General Motors' headquarters in Detroit. Photo credit: GM.

Things have been changing quickly for General Motors after the U.S. Treasury finished selling off the last of its ownership in the once troubled automaker. In the latest string of headlines, today General Motors' Board of Directors declared a quarterly dividend of $0.30 per share on its common stock; it's the first dividend for the current General Motors, and/or the "previous" company that declared bankruptcy, since May, 2008. The dividend will be payable March 28 to all common shareholders on record as of March 18. 

The news immediately sent General Motors stock up more than 3% in after-hours trading and is further proof the company is slowly but surely distancing itself from the depths of the Great Recession that brought the company to its knees. As of the third quarter of 2013, General Motors has recorded 15 straight profitable quarters where it generated more than $16 billion in adjusted automotive free cash flow. The largest Detroit automaker also boasts total automotive liquidity of more than $37 billion.

As of closing prices on Tuesday, GM's reinstated dividend is a yield of 2.99% and is right in line with crosstown rival Ford's dividend yield of 3.04%. General Motors believes this to be a sustainable dividend with its improving business.

"Our fortress balance sheet, substantial liquidity, consistent earnings and strong cash flow provide the foundation for an ongoing payout." Said Dan Ammann, GM executive vice president and chief financial officer, in a press release. "This return to shareholders is consistent with our capital priorities and is an important signal of confidence in our plans for a continuing profitable future."

Coca-Cola's stock price lagged the market by a considerable amount over the last year due to flagging carbonated soft drink, or CSD, sales. There may be an antidote to Coca-Cola's woes in the form of Monster Beverage . As recently as 2012, Coca-Cola was in serious discussions to buy Monster in what would have been a huge, multibillion dollar acquisition that would put enormous pressure on PepsiCo .

The deal eventually fell apart, but with Monster now trading near the same price as it did during the 2012 talks, the acquisition may gain new life.

A deal makes sense for both Coca-Cola and Monster
Coca-Cola has struggled to enter the energy-drink category. Its two most popular brands, Full Throttle and NOS, have yet to gain a significant presence in a market dominated by Monster and Red Bull. Monster and Red Bull are as dominant in the energy-drink market as Coca-Cola and PepsiCo are in the CSD market; it will be difficult for any company to steal share from the market leaders.

While Coca-Cola could use a boost in the energy-drink category, Monster needs a boost in distribution. Monster relies on third-party distributors to get its products from the warehouse and into stores. Coca-Cola already has a global distribution system that distributes its beverages around the world; it could easily add Monster to its worldwide distribution network and add significant value by introducing the energy drink to markets that Monster could never reach on its own.

A deal would force PepsiCo's hand
Though Coca-Cola is struggling in the energy-drink space, PepsiCo is fairing even worse. PepsiCo's only major energy-drink brand, AMP Energy, has the fifth-largest market share in the category; it is squeezed between NOS and Full Throttle. But all three are quite a distance from the No. 3 brand, Rockstar, which is still further behind Red Bull and Monster.

Energy drinks have been gaining share in the CSD category for years. Of the top three CSD companies, only Dr Pepper Snapple Group has increased its market share in recent years; Coca-Cola and PepsiCo have both witnessed declines. John Sicher, editor of Beverage Digest, says that energy drinks are driving growth in the CSD market and stealing market share from traditional CSDs. If energy drinks can gain even wider distribution, the market opportunity is huge. Some estimates put 2017 energy drink sales at $21.5 billion, up from $12.5 billion in 2012.

With Coca-Cola's overall sales coming in below $50 billion, acquiring Monster and achieving market share growth through wider distribution would have a meaningful impact on the top line. Assuming a $21.5 billion energy drink market in 2017, if Coca-Cola's energy drink share hits 40%, it will generate $8.6 billion in revenue -- about 18% of its current overall revenue. While increased energy drink distribution would cannibalize sales of Coca-Cola's soft drinks, it would lead to CSD market share gains overall by stealing share from PepsiCo as well.

If Cola-Cola acquires Monster, PepsiCo could be pressured into making a bid for Rockstar. Such an acquisition would upset PepsiCo's carefully planned product portfolio, but would be necessitated because of the market share boost Coca-Cola could give to Monster. Since PepsiCo already distributes Rockstar in the United States, it would make a better -- and less expensive -- fit than Red Bull. PepsiCo can do the same for Rockstar that Coca-Cola can do for Monster; namely, introduce it to markets that it could not otherwise reach.

What's holding things up?
From a pure business combination standpoint, the deal is a no-brainer for both Coca-Cola and Monster. The price, however, could be a deal breaker. Monster's stock price quadrupled over the last five years and now trades for 36 times earnings. The company's market capitalization is slightly less than $11.5 billion. After factoring in a 30% acquisition premium, it would be a huge $15 billion acquisition.

However, there is reason to believe that the deal may go through this time. Coca-Cola was interested in 2012 when Monster traded for $11 billion -- not much lower than it trades for two years later. In three or four years, Monster could trade for several billion more, making it an acquisition that may be too big even for Coca-Cola to absorb easily.

Other than price, the only thing holding up the acquisition is the uncertainty regarding regulations governing energy drinks. Congress and the Food & Drug Administration are clamping down on the category, creating uncertainty for shareholders. However, if the new regulations turn out to be relatively benign, then Monster's stock price will surely zoom out of Coca-Cola's price range. If Coca-Cola wants to buy Monster, this is the time.

Bottom line
Betting on takeovers is a poor investment strategy, but investors should be prepared for them. If Coca-Cola buys Monster, it will immediately benefit the former's top-line results and will likely lead to long-term value creation. Investors who understand that ahead of time can quickly factor it into their assessment of Coca-Cola when the time comes.

Jazz Pharmaceuticals,  which spent nearly $1 billion buying orphan drug maker Gentium in December, just inked another deal to lock up Aerial BioPharma's promising mid stage narcolepsy drug, ADX-N05

Jazz is giving Ariel -- a small biotech firm that admitted in October it was seeking a partner to bring its sleep-inhibiting drug into phase 3 trials -- $125 million up-front after ADX-N05 in a phase 2b trial successfully met its endpoint of reducing sleepiness in narcolepsy patients.

Bolstering its anti-sleep franchise

Jazz is also promising to pay Aerial up to $272 million in milestone payments if the drug is successful in phase 3 and wins FDA approval.

The move to lockup global rights to ADX-N05 eliminates a potential competitor for Jazz's successful narcolepsy drug Xyrem, which is a class 1 controlled drug that is also known by the name GHB.

Sales of Xyrem were up 50% to nearly $154 million in the third quarter. That's more than double the revenue Xyrem generated for Jazz in the second quarter of 2011 and just about triple quarterly levels from 2010. That growth has come in part thanks to a 200% plus lift in Xyrem's price between 2008 and 2011. But its also coming thanks to rising adoption of its use. The company reported 11,000 were treated with Xyrem in the third quarter, up from 10,200 a year ago.

The only regions Jazz won't control ADX-N05 rights to are in Asia, which are held onto by South Korean drug maker SK Biopharmaceuticals when it licensed the compound to Ariel.

Jazz also thinks ADX-N05 might have label opportunities in other sleep causing disorders, such as obstructive sleep apnea. As a result, Jazz plans to start exploring those possibilities too.

It's an important market given daytime sleepiness is common in both narcolepsy and obstructive sleep apnea. Roughly 150,000 people in the United States suffer from narcolepsy, with about 50,000 of them receiving wake-promoting drugs. OSA is even more common, with approximately a half million people receiving wake promoting drugs in the U.S. alone.

On to the next idea

Aerial's founders are likely happy with the news. But it's not like they're newcomers to inking deals. Previously, they sold Neuronex to Acorda Therapeutics for as much as $134 million if incentives are reached.

Similar to Aerial, Neuronex's attractiveness was tied to technology licensed from SK Biopharmaceuticals that resulted in a nasal spray version of epilepsy drug diazepam, formerly marketed as Valium. Acorda has filed for FDA approval of the compound. If approved, the drug would complement its multiple sclerosis drug, Amprya, which generated sales of roughly $300 million this year for Acorda, up 12% from last year.

Ariel's deal with Jazz for ADX-N05 frees it up to focus on its next target, a pre-clinical pain compound, prostatic acid phosphatase, which Ariel hopes to bring into human trials soon.

Fool-worthy final thoughts

Despite being rumored to be an acquisition target itself, Jazz continues to use its strong balance sheet to build out its specialty drug business. Treating small patient populations remains widely profitable thanks to orphan patent protection and pricing power. So, a bigger company could still show up knocking on Jazz's door. In the meantime, the company seems content to keep expanding its product lineup.

The past few days have been dizzying for investors in the maker of the daVinci Surgical Robotic System, Intuitive Surgical .

Source: Intuitive Surgical.

On Friday, the Journal of Endourology made public a study touting the benefits of robotic-assisted surgery in prostatectomies, sending shares up as much as 10%.

But yesterday, an analyst at Northland Securities published a note stating that the daVinci system was no longer "popular" with hospitals and that the company's single-site three-arm attachment was being offered for as much as 50% off, sending shares down as much as 9%.

Then, finally, the company itself weighed in with preliminary fourth-quarter results. The big story is that revenue, though down from a year ago, will come in 5% higher than expected. That news sent shares up once again, by as much as 12%.

But things still aren't as rosy as this jump might lead you to believe, as a deeper dive reveals trends that are still weighing on the company's performance.

The bleeding hasn't stopped
Though Intuitive is a global company, it still relies on the United States for the majority of its revenue. Even in a down year, for instance, the U.S. accounted for 63% of all daVinci System sales.

Source: SEC filings.

Knowing that, you can imagine the revenue drop created this past quarter when 48% fewer daVinci's were sold when compared to 2012. Add on top of that the fact that the average daVinci system sold for 2% less this year, and that the company brought in 6% less cash per procedure and it's not hard to understand why total revenue was down 5% for this once-fast-growing company.

What does the future hold?
It would have been instructive if the company had broken out the number of hysterectomy procedures in the fourth quarter of 2013 compared to 2012. Instead, it only gave full-year numbers. On the whole, the number of hysterectomies performed increased only 8% -- far slower than in the past, but still enough to account for well over half of all procedures for the year.

The key reason for the slowdown comes from increased skepticism  on behalf of the medical community regarding the efficacy using the daVinci in hysterectomies.

Source: SEC filings.

For long-term investors, though, all is not lost. A major factor in the slowdown of system sales in the United States revolves around financial uncertainties due to the rollout of the Affordable Care Act. As insurers and hospitals become more comfortable with the new playing field, that trend could reverse.

But more importantly for those willing to hold shares for decades is the growth of "general surgery" procedures. As it stands now, gynecological and urological procedures account for more than 75% of all surgical uses for the daVinci in the United States.

There's nothing inherently wrong with that, but as doctors continue to experiment with ways to use the daVinci to help them in other areas, the robot could become infinitely more valuable. Over the past two years alone, these general operations have increased a remarkable 440%. What once made up just 4% of all procedures has exploded to account for more than 15%.

And that's the reason why for now I fully intend to hold my shares, which account for roughly 4% of my real-life holdings.

Thanks to strong performances from The Blacklist and Grimm, among others, NBC is becoming a more meaningful contributor to Comcast's business, Fool contributor Tim Beyers says in the following video.

NBC recently re-upped The Blacklist, which just this week returned from mid-season hiatus, for a second season. The show draws some 17 million viewers per episode for NBC while Grimm draws about 7 million. In each case, NBC seems to be winning over fans who spend at least a portion of their viewing hours watching edgy cable fare via HBO and AMC Networks, Tim argues.

They're having an impact as a result. Comcast collected $1.644 billion in Broadcast TV revenue in the third quarter, up 8.8% from $1.511 billion in 2011's Q3. Why exclude 2012? Comcast and NBC had the exclusive rights to broadcast 2012's London Summer Olympics, resulting in abnormally high ad revenue.

NBC is also winning acclaim among critics and awards panels. For example, actor James Spader was nominated for "Best Actor in a Television Series: Drama" at this year's Golden Globes -- the lone entry from a network TV program. Sure, Bryan Cranston took home the statue for Breaking Bad. That still doesn't diminish The Blacklist's growing impact on NBC's (and correspondingly, Comcast's) fortunes.

Do you agree? Are you watching The Blacklist? Please watch the video to get Tim's full take and then leave a comment to let us know whether you would buy, sell, or short Comcast stock at current prices.

Baidu has seen excellent growth since Google exited the Chinese market in 2010. In the last 18 months or so, though, Qihoo 360 has emerged as the No. 2 search engine in China.

Although the company has gained significant traffic share from Baidu, Qihoo still hasn't ramped up monetization. Analysts at Stifel expect 2014 to be the year Qihoo flips the switch and closes the gap between market share and revenue share, and they upgraded the stock earlier this week.

Product first
Qihoo 360 launched its search engine two summers ago, and its quickly gained 23% of China's search traffic. Meanwhile, Baidu has fallen to attract just two-thirds of Chinese web searches, and Google has fallen to just 1.6% of traffic.

The exciting thing about Qihoo's phenomenal market share gains in the last 18 months is that all of this search traffic is organically driven. Qihoo is relying on its other products -- its security software, its web browser, its Android app store -- to bring people to its search engine, So.com. That's a great sign, as the company doesn't even heavily promote search.

Instead, Qihoo's management is focused on making the product the best it can be. On the company's third-quarter conference call, co-founder and CEO Hongyi Zhou explained that if you promote a product before it's reached perfection, users will not stick. He wants a sticky product before he introduces it on a broader basis. He said So.com is in the late stages of the perfection process, so maybe Stifel is right that it will increase revenue share in 2014.

For the long-term investor, though, this process of perfection-promotion-monetization looks like a strong strategy. The idea is to get the biggest return on investment from the company's marketing and sales efforts and not rush things.

The company has a goal of reaching 30% traffic share in 2014, but it could be much more if it transitions to the promotion stage this year.

Flipping the revenue switch
Last summer, the head of Google China, John Liu, stepped down to "pursue other opportunities." It turns out those other opportunities include a big role at Qihoo 360, where he was just hired as Chief Business Officer. Liu's hiring was brought on specifically to "help [Qihoo] execute [its] strategy in search monetization."

No company knows how to monetize its web users better than Google. Enders Analysis Ian Maude estimates Google generated about $29.95 per user in the third quarter. The rest of the competition -- Yahoo!, Facebook, Twitter -- aren't even close to that level of monetization.

Qihoo doesn't currently offer the range of advertising products that Baidu does, so investors should look for the company to begin selling new products spearheaded by Liu. If Qihoo can copy even just a part of Google's success, search can become another major revenue stream for the company.

In its third quarter, Morgan Stanley analysts estimate that Qihoo generated $28 million in search ad revenue. Comparatively, Baidu posted online marketing revenue of $1.45 billion. That's with just three times the traffic share.

In other words, if Qihoo can monetize its traffic at even half the level of Baidu, it could increase its search revenue tenfold without even increasing its traffic. Of course, as more Chinese consumers buy smartphones and get online, the opportunity for both Qihoo and Baidu continues to grow.

Searching for growth in China
In my opinion, both Baidu and Qihoo make great investments as a way to play the growth of the Internet population in China. I like Qihoo a little bit more, as its opportunity in search is just getting started and it has a great ecosystem of users from its security software, browser, and app store. Baidu has been aggressively attacking the mobile market in order to compete with Qihoo's foothold there, but with the growth of the market, there's plenty of room for both companies.

Cigna is an odd duck in the managed care world. Managed care is certainly about managing costs, but it is also about pricing risk; Cigna's approach appears to be avoiding risk when possible, as the company has the smallest risk-based premium business of the major managed care companies. Not unlike UnitedHealth , Cigna is looking to a diversified array of businesses, including international expansion, to help fuel growth. Also, very much unlike Aetna , WellPoint , and Humana , Cigna has chosen to be quite cautious with its initial forays into the Obamacare exchanges.

Largely On The Sidelines For The Affordable Care Act

Like UnitedHealth and Health Net , Cigna has taken only a bare minimum approach to the new public exchanges under the Affordable Care Act, also known as Obamacare. Cigna is active in only five exchanges (Arizona, Colorado, Florida, Tennessee, and Texas), making it one of the least-involved managed care companies.

I see at least two reasons for this. First, there was a great deal of uncertainty as to what the enrollments and risk pools were going to look like in the early years of the process. With the assumption being that those most likely to sign up are those who are going to use the most health care, Cigna has chosen to play it safe and establish just a token presence in the markets. Seeing as how enrollment trends in the under-34 age group are below expectations (around 30% signing up instead of the hoped-for 40%), that may prove to be a margin-sparing move for Cigna in 2014 even with the risk mitigation options offered by the federal government.

Second, it's also worth remembering that Cigna doesn't have a particularly large funded (at risk) individual risk business. Roughly 85% of the company's covered lives are service arrangements where Cigna doesn't take on risk. As companies like Aetna and WellPoint are far bigger players in individual and funded risk, it would stand to reason that they'd be much more active than Cigna.

Banking On Medicare

Medicare, and particularly Medicare Advantage, is a big deal to all of the major managed care companies, but Cigna seems to be focusing a lot of attention here. With the graying of the boomer generation, Medicare enrollments are going to be rising in the not-so-distant future. At the same time, though, there are likely to be a lot of disruptions in the market in 2014 and reimbursement pressures could well hurt the smaller operators - giving rise to acquisition opportunities for companies like Cigna.

Unlike WellPoint and UnitedHealth, though, Cigna is not a major player in Medicaid and really not looking to be. Although Medicaid-oriented names like Molina and WellCare have gotten attention from time to time as acquisition candidates, Cigna's management has made comments that indicate they'd only really be interested in acquiring into Medicaid if it also provided a significant gateway to dual-eligibles (those eligible for both Medicaid and Medicare).

Overseas Is Significant, And Getting More So

UnitedHealth has gotten some positive attention for its large foray into the Brazilian health insurance market, but Cigna has been making international expansion a priority for some time now. Operations outside the U.S. comprise about one-tenth of the company's earnings base, with operations largely focused on South Korea and Taiwan today. Cigna has also entered markets like Brazil, Indonesia, Turkey, and China, and will be entering India in 2014. Although many of these foreign markets are regulated and have state-funded universal health care offerings, there is a growing demand for supplementary coverage that gives policy holders access to different levels of care and/or different providers (essentially allowing for a wider range of services and faster service times).

Strong Growth Potential

Cigna has gone to great lengths to build up business lines that are outside of the current scope of reforms. While the next couple of years are still likely to be turbulent and erratic, Cigna management believes they will be a rare grower in the field. Moreover, I like Cigna's chances for above-average long-term growth, given the large base of business outside of traditional risk-based premiums.

I believe Cigna can deliver top-line growth in excess of 7% over the long term, with stronger free cash flow margins than it peers. That leads me to estimate a DCF-based fair value of almost $125 today. Looking at an excess returns model, I do believe that Cigna should consider deleveraging a bit, but I believe the company's diverse service-heavy business mix can keep ROE in the high teens, suggesting a fair value north of $110.

The Bottom Line

Like Aetna, Cigna seems significantly undervalued though you perhaps could not find two more different business models at present (or at least with respect to embracing public exchanges). I do like the foothold that Cigna is building overseas, and this would be a name I'd still consider at these levels.

The flu is in full swing, with 35 states experiencing widespread activity and 20 states reporting high levels of flu-like illness, according to last week's FluView report from the Centers for Disease Control and Prevention, or CDC.

While the timing, severity, and length of the flu season is tough to pin down, it seems it's spreading quickly, and that means plenty of foot traffic for retail pharmacies CVS Caremark , Walgreen , and Rite Aid .

Unpredictably predictable
The flu hits epidemic levels every season, usually in February. It seems this year won't be an exception, given a jump from 25 to 35 states reporting widespread flu activity.

The embrace of patient-care models such as CVS's MinuteClinics suggests that patient demand for services, prescriptions, and over-the-counter medicine is picking up across retail pharmacies as the flu spreads. The migration of common health-care services, including diagnosing and prescribing treatment for the flu, to CVS and Walgreen from doctor's offices reflects a tidal shift in the way patients demand and receive care. Insured and uninsured patients no longer need to make off-hours visits to emergency rooms or beg their doctor to squeeze in an appointment. Instead, patients can hit their corner pharmacy for a quick checkup, get their prescription filled, and pick up cough syrup and ibuprofen all in one stop.

That's not only good news for CVS and Walgreen, the two largest operators of such in-store clinics, but also for insurance companies, which are increasingly embracing retail clinics' lower costs. The adoption of store clinics by health plans and government-sponsored programs is one reason that, according to CVS, MinuteClinics are posting comparable sales growth percentages in the high teens to low 20s.

And while CVS and Walgreen probably benefit the most from the shift, Rite Aid isn't left out altogether. Rite Aid's chainwide marketing blitz to provide patients with flu shots increases foot traffic during flu season, too.

All three will face stiff year-over-year comparisons, given that last season's flu was particularly potent. But CVS appears best positioned to capture flu-driven revenue this season, since it operates 743 in-store clinics. CVS plans to have 1,500 of the clinics open in its stores by 2017. Walgreen, in comparison, operates about 400, up from 350 a year ago.

The spike in the number of clinics suggests that flu-related sales will climb even more next season, as we should see an increase in the number of flu shots and of patients turning toward retail pharmacies for care, in the wake of Medicaid and private insurance expansion tied to health-care reform.

Fool-worthy final thoughts
Thanks in part to opening 42 new clinics in the past year, sales at CVS MinuteClinics grew 18% year over year in the third quarter. CVS administered more than 3 million flu shots across its stores through October. Over at Walgreen, the company provided 6.4 million flu shots to customers in the third quarter, a million more than a year ago. And in its third-quarter earnings conference call, Rite Aid was guiding for 2.5 million flu shots during this year's flu season. That suggests plenty of opportunity for retail pharmacies to convert customers into script and front-end sales this flu season.

Gilead Sciences is one of the hottest names in health care this year, after receiving approval from the U.S. Food and Drug Administration, or FDA, for its game-changing hepatitis C drug Sovaldi. Even though Gilead shares have risen more than 90% in the past year in anticipation of the approval, some experts still see another 50% rise in 2014.

These estimates seem lofty, but could actually be conservative in nature; the stock could outperform the broader market again this year. In my view, Gilead is a rare bird in that it's a large-cap pharma that behaves like a small-cap growth stock. So it offers investors healthy growth with the safety of a well-developed commercial pipeline. Indeed, I think this is the very reason so many fund managers are optimistic about Gilead going forward.

With that said, my view is that there are three compelling reasons to buy Gilead shares now.

Reason No. 1
Sovaldi will probably be a megablockbuster, and it could even be the top-selling drug of all time. Although this is the most oft-cited reason to buy into Gilead now, it's a very good one. During my time covering health care, I've never seen so much confusion over "consensus" on peak sales for a drug. Namely, I've seen consensus estimates of $2.4 billion, $5.4 billion, and even mind-altering numbers in the $13 billion range. Perhaps I'm not an expert on sales projections, but this diversity in estimates appears to defy the Webster's definition of the word "consensus."

Where does the confusion come from? The problem is that Sovaldi may radically alter the hepatitis C landscape. With cure rates topping 90% in clinical trials, Sovaldi may be its own worst enemy. The idea is that it will substantially reduce the size of the hepatitis C market over time, causing sales to drop in the long run.

Complicating matters, AbbVie's competing oral-based hepatitis C drug should be approved this year, and it also has cure rates in the high 90% range. Bristol-Myers Squibb and Merck also have promising hepatitis C drugs under development that could further exacerbate this problem. Taken together, these new orally administered hepatitis C drugs may lay waste to their own market by doing the unthinkable -- eradicating a disease. Time will tell.

What's key to understand is that Gilead's drug requires fewer pills, targets the most common form of the virus, and, most importantly, is the first to market. Moreover, hepatitis C won't be eradicated overnight, not by a long shot.

So I expect Sovaldi to be a major revenue generator for Gilead for years to come, and it may, in fact, achieve some of the higher consensus estimates floating around in the ether right now. So, stay tuned!

Reason No. 2
Idelalisib could be approved this year as a second-line treatment for chronic lymphocytic leukemia. Last December, Gilead announced that a late-stage trial for idelalisib was stopped early because patients receiving a combo of idelalisib plus rituximab showed a highly significant improvement in overall survival and progression-free survival. With the FDA more willing than ever to speed impressive oncology drugs through the regulatory process, I am cautiously optimistic that idelalisib will be approved in 2014, especially since it targets patients with limited treatment options.

Turning to value creation, idelalisib isn't expected to be a blockbuster as a second-line treatment, but the drug could see peak sales of around $700 million a year. That's certainly nothing to sneeze at, and it's yet another good reason to dig deeper into Gilead's compelling growth story.

Reason No. 3
Looking into the future, Gilead has another potential megablockbuster in development with simtuzumab, which is an experimental treatment for non-alcoholic steatohepatitis, or NASH, that's currently in midstage trials. Last week, we saw just how powerful a potential treatment for this disease could be when Intercept Pharmaceuticals stopped a midstage trial for its experimental NASH drug early because of overwhelmingly positive results, and the company's shares literally quadrupled in value. While simtuzumab isn't expected to report results until early 2016, and the market could change dramatically by then with the potential approval of Intercept's drug, it shows that Gilead isn't remaining idle in its quest for the next blockbuster drug.

For these reasons, I'm optimistic that Gilead will be a top performer in the sector this year, and that's why I'm making one of my Motley Fool CAPS picks.

UnitedHealth Group will release its quarterly report on Thursday, and investors have been pleased with the stock's performance over the past year. With the arrival of the Patient Protection and Affordable Care Act, UnitedHealth and peers WellPoint and Humana have had great opportunities to try to make the most of health-care reform, seeking to capture a greater number of insurance customers even as they have to offer different services than they have in the past. The big question is whether UnitedHealth earnings will get more positive impact from serving more customers than negative impact from changes like having to ignore preexisting conditions.

UnitedHealth Group has taken a middle-of-the-road approach toward Obamacare. Rather than follow in the footsteps of WellPoint, which has committed to making its presence felt throughout the nation on Obamacare-provided health insurance exchanges, UnitedHealth has instead held back with only partial participation in certain key markets. That calculated gamble puts UnitedHealth in a better position to deal with any disappointment from the program and to adapt its approach to deal with changing conditions in relation to the Affordable Care Act. Let's take an early look at what's been happening with UnitedHealth Group over the past quarter and what we're likely to see in its report.

Stats on UnitedHealth Group

Source: Yahoo! Finance.

What's next for UnitedHealth earnings?
Analysts have gotten more downbeat in recent months about UnitedHealth earnings, cutting their fourth-quarter estimates by $0.03 per share and reducing their full-year 2014 projections by a more substantial $0.23 per share, or about 4%. The stock has largely topped out, remaining mostly flat since mid-October.

UnitedHealth's third-quarter report showed some of the challenges that the health insurance industry is facing right now. A 12% gain in revenue and a rise of 275,000 in its health-network customer count pointed to the success of its operations, especially with its acquisition of Brazil's health insurance giant Amil helping to bolster its international diversification. But earnings rose only 1%, and poor guidance for the full 2013 year led to dissatisfaction about how much of UnitedHealth's revenue is falling to the bottom line. In particular, poor reimbursement rates from Medicare weighed on profits, and with the government intending to keep a lid on those costs, UnitedHealth could well see further trouble ahead. WellPoint doesn't have as many Medicare members as UnitedHealth, but Humana gets nearly three-quarters of its total revenue from Medicare-related products, leaving it especially vulnerable.

Source: TaxFix.co.uk, Flickr.

Yet in dealing with those challenges, UnitedHealth has done a particularly good job. The company has kept its medical loss ratios relatively low, with most recent figures coming in at the low end of the mandated 80% to 85% range under Obamacare. By contrast, WellPoint has been toward the high end of the range. UnitedHealth has also gotten more aggressive in its premium pricing, making sure that higher premiums reflect adverse claim experience and the greater costs involved in providing mandated benefits under the Affordable Care Act.

Still, the big challenge in the long run for UnitedHealth, WellPoint, Humana, and other insurers will be operating costs. UnitedHealth has had to reduce the size of its physician network in order to deal with anticipated Medicare cuts. The impact on health care could be sizable, but membership growth should hopefully give UnitedHealth the leverage it needs to keep its costs under control even as the industry environment gets tougher. Moreover, UnitedHealth's efforts in bolstering its Optum unit, which incorporates health management, pharmacy benefits management, and other specialty services, gives the company a big competitive advantage over Humana and WellPoint as well as greater growth opportunities for the future.

In the UnitedHealth earnings report, watch to see how the company performs in keeping its costs down and its profits up. As more of the Affordable Care Act becomes law, UnitedHealth will need to work even harder to ensure that it remains as successful as it has in the past.

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

Mr. Market didn't much like what Celgene had to say on Monday -- and promptly shaved around $2 billion off of the big biotech's market cap. But was Celgene's message at the J.P. Morgan Healthcare Conference really that disappointing? Consider what was actually said.

Rearview mirror

First of all, Celgene gave a sneak peak at the 2013 fourth-quarter numbers that will be announced in a couple of weeks. Adjusted diluted earnings per share should be around $1.51. That's a solid increase of 14% year-over-year, so why were investors not excited?

Wall Street expected Celgene to report earnings of $1.55 per share for the fourth quarter. Without the negative impact of collaboration-related payments to partners, though, the earnings figure would have been $0.10 per share higher.

News from just last week provided a helpful reminder that collaboration payments can be positive. Epizyme reported good results from an early stage study of acute leukemia drug EPZ-5676. Those results landed the small biotech a $25 million milestone payment from -- you guessed it -- Celgene.

That was clearly great news for Epizyme. The company's shares nearly doubled last week. It's also good news for Celgene, because it's one more step along the path to possibly bringing another profitable drug to market. If you're just focused on the past, an earnings miss of $0.04 per share is disappointing. But if you're focused on the future, $0.10 per share in collaboration payments is reason to be optimistic about what could be on the way. 

Down the road

And that leads us to the rest of what Celgene had to say on Monday. The biotech projects 2014 revenue of $7.5 billion -- up 15% from last year. A big chunk of that growth will come from Revlimid, which Celgene expects will generate sales of around $5 billion.

This year's earnings should be in the range of $7.00 to $7.20 per share. The midpoint of that range is 19% higher than 2013 earnings. Not bad at all, but a little short of the $7.30 per share estimated by analysts. 

A lot of companies shy away from trying to predict financial results more than a year out. Celgene isn't so bashful. The company thinks that revenue in 2015 will be between $8.5 billion and $9.5 billion -- a $500 million increase from the previous target and a 20% jump from this year's expected revenue. Earnings in 2015 are anticipated to be in the range of $9.00 to $9.50 per diluted share, considerably more optimistic than the $8.00 to $9.00 per share previously estimated. 

What's of particular interest, in my view, is how Celgene views its future into 2017. It sees revenue four years from now as high as $14 billion. Revlimid should continue to rock along, with projected sales of $7 billion -- even better than predicted earlier.

Celgene thinks that it's Pomalyst/Imnovid multiple myeloma franchise will exceed previous estimates also. The company says that by 2017 the drug should bring in $1.5 billion. My guess is that Celgene anticipates stealing significant market share away from Amgen's Kyprolis.

Even though Kyprolis has been on the market longer in the U.S., Pomalyst managed to trounce its rival in sales in the third quarter. And while Celgene won regulatory approval in Europe as well, Amgen still hasn't succeeded across the Atlantic with Kyprolis.

Disappointment?

How should long-term investors interpret Celgene's announcement on Monday? I don't think the company is actually worth $2 billion less because of the fourth-quarter earnings miss and 2014 earnings projection slightly below analysts' estimates.

Remember why Celgene's earnings last quarter weren't as high as they could have been.  Also, keep in mind that Celgene has been known to offer relatively conservative guidance for the future. While the market might have been disappointed this week, with Revlimid powering along and more potential blockbuster drugs in its arsenal, I suspect that the biggest disappointment will be experienced by investors who sell Celgene now rather than hold on for what should be solid growth into the future.  

Want an exciting pick for 2014?

How can you tell if the CEO of a company you've invested in is dumping stock? Check the Form 4, Fool contributor Tim Beyers says in the following video.

For those unfamiliar, the Form 4 is an SEC disclosure required of board members and management teams of public companies when they buy or sell stock. All transactions are recorded in the SEC's EDGAR database, which is free to access and searchable by ticker, company name, and a variety of other criteria.

Checking up on your chief can be as simple as entering your ticker at EDGAR and then clicking the link for "insider transactions" in the upper left. That will give you a list of reporting executives, directors, and significant shareholders.

Let's take Netflix as an example. The "insider" transactions page lists a number of reporting filers, with co-founder and CEO Reed Hastings at the top. His latest transactions include a sale on Dec. 26 and a stock award on Jan. 2. Clicking on the "4" next to each transaction brings up a landing page. Clicking again on "edgardoc.html" reveals the actual filings and assorted details.

In the case of the sale, Hastings parted ways with 15,238 shares that he had exercised via options granted all the way back in 2004 and that were due to expire in a week -- a smart stock move, all things considered. The document also shows that he owns more than 1 million shares via family trust.

In the case of the award, Hastings was granted 2,297 options to buy stock at a strike price of $362.82 per share. The options expire on Jan. 2, 2024. History says he'll keep them for much of that duration, winning (or losing) right alongside common Netflix shareholders.

Unsure whether the CEO of a stock you own is aligned with your interests? Check the Form 4s and report what you find in the comments box below. Or you can list a ticker and ask Tim to take a look. He'll be talking more about insider buying and selling in the weeks to come.

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.

Although the holiday season is well behind us and we're already halfway through January, Wall Street's not quite done reflecting on December's festivities. Investors were in a festive mood all over again Tuesday, as surprisingly robust December retail sales gave further indication that the U.S. economy's healing process is well under way. Excluding auto sales, December retail revenue rose 0.7%, meaningfully above the 0.4% growth that was expected. Sure, a 0.7% uptick is nothing earth-shattering, but considering the meager expectations it was enough to provoke a rally in the stock market today. The Dow Jones Industrial Average surged 115 points, or 0.7%, to end at 16,373. 

Walt Disney stock ended as one of the Dow's top gainers, tacking on 1.6% Tuesday. If a full-fledged U.S. recovery is indeed in the works, Disney shouldn't be a bad name to hold, as Americans shell out their discretionary income on things like, oh, entertainment, for instance. Of course, the "proof is in the pudding," as they say, and as Disney shareholders are aware, this company makes nothing but high-proof pudding. Its animated holiday film Frozen stands out as a recent example of Disney's consistency, as the film took in more than $710 million worldwide since its November opening.

The largest franchisee of Disney's Dow peer McDonald's restaurants, Arcos Dorados Holdings , fell 2.8% today, as Bloomberg reported the price of a Big Mac Combo is set to slump in Venezuela. In 2012, more than 80% of Arcos Dorados sales came from a set of just five countries and territories: Argentina, Brazil, Mexico, Puerto Rico, and Venezuela. The company is in a privileged position, having the right to own, operate, and sell franchise rights to McDonald's restaurants in 20 Latin American countries and territories. The less stable nature of these economies is evidenced by the Big Mac Combo price reduction, as Venezuela struggles to combat steep inflation.

Finally, shares in the volatile Chinese e-retailer, aptly named E-Commerce China Dangdang , rocketed 9.4% higher today. Massive swings like today's aren't unusual in Dangdang shares, which have a "beta" of nearly 5. Beta is an imperfect but sometimes useful measure of volatility, gauging how amplified or subdued a stock's swings are likely to be relative to the broader market. A high beta in theory means the stock will outperform in surging markets (and vice versa), but Dangdang investors beware: The small Chinese e-tailer hasn't posted an annual profit since 2010.

Galena Biopharma has forged a partnership in India for its NeuVax breast cancer vaccine. The company announced that it is teaming up with Dr. Reddy's Laboratories in a strategic partnership whereby Galena will license the commercial rights for NeuVax to the latter company. Dr. Reddy's will also head the development of NeuVax to treat gastric cancer. The terms of the arrangement were not disclosed, although Galena did reveal that it will receive development and sales milestone payments, and royalties in the double digits on net sales.

In the press release heralding the news, Galena CEO Mark Ahn said that the deal "is consistent with our strategy to expand the clinical utility of NeuVax in unment medical needs while simultaneously increasing the commercial footprint of this innovative cancer immunotherapy."

Galena has been a hot stock in recent months, although that appears to have more to do with acquisitions than the performance of NeuVax. Last week, the company announced it had bought Mills Pharmaceuticals, and last March it acquired the cancer pain treatment Abstral.

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 Silicon Graphics International Corp. plunged more than 14% Tuesday morning after the company provided disappointing preliminary fiscal second-quarter guidance.

So what: Quarterly revenue is expected to fall 32% year over year to approximately $116 million, which should translate to an adjusted net loss per share between $0.24 and $0.21. By comparison, Silicon Graphics reported net income of $0.03 per share in the same year-ago period. Analysts, on average, were modeling a net loss of $0.14 per share on sales of $128 million.

Silicon Graphics CEO Jorge Titinger explained the loss primarily stems from the negative impact and "after-effects" of the government shutdown. However, he also noted core revenue outside of the company's federal business grew 14% sequentially, which is why they are "accelerating our initiatives to further penetrate the enterprise market with our extreme high performance in-memory UV system." 

As a result, the company also provided preliminary guidance for the second half of fiscal 2014, saying revenue is expected to be in the range of $260 million to $300 million. 

Now what: Even so, Titinger admitted that's lower than they expected, as the federal business is likely to remain a drag on growth thanks to "near-term delays in certain federal programs."

Shares of Silicon Graphics may look inexpensive trading under 12 times next year's estimated earnings, but keep in mind those estimates are likely to fall once analysts have time to digest today's news. Until Silicon graphics can prove it has what it takes to stop the bleeding and resume profitable growth over the long term, I think investors would do well to remain on the sidelines.

Book publishers are hardly the same, and can easily be classified based on the type of books they sell and who they sell to. These differences in product type and customer segment have a huge impact on their attractiveness as investment candidates. Textbook publishers like Houghton Mifflin Harcourt and Pearson  are far more attractive than trade publishers such as Scholastic  because of their specific market characteristics.

K-12 textbook publishing
The K-12 textbook-replacement cycle is long, typically lasting more than five years. This is a function of the K-12 textbook-adoption process, where the 20 states (adoption states), accounting for more than half of the U.S.' K-12 population, approve new textbooks every five to seven years at the state level. Individual schools in these 20 states are only allowed to purchase textbooks on the approved list during this period.

For example, if a school administrator purchases a science textbook published by Houghton, it will likely be the same textbook used by the school for the next five years or more. This enhances the 'stickiness' of textbook purchases, making it more difficult for new K-12 textbook publishers to enter the market with competing products and take market share away from leaders like Houghton.  

Furthermore, a new wave of K-12 textbook upgrades driven by regulatory forces is in the cards in the next year or two. As of November 2013, 45 states have adopted the Common Core State Standards as part of federal guidelines to ensure a consistent and high-quality level of K-12 education for every U.S. student. School administrators in these states will have to replace their existing textbooks with new ones to meet the standards by the start of the 2014-2015 school year. This should result in a spurt in textbook spending and an increase in Houghton's sales in the near future.

Higher education textbook publishing
Besides being a major textbook publisher in the K-12 market, Pearson is also a dominant player in the higher education market where the demand drivers are equally, if not more, favorable.

Professors, like most humans, are creatures of habit. They prefer using the same textbook for their classes; and when they need to upgrade their teaching materials, they go for the latest editions of their existing textbooks. They also need to make fewer changes to the course curriculum by staying with the same textbooks that they are already very comfortable with in terms of style and structure.

On the flip side, instructors don't see any need to put their personal reputation on the line by going with a new textbook. This reminds me of the old adage in corporate purchasing that "nobody ever got fired for buying IBM." In fact, a cursory examination of Pearson's online catalog shows that many of its higher education textbooks are already into their 10th version and beyond. The longevity of Pearson's higher education textbooks suggest that competition from new textbooks and new entrants is limited.

Trade publishing
In contrast to the favorable economics of K-12 and higher education textbook publishing, trade publishing's hit-driven model is far less assuring for investors. For trade publishers like Scholastic, most of its profits are concentrated with the blockbuster successes and winners, which pay multiples of losses incurred by other books that don't sell. But there is simply no guarantee that Scholastic can churn out winners like "Harry Potter" and "The Hunger Games" consistently.

Even for hits like "The Hunger Games," there are many uncertainties. For example, Scholastic reported its full-year fiscal 2013 results in July 2013. A 25% year-over-year drop in sales was attributed to lower sales of "The Hunger Games" trilogy resulting from fading reader interest. However, Scholastic saw its revenue for the second quarter of fiscal 2014 increase by 1.5%, as sales of "The Hunger Games" trilogy benefited from renewed reader interest following the screening of The Hunger Games movie.

Also, trade publishing is more volatile than textbook publishing because of shorter lifespans. While the lifespans of textbooks can be almost extended infinitely by refreshing later editions with updated content, most other non-fiction books don't go beyond their second editions, and there is a natural limit on the number of sequels or trilogies for successful fiction best-sellers.

Epilogue
Of the three listed book publishers, Houghton is my top pick because textbook publishers face less competition and are less reliant on blockbuster hits than their trade-publishing peers like Scholastic.

Moreover, Houghton is a much purer proxy for K-12 textbook publishing than diversified Pearson, and is therefore better positioned to benefit from the upsurge in demand resulting from the adoption of the Common Core State Standards.

When it comes to producing consistently good results, Wells Fargo  is the poster child. The bank reported fourth-quarter numbers today, and long-term investors were surely impressed.

In this segment of The Motley Fool's financials-focused show, Where the Money Is, banking analysts Matt Koppenheffer and David Hanson discuss the details of Wells Fargo's earnings and how banks can weather the storm while some wrestle with the mortgage slowdown.

Problem: Your commute is long and boring. Solution: Subscribe to our daily podcast Where the Money Is! https://t.co/jAnlvNyUDV

— MotleyFoolFinancials (@TMFFinancials) December 9, 2013

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 Tesla Motors got a jolt today, finishing up 16% after management bumped up its guidance for the fourth quarter of 2013.

So what: The maker of high-end electric cars said that sales in the final quarter of last year were "the highest in company history by a significant margin," as it sold and delivered nearly 6,900 vehicles, beating its own prior guidance by 20%. The company also said that the two key drivers of the increased demand were "the superlative safety of the Model S and great performance under extremely cold conditions."

Now what: Shares of Tesla continued to gain after hours, climbing an additional 3% on enthusiasm for increased sales. The carmaker's shares soared through most of 2013, but hit a speed bump on concerns about engine fires. Those seem to have been assuaged, though, as weeks ago the German vehicle safety regulatory authority approved the Model S, and CEO Elon Musk has been vigilant in his defense of the car's safety, taking every public opportunity to take critics to task. While Tesla continues to knock sales projections out of the park, there is still a strong argument that the stock is overvalued. At a forward P/E of 108, there are enormous expectations baked in. Musk intends for the carmaker to be a transformational company, and investors will need him to pull that off for the stock to move significantly higher.

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.

For precious-metals investors, the poor performance in the stock market has been a big contributor to a nice beginning for 2014. Today, though, a turnaround in stocks punished gold and other metals, with spot gold dropping about $8 per ounce to $1,245, sending SPDR Gold down almost 1%. Silver fell $0.16 per ounce to $20.25, with iShares Silver falling 1.3% as a result. Platinum was hit hardest on a percentage basis, falling $16 to $1,425, while palladium prices dropped $5 to $734.

The interesting news hitting the gold market came from the Federal Reserve, which started a review of the way commercial banks engage in commodities businesses. The practice was criticized last summer, as Goldman Sachs and JPMorgan Chase were sued in connection with aluminum warehouses that were allegedly involved in a hoarding scheme that resulted in higher prices for the metal than market conditions warranted. The Fed review will look for conflicts of interest and the potential systemic impact of commodity operations, with a request for public comment on proposed rules. JPMorgan has already announced that it would exit the physical commodities business, but the impact on the precious-metals markets could be substantial.

Mining stocks generally followed bullion lower, with the Market Vectors Gold Miners ETF falling 2.4%. But bucking the downward trend was Thompson Creek Metals , which soared 18% after announcing a 34% jump in molybdenum production for 2013 compared to 2012 as well as favorable updates on its Mt. Milligan gold and copper mine. Now that Thompson Creek expects Mt. Milligan to reach ordinary commercial production levels during the current quarter, investors finally stand a chance of seeing the full potential of the lucrative mine help Thompson Creek's long-suffering results.

In the near term, gold investors should expect the price of the yellow metal to track the inverse of stock market returns. Yet with some signs of heightened activity in the space, gold could continue to rebound modestly even if stocks fail to implode in 2014.

Shares of VIVUS were up nearly 5% yesterday, after the announced a deal with Aetna for a weight loss program for the big insurer's members. It combines both a drug and lifestyle focus for losing weight. This could potentially boost sales of VIVUS' weight loss drug Qsymia, which came to market with a lot of hype but so far has posted meager numbers.

In this video, Motley Fool health care analyst David Williamson discusses the deal, and how beneficial it could be both to VIVUS and Aetna, but he also notes that the obesity drug war that many thought would explode between Qsymia and Arena Pharmaceuticals' Belviq has ended up in more of a fizzle, with sales lagging expectations across the board. David then points to one competitor that may end up being far more interesting in this space with a drug that may fall right in the sweet spot between safety and efficacy, and why FDA approval for this competitor drug may be just around the corner.