Can American Axle & Manufacturing Holdings Meet These Numbers?

American Axle & Manufacturing Holdings (NYSE: AXL  ) is expected to report Q1 earnings on May 3. Here's what Wall Street wants to see:

The 10-second takeaway
Comparing the upcoming quarter to the prior-year quarter, average analyst estimates predict American Axle & Manufacturing Holdings's revenues will compress -0.3% and EPS will decrease -73.8%.

The average estimate for revenue is $749.2 million. On the bottom line, the average EPS estimate is $0.16.

Revenue details
Last quarter, American Axle & Manufacturing Holdings booked revenue of $736.7 million. GAAP reported sales were 22% higher than the prior-year quarter's $605.6 million.

Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures may vary to maintain comparability with estimates.

EPS details
Last quarter, non-GAAP EPS came in at -$0.02. GAAP EPS of $4.21 for Q4 were much higher than the prior-year quarter's $0.41 per share.

Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.

Recent performance
For the preceding quarter, gross margin was 12.2%, 600 basis points worse than the prior-year quarter. Operating margin was 3.4%, 560 basis points worse than the prior-year quarter. Net margin was 43.4%, much better than the prior-year quarter.

Looking ahead

The full year's average estimate for revenue is $3.30 billion. The average EPS estimate is $1.69.

Investor sentiment
The stock has a two-star rating (out of five) at Motley Fool CAPS, with 191 members out of 306 rating the stock outperform, and 115 members rating it underperform. Among 75 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 48 give American Axle & Manufacturing Holdings a green thumbs-up, and 27 give it a red thumbs-down.

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on American Axle & Manufacturing Holdings is outperform, with an average price target of $12.79.

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The Surging Nikkei Takes a Ride on a Plunging Yen

Forget the gains of the U.S. markets. Japan's Nikkei (NIKKEIINDICES: ^NI225  ) blew away the competition this week, posting an eye-popping gain of 6.3% over the past five days. What helped spur Japan's markets? Prime Minister Shinzo Abe's inflationary tactics are finally paying off: The yen sank to the important 100 yen-to-the-dollar mark this week, part of a 14% year-to-date fall against the U.S. currency. Other nations won't sit by idly as Japan drives down its currency, however; let's look at the latest from across the Pacific.

Conflict around the falling yen
The ever-weakening yen is a boon for Japan's exports, which have had to deal with a strong currency for years and a stagnant economy for two decades. Abe's 2% inflation target is still a long way off in Japan's current deflationary climate, but the yen's fall is a sign that things are headed the right way.

Japan will need the boost: If Abe's aggressive moves can't jump-start its flat economy, the nation in coming years will run into a two-tiered gauntlet of an aging population -- the result of a low birthrate in the recent past -- and a giant public debt that's more than double the country's GDP. Those two events, each massive in scope, although probably years away from becoming major problems, could derail Japan's economic hopes.

Yet Japan's gains have sparked concerns among other economic leaders around the globe. China has already spoken out against continued aggressive moves from Japan's central bank, saying that its Asian rival should stop its attempts to devalue its currency -- even as China looks to keep its yuan low against foreign currencies itself. This week at a meeting of the G7, U.S. Treasury Secretary Jack Lew joined the chorus of voices, saying that Japan's economic stimulus attempts needed to stay within international guidelines to avoid a potential currency war.

Currency devaluation could be a boon for top Japanese exporters, yet Nissan (NASDAQOTH: NSANY  ) , as one of Japan's top automakers, hasn't been able to take advantage this year. The stock has risen more than 9% year to date -- something most investors can't complain about -- but that's far behind the Nikkei's double-digit surge in 2013.

The company's full-year earnings report this week inspired no one on Wall Street. Nissan's net profit pushed higher by just 0.3% for the past 12 months ending in March, and like fellow Japanese automaker Toyota (NYSE: TM  ) , Nissan took a hit from the Chinese market. The company does expect net income to jump by 23% for the current fiscal year, but with Chinese and European sales slumping, Nissan will have to rely on American sales and revenue from Japan to fuel any rise. The weak yen should help overseas, but Nissan underperformed its Japanese rivals this past year -- a problem that a falling currency won't solve.

Nissan's done better this year than electronics maker Advantest (NYSE: ATE  ) , but this stock absolutely blew up over the past week. Advantest's shares shot higher by more than 9%, wiping out pessimism over the company's weak earnings released a few weeks ago. Advantest's net loss and operating profit both fell below its guidance, and despite this week's investor optimism, the future's murky for this company. Financial site TheStreet downgraded the stock last week, citing Advantest's falling earnings, among other issues.

It was anything but a good week for Japanese telecom carrier NTT DoCoMo (NYSE: DCM  ) , however. The wireless leader saw its stock fall 1.4% over the past five days even after reports emerged that Sony (NYSE: SNE  ) could be releasing a new phone, the Xperia A, under DoCoMo's network. An FCC filing has shown the Xperia A with a 5-inch screen, and DoCoMo investors could know more when the company unveils its mobile offerings for the summer on May 15.

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FTSE Shares That Soared and Plunged This Week

LONDON -- The FTSE 100 (FTSEINDICES: ^FTSE  ) has had a great week, smashing through records to set a new five-and-a-half year high of 6,638 points during Friday, and closing the week a few points down from that on 6,625. That's seven sessions of gains in a row, mostly boosted by positive earnings reports from some of the U.K.'s top companies, but also supported by continuing economic stimulus measures.

We take a look at three of the week's biggest risers, and one faller.

BT Group (LSE: SL  )
BT Group saw its price rise by 34.5 pence (12.5%) to 309.5 pence, after the U.K.'s biggest fixed-line telecom company announced a 14% increase in its annual dividend on Friday, to 9.5 pence. That's a yield of 3.1% on the current price -- and BT intends to lift its payment by 10%-15% per year over the next two years. Although actual revenues fell, by 5% to 18.3 billion pounds, substantial savings in operating costs were made, and BT managed to get net debt down by 1.3 billion pounds to 7.8 billion. We also heard that BT's broadband fiber now reaches more than half of U.K. homes and businesses, and that 1.5 million customers have signed up for it.

Lloyds Banking Group (LSE: LLOY  )
Lloyds Banking Group gained a little when the partly state-owned bank released first-quarter figures on April 30, revealing a pre-tax profit of 2.04 billion pounds -- the same period a year previously brought a profit of just 280 million pounds, though that was largely due to money set aside to cover mis-sold financial products. Then over the past week, the price has powered up a further 9.3% to 59 pence, taking it to a 90% gain over the past 12 months. Lloyds, which currently owns 50% of Sainsbury's Bank, is to sell that stake to J Sainsbury, which will then be the sole owner. Lloyds should pocket 248 million pounds from the deal.

TUI Travel (LSE: TT  )
Travel agent TUI Travel got off to a good first half, telling us on Friday of a 14% improvement in its operating performance. It's the seasonal low point and a loss was expected, but at 274 million pounds it was better by 43 million on the previous year. Net debt is down, cash flow is improved, and TUI lifted its interim dividend by 10% to 3.75 pence. A similar rise in the final dividend should give us a yield of around 3.7%, after the share price gained 23 pence (7%) to end on 347 pence.

G4S (LSE: GFS  )
Security group G4S headed the list of fallers by quite some way, with its price plunging 58 pence (19%) to 248 pence after disappointing first-quarter results were released on Tuesday. The company, which famously failed in its Olympics contract last year, warned of poor trading in Europe with a squeeze on margins and expects the pressure to continue for the rest of the year. On the bright side, overall revenues were actually up 7.5%, though earnings growth forecasts are pretty certain to be cut now.

What now?
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Will Natural Gas Pay Off for InterOil?

Next Monday, InterOil (NYSE: IOC  ) will release its latest quarterly results. The key to making smart investment decisions on stocks reporting earnings is to anticipate how they'll do before they announce results, leaving you fully prepared to respond quickly to whatever inevitable surprises arise. That way, you'll be less likely to make an uninformed knee-jerk reaction to news that turns out to be exactly the wrong move.

InterOil has huge natural gas holdings in Papua New Guinea, with its Elk and Antelope gas fields having huge potential to supply fuel to the Asia-Pacific region. But the company has gone through plenty of ups and downs recently. Let's take an early look at what's been happening with InterOil over the past quarter and what we're likely to see in its quarterly report.

Stats on InterOil

Analyst EPS Estimate	($0.12)
Year-Ago EPS	$0.19
Revenue Estimate	$331.46 million
Change From Year-Ago Revenue	(2%)
Earnings Beats in Past 4 Quarters	2

Source: Yahoo! Finance.

What will happen with InterOil's earnings this quarter?
In recent months, analysts have gotten less optimistic about InterOil's future earnings prospects. They've widened their first-quarter loss estimates by a dime per share, with full-year 2013 loss projections $0.35 per share higher than they were three months ago and with full-year 2014 profit consensus cut by more than half. Yet the stock has soared, rising more than 25% since early February.

InterOil isn't well-known, but it has huge potential in the global natural gas market. From its 4 million acres in Papua New Guinea, strategically located within a stone's throw of China, India, and other lucrative Asian energy markets, InterOil has an estimated 6 trillion cubic feet of recoverable reserves, albeit without that full amount having been proven.

Yet InterOil faces substantial challenges. Because Papua New Guinea has little existing energy infrastructure, the company will have to spend money to boost production, build a transportation network to get gas to an export terminal, and then create a facility to convert the dry gas into transportable liquefied natural gas. That last step holds plenty of risk, as ExxonMobil (NYSE: XOM  ) has had to spend substantially more than it originally anticipated on a similar LNG facility in Papua New Guinea. Meanwhile, ConocoPhillips (NYSE: COP  ) has a similar project near its extensive gas assets in western Australia and has seen similarly large cost overruns that have added billions to the cost of the projects.

The next step for InterOil will be for the company to find a partner to provide enough capital to build out its facilities and convince the government of Papua New Guinea to approve the LNG project. Yet the fact that CEO and founder Phil Mulacek retired at the end of April threw an added wrench into the works, especially with the company having adopted a poison-pill takeover-defense plan immediately after the announcement.

In InterOil's report, watch for any confirmation of rumors that Royal Dutch Shell (NYSE: RDS-A  ) may become InterOil's partner on its LNG project. Shell should have ample assets to reassure the Papua New Guinean government that the venture has the financial capacity to move forward, removing one more barrier from what InterOil hopes will be profitable days to come.

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These Stocks Helped Pull the Dow to Yet Another Record High

For the second day in a row, international currency moves had a huge impact on the stock market. With the Japanese yen having broken above the 100 yen-per-dollar mark yesterday, the dollar continued its advance against Japan's currency again today, gaining another 1%. The news sent Japanese stocks soaring, commodities like gold and oil falling, and bond prices plunging. But for U.S. stock market investors, the news had a much less dramatic effect, with the Dow Jones Industrials (DJINDICES: ^DJI  ) finishing with a gain of about 36 points, while the broader market posted slightly stronger gains.

Looking at the largest gainers in the Dow, two companies stood out for very different reasons. On one hand, UnitedHealth (NYSE: UNH  ) rose about 1.4%. Despite having no substantial news to justify the gains, UnitedHealth has benefited from increasing clarity about the impact of Obamacare on its revenue and earnings going forward. Moreover, as the market has soared, UnitedHealth's relatively low earnings multiple of just 12 looks increasingly attractive, especially in comparison to much higher-priced consumer stocks and other more traditional defensive plays.

Meanwhile, Hewlett-Packard (NYSE: HPQ  ) picked up almost 1.7% today. Lately, most of the news in the industry has centered on rival Dell (NASDAQ: DELL  ) , which today included another round in the ongoing battle between activist investor Carl Icahn and Dell founder and would-be going-private buyer Michael Dell about the valuation of the company. Yet HP has quietly continued making its adjustments to try to take advantage of Dell's distractions, and so far, the stock has rewarded investors' patience with solid gains in 2013. HP still has a ways to go before it can declare victory, including fending off whatever Dell decides to do to try to boost its own competitive position, but things are finally starting to look up for HP after a horrific 2012.

Finally, beyond the Dow, rare-earth-metals miner Molycorp (NYSE: MCP  ) soared more than 30% after reporting a narrower-than-expected loss and gains in production output in its quarterly earnings. The company is still nowhere near profitability, but with a 73% boost in revenue and more than triple its year-ago sales in terms of volume tonnage, Molycorp just might be able to work through the poor pricing conditions in the industry.

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Is the Market Too Rich?

Raytheon Moves Forward With AI3 Rocket-Intercept Project

Raytheon (NYSE: RTN  ) has completed a successful series of flights for control test vehicles (CTV) in the Accelerated Improved Intercept Initiative, aka AI3, the company announced this week.

The AI3 goal is to destroy a wider variety of artillery, rockets, and other types of weaponry, in order to protect warfighters.

The company's most recent test flight consisted of the Ku-Band Radio Frequency System (KRFS) detecting a would-be threat, calculating the impact on a protected area, and guiding an AI3 missile through datalink. The missile successfully intercepted the incoming rocket, according to Raytheon.

Representatives from both Raytheon and the U.S. Army have spoken favorably about the recent tests. Steve Bennett, Raytheon's director of the AI3 program, believes the tests' success mean "the AI3 program remains on schedule." The Army's AI3 project manager, Lt. Col. Brett Wilhide, said the project is now ready to "progress to the guided test vehicle flight test phase of the program. Those tests will demonstrate the full integration of the tactical AI3 battle element system to intercept threat targets."

Raytheon announced in March 2012 that the Army had awarded it a $79.2 million contract to develop a system to detect and destroy incoming rockets: the Accelerated Improved Intercept Initiative to include an interceptor developed by Raytheon and a government-furnished launcher, fire control system, and command and control system.

The next set of tests will include an onboard semiactive radar seeker, which will perform terminal guidance to intercept its targets. 

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For BlackBerry, It All Comes Down to This

Looking back, it's easy to say that BlackBerry (NASDAQ: BBRY  ) should have -- if they could have -- gone to market with its Q10 smartphone first, keyboard and all. The Q10, by most accounts, is a top-flight version of the BlackBerry Bold smartphone, which fans have come to know and love over the years. Results for BlackBerry's first phone running its BB10 OS, the Z10 with its touchscreen, are so-so.

Even with a late rollout, the one million Z10s sold in BlackBerry's recent fiscal Q4 is marginal at best, particularly for a company fighting its way back from obscurity. It needs a home run, not a base hit, which is why BlackBerry's turnaround hinges on the Q10.

The rubber meets the road
According to sources, delays in formatting BlackBerry's new BB10 OS to the Q10's smaller screen took a bit longer than expected, leaving customers with a few choices: Forget the keyboard and grab BlackBerry's Z10 touchscreen smartphone, wait for the Q10, or opt for one of the other smartphone alternatives out there. Problem is, even if BlackBerry fans are waiting on the Q10, the overall market for keyboard phones is shrinking fast.

According to IDC, of the 62.8 million phones with keyboards sold in 2012, BlackBerry garnered 47% of the market: That's the good news. What's discouraging for BlackBerry isn't the market share of its keyboard smartphones, it's how much smaller the overall market has become. The 62.8 million units that the IDC reported sold worldwide in 2012 was down nearly 40% from the 100 million keyboard devices sold the previous year.

Does the Q10 have enough oomph to put an end to the shift toward touchscreen smartphones? We'll know soon enough, as BlackBerry prepares to roll the Q10 out in Canada on May 1, the U.K. shortly thereafter, and in the states within a few weeks.

Not alone
The high-end, keyboard-enabled smartphone market is where the Q10 resides, but it's hardly the only option out there. Samsung, Motorola, and Nokia, among others, offer keyboards with some of their many phone models. Nokia's recently released Asha 210 is a low-priced phone with a keyboard, and HTC is another phone manufacturer fighting for a piece of the declining keyboard phone market.

BlackBerry and Nokia are often mentioned in the same breath, as the once high-flying device makers work to reinvent themselves. A marked advantage that Nokia has over BlackBerry is the ability to continually introduce new devices targeting different price points, markets, and touchscreen or keyboard users. BlackBerry plays strictly in the high-end smartphone niche, competing more directly with industry-leading Apple (NASDAQ: AAPL  ) and its iPhone. Making a dent in Apple's smartphone sales – 37.4 million iPhones sold last quarter alone – is a tall order, even as industry pundits bemoan Apple's lack of innovation and declining margins. Despite recent pressures, Apple remains a worthy competitor, and if BlackBerry's going to make a dent, it looks like the Q10 will have to do it.

Going forward
Based on the 6% jump in share price since BlackBerry announced earnings in late March, investors either viewed the one million Z10s sold as a win, or brushed that aside to focus on other news, and there were a lot of positives. BlackBerry's profitable quarter took many by surprise, and word that 55% of Z10 buyers came from other platforms bodes well for both the Z10 and Q10. Gross margins also impressed, jumping to 40.1%, and let's not forget the winning combination of zero long-term debt and BlackBerry's $2.6 billion in cash and equivalents.

The decline in BlackBerry's service subscribers took a bit of the luster off fiscal Q4 results, as did the drop in revenues, sequentially and compared to last year. And with CEO Thorsten Heins' commitment to ramp up marketing costs by as much as 50% this quarter, breaking even will be a challenge.

The challenges facing BlackBerry aren't insurmountable, as last quarter demonstrated. But one million Z10s, limited production time or not, isn't going to get it done. For BlackBerry to become relevant again -- not just stay afloat, but become a genuine threat to companies of the smartphone world like Apple, Google, and Nokia -- it's up to the Q10, keyboard and all.

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A Closer Look at British American Tobacco's Dividend Potential

LONDON -- Dividend income accounts for around two-thirds of total returns, the actual rate of return taking into account both capital and income appreciation. Given that share prices are often volatile and unpredictable, the potential for plump dividends can give shareholders much-needed peace of mind for decent returns.

I am currently looking at the dividend prospects of British American Tobacco  (LSE: BATS  ) (NYSEMKT: BTI  ) and assessing whether the company is an appetizing pick for income investors.

How does British American Tobacco's dividend history stack up?

 Metric

2009

2010

2011

2012

FY dividend per share	99.5 pence	114.2 pence	126.5 pence	134.9 pence
DPS growth	15.80%	14.80%	10.80%	6.60%
Dividend cover	1.5 times	1.5 times	1.5 times	1.5 times

Source: British American Tobacco company accounts.

British American Tobacco's ability to generate meaty double-digit earnings expansion over the past five years -- 2012 excepted, when adjusted diluted earnings per share rose a still-healthy 7% -- has enabled it to deliver robust dividend growth over the period.

Dividend cover has historically remained stable at 1.5 times forward earnings, although this is below the watermark of 2 times that generally represents absolute security for dividends. However, the company's traditionally defensive operations in the tobacco sector help protect it against fluctuating earnings in the case of a weakening economic backdrop, and thus ease potential pressure on shareholder payments.

What are British American Tobacco's dividends expected to do?

Metric 

2013

2014

FY dividend per share	149.6 pence	163.3 pence
DPS Growth	10.90%	9.20%
Dividend cover	1.5 times	1.5 times
Dividend yield	4.10%	4.50%

Source: Digital Look.

British American Tobacco announced in last month's interims that revenue increased 5% in the first three months of the year, despite a 3.7% drop in cigarette volumes to 160 billion sticks. City forecasters expect earnings per share to continue heading upwards, increasing 10% and 9% in 2013 and 2014 respectively, which should in turn thrust dividends higher.

Indeed, the company is able to keep growing the bottom line despite material demand declines across the group, owing to the considerable pricing power achieved through its four "Global Brands" -- Lucky Strike, Dunhill, Kent, and Pall Mall.

Crucially, the tobacco giant continues to witness accelerating demand for its products in developing regions, particularly in the Asia-Pacific territories where sales rose 6.7% in January-March to 48 billion sticks. British American Tobacco continues to invest heavily in these areas, and with approximately four-fifths of cigarette demand originating from emerging markets, the company is well positioned to harness galloping consumption from these areas.

How do British American Tobacco's dividend prospects rate against the competition?

 

Prospective Dividend Yield

Prospective P/E Ratio

Tobacco	4.50%	13.5
FTSE 100	3.20%	15.4

Source: Digital Look.

British American Tobacco beats the FTSE 100 in terms of both forward dividend yield and in value-for-money terms, trading on a P/E readout of 15.8 for the current year. The company lags behind its sector peers on both counts, however.

Despite this, I believe that the firm has a more advanced position than most of its rivals in developing markets, a solid long-term growth driver that I reckon makes it a stock worthy of serious consideration.

As well, the company is also committed to returning cash to shareholders through its progressive share repurchase program, which outstrips those of its main competitors. British American Tobacco plans to return 1.5 billion pounds to investors this year alone, which compares with 1.25 billion pounds last year and 750 million pounds in 2011.

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Is Google Using Shareholder Capital Properly?

Investing expert Benjamin Graham, Warren Buffett's mentor, warns shareholders to pay careful attention to whether their companies give proper recognition to the interests of average outside shareholders.

I fear that Google (NASDAQ: GOOG  ) may not pass this test. Here's why.

Questionable investments
According to its 2013 proxy, Google has now invested almost $12 million in 23andMe, a private personal genetics company co-founded and led by Google co-founder Sergey Brin's wife, Anne Wojcicki. The proxy also indicates that Google leases office space to 23andme.

Investors should also note that the 2007 8-K disclosing Google's initial investment also clarifies that Brin provided about $2.6 million of interim debt financing to 23andMe, and that Google's investment was used to repay this debt. In other words, Brin had at least two personal reasons to favor Google's investment -- the fact that it would help his wife's company and the fact that it would help him get his $2.6 million back. And Google's average outside investors do not share in these interests.

As shady as I think this looks, investors should note several disclaimers made by Google management surrounding this investment, including:

The transaction was approved by Google's audit committee as required by the company's policy for related-party transactions. The audit committee's decision-making process included advice from independent counsel and an independent valuation of 23andMe. Sergey Brin recused himself from discussions in which Google evaluated 23andMe as a potential investment.

However, these disclaimers do not eliminate my concerns. For starters, neither the 8-K announcing Google's initial investment in 23andMe, nor Google's subsequent proxy, share relevant details about the advice given by the independent counsel they consulted or the independent advisor's report on 23andMe's valuation. In other words, while these filings made it clear that management considered outside advice, they didn't clarify what that advice was so shareholders could verify that these transactions were in their best interests.

Also, as Google's 2012 proxy points out, Brin controls almost 28% of the voting power associated with Google's outstanding stock. This means he has an overwhelming say in which directors will be re-elected. This could put significant pressure on the directors who sit on the audit committee to push through decisions that please Brin.

A broader trend
Other founder-led businesses have also reported a large number of related-party transactions in their 2013 proxies. As I pointed out in a previous article, Las Vegas Sands was involved in a number of questionable transactions with CEO/Chairman Sheldon Adelson's family members, and with other businesses Adelson owned. Wynn Resorts and Boyd Gaming also reported several related-party transactions in their most recent proxies, such as employee use of company services and company-owned property and employment of relatives.

In all of these cases, insiders control a large percentage of shareholder votes.

Adelson, his family, and entities established for his family's benefit own about 52% of the Las Vegas Sands' company stock CEO/Chairman Stephen Wynn of Wynn Resorts, along with his ex-wife and fellow director Elaine Wynn, own nearly 20%  of the company's stock Boyd Gaming's CEO/Chair William Boyd, and fellow board members Marianne Boyd Johnson and William R. Boyd, together own around 37% of the company stock.

Other issues
The concentration of ownership may create other risks to outside shareholders apart from the potential for related-party transactions that can put insiders' interests above those of average shareholders.

Along with Brin, fellow co-founder and Google CEO Larry Page and Google chairman Eric Schmidt controlled about 64% of Google's voting power as of its last 10-Q filing. In a proposal pushing for Google to give all shares equal voting power, one shareholder suggested that the current power structure allows the company to offer compensation packages that cannot be justified in terms of long-term shareholder value, including Schmidt's 2011 $100 million equity compensation package that had no job performance requirements.

The Foolish bottom line
While related-party transactions can be legitimate, they also create the potential for conflicts of interest and can create a situation in which insiders' interests are put ahead of the average outside shareholder. For this reason, I believe companies should avoid engaging in related-party transactions unless they can offer a clear and convincing argument that demonstrates to shareholders that their capital is being used wisely.

Unfortunately, I don't believe Google's management has offered a sufficient justification of its continued investment in 23andMe.

A fresh idea for 2013
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Apple and Volkswagen Team Up for iBeetle

German automaker Volkswagen (NASDAQOTH: VLKAY  ) and Apple (NASDAQ: AAPL  ) have partnered to unveil the iBeetle, a model of the former's iconic car that will integrate directly with an iPhone.

Both the Beetle and Beetle Convertible will interface with the iPhone through a specialty app and docking station built directly into the dashboard.

The specialized models will launch in early 2014, and will debut at the 2013 Shanghai Auto Show this month. Once docked, all of the iPhone's functions can be used within the car, including navigation, hands-free calling, and music listening, among others. The Beetle app will allow functions such as measuring oil and coolant temperatures, sending the car's location to friends as a digital postcard, and sending photos taken inside the car directly to social networks.

Volkswagen said the iBeetle is one of the first cars to feature this level of integration with iPhones after collaborating with Apple. The company also said the styling of colors and equipment features would be similar to Apple's design aesthetic.

Source: Volkswagen.

 

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ADT Is an Industry Leader With New Competition

Home and small-business security company ADT (NYSE: ADT  ) debuted on the markets in October of last year as a spinoff of conglomerate Tyco. While spinoffs are often misunderstood or neglected investment opportunities, this one came out priced high and covered well, eliminating the opportunity for a value play. Since its IPO, the stock has only ticked up around 6% while sales and profits continue to rise. In the past quarter, the company added more than 300,000 new customers, with plenty of room to grow. It's no doubt that ADT is an industry leader, but is the stock still too expensive to warrant a buy?

Earnings recap
ADT brought in $821 million for the first quarter -- a hair under 2% growth over last year's number. As mentioned by management, overall sales growth has been limited since the company decided to switch over to completely ADT-owned systems. This helps the company protect its intellectual property, which is more important for long-term product sustainability than short-term revenue growth.

EBITDA grew nearly in line (up 1.5%) to $409 million, yielding an EBITDA margin of nearly 50% -- flat with the prior year. On the bottom line, EPS came in at $0.41 per share -- $0.01 below Wall Street analysts' expectations.

ADT represents 25% of the home automated security market, meaning there is room for growth but its typical box-near-the-front-door product is nearing maturity. The current growth driver for the company lies in two areas: small business and the Pulse product. Let's take a look at the latter.

Pulse was introduced more than two years ago, but it is just now starting to see some really encouraging results. The company originally guided that 20% to 30% of new direct-sale customers would opt for the Pulse option. In the fourth quarter of 2012, the penetration rate was just under 30%. For the just-ended quarter, the take rate has risen to 32.7%. Compared to the year-ago quarter, take is up 14%. The Pulse system lets owners interact with their homes and security systems via phones and tablets. Owners can control anything from lights to arming the system. In total, Pulse units represented 23% of all new subscribers, and that does account for the 13,000 customers who were upgraded from existing systems throughout the quarter.

The company continues to grow and has industry-leading products, but is it enough to warrant valuation?

Comps
ADT is relatively unique in the public market in that it does not have a direct competitor. Companies such as Protection One and Bosch Security are privately held entities, which makes comparing valuation difficult. At more than 21 times forward earnings, though, ADT appears expensive regardless. On a trailing basis, the company's enterprise value trades at nearly nine times EBITDA.

There are some public companies that are moving into the home automation/security industry, such as media juggernaut Comcast. The latter is rolling out products that easily complement its cable provider business, and conversion rates are appealing. Time Warner Cable is doing something very similar as well.

With a limited moat and the threat of the better-scaled cable operators, there is a fair amount of risk in ADT, especially at today's prices. All in all, investors are wise to wait for a drop in price for a better entry point into this well-managed, strong-performing company.

More from The Motley Fool 

Check out these global leaders
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BAE Systems Still Yields 5.2%

LONDON -- The shares of BAE Systems  (LSE: BA  ) (NASDAQOTH: BAESY  ) advanced 3 pence to 378 pence this morning as investors studied the defense group's latest update and its 5.2% yield.

BAE said today that trading since the start of the year had been "consistent with management expectations" and confirmed underlying earnings per share were expected to grow "modestly" during 2013.

The FTSE 100 member added that underlying earnings per share could be increased by a further 3 pence should discussions concerning the Salam Typhoon program conclude satisfactorily.

The Salam Typhoon program concerns an order of 72 Eurofighter Typhoons for the Royal Saudi Air Force, the requirements of which were changed during 2011 and have since prompted protracted price negotiations.

BAE admitted today's forecast did not reflect the potential impact on the U.S. defense sector arising from any automatic cuts to the country's government spending.

However, the company did say it was awarded a £504 million contract from the U.S. Army during March to manage an ammunition plant for five years.

Based on BAE's 2012 results, the company is currently valued at less than 10 times earnings and offers a 5.2% yield.

Of course, whether those ratings, today's update and the general outlook for the defense industry all combine to make BAE a buy right now is something only you can decide.

But if you already own BAE shares and are looking for alternative buying opportunities, this exclusive wealth report reviews five particularly attractive possibilities.

Indeed, all five names have just been declared by the Fool as "5 Shares You Can Retire On"!

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Meritor Announces Notes Cash Tender Offer

Meritor  (NYSE: MTOR  )  has launched a cash tender offer for its 8.125% notes maturing in 2015. The company is offering $1,140 in total for each $1,000 in principal value of the notes, plus accrued and unpaid interest.

The auto parts supplier is offering $30 for the early tender of the notes as well as $1,110 as tender consideration. The offer is subject to certain conditions, including Meritor's receipt of proceeds from a debt financing transaction sufficient to purchase and pay for all the accrued interest on the notes that are tendered and accepted for purchase. 

This offer expires at 12:01 a.m. New York City time on June 5.

All told, the issue has an aggregate principal amount of $251 million. Only those noteholders who tender their notes before 5:00 p.m. on May 17 New York City time will receive the early tender premium.

Citigroup's eponymous Global Markets unit is the dealer manager and solicitation agent in the tender.

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Reactions to European Central Bank Rate Cut

The European Central Bank, which sets monetary policy for the 17 European Union countries that use the euro, cut its main interest rate by a quarter of a percentage point to a new record low of 0.5 percent.

The ECB's president, Mario Draghi, also hinted that the bank could do more in coming months to get the eurozone economy growing again. That could include setting a negative deposit rate -- meaning it would charge banks to place money with the ECB, encouraging them to lend it out instead.

Here are some reactions from economists:

Chris Williamson, chief economist at Markit: "At last, the fastest contracting region in the world no longer has the highest central bank policy rate of all major developed economies."

Tim Ohlenburg, senior economist at the Centre for Economics and Business Research: "A cut in interest rates has long made sense given the scale of the eurozone's fundamental economic weakness."

Jennifer McKeown, senior European economist at Capital Economics: "The ECB's widely anticipated interest rate cut should provide troubled banks in the region's periphery with some much-needed support. But it will not be enough to drag the eurozone out of recession on its own and bolder plans to boost lending to small and medium sized enterprises seem to be in their infant stages to say the least."

Howard Archer, chief European economist at IHS Global Insight: "The ECB's cut may have a downward impact on bond yields as well as some softening impact on the euro, which would be generally helpful to growth prospects. Having said that, any further impact on bond yields is likely to be modest as the ECB's cut has been increasingly anticipated and it may already be, at least partially, incorporated in current bond prices."

Craig Erlam, market analyst at Alpari: "Draghi conceded that the ECB did discuss a 50 basis point cut to the main rate, which along with many other dovish comments during the press conference, certainly leaves the door open to another rate cut in the coming months."

Benjamin Reitzes, senior economist at BMO Capital Markets: "Draghi said the ECB 'stands ready to act if needed' and that they are open to negative deposit rates. That suggests further rate cuts remain a possibility."

Will Obama Really Confiscate Your Retirement Savings?

The budget proposal President Obama recently submitted had several provisions designed to increase government tax revenue. But one provision concerning retirement accounts triggered alarm bells for many Americans, raising fears that the government will confiscate your retirement savings.

Why people think confiscation is possible
The provision in the Obama budget calls for tax laws to "prohibit individuals from accumulating over $3 million in tax-preferred retirement accounts." Specifically, the budget refers to a complicated formula that involves figuring out how much money a person would need in order to buy an annuity contract that would guarantee annual payments to retirees of $205,000 for the rest of their lives. The proposal would raise $9 billion over the next 10 years, according to the budget's forecast.

Immediately, many analysts jumped to the conclusion that the provision might involve actually taking away money from retirement accounts. CNBC's Larry Kudlow described the measure in a special editorial in the New York Sun as an "incredible and arbitrary limit or tax on -- or even possible confiscation of -- IRA-type tax-advantaged savings account [emphasis added]."

Past confiscation fears
Constitutionally, the idea that the government could simply confiscate your retirement savings without compensation goes directly against the due process and takings clauses of the Fifth Amendment. More skeptical analysts will note that retirement accounts make up trillions of dollars in assets that major banks Bank of America (NYSE: BAC  ) and Wells Fargo (NYSE: WFC  ) and many other major financial institutions use to drive profits, giving them a huge incentive to use their political power to ensure that those assets don't disappear instantaneously.

Yet this isn't the first time that the issue of confiscation has come up. Even before President Obama was elected, Congress looked at a proposal to replace 401(k) plans with government-managed retirement accounts. Under the plan from Prof. Teresa Ghilarducci of the New School's Schwartz Center for Economic Policy Analysis, these accounts would have had savers contributing 5% of their pay to a government-run retirement plan that would invest in bonds paying a fixed, guaranteed return over the rate of inflation. Ghilarducci's plan did not propose confiscation, and as she described in an interview with Seattle talk show host Kirby Wilbur at the time, "Whatever you have in your 401(k) now will keep its tax break."

Moreover, historians point to the 1933 executive order that required individuals to deliver gold coins, bullion, and certificates to banks in exchange for regular currency at a rate of $20.67 per ounce as being functionally equivalent to confiscation. With the government proceeding to devalue the dollar to $35 per gold ounce the following year, those who complied with the order suffered a substantial loss of purchasing power. Indeed, many gold investors use that same argument in arguing against bullion ETFs SPDR Gold Trust (NYSEMKT: GLD  ) , iShares Gold (NYSEMKT: IAU  ) , and iShares Silver Trust (NYSEMKT: SLV  ) , preferring instead to take physical possession of their gold and silver to ensure its safekeeping themselves.

Executive Order 6102. Source: Wikimedia Commons.

Jumping to conclusions
Even though the Obama budget lacks details on what exactly would happen with retirement accounts that hold assets above the $3 million limit, the most likely scenario is one in which existing accounts would be grandfathered, with restrictions applying only on future contributions. That by itself may be bad enough to alarm those striving to provide their own retirement in the face of a weakening Social Security and pension system, but at least for now, fears of outright confiscation are unwarranted.

Regardless of whether tax-favored retirement accounts continue to exist, 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.

Today's 3 Best Stocks

Is There a Monster Beverage Under Your Child's Bed?

[2] [3] [7] [9] [12] [14] [16] [20] 10 Best European Stocks To Watch Right Now

tags:NYSEMKT, VHC  ,,European,BTI,Energy,Dividend,Canadian,TOT,Advertising,AER,TEF,Basic Materials,BP,Cheap,AEG,Financial,NXP,Healthcare,FLML,Technology,STM,FMS,

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of VirnetX (NYSEMKT: VHC  ) have jumped today by as much as 12% after the company announced that it has identified an additional developing specification related to its 3GPP LTE, SAE project.

So what: The company has submitted updates to its licensing declaration to the European Telecommunications Standards Institute as well as the Alliance for Telecommunications Industry Solutions to include the new specification. That brings its tally up to 18 specifications or developing specifications in its 3GPP LTE, SAE project where it hopes its patents and patent applications are or may become essential.

Advisors' Opinion:

• [By Glenn]  

  TOT has a market capitalization of $130 billion. Its dividend yield last year of 5% is among the best in the industry. Current P/E ratio of 9.2 seems very attractive compared to the industry average of 12. The stock prices did not participate much in the recent bull market. While smaller sized competitors such as ConocoPhillips (COP), Marathon Oil Corporation (MRO) and Statoil ASA (STO) offered spectacular returns (ranging from 30% to 50%), Total’s return in 2010 was only 2%. One may find that the price will catch up with profits.

• [By Dave Friedman]

  Institutional investors bought 15,892,820 shares and sold 13,997,360 shares, for a net of 1,895,460 shares. This net represents 0.08% of common shares outstanding. The number of shares outstanding is 2,234,829,040. The shares recently traded at $46.80 and the company’s market capitalization is $109,165,864,774.97. About the company: Total SA explores for, produces, refines, transports, and markets oil and natural gas. The Company also operates a chemical division which produces polypropylene, polyethylene, polystyrene, rubber, paint, ink, adhesives, and resins. Total operates gasoline filling stations in Europe, the United States, and Africa.

Top Value Companies To Buy For 2014: Aercap Holdings N.V. (AER)

AerCap Holdings N.V., through its subsidiaries, operates as an integrated aviation company worldwide. It engages in leasing and trading aircraft and engines; and selling parts. The company also provides aircraft management services, as well as aircraft and limited engine MRO services, and aircraft disassembly services through its repair stations. In addition, it offers aircraft services, including remarketing aircraft; collecting rental and maintenance payments, monitoring aircraft maintenance, monitoring and enforcing contract compliance, and accepting delivery and redelivery of aircraft; conducting ongoing lessee financial performance reviews; inspecting the leased aircraft; coordinating technical modifications to aircraft to meet new lessee requirements; conducting restructurings negotiations in connection with lease defaults; repossessing aircraft; arranging and monitoring insurance coverage; registering and de-registering aircraft; arranging for aircraft and aircraft engine valuations; and providing market research. The company?s management services include leasing and remarketing, cash management and treasury, technical advisory, and accounting and administrative services. As of March 31, 2011, it owned 272 aircraft and 95 engines, which it leased under operating leases to 118 lessees in 53 countries. The company was founded in 1995 and is headquartered in Schiphol, the Netherlands.

Advisors' Opinion:

• [By Conrad]

  Telefonica (TEF) is acting within the foreign telecom services industry. The company has a market capitalization of $89.2 billion, generates revenues in an amount of $85.4 billion and a net income of $13.0 billion. It follows P/E ratio is 6.8 and forward price to earnings ratio 8.1, Price/Sales 1.0 and Price/Book ratio 3.1. Dividend Yield: 10.1 percent. The return on equity amounts to 48.1 percent.

• [By Conrad]

  Among the stocks that Bolton favors are Spain's Telefonica (TEF), which has a 7% 2009 yield and 3.8 times dividend cover, and BP, the British oil producer, which has a 6.9% yield and 2.8 times cover. Falling oil prices are an issue for BP, but he thinks it will try to avoid a dividend cut, owing to bad memories of a prior cut in the 1990s.

10 Best European Stocks To Watch Right Now: BP p.l.c.(BP)

BP p.l.c. provides fuel for transportation, energy for heat and light, retail services, and petrochemicals products. Its Exploration and Production segment engages in the oil and natural gas exploration, field development, and production; midstream transportation, and storage and processing; and marketing and trading of natural gas, including liquefied natural gas (LNG), and power and natural gas liquids (NGL). This segment has exploration and production activities in Angola, Azerbaijan, Canada, Egypt, Norway, Russia, Trinidad and Tobago, the United Kingdom, and the United States, as well as in Asia, Australasia, South America, North Africa, and the Middle East. This segment also owns and manages crude oil and natural gas pipelines; processing facilities and export terminals; and LNG processing and transportation, as well as NGL extraction facilities. BP p.l.c. has interests in the Trans-Alaska pipeline system, the Forties pipeline system, the Central Area transmission sys tem pipeline, the South Caucasus Pipeline, and Baku-Tbilisi-Ceyhan pipeline, as well as in LNG plants located in Trinidad, Indonesia, and Australia. The company?s Refining and Marketing segment involves in the supply and trading, refining, manufacturing, marketing, and transportation of crude oil, petroleum, and petrochemicals products and related services to wholesale and retail customers primarily under the BP, Castrol, ARCO, and Aral brands. Its Other Businesses and Corporate segment produces and markets rolled aluminum products, as well as generates energy through wind, solar, biofuels, hydrogen, and carbon capture and storage sources; and engages in shipping activities. The company was founded in 1889 and is headquartered in London, the United Kingdom.

Advisors' Opinion:

• [By Rahemtulla]

  Among the stocks that Bolton favors are Spain's Telefonica (TEF), which has a 7% 2009 yield and 3.8 times dividend cover, and BP, the British oil producer, which has a 6.9% yield and 2.8 times cover. Falling oil prices are an issue for BP, but he thinks it will try to avoid a dividend cut, owing to bad memories of a prior cut in the 1990s.

Advisors' Opinion:

• [By seekingalpha.com]

  Shares of this life insurance company are trading at $4.25 at the time of writing, and at the low end of their 52-week trading range of $4.18 to $8.07. At the current market price, the company is capitalized at $7.50 billion. Earnings per share for the last fiscal year were $0.69, placing the shares on a price-to-earnings ratio of 6.13.

  These earnings are expected to rise through the next couple of years, hitting $0.73 this year, and then rising to $0.89 the following year. AEG received Dutch government aid in the 2008 financial crisis, and has been selling operations to repay its debts. The latest sale, Guardian Life in the U.K. for $451 million, takes it a step closer to achieving this goal. It will continue to manage Guardian’s assets of £7.5 billion (approximately $11 billion).

  Well on the way to achieving its target of full repayment to the Dutch government, and continuing to shed non core assets, for Aegon it is deals like the Guardian one that will push it to a better-managed profit stream. When the company has fully repaid its debts, it is likely to reinstate dividend payments. This will help the stock price near and long term.

Nobel Prize-Winning Psychologist Daniel Kahneman on Stock-Picking

Make a Money-Smart College Decision

The costs of college are higher than ever and keep rising at an alarming rate. To get the most from your education, you have to make smart decisions on the financial aspects of choosing the right college.

In the following video, Motley Fool investment-planning editor Lauren Kuczala talks with longtime Fool contributor and financial planner Dan Caplinger about how students and parents can make smart college choices without jeopardizing their financial futures. Dan notes that while student-loan lenders have reaped big profits from extending credit to students, high debt burdens and a weak job market have held graduates back. Moreover, the scrutiny of for-profit educational institutions has added to the debate over whether college is a good value.

Dan talks about several things to consider in getting the most from your education savings. By critically assessing the long-term merits of a school to a student's career and comparing them with the costs involved and financial resources available, you can make a decision that provides the right fit without breaking your budget.

Student loans are just part of Wells Fargo's business, but for investors, Wells Fargo's dedication to solid, conservative banking helped it vastly outperform its peers during the financial meltdown. Today, Wells is the same great bank as ever, but with its stock trading at a premium to the rest of the industry, is there still room to buy, or is it time to cash in your gains? To help figure out whether Wells Fargo is a buy today, download our premium research report from one of The Motley Fool's top banking analysts. Click here now for instant access to this in-depth take on Wells Fargo.

Editor's note: The volume levels in some segments of the video are low. We apologize for the inconvenience.

Bank of America Should Be More Like Netflix

After rubbing customers the wrong way with proposed changes and subsequently backing off those changes, Netflix (NASDAQ: NFLX  ) appears to be back in good graces with its customer base. On the other hand, a recent survey of bank customer satisfaction highlighted Bank of America's (NYSE: BAC  ) continued struggles with sufficiently serving its customers.

Despite the clear and vast differences between these two companies, Bank of America can learn from the steps Netflix took after it enraged customers. Netflix focused on tailoring its customer experience to the needs and wants of its target market by pouring more resources into the streaming business and creating original content. 

Bank of America may need to focus on its customers' experience by continuing to develop new and innovative payment solutions and other proprietary technologies.

In this video, Motley Fool financial analysts David Hanson and Matt Koppenheffer discuss Bank of America's ability to excel in this area. 

Despite a few hiccuips, Bank of America's stock doubled in 2012. Is there more yet to come? With significant challenges still ahead, it's critical to have a solid understanding of this megabank before adding it to your portfolio. In The Motley Fool's premium research report on B of A, analysts Anand Chokkavelu, CFA, and Matt Koppenheffer, Financials bureau chief, lift the veil on the bank's operations, including detailing three reasons to buy and three reasons to sell. Click here now to claim your copy.

This Health-Care Revolution Is Only Just Beginning

This Week in Utilities: Subsidiary Sales and Rate Requests

Earnings announcements aside, it's been a busy week for utilities. From natural gas and transmission sales to rate increase to cover increasing costs, these dividend stocks are making moves to make the most of your money. Here's what you need to know.

Subsidiary switch-up
AGL Resources announced Thursday that it has officially handed off subsidiary Compass Energy Services to Integrys Energy (NYSE: TEG  ) for an initial cash consideration of $12 million, with an additional $3 million to $8 million cash consideration. If the unregulated natural gas subsidiary fares well over the next five years, Integrys will fork over more finances for its purchase. If not, AGL could be left with $15 million total for the sale. For now, AGL will record a $9 million to $11 million pre-tax gain for Q2 2013.

AGL and Integrys aren't the only utilities switching around subsidiaries. Duke Energy (NYSE: DUK  ) completed its purchase of a 72% stake in Atlantic Power's (NYSE: AT  ) Path 15 transmission project. The 84-mile line connects Northern and Southern California's transmission grids and, according to Duke, plays "a key role in maintaining statewide electric system reliability and market efficiency."

PG&E lays claim to an 18% stake for its ownership and operation of connecting substations, while Western Area Power Administration gets a 10% piece for its continued ownership and operation of the line itself. The announcement did not disclose any financial details of the transaction.

Raising rates
Dominion (NYSE: D  ) requested a fuel rate increase for its Virginia operations, citing higher fuel costs and increased demand as primary reasons for its ask. Its first request in two years, a fuel rate increase is meant to cover costs, but not increase profits. The total ask reflects a 2.1% increase in the average customer's monthly bill, considerably less than TECO Energy's (NYSE: TE  ) 10% ask in April. According to Dominion and TECO, both their requests keep their customers' bills below national averages. If Virginia's regulatory body approves the request, Dominion's new rates will rise in July.

Stay current on electricity
The world of utilities is changing fast, and dividend stocks aren't the stable stalwarts they once were. Be sure to check back weekly for the latest on your portfolio's moves, and you'll be well on your way to electrifying earnings.

As the nation moves increasingly toward clean energy, Exelon is perfectly positioned to capitalize on having the largest nuclear fleet in North America. This strength, combined with an increased focus on balance sheet health and its recent merger with Constellation, places Exelon and its resized dividend on a short list of the top utilities. To determine whether Exelon is a good long-term fit for your portfolio, you're invited to check out The Motley Fool's premium research report on the company. Simply click here now for instant access.

Will These Numbers from Darling International Be Good Enough for You?

Darling International (NYSE: DAR  ) is expected to report Q1 earnings around May 7. Here's what Wall Street wants to see:

The 10-second takeaway
Comparing the upcoming quarter to the prior-year quarter, average analyst estimates predict Darling International's revenues will grow 6.1% and EPS will grow 8.3%.

The average estimate for revenue is $410.8 million. On the bottom line, the average EPS estimate is $0.26.

Revenue details
Last quarter, Darling International reported revenue of $424.9 million. GAAP reported sales were 1.4% lower than the prior-year quarter's $430.9 million.

Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures may vary to maintain comparability with estimates.

EPS details
Last quarter, EPS came in at $0.24. GAAP EPS of $0.24 for Q4 were 4.0% lower than the prior-year quarter's $0.25 per share.

Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.

Recent performance
For the preceding quarter, gross margin was 26.1%, 80 basis points worse than the prior-year quarter. Operating margin was 11.6%, 210 basis points worse than the prior-year quarter. Net margin was 6.8%, much about the same as the prior-year quarter.

Looking ahead

The full year's average estimate for revenue is $1.69 billion. The average EPS estimate is $1.16.

Investor sentiment
The stock has a five-star rating (out of five) at Motley Fool CAPS, with 1,200 members out of 1,227 rating the stock outperform, and 27 members rating it underperform. Among 273 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 268 give Darling International a green thumbs-up, and five give it a red thumbs-down.

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Darling International is outperform, with an average price target of $18.25.

Selling to fickle consumers is a tough business for Darling International or anyone else in the space. But some companies are better equipped to face the future than others. In a new report, we'll give you the rundown on three companies that are setting themselves up to dominate retail. Click here for instant access to this free report.

Add Darling International to My Watchlist.

Oakmark Sells Dell Stake

Mutual fund family Oakmark has had enough of Dell (NASDAQ: DELL  ) . In a statement released today, portfolio manager William Nygren outlined the reasons his company is selling its stake in Dell.

In a word: Blackstone (NYSE: BX  ) . After the private equity firm pulled out of its $25 billion bid on April 18, Oakmark began to see a fundamental flaw with its own investing thesis:

"Our numbers suggested Dell should be worth a premium to the $13.65 offer from management, but then a potential acquirer with access to non-public information decided to end its quest to acquire Dell at a higher price. Since they had information we didn't, we believed it was prudent to assume they might be right," Nygren said in his statement.

Nygren mentioned that, in addition to information Blackstone would have received as a bidder for Dell, the computer company's own former head of mergers and acquisitions now works for Blackstone. Oakmark had high expectations for Dell's future acquisitions to expand its non-PC business -- expectations that seemed less warranted after Blackstone's bail.

According to The Wall Street Journal, Oakmark funds collectively owned approximately 24.5 million shares of the computer company, equivalent to 1.4% of total shares outstanding .

More Expert Advice from The Motley Fool

The Motley Fool's chief investment officer has selected his No. 1 stock for the next year. Find out which stock in our brand-new free report: "The Motley Fool's Top Stock for 2013." I invite you to take a copy, free for a limited time. Just click here to access the report and find out the name of this under-the-radar company.

Why Value Stocks Are Beating Growth Stocks

With the S&P 500 (SNPINDEX: ^GSPC  ) having hit new all-time record highs on Friday, it's a good time to take a look back and see where the index's most recent gains have come from. Somewhat surprisingly, value stocks appear to be taking the lead in pushing the overall market higher, while growth stocks have lagged behind somewhat. Let's take a closer look at the trend and see if we can come up with a good explanation.

Value's ahead of growth
Standard & Poor's is kind enough to calculate its own growth and value indexes. It takes the companies in the S&P 500 and looks at growth factors like revenue and earnings growth as well as share-price momentum, as well as value factors including ratios of stock price to book value, earnings, and revenue. After ranking the stocks, S&P divides them into three categories, with a third of stocks going solely into the value basket and another third going into the growth basket. The middle third combines elements of both and are thus included in both indexes, but with weightings that reflect their respective growth and value attributes.

As you can see from looking at the iShares ETFs that cover the two sets of stocks in the S&P 500, over the past year, value has beaten out growth.

S&P 500 Total Return Price data by YCharts

With a better than five-percentage-point advantage, value has clearly done exceedingly well. What's behind that outperformance?

As it happens, probably the biggest contributor to growth's troubles is Apple (NASDAQ: AAPL  ) . With declines of 15% so far this year despite its big rebound more recently, Apple has a huge weighting of about 5.7% as a pure growth stock. In fact, it's the only stock in growth ETF's top 25 holdings that has posted declines for 2013.

Surprisingly, defensive stocks aren't really contributing to value's dominance, in part because many of those stocks no longer qualify as pure value stocks according to S&P's methodology. Johnson & Johnson (NYSE: JNJ  ) and Procter & Gamble (NYSE: PG  ) appear in both indexes, with J&J actually having a greater weight in the growth ETF than in the value ETF. The reason: investors have bid those companies' stocks up so far that their P/E ratios and other valuation measures no longer resemble value stocks. Rather, financial stocks have taken over the lead as top vale prospects, with AIG (NYSE: AIG  ) and major Wall Street banks having become pure value plays once again.

Find value wherever you can
Value and growth stocks tend to move in and out of favor over time, so there's no one right answer as to which strategy is best. Rather, choosing value or growth is more of a personal investing preference, and ideally, keeping both as viable options can be your best chance to maximize your most promising investment opportunities.

Value stock or growth stock, Apple raises a huge amount of debate. Find out whether Apple remains a buy by looking at Motley Fool senior technology analyst and managing bureau chief Eric Bleeker and his latest premium research on the company. Eric's prepared to fill you in on 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.

[1] [5] [8] [9] [13] [16] [17] [19] [21] Top Japanese Companies To Watch In Right Now

tags:NYSE, TM  ,,Japanese,Healthcare,BMRN,Services,RPXC,XXL.AX,

GEORGETOWN, Ky. (AP) -- Toyota (NYSE: TM  ) will start building the Lexus ES 350 at a factory in Georgetown, Ky., starting in 2015, producing a luxury brand vehicle for the first time in the United States.

The Japanese car company said Friday that the Georgetown plant will build about 50,000 of the flagship sedans each year, creating 750 new jobs.

The Georgetown plant currently assembles the Camry, Avalon and Venza models as well as their hybrid counterparts. The plant already employs about 6,600 people.

Toyota�said it will invest $360 million to build the Lexus assembly line, boosting Georgetown's annual vehicle production to 550,000 a year. The company made the announcement at simultaneous news conferences Friday in New York and Georgetown.

"It is fitting that the first country to build the ES outside of Japan is the United States,"�Toyota�Motor Corp. President Akio Toyoda, the company's top executive, said in New York. "This is the home for Lexus. It was where the brand was founded and it is still the biggest market for the luxury brand."

Best Biotech Stocks To Watch For 2014: Xiaoxiao Education Limited(XXL.AX)

Xiaoxiao Education Limited operates as a preschool education institution in China. It has 10 kindergartens and 1 professional comprehensive training school for children. The company?s schools provide parenting education for 0 to 3 year old children, preschool education for 3 to 6 year old children, and professional training programs for 2 to 12 year old children. Xiaoxiao Education Limited has 4,000 enrolled students and 4,000 additional children attending extra-curricular programs out of school hours and during holiday periods, as well as approximately 6,570 students attending short courses at its Hangzhou Binjiang Art Training school. The company was founded in 1996 and is based in Hangzhou, China.

Create the Best Product, and the Profit Will Follow

In the following video, we hear from Fedele Bauccio, founder and CEO of Bon Appetit Management. His company has built its reputation on locally sourced, seasonal, healthy foods and is actively involved in sustainability issues affecting every aspect of the food industry.

We look at the chef's responsibility in a company such as Bon Appetit. Beyond just creating great-tasting food, Bauccio's chefs must search out fresh, local, high-quality ingredients.

A transcript follows the video.

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Isaac Pino: While we're speaking about chefs, I've read some of the pieces that you've done. You said you've published in many different news sources, Huffington Post being one of them. When it comes to chefs -- and you mentioned this earlier -- there's an important aspect of what they do that almost always revolves around taste.

Some of these star chefs say that their responsibility is to taste, and in some cases they have no responsibility to where the food comes from, the sustainability of the food, whether it's sourced appropriately. Would you agree with that? What is a chef's responsibility, at the end of the day?

Fedele Bauccio: Yeah, taste and flavor are critical, but I think the chef's responsibility, at least in our company, is to figure out within 150 miles of his or her kitchen, where he can buy and source the best products that are seasonal, to create authentic recipes.

So sourcing is a critical issue. If we bring in and source authentic and really great ingredients, then they don't have to do a lot with it. They don't have to mask the food with all kinds of sauces and junk, and so forth.

I like food to be very simple and clean tasting, and know that it's healthy and the animals were raised right, or the soil was terrific where they grew their vegetables from, and so forth.

Our chef's responsibility is not only to be able to produce that food, but before they do that they've got to work with the ranchers and go into the fields and audit them to make sure that they're buying the very best ingredients they can buy.

We spend a lot of money on sourcing and the food, and if we do that right, it seems like everything else falls into place.

Best Biotech Stocks For 2014

Investing in speculative biotech is a tough thing to do for investors. In this world stock prices give way to the ebb and flow of rumors and gossip, mixed in with half truths and partial lies. Manipulation runs rampant, and sometime virtually unchecked. Here is where retail investors, hedge fund managers, day traders, and large institutions all collide head on in trying to find the latest and greatest stock to either short or go long. Fortunes are made and lost in seconds, as the never ending game of chance continues every trading day in the markets.

That pretty much sums up speculative biotech investing in a nutshell. The real question though is which of these types stocks are looking to make money for investors in 2012? Needless to say, and after reading the first paragraph, that is a tough if not impossible call to make. That being the case, there are several stocks out there that have some outsized potential for investors in 2012. Actually, there are a handful of stocks that biotech investors should pay particular close attention to this year. To keep it interesting, I have given a nickname, or handle, to each stock that suggests how they are currently being viewed by today’s market sentiment. As a result, we have the Misunderstood, the Time Bomb, the Sleeper, and the Dynamic Duo.

Best Biotech Stocks For 2014: Merck & Company Inc.(MRK)

Merck & Co., Inc. provides various health solutions through its prescription medicines, vaccines, biologic therapies, animal health, and consumer care products. The company?s Pharmaceutical segment provides human health pharmaceutical products, such as therapeutic and preventive agents for the treatment of human disorders in the areas of bone, respiratory, immunology, dermatology, cardiovascular, diabetes and obesity, infectious diseases, neurosciences and ophthalmology, oncology, vaccines, and women's health and endocrine. This segment also offers human health vaccines, such as preventive pediatric, adolescent, and adult vaccines. Its Animal Health segment discovers, develops, manufactures, and markets animal health products. This segment offers antibiotics, anti-inflammatory products, vaccines, products for the treatment of fertility disorders, and parasiticides for cattle, swine, horses, poultry, dogs, cats, salmons, and fish. The Consumer Care segment develops, manufac tures, and markets over-the-counter, foot care, and sun care products. Its over-the-counter product line includes non-drowsy antihistamines; treatment for occasional constipation; decongestant-free cold/flu medicine for people with high blood pressure; nasal decongestant spray; and treatment for frequent heartburn. This segment?s foot care products comprise topical antifungal, and foot and sneaker odor/wetness products; and sun care products include sun care lotions, sprays and dry oils; and sunburn relief products. The company serves drug wholesalers and retailers, hospitals, government agencies, physicians, physician distributors, veterinarians, animal producers, and managed health care providers, as well as food chain and mass merchandiser outlets in the United States and Canada. Merck & Co., Inc. was founded in 1891 and is headquartered in Whitehouse Station, New Jersey.

Advisors' Opinion:

• [By Smart Money]

  Forward P/E: 7.8.

   

  Five-year average forward P/E: 13.7.

  Discount to five-year average: 46%.

  The market's shift away from defensive stocks in sectors like pharmaceuticals and the Obama administration's proposed health care reforms are just a couple of issues weighing on Merck (MRK, news, msgs). Shares in the Whitehouse Station, N.J., company are also being hobbled by company-specific problems, such as disappointing sales of asthma treatment Singulair, its best-selling drug, as well as increased competition, patent expirations and a pipeline of drugs with poor prospects for Food and Drug Administration approval.

  Fortunately for Merck investors, the company's pending acquisition of Schering-Plough (SGP, news, msgs) should go a long way toward easing many of these problems, especially Merck's poor drug pipeline and its ability to remain competitive, says Morningstar analyst Damien Conover. "Merck greatly improved its long-term outlook by agreeing to acquire Schering-Plough," the analyst says.

• [By McWillams]

  Merck & Co. Inc. (NYSE: MRK : 31.91, 0.05) reported net income of $2.02 billion, or 65 cents per share in its fiscal 2011 second quarter, compared to net income of $752 million or 24 cents a year ago. Analysts had estimated earnings of 95 cents per share for the firm. The company's revenue rose 7 percent to $12.15 billion, better than analysts' forecast of $11.82 billion. Shares closed Thursday's trading at $34.93.

Best Biotech Stocks For 2014: Neurocrine Biosciences Inc.(NBIX)

Neurocrine Biosciences, Inc. engages in the discovery, development, and commercialization of drugs for the treatment of neurological and endocrine-related diseases and disorders in the United States. It develops drugs for endometriosis, stress-related disorders, pain, tardive dyskinesia, uterine fibroids, diabetes, insomnia, and other neurological and endocrine-related diseases and disorders. The company?s products in clinical development include Elagolix, a Phase II drug for endometriosis; Vesicular Monoamine Transporter 2 Inhibitor (VMAT2), a Phase II drug for movement disorders; CRF2 Peptide Agonist, a Phase II drug for cardiovascular diseases; CRF1 Antagonist, a Phase II drug for stress-related disorders; and Elagolix, a Phase II drug for uterine fibroids. Its research programs comprise G Protein-Coupled Receptor 119 (GPR119) for type II diabetes; VMAT2 for schizophrenia; GnRH Antagonists for men?s and women?s health, and oncology; Antiepileptic Drugs for epilepsy, essential tremor, and pain; and G Protein-Coupled Receptors for other conditions. The company has collaborations with GlaxoSmithKline to develop and commercialize CRF antagonists for psychiatric, neurological, and gastrointestinal diseases; Dainippon Sumitomo Pharma Co. Ltd. to develop and commercialize Indiplon in Japan; Abbott International Luxembourg S.à r.l. to develop and commercialize elagolix and GnRH antagonists for women?s and men?s health indications; and Boehringer Ingelheim International GmbH to research, develop, and commercialize small molecule GPR119 agonists for the treatment of type II diabetes and other indications. Neurocrine Biosciences, Inc. was founded in 1992 and is headquartered in San Diego, California.

Advisors' Opinion:

• [By Kevin1977]

  One of the top biotechnology stocks, Neurocrine Biosciences, Inc. has shown outstanding performance and trading activity lately.

Best Biotech Stocks For 2014: InterMune Inc.(ITMN)

InterMune, Inc., a biopharmaceutical company, engages in the research, development, and commercialization of therapies in pulmonology and fibrotic diseases. In pulmonology, the company focuses on therapies for the treatment of idiopathic pulmonary fibrosis (IPF), a progressive and fatal lung disease. It markets pirfenidone, an orally active drug that inhibits the synthesis of TGF-beta under the Esbriet name in the European Union, as well as in a Phase III clinical trial in the United States. Pirfenidone is also approved for the treatment of IPF in Japan, where it is marketed by Shionogi & Co. Ltd. under the Pirespa trade name. The company?s research programs focus on the discovery of small-molecule therapeutics and biomarkers to treat and monitor serious pulmonary and fibrotic diseases. InterMune, Inc. was founded in 1998 and is headquartered in Brisbane, California.

Best Biotech Stocks For 2014: Galena Biopharma Inc (GALE.PH)

Galena Biopharma, Inc. (Galena), formerly RXi Pharmaceuticals Corporation, incorporated on April 3, 2006, is a biotechnology company focused on discovering, developing and commercializing therapies addressing unmet medical needs using targeted biotherapeutics. The Company is pursuing the development of cancer therapeutics using peptide-based immunotherapy products, including its main product candidate, NeuVaxTM (E75), for the treatment of breast cancer and other tumors. NeuVax is a peptide-based immunotherapy intended to reduce the recurrence of breast cancer in low-to-intermediate HER2-positive breast cancer patients not eligible for trastuzumab (Herceptin; Genentech/Roche). On January 19, 2012, the Company initiated enrollment in its Phase 3 PRESENT clinical trial for NeuVax (E75 peptide plus GM-CSF) vaccine in low-to-intermediate HER2 1+ and 2+ breast cancer patients in the adjuvant setting to prevent recurrence (Clinicaltrials.gov identifier NCT01479244). The Preven tion of Recurrence in Early-Stage, Node-Positive Breast Cancer with Low to Intermediate HER2 Expression with NeuVax Treatment study is a randomized, multicenter, multinational clinical trial that will enroll approximately 700 breast cancer patients. The Company’s Phase 2 trial of NeuVax achieved its primary endpoint of disease-free survival (DFS). On April 13, 2011, the Company completed its acquisition of Apthera, Inc.,(Apthera).

The Company focuses to start a Phase 2 trial comparing NeuVax in combination with trastuzumab (Herceptin) versus trastuzumab, alone, in a 300-patient, randomized study in the adjuvant breast cancer setting. The Company's second product candidate, Folate Binding Protein-E39 (FBP), is a vaccine, consisting of the peptides E39 and J65, aimed at preventing the recurrence of ovarian, endometrial, and breast cancers. On February 14, 2012, the Company announced the initiation of a Phase 1/2 clinical trial in two gynecological cancers: ovari an and endometrial adenocarcinomas. Folate binding protein h! as very limited tissue distribution and expression in non-malignant tissue and is over-expressed in more than 90% of ovarian and endometrial cancers, as well as in 20% to 50% of breast, lung, colorectal and renal cell carcinomas.

In April 2011, the Company acquired Apthera Inc and its NeuVax product candidate. The Company focuses on developing a pipeline of immunotherapy product candidates for the treatment of various cancers based on the E75 peptide, the advanced of which is NeuVax, which is targeted at preventing the recurrence of breast cancer. NeuVax has had positive Phase 1/2 clinical trial results for the prevention of breast cancer recurrence in patients who have had breast cancer and received the standard of care treatment (surgery, chemotherapy, radiotherapy and hormonal therapy as indicated). The Company had also initiated its Phase 3 PRESENT clinical trial of NeuVax for the prevention of breast cancer recurrence in early-stage low-to-intermediate HER2 breast cancer patients. NeuVax directs killer T-cells to target and destroy cancer cells that express HER2/neu, a protein associated with epithelial tumors in breast, ovarian, pancreatic, colon, bladder and prostate cancers. NeuVax is comprised of a HER2/neu-derived peptide called E75. E75 is a nine-amino acid sequence that is immunogenic (produces an immune response) and GM-CSF is a commercially available protein that acts to stimulate and activate components of the immune system such as macrophages and dendritic cells.

The Company also develops novel applications for NeuVax based on preclinical studies and phases 2 clinical trials which suggest that combining NeuVax and trastuzumab (Herceptin; Genentech/Roche) can increase antigen presentation by tumor cells by promoting receptor internalization and subsequent proteosomal degradation of the HER2 protein. The Company also is pursuing additional therapeutic indications for NeuVax that are in Phase 1/2 clinical trials. RXI-109, is a dermal anti-scarring therapy that targ! ets conne! ctive tissue growth factor (CTGF) and that may inhibit connective tissue formation in human fibrotic disease.

The Company competes with Roche Laboratories, Inc., Pfizer Inc., Bayer HealthCare AG, Sanofi-Aventis, US, LLC, Amgen, Inc., GlaxoSmithKline plc, Renovo Group plc, CoDa Therapeutics, Inc., Sirnaomics, Inc., FirstString Research, Inc., Merz Pharmaceuticals, LLC, Capstone Therapeutics, Halscion, Inc., Garnet Bio Therapeutics, Inc., AkPharma Inc., Promedior, Inc., Kissei Pharmaceutical Co., Ltd., Eyegene, Derma Sciences, Inc., Healthpoint Biotherapeutics, Pharmaxon, Excaliard Pharmaceuticals, Inc., Alnylam Pharmaceuticals, Inc., Marina Biotech, Inc., Tacere Therapeutics, Inc., Benitec Limited, OPKO Health, Inc., Silence Therapeutics plc, Quark Pharmaceuticals, Inc., Rosetta Genomics Ltd., Lorus Therapeutics, Inc., Tekmira Pharmaceuticals Corporation, Arrowhead Research Corporation, Regulus Therapeutics Inc. and Santaris.

Best Biotech Stocks For 2014: AMAG Pharmaceuticals Inc.(AMAG)

AMAG Pharmaceuticals, Inc., a biopharmaceutical company, engages in the development and commercialization of a therapeutic iron compound to treat iron deficiency anemia (IDA). Its principal product includes Feraheme (ferumoxytol) injection for intravenous (IV) use, which was approved for marketing in the United States in June 2009 by the U.S. Food and Drug Administration, for use as an IV iron replacement therapy for the treatment of IDA in adult patients with chronic kidney disease (CKD). The company is pursuing marketing applications in the European Union, Canada, and Switzerland for Feraheme for the treatment of IDA in CKD patients. AMAG Pharmaceuticals was founded in 1981 and is based in Lexington, Massachusetts.

Best Biotech Stocks For 2014: Amgen Inc.(AMGN)

Amgen Inc., a biotechnology medicines company, discovers, develops, manufactures, and markets human therapeutics based on advances in cellular and molecular biology for grievous illnesses primarily in the United States, Europe, and Canada. The company markets recombinant protein therapeutics in supportive cancer care, nephrology, and inflammation. Its principal products include Aranesp and EPOGEN erythropoietic-stimulating agents that stimulate the production of red blood cells; Neulasta and NEUPOGEN to stimulate the production of neutrophils, which is a type of white blood cell that helps the body to fight infections; and Enbrel, an inhibitor of tumor necrosis factor that plays a role in the body?s response to inflammatory diseases. The company also markets other products comprising Sensipar/Mimpara, a small molecule calcimimetic that lowers serum calcium levels; Vectibix, a monoclonal antibody that binds specifically to the epidermal growth factor receptor; and Nplate, a thrombopoietin (TPO) receptor agonist that mimics endogenous TPO, the primary driver of platelet production. In addition, it provides Denosumab, a human monoclonal antibody that targets RANKL, an essential regulator of osteoclasts. Further, the company offers product candidates in mid-to-late stage development in a variety of therapeutic areas, including oncology, hematology, inflammation, bone, nephrology, cardiovascular, and general medicine consisting of neurology. It markets its products to healthcare providers, including physicians or their clinics, dialysis centers, hospitals, and pharmacies; consumers; and wholesale distributors of pharmaceutical products. The company has various collaborative arrangements with Pfizer Inc.; GlaxoSmithKline plc; Takeda Pharmaceutical Company Limited; Daiichi Sankyo Company, Limited; Array BioPharma Inc.; Kyowa Hakko Kirin Co. Ltd.; and Cytokinetics, Inc. Amgen Inc. was founded in 1980 and is headquartered in Thousand Oaks, California.

Advisors' Opinion:

• [By Paul Goodwin]

  For many investors Amgen is considered the biotech stock to own, and one of the very best in this sector. With an international focus and excellent returns this stock is one that many financial advisors own.

• [By TheStreet Staff]

  The Amgen (AMGN) strategy of returning cash to shareholders in form of share buybacks, Dutch tender offers and dividends is abandoned in favor of ramped up acquisitions i.e. Gilead Sciences buying Pharmasset. Large-cap biotech firms start acting like Big Pharma -- choosing to buy growth instead of seeking it from internal drug development.