2 Stocks for the Next Revolution in Smartphone Technology

We are on the brink of a revolution.

But let me tell you, this revolution doesn't involve explosive growth in Asia, the collapse of the euro, or the end of the world as we know it (although some may be wondering about that in light of today's market).

 

The revolution I'm speaking of deals with something more near and dear to our hearts: Money, and more specifically, how we spend it.

Going back to the Romans, there have only been two major revolutions in money -- the switch from coins to paper bills and the switch from paper bills to plastic cards.

Think about it -- when you get paid, how much cash actually makes it to your wallet? Do you ever physically see your money, or are you like most Americans who simply swipe a plastic card and keep track of a digital number out in cyberspace?

We've arrived at the point in this nation where it is possible to live without cash or checks. Transactions have moved to plastic, electronic transfers, direct deposits. I do, however, need my cell phone. And the ubiquitous search giant Google (Nasdaq: GOOG) is onto an idea that will put these two things together.

Google's innovation, known as Google Wallet, combines the convenience of a debit card with the popularity of a smartphone. The idea is that instead of swiping a plastic card at the checkout line, consumers will simply tap their phones on a special device that will automatically bill them for the purchase.

It may sound a little crazy. But as far as I'm concerned, this could be the next step in the payment revolution.

Here's how it works…

The system has three parts: There's a special microchip in the phone that stores account data, there's an electronic reader attached to the cash register, and, lastly, there's a customer account.

The special chip in the phone emits a highly-specialized radio signal that the reader can detec! t. This radio signal provides secure account information to the register. Instead of reading your account number off the magnetic strip on the back of your card by swiping it through a special terminal, the device picks up the number wirelessly.

The bank account at the center of this wireless phone transaction -- so far -- can be one of two things: either a prepaid account directly administered by Google, or a certain special MasterCard (NYSE: MA) account administered by Citigroup (NYSE: C).

So... you pull in to the gas station to fill up, tap your phone to a special reader on the pump, fill your tank -- and go. The receipt is emailed to you.

Now if you're thinking this idea sounds familiar, then you're right. Lots of companies have had access-card readers in lieu of door locks that use the same technology. Mobil also implemented its "Speedpass" in 1997 using the same system.

But don't let this alter your vision of the effect that Google Wallet will have going forward.

It's important to remember most breakthrough products don't just come out of nowhere. They arise from innovation and continue to be refined until they find an early adopter. From there, they begin to grow -- a process that takes, even in the digital age, a relatively long time.

In July, Wired magazine's Clive Thompson quoted Microsoft researcher Bill Buxton as saying "Anything that's going to have an impact over the next decade -- that's going to be a billion-dollar industry -- has already been around for 10 years."

That being said, I believe the time for this technology has come.

It's been predicted that a half-billion people will be using the technology within the next three years. Clearly the market is large, the technology is available and a big-name Google-branded roll-out is imminent.

What's most compelling about this impending change is the scale. This isn't one major change, it's bil! lions of the same minor change happening again and again. At first, the usual corps of affluent early adopters will gravitate toward it, but after that, the entire population is going to want in. And the demand will be such that they will get in, one way or another.

Ok, so Google Wallet will be huge. What's the investment angle? After all, I'm on the hunt for game-changing stocks... and I think Google is far too large at this point to see the sort of gains I'm looking for.

There are a couple of different ways to invest. The two main components of this system, and the two areas that could experience rapid growth, are in the hardware and software businesses.

On the hardware side, Zebra (Nasdaq: ZBRA) might make a good choice. Zebra makes RFID chips, which is one of the technologies on which contactless payment systems can be based. If you have a toll tag on your car, it likely uses RFID technology. As a leader in this field, Zebra could do well if Google Wallet becomes popular.

If you're interest is in software, then a company like Elephant Talk (OTC: ETAK) could be a smart play. Elephant Talk, based in the Netherlands, owns some unique elements of the mobile-phone business in Europe. Because it controls the operating system, it has the ability to integrate mobile-payment systems.

Because Europe is already ahead of the United States in some mobile functionality and Elephant Talk is one of the companies that made this possible, its international footprint ensures it will be part of the future.

Tags: CLF ,FCX ,SWC ,Miners Fall Hard Even as Overall Market Rises

5-Star Stocks Poised to Pop: Emerson Electric

Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, electrical products maker Emerson Electric (NYSE: EMR  ) has earned a coveted five-star ranking.

With that in mind, let's take a closer look at Emerson's business and see what CAPS investors are saying about the stock right now.

Emerson facts

Headquarters (Founded)	St. Louis (1890)
Market Cap	$35.6 billion
Industry	Electrical components and equipment
Trailing-12-Month Revenue	$23.52 billion
Management	Chairman/CEO David Farr? President/COO Edward Monser
Return on Equity (Average, Past 3 Years)	22%
Cash/Debt	$1.78 billion / $5.22 billion
Dividend Yield	3%
Competitors	ABB (NYSE: ABB  ) ? General Electric (NYSE: GE  ) ? Hitachi (NYSE: HIT  )

Sources: S&P Capital IQ and Motley Fool CAPS.

On CAPS, 98% of the 1,365 members who have rated Emerson believe the stock will outperform the S&P 500 going forward. These bulls include ethwc and Joulesh.

This past summer, ethwc listed several of Emerson's positives: "Solid line of products with international market. Good dividend. Company appe! ars to h ave ethical board of directors."

Emerson even boasts a solid three-year average operating margin of 16.6%. That's higher than rival industrial gorillas ABB (13.1%), General Electric (9.4%), and Hitachi (2.8%).

CAPS member Joulesh expands on the outperform argument:

EMR is a great balance between value and growth. Nice share price to owner earnings ratio, great ROE, nice growth in earnings, low P/E and GREAT CEO. This is one to own for the long-term and load up on during the dips. It has gone down since I added it to my CAPS, I probably should have waited for a dip, but over the long-term it won't matter much.

What do you think about Emerson, or any other stock for that matter? If you want to retire rich, you need to put together the best portfolio you can. Owning exceptional stocks is a surefire way to secure your financial future, and on Motley Fool CAPS, thousands of investors are working every day to find them. CAPS is 100% free, so get started!

Interested in another easy way to track Emerson? Add it to your watchlist.

Tags: Best Tech Stocks For 2012 ,GOOG ,Top Stocks To Buy In 2012Small ,Facebook Offers Free Ads to Small Businesses

GE Earnings: Don't Buy the Headline, It's a Miss

General Electric(GE) reported improved profit and an in-line bottom line in the third quarter, but earnings were helped by tax treatment and margins across key GE businesses were lower year over year.

GE earnings rose 57% to $3.22 billion in the third quarter, up from $2.06 billion a year earlier.

GE CEO Jeff Immelt

Per-share earnings fell to 22 cents a share from 28 cents due to a large dividend payout to Warren Buffett's Berkshire Hathaway(BRK.A), which was expected to hit this quarter; going forward it will add 3 cents back to GE earnings annually.

Operating earnings in the quarter were 31 cents a share, meeting the estimates of analysts.

If GE met expectations in terms of the 31-cent earnings, it was only on the surface. Jeff Sprague, analyst at Vertical Research Partners, noted in a premarket review of the GE results, "Headline looks OK, but it's a miss."

Sprague explained that industrial operating profit was 2 cents below his forecast on weak margins, but the lower operating results were offset by a lower-than-expected industrial tax rate of 17.6% versus his estimate of 21% and other below-the-line items. GE Capital net earnings were almost exactly on Vertical's estimate, but tax rate was 3.7% versus the high teens GE was guiding. The lower tax rate contributed another 2 cents to earnings.

"Net/net the operating results were about 4 cents below our forecast and implicitly the same miss versus the Street," Sprague calculated.

Margins in core GE businesses remain under pressure as well.

Chris Glynn, Oppenheimer & Co. analyst, wrote in a premarket flash note, "Bottom Line: Visibility to Industrial revenue! mix imp rovement remains a bitcloudy, and we await details ... Energy infrastructure operating margin remains a concern."

Vertical Research's Sprague noted that margins were down year over year in "the big four" industrial businesses. Energy margins were 14.3% versus the Vertical estimate of 18% and versus 20.4% last year. Oil and gas margins were 12.6% versus Sprague's estimate of 15% and 16.1% last year. Aviation margins were 17.8% versus Vertical's 18% estimate and 18.3% last year. Finally, health care margins were 14% versus Sprague's 15.2% estimate and 14.7% last year.

"These margin declines came on up revenues in every division underscoring our concern that there is little or no operating leverage in GE's portfolio due to low priced equipment in backlog and R&D headwinds," Sprague wrote.

On the earnings call, the issue of margin and pricing weakness in energy was keyed on by analysts. GE's Immelt said it was a "particularly tough" comparison year for energy margins. OpCo's Glynn asked how profit could be down in energy on 25% revenue growth.

GE said the wind business -- which has been a margin headwind for several quarters -- continued to be the primary driver of margin weakness, along with M&A impacts, plant revenue and global investments.

GE tried to spin a positive margin story amid the weakness. The industrial conglomerate said on the earnings call that with the energy margin profile, "we will improve off of where we've been this year, and directionally in what we are tying to achieve for 2012."

GE also noted that aviation margins will continue to be pressured in the fourth quarter as its ramps up its shipments of its GenX engines. "We've got a shot at expanding margins in aviation next year," Immelt said.

GE touted its record backlog in the quarter of $191 billion, but the Vertical Research analyst threw some cold water on this as well.

"GE Industrial orders were up 16% and backlog stands at! an eye popping $191 billion. However, we believe very aggressive pricing is behind the order growth and flushing the backlog of poorly priced product is at least another 12-18 month process. In the meantime, GE will likely show little or no operating leverage in its businesses."

Oppenheimer's Glynn had noted ahead of GE earnings, "Industrial earnings lack meaningful cyclical leverage to a reaccelerating economy, given largely stable services growth and long-cycle equipment lead times."

For a stock that has had a difficult time moving any quicker than a glacier, this isn't likely the earnings that does the trick. GE shares were at a 52-week low on Oct. 2.

GE said in its earnings presentation that earnings growth and margin outlook are stronger headed into 2012, and it's positioned well in a "volatile market." But the initial read on earnings was less confident from Wall Street, if acknowledging that there was nothing dire in the GE report.

GE was sober in its assessment of margins and pricing headed into 2012, even as it spun an improving outlook. "What we've had to deal with in terms of margin compression in 2011 means we will still have price pressure in 2012," GE said on the earnings call.

A bank investor might play GE for its capital arm, but Vertical Research's Sprague had another conclusion for industrial sector investors: "While GE's earnings are gradually healing we see much more interesting industrial plays for exposure to energy and aviation."

GE would disagree, saying on its earnings call that when you look at its profile of businesses and opportunity to grow organically, it compares favorably to peers.

GE shares were down on Friday by 2% as the markets rallied strongly, with the Dow Jones Industrial Average (DJIA) up 2% on hopes for a Euro zone crisis resolution. GE was the only member company of the venerable DJIA that was in the red on Friday.

One of the biggest questions -- and potential catalysts for GE shares -- would be the reinstatement of a dividend from GE Capital t! o the pa rent company. There had been chatter on Wall Street earlier this year that the GE Capital unit might begin paying a dividend to the parent this year, but more recently, the conventional wisdom backed this event up to 2012. GE confirmed the hoped-for 2012 timeline on the earnings call, and gave its view of the challenges it faces in meeting this goal.

GE said on the call that as far as cash and capital allocation, it won't have the drag of not having the NBC Universal cash anymore as growth of industrial cash from acquisitions and growth in earnings offset the NBC Universal divestiture next year.

"Our plan is to have a dividend back from GE Capital to the parent in 2012. We have worked hard to get there, to strengthen our cap ratios," a GE official said on the call. However, GE noted one wrinkle in this plan is the recent Federal Reserve oversight of GE as a new financial regulator, which began during the summer. "It's early in the process for them to understand us, so the objective is still the same, and there is lot of work to do to get there. We expect to have lots of cash to allocate in 2012."

Immelt stepped in during the discussion of the dividend and Fed regulation to downplay the Fed's role in potentially holding up plans to reinstate the GE Capital dividend to the parent, saying that the GE dividend is key for investors and an "extremely strong" priority for GE and its board, separate from the issues related to Fed oversight.

-- Written by Eric Rosenbaum and Joseph Woelfel in New York.

Tags: Best Bank Stocks For 2012 ,Best Stocks To Buy ,Top Stocks To Buy For 2012 ,Banks Pull Back on Debit Card Fees

HP: Big Tech Ain’t Been This Cheap In 20 Years, Says Bernstein

Sanford Bernstein’s Toni Sacconaghi this afternoon writes that Hewlett-Packard (HPQ), the cheapest stock in the S&P 500 currently, has very few precedents in the history of tech stocks for such cheap valuation.

At 4.9 times projected earnings, HP is in a class by itself as far as tech:

Prior to this month, not one tech stock with a market cap of >$5B has traded at less than 5.5x earnings in the last 20+ years. In fact, ex financials, only 19 stocks with market cap above $5B have traded below 5.5x since 1990 (of which nearly half were in the cyclical energy sector), and only 5 stocks with a market cap over $20B have traded that low.

With a free cash flow yield projected at 20% (relative to market cap) this year, a 2.1% dividend yield, and a weighted average cost of capital, the stock looks even more cheap, writes Sacconaghi.

Sacconaghi’s conclusion is that the stock is “overly discounted,” being treated as if it were a “broken” company, when in fact it is not.

“We believe that the stock’s valuation is overly discounted due to part to investors’ exasperation with recent management and the Board,” he concludes, “and believe the stock offers very attractive risk reward for patient investors.”

Sacconaghi reiterates an Outperform rating on the shares and a $37 price target.

HP today closed up 89 cents, or 4%, at $23.60.

Tags: Coal ,ETFs ,GLD ,Gold ,IAU ,Precious Metals ,6 Best ETFs To Buy For 2012

3 Stocks That Blew the Market Away

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Don't settle for ordinary quarterly reports.

I take a look at three companies that beat market expectations every week, since I believe that it's the biggest factor in a stock beating the market. Leaving Wall Street's pros with stunned expressions can be a good thing. It usually means that the companies have more in the tank than analysts figured. Capital appreciation typically follows.

Let's take a look at a few companies that humbled the prognosticators over the past few trading days.

We can start with TIBCO Software (Nasdaq: TIBX  ) .

Things looked bleak for TIBCO last month, with digital data enablers plunging on concerns that tech spending would dry up in this iffy economy. Thankfully TIBCO held up better than some of its rivals, with revenue soaring 24% in its latest quarter -- fueled by a 29% spike in license revenue. The end result for TIBCO was a profit of $0.23 a share, just ahead of the $0.21 a share that the market was expecting.

No one should be surprised. TIBCO has now surpassed Wall Street estimates in each of the past 14 quarters.

Red Hat (NYSE: RHT  ) also earned a tip of the hat from its shareholders. Companies continue to turn to Red Hat's open-source solutions for their cost-effective enterprise software needs. Adjusted profitability climbed 53% to $0.29 a share, blowing past the $0.25 a share that the pros were targeting.

Finally, we have Cintas (Nasdaq: CTAS  ) . The corporate uniform giant continued to trend we saw two months ago when it posted marke! t-thumpi ng fiscal fourth quarter results. Cintas' quarterly net income of $0.52 a share left analyst estimates of $0.47 a share pressed like freshly washed uniforms being handed over by a Cintas driver.

The strong showing at Cintas is welcome news for corporate America, even though last week dealt investors a mixed message when it comes to another reliable pulse take -- office furniture. Herman Miller (Nasdaq: MLHR  ) blew estimates out of the water, but rival Steelcase (NYSE: SCS  ) fell just short.

It's important to keep watching the companies that surpass expectations. Over time, it will be a lucrative experience for investors as the market rewards the overachievers. That's the kind of surprise that we look for?in the Rule Breakers newsletter service. Want in? Check out a 30-day trial subscription.

Either way, come back next Monday to learn about more stocks that blew the market away.

If you want to track these stocks to see if they come out ahead next quarter, add them to My Watchlist:

• Add Tibco?Software to My Watchlist.
• Add Steelcase to My Watchlist.
• Add Red?Hat to My Watchlist.

Tags: AA ,Best Stocks To Buy For 2012 ,Earnings ,GS ,Maybe the bar is set too darn high for current market conditions

Hudson City Bancorp, Inc. Third Quarter Earnings Sneak Peek

S&P 500 (NYSE:SPY) component Hudson City Bancorp, Inc. (NASDAQ:HCBK) will unveil its latest earnings on Monday, October 17, 2011. Hudson City Bancorp is a holding company for Hudson City Savings Bank, which is a retail savings bank offering traditional deposit products, consumer loans and residential real estate mortgage loans.

Hudson City Bancorp, Inc. Earnings Preview Cheat Sheet

Wall St. Earnings Expectations: The average estimate of analysts is for profit of 19 cents per share, a decline of 24% from the company’s actual earnings for the same quarter a year ago. The average estimate is the same as three months ago. Between one and three months ago, the average estimate was unchanged. It also has not changed during the last month. Analysts are projecting net loss of 57 cents per share versus net income of $1.09 last year.

Past Earnings Performance: The company’s quarterly results have come in above estimates for the last three quarters. Last quarter, the company booked profit of 19 cents per share versus a mean estimate of net income of 18 cents per share.

Wall St. Revenue Expectations: Analysts are projecting a decline of 9.2% in revenue from the year-earlier quarter to $263.7 million.

Analyst Ratings: Analysts seem relatively indifferent about Hudson City Bancorp with 13 of 14 analysts surveyed maintaining a hold rating.

A Look Back: In the second quarter, profit fell 32.7% to $96 million (19 cents a share) from $142.6 million (29 cents a share) the year earlier, but exceeded analyst expectations. Revenue fell 26% to $555.5 million from $750.8 million.

Key Stats:

Revenue has fallen in the past four quarters. Revenue declined 5.9% in the first quarter from the year earlier, dropped 5.7% in fourth quarter of the last fiscal year from the year-ago quarter and 3.2% in the third quarter of the last fiscal ! year.

Competitors to Watch: New York Community Bancorp, Inc. (NYSE:NYB), Kearny Financial Corp. (NASDAQ:KRNY), OceanFirst Financial Corp. (NASDAQ:OCFC), Ocean Shore Holding Co. (NASDAQ:OSHC), Northwest Bancshares, Inc. (NASDAQ:NWBI), Provident New York Bancorp (NASDAQ:PBNY), Oritani Financial Corp. (NASDAQ:ORIT), Magyar Bancorp, Inc. (NASDAQ:MGYR), Roma Financial Corp. (NASDAQ:ROMA),?Citigroup (NYSE:C),?Bank of America Corp. (NYSE:BAC), JPMorgan Chase & Co. (NYSE:JPM), Wells Fargo & Company (NYSE:WFC), Morgan Stanley (NYSE:MS), Barclays PLC (NYSE:BCS), Goldman Sachs Group, Inc. (NYSE:GS), U.S. Bancorp (NYSE:USB), UBS AG (NYSE:UBS), Deutsche Bank AG (NYSE:DB), and Royal Bank of Scotland Group plc (NYSE:RBS).

Stock Price Performance: During July 18, 2011 to October 11, 2011, the stock price had fallen $2.01 (-25.3%) from $7.94 to $5.93. The stock price saw one of its best stretches over the last year between January 28, 2011 and February 8, 2011 when shares rose for eight-straight days, rising 4.1% (+43 cents) over that span. It saw one of its worst periods between July 28, 2011 and August 8, 2011 when shares fell for eight-straight days, falling 19.3% (-$1.58) over that span. Shares are down $6.40 (-51.9%) year to date.

 

Tags: ACUR ,BAC ,CDM ,DMAN ,EK ,FMCN ,GPN ,SYMX ,TE ,WYNN ,YHOO ,YUM ,Top 10 Stocks Catching the Eyes of Investors and Traders October 4th

NEW YORK -- Citigroup Inc.'s (C) earnings rose 74 percent in the third quarter as more of its customers paid their bills on time, leading to lower losses from loans. An accounting gain also boosted income.

It was the seventh straight quarter of income growth for Citi, the nation's third-largest bank by assets. Citigroup was one of the biggest recipients of taxpayer support during the financial crisis. It received $45 billion in bailouts funds and was partly owned by the government until December 2010.

The New York bank's net income rose 74 percent, to $3.8 billion, due to lower losses from loans and an accounting gain related to the valuation of the bank's own debt. Citi's stock fell 1.7 percent to close at $27.93, less than other banks stocks.

The profit report came as the Occupy Wall Street movement entered its second month and spread across the country, targeting large financial institutions like Citi. As of Monday the bank said it had not yet been approached by organizers of the protest following an offer last week from Citigroup's CEO, Vikram Pandit, to meet with them.

Occupy Wall Street rallies started last month in New York with protests against income inequality and demands for higher taxes on the wealthy. CEOs like Pandit are prime targets. On Saturday, two dozen people were arrested after they entered a Citibank branch in New York and refused to leave.

Banks like Citi have benefited as Americans have improved their financial health, saving more and paying off their credit card debt on time. Citi's losses from bad loans fell 41 percent during the quarter to $4.5 billion as defaults fell on Citi-branded cards. That allowed Citi to add $1.4 billion to its earnings ! from cre dit reserves it had set aside earlier in anticipation of deeper losses.

However, the bank's ability to collect fees from raising interest rates on loans or from fees for late payments has decreased because of new regulations. That led to a 9 percent drop in revenue at its North American consumer business. Rival Wells Fargo & Co., which also released its results Monday, took a similar hit to its credit card fee income due to new banking rules.

Citi said new regulation has also changed its plans for its private-label credit card unit, which issues cards in partnership with retail stores. Citi had said it was planning to either sell or reduce the size of the unit. The bank reversed course after noticing that customers are using retailer-issued cards more. Pandit said in an internal memo to employees the business earned $2.2 billion so far this year as delinquencies declined.

Citi's income also included a $1.9 billion accounting gain. Citi had to take the accounting gain because the cost of its debt fell on the bond market. Since the bank could theoretically buy back that debt at a lower cost, accounting rules require that a gain be recorded. In the third quarter, corporate debt prices fell sharply due to the uncertainty in the financial markets.

With the accounting gain, its revenue edged up 1 percent to $20.86 billion. Excluding the gain, Citi's revenue fell 8 percent from the same period last year.

Trading in stocks and bonds and Citi's investment banking division were hurt by turmoil in financial markets brought on by the debt crisis in Europe and a downgrade of the U.S. government's credit rating in August. The volatility kept many investors away and led companies to put off stock and bond offerings. Those factors also led to a sharp drop in investment banking fees at rival JPMorgan Chase & Co. which reported earnings last week.

Citi's revenue from fixed income fell 33 percent to $2.3 billion; its stock business ! fell 73 percent to $289 million and investment banking fell 21 percent.

On a positive note, Citi's large network of international branches _ more than any other U.S. bank _ helped the bank offset some of the slowdown in the U.S. Led by Asia and Latin America, the bank's international consumer business increased 10 percent.

"Our deep roots in these markets give us efficient advantages," said Pandit in a conference call with analysts to discuss earnings.

Tags: BAC ,BCS ,COF ,GS ,HBC ,LYG ,Is HSBC the Right Stock to Retire With?

ARM Holdings: New 3Q Customers, 4Q Muted

Expect more details after the close from ARM Holdings (ARMH), which reported a solid third quarter but issued fourth quarter revenue and earnings guidance slightly below expectations.

Revenue in the three months ended in September rose 22% to $192.3 million. For the first nine months of the year, revenue rose 26% to $568 million. Gross margins held steady. Non-GAAP operating margins came in at 44.6%, and earnings of 15 cents per U.S. share exceeded the 13 cents analysts expected.

The company now sees fiscal 2011 revenue of $763 million, which implies fourth quarter 2011 revenue of approximately $195 million compared to the prior consensus of $196.4 million, notes Gary Mobley,? an analyst at Benchmark.? He sees fourth quarter non-GAAP earnings of 13 cents, a penny below the prior consensus.

Battling for the future of computing with Intel (INTC), ARM Holdings gushed about 14 new processor technology customers, including established semiconductor companies buying their first ARM processor license. It also reported a 10% increase in shipments of ARM chips for mobile phones and mobile computers, to 1 billion chips, and a 50% increase in shipments for consumer and embedded digital devices, to 900 million.

CEO Warren East said requirements for smarter, low-power chips are driving demand for a broad range of applications from sensors to computers. Known for its dominance in cellular basebands, mobile application processors and hard disk drive controllers, ARM is selling into other markets for non-mobile devices like digital TVs, microcontrollers and networking applications.

“Royalty revenues in Q3 have been impacted by the below seasonal growth in the semiconductor industry, but we continue to gain share. With customers looking to design ARM technology into a widening product portfolio, ARM is continuing to invest in the development of new products to drive long-term growth i! n our re venues, profits and cash.��

While still at record levels, the third quarter backlog of license and service revenue was flat, quarter over quarter, says Mobley who has a Buy rating on the stock. He adds:

“Considering weak chip industry sales trends, ARM PD royalty revenue is expected to trend flat q/q for 4Q11. Normally, ARM PD royalty units would trend up by approximately 10% q/q. Using management��s 4Q11 normalized operating expense guidance, our new 4Q11 non-GAAP EPS estimate will likely remain $0.13 (vs. prior consensus of $0.14).”

Tags: Apple ,Best Tech Stocks To ,GOOG ,iPhone ,MMI ,NOK ,Smartphones ,SSNLF ,T ,Google/Motorola could challenge iPhone by going bare-bones

Microsoft: Ha, Ha, We Win with Android Royalties

Microsoft (NASDAQ:MSFT) is likely to have scored a coup with its agreement signed with Samsung (SSNLF.PK). The two companies will collaborate on developing and marketing Windows phones. More important, the agreement will entitle Microsoft to earn royalties from Samsung��s Android (NASDAQ:GOOG) sales. Those payments should be significant considering Samsung��s 19% share of the mobile phone market.

Super Hot Feature: Amazon Kindle Fire Revealed, Stock Up 3.75%.

The agreement enables the two companies to cross-license their patent portfolios thus improving the coverage of their products. “Microsoft (NASDAQ:MSFT) and Samsung see the opportunity for dramatic growth in Windows Phone, and we’re investing to make that a reality,” said Andy Lees, president, Windows Phone Division at Microsoft. “Microsoft believes in a model where all our partners can grow and profit based on our platform.”

The stock is trading at $26.14 today, up 1.83%. Shares are up 4.01% in one year. The stock’s trading range for the year is between $23.65 and $29.46.

Don’t Miss: Warren Buffett: The Ultimate Flip Flopper?

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1 Killer Statistic of Amazing Retail Stocks

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Stock analysts have used the same metrics to assess retail stocks for as long as I can remember. After reading a report from a retail industry website, however, I question whether we've been looking at the wrong metrics all along.

After briefly examining the traditional retail metrics, we'll turn our attention to the one statistic that has produced market-smashing portfolio returns. I'll then provide a link to a free report detailing the handful of retailers that are growing revenue despite the ongoing economic malaise.

The old school
As I discussed in a recent column, investors traditionally rely on three metrics to make buying and selling decisions in the retail industry.

The first is same-store sales growth, sometimes referred to as "comp" sales. This compares sales from existing outlets to identical periods in the past, most often annually, allowing you to isolate revenue growth from improved operations (what's known as "organic growth") as opposed to revenue growth from new stores. In the second quarter of 2011, for example, lululemon athletica (Nasdaq: LULU  ) reported same-store sales growth of an astounding 20%.

The second is gross margin, which indicates both potential profitability and brand power. It's the amount of each dollar a company keeps after paying its sales costs -- including the cost of the goods themselves. On one end of the gross margin spectrum are Apple (Nasdaq: AAPL  ) and Select Comfort (Nasdaq: SCSS  ) , which regularly report gross margins of 40% and 60%, respectively. And on the other end of the spectrum is Costco, an equally compelling business but with gross margins closer to 12%.

The third statistic is free cash flow, which is the difference between operating cash flow and capital expenditures. The luxury goods retailer Coach (Nasdaq: COH  ) provides an example of healthy free cash flow, growing it from $638 million in 2007 to $885 million in 2011.

The new school
Although these metrics are unquestionably important, none of them address productivity, the metric I've found to be the most accurate at predicting retail stock performance. The rationale for my opinion is illustrated in the following figure, which in part replicates the results of a report by Retailsails.com.

Source: Retailsails.com and Yahoo! Finance.

As you can see, the return on an equally weighted portfolio of the 10 most productive retailers in terms of sales per square feet (32.2%) beat the returns of similar portfolios containing the 10 fastest-growing retailers over the last year (17%) and the 10 most productive retailers in terms of sales per store (11.4%).

Beyond this, it smashed the 7.9% return of the SPDR S&P Retail ETF, which seeks to replicate the performance of the overall S&P Retail Industry Index.

Consequently, the best investments according to this metric are companies like Apple and Vera Bradley (Nasdaq: VRA  ) , which are both growing in size and highly productive in terms of sales per square foot, as opposed to companies such as Cabela's (NYSE: CAB  ) and Under Armour (NYSE: UA  ) , neither of which is in the top 10 with respect to sales per square foot.

The foolish bottom line
Although I haven't found a crystal ball to predict the future returns of retail stocks, I have found that a chain's productivity per square foot is one of the strongest indicators of past success.

If you're interested in retail stocks and want to read more about them, I urge you to check out our free report detailing the handful of retailers that are currently growing revenue despite the ongoing economic troubles. To get your copy while it's still free and available, click here.

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Ford Rallies on Credit Upgrades

Ford (F) obtained its long-hoped-for credit upgrade today from Standard & Poor’s after getting the nod from Fitch Ratings on Thursday. Shares rose 4% in midday trading.

S&P raised its rating on the automaker two notches to BB+ from BB- with a stable outlook. The company’s debt is now just shy of an investment grade rating.

“The upgrade reflects our view that, among other things, Ford’s prospects for generating free cash flow, and profits in its automotive manufacturing business remain intact, because of its cost base in North America,” said S&P analyst Robert Schulz.

The catalyst appears to be Ford’s deal with the UAW, which was ratified by union members this week.

Moody’s has also said it is reviewing Ford’s credit outlook .

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JPM: Still A Strong Long-Term Buy

JP Morgan (JPM) sold off over 5% Thursday even as it produced better than expected top-line earnings, due to a poorly received conference call. Although financials have just been plain ugly this year, JPM is "best of breed" in the banking category. As such, I believe the selloff represents a buying opportunity for intrepid long term investors.

"JPMorgan Chase & Co., a financial holding company, provides various financial services worldwide. Its Investment Bank segment provides various investment banking products and services, including advising on corporate strategy and structure, capital-raising in equity and debt markets, risk management, market-making in cash securities and derivative instruments, prime brokerage, and research services serving corporations, financial institutions, governments, and institutional investors." (business description from Yahoo Finance)

So here are 8 reasons JPM is a great long term buy at $31.50 a share:

1. It is selling at the bottom of its five year valuation range based on P/E, P/S, P/B and P/CF.
2. JPM was one of the few large banks not downgraded or put on ratings watch yesterday by Fitch.
3. Analysts consistently underestimate JPM's earnings. The company has beat top line earnings estimates for twelve straight quarters. The average beat over consensus has been 10% over the prior four quarters.
4. JPM has an A+ rated balance sheet, yields 3% and is selling at .7 times book value.
5. Insiders purchased over $8m in new shares in July and August at higher prices.
6. JPM's five year projected PEG is .8 which is a 45% discount to its five year historical average.
7. JPM is widely acknowledged to have the best management team of any major bank, achieved a 7.7% Tier 1 capital ratio under Basel III in the earnings reports yesterda! y and ha s a forward PE of under 7.
8. JPM is selling at significantly under analysts' price targets. Credit Suisse has a price target of $58, S&P is at $47 and the median analysts' price target on JP Morgan is $50.

Disclosure: I am long JPM.

Tags: Best Stocks For 2012 ,Best Stocks To Buy ,CROX ,Top Stocks For 2012 ,Crocs Plummets After-Hours on Weak Guidance

State Street rises on activist shareholder letter

Earnings Disappoint, But Apple Adds $5 Billion To Its Coffers

Apple’s (AAPL) quarterly report disappointed investors with earnings per share of $7.05 vs. the consensus expectation of $7.39. And as you might expect, the stock is down in after-hours trading (around $396 as I write this).

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The Amazing Dividend Chart You HAVE to See

I have a chart I want to show you. It's nothing complex or hard to understand. In fact, I take pride in how simple it is to read.

You'll be surprised the information shown in this chart is the result of less than two years of work; you'd never know it at first glance. I'm betting you'll think it took a decade to cultivate.

 

You might also think replicating what my chart shows takes a fortune to pull off. I've done it with $200,000 invested. That's nothing to sneeze at, but it's far from an extraordinary amount of money.

The results are also fully scalable. If you only have half this amount to invest, then you'll receive half of what my chart shows -- which is still a considerable amount of money. If you have $400,000 at work, then just double my numbers. Anyone -- and any dollar amount -- can replicate my performance.

But the best news is that what this chart shows is the result of a strategy you can start today. It doesn't take a doctorate degree to follow. You don't have to track the market every day -- or every week for that matter. The beauty of this strategy is that it takes care of itself.

In fact, the primary investing "skill" you need is patience. If you can allow yourself to build a portfolio without having to constantly fuss over it, make unnecessary trades, or live and die by daily fluctuations, then you can achieve these results.

My chart below shows what I'm talking about. Listed are the total amount of the "paychecks" I've received in the past six months using my Daily Paycheck strategy. As you can imagine, I've been pretty happy:

Microsoft and Nokia Look to Stab Apple

Microsoft Corporation (NASDAQ:MSFT), which has been viewed as slow to react to the rapidly rising popularity of mobile devices, said it will launch Mango-powered handsets from top makers including Nokia Oyj (NYSE:NOK), Samsung Electronics, and HTC Corp in coming weeks. Apple (NASDAQ:AAPL) and Android (NASDAQ:GOOG) phones, which together make up about half of the market, currently dominate the smartphone sector.

Microsoft (NASDAQ:MSFT) would launch Samsung and HTC Mango smartphones in the United States and Europe over the next week or so, with Nokia (NYSE:NOK) following in various markets, but Fujitsu Ltd (FJTSY) has already rolled out a Mango smartphone in?Japan. Microsoft (NASDAQ:MSFT) would introduce its Mango handsets in China for the first time next year, which is the world’s biggest mobile phone market with more than 900 million subscribers. Although only a fraction of the 900 million are smartphone users, many use Apple’s (APPL) iPhone and Samsung’s Galaxy.?Blackberry (NASDAQ:RIMM)?maker Research In Motion’s recent outage problems might also ultimately help competitors such as?Microsoft (NASDAQ:MSFT).

��Microsoft’s (NASDAQ:MSFT) comments come a day after Samsung and Google (NASDAQ:GOOG) held the Hong Kong launch of the first smartphone powered by the new Ice Cream Sandwich operating system,�� according to Reuters.

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Suntrust Banks Inc. Earnings Cheat Sheet: Profit Up

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S&P 500 (NYSE:SPY) component Suntrust Banks Inc. (NYSE:STI) reported net income above Wall Street’s expectations for the third quarter. SunTrust Banks is a financial services holding company whose businesses provide a range of financial services to consumer and corporate clients.

Investing Insights: Amazon.com has a Stock Chart Technical Analysts Dream About.

Suntrust Banks Earnings Cheat Sheet for the Third Quarter

Results: Net income for Suntrust Banks Inc. rose to $215 million (39 cents per share) vs. $153.1 million (17 cents per share) in the same quarter a year earlier. This marks a rise of 41% from the year earlier quarter.

Revenue: Noninterest income was $1.05 billion last quarter.

Actual vs. Wall St. Expectations: STI beat the mean analyst estimate of 35 cents per share.

Quoting Management: “Lower-cost deposit growth and improved credit quality continued in the third quarter,” said SunTrust President and Chief Executive Officer, William H. Rogers, Jr. “Further, overall loan growth was driven by solid increases in targeted consumer and commercial loan portfolios. We remain focused on delivering improved shareholder value through the execution of our client-centric initiatives and the implementation of our expense program.”

Key Stats:

The company has now topped analyst estimates for the last four quarters. It beat the mark by 2 cents in the second quarter, by 9 cents in the first quart! er, and by 13 cents in the fourth quarter of the last fiscal year.

Looking Forward: The outlook for the company’s results in the upcoming quarter is unfavorable. The average estimate for the fourth quarter is 34 cents per share, down from 38 cents ninety days ago. At $1.13 per share, the average estimate for the fiscal year has fallen from $1.14 ninety days ago.

Competitors to Watch: Wells Fargo & Company (NYSE:WFC), JPMorgan Chase & Co. (NYSE:JPM), KeyCorp (NYSE:KEY), PNC Financial Services (NYSE:PNC), Regions Financial Corp. (NYSE:RF), First Horizon National Corp. (NYSE:FHN), Citigroup Inc. (NYSE:C), Bank of America Corp. (NYSE:BAC), Cadence Financial Corp. (NASDAQ:CADE), and BB&T Corporation (NYSE:BBT).

Investing Insights: Amazon.com has a Stock Chart Technical Analysts Dream About.

(Source: Xignite Financials)

 

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Test Only!

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Here are 3 ways to play defense with options

With the S&P 500 now testing the key resistance level at the upper end of its trading range, those who have captured gains during this insane run should consider taking some profits off the table.

Given both the speed and magnitude of the recent rally — and the significant resistance looming overhead — prudence dictates adopting a more-defensive posture right now.

The fear that naturally arises when taking profits is potentially missing out on further upside.?Fortunately, traders have a variety of techniques available for striking the right balance between locking-in returns while remaining open to additional gains.

Such techniques also soothe the emotional drama that arises when faced with an all-or-nothing decision.? Should I stay all-in or go all-out?

All-or-nothing is always a hard pill to swallow. Its large, coarse, spiky outer shell makes it hurt on the way down. So, consider these alternatives in the options market that allow you to have your cake and eat it, too.

1. Covered Cal! l — Given the plethora of expiration months and strike prices available to trade, you can identify a call option that offers the right balance between risk and reward to sell against the stocks you already own.

Here, you may want to become familiar with option delta, which tells you the percentage chance of your option finishing where you want it to. (You can find delta through your brokerage platform or at financial sites that give you the option to see detailed options chains.)

To use delta with covered calls, here’s a rule of thumb. Want more protection??Sell a higher delta call.? Want more profit potential?? Sell a lower delta call.

2. Stock Replacement Strategy — Unload your stock and replace it with a call option or call spread.? Such an adjustment drastically reduces the capital allocated to the position, thereby reducing the risk.? It also allows the accumulation of additional profits and, unlike the stock itself, you can trade in and out of the call or call spread to maximize your returns.

3. Collar — Adding a collar to the mix consists of simultaneously selling a call and buying a put around your long shares. This strategy morphs the unlimited risk/reward nature of a long stock position to a more-palatable limited risk/reward.

A number of other adjustments could certainly be made. The options market provides virtually limitless choices that enable you to structure positions to your preference.

GE Energy Bets Big on More Alternative Energy, Shares Up 2.76%

GE Energy (NYSE:GE) is already a strong proponent of wind turbines, but now the company is ready to make a bigger bet on the wind industry (NYSE:FAN) with a?15 megawatt wind turbine.

Based on state-of-the art innovations in magnetic resonance imaging and nano-composites, these turbines are bigger with better blades and a next-generation control system. This will allow a huge increase in potential output.

Investing Insights: Alternative Energy ETFs: The Top 10 Exchange Traded Funds for Investing in Alternative Energy.

General Electric (NYSE:GE) currently leads the market in onshore wind turbines. The company’s 1.5/1.6 MW wind turbines dominate the market with its 1,679 installed units, according to the 2010 Wind Technologies Market Report. These 2010 installations represented almost half of all the wind power capacity.

GE’s stock (NYSE:GE) is up 2.76% to $15.27. Shares are down 17.5% year to date. The stock has traded in a 52-week range between $14.02 and $21.65.

Hudson City Bancorp, Inc. Third Quarter Earnings Sneak Peek

S&P 500 (NYSE:SPY) component Hudson City Bancorp, Inc. (NASDAQ:HCBK) will unveil its latest earnings on Monday, October 17, 2011. Hudson City Bancorp is a holding company for Hudson ! City Sav ings Bank, which is a retail savings bank offering traditional deposit products, consumer loans and residential real estate mortgage loans.

Hudson City Bancorp, Inc. Earnings Preview Cheat Sheet

Wall St. Earnings Expectations: The average estimate of analysts is for profit of 19 cents per share, a decline of 24% from the company’s actual earnings for the same quarter a year ago. The average estimate is the same as three months ago. Between one and three months ago, the average estimate was unchanged. It also has not changed during the last month. Analysts are projecting net loss of 57 cents per share versus net income of $1.09 last year.

Past Earnings Performance: The company’s quarterly results have come in above estimates for the last three quarters. Last quarter, the company booked profit of 19 cents per share versus a mean estimate of net income of 18 cents per share.

Investing Insights: Amazon.com has a Stock Chart Technical Analysts Dream About.

Wall St. Revenue Expectations: Analysts are projecting a decline of 9.2% in revenue from the year-earlier quarter to $263.7 million.

Analyst Ratings: Analysts seem relatively indifferent about Hudson City Bancorp with 13 of 14 analysts surveyed maintaining a hold rating.

A Look Back: In the second quarter, profit fell 32.7% to $96 million (19 cents a share) from $142.6 million (29 cents a share) the year earlier, but exceeded analyst expectations. Revenue fell 26% to $555.5 million from $750.8 million.

Key Stats:

Revenue has fallen in the past four quarters. Revenue declined 5.9% in the first quarter from the year earlier, dropped 5.7% in fourth quarter of the last fiscal year from the year-ago quarter and 3.2% in the third quarter of the last fiscal year.

Competitors to Watch: New York Community Bancorp, Inc. (NY! SE:NYB), Kearny Financial Corp. (NASDAQ:KRNY), OceanFirst Financial Corp. (NASDAQ:OCFC), Ocean Shore Holding Co. (NASDAQ:OSHC), Northwest Bancshares, Inc. (NASDAQ:NWBI), Provident New York Bancorp (NASDAQ:PBNY), Oritani Financial Corp. (NASDAQ:ORIT), Magyar Bancorp, Inc. (NASDAQ:MGYR), Roma Financial Corp. (NASDAQ:ROMA),?Citigroup (NYSE:C),?Bank of America Corp. (NYSE:BAC), JPMorgan Chase & Co. (NYSE:JPM), Wells Fargo & Company (NYSE:WFC), Morgan Stanley (NYSE:MS), Barclays PLC (NYSE:BCS), Goldman Sachs Group, Inc. (NYSE:GS), U.S. Bancorp (NYSE:USB), UBS AG (NYSE:UBS), Deutsche Bank AG (NYSE:DB), and Royal Bank of Scotland Group plc (NYSE:RBS).

Stock Price Performance: During July 18, 2011 to October 11, 2011, the stock price had fallen $2.01 (-25.3%) from $7.94 to $5.93. The stock price saw one of its best stretches over the last year between January 28, 2011 and February 8, 2011 when shares rose for eight-straight days, rising 4.1% (+43 cents) over that span. It saw one of its worst periods between July 28, 2011 and August 8, 2011 when shares fell for eight-straight days, falling 19.3% (-$1.58) over that span. Shares are down $6.40 (-51.9%) year to date.

Shutdown Averted, Senate Approves Bipartisan Spending Deal

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The U.S. Senate has reached a bipartisan deal on stopgap spending that will finance the government through November 18, thus avoiding a government shutdown and defusing debate between Republicans and Democrats over disaster relief funding. The measure was approved late yesterday, 79-12, and includes $2.65 billion for federal disaster assistance. The 2011 fiscal year ends on September 30, and were a budget not in place by then, the government would have partially shut down.

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Though the House has yet to vote on the measure, New York Senator Charles Schumer, the chamber’s third-ranking Democrat, says they “expect speedy passage of this agreement” so that the “flow of disaster aid is not interrupted.” Speaking with reporters after the Senate vote, Schumer said, “It is hard to see how the House Republicans could reject this proposal given the overwhelming” support it got in the Senate.

The Senate deal breaks a partisan impasse in which House Republicans were asking that new rescue funds be offset by cuts to other programs, particularly loan programs designed to fund resear! ch and i nnovation in alternative energy technologies. Democrats refused to cut spending to the programs, saying they were responsible for creating many jobs, and that to require offsetting cuts for any new spending would create a dangerous precedent.

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“We’ve basically resolved this issue,” said Majority Leader Harry Reid on the Senate floor last night. “It means we no longer have to fight over 2011 funding.” Democrats will not have to cut spending on alternative energy loan programs, but in turn, the amount of new relief spending will be roughly $1 billion less than originally proposed.

 

Top Dividend Rises and Stock Pops 7%

Tags: INFY ,NASDAQ ,Top Dividend Rises and Stock Pops 7%

Indian software and outsourcing giant Infosys Technologies (NASDAQ:INFY) beat analyst expectations and revised guidance when it declared FQ2 results today.

Quarterly profit was up 9.8% to 19.1 billion rupees?versus the expected 18.7 billion. Revenue improved 16.5% to 81 billion rupees.?The company's forecast for revenues for the current financial year now stands at 335-340.9 billion rupees?versus earlier guidance of 317.8-323.1 billion rupees.

The company declared an interim dividend of 15 rupees per share.

INFY (NASDAQ:INFY) is trading at $56.34 today, up 6.99%. Shares are down 23.61% in one year. The stock's trading range for the year is between $46.12 and $77.92.

 

BP To Get $4B In Anadarko Settlement;

Anadarko Petroleum(APC) announced today that it had reached a $4 billion settlementwithBP(BP) for the Deepwater Horizon disaster of April 2010.

The $4 billion tab was more than some analysts had forecast, but less than the $6.1 billion BP had original sought. Along with agreeing to pay the sum, Anadarko will drop its gross negligence claims against BP, as well as return the 25% interest it still holds in the Macondo well. Other former stakeholdersMitsui & Co. andWeatherford International (WFT) have already reached similar settlements with BP.

While the move grants Anadarko immunity from private businesses and area residents who may want to seek damages for the explosion, which killed 11 people and led to the most devastating oil spill in U.S. history, the company may still face penalties from the federal government.

Both Anadarko and BP were moving up in pre-market trading.

In related news, BP CEOBob Dudley said he expects the price of Brent crude to hover between $90 to $100 a barrel in the near future, below the $111.45 that futures were recent! ly chang ing hands for. However, while predicting a price decrease, Dudley stressed that he does not see the U.S. entering into a double-dip recession.