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Square Has Already Won Mobile Payments. Here's Who Stands to Benefit

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Source: Square.

Brandon Workman of Business Insider Intelligence thinks that Square and, more generally, card reader technology, has already won the fight for mobile payment dominance. 

But alas for Foolish investors, Square is a private company (for now). Where does that leave an investor to turn?

Opportunities abound in every corner of the payment processing universe
There are Square's competitors scurrying to catch up -- like eBay subsidiary PayPal. These are the companies developing applications for smartphones and tablets that link either directly to a specific retailer or to a generic payment platform (like PayPal). Square has an early and dominant lead, but PayPal has the brand and existing customer network to find scale as the technology evolves.


Then there are the payment processing networks that facilitate the transactions between consumer and vendor -- the giants being Visa and MasterCard . These companies maintain the vast systems that communicate with the consumer's bank or credit card company and securely transfer funds into the vendor's account. Of course, Visa and MasterCard don't provide this service for free. They act as toll collectors and collect a fee on each transaction. For these middle men, higher transactions, regardless of the source, are a good thing.

And, don't forget the vendors themselves, like Starbucks , who are fueling growth by embracing emerging tech. Others have come into this space, but Starbucks has been far ahead of the curve. First came the Starbucks app, which allows customers to purchase their Grande Americanos via a QR code on their smartphone scanned at the point of sale. Then came the strategic partnership and investment in Square, further aligning Starbucks with the growth of mobile payments. 

In the video below, I interview Brandon to understand what he sees as the next evolution for mobile payments. Our discussion moves from the past to the present, and perhaps most interestingly, to a future of location-based, image-verified, and voice-activated purchases -- with Square and Starbucks leading the way.

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The article Square Has Already Won Mobile Payments. Here's Who Stands to Benefit originally appeared on Fool.com.

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

Copyright © 1995 - 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

 

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Why Is Novavax Breaking Out?

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Shares of the developmental stage vaccine maker Novavax broke through its 52-week highs last Tuesday, and did so in stunning fashion, ending the day up almost 20%. What's most impressive is that this dramatic upswing isn't the result of a clear cut news event. Instead, it's simply the continuation of the stock's nearly two year-long rally. Specifically, Novavax has been one of the best performers in the health care sector, rallying almost 250% over the last two years.

Novavax develops recombinant nanoparticle vaccines and adjuvants for an array of infectious diseases, such as influenza, respiratory syncytial virus, or RSV, and rabies. At present, the company has seven experimental vaccines and adjuvants undergoing clinical trials, many of which are funded by third parties. The company's lead vaccine candidates for RSV and seasonal influenza are currently in mid-stage trials. And this is one of many reasons why Novavax shares are heating up going into year's end.

Poised for a breakout 2014?
Novavax's management has, in many ways, set up 2014 as a transformational year, and the market is clearly reacting to these moves. By raising $87 million through a public offering last September, Novavax should end the year with close to $140 million in liquid assets.


What's important to understand is that Novavax will also earn somewhere around $40 million to $50 million from its contract with the U.S. Department of Health and Human Services, Biomedical Advanced Research and Development Authority, or BARDA, next year for its pandemic flu vaccine work. Taken together, this means that Novavax should be fully funded well into 2016.

And there is good reason to believe that the company will have a commercial vaccine on the market before funding becomes an issue. Namely, Novavax is expected to release full mid-stage data for both its RSV and seasonal influenza vaccines by the middle of 2014. Because of its ability to trigger strong immune responses in earlier trials, management believes pivotal late-stage trials could be under way before the end of next year. In sum, Novavax's innovative clinical pipeline and strong financials look promising going into the New Year, and appear to be the underlying causes behind the stock's recent upswing.

Foolish outlook
Novavax's vaccine platform is undoubtedly cutting-edge, allowing it to formulate novel vaccines in record time. Earlier this year,  Novavax engineered and tested a novel vaccine for Avian Flu in under four months. If that wasn't impressive enough, the results were published in the New England Journal of Medicine, which is rare for early stage data. Indeed, this is the reason why the U.S. Government is working so closely with Novavax in its efforts to defend the Nation against natural and man-made threats.

While naysayers may point to the U.S. Food and Drug Administration's, or FDA, long history of exercising caution with novel technologies as a potential risk, there are recent examples of the agency approving nanoparticle-based vaccines. In 2009, GlaxoSmithKline pushed its highly effective human papillomarvirus , or HPV, vaccine Cervarix through the regulatory process. The vaccine is now a major competitor to Merck's blockbuster Gardisil.

So unlike other next-generation vaccine makers like Inovio Pharmaceuticals  -- whose DNA approach has yet to be validated, at either the developmental or commercial levels, Novavax's platform has been broadly validated and its regulatory pathway has been vetted by a major player in the pharma world. In short, I believe Novavax offers less risk than Inovio when comparing the next generation of vaccine developers.

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The article Why Is Novavax Breaking Out? originally appeared on Fool.com.

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

Copyright © 1995 - 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

 

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An Up-Close Look at Alere's Medical Devices

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Alere's Alere Connect division is ramping up from 2,000 remote monitoring health devices this year to more than 10,000 in 2014. Motley Fool analysts Max Macaluso and Rex Moore spoke with Alere Connect CEO Kent Dicks at the recent mHealth Summit near Washington, D.C., and got a first-hand look at some of these devices.

More Foolishness
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The article An Up-Close Look at Alere's Medical Devices originally appeared on Fool.com.

Max Macaluso, Ph.D. and Rex Moore have no position in any stocks mentioned, and neither does The Motley Fool. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Copyright © 1995 - 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

 

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Consumer Spending Brightens Economic Outlook

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november consumer spending
Jae C. Hong/APBlack Friday shoppers at the Brea Mall in Brea, Calif., last month.
By Lucia Mutikani

WASHINGTON -- U.S. consumer spending posted its largest increase in five months in November, the latest suggestion of sustained strength in the economy as the year winds down.

The Commerce Department said Monday consumer spending rose 0.5 percent after advancing by a revised 0.4 percent in October. It was the seventh straight month of increases and matched economist expectations.

Consumer spending, which accounts for more than two-thirds of U.S. economic activity, was previously reported to have increased 0.3 percent in October.

When adjusted for inflation, consumer spending increased 0.5 percent in November after rising 0.4 percent in October. November's increase in so-called real consumer spending was the largest since February 2012.

This indicates that consumer spending in the fourth quarter probably accelerated from the third quarter's 2 percent annual rate. Spending is being bolstered by improving household balance sheets, thanks to a rising stock market and house prices.

The report added to other upbeat data, such as employment and industrial production,
in suggesting that the economy retained some of its third-quarter momentum in the lead-up to the end of the year and was poised for faster growth in 2014.

It also fits in with Federal Reserve's upbeat view on the economy, which prompted the U.S. central bank to announce last week that it would start reducing its monthly bond purchases from January.

The economy grew at a 4.1 percent clip in the July-September period, the fastest pace in nearly two years, after expanding at a 2.5 percent rate in the second quarter.

International Monetary Fund managing director Christine Lagarde said Sunday the international lender would raise its growth forecast for the world's largest economy next year. The IMF forecast in October that the U.S. economy would expand 2.6 percent in 2014.

Despite the signs of strength in the economy, inflation remains benign. A price index for consumer spending was unchanged for a second straight month.

Over the past 12 months, prices rose 0.9 percent. The index had gained 0.7 percent in October.

Excluding food and energy, the price index for consumer spending rose 0.1 percent, rising by the same margin for a fifth straight month. Core prices were up 1.1 percent from a year ago, after rising by the same margin in October.

Both inflation measures continue to trend below the Fed's 2 percent target, which would suggest the U.S. central bank could keep interest rates near zero for a while, even as it reduces its monthly bond purchases.

Income rose 0.2 percent, rebounding from a 0.1 percent drop in October. With spending outpacing income growth, the saving rate -- the percentage of disposable income households are socking away -- fell to a nine-month low of 4.2 percent.

 

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Money Minute: Backlash Hurts Target Sales; Apple Scores Big China Deal

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Target reportedly suffers a consumer backlash and Apple makes a breakthrough in China.

Shoppers may have punished Target (TGT) after the retailer revealed last week that 40 million people had personal information compromised in a data security breach. Analysts estimate the number of transactions at Target stores over this key weekend fell compared to a year ago. Many customers are angry it took Target several weeks to inform the public of the hacking incident.

Reuters reports that other retailers also struggled this weekend.

CHINA-US-IT-TELECOM-APPLE
Rita Qian, AFP/Getty Images
After weeks of rumors, Apple (AAPL) says China Mobile will start taking pre-orders for the iPhone this week, and start selling the devices Jan. 17. That opens the door for Apple to expand its presence in China and reach China Mobile's 700 million customers.

A Dutch arbitration panel has ruled the luxury retailer Tiffany (TIF) must pay $450 million in damages to Swatch. The Swiss watchmaker had accused Tiffany of breach of contract. As a result of the ruling, Tiffany will take a big fourth-quarter charge.

Here on Wall Street, the Dow Jones industrial average (^DJI) and the Standard & Poor's 500 index (^GPSC) start the week at all-time highs, after the major averages rallied last week.

Friday's record for the Dow was its 47th this year, but this one was different from all of the others. This is the first inflation-adjusted record for the Dow since January of 2000.

The Chrysler IPO plan is on hold. Fiat Chairman Sergio Marchionne has reportedly restarted talks with a trust run the by the United Auto Workers about buying the 41 percent stake it holds in Chrysler. Fiat doesn't want the union to sell its shares in a public offering. That would make it more difficult for the Italian automaker to take total control of Chrysler.

Lastly, Michaels Stores, the national chain of arts and craft stores, also had planned to go public -- but the company has withdrawn its IPO filing. Michaels is owned by a pair of large investment firms.

 

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3 Reasons to Hold On to United Technologies Stock

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United Technologies  is a selection for the real-money Inflation-Protected Income Growth portfolio. In this brief video, portfolio manager Chuck Saletta offers three reasons why he's holding on to United Technologies' stock despite the company's modest gain since he bought it last year.

Help your money compound faster
United Technologies' dividend was key to its selection for the iPIG portfolio. A well-covered and rising dividend, reinvested over time, can help your money compound faster and could ultimately make you rich. It's as simple as that.

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In summary:

  • United Technologies' market price is close enough to Chuck's fair-value estimate to continue holding.
  • United Technologies' balance sheet is solid, with a 0.7 debt-to-equity ratio.
  • United Technologies' dividend is well-covered and has room to increase as the company grows.

To follow the IPIG portfolio as buy and sell decisions are made, watch Chuck's article feed by clicking here. To join The Motley Fool's free discussion board dedicated to the IPIG portfolio, simply click here.

The article 3 Reasons to Hold On to United Technologies Stock originally appeared on Fool.com.

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

Copyright © 1995 - 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

 

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Stock Market Today: Apple Goes to China and Tiffany Books a Huge Loss

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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.

Expect a strong start to the stock market today, as the Dow Jones Industrial Average is set to rise by 56 points at the opening bell. Stocks look set to end 2013 near all-time highs, sitting on an overall 24% gain with just a few trading days left in the year. Meanwhile, news is breaking this morning on several stocks that could see heavy trading in the session, including Apple , Tiffany , and Darden Restaurants .

Apple shares are up after the company finally inked a deal to offer its phones to China Mobile's nearly 800 million customers. The Mac maker announced over the weekend that it will begin selling the iPhone 5S and 5C models on China Mobile's massive 4G network on Jan. 17. In the statement, CEO Tim Cook hinted at aggressive plans to deliver millions of devices into the market in 2014, saying that Apple hopes to ring in the Chinese New Year by "getting an iPhone into the hands of every China Mobile customer who wants one." To make big inroads in that market, however, Apple will have to go through Samsung, which dominates the country with a 21% share. Apple's stock is up 3.3% in premarket trading.


Tiffany lost an expensive court battle over the weekend that will cost the company more than $450 million. After an arbitration panel found that it was at fault over a failed deal with the Swatch Group, Tiffany will have to take a roughly $300 million after-tax charge to its fourth-quarter results. The total penalty weighs in at more than the retailer's entire net earnings last year. Tiffany expects to fund the payment with a mixture of cash and debt that will reduce full-year earnings by roughly $2.30 a share, but should have no real impact on its business going forward. The stock is down 3% in premarket trading.

Finally, Darden Restaurants has another activist investor on its hands. Starboard Value recently bought a 5.6% stake in the struggling restaurant operator, according The Wall Street Journal. The fund plans to push for a bigger breakup of the company than just the spinoff or sale of the Red Lobster business that Darden announced last week. Instead, Starboard reportedly wants Darden to reorganize by first splitting its real estate holdings into an investment trust before regrouping its restaurant portfolio into high-growth and low-growth divisions. The stock is up 2.3% in premarket trading.

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The article Stock Market Today: Apple Goes to China and Tiffany Books a Huge Loss originally appeared on Fool.com.

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

Copyright © 1995 - 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

 

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Warren Buffett's Letter to Santa Claus

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Although I haven't had the chance to ask Warren Buffett what he'd like for Christmas, I image his letter to Santa would look something like this:


Source: recitethis.com 

Dear Santa,


2013 has been a solid year for Berkshire Hathaway , and I'm thankful for that. We bought Heinz -- they make ketchup, which is red, just like your sleigh -- for a tidy $28 billion in partnership with 3G Capital, and I'm certain it was a great investment in a great company.

We also added a nice $3.4 billion position in ExxonMobil , which places it just behind Wal-Mart in our portfolio. I suspect your elves aren't the biggest fans of Wal-Mart, as it provides quite a bit of competition in the toy landscape, but I'm certain you all have a competitive edge. Exxon could likely help you out if you every run into any issues with heat in the North Pole -- they know a thing or two about energy. I also suspect they could make your coal production phenomenally more cost effective. I hear there have been some naughty CEOs this year.

As you know, I'm also a tremendous fan of Coca-Cola , and based on what I've seen, it looks like you are too. I have a nice cold Cherry Coke with the See's Candies -- they're better than cookies -- next to the fireplace for a little nourishment foe you before you journey out of Omaha.


Image Source: Flickr/Elliot Brown 

Speaking of your sleigh, did you know I also have managed to accumulate a $19.1 billion position in Wells Fargo ? I assume you did, as John Stumpf and his team are undoubtedly on your nice list. But the reason I ask is because their logo of the horse drawn carriage makes me wonder if you moonlight for them in the spring and summer months? Simply a thought.

Photo: Andy Rusch

It's also worth mentioning that if you're ever in the mood for a different way to travel, I'd highly recommend you consider a NetJet. It is a wonderful way to get largely anywhere in the world. Your sleigh is fast, but a private jet is tough to compete with. And if you're ever looking for a new set of boots, perhaps you should consider Brooks shoes, they're wildly comfortable. I image Mrs. Claus makes your suit, but if you need an extra layer, I'd suggest something our team at Fruit of the Loom came up with. In the interest of full disclosure, Berkshire Hathaway owns all of those as well.

But enough about that. I just have a few simple requests for Christmas. The first is about our good friends at IBM. I hope the whole "Big Blue" thing doesn't bother you, considering you're a fan of red and all. I first started buying their shares in the summer of 2011 -- when the price was right around $175 -- which is almost exactly what it stands at today. I don't need much, but I'd love it if you could give their engineers a new product to bring to market or something that'll get the stock price inching upwards.

A few Christmas's ago you also gave me ammunition for my "elephant gun" And while I've searched, I still can't find a company to use it on. Everything is mighty expensive in 2013, so a safari trip where I'm assured of spotting some big game would be great to unwrap on Christmas morning. That, or a brief moment of market panic. That's usually when I make my big bucks!

I know you're a busy man much like myself, so this is my last request, but I'd really appreciate it if you could get folks to stop asking me who will succeed me as chairman of Berkshire Hathaway. No one asks you who your successor will be, so I'm not sure why they're so compelled to do the same for me. Perhaps you'd leave me a bag of coal to send to any journalist who speculates on the subject. We've decided who it is; can't that be enough for them?

Thanks again for all the gifts over the years -- here's to hoping 2014 is as good a year as the last 83.

Sincerely,

Warren

The real words of Warren
While it's fun to speculate what Warren Buffett may say to Saint Nick, through the years, Buffett has offered up investing tips to shareholders of Berkshire Hathaway. Consider that he has made billions through the years and he wants you to be able to invest just like him. Now you can tap into the best of Warren Buffett's wisdom in a new special report from The Motley Fool. Click here now for a free copy of this invaluable report. It's a free gift that will keep on giving.

The article Warren Buffett's Letter to Santa Claus originally appeared on Fool.com.

Fool contributor Patrick Morris owns shares of Berkshire Hathaway, Coca-Cola, and ExxonMobil. The Motley Fool recommends Berkshire Hathaway, Coca-Cola, and Wells Fargo. The Motley Fool owns shares of Berkshire Hathaway, Coca-Cola, International Business Machines, and Wells Fargo. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Copyright © 1995 - 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

 

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Why You Should Ask for These 3 MLPs for Christmas

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Even if you've already completed all shopping and are ready to embrace the holiday season, these MLPs are worth a second glance. Simply consider them an early gift for 2014.

High demand
First, most operate within the midstream business segment, meaning that they are actively engaged in processing and distributing produced natural resources, notably energy sources. And with the booming natural gas industry—the Energy Information Administration recently released a report indicating that U.S. natural gas production will soar 56% from through 2040—many MLPs are poised to benefit.

Specifically, the future of the energy landscape within the Appalachian region, home to the Marcellus and Utica Shales, looks bright. For instance, even before CONSOL Energy recently closed a $3.5 billion deal to sell historic coal mines to focus on its natural gas business in Appalachia, it increased its Marcellus shale production 72%. And for perspective, CONSOL's net gas reserves grew 286% over the past five years.


In short, many midstream companies may benefit from building the necessary infrastructure to meet the rapid production growth.

Models that last
Then, to maximize efficiencies, many midstream businesses like MarkWest Energy Partners (NYSE: MWE) and Sunoco Logistics Partners (NYSE: SXL) partner with exploration and production companies like CONSOL, Range Resources, and Chesapeake Energy. The production companies guarantee a minimum volume of product over a period of time, enabling the midstream businesses to more effectively forecast future capital intensive projects. Additionally, the partnership model locks in customers (and cash) for midstream firms while providing peace of mind—and sometimes discounts—to the producers.

In addition to existing contracts with CONSOL Energy, Antero Resources, and other drilling firms, MarkWest recently announced a new, definitive agreement with Gulfport Energy Corporation. Under the contract, MarkWest and the Energy and Minerals Group will construct a condensate stabilization facility with initial stabilization capacity of 23,000 barrels per day, with plans to add an additional 30,000 Bbl/d of capacity. In addition to stabilizing raw condensate so it can be transported to end markets, the plant will become the primary hub for the Utica Cornerstone Pipeline, which is expected to become operational in 2016.

And the partnership model supplemented with high demand leads to a third key benefit: customized service.

Customization for the future
Many MLPs are able to customize their operations to specific customer requirements or requests—over a long period of time. For example, Sunoco Logistics Partners' Project Mariner East Phase One line is capable of transporting around 70,000 barrels of propane and ethane to a distribution facility, and the project was embraced because Sunoco Logistics knew it would secure long term customers. For instance, among other drilling companies it is currently engaged in a 15-year agreement with Range Resources, the "anchor shipper" for Project Mariner East. Plus, after receiving "considerable market interest," Sunoco Logistics announced a binding season earlier this month for its Mariner East Two project, and the pipeline is expected to begin operating in early 2016.

Spectra Energy and its subsidiary Spectra Energy Partners are also leading the bandwagon via a division coined Texas Eastern Transmission. Known as TEAM 2014 Project, Spectra is preparing to meet customer demand by installing and upgrading a pipeline that will enable Texas Eastern to supply natural gas from the Appalachian region to demand areas across the U.S. Once complete, the pipeline will be transporting an additional 600 million cubit feet of product per day.

Spectra Energy is also eyeing the Appalachian region; it expects to invest around $4 billion by 2016 to further develop the infrastructure within the Marcellus and Utica Shales.

Bottom line
The producers of natural gas, like CONSOL Energy and Range Resources, are calling upon infrastructure builders so that production growth can be sustained and even continue. Therefore, MLPs like MarkWest Energy Partners, Sunoco Logistics Partners, and Spectra Energy are rising to the challenge.

2014 and beyond
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The article Why You Should Ask for These 3 MLPs for Christmas originally appeared on Fool.com.

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

Copyright © 1995 - 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

 

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3 Reasons Marvel's Ant-Man Movie Could Be a Surprise Hit

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Disney's Marvel recently announced that it had cast Paul Rudd as Ant-Man, the titular hero of the 2015 Marvel film that will be incorporated into the rapidly expanding Marvel Cinematic Universe.

However, many people responded to that announcement with two simple questions -- who the heck is Ant-Man, and why should we care?


Source: Celebuzz.com

To better understand who Ant-Man is and why he represents an important turning point for the Marvel Cinematic Universe, we need to look back at the growth of the film franchises over the past five years.

Ever since Disney acquired Marvel in 2009, the Marvel Cinematic Universe has been expanding at a rapid rate. Marvel's vision for a unified Cinematic Universe to complement its comic book one came together with The Avengers, a film that grossed $1.5 billion worldwide and seamlessly united four of the company's core film franchises -- Iron Man, Hulk, Captain America, and Thor.

Marvel is building its Cinematic Universe in three clearly defined phases. For now, the path to the end of Phase 2 is fairly clear:

 

Total films

Starts with:

Ends with:

Phase 1

6

Iron Man (2008)

The Avengers (2012)

Phase 2

5

Iron Man 3 (2013)

Avengers: Age of Ultron (2015)

Phase 3

TBA

Ant-Man (2015)

TBA

Source: Wikipedia.

Phase 2 will mostly be a continuation of Phase 1, which introduced audiences to the four main Avengers. However, Phase 2 notably includes The Guardians of the Galaxy (2014), which will introduce over a dozen new Marvel characters such as Star-Lord, Gamora, Drax the Destroyer, and Ronan the Accuser.

Although Avengers: Age of Ultron will be a guaranteed blockbuster, it's unclear if following up that huge film up with an oddball film like Ant-Man is a good idea.

However, let's give Marvel the benefit of the doubt and take a look at three big reasons I believe that Ant-Man could be a surprise hit.

1. A clean slate

Ant-Man is an unfamiliar hero to most people, since he hasn't appeared in any feature films since his creation in 1962. Yet that unfamiliarity, often considered the upcoming film's biggest weakness, could also be its greatest strength.

Ant-Man is the alter-ego of Dr. Hank Pym, a scientist who discovers subatomic particles known as "Pym particles." These particles allow him to shrink and grow his body at will. He can also communicate with and control ants by using a telepathic helmet.

Ant-Man is notably the creator of Ultron, a psychotic AI robot modeled on Pym's own brain. Ultron will be the main villain in Avengers: The Age of Ultron, but since Ant-Man will be released after Ultron, it's unclear how the connection between Ant-Man and Ultron will be reestablished.

Ant-Man flees from Ultron. Source: Marvel.

In my opinion, Ant-Man's lack of mainstream recognition could actually make him a fresher, more interesting character for movie audiences.

Constantly retelling and rebooting superhero origins gets old in both comics and movies. After all, how many times do we have to see Uncle Ben die in Sony's Spider-Man or watch Bruce Wayne's parents get gunned down in Time Warner's Batman? At some point, audiences simply want fresh stories, rather than being told the same old tales.

By comparison, the Disney side of the Marvel Universe has effortlessly succeeded at introducing comic book characters to mainstream audiences who aren't as familiar with their comic book counterparts.

Prior to their film adaptations, there were doubts that Captain America and Thor -- both less familiar characters -- would translate well to film. Box office numbers and critical response, however, have proven naysayers wrong.

Film (Year)

Production budget

Global box office

Rotten Tomatoes Rating

Captain America: The First Avenger (2011)

$140 million

$371 million

79%

Thor (2011)

$150 million

$449 million

77%

Thor: The Dark World (2013)

$170 million

$627 million

65%

Source: Boxofficemojo, Rotten Tomatoes.

Considering Disney and Marvel's track record with successfully launching "less familiar" characters into film franchises, I believe that Ant-Man could be a bigger hit than most people expect.

2. Top-notch talent

Ant-Man might also be a surprising hit thanks to its top-notch cast and crew.

Paul Rudd isn't exactly an actor on par with Robert Downey, Jr., but I believe that he could have the requisite sarcasm and comedic wit to play Hank Pym.

However, director and co-writer Edgar Wright is the man who could make Ant-Man a hit. Edgar Wright isn't a household name, but he has an exceptional track record. Let's take a look at the box office and critical response for Wright's four main films.

Film (Year)

Production budget

Global box office

Rotten Tomatoes Rating

Shaun of the Dead (2004)

N/A

$30 million

91%

Hot Fuzz (2007)

N/A

$81 million

91%

Scott Pilgrim vs. The World (2010)

$60 million

$48 million

82%

The World's End (2013)

$20 million

$46 million

89%

Source: Boxofficemojo, Rotten Tomatoes.

While Wright hasn't completely proven himself at the box office yet, it's clear that critics and audiences enjoy his films.

More importantly, he's a director who established his career on smaller indie films -- just like Bryan Singer (The Usual Suspects, X-Men) and Christopher Nolan (Memento, Batman Begins) -- rather than bombastic CGI extravaganzas.

Considering Wright's eclectic career so far, I think that Ant-Man could be a refreshingly different film compared to Marvel's established franchises.

3. It could actually be lots of fun

Last but not least, Ant-Man could actually make comic book films fun to watch again.

Ever since Christopher Nolan rebooted Batman in a more realistic, military-industrial form in 2005, comic book movies have been darker than ever. Marc Webb rebooted Sam Raimi's Spider-Man (2002) as The Amazing Spider-Man (2012), a joyless affair that lacked Raimi's near-perfect balance of campiness and seriousness. Zack Snyder also rebooted Superman into a gloomy, loud affair with The Man of Steel (2013), which lacked the charm of Richard Donner's classic films.

Disney's Marvel films, at least, usually understand that comic book films shouldn't take themselves too seriously. The Avengers was lighthearted and unrealistic, but at no point did it disrespect the source material, as Joel Schumacher infamously did with Batman & Robin (1997).

Ant-Man could take audiences back to the time when Honey, I Shrunk the Kids (1989) amazed audiences with kids sleeping in Legos and riding an ant through the backyard. Moreover, Pym can control his size -- shrinking to the size of an ant or a becoming massive giant -- which could lead to some crazy comic situations. A head-to-head confrontation with the Hulk would be particularly hilarious, in my opinion.

The bottom line

Make no mistake -- Ant-Man is a risky project. If done badly, it could bomb and start Marvel's Phase 3 films on the wrong foot. However, if done right, it could help Marvel's Cinematic Universe keep growing, and eventually become as diverse and interesting as the comic book universe on which it is based.

What do you think, dear readers? Will Ant-Man be a blockbuster or a bomb? Let me know in the comments section below!

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The article 3 Reasons Marvel's Ant-Man Movie Could Be a Surprise Hit originally appeared on Fool.com.

Fool contributor Leo Sun owns shares of Walt Disney. The Motley Fool recommends Walt Disney. The Motley Fool owns shares of Walt Disney. 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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Why You Need To Watch Johnson & Johnson, The Medicines Company, Santarus, and Tesaro Today

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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.

Good morning, fellow Foolish investors! Let's take a look at three companies which could make health care headlines this morning -- Johnson & Johnson , The Medicines Company , Santarus , and Tesaro .


Johnson & Johnson wins a positive opinion for Sirturo in Europe

Over the weekend, Johnson & Johnson announced that it received a positive opinion in the EU for its drug Sirturo, as part of a combination therapy for treating pulmonary multi-drug resistant tuberculosis in adults. The FDA approved Sirturo in December 2012 for the same indication.

While the positive opinion of the Medicinal Products for Human Use (CHMP) bodes well for an eventual European approval, investors should remember that the FDA approval of Sirturo was a controversial one. Critics pointed out that the FDA ruling was based on sputum cultures rather than overall patient deaths.

The CHMP opinion was based on positive data from a 24-week phase 2 clinical study in safety and efficacy of Sirturo versus a placebo, but it remains to be seen if similar concerns from the U.S. approval will arise ahead of its European approval.

Sirturo is notably the first new tuberculosis drug to be approved in over 40 years. However, annual peak peak estimates are modest, at $300 million -- which would only make it worth 1% of the pharmaceutical segment's top line, based on J&J's 2012 revenue of $25.4 billion.

The Medicines Company receives marketing authorization for cangrelor in Europe

Meanwhile, The Medicines Company announced that the European Medicines Agency (EMA) had accepted its marketing authorization application (MAA) for cangrelor. This is the second piece of good news regarding cangrelor this year, following the FDA's acceptance of its new drug application (NDA) in July.

Cangrelor is an investigational intravenous antiplatelet agent (blood thinner). Cangrelor is notably an active drug that does not require metabolic conversion, unlike Bristol Myers-Squibb's prodrug Plavix. Cangrelor has had a rocky past -- two phase 3 trials were halted in 2009 due to poor interim results.

After those failures, the company continued testing the drug as a possible treatment for short-term use prior to surgery. Cangrelor is currently in development for patients undergoing percutaneous coronary intervention (PCI) and patients who require bridging from an oral antiplatelet therapy to surgery. If approved, analysts believe cangrelor could generate annual peak sales of $400 million by 2019.

The Medicines Company's revenue mostly comes from U.S. sales of Angiomax, another blood thinner which generated 79% of the company's top line last quarter. U.S. sales of Angiomax rose 12% year-over-year to $138.5 million last quarter, boosting the company's net revenue by 27%.

Santarus initiates a phase 2 study of SAN-300 for rheumatoid arthritis

Earlier today, Santarus announced that it had begun a phase 2a study of SAN-300, an investigational humanized monoclonal antibody, for the treatment of patients with active rheumatoid arthritis. The randomized, double-blind, and placebo-controlled trial will include 90 patients in 5 cohorts.

The administered doses will ascend from 0.5 mg/kg weekly to 4.0 mg/kg every other week. Each patient will receive 6 weeks of exposure to either SAN-300 or a placebo, and receive a 4 week follow-up checkup to assess the drug's overall safety and efficacy.

Santarus has high hopes for SAN-300 beyond rheumatoid arthritis. The company believes that the drug also has possible applications in other autoimmune diseases, inflammatory bowel disease, psoriasis, asthma, and organ transplantation.

Santarus currently has five marketed products -- Uceris, Zegerid, Glumetza, Cycloset, and Fenoglide. Of these drugs, Glumetza, a diabetes drug which helps control blood sugar in type 2 diabetes, generates the most revenue. Glumetza sales, at $45.6 million last quarter, accounted for 46% of the company's top line.

Investors should remember that Salix Pharmaceuticals  has already agreed to acquire Santarus for $2.6 billion in November -- a transaction that will close in the first quarter of 2014. Therefore, any positive developments at Santarus should be considered good news for Salix as well.

Tesaro announces positive phase 3 results for Rolapitant

Last but not least, Tesaro just announced positive phase 3 data for Rolapitant, a drug for chemotherapy-induced nausea and vomiting.

Rolapitant had achieved its primary endpoint of a complete response over a delayed period of 24 to 120 hours, following the initiation of chemotherapy. Rolapitant was successful at treating both patients receiving moderately emetogenic and highly emetogenic chemotherapy. This bodes well for Tesaro's plans to submit an NDA to the FDA by mid-2014. If approved, Rolapitant could generate annual peak sales of $300 million.

Tesaro doesn't currently have any marketed products. Its product pipeline consists of three main drugs -- Rolapitant, Niraparib (breast and ovarian cancer), and TSR-011 (ALK+ mutations in non-small cell lung cancer). Rolapitant and Niraparib are currently farther along, in phase 3 trials, while TSR-011 is still in phase 1/2 trials.

Top Stock of 2014

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The article Why You Need To Watch Johnson & Johnson, The Medicines Company, Santarus, and Tesaro Today originally appeared on Fool.com.

Fool contributor Leo Sun has no position in any stocks mentioned. The Motley Fool recommends Johnson & Johnson. The Motley Fool owns shares of Johnson & Johnson. 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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Whole Foods' Decision to Drop Chobani Isn't Personal

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In a recent interview on CNBC, Hamdi Ulukaya, founder of Greek yogurt phenom Chobani, discussed Whole Foods Market's decision to in 2014 drop the product from its store shelves. Ulukaya's reaction was raw and genuine, and it almost sounded as though he was working through the five stages of grief -- denial, anger, bargaining, depression, and acceptance -- right there on the phone.

Ulukaya created Chobani yogurt from modest beginnings, having acquired an old Kraft Foods  plant in 2005, and built it into a billion-dollar brand. Nevertheless, his response was kind of priceless and the snub may speak more to Whole Foods' internal strategy than it does to any supplier, including Chobani. Let's explore Ulukaya's candid reaction and try to get to the root of the issue.  

The following are excerpts from Ulukaya's Dec. 19 interview on CNBC: 


Denial
'It won't hurt our business'..."We grew about 30[%] this year, and we wanted to grow more and more places, not lesser places. Of course we don't like it."  

Anger
"First they said it was GMO and then it was changed to be more exclusive specialty products. On the GMO front...even their own stores and some of their products have GMO-fed cows...But when it comes to yogurt thinking that yogurt should be exclusive, that I don't understand. It's not an expensive watch or imported ham. Why yogurt has to be exclusive, that I don't understand." 

Bargaining-"As a farmer who comes from Turkey who grew up with yogurt, grew up working in the farms..I"m very close w/the farmers....The reality is...more than 800 farmers are not injecting hormones into their cows now. I'm proud of that." 

Depression
"Yesterday I was at the plant when I heard the news. Of course I took it personally."

Acceptance
"Chobani is leading to make sure that when we go further, we make food better, we make milk better, we make farmers better, and everybody wins." 

'It's not about GMOs'
Whole Foods' decision, the grocer said, wasn't about GMO concerns despite the fact that  seems to be the word that Ulukaya heard, too. Instead, Whole Foods told The Washington Post, it was a function of the fact that the Greek yogurt maker didn't accept a challenge to create "unique options for shoppers to enjoy." Incidentally Chobani only days ago introduced Simply 100 Greek Yogurt, a 100-calorie product that is the first of its kind.   

Chobani generates about $1 billion in sales each year, and Whole Foods is a fractional part of that, comprising less than one-half of a percent of total business, Ulukaya said. And as Ulukaya noted, the company has been growing by leaps and bounds in the past year in a broader yogurt market that generated $4.2 billion in revenue in 2013...and Greek yogurt represents nearly one-third of that. 

Perhaps Whole Foods' decision is more about its exclusive-label sales push, as Ulukaya also suggested, where profit margins tend to be higher as it moves into places like Brooklyn, where the organic- and natural-food grocer on Dec. 17 opened its maiden location in the New York borough.

Our exclusive brands are a key component of our differentiation strategy. In fiscal year 2013, our exclusive brands accounted for approximately 16% of our non-perishable sales and approximately 12% of our total retail sales, up slightly from 15% and 11%, respectively, in fiscal year 2012. -- Whole Foods 10-K filing, fiscal 2013

And while Whole Foods remains the market leader in natural- and organic-food grocers, the market has seen heightened competition in recent years, with the players like Sprouts Farmers Market strengthening its presence, taking potential customers and shareholders in the process.

In fact, Whole Foods' decision to nix Chobani might not be about Chobani at all. It may just be a function of the grocer's fight to defend its market position in a dynamic where new organic and natural-food grocery stores are popping up around the country. 

Whole Foods' same-store sales have been rising, but in the fiscal fourth quarter grew at the slowest pace of the year. Worse, Whole Foods narrowed its fiscal 2014 sales growth projections to the downside to a range of 11% to 13% from a previous range of 12% to 14%. 

So perhaps changes are in order and Chobani's shelf space may have just been a casualty of Whole Foods' battle plan. This fallout seems to be less about Greek yogurt and even the control of GMOs than it is about Whole Foods' attempt to increase pricing power and create more of a moat, and in light of the grocer's tactics I wouldn't be surprised if there are more supplier casualties to come. 

Conclusion
You can still get Chobani yogurt elsewhere, from the aisles at Wal-Mart  to Walgreen  and Sprouts. And despite the snub, Ulukaya isn't stuck in denial; he just seems to be taking personally a decision that while it affects his company, to the tune of less than 1% of business, doesn't appear to be personal at all. 

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The article Whole Foods' Decision to Drop Chobani Isn't Personal originally appeared on Fool.com.

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Is It Finally Time to Buy Bank of America?

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"Generally, the greater the stigma or revulsion, the better the bargain." -- Seth Klarman

$43 billion in lawsuits has left Bank of America drenched in stigma, but as Klarman suggests, the greater the stigma, the greater the possible opportunity.

With that in mind, Bank of America CEO Brian Moynihan recently spoke at a conference and gave four key ingredients for Bank of America to have continued success in 2014. Today, I'll be digging into those ingredients while comparing them to in-class competition Wells Fargo and Citigroup to determine if now is the perfect time to buy Bank of America.


The big difference
With over $2.1 trillion in assets, Bank of America is the second largest bank in the United States, and being big provides big competitive advantage. That means, as CEO Brian Moynihan suggested, a "leadership position across the consumer business and one of the broadest distribution networks in banking."

Bank of America, also, is never far from the public eye, because with over $1.3 billion in marketing spend -- which is matched by Citigroup, and double Wells Fargo -- you're never far from a commercial, a building, or even a stadium with the company's logo. That's power only size can buy, and the edge Bank of America will need to leverage to have continued success in 2014.

Cutting costs

An improvement in efficiency ratios often translates into an improvement in profitability. So, glass half full, Bank of America certainly has the most room for improvement moving into 2014.

The company has taken significant strides in 2013. This includes cutting more than $600 million in jobs and decreasing long-term debt by more than $30 billion. These are both trends investors should expect to continue into 2014 and will, in this investor's opinion, improve the company's profitability in the process.

Investing in technology
In the past few years, Bank of America has invested more than $750 million in enhancing its digital presence -- and it shows. The company recently received the "Best in Class" mobile banking award from Javelin Strategy and Research, while Wells Fargo won the "Best in Text" banking award, and Citigroup was a top five winner in "Mobile Functionality."

It seems clear, at least to this investor, that CEO Brian Moynihan understands the direction of the industry, stating, "Banking center transactions have declined 11% while ATM, online, and mobile transactions have grown 5%." This is another trend investors should expect to continue, considering Bank of America's mobile app has 14 million active customers, and is adding, to Moynihan's estimates, nearly 7,000 new users daily.

While that's still only a small percentage of the company's 49 million customers, the growing online user base gives Bank of America the opportunity to continue to reduce the physical banking center presence, while allowing employees more time to serve customers better. Investing in technology should prove incrementally beneficial for Bank of America into 2014 and beyond.

Deepen relationships
Increasing deposits -- especially in a low loan growth environment -- is about developing relationships. This is because when customers are happy, they do things like get credit cards, take out loans, and eventually, invest with one of Bank of America's wealth management companies -- like U.S. Trust or Merrill Lynch.

It's called cross-selling, and it's by no means a new strategy, but it's one Bank of America has been steadily improving. In fact, according to Moynihan, referrals to the company's wealth management businesses are up 70% year to date. The process is good for customer satisfaction and dramatically increases customer retention rates -- it's what we like to call a win-win.

Looking ahead
As Klarman said at the beginning of this article, "Generally, the greater the stigma or revulsion, the better the bargain" -- "generally," meaning, don't pick stocks because there's stigma; rather, look for strong companies that happen to be surrounded by stigma.

Bank of America is a strong company that will attack 2014 with size, diligent cost cutting, technology, and stronger customer relationships. Bank of America, in this investor's opinion, is a steal selling at just 0.7 times book value, which is on par with Citigroup, and a better buy than Wells Fargo.

A possible game-changer
The traditional bricks-and-mortar bank will soon go the way of the dodo bird -- into extinction, that is. This sounds crazy, but it's true. Every single one of the nation's biggest banks are dramatically reducing branch counts and overhauling the ones left behind. But despite these efforts, they're still far behind a single and comparatively tiny lender that's already leapt into the future. Since the beginning of 2012 alone, this company's shares are already up more than 250%. And they're bound to go higher. To download our free report revealing the identity of this stock, all you have to do is click here now.

The article Is It Finally Time to Buy Bank of America? originally appeared on Fool.com.

Dave Koppenheffer has no position in any stocks mentioned. The Motley Fool recommends Bank of America and Wells Fargo. The Motley Fool owns shares of Bank of America, Citigroup, JPMorgan Chase, and Wells Fargo. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Copyright © 1995 - 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

 

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Baidu in 2013: A Year in Review

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It's been a good year for China's leading search engine. Shares of Baidu are up a whopping 73% with a handful of trading days to go, easily beating the market.

It didn't start out that way. Baidu stock was trading as much as 17% lower in 2013 when it bottomed out in April. The market was concerned that Baidu wasn't doing enough to matter in mobile. There were also concerns that Qihoo 360 was gaining market share in search after launching its own platform last year. 

Baidu bounced back. Some timely acquisitions assured investors that Baidu wouldn't have all of its eggs in desktop search. The dot-com speedster's heady growth and rosy outlooks also silenced the fears that it was losing ground in the world's most populous nation.


Deals and growth
The first deal to turn heads came in early May, just weeks after Baidu stock hit a fresh 52-week low. Baidu acquired PPS.tv's streaming video service in a $370 million deal. Combining PPS.tv with its own iQiyi transformed Baidu into an online video juggernaut that would rival market leader Youku for market dominance. Video is naturally not as lucrative as paid search, but investors have gotten excited about streaming video's prospects in China. Youku hit a 52-week high this month despite posting larger than expected losses in two of the past three quarters.

Baidu shares began to move higher after the PPS.tv purchase, but the real game changer came two months later when it shelled out $1.9 billion to snap up China's leading mobile apps marketplace operator. It may have been a stiff price to pay, but Baidu's good for the money. Even after a year of major acquisitions, the Chinese bellwether had more than $7 billion in cash and short-term investments on its balance sheet by the end of September. 

Making big bets on streaming video and mobile apps will pay off in the future, but a big reason for Baidu more than doubling off of April's low is that it's doing a nice job of growing. Baidu's third quarter was a gem with revenue soaring 42% for the period. More importantly, its outlook for the final quarter is even more promising. Baidu sees revenue growth accelerating to the point where it posts 46% to 50% top-line growth during the current quarter.

Baidu may have started out the year as a lamb, but it's closing it out as a lion.

Baidu was big in 2013, but here's a stock that should be big in 2014
The market stormed out to huge gains across 2013, leaving investors on the sidelines burned. However, opportunistic investors can still find huge winners. The Motley Fool's chief investment officer has just hand-picked one such opportunity in our new report: "The Motley Fool's Top Stock for 2014." To find out which stock it is and read our in-depth report, simply click here. It's free!

 

 

The article Baidu in 2013: A Year in Review originally appeared on Fool.com.

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

Copyright © 1995 - 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

 

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Monday's Top News Headlines

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Here are today's top news headlines from Fool.com. Check back throughout the day as this list is updated, and follow us on Twitter at TMFBreaking.

Stock Market Today: Apple Goes to China and Tiffany Books a Huge Loss

Why You Need To Watch Johnson & Johnson, The Medicines Company, Santarus, and Tesaro Today


Jos. A. Bank Turns Down Men's Wearhouse Offer

The article Monday's Top News Headlines originally appeared on Fool.com.

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

Copyright © 1995 - 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

 

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NASDAQ-100 Index Additions to Ignore for Now

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The data is undeniable -- being added to or removed from a major index has a dramatic impact on stock prices over the next six months to a year. The NASDAQ-100 index is doing its annual update effective Dec. 23. Based on research from Schaefer's and raw numbers from the 2012 updates, investors clearly do better investing in the group removed from the index over the short run.

For 2012, the stocks added to the index gained in line with the NASDAQ-100 over both the six-month and 12-month periods. The removals from the index actually smashed the index with an average six-month gain of 43.5% versus 8% for the index. The 12-month numbers were not as impressive, but still very strong at nearly 69% versus 32% for the index.

Facebook and Netflix are prime examples of how the index changes typically add the strong stocks at short-term highs and remove weak stocks with more upside potential. The index removed Netflix to only watch it soar nearly 320% for the year. Facebook was added to the index and started out with a negative return for the first six months. Facebook eventually soared 100% by the time the year was up, but it highlights how the stock got overheated in the short term.


Based on these stats, investors should clearly stick to the stocks removed from the index. After several months, however, the stocks added to the index become more attractive. The stocks added for this year include DISH Network , Illumina, NXP Semiconductors N.V. , TripAdvisor , and Tractor Supply Company.

Satellite play
DISH Network offers direct-broadcast subscription television services. The company continues to push forward with a full suite of services, including high-speed Internet, and there are constant rumors about it making an acquisition in the mobile space. A full suite of services would make DISH a real threat to cable and mobile providers that offer only one service or the other.

The stock has seen significant gains in the last year, even while missing earnings in three of the last four quarters. Analysts forecast limited revenue growth for the next couple years. But the consolidation in the general space, including mobile providers, has made the company an interesting consolidation opportunity. With the stock trading at 27 times forward earnings following strong gains in the last year, investors might want to place the stock on hold for now.

Underfollowed semiconductor
NXP Semiconductor is driving innovation in integrated circuits and discrete semiconductors. The company claims it creates solutions that enable secure connections for a smarter world. The former division of Phillips only recently changed its name to NXP.

For a list of additions to the NASDAQ-100, NXP has one of the more attractive valuations. The stock trades at roughly 11 times forward earnings estimates and only around two times revenue forecasts. Also, analysts have favorable forecasts for long-term earnings growth, likely due to the benefits of the spinoff from Phillips. The stock has seen significant gains in the last year, but it offers an attractive valuation that suggests it might not see the normal weakness of a stock added to the index.

Advising on trips
TripAdvisor fits the above Facebook example almost perfectly. The stock has seen a huge run prior to its addition to the index and trades at what most consider a high valuation of nearly 40 times forward earnings. TripAdvisor has a promising future, but the stock probably needs to rest for a few months before making another run.

The company offers reviews from real travelers, along with a wide variety of travel choices and planning features to book the perfect trip. TripAdvisor has more than 260 million unique monthly visitors, and more than 125 million reviews on 3.1 million travel options.

Bottom line
A hot stock that gets an extra boost from joining a major index might peak in the short term. The above stocks that are being added to the index effective Dec. 23 are ones for investors to keep an eye on with the 2012 additions eventually providing some solid gainers. The only problem is that over the last year, the average stock added to the index has only matched the performance of the index. DISH Networks, NXP Semiconductors, and TripAdvisor appear the most appealing long-term, but for the next few months, investors should check out the stocks removed from the index.

If we could buy only one stock in 2014, this would be it
There's a huge difference between a good stock, and a stock that can make you rich. The Motley Fool's chief investment officer has selected his No. 1 stock for 2014, and it's one of those stocks that could make you rich. You can find out which stock it is in the special free report: "The Motley Fool's Top Stock for 2014." Just click here to access the report and find out the name of this under-the-radar company.

The article NASDAQ-100 Index Additions to Ignore for Now originally appeared on Fool.com.

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

Copyright © 1995 - 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

 

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3 Top Consumer Goods Dividend Stocks for 2014

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Rock-bottom interest rates have left investors starved for income-producing securities. That's led to a surge in dividend stock popularity in recent years, which will likely continue in 2014. Here are three attractive consumer goods companies each growing their dividends and boasting price-to-earnings ratios near or below that of the overall stock market.

Kraft Foods' dividend yield recently hit 4%. The packaged foods company raised its dividend by 40% last year. Given Kraft's 48% dividend payout ratio, future increases could also be in store. Even though the maker of Oscar Mayer, Velveeta, and Cool Whip may seem like a boring, slow-growing company, its stock has returned more than 25% since its October 2012 split from its parent company, now known as Mondelez International . Since the corporate breakup, Kraft has emerged as a leaner organization, specifically focusing on cost-cutting and profitability. As Kraft's margins grow, it'll grant the company more leeway to increase its already lip-smacking dividend.

General Mills recently yielded 3%. The cereal maker boosted its dividend by 15% this year and has increased its dividend 11% on average annually during the past five years. Amazingly, the packaged foods powerhouse has paid an uninterrupted dividend for 115 years! General Mills' broad product portfolio centers on health and convenience, two fast-growing trends that have gained traction in recent years. The company is well positioned in several profitable food categories, such as yogurt, soup, and cereal with its Yoplait, Progresso, and Cheerios brands. International expansion is also becoming an increasingly important source of growth for General Mills, especially with its recent acquisitions.


Diageo's dividend yield recently neared 3%. The U.K.-based spirits maker boosted its dividend 9% last year and has grown it nearly 17% on average annually during the past three years. Its strength lies in its geographic breadth, which significantly lessens the impact of individual market challenges. Diageo currently derives about 40% of sales from emerging markets, but has plans to grow that even more aggressively. The world's largest distiller also boasts a very diverse product portfolio, which includes Johnnie Walker and Smirnoff. Spirits account for more than 70% of net sales, yet no individual spirits category makes up more than 29% of company sales. Diageo holds industry-leading brands at every price point across the globe, giving it the ability to capture dollars as consumers trade up or down worldwide.

More love for dividend investors
One of the dirty secrets that few finance professionals will openly admit is the fact that dividend stocks as a group handily outperform their non-dividend-paying brethren. The reasons for this are too numerous to list here, but you can rest assured that it's true. However, knowing this is only half the battle. The other half is identifying which dividend stocks in particular are the best. With this in mind, our top analysts put together a free list of nine high-yielding stocks that should be in every income investor's portfolio. To learn the identity of these stocks instantly and for free, all you have to do is click here now.

The article 3 Top Consumer Goods Dividend Stocks for 2014 originally appeared on Fool.com.

Fool contributor Nicole Seghetti owns shares of General Mills and Mondelez International. Follow her on Twitter @NicoleSeghetti. The Motley Fool recommends Diageo. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Copyright © 1995 - 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

 

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Nordstrom Has Reinvented Itself

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Would you feel comfortable investing in a company that has seen 30% e-commerce growth over the past two years? What if that company has also been outperforming its peers on the top line by a wide margin over the past five years? And what if this same company was recently ranked by Market Force as America's Favorite Fashion Retailer? If you answered yes to these questions, then you might want to consider Nordstrom .

Top-notch customer service
Nordstrom is primarily known as a high-end retailer, but it should be known for its customer service as well. This is somewhat ironic considering many consumers are intimidated by higher-end stores, thinking that their lack of knowledge about popular brands should keep them from visiting certain retail stores. If you happen to fit into that category, then you will be happy to know that you would likely have the opposite experience at Nordstrom. 

Market Force rated Nordstrom as America's Favorite Fashion Retailer for several reasons, but customer service stood out. Nordstrom offers a very lenient return policy as well as salespeople that are friendly, helpful, and knowledgeable. These simple initiatives have led to strong customer loyalty.


Nordstrom offers top-notch customer service when you visit its brick-and-mortar stores, and this has led to success, but how is its online store faring? 

Online performance
As hinted at above, Nordstrom has seen 30% e-commerce growth over the past two years, and this trend is expected to continue. Nordstrom is highly focused on its website because it has found that multichannel shoppers (people who shop at least two of the following "channels": brick-and-mortar, website, mobile) tend to spend four times more than single-channel shoppers.

One example is that Nordstrom offers 50% more product offerings online than it did last year at this time. It's now at the point where Nordstrom has more products online than in its brick-and-mortar stores. Nordstrom has especially seen strong online demand for footwear and women's apparel. Logically, it will aim to build out these product offerings on its site. 

Prior to getting to online comparisons between Nordstrom and two of its peers, Macy's and Gap , let's first take a look at top-line performance comparisons over the past five years. Despite Gap not being a department store, consumers searching for a broad array of apparel are likely to look to one of Gap's brands, especially in search of apparel at varying price points. Now for that chart: 

JWN Revenue (TTM) Chart

Nordstrom revenue (trailing-12-month) data by YCharts.

Impressive for Nordstrom, but the company's website, Nordstrom.com, hasn't been the top performer in this group when it comes to online trends over the past three months. Consider the numbers in the following table:

Website 

Global Traffic Ranking

Domestic Traffic Ranking

Bounce Rate (visitor only views one page and leaves)

Page views per User

Time on Site

Nordstrom.com

615

161

Up 6% to 32.3%

Down 9.7% to 5.42

Down 18% to 4:54

Macys.com

487

81

Up 6% to 26.8%

Up 9.2% to 6.04

Up 4% to 6:41

Gap.com

597

127

Up 3% to 24.1%

Up 4.4% to 7.86

Down 3% to 6:14

Source: Alexa.com.

Nordstrom might be growing online, but Macys.com stands out over the past three months. Not only does it generate the most traffic of the three internationally and domestically, but its website is good at keeping visitors interested. This, of course, has the potential to lead to increased sales. However, if you take out three-month trends and look at the overall picture, Gap.com offers the lowest bounce rate as well as the highest page views per user.

It should also be noted that Gap has demonstrated the best debt management of this group, sporting a debt-to-equity ratio of 0.4, whereas Nordstrom and Macy's have debt-to-equity ratios of 1.6 and 1.3, respectively. This might not matter now, but if the economy were to sour, Gap would likely hold up best.

For now, fear not for Nordstrom. For this quarter alone, it's investing $6 million in technology, fulfillment, and a Canadian expansion. These initiatives have the potential to accomplish three goals: improve online performance, reduce costs/improve margins, and drive top-line growth.

The bottom line
Nordstrom is on-trend, which has led to 52% stock appreciation over a three-year time frame. And Nordstrom currently yields a 2% dividend. Barring an economic calamity, Nordstrom's top-notch customer service, solid online performance, and strategic investments should lead to continued strong performance for the retailer. 

Top growth potential in retail 
To learn about two retailers with especially good prospects, take a look at The Motley Fool's special free report: "The Death of Wal-Mart: The Real Cash Kings Changing the Face of Retail." In it, you'll see how these two cash kings are able to consistently outperform and how they're planning to ride the waves of retail's changing tide. You can access it by clicking here.

 

The article Nordstrom Has Reinvented Itself originally appeared on Fool.com.

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

Copyright © 1995 - 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

 

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5 Reasons It's Better to Own Than Rent

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Source: StockMonkeys.com.

I recently wrote an article that explained in detail why thinking of your home as an investment is simply faulty logic. So, by the title of this post, it may seem that I'm contradicting myself. Not so. While I don't advocate considering "investment value" when purchasing a home, there are still plenty of valid reasons to own instead of rent, especially in the current low rate environment. Let's take a look at why homeownership simply makes more sense than renting, especially over a long-term basis.


Reason 1: Mortgages are cheap
Even though rates have spiked about 1% over the past year or so, at a 4.5% interest rate, 30-year mortgages are still very cheap on a historical basis. This is significant because in many cases, it is actually cheaper on a monthly basis to own a home than rent. In the market I live in, $350,000 gets you a relatively basic three-bedroom home, and I live in a hurricane-prone area, so we have to pay flood and windstorm insurances, which brings the total mortgage payment on a $350,000 house to about $2,400. The same house would easily command $2,700 per month in rent.

Reason 2: Your life, your way
Want to get a new family pet? Go for it! Want to landscape your yard, put in a pool, add on another bedroom, or remodel your kitchen? These are some things that are out of the question in virtually any rental situation and can be as easy as applying for a building permit if you own your own home. 

If you're a dog lover, finding an apartment can be a nightmare. Many of my friends who rent their houses are stuck with kitchens that look like something from a 70s TV show, and their landlords seem to be in no rush to update anything. The freedom to make your home truly your own is one of the best reasons to buy a house. 

Reason 3: Credit
This may seem somewhat unimportant, since most people in a position to buy a house already have very good credit. Regardless, a mortgage will certainly report to the credit bureaus, and a rental company will almost certainly not. There are few items on a credit report that demonstrate financial responsibility and general stability in life better than a long history of on-time mortgage payments.

Reason 4: Equity
Having equity that can be tapped into if necessary is a big plus for homeowners. Having equity in your home is not only important to help pay emergency expenses, home improvements, or your kid's college tuition, but simply having the equity available to you makes it much easier to get a loan for almost anything else. If you have, say, $75,000 in home equity, a bank will feel much better loaning you $20,000 to buy a boat than if you were renting an apartment.

Reason 5: Not an investment, but still much better than renting for your financial health
Even though I've said your home is not a good investment, at least in the traditional sense of the word, it is still exponentially better for your long-term financial health than being a lifelong renter. 

Let's say you buy a $200,000 house, and you put $40,000 down. This would make your mortgage payment $810.70 for 30 years at a 4.5% interest rate. At the end of the 30 years, you own the home free and clear, and hopefully it's appreciated significantly in value.

If you pay the same amount in rent, after 30 years, you'll have paid a total of $291,852 in housing payments. This is also a glorified scenario, as rental rates usually rise over time, making your actual total even more. At the end of 30 years, you'll have absolutely nothing to show for all of the money you spent.

So, while owning your home only provides 3%-5% annual returns on a long-term basis, this is still far better than paying out hundreds of thousands of dollars and not building any equity whatsoever. Homeownership is still the way to go!

More reasons banks are terrified
The traditional bricks-and-mortar bank will soon go the way of the dodo bird -- into extinction, that is. This sounds crazy, but it's true. Every single one of the nation's biggest banks are dramatically reducing branch counts and overhauling the ones left behind. But despite these efforts, they're still far behind a single and comparatively tiny lender that's already leapt into the future. Since the beginning of 2012 alone, this company's shares are already up more than 250%. And they're bound to go higher. To download our free report revealing the identity of this stock, all you have to do is click here now.

The article 5 Reasons It's Better to Own Than Rent originally appeared on Fool.com.

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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Tuesday's Top Upgrades (and Downgrades)

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This series, brought to you by Yahoo! Finance, looks at which upgrades and downgrades make sense, and which ones investors should act on. Today, our headlines feature improved price targets for two consumer favorites: Nike and Darden Restaurants . But the news isn't all good. Before we get to those two, let's take a quick look at why one analyst is no longer ...

Stuck on Gluu
After watching shares of mobile games maker Glu Mobile rocket 72% over the past year, analyst B. Riley is declaring victory and calling it quits this morning.

According to StreetInsider.com, Riley cut its rating to neutral today -- and it's not hard to see why. Just two months ago, Riley predicted that Gluu shares would hit $3.75 per share within a year and recommended buying them. Two months later, the shares had climbed past $4 a share, achieving all the analyst had hoped they would achieve -- and more -- 10 months ahead of schedule.


But should investors stick around in hopes of more gains to come?

Riley seems to be voting "no," and I agree. With no GAAP profits to its name -- no profits earned ever, at any time in the past decade -- Glu may have turned in great returns as a stock, but as a business it's anything but great. The company's burning through its cash reserves at the rate of nearly $15 million a year, and unless something changes it will be out of cash within just two years. Personally, I'd bail before that happens.

Next up, Nike 
Nike reported $0.59 per share in profits for fiscal Q2 earlier this month, a penny better than expected, and largely thanks to an improvement in gross profit margins. Sales, however, fell short of estimates, rising only 8% year over year, as inventories climbed 11%.

Weighing the results, analysts at Argus Research appear to be more impressed with the earnings "beat" than with the sales miss, and today announced they're hiking their price target on the already buy-rate stock by four dollars, to $88 a share. I think that's a mistake.

Priced at close to 25 times earnings today, Nike shares look overvalued relative to 12% anticipated annualized earnings growth. Plus, the $2.3 billion in net income the company has reported earning over the past three reported quarters overstates true free cash flow at the company by 30% -- so the profits that Nike is earning don't appear to be of particularly high quality. Meanwhile, the stock -- like Glu's -- has beaten the S&P 500 soundly over the past year, racking up 50% gains to the market's 29% return.

I don't think Nike necessarily deserves all those gains, given its only modest prospects for earnings growth over the next five years and the low quality of the profits it is currently earning. While a move to $88 certainly isn't impossible, I don't think it would be justified given the numbers we see today. At today's valuation, I think the stock's more likely to go down than up.

Red Lobster no more 
Finally, we turn to Darden. Last week, the owner of Olive Garden, LongHorn Steakhouse, and Red Lobster announced it's spinning off one of these three marquee brands, and reining in capital spending by reducing unit growth at Olive Garden and LongHorn.

Management predicts these moves will result in "increased cash flow from reductions in capital spending." Management further promises to use the cash it saves "to support dividends, share repurchase and strengthening of the Company's credit profile." Analysts seem to like the idea, with Wunderlich in particular upping its price target on the hold-rated stock to $54 a share -- and I agree.

Darden's 17-times-earnings valuation is anything but attractive in light of the stock's projected 3% long-term earnings growth rate. But if Darden starts redeploying its cash to earnings-concentrating stock buybacks, boosting the already rich 4.4% dividend yield further, and paying down the company's substantial $2.7 billion debt load ... well, who could argue with that?

The prospect of cutting capex -- so that Darden's free cash flow number (currently a measly $65 million) begins to better resemble reported GAAP earnings ($197 million over the past 12 months) -- will also be a positive for the stock.

Mind you, I still see Darden as too expensive given the growth rate. I still think Wunderlich is right to be cautious about its optimism -- raising the price target ever so slightly, but maintaining its hold recommendation on the stock. But prospects are improving. Let's give this one a second look after the spinoff and see how much good unloading Red Lobster does for the valuation of the pieces that remain.

The article Tuesday's Top Upgrades (and Downgrades) originally appeared on Fool.com.

Fool contributor Rich Smith has no position in any stocks mentioned. The Motley Fool recommends Nike. The Motley Fool owns shares of Darden Restaurants and Nike.

Copyright © 1995 - 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

 

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