2 Smart Tech Investments, According to Teenagers

Teenagers may not be the best judges of investments, but when it comes to their preferences, their thoughts can be a good indicator for where trends are headed -- especially when it comes to technology. Tapping into the teenage mind can be a scary endeavor, but let's look briefly at what technology teens prefer right now, and how investors can benefit.

Teens prefer Facebook, for now
According to a recent survey by Piper Jaffray, Facebook (NASDAQ: FB  ) is still the preferred social media network among teenagers. The study showed that although teens are starting to move away from Facebook's website, the social network itself is still very important. The shift away from the website may be due more to the Facebook focusing on mobile offerings, rather than a shift in teenage preferences.

But the social media landscape can change quickly. Facebook's $1 billion purchase of Instagram last year is a prime example of how even the biggest social network companies can feel threatened by smaller ones -- and with good reason. In the survey, teens said that services like Wanelo and SnapChat are at the top of their list, even though they weren't included in the survey.

Facebook is trying to keep users hooked on its service, most recently with its launch of its Facebook-infused Android program, Facebook Home. If the survey's representative sample is correct, than it seems Facebook is doing a good job of retaining teens -- but it's not the only one at the top of the list.

Twitter followed behind Facebook for one of the most important teenage social networks, which could be a good indicator for tech investors chomping at the bit for a Twitter IPO. Rumors are still flying that the company will go public late this year or in 2014.

Apple's stock is down, but teen demand it high
When it comes to devices, the study found that 91% of teens surveyed said the next high-tech device they'll purchase will be a smartphone. That's good news for smartphone makers, and especially good for Apple (NASDAQ: AAPL  ) . Out of those who want to purchase a smartphone, 51% said they'd buy an iPhone -- compared to just 22% who said they wanted and Android device. Of all the teens surveyed, about half of them already owned an iPhone.

It's worth noting that only 6.5% of iPhone owners fall into the teenager demographic, 1% higher than Android's market share in the same demographic. But what's important to take away from the survey is that the next demographic above survey respondents, those aged 18-24, make up almost 19% of iPhone owners and 16% of Android users. According to a recent comScore study, "iPhone owners tend to think very highly of their devices, and as a result they are likely to remain iPhone users over time. Nearly two-thirds (62 percent) of iPhone owners are highly satisfied with their device, and more than 80 percent of them have previously owned an iPhone." Contrast that with 48% of Android users that are satisfied with their device.

Apple seems to be winning the smartphone mindshare war among teenagers, and based on the comScore data, this could translate into more iPhone purchases down the road.

Obviously, teens aren't the only -- or the best -- indicator for picking a tech stock. But if you consider the information from the surveys and reports we mentioned, it's pretty solid market research. When it comes to social media investments, I'm still cautious on getting on board with Facebook. The company has made some huge strides in mobile as of late, and I think they're on the right track in a lot of ways, but social media trends can change quickly and I think it's still too early to tell how the company's stock will play out.

As for Apple, tech investors know what a wild ride it's been since last fall, but there's something to be said for Apple's ability to maintain high customer satisfaction and high retention rates for its devices. Despite increased competition, Apple is still one of the most dominant mobile tech companies and there's no indication that will change anytime soon. Teens see the value in the company's products, and I think investors would be smart to do the same.

There's a debate raging as to whether Apple remains a buy. The Motley Fool's senior technology analyst and managing bureau chief, Eric Bleeker, is prepared to fill you in on both reasons to buy and reasons to sell Apple, and what opportunities are left for the company (and your portfolio) going forward. To get instant access to his latest thinking on Apple, simply click here now.

Pentagon Spending Screeches to a (Near) Halt

Maybe there's something to this whole "sequestration" phenomenon after all -- because for all intents and purposes -- and certainly in comparison with recent trends -- Department of Defense spending has come to a screeching halt in recent days. On Wednesday, for example, DoD issued a grand total of three new contracts, totaling a mere Pentagon pittance of just $44.4 million.

Divvying up what loot still remains to be had were three companies:

Privately held Beechcraft Defense, still feuding with Embraer (NYSE: ERJ  ) over a contract award for fighter planes in Afghanistan, got a consolation prize of sorts. The $28.6 million firm-fixed-price contract extension it won Wednesday, to service Iraqi Air Force T-6 training aircraft through Dec. 31, was the largest award the DoD gave out Wednesday. A large step down from that one was an $8.3 million award to BAE Systems' (NASDAQOTH: BAESY  ) Maritime Services Division to supply "Archerfish neutralizers (destructor, mine neutralization, Airborne EX64 Mod 0 Archerfish)" as part of an upgrade to U.S. Navy MK-105 AMCM Magnetic Mine Sweeping systems produced by Exelis (NYSE: XLS  ) . BAE's expected to complete performance on this contract by September 2014. Finally, Comtech Telecommunications (NASDAQ: CMTL  ) subsidiary Comtech EF Data won at $7.5 million cost-plus-incentive-fee, cost-plus-fixed-fee, firm-fixed-price contract to supply Advanced Time Division Multiple Access Interface Processors -- Ethernet devices to be used by the U.S. Navy to connect ship, shore, and submarine platforms. Work on this contract will be complete by April 24, unless contract options are extended. In that case, the completion date could move out to March 2018, and the contract value could rise to $28.4 million.

5 Ideas for Your Tax Refund Dollars

Another tax season is nearly behind us. If you're slated to receive a refund, you may wonder how to best use the money. Here are five great ideas to consider for your refund dollars.

1. Spend a small percentage of it
Take 10% of your refund money and spend it on something for yourself. Doing so will help you stick to your plans for the rest of the money. If you're too strict with yourself, you may be more likely to fall off the financial wagon. The average tax refund amount is just shy of $3,000, according to the IRS. So if you receive the average $3,000 refund, spend $300 of it. But use the remaining $2,700 wisely. Check out the following ideas for how to do just that.

2. Pay off high-interest debt
Put your money to excellent use by paying off any outstanding credit card debt you may have. If paying it all off isn't feasible, then consolidate your debt. Several credit cards offer 0% on balance transfers. For instance, Citigroup's (NYSE: C  ) Citi Simplicity and JPMorgan Chase's (NYSE: JPM  ) Slate cards offer 0% on balance transfers for 18 and 15 months, respectively, and no annual fees. If you qualify, transfer your balance as soon as possible. The immediately set up and stick with a monthly payment plan. Discipline yourself to have the entire balance paid off before the 0% time clock is up.

3. Build your savings account
Take this opportunity to bolster your savings such that you have at least three months' worth of living expenses socked away. Money market or savings accounts will provide you with the best rates. For example, American Express' (NYSE: AXP  ) high-yield savings account pays 0.85%, and Capital One Financial's (NYSE: COF  ) Capital One 360 offers a 0.75% APY. Both accounts boast no minimum balances and no fees. Meanwhile, EverBank Financial (NYSE: EVER  ) pays an attractive 1.01% money market rate but requires a $1,500 minimum opening balance.  

4. Fund a Roth IRA for 2013
Get a jump on this year's Roth IRA contribution. Sure, you have until April 15, 2014, to make your contribution for the 2013 tax year. But don't wait. The earlier in the year you fund your Roth, the more months of tax-free growth you'll accrue. And that can amount to a lot of money over your working life.

5. Revisit your tax withholdings
Consider talking with an accountant about why you're getting a refund in the first place. When you receive a refund, it's only because you've overpaid to Uncle Sam throughout the year. He's essentially used your money all year long. Don't stand for that another year. Discuss your situation with a tax professional, or, if you're more hands-on, tackle the issue yourself.

Foolish bottom line
Put your tax refund money to good use by employing these strategies. Making small steps toward improving your financial situation can make a big difference later in life.

Now that you've got a strategy for your tax refund dollars, get a jump on some great investing ideas. The Motley Fool's chief investment officer has selected his No. 1 stock for the next year. Find out which stock it is in the brand-new free report: "The Motley Fool's Top Stock for 2013." Just click here to access the report and find out the name of this under-the-radar company.

An Unreal Plan to Fix the Deficit and Help Taxpayers

The best April Fool's jokes feel real. That's why we put so much time and effort into ours. And yet, good as it was, CardHub.com may have done us one better with an email profiling a low-fee credit card from no less than the Internal Revenue Service.

"With Tax Day fast approaching and a large segment of U.S. consumers continuing to struggle as the economic recovery trudges on, the IRS has launched a new credit card that cash-strapped taxpayers can use to satisfy Uncle Sam. It offers 0% for 36 months, doesn't charge a balance transfer fee, and can only be used to pay the IRS," the pitch read.

And it was genius, says Tim Beyers of Motley Fool Rule Breakers and Motley Fool Supernova.  Each day, the headlines scream of how politicians are fighting over ways to fix the deficit. Meanwhile, CardHub.com says consumers packed on an additional $36.2 billion in new debt last year.

Rising balances have proven to be a boon for the likes of American Express (NYSE: AXP  ) , Citigroup (NYSE: C  ) , and JPMorgan Chase (NYSE: JPM  ) , all of which have seen revenue and profit from credit card use rise noticeably over the past two years. (Though Chase suffered a modest decline in 2012 after sharp increases the year prior.)

Knowing the data and the context made the joke seem frighteningly real, Tim says in the following interview with The Motley Fool's Erin Miller. Please watch this short video to get his full take, and then leave a comment to let us know if you're struggling with debt right now, and if so, how you're handling the burden. 

With big finance firms still trading at deep discounts to their historic norms, investors everywhere are wondering if this is the new normal, or whether finance stocks are a screaming buy today. The answer depends on the company, so to help figure out whether JPMorgan is a buy today, I invite you to read our premium research report on the company today. Click here now for instant access!

Zuckerberg Is Right About Immigration

Last week an Economist piece on H1B visas offered the following tidbit. "The cap on visas is entirely arbitrary and unnecessary, and almost certainly imposes high economic costs on the country." Well, it only took a few days for Facebook (NASDAQ: FB  ) CEO Mark Zuckerberg to come up with a solution -- offer more of them.

In an op-ed in The Washington Post, Zuckerberg argued that the U.S. needs to do more to attract highly skilled immigrants in order to keep up with the rest of the world. His solution involves increasing the number of H1B visas and letting those visa holders stick around longer. In this effort, he's being supported by executives from Google, LinkedIn, and Yahoo!, to name just a few.

The current situation
Right now, the US gives out 65,000 H1B visas each year. This year, it took less than a week to issue all of them -- hope you applied early. The government issues H1B visas in partnership with business, which are supposed to use the visas to "employ foreign workers in specialty occupations that require theoretical or technical expertise in specialized fields, including but not limited to: scientists, engineers, or computer programmers." 

The program is not designed to find employees who are smarter, faster, or generally better than American employees. It is instead designed to increase the pool of skilled workers by tapping international resources. Zuckerberg alluded to this point in his piece, writing, "[T]he more people who know something, the better educated and trained we all are, the more productive we become, and the better off everyone in our nation can be." His point being that we should get as many skilled people as we can if we want to compete at the highest level.

The "problems" with H1B
Since we're talking about it, there is clearly another side to the story. Those who argue against the H1B program expansion say that it drags down incomes, takes jobs away from Americans, or fails to capture the best possible candidates. I've already pointed out that the purpose of the program isn't to get the top echelon of workers, but simply to increase the pool. The other two points are also simple misunderstandings of the actual system, and neither of them should stop us from expanding the program, as Zuckerberg suggests.

Income being dragged down by foreign workers is a traditional response to any increase in the foreign labor. It's a common response because it's true, to some degree. By increasing the availability of labor, you drive down the value of that labor. But what we don't take into account is the value that the labor provides us as a whole.

A recent study found that while wages are decreased, overall output increases and the economy profits. That study took into account both illegal and legal immigrants, and the positive effects would likely be expanded due to an increase in the H1B population, as it applies to high margin fields, like software development.

The second concern is that an increase in the number of H1B holders would take jobs away from Americans. However, The Wall Street Journal has published a breakdown of unemployment by field, and computer related fields tend to have unemployment rates between 3% and 4%, which indicates that the sector is doing well, and can sustain the increase in the labor force.

The bottom line
Zuckerberg is right, and we should be embracing an increase in the skilled labor force across the technology sector. By increasing H1B visas, we increase the overall output of the sector, and ensure that America maintains a strong position in the global tech industry. This will be an important lobbying topic over the next few years, and a positive result would mean great things for the companies involved, as well as the economy as a whole.

It's incredible to think just how much of our digital and technological lives are almost entirely shaped and molded by just a handful of companies. Find out "Who Will Win the War Between the 5 Biggest Tech Stocks?" in The Motley Fool's latest free report, which details the knock-down, drag-out battle being waged by the five kings of tech. Click here to keep reading.

Strong First Quarter Powers Aggreko

LONDON -- FTSE 100 company Aggreko (LSE: AGK  )  saw a boost in its share price this morning following a positive interim management statement, gaining 1.6% in early trade to reach 1,789 pence.

The world's largest temporary power generation supplier announced that underlying group revenues grew 8% in the first three months of the year (excluding revenues from the London Olympics, the Poit Energia acquisition, pass-through fuel and currency movements), while trading margins were in line with expectations, and the outlook remains the same from previous guidance.

The firm revealed that local business saw a 17% increase of power on rent in the quarter year on year as Q1 underlying revenues rose 10%, with "most areas other than Europe showing healthy year-on-year increases in MW on hire".

Order intake was enhanced by big contracts (or Power Projects) -- including 122 MW of cross-border power to Namibia and Mozambique, and a new heavy fuel oil contract for 56 MW in the Caribbean -- and underlying revenues were 5% ahead of last year. Elsewhere, the Americas grew underlying revenues by 9%; Asia, Pacific and Australia was 1% ahead of last year; and Europe, Middle East and Africa grew 13%.

Management confirmed intentions to spend around £130 million in the first half on fleet capital expenditure, and around £260 million for the year as a whole, although "as always we will increase or decrease our rate of investment depending on market conditions". Net debt increased £4 million to £597 million in the quarter and £169 million against the same period last year, but that's taking into account the £139 million Poit Energia purchase with the rest attributed to "higher working capital requirements".

Last month Aggreko lifted its full-year dividend by 15%, but despite moving in the right direction -- the firm's dividend payout has risen for five years straight now -- it still yields less than 1.5%, while it's on a fairly costly valuations of 20 times earnings... neither hugely appealing to income or value investors alike.

If you're looking for companies that have strong potential to soar in price, though, then we've pinpointed our favourite growth share from the FTSE 100. Our analysts have produced a free report in which they evaluate its finances and risks, and its growth prospects going forward. Simply click here to get your copy delivered to your inbox immediately -- it's completely free.

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This Area Is Worth Its Weight in Natural Gas

Banks Will Pay for Misleading Customers

Ongoing litigation in the U.K. means that banks will likely be on the hook for mis-selling products to small business and individuals. According to the U.K.'s Financial Services Authority (FSA), the banks may have mis-sold up to 90% of the products under review. Claims have been coming in for over a year, and banks are just now undertaking a review of their sales, to determine which customers need to be compensated.

The banks facing the first wave of investigation are Barclays (NYSE: BCS  ) , Royal Bank of Scotland (NYSE: RBS  ) , HSBC (NYSE: HBC  ) , and Lloyds Banking Group (NYSE: LYG  ) . These companies are going to pay out something, as they've already admitted that rules were broken. The question remains -- how much will it cost?

Swaps explained
The charges related to rate swaps that the banks tacked on to variable rate loans in the middle of the last decade. Customers who wanted -- or were urged -- to hedge against interest rates going up could agree to a "cap" and "floor" -- together forming a "collar" -- on the rates. If interest rates rose above a certain amount, the cap rate would come into effect, with a customer paying only that rate, not the higher, actual rate.

If rates fell below the floor, then customers would pay the floor rate plus the difference between the floor and the actual rate. Clearly, the banks were selling the collars under the pretense that rates would be rising, as they did until 2008 -- when they suddenly fell.

Mis-selling to consumers
Once rates started to plummet, customers began to see their costs rise. Ironically, the very thing causing them to rise was a move designed to help borrowers. As the rates collapsed, customers approach their banks to cancel their coverage, only to discover that there was an often massive fee associated with cancellation. 

The key to the litigation is not the product itself, which is relatively straightforward -- it's the selling of the product. Claimants believe that they were not given a choice when purchasing a collar, not fully made aware of the fees to cancel the product, or not given enough explanation to fully understand the risks involved.

Now the FSA believes that over 40,000 of these products were sold in the last decade. While many of these will have expired, or be of such low value that banks won't be harmed, many are likely to result in repayments. As an example, Barclays announced that it has set aside $1.3 billion to repay harmed customers. 

While the final tally won't be known for some time, it's a sure bet that this is one more hurdle for the banks to overcome before they can return to respectability -- investors beware.

Many investors are scared about investing in big banking stocks after the crash, but the sector has one notable standout. In a sea of mismanaged and dangerous peers, it rises above as "The Only Big Bank Built to Last." You can uncover the top pick that Warren Buffett loves in The Motley Fool's new report. It's free, so click here to access it now.

Here's Why Modine Manufacturing's Earnings Are Worse Than They Look

It takes money to make money. Most investors know that, but with business media so focused on the "how much," very few investors bother to ask, "How fast?"

When judging a company's prospects, how quickly it turns cash outflows into cash inflows can be just as important as how much profit it's booking in the accounting fantasy world we call "earnings." This is one of the first metrics I check when I'm hunting for the market's best stocks. Today, we'll see how it applies to Modine Manufacturing (NYSE: MOD  ) .

Let's break this down
In this series, we measure how swiftly a company turns cash into goods or services and back into cash. We'll use a quick, relatively foolproof tool known as the cash conversion cycle, or CCC for short.

Why does the CCC matter? The less time it takes a firm to convert outgoing cash into incoming cash, the more powerful and flexible its profit engine is. The less money tied up in inventory and accounts receivable, the more available to grow the company, pay investors, or both.

To calculate the cash conversion cycle, add days inventory outstanding to days sales outstanding, then subtract days payable outstanding. Like golf, the lower your score here, the better. The CCC figure for Modine Manufacturing for the trailing 12 months is 44.2.

For younger, fast-growth companies, the CCC can give you valuable insight into the sustainability of that growth. A company that's taking longer to make cash may need to tap financing to keep its momentum. For older, mature companies, the CCC can tell you how well the company is managed. Firms that begin to lose control of the CCC may be losing their clout with their suppliers (who might be demanding stricter payment terms) and customers (who might be demanding more generous terms). This can sometimes be an important signal of future distress -- one most investors are likely to miss.

In this series, I'm most interested in comparing a company's CCC to its prior performance. Here's where I believe all investors need to become trend-watchers. Sure, there may be legitimate reasons for an increase in the CCC, but all things being equal, I want to see this number stay steady or move downward over time.

Source: S&P Capital IQ. Dollar amounts in millions. FY = fiscal year. TTM = trailing 12 months.

Because of the seasonality in some businesses, the CCC for the TTM period may not be strictly comparable to the fiscal-year periods shown in the chart. Even the steadiest-looking businesses on an annual basis will experience some quarterly fluctuations in the CCC. To get an understanding of the usual ebb and flow at Modine Manufacturing, consult the quarterly-period chart below.

Source: S&P Capital IQ. Dollar amounts in millions. FQ = fiscal quarter.

On a 12-month basis, the trend at Modine Manufacturing looks less than great. At 44.2 days, it is 5.6 days worse than the five-year average of 38.6 days. The biggest contributor to that degradation was DIO, which worsened 6.3 days when compared to the five-year average.

Considering the numbers on a quarterly basis, the CCC trend at Modine Manufacturing looks OK. At 46.1 days, it is 3.3 days worse than the average of the past eight quarters. Investors will want to keep an eye on this for the future to make sure it doesn't stray too far in the wrong direction. With both 12-month and quarterly CCC running worse than average, Modine Manufacturing gets low marks in this cash-conversion checkup.

Though the CCC can take a little work to calculate, it's definitely worth watching every quarter. You'll be better informed about potential problems, and you'll improve your odds of finding underappreciated home run stocks.

If you're interested in companies like Modine Manufacturing, you might want to check out the jaw-dropping technology that's about to put 100 million Chinese factory workers out on the street – and the 3 companies that control it. We'll tell you all about them in "The Future is Made in America." Click here for instant access to this free report.

Add Modine Manufacturing to My Watchlist.

Buy These 2 Small-Cap Stocks Before They Rebound

There's a certain thrill involved with holding small cap stocks in your portfolio. After all, given the relatively tiny size of their underlying businesses, these are the stocks which often hold the greatest prospects for growth over the long run.

To be sure, who wouldn't love to see his or her portfolio explode to the upside as today's small caps become tomorrow's massively profitable industry giants?

So what's the catch? Small-cap stocks tend to be much more volatile than their larger brethren. As a result, as long as nothing has happened to significantly change your buying thesis, you need to be willing to stick it out through thick and thin to realize truly substantial long-term gains.

With that in mind, here are two small cap stocks which are trading significantly below their 52-week-highs, and why I think you should buy them before they bounce back:

Company Market Cap % Below 52-Week-High Recent Price CAPS Rating
(out of five)

InvenSense (NYSE: INVN  )	$854 million	45%	$10.15	*****
MAKO Surgical (NASDAQ: MAKO  )	$532 million	74%	$11.27	*****

Source: Motley Fool CAPS

Sensing long-term opportunity
First up, shares of motion sensor specialist InvenSense (NYSE: INVN  ) are still reeling from a number of disappointing earnings reports and downgrades over the past year. The most recent "bad" news came from analysts at Maxim three weeks ago, who maintained their "Buy" rating on the stock, but lowered its price target to $12 per share, from $17. Even if Maxim is justified in its downgrade, however, I'm betting it's difficult to find too many investors who wouldn't be happy with an 18% gain should the stock reach the stated target

What's more, InvenSense boasts strong free cash flow, and a sterling balance sheet, with $193 million in cash and no debt. In addition, its shares currently trade at 20 times trailing earnings and just 13.5 times forward estimates -- a perfectly reasonable premium for a small-cap stock whose products have the potential to play an integral part in the fast-growing global market for mobile device sensors.

Robotic-assisted profits
I've made no secret of my optimism for shares of MAKO Surgical (NASDAQ: MAKO  ) , despite the company's gut-wrenching fall from grace over the past year; 2012 included one particularly brutal quarterly earnings report, which caused a single day drop of as much as 37%. Now, I'm a patient guy, but I have to admit that that one definitely made me think twice about selling what still remains one of my largest personal holdings. 

On one hand, MAKO management had undoubtedly overestimated its ability to sell expensive robotic surgery equipment to hospitals during one of the most challenging economic environments in recent history. As a result, they lost plenty of rapport with investors after twice being forced to lower their system sales guidance.

Even still, I remain convinced MAKO's punishment doesn't fit the crime, especially after management provided some solid answers to wary investors' questions during its most recent quarterly earnings call.

Foolish final thoughts
When the rubber hits the road, I think InvenSense and MAKO both represent fantastic small-cap stocks for patient long-term investors. If you can take the heat, these companies may just be able to help you absolutely thrash the broader market's returns.

However, if you'd still like to learn more about MAKO, Fool.com analyst and MAKO expert David Meier has authored a premium research report covering all of the must-know details on the company, including key areas to watch and risks looming in the future for the medical robotics company. Claim your copy by clicking here now.

Costco Hammers Home Its Strength

March was a solid month for Costco (NASDAQ: COST  ) , and the company posted a 4% increase in comparable sales. The stock was stagnant, though, as analysts had been expecting a 5% increase. But investors shouldn't be alarmed, as the shortfall was due mainly to exchange rates and lower fuel sales. In its press release, the company said that stripping out exchange rates and fuel changes, comparable sales rose 6%.

Costco has already posted a solid beginning to 2013, with its second-quarter comparable sales -- through the middle of February -- up 5%. The company has continued to find success through its disruptive membership model, and investors have rewarded it with a 20% increase in the stock price over the last 12 months. But even at its current price, Costco still looks like a good buy.

Solid management leads the way
Costco's leadership has been focused on meeting its customers' needs since the company's founding. But as evidence of its strategic abilities, the company hasn't been happy just to let its past customers make up the whole of its future customer base. Instead, the company has branched out into business products and homegoods to bring in a new audience.

It has also partnered with local auto dealerships to offer discounts on cars to members. While at the outset this might seem like a gimmick, the theory behind it is brilliant. Costco customers are car owners. In order to get the most out of a membership, you have to be able to transport a huge amount of dog food -- or whatever. Costco members are also deal seekers. You don't just happen into a Costco with a coupon from the paper -- you have to really want to save.

Management recognized that it could provide a new service and attract new customers by partnering with local dealerships, who themselves may become members. That kind of cycle is what makes Costco such a solid business. In short, it's founded on relationships.

Growth for investors
But buying at Costco isn't the only good deal the company offers. Over the last three years, an investment in Costco has proven to be a world beater. The chart below shows the total return from 2010 to today for Costco and its competitors.

COST Total Return Price data by YCharts.

Costco has been the clear winner, beating out both Target (NYSE: TGT  ) and Wal-Mart (NYSE: WMT  ) . Wal-Mart, in particular, has struggled recently. Reports have come out that indicate the company is having trouble keeping its stores stocked, due to the sheer physical effort required. Target, meanwhile, has had limited success in the last year with its new product lines. The company's tie-in with Neiman Marcus last holiday season was a flop.

The bottom line
With its strong customer base and relationship-focused business plan, Costco represents the better side of American retail. Workers at the company have generally positive reviews of Costco, and the brand has never been stronger. The company isn't cheap, but now looks like a great time to get in, nonetheless.

Costco's low prices haven't just benefited customers -- shareholders have walloped the market, returning 11,000% over the past two decades. However, with prices near all-time highs, is the ride over for Costco investors? To answer that and more, The Motley Fool's compiled a premium research report with in-depth analysis on Costco. Simply click here now to gain instant access to this valuable investor's resource.

A "Breakthrough" May Be on the Way for Breast Cancer Patients

The process of developing a drug from start to finish is incredibly arduous, usually involves around $1 billion in costs, and can take upwards of a decade to complete. To boot, a vast majority of drug hopefuls are destined to fail. That's why yesterday's news from Pfizer (NYSE: PFE  ) and the Food and Drug Administration should get breast cancer sufferers' blood pumping.

What's behind the "breakthrough" designation
The FDA yesterday gave Pfizer's Palbociclib the extremely rare and relatively new "breakthrough therapy" designation based on its phenomenal mid-stage trial results and the life-threatening nature of some of the cancers it could eventually treat.

The "breakthrough therapy" designation is about three months old -- it was a designation added to the Food and Drug Administration Safety and Innovation Act last year -- and is targeted at expediting experimental drugs through the development and review process. According to FDASIA, a breakthrough therapy is one that, "treat a serious or life-threatening condition, and preliminary clinical evidence indicates that the drug [or combination of drugs] may demonstrate substantial improvement over existing therapies on one or more clinically significant endpoints."

Very few breakthrough therapies have been approved up to this point -- then again, we're only working with about 100 days for the Food and Drug Administration to have assigned such a designation. Vertex Pharmaceuticals' received the first two "breakthrough therapy" designations from the FDA for two cystic fibrosis treatments, of which both involve the use of the already FDA-approved Kalydeco. The more intriguing "breakthrough therapy" designation is Pharmacyclics' (NASDAQ: PCYC  ) Ibrutinib for the treatment of two rare blood cancers, which analysts feel could have a peak sales value of $5 billion if approved.

The awe-inspiring numbers behind the designation
The potential for Vertex's cystic fibrosis dynamic duo and Pharmacyclics' Ibrutinib in clinical trials so far cannot be refuted, but I don't believe they hold a candle to the ridiculously strong clinical data that Pfizer's combination of Palbociclib and Novartis' (NYSE: NVS  ) Femara brought to the table in its mid-stage metastatic breast cancer trial.

The decision to assign the "breakthrough therapy" designation had to do with the end results, which showed Femara by itself providing trial patients with 7.5 months of progression-free survival, or PFS, while the combination of Palbociclib and Femara more than tripled that level to 26.1 months of PFS. I read that and my jaw hit the floor! That is the precise definition of a breakthrough drug that, if safe in trials, should be ushered through the development and review process with the utmost urgency.

Palbociclib itself targets ER+, HER2-positive breast cancer (the most common form of breast cancer) and works by inhibiting two cyclin dependent kinases, or CDKs, 4 and 6. These CDKs are essential for cell replication and their suppression has been demonstrated to interfere with tumor cell progression in advanced stages of the disease. Analysts at both Leerink Swan and JPMorgan estimate that, if approved for multiple indications, Palbociclib could have sales of $5 billion, annually.

A moat of competition, but plenty of upside
However, investors would probably be wise not to get too carried away with yesterday's news given that another therapy -- which I would certainly call revolutionary -- known as Kadcyla for HER2-positive breast cancer was just approved in February. Kadcyla, developed by Roche and ImmunoGen (NASDAQ: IMGN  ) piggybacks a toxin on an antibody and, using ImmunoGen's proprietary targeted antibody payload technology, delivers a higher dose of toxin directly to the targeted cancer, which has a signature protein that causes the release of the toxin from the antibody. In late-stage trials, Kadcyla improved PFS by 50% over the placebo to 9.6 months.

Where Palbociclib will have a major one-up on the competition is in ease of use. It's an oral medication compared to Roche's Herceptin, Perjeta, or combo drug Kadcyla, which are all administered intravenously. Only the combination of Roche's Xeloda and GlaxoSmithKline's (NYSE: GSK  ) Tykerb is currently administered in pill form, but many newly approved drugs and pipeline products have shown PFS advantages over that combination. Even Palbociclib (going strictly off phase 3 results) whooped Kadcyla on a numerical PFS basis, but I'd like to see a head-to-head trial before I'd go making any definitive "one's better than the other" statements.

If Pfizer and Novartis can demonstrate that its combination is safe, I don't think there's a thing that'll hold back an accelerated approval within the next two years. Breast cancer patients definitely have a reason to celebrate if Palbociclib's 248% PFS improvement over the placebo holds true in further studies.

While you can certainly make huge gains in biotech and pharmaceuticals, the best investing approach is to choose great companies and stick with them for the long term. The Motley Fool's free report "3 Stocks That Will Help You Retire Rich" names stocks that could help you build long-term wealth and retire well, along with some winning wealth-building strategies that every investor should be aware of. Click here now to keep reading.

Most European Stocks Rise; Marks & Spencer Gains

Raytheon Wins Part of $1.1 Billion South Korean Contract

South Korea has named the next contractor to participate in the planned $1.1 billion upgrade of its 134 KF-16C/D Block 52 Fighting Falcon fighter jet fleet. And the winner is: Raytheon (NYSE: RTN  ) .

South Korea's upgrade program got under way last summer, when the country chose Britain's BAE Systems (NASDAQOTH: BAESY  ) over Lockheed Martin (NYSE: LMT  ) to serve as prime integrator in the project -- a surprising development, given that Lockheed built the planes in the first place.

The upgrades that will be made are substantial, including the installation of new software, a new fire control computer, radar, data exchange system, display, and new, more advanced air-to-air and air-to-ground ordnance. Raytheon's role in all this will be to supply its new Raytheon Advanced Combat Radar, an active electronically scanned array radar system, in the 134 planes.

Deliveries will begin in 2016. Raytheon's share of the $1.1 billion in project payouts was not revealed.

What the End of Free Money Means for These 3 Tech Giants

Pentagon Announces Contracts With Dell, Cardinal Health, Raytheon

DIB Rise to Highest Since 2011 as Bank Repays Loan: Dubai Mover

Dubai Islamic Bank PJSC (DIB) climbed to the highest level in almost two years as the biggest Shariah- compliant lender in the United Arab Emirates paid a government loan it got in 2008 before it was due.

The shares jumped 4.1 percent to 2.27 dirhams, the highest close since April 2011. About 25 million shares were traded, or almost five times the three-month daily average, according to data compiled by Bloomberg. The benchmark DFM General Index lost 0.3 percent.

DIB's surge takes this year's gain to 13 percent, compared with a 16 percent advance in Dubai's gauge. The bank, which is taking over mortgage lender Tamweel PJSC (TAMWEEL), paid back the 3.75 billion-dirham ($1 billion) loan it received from the U.A.E. Finance Ministry during the global financial crisis. National Bank of Abu Dhabi PJSC and Abu Dhabi Commercial Bank PJSC (ADCB) are also among lenders that have repaid all or part of the funds owed to the ministry.

DIB's "robust liquidity position" helped pay the loan ahead of time, the bank said in a regulatory filing.

The stock's 14-day relative strength index rose to 70 today. A reading above this level indicates to some analysts that the security is poised to decline. Two analysts have a buy rating on the shares, two say hold and two recommend selling, according to data compiled by Bloomberg.

Final Four Stocks: Celgene vs. Johnson & Johnson

With March Madness in full swing, we decided to stick with what we know here at The Motley Fool, trading our basketball picks in for stock picks. We formed our own bracket filled with the top Big Pharma and Big Biotech stocks in a winner take-all tournament as determined by the collective intelligence of our CAPS community.

This Final Four matchup is a heavyweight bout between Celgene and Johnson & Johnson. Watch and find out what J&J and embattled Rutgers University have in common and whether Celgene's style of play is enough to advance to the championship round.

Can Celgene continue to soar?
Every in-the-know biotech investor has an eye on Celgene. Shares have skyrocketed this year as the company outlined a plan to almost triple its profits in only a few years. But should you buy the story Celgene is selling? Make sure you understand the key opportunities and risks facing this company by picking up The Motley Fool's brand-new premium report on Celgene. To claim your copy today, simply click here now.

What You're Hearing About Oil Exports Is Wrong

 A government loophole is keeping oil prices high...

 

As regular Growth Stock Wire readers know, I've been predicting a big drop in the benchmark West Texas Intermediate Crude (WTIC) price... I figured soaring U.S. oil production coupled with lower demand for oil products would drop the oil price down as low as $70 a barrel.

 

Since January 2011, WTIC has averaged $94 per barrel. It bottomed at $78 last June... That's about 10% from my estimate. But it didn't stay there long. Today, it's back up to $97. What's happening?

 

Exports.

 

Officially, it's illegal to export oil from the U.S. These rules were put in place in the 1970s, when crude was scarce. Even though things have changed dramatically, the laws stand.

 

That should leave a huge "captive" supply of crude here in the U.S.

 

But some energy companies have discovered a "loophole." While it's illegal to export oil... it's not illegal to export the products you can refine from it.

 

Our exports of "finished" oil products (gasoline, diesel, and jet fuel) have nearly quadrupled since 2005. They're at all-time highs.

 

You see, for the last 18 months, foreign oil (Brent crude) has traded at a 20% premium to WTIC. So there is huge international demand for products made from the "cheap" American oil. We're shipping product to South America, Africa, Asia, and Europe.

 

It's having a dramatic effect on our actual oil supply... Take a look at this chart...

 

 

The black line represents total U.S. production. By itself, it would spell that epic drop in oil prices. But the blue line is U.S. production, minus the crude that's being refined for export. It's ramping up... but not nearly as high as the blue line.

 

Exports now equal a huge 41% of U.S. oil production. They're helping keep the oil supply under control. While a capacity pinch at the refiners could push oil prices down, I no longer believe oil will crash below $70.

 

That's great news for oil investors right now. We can buy oil and gas producers without the fear of an oil price cliff looming in the near future. And right now, there are stocks trading as though oil prices are headed lower...

 

To measure value in oil producers, I like to use enterprise value (which is the market cap plus debt minus cash) divided by earnings (before interest, taxes, depreciation, and amortization). This "EV/EBITDA" measure gives us a good "big picture" view of a company.

 

The average EV/EBITDA in the industry right now is 13.4. But top names like Marathon, Apache, and Newfield have EV/EBITDAs under four.

 

I'm bargain-hunting in this sector right now. I suggest you do the same.

 

 If you're investing for "energy income," watch out...

 

My top "energy income" investments are royalty trusts. They simply collect cash from oil and gas wells drilled on their lands and distribute it to owners.

 

They are passive, low-risk investments that, if bought at the right time, can provide commodity investors with double-digit yields... and you don't have to depend on commodity prices rising.

 

As I've been showing you over the last year, low natural gas prices have depressed their distributions. That's no problem if you buy at a low price...

 

But now, there's another wrinkle to the story.

 

San Juan Basin Trust (NYSE: SJT) is one of the top names in the sector. It generates royalties from wells drilled by ConocoPhillips in the San Juan Basin (in Colorado and New Mexico). But with natural gas prices at today's depressed levels, you just can't make money drilling new wells there.

 

So Conoco said it was going to stop drilling wells. And that's a major problem for SJT.

 

SJT's wells are old and in decline. It needs new wells to generate more revenue. If it doesn't get those wells, its distributions are going to fall... even if natural gas prices hold steady.

 

If you jumped back into San Juan Basin, I suggest getting out. Shares of this trust are going lower.

 

And I expect many operators to follow ConocoPhillips' lead... That's going to hurt folks who specialize in drilling natural gas wells. If you own shares of drilling companies, tighten your trailing stops.

 

– Matt Badiali