After-the-Bell Earnings Wrap: FB, EXPE, WTW

NEW YORK (TheStreet) -- Earnings for Facebook (FB), Expedia (EXPE) and Weight Watchers (WTW) were a mixed bag, sending shares in opposite directions.

Facebook

Social networking king Facebook slipped 0.2% to $48.91 in after-market trading, reversing an earlier gain of 12%.

For its third quarter, Facebook reported earnings of 25 cents a share compared to an average of 19 cents a share according to a survey of analysts by Thomson Reuters. Revenue of $2.02 billion, 49% of which was generated by mobile, was higher than an anticipated $1.91 billion. TheStreet Ratings team rates Facebook Inc as a Hold with a ratings score of C-. TheStreet Ratings Team has this to say about their recommendation: "We rate Facebook Inc (FB) a HOLD. The primary factors that have impacted our rating are mixed -- some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures and impressive record of earnings per share growth. However, as a counter to these strengths, we find that the company's return on equity has been disappointing." You can view the full analysis from the report here: FB Ratings Report

Expedia

Expedia shares were surging 18% in after-hours trading after reporting better-than-expected third-quarter figures. The online travel agent reported earnings of $1.43 a share on revenue of $1.4 billion. Analysts surveyed by Yahoo! Finance were expecting $1.35 a share on $1.37 billion. Shares closed in regular trading at $49.96.

TheStreet Ratings team rates EXPEDIA INC as a Hold with a ratings score of C+. The team has this to say about its recommendation: "We rate EXPEDIA INC (EXPE) a HOLD. The primary factors that have impacted our rating are mixed -- some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its robust revenue growth, reasonable valuation levels and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and weak operating cash flow." You can view the full analysis from the report here: EXPE Ratings Report

Weight Watchers

Weight Watchers plunged 14% to $34.31 in after-hours trading following an unexpectedly negative 2014 forecast. The weight-management company said it expects a "challenging" year ahead as revenue continues to be buffeted by waning new memberships.

"While we are working aggressively on both near-term commercial activities and longer-term strategic initiatives, 2014 will be a very challenging year.  To maintain financial flexibility and fund the company's transformation, the board has elected to suspend the dividend," said CEO Jim Chambers in a statement. The New York-based company reported third-quarter earnings of $1.07 a share on revenue 8.5% lower than a year earlier of $393.9 million. Analysts surveyed by Yahoo! Finance had expected 84 cents a share on $386.5 million. Management said cost-cutting measures allowed the business to surpass third-quarter expectations but that the trend will not extend to the fourth quarter. "While progress on cost cutting has allowed us to exceed our Q3 expectations, we expect Q4 revenues to be down low double digits," said Chambers. TheStreet Ratings team rates WEIGHT WATCHERS INTL INC as a Hold with a ratings score of C+. TheStreet Ratings Team has this to say about their recommendation: "We rate WEIGHT WATCHERS INTL INC (WTW) a HOLD. The primary factors that have impacted our rating are mixed ? some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. Among the primary strengths of the company is its expanding profit margins over time. At the same time, however, we also find weaknesses including a generally disappointing performance in the stock itself, deteriorating net income and weak operating cash flow." You can view the full analysis from the report here: WTW Ratings Report

China Construction Bank in talks with Brazil bank

China Construction Bank Corp. (0939.HK), China's second-largest bank by assets, is in talks to buy a mid-sized Brazilian bank, with privately owned Banco Industrial e Comercial SA (BICB4.BR) among over 20 such targets it is looking at, a person with knowledge of the matter said Wednesday.

It wasn't immediately clear whether the talks with Brazil's BicBanco would lead to a deal, the person said. BicBanco has a market value of US$776 million and is controlled by the Bezerra de Menezes family.

BicBanco said in a filing to the Brazilian Stock Exchange Tuesday that its controlling shareholders are always open to business opportunities and have been in talks to sell their stake. "However, no agreement has been achieved so far without any binding documents signed or even any confirmation that the sale of control of the company will be held."

China Construction Bank has been in talks to buy a Brazilian bank for over a year now, seeking to capitalize on growing ties between Chinese companies and Latin America. It made a bid for German bank WestLB AG's assets in Brazil last year but lost out to Japan's Mizuho Financial Group. Chinese state-run oil companies have made a big push into Latin America over years as part of efforts to secure energy supplies and diversify their investments abroad, and Chinese banks are joining oil companies in investing in the region.

Brazil's banking system is dominated by five major banks, but there are around 170 small and mid-sized banks with about 220 billion Brazilian reais ($97 billion) in loans outstanding. The assets in Brazil's financial system were worth 5.2 trillion reais at the end of the first quarter, with BicBanco holding 16 billion reais in assets, according to the Central Bank of Brazil.

The Sao Paulo headquarted BicBanco provides retail and wholesale banking, according to FactSet. It also offers auto financing, consumer credit, foreign exchange and fund management and has a brokerage business.

Write to P.R. Venkat at venkat.pr@wsj.com and Prudence Ho at prudence.ho@wsj.com

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Dow Jones Newswires

More new-car buyers opt for 7-year loans

More new-car buyers are stretching out their loan payments as long as possible -- as many as seven years -- and experts wonder if the trend is another financial time bomb.

While many buyers remember the days when ads touted 48-month loans, today the biggest growth is coming in loans lasting up to 84 months. That's longer than most people are expected to want to keep their new car.

The longest-term new-car loans -- 73 to 84 months -- have jumped 25.1% in the past year and now make up 19.5% of total new-car lending, according to Experian Automotive. All other loan-length categories, in fact, have become less popular as buyers shift to longer terms to get lower payments.

The next-shorter category -- 61 to 72 months and considered a very long loan only a few years ago -- now is 41.7% of new-car loans, Experian says. That's down 3.2% from a year ago, but it's still by far the biggest single loan-length category.

Short loans of 25 to 36 months -- the time limit that many financial planners and advisers recommend not be exceeded -- fell 24.7%, and the 37-to-48-month loan category was off 2.4%.

The phenomenon marks a turnabout from the Great Recession, when lenders were tight with even shorter term car loans. Now, low interest rates, near-record low loan delinquency rates, high average used-car prices and cars lasting longer all appear to be contributing to the trend.

Also having an effect: Old trade-ins. The average age of vehicles on the road is about 11 years, while the average transaction price of a new vehicle has gone from $25,703 in 2002 to $30,592 now, according to researcher TrueCar.

So people finally trading for a new model might have 11-year-old trade-ins worth nearly nothing, even as they try to buy new vehicle priced thousands of dollars more than when they last bought.

Long-term loans with lower payments might be the only answer for those buyers, even though they'll pay more overall than with a shorter loan.

At the average new-car interest rat! e of 3.94%, the monthly payment on a $28,000, 48-month loan would be $631.46. That works out to a $30,310.08 repayment, including the $2,310.18 in interest. Same deal, 84 months: $381.95 monthly payment, for a total of $32,083.80 paid, or $4,084.11 in interest.

Thus, the longer loan costs the borrower $1,773.93 more in interest.

"You end up 'upside down' (owing more than the car is worth) for a longer time," says Greg McBride, senior financial analyst for Bankrate.com. "You are going to pay down the balance at a snail's pace while the vehicle depreciates rapidly."

"It's definitely market driven," says Allen Foster, general manager of Smart Motors in Madison, Wis."Customers want a vehicle, but have a budget to work within." At his big Toyota dealership, 16% of loans now average 72 months or longer, up from 11% as recently as 2010.

Lee Auto Malls, a family-owned multi-brand dealer chain in Maine, is seeing longer-term loans and says it reflects stagnant incomes and tight family budgets at a time when new-car prices are rising.

Customers want to "keep a payment at $300 a month when a car is now $28,000," says Chairman Adam Lee. Finance companies are giving customers want they want, but he says "it scares me."

Lenders say, though, it's not necessarily cash-strapped customers who opt for the longer loans.

"It's people with higher credit" generally, says Toyota Credit spokesman Justin Leach. "A lot get paid off before hitting 84 months."

Time for the Aussie Government to Step Up

In recent weeks, we’ve noted that Australia has three factors in place that should help spur an eventual rebound in its economy: historically low interest rates, a weakening exchange rate, and a new, more business friendly government that’s likely to rescind both the carbon tax and the Minerals Resource Rent Tax (MRRT). However, the situation with the Australian dollar has now become more complex, while stronger-than-expected inflation data could cause the Reserve Bank of Australia (RBA) to stand pat on short-term rates.

Until earlier this year, the Australian dollar had enjoyed unusual strength relative to other developed-world currencies, thanks in part to the perception that it’s backed by a resource-based economy. Unfortunately, a strong Aussie made the country’s exports less competitive in global markets, while raising consumer demand for imports at the expense of domestic manufacturers.

Although one of the main goals of the RBA’s easing cycle has been to undercut the Aussie’s strength, the currency didn’t truly weaken until US Federal Reserve Chief Ben Bernanke indicated that the central bank was considering when to start withdrawing some of its extraordinary stimulus. The Aussie subsequently fell below parity with the US dollar, bottoming at USD0.89 in August.

But the Fed blinked when it came time for what many assumed would be a September taper, and the recent government shutdown along with a still sluggish US economy suggest a further delay in the central bank’s eventual curtailment of it’s so-called quantitative easing. That, in turn, has bolstered the Aussie, which is up 7.9 percent since early September and currently trades near USD0.96. Even at that level, the currency is still about 9.4 percent off its year-to-date high.

The currency’s resurgence prompted an intriguing analysis from the Australian Chamber of Commerce and Industry’s outgoing policy chief, Greg Evans, who expects the Aussie to once again reach parity with the US dollar in the coming months. “Relying on a depreciating exchange rate to deliver greater competitiveness may lead to disappointment; more enduring alleviation will come from government and policymakers delivering the big structural reforms, including having a sustainable budget approach, reducing regulatory burdens and removing other cost-bearing rigidities,” he said.

“There has been too much reliance on currency depreciation as some type of silver bullet, and not on reform, which is the crux of the issue.” That may be a spot-on critique, but its perhaps too much to hope for a government in a representative democracy to easily deliver on such structural reforms, even one that’s favorably disposed to the business community, such as the ascendant Liberal-National Coalition.

Policymaking at the federal level is an inherently messy process, so it’s easy to understand why so many would place their hope in a weakening currency as a quick panacea for the economy’s ills. Nevertheless, the onus may now be on the government, as the RBA’s monetary policy could be constrained by a rising real estate market, which we’ve written about previously, along with a sudden surge in inflation, both of which diminish its scope for further easing.

This week, the Australian Bureau of Statistics reported a sharp jump in inflation, with the consumer price index jumping 1.2 percent sequentially during the third quarter, which was four-tenths of a percentage point higher than the consensus forecast and triple the pace of the second quarter.

This result was partially due to a declining Aussie’s impact on the prices of key imports. Although this could cause the central bank to moderate its easing bias to a more neutral stance, the central bank’s cash rate remains at an all-time low of 2.5 percent.

Of course, currency markets are dynamic, and the sudden jump in inflation could prove fleeting. But for now, it’s up to the Australian government to shoulder more of the burden of boosting the country’s economy.

US Stock Futures Flat Ahead Of Durable-Goods Data

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Pre-open movers

US stock futures were mostly flat in early pre-market trade, ahead of economic data. Data on durable goods orders for September will be released at 8:30 a.m. ET, while the Reuter's/University of Michigan's consumer sentiment index for October will be released at 9:55 a.m. ET. Data on wholesale inventories for August will be released at 10:00 a.m. ET. Futures for the Dow Jones Industrial Average fell 1 point to 15,453.00, while the Standard & Poor's 500 index futures declined 1.10 points to 1,747.40. Futures for the Nasdaq 100 index gained 5.75 points to 3,376.75.

A Peek Into Global Markets

European markets were mostly lower today, with the Spanish Ibex Index dropping 0.65%, London's FTSE 100 index rising 0.13% and STOXX Europe 600 Index declining 0.10%. German DAX 30 index fell 0.03% and French CAC 40 Index declined 0.13%.

Asian markets ended mostly lower today. Japan's Nikkei Stock Average tumbled 2.75%, China's Shanghai Composite fell 1.45% and Hong Kong's Hang Seng Index declined 0.60%. Australia's ASX/S&P500 rose 0.22% and India's Sensex declined 0.20%. Japan's core consumer price index increased 0.7% y/y in September, versus a 0.8% rise in August. The consumer price index rose 0.1% on a monthly basis.

Broker Recommendation

Analysts at JP Morgan downgraded United Continental Holdings (NYSE: UAL) from "neutral" to "underweight." The target price for United Continental Holdings has been lowered from $32.50 to $25.

United Continental's shares fell 1.76% to $30.75 in pre-market trading.

Breaking news

Weyerhaeuser Co (NYSE: WY) reported a 34% rise in its third-quarter profit. Weyerhaeuser's quarterly profit surged to $157 million, or $0.27 per share, from $117 million, or $0.22 per share, in the year-ago period. To read the full news, click here. Sorrento Therapeutics (NASDAQ: SRNE) announced the pricing of an underwritten public offering of 4,150,000 shares of common stock at an offering price of $7.25 per share. To read the full news, click here. Live Nation Entertainment (NYSE: LYV) has acquired Voodoo Music & Arts Experience, New Orleans' critically-acclaimed music festival. To read the full news, click here. B/E Aerospace (NASDAQ: BEAV) today announced that its Board of Directors has appointed Werner Lieberherr, who is currently President and Chief Operating Officer of B/E Aerospace, Inc., as co-Chief Executive Officer of B/E Aerospace, Inc. effective as of January 1, 2014. To read the full news, click here.

Posted-In: JP Morgan US Stock FuturesNews Eurozone Futures Global Pre-Market Outlook Markets

(c) 2013 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.

Partner Network   Around the Web, We're Loving... Learn to Use Trading Platforms Like Hedge Fund Traders do Rumsfeld: Denial of Benefits to Fallen Soldiers' Families 'Inexcusable' Come See How the Pro's Trade in this Exclusive Webinar Facebook, Baidu Lead Big Caps Beating Shutdown What Should You Know About AMZN? Most Popular UPDATE: Jefferies Downgrades Exelon Corporation on Valuation Earnings Scheduled For October 24, 2013 Apple Rumored To Ship 10 Million iPad Air Units In Q4 Icahn Makes a Big Profit on Netflix, Offers Lesson in Selling 3 Small Caps With Dividends over 4% That Could Grow Even Bigger Top Tweets From Stocktoberfest 2013 Related Articles (BEAV + LYV) US Stock Futures Flat Ahead Of Durable-Goods Data Live Nation Entertainment Acquires Voodoo Music & Arts Experience B/E Aerospace Names Werner Lieberherr Co-CEO His Name Is Kid Rock, Detroit Is His City UPDATE: Canaccord Genuity Initiates Coverage on B/E Aerospace as 2014 Acceleration is Expected Across All Segments Benzinga's Top Initiations View the discussion thread. Partner Network #marketfy-ae-block { display: none; border: 2px solid #0a3f75; overflow: hidden; width: 300px; height: 125px; text-align: center; background-color: #45719E; position: relative; z-index: 1; } #marketfy-ae-block a { display: block; width: 300px; height: 125px; position: relative; z-index: 2; color: #ffffff; text-decoration: none; } #marketfy-ae-block-countdown-text { color: #f9fc99; padding: 0px 0 0 0; font-size: 19px; font-weight: bold; line-height: 19px; } #marketfy-ae-block-countdown-text-start { font-size: 12px; } #marketfy-ae-block-countdown { padding: 5px 0 5px 0; font-size: 26px; } #marketfy-ae-block-signup { padding: 5px 47px; } #marketfy-ae-block-signup:hover { background-color: #457a1a; } #marketfy-ae-block #marketfy-ae-block-logo { display: block; padding: 3px 0 0 0; margin: 0; } #marketfy-ae-block-logo { text-indent: -9999px; } #marketfy-ae-block-free { display: block; position: absolute; top: 7px; right: -23px; width: 80px; height: 16px; line-height: 16px; text-align: center; opacity: 1; -webkit-transform: rotate(45deg); -moz-transform: rotate(45deg); -ms-transform: rotate(45deg); transform: rotate(45deg); font-size: 13px; font-weight: normal; color: #333333; background-color: yellow; z-index: 500; text-shadow: 1px 1px #999999; } #marketfy-ae-block-arrow { position: relative; width: 60px; height: 60px; z-index: 10; margin: -80px 0 13px -21px; } #marketfy-ae-block-arrow img { height: 60px; width: auto; }

Hasbro Follows Zynga's Lead

Hasbro (NASDAQ: HAS  ) is making a bet on social gaming, and it probably couldn't have happened without Zynga (NASDAQ: ZNGA  ) .

Hasbro's decision to invest $112 million for a 70% stake in Backflip Studios is being applauded by the market. Shares of the second-largest toy maker opened higher on the news. Investors seem to have forgotten that the last time that a publicly traded company spent nine figures on a mobile gaming company was Zynga's ill-advised $210 million purchase of OMGPOP last year.

Buying the parent company of Draw Something didn't pan out well for Zynga. It had to write off nearly half of its acquisition price a few months later. One would expect that the next notable deal in casual and social gaming would be greeted with brutal skepticism, but then Xbox chief Don Mattrick decided to leave Mr. Softy to become Zynga's new CEO.

If the Xbox boss is leaving the country's leading console platform to hop on a social gaming company that was dogged by declining bookings and defecting executives, surely this must be a sign that mobile gaming has bottomed.

The market seems to think so. Shares of Zynga soared 23% last week on Mattrick's move. Even Glu Mobile (NASDAQ: GLUU  ) -- another publicly traded mobile gaming player -- popped 15% higher on the week.

Glu did introduce a new game during the week, but let's not kid ourselves here. Glu moved higher because Mattrick's move validates Zynga's realm of free-to-play games that are easy to download through the growing base of active smartphones, tablets, and media players.

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I'm not suggesting that Hasbro wasn't courting Backflip before Mattrick's arrival at Zynga. However, one simple appointment probably helped seal the deal. Buying a mobile gaming company is suddenly fashionably acceptable on Wall Street. If anything, the deal may have rushed Hasbro into completing the terms to avoid having to pay even more. After all, if Zynga and Glu saw their market values increase sharply last week, what does this mean for the countless privately held app makers?

Zynga and Hasbro have helped each other before. The two companies teamed up last year to put out Zynga properties as real-world Hasbro board games. They obviously didn't work together this time, but it would be hard to picture Hasbro being praised for snapping up a majority stake in the company behind the Paper Toss franchise if Zynga hadn't made casual gaming cool again a week earlier.

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

Friday's Top News Headlines

Here are today's top news headlines from Fool.com. Check back throughout the day as this list is updated, and follow us on Twitter at TMFBreaking.

Fixed-Rate Mortgage Rate Spike Subsides

Chesapeake Announces $1 Billion in Asset Sales

June Job Growth Clocks In at 188,000, Beating Estimate

Zoetis to Expand Nebraska Plant

Crude Oil Inventories Fall 2.6%

Initial Jobless Claims Drop 1.4%

Trade Deficit Widens to $45 Billion for May

Services Sector Index Slumps for June

Apple to Fund Solar Plant to Power Data Center in Nevada

S&P Downgrades Nokia

Boeing's Order Book Expands Post-Paris Airshow

lululemon athletica Chairman Paring Stake in Company

Magna International's Top Strategist Steps Down

Restoration Hardware Shareholders to Sell Shares

Unemployment Rate Unchanged at 7.6% for June

Zynga Gives Mattrick $5 Million Sign-On Bonus

Acacia Research Switches CEOs

Microsoft Makes Deal With Former Windows Chief

When Does Tesla Plan to Unveil Its Newest Prototype?

At a recent presentation for Model S owners at his company's new service center in the German city of Munich, Elon Musk, CEO of Tesla Motors (Nasdaq: TSLA) revealed some new information relevant to both the German market and the company's global future.

More AC for the autobahn
He was announcing a soon-to-be-released free retrofit update, giving Model S owners an improved driving experience at high speed. That's a much-needed upgrade for German owners, who can reach speeds of 200km/h on the Autobahn. He also confirmed that Tesla's Supercharger network in Germany will have Europe's highest number of stations per capita by the end of 2014. The reason is simple: The faster you drive, the more you will need to recharge.

Musk stated that Tesla is increasing its focus on the German market. Germans are very protective of their big automakers, such as BMW; if Tesla manages to beat the German automakers on their own turf, it would send a strong message to the global car industry.

A peek at Tesla's future
Musk then revealed new details about the mass-market GEN III car, possibly named the Model E, on which Tesla's current market valuation heavily relies. For the first time, he announced a timeframe for a prototype: 12 to 15 months. He also reiterated that it'll have a range of at least 320km (200 miles).

Musk reassured his audience about the current anxiety surrounding Tesla's battery cell supply. He stated that Panasonic is set to increase its battery manufacturing capacity to allow Tesla to build between 1,200 and 1,500 cars a week by the end of next year. Samsung and LG are also stepping up as secondary suppliers to make sure the supply of battery cells keeps up with the demand.

Musk also gave some insight into next year's plans to ramp up of production next year. He is spending 80% of his time on the expansion of the production capacity and the development of the Model X SUV, and he sees about 200 deliveries a week in Germany in comparison to 400 a week in the US.

Tesla Motors will post its financial results for the third quarter after market close today. While you're waiting for those earnings, check out full video of Musk's talk at the Munich event:

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UPS' Contract Votes Coming In: Problems Loom Large

In the following video, Motley Fool industrial analyst Blake Bos takes a look at the preliminary counts coming in for UPS'  (NYSE: UPS  ) labor contract vote. While the national master contract looks as though it will pass, 14 regional and local contracts have been rejected so far. Blake discusses in the video why he thinks a strike would be unlikely, but shows how the margin the contract is passing by highlights a much bigger problem for UPS: nearly half of its employees are dissatisfied with the contract. He compares this vote to the last labor contract vote tally at UPS, which shows that employee satisfaction rates may be getting worse, not better.

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UnitedHealth Downgraded to “Hold” at Cantor Fitzgerald (UNH)

On Friday, Cantor Fitzgerald reported that it has downgraded UnitedHealth Group Inc. (UNH) to “Hold.”

The firm has cut its rating on UNH from “Buy” to “Hold,” and has lowered the company’s price target from $75 to $70. This price target suggests a 2% decline from the stock’s current price of $71.37.

Cantor Fitzgerald analyst Joseph D. France commented: “We are lowering our rating on UnitedHealth from BUY to HOLD to reflect its recent move near our $75 price target, which we are reducing to $70 to reflect our lower 2013-14 EPS estimates. Although the company’s 3Q:13 results were inline with expectations, and there is no significant change in its guidance (although management was more specific about the outlook than in the past), we see little upside in the stock, given uncertainty about reform, costs and utilization. Our new EPS estimates are $5.45 for 2013 (reduced from $5.50) and $5.75 for 2014 (vs. $6.10 previously).”

UnitedHealth shares were mostly flat during premarket trading Friday. The stock is up 32% YTD.

S&P 500 Touches New All-Time High

What started off as a bummer of a day, has turned back into a party.

Fred Dufour/Agence France-Presse/Getty Images

The S&P 500 has gained 0.5% to 1,729.80 at 3:28 p.m., just off the new all-time high of 1,730.29 hit a few minutes earlier. The Dow Jones Industrials have dropped 0.2% to 15,348.44.

This, from Citigroup’s Dirk Willer, sums up the vibe:

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Interesting… so we got negative earnings from [Goldman Sachs (GS), eBay (EBAY), International Business Machines (IBM). And SPX doing very well. You can argue that EBAY does not have broad relevance to market, and that GS is really a quarter to quarter thing, where earnings this quarter tell us little about next quarter (trading), but IBM is a big deal as it is a good measure of spending on IT. So SPX performance very impressive, even though it is driven to some extent by defensives/ rates plays (utilities, telcos etc). This is a good sign. The market wants to go up into year end.

How high can it go?

Why the Street Should Love CareFusion'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 CareFusion (NYSE: CFN  ) , 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, CareFusion generated $628.0 million cash while it booked net income of $320.0 million. That means it turned 17.3% of its revenue into FCF. That sounds pretty impressive.

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 CareFusion 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 24.8% of operating cash flow coming from questionable sources, CareFusion 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 16.8% of cash flow from operations. Overall, the biggest drag on FCF came from capital expenditures, which consumed 12.9% of cash from operations.

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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IDEXX Laboratories Taps Board Member, Iron Mountain Exec as New CFO

After 10 years on the board of IDEXX Laboratories (NASDAQ: IDXX  ) , including serving on its audit and compensation committees, Brian McKeon has been named IDEXX's new executive vice president and CFO, the company announced today. McKeon's appointment as CFO becomes effective Jan. 1, though he has resigned from the IDEXX board as of Oct. 11, the company said.

McKeon has been CFO of records and storage services provider Iron Mountain since April 2007. Iron Mountain announced his departure from that company last week, saying he would step down Oct. 31 but remain with the company through the end of the year to help with the transition. McKeon was also executive vice president and CFO of Timberland for seven years, from 2000 to 2007, a privately held supplier of outdoor footwear and clothing.

Best Undervalued Companies To Buy Right Now

Commenting on the appointment of McKeon, IDEXX Chairman, President and CEO Jonathan Ayers said, "Due to McKeon's 10 years of experience serving as an IDEXX Board member, he has an in-depth knowledge of the Company, which will be a key advantage as he embarks on this important leadership position within the Company."

IDEXX operates in two primary business units, which include IT and diagnostics for the vet market, and water products for livestock and poultry. IDEXX's other business units, products for the dairy marketplace and human medical care diagnostics, are ancillary divisions.

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Does Johnson & Johnson Support Higher Prices?

With shares of Johnson & Johnson (NYSE:JNJ) trading around $85, is JNJ an OUTPERFORM, WAIT AND SEE, or STAY AWAY? Let's analyze the stock with the relevant sections of our CHEAT SHEET investing framework:

T = Trends for a Stock’s Movement

Johnson & Johnson engages in the research and development, manufacture, and sale of various products in the health care field worldwide. The company operates in three segments: Consumer, Pharmaceutical, and Medical Devices and Diagnostics. The company offers a range of products used in general care, women''s health fields, nutritional and anti-infective, contraceptive, gastrointestinal, oncology, pain management, and vaccines. It also offers products to treat cardiovascular disease, orthopedic and neurological products, blood glucose monitoring and insulin delivery products, and general surgery products. Through its wide variety of health care products, Johnson & Johnson is able to support consumers and medical businesses around the world that continue to demand improved products.

Recently, the Defense Department has awarded two contracts to Johnson & Johnson, worth more than $62 billion all told. One is for $42.1 million, when the Department exercises the fifth of seven possible option-year extensions on a contract through which to provide the United States Army, Air Force, Navy, Marine Corps, and federal civilian agencies with “various medical and surgical products.” The other contract, worth $21.6 million, is connected with exercising the fourth of seven possible option-year extensions on a separate contract to supply like products to the same military branches and government agencies.

T = Technicals on the Stock Chart Are Mixed

Johnson & Johnson stock trended higher over the last several months. However, the stock is now pulling-back from all time highs as investors began to book gains. Analyzing the price trend and its strength can be done using key simple moving averages. What are the key moving averages? The 50-day (pink), 100-day (blue), and 200-day (yellow) simple moving averages. As seen in the daily price chart below, Johnson & Johnson is trading between its key averages which signal neutral price action in the near-term.

(Source: Thinkorswim)

Taking a look at the implied volatility (red) and implied volatility skew levels of Johnson & Johnson options may help determine if investors are bullish, neutral, or bearish.

	Implied Volatility (IV)	30-Day IV Percentile	90-Day IV Percentile
Johnson & Johnson Options	21.64%	96%	93%

What does this mean? This means that investors or traders are buying a very significant amount of call and put options contracts as compared to the last 30 and 90 trading days.

	Put IV Skew	Call IV Skew
October Options	Flat	Average
November Options	Flat	Average

As of today, there is an average demand from call buyers or sellers and low demand by put buyers or high demand by put sellers, all neutral to bullish over the next two months. To summarize, investors are buying a very significant amount of call and put option contracts and are leaning neutral to bullish over the next two months.

On the next page, let’s take a look at the earnings and revenue growth rates and the conclusion.

E = Earnings Are Mixed Quarter-Over-Quarter

Rising stock prices are often strongly correlated with rising earnings and revenue growth rates. Also, the last four quarterly earnings announcement reactions help gauge investor sentiment on Johnson & Johnson’s stock. What do the last four quarterly earnings and revenue growth (Y-O-Y) figures for Johnson & Johnson look like and more importantly, how did the markets like these numbers?

	2013 Q2	2013 Q1	2012 Q4	2012 Q3
Earnings Growth (Y-O-Y)	166.00%	-13.48%	1050.00%	-8.70%
Revenue Growth (Y-O-Y)	8.51%	8.46%	8.02%	6.54%
Earnings Reaction	0.00%	2.11%	-0.51%	1.38%

Johnson & Johnson has seen mixed earnings and rising revenue figures over the last four quarters. From these numbers, the markets have been pleased with Johnson & Johnson’s recent earnings announcements.

P = Excellent Relative Performance Versus Peers and Sector

How has Johnson & Johnson stock done relative to its peers, Pfizer (NYSE:PFE), Covidien (NYSE:COV), Novartis (NYSE:NVS), and sector?

	Johnson & Johnson	Pfizer	Covidien	Novartis	Sector
Year-to-Date Return	22.14%	12.20%	14.07%	15.48%	14.96%

Johnson & Johnson has been a relative performance leader, year-to-date.

Conclusion

Johnson & Johnson provides valuable and essential health care products and services to many consumers and companies operating worldwide. The company recent acquired two large contracts that may be a positive catalyst for the stock. The stock has been trending higher recently but is now pulling-back from all time high prices. Over the last four quarters, earnings have been mixed while revenues have been rising, however, investors have been pleased during recent earnings announcements. Relative to its peers and sector, Johnson & Johnson has been a year-to-date performance leader. Look for Johnson & Johnson to OUTPERFORM.

This Week in Biotech

With the SPDR S&P Biotech Index up 29% over the trailing-12-month period, it's evident that investment dollars are willingly flowing into the biotech sector. Keeping that in mind, let's have a look at some of the rulings, studies, and companies that made waves in the sector last week.

Clinically impressive
As we do at the conclusion of every week, let's lead off with some of the most positive stories within the sector. Perhaps none stands out as more intriguing than Gilead Sciences (NASDAQ: GILD  ) late-stage study of idelalisib in previously treated chronic lymphocytic leukemia patients who aren't fit for chemotherapy. According to Gilead's press release on Wednesday, an independent data monitoring committee stopped the trial early because of, "highly statistically significant efficacy for the primary endpoint of progression-free survival in patients receiving idelalisib plus rituximab compared to those receiving rituximab alone." It's looking as if we can chalk up another successful late-stage study for Gilead.

Alkermes (NASDAQ: ALKS  ) also joined the party by announcing on Thursday that its experimental major depressive disorder therapy ALKS-5461 had received a fast track designation from the Food and Drug Administration. A fast track designation helps a biotechnology company by expediting its review process once it files for a new drug application so this is great news for Alkermes shareholders and MDD patients. In mid-stage trials ALKS-5461 met its primary endpoint of a change from the baseline in depressive symptoms according to the Hamilton Depression Rating Scale when tested in a group of 142 patients. ALKS-5461 holds unique promise since most MDD drugs are really a one-size-fits-all type medication.

Pfizer's shoulder shrug
For others it was more of a mixed week. On Wednesday, Pfizer (NYSE: PFE  ) reported top-line results from two of its five late-stage studies for its FDA-approved drug Xeljanz (known chemically as tofacitinib) for the treatment of moderate-to-severe chronic plaque psoriasis. As you may have inferred from the subhead, the results were so-so at best. The 5mg dose didn't demonstrate non-inferiority to Enbrel in one study, but Xeljanz did show a demonstrable benefit in patients relative to Enbrel once they stopped taking the drug. There's still plenty of data left to play out and we won't get that data until next year, but Pfizer is probably going to need stronger data than this if it hopes to add psoriasis as an indication for Xeljanz.

Teva brings out the ax
Becoming the latest large biopharmaceutical company to dramatically trim its workforce, on Thursday Teva Pharmaceutical (NYSE: TEVA  ) announced that it'd be shedding 5,000 of its 46,000 global employees in an effort to save $2 billion annually by 2017. Teva plans to use its saved cash to reinvest in its R&D pipeline with a specific focus on complex generic drugs and specialty branded pharmaceutical products. In addition, it also plans to focus on emerging markets which should help it cope with the upcoming loss of Copaxone to generic competition. Copaxone, a multiple sclerosis blockbuster, currently accounts for close to one-fifth of Teva's revenue. This looks like a necessary move for the company, but it could lead to shaky growth over the next couple of quarters as it transitions.

This week's duck-and-cover
This week's disaster du jour 00 and what a disaster it was -- is Ariad Pharmaceuticals (NASDAQ: ARIA  ) which plummeted as much as 77% at one point after updating investors to new developments with its only FDA-approved drug and primary pipeline candidate, Iclusig. According to Ariad's press release, follow-up studies of patients taking Iclusig demonstrated a higher risk for arterial thrombosis, causing Ariad and the FDA to place a clinical hold on all new clinical trial patients and cut the dosing in half for all remaining trial patients. Investors have been expecting Iclusig to gain considerably more indications in treating chronic myeloid leukemia, the most common type of blood cancer in adults, but toxicity issues are certainly going to make that difficult to achieve now.

Two game-changing biotech you should be watching
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Hot High Tech Companies To Invest In 2014

5 Stocks Spiking on Big Volume

DELAFIELD, Wis. (Stockpickr) -- Professional traders running mutual funds and hedge funds don't just look at a stock's price moves; they also track big changes in volume activity. Often when above-average volume moves into an equity, it precedes a large spike in volatility.

>>5 Stocks Poised for Breakouts

Major moves in volume can signal unusual activity, such as insider buying or selling -- or buying or selling by "superinvestors."

Unusual volume can also be a major signal that hedge funds and momentum traders are piling into a stock ahead of a catalyst. These types of traders like to get in well before a large spike, so it's always a smart move to monitor unusual volume. That said, remember to combine trend and price action with unusual volume. Put them all together to help you decipher the next big trend for any stock.

>>5 Rocket Stocks Ready for Blastoff

With that in mind, let's take a look at several stocks rising on unusual volume today.

Hain Celestial Group

Hain Celestial Group (HAIN) manufactures, markets, distributes and sells natural and organic products. This stock closed up 1.7% to $79.56 in Monday's trading session.

Monday's Volume: 801,000

Three-Month Average Volume: 521,395

Volume % Change: 50%

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Shares of HAIN moved higher on Monday after a Piper Jaffray analyst upgraded the stock from neutral to overweight on rising demand for organic, natural, gluten-free foods, as well as those that have been genetically modified. Piper said that Hain Celestial is well-positioned to capitalize on these trends and raised their price target to $94 from $80.

From a technical perspective, HAIN spiked modestly higher here right above its 50-day moving average of $77.49 with above-average volume. This stock has been uptrending for the last few weeks, with shares moving higher from its low of $75.81 to its intraday high of $80.40. During that move, shares of HAIN have been mostly making higher lows and higher highs, which is bullish technical price action. That move has now pushed shares of HAIN within range of triggering a near-term breakout trade. That trade will hit if HAIN manages to take out Monday's high of $80.40 and then more resistance at $81.55 with high volume.
Traders should now look for long-biased trades in HAIN as long as it's trending above its 50-day at $77.49, and then once it sustains a move or close above those breakout levels with volume that hits near or above 521,395 shares. If that breakout hits soon, then HAIN will set up to re-test or possibly take out its next major overhead resistance levels at $83 to its 52-week high at $85.48.

ExOne

ExOne (XONE) is a global provider of 3D printing machines and printed products to industrial customers. This stock closed up 9.3% at $48.32 in Monday's trading session.

Monday's Volume: 1.81 million

Three-Month Average Volume: 879,349

Volume % Change: 93%

Shares of XONE skyrocketed higher on Monday after FBR Capital Markets reiterated its outperform rating and a $75 price target on the stock.

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From a technical perspective, XONE exploded higher here right above some near-term support at $42.16 with strong upside volume. This stock has been downtrending badly for the last month and change, with shares moving lower from its high of $72.90 to its recent low of $42.16. During that move, shares of XONE have been consistently making lower highs and lower lows, which is bearish technical price action. That said, shares of XONE look ready to see an end in the short term to their downside volatility -- and potentially start a new uptrend.

Traders should now look for long-biased trades in XONE as long as it's trending above Monday's low of $44.02 and then once it sustains a move or close above Monday's high of $49.48 with volume that hits near or above 879,349 shares. If we get that move soon, then XONE will set up to re-test or possibly take out its next major overhead resistance levels at $56 to its 50-day at $60.21.

eHealth

eHealth (EHTH) is a health insurance exchange through which individuals, families and small businesses can compare health insurance products and purchase and enroll in coverage online. This stock closed up 2.3% at $33.98 in Monday's trading session.

Monday's Volume: 208,000

Three-Month Average Volume: 124,817

Volume % Change: 115%

>>5 Cash-Hoarders to Triple Your Gains

From a technical perspective, EHTH trended modestly higher here right above some key near-term support levels at $32 and $31 with above-average volume. This stock has been uptrending strong for the last two months, with shares moving higher from its low of $26.68 to its recent high of $35.92. During that uptrend, shares of EHTH have been mostly making higher lows and higher highs, which is bullish technical price action. That move has now pushed shares of EHTH within range of triggering a major breakout trade. That trade will hit if EHTH manages to take out Monday's high of $34.06 to its 52-week high at $35.92 with high volume.

Traders should now look for long-biased trades in EHTH as long as it's trending above key support at $32 or at $31, and then once it sustains a move or close above those breakout levels with volume that's near or above 124,817 shares. If we get that move soon, then EHTH will set up to enter new 52-week-high territory above $35.92, which is bullish technical price action. Some possible upside targets off that move are $40 to $43.

Darling International

Darling International (DAR) is a recycler of food and animal by-products and provides grease trap services to food service establishments. This stock closed up 2.3% at $20.80 in Monday's trading session.

Monday's Volume: 1.97 million

Three-Month Average Volume: 676,482

Volume % Change: 215%

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From a technical perspective, DAR spiked higher here back above its 50-day moving average of $20.52 with strong upside volume. This move is quickly pushing shares of DAR within range of triggering a big breakout trade. That trade will hit if DAR manages to take out some near-term overhead resistance at $21.49 and then once it clears its 52-week high at $22.20 with high volume.

Traders should now look for long-biased trades in DAR as long as it's trending above some key near-term support at $20.17 or at $19.75 and then once it sustains a move or close above those breakout levels with volume that's near or above 676,482 shares. If that breakout hits soon, then DAR will set up to enter new 52-week-high territory, which is bullish technical price action. Some possible upside targets off that breakout are $25 to $27.

Dunkin' Brands Group

Dunkin' Brands Group (DNKN) is a franchisor of quick-service restaurants serving hot and cold coffee and baked goods, as well as hard-serve ice cream. This stock closed up 1% at $45.20 in Monday's trading session.

Monday's Volume: 1.48 million

Three-Month Average Volume: 846,494

Volume % Change: 145%

>>5 Big Trades to Take Now

From a technical perspective, DNKN jumped higher here right above its 50-day moving average of $43.98 with above-average volume. This move briefly pushed shares of DNKN into breakout territory, after the stock flirted with some near-term overhead resistance at $45.55. Shares of DNKN closed just below that breakout level at $45.20 with volume that was well above its three-month average action of 846,494 shares. Shares of DNKN are now starting to move within range of triggering a major breakout trade. That trade will hit if DNKN manages to take out Monday's high of $45.49 and then once it clears its all-time high at $46.50 with high volume.

Traders should now look for long-biased trades in DNKN as long as it's trending above its 50-day at $43.98 or above more near-term support at $43.44 and then once it sustains a move or close above those breakout levels with volume that's near or above 846,494 shares. If that breakout hits soon, then DNKN will set up to enter new all-time high territory, which is bullish technical price action. Some possible upside targets off that breakout $50 to $55, or even $60.

To see more stocks rising on unusual volume, check out the Stocks Rising on Unusual Volume portfolio on Stockpickr.

-- Written by Roberto Pedone in Delafield, Wis.

RELATED LINKS:

>>4 Stocks Under $10 Making Big Moves

>>4 Hot Stocks to Trade (or Not)

>>3 Huge Tech Stocks on Traders' Radars

Follow Stockpickr on Twitter and become a fan on Facebook.

At the time of publication, author had no positions in stocks mentioned.

Roberto Pedone, based out of Delafield, Wis., is an independent trader who focuses on technical analysis for small- and large-cap stocks, options, futures, commodities and currencies. Roberto studied international business at the Milwaukee School of Engineering, and he spent a year overseas studying business in Lubeck, Germany. His work has appeared on financial outlets including

CNBC.com and Forbes.com. You can follow Pedone on Twitter at www.twitter.com/zerosum24 or @zerosum24.

Cloud Computing and Fiber Provider Stocks That Could Lead Technology for Years

Think about how much data the average individual tries to access on any given day. To put this into perspective, when people want to look up something on the Internet, they don’t “surf the Web,” they “Google it.” The demand placed on companies for storage and retrieval of data is becoming gigantic.

Last week, the cloud technology team from Cowen & Co. attended 451 Group's Hosting and Cloud Transformation Summit in Las Vegas. During the two-day event the analysts met with several chief technology officers and financial sponsors, and they attended several panel discussions. In a new research report, they pointed out that mergers and acquisitions in the space could be right around the corner. They also highlighted several names within their coverage universe as solid ways for investors to play “the cloud.”

Akamai Technologies Inc. (NASDAQ: AKAM) has been able to offer scalable benefits associated with offloading services from client infrastructures, allowing clients to have fewer hard assets in place while providing an ongoing revenue stream for Akamai. This translates into more than 125,000 servers operating dedicated, hybrid cloud and true cloud servers to provide IT and, increasingly, security services in a vast array of companies across a widely diversified group of industries. With an impressive client list that grows each quarter, the company is firing on all cylinders. The Thomson/First Call price objective for the stock is $53.50. Akamai closed Thursday at $51.16.

Equinix Inc. (NASDAQ: EQIX) is expected to be one of the companies in the space looking to employ a merger or acquisition strategy in the near future. The company announced last Friday that it has opened its second International Business Exchange (:IBX) in Rio de Janeiro, based on the platform provided by ALOG Data Centers of Brazil. This new Rio de Janeiro data center, popularly known as RJ2, will enable Equinix to meet the growing demand for data center services in the region. The consensus price target for this top stock is $230.50. Equinix closed Thursday down almost 4% at $166.61.

Interxion Holding N.V. (NYSE: INXN) provides data colocation services through its 34 data centers in 11 European countries. In 2012, the company generated approximately 62% of its total revenues from France, Germany, the Netherlands and the United Kingdom, which represents Interxion’s “Big 4″ markets. The remaining 38% revenue came from seven other European countries. The company's data centers act as content and connectivity hubs that facilitate processing, storage, sharing and distribution of data, content and applications. The consensus price target for the stock is $20.78. Interxion closed at $22.52.

Rackspace Hosting Inc. (NYSE: RAX) recently added a huge new customer in Emerson Electric (NYSE: EMR). In January Emerson started using Rackspace to help tune and monitor climate control products for residential and commercial customers. Adoption has gone so well that Rackspace expects Emerson to hike its commitment from 43 servers today to 100 by year’s end. The consensus price target for the stock is posted at $52. The stock closed at $50.60.

The Cowen analysts are also very positive on the fiber provider space as it works hand-in-hand with the top cloud infrastructure providers. In their report, they also listed these top stocks to buy in that space.

Cogent Communications Group Inc. (NASDAQ: CCOI) provides high-speed Internet access, Internet protocol (IP) and communications services, primarily to small and medium-sized businesses, communications service providers and other bandwidth-intensive organizations in North America, Europe and Japan. The consensus price target for the stock is $35. Investors receive a 1.7% dividend. Cogent closed Thursday at $32.12.

Level 3 Communications Inc. (NYSE: LVLT) is a Fortune 500 company that provides local, national and global communications services to enterprise, government and carrier customers. Level 3′s comprehensive portfolio of secure, managed solutions includes fiber and infrastructure solutions, IP-based voice and data communications, wide-area Ethernet services, video and content distribution, as well as data center and cloud-based solutions. The consensus price target for the stock is $25.75. Level 3 closed at $27.94.

Lumos Networks Corp. (NASDAQ: LMOS) is a leading provider of fiber-based bandwidth infrastructure and IP services in key mid-Atlantic markets. It announced last month it had launched its cloud-based hosted call center solution, which provides best-in-class automated call distribution, integrated voice response and call reporting to help organizations manage call volumes more effectively and efficiently. The service operates over Lumos’s carrier-grade, premium optical network, which provides high-speed, resilient access to the call-center cloud service. The consensus price target for the stock is $20.50. Investors are paid a reasonable 2.7% dividend. Lumos closed Thursday at $20.77.

While some on Wall Street are calling for a large correction in the cloud computing infrastructure business, spending may be poised to increase. At the beginning of 2013, 63% of chief information officers surveyed said they planned to increase spending on storage and networking. Through the first three quarters of the year, signs of that have been few. It is entirely possible that the fourth quarter and 2014 will see the bulk of the planned expenditures. This can only bode well for these top stocks to buy.

Catering to Customers in the Software Industry

Innovation and friendliness are two stewards that software developers value highly in order to retain and attract customers. Applications that are easy to navigate and to use have proved to be highly valued by users. Some companies were able to meet the challenge and deliver tailor made products, among them are: Sap Aktiengesellschaft (SAP) and Adobe Systems (ADBE). But, does catering to customer preferences generate profits?

Developing Cloud Customers

Headquartered in Germany, and with regional offices around the globe, SAP is a leading software solutions developer. The firm also provides consulting, training, and other services for the wide range of products offered. The latest product introductions have been very well received in the Americas, the most important market to the firm. Also, SuccessFactors and Ariba have provided the company with one of the best cloud portfolios in the industry.

On the upside, the open ecosystem strategy continues to fare well for the company. Innovation has been one of the stewards behind the strategy, allowing partners to develop additional customer value. The strategy has the consequence of sharing innovation responsibilities, allowing the firm to draw feedback from small to big companies that are in constant dialogue with customers. In turn, positive results measured by growth have been observed among the companies five segments: analytics, cloud, mobile and database, and technology.

SAP also implemented a specific strategy for market expansion. The approach is systematic and implies selecting a region, then a market, and finally an industry. By default, there can be great differences between markets in the same region. The company identifies those that are growing the fastest, and then directs investments through its go-to-market coverage model to effectively sell industry-specific solutions.

SAP is financiallymoderate because cash has dwindled amid recent acquisitions, and stands close to debt levels.Currently trading at 21.1times i! ts earnings, the stock packs a 55% discount to the industry average. I share the positive sentiment demonstrated by Frank Sands, Jim Simons, Steven Cohen and Chris Davis' latest position increments. I value the emphasis placed on customer needs, and the company's partnerships for product development.

Subscribing Cloud Customers

With a base in Mountain View, Calif., and branches across the U.S., Europe and Asia, Adobe provides graphic design, publishing and imaging software. Last quarter results have been good overall, and management made public its encouraging forward revenue guidance. Nonetheless, analysts continue to question the firm's decision to move to a subscription-based service. They argue that revenues will be affected in the short term, aggravated by slow recovery at end markets and high exposure to the European market.

In addition to switching to a subscription-based service, Adobe has also entered the cloud business decisively. According to the company, the new business model allows for more pricing options and flexibility to users. Even the Creative Solutions platform, the most important product when it comes to revenues, has been switched to the cloud-subscriptions based model. Amid revenue shortcomings in the short term, positive long-term outlook is based on predictable revenues. And the cloud based system is expected to be a positive catalyst for overall performance.

To counter competition and ease the loss of market share in the web design segment, Adobe has revamped investment on HTML 5. Updates have been done to the company's products to ease interaction with HMTL 5, and an additional set of tools have been developed. The digital market place is however, a new ground to the firm. A series of acquisitions, being Omniture the latest, continues to tell the interest paid by the firm to this growing segment.

Adobe's finances are strong. Trading at 58.1 times its earnings, the stock carries a 23% premium to the industry average. The largest gurus h! olding a ! position in the company, Dodge & Cox, have not modified his positions through 2013. His standstill however, does not align with my optimism. The company has made simple tweaks to a business model that is bound to deliver profits.

Clouding Is Not Enough

I like both companies because they pay attention to what the clients' needs are, and make a profit with a tailor made service. I do not mean to say the companies will develop a product for each client, but serving to industry wide preferences is a very positive point in my balance. I understand that SAP goes a step further by developing partners and increase feedback, and prefer it for a prospective investment.

Disclosure: Vanina Egea holds no position in any of the mentioned stocks.

Best Low Price Stocks For 2014

LONDON -- Tesco
After trading as high as 385 pence in May, shares in�Tesco� (LSE: TSCO  ) (NASDAQOTH: TSCDY  ) were today down at 328 pence. That's a 15% fall in just one month. However, Tesco's low price-to-earnings ratio and significant dividend yield will now be attracting value and income investors.

Tesco is forecast to pay a dividend of 15.2 pence for the full year. At today's price, that's a 4.6% yield. If the supermarket manages to hit expectations for the year of 32.9 pence, the forecast P/E is just 10. According to my statistics, only nine other shares in the FTSE 100 are cheaper on both metrics.

Tesco is not excruciatingly cheap. That said, it's more than three years since the shares spent any meaningful time under 300 pence.

Croda International
Croda International� (LSE: CRDA  ) is one of the FTSE 100's great success stories. Five years ago, the company had just reported 33.5 pence of earnings per share and the shares traded hands for 631 pence. Fast-forward to today, and 137 pence of EPS is expected for the full year. The shares are now priced at 2,260 pence.

Best Low Price Stocks For 2014: Schnitzer Steel Industries Inc.(SCHN)

Schnitzer Steel Industries, Inc. engages in recycling ferrous and nonferrous scrap metals, and used and salvaged vehicles; and manufacturing finished steel products. The company operates through three segments: Metals Recycling Business (MRB), Auto Parts Business (APB), and Steel Manufacturing Business (SMB). The MRB segment involves in the purchase, collection, processing, recycling, sale, and broking of ferrous scrap metals. It processes mixed and large pieces of scrap metal into smaller pieces by sorting, shearing, shredding, and torching. This segment?s products include ferrous products, including ferrous scrap metal, a feedstock used in the production of finished steel products; and nonferrous scrap metals, including aluminum, copper, stainless steel, nickel, brass, titanium, lead, high temperature alloys, and joint products, such as zorba (mixed nonferrous material) and zurik (stainless steel). The MRB segment sells its products to steel mills and smelters. The APB segment purchases used and salvaged vehicles and sells serviceable used auto parts from these vehicles through its 45 self-service auto parts stores, which are located across the United States and western Canada. It also sells other vehicles, including auto bodies; cores, such as engines, transmissions, alternators, and catalytic converters; and nonferrous materials to metal recyclers. The SMB segment engages in the purchase of recycled metal, and processing of the recycled metal and other raw materials into finished steel products. Its product portfolio comprises semi-finished goods and finished goods consisting of rebar, coiled rebar, wire rod, merchant bar, and other specialty products. This segment serves steel service centers, construction industry subcontractors, steel fabricators, wire drawers, and farm and wood product suppliers. The company exports its products worldwide. Schnitzer Steel Industries, Inc. was founded in 1946 and is based in Portland, Oregon.

Advisors' Opinion:

• [By Rich Smith]

  If you want to know what the future holds for global steel giants like Arcelor Mittal (NYSE: MT  ) , U.S. Steel (NYSE: X  ) , and Nucor (NYSE: NUE  ) , one of the best ways you can spend your time, I suspect, is by reviewing the earnings reports of another company entirely -- Schnitzer Steel (NASDAQ: SCHN  ) .

Best Low Price Stocks For 2014: Hollywood Media Corp.(HOLL)

Hollywood Media Corp. primarily provides advertising services. The company?s Ad Sales segment sells advertising on plasma TV displays; and on lobby display posters, movie brochure booklets, and ticket wallets distributed in cinemas, live theater, and other entertainment venues in the United Kingdom and Ireland. This segment also holds a 26.2% ownership interest in the MovieTickets.com, a seller of online movie tickets. Its Intellectual Properties segment owns or controls the rights to certain intellectual properties created by various authors and media celebrities, which it licenses for book and other media. This segment also owns a 51% interest in Tekno Books, a book development business. The company was founded in 1993 and is headquartered in Boca Raton, Florida.

5 Best Low Price Stocks To Own Right Now: Torch Energy Royalty Trust(TRU)

Torch Energy Royalty Trust, a grantor trust, holds net profits interests, to receive payments from the working interest owners. Its working interest owners include Torch Royalty Company, Torch E&P Company, Samson Lone Star Limited Partnership, and Constellation Energy Partners LLC. The trust is entitled to receive 95% of the net proceeds attributable to oil and natural gas produced and sold from wells on the underlying properties, including Chalkley Field in Louisiana; the Robinson?s Bend Field in the Black Warrior Basin in Alabama; Cotton Valley Fields in Texas; and Austin Chalk Fields in central Texas. Torch Energy Royalty Trust was founded in 1993 and is based in Wilmington, Delaware.

Best Low Price Stocks For 2014: Ceragon Networks Ltd.(CRNT)

Ceragon Networks Ltd. offers wireless backhaul solutions that enable cellular operators and other wireless service providers to deliver voice and data services. Its wireless backhaul solutions use microwave technology to transfer large amounts of telecommunication traffic between base stations and the core of the service provider?s network. The company offers Internet protocol (IP) based FibeAir IP-10E/IP-MAX2, a high-capacity Ethernet that is used in wireless backhaul for carriers, private networks, and metro area networks; FibeAir IP-10G/IP-MAX2, a high-capacity multi-service, which is used in wireless backhaul for carriers and private networks; FibeAir 2000/4800, an unlicensed multi-service for private networks and business access; FibeAir/1500R, a high-capacity SDH/SONET for wireless backhaul and metro area networks; and FibeAir 3200T, a high-capacity circuit-switched TDM for wireless backhaul and long distance networks. It also provides advanced pure IP/Ethernet solu tions to wireless broadband service providers, as well as to businesses and public institutions that operate their own private communications networks. In addition, the company offers turnkey project services, including network and radio planning, site survey, solutions development, installation, maintenance, and training services. It sells its products through various channels, including direct sales, original equipment manufacturers, resellers, distributors, and system integrators in North America, Europe, the Middle East, Africa, the Asia Pacific, and Latin America. The company was formerly known as Giganet Ltd. and changed its name to Ceragon Networks Ltd. in September 2000. Ceragon Networks Ltd. was founded in 1996 and is headquartered in Tel Aviv, Israel.

Best Low Price Stocks For 2014: Somaxon Pharmaceuticals Inc.(SOMX)

Somaxon Pharmaceuticals, Inc., a specialty pharmaceutical company, focuses on the in-licensing, development, and commercialization of proprietary branded products and late-stage product candidates for the treatment medical conditions in the central nervous system therapeutic area. Its product includes Silenor for the treatment of insomnia characterized by difficulty with sleep maintenance. The company sells its products to wholesale distributors in the United States. Somaxon Pharmaceuticals, Inc. was founded in 2003 and is headquartered in San Diego, California.

Advisors' Opinion:

• [By CRWE]

  Somaxon Pharmaceuticals, Inc. (Nasdaq:SOMX), a specialty pharmaceutical company, will release its financial results for the third quarter ended September 30, 2012 on Wednesday, October 31, 2012 after the close of the U.S. financial markets.

Noble Corp. leads energy stocks higher

SAN FRANCISCO (MarketWatch) — Energy stocks gained Wednesday, with Noble Corp. shares advancing as the offshore driller announced plans to split itself in two companies.

Shares of Noble rose 2.7%.

Noble Corporation

Noble (NE) , one of the world's largest offshore drillers, said late Tuesday it would spin off its that may go public next year.

The split would set apart "high specification" deepwater and ultra-deepwater rigs as the company seeks the best valuation for its premium assets.

Ultra-deepwater rigs are defined in the industry as those capable of drilling in water depths of 5,000 feet or more. As oil gets harder to find, companies have been pushing into deeper waters and harsher environments.

Other offshore drillers gained as well, with Diamond Offshore Drilling Inc. (DO)  up 1.5%. Transocean Ltd. (RIG)  shares gained 0.6%.

Major oil companies were mixed, with shares of Exxon Mobil Corp. (XOM)  down 0.2%. Shares of Chevron Corp. (CVX)  and ConocoPhillips (COP)  rose 0.3% each.

U.S.-listed shares of France's Total SA (TOT)  rose 0.5%.

Click to Play Investors cashing out after Fed rally

Hot Safest Stocks To Buy Right Now

The stock market's surge is pushing some investors to cash in a few of their chips. Their reasons: after such a strong run, the rally may be losing steam and the Fed will soon begin withdrawing the stimulus it has been injecting into the economy. Steven Russolillo reports. Photo: Getty.

Total said Wednesday it made a final investment decision of the Incahuasi gas and condensate field in Bolivia.

The first phase will involve three wells southwest of the Bolivian town of Santa Cruz in the Andean foothills. Total also plans on a gas treatment plant and export pipelines. The first natural gas is expected in 2016.

Top decliners of the day included Cabot Oil and Gas Corp. (COG) , with shares down 1.7%. Pipeline operator Kinder Morgan Inc. (KMI)  retreated 0.2%.

The SPDR Energy Select Sector (XLE) , an exchange-traded fund focused on energy names, rose 0.6%.

Forest Laboratories, Inc. (FRX): Key Reasons Why Forest Won't Slim Down

Investors of Forest Laboratories, Inc. (NYSE: FRX) is banking on the prospect that Forest, under its newly anointed CEO, will simply become more specialized, shedding salesforce expenses along the way.

However, when one looks deeply into where Forest is getting its prescriptions and sales, they could see that is not likely to happen. If you are a drug company that markets drugs that address a large physician group, such as family practitioners or internists, then you have to field a large salesforce to reach physicians.

"Forest is among the most dependent on primary care sales of all drug companies, and so shedding salespeople would affect sales and shedding brands would not free up resources," BMO Capital Markets analyst David Maris wrote in a note to clients.

For Forest, 69.5 percent of its prescriptions come from the Primary Care area, the second-highest percentage overall and significantly higher than the percentages for all of its Specialty Pharma peers and next only to Merck (NYSE:MRK)., whose PCP rate is 75 percent

Many drugs that sound like a specialty sales call, like an asthma drug or a depression drug or even an Alzheimer's treatment drug like Namenda, actually get more than 50 percent of their sales and prescriptions from primary care physicians (PCPs).

"It is clear that even with recent launches, Forest is dependent on its large primary care salesforce, as more than 50% of prescriptions are coming from PCPs for each," Maris said.

It seems unlikely for a company to shrink salesforce when more than half its prescriptions and sales for lead products are coming from Primary Care. If Forest was to shed any part of its primary care salesforce, it would likely have a directly negative effect on overall sales of the product.

In addition, the idea of divesting some products to allow Forest to become more Specialty and less dependent on a PCP salesforce seems not to make any sense as the dependence on PCP sales is broad based across Forest's entire product ! line.

"Forest has the need for a PCP salesforce because all of its products – even the respiratory and GI products that many analysts call "Specialty" – get more than 50% of their prescriptions from PCPs," Maris said.

This clearly shows that Forest is a specialty pharma company by size only – its salesforce and product base is not specialty focused, and Forest has problems that large pharma often faces – the need to feed an expensively large, broad-based, and geographically diverse salesforce.

Forest is not in a good position to become specialized without drastically reducing sales. It is more likely that Forest would look to buy its way out of its problems, whether through in-licensing, acquisitions, or mergers.

"Some bulls might see this PCP problem and say it is yet more evidence that Forest might not have any avenue by which to streamline, but it would provide another large drug company with a lot of cost cutting opportunities," Maris wrote.

However, there are not any potential partners that want to acquire Forest given its pipeline is largely spoken for and already launched, and it faces the loss of patent protection on its largest product in April 2015.

"Instead of a focused Specialty company, we think Forest will spend much of its cash hoard to become larger, therapeutically, and geographically sprawling, to help blunt the trauma of the Namenda and Namenda SR generics," Maris noted.

Investors in the stock expect the new CEO to alter course dramatically and cut the company down to a smaller, more focused company – as Icahn and several analyst have suggested, but any refocusing would result in substantially lower revenues and earnings.

When cutting and refocusing doesn't turn out to be the game plan, and spending and acquiring become the game plan, then the recent rise in the shares - on the promise of new management streamlining the company - will reverse.

Hot Undervalued Stocks To Invest In Right Now

About a year ago, I attempted to value Berkshire Hathaway (NYSE: BRK-B  ) , and I found it to be at least 20% undervalued at $82�per B-share. Fast forward just over a year, and the B-shares have advanced 30% to almost $107. So, I figured it was time to sharpen up my pencil and reestimate the value.

My conclusion: It is just as undervalued, even at today's higher prices.

My valuation approach
Berkshire is a huge company, and notoriously difficult to value. Fortunately, Warren provides a pretty good framework for evaluating the intrinsic value. He laid it all out in his 2010 letter to shareholders. Basically, the value of Berkshire Hathaway shares comes down to two quantitative factors:

Investments per share Operating earnings per share

I've shown my math (and assumptions) below, and you're free to use this methodology, also known as the two-column approach, to create your own valuation.

Hot Undervalued Stocks To Invest In Right Now: Tupperware Corporation(TUP)

Tupperware Brands Corporation operates as a direct seller of various products across a range of brands and categories through an independent sales force. The company engages in the manufacture and sale of kitchen and home products, and beauty and personal care products. It offers preparation, storage, and serving solutions for the kitchen and home, as well as kitchen cookware and tools, children?s educational toys, microwave products, and gifts under the Tupperware brand name primarily in Europe, Africa, the Middle East, the Asia Pacific, and North America. The company provides beauty and personal care products, which include skin care products, cosmetics, bath and body care, toiletries, fragrances, nutritional products, apparel, and related products principally in Mexico, South Africa, the Philippines, Australia, and Uruguay. It offers beauty and personal care products under the Armand Dupree, Avroy Shlain, BeautiControl, Fuller, NaturCare, Nutrimetics, Nuvo, and Swissgar de brand names. The company sells its Tupperware products directly to distributors, directors, managers, and dealers; and beauty products primarily through consultants and directors. As of December 26, 2009, the Tupperware distribution system had approximately 1,800 distributors, 61,300 managers, and 1.3 million dealers; and the sales force representing the Beauty businesses approximately 1.1 million. The company was formerly known as Tupperware Corporation and changed its name to Tupperware Brands Corporation in December 2005. The company was founded in 1996 and is headquartered in Orlando, Florida.

Advisors' Opinion:

• [By Oliver Pursche]

  European large-cap pharmaceuticals like Novartis (NVS) �and Bristol Meyers Squibb (BMY) �count amongst some of our favorite stocks right now, as do U.S. multinationals that are growing revenue and margins in Asia ��Tupperware (TUP) �is a shining example. Stay away from utilities and energy stocks, as they are likely to be the laggards over the next year.

• [By Brian Pacampara]

  Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, household products company Tupperware Brands (NYSE: TUP  ) has earned a coveted five-star ranking.

• [By John Udovich]

  Everyone is familiar with�the Tupperware brand from�consumer products stock Tupperware Brands Corporation (NYSE: TUP) and you are probably familiar with the brands�of mid cap stock Jarden Corp (NYSE: JAH) along with small cap stocks Libbey Inc (NYSEMKT: LBY) and Lifetime Brands Inc (NASDAQ: LCUT); but what about the stocks themselves? Chances are, their brands or products are right under your nose at home and you probably don�� know anything about the mid cap or small cap stock behind them.

Hot Undervalued Stocks To Invest In Right Now: Dollar Tree Inc.(DLTR)

Dollar Tree, Inc. operates discount variety stores in the United States and Canada. Its stores offer merchandise primarily at the fixed price of $1.00. The company operates its stores under the names of Dollar Tree, Deal$, Dollar Tree Deal$, Dollar Giant, and Dollar Bills. Its stores offer consumable merchandise, including candy and food, and health and beauty care, as well as household consumables, such as paper, plastics, household chemicals, in select stores, and frozen and refrigerated food; variety merchandise, which includes toys, durable housewares, gifts, party goods, greeting cards, softlines, and other items; and seasonal goods, such as Easter, Halloween, and Christmas merchandise. As of April 30, 2011, it operated 4,089 stores in 48 states and the District of Columbia, as well as 88 stores in Canada. The company was founded in 1986 and is based in Chesapeake, Virginia.

Advisors' Opinion:

• [By Paul Ausick]

  Dollar General�� share price is up less than 6% in the past 12 months, but since the beginning of the year shares have risen more than 22%. And even then, Dollar General�trails Dollar Tree Inc. (NASDAQ: DLTR) in share price growth since January 1. Dollar Tree stock is up 30%.

• [By Lawrence Meyers]

  The finance sector, as mentioned, can make money in many ways. The second-highest growth sector is expected to be consumer discretionary, with a 6.2% increase. When you look at earnings from luxury brands like Tiffany & Co. (TIF), and that the hotel sector continues to do very well, it suggests that those people who are in good financial shape are spending their money. Meanwhile, dollar players like Dollar Tree (DLTR) continue to perform very well, suggesting that folks with less money are spending it on cheaper items.

• [By Lawrence Meyers]

  As a convenience store, it doesn’t have direct competition from�Dollar Tree (DLTR) or Family Dollar (FDO) because these dollar stores aren�� exclusively focused on food (and they have no gasoline or cigarette sales), and they��e targeted at the folks who are trying to save money over convenience, not vice versa. The convenience angle is another reason why�Walmart (WMT) and Costco (COST)�aren’t competitors, since those behemoths are about a total shopping experience.

Top 5 Cheap Stocks To Watch Right Now: Schlumberger N.V.(SLB)

Schlumberger Limited, together with its subsidiaries, supplies technology, integrated project management, and information solutions to the oil and gas exploration and production industries worldwide. The company?s Oilfield Services segment provides exploration and production services; wireline technology that offers open-hole and cased-hole services; supplies engineering support, directional-drilling, measurement-while-drilling, and logging-while-drilling services; and testing services. This segment also offers well services; supplies well completion services and equipment; artificial lift; data and consulting services; geo services; and information solutions, such as consulting, software, information management system, and IT infrastructure services that support oil and gas industry. Its WesternGeco segment provides reservoir imaging, monitoring, and development services; and operates data processing centers and multiclient seismic library. This segment also offers variou s services include 3D and time-lapse (4D) seismic surveys to multi-component surveys for delineating prospects and reservoir management. The company?s M-I SWACO segment supplies drilling fluid systems to improve drilling performance; fluid systems and specialty tools to optimize wellbore productivity; production technology solutions to maximize production rates; and environmental solutions that manages waste volumes generated in drilling and production operations. Its Smith Oilfield segment designs, manufactures, and markets drill bits and borehole enlargement tools; and supplies drilling tools and services, tubular, completion services, and other related downhole solutions. The company?s Distribution segment markets pipes, valves, and fittings, as well as mill, safety, and other maintenance products. This segment also provides warehouse management, vendor integration, and inventory management services. Schlumberger Limited was founded in 1927 and is based in Houston, Texas.

Advisors' Opinion:

• [By Dr. Kent Moors]

  That's why some of the biggest OFS providers - like Schlumberger (NYSE: SLB), Halliburton (NYSE: HAL) and Weatherford International (NYSE: WFT) - have been buying up oil and gas equipment companies.

• [By Lee Jackson]

  Schlumberger Ltd. (NYSE: SLB) revenue grew 8% year-over-year to $11.18 billion in the second quarter of 2013, fueled by high growth in its international segment. While the company does generate 11% of revenue in the Middle East and Asia, only a prolonged Syrian conflict is expected to dent their strong results. UBS has a $98 price target and the consensus figure is at $96. Stockholders are paid a 1.5% dividend.

Hot Undervalued Stocks To Invest In Right Now: Caterpillar Inc.(CAT)

Caterpillar Inc. manufactures and sells construction and mining equipment, diesel and natural gas engines, industrial gas turbines, and diesel-electric locomotives worldwide. It operates through three lines of businesses: Machinery, Engines, and Financial Products. The Machinery business offers construction, mining, and forestry machinery, including track and wheel tractors, track and wheel loaders, pipelayers, motor graders, wheel tractor-scrapers, track and wheel excavators, backhoe loaders, log skidders, log loaders, off-highway trucks, articulated trucks, paving products, skid steer loaders, underground mining equipment, tunnel boring equipment, and related parts. It also manufactures diesel-electric locomotives; and manufactures and services rail-related products and logistics services for other companies. The Engines business provides diesel, heavy fuel, and natural gas reciprocating engines for Caterpillar machinery, electric power generation systems, marine, petrol eum, construction, industrial, agricultural, and other applications. It offers industrial turbines and turbine-related services for oil and gas, and power generation applications. This business also remanufactures Caterpillar engines, machines, and engine components; and offers remanufacturing services for other companies. The Financial Products business provides retail and wholesale financing alternatives for Caterpillar machinery and engines, solar gas turbines, and other equipment and marine vessels, as well as offers loans and various forms of insurance to customers and dealers. It also offers financing for vehicles, power generation facilities, and marine vessels. The company markets its products directly, as well as through its distribution centers, dealers, and distributors. It was formerly known as Caterpillar Tractor Co. and changed its name to Caterpillar Inc. in 1986. Caterpillar Inc. was founded in 1925 and is headquartered in Peoria, Illinois.

Advisors' Opinion:

• [By Travis Hoium]

  Caterpillar (NYSE: CAT  ) led the way with a 6.1% gain this week. There wasn't an abundance of news out about the company, but the stock will often jump when investors feel more confident about the economy. Caterpillar reports earnings July 24, and that's when we'll learn how bullish management is about the domestic and global economy.