Top Warren Buffett Companies For 2014

He is one of superinvestors mentioned by Warren Buffett in his famous Graham-and-Doddsville. The late William J. Ruane I knew had a shining smile that could light up a room when he walked in. Warren Buffett advised associates to invest with Ruane after closing out the Buffett Partnership. William J. Ruane (October 24, 1925, Chicago, Illinois ��October 4, 2005, New York City, New York) was one of the superinvestors in Warren Buffett�� Graham-and-Doddvile. Ruane graduated from the University of Minnesota in 1945 with a degree in electrical engineering and from Harvard Business School in 1949. He enlisted in the U.S. Navy and was on his way to Japan when World War II ended.

Ruane met Warren Buffett at an investment seminar with value investing guru Benjamin Graham. They became lifelong friends. Ruane founded his own investment firm, Ruane Cunniff, with partner Rick Cunniff in 1970, and the same year they launched their flagship Sequoia Fund (SEQUX). You can read more about Ruane�� success formula for the investment business.

Top Warren Buffett Companies For 2014: Golfsmith International Holdings Inc.(GOLF)

Golfsmith International Holdings, Inc. operates as a specialty retailer of golf and tennis equipment, apparel, footwear, and accessories. Its stores offer branded clubs, balls, apparel, and accessories, as well as its proprietary-branded products, including Clubmaker, Golfsmith, Killer Bee, J.G.Hickory, Lynx, Profinity, Snake Eyes, TourTrek, XPC, Zevo, Maggie Lane, ZTech, and MacGregor. The company?s stores also provide club components, clubmaking tools, supplies and on-site clubmaking, custom club-fitting, and club repair services; and hitting areas, putting greens, ball-launch monitor technology, and club demos. In addition, its stores offer golf and tennis lessons, tennis equipment, and tennis racquet maintenance and repair services, as well as partial-flight indoor driving ranges. Further, the company develops and promotes proprietary merchandise, including clubs, club components, apparel, golf bags and covers, pull and push carts, shoes, furnishings, accessories, tra ining aids, and gifts. As of January 25, 2012, it operated 79 stores in the United States. Golfsmith International Holdings also offers its products through catalog and Internet sales. The company was founded in 1967 and is headquartered in Austin, Texas.

Top Warren Buffett Companies For 2014: Patriot National Bancorp Inc.(PNBK)

Patriot National Bancorp, Inc. operates as the bank holding company for Patriot National Bank that provides consumer and commercial banking services to individuals, small and medium-sized businesses, and professionals in Connecticut and New York. It offers various consumer and commercial deposit accounts, such as checking accounts, interest-bearing NOW accounts, insured money market accounts, time certificates of deposit, savings accounts, individual retirement accounts, and health savings accounts. The company also provides commercial loans, including secured and unsecured loans to service companies, real estate developers, manufacturers, restaurants, wholesalers, retailers, and professionals, as well as to small and medium-sized businesses; personal loans, such as lines of credit, installment loans, overdraft protection, and credit cards; real estate loans, including home mortgages, home improvement loans, bridge loans, home equity loans, and lines of credit to individua ls; and commercial real estate and construction loans to area businesses and developers. In addition, it offers Internet banking, bill paying, remote deposit capture, debit card, money order, traveler?s checks, and automated teller machine services; and solicits and processes mortgage loan applications from consumers on behalf of permanent investors and originates loans for sale. As of June 20, 2011, the company operated 15 full service branches, including 12 branches in Connecticut and 3 branches in New York, as well as a loan production office in Stamford, Connecticut. Patriot National Bancorp, Inc. was founded in 1994 and is headquartered in Stamford, Connecticut. Patriot National Bancorp Inc. is a subsidiary of PNBK Holdings LLC.

Top 5 Low Price Stocks To Own For 2014: Hochschild Mining(HOC.L)

Hochschild Mining plc, a precious metals company, engages in the exploration, mining, processing, and sale of silver and gold deposits. It principally operates four underground epithermal vein mines, three located in southern Peru and one in southern Argentina, as well as one open pit mine in northern Mexico. The company was founded in 1911 and is based in London, the United Kingdom.

Top Warren Buffett Companies For 2014: BlackRock Municipal Income Quality Trust (BYM)

BlackRock Insured Municipal Income Trust (the Trust) is a diversified, closed-end management investment company. The Trust�� investment objective is to provide high current income exempt from regular federal income taxes. The Trust will invest at least 80% of its total assets in municipal obligations that are insured as to the timely payment of both principal and interest.

The Trust invests in sectors, such as transportation, water and sewer, power, education and hospitals. BlackRock Advisors, LLC, a wholly owned subsidiary of BlackRock, Inc., serves as the Trust�� investment advisor. BlackRock Financial Management, Inc., a wholly owned subsidiary of BlackRock, Inc., serves as sub-advisor to the Trust.

Top Warren Buffett Companies For 2014: Banco San(BNC.L)

Banco Santander, S.A. provides a range of banking and financial products. It offers various deposit products, such as demand and time deposits, and savings and current accounts; repurchase agreements; mortgages and personal loans; consumer finance; and telephone banking services, and online and mobile telephone banking services. The company also engages in corporate banking, treasury, and investment banking activities; designs and manages mutual and pension funds, investment companies, and discretionary portfolios; manages real estate investment products; and offers trade finance and wholesale banking services. In addition, it provides financial advice and wealth management for high-net-worth clients; private equity for venture capital; protection and household savings insurance products; brokerage of securities; and credit and debit cards, as well as collection services and payment processing for merchants. The company operates primarily in Spain, the United Kingdom, othe r European countries, Brazil and other Latin American countries, and the United States. As of December 31, 2011, it had 6,608 branch offices in continental Europe; 1,379 branches in the United Kingdom; 6,046 branches in Latin America; and 723 branches in the United States. The company was formerly known as Banco Santander Central Hispano S.A. and changed its name to Banco Santander, S.A. in June 2007. Banco Santander, S.A. was founded in 1857 and is headquartered in Madrid, Spain.

Top Warren Buffett Companies For 2014: Colgate-Palmolive Company(CL)

Colgate-Palmolive Company, together with its subsidiaries, manufactures and markets consumer products worldwide. It offers oral care products, including toothpaste, toothbrushes, and mouth rinses, as well as dental floss and pharmaceutical products for dentists and other oral health professionals; personal care products, such as liquid hand soap, shower gels, bar soaps, deodorants, antiperspirants, shampoos, and conditioners; and home care products comprising laundry and dishwashing detergents, fabric conditioners, household cleaners, bleaches, dishwashing liquids, and oil soaps. The company offers its oral, personal, and home care products under the Colgate Total, Colgate Max Fresh, Colgate 360 Advisors' Opinion:

• [By ChuckCarlson]

  Colgate-Palmolive Company (CL), together with its subsidiaries, manufactures and markets consumer products worldwide. The company has raised distributions for 48 years in a row. The 10 year annual dividend growth rate is 12.40%/year. The last dividend increase was 9.40% to 58 cents/share. Analysts are expecting that Colgate Palmolive will earn $5.52/share in 2012. I expect that the quarterly dividend will be raised to 64 cents/share in 2012. Yield: 2.60%

Goldman Lowers Tesla Price Target To $84--Time To Sell?

Goldman Sachs (NYSE:GS) released a 53-page report June 16 analyzing the car business. A very small section of the report (one paragraph) lowered its price target for Tesla (Nasdaq:TSLA) to $84, sending the electric carmaker's stock tumbling 14%. It's come back some in subsequent trading. The question for investors--Is it time to sell? I don't think so. Here's why.

SEE: Why There ARe Few Sell Ratings On Wall Street

Profitable
That's not an easy task. In May I marveled at the fact the markets valued Tesla at more than Fiat (OTCBB:FIATY) despite the fact the Italian-American carmaker produced 200 times as many vehicles annually. This historic revelation came just four days after announcing its first profitable quarter in its 10-year history. In those four days, its stock jumped 49% to $83.24 per share. Tesla, who will deliver just 21,000 Model S vehicles for all of 2013, can't possibly be worth more than Fiat. At least that was the argument in May. Goldman's view, albeit two months later, essentially comes to the same conclusion. They would be wrong.

Goldman's Calculation
In a best-case scenario, Goldman sees Tesla producing 200,000 cars annually garnering a global market share of 3.5% in the entry and mid-luxury market with a 15.2% operating margin, which leads to a share price of $113. That's $7 below its July 17 close. And that's the best case. The worst case puts it at $58 with 105,000 cars produced in a year with an operating margin of 14.6% while the most likely scenario is 150,000 produced at a 14.8% operating margin.

I personally haven't seen the report but the numbers must be 3-5 years out. It's currently producing 400 of the Model S per week and should hit 800 by the end of 2014. In addition, the SUV Model X version won't hit production until late next year. Assuming 400 per week from it and 800 from the Model S, that projects to 63,000 vehicles in 2015. Add another 80,000 vehicles in a lower-priced version ($35,000 as opposed to $62,400)) of the Model S and Tesla hits 143,000 vehicles by the end of 2015. It's important to note that its assembly plant in California has a capacity for 500,000 cars annually. If it achieves the 143,000 number in 2015, I estimate its total revenue from car sales will be upwards of $6.5 billion, or about six times its current revenue.

SEE: 5 Earnings Season Investing Tips

Back of the Napkin Valuation
Consider for a moment that Tesla currently has an enterprise value that's 16 times revenue and a market cap 13 times revenue. Push those multiples out to 2015 using my revenue projection in the previous paragraph and you get an enterprise value of $104 billion based on a market cap of $84.5 billion, which works out to $731 per share. Clearly its multiples will fall as revenues grow. However, if it hits $6.5 billion in revenue at anywhere near Goldman's operating margin forecasts, $120 per share, if available in two years, will be the deal of a century. Somehow I don't think that's going to happen.

Bottom Line
Elon Musk is an innovator along the lines of Steve Jobs. He is building a technology company that just happens to sell cars. Tesla reminds me of Ford (NYSE:F) in the early days of the automotive industry; inventing as it goes. While I've never been especially fond of momentum investing and only pay for growth when it is at a reasonable price, I see Tesla as one of the few examples where I think I'd buy at almost any price because it's such a game changer.

Sure there are other car companies that are making electric vehicles like General Motors (NYSEGM) and Nissan (OTCBB:NSANY), but none who are building their own Supercharger stations across the United States and Canada. That service alone allows Tesla to charge premium prices for its cars. Ingenious. By the end of 2015, you will be able to take your Tesla anywhere there are people and be sure a 30-minute charge is available.

Goldman Sachs put GM on its conviction buy list. I like GM, but I find it hard to imagine that GM's opportunities are any brighter than Tesla's. I would use the current volatility to your advantage, picking up additional shares when its price drops 10% or more in a single day. Tesla's brightest days are still ahead.

Does CBS Have More Room to Grow in 2013?

CBS (NYSE:CBS) made financial headlines this week over its battle royale with Time Warner Cable (NYSE:TWC) concerning distribution fees. Nevertheless, CBS's stock has performed admirably this year — up 34 percent in the past six months. Can CBS continue its impressive run? Let's use our CHEAT SHEET investing framework to decide whether CBS is an OUTPERFORM, WAIT AND SEE, or STAY AWAY.

C = Catalysts for the Stock's Movement

In addition to its seminal series, CSI and NCIS, which enjoy both strong international and domestic audiences, CBS has continued to develop hits for its namesake network channel. These shows include Big Brother, The Big Bang Theory, and Under the Dome. According to Nielsen, these were three of the top 10 most-watched network TV shows last week. CBS continues to experience growth within its Showtime Networks — revenue increased 6 percent in the first quarter on a year-over-year basis. While Showtime continues to face competition from Time Warner's (NYSE:TWX) HBO, the network has recently expanded its distribution by inking key deals with online streaming services such as Amazon (NASDAQ:AMZN) and Netflix (NASDAQ:NFLX).

E = Earnings are Increasing Year-Over-Year

CBS reported first-quarter earnings of 69 cents a share — up an impressive 28 percent from the previous year's quarterly earnings of 54 cents. CEO Leslie Moonves was optimistic, declaring that the first quarter of 2013 "was the most successful quarter in [its] Company's history." He cited ad revenues from the Super Bowl, the Grammys, and the NCAA men's basketball tournament as some of the primary reasons for the company's success. Advertising revenues were up 8 percent from the previous year's quarter. While the second quarter does not have the same caliber of entertainment events for which to generate viewership and ad revenue, CBS should see healthier gross margins as it divests its lagging billboard business, Outdoor Americas.

	2013 Q1	2012 Q4	2012 Q3	2012 Q2	2012 Q1
Qtrly. EPS	$0.69	$0.60	$0.60	$0.65	$0.54
EPS Growth YoY	27.78%	9.32%	20.00%	12.07%	86.21%
Qtrly. Revenue	$4.04B	$3.271B	$3.418B	$3.476	$3.796
Revenue Growth YoY	6.43%	2.99%	1.58%	-3.07%	8.15%

*Data sourced from YCharts

E = Excellent Performance Relative to Peers?

CBS stacks up well to its chief competitors, Time Warner (NYSE:TWX) and Disney (NYSE:DIS). The company has a trailing price-to-equity ratio of 20.53 — slightly higher than that of Time Warner but much lower than that of Disney. CBS has the most attractive return on equity of the three at 17.56 percent, implying that management is performing well in maximizing shareholder profitability. While CBS has the highest debt-to-equity ratio of the group, it has an interest coverage ratio of over 7, meaning that the company's earnings can cover its interest expense seven times over. CBS is is poised to grow at a similar rate to Disney and Time Warner over the next five years. The company pays a modest dividend of 0.90 percent; however, with a payout ratio of only 18 percent, the company has room to increase its dividend in the future.

	CBS	TWX	DIS
Trailing P/E	20.53	18.95	33.15
Profit Margin	11.54%	11.00%	13.64%
ROE	17.56%	10.56%	15.43%
Growth Est (5 yr.)	12.20%	12.43%	12.33%
Dividend Yield	0.90%	1.90%	1.10%
Debt/Equity Ratio	0.69	0.65	0.38

*Data sourced from Yahoo Finance

T = Technicals on the Stock Chart are Strong

CBS is currently trading at around $52.50, above both its 200-day moving average of $45.86 and its 50-day moving average of $49.32. The stock has experienced a strong uptrend in the past year — up 70 percent in the last 12 months. CBS's stock has a high relative strength index of more than 80, implying that shares may be overbought and that the stock is due for a pullback. CBS set a new 52-week high of $53.84 on Thursday.

 

Conclusion

CBS continues to offer high-quality entertainment content. As evidenced by its first-quarter results, both its Showtime and CBS network channel audiences have grown on a year-over-year basis. One cause for concern is the increased competition from Time Warner's HBO. Additionally, it remains to be seen if nascent content producers such as Netflix will provide formidable competition for Showtime. Still, CBS is trading at a reasonable price-to-equity ratio, has a manageable debt level, and pays a modest dividend. CBS is probably due for a slight pullback, as it recently set a new 52-week high — however, it should continue to OUTPERFORM for the rest of the year.

What Do These Factors Say About Sprint’s Stock?

With shares of Sprint (NYSE:S) trading around $7, is S an OUTPERFORM, WAIT AND SEE or STAY AWAY? Let's analyze the stock with the relevant sections of our CHEAT SHEET investing framework:

T = Trends for a Stock's Movement

Sprint offers wireless and landline communications products and services to individuals and businesses in the United States. Through its two segments, Wireless and Wireline, it offers voice and data transmission services to subscribers in all 50 states, Puerto Rico, and the United States Virgin Islands under the Sprint corporate brand, which includes its retail brands of Sprint, Nextel, Boost Mobile, Virgin Mobile, and Assurance Wireless. An increasing share of the population is opting for these communications products and services, fueling profits for Sprint.

Sprint posted earnings recently and the company reported net losses of $1.6 billion, up from $1.4 billion a year earlier. The company was hurt by the $623 million it cost to close Nextel, which also cost Sprint 1.05 million subscribers. However, revenue increased to its highest point ever of $7.2 billion, and the company has big plans for the cash it's getting from SoftBank and wireless holdings from Clearwire.

T = Technicals on the Stock Chart are Strong

Sprint stock has seen a strong bid in the last couple of years. The stock is now trading at prices not seen for several years. Analyzing the price trend and its strength can be done using key simple moving averages. What are the key moving averages? The 50-day (pink), 100-day (blue), and 200-day (yellow) simple moving averages. As seen in the daily price chart below, Sprint is trading slightly above its rising key averages which signal neutral to bullish price action in the near-term.

(Source: Thinkorswim)

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

	Implied Volatility (IV)	30-Day IV Percentile	90-Day IV Percentile
Sprint Options	42.32%	50%	48%

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

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

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

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

E = Earnings Are Mixed Quarter-Over-Quarter

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

	2013 Q2	2013 Q1	2012 Q4	2012 Q3
Earnings Growth (Y-O-Y)	-15.21%	27.59%	-1.22%	-160.00%
Revenue Growth (Y-O-Y)	0.31%	0.68%	3.24%	5.16%
Earnings Reaction	7.31%	-0.14%	-0.51%	-1.77%

Sprint has seen decreasing earnings and increasing revenue figures over the last four quarters. From these numbers, the markets have been excited about Sprint's recent earnings announcement.

P = Excellent Relative Performance Versus Peers and Sector

How has Sprint stock done relative to its peers, AT&T (NYSE:T), Verizon (NYSE:VZ), T-Mobile (NASDAQ:TMUS), and sector?

	Sprint	AT&T	Verizon	T-Mobile	Sector
Year-to-Date Return	23.42%	-0.24%	9.71%	41.28%	17.97%

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

Conclusion

Sprint provides communications services and technology to a wide variety of consumers and companies in the United States and its territories. The street is excited about a recent earnings announcement. The stock is currently trading at high prices not seen for several years. Over the last four quarters, earnings have been decreasing while revenue figures have been increasing which has left investors with mixed feelings. Relative to its peers and sector, Sprint has been a year-to-date performance leader. Look for Sprint to OUTPERFORM.

Lithium Corporation Acquired BC Sugar Property (OTCBB:LTUM, OTCMKTS:CRWE)

Lithium Corporation (LTUM)

Today, LTUM has shed (-19.80%) down -0.0079 at $.0320 with 33,100 shares in play thus far (ref. google finance Delayed: 11:18AM EDT June 26, 2013), but don't let this get you down.

Location Based Technologies, Inc. previously reported it received FCC and IC certification for its versatile LBT-886 device. These certifications are necessary before devices can be sold to consumers throughout the US and Canada.

Lithium Corporation previously reported it has recently acquired a new Graphite (BC Sugar) prospect in the Shuswap area of British Columbia, in an under-explored area. In addition to the acquired claim, Lithco has also staked another four claims, to bring the total area to be explored by the Company to 3,405.77 acres (1,378.27 hectares). Although graphite has been identified locally in marbles, it has become apparent that graphite is also hosted here in quartz, biotite/mica gneisses, and also in calc-silicate gneisses. The host rocks at BC Sugar are similar to the host rocks in the area of the Crystal Graphite deposit 55 miles (90 kms) to the Southeast, where Lithium Corporation holds the Mt Heimdal block of claims.

Take a look at Lithium Corporation (LTUM) 5 day chart:

Crown Equity Holdings Inc. (CRWE)

Today (June 26), Crown Equity Holdings Inc. (OTCMKTS:CRWE) (www.crownequityholdings.com ) has surged (+50.00%) up +0.0025 at $.0075 with 55,600 shares in play thus far (ref. google finance Delayed: 2:14PM EDT June 26, 2013).

Together with its digital network of Websites, CRWE offers advertising branding and marketing services as a worldwide online multi-media publisher. The company focuses on the distribution of information for the purpose of bringing together a targeted audience and the advertisers that want to reach them. Its advertising services cover and connect a range of marketing specialties, as well as provide search engine optimization for clients interested in online media awareness.

Today (June 26)  CRWE Files 10-Q.  To view click URL  http://www.otcmarkets.com/edgar/GetFilingHtml?FilingID=9371051

Today (June 26)  CRWE Files 10-K. To view click URL http://www.otcmarkets.com/edgar/GetFilingHtml?FilingID=9371048

Take a look at Crown Equity Holdings Inc. 5 day chart:

Top 5 Clean Energy Stocks To Watch Right Now

Exchange-traded funds offer a convenient way to invest in sectors or niches that interest you. If you'd like to add some clean-energy-related stocks to your portfolio, the PowerShares WilderHill Clean Energy Portfolio ETF (NYSEMKT: PBW  ) could save you a lot of trouble. Instead of trying to figure out which companies will perform best, you can use this ETF to invest in lots of them simultaneously.

The basics
ETFs often sport lower expense ratios than their mutual fund cousins. The PowerShares ETF's expense ratio -- its annual fee -- is 0.70%. The fund is fairly small, too, so if you're thinking of buying, beware of possibly large spreads between its bid and ask prices. Consider using a limit order if you want to buy in.

This ETF has performed�terribly, significantly underperforming the world market over the past three and five years. But the future counts more than the past, and it's been a rough few years for the entire solar energy industry, among others. And, as with most investments, of course, we can't expect outstanding performances in every quarter or year. Investors with conviction need to wait for their holdings to deliver. Indeed, stocks that have fallen sharply are sometimes great bargains.

Top 5 Clean Energy Stocks To Watch Right Now: Sysco Corporation(SYY)

Sysco Corporation, through its subsidiaries, distributes food and related products primarily to the foodservice or food-away-from-home industry in North America and Europe. The company offers a line of frozen foods, such as meats, fully prepared entrees, fruits, vegetables, and desserts; a line of canned and dry foods; fresh meats, custom-cut fresh steaks, other meat, seafood, and poultry; dairy products; beverage products; imported specialties; and fresh produce. It also supplies various non-food items, including paper products, such as disposable napkins, plates, and cups; tableware, which include china and silverware; cookware comprising pots, pans, and utensils; restaurant and kitchen equipment and supplies; and cleaning supplies. In addition, the company offers personal care guest amenities, equipment, housekeeping supplies, room accessories, and textiles to the lodging industry. It serves restaurants, hospitals and nursing homes, schools and colleges, hotels and mote ls, lodging establishments, and other foodservice customers. Sysco Corporation was founded in 1969 and is headquartered in Houston, Texas.

Advisors' Opinion:

• [By Richard Young]

  America’s largest foodservice company is Sysco (NYSE:SYY), which operates out of 180 locations nationwide. Sysco serves around 400,000 customers including hospitals, schools, restaurants and hotels. My relative strength chart for Sysco shows a positive trend developing. Buy.

Top 5 Clean Energy Stocks To Watch Right Now: Hilltop Holdings Inc. (HTH)

Hilltop Holdings Inc., through its subsidiary, NLASCO, Inc., operates as a property and casualty insurance company in the United States. The company�s personal product line includes homeowners, dwelling fire, manufactured home, flood, and vacant insurance policies; and commercial product line consists of commercial, builders risk, builders risk renovation, sports liability, and inland marine insurance policies. It distributes its insurance products through a network of independent agents and managing general agents. The company was formerly known as Affordable Residential Communities Inc. and changed its name to Hilltop Holdings Inc. in July 2007. Hilltop Holdings Inc. was founded in 1948 and is headquartered in Dallas, Texas.

Best Safest Companies To Invest In 2014: Abbeycrest(ACR.L)

Abbeycrest plc, through its subsidiaries, engages in the design, manufacture, and distribution of jewelry products worldwide. It primarily offers gold, platinum, palladium, silver, and gemset jewelry. The company offers its products to the retailers and individuals. Abbeycrest plc is based in Leeds, the United Kingdom.

Top 5 Clean Energy Stocks To Watch Right Now: Itau Unibanco Holding SA (ITUB)

Itau Unibanco Holding S.A., incorporated on September 9, 1943, is a bank in Brazil. The Company has four operational segments: Commercial Banking, Itau BBA, Consumer Credit and Corporate and Treasury. Commercial banking, including insurance, pension plan and capitalization products, credit cards, asset management and a variety of credit products and services for individuals, small and middle-market companies). Itau BBA includes corporate and investment banking. Consumer credit includes financial products and services to its non-accountholders. Corporate and treasury includes the results related to the trading activities in its portfolio, trading related to managing currency, interest rate and other market risk factors, gap management and arbitrage opportunities in domestic and foreign markets. It also includes the results associated with financial income from the investment of its excess capital.

On October 24, 2010, Itau Unibanco completed the integration of customer service locations throughout Brazil. In total, 998 branches and 245 customer site branches (CSB) of Unibanco were redesigned and integrated as Itau Unibanco customer service locations, thus creating a network of approximately 4,700 units in the country under the Itau brand. The Company is a financial holding company controlled by Itau Unibanco Participacoes S.A. (IUPAR). As of December 31, 2010, it had a network of 3,747 service branches throughout Brazil. As of December 31, 2010, it operated 913 CSBs throughout Brazil. As of December 31, 2010, it operated 28,844 automated teller machines (ATMs) throughout Brazil.

Commercial banking

The commercial banking segment offers a range of banking services to a diversified base of individuals and companies. Services offered by the commercial banking segment include insurance, pension plan and capitalization products, credit cards, asset management, credit products and customized products and solutions. The commercial banking segment comprises the specialized! areas and products, such as retail banking (individuals); public sector banking; personnalite (banking for high-income individuals); private banking (banking and financial consulting for wealthy individuals); very small business banking; small business banking; middle-market banking; credit cards; real estate financing; asset management; corporate social responsibility fund; securities services for third parties; brokerage, and insurance, private retirement and capitalization products.

The Company�� credit products include personal loans, overdraft protection, payroll loans, vehicles, credit cards, mortgage and agricultural loans, working capital, trade note discount and export. Its investments products include pension plans, mutual funds, time deposits, demand deposit accounts, savings accounts and capitalization plans. Its services include insurance (life, home, credit/cash cards, vehicles, loan protection, among others), exchange, brokerage and others. Its core business is retail banking, which serves individuals with a monthly income below R$7,000. In October 2010, it completed the conversion of branches under the Unibanco brand to the Itau brand and as of December 31, 2010, it had over 15.2 million customers and 4,660 branches and CSBs. Its public sector business operates in all areas of the public sector, including the federal, state and municipal governments (in the executive, legislative and judicial branches). As of December 31, 2010, it had approximately 2,300 public sector customers. Itau Personnalite�� focus is delivering financial advisory services by its managers, who understand the specific needs of its higher-income customers; a portfolio of exclusive products and services; special benefits based on the type and length of relationship with the customer, including discounts on various products and services. Itau Personnalite�� customer base reached more than 600,000 individuals as of December 31, 2010. Itau Personnalite customers also have access to Itau Unibanco netwo! rk of bra! nches and ATMs throughout the country, as well as Internet banking and phone.

Itau Private Bank is a Brazilian bank in the global private banking industry, providing wealth management services to approximately 17,951 Latin American clients as of December 31, 2010. The Company serves its customers��needs for offshore wealth management solutions in major jurisdictions through independent institutions in the United States through Banco Itau Europa International and Itau Europa Securities , in Luxembourg through Banco Itau Europa Luxembourg S.A. , in Switzerland through Banco Itau Suisse , in the Bahamas through BIE Bank & Trust Bahamas and in Cayman through Unicorp Bank & Trust Cayman. As of December 31, 2010, it had over 565 very small business banking offices located throughout Brazil and approximately 2,500 managers working for over 1,235,000 small business customers. Loans to very small businesses totaled R$5,981 million as of December 31, 2010. As of December 31, 2010, it had 374 small business banking offices located nationwide in Brazil and nearly 2,500 managers who worked for over 525,000 companies. Loans to small businesses totaled R$28,744 million as of December 31, 2010.

As of December 31, 2010, it had approximately 115,000 middle-market corporate customers that represented a range of Brazilian companies located in over 83 cities in Brazil. The Company offers a range of financial products and services to middle-market customers, including deposit accounts, investment options, insurance, private retirement plans and credit products. Credit products include investment capital loans, working capital loans, inventory financing, trade financing, foreign currency services, equipment leasing services, letters of credit and guarantees. The Company also carries out financial transactions on behalf of middle-market customers, including interbank transactions, open market transactions and futures, swaps, hedging and arbitrage transactions. It also offers its middle-market custom! ers colle! ction services and electronic payment services. The Company is able to provide these services for virtually any kind of payment, including Internet office banking. It charges collection fees and fees for making payments, such as payroll, on behalf of its customers.

The Company is engaged in the Brazilian credit card market. Its subsidiaries, Banco Itaucard S.A. (Banco Itaucard) and Hipercard Banco Multiplo S.A. (Hipercard), offers a range of products to 26 million customers as of December 31, 2010, including both accountholders and non-accountholders. As of December 31, 2010, it had approximately R$16,271 million in outstanding real estate loans. As of December 31, 2010, it had total net assets under management of R$291,748 million on behalf of approximately 2.1 million customers. The Company also provides portfolio management services for pension funds, corporations, private bank customers and foreign investors. As of December 31, 2010, it had R$184,496 million of assets under management for pension funds, corporations and private bank customers. As of December 31, 2010, the Company offered and managed about 1,791 mutual funds, which are mostly fixed-income and money market funds. For individual customers, it offered 154 funds to its retail customers and approximately 287 funds to its Itau Personnalite customers. Private banking customers may invest in over 600 funds, including those offered by other institutions. Itau BBA�� capital markets group also provides tailor-made mutual funds to institutional, corporate and private banking customers.

The Company provides securities services in the Brazilian capital markets. Its services also include acting as transfer agent, providing services relating to debentures and promissory notes, custody and control services for mutual funds, pension funds and portfolios, providing trustee services and non-resident investor services, and acting as custodian for depositary receipt programs. The Company also provides brokerage services to inte! rnational! customers through its broker-dealer operations in New York, through its London branch, and through its broker-dealers in Hong Kong and Dubai. Its main lines of insurance are life and casualty (excluding Vida Gerador de Benefucio Livre), extended warranties and property. Its policies are sold through its banking operations, independent local brokers, multinational brokers and other channels. As of December 31, 2010, it had 9.9 million in capitalization products outstanding, representing R$2,620 million in liabilities with assets that function as guarantees of R$2,646 million. The Company distributes these products through its retail network, Itau Personnalite and Itau Uniclass branches, electronic channels and ATMs. These products are sold by its subsidiary, Cia. Itau de Capitalizacao S.A.

Itau BBA

Itau BBA is responsible for its corporate and investment banking activities. As of December 31, 2010, Itau BBA offered a portfolio of products and services to approximately 2,400 companies and conglomerates in Brazil. Itau BBA�� activities range from typical operations of a commercial bank to capital markets operations and advisory services for mergers and acquisitions. As of December 31, 2010, its corporate loan portfolio was R$ 76,584 million. In investment banking, the fixed income department was responsible for the issuance of debentures and promissory notes that totaled R$18,888 million and securitization transactions that amounted to R$4,677 million in Brazil in 2010. In addition, Itau BBA advised 35 merger and acquisition transactions with an aggregate deal volume of R$16,973 million in 2010.

Itau BBA is also active in Banco Nacional de Desenvolvimento Economico e Social (BNDES) on-lending to finance large-scale projects, aiming at strengthening domestic infrastructure. In consolidated terms, total loans granted by Itau BBA under BNDES on-lending represented more than R$9,010 million in 2010. Itau BBA focuses on the products and initiatives in the international ! business ! unit, such as structuring long-term, bilateral and syndicated financing, and spot foreign exchange. In addition, in 2010 Itau BBA continued to offer a large number of lines of credit for foreign trade.

Consumer Credit

As of December 31, 2010, its portfolio of vehicle financing, leasing and consortium lending consisted of approximately 3.8 million contracts, of which approximately 71.1% were non-accountholder customers. The personal loan portfolio relating to vehicle financing and leasing reached R$60,254 million in 2010. The Company leased and financed vehicles through 13,706 dealers as of December 31, 2010. Sales are made through computer terminals installed in the dealerships that are connected to its computer network. Redecard S.A. (Redecard) is a multibrand credit card provider in Brazil, also responsible for the capturing, transmission, processing and settlement of credit, debit and benefit card transactions. As of December 31, 2010, the Company held approximately 50% interest in Redecard�� capital stock.

The Company competes with Bradesco, Banco do Brasil S.A. (Banco do Brasil), Banco Santander, Caixa Economica Federal (CEF), BNDES, HSBC, Banco Citibank S.A, Banco de Investimentos Credit Suisse (Brasil) S.A., Banco JP Morgan S.A., Banco Morgan Stanley S.A., Banco Merrill Lynch de Investimentos S.A., Banco BTG Pactual S.A., Banco Panamericano S.A, Citibank S.A., Banco GE Capital S.A. and Banco Ibi S.A.

Top 5 Clean Energy Stocks To Watch Right Now: Snai Ord Spa(SNA.MI)

Snai S.p.A. provides hardware and software systems for accepting bets, pools, and bingo games. It is also involved in the installation and management of slots machines; management of digital system for online data transmission through cable and satellite; and organization and sales services related to bet acceptance activities and the game of bingo. In addition, the company designs gaming terminals and sets up acceptance points; defines and manages communication initiatives; owns and manages gallop and trot race tracks; and manages satellite TV channels for horse races, and broadcasts in-depth programs on subjects related to gaming and betting, as well as sells and installs information technology (IT) systems and equipment. Further, it operates a Web site, snai.it, which enables users to place bets, and play pools and skill games, such as poker and Texas hold?em, and black jack; and engages in publishing and real estate ownership activities, as well as owns the image righ ts for Varenne, a trotter in history. Additionally, the company provides help desk, customer care, telemarketing, and telesales services through its contact center. The company was founded in 1990 and is based in Porcari, Italy. As of March 29, 2011, Snai S.p.A. operates as a subsidiary of Global Games Srl.

Broker-Dealer INVEST Signs Equity Bank

Bank broker-dealer INVEST Financial Corp. will add Equity Bank to its roster.

The Jackson National Life-owned firm announced Monday that it would provide brokerage and investment services for Equity, based in Andover, Kan. Founded in 2002, Equity Bank has $1.2 billion in assets and 29 branches across Kansas and Missouri.

INVEST currently supports 150 banks and credit unions and 1,100 representatives nationwide.

“Equity Bank’s mission to create a positive experience with their customers, shareholders, associates and peers really resonates with INVEST,” Steve Dowden, president and CEO of INVEST, said in a statement. “Through our customer service, technology solutions and operations support, we aim to build a lasting relationship with this organization. Together, we can increase back-office productivity and efficiency, providing a first-rate experience for everyone involved.”

The Tampa, Fla.-based firm is a subsidiary of National Planning Holdings, a division of Jackson. INVEST claims to be first broker-dealer to conduct a securities trade in a bank lobby and “has remained an industry leader in providing brokerage services for financial institutions for 30 years.”

“As Equity continues to grow, it’s vital that we enlist the support of a broker-dealer that has similar core values, and can offer the tools and technology we need to be successful,” added Brad Elliott, CEO of Equity. “We are excited to work with this experienced organization, and we believe that INVEST’s technical and marketing resources will be invaluable.”

Tips for housewives: How to be financially savvy

A typical housewife with no knowledge of money matters, Richa transformed herself into a financially smart lady - and in just six months. Till last year, she was a 35-year old happy-go-lucky wife of Raj, a senior sales manager in an MNC, and mother of two kids Mitesh and Ria.

When they lost almost Rs.50,000 to a wrong investment, done at the recommendation of a relationship manager, Richa was jolted out of her complacency. She wondered whether understanding personal financial matters was really such a big deal. At school she could easily master trigonometry and calculus; chemical reactions, equations and formulas; Newton�s and Einstein�s laws; and all the history, geography, etc. So why couldn�t she study personal finance too?

So with lots of enthusiasm and determination she decided to crack the finance code. She vowed that her money knowledge would no longer be restricted to just spending what Raj earned, but henceforth she would also manage the money judiciously while her husband was busy with his work and travel commitments.

As a first step, therefore, Richa registered herself for an online course on the basics of personal finance. This would enable her to study from home and at her convenience. The idea behind doing this course was to first learn the ABC of finance. There are many aspects to Personal Finance such as Investments, Borrowing, Insurance, Taxation etc. Further, for each of these, there are a plethora of alternatives/options available. Therefore, Richa wanted to begin by familiarizing herself with the nitty-gritty of each of these facets.

To supplement this, she started buying one book on personal finance every month. She thought how ridiculous it was with people (including herself till a few months back) willing to spend Rs.500-1000 on pizzas and burgers every weekend but not investing Rs.300-500 in a book even once a month. Thus, with time, Richa not only enhanced her knowledge multifold, but also created a nice little library (and a more useful legacy than money) for her children.

She also decided to avail the services of an independent personal finance advisor. However, her intention was not to be spoon-fed. Rather, Richa was looking for a person who would also be her mentor and accelerate her learning process.

From time to time, she enhanced her knowledge and understanding in a few areas of her interest by attending specific workshops and seminars.

Further, she has subscribed to a personal finance magazine and a business newspaper. Richa knows that policies change, investment climate changes, products change, economic situations change, and therefore, timely action is important if one doesn�t want to get caught on the wrong foot or miss any new opportunities. In fact, these magazines and newspapers not only disseminate news, they also carry useful analyses; interviews with financial experts; product comparisons; new investment ideas; investor queries; and so on.

And of course, internet, the storehouse of unlimited knowledge, has become Richa�s friend, philosopher and guide. Internet is no longer just for entertainment, chatting, social networking and online shopping. It is also a very useful learning tool.

That apart, Richa has switched channels. No more saas-bahu dramas for her! Now she mainly watches the business channels.

Read on for more tips!

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Bear of the Day: RadioShack (RSH) - Bear of the Day

RadioShack Corporation (RSH) hasn't been profitable since 2012 as sales and margins have eroded. But this Zacks Rank #5 (Strong Sell) has a new CEO and is testing new concept stores. Is it too late to save this electronics retailer?

RadioShack operates 4300 stores in the United States and 270 stores in Mexico. It also has about 1,000 dealer and other outlets worldwide.

On July 1, RadioShack opened up a new concept store on Manhattan's Upper West Side which aims to highlight popular tech devices from Apple, Samsung and the others. There is more hands on testing capabilities.

Over the next several weeks, RadioShack also expects to open up different store prototypes across the New York area, including New Jersey, and also in Texas. Data from the response to the new stores will be used in determining which of the other 4300 stores across the U.S. will get reconfigured.

The company is undergoing changes at the hands of new CEO Joseph Magnacca, who came to RadioShack in February 2013 from Walgreens. He instituted a 100 day plan to turn it around. He is behind the recent concept store changes but he needs time to implement the changes.

How Much Time Does RadioShack Have?

On Apr 23, RadioShack reported its first quarter results which were pretty dismal. Comparable same store sales fell 5.7%. Inventory was up 27% and margins eroded.

RadioShack expected continued weakness in first half of 2013. It's scheduled to report second quarter results on July 24 so further details will soon be forthcoming.

For now, however, there is no end in sight to the earnings losses. The company is expected to lose 76 cents in 2013 and another 51 cents in 2014.

As for liquidity, at the end of the first quarter it had total liquidity of $820 million.

Shares Sinking Again

Shares have been on an up and down ride the past few months. Recently, they have been sinking again.

Instead of taking a chance on the RadioShack turnaround, investors should take a look at Texas retailer Conns Inc. (CONN). It is a Zacks Rank #1 (Strong Buy). It sells not only electronics but is also a play on the housing rebound with beds and appliances.

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Tracey Ryniec is the Value Stock Strategist for Zacks.com. She is also the Editor of the Turnaround Trader and Value Investor services. You can follow her on twitter at @TraceyRyniec.

Fear Dominating The Broadcom Story

A lot of what has worried Broadcom (Nasdaq:BRCM) analysts and investors appeared to come home to roost with the company's latest earnings report. Weak guidance has investors fearing that the company is losing more and more share to Qualcomm (Nasdaq:QCOM), with an overall stagnation in high-end devices leading to fears that ASPs and margins are in danger.

I can understand these fears, but I think there are still some positives to this story. The company's NFC business appears to be doing pretty well, and the higher-margin broadband and networking businesses are likewise more than just afterthoughts. I'd be nervous making a long-term commitment to any mobile chip company right now, but Broadcom could work as a rebound trade for aggressive investors.

Q2's Results Weren't That Bad...
Broadcom reported revenue growth of 6% (year-on-year) and 4% (sequential) for the June quarter, slightly below the average sell-side estimate. While broadband (up 5% and 6%) and infrastructure (up 7% and 19%) were stronger than expected, the mobile/wireless business (up 7% and down 3%) was almost 10% below expectations.

While the growth (or lack thereof) of the mobile business pretty much dominates the discussion around Broadcom, the company's other units are actually more profitable, and the company benefited from that mix shift. Gross margin declined 40bp from last year and rose 20bp sequentially. Operating income was up 3% and 10%, though, which was slightly better than expected despite very weak margins in the wireless business.

SEE: Analyzing Operating Margins

… But Guidance Was That Bad
Broadcom shares almost certainly weren't going to outperform on the basis of the reported results, but management's guidance and comments on the call seriously spooked the market. Management gave a range of revenue estimates for the third quarter with the midpoint about 5% below the prior sell-side estimate. Even worse, they pushed back the commercialization target for the LTE products by about six months – a significant delay in what many analysts have marked as a key driver of the company's near-term growth prospects.

What's Really Going On With Sockets And Shares?
A lot has been made of Broadcom losing connectivity slots in recent Samsung devices to Qualcomm as proof that Broadcom's mobile business is about to face serious trouble. To be sure, I do see some risk that Samsung shifts more business to Qualcomm or Marvell (Nasdaq: MRVL) in the future and/or leverages its purchase of assets from CSR to cut Broadcom out of future designs. Likewise, the announcement of Texas Instruments (NYSE: TXN) selling its connectivity assets to an unnamed buyer (speculation has centered on Apple (Nasdaq: AAPL)) has bears projecting significant share, ASP, and margin losses into the future.

That may be premature. It is true that Qualcomm has been winning sockets that were formerly Broadcom's, but it's also true that Broadcom has been winning baseband business elsewhere and this can actually be more lucrative. What's more, Broadcom has been beating NXP Semiconductors (Nasdaq: NXPI) and gaining some share in the NFC chip market.

It's also worth noting that Broadcom's non-mobile/wireless businesses aren't exactly chopped liver. Although the company wrote down the NetLogic deal by $501 million, the new Trident II networking chip is ramping with customers like Cisco (Nasdaq: CSCO) and Huawei, and these business can still drive worthwhile higher-margin growth.

The Bottom Line
At today's price, I think there's a great deal of bearishness on the company's future in wireless baked into the shares, bearishness that may well overlook the company's strong IP position in system-on-a-chip technologies. While I would not be cavalier about the threat of competition from Qualcomm or Intel (Nasdaq:INTC), nor the risk of "home-grown" solutions from Samsung and/or Apple, I think a lot of the downside may already be in the market.

Just 2% long-term annual free cash flow growth would suggest that Broadcom shares should trade closer to $33 or $34, while I think a worst-case scenario would fall around $27 or $28 per share. There are certainly risks tied to shrinking market growth, shrinking margins, and increasing competition, and these are not shares for investors who don't like or tolerate risk. Even so, while I don't think its appropriate to approach Broadcom with a buy-and-forget mentality, I do believe the shares are too cheap below $28.

Disclosure – At the time of writing, the author owned no shares of companies mentioned in this article.

Crown Unveils Vented End Cans - Analyst Blog

Crown Beverage Packaging North America, a unit of Crown Holdings, Inc. (CCK), in association with Molson Canadian, has introduced new vented end beverage cans. These cans feature a vented end which is easily activated and creates a smoother pour for beer drinkers.

The vented end has a specially designed top with a distinctive red tab and a button-shape to the right of the can opening. While opening the can, consumers have to align the red tab over the button and press down on the vent to open it. With these three easy steps, the consumers will get enhanced experience while drinking. Its unique opening feature will increase the flow rate without the need of added tools.

Molson Coors Brewing Company is a leading global brewer delivering extraordinary brands. Two of its top selling Canadian brands, Coors Light and Molson Canadian are the first to flaunt the new vented end beverage cans. The vented end will not only enhance the appeal of the package but will also help in improving brand identity. Additionally, the vented end can be used alongside existing technologies, like Crown's promotional tabs, can shaping, finishing and printing.

Crown, which belongs to the containers and packaging industry along with Mobile Mini, Inc. (MINI), Ball Corporation (BLL) and EveryWare Global, Inc. (EVRY), achieved this latest and exclusive innovation through extensive work and rigorous testing which will attract consumers and drive sales up.

The Molson Canadian and Coors Light Vented Cans will be sold in 473ml cans and will be available starting mid-June with newly decorated packaging. Full distribution nationally is expected for the Canada Day long weekend. 355ml Vented Cans inside 15- packs will also be available in Ontario and the Atlantic in August.

Philadelphia, Pa.-based, Crown is a leading supplier of packaging products to consumer marketing companies. The company manufactures aluminum beverage cans, food cans, aerosol cans and other packaging products.

Crown currently ! retains a Zacks Rank #3 (Hold).

Portfolio diversification: How does it boost investment?

One of the most common advice given to investors is,' Do no put all your eggs in your basket'. This essentially means that investments should be spread across different asset classes. This suggestion also brings forward the concept of portfolio diversification which propagates allocation of investible amount into different asset classes based on certain parameters. However, the problem with investors is that they ignore the most critical ingredient of diversification which is known as correlation. They invest with the belief that investment in different assets automatically results into diversification. On the face of it the portfolio looks diversified, but pratically lacks benefits of diversification. In order to make diversification work, the correlation between different asset classes should be clearly understood.

In order to understand benefits of correlation, let us first look at the concept of correlation. Correlation shows relationship between movements of different asset class. In simple words, when one asset class ,say shares, give positive return while another asset class  gold gives negative return, it can be concluded that the correlation between shares and gold is negative. It is important for investors to understand correlation factor before allocating investments across asset classes. Let us look at some examples where correlation can give benefits of investments:

Equity and debt often show opposite return behavior: It has been often seen that when rate of interest goes up, the value of equity shares goes down, while the return from debt instruments goes up. So in a rising rate of interest scenario, it will in interest of investors to have more of debt in the portfolio and reduce equity exposure. As rate of interest goes down, the reverse can be done. This decision primarily is driven by the fact that rate of interest or return from debt and equity are generally inversely related. Diversification works well in this kind of scenario. Also high rated debt instruments are almost risk free. This helps in diversification of portfolio by keeping portfolio relatively risk free.

Two schemes of mutual funds do not essentially result into diversification:  Investors often invest with the assumption that investments in different schemes of mutual funds will result into more diversification. However, reality is different from this. As an investor, you need to check whether different schemes of mutual funds selected by you are investing in different kind of stocks. If you end up selecting two schemes in which there are commonalities in terms of investments, diversification benefits will be limited. So ensure that mutual fund schemes selected by you are well diversified themselves.

Combining high beta stocks with defensive stocks: In rising market, high beta stocks give you high return while in falling markets these stocks become drain on your investments. In order to avoid the downside risk and avail benefits of diversification, it will make sense to combine these high beta stocks with defensive stocks such as FMCG and Pharma stocks. The experience of last five years shows that while stock market has not given good returns in general, pharma and FMCG stocks have been consistent performers. Diversification of equity portfolio will work for an investor if this kind of investment strategy is adopted.

Gold as an asset class adds to diversification benefits: It is often said that gold continues to perform when all asset classes fail to do so. Investors often switch to gold as an asset class during periods of crisis. It makes sense to hold gold in your portfolio to minimize portfolio risk. Gold has a negative correlation with many of the asset classes such as equity and debt. For investors holding commodity such as crude in their portfolio, gold works as an asset which gives diversification benefits.

It is extremely important to note that diversification does not mean more assets in portfolio, it means having assets whose correlation is well defined. Benefits of diversification is maximized when portfolio is created on correlation benefits.

Back to Basics - Earnings Yield and Forward Rate of Return

GuruFocus will display an earnings yield and forward rate of return in the new summary page. This is in addition to the basic valuation ratios and the intrinsic values.

Earnings Yield

Earnings yield is the reciprocal of the P/E Ratio. Therefore it can be calculated as:

Earnings yield = Earnings per share (EPS) / Share Price

It can also be calculated from the numbers for the whole company:

Earnings yield = Net Income / Market Cap

The earnings in the calculation is the Trailing Twelve Months earnings.

Guru explains:

If the P/E ratio is an indication of how many years it takes for the company to earn back the stock price shareholders pay to buy the shares, the earnings yield is an indication of how much return shareholders' investment in the company earned over the past 12 months. The higher the earnings yield is, the better.

If a company loses money, the earnings yield is negative. This gives a more straightforward indication that the company is losing money. This is an advantage of using earnings yield instead of the P/E ratio in valuation. For valuation purposes, the P/B Ratio and the P/S Ratio should be used for companies that are losing money.

Like the P/E ratio, the earnings yield can be used to compare investments in different industries. It can even be used to compare the attractiveness of different asset classes such as bonds and cash. Of course, the earnings yield should not be the only factor in deciding which asset classes to invest.

Also similar to the P/E ratio, the earnings yield does not consider the growth of the business. A growing company with the same earnings yield should be more attractive than a company that has the same earnings yield but does not grow.

A better indicator of the attractiveness of an investment which takes growth into account is the Forward Rate of Return.

Be aware:

Just like the P/E Ratio, non-recurring items such as selling part of the business, selling a previous ! investment, etc., can affect earnings yield dramatically. The earning yield is also a poor indication for cyclical companies. When a cyclical stock has a high earnings yield it is usually at the peak of its cycle.

Related: P/E ratio, Earnings Yield (Joel Greenblatt), Forward Rate of Return

Earnings Yield (Joel Greenblatt)

In his book, "The Little That Beat the Market," hedge fund manager Joel Greenblatt defines Earnings Yield as:

Earnings Yield = Earnings before Interest & Taxes / Enterprise Value.

Guru explains:

Joel Greenblatt defines the earnings yield using the above equation because it more accurately reflects the company's profitability relative to its stock price. Items like interest payment and tax etc. are not directly related to the company's operational profitability.

Enterprise Value instead of market cap (share price) is used in the calculation because it is the real price stock and bond investors together pay for the company.

Be aware:

Joel Greenblatt's definition of earnings yield has the same problems the regular earnings yield does. It does not consider the growth of the company. It only looks at one-year's business operation. For cyclical companies, the earnings yield is usually highest at the peak of the business cycle. But these earnings are rarely sustainable.

Forward Rate of Return based on Don Yacktman's definition is a better measure of the expected rate of return for a stock.

Forward Rate of Return

Forward Rate of Return is a concept Don Yacktman uses in his investment approach. Yacktman explained the forward rate of return concept in detail in his interview with GuruFocus. Yacktman defines forward rate of return as the normalized free cash flow yield plus real growth plus inflation. He said in the interview (March 2012, when the S&P 500 was at about 1400):

"If the business is stable, this calculation is fairly straightforward. For instance, on the S&P 500 we would normali! ze earnin! gs. We would then calculate what percentage of those earnings are not reinvested in the underlying businesses and are therefore free. Historically, for the S&P 500, this has been just under 50% of earnings. Currently, we expect the S&P to earn about 70 on a normalized basis, a number which is far below reported earnings due to our adjusting for record high profit margins. $70 X ½ / 1400 gives you a normalized free cash flow yield of approximately 2.5%."

"The historical real growth rate of the S&P 500 (companies) is about 1.5%. Assuming an inflation rate of 2.5%, the forward rate of return on an investment in the S&P 500 is about 6.5% today (2.5% free cash flow yield plus 1.5% real growth plus 2.5% inflation)."

Therefore, forward rate of return = Normalized Free Cash Flow / Price + Growth rate

Guru explains:

Unlike the Earnings Yield, the Forward Rate of Return uses the normalized Free Cash Flow of the past seven years, and considers growth. The forward rate of return can be thought of as the return that investors buying the stock today can expect from it in the future.

For the growth part of the Forward Rate of Return calculation, GuruFocus uses the lower of total revenue growth or per share revenue growth, and the growth rate is always capped at 20%. For the Free Cash Flow we use per share data averaged over seven years. The reason we use seven years is because research shows that seven years is the length of the typical business cycle.

Be aware:

In the Forward Rate of Return calculation, the growth rate is added directly to today's free cash flow yield. Therefore the calculation is reliable only if the company can grow at the same rate in the future as it did in the past. Investors should pay close attention to this when researching growth stocks.

Is Sprint Stock Undervalued?

With shares of Sprint (NYSE:S) trading around $5, is S an OUTPERFORM, WAIT AND SEE, or STAY AWAY? Let's analyze the stock with the relevant sections of our CHEAT SHEET investing framework:

T = Trends for a Stock’s Movement

Sprint offers wireless and landline communications products and services to individuals and businesses in the United States. Through its two segments, Wireless and Wireless, it offers voice and data transmission services to subscribers in all 50 states, Puerto Rico, and the United States Virgin Islands under the Sprint corporate brand, which includes its retail brands of Sprint, Nextel, Boost Mobile, Virgin Mobile, and Assurance Wireless. An increasing share of the population is opting for these communications products and services, fueling profits for Sprint. A recent bidding war with Dish Network (NASDAQ:DISH) for Clearwire (NASDAQ:CLWR) has ended, and left Sprint with the opportunity to take over the rest of the company that will lead to further expansion.

Sprint posted earnings on Tuesday morning, with the company reporting net losses of $1.6 billion, up from $1.4 billion a year earlier. The company was hurt by the $623 million it cost to close Nextel, which also cost Sprint 1.05 million subscribers. However, revenue increased to its highest point ever of $7.2 billion, and the company has big plans for the cash it's getting from SoftBank and wireless holdings from Clearwire.

T = Technicals on the Stock Chart are Weak

Sprint stock has struggled a bit in the last year. The stock is now trading near lows for the year, where it may need to spend some time before moving higher. Analyzing the price trend and its strength can be done using key simple moving averages.

What are the key moving averages? They are the 50-day (pink), 100-day (blue), and 200-day (yellow) simple moving averages. As seen in the daily price chart below, Sprint is trading below its key averages, which signals neutral to bearish price action in the near-term.

(Source: Thinkorswim)

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

	Implied Volatility (IV)	30-Day IV Percentile	90-Day IV Percentile
Sprint Options	50.84%	6%	4%

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

	Put IV Skew	Call IV Skew
August Options	Steep	Average
September Options	Steep	Average

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

On the next page, let’s take a look at the earnings and revenue growth rates, and what that means for Sprint’s stock.

E = Earnings Are Mixed Quarter-Over-Quarter

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

	2013 Q2	2013 Q1	2012 Q4	2012 Q3
Earnings Growth (Y-O-Y)	-15.21%	27.59%	-1.22%	-160.00%
Revenue Growth (Y-O-Y)	0.31%	0.68%	3.24%	5.16%
Earnings Reaction	2.44%*	-0.14%	-0.51%	-1.77%

Sprint has seen mixed earnings and rising revenue figures over the last four quarters. From these numbers, the markets have had mixed feelings about Sprint’s recent earnings announcements.

* As of this writing

P = Excellent Relative Performance Versus Peers and Sector

How has Sprint stock done relative to its peers, AT&T (NYSE:T), Verizon (NYSE:VZ), T-Mobile (NYSE:TMUS), and sector?

	Sprint	AT&T	Verizon	T-Mobile	Sector
Year-to-Date Return	25.32%	6.93%	19.39%	22.82%	16.91%

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

Conclusion

Sprint provides communications services and technology to a wide variety of consumers and companies in the United States and its territories. A recent earnings announcement has investors relatively pleased with the company. The stock is trading near lows for the year, so it may need to spend some time here before heading higher. Over the last four quarters, investors in the company have had mixed feelings, as earnings have been mixed, while revenue figures have been rising. Relative to its peers and sector, Sprint has been a year-to-date performance leader. WAIT AND SEE what Sprint does this coming quarter.

Debunking the Myth of Netflix's "Unsustainable" Business Model

Netflix (NASDAQ: NFLX  ) is really a very simple business in its streaming-focused incarnation. Spend money on content licenses and original shows, pay a minuscule amount of upkeep to keep the digital streams rolling, and cash in large profits as the as-yet-unmatched service attracts millions of new subscribers with very low marginal overhead costs.

The picture grows a tiny bit murkier when you factor in the costs of expanding the service to new international markets, but domestic streaming has become more profitable than the DVD-based cash cow. The long-term margin improvements from this strategy are juicy and undeniable.

But some industry watchers worry that Netflix is spending itself into a corner. The chief proponent of this theory is Wedbush Morgan analyst Michael Pachter, who takes every opportunity to call Netflix's model "unsustainable." The Street writer Rocco Pendola is another heavy critic, and Pendola just launched another attack on Netflix CEO Reed Hastings' "smoke and mirrors, dog and pony show."

In this diatribe, Pendola leans heavily on the assumption that Netflix is spending money faster than making it. Here's the keystone to the entire argument, quoted from an earlier Pendola article:

See if you notice a pattern in this series of numbers: $194,499, $150,419, $175,207, $159,199, $508,053, $395,992, $402,251, $370,298, $290,291. Those numbers represent, in chronological order (and in thousands), Netflix's cash and cash equivalents over the last nine quarters, ranging from the quarter ending Dec. 31, 2010, to the most recent reported quarter ending Dec. 31, 2012. ...

That pop -- from $159,199 to $508,053 -- came when Netflix had to hit the market for extra cash at the end of 2011 as things really began to unravel.

At first glance, it all makes sense. Netflix is borrowing money and not building up cash reserves. A classic scam, right? Pendola compares it to maxing out his credit card to pay utility and grocery bills.

But where did Netflix spend that 2011 cash infusion? That's a question Pendola doesn't seem interested in answering. Here, let me help:

NFLX Cash and ST Investments data by YCharts.

The "cash equivalents" that Pendola focused his wrath on don't include Netflix's short-term investments, which are securities not quite liquid enough to count as cash. It's a bundle of low-risk assets, mainly "corporate debt securities, government and agency securities and asset and mortgage-backed securities." Hardly cash burned on an open fire, nor pumped into risky content bets.

Taking all of this into account, that scary sequence of falling cash balances loses its sting. Compare and contrast:

I think it's pretty obvious from the stable net cash line that Netflix is being responsible with its cash reserves. Pendola missed a vital component of this calculation, which led him to believe that Hastings is basically tricking investors. If you make the same mistake, you might confuse a rock-solid and opportunistic business with an unstable mess, thus missing out on a tremendous investment.

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Pentagon Spends $137 Million on Huey Parts, Destroyer Upgrades

Returning groggy from a holiday weekend (which was, after all, held in its honor), the Department of Defense was slow out of the gate on Tuesday, awarding a bare half-dozen contracts worth no more than $137 million in total. Those going to publicly traded firms included:

$50.6 million: Awarded to Textron's (NYSE: TXT  ) Bell Helicopter division to fund the purchase of long lead parts and components needed to manufacture 15 Lot 11 UH-1Y Super Huey utility helicopters and 10 Lot 11 AH-1Z Viper attack helicopters for the Marine Corps. This contract runs through September 2014.
  $49.8 million: Awarded to BAE Systems (NASDAQOTH: BAESY  ) as part of a previously awarded cost-plus-award-fee contract to perform upgrades on the guided missile destroyer USS Russell (DDG 59) while in extended dry-dock. This work will be completed by February 2014.
  $7 million: Awarded to Breeze Eastern Corp. (NYSEMKT: BZC  ) in exercise of the first option year on a contract to perform repair work on Navy H-53 Sea Dragon helicopters through Nov. 21, 2013. 
  $6.7 million: Awarded to United Technologies (NYSE: UTX  ) subsidiary Universal Propulsion Co. for the purchase of spare digital recovery sequencer kits, power modules and electronic modules for F-15, F-16, F-117, and B-1 aircraft. This contract will be performed by Nov. 14, 2014. Although awarded through the U.S. Naval Supply Systems Command Weapon Systems Support office, the contract actually benefits not only the U.S. military, but also the governments of several U.S. allies -- Bahrain, Columbia, Denmark, Egypt, Greece, Indonesia, Jordan, the Netherlands, Pakistan, Poland, Portugal, Saudi Arabia, South Korea, Taiwan, and Turkey.

Will Electronic Arts Stock Power Up in the Next Generation?

Electronic Arts' (NASDAQ: EA  ) stock has surged this year, but you wouldn't know it by watching the video-game industry alone. Game sales have fallen as the current generation of gaming consoles has grown long in the tooth, a trend that drove down revenue and earnings in EA's most recent quarter. With two new consoles from Sony (NYSE: SNE  ) and Microsoft (NASDAQ: MSFT  ) on the way this year, however, could the long-awaited next generation of gaming propel EA's stock to even higher heights?

Riding Microsoft and Sony's buzz
Sony's next-gen PlayStation 4 and Microsoft's recently announced Xbox One are making the game industry buzz with excitement.

Source: Xbox Wire.

The former's PlayStation 3 of the current generation was released all the way back in 2006; Microsoft's competing Xbox 360 came a year earlier, making it quite a long time since new gaming power arrived for the console industry. As technology in both consoles has been pushed to the limit, game developers such as EA are clamoring to climb on board with both companies' new devices when they release later in 2013.

The current generation of consoles has brought hundreds of millions of consumers into the game industry, and more buyers are good news for EA. Research manager Lewis Ward at International Data Corporation estimates around 250 million PlayStation 3s, Xbox 360s, and Nintendo (NASDAQOTH: NTDOY  ) Wii units sold between 2005 and 2012, generating a massive base for EA to tap into -- and capitalize it has.

Yet Ward is less optimistic about the next generation of consoles. He believes that consoles have peaked as mobile and other gaming trends grow and expects the Xbox One and PlayStation 4 sell less than their predecessors. Nintendo has already followed that trend, with its new Wii U console selling more than 2 billion units less than the company expected after its launch late last year. Still, with console gaming commanding more than 40% of the video game industry's worldwide market share despite mobile and online gaming's rise, and EA can't afford to miss on its best games heading into the next generation.

What will drive EA's next-gen console revenue?
Even if the Xbox One and PlayStation 4 can't match their predecessors' success, don't think EA's out of the game. As the current console generation has aged, the company has continued delivering huge hits in its sports games, such as the Madden NFL and FIFA series that release new titles yearly to millions of sales. EA announced those series to continue on Sony and Microsoft's new offerings, as well as bringing back basketball simulation NBA Live for the next generation.

FIFA 13 alone sold almost $350 million in digital revenue alone in the 2013 fiscal year and sold 30% more units than FIFA 12. Expect that game and EA's fellow sports simulations to remain solid cash cows for this company, particularly with EA developing its new Ignite gaming engine to upgrade the play and look of its sports titles for the next generation of games.

If EA wants to thrive in the next generation of consoles, however, it has to hit a home run with its next title in the massively popular Battlefield series of first-person military shooters. The company announced Battlefield 4 for both Sony and Microsoft's new consoles, hoping to double down on the success of Battlefield 3, which sold more than 8 million copies in just over a month when it launched in 2011. Battlefield 3's continued to drive EA's revenue higher, with its Premium service alone raking in $120 million in revenue last quarter.

Still, EA will have to compete better with rival Activision Blizzard (NASDAQ: ATVI  ) and its video-game goliath Call of Duty in the next generation. Activision's Call of Duty: Modern Warfare 3, which launched head-to-head against Battlefield 3 in 2011, sold 6.5 million units in its first 24 hours, and the company has another title ready to go for the new generation with Call of Duty: Ghosts recently unveiled. It's doubtful EA will be able to beat Activision's dominance in the military shooter genre any time soon, but the company needs to push Battlefield's success even harder with the PlayStation 4 and Xbox One.

Will Disney's gift deliver?
EA plans to unveil a number of other new next-generation games at the 2013 Electronic Entertainment Expo this June, but if there's one license that can seal a win for this company's next-generation future, it's Star Wars.

What does George Lucas' -- and now Disney's -- sci-fi saga have to do with EA? After Disney earlier this year shuttered game developer LucasArts -- part of its $4 billion purchase of the Star Wars property from Lucas -- the entertainment giant inked a deal with EA to develop and publish Star Wars games for the next few years. While no official titles have been released, a brand with a fan base as strong as this one is a sales bonanza in the making for EA.

This is an opportunity it can't afford to let go. EA's last Star Wars game, massively multiplayer online offering The Old Republic, arrived last year with a lot of hype and failed to deliver on its promise, going free-to-play earlier this year. The company reportedly has three top developer studios already at work on future Star Wars games. While investors shouldn't expect to see these games arrive before next year, a major Star Wars game hit could generate massive sales and cement EA as the top game publisher of the new console generation.

EA's push into mobile gaming, as well as its microtransactions digital download strategy, should help firm up the company's financials in the future, but console gaming still dominates this industry. The new generation of consoles from Microsoft and Sony will make or break this stock in the next few years. If EA can take its established franchises and potential winners of tomorrow to new heights, this stock's recent rise may be just the beginning of something big.

While Activision and Microsoft have been taking the headlines when it comes to console gaming, investors following the gaming sector would do well to also keep tabs on Electronic Arts. We can help. The Motley Fool's special report breaks down the risks and opportunities facing the company to help you decide if EA is right for your portfolio. Click here to get your copy now.

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TriQuint Launches New Share Buyback Program

TriQuint Semiconductor (NASDAQ: TQNT  ) is aiming to boost the value of its shares with a fresh repurchase scheme. The firm announced it has authorized the buyback of up to $75 million worth of its common stock. This will be bought "from time to time in the open market at prevailing market prices or through privately negotiated transactions at the discretion of Company management."

Once purchased, the stock will become authorized but unissued shares.

TriQuint's most recent closing stock price was $6.12, giving it a market cap of just under $1 billion. It currently has approximately 163 million shares outstanding.

More Expert Advice from The Motley Fool

The Motley Fool's chief investment officer has selected his No. 1 stock for the next year. Find out which stock in our brand-new free report: "The Motley Fool's Top Stock for 2013." I invite you to take a copy, free for a limited time. Just click here to access the report and find out the name of this under-the-radar company.

3 Tech Stocks Under $10 in Breakout Territory

DELAFIELD, Wis. (Stockpickr) -- At Stockpickr, we track daily portfolios of stocks that are the biggest percentage gainers and the biggest percentage losers.

Stocks that are making large moves like these are favorites among short-term traders because they can jump into these names and try to capture some of that massive volatility. Stocks that are making big-percentage moves either up or down are usually in play because their sector is becoming attractive or they have a major fundamental catalyst such as a recent earnings release. Sometimes stocks making big moves have been hit with an analyst upgrade or an analyst downgrade.

Regardless of the reason behind it, when a stock makes a large-percentage move, it is often just the start of a new major trend -- a trend that can lead to huge profits. If you time your trade correctly, combining technical indicators with fundamental trends, discipline and sound money management, you will be well on your way to investment success.

With that in mind, let's take a closer look at a several stocks under $10 that are making large moves to the upside today.

ION Geophysical

ION Geophysical (IO) is a technology-focused seismic solutions company that provides advanced seismic data acquisition equipment, seismic software and seismic planning, processing and interpretation services to the global energy industry. This stock closed up 3.7% to $6.38 in Thursday's trading session.

Thursday's Range: $6.25-$6.43

52-Week Range: $5.52-$7.87

Thursday's Volume: 1.38 million

Three-Month Average Volume: 945,989

From a technical perspective, IO gapped higher here back above its 50-day moving average at $6.14 with above-average volume. This stock has been trending sideways for the last four months, with shares moving between $6.90 on the upside and $5.55 on the downside. This move today is now starting to push shares of IO within range of triggering a breakout trade above the upper-end of its recent sideways trading chart pattern. That trade will hit if IO manages to take out some key overhead resistance levels at $6.45 to $6.70 and then once it clears more resistance at $6.90 with high volume.

Traders should now look for long-biased trades in IO as long as it's trending above its 50-day at $6.14 or above more support at $5.95 and then once it sustains a move or close above those breakout levels with volume that hits near or above 945,989 shares. If that breakout hits soon, then IO will set up to re-test or possibly take out its next major overhead resistance levels at $7.25 to $7.70. Any high-volume move above those levels will then put its next major overhead resistance levels at $8 to $8.79 into range for shares of IO.

Emulex

Emulex (ELX) is a provider of a range of network convergence solutions that intelligently connect servers, storage and networks within the data center. This stock closed up 1.6% to $8.14 in Thursday's trading session.

Thursday's Range: $8.05-$8.22

52-Week Range: $5.72-$8.99

Thursday's Volume: 727,000

Three-Month Average Volume: 786,981

From a technical perspective, ELX bounced modestly higher here right above some near-term support at $7.95 with decent upside volume. This stock has been trending sideways inside of a consolidation chart pattern over the last month, with shares moving between 7.50 on the downside and $8.46 on the upside. This modest spike is now starting to push shares of ELX within range of triggering a near-term breakout trade above the upper-end of its recent sideways trading chart pattern. That trade will hit if ELX manages to take out some near-term overhead resistance levels at $8.34 to $8.46 with high volume.

Traders should now look for long-biased trades in ELX as long as it's trending above some key near-term support levels at $7.95 or $7.50 and then once it sustains a move or close above those breakout levels with volume that hits near or above 786,981 shares. If that breakout hits soon, then ELX will set up to re-test or possibly take out its 52-week high at $8.99. Any high-volume move above $8.99 will then give ELX a chance to tag its next major overhead resistance levels at $10 to $11.19.

Pixelworks

Pixelworks (PXLW) designs, develops and markets video and pixel processing semiconductors and software for high-end digital video applications. This stock closed up 1.1% to $3.40 in Thursday's trading session.

Thursday's Range: $3.40-$3.50

52-Week Range: $2.11-$4.95

Thursday's Volume: 63,000

Three-Month Average Volume: 326,500

From a technical perspective, PXLW spiked modestly higher here right above its 50-day moving average of $3.37 with lighter-than-average volume. This spike is starting to push shares of PXLW within range of triggering a major breakout trade. That trade will hit if PXLW can manage to take out some near-term overhead resistance levels at $3.51 to $3.86 with high volume.

Traders should now look for long-biased trades in PXLW as long as it's trending above some key near-term support levels at $3.14 to $3 and then once it sustains a move or close above those breakout levels with volume that hits near or above 326,500 shares. If that breakout hits soon, then PXLW will set up to re-test or possibly take out its 52-week high at $4.95. Any high-volume move above $4.95 could then send PXLW north of $5.

To see more stocks that are making notable moves higher today, check out the Stocks Under $10 Moving Higher portfolio on Stockpickr.

-- Written by Roberto Pedone in Delafield, Wis.