A Small-Cap Energy Stock Fueling Up for a Short Squeeze

DELAFIELD, Wis. (Stockpickr) -- Energy -- and specifically the oil and gas complex -- continues to be a bright spot in this market.

>>3 Stocks Spiking on Big Volume

Just take a look at some of the moves in this sector, such as small-cap independent oil and gas player Quicksilver Resources (KWK). That stock is ripping higher today by 7% on above-average volume. Over the last six months, shares of KWK have soared higher by 58%, and the stock is now approaching its 52-week high at $3.67 a share.

Another small-cap oil and gas player that's been on a fire of late is Callon Petroleum (CPE), which is up by more than 40% so far in 2014. This stock is also trending strong today, with shares up by 2.6% at $9.17, within range of its 52-week high of $9.84 a share. One more small-cap oil and gas play that's recently exploded to the upside is Magellan Petroleum (MPET), which has soared higher in 2014 by over 100%.

As you can see, the oil and gas complex is trending strong right now, and small-cap stocks in this space are in play with the bulls. This momentum could be here for a while when you consider the troubling escalations we've seen in the past few weeks in Ukraine. The geopolitical tensions in Ukraine are keeping a bid under the energy market, and unless that situation de-escalates dramatically, then I expect that bid to remain in place.

>>5 Rocket Stocks to Buy for May Gains

This all has me scanning the small-cap energy space for what could be the next big runners. A number of small-cap oil and gas players could very easily be next to make a major run as the momentum players move from stock to stock in the sector looking for opportunity. These small-cap energy names have the capability to make massive moves higher, since many have low floats and lots of shorts.

A perfect example of an oil and gas player that's recently exploded higher and also has a low float and lots of shorts is FX Energy (FXEN), which has ripped to the upside by 30% over the last three months. FX Energy has a tradable float of 50 million shares, and the short interest as a percentage of its float is just over 6%. Just this month, shares of FXEN exploded higher from its low of $3.13 to its recent high of $5.14 a share. Make no mistake, once the big upside volume flowed into FXEN a few weeks ago. the shorts got spooked and covered in a hurry, producing that large spike.

>>5 Stocks Poised for Breakouts

One small-cap independent oil and gas player that's showing up on my scans today that could be capable of a massive move higher soon is Endeavour International (END), which acquires, explores and develops energy reserves and resources in the U.K. North Sea and the U.S. onshore. This company has interests in Alba, Bacchus, Rochelle and other field areas in the U.K., as well as the Pennsylvania Marcellus area, Haynesville producing project areas in Louisiana and Heath Shale Oil Play in Montana. So far in 2014, shares of END haven't joined the small-cap oil and gas party; shares are down by 37%.

That might be about to change, though, since shares of END are starting to look interesting from a technical standpoint, and this stock has a very low tradable float and a massive short interest. This is just the recipe that can produce moves like the ones we've seen in some of the names mentioned above. END could outperform them all if a short-squeeze gets underway that's accompanied by strong upside volume flows.

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If you take a look at the chart for Endeavour International, you'll notice that this stock was in a massive downtrend from its January high of $7.50 to its recent low of $2.71 a share. During that downtrend, shares of END were consistently making lower highs and lower lows, which is bearish technical price action. That said, shares of END have now started to show signs of coming out of that downtrend, since the stock has trended sideways for the last two months, between $2.71 on the downside and $3.69 on the upside. Shares of END have recently rebounded higher off that $2.71 low to its current price of $3.25 a share and it's now quickly moving within range of triggering a major breakout trade.

Traders should now look for long-biased trades in END as long as its trending above $3 a share or above $2.90 a share then once it breaks out above some near-term overhead resistance levels at $3.31 to $3.36 a share and then once it clears more resistance levels at $3.49 to $3.69 a share with high volume. Look for volume on that move that registers near or above its three-month average action of 1.11 million shares. If that breakout gets sparked soon, then END could see a monster short-squeeze that takes the stock back towards its 200-day moving average at $4.99 to even $5.50 or $6 a share.

The short-squeeze opportunity is huge here, since the current short interest as a percentage of the float for END is massive at 33%. That means that out of the 29.8 million shares in the tradable float, 9.88 million shares are sold short by the bears. This is a very low float that's being leaned on big by the short-sellers. If the sector strength we've seen recently in the small-cap oil gas names spills over to END soon, then this stock could make the biggest move yet.
The key thing to watch for if that squeeze is going to happen soon, is for shares of END to take out those near-term overhead resistance levels I highlighted with strong upside volume. Traders should watch for large block trades to hit the tape on END if the stock starts to clear those levels soon, because that could mean the shorts are covering knowing full well the sector is in play. Keep in mind, this is just a trading opportunity I see here not a long-term call on END as a great buy. I am simply looking to take advantage of the sector strength on a low float high short interest idea.

-- Written by Roberto Pedone in Delafield, Wis.

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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.

Should I buy life insurance for my child?

Most kids don't need life insurance. Investing for their education is a better idea.

NEW YORK (Money Magazine) Does it make sense to buy a whole life insurance policy for a child? -- Michael C., Coatesville, Pa.

Hardly ever. Most kids don't need life insurance, since its chief purpose is to replace income, says Jason Brooks, a financial planner in Berthoud, Colo.

Ultimate Guide to Retirement Getting started401(k)s & company plansInvestingAnnuitiesIRAsSelf-employment plansPensions and benefit plansSocial SecurityInsuranceEstate planningLiving in retirementGetting help

And while whole and variable life policies have a cash value that rises, high fees slow that growth. Breaking even on premiums can take decades.

The only reason to buy is to guarantee insurability later in life, says Cleveland adviser Joe Heider.

You can, he notes, lock in a policy -- helpful if your child later has an illness, such as cancer or diabetes, that makes insurance expensive or unobtainable.

But such misfortune is rare; only one in 400 children has diabetes before age 20, for example. And the size of most kiddie policies ($50,000 or less) is usually too small to be useful for adults.

A better idea is to save for a more likely need: higher education.

FINRA OKs RCAP’s Cetera Deal; Schorsch Group May Buy NorthStar Realty

RCS Capital (RCAP) said early Monday that FINRA has approved its $1.15 billion purchase of Cetera Financial’s broker-dealer operations, which include about 6,600 independent financial advisors.

Meanwhile, RCAP affiliate American Realty Capital Properties (ARCP) reportedly is in talks to buy NorthStar Realty Finance Corp., according to Bloomberg. NorthStar is a loan originator and manager of commercial real estate debt.

ARCP, led by Nicholas Schorsch, bought Cole Real Estate Investments last year. Schorsch also is executive chairman of RCAP. (Schorsch is named in the IA 25 for 2014.)

Realty Capital announced its deal with Cetera in January and says it “expects to close the Cetera acquisition in the coming days in accordance with the merger agreement.”

The company is also buying Investor’s Capital (ICH), J.P. Turner and Summit Brokerage Services—giving it about 9,000 reps and roughly $200 billion in assets. 

“This creates one of the most powerful capital accumulation machines on the globe,” Schorsch said, when the Cetera deal was announced earlier this year. “It will attract the best and brightest financial advisors, and with $3.1 billion in revenue brings us close to LPL Financial (LPLA) and puts us ahead of others in the business.”

Cetera was formed in 2010 following the sale of three ING broker-dealers; it includes four platforms — Cetera Advisors, Cetera Advisor Networks, Cetera Financial Institutions and Cetera Financial — and is led by CEO and President Valerie Brown.

In June 2013, RCAP Holdings shared the news that it was buying First Allied Securities and the Legend Group from Lovell Minnick Partners. (RCAP Holdings owns Realty Capital Securities, which is the wholesale broker-dealer and affiliate of American Realty Capital Properties.) 

A request for a statement on the two deals was declined by RCAP and ARCP. 

How Bitcoin Works

Bitcoin is a digital currency that exists almost wholly in the virtual realm, unlike physical currencies like dollars and euros. A growing number of proponents support its use as an alternative currency that can pay for goods and services much like conventional currencies. Bitcoin is the first and easily the most popular cryptocurrency, or currency that uses cryptography1 (see "Definitions and Key Concepts" at end of article) to control its creation, administration and security.

Bitcoin was set up in 2009 by a mysterious individual or group with the pseudonym Satoshi Nakamoto, whose true identity is yet to be revealed and who left the project in 2010. It rocketed to prominence in 2013, when the value of a Bitcoin soared more than 10-fold in a two-month period, from $22 in February to a record $266 in April. At its peak, based on more than 10 million bitcoins issued, the cryptocurrency boasted a market value of over $2 billion.

Bitcoin Versus Conventional Currencies
Bitcoin differs from conventional currencies in some very fundamental ways, as noted below (for the sake of simplicity, we use the U.S. dollar as a proxy for conventional currencies). Bitcoin uses P2P technology without a central authority: Bitcoin is a decentralized currency managed by peer-to-peer technology (P2P2), without a central authority. All functions such as Bitcoin issuance, transaction processing and verification are carried out collectively by the network, without a central supervisor or agency to oversee operations. In contrast, a conventional currency is issued by a central bank as part of its mandate to manage national monetary policy. In the U.S., only the Federal Reserve has the power to issue dollars; it is also the central authority that conducts monetary policy, supervises banks, maintains financial system stability, and provides financial services to depository institutions. Bitcoin is primarily digital: Although physical Bitcoins are available from companies such as Casascius and BitBills, Bitcoin has been designed primarily to be a digital currency. Physical Bitcoins are somewhat of a novelty, and the very idea of a tangible form defeats the purpose of a digital currency, according to the most ardent supporters of the concept. Conversely, your dollars exist primarily in physical form; the balances that you hold at your bank and online brokerage can be converted into physical dollars within minutes if you so desire. Bitcoin has a maximum 21 million limit: The total number of Bitcoins that will be issued is capped at 21 million. The Bitcoin "mining"3 process presently creates 25 Bitcoins every 10 minutes (the number created will be halved every four years), so that limit will not be reached until the year 2140. While Bitcoin critics argue that the maximum limit is not large enough, supporters maintain that since each Bitcoin is divisible to eight decimal places, the number of fractional Bitcoins (called "satoshis") – at 21 x 1014 – will be more than enough for all conceivable applications. Conventional currencies, on the other hand, can be issued without limit. Bitcoin is a complex product: The concepts of cryptocurrencies in general are abstruse and abstract, and understanding how and why Bitcoin works requires a fair degree of technological knowledge. Bitcoin has limited acceptance: It has limited acceptance so far and cannot be used at brick-and-mortar storefronts, although that may eventually change if it continues to gain traction. The dollar, on the other hand, has near-universal acceptance as the world's global reserve currency. Bitcoin transactions have limitations: A Bitcoin transaction can take as long as 10 minutes to confirm. Transactions are also irreversible and can only be refunded by the Bitcoin recipient. These limitations do not exist with conventional currencies, where debit and credit transactions are confirmed within seconds; certain transactions can also be reversed for valid reasons by the originator, without having to rely on the recipient's largesse. Bitcoin balances are not insured: This means that if you lose your Bitcoins for any reason – for example, your hard drive crashes, or a hacker steals the digital wallet in which your Bitcoins are stored, or the Bitcoin exchange where you held a balance went out of business – you have little recourse. Currency balances held at banks, on the other hand, are insured against certain events such as bank failure by agencies like the Federal Deposit Insurance Corporation in the U.S. How Bitcoin Works
Let's say you want to test the Bitcoin waters. The first thing you need to do as a new user is install a digital wallet on your computer or mobile device. This wallet is simply a free, open-source software program that will generate your first and subsequent Bitcoin addresses. There are three types of wallets – a software wallet (installed on your computer), a mobile wallet (which resides on your mobile device) or a Web wallet (located on the website of a service provider that hosts bitcoins).

Bitcoin uses public key encryption4 techniques for security. This means that when a new Bitcoin address is created, a cryptographic key pair consisting of a public key and private key – which are essentially unique, long strings of letters and numbers – is generated.

Each address has its own Bitcoins balance, so all you need to do is acquire a number of Bitcoins that will be held at one of the addresses in your wallet. You can acquire Bitcoins through a number of ways – by buying them from a Bitcoin currency exchange such as Mt. Gox or Bitstamp, or through a service like BitInstant that enables fund transfers between Bitcoin exchanges and supports various payment mechanisms.

Note that all Bitcoin transactions are stored publicly and permanently on the Bitcoin network, which means that the balance and transactions of any Bitcoin address are visible to anyone. Experts therefore recommend that Bitcoin owners create a new address for each transaction as a means of ensuring privacy and enhancing security.

Once you have created a Bitcoin address and have acquired Bitcoins, you can use them for an online transaction with a company that accepts Bitcoins as a payment mode. The company will send you the Bitcoin address to which you can send your Bitcoin payment. You direct the payment to that address; while the transaction takes place within seconds, verification can take 10 minutes or longer.

All Bitcoin transactions, without exception, are included in a shared public transaction log known as a "block chain". This is to confirm that the party spending the Bitcoins really owns them, and also to prevent fraud and double-spending.5

Why does transaction verification or confirmation take so long? Because the complex algorithms involved in Bitcoin mining (see description below) take time to solve, even with immense computing power at one's disposal.

An Example of a Bitcoin Transaction
Let's assume you want to make an online payment to a company – call it BitChamp – using 5 Bitcoins that you have in an address in your digital wallet. Here are the steps in the transaction: BitChamp creates a new Bitcoin address and directs you to send your payment to it. This creates a private key (known only to BitChamp) and a public key (available to you and anyone else). Note that just as a seller does not need to know your physical identity if you pay cash, you do not need to disclose your real identity to BitChamp and can remain anonymous. You instruct your Bitcoin client (the free Bitcoin software you first installed on your computer) to transfer 5 Bitcoins from your wallet to the BitChamp address. This is the transaction message. Your Bitcoin client will electronically "sign" the transaction request with the private key of the address from where you are transferring the Bitcoins. Recall that your public key is available to anyone for signature verification. Your transaction is broadcast to the Bitcoin network and will be verified in a few minutes. The 5 Bitcoins have been successfully transferred from your address to the BitChamp address. Note that only the first two steps involve action by the seller and you respectively. The latter two steps are automatically executed by the Bitcoin client software and Bitcoin network. As well, storing the private key attached to an address safely and securely is of the utmost importance; otherwise, anyone who obtains the private key can control the Bitcoins at that address and use them fraudulently.

Bitcoin Pros and Cons
Bitcoin has a number of advantages: As the first cryptocurrency to capture the public imagination, Bitcoin has "first mover" advantage and a head start over the competition. Total issuance is limited to 21 million, so it is unlikely to be devalued because of the prospect of a massive influx of new bitcoins. As a decentralized currency, Bitcoin is free from government interference and manipulation. Transaction costs are much lower than with conventional currencies. On the flip side, Bitcoin's disadvantages include: The price of a Bitcoin has been increasingly volatile, making it difficult to assess its real value and increasing the risk of losses for investors in the cryptocurrency. The relative anonymity of Bitcoin may encourage its use for illegal and illicit activities such as tax evasion, weapons procurement, gambling and circumvention of currency controls. The fact that bitcoins exist primarily in digital form renders them vulnerable to loss. Conclusion
Bitcoin has made significant progress in its adoption and usage since it was unveiled in 2009. Its evolution over the next few years will determine whether this leading cryptocurrency will become an integral part of the global financial system, or whether it is destined to remain a niche player.

Definitions and Key Concepts

1 Cryptography refers to the practice and technique of using encryption for secure communication and transmission of data and information.

2 In a P2P network, a group of computers is connected to enable the sharing of resources and information by users, and there is no central location for the network. This is diametrically opposed to a typical client-server network, where the central server controls the level of access by users to shared network resources. Popular applications of the P2P concept are Skype and file-sharing services such as BitTorrent.

3 Bitcoin mining refers to the computationally-intensive task of generating Bitcoins. While any computer can be put to the task of Bitcoin mining by using a free mining application, in reality a great deal of computing power is required to solve the extremely complex algorithms involved and to share those solutions with the entire Bitcoin network. The mining process is quite complicated and involves advanced concepts such as cryptographic hashes and nonces.

In simple terms, Bitcoin miners use powerful computers to track and compile pending Bitcoin transactions every 10 minutes into a new block. These miners then set to work doing the intensive number-crunching required to verify all the transactions in the block. This is a competitive process, and the first miner to solve the algorithms and verify the transactions transmits the results to the entire Bitcoin network. Upon confirmation by the rest of the network, the block is then added to the block chain. Each block includes a certain number of Bitcoins in a "coinbase" transaction that is paid out to the successful miner. This reward was set at 50 Bitcoins when the system first commenced operations in 2009, but was halved to 25 Bitcoins in November 2012, and will reduce by 50% approximately every four years.

4 Public key encryption combines a public key and a private key. While the public key is available to anyone, the matching private key is stored securely in the digital wallet and is generally password-protected. Each Bitcoin transaction is signed by the private key of the initiating user, providing mathematical proof that it has indeed originated from the owner of the address, and preventing the transaction from being altered once it has been issued. Since the key pair is mathematically related, any data or information encrypted with a private key may only be decrypted or deciphered with the corresponding public key and vice versa.

5 Double-spending means spending the same digital currency twice, something that is impossible with physical currencies.

Why Brown-Forman's Earnings May Not Be So Hot

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 Brown-Forman (NYSE: BF.B  ) , 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, Brown-Forman generated $442.0 million cash while it booked net income of $591.0 million. That means it turned 15.5% of its revenue into FCF. That sounds pretty impressive. However, FCF is less than net income. Ideally, we'd like to see the opposite.

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

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

So how does the cash flow at Brown-Forman 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 7.3% of operating cash flow, Brown-Forman'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 5.2% of cash flow from operations. Overall, the biggest drag on FCF came from capital expenditures, which consumed 17.7% 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.

Is Brown-Forman the best beverage bet for you? Learn how to maximize your investment income and "Secure Your Future With 9 Rock-Solid Dividend Stocks," including one above-average beverage seller. 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.

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One Marijuana Stock Earns Some Legitimacy Plus Other Pot News (GWPH, ERBB & PHOT)

Its been a rather eventful week for news from the marijuana sector and small cap marijuana stocks like GW Pharmaceuticals PLC (NASDAQ: GWPH), Tranzbyte Corp (OTCMKTS: ERBB) and Growlife Inc (OTCMKTS: PHOT) as one of these stocks gets endorsed by Morgan Stanley while another appears on CNBC – more signs of legitimacy for an investment sector that's full of pumps, dumps and other unsavory types of activities. Just consider the following small cap marijuana stock or pot industry news:

GW Pharmaceuticals PLC Soars on Morgan Stanley Coverage. UK based GW Pharmaceuticals PLC, which is developing a product portfolio of cannabinoid prescription medicines, soared more than 32% on Tuesday after Morgan Stanley initiated coverage of the stock with an Overweight rating and $103 price target. Morgan Stanley also predicted that US sales of GW Pharmaceuticals PLC's Sativex, a treatment for MS spasticity and cancer pain, should grow over time. GW Pharmaceuticals PLC is up 47% since the start of the week, up 68.1% since the start of the year and up 656.1% since last May. 

Cramer Endorses GW Pharmaceuticals PLC. For what his opinion might be worth, CNBC Mad Money host Jim Cramer called Morgan Stanley's recommendation "timely" and "bold," predicting the stock will quickly reach the target because:

"It's not a medical marijuana stock. They have a novel platform. It is an epilepsy company."

However, he still warned investors to stay away from other marijuana-related penny stocks, saying:

"Forget it! If you like cannabis, and I'm not necessarily speaking about 'liking' cannabis, it's GW Pharma."

Marijuana: A New Frontier for Silicon Valley. Mat Honan, senior writer at WIRED, has written a story entitled "High Tech: How Silicon Valley entrepreneurs are rushing to cash in on cannabis." Honan was then interviewed by The Daily Ticker where he talked about Stanley Brothers' Charlotte's Web marijuana strain that has therapeutic benefits without a big high for patients who have seizures. He also commented that there's been talk about pot businesses using bitcoin and other virtual currencies in their banking relations, but so far there haven't been any "large-scale solutions" to address the problem of banks continuing to avoid the sector.

Tranzbyte Gets CNBC's Attention. Stephen Shearin, the COO of Tranzbyte, recently appeared on CNBC to discuss his company's age verification marijuana vending machine for medicinal users that, by law, must sit inside a dispensary. When asked why someone would want to buy pot from a vending machine, Shearin commented:

Well, you know, at this point, it's very new, it's news, right? We're talking about this and people getting their cards and they're going in, experimenting, maybe they did it in the '60s and '70s, coming back to it, being treated for an ailment and they have a lot of questions and they should have those questions answered and take the time and be educated about it. If you know what you want, you don't want to stand behind somebody who is asking. Should i eat it? Should i dab? Should i infuse? Should i have a blend? There's a thousand questions they have. Somebody might know they love the dispensary. It's temperature controlled, 58 degrees and the thing right behind, they can bypass the whole conversation and be in and out in a few minutes. Most dispensary conversations and sales take 15 minutes. People stand in line for 45 minutes. We can speed that up so they can get in and back out. 

Tranzbyte is up 2,000% since the start of the year, up 577.4% over the past year and down 53.3% over the past five years.

Growlife, Inc Trading Suspension is Scheduled to End as the Company Scrambles to Limit the Fallout. Growlife, which is focused on the specialty hydroponics industry (pretty much code for supplying what is needed to grow pot), was hit be an SEC temporary suspension lasting from at 9:30 am EDT on April 10 until 11:59 pm EDT on April 24. Yesterday, Growlife issued a press release to announce a new shareholder hotline and email communication system to address anticipated increases in shareholder questions over the next several days plus the company posted an open letter to shareholders from its Chairman and CEO, Sterling C. Scott, which stated:

The SEC has informed GrowLife through counsel that it is not the subject of an informal or formal investigation.  The SEC has not requested any documents from the company or its Board.  Nor have they issued GrowLife any subpoenas or broad requests for information.  

It appears, from counsel's discussions with the SEC's staff, that the SEC suspension was prompted by concerns that some 3rd party holder(s) of GrowLife stock may have been planning to engage in some form of manipulative promotional activity. GrowLife does not have any more specific information regarding this matter.

The letter went on to state that the Board of Directors of GrowLife has been actively working with management to establish even higher levels of oversight and checks/balances in place throughout the company. GrowLife is up 253.5% since the start of the year, up 1,109.6% over the past year and down 44.8% over the past five years.

Nine Reasons Sanjay Sanjay Gupta Changed His Mind About Marijuana. Dr. Sanjay Gupta, CNN's chief medical correspondent, has nine reasons and one BIG unstated one for changing his views on pot. The nine stated reasons include: 1) Marijuana laws are not based on science; 2) Marijuana doesn't have a "high potential for abuse"; 3) In some medical cases, marijuana is "the only thing that works," 4) It's safer than a lot of prescription drugs; 5) Seventy-six percent of physicians surveyed would prescribe marijuana to ease the pain of women suffering from breast cancer; 6) It is still nowhere near as bad at drugs like heroin or cocaine, or even booze; 7) The medical and scientific communities have been studying medical marijuana since the 19th Century; 8) Only 6% of research on marijuana published in the last year analyzed benefits; and 9) The system is biased against research into pot. And unstated reason number 10? He or his bosses at CNN have read the polls about marijuana – and then looked at their ratings verses those of Fox and MSNBC…

First Take: Facebook takes on another transition

SAN FRANCISCO — A year ago, Facebook's first 2013 earnings report proved to Wall Street that the company had managed the transition of its users from desktop software to mobile devices.

That's why its stock has risen 140 percent in the past 12 months.

This year, Facebook's first-quarter results show just how much profit the social network can extract from the exploding market for mobile advertising – especially brand-name video ads.

EARNINGS: Facebook rides mobile ad sales to earnings of $885M

The amount was $885 million in net income, or 34 cents a share, compared to $312 million, or 12 cents a share a year ago.

Facebook also reported sales rose 72 percent, almost double the 38 percent growth rate of a year ago and higher than 63 percent rate in the fourth quarter of last year.

Now, with sales and profit surging, Facebook faces another transition as the cloud-based Internet turns more Web sites into mobile apps.

The company this month rolled out a separate messaging app for iPhone and iPad users, while changing the mix of messaging tools in its primary Facebook app.

The update, Facebook Version 9.0, became available in Apple's app store on April 17, which is when I downloaded it.

It has several new features designed to help companies create conversations around their so-called sponsored posts.

Those changes include replying directly to comments on Pages (or Facebook accounts held by companies, celebrities, artists, etc.) and, for iPad users, the ability to see more posts about trending topics in News Feeds.

Exploding sales of video News Feed ads are a big reason CEO Mark Zuckerberg and his team have been able to produce accelerating revenue growth over the past year.

The update also directs Facebook users who want to send a direct message to a friend onto a separate Messenger app, which became available in the app store on April 18.

On the consumer Web of the future, the winning tech companies will be those who can get th! e best ad rates from online marketers by providing the most detailed data on users of such stand-alone mobile apps.

In that market, Facebook has squared off against Google and other rivals, including Amazon, Apple and Twitter, all trying to grab the same brass ring.

As it charges headlong into the fray, Facebook takes with it a lot of positive financial momentum

A Fresh Look at Ford's 2014 F-150 Tremor

Ford's 2014 F-150 Tremor. Photo: Ford Motor.

Ford's (NYSE: F  ) 2014 F-150 Tremor is the first sport truck powered by an EcoBoost engine, addressing desires of a street truck fan looking for high performance with fuel economy. It's a pretty smart move by the marketing folks at Ford to combine the growing brand image of its popular EcoBoost engine with its F-Series namesake. Will it be a hit with its target consumer, though? Will street enthusiasts who desire this type of sport truck accept a V-6? Let's take a look at the truck and see if the Tremor could be a successful addition for Ford.

Specs and facts
According to Ford's press release, the 2014 F-150 Tremor will come with the high-performance 3.5-liter EcoBoost engine it claims to offer V8 performance with V6 fuel efficiency. The Tremor will put out 365 horsepower with 420 pound-feet of torque while achieving 16 miles per gallon in the city and 22 mpg on the highway. According to the Detroit Free Press, the suspension has been tuned for performance and the 4.10 ratio rear axle will provide drivers with faster acceleration.

Looking at the exterior, its short-wheelbase and regular-cab Tremor has an FX appearance package that offers sleek flat-black accents and matching 20-inch flat-black wheels. Additional features include a floor shifter and HID headlamps. The Tremor also offers bucket seats rather than bench seats.

The interior has a more customized feel with its center console and red-stitched steering wheel and seats. It also comes standard with Ford's SYNC and MyFord Touch infotainment system -- which has been a little buggy for consumers but will continue to improve as the technology ages.

Ford's 2014 F-150 Tremor. Photo: Ford Motor.

"The new Tremor gives F-150 customers yet another option to drive a highly capable, distinctive performance truck with features typically found only in the aftermarket," said Brian Bell, F-150 product marketing manager in a Ford press release. "Plus, the Built Ford Tough EcoBoost engine is available for the first time in a short-wheelbase F-150." 

I initially thought that this would directly compete with Ford's Raptor, but it looks as if Ford will attempt to keep the base price under $30,000 -- although official pricing hasn't been released. If it can keep the price lower, it might open up doors to a consumer wanting an aftermarket look right off the dealer lot and at a fair price.

Investing takeaway
Keeping the price low will be key for the Tremor's success, but it will probably cannibalize sales of Ford's Raptor. Ultimately the Tremor and Raptor are niche vehicles that represent a very small amount of F-150 sales. Any incremental sales gained by the Tremor won't be enough to move the needle and create profits that the truck segment typically brings Ford -- but perhaps that isn't the goal.

Perhaps the goal is to simply attract as much attention from General Motors' (NYSE: GM  ) release of its 2014 Silverado and Sierra before Ford can release its next-generation 2015 F-150. A flashy looking ride, with high performance and fuel economy at a price under $30,000, could indeed be successful at stealing some thunder from GM's new models when the Tremor hits stores this fall.

The Tremor might be a success for consumers looking for this type of ride, and it will probably deliver performance-satisfying results. For investors, though, this is nothing to get excited about. It won't boost market share, profits, or sales numbers. But that's OK, because the F-Series already delivers a ton of profits to Ford's bottom line and has been America's favorite truck for 36 years. This can only steal excitement from GM's launch, which is fine by Ford investors.

Ford has been an excellent investment since the recession and the best investing approach is to choose great companies and stick with them for the long term. The Motley Fool's free report "3 Stocks That Will Help You Retire Rich" names stocks that could help you build long-term wealth and retire well, along with some winning wealth-building strategies that every investor should be aware of. Click here now to keep reading.

Stocks Hitting 52-Week Highs

Related IIN Morning Market Movers Morning Market Losers Related AXAS Abraxas Petroleum Corp. (AXAS) in Focus: Stock Moves 6.4% Higher - Tale of the Tape Will Noble Energy Disappoint This Quarter? - Analyst Blog

Intricon (NASDAQ: IIN) shares gained 33.98% to touch a new 52-week high of $6.23 after the company reported Q1 results.

Abraxas Petroleum (NASDAQ: AXAS) shares gained 2.19% to reach a new 52-week high of $5.60. Abraxas Petroleum shares have jumped 154.88% over the past 52 weeks, while the S&P 500 index has gained 18.57% in the same period.

Harley-Davidson (NYSE: HOG) shares touched a new 52-week high of $72.56 after the company reported a rise in its first-quarter profit.

Allergan (NYSE: AGN) shares reached a new 52-week high of $164.46 on buyout offer from Valeant Pharmaceuticals International (NYSE: VRX).

Posted-In: 52-Week HighsNews Intraday Update Markets Movers

© 2014 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.

  Most Popular Earnings Expectations For The Week Of April 21: Apple, Facebook, GM And More A Look At 2014's Leading Cannabis Stocks Sears And Others Insiders Have Been Buying Watching Tech, Alibaba IPO, With Ironfire's Eric Jackson Wells Fargo Securities Sees Mixed Factors for Apple Earnings Scheduled For April 22, 2014 Related Articles (AXAS + AGN) Stocks Hitting 52-Week Highs Will Allergan (AGN) Continue to Surge Higher? - Tale of the Tape Abraxas Petroleum Corp. (AXAS) in Focus: Stock Moves 6.4% Higher - Tale of the Tape Morning Market Movers Sterne Agee Expects Allergan to Resist Hostile Takeover by Valeant Benzinga's Top #PreMarket Gainers Around the Web, We're Loving... Noble Energy to Promote COO Stover to CEO as Davidson Retires Lightspeed Trading Prese

These Are the 5 Most Patriotic Brands

Today, July 4th, represents our Independence Day as a nation. It's a time for celebration of our freedoms, our forefathers, and for those who have served, and continue to serve, to protect the freedoms that we often take for granted. For some of us, it's also a time to shoot off an excessive amount of fireworks. Here's a hint... I fall into both camps.

Source: US Navy, commons.wikimedia.org.

With today's contagious patriotism in mind, I thought it would be worthwhile on this reflective day to dig a bit deeper into a recent survey conducted by research firm Brand Keys, and published by USA Today, of America's "Most Patriotic Brands." The survey conducted by Brand Keys covered some 35 sectors, included 197 total companies, and questioned 4,500 respondents to come up with the U.S.'s most patriotic brands.

Here are the results:

1. Jeep (98/100)
2. Hershey (NYSE: HSY  ) (97/100 tie)
3. Coca-Cola (NYSE: KO  ) (97/100 tie)
4. Levi Strauss (95/100 tie)
5. Disney (NYSE: DIS  ) (95/100 tie)

Brand Keys' formula, as we've witnessed in previous instances, focuses on customer engagement with the brand. Ultimately, better engagement drives loyalty, and loyalty drives sales, repeat sales, and referrals, which are the bread and butter of the retail business.

The way I see it, there are four components that all of these brands share that helps drive consumer engagement, and makes them an integral part of American culture.

Source: US Army, commons,wikimedia.org.

Rich company history
Possibly the most defining factor of many brands on this list is the role they've played throughout American history. Many brands can date their roots back more than a century, which instills a sense of foundation and heritage with younger and older consumers. As USA Today pointed out, Chrysler Group's Jeep was the "brand known for winning World War II," providing ground transportation to troops overseas. Interesting enough, Ford was the only other auto brand to even crack the top 25. Despite its rich history in the U.S., its lack of involvement in previous wars disassociated it from gaining traction on the most patriotic brands listed above. No General Motors brand even finished in the top 25.

Similarly, brand value and recognition play an important role. While you can certainly go to Hong Kong or Shanghai and enjoy Disney's theme parks, the concept of family-oriented theme parks (in a large sense) originated in the U.S. The same goes for Coca-Cola; you can't think of Coca-Cola's influence without driving around the U.S. and seeing its image plastered in nearly every city you travel to.

Family oriented
The common image we're shown in ads on television and online when Independence Day rolls around is of the American family. Brands that have universal appeal to mom, dad, and the kids are bound to strike a chord more powerfully than brands that don't.

Source: Jared, Flickr.

Perhaps no brand in the top echoes this better than Disney, whose entire purpose is to entertain. Its theme parks are meant to bring families closer together, and the entertainment provider recently signed a long-term deal with streaming content provider Netflix to deliver its classic movies to living rooms around the U.S. almost immediately, with newer movies hitting Netflix's digital library beginning in 2016.

You could also make an easy case for confectioner Hershey, as well. Honestly, how many people do you know who don't like chocolate? Chances are that everyone from mom to dad and the kids are thrilled to dig into a pile of Hershey's Kisses.

Source: Denise Mattox, Flickr.

Brings joy
This builds on brands being family oriented, and is sort of the "Duh!" factor of the bunch; but brands that engage consumers by being entertaining, or bringing joy, tend to offer higher patriotic engagement scores. This is really where a company like Hershey would shine, given that research shows that chocolate increases dopamine and serotonin levels in the brain, which triggers heightened motivation, and also relaxes tension. What better way to celebrate the holiday than relaxing with some chocolate, right?

This could also be the factor that kept a company like Procter & Gamble (NYSE: PG  ) from busting into the top five with two of its leading brands, Colgate and Gillette, which finished sixth and 11th, respectively, in polling. While P&G certainly has the brand history and recognition to back up being a part of Americana, brushing our teeth and shaving aren't exactly the family-oriented, joyful events that, say, going to a theme park, or chowing down on chocolate can be.

Dependable
The final engagement factor that I believe drives patriotic engagement among consumers is the dependability of the brand. We've already touched on one component of dependability: a company's historical roots. Obviously, having endured decades, or a century or more, of economic ups and downs means the brand can be trusted by consumers to be there for many more decades to come.

There's also the actual dependability of the brand and/or product itself. This could be one of the primary reasons why we don't see any GM brands appearing in top 25, given its bankruptcy reorganization in 2009. Having sought bankruptcy protection removed the dependable tag consumers often associated with GM.

This is a category where denim-products maker Levi Strauss shines. When it comes to denim pants, no brand is better known in the U.S. than Levi Strauss, and no jean more classic than its "501," which had its introduction as far back as the 1890s.

The takeaway
Looking at this from an investing perspective, the key point here is that the companies behind these brands are doing a fantastic job of targeting their marketing, and utilizing their brand value, to drive sales.

While Coca-Cola does spend quite a bit on advertising -- nearly $3 billion in 2010 alone -- it can let its branding do the talking for the company. As the most valuable brand in the world according to Interbrand, and operating in all but two countries worldwide, Coca-Cola's bottom-line growth is practically self-sustaining.

Disney has also done a phenomenal job hitting its target family audience through theme park expansion and modernization, as well as by hitting the basic components of media entertainment by driving growth at ESPN, and forging content deals with Netflix and DreamWorks Animation to capture the younger audiences.

If anything, this survey gives risk-averse investors some research fodder for potential future investments – in between setting off fireworks, of course.

Have a happy and safe July 4th, Fools!

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3 Stocks for the Offshore Boom

The world is gearing up to spend more and more money pillaging deepwater oil and gas reserves. Norway's parliament has opened up a new part of the Arctic Circle to oil and gas drilling, the European Union recently passed legislation to tighten up offshore safety measures, and the U.S. House of Representatives just passed a bill to increase offshore oil and gas drilling here in the States. The exploration and production industry is already pouring billions of dollars into offshore areas, and the results are coming in the form of discovery after discovery of natural gas deposits and ambitious deepwater drilling endeavors. 

Transocean is as good a bellwether as any, given it's the world's largest offshore driller. The company's most recent fleet status report shows that a number of rigs that were idle are now booked for work. Seadrill (NYSE: SDRL  ) is no slouch either, with its fleet of 61 drillships and rigs. It just inked a massive $2.7 billion contract with Brazil's state-owned oil company, Petrobras (NYSE: PBR  ) .

A semi-submersible offshore rig. Photo: © Seadrill

As the offshore movement intensifies, Transocean and Seadrill should benefit, but there will be many winners, including the three companies I'm talking about today.

1. KNOT Offshore Partners (NYSE: KNOP  )
Ever wonder how the oil gets from the offshore rig to the onshore refinery? Sometimes there's a pipeline, and sometimes there are shuttle tankers, like the ones owned and operated by KNOT Offshore.

The master limited partnership only went public April 10, but don't let that fool you. Parent company Knutsen NYK has origins that stretch back 120 years, and it's the second-largest shuttle tanker company in the world. KNOT Offshore only has four vessels in its fleet right now, but it has at least five tankers identified as potential drop-downs from the parent company.

2. Oiltanking Partners (NYSE: OILT  )
The Houston ship channel is the Mecca of marine transportation services for the oil industry, and Oiltanking Partners has one of the largest third-party terminals there. It's got six deepwater docks and a storage capacity of 12.1 million barrels.

The partnership handles a variety of products, including crude oil, fuel oil, refined products, liquefied petroleum gas (propane), and chemical feedstocks. All those different products mean that Oiltanking also has a host of different customers, which results in diversified income, something every investor loves to see.

3. National Oilwell Varco (NYSE: NOV  )
This company has really left its mark on the offshore world, quite literally, with equipment on 90% of the industry's rigs. It doubled its quarterly dividend earlier this year, to $0.26 per share and an annualized payout of $1.04 per share. After a rough 2012, earnings are up again in 2013 as the entire industry has begun to rebound. Like Seadrill, the company has a lucrative relationship with Petrobras that should bode well in the near future.

Bottom line
The offshore industry has had a tough couple of years, but it is finally showing signs of life. If you want to take a deeper dive into one of these companies, check out the Fool's special free report: "The Only Energy Stock You'll Ever Need." It should help you on your way to developing a fundamental understanding of the industry, and how a great company can really dominate. 

Macey: Why The London Whale Scandal Was Blown Out of Proportion

We interview Jonathan Macey, who is Yale University's Sam Harris Professor of Corporate Law, Corporate Finance and Securities Law. Jonathan has authored several books on corporations and the law, and joins The Motley Fool to talk about his most recent work, The Death of Corporate Reputation.

A full transcript follows the video.

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Brendan Byrnes: I wanted to ask you about the JPMorgan (NYSE: JPM  ) London Whale scandal. Their stock price now is up higher than it was back prior to the scandal. Do you think this is any kind of hit to their reputation, or hurts them long-term?

Jonathan Macey: It's interesting. Every scandal is different.

The JPMorgan London Whale scandal was very different than, say, the Goldman Sachs (NYSE: GS  ) Abacus scandal. The Goldman Sachs Abacus scandal, they're ripping off people. In the London Whale, you have a guy who's proprietary trading. He's trading with JPMorgan's own money, and he's losing money. He's just making bad bets.

There's nothing in that scandal that impugns JPMorgan's honesty or integrity, or the way they interface with customers. It's all about, do they have adequate internal controls...?

The London Whale scandal is really all about...if anybody cares about it, it really should be the shareholders, to the extent that it suggests weakness of controls, but as we see from the market, this seems to be something that JPMorgan has under control. It seems to be a bit aberrational.

Clearly, the company is taking it very seriously, so I don't think that the London Whale scandal really is...I think the market's right in not reacting to it. I think people are blowing it tremendously out of proportion. It's their problem. They made a mistake -- a big mistake; it cost them billions -- but they're moving on. They make a lot of money, and even in that quarter they didn't show a loss.

The Top 3 Stocks on the Dow This Week

It was another wild week on Wall Street, but at the end of the week the Dow Jones Industrial Average (DJINDICES: ^DJI  ) was up 0.88% and the S&P 500 (SNPINDEX: ^GSPC  ) had gained 0.78%. Early in the week, stocks dropped because investors feared the Federal Reserve would taper off a bond-buying program that's helped keep interest rates low, but by the end of the week, losses had reversed on another pretty mediocre employment report.

Pfizer (NYSE: PFE  ) led the Dow this week by gaining 3.8%. The company partnered with a company called CytomX to build antibody-drug conjugate products to fight cancer. The company can get an upfront payment of $25 million and a much as $610 million if sales goals are reached. Cancer drugs are really the next frontier for drug companies, and hopefully this is a winner for Pfizer.  

Verizon (NYSE: VZ  ) was second in the Dow this week with a 3.6% gain -- surprising, considering how much the company was in the headlines. The Guardian broke a story about Verizon's cooperating with an NSA requirement to turn over information about both domestic and international phone calls, and another privacy debate erupted around the country. Verizon didn't have much of a choice considering the court order, so you can't really blame the company for cooperating. If we focus on the longer term, I think Verizon is still in prime position in the wireless market, and the NSA debate will grab headlines for only a short time. A 4.2% dividend yield and a wide competitive moat make this one of the best stocks on the Dow.

Rounding out the top three this week was Coca-Cola (NYSE: KO  ) , which gained 3.6%. Sometimes it takes a wild week like this for the market to appreciate a steady company like Coca-Cola. The soft-drink giant has an incredible competitive advantage around the globe and has managed to update its business as consumers have trended to healthier drinks in recent years. A 17.7 forward P/E ratio may sound expensive for some stocks, but this company will be around in another 100 years, and sometimes it takes turbulent markets for investors to realize that.

Coca-Cola's wide moat has helped provide its shareholders with superior gains in the past, but the company faces some new threats to its continued market dominance. The Motley Fool recently compiled a premium research report containing everything you need to know about Coca-Cola. If you own or are considering owning shares in the company, you'll want to click here now and get started!

Top Information Technology Companies To Watch In Right Now

With shares of International Business Machines�(NYSE:IBM) trading around $203, is IBM an OUTPERFORM, WAIT AND SEE, or STAY AWAY? Let�� analyze the stock with the relevant sections of our CHEAT SHEET investing framework:

T = Trends for a Stock’s Movement

IBM is an information technology company. The company operates in five segments: Global Technology Services, Global Business Services, Software, Systems and Technology, and Global Financing. Technology products and services are in high demand worldwide as consumers want to be up-to-speed, and companies always need the latest and greatest to stay ahead of the competition. Cloud computing has been hot in recent times, which has not been too good for IBM. Should the company want to hold on to its market share, it needs to make moves quickly, and provide the technology products and services that worldwide consumers and companies demand.

NEW! Discover a new stock idea each week for less than the cost of 1 trade. CLICK HERE for your Weekly Stock Cheat Sheets NOW!

T = Technicals on the Stock Chart are Mixed

Top Information Technology Companies To Watch In Right Now: GTT Communications Inc (GTT)

GTT Communications, Inc., formerly Global Telecom & Technology, Inc., incorporated on January 3, 2005, is a global network integrator providing a portfolio of Wide-Area Network (WAN), dedicated Internet access and managed data services. The Company combines multiple networks and technologies, such as traditional OC-x, MPLS and Ethernet, to deliver solutions designed for each client�� requirements. The Company improves its client performance through its Client Management Database (CMD), providing customers with an integrated support system for all of their services. It is provides solutions, project management and 24x7 global operations support. In May 2012, the Company acquired nLayer Communications Inc. In April 2013, Neutral Tandem Inc acquired the global data services business of Global Telecom & Technology Inc.

The Company�� global operations consist of two parts: global customer operations, and global network operations and engineering. Customer operations include project management and development of its CMD system. Global project management assures the implementation of a customer services after the sale. Network operations and engineering consists of global Network Operations Center (NOC) and Engineering and Information and Communications Technology (ICT). The NOC receives, prioritizes, tracks and resolves network outages or other customer needs, along with provisioning and testing of services. Engineering provides support for the NOC and the sales team, as well as carrying out all provisioning for GTT Network Services. ICT manages all internal desktop, and network and server infrastructure.

The Company competes with Level 3, Qwest, KPN, XO Communications, COLT, Verizon Business, AT&T, British Telecom, NTT and Deutsche Telekom.

Advisors' Opinion:

• [By The GeoTeam]

  This brings us to Global Telecom (GTT), a company that provides customers with innovative connectivity solutions by utilizing its own network assets.

Top Information Technology Companies To Watch In Right Now: Woodside Petroleum Ltd (WPL)

Woodside Petroleum Ltd (Woodside) is an Australia-based oil and gas company. Woodside, along with its subsidiaries is engaged in hydrocarbon exploration, evaluation, development, production and marketing. As of December 31, 2011, the Company produced around 700,000 barrels of oil equivalent each day from a portfolio of facilities, which it operates on behalf of some of the major oil and gas companies. It operating facilities include six liquefied natural gas (LNG) trains, five offshore platforms and four oil floating production storage and offloading (FPSO) vessels. It is one of the non-government operators LNG plants. The Company operates six segments: North West Shelf Business Unit, Australia Oil Business Unit, Pluto Business Unit, Browse Business Unit, United States Business Unit and Other. In September 2012, it sold a minority portion of its equity in the proposed Browse LNG Development to Japan Australia LNG (MIMI Browse) Pty Ltd. Advisors' Opinion:

• [By Jonathan Burgos]

  Agricultural Bank of China Ltd., the nation�� third-largest lender, slid 2.3 percent in Hong Kong. Yamada Denki Co. sank 4.8 percent in Tokyo after the consumer electronics retailer missed its full-year profit forecast. Woodside Petroleum Ltd. (WPL), Australia�� second-biggest oil producer, jumped 9.7 percent after announcing plans to return cash to shareholders.

Top 10 Consumer Service Companies To Watch In Right Now: Globe Specialty Metals Inc.(GSM)

Globe Specialty Metals, Inc., together with its subsidiaries, produces and sells silicon metal and silicon-based alloys in North America, Europe, South America, and Asia. The company primarily offers silicon metal that is used as a raw material for silicone compounds, aluminum, and polysilicon. It also produces silicon-based alloys, such as ferrosilicon; magnesium-ferrosilicon-based alloys known as nodularizers; ferrosilicon-based alloys known as inoculants; calcium silicon alloys; and cored-wire silicon-based alloy products, as well as carbon electrodes, silica fume, and fines. The silicon-based alloy products are used as raw materials for steel, automotive components, and ductile iron. In addition, the company processes and supplies specialty metallurgical coal to other silicon and silicon-based alloy producers. Its customers include silicone chemical, aluminum, and steel manufacturers; auto companies and their suppliers; ductile iron foundries; manufacturers of photovol taic solar cells and computer chips; and concrete producers. The company was formerly known as International Metal Enterprises, Inc. and changed its name to Globe Specialty Metals, Inc. in November 2006. Globe Specialty Metals, Inc. was incorporated in 2004 and is headquartered in New York, New York.

Advisors' Opinion:

• [By Marc Bastow]

  Silicon metals and alloys producer Globe Specialty Metals (GSM) raised its quarterly dividend 7.1% to 7.5 cents per share, payable March 12 to shareholders of record as of Feb. 26.
  GSM Dividend Yield: 1.65%

Top Information Technology Companies To Watch In Right Now: HealthSouth Corporation (HLS)

HealthSouth Corporation offers inpatient rehabilitative healthcare services in the United States and Puerto Rico. The company primarily operates inpatient rehabilitation hospitals and long-term acute care hospitals, which provide treatment on both an inpatient and outpatient basis. Its inpatient rehabilitation hospitals offer services to patients who require institutional rehabilitation care, and patient care is provided by nursing and therapy staff as directed by a physician order. As of December 31, 2010, the company operated 97 inpatient rehabilitation hospitals, including 68 owned hospitals and 29 jointly owned hospitals; 6 freestanding long-term acute care hospitals; 32 outpatient rehabilitation satellite clinics; 25 licensed hospital-based home health agencies; and managed 4 inpatient rehabilitation units through management contracts. The company was founded in 1983 and is headquartered in Birmingham, Alabama.

Advisors' Opinion:

• [By Rich Duprey]

  Rehab hospital operator�HealthSouth (NYSE: HLS  ) announced this morning its second-quarter dividend on its 6.5% Series A convertible perpetual preferred stock�of $16.25�per share.

• [By Brad Thomas]

  As the only healthcare REIT with a "hospital-focused" platform, MPW is a relatively new REIT that was formed (in 2004) to lease from many of the nation's leading hospital operators, including Prime Healthcare Services, Kindred Healthcare (KND), HealthSouth (HLS), Health Management Associates (HMA), Community Health Systems (CYH), Vibra Healthcare, Ernest Health Inc., and IASIS Healthcare.

Top Information Technology Companies To Watch In Right Now: Zynga Inc (ZNGA)

Zynga Inc. (Zynga), is a provider of social game services with 240 million average monthly active users over 175 countries. The Company develops, markets and operates online social games as live services played over the Internet and on social networking sites and mobile platforms. The Company�� games are accessible on Facebook, other social networks and mobile platforms to players globally, wherever and whenever they want. It operates its games as live services. All of its games are free to play, and it generates revenue through the in-game sale of virtual goods and advertising. In March 2012, the Company acquired New York-based social game developer OMGPOP, makers of the cultural hit mobile game, Draw Something, and over 35 additional social games. In 2012, the Company launched several new games, including Hidden Chronicles, Zynga Bingo, Scramble With Friends, Slingo and Dream Heights.

Social Games

The Company designs its social games to provide players with shared experiences. Its social games leverage the global connectivity and distribution on Facebook, other social networks and mobile platforms, such as Apple iOS and Google Android. Its games are free to play, span a number of genres. It operates its games as live services and updates them with content and features. Its games include CityVille, Zynga Poker, FarmVille, CastleVille, FrontierVille, Mafia Wars and Word with Friends.

Virtual Goods

The Company�� primary revenue source is the sale of virtual currency, which players use to buy in-game virtual goods. Some forms of virtual currency are earned through game play, while other forms can only be acquired for cash or, in some cases, by accepting promotional offers from its advertising partners.

Advertising

The Company�� advertising services offer ways for marketers and advertisers to reach and engage with its players. Its advertising offerings include branded virtual goods and sponsorships, engagement ads, mobil! e ads and display Ads. It offers branded virtual goods and sponsorships integrate advertising within game play; Engagement Ads and Offers, in which players can answer certain questions or sign up for third party services to receive virtual currency; Mobile Ads through ad-supported free versions of its mobile games such as Words with Friends and Display Ads in its online web games include banner advertisements.

The Company competes with Crowdstar, Inc., DeNA, Electronic Arts Inc., King.com, The Walt Disney Company, Vostu, Ltd. wooga GmbH, Amazon.com, Inc., Facebook, Inc., Google Inc., Microsoft Corporation , Tencent Holdings Limited, Apple, Electronic Arts, GREE, DeNA Co. Ltd., Gameloft, Glu Mobile, Rovio Mobile Ltd , Storm8, Inc., Activision Blizzard, Inc., Big Fish Games, Inc., Electronic Arts, SEGA of America, Inc., and THQ Inc..

Advisors' Opinion:

• [By Ian Kar]

  Zynga (NASDAQ: ZNGA)- The popular mobile gaming company announced that it would start using the virtual currency for purchases, which helped the price of Bitcoin to skyrocket past $1000 a piece.

• [By Lisa Levin]

  Zynga (NASDAQ: ZNGA) posted a narrower-than-expected third-quarter loss. Zynga shares jumped 12.87% to $3.99 in the after-hours trading session.

  Analysts expect Weyerhaeuser Co (NYSE: WY) to report its Q3 earnings at $0.21 per share on revenue of $2.09 billion. Weyerhaeuser shares rose 0.50% to $30.45 in after-hours trading.

• [By Paul Ausick]

  Zynga Inc. (NASDAQ: ZNGA) rode its Farmville franchise to an IPO in December 2011 at a starting price of $11 a share. The stock rose to an all-time high of more than $14.50 a share the following February, before falling to an all-time low of around $2 a share in October of 2012. The stock now trades near $5 a share. And the company has yet to duplicate the success of the Farmville franchise.

Top Information Technology Companies To Watch In Right Now: VIVUS Inc (VVUS)

VIVUS, Inc., incorporated on May 16, 1996, is a biopharmaceutical company. It commercializes and develops therapies to address unmet needs in obesity, sleep apnea, diabetes and sexual health. The Company's drug, Qsymia (phentermine and topiramate extended-release) was approved by the the United States Food and Drug Administration (FDA) for the treatment of obesity as an adjunct to a reduced-calorie diet and increased physical activity for chronic weight management in adult patients with an initial body mass index (BMI) of 30 or greater (obese), or 27 or greater (overweight) in the presence of at least one weight-related comorbidity, such as hypertension, type 2 diabetes mellitus or high cholesterol (dyslipidemia). Qsymia incorporates low doses of active ingredients from two previously approved drugs, phentermine and topiramate. It has completed Phase 2 clinical studies for Qsymia for the treatment of sleeps apnea and Qsymia for the treatment of type 2 diabetes. Its drug also includes STENDRA, or avanafil.

Qsymia for the treatment of obesity was approved as an adjunct to a reduced-calorie diet and increased physical activity for chronic weight management in adult patients with an initial BMI of 30 or greater (obese), or 27 or greater (overweight) in the presence of at least one weight-related comorbidity, such as hypertension, type 2 diabetes mellitus or high cholesterol (dyslipidemia). Qsymia incorporates low doses of active ingredients from two previously approved drugs, phentermine and topiramate.

The Company initially launched Qsymia for distribution to eligible patients through the home delivery networks of two certified pharmacies, CVS Pharmacy and Walgreens. Since then, it has expanded the distribution of Qsymia to include the home delivery networks of Express Scripts, Wal-Mart Pharmacy and, for its members only, Kaiser Permanente. Clinical studies of topiramate, a component of Qsymia, in type 2 diabetics resulted in a clinically reduction of hemoglobin A1c (HbA1c). The! Company's drug, STENDRA (avanafil), is an oral PDE5 inhibitor the Company has licensed from Mitsubishi Tanabe Pharma Corporation (MTPC).

Advisors' Opinion:

• [By Bryan Murphy]

  If you're curious as to why shares of Orexigen Therapeutics, Inc. (NASDAQ:OREX) are tanking following what was seemingly good news, you only have to look at the sagas of Arena Pharmaceuticals, Inc. (NASDAQ:ARNA) and VIVUS, Inc. (NASDAQ:VVUS) to find your answer. Both ARNA and VVUS shares fell - precipitously - after each of those companies came up with similar (though better, technically) news. The downside for OREX shares is, not only are they apt to struggle for the same dynamic/technical reason VIVUS and Arena shares did, but the market has had a chance to see a major fundamental reason that Orexigen could be in trouble.

• [By Maxx Chatsko]

  Investors are already imagining what could be possible in the newly opened obesity market. The Food and Drug Administration approved Qsymia from VIVUS (NASDAQ: VVUS  ) and Belviq from Arena Pharmaceuticals (NASDAQ: ARNA  ) in 2012. These treatments may or may not take off on their own -- each offers weight loss of 6% to 8% over one year -- but they could certainly be a good starting point for future, more effective compounds.

Top Information Technology Companies To Watch In Right Now: Vector Group Ltd (VGR)

Vector Group Ltd is a holding company. The Company operates in Tobacco and Real Estate. The Tobacco segment consists of the manufacture and sale of cigarettes. The Real Estate segment includes the Company�� investments in consolidated and non-consolidated real estate businesses. The Company is engaged in the manufacture and sale of cigarettes in the United States through its Liggett Group LLC (Liggett) and Vector Tobacco Inc. (Vector Tobacco) subsidiaries, and the real estate business through its New Valley LLC (New Valley) subsidiary, which is seeking to acquire additional operating companies and real estate properties. New Valley has real estate-related investments, including Douglas Elliman Realty, LLC (Douglas Elliman Realty) (50% interest), New Valley Oaktree Chelsea Eleven LLC (40% interest) and Fifty Third-Five Building LLC (50% interest), Sesto Holdings S.r.L (7.2% interest), MS/WG 1107 Broadway Holdings LLC (1107 Broadway) (5% interest), NV SOCAL LLC (26% interest) and HFZ East 68th Street (18% interest), where other partners hold interests.

As of February 15, 2012, 52 of the 54 units in the Chelsea Eleven LLC real estate development had been sold. During the year ended December, 31, 2011, New Valley invested in MS/WG 1107 Broadway Holdings LLC for an approximate indirect 5% interest. In September 2011, MS/WG 1107 Broadway Holdings LLC acquired the 1107 Broadway property in Manhattan, New York. In February 2011, New Valley invested in Lofts 21 LLC for an approximate 12% interest. In October 2011, New Valley invested in Hill Street Partners LLP (Hill) for an approximate 17.39% interest. Hill purchased a 37% interest in Hill Street SEP (Hotel Taiwana), which owns a hotel located in St. Barts, French West Indies. The hotel consists of 30 suites, six pools, a restaurant, lounge and gym. The purpose of the investment is to renovate and the sell the hotel in its entirety or as hotel-condos. In December 2011, New Valley invested in a condominium conversion project for an approximate 1! 8% interest. The building is a 12-story, 105,000 square foot residential rental building located on 68th Street between Fifth Avenue and Madison Avenue in Manhattan, New York.

Tobacco Operations

Liggett is the operating successor to Liggett & Myers Tobacco Company. During 2011, Liggett was a manufacturer of cigarettes in the United States. Liggett�� manufacturing facilities are located in Mebane, North Carolina where it manufactures most of Vector Tobacco�� cigarettes pursuant to a contract manufacturing agreement. As of December 31, 2011, Liggett and Vector Tobacco have no foreign operations. The Company�� tobacco subsidiaries manufacture and sell cigarettes in the United States. Liggett produces cigarettes in approximately 118 combinations of length, style and packaging. Liggett�� brand portfolio includes PYRAMID, GRAND PRIX , LIGGETT SELECT , EVE and USA and various Partner Brands and private label brands.

Liggett Vector Brands LLC (LVB), which coordinates its tobacco subsidiaries��sales and marketing efforts, along with certain support functions, has an agreement with Circle K Stores, Inc., which operates more than 3,300 convenience stores in the United States under the Circle K and Mac�� names, to supply MONTEGO, a deep discount brand, exclusively for the Circle K and Mac�� stores. The MONTEGO brand was offered under LVB's Partner Brands program. LVB also has an agreement with Sunoco Inc., which operates approximately 675 Sunoco APlus branded convenience stores in the United States, to manufacture SILVER EAGLE. SILVER EAGLE, a deep discount brand, is exclusive to Sunoco and was the second brand to be offered under LVB's Partner Brands program. Liggett also manufactures BRONSON cigarettes as part of a multi-year Partner Brands agreement with QuikTrip, a convenience store chain with more than 580 stores.

New Valley LLC

New Valley is engaged in the real estate business and is seeking to acquire additional real estate properties an! d operati! ng companies. New Valley owns a 50% interest in Douglas Elliman Realty, LLC, which operates residential brokerage company in the New York City metropolitan area. New Valley also holds an investment in a 450-acre approved master planned community in Palm Springs, California (Escena), holds investment interests in various real estate projects in Manhattan, New York, southern California and Milan, Italy through both debt and equity investments.

Douglas Elliman Realty, LLC

Douglas Elliman Realty is engaged in the real estate brokerage business through its two subsidiaries which conduct business as Prudential Douglas Elliman Real Estate. The two brokerage companies have 62 offices with approximately 3,975 real estate agents in the metropolitan New York area. The Long Island brokerage operation, is the residential brokerage company on Long Island with 44 offices and approximately 1,850 real estate agents. During 2011, the Long Island brokerage operation closed approximately 6,163 transactions. Prudential Douglas Elliman Real Estate acts as a broker in residential real estate transactions.

Prudential Douglas Elliman Real Estate also offers relocation services to employers, which provide a variety of specialized services primarily concerned with facilitating the resettlement of transferred employees. These services include sales and marketing of transferees��existing homes for their corporate employer, assistance in finding homes, moving services, educational and school placement counseling, customized videos, property marketing assistance, rental assistance, area tours, international relocation, group move services, marketing and management of foreclosed properties, career counseling, spouse/partner employment assistance, and financial services. Clients can select these programs and services on a fee basis according to their needs. DE Capital Mortgage LLC primarily originates loans for purchases of properties located on Long Island, New York City and Westchester. Approx! imately o! ne-half of these loans are for home sales transactions, in which Prudential Douglas Elliman Real Estate acts as a broker.

Douglas Elliman Realty is also engaged in the management of cooperatives, condominiums and apartments though its subsidiary, Residential Management Group, LLC, which conducts business as Douglas Elliman Property Management and is a manager of apartments, cooperatives and condominiums in the New York metropolitan area. Residential Management Group provides service third-party fee management for approximately 350 properties, representing approximately 47,000 units in New York

The Company competes with Philip Morris USA Inc., Reynolds America Inc., Lorillard Tobacco Company, Commonwealth Brands, Inc., Century-21, ERA, RE/MAX, Coldwell Banker, GMAC Home Services and NRT LLC.

Advisors' Opinion:

• [By Alex Planes]

  At the time of the breakup, the American Tobacco Trust controlled or held significant interests in 65 subsidiary companies in the United States, as well as two British companies. These interests were eventually separated into 14 different tobacco companies, of which four became an American tobacco oligopoly to replace the monopoly: R. J. Reynolds (now Reynolds American), Liggett and Myers (now Vector Group (NYSE: VGR  ) ), Lorillard (NYSE: LO  ) , and a diminished American Tobacco.

• [By Brian Pacampara]

  Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, cigarette maker Vector Group (NYSE: VGR  ) has received a distressing two-star ranking.

Top Information Technology Companies To Watch In Right Now: Meridian Bioscience Inc.(VIVO)

Meridian Bioscience, Inc., a life science company, engages in the development, manufacture, sale, and distribution of diagnostic test kits primarily for gastrointestinal, foodborne, viral, respiratory, and parasitic infectious diseases. The company?s diagnostic products primarily consist of C. difficile for the detection of gastrointestinal diseases; Rotavirus and Adenovirus products for pediatric diarrhea detection; H. pylori for stomach ulcers; Enterohemorrhagic E. coli infection and Campylobacter jejuni used in the detection of foodborne diseases; Varicella-Zoster for viral diseases; and Cytomegalovirus for organ transplant infections. Its products also include transport media that store and preserve specimen samples from patient collection to laboratory testing. The company?s diagnostic test kits utilize immunodiagnostic and molecular technologies, which test samples of stool, blood, urine, and other body fluids or tissue for the presence of specific infectious disea ses. In addition, Meridian Bioscience, Inc. manufactures and distributes bulk antigens, antibodies, PCR/qPCR reagents, nucleotides, competent cells, and bioresearch reagents used by researchers and other diagnostic manufacturers. Further, it involved in the contract development and manufacture of proteins and other biologicals under cGMP conditions for use by biopharmaceutical and biotechnology companies engaged in research for new drugs and vaccines. The company sells its diagnostic test kits through direct sales force and independent distributors to reference laboratories and hospitals, principally in the United States, Canada, Belgium, France, Holland, Italy, the United Kingdom, Africa, the Middle East, and other European countries. The company was founded in 1976 and is headquartered in Cincinnati, Ohio.

Advisors' Opinion:

• [By Seth Jayson]

  Meridian Bioscience (Nasdaq: VIVO  ) reported earnings on July 25. Here are the numbers you need to know.

  The 10-second takeaway
  For the quarter ended June 30 (Q3), Meridian Bioscience met expectations on revenues and beat expectations on earnings per share.

• [By Marc Bastow]

  Integrated life sciences company Meridian Biosciences (VIVO) raised its quarterly dividend 5.3% to 20 cents per share, payable on Feb. 14 to shareholders of record as of Feb. 3.
  VIVO Dividend Yield: 3.22%

Top Information Technology Companies To Watch In Right Now: Popular Inc.(BPOP)

Popular, Inc., through its subsidiaries, provides a range of retail and commercial banking products and services primarily to corporate clients, small and middle size businesses, and retail clients in Puerto Rico and Mainland United States. It offers deposit products; commercial, consumer, and mortgage loans, as well as lease finance; and finance and advisory services. The company also offers trust and asset management, brokerage and investment banking, and insurance and reinsurance services. As of December 31, 2010, it owned and occupied approximately 94 branch premises and other facilities in Puerto Rico; and 119 offices, including 20 owned and 99 leased in New York, Illinois, New Jersey, California, Florida, and Texas. Popular, Inc. was founded in 1917 and is headquartered in San Juan, Puerto Rico.

Advisors' Opinion:

• [By Jake L'Ecuyer]

  Popular (NASDAQ: BPOP) shares tumbled 5.54 percent to $27.48 after Morgan Stanley downgraded the stock from Equal-weight to Underweight.

  Pacific Coast Oil Trust (NYSE: ROYT) down, falling 7.13 percent to $16.70 after the company priced a public offering by Pacific Coast Energy Company LP and other selling unitholders of 13,500,000 trust units at a price of $17.10 per unit.

• [By Paul Ausick]

  Among multinationals, Sterne Agee recommends three banks. The first is Puerto Rico�� Popular Inc. (NASDAQ: BPOP). The mid-cap bank�� stock closed at $28.21 on Friday in a 52-week range of $20.31 to $34.34. Based on Sterne Agee�� 2014 price target of $40.00, Popular has an upside potential of nearly 42% and a 2014 EPS estimate of $2.90. The investment firm�� forward multiple is just 9.6, below the Thomson Reuters consensus multiple of 10.3. Popular received TARP funds in 2009 and could repay the loan in the first quarter of next year, which will give the stock a shot in the arm as well.

Johnson & Johnson's 3 Major Strengths

I recently wrote a mini-series on Johnson & Johnson  (NYSE: JNJ  ) , where I focused on each of its three segments: pharmaceuticals, consumer goods, and medical devices. Now seems like an opportune moment to check out the strengths of J&J as a group, with this article being the first of four that, in turn, will highlight the strengths, weaknesses, opportunities, and threats it is facing.

The pharma segment is a major strength
J&J's biggest strength appears to be its pharma segment. That's because it is currently the most profitable segment by far, with it accounting for 56% of the company's total pre-tax profit in 2013. However, where the pharma segment really provides opportunity for J&J is in its potential to deliver improved profits in future, with a number of drugs in the pharma segment's pipeline having the potential to deliver both top- and bottom-line improvements.

For instance, Imbruvica (a treatment for leukemia that was approved in November 2013) and Invokana (a type 2 diabetes treatment approved just over a year ago) have a combined peak sales estimate of $7 billion -- or possibly more. The great thing about both of these drugs, though, is that they are approved and so, while peak sales numbers are estimates, they could impact the income statement over the short to medium term. In addition,  This could be great news for J&J and is a major strength of the business.  

As for the present, J&J's pharma segment performed well in the first quarter of 2014. It grew sales by 10.8% when compared to the first quarter of 2013 despite a negative currency impact of 1.4%, with international sales showing particular strength. They grew by 14% and highlight the potential for J&J outside of the US. On the topic of potential, J&J's drug pipeline is strong and it includes multiple late-stage candidates, with the aforementioned Imbruvica currently in Phase 3 trials for further treatments, and other oncology drugs such as Velcade and Yondelis also being in late-stage trials for further applications.

Diversity should not be overlooked
However, J&J isn't all about pharmaceuticals. In fact, it accounts for less than 40% of the group's total revenue and highlights another strength: its diversity. Certainly, the pharma segment offers super-high margins (pre-tax margins were 32.6% in 2013) but it is complemented by the consumer and medical devices segments. Although less profitable than the pharma segment, they provide J&J with increased stability due to lower sales volatility and this helps to smooth out the "boom and bust" nature of pharmaceuticals. For instance, J&J's top-line increased by 3.5% in the first quarter of 2014 when compared to the first quarter of 2013, with the bottom-line increasing by an impressive 6.9% over the same time period. Indeed, increased stability and diversification could be seen as  even greater strengths further down the line should generic competition become a bigger factor for J&J's pharma segment.

What about its rivals?
On the topic of generic competition, some of J&J's rivals have been hit hard in recent years. For instance, sector peer Merck (NYSE: MRK  ) is more focused on pharmaceuticals than J&J (they make up 85% of the company's revenue) and its sales fell by 7.8% in 2013, as sales of respiratory drug Singulair were hit hard by a loss of patent protection and subsequent generic competition. While J&J is not immune from this eventuality, it is far more diversified than Merck and, although a similar event would still hurt J&J, it may not have as great an impact as at Merck.

Of course, Merck, like J&J, has potential in its pipeline, with MK-3475 having a peak sales estimate of $3 billion by 2020. Approval for the drug is not certain, but it could be a catalyst for Merck's top and bottom lines over the medium to long term.

It is a similar picture in terms of generic competition at Pfizer (NYSE: PFE  ) , where the pharma segment accounted for 93% of sales in 2013. The key reason for this was a loss of exclusivity on cholesterol-lowering medication, Lipitor, in developed Europe and Australia as well as further patent losses on other products. Although such events would impact any company, Pfizer's reliance on pharmaceuticals and lack of diversity meant that there was no great "stabilizer" to help counter the effects of loss of exclusivity. However, Pfizer continues to offer strength in its pipeline, with breast cancer treatment palbociclib having peak sales estimates of over $5 billion. Unlike J&J, though, Pfizer's business looks set to be a lot more boom and bust in the future due in large part to its lack of diversity.

Is J&J's valuation a weakness?
The S&P 500 itself trades on a P/E of 17.6 (trailing 12 months), which is relatively high by historical standards, while J&J's P/E of 20.2 is even higher and makes shares in the company look overvalued relative to the wider index.

However, when growth forecasts for the next year are taken into account, J&J's P/E no longer appears unattractive. That's because it falls to 15.4 when looking a year out, which is the same as the S&P 500's forward P/E. So, while the trailing P/E is high relative to the wider market, J&J's valuation in terms of a forward P/E is in line with the market.

Furthermore, when J&J's strengths are taken into account, namely the huge potential and high profitability of the pharma segment, as well as the diversity and stability provided by the consumer and medical devices segments, J&J appears to be a good value when compared to the wider market.

Far from being a weakness, J&J's valuation could, I believe, be its hidden (and third) strength. In other words, paying the same price as that of the wider market for a company as high quality as J&J could be the strongest reason, in my view, why the stock could be a top future performer.

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Why Intel Corporation Shares Might Pull Back

While Fools should generally take the opinion of Wall Street with a grain of salt, it's not a bad idea to take a closer look at particularly stock-shaking upgrades and downgrades -- just in case their reasoning behind the call makes sense.

What: Shares of Intel Corporation (NASDAQ: INTC  ) traded sluggishly on Wednesday after the chip gorilla posted in-line Q2 results and received a buy-to-neutral downgrade from B. Riley & Co.

So what: Along with the downgrade, B. Riley planted a price target of $29 on the stock, representing just 8% worth of upside to yesterday's close. While momentum traders might be attracted to Intel's price strength in recent weeks, B. Riley's call could reflect a growing sense on Wall Street that its valuation is becoming a bit stretched.

Now what: According to B. Riley, Intel's risk/reward trade-off is pretty balanced at this point. B. Riley said in reference to Intel's Q2:

Revenues were slightly below/in-line with the Street's $12.76B/$13.00B but the mid-yr ramp to 63% [gross margin] was a pleasant surprise. However, from there 2H14 tablet margin mix pressures GM 100-200 bps/qtr to leave OM flattish from 2Q14-4Q14 despite falling opex. ... For the stock -- which we upgraded to 'Buy' in mid-October expecting PC stability to ultimately price in, we believe this sets up a tough 2H14 catalyst profile at a time when PCG's qq growth risks escalate.

Of course, when you couple Intel's structural advantages with its juicy 3.5% dividend yield, those short-term concerns might be providing patient Fools with a solid long-term income opportunity.

More dynamic dividend picks
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Shelter Your Investment Income with MLPs

Editor’s Note: As a Tax Day special for this edition of Utility & Income, we’ve given our colleagues at our sister publication, MLP Profits, an opportunity to explain the basics of master limited partnerships (MLP), which offer high-yielding, tax-deferred payouts.

While Utility Forecaster includes a number of MLPs in our Portfolios as well as in How They Rate, our coverage of the MLP space is not exhaustive.

For investors interested in thorough coverage of this area, MLP Profits provides three portfolios (Conservative, Growth and Aggressive), as well as a monthly Sector Spotlight feature, which analyzes the top MLPs operating in a particular niche, and two Best Buys every month.

MLP Basics

The first MLP was formed by Apache Oil Company in 1981. In 1987, Congress legislated the rules for publicly traded partnerships, which required that at least 90 percent of an MLP's income must come from qualified sources, such as real estate or natural resources. Section 613 of the tax code requires qualifying energy sources to be depletable resources or their derivatives such as crude oil, petroleum products, natural gas and coal.

Recent case-by-case Internal Revenue Service rulings have expanded the range of activities qualifying for MLP treatment. A proposed bill called the MLP Parity Act would further expand the definition of "qualified" sources to projects involving wind and solar power, as well as closed and open loop biomass, geothermal, municipal solid waste, hydropower, marine, fuel cells, and combined heat and power.

MLPs and Taxes

There are some important differences between investing in MLPs and investing in a corporation. An MLP issues units rather than shares, and these also trade on major stock exchanges and can go up or down in value.

But the key difference is in tax rules. MLPs aren't subject to the corporate income tax, instead passing profits ! directly to unitholders in the form of distributions. This arrangement avoids the double taxation of corporate income and dividends affecting traditional corporations and their shareholders and, all things being equal, should deliver more money to unitholders. As a result, MLPs tend to trade at a premium to corporations in similar businesses.

But the distributions from MLPs aren't immediately fully taxed either. Because of the depreciation allowance, as much as 80 percent to 90 percent of a typical MLP's distribution can be classified a "return of capital" and thus not taxable when received. Instead, returns of capital reduce the cost basis of an investment in the MLP.

The rest of the distribution–typically 10 percent to 20 percent–is taxed at the recipient's income tax rate. But being able to defer the rest of the tax until the investment is sold is an advantage, since the income can be reinvested to generate compound returns that could more than pay for the eventual tax bill.

When you ultimately sell the units or the cost basis drops to zero, a portion of the capital gain is taxed at the special long-term capital gains tax rate, and the remainder will be taxed at your normal income tax rate.

MLPs issue Schedule K-1 forms instead of the 1099s you may receive from a corporation, and the K-1 will reflect your share of the taxable income. Partnerships are not required to release tax information until the April 15 following the calendar year-end. Most K-1s are issued between late February and early April, which could certainly delay a tax return. You may not have to file for an extension, but you also may not be able to file before March.

The other thing to understand about MLPs and taxes is that the K-1 package will include a state schedule. This schedule details the MLP's share of income or loss attributed to each state in which it operates. For example, a pipeline may cut across five states and have reportable income in each state. You may be require! d to file! state tax returns for each of these states, which means your tax reporting may be more complex and costlier, though most individual investors will fall well under the threshold for having to do so.

Are MLPs Right for Your Portfolio?

MLPs are primarily for investors seeking stable, tax-advantaged income. However, there are numerous exceptions to this idealized definition.

Some MLPs don't provide stable income. There are many variable distribution MLPs, particularly in refining and fertilizer manufacture. These are highly cyclical industries given their exposure to commodity prices. They could pay out an annualized 20 percent yield one quarter and then suspend the distribution three months later should profits dry up.

Some MLPs have experienced huge capital appreciation. Three–Icahn Enterprises (Nasdaq: IEP), Hi-Crush Partners (NYSE: HCLP), and The Blackstone Group (NYSE: BX)–gained over 100 percent in 2013. A fourth, American Midstream Partners (NYSE: AMID) gained 96 percent for the year.

Some partnerships and MLP investment vehicles are not especially tax advantaged. There are partnerships that have chosen to pay corporate income taxes, and mutual funds and exchange traded funds (ETFs) have to pay corporate taxes which reduces the distribution to the investor.

Most MLPs provide midstream energy services. In fact, the 10 largest MLPs by market capitalization  all engage in oil and gas gathering, storage, and/or transportation. This sector is characterized by lower volatility and throws off income more reliably than many of the niche MLPs, and as a result draws more conservative income-seeking investors.

Source: Alerian

The Alerian MLP Index is a composite of the 50 most prominent MLPs, and can provide a snapshot of a "typical" midstream MLP. Over the past year, the index has gained 5.8 percent, whi! le the an! nual yield averaged 6.3 percent, for a total return of 12.1 percent.

We can use those numbers to examine the implications for an investor who is seeking a stable source of retirement income. If we had invested $100,000 in an MLP whose performance was identical to the Alerian MLP index, the size of the investment would have increased to $105,800, while returning $6,300 back to the investor as income.

Because most of that income is treated as a return of capital, it is not taxed. This can represent 80 percent to 90 percent of the distribution. If we assume that 85 percent of the investment was a return of capital, then only 15 percent of the $6,300–$945–is taxable income. The other $5,355 reduces the cost basis of the investment, which is now $94,645 ($100,000 – $5,355).

An investor selling the entire position after one year would be responsible for a capital gain between the sales price ($105,800) and the depreciated basis ($94,645). Thus, the government will still tax the entire gain, but the majority of taxes will be deferred until the investment is sold. If your investment basis gets to zero (which is likely if you hold the investment for more than 10-15 years) you will have to start paying tax on further distributions.

Conclusions

Hopefully this article has helped you better understand the MLP investment opportunities. MLPs aren't without risk. Investors chasing high yields may be putting themselves at high risk, but there are many midstream options that yield 4 percent to 6 percent without much direct commodity exposure. There are also specific tax implications, but the benefits can make MLPs a good options for conservative buy-and-hold income-seekers. If this is your goal, you should get better acquainted with this growing sector.