The Only Way to Make Money From Gold Lately

Gold prices plunged over the past three months, making it almost impossible to find a money-making trade in the precious-metals sector during the second quarter. But by using exchange-traded products designed for short-term traders, those courageous enough to ride the wave downward in gold and silver prices were richly rewarded with huge gains. Let's take a closer look at these investments with an eye toward deciding if they make sense for those with a longer-term perspective.

The perfect time for precious-metals leverage
The best-performing exchange-traded products in the market were those that bet against gold and silver bullion and mining companies. In particular, VelocityShares 3x Inverse Silver ETN (NYSEMKT: DSLV  ) managed to rise 140% over the past three months, while the similar inverse gold ETN posted more modest gains of about 90%. Bets against mining stocks were equally lucrative, with the popular Direxion Daily Gold Miners Bear 3x (NYSEMKT: DUST  ) coming close to matching the inverse silver ETN's performance at a nearly 140% rise.

What's somewhat surprising is the effectiveness with which these leveraged products have produced amazing returns. Over longer periods of time, leveraged exchange-traded products have typically been disasters for long-term investors, as volatility in both directions has steadily eroded the value of both bullish and bearish bets on the same markets.

But the current environment has been perfect for leveraged investments in precious metals, because the market has moved in one direction: down. That has knocked bullish investments for a largely fatal loop, with Direxion Daily Gold Miners Bull 3x (NYSEMKT: NUGT  ) having lost almost 80% of its value during the second quarter, necessitating a 1-for-5 reverse split just to hold its share price. The story is similar for VelocityShares 3x Long Silver (NYSEMKT: USLV  ) , with its decline of more than 70%.

What's next for these winning ETFs?
Investors have mixed thoughts about whether precious metals and mining stocks will continue their moves lower. In the past few days, gold-mining stocks have bounced off their recent lows even before bullion prices started to move higher, as bargain-hunting investors seemed to conclude that the beaten-down shares of miners and miner-tracking ETF Market Vectors Gold Miners (NYSEMKT: GDX  ) represented a value proposition. Yet even though gold climbed yesterday to start off the third quarter, silver prices remained largely unchanged, pointing to a clear lack of resolve within the sector.

What investors shouldn't do is to conclude that leveraged ETFs are a viable long-term play based on one quarter's extraordinary performance. Anything short of a continued violent move downward in precious metals could lead to much weaker returns for leveraged products tied to their prospects. Too often, those who end up making the most from their leveraged plays end up overstaying their welcome -- and thereby give back much more of their returns than they expect.

Gold has outshone the stock market with strong returns since 2000, but more recently has given way to big declines. The Motley Fool's new free report "The Best Way to Play Gold Right Now" dissects the recent volatility and provides a guide for gold investing. Click here to read the full report today!

3D Systems Teams Up With Would-Be Asteroid Miner

3D Systems (NYSE: DDD  )  is pushing the boundaries of Star Trek-tech -- again.

Earlier this month, 3D's name showed up on a who's-who list of companies backing 3-D-printing-in-space company Made in Space, supporting the latter's efforts to bring the 3D printing of objects to a weightless environment. On Wednesday, 3D expanded its involvement in the space frontier with the announcement that it's collaborating with would-be asteroid miner Planetary Resources to try manufacturing actual spacecraft.

According to 3D, its machines will be used to develop and manufacture components for Planetary's ARKYD Series of asteroid-mining spacecraft. Planetary Co-Founder and Co-Chairman Dr. Peter H. Diamandis welcomed 3D aboard the project, saying: "We are absolutely thrilled to partner with 3D Systems, the world's pioneer and leader in 3D printing and advanced manufacturing, as we pursue our vision to expand the resource base beyond Earth. 3D Systems has a long history of inventing, advancing and democratizing manufacturing -- and our vision of mass producing the ARKYD 100, 200 and 300 line will greatly benefit from their thinking and technology."

In a move demonstrating its interest in forming additional partnerships elsewhere, 3D says it has set up 3D Systems Ventures to "identify, seek and manage its seed investments in promising enterprises that will benefit from or be powered by the company's leading technologies." The venture arm will be headed by Hugh Evans from T. Rowe Price, who will join 3D Systems as the vice president corporate ventures.

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Sonoco Products: A 3.60% Yield And Potential H2 2013 EPS Growth

Sonoco Products (SON) is a diversified manufacturer that is mostly involved in the consumer packaging industry and other related fields. The company is also a dividend champion, with 31 consecutive years of dividend growth. Like many dividend stocks, Sonoco Products' stock has been an outperformer, with a YTD gain of over 17%. Sonoco Products currently offers a $0.31 per share quarterly dividend and yields about 3.60%.

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Overview

Sonoco Products is a provider of consumer packaging, industrial products, protective packaging, and packaging supply chain services. When a customer wants custom packages for their products, Sonoco Products is usually the company they go to. The majority (77%) of Sonoco Products' FY 2012 sales came from North America, while only a small fraction (16%) were from Europe.

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Sonoco Products is divided into four separate business units: consumer packaging, display and packaging, paper and industrial converted products, and protective solutions. The largest in terms of both sales and EBIT is the consumer packaging segment, followed closely by the paper related segment. Sonoco Products' protective packaging segment saw strong growth in 2012 due to the November 2011 Tegrant Corp acquisition.

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Operating Metrics

Since 2011, Sonoco Products has seen relatively stable revenue growth. During Q1 2013, Sonoco Products reported revenues of $1.18B, down 3% from the $1.21B in 2012. The vast majority of this decline came from lower volumes in its consumer packaging segment, which declined $33M, or 7%,! to $463M. The paper related segment also saw revenues decline $10M, or 2%, to $454M, due to declining volumes in Europe. A bright spot for Sonoco Products in Q1 2013 was its display and packaging segment, which saw revenues increase $5M, or 4%, to $120M. This was due to lower margin volume growth from an international contract. Also seeing small growth was the protective solutions segment, which saw revenues grow $4M, or 3%, to $142M. This was mostly due to increase volumes.

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Sonoco Products net income actually increase $5M to $48.1M, or $0.47 per share, for Q1 2013, compared with $43.1M, or $0.42 per share last year. However when adjusting for certain items such as impairments, restructuring charges and currency adjustments, base earnings were actually $51.7M, or $0.50 per share, down from $53.8M, or $0.52 per share. For Q2 2013, Sonoco Products has guided for EPS to range from $0.56 to $0.60 per share, Using the midpoint of $0.58 per share, this points towards Sonoco Products EPS being flat from last year.

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When looking at Sonoco Products' margins, we can see that the company may be getting squeezed. Except for the protective solutions segment, every segment for Sonoco Products saw margins decline year over year. The worst drop by far was in the consumer packaging segment, which saw margins decline a full percent to 9.1%. Overall, Sonoco Products saw its margins decline 0.5% to only 7.3%.

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However, when looking at Sonoco Products' gross profits, the decline does not seem that bad. Gross profits were 17.4% in Q1 2013, down from 1! 7.9% last! year. This quarter was actually the first year over year decline in gross profits in five quarters.

Lowering Debt

Sonoco Products has been aiming to lower its overall debt for a couple years. In the quarter, the company managed to lower its total debt by $258M to $1.12B, from $1.37B in Q4 2012. Sonoco Products achieved this by repatriating $260M of its overseas cash. Sonoco Products net debt to EBITDA is now a modest 1.6Xm down from 2.1X last quarter. By 2014, Sonoco Products plans to reduce its debt to about $968M using its FCF.

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Price Increases, Improved Productivity and New Contracts Drive EPS Growth

When looking at Sonoco Products' guidance, we can see that the company projects a fairly strong rest of the year. Assuming the above mentioned Q2 2013 EPS of $0.58, Sonoco Products' Q3 and Q4 2013 combined EPS should range from $1.16 to $1.22, which would be an increase from the combined Q3 and Q4 2012 EPS of $1.11. Using the midpoint of $1.19 for this range, Sonoco Products would see EPS growth of about 7% for the later half of 2013.

During the Q1 2013 conference call, Sonoco Products' CEO Jack Sanders mentioned several reasons why the company projects stronger growth in EPS.

The first factor is improve pricing. Sonoco Products has increased price for several of its products, which should result in improved margins.

The first is pricing. As many of you know, we implemented a $25 a ton domestic price increase for encoded recycled paperboard and a 4% increase in tubes and cores. We are very encouraged as the increases are supported in the m! arket. Wh! ile we are not a large producer, we will benefit from the announced $50 a ton increase in container board and corrugated medium. Finally, we have implemented price increases beginning this quarter in both composite cans and plastics. These increases are to recover a material and other inflationary costs.

The second reason for improved EPS will come from improved productivity. Sonoco Products was plagued by unplanned downtime due to maintenance in Q1. This work should improve uptime for the remainder of the year. In addition, Sonoco Products is planning cost cuts in various segments.

The second factor that will drive our improvement is better operating performance. Clearly, productivity in the first quarter was not to our historic average. Late last year, we changed the management team in paper North America, and their focus on preventive maintenance is much greater than we've had in the past. As we were conducting both planned and unplanned maintenance during the quarter, we expanded the scope of the work to ensure we fix the problem and paved the way for better uptime for the balance of the year. As we enter April, the mills are running better, and we are projecting improved run rates and productivity. Demand remains solid. In plastics, we are bringing up a third production wheel that will eliminate the bottleneck that impacted volume in Q1 and will pave the way to produce new won volume. In addition, we're implementing further cost reductions in many of our businesses.

Lastly, Sonoco Products scored a large contract from battery maker Energizer. Sonoco Products will be the primary packaging, retail display assembly and fulfillment of a segment of battery products for Energizer brands.

The third factor that makes me optimistic is recent won volume. Yesterday, we announced the Energizer, but we also have several additional wins I believe will help us reach our commercial objectives in 2013.

Are Volumes for Composite Cans Picking Up?

Along with the above mentioned Ener! gizer dea! l, there are other signs of Sonoco Products seeing volumes pick up. Volumes for composite cans, which is a large chunk of its paper related segment, have been on the rise. Sonoco Products has added a new line for this product in Malaysia. In addition, the company added a second line in China. The company also shifted some of its capacity in composite cans from Germany to Poland, which should lower labor costs. Composite can volumes in Q1 were actually down 1%, largely due to declines in the US. In addition, revenues were down 4%, hurt by a shift towards smaller cans, such as refrigerated dough, and away from larger cans for powdered coffee and infant formula. However, as mentioned above, Sonoco Products pushed through a price increase for this product.

Also, food inflation has moderated in the US. This may lead to an increase in volumes for food based packages. In addition, food volumes in US are usually higher during summer months. When you couple improved volumes with the above mentioned price increase, it appears that Sonoco Products' paper related segment may post improved results in Q2 2013.

Are Plastic Clamshells in Decline?

A large business for Sonoco Products is in producing plastic clamshells. These are part of its protective packaging segment. Much of Sonoco Products' material for this segment is sourced through its Alloyd business. However, volumes were down 9% for Alloyd. This lead to speculation during the Q1 2013 conference call about possible structural changes in protective packaging industry away from clamshells. The company noted that this decline in volumes was mostly due to customers delaying several product launches. However, as anyone who has been frustrated in opening a plastic clamshell can attest, clamshells are rather user unfriendly. Investors should be on the lookout to see if there is indeed a secular shift away from these packages.

Conclusion

Sonoco Products seems to be a solid stock for risk-averse investors. The company has a long history of ! growing i! ts dividend and has mundane, but safe, business model.

I would however wait for a pullback before starting a position. The stock is currently trading for a 18 PE ratio, which is fairly high for a slow grower like Sonoco Products. Using the above mentioned 6% EPS growth rate, this leads to a PEG ratio of around 3.0X, which is again somewhat inflated. Q2 2013 earnings are also just around the corner, which should lead to more clarity in regards to the anticipated Q3 and Q4 EPS growth.

Disclaimer: The opinions in this article are for informational purposes only and should not be construed as a recommendation to buy or sell the stocks mentioned. Please do your own due diligence before making any investment decision.

Source: Sonoco Products: A 3.60% Yield And Potential H2 2013 EPS Growth

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. (More...)

1 Weight-Loss Drug That Investors Forgot

You know Belviq and Qsymia and Contrave and Empatic, but do you recall the still most widely used weight-loss drug of all? It seems almost like ancient history now, but back in 1999 the Food and Drug Administration approved Roche's (NASDAQOTH: RHHBY  ) Xenical. 

Fast-forward to 2013. Many investors are excited about the prospects for a new weight-loss drug on the market from Arena Pharmaceuticals  (NASDAQ: ARNA  ) . Many are disappointed by the sluggish start for VIVUS' (NASDAQ: VVUS  ) Qsymia. And some are hopeful for potential drugs on the way from Orexigen Therapeutics (NASDAQ: OREX  ) .

Meanwhile, Xenical still reigns as the most-used obesity drug. Are there lessons to be learned from this weight-loss drug that investors likely forgot? Let's take a look.

The tortoise and the hare
Xenical quickly became one of Roche's top-selling drugs and "exceeded expectations by a substantial margin" in the U.S. after its launch. In 2001, sales for Xenical reached $600 million -- not bad, but not blockbuster status. Unfortunately, that also marked the peak for the drug. By 2004, sales were down to $464 million, and GlaxoSmithKline  (NYSE: GSK  ) bought the rights to sell the drug over-the-counter in the U.S. under the brand name Alli.

The lesson for today's investors is that of the old story about the tortoise and the hare. A quick start doesn't always win the race. That could be comforting for VIVUS investors. Qsymia sales in the first quarter totaled $4.1 million, well below analysts' expectations. This slow start added fuel to the fire for efforts by activist investor First Manhattan to replace VIVUS' management team.

Arena investors were excited about initial sales results for Belviq. That quick start is good news, but the real key for Arena will be to sustain solid sales. Remember: Xenical started out as a hare and morphed into a tortoise.

The real tortoise of today could be Orexigen. While Arena and VIVUS battle with their drugs already on the market, Orexigen's Contrave has yet to gain FDA approval. The company hopes to secure that go-ahead in 2014. If its large cardiovascular study goes well, Orexigen could be in position to succeed over the long run -- especially with its partnership with Takeda for commercialization of Contrave.

Market potential is still just potential
The number of obese individuals was high in the early years for Xenical. GlaxoSmithKline and Roche touted the market potential of 129 million Americans at risk for serious health concerns due to being obese or overweight. In 1999, analyst Rene Nordmann said that Xenical "will reach peak sales of up to $1 billion worldwide after five years." It didn't happen. 

GlaxoSmithKline put Alli (its non-prescription version of Xenical) up for sale in 2011 along with a block of other over-the-counter drugs, although the company delayed the sale due to manufacturing problems. Despite a big marketing push, sales disappointed to the point where Glaxo didn't even break out Alli sales beginning in 2010.

When Belviq gained FDA approval last year, some analysts pegged peak annual sales for the drug at $1 billion. In August, analyst Thomas Wei projected peak sales for Qsymia at $1.2 billion (although that estimate was well below Wei's initial projection of $3.6 billion in peak sales for the drug.)Analysts also think that Orexigen's Contrave could hit peak sales around $1 billion.

Deja vu? Maybe not. Times are different -- and so are the newer weight-loss drugs. However, the lesson from Xenical is still one to keep in mind: Market potential is still just potential.

Negatives add up
Perhaps the most important thing to learn from Xenical is that negatives add up. While the drug was proven to be effective in helping individuals lose weight, the side effects were and are absolutely yucky. 

Xenical works by preventing absorption of fat by the body. Unfortunately, that non-absorbed fat has to go somewhere. The drug's side effects include gas, diarrhea, intestinal cramping, and oily stools. These unpleasant aspects of taking Xenical contributed to its lack of sustained commercial success.

Today's group of weight-loss drugs have their own side effects. Patients taking Qsymia, for example, commonly experience numbness or tingling in parts of the body, dizziness, loss of taste or change in the way foods taste, insomnia, constipation, and dry mouth. Belviq's common side effects include headache, dizziness, fatigue, nausea, dry mouth, and constipation. Patients with diabetes also can experience low blood sugar, back pain, and cough. The biggest concern for Contrave is potential cardiovascular issues, which necessitated the study the company has under way.  

Negative effects of taking a drug can hurt its chances of becoming successful. That's not to say that side effects will derail Belviq, Contrave, or Qsymia. It's important, though, to not overlook these hurdles.

History rhymes
I like the old saying attributed to Mark Twain that "history doesn't repeat itself, but it does rhyme." Arena, Orexigen, and VIVUS aren't doomed to experience the same issues encountered by Xenical -- just as Xenical didn't have the same issues as Fen-Phen. However, the general lessons learned from the older drug still apply today. 

At this point, Arena appears to be on the better track to achieve its market potential and avoid missteps from Belviq's negatives. Like with the tortoise and the hare, though, only time will tell which company ultimately wins the race.

The best "tortoise" investment strategy is to pick great companies and stick with them for the long term. The Motley Fool's free report "3 Stocks That Will Help You Retire Rich" not only shares stocks that could help you build long-term wealth, but also winning strategies that every investor should know. Click here to grab your free copy today.

Emerging Stocks Join Currencies Lower on U.S. Jobs Data

Emerging-market stocks declined, extending a weekly slump, and currencies fell as stronger-than-forecast U.S. jobs data boosted speculation the Federal Reserve will pare back monetary stimulus in the world's biggest economy.

The MSCI Emerging Markets Index slid 0.5 percent to 917.58, sending its weekly retreat to 2.4 percent. The Borsa Istanbul Stock Exchange National 100 Index (XU100) led losses among developing nations, while the lira weakened to a record low. Twenty two out of the 24 currencies tracked by Bloomberg fell. Gold producers paced a slump in South Africa's benchmark stock index as the metal sank amid a U.S. dollar rally. The premium investors demand to own emerging-market debt over U.S. Treasuries tumbled 15 basis points, according to JPMorgan Chase & Co.

Stocks erased gains after government data showed that U.S. employment increased more than forecast in June, wages picked up and the U.S. jobless rate held close to a four-year low as the world's largest economy weathered the effect of higher taxes and federal budget cuts. Today's report gives Fed Chairman Ben S. Bernanke more reason to start trimming bond purchases intended to spur the economy and lower unemployment.

Emerging markets are "looking at it more from the standpoint of implications for Fed policy, thinking that this may lead to the Fed tapering bond purchases more quickly," Peter Jankovskis, who helps oversee $3 billion as co-chief investment officer of Lisle, Illinois-based Oakbrook Investments LLC, said by phone. "Anything that removes support from the economy is going to be negative for the world economy, which would certainly impact emerging markets."

Biggest Losses

All 10 groups in the MSCI Emerging Markets Index fell, led by commodity and phone shares. The broad measure has slumped 13 percent this year, compared with an 8.3 percent gain in the MSCI World Index. The developing-nation gauge trades at 9.6 times projected earnings, lower than the MSCI World's valuation of 13.3, according to data compiled by Bloomberg.

The iShares MSCI Emerging Markets Index exchange-traded fund slid 0.6 percent to $37.34. The Chicago Board Options Exchange Emerging Markets ETF Volatility Index, a measure of options prices on the fund and expectations of price swings, slipped 3.9 percent to 29.56.

The Ibovespa (IBOV) fell 1.2 percent as steelmaker Usinas Siderurgicas de Minas Gerais SA and iron-ore producer Vale SA dropped as metals declined. The real depreciated even after Brazil's central bank sold $1.9 billion worth of currency swap contracts today to stem the currency's decline in the 12th day of intervention in the past five weeks.

The Micex Index (INDEXCF) reversed earlier gains OAO Magnit, Russia's biggest food retailer, tumbled 2.8 percent. OAO Raspadskaya, a Russian producer of coal for steelmaking, surged 4.8 percent.

Gold Producers

Turkey's benchmark gauge slumped to the lowest level since June 25, while the lira retreated 1.3 percent. Poland's WIG20 Index dropped 1.5 percent and Hungarian shares gained. The FTSE/JSE Africa All Shares Index slumped 2.1 percent in Johannesburg as DRDGOLD Ltd. and AngloGold Ashanti Ltd. plunged.

China's benchmark stock index advanced, capping its first weekly gain since May, as rallies in property firms and material producers overshadowed losses in energy shares and drugmakers. China Vanke Co. climbed 4.1 percent after the developer's sales increased last month.

India's S&P BSE Sensex (SENSEX) extended this week's advance to 0.5 percent, a second straight week of gains. Hindustan Unilever, India's biggest household products maker, rose to a record. Reliance Industries Ltd., owner of the world's largest refining complex, added 2.2 percent, the biggest boost to the Sensex.

The extra yield for emerging-market debt over U.S. Treasuries tumbled to 319 basis points, according to JPMorgan's EMBI Global Diversified Index.

Top Managed Healthcare Companies To Buy For 2014

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When Will Amazon Make the Big Change?

Last quarter, Amazon (NASDAQ: AMZN  ) managed a 4.9% operating margin in the U.S., while its international business posted a negative 0.2% operating margin. The company has always worked on the premise that lower margins through more selling still equals more, but the rut doesn't seem to have broken yet. Back in 2010, analysts were expecting margins to begin their rise and finally reward investors who had watched as the company pushed promotions and innovation.

Those big gains have yet to come, but recent analysis has seen some prices starting the slow climb. Does that mean that the end of thin times is upon us, or is there still a wait for the big jump?

Blood from the stone
Amazon lost money last year. The company recorded a net income of negative $39 million, even though it managed revenue of $61 billion. Even with that loss, the company has continued to see strength in its stock. Shares have risen 25% over the last 12 months, beating out the S&P 500 return of 19%.

The trick is that the companies that Amazon is beating down have done even worse. Barnes & Noble (NYSE: BKS  ) and Best Buy (NYSE: BBY  ) are succumbing to the pressure, both companies losing out over their last financial years. The difference is that Amazon seems to be in control of its losses, while its competition is just being jerked around by the online retailer.

Best Buy, at least, has made a move to try to staunch the bleeding. The company has been price-matching Amazon and other retailers since Christmas 2012, and in March it implemented a low-price guarantee program that offers shoppers 15 days after purchase to find a lower price from a competitor.

Even with that level of competition, Best Buy can't match the huge revenue advantage that Amazon has. By selling so many products, Amazon can offer loss-making prices on some, while generating enough free cash to keep pushing by adjusting the prices of its more popular items. The result makes the company seemingly unstoppable.

Increasing the flow
Now Amazon may be making a move to get more out of the physical goods that it sells. While management has highlighted the investment cost of the Kindle and its digital content, a report from The New York Times pointed out that many book prices have started to rise. The theory is that Amazon is realizing that it's moved beyond the reach of serious competition, and no longer needs to fight every battle with its full force.

That could mean more coming in for investors, but I think it's too soon to tell. Amazon has replied that its prices are as low now as they've ever been, and the price changes are still too spotty to be considered a major trend. It's still an encouraging sign, and it may be that it highlights how close Amazon is to making the price shift change. For now, investors should continue to enjoy the wild ride that Amazon continues to offer, while pushing the company for a more aggressive pricing system. I'll be looking for a more substantial difference by the end of the year, as the Nook and other competitors fade into the history books.  

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What Canada Is Doing to Improve Pipeline Safety

Last week, the Canadian government announced that it will enforce more stringent standards for pipelines under its jurisdiction.

The Honorable Joe Oliver, Canada's Minister of Natural Resources, said that pipelines will need to have the financial capability to "respond to any incident and remedy damage."

Major crude oil pipelines, for instance, must have "a minimum financial capability of $1 billion," he said. He also announced additional measures, including new safety rules for pipeline operators and new financial penalties for violators, which are set to come into effect shortly.

According to Canada's Department of Natural Resources, some of these additional measures include:

1) New fines that will soon come into force that will preventatively address contraventions quickly so that larger issues do not arise in the future. The penalties to companies and individuals for a range of infractions can range from $25,000 to a maximum of $100,000;
2) Requiring companies to appoint an accountable senior officer whose duty is to ensure their management system and programs are in compliance;
3) Ensuring companies' emergency and environmental plans are transparent and easily available to the public; and
4) Enshrining in law the 'polluter pays' principle explicitly in law. Currently it is only implicit; Some pipelines are regulated by the federal government and others by the province.

Why pipeline safety is crucial
The announcement came at the end of a month in which a seemingly unusual number of Canadian pipeline spills were reported. In early June, Apache (NYSE: APA  ) reported a pipeline spill in northern Alberta that released 2.5 million gallons of contaminated water, impacting an area of about 100 acres.

Shortly thereafter, Kinder Morgan's (NYSE: KMP  ) Trans Mountain pipeline discharged about 12 barrels of crude oil in southwestern British Columbia near the town of Kingsvale. The pipeline, which transports crude oil and refined products from Alberta to Canada's west coast, suffered another accident last week, when an unspecified amount of oil leaked near the town of Hope in British Columbia, some 100 miles east of Vancouver. Kinder Morgan shut the pipeline down on Thursday, as it investigates the cause of the spill, and begins the cleanup process.

Other spills reported in recent weeks include an Enbridge (NYSE: ENB  ) pipeline spill north of Cheecham, Alberta, which leaked some 750 barrels of light, synthetic crude oil, and a pipeline operated by Penn West (NYSE: PWE  ) that spilled more than 5,000 liters of oil in northern Alberta, affecting surface waters and muskeg lands covering an estimated area of roughly 2.5 square kilometers.

The bottom line
In light of these and other recent spills, Canada's announcement to implement new standards for pipelines is an important first step in tackling the issue of pipeline safety. Though some pipeline leaks are unpreventable, others can be prevented by requiring operators to install advanced leak detection systems and/or conduct daily aerial or foot patrols, for instance.

While spills are always a negative for the companies involved, the people affected, and the surrounding environment, they're, at least, leading to more intense scrutiny of the large network of pipelines that crisscross North America.

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Stocks and the Federal Reserve -- Necessary Pandemonium

Let me be clear from the outset: The Federal Reserve has not only been justified in its aggressive stance toward monetary policy over the past five years, it's also been effective.

Fears of inflation were wrong. Completely. Price appreciation isn't too high; the problem is that it's too low.

And the idea that the benefits of the central bank's policies -- namely, the three successive rounds of quantitative easing -- were outweighed by their detriments, exhibits abject ignorance about the source of our economic malaise. By driving down long-term interest rates, the Fed allowed tens of thousands of homeowners to refinance their mortgages, and thereby free up income for consumer spending. The latter, mind you, accounts for more than 70% of our gross domestic product.

You can see this in action by reading the quarterly reports of any of the nation's largest banks. In the first quarter of this year, for example, Wells Fargo underwrote $109 billion in mortgages, the vast majority of which were refinances. The same was true at Bank of America, though to a slightly smaller degree, given that it originated a total of only $24 billion in home loans over the same three-month period.

But that being said, people who argue that the Fed's policies don't have negative side effects are also deluding themselves. When you inject $2.5 trillion of liquidity into an economy, it's going to inflate asset prices, which is exactly what happened.

Between the beginning of last September, the same month the Fed announced QE3, and the middle of this past May, the Dow Jones Industrial Average (DJINDICES: ^DJI  ) and the S&P 500 (SNPINDEX: ^GSPC  ) climbed by 18% and 19%, respectively. And if you want a more extreme example of this, just cast your eyes across the Pacific to Japan, where the benchmark Nikkei (NIKKEIINDICES: ^NI225  ) soared more than 80% since the government rolled out a similar, albeit more extreme version of the same thing.

Why are higher asset prices a bad thing? In and of themselves, they aren't. One could even make a convincing argument that they've been good. The accompanying wealth effect makes consumers feel more confident and, therefore, willing to, well, consume -- which, again, as I've already noted is the bedrock of our economy.

Where we run into issues, however, is on the downside, triggered by the inevitable pullback in monetary easing. And this is where the necessary pandemonium referenced in the title comes in.

As you can see in the table below, in June, the first full month after Fed Chairman Ben Bernanke intimated that the central bank could soon begin to taper its $85 billion in monthly bond purchases, things went haywire. The average daily movement of the Dow nearly doubled to 136 points, and the blue-chip index either advanced or declined by a triple-digit margin in 80% of the trading sessions.

Month

Percent of Days of Triple-Digit Moves on the Dow

Average Daily Move

January	5%	61
February	37%	77
March	10%	54
April	32%	74
May	36%	73
June	80%	136

Source: Yahoo! Finance

The big question now, of course, is what does this mean going forward?

To be clear, the Fed hasn't said that it will taper its bond purchases, only that it may soon begin to do so. Consequently, once it does finally make that decision, which could happen at any time now depending on how the economy performs, I think it's safe to assume that volatility could even pickup further. And it's for this reason that investors would do themselves a favor over the next few months by temporarily misplacing the password to their brokerage accounts, as buying and selling in this type of environment will almost invariably lead to substandard performance.

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.

Fiat Moves Closer to a Merger With Chrysler

Fiat (NASDAQOTH: FIATY  ) CEO Sergio Marchionne has made no secret of the fact that he wants to merge the Italian auto giant with Detroit's Chrysler. Fiat took control of Chrysler in the wake of its 2009 bailout, and has remade the scrappy Detroit icon's products into a successful and strong-selling lineup.

Now, Fiat is moving to acquire the rest of Chrysler, but there's an obstacle: the UAW, which holds the shares Fiat needs to buy. In this video, Fool.com contributor John Rosevear explains what needs to happen for the merger to go forward – and why the dispute between Fiat and the UAW has gone to court.

China is already the world's largest auto market – and it's set to grow even bigger in coming years. A recent Motley Fool report, "2 Automakers to Buy for a Surging Chinese Market", names two global giants poised to reap big gains that could drive big rewards for investors. You can read this report right now for free – just click here for instant access.

Don't Get Too Worked Up Over Artesian 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 Artesian Resources (Nasdaq: ARTN.A  ) , 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, Artesian Resources burned $0.5 million cash while it booked net income of $9.0 million. That means it burned through all its revenue and more. That doesn't sound so great. 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 Artesian 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 17.6% of operating cash flow coming from questionable sources, Artesian 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 17.1% of cash flow from operations. Overall, the biggest drag on FCF came from capital expenditures. Artesian Resources investors may also want to keep an eye on accounts receivable, because the TTM change is 4.8 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.

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We can help you keep tabs on your companies with My Watchlist, our free, personalized stock tracking service.

Add Artesian Resources to My Watchlist.

Can Barnes & Noble Bounce Back?

Last Tuesday, shares of Barnes & Noble (NYSE: BKS  ) plummeted by around 17% after the company posted terrible quarterly results.

However, the stock has risen nearly 9% so far this week on hopes the company might actually be able to turn things around.

But there are a few reasons it may not be a good idea to buy into this optimism, says Fool contributor Steve Symington in the following interview with the Fool's Erin Miller.

What do you think? Please watch the video to get Steve's take, and let us know in the comments section below whether you believe Barnes & Noble might actually be able to dig itself out of this hole.

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Hot Financial Companies To Buy Right Now

LONDON -- The shares of�Pearson� (LSE: PSON  ) (NYSE: PSO  ) were flat at 1,146p early this afternoon after the�Financial Times�publisher reported first-quarter sales rising 3%, to 拢1.2bn.

Pearson, which also publishes the�Penguin�books, revealed it expects operating profits for 2013 to be broadly similar to 2012, or 82p per share, in line with market expectations.

The company confirmed that profits will be lower in the first half of 2013, however, due to the phasing-in of 拢150m of restructuring costs to�"reshape the company,"�and tackle new opportunities in digital print and developing markets.

The�Financial Times�segment of Pearson's business reported a 4% increase in digital subscriptions to 328,000, but faced�"weak trading conditions for advertising"�according to the company.

Hot Financial Companies To Buy Right Now: Heritage Financial Group(HBOS)

Heritage Financial Group, Inc. operates as the holding company for HeritageBank of the South that provides retail and commercial banking services in southwest Georgia and north central Florida. It offers savings and checking accounts, money market deposit accounts, NOW and demand accounts, and certificates of deposit. The company?s loan portfolio consists of one- to four-family residential real estate loans; commercial and multi-family real estate loans; farmland loans; construction and development loans; commercial business loans; and consumer loans, including home equity lines of credit, new and used auto loans, boat and recreational vehicle loans, and loans secured by deposit accounts. In addition, it engages in the sale of securities and insurance products to customers through an agreement with a third-party broker-dealer. The company was founded in 1955 and is headquartered in Albany, Georgia.

Hot Financial Companies To Buy Right Now: Oremex Resources Inc. (ORM.V)

Oremex Silver Inc., a development stage company, engages in the exploration and development of mineral properties in Mexico. The company primarily holds interest in the Tejamen Silver property consisting of 22 exploration concessions covering approximately 1,672 hectares located northwest of the city of Durango, Mexico. It also holds interest in the San Lucas silver-lead-zinc property consisting of 18 mineral concessions covering approximately 925 hectares located north of the city of Durango, Mexico. The company was formerly known as Oremex Resources Inc. and changed its name to Oremex Silver Inc. in September 2011. Oremex Silver Inc. was founded in 1995 and is based in Toronto, Canada.

Best Value Companies For 2014: GFI Group Inc. (GFIG)

GFI Group Inc. provides wholesale brokerage, clearing, electronic execution, and trading support products for financial markets. The company offers brokerage and trade execution services, clearing services, market data and trading platform, and other software products to institutional customers. The company provides brokerage services in fixed income derivatives, bond instruments, and other related products; financial instruments, including foreign exchange options, exotic options, non-U.S. Dollar interest rate swaps and options, repurchase agreements, forward and non-deliverable forward contracts, and government and municipal bond options; cash-based and derivative equity products, such as the U.S. domestic and international equity stocks, global depositary receipts, American depositary receipts, and equity derivatives; and cash-based and derivative commodity, and energy products comprising oil, natural gas, biofuel, electricity, wet and dry freight derivatives, dry physi cal freight, precious metals, coal, property derivatives, emissions, ethanol, and soft commodities. It also offers clearing, brokerage, settlement, and back-office services to proprietary traders, brokers, market makers, and hedge funds; provides capital to start-up trading groups, small hedge funds, market-makers, and individual traders; licenses multi-asset class electronic trading and order management software to brokers, exchanges, and traders in the commodities, fixed income, currencies, and equities markets; and offers FENICS Professional, a suite of price discovery, price distribution, trading, risk management, and straight-through processing components. The company primarily serves investment and commercial banks, large corporations, asset managers, insurance companies, hedge funds, and proprietary trading firms in the Americas; Europe, the Middle East, and Africa; and Asia. GFI Group Inc. was founded in 1987 and is headquartered in New York, New York.

Best Prefered Companies To Watch For 2014

The smart-TV market could be a $100 billion opportunity for such tech companies as Apple and Google. In this video, Andrew Tonner looks at both companies and what they may roll out in the future.

Apple is likely to introduce its iTV first, Andrew says. The company has brand strength and premium pricing abilities, so this could be the next chapter of innovative (and profitable) products Apple is known for. A successful launch wouldn't hurt the stock price, either. Google, meanwhile, will probably roll out a low-cost alternative based on its Android system after Apple rolls out iTV.�

Another interesting development is Google's slow but relentless expansion of its fiber technology around the country. The continuing rollout could dovetail with its smart-TV offering and challenge the iTV. Andrew says both companies will almost certainly bring disruptive technology to the TV market and reward investors accordingly.

Best Prefered Companies To Watch For 2014: Foran Mining Corporation(FOM.V)

Foran Mining Corporation engages in the acquisition, exploration, and development of mineral properties in the Flin Flon and Snow Lake mining belts of central Canada. The company primarily explores for zinc, copper, gold, and silver, as well as other base metals. Its principal property includes a 100% interest in the McIlvenna Bay property consisting of 30 claims covering 20,382 hectares located in east central Saskatchewan, west of Flin Flon, Manitoba. Foran Mining Corporation was founded in 1989 and is headquartered in Vancouver, Canada.

Best Prefered Companies To Watch For 2014: Xtierra Inc (XAG.V)

Xtierra Inc. engages in the exploration and development of precious and base metal properties in Mexico. The company primarily explores for silver, zinc, lead, copper, and gold. It principally holds a 100% ownership interest in the Bilbao project that consists of 9 exploitation concessions covering an area of approximately 1,406.7 hectares in the Panfilo Natera district of Zacatecas. The company is headquartered in Toronto, Canada.

Top 5 Energy Companies To Own For 2014: Accelrate Pwr Sys Inc (AXP.V)

Goldstrike Resources Ltd. engages in the exploration of gold properties in Canada. The company principally holds interests in 24 gold exploration properties totaling 3756 claims covering approximately 78000 hectares located in Yukon. Its properties are located in White Gold District, Yukon Tanana metamorphic belt, Nadaleen Gold Trend/Rackla Gold Belt, Selwyn Basin, Red Mountain-Dublin Gulch district, and Rockhaven Klaza area. The company was formerly known as AccelRate Power Systems Inc. and changed its name to Goldstrike Resources Ltd. on June 20, 2011. Goldstrike Resources Ltd. was founded in 1989 and is based in Vancouver, Canada.

Best Prefered Companies To Watch For 2014: United Community Bancorp(UCBA)

United Community Bancorp operates as the holding company for the United Community Bank that provides banking products and services to individuals and businesses in southeastern Indiana. It offers a range of deposit instruments, including noninterest-bearing demand accounts, such as checking accounts; interest-bearing accounts, consisting of NOW and money market accounts; regular savings accounts; and certificates of deposit, as well as municipal deposits. It also originates one- to four-family residential real estate, multi-family real estate, and nonresidential real estate and land loans, as well as construction and commercial loans. In addition, the company provides a range of consumer loans consisting of home equity loans and lines of credit, as well as loans secured by savings accounts or certificates of deposit (share loans); new farm and garden equipment, automobile, and recreational vehicle loans; and secured and unsecured personal loans. The company is headquartere d in Lawrenceburg, Indiana. United Community Bancorp is a subsidiary of United Community MHC.

Best Prefered Companies To Watch For 2014: Ocwen Financial Corporation(OCN)

Ocwen Financial Corporation, through its subsidiaries, provides residential and commercial mortgage loan servicing, special servicing, and asset management services in the United States and internationally. The company provides loan servicing, including asset management and resolution services primarily to owners of subprime residential mortgages. It also invests in subprime residential loans held for resale; and is involved in subprime residual mortgage backed trading securities related to subprime loan origination operation and whole loan purchase and securitization activities, as well as engages in the management of residential assets. Ocwen Financial Corporation was founded in 1988 and is headquartered in Atlanta, Georgia.

Advisors' Opinion:

• [By Ed Carson]

  Ocwen is one of several highflying mortgage loan servicing firms reaping huge growth as bigger lenders unload home loans, especially riskier debt.

  Analysts expect Ocwen to report an 82% EPS gain for Q4, with triple-digit gain in every quarter of 2013.

  Ocwen in October won ResCap's massive loan servicing unit, outbidding Nationstar Mortgage (NSM). Ocwen's shares shot up 34% that month, but then began consolidating. Some investors wondered if the easy pickings were over for the loan servicing upstarts. But Ocwen vaulted nearly 10% last week, back near its highs, after Nationstar snapped up a huge chunk of loans from BofA. It was a timely reminder that Bank of America has wanted to slash its risky mortgage portfolio.

  Nationstar rose 14% for the week, even after shaving gains from Tuesday's all-time high.

Best Prefered Companies To Watch For 2014: Running Fox Resource Corp. (RUN.V)

Running Fox Resources Corporation, a resource sector company, engages in the exploration and development of mineral resource properties in Canada. The company owns 100% interests in the Brett Gold and Silver Project located in the north Okanagan region of southwest British Columbia. It also has an option interest in the Pincher Creek oil and gas Project located in Alberta. The company was incorporated in 1981 and is based in Claresholm, Canada.

Top 5 Semiconductor Stocks To Own Right Now

I went out on a limb last week, and now it's time to see how that decision played out.

I predicted that Stratasys (NASDAQ: SSYS  ) would close higher on the week. The maker of 3-D printers was a hot stock last year before cooling off in 2013, but I figured its quarterly report on Monday could get the bullish sentiment rolling again. It was a well-received report, and Stratasys went on to inch higher in four of the five trading days. The stock rose nearly 6% on the week. I was right. I predicted that the tech-heavy Nasdaq would outperform the Dow Jones Industrial Average. (DJINDICES: ^DJI  ) . This has been a tricky call lately, so how did it play out this time? Well, the market had a strong run this week, fueled by encouraging corporate developments. Secondary stocks led the way with Nasdaq soaring 1.8% on the week. The Dow managed to close just 1.6% higher. I was right. My final call was for Applied Materials (NASDAQ: AMAT  ) to beat Wall Street's income estimates in its latest quarter. The provider of gear, services, and software to assist in the making of advanced semiconductors, flat-panel displays, and solar photovoltaic products companies has been posting blowout quarterly results over the past year, and I was banking on seeing the trend continue. Analysts were looking for a profit of $0.13 a share during the quarter, and Applied Materials came through with earnings of $0.16 a share. I was right.

Three out of three? Awesome! That makes me 11 of 12 over the past four weeks.

Top 5 Semiconductor Stocks To Own Right Now: Xilinx Inc (XLNX)

Xilinx, Inc. (Xilinx), incorporated on February 5, 1984, designs, develops and markets programmable platforms. These programmable platforms have a number of components, including integrated circuits (ICs) in the form of programmable logic devices (PLDs), including Extensible Processing Platforms (EPPs); software design tools to program the PLDs; targeted reference designs; printed circuit boards, and intellectual property (IP), which consists of Xilinx and various third-party verification and IP cores. In addition to its programmable platforms, Xilinx provides design services, customer training, field engineering and technical support. The Company�� PLDs include field programmable gate arrays (FPGAs), complex programmable logic devices (CPLDs) that its customers program to perform logic functions, and EPPs. Xilinx�� products are offered to electronic equipment manufacturers in end markets, such as wired and wireless communications, industrial, scientific and medical, aerospace and defense, audio, video and broadcast, consumer, automotive and data processing. The Company sells its products globally through independent domestic and foreign distributors and through direct sales to original equipment manufacturers (OEMs) by a network of independent sales representative firms and by a direct sales management organization. In January 2011, the Company acquired AutoESL Design Technologies, Inc. In August 2012, the Company acquired embedded Linux solutions provider PetaLogix.

Product Families

The 7 series devices that comprise the Company�� 28-nanometer (nm) product families are fabricated on a high-K metal gate 28-nm process technology. These devices are based on an architecture, which enables design and IP portability and re-use across all families, as well as provides designers the ability to achieve the appropriate combination of I/O support, performance, feature quantities, packaging and power consumption to address a range of applications. The 7 series devices consist of! three families: Virtex-7 FPGA, Kintex-7 FPGAs and Artix-7 FPGAs. The Zynq-7000 family is the family of Xilinx EPPs. The Virtex-6 FPGA family consists of 13 devices and is the sixth generation in the Virtex series of FPGAs.

Virtex-6 FPGAs are fabricated on a high-performance, 40-nm process technology. There are three Virtex-6 families: Virtex-6 LXT FPGAs, Virtex-6 SXT FPGAs and Virtex-6 HXT FPGAs. The Spartan-6 family is the PLD industry�� 45-nm high-volume FPGA family, consisting of 11 devices in two product families: Spartan-6 LX FPGAs and Spartan-6 LXT FPGAs. The Virtex-5 FPGA family consists of 26 devices in five product families: Virtex-5 LX FPGAs for logic-intensive designs, Virtex-5 LXT FPGAs for high-performance logic with serial connectivity, Virtex-5 SXT FPGAs for high-performance DSP with serial connectivity, Virtex-5 FXT FPGAs for embedded processing with serial connectivity and Virtex-5 TXT FPGAs for high-bandwidth serial connectivity. Prior generation Virtex families include Virtex-4, Virtex-II Pro, Virtex-II, Virtex-E and the original Virtex family. Spartan family FPGAs include 90-nm Spartan-3 FPGAs, the Spartan-3E family and the Spartan-3A family. Prior generation Spartan families include Spartan-IIE, Spartan-II, Spartan XL and the original Spartan family.

Design Platforms and Services

The Company offers three types of programmable platforms. The Base Platform is the delivery vehicle for all of its new silicon offerings used to develop and run customer-specific software applications and hardware designs. The Base Platform consists of FPGA silicon; Integrated Software Environment (ISE) Design Suite design environment; integration support of optional third-party synthesis, simulation, and signal integrity tools; reference designs; development boards and IP. The Domain-Specific Platform targets one of the three primary Xilinx FPGA user profiles: the embedded processing developer; the DSP developer; or the logic/connectivity developer. The Market-S! pecific P! latform enables software or hardware developers to build and run their specific application or solution. Built for specific markets, such as automotive, consumer, aerospace and defense, communications, audio, video and broadcast, industrial, or scientific and medical, the Market-Specific Platform integrates both the Base and Domain-Specific Platforms.

During April 2012, Xilinx introduced the Vivado Design Suite. Vivado supports Xilinx 7 series FPGAs and Zynq EPPs. Xilinx and various third parties offer hundreds of no charge and fee-bearing IP core licenses covering Ethernet, memory controllers Interlaken and PCIe interface, as well as domain-specific IP in the areas of embedded, DSP and connectivity, and market-specific IP cores. The Company also offers development kits, including hardware, design tools, IP and reference designs. Xilinx offers a range of configuration products, including one-time programmable and in-system programmable storage devices to configure Xilinx FPGAs. These programmable read-only memory (PROM) products support all of the Company�� FPGA devices. Xilinx and certain third parties have developed and offer a ecosystem of IP, boards, tools, services and support through the Xilinx alliance program. Xilinx also works with these third parties to promote its programmable platforms through third-party tools, IP, software, boards and design services. Xilinx engineering services provide customers with engineering, ranging from hands-on training to full design creation and implementation.

The Company competes with Altera Corporation, Lattice Semiconductor Corporation and Microsemi Corporation.

Top 5 Semiconductor Stocks To Own Right Now: Analog Devices Inc (ADI.O)

Analog Devices, Inc. (Analog Devices), incorporated on January 18, 1965, is engaged in the design, manufacture and marketing of a range of analog, mixed-signal and digital signal processing integrated circuits (ICs). The Company produces a range of products, including data converters, amplifiers and linear products, radio frequency (RF) ICs, power management products, sensors based on micro-electro mechanical systems (MEMS) technology and other sensors, and processing products, including DSP and other processors, which are designed to meet the needs of a base of customers. The Company's products are embedded inside many different types of electronic equipment, including industrial process control systems; instrumentation and measurement systems; wireless infrastructure equipment, and aerospace and defense electronics. The Company designs , manufactures and markets a range of ICs, which incorporate analog, mixed-signal and digital signal processing technologies. The Comp any's product portfolio includes both general-purpose products used by a range of customers and applications, as well as application-specific products. On March 30, 2012, the Company acquired Multigig, Inc.

Analog Products

The Company's product portfolio includes several thousand analog ICs. The Company's analog IC customers include original equipment manufacturers (OEMs) and customers who build electronic subsystems for integration into larger systems. The Company is a supplier of data converter products. Data converters translate real-world analog signals into digital data and also translate digital data into analog signals. The Company is also a supplier of amplifiers. Amplifiers are used to condition analog signals. The Company provides precision, instrumentation, intermediate frequency/radio frequency (RF), broadband, and other amplifiers. The Company also offers a range of precision voltage references, which are used in a range of application s. The Company's analog product line also includes a range! p! ortfolio of RF ICs covering the RF signal chain, from RF function blocks, such as phase locked loops, frequency synthesizers, mixers, modulators, demodulators, and power detectors, to broadband and short-range single chip transceiver solutions.

The Company's RF ICs support the requirements of cellular infrastructure and a range of applications in the Company's target markets. Also within the Company's analog technology portfolio are products, which are based on MEMS technology. This technology enables the Company to build small sensors, which incorporate an electromechanical structure and the supporting analog circuitry for conditioning signals obtained from the sensing element. The Company's MEMS product portfolio includes accelerometers used to sense acceleration, gyroscopes used to sense rotation, inertial measurement units used to sense multiple degrees of freedom combining multiple sensing types along multiple axis, and MEMS microphones used to sense audio . The Company's current revenue from MEMS products is derived from the automotive end market. In addition to the Company's MEMS products, its other analog product category includes isolators. The Company's isolators have been designed for applications, such as universal serial bus isolation in patient monitors, where it allows hospitals and physicians to adopt the advances in computer technology to supervise patient health and wirelessly transmit medical records. In smart metering applications, the Company's isolators provide electrostatic discharge performance. In satellites, where any malfunction can be catastrophic, the Company's isolators help protect the power system while enabling designers to achieve small form factors. Power management & reference products make up the balance of the Company's analog sales. Those products, which include functions such as power conversion, driver monitoring, sequencing and energy management, are developed to complement analog signal ch ain components across core market segments from micro ! power,! e! nergy-s! ensitive battery applications to power systems in infrastructure and industrial applications.

Digital Signal Processing Products

Digital Signal Processing products (DSPs) complete the Company's product portfolio. DSPs are optimized for numeric calculations, which are essential for instantaneous, or real-time, processing of digital data generated, from analog to digital signal conversion. The Company's DSPs are designed to be fully programmable and to execute specialized software programs, or algorithms, associated with processing digitized real-time, real-world data. Programmable DSPs are designed to provide the flexibility to modify the device's function using software. The Company's DSP IC customers write their own algorithms using software development tools provided by the Company and third-party suppliers. The Company's DSPs are designed in families of products, which share common architectures and therefore can execute the same software across a range of products. The Company's customers use the Company's products to solve a range of signal processing challenges across its core market and segment focus areas within the industrial, automotive, consumer and communications end markets. As an integrated part of the Company's customers' signal chain, there are other Analog Devices products connected to its processors, including converters, audio and video codecs and power management solutions.

The Company competes with Broadcom Corporation, Maxim Integrated Products, Inc., Cirrus Logic, Inc., Microchip Technology, Inc., Freescale Semiconductor, Inc., NXP Semiconductors, Infineon Technologies, ST Microelectronics, Intersil Corporation, Silicon Laboratories, Inc., Knowles Electronics, Texas Instruments, Inc. and Linear Technology Corporation.

5 Best Canadian Stocks To Invest In Right Now: NVIDIA Corp (NVDA.F)

NVIDIA Corporation (NVIDIA), incorporated on February 24, 1998, is engaged in creating the graphics chips used in personal computers (PCs). The Company operates in three segments: graphics processing unit (GPU) Business, professional solutions business (PSB) and consumer products business (CPB). Its mobile processors are used in cell phones, tablets and auto infotainment systems. Designers use GPUs to create visual effects in movies and create everything from golf clubs to jumbo jets. NVIDIA solutions are based on two technologies: the GPU and the mobile processor. GPUs are the engines of visual computing, the science and art of using computers to understand, create and enhance images. It has three GPU product brands: GeForce, which creates visual experiences for gamers; Quadro, which is engaged in visual computing for designers and digital artists, and Tesla, which accelerates applications for scientists and researchers. Tegra is its mobile processor and is built for a pplications ranging from smartphones, tablets and notebook PCs to televisions and cars. During the fiscal year ended January 29, 2012 (fiscal 2012), it acquired Icera Inc.In fiscal 2012, it launched Project Maximus, which uses the compute power of Tesla with the visualization power of Quadro to merge the design and simulation stages into one workstation. In May 2012, the Company and Intellectual Ventures announced that they jointly acquired a set of patents developed and owned by IPWireless. The portfolio comprises approximately 500 patents granted and pending in the wireless communications area, including concepts in LTE, LTE-Advanced and 3G/4G technologies.

GPU Business

The Company�� GPU business revenue includes primarily sales of its GeForce discrete and chipset products that support desktop and notebook PCs plus license fees from Intel and sales of memory products. It also accelerates video editing and high definition (HD), content creation by consumers. GeForce GPUs power PCs made by or distributed! ! by PC original equipment manufacturers (OEMs), in the world. Its media and communications processor (MCP) chipsets primarily comprised of its ION motherboard GPUs, a product reaching the end of its life cycle.

Professional Solutions Business

The Company�� PSB consists of its Quadro professional workstation products and its Tesla computing products. Its Quadro products are designed to deliver the graphics performance and application compatibility for professionals. Tesla applies the processing power of its GPUs to general-purpose computing problems. Quadro products add functionality, such as photorealistic rendering, to computer-aided design workstations, and are used in professional video editing applications and for generating special effects in movies. Tesla is used in supercomputing centers and in oil exploration; other applications include accelerating drug discovery, weather simulations and derivative price modeling.

Consumer P roducts Business

The Company�� CPB includes its Tegra system-on-chip products for smartphones, tablets, automotive infotainment systems, and other similar devices, and Icera baseband processors. The Tegra revenues are generated by sales in smart phones and tablets. CPB also includes license, royalty, other revenue and associated costs related to video game consoles and other digital consumer electronics devices. NVIDIA Tegra mobile products implement design techniques, both inside the chips and at the system level. These technologies enhance visual display capabilities, connectivity and minimize chip and system-level power consumption. During fiscal 2012, it launched Tegra 3, quad-core mobile computing chip, bringing PC levels of performance within the power envelope of a cellular phone chip. It also launched DirectTouch.

The Company competes with Advanced Micro Devices (AMD), Intel, Matrox Electronics Systems Ltd., VIA Technologies, Inc., ARM Hol dings plc, Broadcom Corporation, Freescale Semiconducto! r Inc! .,! Fujits! u Limited, Imagination Technologies Ltd., Intel, Marvell Technology Group Ltd., NEC Corporation, Qualcomm Incorporated, Renesas Technology Corp., Samsung Electronics Co. Ltd., Seiko Epson Corporation, ST-Ericsson, Texas Instruments Incorporated, Toshiba America Electronic Components, Inc., Imagination Technologies Group plc., HiSilicon Technologies Co., Ltd., Mediatek, Qualcomm Incorporated, Spreadtrum Communications Co., Ltd and ST-Ericsson.

Top 5 Semiconductor Stocks To Own Right Now: Texas Instruments Incorporated(TXN)

Texas Instruments Incorporated engages in the design and sale of semiconductors to electronics designers and manufacturers worldwide. The company?s Analog segment offers high-performance analog products comprising standard analog semiconductors, such as amplifiers, data converters, and interface semiconductors; high-volume analog and logic products; and power management semiconductors and line-powered systems. Its Embedded Processing segment includes DSPs that perform mathematical computations to process and enhance digital data; and microcontrollers, which are designed to control a set of specific tasks for electronic equipment. The company?s Wireless segment designs, manufactures, and sells application processors and connectivity products. Its Other segment offers smaller semiconductor products, which include DLP products that are primarily used in projectors to create high-definition images; and application-specific integrated circuits. This segment also provides handhe ld graphing and scientific calculators, as well as licenses technologies to other electronic companies. The company serves the communications, computing, industrial, consumer electronics, automotive, and education sectors. Texas Instruments Incorporated sells its products through a direct sales force, distributors, and third-party sales representatives. It has collaboration agreements with PLX Technology Inc.; Neonode, Inc.; and Ubiquisys Ltd. The company was founded in 1938 and is headquartered in Dallas, Texas.

Advisors' Opinion:

• [By Paul Goodwin]  

  How do they make their money? TXN makes the PA Duplexer Module and the CDMA PA that goes into every iPhone. With a PEG ratio of 0.2 reveals huge discount compared to peers. This is a cash rich company and one I feel will be a strong performer within the next year.

• [By Fabian]

  Texas Instruments investment returned 46.3% during the past year. The amount of investment is $403 Million. Miller reduced his TXN holdings by 25% during the last quarter of 2010. Since then the stock returned 11.1%. David Tepper also bought TXN during the third quarter.

Top 5 Semiconductor Stocks To Own Right Now: Micron Technology Inc.(MU)

Micron Technology, Inc., together with its subsidiaries, engages in the manufacture and marketing of semiconductor devices worldwide. Its products include dynamic random access memory (DRAM) products that provide data storage and retrieval, which include DDR2 and DDR3; and other specialty DRAM memory products, including DDR, SDRAM, DDR and DDR2 mobile low power DRAM, pseudo-static RAM, and reduced latency DRAM. The company also offers NAND flash memory products, which are electrically re-writeable and non-volatile semiconductor devices that retain content when power is turned off. In addition, it provides NOR flash memory products that are electrically re-writeable and non-volatile semiconductor memory devices; phase change memory products; and image sensor products. Micron Technology?s products are used in a range of electronic applications, including personal computers, workstations, network servers, mobile phones, flash memory cards, USB storage devices, digital still c ameras, MP3/4 players, and in automotive applications. It sells its products to original equipment manufacturers and retailers through internal sales force, independent sales representatives, and distributors, as well as through a Web-based customer direct sales channel. The company was founded in 1978 and is headquartered in Boise, Idaho.

Advisors' Opinion:

• [By Fitz Gerald]  

  The company's management has indicated a positive and more-balanced DRAM and NAND flash demand/supply outlook for 2011. The company also indicated a more-resilient near-term business model with low exposure to the weak PC DRAM segment (25 percent of revenues).

  Micron also indicated strong demand for NAND flash and price reductions consistent with learning curve cost reductions. With many smartphone and iPad/new Web tablets ramping, Micron management expects the benign pricing environment for NAND flash to continue in 2012.

Wall Street Got It Wrong -- but You Don't Have To

If you're in the macro know, there's no beating around the bush: Federal Reserve Chairman Ben Bernanke's statements this week were major market movers. But as the Dow dipped and the S&P shuddered, long-term investors have a huge reason to celebrate. Here's why.

Bernanke's big mouth
Analysts couldn't care less about financial forecasts and official press releases. When it came to this week's Federal Reserve statements, every eye was on Bernanke's Q&A session. Here, the man behind the money would be forced to leave his script and give off-the-cuff remarks to potentially revealing questions.

Did Ben burst into tears? Did he hint that his heyday was over? Did he recommend Bitcoins? Hardly. But he did make mention of a potential end: "In the next few meetings, we could take a step down in our pace of purchases" of mortgage-backed securities and long-term Treasuries.

That statement was enough to send bears roaring to the market. The Dow Jones Industrial Average (DJINDICES: ^DJI  ) dropped 1.35%, while the S&P 500 (SNPINDEX: ^GSPC  ) slumped 1.39% by the end of the day.

Source: Wikimedia Commons. 

But in his hurry to readjust, Mr. Market may have lost its long-term focus. An equally important statement, and one that received little financial fanfare, went a little something like this:

To support continued progress toward maximum employment and price stability, the [Federal Open Market Committee] expects that a highly accommodative stance of monetary policy will remain appropriate for a considerable time after the asset purchase program ends and the economic recovery strengthens. In particular, the Committee decided to keep the target range for the federal funds rate at 0 to 1/4 percent and currently anticipates that this exceptionally low range for the federal funds rate will be appropriate at least as long as the unemployment rate remains above 6-1/2 percent.

Buybacks or not, the Fed is in it to win it and will keep its monetary policy in place as long as it takes for our economy to legitimately pull itself out of its recession rut. And while Mr. Market might've ignored this news, it creates a unique investing opportunity for long-term investors.

Take a walk down market memory lane
The last time the U.S. unemployment rate dropped from 7.6% (our current rate) to 6.5% (the Fed's point of retreat) was between September 1992 and December 1993. In that 15-month period, the Dow Jones increased 14.9%, the S&P 500 soared 16.4%, and Michael Jordan scored his 20,000th career point. Not a bad year for positive numbers. But some of our most beloved blue chips headed even higher.

As retail sales rose 9.8%, McDonald's (NYSE: MCD  ) shares jumped 35%. As the Purchasing Managers Index increased 11.9%, General Electric (NYSE: GE  ) shares grew 41% while Intel (NASDAQ: INTC  ) rocketed 110% on 42% sales increases.

MCD data by YCharts

What happened in 1992 and 1993 was no financial fluke. Unemployment rates are a crucial economic indicator, and the Federal Reserve's recent statements underline that fact. As short-term Wall Street investors pocketed their profits and walked away from Wednesday's market, long-term investors know there's a lot more in store.

Learning from our past
Past markets are no predictor for future movements, but in this case, a 20-year-old history lesson helps put things in perspective. The Federal Reserve may back off on buybacks, and that will undoubtedly hurt the market. But Ben's only going to pull the plug if the markets are well on their way to making returns magnitudes higher than any one-day drop. And when that happens, long-term investors will sit back and enjoy the slight slump on their double- or triple-digit profits.

With the American markets reaching new highs, investors and pundits alike are skeptical about future growth. They shouldn't be. Many global regions are still stuck in neutral, and their resurgence could result in windfall profits for select companies. A recent Motley Fool report, "3 Strong Buys for a Global Economic Recovery," outlines three companies that could take off when the global economy gains steam. Click here to read the full report!

RPM International Keeps Dividend Steady

Specialty coatings manufacturer RPM International  (NYSE: RPM  ) announced today its second-quarter dividend of $0.225 per share, the same rate it's paid for the past three quarters after raising the payout almost 5% from $0.215 per share.

The board of directors said the quarterly dividend is payable on July 31 to the holders of record at the close of business on July 12. The increase made last October puts the speciality coatings maker in a rarified group of companies. It marked the 39th consecutive annual dividend increase RPM has made, which it says something less than 0.5% of all 19,000 publicly traded U.S. companies have achieved. Only 47 other companies besides RPM have consecutively paid an increasing annual dividend for this long or longer, it says.

The regular dividend payment equates to a $0.90-per-share annual dividend, yielding 2.8% based on the closing price of RPM international's stock on July 1.

RPM Dividend data by YCharts.

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Fresenius Falls on Proposed Cut in Medicare Payments

Fresenius Medical Care AG (FME) fell the most in more than four years in Frankfurt after the U.S. government proposed cutting payments to kidney dialysis center operators by 9.4 percent next year.

The shares dropped as much as 10 percent, the biggest intraday decline since October 2008. The stock was down 9.7 percent at 49.18 euros as of 9:11 a.m.

Much of the $1 billion reduction in payments is the result of a federal budget-balancing agreement. That deal targeted overspending on anemia drugs such as Amgen Inc. (AMGN)'s Epogen and Aranesp for patients in Medicare, the U.S. health plan for the elderly and disabled.

The U.S. government will consider phasing in the reduction over more than one year, the Health and Human Services Department said yesterday in a regulatory filing, citing concerns it may "impact beneficiary access to care." The proposal is subject to public comment and may change before taking effect.

"This is a very dramatic cut," Robert Sepucha, Bad Homburg, Germany-based Fresenius's senior vice president for government affairs in the U.S., said by telephone. "We're concerned it would push dialysis clinics under the cost of care, which is not the right thing for Medicare to be doing."

Medicare profit margins for dialysis payments are 3 percent to 4 percent this year, the Medicare Payment Advisory Commission estimated in March. Sepucha said that level is "very thin" and the proposed cuts would be too aggressive.

Fresenius, the world's biggest provider of kidney dialysis, reported a profit margin of 9.6 percent before extraordinary items in 2012, according to data compiled by Bloomberg.

About 414,000 people in the U.S. in 2010 were on dialysis, a procedure in which waste is periodically removed from the blood in patients with malfunctioning kidneys. Diabetes and high blood pressure are the most common reasons for kidney failure.

Zynga's 10% Pop: A Triumph of Hope Over Reason

Best Internet Companies For 2014

Google is currently sitting on $50 billion in cash. Should the company pay a dividend? In this video, Andrew Tonner looks at why he thinks it won't happen. For starters, even though Google can fund much of its research activities with its current cash flow, that $50 billion reserve is a nice backstop. Furthermore, paying a dividend may cause investors to perceive Google less as a cutting-edge growth company and more as a mature tech company. With projections of 20% annual growth for the next several years, that's not a perception Google wants to promote.

In time, Google may grow its bank account to the point where investors insist on a dividend, but Andrew says that time is far in the future.

As one of the most dominant Internet companies ever, Google has made a habit of driving strong returns for its shareholders. However, like many other Web companies, it's also struggling to adapt to an increasingly mobile world. Despite gaining an enviable lead with its Android operating system, the market isn't sold. That's why it's more important than ever to understand each piece of Google's sprawling empire. In The Motley Fool's new premium research report on Google, we break down the risks and potential rewards for Google investors. Simply click here now to unlock your copy of this invaluable resource.

Best Internet Companies For 2014: Pacific Continental Corporation(Ore)

Pacific Continental Corporation operates as the bank holding company for Pacific Continental Bank that provides commercial banking services primarily in Oregon and Washington. The company offers a range of banking and related services to community-based business, not-for-profits, professional service providers, business owners, and executives. It accepts a range of deposit products, including demand, checking, savings, money market, and time deposits. The company?s loan portfolio comprises secured and unsecured commercial loans for general operating purposes, acquisition of fixed assets, purchases of equipment and machinery, financing of inventory and accounts receivable, and other business purposes; small business administration loans; and permanent and construction loan finance products for commercial facilities and for pre-sold, custom, and speculative home construction. Its loan portfolio also comprises residential mortgage loans; and secured and unsecured loans to in dividuals for various purposes, such as purchases of automobiles, mobile homes, boats, and other recreational vehicles, as well as for home improvements, education, and personal investment. In addition, the company offers credit card services, merchant card payment services, and cash management products to its business customers; and online banking, safe deposit, debit and ATM cards, ACH transactions, savings bonds, cashier?s checks, travelers? checks, and notary services. As of March 30, 2010, it operated 14 banking offices in Oregon and Washington. The company was founded in 1972 and is headquartered in Eugene, Oregon.

Best Internet Companies For 2014: Fairwest Energy Corporation (FEC.V)

FairWest Energy Corporation, a junior oil and gas company, engages in the acquisition, exploration, development, and production of crude oil, natural gas, and natural gas liquids in the provinces of Alberta and Saskatchewan. The company is based in Calgary, Canada.

Top 10 Growth Stocks To Buy For 2014: Amphenol Corporation(APH)

Amphenol Corporation engages in the design, manufacture, and marketing of electrical, electronic, and fiber optic connectors; interconnect systems; and coaxial and specialty cables worldwide. Its Interconnect Products and Assemblies segment produces connectors and connector assemblies primarily for the communications, aerospace, industrial, and automotive markets. This segment provides connector and cable assembly products used in communication applications; smart card acceptor and other interconnect devices used in mobile telephones; set top boxes to facilitate reading data from smart cards; fiber optic connectors used in fiber optic signal transmission; backplane and input/output connectors and assemblies used for servers and data storage devices and linking personal computers and peripheral equipment; sculptured flexible circuits used for integrating printed circuit boards; and hinge products used in mobile phone and other mobile communication devices. It also designs a nd produces radio frequency connector products and antennas used in telecommunications, computer and office equipment, instrumentation equipment, local area networks, and automotive electronics. The company?s Cable Products segment produces coaxial cable and connector products used in cable television systems, including full service cable television/telecommunication systems; radio frequency and fiber optic interconnect components for full service cable television/ telecommunication networks; and data cables and specialty cables used to connect internal components in systems with space and component configuration limitations. Amphenol Corporation markets its products directly, as well as through manufacturers? representatives and distributors to original equipment manufacturers, contract manufacturers, cable system operators, and telecommunication companies. The company was founded in 1932 and is headquartered in Wallingford, Connecticut.

Advisors' Opinion:

• [By Pat Racaniello]

  Amphenol Corp (APH) is our technology pick, a manufacturer of specialty cable and various connectors, including fiber optic ones, for use in electronic devices and the cable television industry. Near the lower band of the 52 week band ($40.44 - $59.11), the last traded price of $43.27 represents an excellent buy opportunity considering the stock is so far below the moving averages (50,100, 200).

  The main competition for companies such as Amphenol comes from Taiwanese component makers, that compete at a lower price. Amphenol has a solid market reputation and compared with Molex (MOLX), the free cash flow margin is far ahead at 10% compared to 5% for the latter. Price to earnings is on the industry mark at 14 times, but the concern lies in the dividend payout which is basically nothing (1.91) compared to the industry (26.91).