Data on Geron's imetelstat presented at American Society of Hematology, or ASH, meeting Monday after the bell show that the drug is capable of sending some myelofibrosis patients into complete remission, something that Incyte's Jakafi -- the only drug approved to treat myelofibrosis -- doesn't do.

And yet shares fell 6.7% Tuesday. What gives?

One graph says it all:

GERN Market Cap data by YCharts.

Do you see that? No, I'm not talking about how the company's value has tripled in three months (although that is certainly a contributor).

Look at all those spikes up and down. This is one volatile stock. Should it be all that surprising that investors sold the news? Even with the drop this month, Geron's value is sitting around the same level it spiked to when the ASH abstract was released.

You'll recall, the abstract said the drug was creating changes at the cellular level, but there was no mention of clinical improvements. It seemed logical that if imetelstat was changing the out-of-control cells, clinical symptoms would improve, but without a mention of it in the abstract and the company not able to say much, investors were left reading between the lines.

The data presented at ASH suggest the drug is indeed improving clinical symptoms in addition to those seen under the microscope. The spleen, for instance, is supposed to sit under the rib cage but becomes enlarged in many myelofibrosis patients because blood production shifts from the infected bone marrow to the spleen. Five of 13 patients with an enlarged spleen saw their spleen size reduced by 50% or, for spleens that were only slightly enlarged, reduced by so that it couldn't be felt beyond the rib cage.

A third of the 12 patients with anemia -- low hemoglobin levels -- also improved, another sign that the drug is improving clinical symptoms that doctors care about.

Now, to wait
Despite the good data investors sold in large part because the clinical trial wasn't designed to be a pivotal trial needed to support an FDA approval for imetelstat. Geron is going to have to run a larger trial to confirm the study's findings.

By the time imetelstat gets to the market there could be multiple drugs available. In addition to the aforementioned Jakafi, Cell Therapeutics is developing pacritinib and Gilead Sciences has two drugs, momelotinib and simtuzumab, which may help myelofibrosis patients. While the data is still young it appears imetelstat is the best of the bunch at least when it comes to efficacy.

It's highly likely the patients are getting better because of the drug -- spontaneous improvements are rare -- so I don't think efficacy should be a big concern for investors going forward.

The bigger issue could be the drug's safety. Imetelstat appears to be lowering platelets and white blood cells, especially when dosed more frequently. It's probably manageable, but with just 33 patients in the current study, it's hard to get a good handle on the exact risk.

Myelofibrosis can transition into leukemia, which patients die from, so the FDA should be tolerant of manageable side effects. Whether the side effect profile limits which patients get imetelstat and therefore how well it competes against Incyte's, Cell Therapeutics', and Gilead Sciences' drugs remains to be seen.

At a market cap of $660 million, the risk-reward profile looks reasonable for long-term investors. But you've got plenty of time to buy in given the long development time before imetelstat will be approved.

Or maybe not. Remember that chart above.

Verizon announced its acquisition of EdgeCast Networks on Monday. EdgeCast is a content delivery network, or CDN, provider that sells its services to companies like Twitter, Pinterest, and Hulu, and it competes with companies like Akamai and Level 3 . Verizon's acquisition of the network could have a significant impact on the CDN provider market.

What will Verizon do with EdgeCast?
In short, nothing. EdgeCast will simply replace Verizon's home-baked CDN and become part of Verizon's Digital Media Services, or VDMS, group. EdgeCast ought to continue operating as usual.

What Verizon will likely do with EdgeCast is provide a strong financial backing for a profitable business. One of the biggest challenges for CDNs is increasing R&D expenditure as its often limited by revenue growth. And although revenue growth at Akamai, Level 3, and other CDNs has been strong in the past, analysts expect that growth to slow in the future. That trend is already visible in longtime CDN expert Limelight Networks.

Verizon ought to give a strong boost to EdgeCast's efforts to scale its network, which should support revenue growth for the company. In other words, competing CDNs could see Verizon capture market share with EdgeCast by outspending them.

The whole package
The EdgeCast acquisition comes just a few weeks after Verizon bought digital media streaming company UpLynk. The two acquisitions coupled with Verizon's position in video services with FiOS TV give Verizon a complete video ecosystem.

Verizon has content partnerships through its FiOS segment, transcoding technology necessary for playback on any device, content delivery through EdgeCast, and with UpLynk a front-end management software solution. Verizon could market this package to broadcasters as an alternative to Level 3's ecosystem, which has had great success marketing its all-in-one solution.

Verizon could potentially undercut Level 3's pricing. Verizon has multiple revenue streams to support lower margins at EdgeCast, but moreover should be able to reduce EdgeCast's costs. This will allow Verizon, if it's so inclined, to reduce the price of its CDN services in order to gain market share.

Bad news for Akamai
Aside from potential pricing pressure, this is especially bad news for Akamai. Verizon is a big reseller of Akamai's services, and with this EdgeCast acquisition it's likely that partnership will come to an end.

Additionally, Akamai has been trying to improve its position with wireless carriers. EdgeCast already has a huge lead in the market, as it's been the company's main focus since its inception. With the acquisition by Verizon, it should only strengthen its position as the go to CDN service for telecom companies.

This could also impact Akamai's business with media companies should Verizon begin providing a package like Level 3. Akamai doesn't have the same framework to build a complete ecosystem like Verizon, and it doesn't have the cash to put the pieces together quickly. Granted, Akamai has held its own in the video delivery market, but a lot of growth has come from the expansion of the video streaming market as a whole.

Last year, Netflix decided to take its CDN in-house, which seems to have affected Akamai's sales forecast going forward. On the company's third quarter conference call, CFO James Benson mentioned renogotiation with the company's largest media customer, thought to be Netflix, will have a negative impact on revenue as early as the fourth quarter.

Akamai may be hard-pressed to continue growing its video delivery business with Verizon now in the fold and Netflix becoming more self-reliant. Aside from a more complete service, Verizon could offer better pricing in a market that already has tremendous downward pressure on pricing.

Big names moving in
Verizon is just one of several large companies that are getting serious about CDN services. Netflix, as mentioned, is another one, and Amazon continues to improve its CloudFront service.

Still, Akamai is the leader in the industry, and has a lot of strong competencies that these companies can't or don't match ... yet. Level 3, likewise, has a very strong video delivery platform, and could still benefit from the continued growth of video streaming. In the long run, however, I see Verizon and other larger companies materially impacting the industry as a whole.

Image by Herve Boinay.

Even if you follow Bank of America closely, it's still difficult to get a grasp on the bank's legal situation. We know it's paid out $43 billion in legal costs since the financial crisis, but until today, we didn't know how much more remained.

Speaking to analysts this morning, Bank of America CEO Brian Moynihan shed considerable light on the situation. According to the bank's calculations, the estimated range of possible losses above existing accruals is anywhere from $0 to $9.1 billion.

Where exactly it comes in on this continuum is largely a function of two things. The first concerns how aggressive the federal government decides to be in its efforts to recoup losses related to the financial crisis.

If the recent JPMorgan Chase settlement is any indication, then it appears the costs could be high. In the middle of last month, the nation's biggest bank by assets inked a record $13 billion deal with an assortment of government entities.

This was the largest single settlement in history, far eclipsing the $4.5 billion deal with BP stemming from the Deepwater Horizon disaster in the Gulf of Mexico.

The second thing that could weigh on future legal costs is the ongoing case involving Bank of America's $8.5 billion settlement with 22 institutional investors that's pending approval from a judge in New York as I write. If that deal isn't approved, it's hard to say how much additional liability Bank of America would be facing.

One of the principal objectors to the deal is insurance giant American Insurance Group , which has sued Bank of America in a separate action seeking $10 billion in damages. Its suit alleges that the bank, as well as its Merrill Lynch and Countrywide subsidiaries, knowingly misrepresented the quality of mortgages they sold to institutional investors.

Working against the Charlotte-based bank, moreover, are a number of critical legal precedents that have been established in the interim between when the settlement was agreed to in 2011 and today. Two months ago, for instance, a jury found that Bank of America's Countrywide unit committed fraud in a last-ditch loan-processing program in 2007 and 2008 appropriately known as the "Hustle."

The point being, for Bank of America and its shareholders, the $8.5 billion settlement is a critical step forward. If it were to be thrown out by the New York court, the bank would have to go back to the drawing board.

Will Bank of America end up paying out an additional $9.1 billion in legal costs beyond accruals? That remains to be seen, but as a shareholder myself, I hope at the very least that the upper limit of Moynihan's estimate is indeed the upper limit.

Yahoo! bears will rightfully explain that the stock's price has increased more than 150% in the last 16 months...without producing any fundamental growth. These investors make a very important observation, one that should deem Yahoo! a bad investment going forward. However, these bears miss one very important point, and that is Alibaba.

The Alibaba impact
Alibaba is China's premier and fastest growing e-commerce company, even larger than Amazon. Unlike Amazon, Alibaba does not create revenue from products sold but rather a combination of advertising and cloud infrastructure offerings.

This is a company that is preparing for one of the largest tech IPOs in history, a company whose expected market capitalization continues to soar by the month. Back in October, IPO rumors pegged a market cap of $100 billion for Alibaba, and this was based on 70% top-line growth and quarterly net income of $669 million; thus making Alibaba a faster growing and more profitable company than Facebook.

Alibaba's market capitalization and revenue growth is important because Yahoo! owns a 24% stake in the company. As mentioned, Alibaba's predicted valuation continues to soar, and RBC's Mark Mahaney now believes the e-commerce company is worth $150 billion; this comes just months after $100 billion IPO rumors surfaced. If correct, Yahoo!'s pre-tax profit for its stake would be in excess of $35 billion.

Cash and investments play an important role
For retail investors, the most watched metrics of a company are often revenue and net income growth, as both are flashy numbers that can easily be compared to a company's valuation. However, a company's cash position and investments are equally important, as they signal financial strength, longevity, and give companies the ability to make large investments.

So, if Yahoo!'s stake in Alibaba is in fact worth $35 billion, then nearly all of Yahoo!'s $41 billion market capitalization is directly tied to this investment. Hence, if we add Yahoo!'s $1.8 billion cash position, then Yahoo!'s fundamentals support a market capitalization of about $4 billion.

If you don't think this is a relevant valuation tool, then just think back to last year when shares of Apple were falling from a cliff. At the time, Apple's cash position constantly came into consideration, as bulls would note that its stock traded at just seven times forward earnings "minus cash." Apple's stock has since recovered and remains very cheap at 10 times forward earnings minus cash. However, Apple's valuation is nowhere near as cheap as Yahoo! with its Alibaba investment.

Yahoo!'s valuation (minus Alibaba)
Therefore, cash and equivalents come into play regularly when assessing companies. Yet somehow, in the case of Yahoo!, bears have failed to acknowledge the fundamental impact of the Alibaba investment.

Essentially, Yahoo! trades at just one times sales and four times earnings if you minus the investment in Alibaba. In comparison, Google , a company with 10% plus top-line growth, trades at five times sales and 26 times earnings if you minus its cash position.

While this comparison does not take into account Google's investments, it's important to note that investing activities have been one of Google's primary cash-burners during the last three years. In each of the last three years, Google has lost more than $10 billion in cash flow from investing activities. Therefore, Yahoo! minus the Alibaba investment compared to Google might not be a direct comparison but does give you an idea of the value in shares of Yahoo!.

Conclusion
One criticism of Yahoo! CEO Marissa Mayer has been acquisitions, such as Tumblr. Yet with a $35 billion asset that is likely to be monetized, Mayer can buy as many Tumblr's as she wishes. In fact, the expected proceeds from Alibaba gives Yahoo! one of the strongest balance sheets in technology per market capitalization, if not the strongest.

Yahoo! has more leverage than either Apple or Google, and unlike its peers, Yahoo! can acquire substantial growth in the years ahead due to its size. Yahoo! has sales of less than $5 billion versus $170 billion and $57 billion, respectively, for Apple and Google. Hence, it'll be easier for Yahoo! to produce growth in the coming years.

Therefore, while Yahoo! is not currently growing, its Alibaba investment alone brightens the company's outlook and should be reason for bulls to be very bullish in the years ahead.

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.

With a new era of Federal Reserve policy possibly in the air, Wall Street sold off on Tuesday as investors showed what they truly think about the possibility of a December taper. Given last week's exemplary jobs numbers, there's reason to believe the central bank could begin reining in its loose money policies as soon as next week. The benchmark S&P 500 Index lost five points, or 0.3%, to end at 1,802 on Tuesday.

The $111 billion biotech behemoth Gilead Sciences was one of the index's most pronounced losers today, with shares shedding 3.2% in trading. The losses, which came on heavy volume, came as drug benefits manager Express Scripts expressed its willingness to examine competitors to Gilead's new hepatitis C treatment in an effort to bring down costs. Gilead's Sovaldi may be too expensive for Express Scripts to endorse for reimbursement if it goes to market for $1,000 a pill. 

Elsewhere, Starbucks stock was feeling the hurt from high expectations on Tuesday, as shares tumbled 3%. Preliminary numbers from ITG Research put sales at company-owned stores around $2.8 billion in the current quarter, a figure that, if accurate, would fall slightly short of expectations. Starbucks stock has been on fire in 2013, gaining 44%. Obviously, growth is what's keeping this stock alive, and even though international expansion remains a big part of the story, the U.S. remains the company's biggest market and a vital part of its financial success. 

Oil and gas exploration company Newfield Exploration continued to see fallout from its production outlook for 2014, dropping 2.6% Tuesday. While Newfield sees liquids production growing by 20% a year over the next three years, that's apparently not enough growth for investors in the $3 billion energy company. Natural gas is a massive area of opportunity for investors in the U.S. energy renaissance, and competition is rather stiff, which means 20% a year isn't the best growth on the block. 

There's been a lot of chatter about Apple launching iBeacon in its retail stores. The location-based technology can help customers find products, display product info, and provide indoor mapping services on iPhones at retail stores. But much of the media coverage made iBeacon out to be some sort of marketing gimmick for Apple retail stores, when it has the potential to be much more than that.

Apple's Santa Monica store. Source: Apple.

Shining a light on iBeacon
iBeacon was briefly introduced at Apple's Worldwide Developers Conference back in June, but the company has been rather quiet about the technology so far. That's because it's only beginning to see implementation -- Apple itself only launched it last week.

So what is it? iBeacon is a software update to all iOS 7 devices that uses Bluetooth technology for location-based signal and information sharing. iBeacon uses Bluetooth low energy, called BLE, that allows devices to send out location signals almost constantly with very little battery usage. While Bluetooth allows users to send lots of data wirelessly or stream music to a set of speakers, BLE can only send and receive a very small amount of data.

MLB at the Ballpark App. Source: MLB.

Apple is using the tech to give customers more information about products they walk past -- letting them know if they qualify for a device upgrade -- and display pick-up information if customers are coming to the store to get a device they ordered online. But the tech can be used for much more than just Apple's own retail stores.

One example of iBeacon's potential comes from Major League Baseball's implementation of the technology into a few stadiums for the 2014 baseball season. Back in September, MLB showed how its At the Ballpark app using iBeacon can take iPhone users directly to their seats, offer discount coupons when a user steps into a merchandise store, or even potentially automatically display the customer's ticket on their iPhone as they approach the stadium. In addition to MLB testing out iBeacon, Macy's is testing the technology at its New York and San Francisco stores as well.

Upending NFC
One of the major opportunities for iBeacon is its chance to become the mobile payment system that near-field communication, or NFC, has failed to live up to. NFC works only with a small percentage of Android devices that actually have NFC chips installed in them, and works only in close proximity to sensors used for payments. iBeacon, on the other hand, can broadcast up to 150 feet, which could allow for customers to simply leave their phones in their pockets and automatically pay as they walk out of the store.

Unlike near-field communication, iBeacon works with existing Bluetooth technology that's already found in the vast majority of smartphones. It can also be implemented into current apps, like the MLB At Bat app, and doesn't need its own app in order to send and receive data. Unlike many other Apple endeavors, iBeacon uses open technology that can be implemented by Android devices and developers after software updates.

For Apple investors, iBeacon represents the opportunity for the company to transform how the retail industry interacts with customers and possibly how they pay for their products. It's Apple's way of using its devices and software to not only create a new experience for users, but a way to ensure its services stay ahead of mobile trends. If Apple implements mobile payments into this system, it's possible the company could collect a small percentage per payment, like other mobile payment processors do. But for right now, investors need to keep tabs on how well Macy's and MLB do with iBeacon, and if other retailers and companies start jumping on board with the service.

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.

The stock market gave back some ground in Tuesday's trading, with investors seemingly waiting for more clarity on what Federal Reserve policymakers intend to do with their economic stimulus plans in 2014. Encouraging economic news has made many people nervous about a potential reduction in quantitative easing, but bulls think that the economy is strong enough to handle the Fed's withdrawal. Regardless, many stocks bucked the downward trend in the market, with SINA , Twitter , and 3D Systems posting solid gains of 6% to 7%.

In some ways, the jumps in SINA and Twitter seem related. SINA gained 7% on a good day for China's Internet stocks generally, but SINA's Weibo is generally seen as a close analogue to Twitter in the Chinese Internet world. With Twitter getting a lot of attention this week, it's only natural for those who are excited about the prospects of microblogging generally to look at SINA, which got a vote of confidence earlier this year when Alibaba Group took an 18% stake in Weibo. Moreover, with many seeing U.S. stocks as overpriced, looking abroad for bargains makes a degree of sense.

Meanwhile, Twitter climbed another 6%, hitting a record high as investors continued to pile into the newly public social-media play after it released marketing and advertising tools to help paying users take more advantage of the site's potential. Monetization has always been the big challenge for social-media giants, and Twitter isn't wasting any time getting itself in position to tap as many revenue sources as possible. Even with new tools, though, Twitter will face an uphill battle in working its way toward long-term profitability.

3D Systems rose 6% as analysts at Deutsche Bank issued a buy rating on the 3-D printing stock. The firm believes that even with increasing competition in the space, 3D Systems is working to broaden its scope and offer a wider variety of materials and different services. If the company can follow that growth trajectory, then gains like today's could be just the beginning of another massive run for the company in the long run.

Investment analysts have a difficult job, no doubt about it. One of their greatest challenges is determining the near-term growth prospects of a company. Why near term? Because analyst reports are often used to support investment recommendations for brokers' favorite clients: active traders. Nothing wrong with that -- unless you subscribe to a longer-term, Foolish approach to investing.

And that brings us to Intel . Analysts' opinions on Intel are fairly consistent: a resounding ho-hum. Why? The same reason analysts have been reticent to recommend the chip-making giant for the past year: the declining PC market. Morgan Stanley is the latest to slam Intel's prospects based primarily on slowing PC sales, reiterating its underperform rating. That's too bad for Morgan Stanley clients, but it's great news for value-oriented growth and income investors.

PCs are dead -- but Intel's not
The PC market as a whole is expected to continue its decline, this year and through at least 2017, according to data from research firm IDC. The decline is due, in large part, to consumers opting for mobile devices rather than old-fashioned desktop PCs. Intel, like other IT bellwethers including Microsoft and IBM, was slow to make the transition to mobile. Former Intel CEO Paul Otellini said as much as the door was closing on his reign earlier this year.

So it's no surprise that analysts at Morgan Stanley, and others, consistently bemoan Intel's near-term prospects: PCs were what made Intel a $123 billion company, and they're dying an agonizing death. But that's exactly what makes Intel such a screaming buy for investors willing and able to look at next year, not next week. And new Intel CEO Brian Krzanich gets it.

The year ahead
The shift from PCs to mobile devices like tablets and smartphones offers a huge opportunity for Intel, and new CEO Brian Krzanich has the company well on its way to becoming a major player. This year, Intel's 32-bit Bay Trail chips found their way into Windows 8 and 8.1 devices, and its 64-bit version should hit the streets early in 2014.

It'd be easy to pooh-pooh the value to Intel of running Windows OS tablets with so little market share today, but that's about to change. IDC suggests Microsoft will sell more than 39 million tablets in 2017, up from less than 7.5 million this year. And with the deal for Nokia's growing devices and services unit nearly complete, the possibilities for Intel inside Microsoft smartphones shouldn't be discounted either.

The number and strength of Intel chips targeting mobile devices large and small, expensive and entry level, certainly doesn't end with the 32-bit and 64-bit Bay Trail units, either. New Atom, Quark, and Broadwell chips are a few of Intel's latest creations scheduled for full-scale release in the coming year, and are capable of powering Android devices, far and away the leading mobile OS in the world. And who knows, the love/hate relationship between smartphone rivals Samsung and Apple could open some doors for Intel, particularly as it gains momentum throughout 2014.

Final Foolish thoughts
Analysts serve an important role in the world of investing, and Fools can garner some useful insight into prospective investment opportunities via stock analysis. But bear in mind, though the near-term perspective that analysts sometimes take can impact stock prices and sway some investors, it doesn't account for companies like Intel that are in the midst of transitioning into a new, and more profitable, mobile world.

No, Intel isn't likely to double in stock price by early 2014; it's still in the early stages of its transformation. But 2015, and beyond, after it's established itself as a legitimate mobile competitor? That's a different story, regardless of what some analysts are saying.

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.

The bull market in stocks is approaching the end of its fifth year, and one of its defining characteristics has been its tenacious way of staying near recent highs even in the face of uncertainty. Investors bid stock prices slightly lower today, but even with the Federal Reserve looming over the market's sentiment, losses in the major-market benchmarks were relatively minor. That wasn't the case for some individual stocks, though, with Lumber Liquidators , Icahn Enterprises , and TravelCenters of America all posting big drops today.

Lumber Liquidators fell 14% after the company updated its guidance last night. Although the flooring specialist raised its revenue estimates for 2013 by about 1% and boosted its same-store sales estimates by a percentage point, growth projections of roughly 15% to 20% on the revenue side and high-single to low-double digit percentage gains in comps didn't live up to investors' high expectations. Moreover, earnings guidance of $3.25 to $3.60 per share didn't sit well with analysts, who have raised their own projections toward the upper end of that range over the past few months. Lumber Liquidators will likely have to outperform its guidance to get investors optimistic again.

Icahn Enterprises dropped 11% after the limited partnership announced last night that it would sell 2 million units to raise cash for investment in its operating subsidiaries. Even with the drop, the units have tripled in value since late last year, reflecting some of the strong investments that the limited partnership has made over the past year. Investors were clearly spooked by the move, but raising cash for investment with the track record that Icahn has should arguably make his investors happy that he sees more opportunity to profit, not frightened.

TravelCenters of America declined 9% after a secondary offering of its own, with plans to sell 5 million shares to raise roughly $50 million. The company's press release said that some of the proceeds might go toward its $67 million purchase of 31 Minit Mart convenience stores in Kentucky and Tennessee that TravelCenters of America announced last month. Like Icahn Enterprises, TravelCenters has done quite well, doubling since the beginning of the year even after today's drop and making its stock seem like a natural currency for expansion plans.

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

What: Shares of Lumber Liquidators were ending up on the shop floor today, finishing down 14% after posting a disappointing outlook in its quarterly report.

So what: The wood-flooring specialist issued an updated EPS outlook for the current year of $2.72-$2.75, against estimates of $2.76, while its fourth-quarter outlook was $0.69-$0.72, below the consensus. For 2014, it sees EPS of $3.25-$3.60, versus estimates of $3.50. Sales projections for both this year and next were within range of estimates.

Now what: Investors seem to be reacting to the dialed-down estimates for the current quarter and year, though the top end of the guided range is only a penny below estimates. Shares of Lumber Liquidators have eased down from highs than year on short-selling by Whitney Tilson and an investigation by federal authorities into its wood sourcing. Still, with a brisk expansion and solid growth in organic sales, the company looks poised to grow into its lofty valuation.

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.

The Dow Jones Industrials continued its dance around the 16,000 level Tuesday, this time closing on the low side of the milestone as investors generally seemed reluctant to push stocks back to record-high levels before finding out the Federal Reserve's intentions for monetary policy in the near future. Looking at the biggest decliners on the day, though, consumer stocks were well-represented, with Coca-Cola , Procter & Gamble , and Home Depot all posting drops of more than 1%.

For the most part, none of these three companies came out with specific news explaining their declines. Home Depot rival Lumber Liquidators issued lackluster guidance, but that might just as easily be seen as a mark of confidence in Home Depot's stranglehold over the home-improvement industry. Meanwhile, Coca-Cola and Procter & Gamble typically fly under investors' radars toward year-end, as consumer-oriented investors pay a lot more attention to retailers in their key holiday seasons to see if they'll stand up to intense competition and sales pressure.

But one trend that could be taking hold in the final weeks of 2013 relates to rebalancing. The Dow is up more than 20% this year, with broader benchmarks having posted even stronger returns in 2013. As a result, many investors are looking for places to pare back on their stock exposure, and one natural place to look is in mature companies with high multiples without the growth potential to back them up. All three of those stocks have earnings multiples above 20, raising questions about whether they might be overvalued after solid gains in recent years.

Still, painting a broad brushstroke across the industry seems ill-advised. Home Depot doesn't seem to fit that mold particularly well, as it still has plenty of growth opportunities despite its mildly lofty P/E ratio. Home Depot is projected to grow at an 18% annual clip over the next five years, and as long as the housing market continues to move higher, Home Depot can expect more homeowners to have the capacity to make improvements and spend money at its stores.

For P&G and Coke, though, the argument makes somewhat more sense. With much slower growth projections of 7% to 8% annually, neither consumer giant seems to have the potential to live up to the promises that their 20+ P/E ratios are making. Coca-Cola has had to deal with its growth headwinds from greater regulation and health-related scrutiny, and Procter & Gamble has tried to defend itself against aggressive rivals in key growth areas like emerging markets. In that light, declines like today's could be the beginning of a trend away from pricey consumer stocks -- and toward companies with better growth prospects whose shares offer better value.

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.

Sometimes you see people arguing that the markets are rational. But these arguments for the efficient-market hypothesis can't explain the daily moves that can only be chalked up to irrational thinking. Stocks can move dramatically up and down over things that are small or immaterial. These irrational moments can last just hours or go on for months, and sometimes they don't end until after the market makes a correction in response to the past irrationality.

But identifying them can help you become a better investor, for a number of reasons. First and foremost is that when you accept that these types of price moves happen, you'll be better prepared and can avoid falling prey to the irrational behavior yourself. Instead, you'll be able to take advantage of the irrationality by purchasing shares when the market has undervalued them. These buying opportunities are a wonderful way to maximize your investment returns and will help your portfolio grow to its full potential over time.

Let's look at one stock that has displayed some irrational behavior lately.

On Dec. 2, shares of Groupon opened at $8.72. Today, they closed at $10.04. That's a 15.13% increase over the past seven trading days. What's even more shocking is that from the 3rd through the 6th, the stock closed each day at $9.09. Then yesterday, the stock rose 5.83%, followed by a 4.37% jump today.

So why the rise? We know that on Dec. 3, the company reported that its Black Friday sales set a company record. Thanksgiving weekend marked its largest-ever four-day sale period ever, and revenue rose 30% over the same four-day period in 2012. Yesterday, the only real Groupon news was that competitor RetailMeNot had filed to sell a large chunk of shares. That announcement may have sent investors fleeing for Groupon. And finally, today's rise came after analyst Scott Devitt from Morgan Stanley reiterated his overweight rating and $15 price target on the stock.

While Devitt's price target is within a time frame from now till sometime in 2015, what he sees as a catalyst scares me. Groupon co-founder, CEO, and director Eric Leftofsky recently told Devitt he company is focusing on building a better technological infrastructure, including a more user-friendly website design and an easier method for making transactions and using coupons. Groupon is also developing a method to track what links customers click on in their emails. Groupon is one of the world's largest email marketing companies, so capturing this information will provide a massive amount of vital marketing information. Devitt believes this opportunity to further develop its technology will help push the company forward and increase value for shareholders.  

So were any of these stock moves justified and rational? Yes and no.

I believe the move we saw last Tuesday was certainly rational, as the company reported a great sales increase. But yesterday's move wasn't very rational at all, as it can only be based on bad news from a competitor. Today's move is a little trickier. I never like seeing a stock make a significant jump after an analyst weighs in with a rating. Devitt's points on why he feels the company could improve seems rational, as does his time frame. And he's absolutely right about the value of tracking email clicks.

But the problem is that Groupon should have already been doing this years ago. Groupon was supposed to have practically eliminated the act of sending coupons through the mail as online technology took hold. But that hasn't happened, and it probably won't for some time, because the only difference between Groupon and coupon mailings is that Groupon uses email and not snail mail. That's it. We've seen what Facebook and Google can do with advertising based on what individuals search for or tell others about themselves. Groupon had the information it needed to do the same thing, because it knew what deals people were buying, but it didn't take advantage of that information.

It's a no-brainer that Groupon should have been tracking this information. If it wasn't doing something that seems so simple and so important until now, what other opportunities has it missed out on? What other aspect of its business has it failed to think through? That's what concerns me, and that's why I believe Groupon is not a good investment today. Therefore, the share-price jumps over the past few days appears to me to be not justified and, yes, irrational.

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

Stocks eased down today as the Dow Jones Industrial Average and the S&P 500 both fell 0.3%. Investors seemed to continue to fear the Federal Reserve may taper faster than expected as some Fed regional presidents suggested as much.

Among breakout stocks, Twitter jumped another 5.8% today, hitting $52 after revealing new revenue chains. The microblogging service has added private photo messaging to mobile, as well as other tools to help drive ad revenue. While Twitter is fantastically priced at a P/S of 50, it has the barriers to entry, relevancy, and long-term grow prospects that could make it pay off down the road.

Elsewhere, Smith & Wesson spiked 6% after hours today, following its earnings release. The gun maker topped earnings estimates by $0.07, posting an EPS of $0.28, while revenues grew 2.1% to $139.3 million. Third-quarter revenue guidance was better than expected, while EPS was in line. Profits were down from a year ago, though handgun sales rose 27%. Still, costs grew disproportionately to bring down the bottom line.

Finally, lululemon athletica named a new CEO and said founder Chip Wilson was stepping down from the company's own chairmanship. The yoga clothier named Laurent Potdevin to replace Christine Day, who said she would step down back in June, as chief. The changes come following a rough year for Lululemon as it had a product recall and a PR nightmare when Wilson insulted his own customers by blaming defects with the pants on women's bodies. Former TOMS President Potdevin brings to the table "a proven track record of success in building global brands." Lululemon is just embarking on widespread expansion in Asia and Europe so Potdevin's experience figures to be put to work there. Shares of Lululemon finished down 1.3% on the day, and will report earnings Thursday. Analysts expect earnings of $0.41 per share on revenue of $376.2 million.

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

What: Shares of Burlington Stores ended down 8% after falling as much as 23% during the trading session after reporting earnings today.

So what: The off-price retailer posted a loss of $0.05, in line with estimates, while revenue grew 10% to $1.06 billion. Comparable sales in the quarter improved 3.9% in what was the company's first report as a publicly traded company. The market seemed to be disappointed by same-store sales, projected to be just 2%-3% in the fourth quarter. CEO Tom Kingsbury said the company was "focused on executing growth drivers, expanding retail store base, and enhancing our operating margins in the future."

Now what: Today's pullback seems to come largely from shares having risen 30% since its IPO despite posting a loss for the quarter, and an underwhelming holiday comp outlook. With a P/E of 44 and only modest growth prospects, Burlington may have further to fall.

Restoration Hardware will release its quarterly report on Thursday, and investors have sent the stock soaring ever since spring. But with the arrival of the holiday season, can Restoration Hardware hold off competition from Pier 1 Imports and Williams-Sonoma and continue its excellent performance?

Restoration Hardware came close to failure during the aftermath of the housing bust before a private-equity firm saved the ailing retailer. Now having been public for more than a year, Restoration Hardware has emerged with a new attitude, using the resiliency of upscale luxury shoppers to tap into a market that it hopes will be more reliable. Yet Pier 1 and Williams-Sonoma have their own approaches to the industry, and they've also seen some success as home prices rise and shoppers become more confident about their financial futures. Let's take an early look at what's been happening with Restoration Hardware over the past quarter and what we're likely to see in its report.

Stats on Restoration Hardware

Source: Yahoo! Finance.

Will Restoration Hardware earnings keep soaring?
Analysts have gotten even more optimistic about Restoration Hardware earnings in recent months, boosting their October-quarter estimates by a third and raising their projections for the current and next fiscal years by 7% to 9%. The stock has pulled back somewhat after a red-hot mid-year performance, with shares down 10% since early September.

Restoration Hardware's drop came early in the quarter, as the company simply wasn't able to live up to the high expectations that its soaring share price had made. Revenue jumped 30% on same-store sales growth of 26%, continuing its run of impressive comps that show the organic strength that Restoration Hardware's existing stores have. Adjusted earnings rose 62%, although a one-time charge sent GAAP earnings to a net loss. Future guidance looked equally impressive, with Restoration Hardware increasing its projections for fiscal 2014 earnings by about $0.24 per share. Yet shareholders bid the stock down by more than 10%.

Yet fundamentally, Restoration Hardware is still poised to benefit from positive trends in the housing industry. With home prices on the rise, homeowners are once more starting to build equity in their homes, and relatively low interest rates could allow them to tap that equity to start making long-deferred purchases of home furnishings. That's a trend that Williams-Sonoma's Pottery Barn and Pier 1 have also benefited from, with Williams-Sonoma's West Elm concept seeing a sales surge that's roughly comparable to Restoration Hardware's.

Moreover, Restoration Hardware hopes to build on its past success and become more efficient in its expansion. The company has plans to open 10 locations annually beginning in 2015, with the hope that it can make its stores larger yet less expensive to build and operate, boosting returns on invested capital in the process.

The big question is how competitors will respond to Restoration Hardware's gains. Williams-Sonoma has tried to boost its catalog and online sales, which already make up about half of its overall revenue, in order to improve margins. For Pier 1, appealing to customers at all income levels is a key part of its overall strategy, with unusual items that shoppers won't find at most locations. Those strategies could keep Restoration Hardware on its toes, especially during the key holiday season.

In the Restoration Hardware earnings report, watch to see how the company describes the early part of the holiday-shopping season. With many retailers reporting substantial discounting in order to move merchandise, anything that suggests that Restoration Hardware's brand isn't drawing shoppers could send the stock down again.

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

Monmouth Real Estate Investment will release its quarterly report on Thursday, and investors have been nervous lately about the real estate investment trust's prospects in a rising interest rate environment. Yet what sets Monmouth apart from both leveraged mortgage REIT Annaly Capital Management and traditional industrial REITs is the fact that Monmouth gets about half of its rental revenue from a single customer, FedEx . Does that add an unacceptable level of risk to the investment, or is it actually a positive for Monmouth?

On its face, Monmouth is well diversified, with 80 different properties spread out across 27 different states. But having so much of its fortunes tied to FedEx introduces sensitivity to the delivery business that most REITs that have a broader-based tenant list don't have to deal with. The question is whether Monmouth's yield adequately reflects the risks involved with FedEx, and whether the delivery company actually has the financial strength to keep growing and maintaining its lease obligations. Let's take an early look at what's been happening with Monmouth Real Estate Investment over the past quarter and what we're likely to see in its report.

Stats on Monmouth Real Estate Investment

Source: Yahoo! Finance.

Can Monmouth earnings keep investors happy?
In recent months, analysts have raised their views on Monmouth earnings, increasing their September-quarter estimates by a penny per share and their full-year fiscal 2014 projections by about 15%. The stock has held up reasonably well during the general REIT malaise recently, gaining 2% since early September.

Monmouth came into the quarter on a fairly positive note, with its June-quarter report showing growth in adjusted core funds from operations of more than 10%. Rental revenue climbed by nearly 10%, and the company kept expenses in check, increasing less than 2%. Gains on securities transactions also boosted earnings substantially.

But Monmouth faces the uncertainty of being linked so closely with FedEx. For years, FedEx has seen substantial growth due in large part to the rise in popularity of online commerce. Amazon.com is working hard to avoid becoming reliant on any single carrier, including its efforts to enlist the U.S. Postal Service for Sunday delivery and its most recent aspirational Amazon Prime Air service to circumvent outside delivery services entirely.

In addition, Monmouth has to deal with the same interest rate sensitivity that plagues Annaly and countless other REITs. Essentially, when rates rise, the income streams that Monmouth earns from FedEx and its other tenants look less attractive to investors. That tends to drive share prices down, which is what Monmouth has seen in recent months -- albeit with its dividend distributions helping keep investors in the black. Admittedly, Monmouth's level of leverage is nothing close to Annaly's, leaving it with a greater margin of safety compared to mortgage REITs generally.

Perhaps in response to its risks, though, Monmouth has gone on a huge acquisition binge, announcing no fewer than seven new property acquisitions between September and November. Although four of the acquisitions have FedEx Ground as the net-lease tenant, Monmouth also did deals with International Paper, Dr Pepper Snapple, and ConAgra, showing its efforts to keep its tenant list diversified.

In the Monmouth earnings report, watch to see how the company plans to deal with higher interest rates. So far, interest expense hasn't been a major problem for a long time, but if Monmouth's financing costs climb, then it could eat into funds from operations and potentially jeopardize the size of the dividend in the long run.

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

Facebook's overall engagement continues to rise, and the great thing is that the company commands a significant share in the mobile market. Facebook made history this October, when it announced a 60% increase in revenue. In order to justify its $120 billion market valuation, Facebook is expected to increase its revenue next year to $10.4 billion. Can the social network achieve this stellar revenue growth?

A disruptive force
Facebook will eventually be able to raise the bar on search. Graph Search, which has been designed to give natural answers to queries, is a work in progress. The search engine ramps up Facebook's competition with its rivals. Facebook says you can use Graph Search to find more of the people you're looking for through connections. It has the potential to become a disruptive force in the search engine space. Eventually, it will be a revenue-generating solution for Facebook.

Geographical diversification 
Facebook should benefit from international growth, because the U.S. represents less than 20% of total traffic, but almost 50% of overall revenues. International markets provide a greater opportunity for the company. Additionally, Facebook has been focusing heavily in Japan, as well as building up its local presence. Facebook can leverage its products in Asia and the Middle East, and push for ad sales in Europe. Given the gap between the company's monetization levels in international markets, there is a great opportunity for Facebook to grow.

Advertising age
Now that Instagram has entered the advertising age, Facebook can start benefiting from it. Investors can expect that Instagram's 150 million monthly average users will bring in about $606 million a year. However, Instagram's additional significance could be how it provides Facebook with better insights among younger users. If Instagram can improve Facebook's adaptability, it could increase revenue-generating opportunities.

Competitors
Let's not lose sight of the fact that Facebook isn't the only one operating in the promising social network market. With about 200 million users, Renren provides exposure to a Chinese social network. Renren isn't strictly an advertising company, but it is skilled at using its social network to promote gaming. It is turning its attention to the mobile Internet and is now dedicating 45% of the workforce to mobile development. The products Renren is betting on are the smartphone version of the social network and mobile gaming.

LinkedIn did grow its membership by 38% to 295 million users. However, due to the increasing relevance of competitors, it is becoming difficult to justify its valuation. It recently launched two new mobile products. The first is a mobile extension of its desktop tool. The second  will be offered on Apple's iOS. With these products, LinkedIn will hope to mimic mobile user growth enjoyed by Facebook.

Conclusion
The bottom line probably lies in Facebook's ability to enter new segments and launch innovative applications. Acquisitions could be crucial. For example, the purchase of  Monoidics will allow Facebook to improve quality control of applications. Over the long term, quality improvements have the potential to drive revenue growth because they allow the user experience to be rich and valuable. Ultimately, one in seven people on Earth has a Facebook profile. With the world population expected to reach nine million in the next 12 years, Facebook's user base is expected to increase, and so is the company's potential to achieve stellar revenue growth.

The success of Bitcoin during 2013 has lead to interest in the crypto-currency spreading like wildfire. And though there are still plenty of concerns about the anonymous digital currency, more than just investors have taken notice.

Source: Flickr/BTC Keychain.

A patent application for a new anonymous electronic payment system has just been made public, with many citing the similarities between the proposed currency and Bitcoin. And the applicant behind the new Bitcoin rival? JPMorgan Chase .

Cashing in on currency

The meteoric rise of Bitcoin's value over the past few months obviously drew the attention of other companies that provide means for payment of online transactions. With an estimated $1 trillion in online payments expected by 2017, the market size is nothing to be laughed at. As most banks have begun to realize, a larger and larger segment of the population prefers to do their banking online -- and the same is true of shopping.

JPMorgan Chase's patent states the company's intentions to develop a virtual wallet for consumers with a virtual currency that allows for anonymous, free payments online. The currency would be developed in order to compete with both debit and credit cards, which dominate the online payment market.

If you can't beat 'em, join 'em

Since JPMorgan Chase is one of the nation's largest credit card providers, any sort of competition online would result in the decline of its own business. So the company is joining the growing ranks of online payment systems in order to stanch the flow of revenue headed out the door.

But banks aren't the only ones threatened by the development (and wild success) of digital currencies. eBay's PayPal is the current leader of digital wallets, with 137 million active accounts in markets spread across 26 currencies. But the payment processor has been losing ground to newer, easier systems that have popped up across the Internet -- including Braintree, which eBay just acquired.

Google and Amazon have also both gotten into the online payment melee, with Google Wallet and Amazon Payments. Both methods are widely accepted by merchants across the Internet, but still lag behind PayPal and credit/debit card payments. But the issue for consumers remains that each system still requires access to a bank account or credit card, plus the wallets or payment systems are not accepted everywhere. That leads to multiple accounts, which spreads out their money. Hence the attraction of a digital currency.

Challenges ahead

As we've seen with Bitcoin, there is a huge demand for digital currency. But there are a few roadblocks that still exist for any company or developer trying to get into the game. Despite its incredible popularity, Bitcoin is not accepted as payment everywhere online. Until merchants are assured that Bitcoin is recognized as a legitimate currency, there will be a large number of online sellers that won't allow its use for payment. The same will happen for the proposed currency from JPMorgan Chase, though the bank 's involvement may settle some seller's concerns -- an option unavailable to the open-sourced Bitcoin.

With the undeniable trend towards more and more mobile and online transactions, consumers will be deciding which payment method ultimately wins. But if JPMorgan Chase and the other established payment processors have anything to say about it, Bitcoin's appeal will fizzle out and consumers will rely on their newer payment options.

Shares of Hilton Worldwide are, once again, being traded publicly for the first time. They opened Thursday morning at an initial public offering price of $20 per share. The company raised $2.35 billion, and it will use $1.25 billion of that to pay off a term loan. The publicly owned asset management firm The Blackstone Group still owns about 76% of Hilton, and plans to retain that asset for the time being.

As the shares came to a close on their first day of trading, they had risen 7.5%, to close at $21.50 per share. At today's closing price, the company is now valued around $20 billion, much larger than that of Marriott  at $13.78 billion, or Starwood  at $14.03 billion. But when all things are considered, Hilton is not that much larger than Marriott in terms of hotels and rooms. Hilton currently has just more than 672,000 rooms at 4,080 locations, while Marriott operates 670,000 rooms at 3,883 properties, and Starwood operates 335,400 rooms at 1,134 locations at the end of its last fiscal year. As for Hyatt Hotels , the company is far behind in all categories with only 535 hotels, and a market value of $7.34 billion.

But what is surprising about these numbers is that, when we consider the hotel count and how that relates to the market caps of each company, Hyatt comes out ahead. The idea is to take each single hotel, and decide its worth for each company. So Hyatt's market cap of $7.34 billion is divided by the 535 hotels it operates, giving us an individual hotel value of $13.71 million. Hilton's per hotel value would be $4.9 million, Marriott's comes in at $3.54 million, and Starwood's is at $12.37 million.

We could say that those numbers mean Hyatt is overvalued, or that Hilton and Marriott are undervalued, but the problem is that all hotels are not created equal. Small limited-service properties just aren't going to be worth as much as a 1,000 room full-service hotel with three restaurants. But what's interesting in those numbers is that Hilton is valued that much higher than Marriott, considering the two have the most similar property mix out of any of the large hotel chains. Based on just the hotel and market cap, one could argue that Hilton is already overvalued.

Regardless of whether you believe Hilton is a good buy today or overvalued, investors should hold off on buying shares for at least some time. First, the Blackstone Group still holds 76% of the company and only about 11% of the outstanding shares are available on the open market. This means that, eventually, the other 89% will hit the market, and if too many are sold at the same time, the price could fall. Additionally, with only a small number of shares in float, the simple concept of supply and demand may take over and push the stock higher despite what the valuation looks like. Now, you could certainly make the argument that The Blackstone Group would have sold in the IPO today if they didn't believe the company was still a good investment. And while that is true, my second reason may convince some of you not to make a mistake.

Secondly, here at The Motley Fool, we don't believe investors should be buying on the IPO day, or for a few months afterwards. Let the company report earnings a few times before you pull the trigger. And I would say that this is even more important with a company like Hilton because it has so much competition, so individual investors have a lot to compare the numbers to. For example, when Facebook went public, there was very little an investor could compare the company to -- maybe Google ad revenue -- but even that was a stretch. With Hilton, you have RevPar, daily room rates, occupancy rates, food & beverage revenue per square foot -- I could go on and on; but the point is that a number of different metrics are all going to be reported by the big chains mentioned above. So before you by Hilton because you like staying in their hotels more than Marriott's, compare how the company is performing against the competition.

More Foolish insight

The Department of Defense announced nine new defense contracts on Thursday worth $1.31 billion. Northrop Grumman didn't win the biggest of these contracts. That honor went to Boeing. But Northrop did win the third-largest award -- a $112.9 million firm-fixed-price, cost-plus-incentive-fee, cost-plus-fixed-fee contract for work on the Trident II (D5) Underwater Launcher System and Advanced Launcher Development Program.

This contract has Northrop providing ongoing support for TRIDENT II (D-5) underwater launcher subsystems installed aboard nuclear-powered ballistic missile submarines (SSBNs) and guided missile submarines (SSGNs), as well as supporting refueling operations, procurement of spare parts, launcher trainer support, and other support operations. In particular, Northrop will perform technical engineering work in support of the Advanced Launcher Development Program and the Common Missile Compartment Concept Development and Prototyping effort for the U.S. and U.K. navies.

The expected completion date for this work is Sept. 30, 2018.