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Is Ford Losing Ground to Imports?

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Ford's Fusion has made big inroads against import brands, but now the imports appear to be fighting back. Photo credit: Ford Motor.

Ford has made nice gains in the U.S. market (and elsewhere) as its much-improved product line has rolled out over the last few years. This year has been no exception: Ford's Fusion sedan has made big inroads into the market share of Toyota's Camry -- so much so that Ford has added a second assembly line for the Fusion to meet strong demand.


But even as Ford has been posting gains, exchange-rate shifts have given Japan's automakers an advantage -- and some analysts are predicting that Honda and Nissan will post big sales gains for August, while Ford falls behind. In this video, Fool contributor John Rosevear looks at the latest estimates -- and offers his view on how Ford is likely to respond.

Ford's success so far has nicely rewarded its investors. But for Ford's stock to really soar, a few more critical things need to fall into place. In The Motley Fool's special free report entitled, "5 Secrets to Ford's Future," we outline the key factors every Ford investor needs to watch. Just click here now for your free report.

The article Is Ford Losing Ground to Imports? originally appeared on Fool.com.

Fool contributor John Rosevear owns shares of Ford and General Motors. You can connect with him on Twitter at @jrosevear. The Motley Fool recommends Ford and General Motors and owns shares of Ford. Try any of our Foolish newsletter services free for 30 days. We Fools don't 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 - 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

 

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GM Falls Behind Japan in Customer Satisfaction

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Despite strong new models like the Impala sedan, a new survey found that GM's Chevrolet brand still trails most rivals in customer satisfaction. Photo credit: General Motors.

A new survey released last week showed that the top Japanese automakers lead General Motors , Ford , and Chrysler in customer satisfaction -- and despite Detroit's recent quality gains, the gap may be widening.


What's going on, and is this something that could derail GM's turnaround? In this video, Fool contributor John Rosevear digs into the survey and offers his view on the real reason GM still lags Toyota and Honda in customer satisfaction.

GM still has some work to do, but Ford's turnaround has already rewarded shareholders. But for Ford's stock to really soar, a few more critical things need to fall into place. In The Motley Fool's special free report titled "5 Secrets to Ford's Future" we outline the key factors every Ford investor needs to watch. Just click here now for your free report.

The article GM Falls Behind Japan in Customer Satisfaction originally appeared on Fool.com.

Fool contributor John Rosevear owns shares of Ford and General Motors. You can connect with him on Twitter at @jrosevear. The Motley Fool recommends Ford and General Motors and owns shares of Ford. Try any of our Foolish newsletter services free for 30 days. We Fools don't 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 - 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

 

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Toyota Gets Aggressive With Its New Corolla

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Toyota's new Corolla, shown here in sporty "S" trim, is much more sharply styled than its predecessor. Toyota announced aggressive pricing for the new Corolla this past week. Photo credit: Toyota

Toyota's Corolla is one of the world's best-selling cars, and the company hopes to build on that success with this all-new version, which will be at U.S. dealers soon. The company announced U.S. pricing for its mainstay compact this past week, and to no surprise, Toyota appears determined to offer good value -- and to undercut the Corolla's biggest global rival, Ford's Focus.


Will the new Corolla help Toyota regain lost ground in the U.S.? In this video, Fool contributor John Rosevear looks at how the new car stacks up -- and gives his thoughts on whether it will succeed in what has become a fiercely competitive market segment.

Ford shareholders have already been rewarded as the Blue Oval has gained ground on Toyota this year. But for Ford's stock to really soar, a few more critical things need to fall into place. In The Motley Fool's special free report entitled, "5 Secrets to Ford's Future" we outline the key factors every Ford investor needs to watch. Just click here now for your free report.

The article Toyota Gets Aggressive With Its New Corolla originally appeared on Fool.com.

Fool contributor John Rosevear owns shares of Ford. You can connect with him on Twitter at @jrosevear . The Motley Fool recommends and owns shares of Ford. Try any of our Foolish newsletter services free for 30 days. We Fools don't 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 - 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

 

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Why Navistar Earnings Could Look Scary

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Navistar will release its quarterly report on Wednesday, and investors don't expect good news from the trucking giant. Yet even if Navistar earnings continue to look as bad as they have in recent quarters, relief might not be too far away for beleaguered investors.

Navistar is the company behind a wide variety of industrial vehicles, including trucks for both commercial and military use as well as school buses and recreational vehicles. It also produces diesel engines for vehicles. Yet troubles in meeting regulatory guidelines has led to some huge disruptions in Navistar's business, and even with a solution in place, the company could continue to struggle for a while longer. Let's take an early look at what's been happening with Navistar over the past quarter and what we're likely to see in its report.

Stats on Navistar

Analyst EPS Estimate

($1.32)

Year-Ago EPS

($0.20)

Revenue Estimate

$2.92 billion

Change From Year-Ago Revenue

(11.9%)

Earnings Beats in Past 4 Quarters

2


Source: Yahoo! Finance.

Will Navistar earnings ever go positive?
In recent months, analysts have gotten a lot more pessimistic about Navistar earnings prospects, nearly tripling their loss estimates both for the July quarter and for the full fiscal year. The stock hasn't done all that badly, though, falling just 5% since late May.

Navistar has been under pressure for a long time. Not only did the SEC have to investigate the company last year over alleged poor disclosure of its weak financial condition, but Navistar had to resort to making a deal with rival Cummins in order to obtain engine technology that would allow it to comply with EPA emissions standards. With new regulations coming in future years, Navistar faces the ongoing challenge of keeping up with higher standards.

Navistar hasn't been entirely locked out of the trucking market, though. The company won several contracts from the Defense Department in support of its military vehicles, including its MaxxPro mine-resistant, ambush-protected armored vehicle. On the commercial front, Navistar won part of an order in May from trucking company Con-Way , which purchased 200 ProStar vehicles from the company. Still, the fact that rival Paccar got an even bigger portion of the Con-Way order is just one more sign of the ongoing struggles Navistar faces.

Still, the big challenge Navistar faces is the pace at which its rivals have moved forward. Cummins in particular has worked on pioneering natural-gas-fired engines, which could help the trucking industry take advantage of lower nat-gas prices to fuel a new revolution in freight transportation. Westport Innovations has also worked hard, both in its joint venture with Cummins and independently, to support natural-gas engines, an area in which Navistar badly lags.

In the Navistar earnings report, watch for guidance on how well the company is doing at figuring out a long-range solution to its problems. With activist investor Carl Icahn on board, the potential for dramatic changes is ever-present and could provide the only solution to Navistar's long-term woes.

One home run investing opportunity has been slipping under Wall Street's radar for months. But it won't stay hidden much longer. One little-known stock holds the key to the explosive profit power of the coming "no choice fuel revolution." Luckily, there's still time for you to get on board if you act quickly. All the details are inside an exclusive report from The Motley Fool. Click here for the full story!

Click here to add Navistar to My Watchlist, which can find all of our Foolish analysis on it and all your other stocks.

The article Why Navistar Earnings Could Look Scary originally appeared on Fool.com.

Fool contributor Dan Caplinger has no position in any stocks mentioned. You can follow him on Twitter: @DanCaplinger. The Motley Fool recommends and owns shares of Cummins, Paccar, and Westport Innovations. Try any of our Foolish newsletter services free for 30 days. We Fools don't 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 - 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

 

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LINN Energy and LinnCo Announce September Distribution

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Oil and gas MLP LINN Energy announced yesterday its monthly distribution of $0.2416 per unit, the same rate it's paid for the past two months after switching to a monthly payout scheme. The distribution is payable Sept. 13 to unitholders of record at the close of business on Sept. 10.

The board of directors also announced that LinnCo declared a monthly dividend of $0.2416 per share payable on Sept. 16 to holders of record on Sept. 10. LinnCo has no operations or assets and was created for the sole purpose of owning shares of LINN Energy so that it can receive distributions from the MLP and convert them into regular dividends.

The distribution and dividend payments both equate to a $2.90-per-unit and share annual payout, respectively, yielding 12% for LINN Energy unitholders based on the closing price on Aug. 30, and yielding 10.5% for LinnCo shareholders.


LINE Dividend Chart

LINE Dividend data by YCharts

The article LINN Energy and LinnCo Announce September Distribution originally appeared on Fool.com.

Fool contributor Rich Duprey 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 don't 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 - 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

 

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1 Country That Could Change the LNG Game

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One of the reasons LNG is such a lucrative investment is the large import demand from the Asia-Pacific region. The biggest players on the demand side, of course, are China and India. Both countries imported LNG at a rate of about 1.9 billion cubic per day in 2012. One distinct difference between the two countries, though, is that BP (NYSE: BP) just announced a major gas find off the coast of India. So far, BP has found enough gas to cut Indian gas imports by 33%, and recent pricing changes from the government have made several other prospective fields economically viable. 

These gas finds could potentially alter the LNG demand picture, and it could affect the decision-making process for several proposed LNG facilities going forward. Tune in to the following video, where fool.com contributor Tyler Crowe looks at how this could potentially affect LNG investments going forward.

New oil and gas finds around the world are bucking industry norms, which are giving powerful organizations like OPEC headaches. Much of this is happening thanks to technological advancements, and one behind-the-scenes energy giant is at the center of this fundamental change. We have put together a brand-new Motley Fool report that reveals the company we're calling OPEC's Worst Nightmare. Just click here and we'll give you free access to this special report. 


The article 1 Country That Could Change the LNG Game originally appeared on Fool.com.

Fool contributor Tyler Crowe has no position in any stocks mentioned. You can follow him at Fool.com under the handle TMFDirtyBird, on Google +, or on Twitter: @TylerCroweFool. The Motley Fool recommends Chevron. Try any of our Foolish newsletter services free for 30 days. We Fools don't 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 - 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

 

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Boeing Could Sweep the Field in South Korea

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With each passing day, the future looks brighter for Boeing ... in South Korea.

Last week, Boeing received official confirmation from the Pentagon that it's won the contract to supply 36 AH-64E Apache attack helicopters to the Republic of Korea, beating out rival Textron for the contract. That sale's expected to net Boeing anywhere from $904 million to $1.6 billion, depending on whose figures you believe. (And maybe even more than that. Boeing also won a 30-Apache sale to Taiwan earlier this month, and a Congressional research report estimated that the smaller Taiwanese contract could ultimately generate as much as $2.5 billion for Boeing.)


Apache helicopters in flight. Source: Boeing.


Boeing also appears to have grabbed the pole position for an even bigger South Korean defense contract. Dubbed "F-X III," this is a contract to continue modernizing the Asian nation's aging air force of F-4 Phantoms with new, stealth-technology fighter jets. According to published reports, South Korea is holding tight to its intention to pay no more than $7.4 billion to acquire 60 new fighter jets.

But here's the problem: When the U.S. Defense Security Cooperation Agency notified Congress of the potential sales of both Lockheed Martin and Boeing fighters to South Korea (to clear the way for a speedy sale, in the event either defense contractor wins the contract), DSCA quoted Lockheed's price at "$10.8 billion."

That's way, way out of line with South Korea's stated budget, and it suggests that Lockheed may have priced itself out of this competition. Meanwhile, Boeing lowballed the competition with an estimated price of only $2.4 billion for five dozen of its new F-15SE "Silent Eagle" fighter jets.


Boeing's F-15SE. Source: Boeing Korea.

A couple of weeks ago, South Korea's Defense Acquisition Program Administration confirmed that of the three companies bidding for FX-III, at least one came in below the $7.4 billion cutoff. Knowing what we know about Boeing's offer -- it's pretty much a given that that company's name was "Boeing."

Side note: Sources say that Eurofighter still has hopes it will steal away the contract, stressing that South Korean pilots have not yet had a chance to test-fly either the F-35 or F-15SE, but have flown the Typhoon. However, the Typhoon is not a true stealth fighter like the F-35. And at a price tag estimated to range from $6.1 billion to $8.1 billion for five dozen planes, it appears to cost significantly more than the F-15SE.

Foolish final thought
One final factor in Boeing's favor: In the first two rounds of "FX" fighter-jet buying that have already taken place, Boeing already swept the field, winning contracts to sell the South Koreans a total of 60 F-16K fighter jets. So we already know that the South Koreans like one flavor of the F-15. Odds are, given the opportunity to buy an even more advanced version, and at a price well under-budget, they'll jump at the chance.

A decision is expected next month. Stay tuned.

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The article Boeing Could Sweep the Field in South Korea originally appeared on Fool.com.

Fool contributor Rich Smith has no position in any stocks mentioned. The Motley Fool owns shares of Lockheed Martin and Textron. Try any of our Foolish newsletter services free for 30 days. We Fools don't 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 - 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

 

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Solar Financing Options Opening Up

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The solar lease has become a huge driver of revenue from solar installers such as SolarCity and SunPower . But equity financing that takes advantage of tax credits is becoming a limiting factor to industry growth. One alternative is the solar loan, something SunPower recently unleashed in Australia. Solar analyst Travis Hoium covers why this and other financing options are so important to solar growth. 

Adapting to energy changes
The energy sector is changing rapidly, and investors need to adjust. To find out which three companies are spreading their wings in a growing part of energy, check out the special free report "3 Stocks for the American Energy Bonanza." Don't miss out on this timely opportunity; click here to access your report -- it's absolutely free. 

The article Solar Financing Options Opening Up originally appeared on Fool.com.

Fool contributor Travis Hoium manages an account that owns shares of SunPower. He also owns shares of SunPower and has long January 2015 $5, $7, $15, $25, and $40 calls on SunPower. 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 don't 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 - 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

 

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The Coming Obamacare "Death Spiral"?

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Will the Affordable Care Act, a.k.a. Obamacare, begin a "death spiral" in 2014? The scary-sounding term "death spiral" is used to describe a scenario where individuals with higher health expenses flock to an insurance plan, resulting in more costly premiums that dissuade healthier individuals from enrolling. With fewer healthy enrollees to subsidize the medical costs of the less-healthy members, the cycle continues until few can afford the insurance.

A recent study says that Obamacare appears poised to experience this "death spiral" effect. How likely is this to actually happen? The answers depend on whom you ask.

Source: Wikimedia Commons

Spiraling away
The Obama administration hopes to enroll 7 million Americans in health insurance exchanges by the end of next March. Administration officials say for Obamacare to succeed, 2.7 million of these enrollees need to come from the relatively healthy demographic group of young adults between ages 18 and 30. Research conducted by David Hogberg, health policy analyst with the National Center for Public Policy Research, however, casts doubt on whether that many young Americans will actually sign up.


Hogberg found that around 4.3 million young adults ages 18 through 30 are likely to be eligible for plans on the Obamacare exchanges. 2.9 million of these individuals would be financially better off by at least $500 in 2014. Nearly 2.4 million would have $1,000 more in their pockets by forgoing health insurance. And that's assuming the cheapest Obamacare plans with applicable federal subsidies included.

Another study by the Commonwealth Fund found that the most important reason young adults currently don't buy health insurance is affordability. This survey also reported that only 27% of respondents between ages 19 and 27 were aware of Obamacare exchanges.

If the majority of those with financial incentives to remain uninsured don't purchase health insurance (because they're unaware of the option and/or the perceived economic impact is negative), Obamacare will fall well short of the 2.7 million young adults that the White House says are needed. Insurers participating in the exchanges would then almost certainly raise premiums for the following year -- which could make buying health insurance even more unappealing for young adults despite higher penalties in 2015. The "death spiral" could easily kick into gear if this happens.

More spin than spiral
On the other hand, that Commonwealth Fund survey also said that the data suggest that young adults "will eventually enroll in large numbers" as they become more aware of Obamacare's benefits. Most younger individuals do actually want to have health insurance coverage, according to the survey.

These results could mean that the future prognosis looks better for Obamacare even if too few young adults enroll in 2014. The "death spiral" scenario requires a progressively worsening state of affairs. However, if increased awareness and higher financial penalties in the years after 2014 significantly motivate young adults to buy insurance, the worst-case situation might not materialize -- even if the negative predictions about enrollment of young Americans next year come true.

All of this might not matter, anyway, assuming that a 2012 study conducted by RAND is right. The study focused on the impact of eliminating the individual mandate altogether. According to RAND researchers, insurance premiums would only rise by 2.4% for most individuals even without the financial penalties for buying insurance, although significantly fewer people would gain coverage. Such a small increase, if correct, wouldn't lead to the spiraling deterioration expected by some.

Wait and see
Which view is correct? Some big players are taking a wait-and-see stance.

UnitedHealth Group , the nation's largest health insurer, isn't jumping in head-first. Stephen Hemsley, UnitedHealth's CEO, expressed concerns that the first enrollees in the Obamacare exchanges could be the most costly. Because of this possibility, the insurer is participating in only 12 exchanges in the first year. Earlier this year, Hemsley indicated that UnitedHealth could market its products in as many as 25 exchanges.

Aetna , like UnitedHealth and Cigna , opted out of participating in California, one of the largest individual health insurance markets. The company, which is the nation's third-largest insurer in terms of enrollment, is participating in 14 Obamacare exchanges. Cigna has indicated that it will participate in a grand total of five exchanges.

WellPoint stands out among its peers with a different take. The country's second-largest insurer plans to participate in California and in all of the states where it operates.

In my view, a cautious approach makes a lot of sense. I think the White House is correct that several million young adults must enroll for Obamacare to succeed. I also suspect that many of the country's younger citizens will forgo health insurance for financial reasons even with the subsidies that are available. What I question, though, is whether the issues will be severe enough to result in the ominous "death spiral."

With that in mind, the more tentative insurers could be the better investing choices. UnitedHealth, in particular, seems positioned well. It's taking a cautious stance on the Obamacare exchanges. I also like its fast-growing Optum business segment that provides health management, consulting, technology, and pharmacy benefits management services. This large company seems unlikely to be sucked into a "death spiral" if one happens. And that's still a big "if" at this point. 

Are you concerned about how Obamacare might affect you and your portfolio? The Motley Fool's special report, "Everything You Need to Know About Obamacare," takes a 360-degree look at how the law may impact your taxes, health insurance, and investments. Click here to grab your free copy today.

The article The Coming Obamacare "Death Spiral"? originally appeared on Fool.com.

Fool contributor Keith Speights has no position in any stocks mentioned. The Motley Fool recommends UnitedHealth Group and WellPoint and owns shares of WellPoint. Try any of our Foolish newsletter services free for 30 days. We Fools don't 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 - 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

 

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Last Week's Worst Performing Dow Components

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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.

While the past week wasn't the worst in August -- which itself has been the worst month this year for the Dow Jones Industrial Average -- it also wasn't a very good one. The blue-chip index lost 200 points, or 1.33%, over the past five trading days, making it the third worst week of the month. The Dow now sits at its lowest level since late June, at 14,810.

The S&P 500 also had a rough week, down 1.83%, while the Nasdaq was, by a hair, the worst index performer this week, losing 1.87%. This week brought additional fears of a Federal Reserve taper, volatile interest rates, poor housing data, and the possibility of an American military attack in Syria. Combined with an extreme level of uncertainty, these events could continue to put pressure on the markets during the coming trading sessions.


Before we hit the Dow losers, let's look at this week's best-performing component. With an increase of just 0.81%, Home Depot didn't have the kind of performance you'd expect from the index's leading performer, but that's what happens when only two of the Dow's 30 components managed to end the week higher -- the other being Chevron at 0.75% -- as the fears of possible military action in Syria sent oil prices higher.

As for Home Depot, the specialty retailer was one of the worst performers not only two weeks ago, but three weeks ago also. After it lost 7.9% of its value following three straight weeks of declines, investors seem to have realized that at 22 times past earnings and 17 times future expected earnings per share, the stock was once again a buy. What's odd about this week's move higher, though, was that housing data wasn't great and interest rates remained about the same, in an apparent indication that some investors think the company will perform well regardless of what the housing market does in the near term.

The big losers
Alcoa
was the worst-performing Dow component this past week, losing 4.38% of its value. The bulk of that move came on Friday, after an analyst at JPMorgan Chase released a report indicating that the price of aluminum will probably once again fall in the coming months from its current $250 per ton to $100, and that nearly two-thirds of the world's aluminum producers won't be profitable at that price. The analyst believes that the London Metals Exchange will approve the proposed plan to change how metals are priced. Warehouses currently hold large amounts of aluminum that aren't considered part of the current supply, therefore sending prices higher than they should be if the true supply wasn't being hampered.

While this report caused Alcoa to fall 1.41% on Friday, don't be shocked if shares rise in the coming days as investors realize that if two-thirds of the aluminum producers will fail if prices fall, those that survive should be able to thrive in the coming years as true supply and demand begin to balance out.  

Speaking of JPMorgan Chase, the bank ended the week as one of the worst components, losing 3.42% over the past five trading days. On Monday, Dick Rove at Rafferty Capital Markets downgraded the stock to a "hold" from "buy" and cut his price target on the stock from $60 to $57. Rove believes the company is dealing with a few large risks in the coming months as a result of a "government vendetta." He sees profits taking a hit as he envisions revenues declining in the investment-banking and payment-transaction parts of the business while legal fees go up.  

Lastly, shares of Microsoft lost 3.88% this past week as more negative news of the health of the PC business hurt the stock price. On Thursday the IDC reported that emerging markets -- an area that had seen strong PC sales and was helping offset declining sales in Europe and the U.S. -- is now also experiencing a weakening demand for PCs. The report indicated that China and India are seeing increased demand for tablet computers, which is eating into sales of traditional laptops and tower PCs. Another report earlier in the week indicated that Microsoft had cut its expectations for the Xbox One from 7 million units shipped in 2013 to only 6.2 million. That could be a result of the price difference between the Xbox One and the newest Sony PlayStation console, with both devices set to be released for the holiday shopping season.  

The other Dow losers this week:

(For more information on why shares of the other losers fell lower this past week, click on the following links.)

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The article Last Week's Worst Performing Dow Components originally appeared on Fool.com.

Fool contributor Matt Thalman owns shares of Bank of America, Microsoft, JPMorgan Chase, Walt Disney, and Johnson & Johnson. Check back Monday through Friday as Matt explains what caused the Dow's winners and losers of the day, and every Saturday for a weekly recap. Follow Matt on Twitter: @mthalman5513 The Motley Fool recommends 3M, American Express, Bank of America, Chevron, Cisco Systems, Coca-Cola, Home Depot, Intel, Johnson & Johnson, McDonald's, Procter & Gamble, UnitedHealth Group, and Walt Disney and owns shares of Bank of America, General Electric, Intel, IBM, Johnson & Johnson, JPMorgan Chase, McDonald's, Microsoft, and Walt Disney. Try any of our Foolish newsletter services free for 30 days. We Fools don't 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 - 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

 

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Is the Ciena Earnings Rebound for Real?

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Ciena will release its quarterly report on Wednesday, and investors are hoping that the company can make it three quarters in a row of positive adjusted net income. As Ciena earnings have recovered, the stock's valuation has looked a lot more reasonable, even though the company still has a long way to go before it can declare its turnaround complete.

Ciena relies on the health of the market for high-speed networking, with its products helping customers create network infrastructure that optimizes the flow of data and information across their IT platforms. Spending in that area has been muted in recent years, but with signs of a comeback in IT spending, investors are hopeful that the result will be greater sales and profits for Ciena and its peers. Let's take an early look at what's been happening with Ciena over the past quarter and what we're likely to see in its report.

Stats on Ciena

Analyst EPS Estimate

$0.16

Year-Ago EPS

($0.04)

Revenue Estimate

$532.28 million

Change From Year-Ago Revenue

12.3%

Earnings Beats in Past 4 Quarters

2


Source: Yahoo! Finance.

Will Ciena earnings stay positive?
Analysts have gotten much more optimistic in recent months about Ciena earnings, boosting their July quarter projections by a nickel per share and their full fiscal-year estimates by double that amount. The stock has climbed almost 20% just since late May.

Ciena started the quarter off on the right foot, announcing in early June an unexpected adjusted net profit in its April quarter. Even though rivals JDS Uniphase and NeoPhotonics both soared in sympathy, Ciena CEO Gary Smith made the argument that his company should benefit more from a general rise in network-infrastructure building than its peers. Given that neither JDS Uniphase nor NeoPhotonics have reported particularly good results before or since the Ciena report, it's possible that Ciena has found a secret to success that its rivals simply haven't.

Still, Ciena can't count out the competition entirely. Finisar managed to post equally impressive results and posted further gains after guiding preliminary July quarter revenue and earnings estimates higher. The Ethernet side of Finisar's business has provided particular strength to the company overall, potentially pointing the way toward the direction Ciena should follow as well.

The key to Ciena's growth, though, will be the speed with which customers build out new networks. In late July, the Southern Cross Cable Network completed the implementation of Ciena 100G technology in its high-speed broadband network serving Australia and New Zealand. As demand rises around the world, Ciena needs to get its share of similar wins in order to keep growing.

In the Ciena earnings report, watch to see whether the company can keep posting outpaced growth compared to some of its peers. Another positive result could confirm that Ciena's strategy is giving it a competitive advantage over rival networking companies.

Networking moves data, and the amount of data we store every year is growing by a mind-boggling 60% annually! To make sense of this trend and pick out a winner, The Motley Fool has compiled a new report called "The Only Stock You Need to Profit From the NEW Technology Revolution." The report highlights a company that has gained 300% since first recommended by Fool analysts but still has plenty of room left to run. To get instant access to the name of this company transforming the IT industry, click here -- it's free.

Click here to add Ciena to My Watchlist, which can find all of our Foolish analysis on it and all your other stocks.

The article Is the Ciena Earnings Rebound for Real? originally appeared on Fool.com.

Fool contributor Dan Caplinger has no position in any stocks mentioned. You can follow him on Twitter: @DanCaplinger. 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 don't 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.

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What the 5 Worst Comic Book Movies Can Teach You About Investing in Media Stocks

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Even if you aren't a comic book fan, chances are you know some of the genre's biggest bombs. I mean, is there anyone left who isn't aware of Ben Affleck's failure to deliver in Daredevil a decade ago? The stink of that film has some fans protesting Time Warner's choice to have him play Batman in the next big DC Comics movie adaptation, due in July 2015.

We can expect to see more high-profile flameouts now that comic book movies have become common. It's the law of large numbers: More adaptations will bring more successes, and more failures.

How can investors know which studios are developing winning properties, without the aid of a crystal ball? The following slideshow outlines my process and then adds details on some of the genre's biggest losers. As for the winners? Our analysts have four stock ideas we'd like to present to you. Their full report is available free, right now, when you click here.


The 5 Worst Comic Book Movies from The Motley Fool.

The article What the 5 Worst Comic Book Movies Can Teach You About Investing in Media Stocks originally appeared on Fool.com.

Fool contributor Tim Beyers is a member of the  Motley Fool Rule Breakers stock-picking team and the Motley Fool Supernova Odyssey I mission. He owned shares of Walt Disney and Time Warner at the time of publication. Check out Tim's Web home and portfolio holdings, or connect with him on Google+Tumblr, or Twitter, where he goes by @milehighfool. You can also get his insights delivered directly to your RSS reader.The Motley Fool recommends and owns shares of Walt Disney. Try any of our Foolish newsletter services free for 30 days. We Fools don't 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 - 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

 

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Microsoft's Xbox One Is Too Expensive

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Back in June, Sony launched a stealth attack on Microsoft . This week it's been Nintendo attacking from the other side.

When Microsoft hits the market with the Xbox One in November, its $499 price point is going to stand out against Sony's PS4 at $399 and a deluxe Wii U bundle at $299. Fans of the Xbox console franchise will argue that it's worthy of a premium. They'll say the Wii U is for kids. They'll point out that the PS4 was able to undercut Microsoft's machine by leaving out the motion-sensing camera that's included with the Xbox One. That may all be true, but history hasn't been kind to the higher-priced console. That was the PS3's role last round, and Sony's market leadership position in this country suffered as a result of initially pricing its machine at least $100 higher than the competition.

Microsoft probably thought it had this generation in the bag when it announced its pricing and release strategy in kicking off the annual E3 gaming powwow back in June. It couldn't have imagined that Sony would turn heads a day later by unveiling a lower price for its PS4 and taking shots at the Xbox One's restrictive ways.


Everything seemed to be settling down for Mr. Softy, but then Nintendo's desperation kicked in.

Nintendo's move earlier this week -- slashing the price of its deluxe Wii U console by $50 and making it an even better deal by bundling it with a new Zelda game for the Wii U -- wasn't a surprise. The Japanese gaming pioneer cleared only 160,000 systems worldwide in its latest quarter. A price cut was a given, and it had to act before the November PS4 and Xbox One rollouts to hammer home its value proposition.

Nintendo didn't stop there. It also unveiled the 2DS handheld gaming system at $129. Microsoft doesn't have a portable gaming system on the market, but it will be one more item for adult gamers and parents of young gamers to consider as they size up their holiday shopping priorities this year.

And it could still get worse for Microsoft and that iPad-esque price tag. Reports this summer indicate that Amazon.com is going to dive into the console gaming market later this year. The Android-fueled set-top box will naturally stream TV and surf the Web, but it will also lend itself to the Android games that are rapidly evolving from the Angry Birds and Temple Run that you were playing a couple of years ago.

As the Wii U, Xbox One, and PS4 become more than just gaming machines, it's not a shock to see other media companies moving into gaming platforms. Furthermore, anyone who's seen Amazon's aggressive pricing strategy on the Kindle e-reader and Kindle Fire tablet knows that if the company does put out a gaming system in time for this holiday shopping season, it's going to be cheap.

Are you still comfortable at $499, Microsoft? You may want to rethink your pricing. Isn't that what the Surface RT tried to sell for last November?

We saw how well that played out.

That's why they call it the boob tube
Americans reportedly spend nearly 34 hours a week watching television! With TV viewing taking up almost as much time as the average work week, the potential for profits in the space is enormous. The Motley Fool's top experts have created a new free report titled "Will Netflix Own the Future of Television?" The report not only outlines where the future of television is heading, but offers top ideas for how to profit. To get your free report, just click here!

The article Microsoft's Xbox One Is Too Expensive originally appeared on Fool.com.

Longtime Fool contributor Rick Munarriz has no position in any stocks mentioned. The Motley Fool recommends Amazon.com and owns shares of Amazon.com and Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools don't 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.

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How Ducks and Meth Can Make You Millions

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Who needs autumn when the summer TV season is smoking hot? Not so much network TV shows but rather their record-setting cable cousins. AMC Networks has never had so many viewers for Breaking Bad, while Season 4 of Duck Dynasty is pulling in Walking Dead-like numbers.

Two weekends ago, 5.9 million tuned in to watch Breaking Bad's mid-Season 5 premiere. Duck Dynasty's Season 4 opener drew more than double that number: 11.8 million at last count, with 6 million in the coveted 18-to-49 demographic.

Summer's emergence as a legitimate TV-watching season has changed this $2.2 trillion industry, kicking off a fight between entrenched interests such as Comcast and relative newcomers such as Apple. Check out the following slide presentation for more on what this means for you as an investor. And when you're ready for even more insight on how to profit from the new TV business -- including the secret Steve Jobs took to his grave -- click here for a special tell-all video.


The article How Ducks and Meth Can Make You Millions originally appeared on Fool.com.

Fool contributor Tim Beyers is a member of the  Motley Fool Rule Breakers stock-picking team and the Motley Fool Supernova Odyssey I mission. He owned shares of Apple at the time of publication. Eric Bleeker, CFA, didn't own shares in any of the companies mentioned. Check out Tim's Web home and portfolio holdings, or connect with him on Google+Tumblr, or Twitter, where he goes by @milehighfool. You can also get his insights delivered directly to your RSS reader.The Motley Fool recommends AMC Networks and Apple and owns shares of Apple. Try any of our Foolish newsletter services free for 30 days. We Fools don't 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 - 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

 

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3 Things Apple Must Do at Its Sept. 10 iPhone Unveiling

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iPhone 5. Source: Apple.

Apple's new iPhone lineup is rumored to be unveiled at a Sept. 10 Apple media event. With the stock still trading more than $200 below its 52-week high of $700, the Street will be watching the company closely when it unveils its next generation of smartphones. With negative year-over-year comparisons in EPS for the past three quarters in a row, the iPhone 5 failed to help the company boost its bottom line. For this year's iPhone lineup to potentially have a positive impact on the company's bottom line, Apple's going to need features that introduce an element of surprise and differentiation. Particularly, these three announcements at the Sept. 10 event would help.

A lower-cost iPhone
If there's one aspect to the event that could probably make the biggest difference for Apple, it's the iPhone 5C, or Apple's rumored low-cost iPhone. Why? It could help Apple not only boost the bottom line, but also improve the its overall gross profit margin.


How? Apple's iPhone business is the company's most profitable segment. So even if a lower-cost iPhone had lower profit margins, they will probably be higher than the company's overall average gross profit margin. As Morgan Stanley analyst Katy Huberty suggests, the outsized gain in revenue from increased sales in emerging markets could more than offset the phone's lower gross profit margins, boosting the company's overall gross profit margin, too.

Fingerprint sensor
Rumors are also suggesting that Apple may introduce a fingerprint sensor on the new version of its premium phone, the iPhone 5S.

For Apple to generate the usual hype for the phone, it's going to need to go beyond the typical internal upgrades (e.g., a faster processor or a higher-resolution camera). A fingerprint sensor would be an excellent differentiator. In fact, given that the phone is rumored to have a nearly identical form factor, the fingerprint sensor is basically a necessity.

Groundbreaking battery life
For many consumers, a smartphone goes wherever they go -- without exception. That's why battery life is more important than ever. On this front, the iPhone 5 is currently behind several Android competitors. Launching a phone with groundbreaking battery life could be a selling point in and of itself.

According to Apple's specs for the iPhone 5, the phone gets up to eight hours of talk time on 3G and up to eight hours of Internet use on 3G and LTE. That's a far cry from Google's Moto X, which gets 24 hours of battery life on mixed usage.

Apple must improve its battery life on its premium iPhones for it to have a value proposition that can meaningfully move the bottom line.

What features are you looking for?
What new features would persuade you to buy the iPhone 5S? Do you think Apple needs an iPhone 5C to meaningfully boost the boom line in 2013?

Want to learn more about Apple stock?
It's one of the most ambitious projects in Motley Fool history. The Fool's best investment analysts are on a mission to uncover the crucial factors to watch for every publicly traded company, and a report on Apple was just released. These insights are critical to understanding Apple's future, so access your free report by clicking here now.

 

The article 3 Things Apple Must Do at Its Sept. 10 iPhone Unveiling originally appeared on Fool.com.

Fool contributor Daniel Sparks owns shares of Apple. The Motley Fool recommends and owns shares of Apple and Google. Try any of our Foolish newsletter services free for 30 days. We Fools don't 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.

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Defense News Roundup: Will the U.S. Army Go Solar?

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The U.S. military has a reputation as a somewhat secretive organization. But in one respect at least, the Pentagon is one of the most "open" of our government agencies. Every day of the week, rain or shine, the Department of Defense tells U.S. taxpayers what contracts it's issued, to whom, and for how much -- all right out in the open on its website.

So what has the Pentagon been up to this week?


As I mentioned last week, DoD is budgeted to spend about $6.2 billion-a-week on military hardware, infrastructure projects, and supplies in fiscal 2013. (A further $5.6 billion a week goes to pay the salaries and benefits of U.S. servicemen and servicewomen.) Now, perhaps spooked by sequestration, the Pentagon has been spending a lot less than that in recent weeks. But after more than a month of sitting on its wallet, the generals finally decided to go on a spending spree last week.

In five short days, the Pentagon blew right through its weekly budget, awarding nearly $12.9 billion in contracts. Here are a few of the big line-items.

Solar power
More than half the money shelled out last week went to "green energy." On Tuesday, the Pentagon announced a Power Purchase Agreement that earmarked $7 billion to buy solar energy from an array of 22 individual companies. Big utility concerns participating in the contract, including Dominion Power , NRG Energy , and BP are likely to reap the bulk of the "task orders" handed out under this contract, but smaller players such as Element Power, Enel Green Power, and Emerald Infrastructure will have a chance to bid on slices of the pie as well.


Solar farm at Furnace Creek Ranch, Death Valley, Calif. Source: Wikimedia Commons.

Six meters? That's close enough for government work
Raytheon
claimed a $54 million contract on Monday -- certainly smaller than the Power Purchase Agreement, but sizable in its own right. The U.S. Army is paying Raytheon $54 million to supply it with 765 rounds of Excalibur 155mm ammunition to be fired from Army Paladin self-propelled howitzers, and M198 and M777 towed artillery pieces. That's a bit more than $70,000 a shell -- but the Army thinks it's worth it. According to Raytheon, the GPS-guided Excalibur round is 10 times more effective than conventional artillery shells, and accurate to within 6 meters. By way of comparison, a standard "dumb" artillery round will miss its intended target by as much as 267 meters, half the time. And to put this contract in context, the 765 Excalibur rounds the Pentagon contracted for last week is more than the entire number of rounds the Army has fired since the Excalibur came into existence.

Funds for fighters
Another smallish contract (in Pentagon terms), but with outsized significance, came to United Technologies , which won a $70 million contract to begin purchasing "long lead components" necessary to build F135 turbofan engines to power 39 F-35 fighter jets destined for the U.S. Air Force, Navy, and Marines -- and for the air forces of allied nations Italy, the United Kingdom, and Norway as well. As UTC continues with the process of building the engines, expect further funds to be awarded for their manufacture.

Tiny, intelligent, flying bombs
Meanwhile, tiny unmanned aerial vehicle maker AeroVironment continues in its own quest to make supersized fighter jets like the F-35 obsolete. On Wednesday, AeroVironment won a $16 million order to supply an undisclosed number of "Switchblade" UAVs -- cylindrical flying robots, armed with a networked camera to help operators guide them to their targets, and a small bomb that can be detonated once those targets are in range.

Neither AV nor the Army is saying how many Switchblades were ordered last week, but chances are, they won't be enough. In February, an Army official was quoted saying "we need dramatically more" Switchblades. So this could be only the start of the contracts coming AV's way.

Opportunities on the horizon
So much for the contracts that the Pentagon told us about last week. Now, let's move on to a contract that may not yet be incorporated into defense contractors' stock prices.

Late last week -- Friday, in fact -- DefenseNews.com reported that the Taiwanese Defense Ministry has just added $187 million to its budget for 2014/2015, to purchase a pair of used Perry-class frigates from the U.S. Navy. Taiwan already has eight Perrys in its fleet, built locally by Taiwanese shipbuilder China Shipbuilding.


Perry-class frigate USS Carr (FFG 52) off the Liberian coast. Source: Wikimedia Commons.

Conceivably, the two Perrys Taiwan wants to buy could also be built locally. But last year, GlobalSecurity.org reported that the Taiwanese defense minister was negotiating a purchase of decommissioned USN frigates instead (estimating the cost at roughly $239 million). So that seems to be the more likely theory. The vessels are likely to receive retrofitting, presumably at General Dynamics' Bath Iron Works, one of their original builders, as well as upgrades prior to delivery, in particular the addition of AN/SQR-19 Towed Array Sonar systems from Lockheed Martin.

While the details aren't yet all clear, and no notification of a sale has yet been submitted to Congress for approval, just knowing that the contracts are "out there" puts you a step ahead of the folks on Wall Street.

You don't always have to look far to find good investments. Sometimes, profiting from our increasingly global economy can be as easy as investing in your own backyard. The Motley Fool's free report "3 American Companies Set to Dominate the World" shows you how. Click here to get your free copy before it's gone.

The article Defense News Roundup: Will the U.S. Army Go Solar? originally appeared on Fool.com.

Fool contributor Rich Smith has no position in any stocks mentioned. The Motley Fool recommends AeroVironment and Dominion Resources and owns shares of AeroVironment, General Dynamics, Lockheed Martin, and Raytheon. Try any of our Foolish newsletter services free for 30 days. We Fools don't 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 - 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

 

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4 Health-Care Buzzwords You Need to Know

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Change is here, with more on the way, in the world of health care. And with all of this change, there are plenty of new terms and buzzwords floating about. Here are four important ones that you need to know.

1. Accountable care organizations, or ACOs
Accountable Care Organizations, or ACOs, are groups of health-care providers, particularly hospitals, physicians and skilled nursing facilities, who team up to provide coordinated care to patients. The ACO is collectively responsible for quality and cost of the care, with the payments that it receives for providing care linked to both measures.

The concept of ACOs was first discussed publicly in 2006, although some aspects of ACOs are similar to those of health maintenance organizations, or HMOs, which have been around for decades. ACOs gained significant traction with the passage of the Affordable Care Act, commonly referred to as Obamacare, which established ACOs for Medicare. According to health-care consultant group Leavitt Partners, there are now 488 ACOs in the United States. More than half of these are Medicare ACOs.


Patients might not notice much of a difference if the hospital or physicians they go to participate in an ACO. However, there is a lot more interaction between different care settings behind-the-scenes with an ACO. The hope is that ACOs will hold costs down and improve the quality of patient care as a result of the shared financial incentives for health-care providers to work closely with each other.

2. Health information exchanges, or HIEs
One of the tools ACOs can use to share data among participating health-care providers is a health information exchange, or HIE. HIEs aren't just limited to ACOs, though. Many health-care providers can send and receive data via an HIE.

HIEs facilitate the electronic exchange of clinical data between different organizations. These organizations can include hospitals, physicians, skilled nursing facilities, insurers, government agencies, and pretty much any other entity with a legitimate need for accessing health data.

While all of the health information exchange performed by HIEs is invisible to patients, they should see some of the benefits. Providers that link into a fully operational HIE often have access to important clinical information for patients on a near real-time basis that they otherwise either wouldn't have at all or might only see later after care has already been provided.

3. Health insurance exchanges, or HIXes
Health insurance exchanges, or HIXes, sound a lot like health information exchanges, but they're actually quite different. There are two types of HIX -- private exchanges and public exchanges established as part of Obamacare.

With private health insurance exchanges, employers contract with the exchange, which then allows employees to select from multiple plan offerings. A private HIX supports the migration of employers to a defined contribution model, where they contribute fixed amounts to accounts that employees can use to purchase health insurance.

Obamacare established public health insurance exchanges that are scheduled to begin operation on Oct. 1. These exchanges, also called health insurance marketplaces, allow individuals to enroll for health insurance online. Sixteen states plus the District of Columbia will operate their own exchanges, while all other states will use a federally operated exchange. Most individuals not covered by employers or government programs will need to purchase insurance through one of these exchanges or potentially pay a tax penalty.   

4. Consumer-driven health plans, or CDHPs
Consumer-driven health plans are insurance plans in which members pay for routine medical expenses from contributions made to a savings account, while a high-deductible insurance policy covers more expensive medical services. Either employers or individuals may contribute to the CDHP accounts.

Individuals become much more involved in the decision-making process about their health care with CDHPs. Because initial costs are paid out of the savings accounts, there are financial incentives for individuals to seek the most cost-effective treatment options.

Some private health insurance exchanges include insurance that falls under the CDHP umbrella. Implementation of the Obamacare individual mandate for buying health insurance could leave more Americans without employer insurance coverage who have incomes too high to qualify for federal subsidies looking to CDHPs as an alternative.

Buzzing
Plenty of companies are abuzz in profiting from the trends behind these buzzwords. How could investors potentially participate? The major health insurers are the first to come to mind.

UnitedHealth Group , for example, is involved in all four buzzword trends. The big insurer announced in July that it plans to double its ACO contracts over the next five years. UnitedHealth acquired Axolotl in 2010, a major provider of HIE services. It also plans to participate in a dozen Obamacare health insurance exchanges and some private exchanges. UnitedHealth offers several CDHP products as well.

WellPoint also has jumped into the ACO and CDHP markets. The nation's second-largest insurer invested in HIE provider Availity in 2009. WellPoint is participating in Obamacare exchanges in all of the states where it operates and bought a large stake in a private HIX in 2011.

One possible ACO play is large hospital chain Tenet Healthcare . Tenet announced plans to buy smaller Vanguard Health Systems earlier this year for $4.3 billion. Some saw this move as a bet on the ultimate success of the ACO model because of Vanguard's involvement in the federal government's Pioneer ACO program.

As for HIX, eHealth stands to be a prime beneficiary if the Obamacare exchanges do well. The company recently won a contract with the federal government to support enrollment in the exchanges through its website. If eHealth manages to gain additional business with some of the state-run exchanges, it could emerge as an even bigger winner.

Understanding the buzzwords that could paint the picture of the future of health care makes sense. Gaining insight on what's happening in health care now makes even more sense. Obamacare is rewriting the rules for the health-care industry, and in the process of doing so, it's creating massive opportunities for investors to get ridiculously rich. How? By investing in a handful of specific health-care stocks. In this free report, our analysts walk you through these opportunities and the companies that are positioned to exploit them. The informational edge contained in it is invaluabl, but can only be exploited profitably while the rest of the market remains in the dark. To access this free report instantly, simply click here now.

The article 4 Health-Care Buzzwords You Need to Know originally appeared on Fool.com.

Fool contributor Keith Speights has no position in any stocks mentioned. The Motley Fool recommends UnitedHealth Group and WellPoint and owns shares of WellPoint. Try any of our Foolish newsletter services free for 30 days. We Fools don't 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.

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Natural Gas Versus Diesel: the Truth About Fuel Prices

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The latest fears of a U.S.-led military intervention into Syria will very likely push oil prices higher, especially if Fool contributor Matthew DiLallo's concerns become a reality:

Some have suggested that the price of oil could rise to over $150 a barrel, which would be above the all-time high it set at the dawn of the financial crisis. As it did then, an oil price spike of that magnitude would send shock waves through the still fragile, global economy.

And while this could happen, the key is that oil will remain volatile. Natural gas prices, however, are much more local, and while volatile, has less impact on the price at the pump. Factor in the much lower cost of natural gas-per-gallon equivalent, and there's a strong incentive for shippers to move away from diesel, and toward natural gas. Are there investing opportunities to be had? Let's take a look.

The value of predictability and stability
Below are the spot prices of both crude oil and natural gas from the beginning of 1997:


Brent Crude Oil Spot Price Chart

Brent Crude Oil Spot Price data by YCharts

Both fuels have large amounts of volatility. However, natural gas' volatility is a product of domestic conditions, while oil prices are based on the international market. Domestic natural gas price fluctuation is a product of supply and demand, where oil prices have been, in many cases, driven by political factors, specifically OPEC's control over a significant amount of the world's supply. And while oil has continued to trend higher over the past 16 years, natural gas is actually cheaper today than it was in 1997. 

Natural gas' secret weapon: It doesn't matter as much

Natural gas and oil prices are not the end game for what you pay at the pump. Natural gas' commodity price is a much smaller portion of the final retail price as compared to oil, by a factor of about half. Andrew Littlefair, CEO of Clean Energy Fuels described this during the most recent earnings call. Below is a slightly paraphrased version:

You get 7 gallons per Mcf, so your commodity per-gallon is about 47 cents as we sit here today ... You have to haul it, store it, so I've always said to add about a dollar, a dollar ten ... so that puts you at the nozzle tip at $1.50, $1.60, and you're competing with diesel at $4.00. So there's a lot of room in there to share with the customer, and some room for us. You just have to do the math.

And the math makes it pretty clear why natural gas is so compelling. The cost of the commodity itself could double, and the cost "at the pump" would still be just over $2.00 per gallon. Add in 30% margin, and $2.60 per gallon competes pretty strongly with $4.00 diesel. As Matthew DiLallo mentions in the article linked at the top, gas and diesel prices are about 2/3 based on oil, compared to about 1/3 of the price for natural gas. 

America's Natural Gas Highway (ANGH) and first mover advantage
Clean Energy Fuels has invested heavily in making this cost benefit usable for the trucking industry, with nearly 80 of its more than 150 planned ANGH stations built and ready to open, through its partnership with privately held Pilot Flying J.  Pilot Flying J operates more than 600 truck and rest stops in North America, and this build out puts Clean Energy Fuels and Pilot Flying J well in front of the competition. 

It wasn't until this past April that any of the major oil companies even made a move to invest in natural gas for trucking, with Royal Dutch Shell  and TravelCenters of America  announcing plans to open "up to 100" LNG stations at existing TA and Petro locations. By the time of the announcement, Clean Energy Fuels had already completed more than 70 stations. 

Final thoughts
If Shell and TravelCenters choose to delay expansion into LNG, it's back to the "chicken or the egg" problem. However, Clean Energy Fuels has invested in the future. If you're looking to grab a winner in the natural gas game, Clean Energy Fuels is the way to go. 

Think the days of $100 oil are gone? Think again. In fact, the market is heading in that direction now. But for investors that are positioned to profit from the return of $100 oil, it can't come soon enough. To help investors get rich off of rising oil prices, our top analysts prepared a free report that reveals three stocks that are bound to soar as oil prices climb higher. To discover the identities of these stocks instantly, access your free report by clicking here now.

 

The article Natural Gas Versus Diesel: the Truth About Fuel Prices originally appeared on Fool.com.

Jason Hall owns shares of Clean Energy Fuels. The Motley Fool recommends Clean Energy Fuels. 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.

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How You Affect Oil Prices More Than Military Conflicts Do

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"No one knows just what a war would bring, of course, or what the effect would be on oil supplies. Some analysts, looking at the bidding in the oil markets so far, say the price could [increase by 65%]."

That was a quote from The New York Times ... on Sept. 28, 1990. The Iraqi invasion of Kuwait and the subsequent threat of NATO intervention had sent oil prices soaring 166% higher than prices only three months prior. Pundits and analysts in the article were pontificating about the possibility of $100 oil, which would have quite possibly created a global economic collapse, considering prices in July 1990 were in the $16 range. 

Yet despite fearmongers' lofty predictions of and Iraq's deliberately causing the largest oil spill of all time, oil prices never went much higher than Sept. 28th's price of $39.56. In fact, even before a single U.S. soldier had crossed into Kuwait on February 1991, the price of oil was already back down to $19.50.  


In hindsight, the fears of a major disruption in oil supply were vastly overestimated, and the greatest enemy of investors, traders, and even everyday consumers ended up being themselves. The United States' Strategic Petroleum Reserve at the time had enough oil to supply the nation with 3.5 million barrels per day for several months, which could have easily quelled any sudden drops in oil imports. Also, a quick historical look would have shown that both Iran and Iraq had been at war for eight years prior, but combined production from these two countries actually increased by 40% over the duration of the conflict.

Even though the public was presented presented with evidence of ample reserves and proof that oil production seemingly was able to survive in the face of the largest threats, it didn't prevent people from succumbing to their primary emotional responses to stock up on commodities like oil in face of a potential military conflict that could disrupt oil supplies. More than anything else, people reacted more to the uncertainty of future events rather than the historical evidence that showed a more tempered approach would be more profitable in the long run. In the words of Goldman Sachs' top economist at the time, Thomas McHale:

"[P]sychologically, people are going to worry about having inventory; they'll pay anything for it. [Then] it will sink in, the fact that there is sufficient physical oil."

Today, we find ourselves in a similar position to the days before the 1991 Gulf War. The alleged use of chemical weapons in Syria has led to international backlash and the possibility of U.S. intervention in the Syrian civil war. The threat of a U.S. strike has raised many questions: What kind of military response should we expect from the United States? Will Iran and Russia, both allies of the Syrian government, respond? What if Israel gets involved? Could this potentially affect the Suez Canal and its Sumed pipeline, one of the most critical oil transit routes in the world? 

These uncertainties have driven the price of Brent crude up by 4% over the past couple of days, even though no intervention has commenced. It appears that the evidence of increased U.S. production, big oil discoveries in ultra-deepwater regions around the world, and a U.S. Strategic Petroleum Reserve currently at almost 700 million barrels is still not enough to keep investors from stocking up in fear of a looming crisis.

What a Fool believes
The lesson to be gained from these situation is, as always, that investors are faced with uncertainty everywhere you look. In the past 100 years of U.S. history, the U.S. has been actively engaged in a military conflict for 43 of them. We have experienced oil embargoes, missile crises, multiple economic collapses, peak oil, and everyday stories that should give us reason to sell non-essential items and stock up on commodities just in case.

The key to being a great investor isn't about timing the market perfectly or trading the hot stocks and dropping the losers; it's having the temperament to put aside our immediate emotional responses to these situations and evaluate then dispassionately. It's not an easy task. We're fighting against the very mechanisms that have helped us as a species survive to this day. Those who have been able to do it over a long period, though, have benefited immensely.

No matter how many times it's said, it always bears repeating: Great investing involves choosing great companies and sticking with them for the long term. We've put together a special report called "3 Stocks That Will Help You Retire Rich," which outlines three companies that are built to last. Let us help you discover these stocks that could help you build long-term wealth and retire well, along with some winning wealth-building strategies that every investor should be aware of. Simply click here, and we'll give you free access to this valuable investor resource.

The article How You Affect Oil Prices More Than Military Conflicts Do originally appeared on Fool.com.

Fool contributor Tyler Crowe covers anything energy for The Motley Fool. You can follow him at Fool.com under the handle TMFDirtyBird, on Google +, or on Twitter: @TylerCroweFool. Try any of our Foolish newsletter services free for 30 days. We Fools don't 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 - 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

 

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5 Stocks Growing Their Dividends by 10% Per Year

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Dividend investors would be wise to focus not just on a stock's current yield, but also on the long-term growth potential of its dividends. That's because strong businesses that consistently raise their dividend payouts reward shareholders with a steadily rising income stream that essentially equates to a raise every year. And, well, who doesn't like a raise?

But there are other reasons to value dividend growth so highly, and they're well supported by research. For instance, a study by C. Thomas Howard  published in Advisor Perspectives found that for every percentage point a stock's yield rises, its annual return increases by 0.22 percentage points if it's a large cap, 0.25 if it's a mid cap, and 0.46 if it's a small cap. Even better, Howard found that dividend-growing stocks outperformed dividend cutters by 10 percentage points per year from 1973 to 2010 and beat both flat- and no-dividend stocks. And the icing on the cake is that Howard showed that this outperformance came with a third less volatility. Higher returns, less volatility-induced stress, and a steadily growing income stream -- what's not to love?

With that in mind, here are five stocks that have grown their dividends by 10% or more over the past year.

Company

1-Year Dividend Growth Rate

IBM

12.9%

CARBO Ceramics

12.1%

Schlumberger

11.9%

Omega Healthcare Investors

10.3%

Globe Specialty Metals

10%


Source: S&P Capital IQ

IBM is a diversified global information technology company that offers an expansive suite of software solutions along with system integration, consulting, and financing services that together help to build a "smarter planet." IBM currently has a four-star ranking on CAPS and offers investors a 2.1% yield.

CARBO Ceramics manufactures resin-coated ceramic and sand proppants primarily used in the hydraulic fracturing of natural gas and oil wells. It also provides fracture simulation software and fracture design, engineering, and consulting services to oil and natural gas companies. CARBO Ceramics sports a four-star rating in CAPS and is yielding 1.4%.

Schlumberger is a leading oilfield services company supplying technology, project management, and information solutions that optimize performance in the oil and gas industry. CAPS participants have awarded it with a top five-star rating, and the company is paying out a 1.5% dividend.

Omega Healthcare Investors is a real estate investment trust that invests in income-producing health-care facilities such as long-term-care nursing homes, assisted-living facilities, and rehabilitation hospitals. Fools have given Omega Healthcare Investors a five-star rating in CAPS, and its stock is yielding a healthy 6.6%.

Globe Specialty Metals produces silicon metal that is used as a raw material for silicone compounds, aluminum, and polysilicon; and silicon-based alloys used as raw materials for steel, automotive components, and ductile iron. In addition, the company processes and supplies specialty metallurgical coal to other silicon-based alloy producers. Globe Specialty Metals has a four-star CAPS rating and offers investors a growing 2.1% dividend.

The Foolish bottom line
Had you invested in these companies a year ago, you would have enjoyed total dividend increases ranging from 10% to nearly 13%. That level of growth would provide a substantial boost to just about any investor's dividend income. But more important to investors today is to identify the companies that will grow their dividends substantially in the years ahead. If you're interested in hearing about some excellent companies that are likely to boost their dividends from this point forward, I'd like to offer you a brand-new free report from The Motley Fool's expert analysts called "Secure Your Future With 9 Rock-Solid Dividend Stocks." Today I invite you to download it at no cost to you. To discover the identities of these companies before the rest of the market catches on, you can access this valuable free report by simply clicking here now.

The article 5 Stocks Growing Their Dividends by 10% Per Year originally appeared on Fool.com.

Joe Tenebruso manages a Real-Money Portfolio for The Motley Fool and is an analyst on the Fool's Stock Advisor and Supernova premium service teams. You can connect with him on Twitter: @Tier1Investor. Joe has no position in any stocks mentioned. The Motley Fool owns shares of IBM. Try any of our Foolish newsletter services free for 30 days. We Fools don't 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 - 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

 

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