Get 25% Upside With This 'Cyborg In The Operating Room'

Even after the tech-craze and bubble of the '90s, technological leaps still change our lives drastically and offer the most compelling cases for amazing profits.  

After researching stocks for my recent series on the "Graying of America," I was well aware of the demographic forces behind the health care industry.

The numbers forecast for the health care industry over the next decade are staggering. Total U.S. health care spending is projected to reach $4.8 trillion in 2021, 84% higher than current spending. More than 10,000 baby boomers turn 65 each day, and life expectancy has reached 79 years. These drivers are going to create a lot of opportunities in the sector, and technology is just beginning to play a part.

That is why I am so excited about one company in particular -- one I like to call the cyborg of the operating room.

Da Vinci Meets 'The Terminator' 
Long recovery times and hospital stays associated with major surgery are a big contributor to the high cost of health care. The average hospital stay after invasive surgery is up to seven days, with the average cost per day approaching $4,000 in many states.

And the recovery time after hospitalization can take weeks because the only way to do many of these operations is to open up the patient, which leaves the patient at risk of infection and other complications.

That is, until this company invented a revolutionary new machine, one that combines the art of a surgeon's scalpel with 21st-century robotics.

Enter Intuitive Surgical (Nasdaq: ISRG) and Da Vinci, a robotic arm that allows surgeons to operate with just a single incision less than an inch in size.

	Wikipedia/Antonu
	With the Da Vinci robot, surgeons no longer need to remove organs to perform an operation, so recovery time is shortened, sometimes to as little as one day.

Surgeons no longer need to remove organs to perform an operation, so recovery time is shortened, sometimes to as little as one day. Research has also shown that surgeries using Da Vinci have a lower risk of complications and lower incidence of infection.

There were 2.6 million procedures done last year that could have used the Da Vinci technology, but only 450,000 were done using the apparatus. That amounts to 17% penetration of a market with some strong demographic growth drivers ahead.

Costly Procedures, Cheap Stock
While the technology helps to bring down costs and risks after the procedure, the equipment is not cheap to buy. In fact, the system costs between $1 million and $2.3 million with instruments, costing about $2,000 per procedure.

That's why the stock has taken a hit lately as the government rails against the high cost of medical care. ISRG is down 35% from its February high on fear that the Affordable Care Act will limit the amount paid for procedures and doctors' ability to recommend them.

Even with the slower capital spending environment, procedures were up 25% in 2012, and revenue growth has increased at a compound annual rate of 29% over the past five years. The equipment is expensive, but hospitals are still finding room in their budgets for Da Vinci's revolutionary potential. Once the spending cycle for medical equipment recovers, Intuitive's sales could jump.

The large base of installed systems provides an ongoing stream of instrument sales and service which should support the shares in the near term. Annual service agreements now account for 28% of total revenue at $343 million. With a net margin of 30%, the company could even lower its sales price to attract more purchases, which could drive instrument sales and service even higher.

A moderation in sales growth to 15% and slightly weaker margins should yield at least $16.77 per share in earnings for fiscal 2013. The five-year average price ratio for the stock is 34.3 times trailing earnings, well above the current multiple of 21.8 times. At a more realistic 28 times earnings, the shares should be worth $469 a share at the end of the current fiscal year -- a 25% upside to the current price.

Risks to Consider: The company faces considerable risk from the Affordable Care Act and the general push to lower the costs of medical procedures, which could lead to greater volatility in its stock. 

Action to Take --> Intuitive is changing the way surgery is done and improving outcomes for patients. The revolutionary technology has little to fear from Washington, and investors should consider ISRG while it's still cheap.

P.S. -- If you think 25% upside on ISRG sounds good, you'll want to take a look at our latest report, "The 11 Most Shocking Investment Predictions For 2014." Our previous predictions have given investors 89%... 92%... 293%... and even 310% gains in a year. Click here to learn more.

Beat 85% of Investors with These Steps

I want to start today's article with a quick survey.

Don't worry; it's going to be short, only a couple of questions, and you're the only person who is going to know your answers. So improve your investing savvy and answer honestly.

It might just help you make a lot of money - and sleep better at night...

First question: When the markets hit a rough spot this last March, did you start selling your stocks? If the answer to that question is "yes," what methodology did you use to justify your selling?

Second question: If you did sell your stocks, what methodology do you now plan on using to know when it's time to buy again?

Here's a quick hint: Unless you can quickly answer both of those questions without having to think about it, the answer may be "none" or "no methodology."

Don't feel bad; every investor (including yours truly) has, at one point or another, made an investment decision without a clear plan (or methodology behind the decision).

Here's why that can be such a bad idea, and here's how to tap into the tremendous profits out there if you break out...

What Most Investors Do Wrong

According to Barron's, a whopping 85% of all investor "sell" or "exchange" decisions are wrong. Yikes!

The cycle typically looks like this...

The market starts to sell off (for any number of reasons), investors get spooked and sell their stocks right at (or just before) the point of maximum pessimism (which usually is very close to the bottom).

Once they're out of stocks they take their cash and plow it into safe assets like bonds just in time to miss the beginning of the next leg up in stocks. Once their capital is invested in bonds, they have no idea when to shift back into stocks, mainly because of an emotional bias that leaves them too frightened to take on risk.

If that sounds familiar, again, don't worry - you're not alone. Everyone has made this kind of mistake at least once. We'll just make sure it doesn't happen again.

Instead of using market pullbacks as an excuse to bury your head in the sand and catch up on Dancing with the Stars episodes, you can step up your due diligence to create a buy list of your next investment targets.

At first it might seem uncomfortable to be preparing to buy stocks in the face of uncertainty - but don't worry - you're going to be in great company. Warren Buffett, Jim Rogers, and John Templeton all made their fortunes targeting stocks once they were put on sale by market volatility....so let's follow their lead.

Here are two steps you can take that will not only give you an answer to the questions at the top of the this article, but will also let you use market volatility to your advantage, which is exactly what professional traders do every day.

Step #1
Set Your "Sell" Plan, Before You Buy

The first step: Always make sure you have an exit strategy (or plan regarding when you'll sell) before you hit the "buy" button. This will ensure that you're always making predetermined strategic decisions rather than emotional decisions.

Here are two of my favorite exit strategies: trailing stops and scaling out of a position.

Most people think of trailing stops as a way to protect their downside. While they are great at minimizing losses, they really shine in capturing profits. As your position increases in value, simply tighten up your trailing stop to increase your potential profit.

Strategy Note: Your initial trailing stop and the amount to which you tighten your trailing stop is entirely up to you and should be based on your own risk tolerance. Personally, one of my favorite strategies is to: 1) begin with a 25% trailing stop, 2) once my position is up 30% I like to tighten my stop up to a 19% trailing stop, which makes my stop 5% over my entry price, 3) once my position is up 40% I'll tighten my trailing stop to 15%, 4) and once my position is up 50% I'll settle in with a trailing stop of 12.5% for the remainder of the holding period - or until I get to a 100% gain, which is when I'll start scaling out of the position.

Legendary investor Jesse Livermore summed it up simply and eloquently when he said "you never go broke capturing a profit." Exactly right, and that's why I like to tighten up my trailing stop along the way - especially the first move, which puts my stop 5% over my entry price.

It's worth mentioning, though, that once you tighten up your trailing stop, you do increase the risk of getting stopped out - but I'm totally okay with that because the tighter trailing stop also reduces my odds of letting a winner turn into a loser.

Livermore's second strategy is to sell half of any position once it achieves a 100% or more gain. Professional traders call this "scaling out" of a position. Livermore would refer to this simply as "playing with the house's money" because you effectively take your initial investment off the table and what you're left with is all profit - or the house's money.

The beauty of this strategy is that the freed-up capital created by scaling out of the position can then be used to establish a new position. If you do this a couple of time in a row, your initial allocation of capital can turn into several positions. It's a great way to build multiple positions with a single tranche of capital.

Just like trailing stops, you can choose to start scaling out of a position at any time. The key is that you know, in advance, when you plan on tightening up your trailing stops and when you intend to begin scaling out of a position.

Step #2
Rebalance Your Profits

Moving on to the second step: rebalancing.

I can't emphasize enough how important it is to stay in the markets - and the best way to remain invested is to use the Money Map Report's 50-40-10 model.

In case you're not familiar with the 50-40-10, it is a risk-parity portfolio structure pioneered by Keith Fitz-Gerald, Chief Investment Strategist for the Money Map Report. Here's a quick rundown...

50% of your assets: invested in what we refer to as "Base Builders," which includes assets such as Vanguard Wellington Fund, sovereign debt, muni bonds, corporate debt, etc.

40% of your assets: invested in what we refer to as "Growth and Income," which are stocks with global exposure to some of the world's largest trends, solid cash flow, rock solid balance sheets, and an above average yield.

10% of your assets: invested in what we refer to as "Rocket Riders", which is where you'll find speculative positions such as small-cap stocks. History suggests that by limiting your speculative positions to just 10% of your overall capital, you maximize your potential return while at the same time keeping your overall risk to a razor-thin level.

Now let's get back to rebalancing.

If you're using a predetermined exit strategy like the example I discussed above (or any other predetermined strategy, for that matter), you will, at some point, find yourself with cash to re-deploy. When that happens, calculate the different allocations between the Base Builders, Growth and Income, and Rocket Riders to find out what portion of your portfolio is overweight and where it's underweight. Deploy your freed-up cash into whatever portion of your portfolio is underweight.

Let me give you a simple real-world example to clarify the above.

For the sake of this example, let's assume your entire portfolio is worth $1,000,000, with the following breakdown: $500,000 (or 50%) is currently in your Base Builders positions, $390,000 (or 39%) is currently in your Growth and Income positions, $100,000 (or 10%) in currently in your Rocket Riders positions, and $10,000 is sitting in cash due to your recent winning trade.

In the example above, both your Base Builders and Rocket Riders are in line, with 50% and 10% of your total portfolio, respectively - but your Growth and Income (at 39%) is a little below your target of 40%, therefore it's "underweight."

In order to bring your 50-40-10 structure back in line, you can redeploy your $10,000 worth of cash into an investment that qualifies as a Growth and Income asset and your portfolio structure will then be back to the desired 50-40-10.

If you don't want to redeploy the cash right away, that's fine. You can also wait for a predetermined time (quarterly, bi-annually, annually, etc.) and then rebalance all of your holdings at one time.

The key here is that it's a predetermined time - not a time based on your discretion, because that could leave you open to emotional biases, which typically work against you.

The beauty of rebalancing is that it takes all the guessing out of the equation because it forces you to sell the assets that have increased in value (and are subsequently overweight) and buy assets that have gone down in price (and are subsequently underweight).

That means you're following the golden rule of investing... buy low, sell high. And profit.

Ford issues four recalls involving 1.3M cars, SUVs

Ford issued four recalls Thursday covering 1.3 million vehicles in North America, most of them to fix a power steering defect in SUVs that have resulted in 20 reported accidents.

The biggest recall was of 915,216 Ford Escapes and its corporate sibling, the since-discontinued Mercury Mariner, from the 2008 to 2011 model years, over the steering issue. All of the compact SUVs were made at Ford's Kansas City plant and 736,407 are believed to be in the U.S., with most of the rest in Canada and Mexico.

A separate recall covered the same potential problem in the 2011 to 2013 full-size Explorer SUV made at Ford's Chicago plant. Ford says some 195,527 vehicles are involved, of which 177,747 are believed to be in the U.S.

The number of vehicles in the U.S. involved in Thurday's four recalls is just shy of the total number of vehicles in all of those issued by Ford in 2013. Last year, there were 16 recalls. This year, so far there are 11, says spokeswoman Kelli Felker.

Ford says it is aware of five accident reports involving a total of six injuries related to the defect in Escape and Mariner. On Explorer, there are reports of 15 low-speed accidents and two minor injuries.

Ford reports on both the Escape/Mariner and Explorer, the defect involves a glitch that could result in loss of power steering. The issue has been under investigation on the Escape within Ford since 2009, according to the National Highway Traffic Safety Administration filing. Canadian authorities opened an investigation in 2011. In January, Ford came up with a procedure and parts that allowed dealers to fix the problem without replacing the entire steering column.

The Escape and Mariner problem involves a torque sensor inside the steering column. On Explorer, the issue is an electrical connection in the steering gear that can cut in or out. The result is the same on all the vehicles: the system can default to manual steering mode. In other words, no power steering. Since it takes a lot of effort to turn the whe! el, a crash can result, especially at lower speeds.

The other recalls included:

•2010 to 2014 Taurus. Ford is recalling the popular sedan because a light that illuminates the license plate can corrode. If it does, it can cause a short circuit that can cause a fire. Some 196,639 Taurus sedans are covered by the recall. There have been 18 reports of fire. In one instance, a driver was hurt when they tried to smother the fire with their bare hands.

•Floor mats. Ford sold 82,576 driver's side all-weather floor mats for 2006 to 2011 Fusion sedan, Lincoln MKZ and related vehicles that potentially could jam under gas pedals. Two accidents were reported with no injuries. That's the same issue that Toyota says was at the heart of its unintended-acceleration recalls a few years ago. It recalled 3.8 million vehicles over the issue in 2009.

Contributing: James R. Healey

Citigroup Sees Big Drop in Trading Revenue, Shares Gain

Citigroup’s (C) CFO John Gerspach spoke at a Deutsche Bank conference today and offering some insights into where the company is heading.

Bloomberg News

In his comments, Gerspach said that Citi’s second-quarter trading revenue would drop by as much as 25% from a year ago, called loan demand “choppy,” and said that the banking giant’s “real goal” is to return more capital to shareholders.

Citigroup wasn’t the only bank making comments today. JPMorgan Chase (JPM) investment banking chief Daniel Pinto said marker revenue would be flat, while Bank of America (BAC) jumped after it said it had submitted a new capital-return plan to the Fed.

Nomura’s Bill Carcache thinks the return of excess capital by the bug banks will be “elusive:”

We think it may take years for banks to return the excess capital they hold today and expect excess capital accretion to continue over the near term, particularly with expected payout ratios around 50-80% for the 2014 CCAR period (2Q14-1Q15). In our view, getting the green light from regulators to pay out 100% of earnings will mark an important first step on the road to getting excess capital released. Most investors with whom we've spoken since our recent launch don't see that happening next year. At the earliest, we think it will take at least two years before the current generation of regulators allows some excess capital to leave the system. Even then, we believe the risk is high that a significant portion will remain trapped for a prolonged period. Uncertainty over when excess capital will be released makes us reluctant to give the banks full credit for it at this time.

Shares of Citigroup have gained 0.7% to $47.60 at 2pm today, while JPMorgan Chase has gained 1% to $55.07 and Bank of America has jumped 3% to $15.16.

The Ugly Truth About Payday, Pawn Shop and Car Title Loans

Paul Beaty/AP

People in financial trouble may take on payday, pawn shop and car title loans loans to tide them over until they're financially stable. But these seemingly innocent loans often cause them to end up in worse shape than when they started. On the outside, they just look like convenient ways for people with subprime credit to borrow money. However, there's no such thing as easy money. Read on to learn the truth about these three risky loans, and find some alternatives you should consider instead.

Payday Loans How they work: The payday loan process usually begins with you writing a post-dated check for the loan amount plus interest and fees. When the loan is due, the lender collects the balance unless you choose to roll the loan over (in exchange for more fees, of course). Why they're dangerous: These loans boast notoriously high interest rates that make it almost impossible for borrowers to pay off their balance on time. Even if they pay a small amount each payday, this often just covers the interest and fees, leaving the balance intact. Richard Cordray, the Consumer Financial Protection Bureau director, said in a statement last year that payday loans are long-term, expensive debt burdens: "For too many consumers, payday and deposit advance loans are debt traps that cause them to be living their lives off money borrowed at huge interest rates." It should come as no surprise that payday loan borrowers often find themselves needing to roll over or take on new loans, trapped in a vicious cycle of debt. Pawn Shop Loans How they work: Pawn shop loans typically involve you giving the pawn shop an item that you own (like a television, piece of jewelry or computer) as collateral, and the pawn shop lends you a percentage of the item's value. Why they're dangerous: These loans are short-term and typically have very high interest rates and a variety of fees. If at the end of the loan period you can't afford to pay the balance plus interest and fees, the pawn shop may keep your item and sell it. Car Title Loans How they work: Like pawn shop loans, car title loans use one of your possessions (in this case, your automobile) as collateral to secure a short-term loan for a fraction of what your car is worth –- provided that you own the car free and clear. Just sign over the title of your car, and hand over a set of keys. Why they're dangerous: As with payday and pawn shop loans, these secured loans typically come with very high (often triple-digit) interest rates and loads of hidden costs, from storage fees to repossession fees. This brings up another huge red flag – if you miss just one payment, fail to pay the fees or aren't able to pay the interest accrued on the loan by the end of the term, your car could be sold or repossessed. Also, since title loans are often only 30 days long, borrowers only have a short amount of time to pay the principal, interest and fees. Since they usually aren't able to pay everything back when it's due, they often renew the loan and the nightmare begins all over again. How Do These Loans Affect My Finances? The most redeeming qualities about secured loans are that lenders typically won't check your credit, and the loans aren't reported to the credit bureaus. But while you're frantically trying to gather enough money to pay off those loans, you may neglect paying off things that do affect your credit. So while they may not directly affect your score, know that secured loans can still cause trouble for your credit health. Alternatives

Is VeriFone A Buy?

Provider of electronic payment solutions, VeriFone Systems (PAY), lit up the Street with its first-quarter results by beating analysts' expectations. Investors were overwhelmed by the company's surprising performance, sending shares higher.

Delving deeper...

Both revenue and earnings per share were ahead of estimates, as they increased 2% and 36%, respectively. VeriFone managed to increase its revenue by having an installed base of 20 million terminals across 150 countries. However, the company has a list of issues which are yet to be resolved.

The hurdles faced

The biggest problem for VeriFone has been a lack of research and development efforts which led to bigger problems such as lack of product certifications and loss of customers. As a result, it lost market share in most of the markets despite decreasing product prices. Moreover, loss of a U.S. petroleum deal will be affecting revenue from the region even more.

Against industry players

In an environment where innovation is the key to a successful business, the electronic payment company has been lagging behind. Hence, VeriFone faces stiff competition from its industry peers who have been continuously making the right moves.

One of its strongest rivals, NCR Corporation (NCR), has been getting some great contracts to deliver its technology. Its expansion in China looks interesting with China Eastern Airlines expanding NCR check-in kiosks for its domestic airports.

NCR's expansion has been remarkable as it will also be delivering its technology solutions to shopping malls in China. The company has been very active and has been investing in a number of payment technologies. Its new orders to supply ATMs in China and other deals highlight the growth of this company.

Even Square is an important player with its best move being in mobile payments. The launch of its mobile payment platform set the market on fire, especially when coffee retailer Starbucks (SBUX) invested its money to adopt the new technology. Starbucks announced that all its transactions will be processed by Square.

Square's innovation enabled the coffee maker to attract customers in hordes since this technology provided a convenient way of paying for their coffee. Starbucks has been reaping the benefit which is evident from its move to ramp up its mobile payment system. The retailer also announced that 10% of its transactions are done through smartphones, signifying the success story of both Square and Starbucks.

On the other hand, VeriFone was a laggard with negligible efforts to innovate. However, there have been some improvements during the last quarter that are worth noting.

Interesting moves

It has made two new acquisitions, EFTPOS New Zealand Ltd. and Sektor, which will help in revenue growth. It has been focussing on payment-as-a-service segment in regions such as New Zealand, Australia and the U.S. since the segment is growing at a rate of 11% to 13%.

VeriFone also launched the taxi payment application called Way2ride which might prove to be fruitful for the company's prospects.

Its other moves such as making various applications available for tablets, such as GlobalBay Merchant and renewing existing contracts might help the company to stage a comeback.

Additionally, VeriFone has been performing well in its Services segment, which grew 17% during the quarter. This segment continues to perform well with growth in revenue during each quarter. Moreover, the company has been increasing its investments in R&D and paid off $160 million of debt during the quarter.

The bottom line

The company has been making a lot of effort to improve its performance. With increasing revenue and a stock price surge of 25.9%, VeriFone seems like an interesting investment. However, it faces stiff competition from its peers. Though the competition has been tough the payment solutions provider has started making some moves. Hence, investors should give this company a thought.

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Real Time Picks	Buffett-Munger Screener
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Top Solar Companies To Buy Right Now

Chinese solar photovoltaic (PV) power product manufacturer JinkoSolar Holding Co., Ltd. (JKS) has delivered 304 kilowatts (kW) high-efficient solar PV modules for a project in South Africa.

Johannesburg-based roof-mounted PV Solar plant was built by the German firm Soventix GmbH. Over 1,200 units of PV modules have provision to generate roughly 443,840 Kilowatt-hour (kWh) of electricity annually and reduce emission of carbon dioxide by 72 tons per year.

JinkoSolar has a longstanding relationship with the South African firms. In Apr 2013, the company entered into an agreement with a solar project developer to supply a total of 115 megawatts (MW) of high-efficient solar panels.

Earlier, the Chinese solar product manufacturers generated major chunk of their revenues from the U.S. market. Currently, the U.S. government in a move to encourage domestic players levied countervailing duties of 15.24% and anti-dumping duties of effectively 25.96% on Chinese solar products. These initiatives will take a severe toll on the businesses of the Chinese solar power product manufacturers in North America.

Top Solar Companies To Buy Right Now: Peabody Energy Corporation(BTU)

Peabody Energy Corporation engages in the mining of coal. It mines, prepares, and sells thermal coal to electric utilities and metallurgical coal to industrial customers. The company owns interests in 30 coal mining operations located in the United States and Australia, as well as owns joint venture interest in a Venezuela mine. It is also involved in marketing, brokering, and trading coal. In addition, the company develops a mine-mouth coal-fueled generating plant; and Btu Conversion projects that are designed to convert coal to natural gas or transportation fuels; and clean coal technologies. As of December 31, 2011, it had 9 billion tons of proven and probable coal reserves. The company was founded in 1883 and is headquartered in St. Louis, Missouri.

Advisors' Opinion:

• [By Taylor Muckerman and Joel South]

  After a rough year in 2012, coal companies hope that they could bounce back a bit this year. In the latest deal between utilities and the coal industry, Duke Energy (NYSE: DUK  ) has agreed to purchase between 1.7 million and 1.9 million short tons of coal from Peabody Energy (NYSE: BTU  ) .

Top Solar Companies To Buy Right Now: EMCORE Corporation(EMKR)

EMCORE Corporation, together with its subsidiaries, provides compound semiconductor-based products for the broadband, fiber optics, satellite, and solar power markets. The company operates in two segments, Fiber Optics and Photovoltaics. The Fiber Optics segment offers broadband products, including cable television, fiber-to-the-premises, satellite communication, video transport, and defense and homeland security products; and digital products comprising telecom optical, enterprise, laser/photodetector component, parallel optical transceiver and cable, and fiber channel transceiver products. This segment?s products enable information that is encoded on light signals to be transmitted, routed, and received in communication systems and networks. The Photovoltaics segment provides gallium arsenide (GaAs) multi-junction solar cells, covered interconnected cells, and solar panels for satellite applications; and concentrating photovoltaic (CPV) power systems for commercial and utility scale solar applications, as well as GaAs solar cells and integrated CPV components for use in other solar power concentrator systems. The company markets its products through its direct sales force, external sales representatives and distributors, and application engineers worldwide. EMCORE Corporation was founded in 1984 and is headquartered in Albuquerque, New Mexico.

Advisors' Opinion:

• [By CRWE]

  EMCORE Corporation (Nasdaq:EMKR), a leading provider of compound semiconductor-based components and subsystems for the fiber optic and solar power markets, reported that it is ramping production and shipping the Opticomm-EMCORE NEXTGEN OTP-1DVI2A1SU insert cards for the Optiva platform.

Top 10 Paper Companies To Watch For 2015: JA Solar Holdings Co. Ltd.(JASO)

JA Solar Holdings Co., Ltd., through its subsidiaries, engages in the design, development, manufacture, and sale of photovoltaic solar cells and solar products, which convert sunlight into electricity in the People's Republic of China. The company?s principal products include monocrystalline and multicrystalline solar cells, as well as various solar modules. It also provides silicon wafer and solar cell processing services. The company sells its products primarily under the JA Solar brand name, as well as produces equipment for original equipment manufacturing customers under their brand names. It sells its solar cell and module products primarily to module manufacturers, system integrators, project developers, and distributors in the Germany, Italy, the United States, Hong Kong, Spain, India, the Czech Republic, France, and South Korea. The company has strategic partnerships with various solar power companies, such as BP Solar, Solar-Fabrik, and MEMC/SunEdison. JA Solar Holdings Co., Ltd. was founded in 2005 and is based in Shanghai, the People?s Republic of China.

Advisors' Opinion:

• [By John Kell and Tess Stynes var popups = dojo.query(".socialByline .popC"); p]

  Among the companies with shares expected to actively trade in Monday’s session are Keurig Green Mountain Inc.(GMCR), JA Solar Holdings Co.(JASO) and Five Prime Therapeutics Inc.(FPRX)

• [By Paul Ausick]

  Chinese solar companies are a different story. Many manufacture their own silicon wafers and sell silicon to other makers. Trina Solar Ltd. (NYSE: TSL), LDK Solar Co. Ltd. (NYSE: LDK), JA Solar Holdings Co. Ltd. (NASDAQ: JASO) and Canadian Solar Inc. (NASDAQ: CSIQ) all manufacture and sell solar ingots, wafers or cells.

• [By Jonathan Yates]

  For investors looking to profit from shorting stocks in the sector, JA Solar Holdings (NASDAQ: JASO) and LDK Solar (NYSE: LDK) are both vulnerable. For those looking to go long, Exxon Mobil (NYSE: XOM) is very strong in natural gas, which is expected to increase its market share, according to a recent report from the Department of Energy.

Top Solar Companies To Buy Right Now: First Solar Inc.(FSLR)

First Solar, Inc. manufactures and sells solar modules using a thin-film semiconductor technology. It also designs, constructs, and sells photovoltaic solar power systems. The company?s solar modules employ a thin layer of semiconductor material to convert sunlight into electricity. Its integrated solar power systems activities include the project development; engineering, procurement, and construction services; operating and maintenance services; and project finance. The company sells solar modules to project developers, system integrators, and operators of renewable energy projects; and solar power systems to investor owned utilities, independent power developers and producers, and commercial and industrial companies, as well as other system owners. It operates in the United States, Germany, France, Canada, and internationally. The company was formerly known as First Solar Holdings, Inc. and changed its name to First Solar, Inc. in 2006. First Solar was founded in 1999 a nd is headquartered in Tempe, Arizona.

Advisors' Opinion:

• [By Jon C. Ogg]

  First Solar Inc. (NASDAQ: FSLR) was raised to Market Perform from Underperform at Raymond James now that shares have pulled back $20 or so from the 2013 highs. Shares are indicated up over 2% as effectively this removes on of the “sell” biases from the pool of analysts. Trina Solar Ltd. (NYSE: TSL) was also given the same upgrade to Market Perform from Underperform at Raymond James.

Top Solar Companies To Buy Right Now: JinkoSolar Holding Company Limited(JKS)

JinkoSolar Holding Co., Ltd., together with its subsidiaries, engages in the manufacture and sale of solar power products in China and internationally. The company provides solar modules, silicon wafers and ingots, and solar cells, as well as processing services, including silicon wafer tolling services. It sells its products under the JinkoSolar brand name. The company?s customers include distributors, project developers, and system integrators. It trades its products under short-term contracts and by spot market sales. The company also produces accessory materials for solar power products, such as solar aluminum frame, solar junction box, aluminum materials windows, and other metal component parts. JinkoSolar Holding Co., Ltd. was founded in 2006 and is based in Shangrao, the People?s Republic of China.

Advisors' Opinion:

• [By Rick Munarriz]

  Friday
  The market is typically quiet on Friday, but don't tell that to JinkoSolar (NYSE: JKS  ) . The vertically integrated solar-power products maker closes out the trading week with its latest quarterly results.

Top Solar Companies To Buy Right Now: Hanwha SolarOne Co. Ltd.(HSOL)

Hanwha Solarone Co., Ltd., an investment holding company, engages in the manufacture and sale of silicon ingots, silicon wafers, and PV cells and modules. The company also offers mono crystalline and multi crystalline silicon cells; and provides PV module processing services. It sells its products to solar power system integrators and distributors primarily in Germany, Italy, Australia, the United States, the Czech Republic, Spain, and China. The company was formerly known as Solarfun Power Holdings Co., Ltd. and changed its name to Hanwha SolarOne Co., Ltd. in December 2010. Hanwha Solarone Co., Ltd. was founded in 2004 and is based in Qidong, the People?s Republic of China.

Advisors' Opinion:

• [By Paul Ausick]

  Stocks on the move: Nokia Corp. (NYSE: NOK) is up 31.5% at $5.13 on the announcement that Microsoft Corp. (NASDAQ: MSFT) will acquire the Finnish firm�� mobile phone business for $7.2 billion. Chinese solar energy stocks are getting a boost again today, with Hanwha SolarOne Co. (NASDAQ: HSOL) up more than 15.9% and ReneSola Ltd. (NYSE: SOL) up 14.9%.

• [By Travis Hoium]

  What: Solar stocks are shooting higher again today as the strong run in 2013 continues. LDK Solar (NYSE: LDK  ) , Canadian Solar (NASDAQ: CSIQ  ) , Yingli Green Energy (NYSE: YGE  ) , Hanwha SolarOne (NASDAQ: HSOL  ) , and JinkoSolar (NYSE: JKS  ) led the way, gaining between 10% and 22% today.

• [By Paul Ausick]

  Big Earnings Movers: Hanwha SolarOne Ltd. (NASDAQ: HSOL) is down 6.8% at $3.68. Hovnanian Enterprises Inc. (NYSE: HOV) is up 2.2% at $5.15.

  Stocks on the move: Delta Air Lines Inc. (NYSE: DAL) is up 9.3% at $21.74 after being adding to the S&P 500 index. BlackBerry Ltd. (NASDAQ: BBRY) is up 6.4% at $11.53 on reports that a former board member has nearly lined up financing to take the company private. Molex Inc. (NASDAQ: MOLX) is up 31.6% at $38.60 following an agreement to be acquired by Koch Industries Inc.

• [By Roberto Pedone]

  One under-$10 stock that's starting to move within range of triggering a big breakout trade is Hanwha SolarOne (HSOL), which manufactures a number of silicon ingots, PV cells and PV modules using advanced manufacturing process technologies. This stock has been on fire so far in 2013, with shares up 301%.

  If you take a look at the chart for Hanwha SolarOne, you'll notice that this stock has been uptrending strong for the last month and change, with shares moving higher from its low of $2.60 to its recent high of $4.28 a share. During that uptrend, shares of HSOL have been making mostly higher lows and higher highs, which is bullish technical price action. That move has now pushed shares of HSOL within range of triggering a big breakout trade.

  Traders should now look for long-biased trades in HSOL if it manages to break out above its 52-week high at $4.28 a share with high volume. Look for a sustained move or close above that level with volume that hits near or above its three-month average action of 1.61 million shares. If that breakout triggers soon, then HSOL will set up to enter new 52-week-high territory, which is bullish technical price action. Some possible upside targets off that breakout are its next major overhead resistance levels at $6 to $7 a share.

  Traders can look to buy HSOL off any weakness to anticipate that breakout and simply use a stop that sits right below its 50-day moving average at $3.40 a share, or near more support at $3.35 a share. One can also buy HSOL off strength once it clears $4.28 a share with volume and then simply use a stop that sits a comfortable percentage from your entry point.

Top Solar Companies To Buy Right Now: Yingli Green Energy Holding Company Limited(YGE)

Yingli Green Energy Holding Company Limited, together with its subsidiaries, engages in the design, development, manufacture, marketing, sale, and installation of photovoltaic (PV) products in the People?s Republic of China and internationally. The company offers PV cells, PV modules, and integrated PV systems, as well as polysilicon ingots, blocks, and wafers. It sells its PV modules to distributors, wholesalers, power plant developers and operators, and PV system integrators in Germany, the United States, Italy, China, Spain, the Netherlands, Greece, the Czech Republic, the United Kingdom, South Korea, and Japan under the Yingli and Yingli Solar brand names. The company also offers its integrated PV systems directly to end-users or to contractors for use in the electricity projects, as well as to mobile communications companies in the People's Republic of China. Yingli Green Energy Holding Company Limited was founded in 1998 and is headquartered in Baoding, the People? s Republic of China.

Advisors' Opinion:

• [By Travis Hoium]

  The other earnings report was from Yingli Green Energy (NYSE: YGE  ) , which reported sales of $613.0 million but lost $128.2 million in the quarter. Yingli is seeing strong demand for panels, but it's not generating the margins needed to overcome $2.4 billion in debt. If Yingli can't improve its balance sheet enough to be able to invest in the next generation of equipment it risks failure, so look to see if margins improve enough to make a profit as we move through 2014.

• [By Gary Bourgeault]

  Hit the hardest will probably be Yingli Green Energy (YGE) and Trina Solar (TSL), two of the larger solar manufacturers in China.

  Trina Solar

• [By Travis Hoium]

  Shipment and margin trends aren't usually isolated to one Chinese solar manufacturer so it's easy to assume that other companies will see disappointing numbers in the first quarter. The first two to watch are Yingli Green Energy (NYSE: YGE  ) and Canadian Solar� (NASDAQ: CSIQ  ) , who round out the top three Chinese solar module suppliers with Trina. All three have high debt, low margins, and massive losses. �

Congress Saves the A-10 Warthog... for Now

Sunset for the A-10 Thunderbolt II? Or a new dawn? Photo: U.S. Air Force.

The U.S. Air Force wants to kill the A-10 Thunderbolt II. Really, really, really wants to kill it.

But the Air Force's paymaster does not. And when all's said and done, that's what the debate over the fate of America's best tank-destroying warplane may come down to -- whether the folks who control the Air Force's purse strings want to keep the A-10 flying.

A few weeks ago, we went over a few trial balloons that the Air Force has floated, in case Congress won't let it retire its fleet of 326 A-10 "Warthogs." To save the estimated $700 million a year it costs to keep the A-10s fueled, maintained, and flying, USAF has suggested it could retire its entire fleet of 66 B-1B long-range bombers instead -- or put about a third of its 1,018 F-16 fighter jets into mothballs.

That makes sense because, as Georgia Senators Saxby Chambliss and Johnny Isakson have pointed out, the A-10 is cheaper to fly, per flying hour, than either the F-16 or the B-1. This suggests that cutting the more expensive planes from the Air Force's arsenal, and sticking with the older -- but cheaper and more effective -- A-10 is the right move to make.

And speaking of no brains -- Congress!
Regardless, Congress is busily brainstorming other ways to save the A-10. Earlier this month, for example, legislators in the House Armed Services Committee, or HASC, passed an amendment, voting two to one to forbid the USAF from even thinking of retiring the plane unless it can assure legislators it has other ways of providing "adequate" close-air support to troops on the ground.

Caution: A-10 Warthog at work. Photo: U.S. Air Force.

This requirement edged out a separate proposal (which was rejected) that would have had the Air Force mothball its A-10s -- so that rather than being disassembled and sold for scrap, they'd be kept in stasis, shrink-wrapped in latex, and could be brought back from retirement if need be. (The main problem with that plan: "Spinning up" a latex wrapped A-10 can take as long as four months to accomplish. By that time, the war may already be lost).

Meanwhile in the Senate, the HASC's doppelganger, the Senate Armed Services Committee, confirmed this week that it's working on a plan to shift funding from other programs to cover the cost of the A-10. (The catch here? Optimistic senators think they only need to cobble together $400 million to keep the A-10 flying for another year. That's barely half what USAF says it needs -- and less than half of what the Obama Administration says the A-10 will cost).

What it means to investors
It's that last point that may turn out to be of most importance to defense investors. The White House went on record this week saying it has "serious concerns" with Congressional efforts to keep the A-10 alive, and "objects," in particular to Congress's plan to shift funding from the Littoral Combat Program, among others, to fund programs such as the A-10. The Administration even went so far as to utter the "V" word -- threatening to veto the bill if its demands are not met.

What might this mean for investors, in dollars and cents? Here's a quick rundown of the highlights.

Northrop Grumman (NYSE: NOC  )
America hasn't built a brand-new A-10 Warthog in decades. But as the debate before Congress shows, it still spends hundreds of millions annually keeping the ones it's already built flying. Since 1987, Northrop Grumman has served as prime contractor for A-10 work. Its most important recent contract was awarded in 2010 -- a $486 million contract to equip U.S. Air Force and Navy aircraft -- including A-10s -- with up to 99 LITENING targeting pods.

Other tasks assigned to Northrop: $1.7 million to "sustain and modernize all A-10 weapon system configurations," and $11.3 million to perform "evaluations, analysis, repair designs, and/or testing" of A-10 structural integrity.

Boeing (NYSE: BA  )
Another contractor with arguably as big a stake in the A-10's survival as Northrop Grumman's, is Boeing. Last year, Boeing was the single biggest recipient of A-10-related funding, winning $218 million in maintenance contracts for the A-10, "the most of any defense prime," according to Bloomberg. These included $212 million awarded in just one single contract to deliver 56 replacement "thick-skinned" wings for the A-10.

Going forward, and working from the estimated $4 million cost per wing, Boeing's contract to build as many as 242 replacement wings for the A-10, of which 173 have already been ordered, could yield as much as $276 million in additional revenue for Boeing in years to come -- and help to keep the A-10s flying well into the 2040s. (That is, if Congress can convince USAF to keep the plane flying, at all).

Lockheed Martin (NYSE: LMT  )
Lockheed Martin, in contrast, has almost no ties to the A-10 program whatsoever. Yet, it's arguably the single company most interested in the aircraft's fate.

A review of business segment data from S&P Capital IQ on the revenues of each of the major A-10 players reveals that, even the multi-hundred-million-dollar contracts that Boeing and Northrop have won for A-10 work amount to mere fractions of 1% of each company's annual revenue stream. In contrast, Lockheed Martin gets 20% of its revenues from production of its new F-35 Lightning II fighter jet -- the plane that the Obama administration and the U.S. Air Force agree can do an "adequate" job of replacing the A-10 on, for close-air-support missions.

Over time, and based on the F-35's projected program cost, the F-35 could ultimately grow to constitute 50% of Lockheed's business, if the company is able to sell as many F-35s as originally expected. But here's the key: Every dollar diverted from F-35 production to fund the A-10 means fewer F-35s built today. And the fewer F-35s that get built, the slower Lockheed Martin is able to scale production of the F-35.

Less economies of scale mean less efficiency of production for Lockheed, raising the cost of building F-35s, and making the plane less price-competitive with alternative fighter jets for sale on world markets. And this effect tends to snowball -- the more expensive the plane, the fewer the foreign buyers, and the fewer the foreign buyers, the less efficient the production -- raising the F-35's cost even further, and leading to even fewer buyers.

In short, Lockheed Martin needs to scale production of the F-35 fast. But the more funds get diverted from F-35 production to save the A-10, the harder this job gets for Lockheed Martin. If you were wondering before why the F-35's backers in Congress hate the A-10 so much, well, now you know.

That's a lot of F-35s. But it's still not as many F-35s as Lockheed Martin wants to sell. Photo: Lockheed Martin.

 

Could saving the A-10 threaten your dividends?
The smartest investors know that dividend stocks simply crush their non-dividend paying counterparts over the long term. But what might a revived A-10 program -- and a decimated F-35 program -- do to Lockheed Martin's ability to keep paying its 3.3% dividend? It might mean you need to find yourself a new dividend stock. Knowing how valuable dividend-paying stocks can be for investors, our top analysts put together a report on a group of high-yielding stocks that should be in any income investor's portfolio. To see our free report on these stocks, just click here now.

Was The Fresh Market (TFM) Earnings Report All That Fresh? SVU & WFM

Yesterday after the market closed, small cap supermarket stock The Fresh Market Inc (NASDAQ: TFM) reported earnings and began rising more than 10% in after hours trading, meaning its worth taking a closer look at the stock along with the performance of other supermarket stocks like SUPERVALU Inc (NYSE: SVU) and Whole Foods Market, Inc (NASDAQ: WFM) that have had or are having their share of troubles.

What is The Fresh Market Inc?

Founded in Greensboro, North Carolina in 1982, small cap The Fresh Market is a specialty grocery retailer focused on perishable product categories, which include meat, seafood, produce, deli, bakery, floral, sushi and prepared foods. The company operates 157 stores in 26 states across the United States, primarily in the Southeast, Midwest and Mid-Atlantic United States.    

As for potential peers when it comes to troubles in the supermarket space, small cap SUPERVALU Inc's roots are in supply chain and wholesale distribution plus the company offers a network of approximately 3,420 stores composed of 1,900 stores serviced primarily by the company's food distribution business, 191 traditional retail stores and 1,334 hard-discount stores (of which 957 are operated by licensee owners while large cap Whole Foods Market, Inc is now a leading retailer of natural and organic foods with 374 stores in the United States, Canada and the United Kingdom.

What You Need to Know or Be Warned About The Fresh Market Inc

The Fresh Market reported that fiscal Q1 net sales increased 17.6% to $431.0 million, comparable store sales increased 2.5% and GAAP net income of $16.6 million verses $22.1 million (First quarter fiscal 2014 GAAP net income includes pre-tax store closure and exit costs of $7.0 million related to previously store closings in California and Texas). The company also affirmed its fiscal 2014 guidance of comparable store sales growth of 1.5% to 3.5% and adjusted earnings of $1.56 to $1.66 per diluted share.

In the earnings call (the transcript is available on Seeking Alpha here), the President/CEO commented:

With the exception of the first few weeks, growth in customer traffic remained steady throughout the quarter but growth in basket size was more modest. We continued to invest in thoughtful promotions and new customer offerings as we work to broaden our appeal to new and existing customers.

He also talked about how The Fresh Market opened seven stores (three in Florida, two in North Carolina, one in Illinois and one in Virginia) with six of these seven new stores having had first day sales that rank in the top one-third of all new store openings for the company. Since the end of the quarter, they have opened three more new stores (one in Florida, one in New York and one in Texas) and all three had solid day one sales and opened in line with expectations with the Houston location looking like it will be a particular winner. There are also fiscal 2014 plans to open 23 to 24 new stores

In addition, the President/CEO noted:

We have observed and recent extensive third-party customer research has confirmed that consumers come to us because of our unique combination of outstanding food quality, engaging customer service and an inviting store environment…. We have found and research confirms that consumers are increasingly shopping at more than one food store, which supports our belief that our success is not contingent on providing one-stop shopping for consumers.

In the Q&A when asked about the competitive landscape and what Whole Foods Market, Inc is doing, his reply was:

We are going to watch this very carefully. We are going to be exceptionally mindful of what our competitors are doing. But I would tell you that our research, our view is that people are coming to us for the quality of the service, the quality of the food and a different shopping experience. They don't see us as an organic all natural retailer. There's a couple others out there that are organic all natural retailers. People are coming to us for something different. So we think that gives us a little bit of different platform on which to compete and may make our customers less prone to price sensitivity of what our competitors do.

When asked about what categories are doing well or not, the President/CEO said:

People continue to turn to us and enjoy perishable offerings. Sea food has been a struggle; the price increases and cost increases that we've all been through have affected us in sea food.

Latter, the EVP/CFO commented about food inflation:

And where we've seen the increases have really been -- the biggest driver was sea food and then kind of meat and produce and a little bit of dairy as we mentioned.

While the President/CEO said:

But I think our point in saying that our margins were compressed this quarter is to say that this is -- food retail prices are high for some people and it's tough to pass all of the cost on. So that's certainly the general point.

Otherwise and heading into earnings, it should be mentioned that The Fresh Market had a trailing P/E of 27.33 and a forward P/E of 15.51 – meaning its not exactly undervalued nor hugely overvalued.

Share Performance: The Fresh Market Inc vs SVU & WFM

On Thursday, small cap The Fresh Market fell 2.35% to $28.70 (TFM has a 52 week trading range of $28.60 to $57.17 a share) for a market cap of $1.39 billion plus the stock is down 29.9% since the start of the year, down 37% over the past year and down 10.6% since November 2010. Here is a look at the long term performance of The Fresh Market, SUPERVALU Inc and Whole Foods Market, Inc:

As you can see from the above performance chart, large cap Whole Foods Market, Inc has been a clear winner – up until recently while SUPERVALU Inc seems to have turned things around and The Fresh Market has more recently been trending downward.

Finally, here is a look at the latest technical charts for The Fresh Market, SUPERVALU Inc and Whole Foods Market, Inc – note the trend lines:

The Bottom Line. Small cap The Fresh Market's earnings report looks pretty good, but I don't know if it justifies a double digit rise when the market opens latter this morning. With that said, it does appear the company is in a much better position than some of its competitors like Whole Foods Market, Inc.

3 Stocks Spiking on Big Volume

DELAFIELD, Wis. (Stockpickr) -- Professional traders running mutual funds and hedge funds don't just look at a stock's price moves; they also track big changes in volume activity. Often when above-average volume moves into an equity, it precedes a large spike in volatility.

>>5 Hated Earnings Stocks You Should Love

Major moves in volume can signal unusual activity, such as insider buying or selling -- or buying or selling by "superinvestors."

Unusual volume can also be a major signal that hedge funds and momentum traders are piling into a stock ahead of a catalyst. These types of traders like to get in well before a large spike, so it's always a smart move to monitor unusual volume. That said, remember to combine trend and price action with unusual volume. Put them all together to help you decipher the next big trend for any stock.

>>5 Rocket Stocks Ready for Blastoff

With that in mind, let's take a look at several stocks rising on unusual volume recently.

On Assignment

On Assignment (ASGN) provides short- and long-term placement of contract, contract-to-hire and direct hire professionals in the U.S., Europe, Canada, China, Australia and New Zealand. This stock closed up 1.4% at $35.31 in Wednesday's trading session.

Wednesday's Volume: 1.15 million

Three-Month Average Volume: 386,568

Volume % Change: 188%

From a technical perspective, ASGN trended modestly higher here right above some near-term support levels at $34.27 to its 200-day moving average of $33.53 with above-average volume. This spike higher on Wednesday is starting to push shares of ASGN within range of triggering a near-term breakout trade. That trade will hit if ASGN manages to take out its 50-day moving average of $36.04 to some more near-term overhead resistance at $36.95 with high volume.

Traders should now look for long-biased trades in ASGN as long as it's trending above some key near-term support levels at $34.27 or above its 200-day a $33.53 and then once it sustains a move or close above those breakout levels with volume that's near or above 386,568 shares. If that breakout hits soon, then ASGN will set up to re-test or possibly take out its next major overhead resistance levels at $38.05 to $38.18. Any high-volume move above those levels will then give ASGN a chance to re-test or possibly take out its 52-week high at $39.86.

ARM Holdings

ARM Holdings (ARMH), together with its subsidiaries, designs microprocessors, physical intellectual property and related technology and software. This stock closed up 3.5% at $44.35 in Wednesday's trading session.

Wednesday's Volume: 5.62 million

Three-Month Average Volume: 1.54 million

Volume % Change: 250%

From a technical perspective, ARMH ripped higher here right above its recent low of $42.27 with strong upside volume flows. This stock has been downtrending badly for the last month and change, with shares moving lower from its high of $52.71 to its low of $42.27. During that downtrend, shares of ARMH have been making mostly lower highs and lower lows, which is bearish technical price action. That said, shares of ARMH have now started to bounce off that $42.27 low and it looks ready to reverse its recent downtrend and enter a new uptrend. Market players should now look for a continuation move higher in the short-term if ARMH manages to take out Wednesday's high of $44.40 with strong upside volume flows.

Traders should now look for long-biased trades in ARMH as long as it's trending above Wednesday's low of $43.38 or above its recent low of $42.27 and then once it sustains a move or close above $44.40 with volume that's near or above 1.54 million shares. If we get that move soon, then ARMH will set up to re-test or possibly take out its next major overhead resistance levels at $46.54 to its 50-day moving average of $47.49. Any high-volume move above those levels will then give ARMH a chance to tag its next major overhead resistance levels at $49 to $50.27.

TJX Companies

TJX Companies (TJX) operates as an off-price apparel and home fashions retailer in the U.S. and internationally. This stock closed up 4.9% at $56.60 in Wednesday's trading session.

Wednesday's Volume: 11.88 million

Three-Month Average Volume: 3.62 million

Volume % Change: 199%

From a technical perspective, TJX bounced sharply higher here right above its recent low of $53.87 with heavy upside volume. This move is quickly pushing shares of TJX within range of triggering a big breakout trade. That trade will hit if TJX manages to take out its recent gap-down-day high of $56.90 with high volume.

Traders should now look for long-biased trades in TJX as long as it's trending above Wednesday's low of $54.31 and then once it sustains a move or close above $56.90 with volume that's near or above 3.62 million shares. If that breakout hits soon, then TJX will set up to re-fill some of its recent gap-down-day zone that started just above $58.

To see more stocks rising on unusual volume, check out the Stocks Rising on Unusual Volume portfolio on Stockpickr.

-- Written by Roberto Pedone in Delafield, Wis.

RELATED LINKS:

>>Trade These 5 Airline Stocks for Flyaway Gains

>>A Horrible Chart to Trade for Wonderful Gains

>>5 Toxic Stocks to Sell Before It's Too Late

Follow Stockpickr on Twitter and become a fan on Facebook.

At the time of publication, author had no positions in stocks mentioned.

Roberto Pedone, based out of Delafield, Wis., is an independent trader who focuses on technical analysis for small- and large-cap stocks, options, futures, commodities and currencies. Roberto studied international business at the Milwaukee School of Engineering, and he spent a year overseas studying business in Lubeck, Germany. His work has appeared on financial outlets including

CNBC.com and Forbes.com. You can follow Pedone on Twitter at www.twitter.com/zerosum24 or @zerosum24.

4 Reasons to Buy Disney Stock NOW

Popular Posts: 3 Preferred Stocks Yielding More Than 8%3 Covered Calls for a Cool $1,000 in Income4 Value Trap Stocks to Sell Before It’s Too Late Recent Posts: 4 Reasons to Buy Disney Stock NOW 3 ‘Forever Hold’ Stocks, 3 Ways to Make Income 4 Value Trap Stocks to Sell Before It’s Too Late View All Posts

There are some stocks I consider "forever hold" stocks because of the role the companies play in our lives, because they are absolutely essential to life on earth. And while Disney (DIS) isn’t quite as essential as, say, energy, it has ingrained itself into the global culture in a way that few other companies have.

In fact, Disney stock is a great buy right now for a number of reasons. Here are four of the best:

#1 — Nobody Understands Entertainment Better

Disney understands its customers better than any other entertainment company in the world. That's because it has always hewed closely to its brand – family comes first. Even as the culture has changed and teens have sought out more edgy material, Disney has programmed its television platforms to serve these audiences. The studio's original family-branded films always do well at the box office and in ancillary markets.

The studio also recognizes blockbuster potential. By purchasing Pixar, Marvel, and LucasFilm, the studio locked up three of the most powerful film brands in history. And for Disney stock, the films and ancillary market revenue from these acquisitions will literally pay off for decades.

#2 — Quality

Everything Disney gets involved with meets its legendary standards of high quality.

Its parks and resorts deliver on their intended experience. Sure, we can complain about crowds, but that isn’t Disney's fault — in fact, it speaks to the company’s success. People are willing to endure long lines and fight for space along the parade route and deal with the crowds because they know their kids will love the experience (and the adults will, too).

The film studio consistently makes good movies. Sure, they produce a stinker now and then, but based on box office receipts, parents associate Disney films with "quality family entertainment.” This also goes back to the Pixar, Marvel and LucasFilm acquisitions. Disney isn't just satisfied with internal content creation. It’s also on the hunt for quality content from other sources, and it and acquires that content when it can.

Despite the ubiquity of Disney toys, I actually think Disney’s consumer products is the company's weakest segment. A lot of the plastic toys I purchased for my kids were overpriced and junky. You'll never go wrong with a plush toy, but other consumer products have fallen short of the quality standards I expect. Still, the overall quality of Disney’s products extends all the way to Disney stock.

#3 — Pricing Power

Take a look at this chart of Disney theme park prices over the years. In 1971, the cost for one day at Disney World was $3.50. Today, it costs $99. The average annual inflation rate since 1971 is around 4.2%. Disney's price hikes average close to 8.25%. The ability of a corporation to sell its product consistently and effectively, and do so with increases at twice the rate of inflation? That's like having your own magic lamp.

#4 — Great Financials

As a diversified media company, Disney survived the financial crisis easily. That’s not surprising, because Disney is a cash flow machine. FCF ranges between $3.5 billion and $6 billion annually, and Disney stock generally pays out about 25% as a dividend.

DIS is loaded with $6.8 billion in cash and $10.9 billion in debt that only costs $235 million in interest each year … which amounts to about 2.5% of operating income. That's nothing. Disney is thus funding its empire with very cheap debt while simultaneously reaping massive growth.

Disney is a buy because it’s a "forever hold" stock. Disney stock is trading around $82, so on FY14 estimates of $4.19, it trades at about 20x earnings. Long-term growth is pegged at 16%, but I grant Disney the premium for its brand and its cash flow.

As of this writing, Lawrence Meyers was long DIS.

GM's recall nightmare

  Yet again, another GM recall NEW YORK (CNNMoney) General Motors has already recalled more cars and trucks in the U.S. this year than it has sold here in the five years since it filed for bankruptcy.

Those five years had been good for the "New GM." It recaptured lost market share. It made record profits. And it won praise for the quality of its cars from both critics and buyers.

Then on Feb. 14, GM announced a recall of about 800,000 cars due to an ignition switch problem that could cause the cars to shut off while being driven.

It has been engulfed by the recall crisis ever since.

The company's problems have snowballed. GM (GM, Fortune 500) ultimately recalled 2.6 million cars worldwide for the flawed ignition switch that's been tied to at least 13 deaths. And GM admitted that its employees knew of the problem at least a decade before the recall.

Recalls hit a record: GM has issued more recalls this year than ever before. There have been 29 separate recalls covering 13.8 million U.S. cars and trucks, and at least 15.6 million vehicles worldwide.

The surge is the result of new standards at GM. The automaker is looking back at repair advisories it has issued in the past and issuing recalls when they're warranted. GM says it's also issuing recalls more quickly when reports of new problems emerge.

GM named a new safety chief and also hired 35 additional investigators to follow up on reports of problems.

The company is going to great lengths to show how serious it's taking matters. Last week GM called the owners of 477 trucks, including Silverados, Sierras and Tahoe SUVs to tell them to immediately stop driving the vehicles, which have a steering problem. GM sent flatbeds to pick up the trucks and have them repaire! d.

Scrutiny mounts: So far GM has agreed to pay the maximum fine of $35 million to the National Highway Traffic Safety Administration for the delay in the ignition recall. And it will be subject to closer oversight by the regulator.

The Justice Department is also considering whether to bring criminal charges against the automaker. A similar probe over Toyota's 2009 and 2010 unintended acceleration recalls led to a $1.2 billion fine earlier this year.

GM CEO Mary Barra, who in January became the first woman to lead a major automaker, testified before Congress for two days in April. She faced harsh questions from lawmakers who argued the company is criminally liable.

The company has hired compensation expert Kenneth Feinberg, who worked with victims of 9/11 and the BP oil spill, to determine how to pay victims of the delayed recall.

The automaker is also facing dozens of civil lawsuits.

Profits wiped out: The company estimates it will cost $1.7 billion to repair the cars recalled so far in 2014.

That only covers the cost of actually making repairs, and not any civil or criminal fines it may have to pay to victims or the government.

GM shares are down 18% this year, lagging far behind rivals Toyota (TM) and Ford Motor (F, Fortune 500).

Car buyers don't care: The good news for GM is that car buyers have shown little concern about the recalls. New car sales have been strong in the three months since the ignition recall was announced, and the automaker is still No. 1 in U.S. market share. Even the price of used GM autos have stayed firm throughout the crisis.

Investors Need To Worry About Amazon's Profit Margins

Amazon (AMZN) has been "accused" by The New York Times of raising its prices on some books to improve its anemic margins. The bookseller denies it. If that's true, investors should seriously consider jumping ship.

A Big Business

Amazon is a giant company. While it started out selling just books, it quickly expanded into other areas like merchandise, handling the Internet business of competitors, cloud computing, and video streaming. While its top-line growth has been enviable, advancing from $5 billion to $61 billion over the last decade, the company earned $0.08 a share in fiscal 2003 and lost $0.08 a share last year.

There's clearly a lot of earnings potential at Amazon, which earned over $2.50 a share in fiscal 2012. However, growth spending has taken profit margins from as high as 6% to the low single digits of late. As recently as fiscal 2012 the profit margin was as high as 4%.

Time to Look at Margins

Margins, already low, are clearly moving in the wrong direction. That's not surprising since the company is in some fairly competitive markets. For example, Netflix is the company's main competition in the video streaming space. That company has been growing its top line at an impressive clip, but has made a notable business shift recently.

For example, the streaming giant is spending heavily on upgrading its content. That's included exclusive deals with Disney and DreamWorks, and creating its own content. Overseas expansion has also been a focus. Profit margins collapsed from around 11% to the low single digits on the effort, with earnings going from over $4 a share to just $0.30 or so last year.

Clearly Amazon has to keep up with the competition here if it wants to remain a player. So margins in this aspect of the book sellers business will remain under pressure. In fact, Netflix investors should monitor this trend, too, since its shares are trading with a price to earnings ratio of over 500. If margins don't improve notably, its shares are heading for a big drop.

Money Losers

Another area with intense competition is cloud computing. For example, Oracle and Microsoftare both looking to get bigger in the area at the same time that upstarts like Salesforce.com and Workday are building their names in the space.

The problem for the larger players, including Amazon, is that it's acceptable for an upstart to lose money. So, Salesforce.com, which had previously been profitable, has dipped into the red and nobody seems to care all that much. The shares aren't at all time highs, but they aren't all that far away, either.

That said, the company's sales have gone from just about $100 million ten years ago to over $3 billion last year. It's been growth spending that's pushed earning lower. And it recently announced plans to buy competitor ExactTarget for $2.5 billion, its largest acquisition yet. Clearly Salesforce.com is a growth story and investors are willing to give it the benefit of the doubt on earnings.

With competition like that, Amazon has no choice but to be aggressive. Note, too, that Microsoft recently lowered its cloud pricing to compete better with Amazon. So, the competition isn't just from upstarts. That said, while the potential at Salesforce.com is exciting, the opportunity is most appropriate for more aggressive growth investors.

Less Competition

The one place where Amazon faces the least competition, interestingly enough, is in books. It's pretty much nailed that market. So, working to raise prices in that segment would seem like a good decision. However, The Times says that company representatives deny any such effort, despite anecdotal evidence to the contrary.

In fact, Amazon spokeswoman Sarah Gelman told the paper, "We are actually lowering prices." With razor thin margins and tough competition in all of its businesses, that's a problem. Investors should be watching margins closely, realizing that raising prices or cutting spending are the two easiest avenues to improvement.

Watch From the Side

If the company keeps cutting prices and increasing growth spending, all of the potential in the world won't help push earnings up. The shares are near all-time highs despite increasingly thin margins, if Amazon doesn't work to improve profitability in the industry it dominates, the downside risk is too high for all but the most aggressive to bother with.

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Modi Victory Could Reinvigorate India

India's elections are finally over after four weeks of voting, and the man everyone expected to become the next Prime Minister, Narendra Modi, will undoubtedly be chosen by the newly elected BJP party to lead them forward. Everyone in the market predicted a Modi victory. No one predicted a Modi landslide.  BJP and its political allies have nearly full control of Parliament. Modi has himself a mandate.

The market reacted Friday by pushing up Indian stocks, with the hotly traded Wisdom Tree India Earnings (EPI) exchange traded fund up more than 5% in intraday trade.

If the consumer is the story in China and Brazil, infrastructure is the story in India. And Narendra Modi, or NaMo as he is now popularly known, is the man to deliver the goods in what is still an extremely poor country.

Narendra Modi in Varanasi India, an ancient Hindu city along the Ganges River. Modi clobbered the rival Indian National Congress in this year's election to become the new Prime Minister. Markets are as pleased with the outcome as the majority of Indian voters. (Campaign file photo.)

Per capita income in India is under $2,000 a year, three times less than development crazy China.

Last week there was a risk that results would disappoint and that the optimism of recent months would sour. That would depend on the ruling Indian National Congress, led by Sonia Gandhi, to maintain some of its seats in Parliament. Instead, Gandhi's party and her coalition were nothing short of crushed.  Friday's final body count surprised to the upside in favor of market favorite Modi, giving investors a reason to be more bullish.

"The inbox for the new government is a busy one," says Craig Botham, an emerging markets economist for Schroders, a U.K. investment firm.

"There is an investment bottleneck to clear, fiscal consolidation will be important, and central bank governor Raghuram Rajan is keen to move to inflation targeting. Over the longer term, inefficiencies in the land and labor markets must be addressed, and the tricky issue of foreign investment resolved," Botham says.  "A majority for the BJP greatly reduces the need for compromise and could mean that we see reforms pushed through relatively quickly."

India has nearly a dozen political parties, so the need to form coalitions is imperative in forming a government.  The problem is that those parties do not always see eye-to-eye, often leading to policy paralysis. But this time, Indian voters gave carte blanche to Modi, at least in the lower house of Parliament.

The BJP-led government will still have to negotiate with state governments and the upper house, but Indians by and large are unlikely to tolerate gridlock.  Some state governments aligned with the Indian National Congress could prove particularly obstructive.  Although Modi is a Hindu nationalist, he never made religion in an issue, or tried to drive a wedge between Muslim and non-Muslims states in India.   Botham says the result is a positive one for the Indian economy.

"People have given Modi a lot of front-end expectations," says Joel Wells, a fund manager at Alpine Woods Capital in New York.  "The degree and efficacy of reform will depend on what kind of mandate he has. And now that the market knows what kind of mandate he has, it will act accordingly."

Indeed it has. The Sensex rose to a 52 week high of 25,375 at the opening, nearly 2,000 points above Thursday's close.   On Wall Street, the iShares S&P India Nifty 50 (INDY) ETF was up by 4.5% with two hours to go in the trading session on Friday.

For the first-time since 1989, a single party will be in control of India's government. Modi's Bharatiya Janata Party — better known by its acronym BJP — has over 300 seats of the 543 seats in the lower house of parliament. It only needed 273 to form a new government without having to beg other parties for support.  As a result, Modi will clearly be chosen as Prime Minister by BJP. That will be made official on June 1.

Overlooked in the political upheaval is the fact that the Ghandi-controlled Indian National Congress Party mustered less than 59 seats. They used to have over 200.  Gandhi's son, Rahul, was to become next Prime Minister if Congress managed an upset. On the ground in India, it appeared Rahul had other things on his mind other than campaigning. This election year was nearly all about Modi. To use a boxing match metaphor, Rahul had no chance to go two rounds with golden gloved Modi.

Tesla Motors: Time for the Magic 8 Ball

If you’re thinking of buying shares of Tesla Motors (TSLA), you might do as well consulting a Magic 8 Ball as an analyst report. The reason: So much depends on predicting what will happen well into the future.

Associated Press

Consider this report from FBR’s Aditya Satghare, who explains what Tesla needs to do to head higher:

While management did not provide any updates on target mix for 2014, the ramp up in international sales through the rest of 2014 remains important to meet full-year 2014 shipment volumes. We believe the key to growing U.S. sales sustainably from current levels remains the launch of new variants of the Model S, the launch of a traditional leasing product for customers, and the upcoming launch of the Model X in Spring 2015. While we continue to acknowledge management's strong execution in ramping up production and expanding into new markets, we believe that sustained upside in the stock will be dependent on success of the Gen 3, which is expected to be launched in 2017, and managing execution risk in the Giga factory project.

With a rating of Market Perform and a price target of $150, it’s clear Satghare worries about that happening. Elon Musk apparently disagrees. At a clean-energy conference at a Tesla factory, Musk called the gigafactory a “no brainer.”

Shares of Tesla are little changed at $190.68 at 9:42 a.m.

Home-Selling Advice From Around the Web

The housing market typically heats up as the weather does in spring and summer, but it's off to a slow start this year. The latest report from the National Association of Realtors shows that existing home sales were flat in March, growth in home prices slowed and current home sales activity shows signs of underperforming by historical standards. That's not particularly encouraging news for people trying to sell homes. But NAR expects the slow start to the spring selling season may be temporary. Even so, there are several steps home sellers should take to improve their chances of finding buyers. Here's some advice from a few of our favorite personal finance bloggers.SEE ALSO: How Smart of a Home Seller Are You?

Top 6 Ways to Sell Your Home Without Hosting an Open House [Money Crashers]
"Holding an open house has long been part of the home-selling process. The problem is, open houses no longer work – and real estate agents know this."

10 Cheap Ways to Stage Your Home for Sale [Living on the Cheap]
"There are many things you can do to spruce up the look of your home without shelling out a lot of money."

This Is Why Your House Isn't Selling – Here's How to Finally Get Your House Sold [Free From Broke]
"If you can't figure out why your house isn't selling then seriously go through these reasons again and honestly ask yourself if any apply to your situation."

5 Myths and 5 Truths About Selling Your Home [Zillow Blog]
"Real estate agents participating in Zillow's 2014 Home-Selling Season Survey identified five top real estate myths; the debunking of them should put you on the fast-track to selling your property."

Dan Skiles, SSG’s Tech Guru: The 2014 IA 25 Extended Profile

Dan Skiles’ profile in the advisory world was raised last December when he was named president of Shareholders Service Group, the San Diego-based RIA custodian that he joined in 2009. But for many advisors, Skiles was already well-known from his work at two other custodians Jack White & Co., and Charles Schwab & Co. He’s also among that elite coterie of advisor partners who thoroughly understand advisor technology and how it can best be used to improve an advisory firm’s business operations (Disclosure: He writes on that topic in Investment Advisor’s monthly Technology Coach column).

What many advisors may not know is that Skiles also has an entrepreneurial streak: In his youth, he owned a rock-climbing gym, but as he said in an April interview, he realized it was not for him. “I wasn’t passionate about it,” and realizing that “you have to be passionate to be successful,” he began to search around for another profession. That’s when he used an approach he’s honed ever since: He put his network of contacts to work. A “friend of mine, a mentor” told him that whatever he chose to do, he should “surround yourself with smart, honest, passionate people; I’ve done that ever since and that’s made all the difference.”

When he was considering leaving Schwab’s custodian unit where he was a vice president of advisor technology, Skiles said he asked several advisor friends for their advice. They recommended, he said in an interview last December, that he “get involved with all aspects of the business,” not just technology. He has done just that.

Skiles is passionate about employee-owned SSG, which was founded by Chairman and CEO Peter Mangan and Robert Reed and has grown rapidly since Skiles joined the firm in 2009 from less than 400 RIAs on its platform to more than 1,200. Part of his passion for the firm, he said, revolves around working with RIAs. “It’s rewarding to help advisors achieve their goals,” but it also presented an “opportunity to get back to my entrepreneurial roots.”

SSG’s advisors are mostly smaller RIA firms, but Skiles argues that “size doesn’t matter anymore” for small firms, including those “transitioning” from another business model. “It used to be different,” he recalled, because larger firms had access to investment products and technology that smaller firms couldn’t get. However, “with the world of outsourcing, cloud-based systems” and the competition among technology and investment product manufacturers, he said that “in some cases, firms with only $50 million in AUM can run and leverage better technology than even much bigger firms,” partly because those larger firms must use “legacy platforms, which they have to maintain.”

He doesn’t downplay the challenges that “newer, younger firms” face. “Yes, there’s a lot of work to get established,” but if you begin as a true partnership without silos from the beginning, “you have more consistency; you minimize the variables.” That can benefit a smaller firm not just in technology, but in compliance as well, whereas an “older firm’s [compliance operations] might be based on compliance rules put into place 15 to 20 years ago.”

When asked about two topics that are top of mind for many advisor firm partners like SSG—the demographics of the advisor universe and the possible threat posed by ‘robo-advisors’—Skiles has a unique take on both based on his technology and business chops. “Succession planning will change” in the near future, he suggested. “Many advisors say, ‘I still love the business, still want to be in the profession,’” but as new technology is constantly rolled out that is accepted—or even demanded—by clients, the older advisor may be able to stay in the business for a much longer time without sacrificing clients’ needs.

Leaving out those advisors who want a “liquidity event,” Skiles used the traditional office conference room as an example of how client needs and aging advisor needs might coalesce. The need for an advisory firm to have “a conference room is diminishing every year” because of how clients want to communicate with their advisors. “It doesn’t take much time to learn how to use FaceTime,” Skiles pointed out, and as broadband access increases, “those clients may well say, ‘Why do I need to come down to your office to talk to you?’”

So what about robo-advisors: challenge or opportunity? Skiles began by speaking about “the consistency of the service experience and how personal it is” for end clients. Most of them have complex lives, he said. “Life is not consistent; questions come up throughout the year that you never anticipated.” Human advisors “are there for those questions,” especially for delegator clients, which Skiles thinks “there will be more of.” By contrast, the robo-advisors “revolve around investing. There’s nothing personal about it, and the consistency only relates to the technology used.”

What will remain consistent is that to “be successful in this business,” you need to provide personal service as “an advisor or someone who serves advisors.” Technology, Skiles said, “is a commodity, so as you go through your life stages, having that consistent personal experience increases the value of that relationship.” Robo-advisors may well serve as a transition stage for the self-directed client whose financial life becomes more complex, but as he ticked off some issues that advisors help solve for their clients—staying knowledgeable about cost-basis legislation, or how to pay for health care, or whether the timing is right to do a Roth IRA rollover—he concluded, “Can a robo-advisor answer those?”

Yes, if an advisor’s practice is “all about investments, maybe you should be concerned,” he said about robo-advisors. However, having a cost-effective way to serve clients who may not meet your firm’s minimums is a valuable strategy. “I’d encourage advisors who’ve been raising their minimums year after year to think about a different offering that allows them to serve people with less money,” Skiles said. “I’ve seen a lot of our clients getting into that. Those younger people have simpler lives, so you have to do less for them” now, but getting experience in serving less affluent clients will yield another benefit. “When mom and dad die, how often do you retain a relationship with the beneficiaries? The more experience you have with people like that, the better chance you’ll have to show [those beneficiaries of your current clients] that you’re not only familiar with their needs, but that you already have a channel that serves” such clients.

(Check out Investment Advisor's full IA 25 for 2014 list on ThinkAdvisor.)