Quantcast
Channel: DailyFinance.com
Viewing all 9760 articles
Browse latest View live

SanDisk Earnings: What to Expect Wednesday

0
0

Filed under:

SanDisk will release its quarterly report on Wednesday, and investors have continued to be pleased with the memory giant's stock performance recently, sending the stock to levels not seen since the mid-2000s. Even as rivals Micron Technology and Seagate Technology have taken steps to claim their share of the booming flash-memory segment, SanDisk has worked hard to cement its place in the industry with its own offerings as well as a lucrative partnership with Western Digital .

For decades, hard-disk drives survived as the key force behind mainstream technology storage. All of a sudden, though, big reductions in the cost of flash memory made it possible to use the faster storage alternative for a wider range of electronic devices, and SanDisk jumped on the opportunity to serve the rapidly growing market. Let's take an early look at what's been happening with SanDisk over the past quarter and what we're likely to see in its report.


Source: SanDisk.


Stats on SanDisk

Analyst EPS Estimate

$1.57

Change From Year-Ago EPS

50%

Revenue Estimate

$1.70 billion

Change From Year-Ago Revenue

10.6%

Earnings Beats in Past 4 Quarters

4

Source: Yahoo! Finance.

How fast can SanDisk earnings grow?
In recent months, analysts have gotten more optimistic about the prospects for SanDisk earnings, boosting their fourth-quarter estimates by $0.02 per share and their full-year 2014 projections by four times that amount. The stock has continued its bull run, rising 18% since mid-October.

The lion's share of SanDisk's stock gains came after its third-quarter earnings report, in which the memory company reported a 28% jump in revenue that led to a tripling in operating earnings. CEO Sanjay Mehrotra pointed to strong performance in the company's solid-state drive products for both consumer and enterprise use as helping to build momentum in SanDisk's growth. The results have allowed SanDisk to start paying a dividend and buy back more of its shares, helping to accelerate stock-price gains.

SanDisk's success has also hinged on smart strategic moves. Its acquisition of SMART Storage Systems last summer has already started producing results in bolstering enterprise solid-state drive sales, with the company expecting that it will be able to add new features and make its solid-state drives more reliable with better performance. Meanwhile, SanDisk's partnership with Western Digital to help the hard-disk specialist build hybrid solid-state drives has allowed Western Digital to compete better against Seagate. Moreover, with embedded memory, SanDisk has a strong presence both in high-end products like the iPhone 5s as well as mid- and lower-tier products that can use its iNAND flash memory.

But SanDisk can't declare total victory in the memory space just yet. Micron has risen sharply after completing its buyout of Elpida, which gave it a much bigger presence in selling to high-demand, high-margin customers. In part because of heightened competition, some analysts have been reluctant to project strong growth forward, also arguing that SanDisk might be losing some of its competitive advantage against Micron and Seagate.

In the SanDisk earnings report, watch closely to see the various sources of the company's growth. The holiday season should give investors a good sense of just how good a job SanDisk has done getting its memory into the most popular consumer electronics, but in the long run, its enterprise solid-state drive solutions could prove to be the most lucrative for the company.

Get the best stock in your portfolio
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.

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

The article SanDisk Earnings: What to Expect Wednesday originally appeared on Fool.com.

Fool contributor Dan Caplinger has no position in any stocks mentioned. You can follow him on Twitter @DanCaplinger. The Motley Fool owns shares of Western Digital.. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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

 

Read | Permalink | Email this | Linking Blogs | Comments


The State of GE Capital in 2 Revealing Charts

0
0

Filed under:

Back in 2007, when analysts talked about gushing profits at the conglomerate General Electric , they were talking -- primarily -- about its ballooning banking business. Fast-forward to today, and GE Capital's balloon is slowly, but surely, deflating.

GE's latest fourth-quarter report confirms that the banking arm is gradually withering, contributing a smaller portion of revenue and assets at GE. Two charts illustrate why this soft landing could be a win-win scenario for shareholders.

A smaller, more satisfying slice of the pie
Before delving into the so-far successful turnaround of GE Capital, it's important to keep a couple key plot points in mind:


1. GE Capital's heft before the financial meltdown was completely unnecessary. While lending can be a tangentially related endeavor for a manufacturing company, GE management readily admits that the profits in banking were ultimately a distraction from the core business.

2. GE Capital's turnaround required a helping hand. In 2009, legendary investor Warren Buffett stepped in to back General Electric with a $3 billion loan to a company he called "the symbol of American business to the world." Buffett's endorsement helped GE regain its credibility and footing. While GE avoided TARP, the company benefited from stimulus and financial stability programs available to many of its peers.

There's no debating that GE drove itself into a ditch with a highly leveraged bet on banking, and the company needed a lift to pull itself back on the road. With that in mind, however, investors must look at more recent history to determine whether GE's headed in the right direction. The following chart provides insight into GE Capital's shrinking piece of the revenue pie, and rebounding profit margins.

On the top line, GE Capital has shrunk from 38% of consolidated revenues in 2007 to 31% at the end of 2013. Meanwhile, GE Capital's net income contribution took a nosedive in 2009, but has since recovered to once again make-up about half of the company's total 2013 profits.

While investors might balk at the proportion of profits delivered by GE Capital, GE's on-track to both strengthen and contract the banking business. Increasing profits reflect a healthier operation, while shrinking revenues and assets will diminish GE Capital's importance over time.

GE recently announced plans to spin off the consumer lending business within GE Capital. In a step-by-step fashion, GE appears committed to shedding components of GE Capital, and the consumer loans make-up approximately 18% of total loans.

Further, two other trends predict the fate of GE Capital, where assets and ending net investment have trickled downward in recent years.

The second chart reveals a shrinking GE Capital asset base, which declined by 29% from 2008 to 2013. At the same time, a more revealing measure of the size of GE Capital's business is ending net investment, or ENI. At GE Capital, ENI accounts for the total "capital" -- either debt or equity -- required to fund its loan operations, and by this number GE Capital's contracted by 38% since 2008.

The fate of finance at GE
Following Wall Street's near-implosion, many GE shareholders were more than willing to cut ties with a casino-like lending operation, but a complete spinoff was not in the cards. Instead, GE set forth a plan to rejuvenate the finance business while relegating it to the sidelines.

This was a next-best scenario for shareholders, and the industrial and finance businesses appear stronger today as a result. As illustrated in the preceding charts, GE Capital carries less weight when it comes to key metrics like revenue, assets, and ending net investment. Each one tells a story of a business segment in decline, but one that continues to bolster profits for shareholders all the same.

Why Buffett backed GE
As he noted in 2008, Buffett believed GE's "strong global brands and businesses" would allow the company to bounce back after hitting a wall. In other words, Buffett backed GE for the same reason he's invested in numerous multi-bagger companies over the years. To reveal Buffett's most valuable insight, we recently compiled 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.

The article The State of GE Capital in 2 Revealing Charts originally appeared on Fool.com.

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

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

 

Read | Permalink | Email this | Linking Blogs | Comments

3 Biggest Winners in Biotech Last Week

0
0

Filed under:

Healthcare stocks are notorious for having stellar performances during the annual JPMorgan Healthcare Conference, and this year's conference didn't disappoint. With a number of stocks soaring on material news, here is a Fool's take on the three biggest winners last week.

Market is dazed and confused over Chelsea's Northera
Chelsea Therapeutics  led all health-care stocks last week by rising more than 90%. However, Chelsea shares were actually up 151% last Tuesday after a U.S. Food and Drug Administration, or FDA, Advisory Committee voted overwhelmingly to recommend the company's experimental orthostatic hypotension drug, Northera, for approval. Roughly two years ago, the same Advisory Committee essentially split the vote, leading the FDA to request more data prior to an approval.

In an odd turn of events, Northera looked like it was destined for yet another rejection last week, after the Briefing Documents for the meeting suggested that the FDA may request further clinical trials. So, Tuesday's 16-1 yes vote came as a bit of a surprise to the market.


What's my take? My view is that the market doesn't know what to make of Northera's prospects come Feb. 14, when the drug's final review is due to be handed down from the FDA. The market's confusion is evident by the alarming mismatch between the company's projected peak sales of $375 million per year for Northera, and Chelsea's current market cap of $336 million.

Put simply, companies in similar positions, more often than not, are trading at a minimum of three times projected peak sales, in my experience. So, I take this mismatch to mean that the market still isn't a believer in the drug's approval prospects. While the FDA doesn't have to follow the advice of its Advisory Committee, I believe Chelsea offers an intriguing risk to reward ratio after this surprise vote. So, investors with high risk tolerance may want to keep tabs on this story going forward.

Fourth time is the charm?
Alimera Sciences also had a good week, shooting up more than 58%. Alimera has been on a rampage ever since the FDA relented on further clinical testing for the company's experimental eye-drug, lluvien. To recap, the drug has officially been rejected by the FDA three times, but the agency reversed course last December, informing Alimera that it would consider safety data from the drug's European launch in lieu of another costly clinical trial. Alimera is now in labeling discussions with the FDA, with a possible commercial launch later this year.

Is this story worth keeping tabs on? From a pure valuation perspective, I don't find Alimera's story particularly compelling. Because the bulk of any revenue in the U.S. would go to Alimera's partner pSivida, I believe a fair amount of a U.S. approval is already baked into the share price. Then again, this particular market is placing a hefty premium on earnings in the biotech sector, so that could be a good reason to keep track of Alimera this year.

Conference presentation boosts Stemline
Stemline Therapeutics rounds out the top three with a monstrous 44% jump last week. At the conference, Stemline updated investors on its brain and blood cancer clinical candidates, which are showing some impressive results so far. What got investors excited was the announcement that the company's brain cancer candidate is expected to progress into late-stage trials, after showing positive results in mid-stage trials.

Is Stemline looking like a winner? I think it's best to reserve judgment for the time being. The fact of the matter is that Stemline is going after some of the hardest to treat diseases out there, where numerous clinical candidates have previously failed. So, you may want to stay on the sidelines until Stemline is further into the clinical testing process. 

Don't miss these two potentially game-changing picks in biotech.
The best way to play the biotech space is to find companies that shun the status quo and instead discover revolutionary, groundbreaking technologies. In the Motley Fool's brand-new FREE report "2 Game-Changing Biotechs Revolutionizing the Way We Treat Cancer," find out about a new technology that big pharma is endorsing through partnerships, and the two companies that are set to profit from this emerging drug class. Click here to get your copy today.

The article 3 Biggest Winners in Biotech Last Week 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 - 2014 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

 

Read | Permalink | Email this | Linking Blogs | Comments

Could NFL 'Thursday Night Football' Gain Viewers Next Season?

0
0

Filed under:

The NFL recently confirmed speculation it is seeking a partner to air "Thursday Night Football" in tandem with NFL Network next season. Since the league's premium channel began broadcasting the games in 2006, millions of cable and over-the-air viewers have been without access. 

If the NFL does sell Thursday night rights to another network, it will ultimately be a win for fans. I'll explain why.

The bidders
As of this writing, Disney's ABC, CBS , 21st Century Fox , and Comcast's NBCUniversal are all rumored to be bidding on the games, in addition to dark horse Time Warner  subsidiary Turner.


CBS Sports reports the NFL is searching for a one-year deal in the neighborhood of $800 million, and according to John Ourand of Sports Business Daily, the league would like the games to be simulcast on NFL Network.

Peer comparison
As Ourand points out, "The quality of the Thursday night matchups generally is the weakest among all of the NFL's TV partners," an insight that is illustrated by television ratings.

PackageTV viewers per game, 2013
NBC Sunday Night Football 21.7 million
NFL on Fox 21.2 million
NFL on CBS 18.7 million
ESPN Monday Night Football 13.7 million 
Thursday Night Football 8.0 million 

Source: Sports Illustrated.

If CBS Sports' estimate is to be believed, the rights to "Thursday Night Football" may be cheaper than their peers.

PackageCost of rights per year
ESPN Monday Night Football $1.9 billion
Sunday NFL on Fox* $1.1 billion
Sunday NFL on CBS** $1.0 billion
NBC Sunday Night Football $950 million
Thursday Night Football $800 million

Sources: Sports Illustrated and The New York Times. *Mostly NFC noon and afternoon games. **Mostly AFC noon and afternoon games.

The big question
Still, if I'm an executive contemplating this deal, there'd be one thing on my mind: Can an over-the-air station bring more viewers to "Thursday Night Football" than NFL Network did last season?

By definition, most of the bidding networks reach significantly more viewers than NFL Network.

NetworkTotal U.S. households reached
NBC 112.1 million
ABC 112.1 million
CBS 112.1 million
Fox 112.1 million
TBS 99.2 million
ESPN 97.7 million
NFL Network 70.9 million

Sources: TV By The Numbers, media estimates.

According to the data, cable channels like TBS and ESPN reach about 40% more households than NFL Network. If either of these stations wins the bidding process and is able to convince the league not to require a weekly simulcast, it would be rational to expect  "Thursday Night Football" to average 11 million viewers a game.

Over-the-air stations, on the other hand, collect about 60% more eyes than NFL Network. If "Thursday Night Football" and its 8 million viewers per game are broadcast on a "Big Four" network like NBC, ABC, CBS, or Fox, it's theoretically possible that viewers per game could spike 60% higher with no simulcast, to just under 13 million. This is nearly the same amount of viewers averaged by ESPN's "Monday Night Football."

The caveat
Of course, if the games are simulcast, this would put a dent in these estimates. Some viewers who already watch NFL Network would stick with that channel, rather than move to the winning network.

A "Big Four" network would need at least 40% of NFL Network viewers to switch over to its broadcast of "Thursday Night Football" to maintain last year's average of 8 million. If it can capture half of NFL Network's viewers, its per game average should come close to 9 million.

Likewise, if a cable channel like TBS or ESPN were to show Thursday night games, it would need at least 60% of NFL Network viewers to switch over to its broadcast to maintain 8 million viewers per game. Any less, and the winning cable network would simply not have enough households to match last year's viewership.

Source: NFL.com.

Going forward 
These numbers explain why the bidding networks are likely pushing for exclusive broadcasting rights to "Thursday Night Football." If the games are simulcast, it becomes much more difficult to boost viewership because some will choose to keep watching NFL Network.

Going forward, it would make sense for a "Big Four" network to assume a viewership bump of about 60% if last year's 13-game format is used again, with no simulcast provision. If the schedule is extended to a full 17 games, a rights deal worth at least $1 billion isn't out of the question.

In the scenario that Thursday night games are simulcast, the winning network will likely have a strategy to capture as many NFL Network viewers as possible. Such a plan could include exclusive pre-game analysis and mobile content, or even the rescheduling of a primetime show immediately before the "Thursday Night Football" broadcast.

John Ourand's point mentioned above is also valid: Thursday night games typically feature lower-quality matchups than other slots, which means viewership might not spike as high as the numbers suggest. If the league promised to schedule better Thursday night matchups in the future, it could sweeten a rights deal with a major network.  

Most think the winner of the bidding war should be revealed by springtime, so even if your team isn't in the Super Bowl, there's one date you can look forward to.

The next step
Want to figure out how to profit on business analysis like this? The key is to learn how to turn business insights into portfolio gold by taking your first steps as an investor. Those who wait on the sidelines are missing out on huge gains and putting their financial futures in jeopardy. In our brand-new special report, "Your Essential Guide to Start Investing Today," The Motley Fool's personal-finance experts show you what you need to get started, and even gives you access to some stocks to buy first. Click here to get your copy today -- it's absolutely free.

The article Could NFL 'Thursday Night Football' Gain Viewers Next Season? originally appeared on Fool.com.

Fool contributor Jake Mann has no position in any stocks mentioned. 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.

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

 

Read | Permalink | Email this | Linking Blogs | Comments

eBay Earnings: What to Expect From Its 2-Pronged Growth Attack

0
0

Filed under:

eBay will release its quarterly report on Wednesday, and investors haven't been happy with the roller-coaster ride that the stock has taken them on over the past year, especially since it hasn't led to any lasting results. Yet as much as longtime shareholders have focused on the growth potential of PayPal and its challenge to mobile-payment players that range from traditional credit card networks to Square, Groupon , and other payment upstarts, eBay's auction and marketplace website has reemerged as a key component of growth for the online giant and could continue to play an even larger role in the company's overall future in challenging Amazon.com's online-retail dominance.

eBay has come a long way since its beginnings as an online-auction website. Although auctions still play a vital component in its business, many of eBay's users count on Buy-It-Now listings that allow immediate purchases rather than participating in auctions. Moreover, PayPal has gone well beyond its initial role in facilitating eBay-centered transactions, with many users having little or no connection to eBay's online-retail offerings. As Amazon has moved to embrace outside third-party sellers, it has come more directly into conflict with eBay's business model. Let's take an early look at what's been happening with eBay over the past quarter and what we're likely to see in its report.


Source: Steven Arnold, Wikimedia Commons.


Stats on eBay

Analyst EPS Estimate

$0.80

Change From Year-Ago EPS

14.3%

Revenue Estimate

$4.55 billion

Change From Year-Ago Revenue

14%

Earnings Beats in Past 4 Quarters

3

Source: Yahoo! Finance.

Can eBay earnings keep climbing?
In recent months, analysts have gotten a lot little optimistic about eBay earnings, cutting fourth-quarter estimates by a penny per share and full-year 2014 projections by double that amount. The stock also hasn't gone anywhere, falling 1% since mid-October.

eBay's third-quarter earnings didn't give the online company the start it would have liked to see to the quarter. Revenue grew 14%, boosting net income by 17% and helping to produce a modest beat on the bottom line. Mobile commerce as a big growth engine, rising 75%, and PayPal's revenue growth of 19% came from a 25% jump in payment volume and a 5-million user jump to 137 million active users. But a cautious forecast for the holiday season, with revenue guidance that was below what investors had expected to see, send shares falling sharply after the report.

One concern about eBay's strength comes from the fear that competition from Square, Groupon, and other companies is threatening PayPal's margins. During the third quarter, PayPal's take rate fell by nearly a quarter percentage point to 3.7%. Yet the company points to the lower rates it offers high-volume users as a major cause for the decline, and if that points to greater use of the service, it represents a win for eBay.

Moreover, even though eBay has seen fairly impressive growth from its marketplace segment, Amazon and Latin America's MercadoLibre have seen much more faster growth figures. The move that eBay has made away from auctions toward fixed-price sales is encouraging, as more than 70% of eBay sales come from fixed-price offerings that facilitate faster turns for eBay's seller-partners. Yet Amazon's ability to provide its Prime service and its fairly uniform customer experience stands in contrast to eBay's more hands-off approach, forcing users to deal directly with sellers while using eBay's dispute resolution services as a last resort in cases of disagreements.

But eBay is striving to make itself a bigger force in both industries. Its acquisition of global online- and mobile-payment platform Braintree should help PayPal become a better player in the mobile-payment space. Meanwhile, eBay's Shopping.com website hopes to challenge Amazon with comparison-shopping services, and with the eBay Now service expected to offer same-day delivery, eBay wants to get in on the perceived advantage of Amazon Prime. Mobile applications could also help eBay become a bigger force in the rising mobile-commerce area.

In the eBay earnings report, watch to see where the company's growth comes from and whether the stock can break out of its long funk. With more-balanced growth from both of its divisions, eBay could finally move higher and reward shareholders for their patience.

Don't settle for just any growth stock
They said finding growth stock giants consistently just couldn't be done. But David Gardner has proved them wrong time, and time, and time again with stock returns like 926%, 2,239%, and 4,371%. In fact, just recently one of his favorite stocks became a 100-bagger. And he's ready to do it again. You can uncover his scientific approach to crushing the market and his carefully chosen six picks for ultimate growth instantly, because he's making this premium report free for you today. Click here now for access.

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

The article eBay Earnings: What to Expect From Its 2-Pronged Growth Attack originally appeared on Fool.com.

Fool contributor Dan Caplinger has no position in any stocks mentioned. You can follow him on Twitter: @DanCaplinger. The Motley Fool recommends and owns shares of Amazon.com, eBay, and MercadoLibre. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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

 

Read | Permalink | Email this | Linking Blogs | Comments

Could a Medical Device Be Google's Next Major Project?

0
0

Filed under:

Google's ultra-secretive X research group is credited with the development of Google Glass. This same unit may be cooking up something new involving contact lenses, biosensors, and biological data. This new project is part of Google's commitment to research and development and investments in projects that can lead to new market opportunities down the road.

Employees associated with Google X and who have done research on sensors placed on contact lenses that monitor the body's functions were scheduled to meet with FDA staff members who are in charge of regulating eye devices and diagnostic tests for heart conditions.

According to Bloomberg, at least three of the Google participants in the meeting have backgrounds in engineering or genetics. One in particular, Brian Otis, has worked on biosensors and holds a patent on biosensor-equipped contact lenses that are powered wirelessly. One of Otis' colleagues, Babak Parviz, wrote in a 2009 paper about the potential for "noninvasive monitoring of [a contact lens] wearer's biomarkers and health indicators, [which] could be a huge future market." In a video presentation on the subject, Parvix noted that a teardrop provides a variety of data to a sensor on different bodily fluids that can, for example, provide readings on cholesterol or glucose levels.


Are contact lens-based sensors the future of noninvasive continuous monitoring?
While a contact lens with a biosensor is still in its infancy, what is the market appeal of similar projects like Google Glass? Glass's first prototype was built around 2011, and last year Google made the latest edition available to developers or "explorers" who were able to sign-up for an invitation. As its 2014 consumer launch date approaches, market research firm Gartner believes that the product may initially appeal more to businesses than regular consumers. Gartner predicts that Google Glass can bring greater efficiency to field service workers involved with manufacturing, health care, and retail. According to its report, the cost savings could reach $1 billion per year by 2017 .

Like Google Glass, biosensors could have various practical applications. A 2011 article in the Journal of Diabetes Science and Technology discussed how contact lens-based sensors could help diabetics manage their disease in a convenient and painless manner. In the area of glucose monitoring, other innovative diagnostic tools have had both hits and misses.

Abbott Laboratories had problems with its Freestyle glucose monitoring system, which led to recalls of 20 lots of its Freestyle and Freestyle Lite test trips due to inaccurate glucose readings. Abbott confirmed that its newer Freestyle models did not have this problem . The glucose monitoring device is a part of the diabetes business that saw third quarter sales rise 0.4 %. Abbott's diabetes business has had better performance overseas, with international sales growth of 8.7%. Abbott Diabetes Care's glucose monitoring meters are used in both home and hospital settings.

Medtronic's diabetes business is also invested in continuous glucose monitoring, or CGM. In 2009, the company acquired PreciSense A/S, a Danish company focused on glucose monitoring technologies. The company's glucose monitoring system, MiniMed 530G, is unique in that it combines both glucose monitoring and an insulin pump . Meanwhile, a different CGM device known as the Sentrino system which is used in hospital critical care units received the all clear in Europe in December 2012.

For Medtronic's diabetes business, fiscal 2014's second quarter worldwide revenues were $393 million; this represents an increase of 4% from the same period in fiscal 2013. The MiniMed 530G, which received approval in Sept. 2013, could provide a turnaround for the company's diabetes business, which has seen three quarters of declining revenues. Overall revenues for the quarter were $4.2 billion, up 2.4% over the second quarter of fiscal 2013 .

My Foolish conclusion
According to a report by Business Wire, the global market for biosensors was estimated to be worth $8.5 million in 2012 and could double by 2018. The U.S. takes the largest piece of the pie, with a value of approximately $2.6 billion. If Google is able to develop a safe and functional medical device that uses biosensors it would come as no surprise. Judging by the time frame it has taken Google Glass to reach the market, it could be available sooner than you think.

The Smartphone War You Can Profit From
Want to get in on the smartphone phenomenon? Truth be told, one company sits at the crossroads of smartphone technology as we know it. It's not your typical household name, either. In fact, you've probably never even heard of it! But it stands to reap massive profits NO MATTER WHO ultimately wins the smartphone war. To find out what it is, click here to access the "One Stock You Must Buy Before the iPhone-Android War Escalates Any Further..."

The article Could a Medical Device Be Google's Next Major Project? originally appeared on Fool.com.

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

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

 

Read | Permalink | Email this | Linking Blogs | Comments

Bedding Stocks Sleepless; Electronics Retailers Without Spark

0
0

Filed under:

Maker of the Sleep Number bed Select Comfort  recently sent shudders through the furniture and bedding manufacturing industry when it warned that fourth-quarter sales would miss the mark and that the challenging times would continue into 2014:

Select Comfort Corp...reported that preliminary fourth-quarter 2013 total net sales grew 5% year-over-year to $231 million, with flat company-controlled comparable sales growth. The mid-point of the company's fourth-quarter EPS guidance range of $0.18 to $0.26 assumed low-double-digit growth in total net sales and mid-single-digit growth in company-controlled comparable sales. Through November, company performance was trending consistent with the EPS guidance range, with solid sales results and expense controls. From Cyber Monday through the end of December, however, sales trends fell below internal goals. As a result, the company now expects fourth-quarter EPS to be below the low end of its guidance range.

The sales slowdown following the Thanksgiving holiday reflected a tepid retail holiday shopping season. We expect this challenging environment to continue in 2014 and are planning accordingly," said Shelly Ibach, president and CEO, Select Comfort.

Shares of Select Comfort trade at the low end of Valuentum's fair value range (at the time of this writing), but the research firm is not ready to pull the trigger. Instead of as a price target, Valuentum likes to think of valuation as a range of probable valuation outcomes. As is customary in their process, they like to consider undervalued equities only when their prices begin to move higher, not right after they have fallen abruptly.

This basic tenet to the Valuentum process helps them avoid 'falling knives' (stocks that keep going down) and stocks that may trade below their intrinsic value for extended periods of time as they remain shunned by the market (stocks that generate opportunity cost). Most of the 'Household Durables' industry has been under pressure on the news, including peers Tempur Sealy International and Mattress Firm .


Early January also brought news that home electronics retailer hhgregg 's fiscal third quarter sales (ended December 31, 2013) fell 11.6% from the same period a year ago. The company's comparable-store sales also decreased by more than 11% as its consumer electronics category plummeted nearly 20% and its computing-and-wireless category fell by nearly 25% (both categories performed well below expectations).

In what Valuentum expected as a result of the shortened holiday shopping season, hhgregg noted that its "holiday sales were significantly affected by increased promotional offerings of televisions and tablet products across a variety of retail formats." This is a red flag for gross margin at peer Best Buy  as the electronics retailer likely sought to match prices to retain market share. Still, hhgregg indicated that the appliance category was healthy, up about 1.5% in the period, indicating that not all areas suffered from promotional activity. Valuentum points to Whirlpool as their favorite appliance-related idea:

Whirlpool possesses tremendous operating leverage, so a small increase in sales will have a large impact on the bottom line. This aspect of its business model coupled with improving operational performance makes (Valuentum) confident that the appliance pure-play has room to the upside (the high end of Valuentum's fair value range for Whirlpool is over $200 per share). Source: Valuentum 

Valuentum's Take                                                                                                                                                                                 Early January brought a bevy of news which suggests that firms in the 'Household Durables' industry may have faced demand pressure and that electronics retailers may have been fighting viciously over market share (hurting gross margins) during the holiday season. Valuentum doesn't hold any firm mentioned in this article in the portfolio of its Best Ideas Newsletter, but the research firm does think both Select Comfort's and hhgregg's performances are important data points. As always, Valuentum's best ideas are included in the Best Ideas portfolio and the Dividend Growth portfolio.

The article Bedding Stocks Sleepless; Electronics Retailers Without Spark originally appeared on Fool.com.

Valuentum doesn't hold any firms mentioned in this article in the portfolios of its Best Ideas Newsletter and Dividend Growth Newsletter. RJ Towner has no position in any stocks mentioned. The Motley Fool owns shares of Tempur Sealy International. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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

 

Read | Permalink | Email this | Linking Blogs | Comments

Will Lockheed Martin Win This "Nuclear" War?

0
0

Filed under:


You've come a long way, baby. This is what U.S. Air Force bombers used to look like. Source: Wikimedia Commons.

The U.S. Air Force faces a $350 million decision. Its outcome could affect the fate of the world ... and of Lockheed Martin , too.

Discussing defense acquisitions strategy last week at the Stimson Center, a D.C.-based think tank, former U.S. Air Force Chief of Staff Norton Schwartz laid out the dilemma. Right now, the U.S. has a strong force of aircraft capable of carrying nuclear bombs -- 76 B-52s bombers, 61 B-1s, and 20 B-2 "Bat Wing" stealth bombers. The bulk of these planes, though, the B-52s, are starting to show their age, which is why the Air Force wants to develop and field a new Long Range Stealth Bomber, to be dubbed the "B-3," by 2020.



... and this is what they could look like tomorrow: the planned Next Generation Bomber. Source: Boeing.

Supplementing this force are "nuclear capable" tactical fighter jets like the F-15E and F-16, both of which the Air Force intends to gradually phase out in favor of Lockheed's new F-35 Joint Strike Fighter.

Problem is, in its present form, the F-35 is not designed to carry the Air Force's arsenal of B61 tactical nuclear bombs. Modifying the F-35's design, and modifying the B61 to fit it, is a project that will take years to accomplish, and cost upwards of $350 million to implement. According to General Schwartz, though, these funds would be better spent developing the next generation of strategic bombers -- the B-3s.

And this, in a nutshell, is the crux of the debate. Given a limited and shrinking defense budget, should the U.S. Air Force allocate precious defense dollars to upgrading the F-35 so that it can duplicate a job that the F-15s and F-16s can do (for now)? Or should it take the $350 million that this upgrade would cost, and invest it into accelerating development of a B-3 Long Range Stealth Bomber, whose own job can currently be performed by the nation's fleet of B-52s, B-1s, and B-2s?

A bird in the hand
I've got an opinion on this debate, and it runs something like this: The Pentagon has a history of starting new weapons projects, sinking billions of dollars into them, and then cancelling them with nothing to show for the effort (see Helicopter, Comanche; see also Stealth bomber, Avenger). Given this track record, I'm not 100% convinced the B-3 will actually get built. The high cost of the program -- $55 billion for 100 planes -- combined with the Pentagon's penchant for incurring cost overruns, could doom the program.

Meanwhile, love it or hate it, Lockheed Martin's F-35 is here today, and most military experts agree that the F-35 will still be flying 60 years from now, which is more than we may be able to say for the Air Force's B-52s, B-1s, and B-2s. My hunch is that the $350 million is better spent getting one plane capable of supporting the third (airborne) leg of America's nuclear triad now. We can worry about topping off the $55 billion B-3 budget if it seems likely that that plane will, in fact, get built.

What it means to you
That said, what matters more to investors is what all of this means to their investments. Fortunately, this angle to the story is pretty easy to read. Right now, there are three companies vying to build the Air Force's B-3 bomber -- Lockheed Martin and Boeing have teamed up on one side of the contest. Northrop Grumman , builder of the B-2, opposes them. Depending on who wins the B-3 contract, any of these three companies could benefit if the Air Force shifts $350 million in spending away from the F-35, and spends it on developing the B-3 instead.

In contrast, only one of these three defense contractors -- Lockheed Martin -- benefits from investing $350 million in upgrading the F-35 today. If the Pentagon then goes on to add a further $350 million in spending to move the B-3 along at a later date, Lockheed Martin benefits twice.

In short, in this battle over funding for the Air Force's "nuclear" options, it's heads, Lockheed Martin wins, and tails, it probably still doesn't lose.


Lockheed Martin's F-35s: In line, and ready for a nuclear option. Source: Lockheed Martin.

Oh, and one more thing
Did we mention that Lockheed Martin pays its shareholders an industry-leading 3.6% dividend yield? Mustn't forget that bit -- because dividend stocks can make you rich. While they don't garner the notability of high-flying tech stocks, dividend-paying stocks are also less likely to crash and burn. And over the long term, the compounding effect of the quarterly payouts, as well as their growth, adds up faster than most investors imagine. With this in mind, our analysts sat down to identify the absolute best of the best when it comes torock-solid dividend stocks, drawing up a list in this free report of nine that fit the bill. To discover the identities of these companies before the rest of the market catches on, you can download this valuable free report by simply clicking here now.

The article Will Lockheed Martin Win This "Nuclear" War? originally appeared on Fool.com.

Fool contributor Rich Smith has no position in any stocks mentioned. The Motley Fool owns shares of Lockheed Martin and Northrop Grumman. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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

 

Read | Permalink | Email this | Linking Blogs | Comments


Our Readers Want to Know if its Time to Invest in Gold Miners

0
0

Filed under:

This segment is from Thursday's edition of 'Digging for Value', in which sector analysts Joel South and Taylor Muckerman discuss energy & materials news with host Alison Southwick. The twice-weekly show can be viewed on Tuesdays & Thursdays. It can also be found on Twitter, along with our extended coverage of the energy & materials sectors @TMFEnergy.

Thanks to a question from fool.com reader, Jackie K., our analysts chime in on their opinions of the Market Vectors Gold Miners ETF . Here you have an ETF that underperformed the S&P 500 by around 80% during 2013. While both of our analysts are unsure if gold miners are ready for a turnaround just yet, they do offer up some ideas on how to approach the sector that involve notable companies such as Barrick Gold , Goldcorp and Newmont Mines . Check out the short clip below for their thoughts.

There are very little questions about this company in 2014

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 Our Readers Want to Know if its Time to Invest in Gold Miners originally appeared on Fool.com.

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

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

 

Read | Permalink | Email this | Linking Blogs | Comments

How Global Stocks Fared on the Dow's Holiday

0
0

Filed under:

The Dow Jones Industrials didn't trade today, with U.S. stock exchanges closed for the Martin Luther King Jr. holiday. But most world stock markets were open, and overall, their performance left much to be desired for bullish investors. Let's look at the hot spots in the global stock markets today.

Asia
Stock markets in Asia were generally weaker, as a slight slowdown in China's GDP growth to 7.7% followed similar minor decreases in industrial production, fixed-asset investment, and retail sales growth recently. The Shanghai Composite fell below the 2,000 mark for the first time in six months, with many citing multiple initial public offerings tomorrow as potentially sapping liquidity from the rest of the market and causing further sell-offs. Moreover, short-term interest rates in China have soared above 6%, leading to fears of a credit crisis similar to what the country suffered in mid-2013. Japan's Nikkei fell 93 points to 15,642, while stocks in Hong Kong dropped almost 1%. Among big movers in Japan was Nintendo , which plunged 6% on disappointing results over the holidays of its Wii U video game console.

Europe
European stocks were little changed, with one index of the eurozone posting a 0.1% drop. But markets in Germany and France were both down slightly, with Deutsche Bank falling more than 5% after posting a surprise loss that stemmed largely from more than half a billion euros in litigation-related expenses as well as reorganization costs and other charges. The dour news dragged down banks throughout the eurozone, but stronger performance among luxury consumer-goods sellers helped minimize losses in broader markets, as Luxottica Group gained 4% after getting an analyst upgrade. Most market participants were pleased that Europe managed to avoid downward pressure from China's weaker growth.


Americas
Stock markets in the Western Hemisphere were mixed, with Brazil posting about a 1% drop but markets in Mexico and Canada gaining ground. Leading Canadian stocks higher was BlackBerry , which posted a 9% gain on the Toronto exchange after the U.S. Defense Department said that BlackBerry smartphones still account for 98% of the devices in a new network. The company is also working hard to emphasize its prowess in enterprise software, and if both of its initiatives can bear fruit, BlackBerry hopes that it will be able to navigate a turnaround that will give it a viable corporate strategy moving forward.

The No. 1 way to lose your wealth without ever even knowing it
You've fought hard to build wealth for you and your family. Yet one all-too-common pitfall could completely derail your dreams before you even know it. That's why a company The Economist hails as "an ethical oasis" has isolated five simple questions you must answer to ensure that your financial future is really secure.

Can you answer yes to all five of these eye-opening questions? Click here to find out -- before it's too late!

The article How Global Stocks Fared on the Dow's Holiday originally appeared on Fool.com.

Fool contributor Dan Caplinger has no position in any stocks mentioned. You can follow him on Twitter: @DanCaplinger. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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

 

Read | Permalink | Email this | Linking Blogs | Comments

3 Biggest Laggards in Health Care Last Week

0
0

Filed under:

Health care stocks that drop rapidly can provide investors with compelling entry points, especially when the fall is due to an overreaction to a material event. With this theme in mind, here is my take on the three biggest laggards in the sector last week.

The roller coaster ride continues at Intercept
Intercept Pharmaceuticals heads the list of laggards with its 34% drop last week, following its monstrous 545% gain the week before. Intercept's story begins with its experimental drug obeticholic acid for nonalcoholic steathohepatitis, or NASH. As most health care investors know by now, Intercept's drug worked so well in a mid-stage trial that investigators stopped the trial early because it's unethical to continue giving patients an inferior placebo. Because NASH has no effective treatments, and the potential market is believed to be in the multi-billions, Intercept's share price literally quadrupled in a day.

Since announcing these unexpectedly strong results, however, Intercept's management has thrown a bit of cold water on investor enthusiasm. First off, the company reported that its drug increases bad cholesterol levels, which will require further investigation. Second, Intercept's CEO Mark Pruzanski stated at the recent J.P. Morgan Healthcare Conference that Intercept may need the help of a bigger partner to bring the drug to market.


Put simply, you should expect continued volatility in Intercept's share price until these two critical issues are resolved. That said, Intercept's drug has such amazing potential as an unprecedented type of treatment for NASH that it wouldn't surprise me if the company is already being eyed by larger pharma companies.

Chinese investigation drops Usana Health
USANA Health Sciences skidded 17% last week after Chinese regulators announced that they are investigating personal-care companies on the grounds that they could be pyramid schemes. The issue at hand is whether or not multilevel marketers like Usana, Herbalife, and Nu Skin are than pyramid schemes masquerading as legitimate businesses. So far, some European courts have ruled that multilevel marketers are not pyramid schemes, but the ruling party in China has long held a dubious view of direct selling companies like Usana.

What's the big deal? The reason this news has been so harmful to multilevel marketers is because China is the fastest-growing market for these types of companies.Turning to Usana in particular, revenue from Chinamade up roughly 40% of the company's net profits last year.

So, a ban would erase a major portion of Usana's business. In short, my take is that it's better to stay away from multilevel marketers until this regulatory issue in China is resolved. 

Corcept falls on downgrade
Corcept Therapeutics  fell more than 14% for the week after the company's shares were downgraded from "Buy" to "Hold" by Stifel Nicolaus . The downgrade is based on slower than expected sales for Corcept's Cushing's Syndrome drug Korlym, coupled with the stock's 72% rise over the past year.  

What's my view? Personally, I view this downgrade as long overdue. With annual Korlym sales expected to come in at less than $10 million, research costs increasing, and shares trading at about five times cash on hand, you might want to find more compelling growth stories in the health care sector than this one. I believe Corcept's shares are going to struggle until the company is able to expand Korlym's label. 

Could this stock pick be a top performer this year?
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 3 Biggest Laggards in Health Care Last Week 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 - 2014 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

 

Read | Permalink | Email this | Linking Blogs | Comments

Are Solar Bonds Worth Buying?

0
0

Filed under:

Across the nation, thousands of homeowners are taking advantage of programs from SolarCity , SunPower , and other solar specialists to install solar systems. Many of those companies offer financing, and they're turning around and securitizing those financing arrangements into bonds to sell to investors. Does it make sense for you to buy those bonds?

In the following video, Dan Caplinger, The Motley Fool's director of investment planning, talks about solar bonds and how they work. He points out that SolarCity recently said it would offer solar bonds directly to investors, and already, alternative services like Mosaic allow investors to get exposure to solar deals. Dan explains that the risk-reward analysis depends on the scope of the bond involved, with those including more projects having more diversification than those that hinge on a single project's success. Sticking to reputable companies makes the most sense in the early stages of solar financing, but if the rates turn out to compensate you for the risk involved, solar bonds might end up being a worthwhile investment.

The No. 1 way to lose your wealth without ever even knowing it
You've fought hard to build wealth for you and your family. Yet one all-too-common pitfall could completely derail your dreams before you even know it. That's why a company The Economist hails as "an ethical oasis" has isolated five simple questions you must answer to ensure that your financial future is really secure.


Can you answer yes to all five of these eye-opening questions? Click here to find out -- before it's too late!

The article Are Solar Bonds Worth Buying? originally appeared on Fool.com.

Fool contributor Dan Caplinger has no position in any stocks mentioned. The Motley Fool recommends and owns shares of SolarCity. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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

 

Read | Permalink | Email this | Linking Blogs | Comments

Where the Money Is: January 17

0
0

Filed under:

Will 2014 be your year?
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 Where the Money Is: January 17 originally appeared on Fool.com.

David Hanson owns shares of JPMorgan Chase and Regions Financial. Matt Koppenheffer owns shares of JPMorgan Chase, Morgan Stanley, and Regions Financial. The Motley Fool recommends Google. The Motley Fool owns shares of Fifth Third Bancorp, General Electric Company, Google, JPMorgan Chase, and KeyCorp. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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

 

Read | Permalink | Email this | Linking Blogs | Comments

Earnings Wrap-Up for 3 Big Banks

0
0

Filed under:

Morgan Stanley, Bank of New York Mellon, and GE reported earnings last week -- what do long-term investors need to know? In this segment of The Motley Fool's everything-financials show, Where the Money Is, banking analysts Matt Koppenheffer and David Hanson discuss the earnings reports and the return prospects for these three huge companies.

Are other banks in trouble?
Do you hate your bank? If you're like most Americans, chances are good that you answered yes to that question. While that's not great news for consumers, it certainly creates opportunity for savvy investors. That's because there's a brand new company that's revolutionizing banking, and is poised to kill the hated traditional bricks-and-mortar banking model. And amazingly, despite its rapid growth, this company is still flying under the radar of Wall Street. For the name and details on this company, click here to access our new special free report.

The article Earnings Wrap-Up for 3 Big Banks originally appeared on Fool.com.

David Hanson has no position in any stocks mentioned. Matt Koppenheffer owns shares of Morgan Stanley. The Motley Fool owns shares of General Electric Company. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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

 

Read | Permalink | Email this | Linking Blogs | Comments

Does This Plan Help Fannie Mae and Freddie Mac Investors?

0
0

Filed under:

Another day, and another proposed plan on what to do with Fannie Mae and Freddie Mac. The latest plan from a group of Congressmen aims to wind down the two entities and potentially turn them into private insurers, while keeping the governement's hand in housing finance via Ginnie Mae. Would this new plan help or hurt the investors holding the preferred and commons shares?

In this segment of The Motley Fool's everything-financial show, Where the Money Is, Matt Koppenheffer and David Hanson discuss the new plan and share what they think is the most important thing to watch going forward.

Is Fannie Mae the best bet for 2014?
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 Does This Plan Help Fannie Mae and Freddie Mac Investors? originally appeared on Fool.com.

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

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

 

Read | Permalink | Email this | Linking Blogs | Comments


Human Inequality Is Despicable, but Stock Discrimination on Wall Street Is a Good Thing

0
0

Filed under:

Today here in the U.S. we celebrated Martin Luther King Jr. Day, and most Americans had the day off to commemorate Dr. King's impact on American history and human civil rights. Dr. King dreamed of a world in which all people were treated equally regardless of race, creed, color, or religion, and his life was tragically cut short before that dream could be fulfilled. We still struggle today with these same issues, and we should continue to strive for a world where human discrimination doesn't exist.

Most of us have a negative association with the word "discrimination," and when it comes to the treatment of human beings, that association is appropriate. But when it comes to our investments, a slightly different perspective may be in order.

On the stock market, we can find a number of instances in which stocks are discriminated against, both justly and unjustly. Sometimes a stock has been beaten down based on industry trends, or a because a competitor reported comparatively good or bad earnings figures. Irrational moves like this amount to discrimination against a stock that may never have done anything wrong, but smart investors can take advantage and pick up an unjustly mispriced stock at a bargain.


Likewise, inequality can take on a different meaning in terms of investing. Look at Amazon.com or Tesla Motors to see what I mean. Amazon never records a large profit, and that's because Jeff Bezos has made it clear from the start that most profits will be rolled back into the business. But because Amazon isn't treated like other companies in the retail world, the stock price, on a price-to-earnings basis, looks insane. It currently trades at a mind-boggling P/E ratio of 1,447,

Similarly with Tesla, if we base what the company's market capitalization should be on the number of vehicles it sells, then the stock is insanely overpriced. In 2013, Tesla sold just over 22,000 vehicles, yet the company is currently valued at over $20 billion. For comparison, Ford is believed to have sold more than 2.5 million vehicles in 2013 -- 10 times as much as Tesla -- yet its market cap is only a little more than three times as large, at $65 billion. This is a type of discrimination against Ford, in that investors believe Tesla will grow at a faster rate than the older car company. So you can make an argument that the stocks are being treated unequally, yet they're also being evaluated on their own merit, which is a good thing.

But there's one place where discrimination in investing is just as negative as in other parts of life, and that's on the Dow Jones Industrial Average . Because it's a price-weighted index, it doesn't give an accurate picture of what the markets really look like. Its highest-priced stock, Visa, currently trades at $232.18 and makes up 9.06% of the Dow, while its lowest-priced stock, Cisco Systems, trades at $22.74 and accounts for only 0.89% of the index's weight. Yet the two companies' market caps aren't that far apart -- $147 billion for Visa, and $121 billion for Cisco.

The Dow's methodology thus fails to evaluate stocks based on their own merit (i.e., market cap) and instead judges them by their superficial outward appearance (the share price, which is the first thing investors usually see but doesn't always tell you much about the company).

So while inequality and discrimination can sometimes be a good thing for investors, that's certainly not always the case -- and it's something we should never tolerate on a human basis. So let's take some time today to thank Dr. King and everyone else who's fought and sacrificed so much toward achieving that goal.

More Foolish insight
As every savvy investor knows, Warren Buffett didn't make billions by betting on half-baked stocks. He isolated his best few ideas, bet big, and rode them to riches, hardly ever selling. You deserve the same. That's why our CEO, legendary investor Tom Gardner, has permitted us to reveal The Motley Fool's 3 Stocks to Own Forever. These picks are free today! Just click here now to uncover the three companies we love. 

The article Human Inequality Is Despicable, but Stock Discrimination on Wall Street Is a Good Thing originally appeared on Fool.com.

Fool contributor Matt Thalman owns shares of Amazon.com, Ford, and Tesla Motors. The Motley Fool recommends and owns shares of Amazon.com, Ford, and Tesla Motors. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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

 

Read | Permalink | Email this | Linking Blogs | Comments

Sirona Dental Systems, Inc. Sinks Its Teeth Into Rising Demand

0
0

Filed under:

Dentists may find that patients are more willing to spend on restorative procedures now that the job market is recovering and consumer sentiment is heading higher. That offers new opportunities for providers of dentistry equipment, such as Sirona Dental Systems , a company that was spun out of Siemens in 1997 and brought public in 2006.

If recent trends in employment and confidence continue, pent-up demand from consumers for dentistry could benefit a variety of other suppliers, too, including Align Technology , 3M , and Danaher .

Turning a corner toward demand growth
After climbing 1.8% per year from 2002 through 2008, spending on dentistry slipped 0.3% per year from 2008 through 2011. Contributing to that sluggish U.S. spending growth was a lack of adequate insurance coverage. Roughly two-thirds of American adults don't have dental plans. That gap in coverage and typically higher out-of-pocket expenses for those who do have plans means slower sales when consumers retrench.


But that dynamic may be changing as the unemployment rate slips lower and consumer confidence climbs. Unemployment fell to 6.7% from 7.9% a year ago in December, and the Conference Board's sentiment index stood at 78.1 last month -- the best year-end reading in six years.

Growing sales this past year
Despite a 100-year history serving dentists, Sirona isn't as widely known among investors as maybe it should be. The company is one of the biggest makers of dental products, including CAD/CAM systems for restoration, X-ray systems, beds, and preventative care instruments. That diverse product lineup produced $979 million in fiscal 2012 sales and $1.1 billion in fiscal 2013 revenue, including a record $279 million in sales last quarter. http://www.sirona.com/en/investors/investor-news/ See Q4 pdf http://www.sirona.com/en/investors/investor-news/

Sirona's fastest growth has come from its CAD/CAM systems in the past year. Sales of those systems, which are used to design replacement teeth, jumped 22% year over year in fiscal 2013. The company sold $107 million worth of CAD/CAM products during the third quarter, up 35% year over year thanks to trade-ins and new customers.

Sirona also saw sales of its X-ray systems grow double digits, climbing 10% in the past year. Sales of the company's imaging products totaled $97 million last quarter. Revenue from its beds, referred to as treatment centers, grew 7%, and instrument sales improved by 1% in fiscal 2013, too.

Sales in the United States were particularly strong, with sales improving 18% in the past year. Demand from Germany, where sales climbed 23%, helped overseas sales climb nearly 10%, too.

Competing firms are also seeing sales grow
Align Technology, one of the best performing medical-equipment companies last year, saw sales climb to $165 million in the third quarter, up 20%. That growth came thanks to its well-known Invisalign brand orthodontics, which account for 93% of the company's sales. That performance has Align guiding the Street to expect fourth-quarter unit volume growth of 21% to 24% when it reports results on Jan. 30. 

The far more diversified 3M, which sells a wide array of products for preventative care and orthodontics, is also enjoying sales growth for its medical business. Across dental and medical clinics, and hospital customers, 3M's health-care sales were up 5.5% in the third quarter and 4.3% over the first nine months of 2013 versus the prior year. 

Similarly, Danaher's dental business saw its sales grow from $489 million last year to $510 million in the third quarter this year. Revenue from dental products grew from $1.45 billion in 2012 to $1.5 billion over the first nine months of 2013. About 1.5% of the 3.5% growth in nine-month sales came thanks to product price increases. But the rest came from volume growth, including low-single-digit percentage growth for Danaher's dental equipment. Overall, Danaher's sales were up in all its major dentistry product categories last quarter, driven by strong demand in North America.

Converting sales into profit
Sirona's profit margin was about the same as fiscal 2012, at 53.7% in fiscal 2013. That was up 0.2% and worked out to earnings per share of $3.41, up 12% from $3.03 last year.

The fact earnings grew more quickly than sales is a good sign and is likely to continue in fiscal 2014. Sirona is forecasting that sales will grow by low mid-single digits this year, good enough to deliver $3.60-$3.70 in earnings per share. That would suggest earnings will outpace sales growth by at least a few percentage points at the low end of its guidance.

Fool-worthy final thoughts
The predictability of Sirona's business, solid margin, and a net cash position of $167 million allowed the company to boost its share buyback program by $100 million exiting the third quarter. Of course, for Sirona, Align, 3M, and Danaher to outpace their growth forecasts, the economy will need to keep improving. If it does, the industry should see preventative and restoration dental demand climb over the coming years, given that large number of potential patients from the aging population.  

3 stock picks with staying power
As every savvy investor knows, Warren Buffett didn't make billions by betting on half-baked stocks. He isolated his best few ideas, bet big, and rode them to riches, hardly ever selling. You deserve the same. That's why our CEO, legendary investor Tom Gardner, has permitted us to reveal The Motley Fool's 3 Stocks to Own Forever. These picks are free today! Just click here now to uncover the three companies we love. 

The article Sirona Dental Systems, Inc. Sinks Its Teeth Into Rising Demand originally appeared on Fool.com.

Todd Campbell has no position in any stocks mentioned. Todd owns E.B. Capital Markets, LLC. E.B. Capital's clients may or may not have positions in the companies mentioned. Todd also owns Gundalow Advisors, LLC. Gundalow's clients do not have positions in the companies mentioned. The Motley Fool recommends 3M. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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

 

Read | Permalink | Email this | Linking Blogs | Comments

3 Stocks Set to Make Big News This Week

0
0

Filed under:

Synovus Financial, Regions Financial, and Discover Financial Services are all set to report earnings this week. Synovous and Regions, both banks focused on the Southeastern part of the U.S., have been trying to clean up their balance sheets and get back to the basics of banking. On the other hand, Discover has been firing on all cylinders and has been active entering new markets.

In this segment of The Motley Fool's everything-financial, Where the Money Is, banking analysts David Hanson and Matt Koppenheffer discuss these three companies and tell investors what they will be watching this week.

Are Regions and Synovous set to be blindsided?
Do you hate your bank? If you're like most Americans, chances are good that you answered yes to that question. While that's not great news for consumers, it certainly creates opportunity for savvy investors. That's because there's a brand new company that's revolutionizing banking, and is poised to kill the hated traditional bricks-and-mortar banking model. And amazingly, despite its rapid growth, this company is still flying under the radar of Wall Street. For the name and details on this company, click here to access our new special free report.


The article 3 Stocks Set to Make Big News This Week originally appeared on Fool.com.

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

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

 

Read | Permalink | Email this | Linking Blogs | Comments

Should I Invest in a Stock for Only 6 Months?

0
0

Filed under:

Are stocks a safe investment over a six-month time period?

In this segment of The Motley Fool's financials-focused show, Where the Money Is, banking analysts Matt Koppenheffer and David Hanson dip into their mailbag to answer a listener's question about investing over a short time-frame. While Matt and David say the stock market isn't a good option if you'll need the money in the near future, they say stocks like U.S. Bancorp and Berkshire Hathaway are great companies to learn from for long-term investors.

Questioning your retirement?
It's no secret that investors tend to be impatient with the market, but the best investment strategy is to buy shares in solid businesses and keep them for the long term. In the special free report, "3 Stocks That Will Help You Retire Rich," The Motley Fool shares investment ideas and strategies that could help you build wealth for years to come. Click here to grab your free copy today.


The article Should I Invest in a Stock for Only 6 Months? originally appeared on Fool.com.

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

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

 

Read | Permalink | Email this | Linking Blogs | Comments

Why Norfolk Southern Corp. Stock Is Chugging Along Today

0
0

Filed under:

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 railroad company Norfolk Southern  are riding on the right track today, rising as much as 6.8% following the release of its record fourth-quarter and full-year results.

So what: Norfolk easily topped analyst expectations for sales of $2.85 billion and earnings per share of $1.50 -- the company even beat the highest earnings-per-share estimate of $1.60. Norfolk reported that sales hopped up 7% to $2.9 billion, income from railway operations jumped 23% to $881 million, net income leaped 24% to $531 million, and diluted earnings per share soared 26% to $1.64. Following the news, Norfolk rallied to new all-time highs.


CEO Wick Moorman gave the credit to his "team of safety and service-oriented employees." He added, "We're seeing the results of our investments in network capacity and technology enhance our ability to offer superior service to all of our customers." The company plans to invest 12% more this year compared to 2013 in order to grow profitability even further.

During the conference call, chief marketing officer Donald Seale pointed out that Norfolk will "employ market-based pricing that equals or exceed rail inflation." This sounds like a fancy way of saying that the company will raise prices faster than regular market rates, implying that Norfolk has a pricing power that is above-average which could lead to more earnings beats down the road. All other things being equal, each dollar increase in sales goes straight to the company's bottom line.

Seale began the Q&A session by reassuring investors who were worried about the bad weather. The company saw a large decline in business during the first two weeks of the year but was quick to point out that such volumes only get deferred during times of bad weather and are made up for at a later time. During the third week of January, for example, Norfolk made up for almost all of the business lost to inclement weather.

Now what:  Taking it all in, Norfolk seems unstoppable. With the 9.3% earnings-per-share beat and the optimistic outlook, analysts will likely raise their 2014 estimates, which currently stand at $6.39 per share. If estimates are raised in line with the 9.3% beat, you could see estimates go up to $7.00 per share. That would put Norfolk at a 2014 P/E of 13. Given its history of long-term steady growth, and the fact that it isn't shy about returning value to shareholders in the form of dividends, and Norfolk appears to be cheap for the long term.

You should consider getting on the train of these three winners
As every savvy investor knows, Warren Buffett didn't make billions by betting on half-baked stocks. He isolated his best few ideas, bet big, and rode them to riches, hardly ever selling. You deserve the same. That's why our CEO, legendary investor Tom Gardner, has permitted us to reveal "The Motley Fool's 3 Stocks to Own Forever." These picks are free today! Just click here now to uncover the three companies we love. 

The article Why Norfolk Southern Corp. Stock Is Chugging Along Today originally appeared on Fool.com.

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

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

 

Read | Permalink | Email this | Linking Blogs | Comments

Viewing all 9760 articles
Browse latest View live




Latest Images