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How Bad Is This Delay for Orexigen Therapeutics, Inc?

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Orexigen Therapeutics recently announced that the Food and Drug Administration was delaying an approval decision on the biotech's obesity drug Contrave for three months.

On the surface, the delay seems harmless. In the press release, Orexigen said that "[d]iscussions around the package insert and other post-marketing obligations are ongoing." That's biotech code for "we're going to get approved" since there's no reason for the FDA to discuss post-marketing obligations if the agency isn't going to authorize Orexigen to market the drug.

What's a little worrisome is that the company's ongoing outcomes study of Contrave was the basis for reapplication after the FDA rejected the initial application because of the potential for the drug to cause heart problems. Orexigen seemed to have met all the requirements the FDA set out, but investors only get Orexigen's version of the requirements. Perhaps the FDA is moving the goal posts, or maybe Orexigen didn't quite understand what the agency wanted.


The delay isn't likely to much benefit Orexigen competitors Arena Pharmaceuticals and VIVUS . As senior biotech specialist Brian Orelli and health-care analyst David Williamson discuss in the video below, sales of Arena Pharmaceuticals' Belviq and VIVUS' Qsymia are so low that Contrave taking market share won't materially affect them. In fact, launching Contrave -- whenever it happens -- could benefit Arena and VIVUS because the market will hopefully expand with an additional set of sales reps talking to doctors about the obesity market.

Leaked: This coming blockbuster will make every biotech jealous
The best biotech investors consistently reap gigantic profits by recognizing true potential earlier and more accurately than anyone else. Let me cut right to the chase. There is a product in development that will revolutionize not how we treat a common chronic illness, but potentially the entire health industry. Analysts are already licking their chops at the sales potential. In order to outsmart Wall Street and realize multi-bagger returns you will need The Motley Fool's new free report on the dream-team responsible for this game-changing blockbuster. CLICK HERE NOW.

The article How Bad Is This Delay for Orexigen Therapeutics, Inc? originally appeared on Fool.com.

Brian OrelliDavid Williamson, and The Motley Fool have no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Copyright © 1995 - 2014 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

 

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Bristol-Myers Squibb's Oncology Opportunity

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Although shares of Bristol-Myers moved up over 130% throughout the last 5 years, I believe that investors will be reluctant to bring BMY much higher until the company demonstrates an ability to maintain a clear trend of growth in drug sales.

With a patent expiration on Bristol-Myers' best-selling antipsychotic drug Abilify coming in 2015, and with multiple ongoing investigations over the marketing practices for this drug, it seems likely that revenue from the drug will taper off quickly. The continuous decline of the HIV drug Sustiva (which will go generic in 2015) is also cutting into Bristol's growth.

Investors should also be concerned about Bristol's claim to Baraclude - a top seller in the Hepatitis B space. An ongoing legal battle with Teva Pharmaceuticals might allow the generic drug manufacturer to launch a competitor to Baraclude this year if the courts decide against Bristol's patent claim to Baraclude. This would threaten a quarterly source of roughly $400 million in revenue for Bristol-Myers.


But despite all the challenging facing Bristol-Myers today, I do believe the company is positioned to do well in oncology due to the commercial potential of Sprycel (dasatinib) and Yervoy (ipilimumab). Both drugs have been growing sales rapidly throughout the last year, and have no patent concerns in the short run.

Sprycel currently outsells Yervoy by a hefty margin, but I think that Yervoy's potential to expand into new disease indications makes it a bigger potential value driver. Because the market has big expectations for Yervoy, I think the drug will make a big difference in the long term for the stock.

What's so great About Yervoy/Ipilimumab?
Yervoy is a "sleeper hit" of a cancer drug that was launched in 2011 after great success in phase 3 testing (in skin cancer) and subsequent FDA approval. Although it is toxic, Yervoy showed the medical community that it adds four months of survival to late-stage skin cancer patients.

Yervoy is also the first commercially successful product that is based on a relatively new drug design concept known as immunotherapy. Through various mechanisms of action, immunotherapies are designed to help the immune system's natural response to cancer. What makes Yervoy different from other immunotherapies is its unique mechanism of action, which is based checkpoint inhibition.

Yervoy has substantial growth potential
There are somewhere around 76,000 late-stage melanoma (skin cancer) patients in the United States alone. Based on Bristol-Myers' hefty $120,000 price tag for Yervoy, we know that the drug has the potential to become a multibillion-dollar product just from skin cancer.

But when you also factor in Yervoy's potential expansion into other cancer indications, the opportunity seems a lot less limited.

Bristol is now putting Yervoy through a number of new clinical trials that will provide data for additional drug applications to the FDA to treat kidney, head & neck, and prostate cancer. Many of these trials are combining Yervoy with other drugs that could (potentially) have synergistic effects with the drug's immune-boosting effect.

What's the downside on this gamble?
I think Bristol's biggest concern regarding Yervoy is that the drug will soon be outclassed by next-generation checkpoint inhibitors that target PD-1/L1 (instead of CTLA-4). Although PD-1 drugs (like Merck's MK-3475 and Bristol's own nivolumab) are still a few years from the market, they will affect Yervoy's expansion into new indications like kidney and prostate cancer. They may also threaten Yervoy's market share in metastatic melanoma.

Bristol might be able to keep the product's future revenues afloat by marketing Yervoy as a part of a combined therapy for melanoma (and other types of cancer), but the success of this strategy will be contingent upon the success of combined drug trials. Bristol is currently testing a nivolumab and Yervoy combination against melanoma in the CheckMate 067 trial, which will not yield full results until 2016. 

To continue its effort to expand Yervoy into new cancer indications, Bristol will also have to fund late-stage clinical trials to build new sets of efficacy data. Late-stage cancer trials are expensive, and they will cut into Bristol-Myers' bottom line throughout the next few years. But it might be worth Bristol's effort. Yervoy should be patent-protected until 2023, and 

But in the long run, I do think that Bristol's investment into Yervoy and immunotherapy will play out favorably. Yervoy won't mimic the success it had in melanoma when/if it is introduced to other indications like renal cell carcinoma, but expanded revenue from Yervoy would help the company offset the losses from Abilify, Sustiva, and other dying products.

Leaked: This coming blockbuster will make every biotech jealous
The best biotech investors consistently reap gigantic profits by recognizing true potential earlier and more accurately than anyone else. Let me cut right to the chase. There is a product in development that will revolutionize not how we treat a common chronic illness, but potentially the entire health industry. Analysts are already licking their chops at the sales potential. In order to outsmart Wall Street and realize multi-bagger returns you will need The Motley Fool's new free report on the dream-team responsible for this game-changing blockbuster. CLICK HERE NOW.

The article Bristol-Myers Squibb's Oncology Opportunity originally appeared on Fool.com.

Brian Wilson has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Copyright © 1995 - 2014 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

 

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Will Tim Hortons Go All Starbucks on Us?

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Source:  Tim Hortons

There is a great potential opportunity for Tim Hortons , the "other" publicly traded coffee and pastry chain that you don't often hear being talked about in the media. It seems to always be Starbucks this, and Starbucks that. Hopefully Tim Hortons is paying attention to Starbucks' latest move because it can be a game-changer for Timmy too.


First Timmy's results
On May 7, Tim Hortons reported fiscal first-quarter results. Total revenue popped 4.8% to $766.4 million. Same-store sales lifted 1.6% in Canada and 1.9% in the U.S. Earnings per share soared 16.9% to $0.66. Tim Hortons stated that this was "despite ongoing challenges relating to macro-economic and competitive environments, which have carried over from last year, and unfavorable weather conditions."

Marc Caira, president and CEO of Tim Hortons, credited the positive results to simplified operations, new menu items, and "enhancing" the restaurants. He stated in the press release:

Our organization has mobilized quickly to begin executing on the strategic plan we announced in February. We will see further progress this year in key areas of our strategic road map as we seek to drive sustainable long-term growth.

Mobilized? Interesting choice of word.

Source: Tim Hortons

Going mobile
One key strategy for Tim Hortons is in the area of technology, specifically mobile paying like Starbucks has. On May 22, Tim Hortons announced the launch of mobile payment with its TimmyMe app. Starbucks already attributes 14% -- and growing -- of its domestic transactions to smartphone payments, so we know the idea works.

Tim Hortons is hoping that the mobile barcode payment-scan app will allow customers "faster" service. Again, interesting word choice. Probably more so than Starbucks, Tim Hortons has a line problem. It's probably due to its more complex menu and food choices. On previous conference calls, Tim Hortons executives mentioned that the company was looking to use technology to get the line moving more quickly.

Caira believes this will help. He stated during the May 7 call:

We believe this new payment option will improve speed of service for our guests, which is always a key concern for us in locations where capacity is stretched.

The mobile-payment app is a great step in the right direction. But Starbucks has a far better idea.

Source: Starbucks

The Starbucks idea
During a recent presentation, Starbucks unveiled a pilot program that takes its mobile app to the next level. Scott Maw, CFO of Starbucks, pointed out that the company is the No. 1 payment app out there, making Starbucks a market leader in this space. Assuming the tests are successful, Starbucks expects to launch by the end of next year the ability to order in advance using your app.

This means no line. Your specialty beverage is ready for you and waiting as you walk in. Nothing kills a line faster than people who don't even need to be on it. Now imagine if Tim Hortons follows in the same footsteps.

On an operational and service level, the ability to order in advance could be even more meaningful for Tim Hortons than it is for Starbucks. Tim Hortons sells much more line-stalling food on a percentage of sales basis. The result is the average order is slower as well.

Caira stated in an interview late last year, "People are not prepared to wait in lines anymore." He said then that Tim Hortons was looking for ways to shave off its wait times as much as possible. It needs to jump on Starbucks' ordering-app bandwagon as soon as possible even though Starbucks itself still hasn't launched it.

Source: Tim Hortons

But maybe Tim Hortons is already working on that and just hasn't made any announcements yet. Back in February, Caira had some words that sort of hinted at such. He stated: "Any time you make it easier for your guests to order, reduce complexity for the restaurant team members[,] or decrease the time it takes to execute an order, it makes a difference when you multiply it across the millions of transactions we complete every day."

A mobile-ordering app will be coming to Tim Hortons in this Fool's opinion. Watch for it.

Will Timmy be next?
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The article Will Tim Hortons Go All Starbucks on Us? originally appeared on Fool.com.

Nickey Friedman has no position in any stocks mentioned. The Motley Fool recommends Starbucks. The Motley Fool owns shares of Starbucks. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Copyright © 1995 - 2014 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

 

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Better Buy: Isis Pharmaceuticals vs. Arrowhead Research

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Earlier this year, clinical-stage biotechs fell in dramatic fashion, as investors turned toward bigger health-care names generating revenue from approved products. In recent weeks, however, a marked reversal in this trend has seen several developmental biopharmas marching higher.

Arrowhead Research and Isis Pharmaceuticals were two of the biggest losers in the biotech downturn, even though both companies are working on promising new therapies centered around RNA-based technology. This novel approach to drug development focuses on blocking the expression of defective proteins, which could be tantamount to a functional cure in many diseases. 

Although both companies have compelling pipelines based on this technology, their platforms have important differences that investors need to understand. With that in mind, let's consider which company offers the better opportunity moving forward.  


ARWR Chart

ARWR data by YCharts.

A look at Arrowhead
Arrowhead's platform uses RNA interference, or RNAi, technology. Although this technology was once heralded as a potentially revolutionary discovery, problems associated with delivering the therapy to specific tissues have dogged the field since its inception. So much so that Roche sold its RNAi program to Arrowhead in 2011, citing the many hurdles the sector would need to overcome prior to a viable therapy being developed. The main difficulty facing RNAi technologies is that the molecules tend to end up in the liver, often far from the target tissue.

Arrowhead's breakthrough idea was to turn this weakness into a strength by developing a pipeline of RNAi therapeutics aimed at treating liver diseases such as hepatitis B. The company is conducting a midstage trial of its experimental hepatitis B treatment ARC-520 and is performing pre-clinical work for other liver diseases as well.

If everything goes according to plan, we should see top-line data for ARC-520's midstage trial by the third quarter of this year. Given that this trial would go a long ways toward validating Arrowhead's approach to RNAi therapeutics in general, this is a key event to keep tabs on.  

A look at Isis
Isis' pipeline is centered around antisense technology, which has been broadly validated by two FDA approvals for Isis products to date. Indeed, Isis' Kynamro treatment for homozygous familial hypercholesterolemia was the first antisense drug to reach the market. 

Unlike RNAi, antisense drugs may be more effective at treating a wide range of disorders such as cancers, diabetes, and rare genetic conditions. So it's not surprising that Isis has developed one of the deepest and most diverse clinical pipelines in the industry. Specifically, Isis' pipeline sports over 30 drugs in development, including multiple potential blockbusters. Thanks to its robust pipeline, Isis has had little trouble generating significant interest from Big Pharma when it comes to licensing agreements.

It was announced last week that the company's experimental treatment for high triglycerides, called ISIS-APOCIIIRx, significantly lowered the risk of heart disease in two independent studies. Management said it is therefore actively looking at ways to expand the drug's potential indications based on this finding, which could add up to $2 billion to peak sales. In short, there are a lot of good reasons to keep track of this mid-cap biopharma. 

Foolish wrap-up
Arrowhead and Isis are both developing cutting-edge technology that could change the standard of treatment for a host of debilitating diseases. From an investment standpoint, however, Isis looks like the clear winner for a couple reasons.

First, its technology has already been validated by strong clinical trial results and FDA approvals. Second, the sheer diversity of diseases antisense technology could treat might end up dwarfing that of RNAi approaches -- although the leading developer of RNAi-based therapies, Alnylam, is performing a wide range of clinical trials for a host of diseases. Big Pharma has repeatedly partnered with Isis on various compounds, while RNAi was abandoned by one of its former top proponents, Roche. And even many of Alnylam's pre-clinical candidates are Big Pharma cast-offs, showing the general disinterest in this technology from larger players. 

Put simply, Arrowhead's path to building a product line based on its platform is probably more challenging than what Isis faces. Isis' diverse pipeline also gives it multiple shots on goal on the commercial front, which is why I'm much more confident in the stock. 

Leaked: This coming blockbuster will make every biotech jealous
The best biotech investors consistently reap gigantic profits by recognizing true potential earlier and more accurately than anyone else. Let me cut right to the chase. There is a product in development that will revolutionize not how we treat a common chronic illness, but potentially the entire health industry. Analysts are already licking their chops at the sales potential. In order to outsmart Wall Street and realize multi-bagger returns you will need The Motley Fool's new free report on the dream-team responsible for this game-changing blockbuster. CLICK HERE NOW.

  

The article Better Buy: Isis Pharmaceuticals vs. Arrowhead Research originally appeared on Fool.com.

George Budwell owns shares of Isis Pharmaceuticals. The Motley Fool recommends Isis Pharmaceuticals. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Copyright © 1995 - 2014 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

 

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Cubist and Durata Heat Up Antibiotic Market

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Antibiotics are on a comeback. And Cubist Pharmaceuticals is in the middle of it.

Gone are the days when it seemed the Food and Drug Administration had a bone to pick with every antibiotic drugmaker. On Friday, the agency approved its second antibiotic in as many months: Durata Therapeutics' Dalvance last month and Cubist's Sivextro last week.

And last week the agency also gave another of Cubist's antibiotics, ceftolozane/tazobactam, a priority review, which shaves four months off the review of the drug for complicated urinary tract infections and complicated intra-abdominal infections. With a decision expected on or before December 21, Cubist could have two approvals in one year.


Both Durata's Dalvance and Cubist's Sivextro are approved for treating acute bacterial skin and skin structure infections, or ABSSSI, including the nasty methicillin-resistant Staphylococcus aureus, or MRSA, variety that can't be treated with older antibiotics.

Sivextro is available in both intravenous and oral formulations, so patients can transition to the daily oral formulation when they're discharged from the hospital. Dalvance only has to be administered twice, but both doses, administered a week apart, are given intravenously.

It would seem Cubist has the advantage on dosing with the oral formulation, but given the life-threatening nature of MRSA, doctors are more likely to pick a treatment based on efficacy than convenience.

Unfortunately, that's easier said than done at this point. The drugs haven't been compared head to head, and in the clinical trials used to support their approvals, Durata compared Dalvance to Shire's Vancomycin but Cubist compared Sivextro to Pfizer's Zyvox. Complicating things more, patients in the control group for the Dalvance trials were allowed, but not required, to transition from Shire's Vancomycin to Pfizer's Zyvox after three days.

Both drugs were approved based on clinical trials that showed the drugs are noninferior to their comparators, which is the standard way for an antibiotic to get approved but doesn't tell you much about how good they really are. For Shire the competition isn't a big deal since Vancomycin is already available as a generic, but Pfizer would certainly like to keep the market share Zyvox has. While the efficacy between Sivextro and Zyvox looks similar, Cubist might have Pfizer beat on side effects and certainly has it beat on the convenience front since Sivextro is taken once daily for six days versus twice daily for 10 days for Zyvox.

The fact that we're even talking about competition is a good sign for investors and patients because it means the FDA has woken up and become open to approving new antibiotics. You could argue that the companies have figured out what the FDA wants, and to some degree that's true too, but there's no doubt the Generating Antibiotic Incentives Now part of the Food and Drug Administration Safety and Innovation Act signed into law a few years ago has changed the dynamics of antibiotic drug development.

We're seeing the fruition now. With a pipeline of five drugs including expanded indications for currently approved drugs, Cubist is a company investors should be watching.

Leaked: This coming blockbuster will make every biotech jealous
The best biotech investors consistently reap gigantic profits by recognizing true potential earlier and more accurately than anyone else. Let me cut right to the chase. There is a product in development that will revolutionize not how we treat a common chronic illness, but potentially the entire health industry. Analysts are already licking their chops at the sales potential. In order to outsmart Wall Street and realize multi-bagger returns you will need The Motley Fool's new free report on the dream-team responsible for this game-changing blockbuster. CLICK HERE NOW.

The article Cubist and Durata Heat Up Antibiotic Market originally appeared on Fool.com.

Brian Orelli has no position in any stocks mentioned. The Motley Fool recommends Cubist Pharmaceuticals. The Motley Fool owns shares of Cubist Pharmaceuticals. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Copyright © 1995 - 2014 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

 

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Is Shire's Dividend Safe?

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Shire ( ) is one of the globe's biggest drug companies. It's a major player in ADHD and rare disease, and the company has been rumored as a takeover target by Allergan, and recently AbbVie  announced its third attempt to buy the company. 

Shire's focus to date has remained squarely on growth, rather than dividends; however, the company has a solid track record of double-digit dividend payout increases over the past decade.

Given that Shire has already lost patent protection for its ADHD drug Adderall and will lose patent protection on another important ADHD drug later this year, investors are right to wonder if that dividend streak can continue.


In the following slideshow you'll learn whether I think Shire's dividend is safe and see how Shire's dividend matches up to suitor AbbVie and industry peer Novartis .

Top dividend stocks for the next decade
The smartest investors know that dividend stocks simply crush their non-dividend paying counterparts over the long term. That's beyond dispute. They also know that a well-constructed dividend portfolio creates wealth steadily, while still allowing you to sleep like a baby. Knowing how valuable such a portfolio might be, 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.

 

The article Is Shire's Dividend Safe? originally appeared on Fool.com.

Todd Campbell has no position in any stocks mentioned. Todd owns E.B. Capital Markets, LLC. E.B. Capital's clients may or may not have positions in the companies mentioned. Todd owns Gundalow Advisors, LLC. Gundalow's clients do not have positions in the companies mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Copyright © 1995 - 2014 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

 

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Can CVS Trounce Walgreen?

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On the surface, CVS Caremark  and Walgreen  seem pretty similar. But dig deeper, and you see some big differences: CVS has a huge pharmacy benefit management (PBM) segment and has played more aggressively in retail clinics, while Walgreen's agreement with Alliance Boots (and potential buyout of the company next year) provides it with intriguing overseas growth opportunities. 

In the video below, from Where The Money Is, the Motley Fool's investment show, health care analysts Michael Douglass and David Williamson consider the best stock.

Leaked: The coming multi-bagger tsunami?
The best investors consistently reap gigantic profits by recognizing true potential earlier and more accurately than anyone else. Let me cut right to the chase. There is a product in development that will revolutionize not how we treat a common chronic illness, but potentially the entire health industry. Analysts are already licking their chops at the sales potential. In order to outsmart Wall Street and realize multi-bagger returns you will need The Motley Fool's new free report on the dream-team responsible for this game-changing blockbuster. CLICK HERE NOW.


The article Can CVS Trounce Walgreen? originally appeared on Fool.com.

David Williamson has no position in any stocks mentioned. Michael Douglass has no position in any stocks mentioned. The Motley Fool recommends CVS Caremark. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Copyright © 1995 - 2014 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

 

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Is Baxter's Outlook Worrisome?

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Baxter International  remains in a period of lackluster earnings growth, and questionable prospects. As a result, we must question whether Baxter is a viable investment. Here is what you need to know.

The stability of the health care equipment sub-industry is well documented, with limited downside susceptibility to recessions. Baxter is no exception, as the company has sustained robust growth for more than a decade. Of course, there are any number of potential headwinds -- including the new medical device tax introduced with the health care reform law, which placed additional top-line pressure on Baxter, leaving investors concerned over whether management will reduce costs by aligning its cost structure to offset the impact of the tax increase.

My Foolish take
Baxter's outlook is more encouraging than it seems. For instance, aging populations should increase demand for elective and non-elective procedures, dictating the need for specialized medical devices and driving growth at Baxter.


In the meantime, Baxter's efforts to penetrate emerging markets should supplement earnings growth. Another notable effort includes the recently announced plan to spin off of its BioScience division, which will be run by Ludwig Hantson, who is the current president of Baxter's BioScience division. 

The spinoff will grant Hanston the freedom to develop an independent strategy and determine which projects to invest in, while retaining Baxter's flourishing hemophilia franchise among other product lines. In addition, the spinoff will enable both companies to commercialize new and existing products more effectively, as well as accelerate revenue and enhance profitability.

In addition, the Gambro acquisition provides Baxter with a comprehensive dialysis product portfolio. More importantly, it offers long-term opportunities where Gambro products retain significant market share, such as developed markets like Europe, as well as emerging markets in Latin America and the Asia-Pacific. As Baxter struggles with flat earnings, support from Gambro's dialysis products should offer significant relief. Other than that, Baxter's continued pipeline development will hopefully help bolster earnings to achieve modest overall performance through 2015.

Here's what investors can look forward to in both companies
The progress of ADVATE is encouraging, and it should benefit the new BioScience company as it strives to reaffirm its dominance in the market space for hemophilia.

Speaking of ADVATE, Australia's National Blood Authority (NBA) issued a four-year award for ADVATE as Australia's preferred recombinant FVIII product. Once it becomes effective in early July, 2,300 people diagnosed with hemophilia A will receive access to ADVATE.

Other noteworthy achievements for ADVATE include the continued success in expanding commercialization in the UK, which now treats 5,600 people; regulatory approval in Russia and Turkey; and the impressive 30% uptake in Brazil. As ADVATE is now available in 62 countries and product uptake increases, revenue should put the new company in a favorable position in 2015.

Without its BioScience division, I believe Baxter's outlook strictly as a medical device company is promising nonetheless. In its most recent earnings report, Baxter achieved a 22% rise in global sales for its medical products, compared to a 5% rise in biopharmaceutical products developed by its BioScience division over the same period. It should be noted that the vast majority of that 22% increase was due to new revenue from the Gambro acquisition.

Medical devices make up the bulk of Baxter's revenue, and investors should look forward to continued penetration of existing products in international markets as a solid way to earnings growth. By 2017, Baxter estimates that the market for its medical products will have grown to $50 billion, affording the company numerous opportunities in industries like biosurgery, anesthetics, nutritional therapies, and fluid systems. For example, Baxter's fluid systems products reached $757 million last quarter, and inhaled anesthetics and nutritional therapies reached global sales of $367 million. 

While overall growth was minimal for the above products in the first quarter, I think investors can look forward to improvement as overall demand rises for elective and nonelective procedures coinciding with aging populations.

My Foolish final thoughts
Baxter, with a tasty 2.8% yield and excellent prospects for continued earnings growth, has some great opportunities ahead. In the months to come, investors should watch ADVATE's uptake closely. Also, impressive global sales of its medical products should reinforce Baxter's earnings growth strictly as a medical device company after the spinoff takes effect in mid-2015. As a result, I think this is a stock that Fools should follow closely. 

Leaked: This coming blockbuster will make every biotech jealous
The best biotech investors consistently reap gigantic profits by recognizing true potential earlier and more accurately than anyone else. Let me cut right to the chase. There is a product in development that will revolutionize not how we treat a common chronic illness, but potentially the entire health industry. Analysts are already licking their chops at the sales potential. In order to outsmart Wall Street and realize multi-bagger returns you will need The Motley Fool's new free report on the dream-team responsible for this game-changing blockbuster. CLICK HERE NOW.

The article Is Baxter's Outlook Worrisome? originally appeared on Fool.com.

Trevor Lowenthal has no position in any stocks mentioned. The Motley Fool recommends Baxter International. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Copyright © 1995 - 2014 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

 

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Why Hercules Offshore, Inc. Shares Could Slump 15%

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While Fools should generally take the opinion of Wall Street with a grain of salt, it's not a bad idea to take a closer look at particularly stock-shaking upgrades and downgrades -- just in case their reasoning behind the call makes sense.

What: Shares of Hercules Offshore, slipped about 3% today after Goldman Sachs downgraded the shallow-water driller from neutral to sell.

So what: Along with the downgrade, analyst Waqar Syed lowered his price target to $3.60 (from $4.60), representing about 17% worth of downside to Friday's close. So while contrarian traders might be attracted to Hercules' big drop on Friday, Freedman's call could reflect a sense on Wall Street that its operating challenges are just too difficult to allow for a significant turnaround.


Now what: Goldman cut its 2014 and 2015 EBITDA outlook for Hercules by 25% and 13%, respectively. "After the close on June 19, HERO announced contract cancellation for 2 jack-ups putting at risk ~$300mn of revenues modeled for the next 3 years," noted Syed. "While the stock's 11.7% fall on June 20 somewhat reflects this news, it doesn't fully incorporate weakening near-to-medium term fundamentals. Moreover, revised consensus estimates are still too high, in our view. HERO's GOM based jack-up fleet faces utilization challenges owing to hurricane season, customer consolidation and likely influx of rigs from Mexico." Given Goldman's solid track-record of call-making -- currently ranked in the top 10% of our CAPS community with an accuracy of 75% -- Hercules bulls might want to take a closer look at those risks. 

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The article Why Hercules Offshore, Inc. Shares Could Slump 15% originally appeared on Fool.com.

Brian Pacampara has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Copyright © 1995 - 2014 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

 

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Target Is an Even Better Buy than Wal-Mart Now

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Target  recently boosted its dividend payment by 21%, putting its dividend yield at around 3.6%. Meanwhile, its top peer Wal-Mart Stores  offers a yield of around 2.5%. It looks as if Target is signaling that it can overcome the recent credit-breach issues while still rewarding shareholders. Its superior dividend makes Target an enticing income and growth investment.

Streamlining management
In an effort to streamline management and speed up decision-making, CEO John Mulligan has shifted the company's entire top-management team to the 26th floor of the Minneapolis headquarters. He noted that in order to accelerate the transformation of the company, more "leadership" and less "committee" is required. Target has also brought on Brad Maiorino, previously with General Motors, as chief information security officer.

Problems at home and abroad
In the past, Target relied on trendy clothing and housewares, stocking a minimum level of consumables. This meant that many shoppers would go elsewhere to shop for groceries. In contrast, Wal-Mart saw an opportunity in groceries and began offering a larger selection--it now derives around 55% of its revenue from the consumable segment.


Even though Canada is just north of the U.S., Target found out that expanding into the country was not all that easy. Sales in Canada have grown, but the gross margin is less than 19% compared to nearly 30% for Target as a whole. Target also did a nationwide rollout and didn't have the proper supply chain in place to service all its stores.

Top priorities going forward
Target has identified three major priorities for the current year. The first priority is to seek growth in both sales and traffic in the U.S. The company feels that it can do better in the U.S. by improving on the past record of effectively delivering products and services at attractive prices. The second priority is to improve performance in Canada. Target is hoping that its move to become more of a digital company will promote more online sales in Canada and take the strain off its supply chain.

Another priority is regaining the trust of customers, which took a hit due to the data breach. Target is shifting to using industry-leading chip-and-PIN technology from MasterCard and has accelerated the provision of chip-enabled card readers to all the stores to help boost security.

How shares stack up
Target trades for slightly less than $60, but some Wall Street analysts have a price target as high as $72. Wall Street expects Target to grow earnings at an annualized 12% over the next five years. Compare that to analysts' growth rate for Wal-Mart, which is 8%.

Target has managed to grow its dividend an annualized 20% over the last five years, whereas Wal-Mart's has grown 15%. Target has increased its annual dividend payment for 46 straight years compared to Wal-Mart's 39-year streak.

Target's payout ratio is now around 70% based on its trailing-12 month earnings. Using the expected earnings for 2014 puts its payout ratio at 56%. In comparison, the payout ratio for Wal-Mart is around 40%.

Target's average quarterly free cash flow for the past five years has been $648 million. Its current dividend payment is $329 million, which means there still appears to be adequate cash flow for the dividend.

The bottom line
Target is an attractive income and growth opportunity. Its recent dividend boost makes it one of the top-yielding plays in retail, well above top peer Wal-Mart. For investors looking for a solid play in the retail market, Target is worth a closer look.

Warren Buffett's biggest fear is about to come true
Warren Buffett just called this emerging technology a "real threat" to his biggest cash-cow. While Buffett shakes in his billionaire-boots, only a few investors are embracing this new market which experts say will be worth over $2 trillion. It won't be long before everyone on Wall Street wises up, that's why The Motley Fool is releasing this timely investor alert. Click here to learn more about what's keeping Buffett up at night and the one public company we're calling the "brains behind" the technology.

The article Target Is an Even Better Buy than Wal-Mart Now originally appeared on Fool.com.

Marshall Hargrave has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Copyright © 1995 - 2014 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

 

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Wendy's Brings Back the Pretzel Bun to Boost Comps

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Source: Wendy's

Wendy's  announced Tuesday the early July return of the successful, limited-edition Pretzel Bacon Cheeseburger and its sister sandwich, the Pretzel Pub Chicken. Wendy's saw some of its best comparable-store sales in history with the pretzel-bun menu items but quickly rotated the items out for other limited-time sandwiches.

But the first-quarter report featured a comps drop, and Wendy's wants to reverse course. How much could the pretzel bun's return help Wendy's fend off competition from McDonald's and Burger King Worldwide ?

Potential comps improvement 
Wendy's had a good run of comps growth last year as the competition struggled to stay above even. 

 

Q1'13

Q2'13

Q3'13

Q4'13

Q1'14

Wendy's

0.8%

0.4%

3.2%

3%

1%

Burger King

(1.4%)

0.6%

0.9%

1.7%

2%

McDonald's

(1%)

1%

0.9%

(0.1%)

0.5%


Source: Company filings. Wendy's comps represent the average of company-owned and franchise-owned comps. Burger King and McDonald's comps represent their global performance. 

And the comps bump in the third quarter showed that Wendy's improvement arrived thanks to the pretzel bun. The company specifically called out the Pretzel Bacon Cheeseburger in that quarter's report as driving the highest comps the company had seen since 2005, which was notably before the recession -- a period when Wendy's suffered due to its comparatively higher menu prices.

But Wendy's apparently believed the product's success was easily replicated and shoved the pretzel bun off the menu for the brioche bun and a succession of other limited-time sandwiches. And first-quarter comps dropped below those of Burger King. 

So the pretzel bun has come back to save the comps. But did Wendy's already lose the competitive edge? 

McDonald's falters, Burger King builds
Last year's comps also show the paths of the competition. McDonald's struggled with its own limited-time menu offerings that mostly fell flat with consumers. And the company faced increased competition from Burger King successfully marketing products mimicking the Big Mac and McRib from McDonald's.

McDonald's still wins in sheer size of both its restaurant fleet and global reach. But a look at historical comps shows that the house of Ronald had the roughest ride over the past two years. Burger King remained the steadiest with Wendy's following closely behind. 

 Source: Company filings 

 The fast-food industry remains fiercely competitive but economically pinched with comps staying within the low single digits for even those pulling ahead. Chains need to embrace any advantage while trying to develop future strengths -- even if that means becoming reliant on a certain bun type for a while. 

Foolish final thoughts
Wendy's needed to bring back the pretzel-bun sandwiches. I've long argued that taking limited-time risks only works for the bigger picture if the success stories get to either stay on the menu or make frequent appearances. Right now, the pretzel buns are only back for the summer. But if comps pop back up to 3% after the summer, Wendy's needs to put these products on the permanent menu.

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The article Wendy's Brings Back the Pretzel Bun to Boost Comps originally appeared on Fool.com.

Brandy Betz has no position in any stocks mentioned. The Motley Fool recommends Burger King Worldwide and McDonald's. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Copyright © 1995 - 2014 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

 

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Here's Why HBO Is So Valuable to Time Warner

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Last Sunday, HBO's popular fantasy series Game of Thrones concluded its fourth season with a finale that proved to be everything fans wanted and more. However, the finale was also equally exciting for HBO's parent company Time Warner and its shareholders as well.

With arguably the highest quality lineup in all of television, HBO remains the crown jewel in Time Warner's portfolio. The premium network should also prove to be a major source of potential growth going forward as management at Time Warner seeks new ways to ward off aggressive competitors like Netflix .

HBO's Game of Thrones. Source: Company Facebook 


The king atop the throne
In the media landscape, the most important aspect to consider when evaluating companies is content. Since there is a constant demand for new and compelling programming that will never diminish, a company's ability to generate new content is of chief importance.

This is what makes HBO such a valuable asset for Time Warner, even though it generates just 27% of the company's total revenue.  For years the network has reigned supreme, both critically and commercially, with hit shows like The Sopranos, The Wire and Entourage. The network's newer additions like True Detective and Game of Thrones are no less popular and prove that the company has a winning formula for success in television.

Game of Thrones just recorded its most-watched finale ever; viewership was up 32% from last year's season finale. When accounting for two additional plays, total viewership on Sunday reached 9.3 million. This is very impressive considering that the first season's finale only recorded approximately 3 million views. 

The network's new crime series True Detective, which was already renewed for a second season back in January, also boasted impressive commercial success. The show's finale in March drew in 3.5 million viewers, which represents an increase of 50% from the show's premiere in January. The show ranks behind only Six Feet Under as HBO's most watched freshmen series. 

Increasing competition from Netflix
The demand for content has led technology companies like Netflix to start producing original content of its own. Over the years, Netflix has debuted numerous shows that are only available to Netflix audiences. None is more popular than House of Cards, however.

Although Netflix does not release viewer numbers, the political-based series is a massive success, as 16% of subscribers reportedly watched at least one episode of the show's second season within the first 24 hours of it going live. Incredibly, this viewership number is up eightfold from the first season's premiere. 

To keep competitors like Netflix at bay, HBO has several new shows for 2014 and more in the development pipeline. New comedy Silicon Valley just wrapped a successful first season and is already set for a second  while the dramatic series The Leftovers is set to premiere on June 29.

Meanwhile, HBO made big news a few weeks ago when it announced it was developing a new science fiction series based on Margaret Atwood's popular book trilogy. Perhaps most impressive is that Academy Award winner Darren Arnofsky is reported to be Executive Producer of the series. 

So far, HBO has done better at generating profits than Netflix, although the network's sales are growing much slower. In 2013, HBO's operating profit of $1.8 billion crushed Netflix's $228 million in operating income but its sales growth of 4% was significantly slower than Netflix's robust 21%. 

The future of HBO
Although network management's ability to create some of the best television series is a major catalyst for future growth at HBO, the largest potential driver of future growth may actually come in the form of a stand-alone service.

HBO Go, which is currently a streaming service available only to HBO subscribers, offers most of the network's robust lineup of series and movies to viewers. The app can be downloaded on most mobile devices and media platforms.

Should HBO ever decide to offer the service by itself to customers, it would be in direct competition with the likes of Netflix. With a more powerful content lineup and equally popular brand name recognition, the stand-alone service would no doubt be a compelling asset for HBO and Time Warner going forward as it could accelerate HBO's sales growth.

In a recent interview, HBO Chief Executive Richard Plepler explained his thoughts on the subject, "It's a sin to leave money on the table." He further added, "We will not be caught without the ability to pivot should we decide that pivoting is the right thing to do." 

Some of HBO's biggest hits, past and present. Source: Company Facebook 

Bottom line
The possibility of a stand-alone service from HBO is exciting from both a consumer's point of view as well as an investor's. The company could put to market a service that offers one of the best original television lineups ever and would be a worthy adversary to traditional streaming companies like Netflix.

However, even without the stand-alone service, HBO is still firing on all cylinders. It remains the most valuable asset that Time Warner has at the current time.

Your cable company is scared, but you can get rich
You know cable's going away. But do you know how to profit? There's $2.2 trillion out there to be had. Currently, cable grabs a big piece of it. That won't last. And when cable falters, three companies are poised to benefit. Click here for their names. Hint: They're not Netflix, Google, and Apple. 

 

The article Here's Why HBO Is So Valuable to Time Warner originally appeared on Fool.com.

Philip Saglimbeni has no position in any stocks mentioned. The Motley Fool recommends Netflix. The Motley Fool owns shares of Netflix. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Copyright © 1995 - 2014 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

 

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Can Kate Spade Export Its Magic?

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Years ago on a trip to Hawaii, I heard tales of a genre of Asian tourist -- the shopping tourist. Allegedly, these folks would fly to Hawaii with a carry-on bag and an empty suitcase that they filled up with the finest American loot. The sights? The sounds? None were had -- unless they were found in the mall. It's a tale that rings true with many retailers as they expand into the Asian market and find an insatiable appetite for polished American goods.

One of the newest entrants into Asia is Kate Spade , handbag maven and all-around rock star. Kate has put up incredible sales growth in the U.S. Sales have been so strong that the company ditched its other major brands -- Juicy Couture and Lucky Brand -- to focus on the Kate Spade moniker. Now, Kate is looking to push beyond our fair soil, and she couldn't have picked a better time.

The ace of Spade
Let's start by looking at the handbag market. The three dominant, mass-market brands are Kate Spade, Michael Kors , and Coach . Coach represents the old guard, and its failure to shift quickly has led to a weak third place. Last week, the company announced a revised forecast due to expenses it will incur as it closes down 70 of its retail locations -- about 13% of its entire North American footprint.


That leaves Kors and Kate vying for the top spot, with ambitions to be much more than they currently are. Kors is growing sales in North America at a steady rate, putting up a comparable-store sales increase of 20.6% last quarter. The company's relatively small European division did even better, growing comparable sales by 62.7%, demonstrating the demand for Kors outside of the U.S.

Kate Spade did slightly better than Kors, with comparable sales of 22% in North America. Right now, the former makes a scant 20% or so of its revenue outside of the U.S., but has its sights set on expansion in Europe and Asia, though no doubt hoping to recreate the magic of Kors.

Getting the word out
Michael Kors' European sales have surged ahead as the market catches on to the trend. Kors has reacted to the positive demand by opening new locations, and it now operates around 120 locations outside the U.S. The company has a mix of European and Japanese outlets, and it seems clear that Asia is the next big push.

Kate Spade's management team has said that expansion into Europe is its No. 1 priority, but it's not just going to wait around for Asia to come to it. The company appointed Roy Chan as the new senior vice president of international. Chan has an international background from the Jones Group and was COO at Evisu, a Japanese denim company.

Kate's long-term plan is to have two-thirds of its revenue generated outside the U.S. That's going to require some significant expansion, and Asia is the place where the magic happens. To that end, the company recently completed the buyout of Asia-based Globalluxe, which owned the Kate Spade brand in many Southeast Asian countries. It put a substantial employee base in place before the completion of the deal, so expect that area to be running smoothly and quickly very soon.

To sum it all up, Kate Spade is a brand on a mission and it has the pieces in place to make Asia its next big conquest. If it can beat Kors to the saturation point, then Kate Spade might have a chance to push its advantage into the stratosphere. Don't count Kors out just yet, but Kate is definitely one to watch over the next year.

Bringing the battle to you
There may be a war raging in fashion, but there's an even bigger opportunity in your own home. You know cable's going away. But do you know how to profit? There's $2.2 trillion out there to be had. Currently, cable grabs a big piece of it. That won't last. And when cable falters, three companies are poised to benefit. Click here for their names. Hint: They're not Netflix, Google, or Apple.

The article Can Kate Spade Export Its Magic? originally appeared on Fool.com.

Andrew Marder has no position in any stocks mentioned. The Motley Fool recommends and owns shares of Coach and Michael Kors Holdings. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Copyright © 1995 - 2014 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

 

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Is Sanofi's Dividend Safe?

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Sanofi  is one of the globe's largest drug companies. It's a major player in diabetes treatments, vaccines, and consumer medicines, and is often included in dividend portfolios.

However, looming patent expiration on its top-selling drug, falling margin, and potential competition from Eli Lilly and Novo Nordisk could all impact Sanofi's bottom line, and threaten Sanofi's dividend.

In the following slideshow, you'll learn whether I think Sanofi's dividend is safe, and see how Sanofi's dividend matches up to Lilly and Novo Nordisk. 

Top dividend stocks for the next decade
The smartest investors know that dividend stocks simply crush their non-dividend paying counterparts over the long term. That's beyond dispute. They also know that a well-constructed dividend portfolio creates wealth steadily, while still allowing you to sleep like a baby. Knowing how valuable such a portfolio might be, 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.


The article Is Sanofi's Dividend Safe? originally appeared on Fool.com.

Todd Campbell has no position in any stocks mentioned. Todd owns E.B. Capital Markets, LLC. E.B. Capital's clients may or may not have positions in the companies mentioned. Todd owns Gundalow Advisors, LLC, Gundalow's clients do not have positions in the companies mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Copyright © 1995 - 2014 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

 

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MasterCard Notches a Win in Russia, While Waste Management Lines Shareholders' Pockets

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Last May, I announced my intention to create a portfolio that embodied life's basic needs. To that end, over a period of 10 weeks, I detailed 10 diverse companies that I think will outperform the broad-based S&P 500 over a three-year period because of their ability to outperform in both bull markets and bear markets, as well as their incredible pricing power in nearly any economic environment.

If you'd like a closer look at my reasoning behind each selection, just click on any, or all, of the following portfolio components:

Let's look at how our portfolio of basic-needs stocks has fared since we began this experiment.

Company

Cost Basis

Shares

Total Value

Return

Waste Management

$42.60

23.24

$1,037.20

4.8%

Intel

$23.22

42.64

$1,287.73

30.1%

NextEra Energy

$87.94

11.26

$1,125.89

13.7%

MasterCard

$64.557

15.30

$1,129.29

14.3%

Chevron 

$124.95

7.93

$1,049.46

5.9%

Select Medical 

$8.96

110.49

$1,733.59

75.1%

Ford

$17.50

56.57

$943.02

(4.7%)

American Water Works 

$43.13

22.96

$1,105.75

11.7%

Procter & Gamble 

$81.29

12.18

$973.55

(1.7%)

AvalonBay Communities 

$133.95

7.39

$1,044.21

5.5%

Cash

   

$0.88

 

Dividends receivable

   

$277.03

 

Total commission

   

($100.00)

 

Original investment

   

$10,000.00

 

   

S&P 500 performance

     

14.8%

Performance relative to S&P 500

     

2.3%


Source: Yahoo! Finance, author's calculations.

Although the low-beta Basic Needs portfolio was never intended to outrun the S&P 500 to the upside, it seems to be doing so on a regular basis. Overall, both the portfolio and the S&P 500 ended at their respective highs since this experiment began nearly 11 months ago, however this group of basic-needs stocks has pulled away to its largest lead yet. We still have more than two years left to go, but as of now I'd say the healthy dividend income and sector diversity to which this portfolio was designed is paying off nicely.

As always, let's start our week off with the latest dividend news.

Show me the money!
Shareholders of refuse and recycling giant Waste Management ended the week on a good note when the company paid out $0.375 per share to those on record as of June 6. Waste Management boosted its payout by a penny per quarter earlier this year in light of its strengthening pricing power in refuse collection and better overall yields. But weaker-than-anticipated metal prices are hindering any traction in its recycling business. Still, when it comes to refuse collection there are few choices for customers, meaning Waste Management has relatively little to worry about with regard to its cash flow and can instead focus on controlling costs in its recycling business while boosting investments in harnessing alternative energies such as methane gas from its landfills, which can be used to power homes.

Ford's mixed May
This past Tuesday automaker Ford reported that European sales actually fell 1% in May from the previous year largely due to an unusual bump in consumer segment sales last year. But commercial vehicle sales ticked higher and are now at their highest level in 16 years.



Source: Ford.

Furthermore, Ford was able to tack on an additional 10 basis points of market share in Europe to 7.9%. Ford's ability to rapidly grow commercial sales in Europe, boost consumer sales in China, and deliver steady improvement in the rebounding U.S. market has been its key to success over the past couple of years. So long as Ford continues to hit the right price points with its vehicles and remains innovative, then there's no reason its share couldn't head even higher.

Payment processors' big win
Payment processing facilitator giants MasterCard and Visa appeared to have won a notable victory in Russia this week with Russia's lower house of parliament, the State Duma, beginning talks that would lower the amount of collateral each company would have to post in order to do business within the country. These collateral payments have been a sticking point for both companies and are a direct result of sanctions imposed on American companies by Vladimir Putin following similar U.S. sanctions against Russia that condemned its annexation of Crimea. In sum, with a smaller collateral payment due it's likely Visa and MasterCard won't pull out of Russia, which will give both a good chance to prosper from its rapidly growing economy.

Source: Intel

Intel's "cloudy" outlook
I'm not certain what they're putting in the water over at Intel over the last couple of months, but they should keep doing it because shareholders are enjoying a decade-high share price. Intel impressed this week by introducing its first customized cloud chip. This chip, part of its Xeon series, would allow big data businesses to manage large computer workloads with ease, boosting processing capabilities as needed, as long as their servers were running off Xeon processors. This looks like one of Intel's many ploys to be the hardware company of choice for enterprises moving into the cloud. Intel's goal is to derive around 30% of its revenue from the cloud by 2020, and the introduction of customizable Xeon chips is certainly one step toward achieving that goal. Following its earnings guidance boost in the prior week I'd presume existing shareholders are quite pleased.

Source: Patrick Finnegan, Flickr.

Branching out
Lastly, alternative-energy-focused electric utility NextEra Energy announced details on Thursday regarding its proposed spinoff and creation of master limited partnership NextEra Energy Partners. According to its release, NextEra Energy Partners will be offering 16.25 million shares at an offer price of $19 to $21 per unit, with underwriters having the ability to purchase up to 2.44 million additional shares. NextEra Energy Partners should price its offering on Thursday and begin trading next Friday on the New York Stock Exchange under the ticker symbol "NEP." NEP plans to use some of its proceeds from the offering to purchase common units of NextEra Energy Operating Partners, as well as for general corporate purposes. Spinoffs are proving to be wildly successful for investors as it helps to unlock value by making a company appear more transparent. I suspect this spinoff will have a similar effect on NextEra's share price.

If you're interested in more high-yield dividend ideas, look no further than these picks by our top analysts!
The smartest investors know that dividend stocks simply crush their non-dividend-paying counterparts over the long term. That's beyond dispute. They also know that a well-constructed dividend portfolio creates wealth steadily, while still allowing you to sleep like a baby. Knowing how valuable such a portfolio might be, 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.

The article MasterCard Notches a Win in Russia, While Waste Management Lines Shareholders' Pockets originally appeared on Fool.com.

Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong. The Motley Fool owns shares of, an recommends Ford, Intel, MasterCard, Visa, and Waste Management. It also recommends Chevron and Procter & Gamble. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Copyright © 1995 - 2014 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

 

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Was $57 Billion in Cash Burning a Hole in General Electric Company's Pocket?

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Former GE headquarters building. Source: Wikipedia/UpstateNYer.

Back in April, General Electric established a budget for potential acquisitions in the year ahead. The ideal price tag, as laid out by GE's CEO Jeff Immelt, was anywhere between $1 billion and $4 billion. But Immelt also noted that the company would be "opportunistic" if a larger acquisition happened to present itself, and sure enough -- only a few days later -- it did. 


In the months that followed, GE entered into a quasi-bidding war over Alstom, which is an industrial outfit that, for all intents and purposes, is the "General Electric of France." GE wanted to acquire Alstom's power and grid business, in particular, and was willing to pay upwards of $16.9 billion to do so, a price well beyond its predetermined range.

Accordingly, shareholders and analysts have scrutinized the deal since the day it first made headlines, wondering whether GE's massive $57 billion foreign cash balance was burning a hole in its pockets and thereby tempted Immelt to go shopping in Paris. Is their evidence, in fact, that GE stretched outside of its comfort zone to deliver its largest deal ever?

In the following video, Motley Fool senior manufacturing specialist Isaac Pino dissects the ins and outs of the Alstom transaction and sheds some light on whether this was the best move for GE. Perhaps more important, was it the best long-term move for GE's shareholders? Click on the video below for insight into GE's decision and the possible alternatives that could have unfolded.

Are you clamoring for dividends?
The smartest investors know that dividend stocks like GE simply crush their non-dividend paying counterparts over the long term. That's beyond dispute. They also know that a well-constructed dividend portfolio creates wealth steadily, while still allowing you to sleep like a baby. Knowing how valuable such a portfolio might be, 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.

The article Was $57 Billion in Cash Burning a Hole in General Electric Company's Pocket? originally appeared on Fool.com.

Isaac Pino, CPA, owns shares of General Electric Company. The Motley Fool owns shares of General Electric Company. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Copyright © 1995 - 2014 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

 

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McDonald's Is Running Out of Excuses

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Source:  Wikimedia Commons.

When McDonald's announced on May 28 that it will return up to $20 billion to shareholders over the next three years, I got a sinking feeling that May wasn't going so well. It just smacked of McDonald's trying to buy its way out of the negative spotlight. I was hoping I was wrong, to be quite honest, but once again its May same-store sales failed to impress.

Blaming the weather
It had seemed like McDonald's was finally making a comeback. Domestic same-store sales growth went positive in the third quarter of last year. From there, it's been slipping and sliding. The fourth quarter saw a 1.4% drop. For January, it fell 3.3%. In February the slippage was 1.4%.


All the while McDonald's primarily blamed the weather for its shortfall and pointed to its higher international same-store sales numbers. In March the weather challenges thawed a bit and same-store sales only fell by 0.4%. For April, they were flat. Hurray! Maybe McDonald's was finally out of the snow-covered woods, many of us thought.

We thought wrong. At least for now.

Source: Wikimedia Commons.

April showers didn't bring May flowers
On June 9, McDonald's reported same-store sales for the month of May. The Asia-Pacific, Middle East, and Africa region popped same-store sales by 2.5%. Not bad. Europe lifted by 0.4%. Better than a loss. U.S. sales dropped 1%. Ouch. McDonald's will have a tough time getting away with blaming the weather for this one.

CEO Don Thompson didn't really have much to say in the press release. He just gave the usual speech about providing customers with food, drink, "memorable experiences," convenience, and a brand. What's new, Mr. Thompson?

McDonald's blamed "ongoing broad-based challenges" without going into detail. The release further stated, "McDonald's U.S. business is heightening its customer focus through service, value and menu initiatives to stabilize results." At least it is admitting that its results need stabilizing and has quit blaming Mother Nature and her husband Old Man Winter.

Promotions not working?
During May, McDonald's put efforts toward "the promotion of Dollar Menu & More offerings and breakfast including a focus on McDonald's popular McCafe coffee." It doesn't look like this worked very well. As an example of what did work, rewind to a year ago. In May 2013, domestic sales popped 2.4%. McDonald's then said the gain was led by breakfast, especially with the introduction of the new Egg White Delight sandwich at the time.

Perhaps innovation is key at breakfast. Is Taco Bell chipping away some market share during the morning hours? We'll get more information about that in July. The good news is that the year-ago monthly comparisons will start to become easier with August just two months away.

Source: McDonald's.

Where's the bacon-topped beef?
It was kind of disappointing that McDonald's didn't mention or even refer to its new Bacon Clubhouse burger. Was it another flop like the Mighty Wings? I had high hopes for it, and McDonald's mentioned it in its May 8 release.

Then again, I love to sample new items from restaurants I write about, and something stopped me from taking the next step and just ordering this one. It may be apprehension and distrust about McDonald's trying to offer a fancy gourmet hamburger. Perhaps it just seems too good to be true. Perhaps I'm not alone.

McDonald's is expected to report fiscal second-quarter results on July 22. It will be interesting to learn (with actual detail this time) what strategies and plans McDonald's has to rejuvenate domestic same-store sales growth again.

Juicier dividends than McDonald's?
The smartest investors know that dividend stocks simply crush their non-dividend-paying counterparts over the long term. That's beyond dispute. They also know that a well-constructed dividend portfolio creates wealth steadily, while still allowing you to sleep like a baby. Knowing how valuable such a portfolio might be, 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.

The article McDonald's Is Running Out of Excuses originally appeared on Fool.com.

Nickey Friedman has no position in any stocks mentioned. The Motley Fool recommends McDonald's. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Copyright © 1995 - 2014 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

 

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Lululemon Will Shine Again

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There is no denying the fact that lululemon athletica continues to disappoint, even frustrate, investors as shares continue sinking to fresh 52-week lows. But investors who have already thrown in the towel and deemed Lululemon's future weak and unattractive are wrong.  

While investors could reasonably assume board turmoil and management scuffles will persist and put downward pressure on shares in the short term, the current share price does not reflect the long-term brand value or earnings potential.

Fixing inventory issues
Despite a sub-optimal product assortment, Lululemon still generated an attractive 18.1% operating margin in the first quarter. Lululemon's operating margin is even more attractive when the company is operating in an increasingly competitive environment.


Lululemon isn't sitting back and allowing competitors to swoop in and take market share. However, there are legitimate concerns that Lululemon is losing its "premium" reputation. Lululemon is preparing to implement a new process and systems solutions in 2015 to improve stores' seasonal and core product mix.

During the first quarter, inventory grew 23.4% to $177.4 million, outpacing sales growth by a sizable amount for the second straight quarter. The inventory build relates to a higher composition of core inventory, which the company expects will be rebalanced and adjusted for year-end 2014.

Lululemon's CEO Laurent Potdevin commented during the company's first-quarter conference call that the new process will only see a measurable impact in the second quarter of 2015. Make no mistake about it: Lululemon is taking the right steps today to fix its troubled inventory issues for the long term.

Lululemon's outgoing CFO John Currie explained to analysts during the first- quarter conference call that the company is opening up "pop up stores" that are able to clear excess inventory at full price. Speaking of Currie, the 60-year old executive will retire at the end of the fiscal year to fulfill several personal objectives, including spending more time skiing.  

Currie's retirement set for the end of the fiscal year provides plenty of time for the company to search for a replacement and ensure a smooth transition. While management transitions at a turnaround period are not ideal for investors, Currie's comments should erase any doubt that Currie is retiring for any other reason or that he is being forced out of the company.

2017 isn't that far away
Lululemon's international expansion could be seen as its largest catalyst for growth. Throughout 2014 and 2015, Lululemon is focusing on growing its showroom network with store rollouts that will only ramp up in 2016. A year later, the company expects to have a presence of more than 20 stores in both Europe and Asia.

Currently, Lululemon has 24 stores in Australia and New Zealand, nine in Europe, and seven in Asia. With a focused and unique approach, Lululemon's international stores are designed to build customer awareness and recognition before a store even opens, as explained by Potdevin:

So as we think about our international expansion, we're staying very true to our showroom strategy, which is to build awareness in the market and build momentum...and we expect the showroom to have a lifespan of 12-to-18 months before we're ready for store rollout. So we're going to be in the next 18-to-24 months, we're going to really accelerate the showrooms internationally, and then that's going to trigger [the] store rollout 12-to-18 months following that.

Lululemon has guided toward a long-term operating margin returning to the mid-20s as the company successfully expands into new markets internationally.

Make no mistake: the competition is real
Lululemon could face further downside if the competition becomes more intense. Many Lululemon customers demonstrate extreme brand loyalty, and it is unlikely that its competitors such as Under Armour  would be able to convert these customers. However, as Lululemon's recovery isn't expected to occur until 2015, the company may face issues attracting new customers.

Lululemon will be fighting against Under Armour's already existing $500 million sales in the women's category, which the company expects to double to $1 billion by 2016.

In order to achieve its growth prospects, Under Armour has successfully set up floor space at retailers such as Dick's Sporting Goods and Macy's. Lululemon selling its products at retailers would likely dilute the brand image, leading to further declines until its anticipated recovery in 2015.

In the meantime, Under Armour will gladly continue operating via the wholesale route (in addition to operating its own flagship stores, such as its 20,000 square foot Brand House in Soho, New York) and taking a page out of Lululemon's playbook by hosting brand awareness and demonstration events.

An Under Armour sponsored free workshop at Macy's iconic and flagship location in Herald Square, New York.  
Source: Missfitznyc

Foolish take
Investors may already be factoring in Under Armour's growth story, as shares are trading at a hefty P/E just north of 77. On the other hand, it's possible investors are not giving Lululemon's turnaround and growth prospects enough credit, as shares are trading at a P/E of barely 20, which is also lower than industry leader Nike's P/E of 25. Lululemon investors should remain hopeful but cautious and expect a bumpy road ahead with a promising future.

Leaked: Apple's next smart device (warning, it may shock you)
Apple recently recruited a secret-development "dream team" to guarantee its newest smart device was kept hidden from the public for as long as possible. But the secret is out, and some early viewers are claiming its everyday impact could trump the iPod, iPhone, and the iPad. In fact, ABI Research predicts 485 million of this type of device will be sold per year. But one small company makes Apple's gadget possible. And its stock price has nearly unlimited room to run for early-in-the-know investors. To be one of them, and see Apple's newest smart gizmo, just click here!

The article Lululemon Will Shine Again originally appeared on Fool.com.

Jayson Derrick has no position in any stocks mentioned. The Motley Fool recommends Lululemon Athletica and Under Armour. The Motley Fool owns shares of Under Armour. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Copyright © 1995 - 2014 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

 

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Takeover Tango: Healthcare's Best Dance Partner Is...

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Buying a drug company ain't what it used to be.

Once upon a time, a larger pharmaceutical firm would make an offer for a smaller company. Said smaller drugmaker would swoon at the immediate gains for its shareholders. The deal would go through -- and everyone lived happily ever after. At least, that's how the story frequently unfolded.

Now, though, parties involved in a potential merger or acquisition are likely to perform a delicate dance back and forth for all the world to see. Sometimes, this results in a match made in heaven. And sometimes one company is left standing alone on the dance floor. AbbVie and Valeant Pharmaceuticals are the latest waiting to see how their drugmaker deal dances will end.


The fleeing foxtrot
AbbVie recently discovered that the third time isn't always the charm. Shire Plc rebuffed last week's acquisition offer by AbbVie -- just as it did two earlier attempts. The Dublin, Ireland-based firm thinks remaining solo will provide shareholders more value.

In an interview with The Wall Street Journal on Monday, Shire CEO Flemming Ornskov predicted that revenue will double by 2020 to $10 billion. Ornskov says that 30% of that revenue will stem from drugs currently in Shire's pipeline. If he's right, the $46.5 billion offer by AbbVie isn't high enough.

That kind of growth surely interests AbbVie, which receives the bulk of its sales from a single drug: Humira. Perhaps just as enticing, though, is the prospect of reducing its corporate taxes by taking advantage of Shire's Irish domicile. It takes two to tango, though. At this point, it looks like AbbVie's bid will have to increase significantly for Shire to be wooed successfully. 

The slideshow salsa
Allergan stands out as another reluctant dance partner. Valeant mounted a hostile acquisition attempt last week. Of course, this story is pretty well-known by now, as Valeant and investor William Ackman's Pershing Square Capital Management combining in April to make a play for Allergan.

This pharmaceutical promenade featured a slideshow battle. A couple of weeks ago, Allergan released a presentation highlighting the reasons why a deal with Valeant didn't make sense. One key argument contrasted the "strong, long-term organic growth" of Allergan with the "anemic growth" powered largely by "unsustainable price increases." 

Valeant fired back on Monday with a point-by-point rebuttal of Allergan's slideshow. In response to the allegation of anemic growth, Valeant stated that it has "averaged ~7% pro forma organic growth since 2010" with 13 of its top 15 products experiencing growth -- nine of which are seeing volume growth.  

Judging the dancers
Are these companies ready to keep this going -- or will they just trip? It's not difficult to see why AbbVie and Valeant have their sights set on Shire and Allergan, respectively. But the best dancer award out of these four organizations should go to Shire.

AbbVie's offer for Shire helped jump-start the Irish pharmaceutical firm's stock. Shire's decision to resist the temptation to sell appears to be the right move. Even if projections of a doubling of sales by 2020 proves overly optimistic, shareholders should be able to fetch a better price in the future than AbbVie's previous offers. The truth is that AbbVie needs Shire more than Shire needs AbbVie.

Rumors have also floated that Allergan could make a bid for Shire to thwart a hostile takeover by Valeant. While such an offer hasn't materialized yet, it underscores the attractiveness of the Irish drugmaker. Who will end up scooping up Shire, if anyone, remains to be seen. I don't think we've seen the high mark for the stock yet, though. For now, the dance goes on. 

Dividend stocks that will have you dancing
The smartest investors know that dividend stocks simply crush their non-dividend paying counterparts over the long term. That's beyond dispute. They also know that a well-constructed dividend portfolio creates wealth steadily, while still allowing you to sleep like a baby. Knowing how valuable such a portfolio might be, 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.

 

The article Takeover Tango: Healthcare's Best Dance Partner Is... originally appeared on Fool.com.

Keith Speights has no position in any stocks mentioned. The Motley Fool recommends Valeant Pharmaceuticals. The Motley Fool owns shares of Valeant Pharmaceuticals. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Copyright © 1995 - 2014 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

 

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Why Advanced Micro Devices Should Outperform Intel

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Assuming PC sales rebound, is Advanced Micro Devices or Intel a better buy? The answer is AMD, and here's why.

What's good for Intel and Micron is also good for AMD
For the second quarter, Intel is projecting revenue of $13.7 billion, which is about $700 million higher than the previous midrange guidance of $13 billion. In addition, it also expects some revenue growth for the full year, up from a prior estimate for flat sales. This is a sign that PC sales are on the rebound. 

But Intel is not the only sign that PC sales are coming back. Bank of America Merrill Lynch upgraded Micron Technologies from an underperform to a buy rating, with a price target of $40 a share from a previous $22. One of the reason for this aggressive upgrade was "a favorable chip pricing environment as a result of relatively tight supply." 


So, if the general climate is good for Intel and Micron, it should also be good for AMD.

AMD's revenue has been going up despite lower PC sales
Lower PC sales aside, AMD's revenue has been going up mostly because it is the core technology provider behind Nintendo's Wii U, Sony's PS4, and Microsoft's Xbox One.

And if AMD's CFO Devinder Kumar is correct -- at a recent BoA Merrill Lynch technology conference, he said console life cycles "are probably going to be shorter" -- that might mean higher churning in the console space and more business for AMD longer term.

AMD has many other things going for it that should sustain its current revenue trajectory. For example, Mark Papermaster, AMD's chief technology officer, said that AMD aims at a 25-fold improvement in the energy-efficiency of its products by 2020, using a series of design techniques that go beyond those that have historically come from shrinking transistors on chips.

AMD isn't aiming just at reducing power consumption, but also boosting computing performance at the same time. That combination could help drive AMD's chips, which are now mostly in laptop and desktop PCs, into more tablets and smartphones. Sam Naffziger, an AMD researcher, sees about a five-fold increase in computing capability for the typical laptop while drawing about one watt of power, down from five watts or so today. That means typical battery life would go far beyond the current typical maximum of eight to 10 hours, to several days, claims Naffziger. 

AMD's leveraged balance sheet has been holding the stock back
One of the problems with AMD is that it is highly leveraged, meaning it has a very high debt-to-equity ratio -- currently standing at 4.18. On the plus side, however, most of this debt is long term, and the company does not face any liquidity problems. The quick ratio currently stands at 2, which is very healthy.

AMD Debt to Equity Ratio (Quarterly) Chart

AMD Debt to Equity Ratio (Quarterly) data by YCharts.

So, how will leverage help AMD perform better?
Let's say an omnipotent being tells you the S&P 500 index will climb to 5,000 in the next six months. Obviously, if you buy an ETF that follows the index, you will do good, but why not do better? If you know for a fact that the Index will go that high, why not buy the most leveraged ETF you can find? In fact, why not buy the most leveraged ETF you can find -- and double up on margin also? This is basically the reason AMD will perform better than Intel if PC sales come back.

If PC sales come back and AMD's revenues continue to rise (as has been the case over the past several quarters), that will help the company became profitable and lower its debt. If that happens, then it should perform better, because AMD is trading at depressed levels because of its high debt load. 

AMD PS Ratio (TTM) data by YCharts.

One way to chart just at how depressed AMD is trading compared to Intel is the price-to-sales ratio.  As you can see in the above chart, Intel's price-to-sales ratio stands at 2.9, where AMD's is 0.55.

If AMD can fix its balance sheets issues over the next several years, then the market should view the stock more favorably, and AMD should trade more along the lines of Intel relative to its revenue (if it lowers its debt, that is).

So, how much can AMD outperform Intel, assuming PC sales will continue to improve, and assuming AMD can lower its debt? In theory, if AMD trades similar to Intel on a price-to-sales ratio basis in the future, it has to increase fivefold to trade on par with Intel. So if PC sales come back, think of AMD as an option that never expires in the PC space.

Leaked: Apple's next smart device (warning, it may shock you)
Apple recently recruited a secret-development "dream team" to guarantee its newest smart device was kept hidden from the public for as long as possible. But the secret is out, and some early viewers are claiming its everyday impact could trump the iPod, iPhone, and the iPad. In fact, ABI Research predicts 485 million of this type of device will be sold per year. But one small company makes Apple's gadget possible. And its stock price has nearly unlimited room to run for early-in-the-know investors. To be one of them, and see Apple's newest smart gizmo, just click here!

The article Why Advanced Micro Devices Should Outperform Intel originally appeared on Fool.com.

George Kesarios has no position in any stocks mentioned. The Motley Fool recommends Intel. The Motley Fool owns shares of Intel and Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Copyright © 1995 - 2014 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

 

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