Mortgage Rates Spike to 2-Year Highs

Freddie Mac released its weekly update on national mortgage rates this morning, revealing numbers that show a sharp spike in rates nearly across the board, to levels not seen in two years.

Thirty-year fixed rate mortgages (FRM) jumped 22 basis points in the most recent week to hit 4.51%. Fifteen-year FRMs tacked on 14 basis points to reach 3.53%. In both cases, these numbers exceed the relatively high levels that caused investors concern two weeks ago.

Among variable-rate mortgages, 5/1 ARMs experienced the sharpest weekly rise of all four major mortgage classes tracked by Freddie Mac, rising 16 basis points to 3.26%. The closest thing to "good" news in the report was that one-year adjustable rate mortgages held steady at 2.66% for their third straight week.

Freddie Mac Vice President and Chief Economist Frank Nothaft  attributed the sharp hikes in rates to "June's strong employment," which "led to more market speculation that the Federal Reserve will reduce future bond purchases causing bond yields to rise and mortgage rates followed."

This speculation may, however, have been premature. As Nothaft noted: "the minutes of the June 18th and 19th Federal Reserve's monetary policy committee meeting, released July 10th, stated that many members indicated further improvement in the outlook for the labor market would be required before it would be appropriate to slow the pace of bond purchases."

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Best Gold Stocks To Invest In 2014

LNG export terminals are off to the races! �There is a gold rush like fervor to LNG facilities because each company wants to shore up market share before demand is fulfilled around the globe.�Chevron's (NYSE: CVX  ) Angola LNG is one of the first ones to get there. Chevron just announced that it had shipped its first LNG cargo from the facility to Brazil last week. The addition of LNG provides producers something they haven't had in the domestic market there, demand for natural gas.�

Although this project is one of the first facilities to come online as LNG exports ramp up, it could be just the beginning for Africa LNG. Projects on the other side of the continent are finding massive quantities of natural gas, and LNG exports is the most likely market for it. In this video, Fool.com contributors Tyler Crowe and Aimee Duffy take a look at the potential for African natural gas and some of players in the space.�

Best Gold Stocks To Invest In 2014: Office Depot Inc.(ODP)

Office Depot, Inc., together with its subsidiaries, supplies office products and services. Its North American Retail division sells an assortment of merchandise, such as general office supplies, computer supplies, business machines and related supplies, and office furniture under various labels, including Office Depot, Viking Office Products, Foray, Ativa, Break Escapes, Niceday, and Worklife through its chain of office supply stores. It also provides printing, reproduction, mailing, shipping, and other services, as well as personal computer support and network installation service. As of December 25, 2010, this division operated 1,147 office supply stores in the United States and Canada. The company?s North American Business Solutions division sells nationally branded and private brand office supplies, technology products, furniture, and services to small- to medium-sized customers through a dedicated sales force, catalogs, and Internet. Its International division sells o ffice products and services through direct mail catalogs, contract sales forces, Internet sites, and retail stores using a mix of company-owned operations, joint ventures, licensing and franchise agreements, alliances, and other arrangements. As of December 25, 2010, it sold its office products to customers in 53 countries in North America, Europe, Asia, and Latin America. This division operated, through wholly-owned or majority-owned entities, 97 retail stores in France, Hungary, South Korea, and Sweden; and participates under licensing and merchandise arrangements in South Korea, Thailand, India, Israel, Japan, and the Middle East. The company was founded in 1986 and is headquartered in Boca Raton, Florida.

Advisors' Opinion:

• [By Robert Cotter]

  Office Depot, Inc. operates a chain of office product warehouse stores in North America, Europe, Asia and Central America. The Company sells branded merchandise and provides business services primarily to small and medium-sized businesses and the home office market.

  Office Depot (NYSE:ODP) has a potential upside of 85.3% based on a current price of $2.51 and analysts' consensus price target of $4.65. The stock should run into initial resistance at its 50-day moving average (MA) of $3.14 and subsequent resistance at its 200-day MA of $4.39.

• [By Hilary Kramer]

  Another stock I like is Office Depot (NYSE:ODP), which is what I call a “Fallen Angel” stock in my book. The company is probably a familiar name to you, thanks to its sizable retail operations in the U.S.

Best Gold Stocks To Invest In 2014: Stoneridge Inc.(SRI)

Stoneridge, Inc., together with its subsidiaries, engages in the design and manufacture of engineered electrical and electronic components, modules, and systems for the medium and heavy-duty truck, automotive, agricultural, and off-highway vehicle markets primarily in North America and Europe. The company operates in two segments, Electronics and Control Devices. The Electronics segment produces electronic instrument clusters, electronic control units, and driver information systems, as well as electrical distribution systems, principally wiring harnesses and connectors for electrical power and signal distribution. Its products collect, store, and display vehicle information, such as speed, pressure, maintenance data, trip information, operator performance, temperature, distance traveled, and driver messages related to vehicle performance. In addition, this segment?s power distribution systems regulate, coordinate, and direct the operation of the electrical system within a vehicle. The Control Devices segment designs and manufactures products that monitor, measure, or activate a specific function within the vehicle. This segment?s product lines include sensors, which are employed in a range of vehicle systems, such as the emissions, safety, power train, braking, climate control, steering, and suspension systems; switches that transmit signal to activate or deactivate selected functions; and electromechanical actuator products, which enable original equipment manufacturers to deploy power functions in a vehicle. Stoneridge, Inc. was founded in 1965 and is headquartered in Warren, Ohio.

Advisors' Opinion:

• [By Stephen]

  Stoneridge, Inc. is an independent designer and manufacturer of highly engineered electrical and electronic components, modules and systems for the medium- and heavy-duty truck, automotive, agricultural and off-highway vehicle markets. Its EPS forecast for the current year is 1.19 and next year is 1.84. According to consensus estimates, its topline is expected to grow 15.57% current year and 17.53% next year. It is trading at a forward P/E of 7.82. Out of three analysts covering the company, two are positive and have buy recommendations and the other has a hold rating.

Top 5 Small Cap Stocks To Watch Right Now: Pinnacle Foods Inc (PF)

Pinnacle Foods Inc., incorporated on July 28, 2003, is a manufacturer, marketer and distributor of branded food products in North America. The Company operates in three segments: the Birds Eye Frozen Division, the Duncan Hines Grocery Division and the Specialty Foods Division. The Birds Eye Frozen Division and the Duncan Hines Grocery Division, which collectively represent its North America Retail operations, include the brands. Its brand portfolio enjoys household penetration in the United States, where its products can be found in approximately 85% of U.S. households. Its products are sold through supermarkets, grocery wholesalers and distributors, mass merchandisers, super centers, convenience stores, dollar stores, drug stores and warehouse clubs in the United States and Canada, as well as in military channels and foodservice locations. On June 24, 2011, the Company completed the sale of its Watsonville, California facility which had been recorded as an asset held for sale.

Birds Eye Frozen Division

The Company�� Birds Eye Frozen Division includes its steamed and non-steamed product offerings, with a 27.0% market share, making Birds Eye the recognized frozen vegetables brand in the United States. Birds Eye was the Company to capture a nationwide market share with a product that enables consumers to conveniently steam vegetables in microwaveable packaging.

Duncan Hines Grocery Division

Duncan Hines is the division�� brand and includes cake mixes, ready-to-serve frostings, brownie mixes, muffin mixes, and cookie mixes. During the fiscal year ended September 23, 2012, the Company added two additional items to the line. In February 2012, the Company introduced a line of frosting products, Duncan Hines Frosting Creations, which uses a patent pending frosting system to allow consumers to customize their frosting into one of 12 different flavors. The Company also offers a complete line of shelf-stable pickle products that we market and distribute n! ationally, primarily under the Vlasic brand, and regionally under the Milwaukee�� and Wiejske Wyroby brands. In 2012, the Company introduced Vlasic Farmers Garden, artisan-quality pickle line.

Specialty Foods Division

The Company�� snack products primarily consist of Tim�� Cascade, Snyder of Berlin and Husman��. These direct store delivery brands have local awareness and hold market share positions in their regional markets. The Company also manufactures and distributes certain products, mainly in the frozen breakfast, canned meat, and pie and pastry fruit filling categories, through food service channels. The Company also manufactures and distributes certain private label products in the canned meat, shelf-stable pickles and frozen seafood. As part of its ongoing strategic focus over the last several years, the Company has deemphasized the food service and private label businesses for the benefit of its higher margin branded food products.

Mortgage Applications Fall 20% Over 4 Weeks

The rout in the mortgage market continues.

Since the Federal Reserve intimated at the end of May that it could soon begin to reduce its support for the economy, mortgage rates have shot through the roof. On Friday alone, the interest rate on a 30-year fixed-rate mortgage increased by the largest single-day margin in history, climbing to 4.875% in some instances. 

The result has been predictable. That is, the demand for mortgages has plummeted. According to the Mortgage Bankers Association, mortgage applications fell for the fourth consecutive time last week. They are now at their lowest level since July 2011.

The hardest hit have been applications to refinance, which are down by 26% over the last four weeks. Purchase-money mortgage volumes, by comparison, are off by only 6.9%. 

While it remains to be seen what impact this will have on stocks, and bank stocks in particular, we won't have to wait long to find out. This Friday, the nation's two largest mortgage originators, Wells Fargo (NYSE: WFC  ) and JPMorgan Chase (NYSE: JPM  ) , report earnings for the second quarter. In the first three months of this year, they underwrote a combined $162 billion in mortgages, the vast majority of which were for refinancing purposes as opposed to buying a home. 

The other sector that stands to be affected is homebuilders, the two largest of which are D.R. Horton (NYSE: DHI  ) and PulteGroup (NYSE: PHM  ) -- click here for a graphic of the five biggest homebuilders in America. Both of these companies have seen volumes pick up as of late. However, there's fear that rising mortgage rates could put a damper on that growth.

One bank stock that's likely to survive and thrive in this market is identified in our recent free report: "The Stock Buffett Wishes He Could Buy." The free report details why Warren Buffett is heavily invested in banks right now, and exactly why he can't buy one of the most attractive companies in that sector. Click here to keep reading. 

Mortgage Rates Soar: Is It Too Late to Refinance?

Many investors have expected for years that interest rates on mortgage loans would eventually rise from record-low levels. But the recent rise in mortgage rates has taken everyone by surprise because of the speed with which rates rose and the extent of their jump.

In just the past two months, 30-year mortgage rates have risen by more than a full percentage point from their lowest levels around 3.5%, with a catastrophic surge taking the rate to 4.75% late last week.

Do soaring rates mean that it's too late to refinance your mortgage?

Below, we'll answer that question, but first, let's look at the impact that rising rates have on the housing market more generally.

A tale of two borrowers
For would-be homebuyers, rising rates are particularly bad, as rates on new-purchase mortgages have a huge impact not just on the amount of your monthly payment but on determining how much money a bank will allow you to borrow. With home prices on the rise, some would-be homebuyers will end up getting priced out of their markets as a result of these rate increases, and that in turn has some analysts concerned that the new housing boom could come to an abrupt end.

By contrast, current homeowners with existing mortgages don't feel quite the same pain from rising mortgage rates. As long as you have a fixed-rate mortgage, your rate is locked in for the duration of your loan. That puts you in a no-lose situation; you can refinance if rates are sufficiently low, but you can keep your existing mortgage if rates rise.

Still, those looking to refinance have to be disappointed by the big rise in rates recently. For many, it will no longer make sense to try to refinance, and already, we've seen signs from major lenders Bank of America (NYSE: BAC  ) , JPMorgan Chase (NYSE: JPM  ) , and Wells Fargo (NYSE: WFC  ) that refinancing activity has been on the decline. For those banks, that comes as unwelcome news, especially with JPMorgan also facing the potential need to raise capital after regulators raised capital requirements above the bank's current levels. Even for B of A and Wells, taking away refinancing income will make a full recovery from the financial crisis even harder.

Why refinance now?
But for some, even the recent rise could leave you with some potential savings. The key to the refinancing decision is how much money you can save.

Refinancing typically involves closing costs and other expenses, so you need to save enough on your monthly payment to recoup those upfront costs within a reasonable period of time. Typically, one rule many people follow is that if you can cut your interest rate by a full percentage point without having to pay points or other big costs to get a new mortgage, then refinancing makes sense.

With rates between 4.5% and 4.75%, you might think that refinancing wouldn't make sense for anyone. But as recently as five years ago, 30-year mortgage rates were above 6%.

So if you've been procrastinating for a long time or if your financial situation only recently improved enough that you could get a bank to think about letting you refinance, then it might be economically viable for you to refinance right now.

But should you refinance now, or wait?
The big question, though, is whether you should refinance even if it makes economic sense. After all, if rates drop from here, you might be able to lock in an even more attractive rate.

In assessing whether waiting makes sense, put yourself into one of three categories:

If refinancing doesn't make sense at current rates, then it obviously makes sense to wait and hope for better ones. Contact your lender and get projections on what your savings would be under various rate assumptions. Look at them and then figure out how far rates would have to fall to make refinancing attractive. Then, find out if you can go through some of the formalities with your lender early so that you can jump on rates if they fall to your desired level. If refinancing just barely makes sense right now, then you should strongly consider going forward. If you wait and rates rise further, you could jeopardize your entire refi. If refinancing would still make sense even if rates rose even further, though, then you have some latitude to gamble without entirely losing the potential benefit of refinancing. If you want to wait in the hopes of getting an even better rate, then doing so has much less risk than if you're right on the margin.

Last but not least, consider putting pressure on your lender to give you a better deal. With refinancing activity drying up, mortgage specialists are already under stress from their employers to get deals done to keep income flowing in. Don't expect huge concessions, but small reductions in closing costs or interest rates can make the difference between a viable refi and a failed one.

Don't stop watching
No one knows where interest rates will go next, but if you have an outstanding mortgage, it still might not be too late to refinance. Now's the time to run the numbers and get yourself in position to act quickly if mortgage rates turn around and give borrowers some relief in the weeks and months to come.

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Hot China Stocks To Own For 2014

Some predictions have the Chinese auto market growing by 144% in the coming years. In this video, Brendan Byrnes discusses which auto companies are most likely to benefit. Right now, he says, General Motors and Volkswagen have substantial market share and are likely to expand on their stakes. Ford isn't as big in China as GM or VW are, but it's investing heavily and won't go away quietly. With a decline in Japanese auto sales stemming from the country's current anti-Japan attitudes, American companies could benefit, despite some headwinds related to regulations and infrastructure. Check out the video for further details.

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Hot China Stocks To Own For 2014: China Life Insurance Company Limited(LFC)

China Life Insurance Company Limited provides life, annuities, accident, and health insurance products in China. Its individual life insurance and annuity products consist of whole life and term life insurance, endowment insurance, and annuities. The company also engages in the writing of life insurance business. In addition, it offers group life insurance products, including group annuity products, and group whole life and term life insurance products to enterprises and institutions, as well as universal life products. Further, the company provides short-term insurance products comprising short-term accident insurance and short-term health insurance products; accident insurance products, such as individual accident insurance and group accident insurance; and health insurance products, including defined health benefit plans, medical expense reimbursement plans, and disease specific plans. It distributes its products through its direct sales representatives and exclusive ag ents, as well as through intermediaries comprising insurance agencies and insurance brokerage companies, non-dedicated agencies, bancassurance arrangements, travel agencies, and hotels and airline sales counters. The company was founded in 1949 and is based in Beijing, China. China Life Insurance Company Limited is a subsidiary of China Life Insurance (Group) Company.

Hot China Stocks To Own For 2014: AsiaInfo-Linkage Inc.(ASIA)

AsiaInfo-Linkage, Inc. provides telecommunications software solutions and information technology (IT) products and services to telecommunications carriers and other enterprises in the People?s Republic of China. The company offers business and operation support systems product suites, including OpenBilling, a billing solution for telecommunications operators; OpenCRM, a CRM solution suite for telecommunications operators; OpenBOSS, a carrier-class business operation support system solution; OpenBI, a carrier-class operating analysis and decision support system platform; OpenPRM, a system that calculates, manages, and reconciles payment for intercarrier network access. It also provides network management solutions comprising NetXpert, a data and Internet protocol network management solution; and OpenXpert, an integrated telecommunications network management system. In addition, the company offers service applications products, such as Mail Center, an online messaging softwa re; Spam Patrol software for real time anti-spam control; and Net Disk, a network hard disk product, which facilitates Internet-based file transfer, sharing, and management, as well as supports other functions, such as data processing of short message folders and synchronization of mobile devices. Its service applications products also include Internet Short Messaging Gateway, a business support platform for value-added short messaging services; and Device Management Platform that enables mobile operators to manage various mobile devices and perform remote mobile device management, such as remote diagnosis and parameter setup. In addition, it offers software enhancement and maintenance, system integration, and other value-added IT consulting and planning services. The company was formerly known as AsiaInfo Holdings, Inc. and changed its name to AsiaInfo-Linkage, Inc. in July 2010. AsiaInfo-Linkage, Inc. was founded in 1993 and is headquartered in Beijing, the People?s Republ ic of China.

Top 5 Canadian Companies To Buy Right Now: Sina Corporation(SINA)

SINA Corporation provides online media and mobile value-added services (MVAS) in the People?s Republic of China. It provides advertising, non-advertising, and free services through SINA.com, Weibo.com, and SINA Mobile. SINA.com offers free interest-based channels that provide region-focused format and content, including news, sports, automobile-related news, finance, entertainment, luxury, technology, digital, tools, collectibles, video, music, and wireless application protocol, as well as interactive platform for fashion-conscious users to share comments and ideas on a range of topics, such as health, cosmetics, and beauty. The company's microblogging platform, Weibo.com, enables its users to follow the hottest topics being discussed online, as well as discussions related to people they know. Weibo accounts consist of celebrities, commercial enterprises, government entities, and grass root Internet users. Its SINA Mobile service allows users to receive news and informatio n, download ring tones, mobile games and pictures, and participate in dating and friendship communities. The company also offers SINA Game, which serves as an interactive platform that provides users with downloads and gateway access to popular online games; SINA eReading, a shop for book reviews; SINA.net, an enterprise solutions platform to assist businesses and government bodies; and SINA Mall, an online shopping Website. In addition, it provides a platform for Chinese bloggers; photo-sharing platform; free email, VIP mail, and corporate email for enterprise users; audio and video-based instant messaging tools; proprietary search technology; and classified advertising services, as well as hosts topic-specific discussion forums in Chinese language; and creates user-maintained and supported online communities. The company has strategic cooperation agreement with China Unicom (Hong Kong) Limited. SINA Corporation was founded in 1997 and is headquartered in Shanghai, the Peop le?s Republic of China.

Hot China Stocks To Own For 2014: China Automotive Systems Inc.(CAAS)

China Automotive Systems, Inc., through its interests in Sino-foreign joint ventures, engages in the manufacture and sale of power steering systems and other component parts for the automotive industry in the People?s Republic of China. It offers a range of steering system parts for passenger automobiles and commercial vehicles. The company provides 4 separate series, 307 models of power steering, including rack and pinion power steering, integral power steering, electronic power steering and manual steering, steering columns, steering oil pumps, and steering hoses. China Automotive Systems, Inc. was founded in 2003 and is headquartered in Jing Zhou City, the People?s Republic of China.

Hot China Stocks To Own For 2014: Suntech Power Holdings Co. LTD.(STP)

Suntech Power Holdings Co., Ltd., a solar energy company, engages in the design, development, manufacture, and marketing of photovoltaic (PV) products. The company also provides engineering, procurement, and construction services to building solar power systems for certain related party and third party customers. Its products include monocrystalline and multicrystalline silicon PV cells; PV modules; and building-integrated photovoltaics products. In addition, the company provides PV system integration services, including designing, installing, and testing PV systems used in lighting for outdoor urban public facilities, as well as in farms, villages, and commercial buildings; and project development services. Its products are used to provide electric power for residential, commercial, industrial, and public utility applications. The company sells its products through value-added resellers, such as distributors and system integrators; and to end users, such as project develo pers primarily in Germany, Italy, Spain, France, Benelux, Greece, the United States, Canada, China, the Middle East, Australia, and Japan. Suntech Power Holdings Co., Ltd. is headquartered in Wuxi, the People?s Republic of China.

Advisors' Opinion:

• [By Curtis]

  Suntech Power Holdings Co., Ltd.(NYSE: STP) closing price in the stock market Tuesday, Jan. 3, was $2.35. STP is trading -3.28% below its 50 day moving average and -46.49% below its 200 day moving average. STP is -78.30% below its 52-week high of $10.83 and 38.24% above its 52-week low of $1.70. STP‘s PE ratio is 30.52 and its market cap is $424.30M.

  Suntech Power Holdings Co., Ltd. is a solar energy company, engages in the design, development, manufacture, and marketing of photovoltaic (PV) products. STP also provides engineering, procurement, and construction services to building solar power systems for certain related party and third party customers.

• [By Hawkinvest]

  Suntech Power Holdings (STP) is one of the world's largest makers of solar panels. The company expects to post revenues of just over $3.1 billion for 2011, and it plans to release fourth quarter and full year results on March 8, 2012. Suntech hasn't escaped the difficult industry conditions and it recorded impairment charges of $571 million in the third quarter of 2011. This stock was also once a darling of Wall Street and it traded for over $80 per share in December 2007. Now it can be bought for about $3 per share even though it has made significant progress in driving down the cost of solar energy, as well as improving the efficiency of solar cells.

  The company was recently included in Technology Review's annual list of the world's 50 most innovative technology companies. This company has a debt load which is of concern for some investors, however, the stock appears to have priced that risk in with the shares trading for a fraction of the current book value which is $8.90 per share.

Best Energy Stocks For 2014

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

Duke Energy's merger with Progress Energy helped vault the utility into the uppermost echelon of industry players. But after such a big transaction, when will Duke see earnings start moving back in the right direction? Let's take an early look at what's been happening with Duke Energy over the past quarter and what we're likely to see in its quarterly report.

Best Energy Stocks For 2014: Medidata Solutions Inc.(MDSO)

Medidata Solutions, Inc. provides software-as-a-service based clinical development solutions for life science organizations worldwide. Its solutions comprise software and services that allow customers to increase the value of their development programs by designing, planning, and managing key aspects of the clinical trial process, including study and protocol design, trial planning and budgeting, site negotiation, clinical portal, trial management, randomization and trial supply management, clinical data capture and management, safety events capture, medical coding, clinical business analytics, and data flow and interoperability. The company primarily offers Medidata Rave, a comprehensive platform for capturing and managing clinical data. It also provides Medidata CTMS, a clinical trial management solution that streamlines operational workflows; Medidata Designer, a protocol development tool that enhances the efficiency of clinical trial start-up; Medidata Insights, a busi ness analytics platform; and Medidata Balance, a randomization and trial supply management solution, which streamlines the process of developing, building, and implementing subject allocation plans. In addition, the company offers Medidata Grants Manager, an application to benchmark the investigator budgets against industry data; Medidata contract research organization (CRO) Contractor, an analytical tool for CRO outsourcing, budgeting, and negotiation; and iMedidata, a hosted portal application that allows investigative sites and sponsor study teams to start trial activities. Further, it provides hosting, support, and professional services. The company serves pharmaceutical, biotechnology, and medical device companies; academic institutions; and CROs and other entities engaged in clinical trials through a direct sales force; and through relationships with CROs and other strategic partners. The company was founded in 1999 and is headquartered in New York, New York.

Best Energy Stocks For 2014: Cater Allen Hdg(CTA.L)

Caterpillar Inc. manufactures and sells construction and mining equipment, diesel and natural gas engines, industrial gas turbines, and diesel-electric locomotives worldwide. It offers backhoe, skid steer, multi-terrain, track-type, and wheel loaders; track, wheel, and mini excavators; select work tools; track-type tractors; motor graders; pipelayers; and related parts for the heavy construction, general construction, mining and quarry, and aggregates markets. The company also provides electric rope and hydraulic shovels, mining trucks, wheel dozers, draglines, electric drive mining trucks, compactors, tunnel boring and underground mining equipment, drills, forestry products, highwall miners, off-highway and articulated trucks, paving products, wheel tractor scrapers, electronics and control systems, and machinery components for mine, quarry, forestry, paving, and tunneling applications. In addition, it offers reciprocating engine powered generator sets; integrated systems for the electric power generation industry; reciprocating engines and integrated systems and solutions for the marine and petroleum industries, and industrial applications; turbines and turbine-related services; and diesel-electric locomotives and components, and other rail-related products and services. Further, the company provides retail financing for its equipment, machinery, and engines, as well as for vehicles, power generation facilities, and marine vessels that incorporate its products; wholesale financing to its dealers and customers; and insurance services. Additionally, it offers component manufacturing, remanufacturing, and logistics services, as well as distributes other companies? products. Caterpillar Inc. markets its products through its sales force, distribution centers, dealers, and distributors. The company was formerly known as Caterpillar Tractor Co. and changed its name to Caterpillar Inc. in 1986. Caterpillar Inc. was founded in 1925 and is headquart ered in Peoria, Illinois.

Top Safest Stocks To Own Right Now: L&L Energy Inc.(LLEN)

L&L Energy, Inc., through its subsidiaries, engages in the coal mining, clean coal washing, coal coking, and coal wholesaling businesses in the People?s Republic of China. It involves in producing, processing, and selling metallurgical coke used primarily for steel manufacturing; and crushing coal and washing out soluble sulfur compounds with water or other solvents. The company has four coal mines comprising the DaPuAn, SuTsong, Ping Yi, and DaPing mines; three coal washing plants; one coking facility; and coal wholesale and distribution facilities. It also has a financial interest in the Bowie mine, a thermal coal mine located in Paonia, Colorado. The company provides its products to customers in the steel and the electrical/utility industries, as well as to cement factories. L&L Energy, Inc. sells its products directly and through third-party wholesalers. The company was formerly known as L & L International Holdings, Inc. and changed its name to L&L Energy, Inc. in Jan uary 2010. L&L Energy, Inc. was founded in 1995 and is headquartered in Seattle, Washington.

2.7 Millions Reasons for BlackBerry to Worry

In the end, BlackBerry (NASDAQ: BBRY  ) couldn't live up to its own hype.

Shares of the smartphone pioneer are getting crushed today after posting disappointing quarterly results, but the most damaging nugget in the bloodbath is that BlackBerry moved just roughly 2.7 million Z10 and Q10 devices. 

I wasn't the only one bracing for a bad report. The surprising loss wasn't much of a surprise. The sequential crush in gross margins during a new product cycle, and the spike in marketing overhead to get noticed, weren't shockers. However, clearing just 2.7 million of the new devices -- and that's how the cruel math plays out when BlackBerry concedes that just 40% of its 6.8 million shipped smartphones during the quarter were handsets running its new BB 10 mobile operating system -- is the ultimate deal-breaker.

When Apple (NASDAQ: AAPL  ) sold just 5 million iPhone 5 devices in its debut weekend in the fall, many pegged that as a disappointment. When Samsung announced that it cleared 10 million Samsung Galaxy S4 smartphones in its first month, the discussion eventually evolved into inevitable slowdowns at the supplier level.

How does it feel to ship as many new model smartphones in three months as Apple cleared in a little more than a day?

BlackBerry isn't going anywhere. This isn't about that. Thankfully its balance sheet is flush with billions in cash. However, the ball of hype that found the stock nearly tripling at one point between bottoming out last summer and peaking earlier this year with the BB 10 unveiling has lost its bounce. 

When iOS and Android devices ran into resistance a few months ago, it seemed as if this was an opportunity for the fringe players. BlackBerry seemed to be introducing a substantial upgrade to its mobile operating system at the ideal time.

Shares of Nokia (NYSE: NOK  ) and BlackBerry went on to more than double off of last year's lows. The market sensed that the time was ripe for Nokia's Lumia smartphones, and BlackBerry's BB 10 handsets, to carve out sustainable niches in a market that seemed to be fragmenting.

Well, it isn't happening.

It's not just BlackBerry crashing down on the reality that even a sliver of a seemingly booming market may not be enough. Bernstein analyst Pierre Ferragu reiterated his bearish rating on Nokia yesterday, and his $1.95 price target implies that the stock will shed half of its value.

We may one day come to an era where smartphones are truly operating system-agnostic, just as PCs are now becoming in an era of cloud-based solutions. However, for now, that's just not happening. It's an iPhone and Android world, and that's just not changing. 

BlackBerry bulls probably thought that more of the platform's more than 70-million users would hop on the new BB 10 devices within months of hitting the market. They overestimated the fan base, and it will be hard to believe in BB 10's long-term prospects now.

Another way to play mobile
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How CSX Can Restart Its Earnings Growth Engine

CSX (NYSE: CSX  ) will release its quarterly report next Tuesday, and investors have already prepared for a slight reduction in the company's net income from a year ago. But even as the railroad industry has had to deal with the big drop in domestic demand for commodities like coal and iron ore, it has found ways to replace lost revenue and hold its own against unfavorable trends, and that's a big part of why CSX earnings have held up as well as they have.

CSX in particular faces the challenge of being concentrated in the eastern part of the U.S., which has historically relied more on coal shipments and which doesn't have the access to West Coast export capacity that some of its competitors have. Yet the company has managed to overcome that challenge with the help of some innovative strategies. Let's take an early look at what's been happening with CSX over the past quarter and what we're likely to see in its quarterly report.

Stats on CSX

Analyst EPS Estimate	$0.47
Change From Year-Ago EPS	(4.1%)
Revenue Estimate	$3.02 billion
Change From Year-Ago Revenue	0.2%
Earnings Beats in Past Four Quarters	4

Source: Yahoo! Finance.

Will CSX earnings pick up steam this quarter?
Analysts have modestly dropped their views on CSX's earnings prospects over the past few months, cutting a penny per share from their estimates for both the June quarter and the full 2013 year. The stock has largely stayed stable, rising about 3% since early April.

CSX started the quarter off right, reporting record earnings in the first quarter despite posting roughly flat revenue. That was much better than the slight declines in sales and profits that investors had expected, and it came even though CSX reported coal volumes that were down 10%.

But CSX has recognized the potential of moving important commodities like crops and oil from the center of the country to the East Coast. The success that Union Pacific (NYSE: UNP  ) has had in transporting oil across the country has inspired plenty of copycat moves from its railroad rivals as they all seek to make up for lost revenue elsewhere. For its part, CSX expects to spend $2.3 billion on infrastructure improvements like higher bridges, larger tunnels, and improving clearance to allow for double-decker-container transport to ports on the Atlantic coast. Kansas City Southern (NYSE: KSU  ) is also trying to capitalize on this trend, with its own plans to spend half a billion dollars on capital expenditures this year.

Moreover, coal hasn't been a complete bust for CSX. Both CSX and peer Norfolk Southern (NYSE: NSC  ) have exposure to the coal-rich Appalachian region, and they've found emerging markets like China and India are still willing to ship coal halfway around the world as a cheaper alternative to limited supplies of oil and natural gas. Even domestically, extremely low natural-gas prices have been the primary driver of the move away from coal, and as gas prices return to more typical levels, the relative costs of dealing with side effects of coal use like pollution will encourage greater coal consumption.

When CSX reports earnings, watch for the company to discuss the status of its capex program and whether those improvements are starting to pay off in higher profits. In the long run, those investments will be essential for the railroad company to grow faster.

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

Climate Change: How Has the Market Responded?

John Vechey of PopCap Games recently joined The Motley Fool for a climate change summit. His first panel guests were Dr. Rachel Cleetus and Dr. Joe Casola. Dr. Cleetus is a climate economist with the Union of Concerned Scientists, where she advocates for effective global warming policies at the state, regional, federal, and international levels. Dr. Casola is program director for science and impacts at the Center for Climate and Energy Solutions, which works to assess the current state of knowledge regarding climate change and its impacts, and to promote actions that strengthen climate resilience.

In this video, Dr. Cleetus shares some of the ways that the market has responded to the challenges of climate change. The government is also taking some helpful measures, although not with the urgency that may be required. She also discusses how the auto industry is responding. Her comments are timely, considering last week's announcement from General Motors (NYSE: GM  ) and Honda (NYSE: HMC  ) that the two companies would begin collaborating on fuel-cell technology development for vehicles. The whole industry seems to be getting in on the game. This past January, Daimler, Ford (NYSE: F  ) , and Nissan announced their own plans to work together to build fuel-cell vehicles within five years. Meanwhile, Toyota (NYSE: TM  ) expects to sell a million hybrids per year through 2015, and is currently testing the market for its Rav4 EV Crossover, for which Tesla (NASDAQ: TSLA  ) supplies the battery and motor.

Climate change isn't the only thing driving automotive innovation. 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.

For Time Warner Stock Investors, Vampires and Androids Are the Future

San Diego Comic-Con is almost here, and with it a slew of announcements from the companies driving the pop-culture zeitgeist. Few loom as large as Warner Bros. television, which continues to be an interesting catalyst for Time Warner (NYSE: TWX  ) stock.

At Comic-Con, Warner will highlight four new shows. Almost Human, which will air Mondays on Fox, stars Karl Urban as a detective paired with an android. There's also The Originals, a spinoff of top-rated CW show The Vampire Diaries. The Tomorrow People is about a group of young people with special powers. And The 100 is a post-apocalyptic drama about juvenile delinquents banished from a space-based "Ark" back to a supposedly scorched Earth.  

Can the strategy work? History doesn't offer much hope. Comedies such as The Big Bang Theory and Two-and-a-Half Men still carry much of the weight for the studio, and therefore Time Warner stock. But it's also worth remembering that Arrow -- based on the DC Comics superhero -- has already been reupped thanks to strong ratings.

Meanwhile, AMC Networks (NASDAQ: AMCX  ) made history when The Walking Dead  became the top show in the 18-49 demographic for the first half of its third season. The zombie thriller would go on to become the top-rated scripted drama of the fall TV lineup.

Whether or not Warner has the right shows in its lineup, the size and scope of Comic-Con -- expected to draw at least 125,000 people -- plus the success of genre films and TV shows should make the rollout worth watching. 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 Time Warner stock at current prices .

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Today's 3 Best Stocks

What a difference a better explanation makes!

After a month of topsy-turvy trading on the heels of comments from the Federal Reserve that it may soon scale back QE3 -- its $85 billion monthly bond-buying program meant to keep lending rates near historic lows -- Ben Bernanke did his best mea culpa to calm the markets. With economic data signaling the potential for further stimulus, Bernanke's comments helped calm skittish markets into one of the best gains of the year -- and, subsequently, another record high for the broad-based S&P 500 (SNPINDEX: ^GSPC  ) .

By the end of the day, the S&P 500 had eclipsed yet another all-time record closing high, rising by 22.40 points (1.36%), to close at 1,675.02. This also marked its 10th gain in the past 12 sessions, and completely wiped out June's minor correction.

Leading today's big gains is semiconductor chip maker Advanced Micro Devices (NYSE: AMD  ) , which leapt 11.8% after two analyst rating upgrades. Vivek Arya at Bank of America/Merrill Lynch upped his rating on AMD to buy, from underperform, while boosting his price target to $6, from $2.50. Similarly, Canaccord Genuity analyst Bobby Burleson raised his rating to buy, from hold, and upped his price target to $5, from $3. Based on yesterday's closing value, both price targets implied upside of 51% and 26%, respectively. With key processing wins in both new gaming consoles, the Xbox One and PlayStation 4, AMD's fortunes could be just months from turning around.

The other two big gainers were again the nation's largest homebuilder D.R. Horton (NYSE: DHI  ) , which added 9.2%, and Lennar (NYSE: LEN  ) , the homebuilder with the best margins in the sector, which advanced 8.3%. As you might imagine, the impetus behind the move are the comments made by Bernanke that the U.S. central bank doesn't have any intention of scaling back QE3 anytime soon. The Fed's monetary easing has been a big reason why 30-year mortgage rates have remained at historic lows, and are one reason the housing sector found a bottom. If QE3 is continued for a longer period of time than the Street expects, it should keep rates near historic lows, and spur home buying.

Call me a bit skeptical, though, as it seems more like trying to squeeze blood out of a turnip. Even if the Federal Reserve extends QE3 for a few months, we're still looking at the inevitable paring back of its bond purchases, and the likely return of interest rates to their historical norm, which could cripple the now-spoiled U.S. consumer. I'd tread this sector with extreme caution.

Despite the S&P 500 again reaching new highs today, investors and pundits alike are skeptical about future growth... but in most cases, 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!

Why I'm Buying This Embattled Energy Company

Oil and gas MLP LINN Energy (NASDAQ: LINE  ) has become a battleground stock this year. Vicious short-sellers have called the company's accounting aggressive, if not erroneous. Further, those who are negative on LINN assess its worth as low as $5.50 a unit. Needless to say, it's been a rough year for investors in LINN, especially after it was disclosed that the SEC would now be looking into its books. 

One of LINN's 19,000 producing oil and natural gas wells. (Photo courtesy of LINN Energy)

I firmly believe that LINN will successfully navigate the SEC inquiry, which once resolved should end the attacks against the company. In anticipation of that happening, I want to take advantage of the weakness created to add to my position in the company. In fact, I can point to two other major reasons why I think LINN and its affiliate LinnCo (NASDAQ: LNCO  ) are both compelling values worth buying today.

Getting the facts straight
While Jim Cramer has backed off his bullishness, many other investors are staying the course. Among them is none other than Leon Cooperman, the chairman and CEO of Omega Advisors. In a recent letter to the editor of Barron's, which has been particularly bearish on LINN, Cooperman called the negative articles "distortions about LINN". He further states that these articles are "twisting facts to suggest that there is something untoward about" how LINN accounts for its hedges.

What I've found interesting is while short-sellers make a big deal about LINN's use of puts, LINN has already said it's simply not going to buy them anymore because of the commotion they are causing. If LINN's purchase of puts were so important to keeping up its so-called ruse, then the company would likely rigorously defend the action, not decide to simply use another form of hedging. Finally, as Cooperman points out, LINN's accounting for purchased puts does comply with FAS 133; to say the company is miscounting its puts is simply wrong.

Real, tangible value
While short-sellers would have you believe that LINN's worth is just in the single digits, many other highly qualified analysts disagree. In fact, most Wall Street analysts believe LINN is worth about $40 per unit. Even in a worst-case scenario, it's hard to put a value on LINN that's lower than it's currently trading. This is best summed up in a note by Stiefel to its investors:

If the Berry Petroleum/LinnCo deal falls through and the company NEVER makes additional accretive acquisitions (extremely doubtful in our opinion), we believe LINN's units are worth approximately $22 using a discounted cash flow analysis. However, if the Berry/LinnCo acquisition falls through but the company maintains a conservative acquisition program through 2020, we estimate LINN's units to be worth $32 to $35. If we assume the Berry deal is completed in 4Q13, we estimate LINN's units intrinsic value to be $35-$40 based on a future discounted cash flow analysis and assuming a conservative future acquisition program.

Further, internal and third-party valuations of LINN range from $37.34 per unit on the low end and up to $65.74 per unit on the upper end of the scale. These values for LINN standalone without the benefit of adding Berry Petroleum. That's because the company has a substantial unproved drilling inventory that's estimated to hold up to 14 trillion cubic feet equivalent of reserves, which adds significant potential value to LINN:

Source: LINN Energy investor presentation

The only way you can get value for LINN anywhere near where short-sellers have it pegged is if natural gas prices stay at last year's depressed prices... forever. Seeing how natural gas prices are already substantially higher, with potential future demand drivers coming from electrical generation, exports, and natural gas vehicles, I think it's safe to say that there is a lot more value in LINN's asset base than the shorts give it credit for.

My trade
While I already own units of LINN and shares of LinnCo, both combined make up less than 2% of my well-diversified portfolio. That's why I plan to buy shares and write puts striking at $20 on both companies to bring my overall exposure up to 5% of my portfolio. I feel very strongly that the attacks on LINN are unjustified and that its real value will eventually win out. 

That's not to say that I don't expect a bumpy ride, I just have more than enough stability elsewhere in my portfolio so that I can sleep at night. That being said, if you are worried about your LINN position, you might want to balance it out with other solid high-yielding stocks instead of adding to it during this period of turmoil. If you need to help finding a few solid stocks to balance out your portfolio I'd encourage you to check out The Motley Fool's special free report outlining our nine top dependable dividend-paying stocks. It's called "Secure Your Future With 9 Rock-Solid Dividend Stocks." You can access your copy today at no cost! Just click here.

What Do These Ratios Tell Us About Marks & Spencer?

LONDON -- Before I decide whether to buy a company's shares, I always like to look at two core financial ratios -- return on equity and net gearing.

These two ratios provide an indication of how successful a company is at generating profits using shareholders' funds and debt, and they have a strong influence on dividend payments and share price growth.

Today, I'm going to take a look at High Street stalwart Marks & Spencer Group  (LSE: MKS  ) (NASDAQOTH: MAKSY  )  to see how attractive it looks on these two measures.

Return on equity
The return a company generates on its shareholders' funds is known as return on equity, or ROE. ROE can be calculated by dividing a company's annual earnings by its equity (i.e., the difference between its total assets and its total liabilities) and is expressed as a percentage.

Let's start with a look at Marks & Spencer's ROE for the last five years:

Marks & Spencer

2009

2010

2011

2012

2013

Average

ROE	25.2%	24.8%	25.3%	18.8%	17.6%	22.3%

Marks & Spencer's five-year average ROE of 22.3% isn't bad in itself, but what is worrying is the downward trend over the last three years.

The firm's declining clothing sales have been dragging down its returns and placing pressure on its profits and cash flow, while its dividend has been unchanged for three years.

What about debt?
One weakness of ROE is that it doesn't show how much debt a company is using to boost its returns. A good way of assessing a company's debt levels is by looking at its net gearing -- the ratio of net debt to equity.

In the table below, I've compared Marks & Spencer's net gearing and ROE with those of Debenhams and Sports Direct International, two of its High Street peers:

Company

Net Gearing

5-Year
Average ROE

Marks & Spencer	82.9%	22.3%
Sports Direct International	29.1%	25.3%
Debenhams	43.1%	29.6%

These figures highlight how M&S is delivering lower returns than its two peers, which have much lower gearing and higher returns on equity.

From a shareholder's perspective, this is reflected in the companies' share prices -- Sports Direct's share price has risen by 125% over the last two years, compared to 25% for Debenhams and just 16% for M&S.

Is Marks & Spencer a buy?
The first test of M&S's new clothing management team will come this autumn, when it launches its new collections.

Even if it's successful, any turnaround will take some time, and for that reason -- as well as M&S' whopping 550 million-pound pension deficit -- I rate Marks & Spencer as no more than a hold.

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I own three of the shares featured in this free report, and I don't mind admitting they are among the most successful investments I've ever made. To find out the identity of these five companies, click here to download your copy of this report now, while it's still available.

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Don't Get Too Worked Up Over Isramco'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 Isramco (Nasdaq: ISRL  ) , 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, Isramco burned $3.3 million cash while it booked net income of $0.2 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 Isramco 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 questionable cash flows amounting to only 1.6% of operating cash flow, Isramco's cash flows look clean. 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 1.7% of cash flow from operations. Overall, the biggest drag on FCF came from capital expenditures. Isramco investors may also want to keep an eye on accounts receivable, because the TTM change is 2.1 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.

Looking for an alternative to Isramco? By investing in this multibillion-dollar energy company, you can get in before its stock rebounds, when natural gas prices eventually do turn upward. And until natural gas prices do rebound (which a top Motley Fool analyst expects will happen by 2014), you can cash in on its stable 5.7% dividend. Click here for instant access to this free report.

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

Add Isramco to My Watchlist.

This Bank Is Leading the Dow Higher

The Dow Jones Industrial Average (DJINDICES: ^DJI  ) is up after a positive report on manufacturing activity in the U.S. As of 1:15 p.m. EDT, the Dow was up 25 points to 14,999. The S&P 500 (SNPINDEX: ^GSPC  ) was up 6 points to 1,620.

There were two U.S. economic releases today.

Report

Period

Result

Previous

CoreLogic home prices	May	12%	11%
Factory orders	May	2.1%	1.3%

The one to pay attention is factory orders. It's well known that home prices were up in May; the big question is whether they will continue their rise now that mortgage rates have jumped. The Department of Commerce reported factory orders rose 2.1% in May, slightly above analyst expectations of 1.9% growth and above April's 1.3% growth. Excluding transportation, new orders were up just 0.6%. Durable goods orders were up 3.7% while nondurable goods were up 0.7%. The durable goods growth is an especially good sign of a resurgent economy as it shows that consumers and businesses are investing in appliances, cars, and other purchases that could be put off if the economy were doing poorly.

The one big question on the market's mind is "is the unemployment situation improving?" We will find out more when ADP releases its private sector jobs report tomorrow and when the Department of Labor releases the nonfarm payrolls report Friday. The market is currently being sustained by the Federal Reserve's purchasing of $85 billion worth of long-term assets each month, which the Fed has said will continue until inflation picks up or the jobs market improves to 6.5%-7% unemployment. If the jobs report comes in better than expected, the market may drop as that would mean that the Fed will taper sooner than expected.

One company that won't mind higher rates is today's Dow leader, JPMorgan Chase (NYSE: JPM  ) , which is up 2.01% to $53.16. The bank is up today after being upgraded by Raymond James from "outperform" to "strong buy" with a target price of $64, as the analyst expects the bank's earnings to be better than they previously expected. We will get some idea of how the bank is doing after it reports second-quarter earnings next Friday. While the bank has faced some short-term challenges and now faces another with the rise in interest rates, these will all be nothing more than short-term headwinds for the bank. In the medium term, higher rates are better for banks as they can lend out their deposits and make a higher return on those deposits.

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

Here's Who Will Save Disney Stock From "The Lone Ranger"

On the heels of The Lone Ranger's failure at the box office so far, analysts are estimating that Disney  (NYSE: DIS  ) may be forced to take a writedown of at least $100 million -- similar to last year's $200 million writedown for John Carter.

If that's the case, then why has Disney stock risen around 2% so far this week?

According to Fool contributor Steve Symington in the following interview with the Fool's Alison Southwick, investors aren't (and shouldn't be) worried about Disney stock in part because the stellar $1.2 billion global performance of Iron Man 3 should be more than enough to offset the dominant entertainment company's Lone Ranger losses.

But what do you think? Please watch the following video to get Steve's full take, and then let us know whether you think Disney stock is still a "buy" in spite of The Lone Ranger's dismal take so far.

It's also easy to forget Disney's reach doesn't stop end with the big screen. The future of television begins now ... with an all-out $2.2 trillion media war that pits cable companies such as Cox, Comcast, and Time Warner against technology giants such as Apple, Google, and Netflix. The Motley Fool's shocking video presentation reveals the secret Steve Jobs took to his grave and explains why the only real winners are these three lesser-known power players that film your favorite shows. Click here to watch today!

2 Reasons Dell Is the Riskiest Stock in the Market Today

Shares of Dell (NASDAQ: DELL  ) fell as low as $12.71 on Friday, even as founder Michael Dell's proposal to buy the company for $13.65 goes before shareholders two weeks from now. At first glance, Dell might seem like a no-brainer "buy" candidate (invest $12.71 now, get $13.65 after the proxy vote on July 18).

However, this is far from being the whole story. An activist campaign led by Carl Icahn's Icahn Enterprises (NASDAQ: IEP  ) investment fund has made Dell perhaps the riskiest stock in the market. Icahn believes that Michael Dell's proposal to buy the company significantly undervalues Dell. Yet while Icahn probably has the heft (and the votes) to scuttle Dell's go-private deal, he is unlikely to garner enough support to implement his proposal to increase shareholder value through a $14 tender offer.

The results are likely to be very disappointing for Dell shareholders. If this "clash of the titans" between Dell and Icahn ends in a stalemate, the company will find itself without a clear strategic direction and its valuation could revert to a much lower multiple, in keeping with Dell's uncertain prospects.

1. Dell-Silver Lake buyout on the rocks
Investors can debate whether the $13.65 buyout offer from Michael Dell and hedge fund Silver Lake Partners recognizes the "full" value of Dell. However, one thing cannot be disputed: Until Michael Dell and Silver Lake came along with a proposal to take the company private, Dell stock was worth much less, bottoming below $9 in late 2012.

Dell 1 Year Price Chart, data by YCharts

The rapid rise in Dell's stock price in early 2013 was a direct result of the buyout offer. Indeed, as Dell's "Special Committee" pointed out in a shareholder presentation released Friday, the PC industry outlook has been revised lower numerous times in the past year. Company fundamentals have also suffered, lagging those of competitors like Hewlett-Packard (NYSE: HPQ  ) .

This hasn't stopped Icahn from making the rounds on TV to tell anybody who will listen that Dell is worth far more than $13.65. Yet as the Wall Street Journal recently noted, Icahn has not offered to buy the company at any price; he wants Dell to fund a $14 tender offer with the company's cash on hand and new debt.

In late 2012, when Dell shares were mired below $10, most shareholders would have taken $13.65 in a heartbeat. Icahn's muckraking has clouded the waters; many shareholders now seem unwilling to sell at that price. Indeed, the Special Committee of Dell's board recently advised Michael Dell and Silver Lake to raise their bid in order to improve their chances of winning the upcoming shareholder vote. However, according to a Bloomberg report on Friday, Dell and Silver Lake will not budge.

2. Icahn's tender offer: a long shot
Shareholders voting against the Dell-Silver Lake buyout offer are probably doing so because they have been convinced that Icahn's tender offer plan would offer more value. However, investors need to understand that even if the Dell-Silver Lake buyout is rejected, Icahn's plan has a very low probability of being implemented.

The problem is that Michael Dell owns approximately 16% of the company. While he has to remain "neutral" in the buyout vote, he can vote as he pleases if the buyout offer fails. This means that while Icahn only needs to muster 42% of the shareholder vote to scuttle the buyout offer, he needs a full 50% to elect his slate of directors and proceed with his recapitalization plan.

According to AllThingsD, there is a good chance that the buyout will fail but Icahn will also fail to gain control of the company, leaving the company in no-man's-land. It has been very clear from the recent verbal sparring in the press that Icahn and Michael Dell have very different ideas about how to turn the company around. If the two sides are forced to share control of the company, prolonged bickering seems more likely than concerted action.

Foolish bottom line
If the "deadlock" scenario emerges, where neither Michael Dell nor Carl Icahn can take full control of the company, Dell stock could plummet. Dell's special committee noted in its recent presentation that if Dell were to trade for the same earnings multiple as HP, shares would be worth just $5.85-$8.67 across a range of plausible scenarios.

Dell shares are trading at a significant discount to Michael Dell's buyout offer ($13.65) and Carl Icahn's proposed tender offer ($14) for good reason. Shareholders are so closely divided that it is very possible that both proposals will fail. Even if you are willing to sell your Dell stock for $13.65 and Michael Dell wants to buy your stock for $13.65, you'll only be able to sell at that price if enough other shareholders are of the same mind.

While virtually every shareholder favors either Dell's plan or Icahn's plan over the status-quo, the two sides may be reaching a deadlock that keeps the status-quo intact by default. Ordinary shareholders are just pawns in this high-stakes game. The growing likelihood of stalemate makes Dell an incredibly risky stock for investors -- one that should probably be avoided.

Dell is trying to transform itself to take advantage of new trends in the IT world, like the rise of "Big Data." The amount of data we store every year is growing by a mind-boggling 60% annually! To make sense of this trend and pick out a winner, The Motley Fool has compiled a new report called "The Only Stock You Need to Profit From the NEW Technology Revolution." The report highlights a company that has gained 300% since first recommended by Fool analysts but still has plenty of room left to run. To get instant access to the name of this company transforming the IT industry, click here -- it's free.

The 1 Earnings Report You Have to Watch

Detroit Makes Big Gains With Big Pickups

The Ford F-150, shown here in Limited trim, and its Super Duty siblings are America's top-selling pickups. Photo credit: Ford Motor Co.

June was the best month for U.S. auto sales since 2007, and one big factor is the boom in sales of full-sized pickup trucks. Ford (NYSE: F  ) , General Motors (NYSE: GM  ) , and Chrysler all posted big gains in pickup sales last month, and all three gained U.S. market share in the first half of 2013 – the first time that has happened in 20 years.

What's behind the boom? In this video, Fool.com contributor John Rosevear looks at the economic "perfect storm" that has made for great pickup sales, and at why that's likely to be a big deal when the Detroit automakers report second-quarter earnings later this month.

Ford has been making big gains in China's booming 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", says that Ford is one of two global giants poised to reap big gains from China's massive growth. You can read this report right now for free – just click here for instant access.

Ford and GM Invest Heavily in Their Futures

Ford China SUV media event. Photo Credit: Ford Motor Co.

If you follow the automotive industry you know the elite automakers are all drooling at the potential sales volume expected in China by 2020. General Motors (NYSE: GM  ) is throwing $11 billion toward its investments in China through 2016. Ford (NYSE: F  )  was late to the game in China but is investing nearly $5 billion on new plants there as well as introducing 15 new vehicles by mid-decade. Ford's sales in China have increased almost 50% through May but the company still trails its crosstown rival General Motors by a large margin. This is a gap that Ford hopes to close as it plans to double its market share over the next few years. One thing is clear, China is a future gold mine for automakers. Here are some details at just how how big China's surge is and what it means for investors.

By the numbers
China is witnessing a surge in light vehicle demand as a result of its growing middle class. Here are some facts to chew on to better understand the potential in China. Right now mature markets in Europe and here in the U.S. are on pace to sell roughly 12 million and 15.4 million vehicles this year, respectively. Last year China sold just over 19 million vehicles and is projected to sell 27 million vehicles by 2021, according to research from R.L. Polk & Co. Some estimates even have China breaking 30 million in that same time frame. Either of those two estimates is a significant increase compared to estimates that vehicle sales in Europe and the U.S. will reach around 15 million and 17.5 million, respectively, by 2020. 

Here's a tidbit that has executives at Detroit's Big Three cheering: The Chinese market has over 180 different brands available, yet eight of the 10 top brands are not Chinese. Global automakers are positioned to benefit in the early stages of China's vehicle sales growth because the Chinese favor imports' reputations of higher quality vehicles. Chinese automotive brands represent only 40% market share; according to Polk's research, as many as half the Chinese automakers could go out of business in the coming years.

Another statistic from Polk shows that there are only 37 cars per every 1,000 people in China. That's less than one-third of the global ratio of 114 cars for every 1,000. Polk anticipates that China's surging middle class will boost that ratio to 130 cars for every 1,000 by 2020 – this spells huge profits for the automakers that are positioned with brand loyalty, high quality, and popular models in the region.

Caveat
As a way of entering the world's biggest and fastest growing auto market, joint ventures were developed between Detroit's Big Three automakers and Chinese companies. These joint ventures give Chinese companies full use of our technology and ways of doing business – shortening the learning curve for Chinese automakers.

Furthermore, as international brands continue to make vehicles on global platforms with similar design features for all markets, Chinese automakers will likely become increasingly competitive globally, not just in China, as we head toward 2020. The shortened learning curve for China's automakers and the influence of politics on business in the region are good reasons why global automakers need to succeed early in the country's automotive market boom. The next leader in global auto sales will likely be a company that has sustained success in China as well as the U.S. – this will be a company worth a spot in any portfolio.

Which automakers are best positioned to profit from the surge in China? 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.

GM and Honda Team Up on Fuel Cell Technology

Source: GM.com, Project Driveway Program. GM's Project Driveway program, launched in 2007, has accumulated nearly 3 million miles of real-world driving in a fleet of 119 hydrogen-powered vehicles.

General Motors (NYSE: GM  ) and Honda (NYSE: HMC  ) announced today a long-term agreement aimed at co-developing commercially feasible fuel cell technology by around 2020.

The two automakers said they plan to pool their resources, capitalizing on shared expertise, economies of scale, and common sourcing strategies to make their goals concerning next-generation fuel cell system and hydrogen storage technologies a reality.

"This collaboration builds upon Honda and GM's strengths as leaders in hydrogen fuel cell technology," said GM chairman and CEO Dan Akerson in a statement today. "We are convinced this is the best way to develop this important technology, which has the potential to help reduce the dependence on petroleum and establish sustainable mobility."

Honda President and CEO Takanobu Ito was quoted in the same press release as saying, "Among all zero CO2 emission technologies, fuel cell electric vehicles have a definitive advantage with range and refueling time that is as good as conventional gasoline cars. Honda and GM are eager to accelerate the market penetration of this ultimate clean mobility technology, and I am excited to form this collaboration to fuse our leading fuel cell technologies and create an advanced system that will be both more capable and more affordable."

Fuel cell vehicles have electric motors that are powered by a chemical reaction between hydrogen and oxygen. Ford, Daimler and Renault-Nissan announced a similar plan to collaborate on hydrogen vehicles earlier this year. GM and Honda said they will also push for more refueling infrastructure. The companies said fuel cell vehicles can have up to 400 miles driving range and can be refueled in as little as three minutes.

The auto companies said that according to the Clean Energy Patent Growth Index, they hold the top two spots with more than 1,200 fuel cell patents collectively filed between 2002 and 2012. GM is currently experimenting with 119 hydrogen-powered vehicles, while Honda has 85 units on the road.

-- Material from The Associated Press was used in this report.

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Europe Could Sink Wall Street Ahead of Holiday

Did you think the debt crisis in Europe was over? Not so fast.

Major European markets tumbled between 1.4% and 2% today after two of Portugal's cabinet members resigned, sparking worries that a coalition that passed austerity measures may be cracking. Portugal's bonds jumped more than 1% to exceed 8% for the first time since November.  

To add to these concerns, oil is up 2% as an all-out upheaval in Egypt starts to look more and more likely. That could have a big impact on oil supply coming from the Middle East, although right now it's more speculation than reality. Wall Street still doesn't like what it sees, and in premarket trading the Dow Jones Industrial Average (DJINDICES: ^DJI  ) has fallen 0.26% while the S&P 500 (SNPINDEX: ^GSPC  ) is down 0.31%.

Global markets will have a negative impact on Wall Street today, but the jobs market may cheer up some investors. ADP's jobs report for June showed an addition of 188,000 jobs for the month, well ahead of economists' expectations for 160,000 new jobs. This is a key signal that the Department of Labor's nonfarm payroll report may be better than expected on Friday. The Department of Labor released weekly jobless claims this morning, reporting that they fell by 5,000 to 343,000 last week.

After a short day of trading today, the jobs report will be out before markets open again on Friday, and it will drive stocks for a couple of days until earnings season kicks in.  

On a company level, investors should follow the never-ending saga of Dell's (NASDAQ: DELL  ) potential buyout. The company has already spurned Carl Icahn, and now Michael Dell himself is under pressure to increase his contribution if he wants to make a deal happen. Private-equity firm Silver Lake Partners has balked at adding to the pot in an effort to close the deal. One reason is that the PC market has deteriorated further since Dell brought up buyout plans -- and the company was unappealing enough as it was, even at that discounted price. Dell will certainly be the talk of Wall Street today.

Always a Bridesmaid, Never the Bride: Where Will DISH Turn Now?

After more than nine months of high-stakes dealmaking, Sprint Nextel (NYSE: S  ) and Clearwire (NASDAQ: CLWR  ) have finally found their permanent homes. I think they're turning Japanese.

DISH Network (NASDAQ: DISH  ) dropped its $25.5 billion bid for Sprint and then abandoned the $6.3 billion offer to buy Clearwire. That leaves Japan-based wireless operator Softbank unopposed in its quest to own Sprint, which in turn lost its only challenger for Clearwire ownership. Sprint shareholders have already approved the Softbank merger. It's only a matter of time and formalities before the Sprint-Clearwire bundle lands in Japanese hands.

Shareholders in Sprint and Clearwire may or may not be sad to see DISH leave the negotiating table, but they certainly should appreciate the bidding war that just ended. Sprint shares have more than doubled over the past year, while Clearwire quadrupled.

Where does that leave DISH? Scouring the wireless market for leftovers, of course. In the following video, Fool contributor Anders Bylund dismisses the idea that DISH might give up on ground-based wireless networking at this point, and suggests two options to move Chairman Charlie Ergen closer to his wireless broadcasting ambitions.

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 I'm Buying More Costco Now

Costco (NASDAQ: COST  ) was one of the first stocks I purchased for the Prosocial Portfolio I'm managing for Fool.com. It's one of my very favorites -- a company that sets high standards in an industry that generally keeps their standards pretty low. However, I have failed to add to my position.

That's about to change. Finally, I'm purchasing a little more of this gold-standard stock for the portfolio now, two years after the initial buy, and it's long overdue.

An increasing competitive advantage
Costco's been a real winner since I purchased it for the portfolio in December 2010, and before. The company has been a success both in terms of operations and stock price, even weathering the worst of the recessionary environment.

When I bought shares of Costco for the Prosocial Portfolio, which seeks to include positive environmental, social, and governance (ESG) factors in its design, I may have lost a few people. I got the impression that some people couldn't fathom how Costco could possibly be considered a socially responsible company.

Basically, Costco had a secret, and unlike many of corporate America's secrets, it was actually a nice one.

Costco is one of the few retail companies that gives workers living wages and important benefits like health insurance. Former CEO Jim Sinegal designed the company that way. Although sticklers for the bottom line often pushed at him to squeeze out more profits by cutting the bennies, Sinegal never backed down from doing the right thing.

Now that Sinegal has retired from the CEO post, current CEO Craig Jelinek has clearly continued to carry the torch high at Costco. As much as any changing of the guard can be disturbing at a public company, Jelinek hasn't changed worker-friendly and admirable aspects that make Costco special. He was an insider who was always down with the program.

Over the last two years or so, I've noticed that more consumers seem to be catching on that Costco sets itself apart from discounters such as Wal-Mart (NYSE: WMT  ) and Target (NYSE: TGT  ) . It's not because of factors like its slightly different customer demographic, its bulk items, or its treasure hunt atmosphere. Those worker-friendly attributes do make for a happy workforce, and consumers feel good about a retailer with well-treated employees.

BusinessWeek recently reported on Costco's happy workforce, and how it differentiates itself from its industry in a big way. The average hourly worker at Costco makes $20.89 per hour, and that doesn't include overtime payments. Minimum wage is $7.25 per hour, and although Wal-Mart does exceed that bottom-rung mandate, it's not by much. Wal-Mart's average pay for full-time workers is $12.67 per hour.

In addition, 88% of Costco's workers have health insurance through the company, and its employees pay less than 10% of their plans' cost in premiums.

Here's Jelinek's refreshingly common-sense take on Costco's voluntary business decision:

I just think people need to make a living wage with health benefits. It also puts more money back into the economy and creates a healthier country. It's really that simple.

The BusinessWeek article (read it, it's great) uncovers quite a few outright oddities that set this retailer apart in a positive way. For example, Costco doesn't focus on bringing business school graduates on board but instead promotes people through the ranks of the company. In other words, you can start out as a cashier and have a shot at upward mobility at Costco. Apparently your work experience, performance, and potential mean more than a piece of paper (although Costco does assist in furthering workers' educations, too).

Go ahead and bust on that, I dare you. Here's another rebuttal: Google (NASDAQ: GOOG  ) recently dropped a real bombshell. An executive admitted that according to its internal data, its focus on hiring workers boasting high GPAs and test scores generally added nothing to its business. Such qualifications were "almost worthless," and Google has started hiring a few workers who didn't even attend college. 

Apparently Costco knew this a long time ago.

Price vs. philosophy
Granted, Costco is also commonly viewed as one of the most expensive retail stocks out there. Its forward price-to-earnings ratio of 22 exceeds those of Wal-Mart and Target by a long shot. Both trade at 13 times forward earnings. Many value investors would tell you which of these stocks are the cheap ones.

Still, Costco's basic philosophies are so positive -- for workers, employees, and shareholders -- that I'm willing to pay the premium price. Some might accuse me of touchy-feely analysis, but I believe this is completely logical. These business practices promise long-term growth, increasing customer traffic, a rock-solid brand, and continued customer loyalty because of all the things Costco's management does right.

Companies like Wal-Mart and Target face major reputational risk that really could drive customers away over the long haul. Just days ago, Wal-Mart endured yet another employee strike. Target somehow squeaks by with a pretty solid brand and reputation, but the odd and generally unpublicized truth is that Target pays its employees slightly lower wages than Wal-Mart does.

In even more examples of reputational risk, Wal-Mart still faces a bribery investigation, and both Wal-Mart and Target have had to distance themselves from Paula Deen amid major controversy.

Obviously, Costco isn't immune to the occasional reputational dings. For example, Tiffany recently became the latest company that accused Costco of trodding on its brand by selling "Tiffany" rings that weren't actually from Tiffany. Still, occasional problems like that tend to be rectified, and not quite as soul-destroying as some of the controversies that have enveloped peers.

Stocking up on the gold standard
The only reason that it took me this long to buy more Costco was my hope for a temporary fall in Costco's price. The market sometimes delivers such opportunities, and one of the strategies I try to use when I can is to try to figure out when negative psychology outweighs a business's reality and jump on chances. If Costco's price falls from here, you'd better believe I'll add to the position again, too.

Gold-standard stocks can survive thick and thin. The Prosocial Portfolio is about positive business and positive returns. The intention is also to pick great companies to weather economic storms and market mayhem. In my opinion, Costco is one of the safest stocks investors can buy for the long haul.

The retail space is in the midst of the biggest paradigm shift since mail order took off at the turn of last century. Only the most forward-looking and capable companies will survive, and they'll handsomely reward investors who understand the landscape. You can read about the 3 Companies Ready to Rule Retail in The Motley Fool's special report. Uncovering these top picks is free today; just click here to read more.