Synthetic Biology Is the Solution to Chemical Explosions

Three chemical facilities have been rocked by fatal explosions this spring. The first occurred on April 17 when a fertilizer plant exploded in West, Texas, leveling the town and happening with such great force that investigators could not determine the exact cause of the blast. There simply wasn't anything left to examine. The second occurred on June 13 in Geismar, La., when a petrochemical facility owned by Williams Companies (NYSE: WMB  ) erupted during an expansion. The third took place one day later at an ammonia fertilizer plant owned by CF Industries (NYSE: CF  ) . In all, at least 16 people were killed and over 300 were injured.

All three facilities employed thermochemical reactions to produce useful chemicals for everyday life, including fertilizer and olefins used in various applications ranging from synthetic rubber to polyesters. The safety track record of these industries has been remarkable over the last 60 years and numerous mechanisms have been developed to ensure the safe production of chemicals. But we can do better. The future of chemical production figures to be much safer with synthetic biology gradually maturing to industrial levels of production. Fool.com contributor Maxx Chatsko explains how in the following video.

Looking for an explosive energy stock? Good news, The Motley Fool's analysts have uncovered an under-the-radar company that's dominating its industry. This company is a leading provider of equipment and components used in drilling and production operations, and poised to profit in a big way from it. To get the name and detailed analysis of this company that will prosper for years to come, check out the special free report: "The Only Energy Stock You'll Ever Need." Don't miss out on this limited-time offer and your opportunity to discover this under-the-radar company before the market does. Click here to access your report -- it's totally free.

The Hidden Way to Invest in Obesity

The Motley Fool's health-care show Market Checkup focuses this week on obesity, one of America's largest health-care concerns. Recently classified as a disease, obesity leads to serious health problems, including diabetes, heart disease, and stroke. Currently 35% of adults in the U.S. are classified as obese, but more troubling, one out of three children is as well. All told, obesity adds $190 billion in medical costs to the system, but efforts to tackle this growing problem are increasing.

In this video, health-care analysts David Williamson and Max Macaluso discuss the third and often forgotten obesity-drug maker, Orexigen. This small-cap is stuck running an additional phase 3 trial for Contrave while its two competitors have made it to market. But given its prior positive FDA advisory committee vote and its small market cap, Orexigen may be the best speculative play of all obesity stocks. Watch and find out why.

Rising health-care costs continue to be a hotly debated topic, and even legendary investor Warren Buffett called this trend "the tapeworm that's eating at American competitiveness." To learn more about what's happening to the health-care system -- and how to potentially profit from this trend -- click here for free, immediate access.

Follow David on Twitter: @MotleyDavid.

Look at the Dow's Big Winners So Far This Year

Six months into the year, the Dow Jones Industrials (DJINDICES: ^DJI  ) have delivered their best performance since the roaring bull market of the 1990s, with gains of almost 14% having sent the average up by more than 1,800 points. Even though the Dow lost ground in June -- the first down month all year -- it still posted a respectable 2% gain for the second quarter.

But some of the Dow's stocks have done even better than the overall average. Let's look at the four stocks that have more than doubled the return of the Dow so far in 2013, with an eye toward what could be coming next for these companies in the second half of the year and beyond.

Hewlett-Packard (NYSE: HPQ  ) , up 76.2%
Many investors don't understand how HP has managed to recover so strongly this year. After all, CEO Meg Whitman's turnaround strategy still has a long way to go before it completely plays out, and it's far from certain that HP will succeed in putting its PC legacy behind it and finding new avenues for strong growth. If you only look at 2013's stock performance in isolation, you might come to the conclusion that investors are betting everything on a home run from Whitman and her team.

The key to HP's gains, though, is the fact that the stock got beaten down so badly last year. As a result, even with the stock's gains, HP still carries a price that offers some margin of safety even if things don't go as well as its executive team hopes. Moreover, if things go well, there's still some upside left for new investors in HP.

Boeing (NYSE: BA  ) , up 37.5%
Ordinarily, when a company has a major product recall, it's bad news for the stock. Yet even though Boeing had to ground its brand-new 787 Dreamliner aircraft early this year, the company managed not only to fix the plane's battery problem and get the Dreamliner up and flying again but also to make its official launch of its stretched Dreamliner 787-10 at the Paris Air Show.

None of Boeing's problems kept airlines and aircraft leasing companies from making initial orders of the Dreamliner, and the company sees a multi-trillion-dollar opportunity for aircraft sales in a number of different areas, ranging from the fuel efficient 737 MAX line of single-aisle planes to an eventual potential updated 777X that could improve on the large airliner's fuel efficiency. All these opportunities give Boeing plenty of room to fly higher.

Microsoft (NASDAQ: MSFT  ) , up 31.3%
Almost all of Microsoft's gains have come in the past few months, as investors have finally gotten comfortable with the value proposition behind the stock. Despite persistent concerns about Windows 8, Microsoft recently announced plans to provide its Windows 8.1 update to address concerns raised by early adopters of the operating system. In addition, the company has made some progress in the mobile space, assuming the No. 3 spot convincingly.

Microsoft has plenty of work left to do, but even after the recent run-up, shares still fetch just 11 times forward earnings estimates. Growth potential from moving Office software to a subscription-based model as well as its Xbox One next-generation gaming console could provide the drivers necessary to push Microsoft to even new heights.

American Express (NYSE: AXP  ) , up 30.9%
Payment processors thrive on improving economic prospects, and American Express owes its rise to all-time highs to the health of consumer spending. Even though its rivals in the card-network business have far greater transaction volume and cards issued, AmEx nevertheless has the edge in income, because it's willing to take on the credit risk of its cardholders.

AmEx has traditionally targeted upper-income customers, but expanding into the prepaid-card business should provide even more growth and expose the company's brand to a new demographic group. That could spell even greater profits down the road.

Where will the Dow go?
Recent turbulence in the broader market suggests that the Dow's second half might not be as lucrative as the first. Picking the right stocks, though, can get you better returns than the overall average, so be sure to look not just at how stocks have done so far in 2013 but whether they still have further reasons to move even higher.

If you're looking for some long-term investing ideas, you're invited to check out The Motley Fool's brand-new special report "The 3 Dow Stocks Dividend Investors Need." It's absolutely free, so simply click here now and get your copy today.

GameStop Stock: Don't Look Down

GameStop (NYSE: GME  ) investors keep reaching for new levels.

GameStop stock approached a four-year high after Oppenheimer & Co. upgraded the leading video game retailer. Slapping the shares with an outperform rating and jacking up his price target from $27 to $50, Oppenheimer's Brian Nagel is clearly encouraged by the way things played out at E3 this week.

Sony (NYSE: SNE  ) received the expo's loudest applause when it announced that it would let buyers of PS4 games trade them in at GameStop without restrictions.

Electronic Arts (NASDAQ: EA  ) stood by last month's decision to kill its controversial Online Pass that required registrations, forcing buyers of secondhand games to pay a fee to unlock the game.

"The amount of money that we made, it didn't replace the amount of frustration we put on our customers and it didn't offset the reputation damage it caused the company," EA executive Frank Gibeau told gamer blog Joystiq this week.

In other words, even if Microsoft (NASDAQ: MSFT  ) is opening the door for publishers to institute their own digital rights management protocol on games for the Xbox One, it won't be easy. The die-hard gamers have spoken, and they're ready to blackball restrictive publishers just as they've been trashing Microsoft and praising Sony this week.

This all plays right into GameStop's strengths, since the sale of used games and hardware generate its thickest gross margins.

Nagel is encouraged by the developments, and that also includes the surge in popularity for video game consoles and new games that should skyrocket this holiday season.

This all paints a pretty picture, but why is GameStop trading at its highest levels in nearly five years after years of industry declines?

If publishers are backing away from attacking the profitless resale of their titles, aren't they doing so because of the possibilities that await in direct distribution? Sony has made it clear that it's supporting all models, and that even includes the "free-to-play" approach that many mobile apps embrace. Both new consoles have fat hard drives, but also embrace cloud-based gaming.

GameStop wasn't doing so well even before these new machines that will make disc-based gameplay less relevant. The sale of pre-owned titles and gear is actually falling harder than new merchandise sales at GameStop, and that's before considering that these older games won't play organically on the PS4 and Xbox One.

Analysts see revenue and earnings slipping this fiscal year at GameStop, and that's even with the new console boost.

We don't know how well GameStop will hold up in this next generation of gaming consoles, but those defending the retailer may feel the same way that bookstore and record store owners felt when their media migrated to digital distribution. It seems highly unlikely that folks will be buying more disc-based games in a web-tethered future, and Microsoft even emphasized the same-day digital availability of new games.

The marketplace is changing, and while GameStop investors have been laughing all the way to the bank in recent months, it seems highly unlikely that they will be the ones getting the last laugh.

The gaming revolution is hitting the road
The mobile revolution is still in its infancy, but with so many different companies it can be daunting to know how to profit in the space. Fortunately, The Motley Fool has released a free report on mobile named "The Next Trillion-Dollar Revolution" that tells you how. The report describes why this seismic shift will dwarf any other technology revolution seen before it and also names the company at the forefront of the trend. You can access this report today by clicking here -- it's free.

Why FedEx Is Poised to Keep Poppin'

Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, express delivery gorilla FedEx (NYSE: FDX  ) has earned a respected four-star ranking.

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

FedEx facts

Headquarters (founded)	Memphis, Tenn. (1971)
Market Cap	$31.7 billion
Industry	Air freight and logistics
Trailing-12-Month Revenue	$44.3 billion
Management	Founder/Chairman/CEO Frederick Smith CFO Alan Graf
Return on Equity (average, past 3 years)	11.1%
Cash/Debt	$4.9 billion / $3.0 billion
Dividend Yield	0.6%
Competitors	DHL International TNT Express United Parcel Service

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

On CAPS, 91% of the 2,339 members who have rated FedEx believe the stock will outperform the S&P 500 going forward.

Just last week, one of those Fools, TMFGemHunter, succinctly summed up the bull case for our community:

FedEx is aggressively restructuring its trademark Express business in order to better match capacity to demand for priority shipments. At the same time, it is growing its FedEx Ground business rapidly, gaining share vis-a-vis competitors. The company is driving its cost structure down and will reap a big payoff when global GDP growth starts to increase. EPS could approximately double in the next 4 years.

If you want market-thumping returns, you need to put together the best portfolio you can. Of course, despite a strong four-star rating, FedEx may not be your top choice.

With the U.S. relying on the rest of the world for such a large percentage of our goods, many investors are ready for the end of the "made in China" era. Well, it may be here. Read all about the biggest industry disrupters since the personal computer in 3 Stocks to Own for the New Industrial Revolution. Just click here to learn more.

This Week's 5 Dumbest Stock Moves

Stupidity is contagious. It gets us all from time to time. Even respectable companies can catch it. As I do every week, let's take a look at five dumb financial events this week that may make your head spin.

1. South of the hoarder
It seems as if DIRECTV (NASDAQ: DTV  ) wasn't doing as well in Latin America as we may have thought.

The satellite television leader is taking a $25 million charge to account for bogus subscriber accounting after discovering that some of its Sky Brasil employees were improperly crediting subscriber accounts. The move inflated the subscriber count to the tune of 200,000 subscribers as of the end of March. Creating the illusion that those subs were still around also artificially reduced DIRECTV's churn rate.

DIRECTV expects the subscriber count to be corrected by the end of the June quarter, but it's still an embarrassing episode for the company that many see as the class act of satellite television.

2. Still wrong when it comes to Netflix
Analysts have been burned on both sides of Netflix (NASDAQ: NFLX  ) over the years, and for now, it continues to be the bears getting scorched.

Bernstein Research analyst Carlos Kirjner is lowering his rating on the leading video service provider from market perform to underperform, but he has been so wrong on where the stock has been heading, that he's actually dramatically boosting his price target on the shares from $125 to $180.

When an analyst upgrades a stock while lowering its price target, or downgrades a stock while raising its price goal, it's a dead giveaway of a Wall Street pro that got it wrong.

3. Demand isn't the man
Shares of Demand Media (NYSE: DMD  ) plunged more than 20% on Monday after the content farm operator hosed down its near-term outlook.

A reduction in referral traffic from search engines is brutal, because Demand Media's model relies on farming out content on the cheap, and making that back through traffic from organic search engine results.

Things just haven't gone well for Demand Media since going public at $17 in early 2011. A couple of analysts -- including JMP Securities and Stifel Nicolaus -- lowered their stock ratings on the news.

4. Throwing the book at the Nook tablet
After nearly three years, Barnes & Noble (NYSE: BKS  ) has had enough of its money-losing foray into tablets.

The struggling book retailer finally pulled the plug on its Nook Color. Barnes & Noble will continue to make its traditional Nook e-readers, but the market for multi-purpose color tablets that also double as e-readers was just too cutthroat for a company that has a long road back to turning an annual profit. 

Letting go is the right call, but it makes the cut this week because the chain went with tablets in the first place. It was never going to undercut the e-reader leader that has no problem taking a hit on the hardware in exchange for hooking a buying into its ecosystem. Barnes & Noble is in a difficult spot as store sales stumble, and it should've been devoting more of its attention to promoting its original Nook product line.

It will do that now, but it may be too late.

5. Shield your eyes
NVIDIA (NASDAQ: NVDA  ) was hoping to make a big splash in the portable gaming market with Thursday's introduction of Shield. 

Well, it didn't happen. 

A day before the handheld Android gaming device's debut, NVIDIA announced that a mechanical issue would be bumping the gaming gadget's rollout to later this summer.

NVIDIA Shield was already off to a dubious start. Last week, NVIDIA cut the price from $349 to $299. You don't often see that happen days before a release unless demand was soft. Now, the delay is going to make more early adopters cautious about diving into a device where a mechanical defect didn't come to light until a day before its actual retail release.

NVIDIA is a great company when it comes to graphic chips, but it has a lot to prove now when it comes to gaming hardware. 

Get smart
With so much of the financial industry getting bad press these days, it may be a greedy-when-others-are-fearful moment. Not surprisingly, some of Warren Buffett's biggest investments are in the space. In the Motley Fool's free report, The Stocks Only the Smartest Investors Are Buying, you can learn about a small, under-the-radar bank that's too tiny for Buffett's billions. Too bad, because it has better operating metrics than his favorites. Just click here to keep reading.

Congress Asked to Approve $170 Million Finnish Military Sale

The Defense Security Cooperation Agency notified Congress [link opens in PDF] Thursday of plans to conduct a Foreign Military Sale of $170 million worth of equipment and support services to Finland, as part of that country's Finland's F-18 Mid-Life Upgrade Program.

According to the DSCA, contractors including Raytheon (NYSE: RTN  ) , Lockheed Martin (NYSE: LMT  ) , Boeing (NYSE: BA  ) , General Electric (NYSE: GE  ) , and General Dynamics (NYSE: GD  ) will participate in providing the requested services, as well as equipment to include:

69 KIV-78 friend-or-foe identification systems. 69 AN/APX-11-30 combined interrogator/transponders. 32 SUU-63 payload pylons. An unspecified number of Multifunctional Information Distribution Systems.

Also included in the proposed order will be software test and integration center upgrades, flight testing services, support and testing equipment, technical documentation, personnel training, and assorted spare parts.

The DSCA says the sale will "contribute to the foreign policy and national security of the United States by helping to improve the security of a friendly country which has been, and continues to be an important force for political stability and economic progress in Europe. The Finnish Air Force (FAF) intends to purchase the MLU Program equipment to extend the useful life of its F-18 fighter aircraft and enhance their survivability and communications connectivity."

The DSCA further assures Congress that the proposed sale "will not alter the basic military balance in the region," nor will there be any "adverse impact on U.S. defense readiness as a result of this proposed sale."

link

Microsoft Backtracks on the Xbox One, but Is the Damage Already Done?

The following video is from The Motley Fool's weekly Tech Review, in which host Chris Hill talks all things tech with Fool analysts Eric Bleeker and Lyons George.

This week, Microsoft (NASDAQ: MSFT  ) announced a reversal of its position regarding its upcoming Xbox One console, which will no longer be DRM-restricted. Consumers had long been expressing that they would be dissatisfied with having DRM restrictions in the console, and while initially Microsoft had taken a stance in defense of the feature, the major momentum shifts in favor of competitor Sony (NYSE: SNE  ) with its upcoming new iteration of its PlayStation have finally pushed Microsoft into this reversal. Did the shift come too late for the Xbox One to regain lost traction? In this video, Lyons and Eric discuss the gaming-console competitive landscape, and which of these two companies holds the advantage at the moment.

It's been a frustrating path for Microsoft investors, who've watched the company fail to capitalize on the incredible growth in mobile over the past decade. However, with the release of its own tablet, along with the widely anticipated Windows 8 operating system, the company is looking to make a splash in this booming market. In a new premium report on Microsoft, a Motley Fool analyst explains that while the opportunity is huge, so are the challenges. The report includes regular updates as key events occur, so make sure to claim a copy of this report now by clicking here.

The relevant video segment can be found between 6:45 and 10:53.

For the full video of this edition of the weekly Tech Review, click here .

Top 5 Income Companies To Watch In Right Now

Shares of Qihoo 360 (NYSE: QIHU  ) opened nearly 10% higher today -- hitting a fresh all-time high -- after posting better than expected quarterly results.

The Chinese dot-com speedster showed healthy top-line growth with revenue soaring 59% to $109.9 million. Online advertising grew at a healthy 40% clip, but it was mobile games revenue skyrocketing 119% -- now accounting for 42% of the total revenue -- that really drove the push higher.

The path down the income statement was challenging as expected. Qihoo 360 is investing in the infrastructure, marketing, and personnel to build out its browser, security software, and search businesses, leading net margins to crater. Qihoo 360's adjusted profit of $0.14 a share was short of the $0.21 a share it posted a year earlier but in line with Wall Street expectations.

Top 5 Income Companies To Watch In Right Now: Sandvine Corp Com Npv (SVC.TO)

Sandvine Corporation develops and markets network policy control solutions for broadband Internet service providers in North America, the Caribbean and Latin America, Europe, the Middle East, Africa, and the Asia Pacific. The company offers network policy control solutions comprising a hardware platform and proprietary software modules, which provide a system for broadband Internet service providers to identify specific types of traffic across their networks, such as VoIP, online gaming, or video streams; and provides tools to help service providers apply specific network policies that enable the quality of service for their subscribers, mitigate malicious traffic, and manage their network. It also offers consultation, installation, integration, and training services; and support and software maintenance services. The company sells its products and services directly, as well as through network equipment resellers and value-added resellers. Sandvine Corporation was founded in 2001 and is headquartered in Waterloo, Canada.

Top 5 Income Companies To Watch In Right Now: Hercules Offshore Inc.(HERO)

Hercules Offshore, Inc., together with its subsidiaries, provides shallow-water drilling and marine services to the oil and natural gas exploration and production industry in the U.S. Gulf of Mexico and internationally. Its services comprise oil and gas exploration and development drilling, well services, platform inspection, and maintenance and decommissioning services in various water provinces. As of May 10, 2011, the company owned and operated a fleet of 50 jackup rigs, 17 barge rigs, 65 liftboats, 3 submersible rigs, and 1 platform rig. It serves national oil and gas companies, integrated energy companies, and independent oil and natural gas operators. The company was founded in 2004 and is headquartered in Houston, Texas.

Advisors' Opinion:

• [By Karim]

  The moratorium on drilling in the Gulf of Mexico in 2010 as a result of the Deepwater Horizon offshore oil spill created all kinds of havoc for key industry players. One company, Seahawk Drilling (Nasdaq:HAWK), suffered so much from its equipment sitting idle that it had to auction off its drilling rigs at fire-sale prices. That was a stroke of luck for Hercules Offshore, which paid about $100 million for an estimated $400 million in assets, including 20 drilling rigs. As an added bonus, Hercules just saw Seahawk, a key rival, drop out of the business, which should help lease rates firm up when shallow water drilling resumes.

  Hercules itself carries far too much debt. If the drilling slowdown continues for an extended period, then shares, currently trading near $4, could re-visit the 52-week low of $2. But thedebt load is actually now more palatable to lenders because there are more assets to put against the borrowings. The transaction may have paved the way for Hercules to avoid more restrictive bank covenants that would have loomed later this year. Book value (a measure of a company's assets) now stands at $8 a shar e, or roughly twice the current stock price. Despite that compelling value, shares may stay range bound until activity in the Gulf picks up. But keep an eye on this one.

Top 10 Oil Stocks To Watch Right Now: Union Pacific Corporation(UNP)

Union Pacific Corporation, through its subsidiary, Union Pacific Railroad Company, provides rail transportation services in North America. It has approximately 31,953 route miles linking Pacific Coast and Gulf Coast ports with the Midwest and eastern United States gateways, and provides several corridors to Mexican gateways. The company offers freight transportation services for agricultural products, including whole grains and related commodities, food, beverage products, corn for ethanol products and its by-products, animal feeds, fruits and vegetables, frozen meat, and poultry products; and automotive products, such as imported and finished vehicles, and automotive parts and materials. It also provides transportation services for chemicals, such as industrial chemicals, plastics, and liquid petroleum products; energy products comprising coal and coke; industrial products, including lumber products, paper and consumer goods, furniture and appliances, and nonferrous and i ndustrial minerals, as well as steel and construction products, such as rock, cement, and roofing materials; and intermodal containers. Union Pacific Corporation was founded in 1862 and is based in Omaha, Nebraska.

Advisors' Opinion:

• [By Richard Young]

  Union Pacific (NYSE:UNP) has paid a dividend on its shares every year for 112 years. On Nov. 17, Union Pacific’s board announced a dividend increase of 26%. That was the second dividend increase of 2011, raising the quarterly dividend to 60 cents a share, up from 38 cents at the beginning of the year. Union Pacific is aiming to pay out more.

   

  Take a look at the long record of outperformance on my relative strength chart for UNP. Over the last five years, UNP has outperformed the S&P by over 150%.

• [By Jonas Elmerraji]

  2013 has been a strong year for shares of Union Pacific (UNP). Shares of the $70 billion railroad stock have rallied almost 19% this year, buoyed by overall strength in the transports sector. UNP is the largest railroad on the continent, with more than 32,000 miles of track that links 23 states, Canada and Mexico. That scale puts the firm in a strong position to grab more freight volume as the economy warms up.

  While oil prices have dipped recently, they're still on the high end of their historic range, and that actually bodes well for railroads. In general, rail shipping costs around one-fourth as much as trucking does per ton shipped, a cost advantage that typically sends customers setting aside the convenience factor of truck freight once fuel prices get past a certain point. The firm's hefty commodity exposure is a little less attractive right now, but that hasn't stopped Union Pacific from posting impressive revenue numbers lately.

  UNP has a deep economic moat. Railroad assets aren't easily copied by rivals – and they're extremely costly to maintain. While that does mean that UNP has some hefty fixed costs to overcome, its scale easily makes up for that drawback. With much better efficiency than the firm had just a couple of years ago, Union Pacific looks well positioned for 2013. We're betting on shares of this Rocket Stock this week.

• [By Robert Holmes]

   Analyst William Greene says Union Pacific is one of the firm's best ideas as it is one of the most compelling stocks in freight transportation.

  "We are bullish on the rail industry's advantage over its truck competitors including lower unit costs for high tonnage freight and greater customer captivity," Greene writes. "Given UNP's particularly favorable exposure to the key themes underpinning our rail thesis, we believe UNP will see secular EPS growth."

  Greene specifically highlights Union Pacific's latent pricing power, its operating leverage to long-term volume growth, and long-term productivity improvement.

  Greene's base case calls for a 26% rise in share price next year, although his most bullish outlook for Union Pacific has the stock up 38% next year. His most bearish scenario has the stock down 12% next year.

Top 5 Income Companies To Watch In Right Now: Dreyfus Municipal Income Inc.(DMF)

Dreyfus Municipal Income, Inc. is a close ended mutual fund launched and managed by The Dreyfus Corporation. It invests in the fixed income markets. It primarily invests in municipal bonds. Dreyfus Municipal Income, Inc. is domiciled in United States.

Top 5 Income Companies To Watch In Right Now: National Interstate Corporation(NATL)

National Interstate Corporation, through its subsidiaries, operates as a specialty property and casualty insurance company in the United States, the District of Columbia, and the Cayman Islands. It underwrites and sells traditional and alternative property, and casualty insurance products primarily to the passenger transportation industry and the trucking industry; general commercial insurance to small businesses in Hawaii and Alaska; personal insurance to owners of recreational vehicles and commercial vehicles in the United States; and insurance products for moving and storage transportation companies. The company?s products include truck and passenger transportation alternative risk transfer insurance products, and worker?s compensation coverage; and commercial auto liability, general liability, physical damage, and motor truck cargo and related coverage?s for truck and passenger operators, as well as various coverage?s to the moving and storage industry, including c ommercial auto liability, physical damage, workers? compensation, employers? liability, cargo, commercial umbrella, commercial property, general liability, crime, equipment breakdown, inland marine, and movers and warehousemen?s liability products. Its products also include coverage?s for campsite liability, vehicle replacement coverage, and coverage for trailers, golf carts, and campsite storage facilities; companion personal auto coverage to recreational vehicle policyholders; and commercial vehicle insurance that provides coverage for companies with vehicles used by contractors, artisans, and other small businesses. National Interstate Corporation markets its products through various distribution channels, such as independent agents and brokers, program administrators, affiliated agencies, and agent internet initiatives. The company was founded in 1989 and is headquartered in Richfield, Ohio. National Interstate Corporation is a subsidiary of Great American Insurance Company.

Dow Slumps 139 Points, Bank of America Stock Leads Losses

Rates, rates, rates. The very fear that interest rates had reached their trough sent them through the roof last week, and today's sluggish market was caused in part by related concerns from the Orient. The Chinese stock market fell more than 6% today, officially crossing into bear market territory as investors worry that record-high money market rates in China will cause a cash squeeze. Wall Street took notice, and the Dow Jones Industrial Average (DJINDICES: ^DJI  ) lost 139 points, or 0.9%, to end at 14,659. Bank of America (NYSE: BAC  ) stock ended as the largest blue-chip decliner. 

As for outperformers, only five Dow stocks ended in the black on Monday, with Johnson & Johnson (NYSE: JNJ  ) leading the way on 1.7% gains. There wasn't anything in particular that made the health-care giant immune to today's losses, but it sure doesn't hurt that the company is one of the largest, most established, and well-known companies in the world. It's worth nearly $240 billion, and pays out a 3.2% dividend to investors, so it's a good option for investors seeking safety in equities.

After losing ground in the previous four trading sessions, Microsoft (NASDAQ: MSFT  ) shares bounced back 1.4% on Monday. Shareholders are watching closely as Wednesday's developers conference approaches, where the company is expected to reveal new changes to its Windows 8 software. The reception to recent Microsoft rollouts has been anything but smooth -- the company quickly reversed its policy on used games for the Xbox One console after a backlash -- so, hopefully, Wednesday's developments won't be too controversial. 

As for the laggards, Hewlett-Packard (NYSE: HPQ  ) closed near the bottom of the index after posting 3% losses. The stock is 60% more volatile than the market in general, so today's steep sell-off isn't too out of the ordinary. When considering the fact that HP has rallied 64% already this year, it helps to put today's slide in perspective. HP is a turnaround story at its core, so now and then a 3% slide is to be expected, especially in a market as unforgiving as today's was. 

Lastly, Bank of America stock shed 3.1%. Unlike Johnson & Johnson, Bank of America pays a minimal dividend to reassure and reward investors, and the interconnectedness of global financial markets poses some immediate risk to the bank if China's economy continues to flounder. After all, big chunks of domestic industry rely in one way or another on the assumption that China will keep chugging along nicely, and Bank of America is a major creditor of American industry. 

With the European debt crisis and slowing growth in China many investors are worried about heady growth going forward, but fear not, because: The Future Is Made in America. Domestic manufacturing is poised to once again become the investment driver of the world, and all because of one disruptive technology. You can uncover the three companies that will become the American Steel of tomorrow in The Motley Fool's new free report. Just click here to read more.

Facebook’s Youth Advantage Explained

Teens may like Twitter more than they did a year ago, but they still love Facebook (NASDAQ: FB  ) . New research from the Pew Research Center and Harvard's Berkman Center shows that 94% have a page and 81% say Facebook is the social network they use most frequently.

Twitter's influence is clearly growing. Nearly a quarter of teens make use of the microblogger, up from 16% in 2011. But that's still orders of magnitude less than what Facebook serves. So long as younger users continue to prefer Mark Zuckerberg's creation, the more attractive it is as an investment, says Tim Beyers of Motley Fool Rule Breakers and Motley Fool Supernova in the following video.

What attracts teens to Facebook is, in many ways, reminiscent of what attracts business users to LinkedIn, Tim says. Both networks make it easy to organize into groups built around common interests, and teens are a cliquish sort.

They also possess an inordinate amount of disposable income. In appealing to teens, Facebook is positioning itself to sell more profitable ads and deliver the big gains in per-user revenue investors have long been hoping for. It's an all or nothing bet that, judging by the research, is working out well so far.

Do you agree? Please watch the video to get Tim's full take, and then let us know whether you would buy, sell, or short Facebook stock at current prices.

Five stocks enter, one stock leaves
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Top 10 Casino Stocks For 2014

 Some critics of our current monetary system will tell you that it tends to make speculators out of everyone...

 

After all, our current monetary system allows the Federal Reserve to "bail out" folks who make terrible lending and borrowing decisions... And the argument goes, if you can't trust the government to maintain a sound currency, you're less likely to park your savings in that currency. You're more likely to make risky bets on stocks, real estate, and bonds. Less sophisticated people are more likely to gamble with their money in lotteries and casinos.

 

That's the theory... But let's consult the market to see if it's working in real life...

Top 10 Casino Stocks For 2014: Penn National Gaming Inc.(PENN)

Penn National Gaming, Inc. and its subsidiaries own and manage gaming and pari-mutuel properties in the United States. It operates approximately 27,000 gaming machines; 500 table games; and 2,000 hotel rooms in 23 facilities in 16 jurisdictions, including Colorado, Florida, Illinois, Indiana, Iowa, Louisiana, Maine, Maryland, Mississippi, Missouri, New Jersey, New Mexico, Ohio, Pennsylvania, West Virginia, and Ontario. The company was formerly known as PNRC Corp. and changed its name to Penn National Gaming, Inc. in 1994. Penn National Gaming, Inc. was founded in 1982 and is based in Wyomissing, Pennsylvania.

Advisors' Opinion:

• [By Quickel]

  Penn National Gaming(PENN) squeaked past its guidance through improved cost controls, and investors praised its efforts.

  But expectations were low, and its upbeat outlook shouldn't be viewed as a message that regional markets are recovering. "Going forward, we project soft regional gaming revenue results over the next three to six months, as we do not expect to see a significant increase in consumer spending patterns given the uncertain economic environment," J.P. Morgan analyst Joseph Greff wrote in a note.

  Penn National raised its full-year earnings guidance to $1.18 from $1.13 a share, and up its revenue outlook by $26 million to $2.44 billion from $2.41 billion.

  During the second quarter, the company earned $9.2 million, or 9 cents a share, compared with $28.5 million, or 27 cents, in the year-ago period. Excluding items, Penn actually earned 29 cents a share, a penny higher than estimates.

  Revenue rose 3% to $598.3 million, higher than the $597.1 million Wall Street projected. The upside was driven by both better revenues and margins and was generally broad-based across many properties, especially larger venues in Charlestown, Lawrenceburg and Grantville, Pa.

  Penn National rolled out table games in West Virginia and Pennsylvania during the quarter, which should be a growth catalyst moving forward. The company also plans to open a slot facility in Maryland on Sept. 30 and expects its Toldeo, Ohio, location to open in the first-half of 2012. Its Columbus project is slated to open in the second-half of 2012.

  The company repurchased 409,000 shares during the quarter. "[This] sends a message to investors on the value of its equity, but perhaps indicating the lack of near-term acquisition opportunities," J.P. Morgan analyst Joseph Greff wrote in a note.

Top 10 Casino Stocks For 2014: Pinnacle Entertainment Inc.(PNK)

Pinnacle Entertainment, Inc. owns, develops, and operates casinos, and related hospitality and entertainment facilities in the United States. It operates casinos, such as L'Auberge du Lac in Lake Charles, Louisiana; River City Casino and Lumiere Place in St. Louis, Missouri; Boomtown New Orleans in New Orleans, Louisiana; Belterra Casino Resort in Vevay, Indiana; Boomtown Bossier City in Bossier City, Louisiana; and Boomtown Reno in Reno, Nevada. The company also operates River Downs racetrack in southeast Cincinnati, Ohio. As of May 26, 2011, it operated seven casinos and one racetrack. The company was formerly known as Hollywood Park, Inc. and changed its name to Pinnacle Entertainment, Inc. in February 2000. Pinnacle Entertainment, Inc. was founded in 1935 and is based in Las Vegas, Nevada.

Advisors' Opinion:

• [By Jeanine Poggi]

  Pinnacle Entertainment(PNK) was the great transition story of 2010, with shares spiking about 45% this year.

  The regional casino operator's most impressive story has been in its gross margins, as management, under the leadership of new CEO Anthony Sanfilippo, is in the process of increasing the company's operating efficiencies and prudently allocating capital. Analysts believe Pinnacle is in the early stages of this process, and will continue to drive revenue growth.

  In its third quarter, Pinnacle reported a surprise profit of 10 cents a share on an adjusted basis, better than consensus estimates of a loss of 7 cents. Revenue grew 15% to $287.8 million, while property-level margins reached 23.4%, also ahead of forecasts.

  Last month, Pinnacle purchased Cincinnati's River Downs Racetrack for $45 million. The deal includes 155 acres, 35 of which are still undeveloped. The transaction is expected to close by the end of the first quarter of 2011.

  This deal could generate significant returns in the event that Ohio decides to legalize video lottery terminals at racetracks, Santarelli said.

  Pinnacle is also in the process of looking for a buyer of its oceanfront land in Atlantic City, where it originally intended to build a $1.5 billion casino, before squelching plans. The casino operator bought the land in 2006 for $270 million from groups affiliated with Carl Icahn and later added another piece of land for $70 million.

  While the land's currently value is $38 million, Pinnacle insists it will not sell it on the cheap, holding out for the best deal.

  Pinnacle currently has $228 million in cash and $375 million of availability under its revolver.

• [By Sherry Jim]

  Pinnacle Entertainment(PNK) swung to a loss in its second quarter, as costs rose.

  During the quarter, the regional casino operator lost $49.3 million, or 81 cents a share, compared with a profit of $4.7 million, or 8 cents, in the year-ago period for Pinnacle.

  Excluding items, Pinnacle actually lost 14 cents a share, 10 cents worse than analysts' estimates of a 4-cent loss.

  Pinnacle's revenue rose 8.5% to $273.6 million from $252.3 million, but also fell short of Wall Street's forecast of $284.4 million.

  Even though revenue was weaker, margins rebounded at all but one of Pinnacle's properties. "Margins are the story for Pinnacle ahead of any longer-term potential true rebound in the economy, and we continue to believe there are multiple opportunities for near-term operational improvements across the Pinnacle portfolio," Bain wrote in a note.

  At a time when most casino operators are striving to reduce costs to offset the decline in consumer spending, Pinnacle saw expenses rise 21% to $289.3 million. But Bain said Pinnacle is still in the early stages of cost-refining. "Given what we view as several areas of potential improvements in this regard, we believe Pinnacle is less dependent on an economic recovery than some of its regional peers," he wrote.

  J.P. Morgan analyst Joseph Greff also reaffirms his overweight rating on the stock, viewing Pinnacle as a transition story. "We continue to believe that new CEO Anthony Sanfilippo and team will drive increased operating efficiencies and allocate capital prudently," he wrote in a note.

  Greff praises Sanfilippo for shelving the Sugarcane Bay project and instead focusing on Baton Rouge.

  Pinnacle's liquidity remains strong, with $200 million in cash and $375 million of availability under its revolver

Hot Warren Buffett Stocks To Watch Right Now: Wynn Resorts Limited(WYNN)

Wynn Resorts, Limited, together with its subsidiaries, engages in the development, ownership, and operation of destination casino resorts. The company owns and operates Wynn Las Vegas casino resort in Las Vegas, which includes approximately 22 food and beverage outlets comprising 5 dining restaurants; 2 nightclubs; 1 spa and salon; 1 Ferrari and Maserati automobile dealership; wedding chapels; an 18-hole golf course; meeting space; and foot retail promenade featuring boutiques. Wynn Las Vegas casino resort also features approximately 147 table games, 1 baccarat salon, private VIP gaming rooms, 1 poker room, 1,842 slot machines, and 1 race and sports book. It also owns and operates an Encore at Wynn Las Vegas resort, a destination casino resort located adjacent to Wynn Las Vegas that features a 2,034 all-suite hotel, as well as a casino with 95 table games, 1 sky casino, 1 baccarat salon, private VIP gaming rooms, and 778 slot machines. In addition, the company operates Wyn n Macau casino resort located in the Macau Special Administrative Region of the People?s Republic of China. Wynn Macau casino resort features approximately 595 hotel rooms and suites, 410 table games, 935 slot machines, 1 poker room, 1 sky casino, 6 restaurants, 1 spa and salon, lounges, meeting facilities, and retail space featuring boutiques. Further, it operates Encore at Wynn Macau resort located adjacent to Wynn Macau. Encore at Wynn Macau resort features approximately 410 luxury suites and 4 villas, as well as casino gaming space, including a sky casino consisting of 60 table games and 80 slot machines, 2 restaurants, 1 luxury spa, and retail space. The company was founded in 2002 and is based in Las Vegas, Nevada.

Advisors' Opinion:

• [By Jeanine Poggi]

  Wynn Resorts'(WYNN) run up of more than 55% this year has caused Wall Street to question its valuation.

  Currently, eight analysts have a buy rating on Wynn, 16 say hold, two rate it underperform rating and one says to sell the stock.

  "With little on the growth horizon in the intermediate term, new competition from Cotai coming in 2011 and 2012 ... and the unclear timing of a true recovery in Las Vegas, we see few catalysts not yet priced-in to pull valuation higher than current levels," Bain wrote in a note following its third-quarter earnings report.

  During the quarter, Wynn lost $33.5 million, or 27 cents a share, compared with a profit of $34.2 million, or 28 cents, in the year-ago period. The loss was attributed to charges related to servicing its debt. On an adjusted basis, Wynn actually earned 39 cents, matching Wall Street's outlook.

  Total Revenue grew to $1 billion from $773.1 million, better than the $990.8 million analysts predicted.

  In Macau, Wynn reported a 50% surge in revenue to $671.4 million, while EBITDA was $198 million, up 54.5% from $128.2 million in the third quarter of 2009. Earlier in the year the company opened its $600 million Wynn Encore Macau, which added 414 rooms to the market.

  Looking ahead, Wynn expects to break ground on its Cotai development in early 2011. The $2 billion to $3 billion project is slated to open in 2015, and management said it would provide additional details following its fourth-quarter earnings report.

  In Las Vegas, CEO Steve Wynn says the Strip is on the road to recovery. "I believe we have seen the bottom in Las Vegas," he said during the company's third-quarter conference call. "I don't know how fast it is going to get better but it isn't going to get any worse."

  Las Vegas revenue inched up 3.1% to $334.5 million during the three-month period, and EBITDA grew 9.3% to $76.5 million.

  Wynn also issued a cash dividend of $8 a share payable on Dec. 7 to sharehold! ers of record on Nov. 23.

• [By Carlson]

  Wynn Resorts(WYNN) saw its second-quarter profit more than double, but most of that strength came from casino wins, and investors were unimpressed.

  During the quarter, the casino operator earned $52. 4 million, or 52 cents a share, on revenue of $1.03 billion, higher than forecasts of 42 cents on revenue of $992.3 million. This compares with a profit of $25.5 million, or 21 cents, on revenue of $723.3 million, in the year-ago period.

  Wynn had already pre-announced disappointing results for its Las Vegas properties, citing higher costs, including employee health care and benefits, and marketing expenses. Its operating loss for its Wynn Las Vegas and Encore widened to $17.2 million from $8.3 million last year. Revenue rose 1.7% to $318 million.

  Occupancy at the Wynn Las Vegas jumped to 92.6% from 86.6% a year earlier, but revenue per available room fell 3.2%.

  Still, management indicated that there is a slight improvement on the Strip, with an increase in forward group bookings and some bright spots for the ability to yield rates. But management tempered enthusiasm by saying there are some struggles and uncertainty in the marketplace.

  "We hope for continued improvement in Las Vegas or -- let me put it different, we hope that we'll get smarter in Las Vegas in dealing with the peculiarities of this market --and this very, very mercurial, national economic market we're living with," said Steve Wynn, chief executive, in a conference call. "The national economy and the political environment in the country as we head up to the elections [is] very, very touchy. And it is impacting all businesses."

  The biggest boost, of course, came from Macau, where revenue surged 74% to $714.4 million from $410.4 million last year.

  The company opened its Encore Macau in the spring, boosting its market share to about 16% from about 13%, Sterne Agee analyst David Bain wrote in a note.

  Wynn is in the process of working on a new development on the Cotai st! rip, which should spike investors' interest as more details are revealed in the coming quarters.

  Still, investors are concerned that as comparisons get harder in Macau, and second-quarter results are adjusted for hold (how much the casino won), Wynn may not be able to outperform. But Bain reassures, "this has been discussed as nauseam by investors, sell-side analysts, the press -- and even dinner-table relatives -- for some time. We believe the Street is underestimating the summer months in Macua, which may help to produce a new leg up for Macau stories, with Wynn being the most profitable on a per position basis."

Top 10 Casino Stocks For 2014: Boyd Gaming Corporation(BYD)

Boyd Gaming Corporation, together with its subsidiaries, operates as a multi-jurisdictional gaming company in the United States. As of December 31, 2011, the company owned and operated 1,042,787 square feet of casino space, containing approximately 25,973 slot machines, 655 table games, and 11,418 hotel rooms. It also owned and operated 16 gaming entertainment properties located in Nevada, Illinois, Louisiana, Mississippi, Indiana, and New Jersey. In addition, the company owns and operates a pari-mutuel jai-alai facility located in Dania Beach, Florida, as well as a travel agency in Hawaii. Further, it holds a 50% controlling interest in the limited liability company that operates Borgata Hotel Casino and Spa in Atlantic City, New Jersey. Boyd Gaming Corporation was founded in 1988 and is headquartered in Las Vegas, Nevada.

Advisors' Opinion:

• [By Hesler]

  Boyd Gaming(BYD) posted a bigger-than-expected drop in its second-quarter earnings, citing weak performance in Las Vegas, the Midwest and the South.

  During the quarter, the casino operator earned $3.4 million, or 4 cents a share, a 73% plunge from $12.8 million, or 15 cents, in the year-ago period. Adjusted earnings came in at 5 cents a share, significantly lower than the 10 cents Wall Street predicted for Boyd.

  Boyd's revenue fell 6% to $578.4 million, also short of the consensus of $588 million.

  "The lingering effects of the recession have left consumers unusually sensitive to shifts in the economy, and they now react more quickly to economic data and other developments, such as fluctuations in the stock market," said CEO Keith Smith, in a statement. "Although conditions remain uncertain, we believe long-term stabilizing trends are still in place, and that year-over-year growth is achievable by the end of 2010."

  In the Las Vegas locals market, the rate of decline in earnings before interest, taxes, depreciation and amortization rose to 16.2% from 10.8%, J.P. Morgan analyst Joseph Greff wrote in a note. Boyd previously reported a 9.9% decline for its Borgata property in Atlantic City. Revenue came in at $186.9 million, a 2.4% decrease from the year-ago period.

  "We think second-quarter results are less important than the coming operating results in the second-half of 2010, when the Atlantic City market faces increased regional competitive pressures from tables in Pennsylvania and West Virginia and the first Philadelphia casino opens this summer," J.P. Morgan analyst Joseph Greff wrote in a note.

  Greff reaffirmed his underweight rating on Boyd, given increasing competition in Atlantic City, a weak recovery in the Las Vegas locals market and stagnant regional gaming trends.

  While there is no doubt the Atlantic City gaming market remains one of the most depressed, Borgata continues to dominate the market and gain share. Atlant! ic City saw gaming revenues plunge 11.1% in June to $286.8 million. Boyd co-owns Borgata with MGM Resorts, which is currently in the process of divesting its 50% stake.

• [By Jeanine Poggi]

  The Las Vegas locals and Atlantic City markets have the longest road to recovery, making Boyd Gaming (BYD) one of the most challenged stocks in the sector long-term.

  It's not a surprise then that Boyd saw some of the most muted gains in 2010, with shares rising just 13.8% since the beginning of the year.

  In Atlantic City, where Boyd owns a 50% stake in the Borgata, gambling revenue plunged 13% in November. The New Jersey Boardwalk has been under pressure even before the recession began, as nearby regions expand their gaming presence.

  Both West Virginia and Pennsylvania added table games to casinos in the second half of the year and new properties opened in Philadelphia and Maryland. In 2011, Atlantic City will also have to contend with additional growth in Pennsylvania and the pending opening of the Aqueduct in New York City.

  Given this, Boyd decided not to exercise its right to match a $250 million offer MGM Resorts(MGM) received for its 50% stake in the Borgata. MGM decided to divest its joint venture with Boyd after the Atlantic City Gaming Commission criticized its relationship with Pansy Ho in Macau, whose family has allegedly been tied to organized crime in China.

  In the Las Vegas locals market, where Boyd generates about 44% of its EBITDA, trends are improving, but not as quickly as analysts would have hoped. In October, gaming revenue in the market grew 6.2% to $169.4 million.

  In its third quarter, Boyd disappointed Wall Street, with adjusted earnings coming in at 2 cents a share, shy of consensus estimates of 5 cents. Revenue dropped 4% to $595.4 million.

  Boyd also announced plans to sell $500 million of eight-year notes. Proceeds will be used to buy back senior subordinated notes due 2012 and to repay bank loans.

Top 10 Casino Stocks For 2014: (XTRN)

Las Vegas Railway Express Inc. focuses to re-establish a conventional passenger train service between the Las Vegas and Los Angeles metropolitan areas. It plans to establish a ?Vegas-style? passenger train service. The company is based in Las Vegas, Nevada.

Top 10 Casino Stocks For 2014: MGM Resorts International(MGM)

MGM Resorts International, through its subsidiaries, primarily owns and operates casino resorts in the United States. The company?s resorts offer gaming, hotel, dining, entertainment, retail, and other resort amenities. It also owns and operates golf courses and a golf club. As of December 31, 2010, the company owned and operated 15 properties located in Nevada, Mississippi, and Michigan; and has 50% investments in 4 other casino resorts in Nevada, Illinois, and Macau. In addition, MGM Resorts International has an agreement with the Mashantucket Pequot Tribal Nation, which owns and operates a casino resort in Connecticut, to carry the ?MGM Grand? brand name. The company was formerly known as MGM MIRAGE and changed its name to MGM Resorts International in June 2010. MGM Resorts International was founded in 1986 and is based in Las Vegas, Nevada.

Advisors' Opinion:

• [By Goodwin]

  MGM Resorts International(MGM) has the most exposure to the Las Vegas market, making it a bet only for those with thick skin.

  For the second quarter, the casino operator lost $883.5 million, or $2 a share, compared with a loss of $212.5 million, or 60 cents, in the year-ago period.

  A majority of the loss was attributed to a $1.12 billion writedown on its investment in CityCenter in Las Vegas. This is the third time MGM has had to write down CityCenter, as the casino has seen little improvement in operating profit since it opened in December. The $8.5 billion development took a loss of $128 million.

  Excluding this writedown, MGM actually lost 35 cents a share, still significantly more than analysts estimates of a 24-cent loss. MGM's revenue rose 3% to $1.54 billion from $1.49 billion, ahead of analysts' estimates of $1.46 billion.

  Revenue-per-available room on the Las Vegas Strip decreased 2%, although Bellagio and MGM Grand showed improvement, the company said. Occupancy levels slipped to 93% from 94% while the average daily rate fell a dollar to $110. "The Las Vegas operating environment remains difficult, but as we expected, we are seeing a gradual recovery," Chief Executive Officer Jim Murren said in a statement.

  Some of MGM's losses in Las Vegas were offset by its joint venture in Macau with Pansy Ho. MGM Macau earned $40 million, compared with a loss of $8 million last year

  Outside of Vegas, MGM said last week that it agreed to sell land from its Borgata hotel in Atlantic City for $73 million to Vornado Realty Trust and Geyser Holdings. The Borgata land, which is co-owned with Boyd Gaming(BYD), is about 11.3 acres, which would translate into about $6.5 million per acre.

  The transaction still needs to be approved by New Jersey regulators, and is expected to close by the fourth quarter. Once this transaction is complete, MGM will still own about 85 acres of developable land in Atlantic City.

  Earlier in the year, MGM said it planned t! o divest its 50% stake in the Atlantic City casino, which is currently in trust. The casino operator is still in talks with potential buyers of Borgata casino, and hotel and investors will be waiting for an update on its progress when second-quarter earnings are released.

  "We view this [deal] as a very modest positive in that there are still buyers of Atlantic City assets out there, at least at the right price," J.P. Morgan analyst Joseph Greff wrote in a note. "We don't necessarily interpret [the] news as any indication that MGM is closer to selling its 50% stake in Borgata."

• [By Hawkinvest]

  MGM Resorts International (MGM) is one of the world's largest hotel and casino companies, based in Las Vegas. Since December, MGM shares have been trading in a range of about $9, to almost $15 per share. The stock is now at the upper limit of the recent trading range which means that the risk of holding or buying this stock right now, could be elevated. MGM shares have rallied with the markets but appear extended and vulnerable to a sell-off. The company has a heavy debt load and it has been reporting losses. The balance sheet has about $13.45 billion in debt and only about $1.97 billion in cash. MGM could be impacted by higher oil prices because many consumers could cut back on spending if they go to Las Vegas, and some might decide not to go at all, and instead opt for a "staycation." With MGM facing challenges and the shares near recent highs, it could make sen se to sell now and buy on dips later this year.

  Here are some key points for MGM:

  Current share price: $14.18

  The 52 week range is $7.40 to $16.05

  Earnings estimates for 2011: a loss of 53 cents per share

  Earnings estimates for 2012: a loss of 39 cents per share

  Annual dividend: none

The Next Step for NYSE Euronext Stock

As the company behind the prestigious New York Stock Exchange, NYSE Euronext (NYSE: NYX  ) makes money when people trade any stock. Yet for its own part, NYSE Euronext stock has soared in anticipation of its pending $8.2 billion acquisition by rival IntercontinentalExchange (NYSE: ICE  ) . With European regulators having approved the deal earlier this week, the transaction appears to be on track to close during the second half of the year, although the SEC and other regulators have yet to weigh in. Let's take a closer look at the exchange industry and what shareholders in NYSE Euronext can expect going forward.

Understanding the ICE deal
If you own NYSE Euronext stock, the ICE buyout gives you choices about what you'll receive in exchange for your shares. With the transaction valued at $33.12 per share at the time of the offer in late December, shareholders will have the election of receiving cash or ICE shares, with 25.81 shares of ICE stock for every 100 shares of NYSE Euronext stock you own. The election is subject to maximum cash and stock requirements that ICE set, with an overall mix of two-thirds stock and one-third cash. Due largely to the fact that ICE shares have posted strong gains, the stock price for NYSE Euronext has climbed well above the $33.12 level.

Shareholders already approved the deal earlier this month, so what shareholders are waiting for are customary approvals from regulators looking at potential anti-competitive effects and other financial considerations. Given the big role that exchanges play in the financial markets, regulatory examinations are especially important, but so far, the companies haven't seen any roadblocks to their merger.

The crown jewel of the trading world
One of the biggest concerns about the NYSE Euronext takeover is preserving the long history of the New York Stock Exchange. Even though technology has greatly transformed how stocks actually trade, the culture of the NYSE still stands as a testament to the importance of live human beings in conducting trading and making markets. ICE has committed to preserving the NYSE brand, maintaining a corporate presence in the same building that houses the NYSE trading floor.

Yet the importance of the NYSE has fallen in recent decades, as rival exchanges have risen up to compete not just in the U.S. but globally as well. Rival Nasdaq OMX (NASDAQ: NDAQ  ) represents the obvious competitive threat in U.S. stocks, with recent moves like opening up shorter ticker symbols to Nasdaq-traded companies helping the exchange close a gap with the NYSE. Yet so-called dark pools have taken away a considerable amount of volume from the major exchanges as well, as computer-driven traders seek advantages from other trading venues.

Among exchanges, the action is beyond the stock market. With the rise in trading of futures, options, and other derivative investments, NYSE Euronext's ownership of the NYSE Liffe exchange in London was a key element of ICE's interest. CME Group (NASDAQ: CME  ) and CBOE Holdings (NASDAQ: CBOE  ) have worked hard to preserve their respective strength in futures and options, and rising market turbulence has made many of their products look a lot more enticing. Given that derivatives can help hedge market risk and reduce overall exposure, all of the exchange companies have an opportunity to bolster their presence in the derivatives market with innovative products that meet the new needs investors have in a more turbulent financial environment.

Cashing out or cashing in?
For holders of NYSE Euronext stock, the big question is whether to take the money and run, or hold onto shares of ICE. Given the huge value of the NYSE brand, ICE should benefit greatly from an enhanced reputation and greater competitive presence in the exchange industry for years to come. Still, many investors wary about the rise of high-frequency trading and possible tougher regulation in the long run might well prefer to take the opportunity to exit, especially given how Nasdaq OMX, CBOE Holdings, and CME Group will all give ICE a run for its money going forward.

The Motley Fool's chief investment officer has selected his No. 1 stock for this year. Find out which stock it is in the special 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.

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

Top 10 Sliver Stocks To Own Right Now

As an investor you're likely keenly aware of the fact that plunking down your hard-earned money for a sliver of ownership in a company involves risk. The amount you're investing for your share of the company could decrease in value significantly, and a worst case scenario could lead to your investment becoming worthless. That's why it's so important to consider what could go wrong ahead of time so you have an idea of what to watch out for as you hold your position.

That's why I love the quote by Carl Richards in which he reminds us that "[risk] is what's left over when you think you've thought of everything else." All too often we only look at what could go right and typically don't dig too deeply into what could go wrong. Instead of being reminded that the real risk is something we are not considering, all too often we are blindsided by a risk that was hiding in plain sight.

Top 10 Sliver Stocks To Own Right Now: Mediaset(MS.MI)

Mediaset S.p.A. engages in the television (TV), advertising, free and pay digital TV, transmission network management, contents production, Internet, and mobile TV businesses primarily in Italy. It is involved in the provision of advertising sales and program scheduling for the three national channels and broadcasts three free-to-air channels using DVB-T technology; and production of game shows, quizzes, events, light entertainment, infotainment programs, reality shows, and soft news. The company also engages in the purchase, development, production, and management of television rights; provision of linear and non-linear content in the digital terrestrial sector; and planning, construction, hosting, and maintenance of network infrastructure and related services. In addition, it develops television sales channels and client services; provides publishing products, including books, digital versatile disks, and compact discs; and distributes Italian and foreign films, as well as offers its services and content on various platforms, such as Internet, teletext, mobile phones, and land-line phones. Mediaset S.p.A. was founded in 1978 and is based in Milan, Italy.

Top 10 Sliver Stocks To Own Right Now: Portugal Telecom SGPS S.A .(PT)

Portugal Telecom, SGPS, S.A., together with its subsidiaries, provides telecommunications services in Portugal, Brazil, sub-Saharan Africa, and Asia. It offers fixed line telephone, Internet protocol television, and direct-to-home satellite pay-TV services; and mobile telecommunications services, such as voice, data, and Internet-related multi-media services primarily for mobile phones, smart phones, tablets, and laptops. The company also provides enterprise services, including data and business solutions, as well as information technology/information system and business process outsourcing services. In addition, it provides engineering solutions and training services in telecommunications; postal network services; consultant negotiation services; public telecommunication services and telebroadcasting services; call center services; mobile cellular services; and development and consultancy services in the areas of electronic commerce, contents, telecommunications, and info rmation technology. Further, it engages in the purchase, management, administration, sale, and investment consultancy of real estate properties; business advisory board service installment, consultation, administration, and business management; and pension fund management,. Additionally, the company provides wholesale services comprising leased lines, interconnection, unbundled access to its local loops, broadband asymmetric digital subscriber line (ADSL), wholesale line rental, access to ducts, transmission of television and radio signals, and international carrier services. The company also publishes directories; provides portal services; and sells telecommunications equipment. As of December 31, 2010, it had approximately 4.9 million telephone and ADSL access lines in service. The company was formerly known as Portugal Telecom, SA and changed its name to Portugal Telecom, SGPS, S.A. in December 2000. Portugal Telecom, SGPS, S.A. was founded in 1994 and is based in Lisbon, Portugal.

Top 10 Consumer Service Companies To Own In Right Now: MICRO FOCUS ORD GBP0(MCRO.L)

Micro Focus International plc provides enterprise application management solutions worldwide. The company offers software that allows companies to develop, test, deploy, assess, and modernize business-critical enterprise applications. Its product portfolio includes i.Sight, an application portfolio management and analysis tool that enable strategic planning, and application overhaul and modernization; Caliber, a enterprise software requirements definition and management tool, which is used to drive the development and testing of applications to the exact and changing needs of end users; and Rumba, a terminal emulation and user interface modernization tool that streamlines and modernizes key business processes. The company also offers Enterprise, a platform modernization tool, which modernizes application portfolios and platforms; StarTeam, a software change and configuration management tool that tracks changes across the software development lifecycle; and VisiBroker, a CO RBA middleware and application server. In addition, it provides Micro Focus Developer COBOL and software developer tools to modernize business-critical enterprise applications; and Silk software test management, test automation, and performance testing suite. Further, the company offers professional services comprising value profile day services; test process, portfolio, language, platform, and resource modernization services; test data management; value assurance; health check; field development solutions; software process improvement; project review services; customer care and education; and training services. Micro Focus International plc was founded in 1976 and is headquartered in Newbury, the United Kingdom.

Top 10 Sliver Stocks To Own Right Now: El Paso Corporation(EP)

El Paso Corporation operates in the natural gas transmission, and exploration and production sectors of the energy industry primarily in the United States. It offers natural gas transmission services to a range of customers, including natural gas producers, marketers, and end-users, as well as other natural gas transmission, distribution, and electric generation companies through its interests in approximately 43,100 miles of interstate pipeline system. The company also operates approximately 240 billion cubic feet of storage capacity, and an LNG receiving terminal in Elba Island, Georgia. In addition, El Paso Corporation focuses on the exploration, acquisition, development, and production of natural gas, oil, and natural gas liquids in the United States, Brazil, and Egypt, as well as engages in midstream business. The company primarily sells its domestic natural gas and oil to third parties. As of December 31, 2010, it had proved natural gas and oil reserves of approximat ely 3.4 trillion cubic feet of natural gas equivalents. The company was founded in 1928 and is based in Houston, Texas.

Advisors' Opinion:

• [By Ken Sweet]

  Shares of El Paso Corp. (EP), owner of the nation's largest natural gas pipeline network, got a boost from increased investor interest in natural gas and stronger-than-expected earnings.

  The company recently raised its full-year guidance to between $1and $1.10 a share, citing higher oil and gas prices.

  Investors also responded positively to El Paso's decision last month to spin off its natural gas exploration and production division into a separate company, allowing El Paso to focus solely on its pipeline, transportation and distribution businesses.

• [By Brian Stoffel]

  El Paso, added to the Rising Star collection by Jordan DiPietro, is a two-headed beast. "El Paso is an exploration and production company second, and a pipeline operator first," he says.

  This means that while exploration and production are subject to the vagaries of changing oil prices, the pipelines can act as a steady stream of reliable income.

  So far, the company's objective of building out its pipelines has been coming up aces: "[El Paso] has three pipeline projects that are on schedule and expected to come in about 25% under budget. With an $8 billion backlog of pipeline projects coming into fruition in the next few years, the company has multiple opportunities to boost earnings."

• [By Louis Navellier]

  El Paso Corp. (NYSE:EP) is an energy company that operates in the natural gas transmission and exploration and production sectors of the energy industry. Clearly the turbulent market hasn’t affected El Paso stock — it’s up 40% year to date.

• [By Chuck]

  El Paso (EP-N17.920.372.11%) is a natural gas transmission, exploration and production company. It receives “buy” ratings from an impressive 80 per cent of analysts.

  El Paso has significant interests in the 42,000-mile North American natural gas pipeline system, which will increase in importance in coming years as the U.S. segues from foreign-produced oil to domestically-abundant natural gas. El Paso has grown net income 7.2 per cent a year, on average, since 2007, but cut its dividend from a high of five cents in 2009, hurting its perception with investors. Currently, the company pays one cent a quarter, equaling an annual yield of 0.3 per cent. Analysts don't expect a near-term boost.

  Still, El Paso is an attractive investment because it has pricing power over those who need to transport or store natural gas and has ample profit margins. In the third quarter, the gross margin jumped from 54 per cent to 64 per cent and the operating margin rose from 34 per cent to 44 per cent. In addition to its stable pipeline business, El Paso's exploration unit has interest in many of the so-called emerging shale plays in the U.S., including the Haynesville, Eagle Ford and Wolfcamp properties. JPMorgan, which rates El Paso “overweight”, recently cut its 2011 natural gas price forecast to $4.35 per thousand cubic feet from $5.06 and its 12-month target for El Paso to $15.50.

  From a longer-term perspective, El Paso is particularly attractive relative to exploration stocks because it has lucrative prospects, coupled with stable transportation cash flow. Also, it remains undervalued relative to peer investments, selling for a trailing earnings multiple of 11, a forward earnings multiple of 13, a book value multiple of 2.2, a sales multiple of 2.1 and a cash flow multiple of 5.4, 43 per cent, 29 per cent, 50 per cent, 32 per cent and 41 per cent industry discounts.

  Bullish Scenario: BMO Capital Markets forecasts an advance of 31 per cent to $19.

  Bearish Scenari! o: Goldman Sachs ranks the stock “neutral”, with a $14 target.

Top 10 Sliver Stocks To Own Right Now: Urologix Inc.(ULGX)

Urologix, Inc. develops, manufactures, and markets non-surgical catheter-based therapies for the treatment of benign prostatic hyperplasia (BPH). The company offers control units; and procedure kits, which consist of a disposable treatment catheter, rectal thermal unit balloon, and coolant bag. Its systems utilize the Cooled ThermoTherapy technology, a targeted microwave energy combined with a cooling mechanism that protects healthy tissue and enhances patient comfort while providing relief from the symptoms of BPH by the thermal ablation of hyperplasic prostatic tissue. The company markets its control units under the CoolWave and Targis names; and procedure kits under the CTC Advance, Targis, and Prostaprobe names. Urologix, Inc. sells its products to urologists, ambulatory surgery centers, and hospitals through its direct sales force, as well as distributors in the United States and internationally. The company was founded in 1991 and is based in Minneapolis, Minnesota.< /p>

Top 10 Sliver Stocks To Own Right Now: Kilo Goldmines Ltd (KGL.V)

Kilo Goldmines Ltd., a development stage company, engages in the exploration and development of gold properties in the Democratic Republic of Congo. The company holds interests in 3 joint ventures in a land package totaling approximately 7,000 square kilometers located in the Archaean Kabalian greenstone geological formation primarily in the Orientale province. It also explores for iron ores. The company is headquartered in Toronto, Canada.

Top 10 Sliver Stocks To Own Right Now: Mount Gibson Iron Ltd (MGX)

Mount Gibson Iron Limited (Mount Gibson) is engaged in mining of hematite deposits at Tallering Peak; mining of hematite deposits at Koolan Island; mining of hematite deposits at Extension Hill, and exploration and development of hematite deposits at Koolan Island and in the Mid-West region of Western Australia. The Koolan Island iron ore mine is located on Koolan Island located in the Buccaneer Archipelago of Yampi Sound in Western Australia. The Extension Hill hematite mine is located in the Mount Gibson Ranges, 85 kilometres east of Perenjori and 260 kilometres east south east of Geraldton. The Company�� subsidiaries include Mount Gibson Mining Limited, Geraldton Bulk Handling Pty Ltd, Aztec Resources Limited, Koolan Iron Ore Pty Ltd, Koolan Shipping Pty Ltd and Brockman Minerals Pty Ltd.

Top 10 Sliver Stocks To Own Right Now: Argonaut Exploration Inc (AGA.V)

Argonaut Exploration Inc., a junior mineral exploration company, engages in the acquisition, exploration, and development of mineral properties in Canada. It primarily explores for gold, silver, copper, molybdenum, lead, and zinc deposits. The company holds a 100% interest in the Terrace property comprising 75 mineral claims located in north-western British Columbia; the Columario Gold property consisting of 31 mineral tenures covering an area of approximately 2,230 hectares located in the Terrace area of British Columbia; and the High Gold property covering an area of approximately 7,832.4 hectares located in Hidden Valley Area, British Columbia. It also holds a 100% interest in the Lucky Luke and Cordillera gold mines located in British Columbia. Argonaut Exploration Inc. is headquartered in Calgary, Canada.

Top 10 Sliver Stocks To Own Right Now: Tejon Ranch Co(TRC)

Tejon Ranch Co., together with its subsidiaries, engages in the real estate development and agribusiness business activities in the United States. The company operates in three segments: Commercial/Industrial Real Estate Development and Services, Resort/Residential Real Estate Development, and Farming. The Commercial/Industrial Real Estate Development and Services segment involves in entitling, planning, and permitting land for development; the construction of infrastructure, pre-leased buildings, and buildings to be leased or sold; and the sale of land to third parties. It leases land to a truck wash, auto service stations with convenience stores, fast-food operations, full-service restaurants, motel, antique shop, and the United States Postal Service facility, as well as for oil and mineral royalties and grazing. The Resort/Residential Real Estate Development segment engages in the land entitlement, land planning and pre-construction engineering, and land stewardship act ivities. The Farming segment farms various permanent crops, including wine grapes in 1,621 acres; almonds in 1,513 acres; and pistachios in 1,012 acres. It also manages farming of alfalfa and forage mix on 775 acres in the Antelope Valley; and leases 750 acres of land for the growing of vegetables. The company was founded in 1936 and is based in Lebec, California.

Top 10 Sliver Stocks To Own Right Now: Biotron Ltd (BIT.AX)

Biotron Limited, a clinical stage drug development company, focuses on developing small molecule antiviral drugs targeting Hepatitis C virus (HCV), HIV, dengue, and others in Australia. The company is developing novel small molecule therapeutics that target primarily the Vpu protein of HIV and p7 protein of HCV. Its lead drug includes the BIT225, a viroporin inhibitor for the treatment of HCV and HIV infections in a Phase Ib/2a HIV trial. The company also has early stage programs target other viruses, including Dengue; and a research and development program with back-up compounds for its HIV/HCV programs. Biotron Limited is based in North Ryde, Australia.

Stock of the Day: Lennar Corp

Shares of Lennar Corp (NYSE: LEN  ) rose Tuesday morning after reporting strong second-quarter numbers. While profit was off from the prior year, the company reported strong orders and deliveries for its recent quarter. Gross margins on home sales rose, as well. Things also looked good in the broader housing market. New-home sales hit their highest point in almost five years in May, rising 2.1% from the previous month. In other housing news, the Case-Shiller index of home prices in 10 major markets increased 1.8% in April. In this installment of Stock of the Day, Motley Fool analyst Matt Koppenheffer discusses how investors should analyze the housing market, and what he thinks of Lennar.

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.

Top US Stocks To Own Right Now

European (SXXP) stocks climbed as mining shares rallied and Alcoa Inc. began the U.S. earnings season with profit that beat analysts��estimates.

BHP Billiton Ltd. (BHP) and Rio Tinto Group, the world�� largest mining companies, advanced at least 3.5 percent. Repsol SA increased the most in a month after saying it discovered natural gas in Algeria. Lagardere SCA (MMB) lost the most in four months after selling its stake in European, Aeronautic, Defence & Space Co.

The Stoxx Europe 600 Index added 0.2 percent to 288.07 at the close of trading. The gauge yesterday rebounded from the biggest three-day selloff since July as German industrial output increased more than forecast. The measure has gained 3 percent this year as U.S. lawmakers agreed on a compromise budget and data fueled optimism the world�� biggest economy is recovering.

Top US Stocks To Own Right Now: Worthington Energy Inc (WGAS)

Worthington Energy, Inc. (Worthington), formerly Paxton Energy, Inc., incorporated July 30, 2004, is an oil and gas exploration and production company with assets in Texas and in the Gulf of Mexico. Worthington�� assets in Texas consist of a minority working interest in limited production and drilling prospects in the Cooke Ranch area of La Salle County, Texas, and Jefferson County, Texas, all operated by Bayshore Exploration L.L.C. (Bayshore). The Company�� assets in the Gulf of Mexico consist of a leasehold working interests in certain oil and gas leases located offshore from Louisiana, upon which no drilling or production has commenced as of December 31, 2011, and a 10.35% interest in the recently drilled I-1 well and a 2% royalty interest in 14,400 acres in the Mustang Island Tract 818. On March 27, 2012, it acquired certain assets from Black Cat Exploration & Production, LLC.

In Texas, the Company has working interests ranging from 4% to 31.75% (net revenue interests ranging from 3% to 23.8125%) in the various wells. In the Gulf of Mexico it has a 70% leasehold working interest, with a net revenue interest of 51.975%, of certain oil and gas leases in the Vermillion 179 tract and 10.35% interest in the recently drilled I-1 well and a 2% royalty interest in 14,400 acres in the Mustang Island Tract 818. As of December 31, 2011, it had one producing well that generated average total monthly net revenue.

The Mustang Island 818-L Field, located in the Kleberg County waters of the Gulf of Mexico, is a field re-habilitation project targeting bypassed or only partially produced gas-condensate. Total production from the wells within the seismic coverage was 125.6 billion cubic feet. In January 2011, the Hercules Offshore 205 jack-up rig was contracted to re-enter the I-Well on the Mustang License Area. The oil and gas leases are located in the VM 179, which is in the shallow waters of the Gulf of Mexico offshore from Louisiana. VM 179 is at 85 inches water depth approximately ! 46 miles offshore Louisiana in the Gulf of Mexico.

Top US Stocks To Own Right Now: Zotefoams(ZTF.L)

Zotefoams plc engages in the manufacture and sale of cross-linked block foams. The company offers its AZOTE, a polyolefin foam product under the PLASTAZOTE, EVAZOTE, and SUPAZOTE brand names; ZOTEK F, a range of lightweight, closed-cell, and polyvinylidene fluoride foams based on Kynar fluoropolymer; ZOTEK N, a lightweight, closed cell, and cross linked foams based on polyamide 6; and ZOTEK S, an ultra-low density silicone foam. It also provides MicroZOTE, a range of closed-cell, non-crosslinked, microcellular, and polyolefin roll foams; and T-Tubes, an insulation system specifically developed for use in clean process in industries, such as biotechnology, pharmaceutical, and semiconductor. The company?s products are used in a range of markets, including sports and leisure, packaging, transport, healthcare, toys, building, marine, military, aerospace, automotive, medical, and construction, as well as general industrial and consumer products. It has operations in the United Kingdom, rest of Europe, North America, and rest of the world. Zotefoams plc is based in Croydon, the United Kingdom.

Top 10 Industrial Disributor Stocks To Buy For 2014: Midlands Minerals Corporation(MEX.V)

Midland Minerals Corporation, a junior exploration stage company, engages in the acquisition, exploration, and development of mineral properties. It engages in the exploration of gold, precious metals, diamonds, and other resources in the continent of Africa. It has interests in Sian-Praso property, which covers an area of approximately 157 square kilometers located on the northwest of Accra, Ghana; and Kaniago property that consists of an area of approximately 25.5 square kilometers located on the Asankrangwa Gold Belt, Ghana. The company also has interests in Lwenge, Kishapu, Lalago, Vukene, and Itilima properties in the Lake Victoria Goldfields area in Tanzania; and Tamota, Mziha East, Ruanda, and Turian East properties in the Handeni area in Tanzania. Midlands Minerals Corporation is headquartered in Toronto, Canada.

Sales of New Homes Up 2.1% for May

New single-family home sales were up 2.1% to a seasonally adjusted annual rate of 476,000 for May, according to a Commerce Department report (link opens as PDF) released today.

After increasing a revised 3.3% for April, May's report points to a third month of improvements in sales of new single-family homes.. Analysts had expected a slight rise off of April's unrevised numbers, but their 460,000 estimate proved too pessimistic. The latest number is 29% above the May 2012 estimate.

Source: Commerce Department.

On a regional basis, sales in the Midwest shot up 40.7% month-to-month, while the Northeast recorded 20.7% gains. At -9%, the South was the only region to register a sales slump.

As demand heads increasingly higher, builders are keeping pace with supply. Just as in April, there is an estimated 4.1 months of supply at the current rate of sales. The median home price clocked in at $263,900, down from April's $272,600 median price tag.

link

A 1-Day Bounce Won't Solve the Dow's Problems

After declines over the past week have sent the Dow Jones Industrials (DJINDICES: ^DJI  ) down by more than 650 points, early signs this morning point to a potential rebound for the beleaguered U.S. stock market, with projections suggesting about a 70-point rise at the open. Yet even with some favorable news emerging both abroad and domestically, you need to be cautious before concluding that the worst of the recent correction is over.

Overnight, some favorable news has calmed global investors somewhat and sent U.S. stock futures markets higher as well. With the Chinese central bank making reassuring gestures in order to address fears that a credit crisis could further slow the emerging nation's economic growth, Asian stock markets recovered from their worst levels of the trading day, with Chinese stocks in particular rising from lows not seen since the depths of the financial crisis in 2009. European markets are also up broadly, with the major stock indexes in France, Germany, and the U.K. gaining between 1% and 1.5%. With durable-goods orders in the U.S. up 3.6% last month, investors can also point to the prospects for a strong domestic economy in justifying a market advance.

Stock gains in premarket trade are widespread. Industrial powerhouses Caterpillar and Alcoa have posted gains of about 1% right before the open. These two stocks' fortunes are strongly linked to China, with Alcoa suffering from a glut of Chinese aluminum production and Caterpillar falling as overall commodity demand reduces the ability and need for mining companies to buy its equipment.

Bank of America (NYSE: BAC  ) has also vaulted higher in the premarket hours, gaining 2.3%. A favorable settlement between B of A's Merrill Lynch unit and the government of the Piedmont region of Italy over a derivatives-related dispute is one more example of the bank trying to handle its legal risk, but of greater importance is avoiding any systemic risk of another global financial crisis. If China's efforts to control its credit markets bear fruit, then it represents one less worry for B of A to consider as it tries to spur growth in the face of rapidly rising interest rates.

Keep your eyes on the big picture
Regardless of whether this morning's favorable signs bear out in stock market gains today, any restoration of the bull market in stocks will take a lot longer than a single day to play out. Bond rates are unlikely to drop to their previous levels, barring a major economic slowdown, and the changing environment for stocks, bonds, and other investments will introduce new challenges for investors. By staying focused on longer-term trends, rather than getting caught up in day-to-day noise, you'll be best prepared to handle what the markets throw at you in the weeks and months to come.

Don't Get Too Worked Up Over AGL Resources's Earnings

Although business headlines still tout earnings numbers, many investors have moved past net earnings as a measure of a company's economic output. That's because earnings are very often less trustworthy than cash flow, since earnings are more open to manipulation based on dubious judgment calls.

Earnings' unreliability is one of the reasons Foolish investors often flip straight past the income statement to check the cash flow statement. In general, by taking a close look at the cash moving in and out of the business, you can better understand whether the last batch of earnings brought money into the company, or merely disguised a cash gusher with a pretty headline.

Calling all cash flows
When you are trying to buy the market's best stocks, it's worth checking up on your companies' free cash flow once a quarter or so, to see whether it bears any relationship to the net income in the headlines. That's what we do with this series. Today, we're checking in on AGL Resources (NYSE: GAS  ) , whose recent revenue and earnings are plotted below.

Source: S&P Capital IQ. Data is current as of last fully reported fiscal quarter. Dollar values in millions. FCF = free cash flow. FY = fiscal year. TTM = trailing 12 months.

Over the past 12 months, AGL Resources generated $137.0 million cash while it booked net income of $295.0 million. That means it turned 3.2% of its revenue into FCF. That sounds OK. However, FCF is less than net income. Ideally, we'd like to see the opposite.

All cash is not equal
Unfortunately, the cash flow statement isn't immune from nonsense, either. That's why it pays to take a close look at the components of cash flow from operations, to make sure that the cash flows are of high quality. What does that mean? To me, it means they need to be real and replicable in the upcoming quarters, rather than being offset by continual cash outflows that don't appear on the income statement (such as major capital expenditures).

For instance, cash flow based on cash net income and adjustments for non-cash income-statement expenses (like depreciation) is generally favorable. An increase in cash flow based on stiffing your suppliers (by increasing accounts payable for the short term) or shortchanging Uncle Sam on taxes will come back to bite investors later. The same goes for decreasing accounts receivable; this is good to see, but it's ordinary in recessionary times, and you can only increase collections so much. Finally, adding stock-based compensation expense back to cash flows is questionable when a company hands out a lot of equity to employees and uses cash in later periods to buy back those shares.

So how does the cash flow at AGL Resources look? Take a peek at the chart below, which flags questionable cash flow sources with a red bar.

Source: S&P Capital IQ. Data is current as of last fully reported fiscal quarter. Dollar values in millions. TTM = trailing 12 months.

When I say "questionable cash flow sources," I mean items such as changes in taxes payable, tax benefits from stock options, and asset sales, among others. That's not to say that companies booking these as sources of cash flow are weak, or are engaging in any sort of wrongdoing, or that everything that comes up questionable in my graph is automatically bad news. But whenever a company is getting more than, say, 10% of its cash from operations from these dubious sources, investors ought to make sure to refer to the filings and dig in.

With 21.7% of operating cash flow coming from questionable sources, AGL Resources investors should take a closer look at the underlying numbers. Within the questionable cash flow figure plotted in the TTM period above, other operating activities (which can include deferred income taxes, pension charges, and other one-off items) provided the biggest boost, at 21.7% of cash flow from operations. Overall, the biggest drag on FCF came from capital expenditures, which consumed 86.5% of cash from operations. AGL Resources investors may also want to keep an eye on accounts receivable, because the TTM change is 7.0 times greater than the average swing over the past 5 fiscal years.

A Foolish final thought
Most investors don't keep tabs on their companies' cash flow. I think that's a mistake. If you take the time to read past the headlines and crack a filing now and then, you're in a much better position to spot potential trouble early. Better yet, you'll improve your odds of finding the underappreciated home-run stocks that provide the market's best returns.

Can your retirement portfolio provide you with enough income to last? You'll need more than AGL Resources. Learn about crafting a smarter retirement plan in "The Shocking Can't-Miss Truth About Your Retirement." Click here for instant access to this free report.

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