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

After Monday's plunge in the stock market, investors were prepared for the worst to begin the week. But with the markets bouncing back during the past couple of days, major-market indexes managed to get back into the black for the week. Huge gains from Nokia , Expedia , and Activision Blizzard helped create a positive mood for investors, even despite some troubling economic data on the jobs front this morning.

Nokia (NOK) jumped 9% after the company agreed to resolve its patent disputes against Taiwanese smartphone maker HTC. The companies didn't release the exact terms of the agreement, but HTC will pay royalties to Nokia in exchange for giving each other access to their respective patented technology. In addition, the agreement holds open the possibility of future collaboration, which could help Nokia as it seeks to figure out its future course after selling its phone business to Microsoft . Even after the Microsoft sale, though, Nokia will retain its patents, making the possibility of partnering with HTC even more attractive.

Expedia (EXPE) climbed 14% after the travel portal announced its latest quarterly earnings figures. Sales rose 18% and boosted earnings per share by almost half, and Expedia also posted solid figures on gross bookings and hotel-room sales volume. Even with Expedia's share-price advance today, rival Priceline.com maintains a huge lead in terms of total returns, but today's news gives Expedia investors some hope that the company can tap into the same trends that have brought so much success to Priceline shareholders.

Activision Blizzard also soared 14%, hitting levels it hasn't seen in more than a quarter-century, as the video-game manufacturer continued its huge rebound on strength in its holiday quarter. The release of two brand-new video game consoles from Microsoft and Sony helped Activision's sales of its latest Call of Duty: Ghosts game, contributing to adjusted revenue and earnings that far exceeded the company's prior outlook in November. But even more importantly, Activision expects to see updates in 2014 to some of its strongest series, including World of Warcraft, as well as a potential new hit in Destiny later this year. Even though the video game industry will have to slow down from its explosive growth linked to the new PlayStation 4 and Xbox One, Activision Blizzard is still in a good position to benefit from the opportunities in the space.

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

What: Shares of Montage Technology Group, Ltd. fell 10% Friday after short-selling firm Gravity Research issued a report accusing the fabless semiconductor company of fraud.

So what: In the 27-page report issued Thursday afternoon, Gravity Research insists it believes Montage is "grossly overstating its revenue," citing "overwhelming evidence" that its largest distributor is a shell company established by a senior Montage employee to help fabricate Montage's financial results.

The accusation comes less than a month after Montage provided encouraging preliminary fourth-quarter results, which caused the stock to jump more than 15% in a single day.

Now what: Montage issued a statement in response today, saying it believes the accusations are without merit and contain "numerous errors of fact, misleading speculation, and misinterpretation of events." What's more, Montage promised it will release additional information "in due course" to refute Gravity's allegations.

Given the potential negative repercussions if Gravity's allegations aren't proven false, I'd prefer to stay on the sidelines until Montage releases that information. On that note, I'll admit it's mildly alarming Montage hasn't already released at least some specifics regarding which details Gravity got wrong -- especially considering Montage just announced pricing of a follow-on public offering of more than 5.3 million new shares last week.

If the company truly has nothing to hide, it should have no problems swiftly refuting the report.

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

What: Shares of ON Semiconductor Corp. rose more than 10% during Friday's intraday trading after the company announced better-than-expected fourth-quarter results.

So what: Quarterly revenue came in at $718 million, which translated to adjusted net income of $0.17 per diluted share. Analysts, on average, were looking for earnings of just $0.14 per share on sales of $691.29 million.

In addition, ON anticipates current quarter revenue of $695 million to $725 million, which is also well above expectations for Q1 sales of only $676.09 million.

Now what: CEO Keith Jackson weighed in: "Business trends during the fourth quarter of 2013 improved significantly with heightened order activity, and the strength has continued thus far in the current quarter. With an improving macro-economic outlook, especially for developed economies, and with favorable supply demand dynamics, we are upbeat on our outlook for 2014."

Even after today's pop, shares are currently only trading for around 10.6 times next year's estimated earnings. Keeping in mind those estimates are likely to increase as analysts have time to fully digest the news, I think ON Semiconductor stock should still be able to reward patient shareholders going forward.

Professional social network LinkedIn reported earnings last night, which saw shares falling this morning after the news, despite a solid quarter from the company. All three segments of the business continue to put up healthy growth, with its core talent solutions business up by 53%. The company also continues to add members at a solid rate, now at 277 million, compared to 259 million last quarter.

In this video, Motley Fool tech and telecom bureau chief Evan Niu discusses LinkedIn's big issue -- its guidance for the year -- which fell short of consensus. The company expects upwards of $2.05 billion in revenue for 2014, versus analyst consensus of $2.2 billion. Evan discusses why he sees 2014 as another year of the company reinvesting in the business, specifically in data centers, with the goal of owning its infrastructure. This is something he sees as cost-intensive now, but well worth it in the long run. Evan also looks at the company's potential future in China, an opportunity that the other two big social networks don't have.

Is renewable energy blowing away fossil fuels? Source: Steve Wilson/flickr

The German government has become pretty good at encouraging renewable energy investment. So good, in fact, that fossil fuel sources are finding it difficult to compete. Of course, that's because renewable energy providers get help from subsidies that aren't accessible to power plants utilizing dinosaur sauces. But rather than scale back renewable energy subsidies and risk jeopardizing the nation's ambitious future capacity targets, Germany's energy minister has proposed instituting subsidies for fossil fuels and renewable energy.

You may think that renewable energy replacing fossil fuel generation capacity is a good thing, but there are technological shortcomings that pose tangible risks to Germany's grid and consumers. Is the problem that's brewing in Germany bound to hit American power generators such as Exelon , Southern Company , and Duke Energy as the nation increases its renewable energy infrastructure? Not so fast. 

#firstworldproblems
Traditional renewable energy sources, wind and solar, don't provide steady, reliable energy 'round the clock. While they can produce as much as 61% of Germany's electrical needs, they can also plummet much lower -- leaving major gaps that are difficult to cover on short notice. Wildly volatile energy generation has made it awfully difficult for unsubsidized fossil fuel and nuclear power plants -- the grid's base -- to compete. Thus, many generators have closed power plants.

The rise of renewables is great news, but fossil fuel and nuclear generation will play an integral role in providing base load power until the industry creates better ways to store, and subsequently distribute, energy from peak renewable generation. Not having enough backup capacity could lead to major supply and price fluctuations for German consumers.

Can this happen to the American grid?
The problems with unpredictable generation and unreliable storage of renewable energy sources are inherent to the technologies. In that regard, the electrical grid in the United States -- and any country pursuing wind and solar generation -- is exposed to those risks. However, there are several major distinctions between Germany and the United States that make it difficult to see a similar problem plaguing the American grid and power generators such as Exelon, Southern Company, and Duke Energy.

First, America generates nearly 19% of its electricity from nuclear power, which provides constant, steady base load power. Germany is in the process of closing all of its nuclear power plants by 2022, which formerly contributed 23% of the grid's spark. Relying on unpredictable renewables and imported fossil fuels to replace one-quarter of the nation's total electricity generation capacity, and the majority of its base load power, was probably not the most realistic expectation.

Second, the United States generates a growing amount of its electricity from cheap domestic natural gas, whereas Germany must import expensive natural gas. In fact, Leonhard Birnbaum, an executive at German power company E.ON, went as far to say that "there is no gas-fired power plant on the European continent that generates profits at present." If that doesn't get the message across, take a look at the following energy table detailing the strengths of the American grid:

Source: EIA 

And compare that to market realities facing German energy providers:

Source: EIA 

America may be less efficient at converting energy into GDP (energy intensity), but Germany sports nearly 40% more overcapacity -- an unhealthy metric to lead in. Overcapacity, and an unequal distribution of subsidies, makes production less economical for fossil fuels, leads to plant shutdowns, and further exacerbates the problem of reliably producing enough base load power. Luckily, America has a healthy distribution of such power from the world's leading nuclear industry (by capacity) and the world's cheapest natural gas. Germany isn't so fortunate.

Foolish bottom line
The current subsidy environment in Germany was intended to spur investment in renewable energy infrastructure, which has been a major success. However, the subsidies continue to flow in despite the maturation of the industry. I find it at least a little ironic that the world has gone from laughing at the thought of renewable energy providing the majority of a nation's electricity to crying about how it makes fossil fuels less competitive. Anyone else?

Nonetheless, the risk of over-subsidizing renewable energy must be balanced out with the composition of a nation's grid on a case-by-case basis. Abandoning nuclear power, which sports the cheapest generation costs of any energy source, is a major reason that Germany finds itself in the delicate position at the moment. America, meanwhile, is not in danger of running out of base load power, especially considering that cheap natural gas can compete with even the cheapest renewable energy generation. Therefore, the need for subsidized energy production doesn't exist for Exelon, Southern Company, and Duke Energy nor should it for the foreseeable future. That's good news for American consumers and investors alike.

It's hard to predict where the stock market will go in 2014, so it is critical for investors to maintain a disciplined investing strategy. My strategy requires a lot of cash, discipline to buy incrementally on down days without acting on emotion, and a focus on defensive stocks that tend to hold up better than the general market in a correction.

I like consumer non-cyclical stocks like Colgate-Palmolive , Church & Dwight , Hershey , and J.M. Smucker .  These companies sell household and food products that are consumed daily. They also pay steady dividends. And the best thing going for conservative investors who hate big swings in the market is that these stocks all share low betas, meaning their volatility is less than the general market.

The following chart illustrates important metrics recorded on Feb. 5: 

Volatility
In general, stocks with high betas like 3D Systems are considered higher risk because they deviate more than the general market, while stocks with low betas tend to carry less risk because they deviate less than the general market.

The chart shows Hershey holds the lowest beta and indeed was the only one with a positive return, albeit a small one, for 2014. Church & Dwight and Colgate-Palmolive also carry low betas with lower volatility. 

As a conservative investor I favor stocks that hold their value in the marketplace while delivering ever-increasing cash dividends to the owner. Viewing investments in the manner of Warren Buffett's intrinsic value, an investment should be measured by how much cash you can extract from it over time. Hershey, for example, has raised its dividend 51% over the past five years while the stock gained 198% compared with SPDR S&P 500 ETF dividend up 53% while the exchange-traded fund was up 137% in five years.

Dividend reinvestment
I rarely take advantage of automatic dividend-reinvestment plans for stocks. All dividends are to be paid in cash. The smart investor shall decide what's on sale at the time cash is delivered, and, if nothing is desired, then it is just fine to let cash sit. Inflation is tame right now, at around 1.5%, so while cash may lose some value to inflation, it is the best defense in a bear market.

The S&P 500 index rose 30% in 2013, topping off four years of successive growth in the S&P 500 since the bottom of March 2009. So far this year the S&P 500 was down -5.2% through Feb. 5. I am prepared for the market to operate in bearish territory or swing sideways for most of 2014.

Several pundits on CNBC have predicted a 10% correction. But what if there is no correction? What if we are experiencing the bottom now? No bell is going to ring saying, "This is the bottom, buy now."

As a result, I am picking off only tiny fractions of the total number of shares that I intend to buy over the next nine months. I may be catching a falling knife and getting stabbed, but I believe the wound is only temporary and over the long term these consumer stocks will rebound eventually.

A mathematician once told me to buy in fourths and fifths -- meaning if you want to own 100 shares -- you buy 20 shares at a time. I would argue that during a bear market, you may want to buy in ninths or tenths. This way you protect yourself when stocks fall rapidly in price; you may be losing money on your first two purchases, but you have the opportunity to catch the stock at a cheaper price with your future trades.

Final thoughts
Buying and selling in a bear market is a challenge. When most investors are running scared from the market, a smart investor with a clear, disciplined approach can use a correction as an opportunity to pick up shares. Consider buying in small increments over time to reduce risk.

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

Another up day for stocks, with the benchmark S&P 500 index and the narrower Dow Jones Industrial Average rising 1.3% and 1.1%, respectively on Friday. According to Bespoke Investment Group, this marks the first back-to-back 1%+ up days since Jan. 2, 2013. If nothing else, this illustrates the fact that, despite a big run-up in the stock market, volatility was subdued in 2013, and we may be witnessing some sort of return to normalcy in that regard. Shares of Apple outperformed (slightly), up 1.4% (see main story, below the picture).

In an interview with the Wall Street Journal, published on Thursday evening, Apple CEO Tim cook revealed that the company has repurchased $14 billion worth of its own shares in the two weeks since its disappointing fiscal fourth-quarter earnings report on Jan. 27. (The stock fell 8% the next day, its second largest daily drop.)

As I pointed out this morning, if you believe the shares are significantly undervalued at or below current prices, then this is excellent news for Apple investors. Unfortunately, buybacks are not well understood in the financial media; here are two misinterpretations of Apple's action found in the media coverage so far.

Apple was trying to support the stock price with its repurchases
There is no evidence to suggest this is the case. The interview in the Wall Street Journal [sign-up may be required] suggests that Tim Cook was unconcerned about the fact that the stock dropped near $500 after its Jan. 27 earnings announcement other than to observe that it was an overreaction on the part of the market, and that the shares now presented better value than they had at $550. There is a fundamental difference between ramping up share repurchases because one believes they offer better value, and defending a specific price level.

Indeed, Mr. Cook reaffirmed his long-term orientation, stating that he wants to "be able to adjust for the long-term interest of the shareholders, not for the short-term shareholder, not for the day trader." If he were worrying about the stock price on a day-to-day basis, he would be doing long-term shareholders a grave disservice - that's not a good use of his time and mental resources.

This latest round of repurchases has no lasting impact
This criticism is premised on the notion presented above that Apple accelerated its purchases in order to try to give the stock a "boost." The only question that Apple shareholders need to be asking themselves right now is whether or not the stock is significantly undervalued (as Carl Icahn believes). If it is, then, in the words of Berkshire Hathaway CEO Warren Buffett, "no alternative action can benefit shareholders as surely as repurchases."

Far from being fleeting, then, repurchases that meet that condition have lasting impact on per-share intrinsic value. Managements do not control the stock price, but a well-executed share buyback is a direct lever to increase a stock's intrinsic value - that's what they ought to aim for and that is a rational basis on which to assess them. On that score, I have Tim Cook doing a superlative job; Apple shareholders can feel very good about his stewardship.

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

Friday delivered great news for many stock investors, as major market averages closed the week with gains of more than 1% to wipe out the losses from Monday's market plunge. Yet, even though most stocks benefited from today's optimism, LinkedIn , NCR , and Cigna weren't so lucky, with sharp declines even on a positive day.

LinkedIn (LNKD) fell 6% despite posting impressive revenue growth during its most recent quarter. Sales rose 47%, but the business social-media giant said that its growth rate would slow to an estimated 33% during the current year, leading some to believe that LinkedIn's share price is too high for revenue to decelerate at such a rapid pace. Yet, the big question for LinkedIn is whether its anticipated rise in spending will pay off in long-term growth, or prove to be a wasted investment. If the net result of LinkedIn's efforts is to shift income into 2015, then today's losses could provide a smart time to buy into the company's long-term growth story.

NCR tumbled 8% after issuing a mixed earnings report last night. The company said that operating income adjusted for pension effects rose 22% from the year-ago period, but revenue increases of just 2% fell short of what investors had wanted to see. NCR's retail and hospitality segments performed especially well, but some unfavorable trends in its financial-services division held the company back. Meanwhile, NCR's future guidance was also a mixed bag, with revenue guidance looking solid, but adjusted earnings expected to come in below investors' expectations. The results show that NCR has more work to do to evolve into a full-service enterprise-solutions specialist.

Cigna (CI) dropped 9% after the health-insurance company also failed to meet earnings expectations. At the same time that costs of its private Medicare insurance business rose, Cigna expects reimbursement rates for its Medicare Advantage plans to fall in the coming year, leading it to issue earnings guidance for 2014 that were 2% to 7% below what investors had expected to see. With Cigna only projecting 1% to 2% growth in customer counts in 2014, it's apparent that the Affordable Care Act and other initiatives haven't delivered the rise in popularity in insurance that some shareholders had expected to see.

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

What: Shares of Lattice Semiconductor jumped nearly 15% Friday after the company turned in solid fourth-quarter results.

So what: Quarterly revenue rose 35.9% year over year, to $89.5 million, which translated to net income of $0.06 per share, compared to a net loss of $0.06 per share in the same year-ago period. Meanwhile, analysts were looking for earnings of just $0.04 per share on sales of $81.05 million.

For the current quarter, Lattice expects revenue to be "flat to plus or minus 2% on a sequential basis" -- which results in a range of $87.71 million to $91.29 million. Analysts were modeling first quarter revenue of only $83.25 million.

Now what: As it stands, shares look downright attractive looking forward at a reasonable 20 times analysts' 2014 estimates. Keeping in mind those numbers are likely to be revised upward as Wall Street has time to fully digest today's news, I still think Lattice shares should still be able to reward patient investors going forward.

Both Time Warner and Walt Disney reported earnings this week. Who did better? Is Warner CEO Jeff Bewkes' braggadocio regarding HBO warranted? Ellen Bowman, Nathan Alderman, and Tim Beyers have these stories and a closer look at the geekiest Super Bowl ads in this week's episode of 1-Up on Wall Street!

The Department of Defense awarded five defense contracts Friday, worth a total of $719.3 million.

The vast amount of the day's awards went to privately held defense contractors. These included the day's biggest contract -- a $497 million IDIQ contract requisitioning technical support in the development and integration of command, control, communications, computers, intelligence, surveillance, and reconnaissance for the U.S. Army, and also its second largest -- a $157.5 million award for the procurement of unspecified "commercial type environmental equipment." Among publicly traded corporations, though, only one received work from the Pentagon today: Snap-On .

The tools and diagnostic equipment maker won a $37.7 million firm-fixed-price, indefinite-delivery/indefinite-quantity contract to supply the U.S. Army with aviation tool kits for use in maintenance work on its helicopters. This contract will run through Feb. 12, 2019.

Shares of Buckeye Partners ended the day higher after the company released its Q4 and fiscal 2013 results. For the quarter, it brought in $1.66 billion in revenue, a notable improvement from the $1.12 billion in the same period last year. Attributable net swung to a loss, however, at $83 million ($0.73 per diluted unit) against the Q4 2012 profit of $35 million ($0.35). Analysts were expecting a per-unit profit of $0.84 on revenue of $1.2 billion.

Much of the Q4 2013 loss was due to a $169 million asset impairment. Factoring that out of results yields attributable income from continuing operations of $87 million ($0.75 per diluted unit), vastly higher than the year-ago quarter's $33 million ($0.32).

For the full year, top line was $5.05 billion, versus $4.29 billion in 2012. Attributable net fell to $160 million ($1.49 per diluted unit) from the year-ago tally of $226 million ($2.32).

The company also announced that its quarterly distribution has been raised by nearly 5% compared to the preceding payout. The new amount, $1.0875 per unit, will be paid on Feb. 25 to holders of record as of Feb. 18.

Following the announcement of the results and the higher dividend, Buckeye Partners' units advanced by 2%, or $1.15, to close the day at $73.03 per unit.

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

A surprising thing happened this morning: The U.S. Labor Department released its January jobs report, and the number of 113,000 was much lower than the anticipated 189,000 that most economists were expecting. But, instead of the major indexes tanking on that news, they rose, and all three of the major indexes finished the day up more than 1%. The Dow Jones Industrial Average closed the day up 165 points, or 1.06%, while the S&P 500 rose 1.33% today, and the Nasdaq jumped 1.69% higher.

While the pundits and analysts had all sorts of different reasons why the markets reacted the way they did to a weaker-than-expected jobs number, the fact of the matter is, the unemployment rate is now down to 6.6%. The labor force participation rate increased in January to 63%, up from 62.8% in December. All these numbers mean the economy is getting stronger. 

Furthermore, the increase to the labor force participation rate means that more Americans are working, and one would assume that would lead to a strong performance by the large consumer-driven stocks today. While that certainly was the case for most of them, Coca-Cola , arguably one of the largest consumer-driven companies, missed the rally. Even more intriguing about the move lower was that there was very little news pertaining to the stock today that would have caused the move lower. But one story making headlines again today, and has for a number of weeks, is the fact that Coke is one of the largest and most notable sponsors of the Winter Olympics.

Coke has been sponsoring both the winter and summer games for years, but the bad press surrounding this year's games has now found its way onto the sponsors. For the past few months, protestors have been raising the gay rights issue within Russia and, while a number of Western leaders declined to attend the Winter Olympics based on the hosting country's political views pertaining to this issue, the major sponsors, such as Coke, never seemed to blink an eye about attaching their names to the games. While Coke certainly does not agree with the laws and beliefs Russia has in terms of human rights, many are saying Coke should have made a stance here and not supported the event. 

Another consumer-facing company, but a slightly dirtier one than Coke, is Republic Services , which had a good day on the market. Shares of the garbage company rose 4.8% today after the company announced earnings after the closing bell. Sales came in at $2.14 billion, above the $2.02 billion reported for the same quarter last year. Earnings hit $0.65 per share, again much higher than the $0.35 per share the company reported for the same period in 2012. Furthermore, while the company beat estimates on revenue, it beat earnings expectations by $0.07 per share. One reason for the better-than-expected results was a 2.5% volume increase, some of which can be contributed to a healthier housing market this year as opposed to last. More homes being built means more trash not only from construction, but from the new residents moving in. 

The increase in volume and better-than-expected results for Republic Services is likely one reason why shares of competitor Waste Management experienced a strong rise of 1.83% today. Waste Management is expected to report earnings on February 18. Analysts are expecting the companyt to report sales of $3.58 billion and earnings per share of $0.60 this quarter, but compared to what Republic Services posted and what was being estimated, those figures may be way low. 

But before you go out and buy Waster Management based solely on what its competitor did, it  may not be a wise move. Republic Services may have simply increased volumes due to taking business away from Waste Management. Or it may operate in an area that experienced growth, and its competitors will not benefit the same way. Always base your buy and sell decisions on company-specific information, not on an industry trend.

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

What: Shares of Ubiquiti Networks, rose more than 10% during Friday's intraday trading, then settled to close up around 4% after the company turned in solid fiscal second-quarter results.

So what: Quarterly revenue rose 85% year over year, to $138.5 million, which translated to adjusted earnings that more than doubled, to $0.48 per diluted share. Analysts, on average, were expecting earnings of $0.45 per share on sales of $133.33 million.

In addition, Ubiquiti projects current quarter revenue between $138 million and $144 million, with adjusted earnings per share between $0.47 and $0.51. By contrast, analysts were expecting fiscal Q3 earnings of $0.46 per share on sales of $137.52 million.

Now what: The numbers were great all around, so it's hard to blame investors for bidding shares up today. Shares may not look particularly cheap trading at 21 times next year's estimated earnings, but I think that's a well-deserved premium given Ubiquiti's growth.

With a healthy balance sheet and assuming it can maintain its momentum going forward, there's no reason Ubiquiti shouldn't continue to reward long-term investors.

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

What: Shares of Imation Corp. rose nearly 15% Friday after the company turned in better-than-expected fourth-quarter results.

So what: Quarterly revenue fell 12.7% year over year, to $232.8 million, which translated to adjusted net income of $0.25 per share. Meanwhile, analysts were expecting a $0.22 per share loss on sales of $224.05 million.

Now what: Nonetheless, CEO Mark Lucas admitted that, while their fourth-quarter results were encouraging, they "have not reached an inflection point in our transformation as our growth products have not yet offset secular revenue declines in our legacy business."

For now, while it may be tempting to dive in to take advantage of Imation's momentum now, I think investors would be wise to simply put it on their watch lists to keep tabs on its progress. Before I'd be willing to consider Imation as a viable long-term investment, I'd prefer to see more tangible evidence its growth products can indeed offset declines for its legacy offerings.

Total consumer credit increased at an annual rate of 7.3% for December, to hit $3.106 trillion, according to a Federal Reserve Consumer Credit report (link opens a PDF) released today. 

US Total Consumer Credit Outstanding data by YCharts 

After advancing at a seasonally adjusted annual rate of 4.8% for November, this month's consumer credit pushed ahead on a sizable $5 billion increase in revolving credit. In absolute terms, analysts had expected an overall $12 billion rise, $6.8 billion short of actual expansion. 

Revolving credit's (no fixed number of payments, e.g., credit cards) rise was the largest since December, and the third largest of the economic recovery.

Non-revolving credit (fixed installments, e.g., car payments) also pushed ahead, up $13.7 billion. At $2.244 trillion, non-revolving credit significantly outweighs revolving credit's $862 billion outstanding. According to The Wall Street Journal, this credit type's increase is due largely to the government's continued purchase of student loans. However, WSJ also notes that car payments indicate a "solid pace" for car sales.

In this episode of Tech Teardown, Erin Kennedy discusses the latest developments in the tech sector with Evan Niu, CFA, our tech and telecom bureau chief.

• Apple puts its money where it's mouth is. Actions speak louder than words, and $14 billion goes a long way.
• Apple has always played it small when it comes to acquisitions. Is Apple preparing to open up its wallet when the time is right?
• Twitter beat expectations on the top and bottom lines in its earnings report this week, but the market was looking at something entirely different.
• Why weak guidance now for LinkedIn may be well worth it in the long run.
• Online music streaming service Pandora was yet another tech stock to get crushed after earnings, despite reporting a pretty good quarter. Why did investors walk away?

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

Stocks jumped again today despite a tepid jobs report, as all three major indexes tacked on at least 1% for the second day in a row. The Dow Jones Industrial Average added 166 points, or 1.1%, for the day. The Department of Labor reported just 113,000 jobs were added in January, short of estimates of 175,000, but private-sector performance was better, seeing an addition of 142,000 jobs. Meanwhile, the unemployment rate ticked down from 6.7% to 6.6%. Many recent economic reports have been unfavorable due to bad weather, and investors seem to have attributed the lackluster jobs report to that factor. There were also positive signs in the report as the percentage of working-age Americans with jobs hit its highest mark since October 2012, at 58.8%, and the number of long-term unemployed fell by 232,000, to 3.6 million. This is a positive sign, as those Americans have been hit hardest by the slow economic recovery. That figure has dropped by 1.1 million during the last year as the economy moves back to full employment.

On the earnings board today, Outerwall jumped 12% after announcing earnings and a share buyback plan. The parent of Coinstar and Redbox said it would repurchase $350 million worth of shares through a modified Dutch auction, giving shareholders the opportunity to sell their stock at a price between $66.82 and $76.32. The offer could lead to the company buying back as much as 20.8% of its stock, which would inflate per-share earnings by more than 25%. Considering shares are now at a 52-week high, the timing of the proposal may be odd, but the market almost always cheers buybacks, especially ones of this size. As for earnings, adjusted profits rose to $1.68 from $1.01 on a 5% increase in revenue, to $593.7 million, showing that the Redbox video-rental model continues to be successful despite the proliferation of video streaming.

Elsewhere, Linkedin shares finished down 6% after reporting disappointing guidance in its quarterly report. The hot social media stock actually beat on both top and bottom lines, as its adjusted per-share profit of $0.39 was $0.01 ahead of estimates; but the professional social network saw top-line growth slowing in the current year. After a 47% increase in sales in the most recent quarter, Linkedin sees growth coming in at about 33% this year. For nearly any other company, that number would be eyepopping, but Linkedin carries a sky-high valuation, as shares have jumped more than 300% since its IPO. Still, the company has the type of business model that can easily convert sales into profits, making it different from many of its Web 2.0 peers.

As markets slid in late January, many investors took heavy losses to begin the new year. But one major company's stock was actually quite resilient through the turbulence. The surprising part is that the company was not a blue chip dividend payer; rather, it was American Airlines Group

The sell-off that was supposed to happen
American Airlines Group was formed out of the merger of US Airways and bankrupt American Airlines parent company AMR, as the two carriers sought integration savings and better pricing power. While shares of US Airways were exchanged one-to-one for shares of American Airlines Group, various stakeholders in AMR were also to receive American Airlines Group shares to cover their claims in the AMR bankruptcy.

AMR's bankruptcy was unique in that common shareholders were also allocated a piece of the new company. However, the restructuring plan still called for AMR creditors to receive a large stake in American Airlines Group. In many cases of restructurings, creditors receiving shares puts downward pressure on a stock as creditors exit by selling their shares; after all, creditors are typically debt, not equity, investors.

About a week after the official merger between US Airways and AMR, analysts from Barclays were cautious on shares of the new airline, noting the underperformance of other post-bankruptcy airlines in the months after restructuring, including Delta Air Lines and United Airlines, now part of United Continental Holdings .

Industry outperformer
Despite the selling pressure from former AMR creditors, and concerns about post-bankruptcy airlines, shares of American Airlines Group have risen 44.9% since the shares began trading on Dec. 9. This increase is still favorable even when compared to the strong performance of airlines during that time frame. By contrast, Delta Air Lines rose 9.6%, United Continental Holdings gained 21.2%, and Southwest Airlines added 15.8%.

Driving factors
Despite the poor history of post-bankruptcy airlines (and even airlines in general), American Airlines Group has been a popular stock among analysts. Among the analysts reporting to Yahoo! Finance last month, eight of 11 rated the shares a buy or strong buy, with the remaining three giving the airline a hold. Today, eight of 13 analysts still give a buy or better opinion, with four at hold, and only one underperform. Price targets are also high with both the mean and median targets calling for double-digit percentage gains. These bullish analyst opinions have likely helped to fuel demand for shares.

Beyond the analyst opinions, American Airlines Group also looks undervalued on a forward price-to-earnings basis. With a forward P/E ratio of only 6.8, American is far cheaper than rivals, including Delta at 10.5, United Continental at 8.0, and Southwest at 13.7. For investors looking to build an airline position at a reasonable price, American Airlines Group continues to bring in buying demand.

Apparently, American Airlines Group itself agrees with analysts and the undervaluation sentiment as the airline bought back approximately 14 million shares since the merger. This move not only helps to balance out selling by former AMR creditors, but also reduces the shares outstanding.

Last but not least, the share distribution plan is also helping to balance out selling pressure from former AMR creditors. Rather than converting claims to shares in one large piece, AMR stakeholders (including creditors and holders of AMR's common stock, AAMRQ) receive their shares in four distributions over the course of 120 days. By not having as many shares available for former creditors to sell at one time, selling pressure is further reduced.

Riding out the mess
While other stocks took major hits during the recent market troubles, shares of American Airlines Group only briefly dropped before bouncing back to close Feb. 7 at a record closing high. Selling pressure from former AMR creditors has been mitigated by a number of factors including positive analyst comments, an already low valuation compared to peers, and the airline buying back shares.

During the next couple of years, American Airlines Group does face some integration risk. However, the little bits of the integration we've seen so far, and the fact that the two carriers had been planning the merger for so long, show the airline's share price has more than factored this in. As a result, I will continue to hold shares and options on American Airlines Group, and I consider the airline to be worth a further look for those bullish on this industry.

Airlines are profiting from record energy production -- and you can too!

If you're following the 3-D printing space, you might know that industry juggernaut 3D Systems  and Google's Motorola Mobility unit announced in November that they were teaming on Project Ara. (Google's recently announced sale of Motorola to Lenovo doesn't include Motorola's advanced technology and projects group, which is the group working on Project Ara.)

Project Ara
Project Ara's goal is to create a large-scale 3-D printing manufacturing platform capable of producing customizable open-source modular smartphones. 3D Systems is charged with developing the 3-D printing platform to churn the Google devices out.

3D Systems' mission entails integrating the 3-D printing of various types of materials that comprise a smartphone into a single platform. This presents one big hang-up on the materials side: 3D Systems doesn't currently possess the capability to 3-D print conductive materials to produce electronic circuitry. So, it needs to develop it internally, partner with a company that does have this capability, and/or acquire such a company to fulfill its end of Project Ara. 

Acquisition or partnership possibilities
I don't usually like to engage in acquisition speculation, because much of what's out there seems to be pulled from thin air. That said, I'm going to indulge here, as we know that 3D Systems absolutely needs the capability to 3-D print conductive materials. This isn't the more usual case where an acquisition or partnership would be "nice to have" because there's a perceived good synergistic fit. This is a "must have" if 3D Systems is to fulfill its part of the deal with Google. Notably, Google usually gets what it wants, as its megadeep pockets enable the company to buy whatever talent and/or tech capabilities it needs for its projects.

Here are two electronics 3-D printing technologies that might fit 3D Systems' current or future needs:

Possibility No. 1: Optomec
This Albuquerque, NM-based private company seems like it could fill a hole in 3D Systems' portfolio -- if it's for sale. Interestingly enough, Optomec has ties with 3D Systems' prime competitor, Stratasys (NASDAQ: SSYS).

Optomec's no green-behind-the-ears upstart. The company developed its metals 3-D printing system based on technology developed at Sandia National Laboratories, and commercialized 15 years ago. It makes two systems: an Aerosol Jet, which prints conductive materials, and a Laser Engineered Net Shaping, or LENS, which prints metals

Last June, Optomec announced that its aerosol jet system had the capability to print antennas onto plastic inserts and enclosures for smartphones and other mobile devices. Optomec's system successfully printed antennas for uses including LTE, NFC, GPS, WLAN, and Bluetooth. The company's system can produce 1 million to 2 million units per year, depending on the antenna design.  

As for Optomec's ties with Stratasys: The two companies teamed on a project that produced what was called the world's first conventional 3-D printing/electronics 3-D printing hybrid structure -- a "smart wing" for an unmanned aerial vehicle, or UAV. The plastic wing was first printed using Stratasys' 3-D technology, fused deposition modeling, and then an Optomec aerosol jet printed an antenna, sensor, and circuitry onto the wing.

Additionally, in 2012, Optomec located its R&D facility in St. Paul, MN. Stratasys is based in a Minneapolis-St. Paul suburb. 

Yes, one does have to wonder if Stratasys could be interested in scooping up Optomec, as it would net it metals and conductive materials 3-D printing capabilities in one fell swoop. Stratasys, unlike 3D Systems, doesn't have metals printing capabilities, though it's just a matter of time, in my opinion. I'll be looking into how Optomec's LENS metals printing tech stacks up against laser sintering, the leading metals 3-D printing technology, and Sweden-based Arcam's electron beam melting tech.

Possibility No. 2: Xerox's technology
It's a little-known fact that 2-D printer innovator Xerox has been collaborating with 3D Systems for a decade-and-a-half, with the collaboration leading to 3D Systems' best-selling ProJet line of printers. The two companies were also jointly in the news in December, when 3D Systems acquired a portion of Xerox's solid-ink engineering group, along with 100 Xerox engineers.

That sale didn't include a promising technology to 3-D print electronic circuitry that Xerox's famed Palo Alto Research Center, or PARC, is working on called "Xerographic micro-assembly." This technology is based on laser printing technology, which Xerox invented in the 1970s. The process involves breaking down silicon wafers into tens of thousands of tiny "chiplets," bottling them to produce the "ink," and printing the circuitry onto a surface.

In addition to producing microprocessors and computer memory, this technology can also be used to produce microelectromechanical systems, or MEMS, which are used for actuating and sensing.

Unlike Optomec's technology, which is fully up and running, Xerox's is still in the R&D stage.

Foolish final thoughts
3D Systems needs the capability to 3-D print electronic components for Project Ara, and it's highly likely it will partner with or buy a company (or technology) to acquire this capability. Xerox and privately held Optomec both have technology that might be of interest to 3D Systems.

Even if an acquisition by 3D Systems turns out to be a no-go, investors might want to keep their eyes on Optomec. The company announced last fall that it saw its bookings for the first half of 2013 soar more than 100%. Given its fast growth, an IPO seems entirely possible, especially if the 3-D printing sector shakes its 2014 blues, and returns to its red-hot days.