early summer, while the DOL fiduciary redraft is scheduled to be released in July, now is the time for advisors’ unfiltered voices to be heard on the subject by taking the 2013 Fiduciary Survey. 

You can read the findings on AdvisorOne of the 2012 Fiduciary Survey, and you can take this year’s 2013 Fiduciary Survey here.

 

Limiting 401(k) Subsidies: Smart Deficit Reduction or Dumb Double Taxation?

Few view the blunt sequestration cuts set to begin on Friday as ideal policy, yet budget hawks worry that non-action on the deficit would leave in place a growing debt dynamic that has fostered only economic stagnation.

To that end, the Brookings Institution’s Hamilton Project convened a roundtable discussion of budget experts Tuesday in Washington to consider “innovative, pragmatic proposals for lowering the deficit by reducing expenditures or raising revenues.”

While the 15 proposals range from military procurement reform to restructuring Medicare, one of them at least drives to the heart of financial advisors’ work with retirement clients. Proposal No. 6 by Brookings fellow Karen Dynan looks to save $40 billion over 10 years by limiting the subsidy of tax-advantaged retirement savings plans such as 401(k)'s.

The essence of Dynan’s idea is that affluent investors would save for retirement anyway, without taxpayer incentives; consequently, the primary plank of her four-tiered proposal is to cap retirement savings-related deductions at 28%.

The Brookings scholar writes:

“The Tax Policy Center has estimated that entirely eliminating the tax preference for new contributions to defined contribution plans would raise about $30 billion from households in the top 5% of the income distribution, which is very roughly the fraction of households that would be affected by a deduction rollback.”

Because she proposes a 28% rate cap, the value to taxpayers would total about $7.5 billion per year. Since Dynan’s other policy plans are aimed at broadening credits and establishing programs for low-income Americans—which would cost some $3.5 billion annually—her proposal over all would generate $4 billion in annual savings, or $40 billion in deficit reduction over 10 years.

Unsurprisingly in Washington, where tweaks in tax policy rouses rapid reactions from those affected, Brian H. Graff, executive Director/CEO of The American Society of Pension Professionals & Actuaries (ASPPA), swiftly called Dynan’s proposal a double tax on 401(k) contributions that would induce business owners to shut down their plans and thereby reduce low-income retirement savings.

In a news release, Graff said “retirees already pay ordinary income tax on distributions from retirement savings plans. If this proposal went through, a small business owner in the 39.6% bracket would pay an 11.6% tax on contributions made to the 401(k) plan today, and pay tax again at the full rate when they retire.”

Graff added that while Dynan’s proposal acknowledges wealthy savers could move their funds to other savings vehicles, “what it fails to acknowledge is when that double-taxed person is a small business owner and it no longer makes sense for the owner to have a 401(k) plan, that owner probably won’t offer a 401(k) plan to the employees, either.”

The Hamilton Project’s 14 other policy proposals were no less controversial. Advisors will be particularly interested in proposals 7, 8 and 10, which would reduce individual tax deductions and exclusions; replace the mortgage interest deduction with a refundable credit; and institute an American valued-added tax (VAT). Those three proposals would reduce the deficit over 10 years by $1 trillion, $300 billion and $1.6 trillion, respectively.

The proposed VAT (proposal No. 10), at a rate of 5% with refundable credits to limit the tax’s regressivity, would be the biggest revenue generator on the list; the tax expenditure limitation (proposal No. 7) would have the second-largest impact.

Among the other deficit-reducing proposals are two that focus on Medicare and two that wield the budget ax at the Pentagon. Proposal 1 looks to bundle Medicare payments to doctors so that physicians assess one charge for the overall wellness of the beneficiary rather than for distinct individual services; Proposal 3 seeks to restructure the program’s cost-sharing features to, among other things, discourage excessive use of program benefits.

The defense-related proposals generate savings through changes in the military force structure (such as ground combat troop reductions) and procurement practices while limiting costs in the growth of military pay and health care costs.

Disability insurance reform and disaster relief programs are among the other budget areas under scrutiny in the Hamilton Project’s policy proposals.

Why Black Box May Be About to Take Off

Here at The Motley Fool, I've long cautioned investors to keep a close eye on inventory levels. It's a part of my standard diligence when searching for the market's best stocks. I think a quarterly checkup can help you spot potential problems. For many companies, products that sit on the shelves too long can become big trouble. Stale inventory may be sold for lower prices, hurting profitability. In extreme cases, it may be written off completely and sent to the shredder.

Basic guidelines
In this series, I examine inventory using a simple rule of thumb: Inventory increases ought to roughly parallel revenue increases. If inventory bloats more quickly than sales grow, this might be a sign that expected sales haven't materialized. Is the current inventory situation at Black Box (Nasdaq: BBOX  ) out of line? To figure that out, start by comparing the company's inventory growth to sales growth. How is Black Box doing by this quick checkup? At first glance, OK, it seems. Trailing-12-month revenue decreased 6.5%, and inventory decreased 8.5%. Comparing the latest quarter to the prior-year quarter, the story looks decent. Revenue shrank 8.6%, and inventory shrank 8.5%. Over the sequential quarterly period, the trend looks OK but not great. Revenue dropped 3.1%, and inventory dropped 0.8%.

Advanced inventory
I don't stop my checkup there, because the type of inventory can matter even more than the overall quantity. There's even one type of inventory bulge we sometimes like to see. You can check for it by examining the quarterly filings to evaluate the different kinds of inventory: raw materials, work-in-progress inventory, and finished goods. (Some companies report the first two types as a single category.)

A company ramping up for increased demand may increase raw materials and work-in-progress inventory at a faster rate when it expects robust future growth. As such, we might consider oversized growth in those categories to offer a clue to a brighter future, and a clue that most other investors will miss. We call it "positive inventory divergence."

On the other hand, if we see a big increase in finished goods, that often means product isn't moving as well as expected, and it's time to hunker down with the filings and conference calls to find out why.

What's going on with the inventory at Black Box? I chart the details below for both quarterly and 12-month periods. (Black Box reports raw materials and work-in-progress inventory combined.)

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

Source: S&P Capital IQ. Data is current as of latest fully reported quarter. Dollar amounts in millions. FQ = fiscal quarter.

Let's dig into the inventory specifics. On a trailing-12-month basis, raw materials inventory was the fastest-growing segment, up 1.2%. On a sequential-quarter basis, each segment of inventory decreased. Black Box seems to be handling inventory well enough, but the individual segments don't provide a clear signal. Black Box may display positive inventory divergence, suggesting that management sees increased demand on the horizon.

Foolish bottom line
When you're doing your research, remember that aggregate numbers such as inventory balances often mask situations that are more complex than they appear. Even the detailed numbers don't give us the final word. When in doubt, listen to the conference call, or contact investor relations. What at first looks like a problem may actually signal a stock that will provide great returns. And what might look hunky-dory at first glance could actually be warning you to cut your losses before the rest of the Street wises up.

Internet software and services are being consumed in radically different ways, on increasingly mobile devices. Does Black Box fit in anymore? Check out the company that Motley Fool analysts expect to lead the pack in "The Next Trillion-dollar Revolution." Click here for instant access to this free report.

• Add Black Box �to My Watchlist.

Nvidia Argues Performance, Features, Price Will Push ‘Tegra 4i’ Chip

Two boards for Nvidia's Tegra reference platform, the one on the right showing Tegra 4 and the i500 discrete modem, the one on the left showing both replaced by Tegra 4i.

I spent some time this afternoon meeting with Nvidia's (NVDA) head of marketing for its Tegra processor line for phones and tablets, Matt Wuebbling, at the company's booth on the floor of the Mobile World Congress.

Nvidia recently introduced an integrated processor, the “Tegra 4i,” which contains both the applications processor and the baseband wireless processor, bringing the company into competition in new markets with Qualcomm (QCOM).

The 4i is a follow-up to Nvidia's recently introduced stand-alone modem, the “i500,” and its brand new Tegra 4 applications processor, combining some of the functionality of each of those In a single silicon die.

The company emphasizes performance capabilities of Tegra, such as its ability to browse the Web at twice the speed of competing quad-core processors. But a large part of what it hopes will be Tegra 4i's appeal will be to come in at a smaller die size than competing integrated processors, and to be able to undercut Qualcomm and others on price, while maintaining profit margin.

For mainstream phones, such as those costing $100 to $300, unsubsidized, which is where 4i is being targeted, “price is almost everything,” says Wuebbling. “It is all about cost” to the phone maker.

The modem component, a reprogrammable “soft modem,” can “do most of those same features” as a discrete modem part in about 40% of the die size area, says Wuebbling. Which means that the integrated chip can combine application and modem functions without being as large as other integrated chips of comparable performance. That saves on the cost it takes to make the part, and saves phone makers board space and power requirements.

The stand-alone i500 is expected to ship in the latter half of this year, while the 4i will ship toward the end of this year.

When I asked Wuebbling if Nvidia are effectively rookies in a wireless modem business where Qualcomm has decades of experience shipping modems, he points out that the first generation was developed in 2006 by Icera, which Nvidia acquired in 2011. Nvidia in fact sold the previous generation of Icera modem, the “i400″ for Asus tablet computers that AT&T (T) carries, and also phones by ZTE. “Icera had never sold into handsets or tablets before,” days Wuebbling. “They wouldn't have been able to sell into a handset until we came in, because the handset and the vendors wanted there to be a bigger, established company behind the effort.”

Wuebbling concedes that “perhaps you could say we're now on our second generation of selling a modem chip, I think that's fair to say.

Nvidia shares today are up 12 cents, or 1%, at $12.35.

 

Diageo: Buy, Sell, or Hold?

LONDON -- I'm always searching for shares that can help ordinary investors like you make money from the stock market.

Right now, I am trawling through the FTSE 100 and giving my verdict on every member of the blue-chip index.

I hope to pinpoint the very best buying opportunities in today's uncertain market as well as highlight those shares I feel you should hold... and those I feel you should sell.

I'm assessing every share on five different measures. Here's what I'm looking for in each company:

Financial strength:�low levels of debt and other liabilities

Profitability:�consistent earnings and high profit margins

Management:�competent executives creating shareholder value

Long-term prospects:�a solid competitive position and respectable growth prospects

Valuation:�an underrated share price.

A look at Diageo
Today, I'm evaluating�Diageo� (LSE: DGE  ) (NYSE: DEO  ) , a company engaged in producing, distributing, and selling premium drinks beers, wines, and spirits, which currently trades at 1,974 pence. Here are my thoughts:

1. Financial strength:�Diageo is in solid financial position with net debt less than three times its three-year average operating profit and interest payments covered a comfortable eight times. The company also has generated positive free cash flow each year for the last 10 years and converts an average of 14% of its revenues into cash.

2. Profitability:�Revenues per share and earnings-per-share growth have been very good, increasing by 8% annually, while dividend growth has been strong, compounding by 6% per year over the past decade. Operating margins have been consistently around 21% while the 10-year average return on equity (ROE) has been excellent at 42%.

3. Management:�Paul Walsh has been one of the FTSE's 100 longest-serving CEOs, having been with Diageo for 12 years. He is responsible for streamlining Diageo's operations -- shedding such non-core business units as Burger King and Pillsbury -- and steering the company to become the leader in premium drinks.

4. Long-term prospects:�Diageo is the world leader in premium drinks, with products sold in 180 markets around the world and owning a broad portfolio of leading brand names such as�Johnnie Walker,�J&B,�Smirnoff,�Baileys,�Guinness, and�Jose Cuervo. These brands are responsible for two-thirds of net sales.

North America continues to be the company's leading market, generating one-third of the group's total revenues in 2012 and earning operating margins of 35%. Meanwhile, revenues from emerging markets -- Russia, Eastern Europe, Turkey, Latin America, Africa, and Asia-Pacific -- have enjoyed tremendous growth, increasing by 33% since 2010. They now account for the 40% of the company's total revenues. However, performance from the Southern European region continues to be a problem. Due to austerity measures and ongoing economic uncertainty, sales and volume decreased by 9% and 6%, respectively, in 2012.

To take advantage of emerging market growth, the company plans to rapidly expand in these faster-growing economies, making key acquisitions such as the Mey Icki business, Turkey's leading spirits company, which brought in 291 million pounds in revenues in 2012.

Also, due to the strong performance of Scotch sales in 2012, growing by 12%, the company believes there is a lot more opportunity for growth in this area and has invested an additional 1 billion pounds in whiskey production.

5. Valuation:�Consensus earnings forecast for 2013 is 103 pence per share giving it a forward price-to-earnings (P/E) ratio of 19, a premium to its 10-year P/E average of 15. It also returns a dividend yield of 2.15%, twice covered.

My verdict on Diageo
Diageo is a very good business. It has a good management team and a broad portfolio of market-leading brands that it leverages to earn high margins and excellent returns on capital. It has performed well over the last 10 years and it looks like it can continue producing similar results right into the next decade with an increasing presence in emerging markets and an ability to grow through acquisitions and strengthen its already impressive portfolio of premium brands. However, factoring in the continued uncertainty and weakness in the European region, a P/E ratio at the higher end of its historical range, and a dividend yield below the FTSE average, I think it's already too expensive.

So, overall, I believe Diageo at 1,974 pence looks like a hold.

More FTSE opportunities
Although I feel Diageo is a hold right now, I am more positive on the FTSE shares highlighted in "8 Dividend Plays Held By Britain's Super Investor." This exclusive report reveals the favorite income stocks owned by�Neil Woodford,�the City legend whose portfolios have thrashed the FTSE All-Share by 200% during the 15 years to Oct. 2012.

The report, which explains the full investing logic behind Woodford's dividend strategy and his preferred blue chips, is free to all private investors.�Just click here for your copy. But do hurry, as the report is available for a limited time only.

In the meantime, please stay tuned for my next verdict on a FTSE 100 share.

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Finra appeals loss in Schwab arbitration case

Finra is appealing a hearing panel decision it lost last week that upheld Charles Schwab & Co. Inc.'s use of arbitration agreements that force customers to bring all disputes into Finra-run arbitration forums.

Financial Industry Regulatory Authority Inc. spokeswoman Michelle Ong said the appeal was filed today with its internal appeal board, the National Adjudicatory Council.

The self-regulator brought charges against Schwab a year ago, claiming that Schwab's arbitration agreement violated Finra rules ensuring that customers can pursue class action claims in lieu of arbitration. In a ruling last Thursday, the hearing panel said the Federal Arbitration Act prevents Finra from enforcing those rules.

The ruling, if ultimately upheld, will end class claims for investors who have signed arbitration agreements like Schwab's, because Finra's arbitration forum will not accept class actions.

News of the appeal was reported earlier by Reuters.

Dan JamiesonEmail Dan@twitterLinkedInGoogle

Dan Jamieson covers investment advisers, the brokerage industry, regulation--and anything else advisers might want to know about.

Feds: 18 Charged in $200 Million Global Credit-Card Fraud

NEWARK, N.J. (AP) -- Eighteen people were charged in what may be one of the nation's largest credit card fraud rings, a sprawling international scam that duped credit-rating agencies and used thousands of fake identities to steal at least $200 million, federal authorities said Tuesday.

The elaborate scheme involved improving fake cardholders' credit scores, allowing the scammers to borrow more money that they never repaid, investigators said.

"In many respects the accused availed themselves of a virtual cafeteria of sophisticated frauds and schemes, whose main menu items were greed and deceit," said David Velazquez, assistant special agent in charge of the FBI's Newark field office.

Paul Fishman, the U.S. attorney in Newark, described an intricate Jersey City-based con that began in 2007, operated in at least 28 states and wired money to Pakistan, India, the United Arab Emirates, Canada, Romania, China, and Japan.

The group used at least 7,000 fake identities to obtain more than 25,000 credit cards, Fishman said. He said $200 million in documented losses could rise.

Participants set up more than 1,800 mailing addresses, creating fake utility bills and other documents to provide credit card companies with what appeared to be legitimate addresses. Once participants obtained the cards, they started making small charges and paying off the cards to raise their credit limits.

They then sent fake reports to credit-rating agencies, making it appear that cardholders had paid off debts, setting the stage for sterling credit ratings and high credit limits.

Fishman said once the credit limits were raised, members would take out a loan or max out the credit card and not repay the debts.

The group also created at least 80 sham businesses that accepted credit card payments, Fishman said. The group would run the fraudulently obtained credit cards through the machines, keeping the money.

The scheme funded a lavish lifestyle for the accused, including spa treatments, electronics and millions of dollars of gold, Fishman said. In one raid, authorities found $78,000 stashed in an oven.

Three jewelry stores in Jersey City were closed Tuesday and their inventory seized, Fishman said.

Thirteen defendants were arrested Tuesday. Four were arrested previously; of them three have pleaded guilty. Others have not yet been charged and the investigation was ongoing, Fishman said.

All were charged with one count of bank fraud.

The Trillion-Dollar Smartphone War Has Just Begun

There are almost as many mobile phone subscriptions on the planet as there are people. At the end of 2012, the world had 6.7 billion mobile subscriptions, effectively covering 94% of the world's population. Aside from agriculture, no other industry in the history of the world has ever been this far-reaching. Accounting for duplicate SIM cards, there's a whopping 4.3 billion mobile phone users in the world, who own 5.3 billion mobile phones. When I say that smartphones are all the rage, I mean to say that 1.3 billion smartphones only accounts for 25% of all mobile phones. In other words, the growth opportunity for smartphones remains extremely ripe, being that there's potentially trillions of dollars of growth to be had, as smartphones continue toward the path of world dominance.

Death to dumber phones!
As smartphone technology continues to advance, previous smartphone technologies are likely to become more cost effective, and should ultimately make its way into the lower end market. Currently, a price threshold of $250 for an unsubsidized smartphone has driven Google (NASDAQ: GOOG  ) Android to become the current smartphone leader in terms of market share. At the end of 2012, IDC believed that Android maintained a dominating 68.3% market share. As Google's OEM partners are able to offer more phone for less money, it will put continued pressure on the feature phone market, and drive more eyeballs to Google's ecosystem.

Nokia (NYSE: NOK  ) may become Android's next victim, since it shipped 79.6 million "dumb" devices last quarter, which declined 15% year over year, and accounted for nearly 65%�of Nokia's net device sales. Smartphone shipments saw a 66% decline in volumes, and only made up 32% of the segment's revenue. The result of the smartphone decline is skewed, and can be largely attributed to the recent launch of Microsoft (NASDAQ: MSFT  ) Windows Phone 8.

Like Google, Microsoft uses the power of its OEM network to drive support and distribution of its freshly-minted Windows Phone 8 ecosystem. Emerging markets remain a key focus for Microsoft, which has reportedly partnered with Qualcomm (NASDAQ: QCOM  ) to develop a Windows Phone 8 reference design for emerging-market OEMs. Devices based on the design are expected to ship in the latter half of the year.

Premium profits
Compared to emerging-markets, the premium smartphone market where Apple (NASDAQ: AAPL  ) operates is undoubtedly more saturated. It isn't expected that Apple will necessarily increase its market share between now and 2016, but the smartphone industry is expected to grow by an average of 18.3% each year. Based on this growth rate, if Apple just maintains its current smartphone share, it will have increased its volume by 65% in three years time. The power of compounding can have profound effects on Apple's earnings potential.

Picks and axes
During the California gold rush of the 1800s, it was those people who sold the picks and axes who made fortunes. In the context of smartphones, chips take the place of picks and axes, making Qualcomm a superb investment idea. Over the long term, Qualcomm will benefit not only from a larger installed base of chips, but also from the royalties its holds for its 3G/4G patent portfolio. Together, this could be a one-two punch in terms of earnings potential. A P/E of 20 doesn't seem all that high for a company with such bright prospects as Qualcomm has.

Can't we all just get along?
With such a low saturation of smartphones compared to mobile phones, investors can expect years of great growth ahead for the entire industry. Google will likely continue benefitting by unlocking more value out of its Android platform. Apple is poised to hold its market share until 2016, but the power of compounding should do wonders for its unit growth. Microsoft stands to gain a new user base, and should command more than 11% of the smartphone market by 2016. Nokia is a toss-up, given the shift away from the feature phone and into its smartphone, and it depends if Nokia can successfully navigate the transition. And, Qualcomm should sell a heck of a lot more chips, all while earning more royalties. Perhaps the smartphone industry is the ultimate definition of a megatrend? There seems to be enough of an untapped market for all the players to stretch out and grow.

There's a debate raging as to whether Apple remains a buy. The Motley Fool's senior technology analyst and managing bureau chief, Eric Bleeker, is prepared to fill you in on both reasons to buy and reasons to sell Apple, and what opportunities are left for the company (and more importantly, your portfolio) going forward. To get instant access to his latest thinking on Apple, simply click here now.

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Why Facebook Is Poised to Underperform

Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, social networking giant Facebook (NASDAQ: FB  ) has received the dreaded one-star ranking.

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

Facebook facts

�	�
Headquarters (founded)	Menlo Park, Calif. (2004)
Market Cap	$65.0 billion
Industry	Internet software and services
Trailing-12-Month Revenue	$5.1 billion
Management	Founder/Chairman/CEO Mark Zuckerberg CFO David Ebersman
Trailing-12-Month Return on Equity	0.6%
Cash/Debt	$9.6 billion / $2.4 billion
Competitors	Google (NASDAQ: GOOG  ) Microsoft (NASDAQ: MSFT  ) Twitter

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

On CAPS, 41% of the 1,718 members who have rated Facebook believe the stock will underperform the S&P 500 going forward.

Earlier this week, one of those Fools, JoeArizona, succinctly summed up the bear case for our community:

Facebook is on top of the social computing world ... for the moment. Personally, I was very turned off by the corruption and dishonesty surrounding the IPO. I feel that the book value of the company has been vastly overstated since the beginning. And if [Facebook] tries to monetize to justify their elephantine valuation, they run the serious risk of alienating their users, driving them to the next big thing. I just don't see how they can keep it going.

Of course, that short pitch doesn't even come close to telling the entire story for Facebook. You're in luck, though. The Fool's brand-new premium report on Facebook tells all sides of the story for one of the most powerful Internet companies in the world. You can grab your copy now, which comes with free updates for 12 months, by just clicking here.

Want to see how well (or not so well) the stocks in this series are performing? Follow the TrackPoisedTo CAPS account.

Home Depot Raises Dividend 34%, OKs $17 Billion Buyback

Home Depot (NYSE: HD  ) today announced its fourth-quarter and fiscal 2012 earnings, along with a significant increase in its dividend, and a new stock repurchase plan.

The company's board of directors approved a 34% increase in its quarterly dividend, raising the payout to $0.39 per share, up from $0.29. This will be the 104th consecutive quarter with Home Depot paying a cash dividend.

In addition, the board of directors has authorized buying back $17 billion worth of shares through fiscal 2015. This would replace any previous authorizations. Since 2002 (through Feb. 3, 2013), the company has returned more than $37.5 billion of cash to shareholders through repurchases, repurchasing approximately 1 billion shares.

These announcements come as Home Depot posted increased fourth-quarter 2012 revenues of $18.2 billion, 13.9% higher than the same period for 2011. That's a comparable-store sales increase of 7%. Net earnings for the quarter were $1 billion, a 29% increase over Q4 2011.

Home Depot's fiscal 2012 sales of $74.8 billion were an increase of 6.2% over fiscal 2011. Comparable-store sales increased 4.6%.

Home Depot's earnings did take a $0.01-a-share hit in Q4 from a $20 million charge associated with store closings in China. For the year, China store closings accounted for a nonrecurring charge of $145 million, or $0.10 a share.

For 2013, the company projects sales growth of approximately 2% and comparable-store sales growth of around 3%. It anticipates opening nine new stores in the year. At the end of the fourth quarter, Home Depot operated a total of 2,256 retail stores.

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3 Stocks Near 52-Week Lows Worth Buying

Just as we examine companies each week that may be rising past their fair value, we can also find companies potentially trading at bargain prices. While many investors would rather have nothing to do with companies tipping the scales at 52-week lows, I think it makes a lot of sense to determine whether the market has overreacted to the downside, just as we often do when the market reacts to the upside.

Here's a look at three fallen angels trading near their 52-week lows that could be worth buying.

Settle your differences
Earlier this month the Department of Justice unveiled a lawsuit against McGraw-Hill (NYSE: MHP  ) subsidiary Standard & Poor's seeking $5 billion in damages for what it deems were highly inflated ratings on mortgage-backed securities when the situation would have dictated otherwise. The DOJ, in effect, is saying that S&P's ratings helped contribute to the eventual near-collapse of credit markets.S&P's peer, Moody's (NYSE: MCO  ) , appears to have escaped charges from the DOJ because a paper trail was never found that would implicate it in any wrongdoing. Since the lawsuit was filed, McGraw-Hill has lost about $5 billion in value -- and now appears to be the perfect time to buy.

While I rarely recommend diving into an embattled company in any industry, this seems like a no-brainer given that DOJ lawsuits are often settled out of court and, in most instances,�for less than the targeted amount. Even if the DOJ does get the full amount extracted via a court ruling, McGraw-Hill's value has already been depleted by that amount with very little effect to its long-term earnings or public image.

Based on even its reduced estimates, McGraw-Hill is valued at a reasonable 13 times forward earnings, is yielding 2.4%, and will likely grow by high single digits over the next couple of years. This seems like a reasonable gamble given the pessimism surrounding the company over the short term.

Can you NFC me now?
We investors really are terrible at predicting when a revolutionary technology will take off. This isn't to say that we aren't eventually right, but it took quite a bit of time before health care and Internet-based companies with revolutionary technologies in the late 1990s translated their products into profitable enterprises. The same can be said of near-field communications, or NFC, technology, which is expected (at some point) to replace credit cards as we use our phones to debit our bank or credit accounts. When, exactly, this revolutionary change will happen I'm not entirely sure, but I can tell you this: Dolby Laboratories (NYSE: DLB  ) is going to be a big winner.

Dolby currently licenses multiple technologies to the movie and entertainment industry for soundtracks, DVDs, PCs, and Blu-ray players, but its most valuable asset is its subsidiary known as Via Licensing, which owns a good chunk of all available NFC patents. This means that in almost every instance where NFC is utilized in a mobile device, Dolby will be receiving a royalty interest payment. Considering that there were 169.2 million smartphones sales to end users at the end of the third quarter of 2012, according to research firm Gartner, this leaves Dolby plenty of room for upgrades and replacements with its NFC licensing technology in the latter half of this decade.

I know it might seem difficult to gaze so far down the horizon, but these patents, at least in my view, are so valuable that Dolby could be worth double or triple its current price by 2020.

MYDAS touch
You know that pullback in mobile marketing advertisers that I've been waiting for? Well, say hello to Millennial Media (NYSE: MM  ) , the name behind the MYDAS advertising technology platform. MYDAS allows advertisers to display everything from banner ads to videos through its platform, and naturally, with everything moving toward smartphones and tablets, it's mobile-based.

What we've found in recent months is that mobile advertising growth is still in its infancy and enterprises tend to be quite fickle with their spending. Millennial Media recently offered up full-year sales guidance of $270 million to $280 million versus the Street's estimate for $290.1 million, which caused its stock to plunge by a third. Similarly, Velti (NASDAQ: VELT  ) , a peer to Millennial Media in mobile marketing, saw its shares tank late last month after it failed to provide full-year guidance and announced a divestiture of its assets into slower fee-collecting businesses.

However, just as this pessimism exists in the near term, it's given investors an opportunity to position themselves with a potential mobile advertising giant in the future. With the mobile space still very fluid and expanding rapidly, smaller companies like Millennial aren't bound by the vice grip that Google holds over the PC-ad market. Based on it and the Street's revenue estimates, Millennial Media is slated to grow revenue by 56% in 2013 and 47% in 2014. Those are growth figures that'll translate into bottom-line profits by mid-decade and should make Millennial a mobile advertiser to reckon with in a couple years.

Foolish roundup
This week's theme is about thinking beyond the horizon. Although we may be terrible predictors of revolutionary technology or may allow our emotions to get the best of us at times, the long-term trends point in favor of all three companies discussed here.

I'm so confident that these three names will bounce off their lows that I'm going to make a CAPScall�of�outperform on each one.

Will Google cede its dominance in mobile marketing?
As one of the most dominant Internet companies ever, Google has made a habit of driving strong returns for its shareholders. However, like many other Web companies, it's also struggling to adapt to an increasingly mobile world. Despite gaining an enviable lead with its Android operating system, the market isn't sold. That's why it's more important than ever to understand each piece of Google's sprawling empire. In The Motley Fool's new premium research report on Google, we break down the risks and potential rewards for Google investors. Simply click here now to unlock your copy of this invaluable resource, and you'll receive a bonus year's worth of key updates and expert guidance as news continues to develop.