Mid-Morning Market Update: Markets Open Mixed; FedEx Posts Rise In Profit

Following the market opening Wednesday, the Dow traded down 0.11 percent to 15,512.41 while the NASDAQ surged 0.16 percent to 3,751.53. The S&P also rose, gaining 0.04 percent to 1,705.41.

Top Headline
FedEx (NYSE: FDX) reported a rise in its fiscal first-quarter profit.

FedEx's quarterly profit surged to $489 million, or $1.53 per share, versus a year-ago profit of $459 million, or $1.45 per share.

Its revenue gained 2% to $11 billion from $10.8 billion. However, analysts were estimating earnings of $1.50 per share on revenue of $11 billion.

Equities Trading UP
Adobe Systems (NASDAQ: ADBE) shot up 6.79 percent to $51.41 after the company reported that its subscription revenue climbed 73% to $299.4 million and its Creative Cloud service added 331,000 paying subscribers in the same quarter.

Shares of New Residential Investment (NYSE: NRZ) got a boost, shooting up 6.10 percent to $6.78 after the company declared a third quarter dividend of $0.175 per share.

FedEx (NYSE: FDX) was also up, gaining 2.02 percent to $112.92 after the company reported a rise in its fiscal first-quarter profit.

Equities Trading DOWN
Shares of Tower Group International (NASDAQ: TWGP) were down 24.53 percent to $10.46. Tower Group announced its plans to release its Q2 results during the week of October 7, 2013. FBR Capital downgraded the stock from Outperform to Market Perform.

Cracker Barrel Old Country Store (NASDAQ: CBRL) shares tumbled 2.50 percent to $104.32 after the company reported a 1.1% drop in its fiscal fourth-quarter earnings and issued a downbeat Q1 forecast.

Five Below (NASDAQ: FIVE) down, falling 4.02 percent to $46.55 after the company announced the secondary offering of 7.1 million shares by selling shareholders.

Commodities
In commodity news, oil traded up 0.46 percent to $105.90, while gold traded down 0.63 percent to $1,301.20.

Silver traded down 1.19 percent Wednesday to $21.53, while copper fell 1.32 percent to $3.27.

Eurozone
European shares were mostly higher today. The Spanish Ibex Index gained 0.53 percent, while Italy's FTSE MIB Index rose 0.29 percent. Meanwhile, the German DAX gained 0.28 percent and the French CAC 40 rose 0.37 percent while U.K. shares dipped 0.03 percent.

Economics
The Mortgage Bankers Association reported that its index of mortgage application activity rose 11.20% in the week ended September 13 versus the prior week.

US housing starts rose 0.9% to an annual rate of 891,000 in August. However, economists were expecting housing starts to reach an annual rate of 921,000.

The Federal Open Market Committee will announce its policy decision and economic projections at 2:00 p.m. ET.

Forget The Greenback: Invest In These Currencies Instead

The only way the Federal Reserve will stop waving its magic stimulus wand is if job creation miraculously comes to life, rescuing the economy.

I wouldn't hold my breath.  

And, as long as Ben Bernanke and company keep buying bonds to artificially stimulate the economy, the dollar will undoubtedly continue its downward spiral. After the Labor Department reported that the U.S. economy added fewer workers than expected in August, the dollar fell to its lowest level in eight weeks.

Add our nation's nearly $17 trillion in federal debt, excess liquidity, credit-happy consumers and a massive trade balance to meager job growth, and the dollar's further debasing becomes even likelier.

So, while investing in the U.S. dollar might be a losing proposition, some foreign currencies thrive under those circumstances or simply do fine on their own. If you like the idea of cashing in outside our borders, here are a few options. 

Canadian Loonie
After the Fed alluded to easing up on stimulus in back-to-back meetings a few weeks back, the Canadian dollar dropped to a six-week low. Conversely, after poor news on the U.S. jobs front -- and the news that Canada added jobs at triple the forecast rate -- the loonie hit its highest level in two weeks.

So, as long as the U.S. remains status quo on its bond-purchasing plan, expect the loonie to gain momentum. Plus, the facts that Canada is resource-rich and a major exporter of oil and gold to the U.S. add a commodities angle and long-term aspect to the investment. Think of it as hitting the trifecta.

The best way for direct exposure to a rising Canadian dollar against the U.S. dollar is through foreign exchange (forex) trading. If you'd rather keep it simple, the Rydex CurrencyShares Canadian Dollar ETF (NYSE: FXC) will do the job.

Finally, a new group of actively managed exchange-traded funds focused on global currency movements will soon hit the market (courtesy of iShares) for yet another foray into the loonie.

Chinese Yuan
Pay no attention to talk of China's slowing economy. Any economic powerhouse that experiences 10% annual growth over three decades is bound to take a breather. That's precisely what China is experiencing and what plenty of investing gurus are overreacting to.

	Demand for the Chinese yuan is unprecedented, which explains a 29% gain over the past six years and a currency-leading 3.7% increase in the first half of this year.

It's not as though unemployment or low productivity are threatening to snuff out the Red Dragon's fire. On the contrary, the U.S. can only dream about the 7.5% annual growth that China projects in 2013.

Considering estimates that the Chinese economy could reach $123 trillion by 2040 -- or nearly three times the economic input of the entire globe in 2000 -- yuan investors are most likely in for a long, profitable ride. Although China isn't expected to overtake the U.S. in per-capita wealth, China's projected 40% share of global GDP would put the U.S. (14%) and Europe (5%) to shame nearly a quarter-century from now.

Demand for the Chinese yuan is unprecedented, which explains a 29% gain over the past six years and a currency-leading 3.7% increase in the first half of this year. Additionally, it appears that the yuan will be freely traded by 2015. There's no place for it to go except up.

I'd suggest a long-term play such as Chinese Renminbi Trust (NYSE: FXCH), which has the lowest expense ratio, 0.40%, of yuan-focused funds.

Norwegian Krone
The world's seventh-largest oil exporter, Norway's krone is known as a "petrol currency." It is backed by a government with zero debt, a budget surplus worth 11% of GDP, and a wealth fund worth $720 billion, or about $144,000 per man, woman and child.

Norway's central bank, which issues the krone, also boasts one of the highest capital ratios of any central bank in the world at 23.3%. Best of all, it isn't tied to any other currency, making it as low a risk as currency investing gets.

"The krone is not simply an alternative store of wealth, like gold, for example. It offers strong fundamentals, both structural and cyclical,"HSBC currency strategist David Bloom says. "Gold is a quasi-currency; (the krone) is the real thing. It does not simply reflect flows and sentiment. It is a currency that will reflect its economic fundamentals. These remain strong."

Because no ETFs exist on the market to buy the krone -- yet -- consider Everbank.com. It offers a foreign currency account that functions like a money market and allows the transfer of money between major currencies.

Risks to consider: While the value of the U.S. dollar won't likely impact the krone, the loonie and yuan are connected at the hip. You may see short-term moves if the Fed acts.

Actions to Take --> Currencies move very slowly, so the best way to buy them is to make regular diversified investments over time.

P.S. -- My colleague Amber Hestla has stumbled onto something big... And since she first started telling people about this strategy, it's helped investors make thousands of dollars. So far, every single Amber's suggested trades has made investors money. We hate to brag, but a 100% track record is nearly unheard of. To learn everything you need to know about her unique income strategy, click here.

European Stocks Fluctuate Near Five-Year High

European stocks slipped from the highest level in more than five years as the region's industrial output contracted more than forecast.

Sanofi fell 2.6 percent after withdrawing a U.S. application for a diabetes drug. Cie. Financiere Richemont (CFR) SA dropped 2.3 percent as revenue missed analysts' estimates. Vivendi SA advanced 2.7 percent after saying it will begin a formal study to separate its French phone unit from its media businesses. Home Retail Group Plc (HOME) surged 5.4 percent to a two-year high as sales exceeded projections.

The Stoxx Europe 600 Index slipped less than 0.1 percent to 310.74 at the close of trading, as four stocks declined for every three that gained. The gauge climbed to the highest level since June 2008 yesterday as U.S. President Barack Obama postponed a decision on military action against Syria. The measure has soared 11 percent in 2013 as central banks around the world maintained their stimulus programs.

"We may have moved from the stabilization phase in Europe, but there's still a lot of work to do," said Michael Morris, head of equities at Mitsubishi UFJ Asset Management in London. "The improving economic situation is not across the board and there's still areas of great concern, like unemployment."

Euro-area industrial output contracted more than economists forecast in July as manufacturers struggled to shake off the legacy of a record-long recession. Factory production in the region fell 1.5 percent from June, when it gained 0.6 percent, the European Union's statistics office said today. That's more than the 0.3 percent contraction forecast by economists, according to the median of 33 estimates in a Bloomberg survey.

'Awful' Figures

"Some awful EU industrial-production figures have seriously hampered the European market's ability to head higher," Alastair McCaig, a market analyst at IG in London, wrote in e-mailed comments.

Still, international investors are gaining confidence in the European economy and many see the region among the best to invest, according to the latest Bloomberg Global Poll. Forty percent of the responding investors, analysts and traders who are Bloomberg subscribers said the euro-area economy is improving, more than four times the number in May. The European Union offers one of the best investment opportunities for 34 percent of those polled, up from 18 percent in May and the most since that question was first asked in October 2009.

Equity Valuations

The Stoxx 600 is trading at 14.2 times projected earnings, data compiled by Bloomberg show. That's the highest valuation since December 2009 and 21 percent more than the five-year average of 11.7 times profit.

National benchmark indexes declined in 11 of the 18 western European markets today. Germany's DAX (DAX) and the U.K.'s FTSE 100 were little changed, while France's CAC 40 lost 0.3 percent.

Sanofi slid 2.6 percent to 72.32 euros in Paris. The company withdrew the application for U.S. approval of an experimental drug called lixisenatide in a delay to the company's effort to bolster sales of diabetes medicines in the world's biggest pharmaceutical market.

Zealand Pharma A/S, the Danish company that licensed the drug to Sanofi, plunged 15 percent to 66 kroner, the biggest drop in seven months.

Richemont declined 2.3 percent to 91.30 Swiss francs. The world's largest jewelry maker said revenue in the Asia-Pacific region, its biggest market, rose 4 percent at constant exchange rates in the five months through August as lower sales in China offset growth in Hong Kong and Macau. That compared with growth of 12 percent for the same period last year.

Total revenue rose 9 percent excluding currency shifts, missing the 10 percent median estimate of 21 analysts gathered by Bloomberg News.

EDF Stake

EDF SA, Europe's biggest power generator, slipped 2.6 percent to 21.65 euros. Norges Bank, the second-largest shareholder, sold 13 million shares at 21.50 euros each, according to three people familiar with the deal.

Vivendi (VIV) rose 2.7 percent to 17.15 euros. Music, pay-TV, European cinema and Internet in Brazil will make up a new media group based in France after the split with phone unit SFR, according to a statement yesterday.

Home Retail gained 5.4 percent to 172.7 pence, its highest price since June 2011. Same-store sales at its Homebase home-improvement business jumped 11 percent in the 13 weeks ended Aug. 31, more than the 3 percent median of analyst estimates compiled by Bloomberg. Sales at its Argos unit rose 2.7 percent, also exceeding the median forecast.

Bouygues Downgrade

Bouygues SA (EN), the French building, telecommunications and television company, surged 7.2 percent to 26.96 euros, the highest close since November 2011. Credit Suisse Group AG upgraded the shares to neutral, similar to a hold recommendation, from underperform.

Swiss Prime Site AG added 3 percent to 69.75 francs. The Swiss real-estate company predicted full-year earnings and profit will increase from 2012, after saying in its March annual report that both figures would be little changed in 2013.

The number of shares trading hands today in Stoxx 600-listed companies was 6.4 percent greater than the average of the past 30 days, data compiled by Bloomberg showed.

Difference Between Short Selling And Put Options

Short selling and put options are essentially bearish strategies used to speculate on a potential decline in a security or index, or to hedge downside risk in a portfolio or specific stock.

Short selling involves the sale of a security that is not owned by the seller, but has been borrowed and then sold in the market. The seller now has a short position in the security (as opposed to a long position, in which the investor owns the security). If the stock declines as expected, the short seller would buy it back at a lower price in the market and pocket the difference, which is the profit on the short sale.

Put options offer an alternative route of taking a bearish position on a security or index. A put option purchase confers on the buyer the right to sell the underlying stock at the put strike price, on or before the put's expiration. If the stock declines below the put strike price, the put will appreciate in price; conversely, if the stock stays above the strike price, the put will expire worthless.

While there are some similarities between the two, short sales and puts have differing risk-reward profiles that may not make them suitable for novice investors. An understanding of their risks and benefits is essential to learning about the scenarios in which they can be used to maximum effect.

Similarities and Differences

Short sales and puts can be used either for speculation or for hedging long exposure. Short selling is an indirect way of hedging; for example, if you have a concentrated long position in large-cap technology stocks, you could short the Nasdaq-100 ETF as a way of hedging your technology exposure. Puts, however, can be used to directly hedge risk. Continuing with the above example, if you were concerned about a possible decline in the technology sector, you could buy puts on the technology stocks in your portfolio. Short selling is far riskier than buying puts. With short sales, the reward is potentially limited (since the most that the stock can decline to is zero), while the risk is theoretically unlimited. On the other hand, if you buy puts, the most that you can lose is the premium that you have paid for them, while the potential profit is high. Short selling is also more expensive than buying puts because of the margin requirements. A put buyer does not have to fund a margin account (although a put writer has to supply margin), which means that one can initiate a put position even with a limited amount of capital. However, since time is not on the side of the put buyer, the risk here is that the investor may lose all the capital invested in buying puts if the trade does not work out. Not Always Bearish

As noted earlier, short sales and puts are essentially bearish strategies. But just as the negative of a negative is a positive, short sales and puts can be used for bullish exposure.

For example, if you are bullish on the S&P 500, instead of buying units of the SPDR S&P 500 ETF Trust (or "Spiders," as they are better known), you could theoretically initiate a short sale on an ETF with a bearish bias on the index, such as the ProShares Short S&P 500 ETF (NYSE:SH). This ETF seeks daily investment results that correspond to the inverse of the S&P 500's daily performance; so if the index gains 1% in a day, the ETF will decline 1%. But if you have a short position on the bearish ETF, if the S&P 500 gains 1%, your short position should gain 1% as well. Of course, specific risks are attached to short selling that would make a short position on a bearish ETF a less-than-optimal way to gain long exposure.

Likewise, while puts are normally associated with price declines, you could establish a short position in a put (known as "writing" a put) if you are neutral to bullish on a stock. The most common reasons to write a put are to earn premium income, and to acquire the stock at an effective price that is lower than the current market price. For example, assume a stock is trading at $35, but you are interested in acquiring it for a buck or two lower. One way to do so is to write puts on the stock that expire in say two months. Let's assume that you write puts with a strike price of $35 and receive $1.50 per share in premium for writing the puts. If the stock does not decline below $35 by the time the puts expire, the put option will expire worthless and the $1.50 premium represents your profit. But if the stock does decline below $35, it would be "assigned" to you, which means that you are obligated to buy it at $35, regardless of whether the stock subsequently trades at $30 or $40. Your effective price for the stock is thus $33.50 ($35 - $1.50); for the sake of simplicity, we have ignored trading commissions in this example.

An Example – Short Sale vs. Puts on Tesla Motors

To illustrate the relative advantages and drawbacks of using short sale versus puts, let's use Tesla Motors (Nasdaq:TSLA) as an example. Tesla manufactures electric cars and was the best-performing stock for the year on the Russell-1000 index, as of Sept. 19, 2013. As of that date, Tesla had surged 425% in 2013, compared with a gain of 21.6% for the Russell-1000. While the stock had already doubled in the first five months of 2013 on growing enthusiasm for its Model S sedan, its parabolic move higher began on May 9, 2013, after the company reported its first-ever profit.

Tesla has plenty of supporters who believe the company could achieve its objective of becoming the world's most profitable maker of battery-powered automobiles. But it also has no shortage of detractors who question whether the company's market capitalization of over $20 billion (as of Sept. 19, 2013) is justified.

The degree of skepticism that accompanies a stock's rise can be easily gauged by its short interest. Short interest can be calculated either based on the number of shares sold short as a percentage of the company's total outstanding shares, or shares sold short as a percentage of share "float" (which refers to shares outstanding less share blocks held by insiders and large investors). For Tesla, short interest as of Aug. 30, 2013, amounted to 21.6 million shares. This amounted to 27.5% of Tesla's share float of 78.3 million shares, or 17.8% of Tesla's 121.4 million total shares outstanding.

Note that short interest in Tesla as of April 15, 2013, was 30.7 million shares. The 30% decline in short interest by Aug. 30 may have been partly responsible for the stock's huge run-up over this period. When a stock that has been heavily shorted begins to surge, short sellers scramble to close their short positions, adding to the stock's upward momentum.

Tesla's surge in the first nine months of 2013 was also accompanied by a huge jump in daily trading volumes, which rose from an average of 0.9 million at the beginning of the year to 11.9 million as of Aug. 30, 2013, a 13-fold increase. This increase in trading volumes has resulted in the short interest ratio (SIR) declining from 30.6 at the beginning of 2013 to 1.81 by Aug. 30. SIR is the ratio of short interest to average daily trading volume, and indicates the number of trading days it would take to cover all short positions. The higher the SIR, the more risk there is of a short squeeze, in which short sellers are forced to cover their positions at increasingly higher prices; the lower the SIR, the less risk of a short squeeze.

How Do the Two Alternatives Stack Up?

Given (a) the high short interest in Tesla, (b) its relatively low SIR, (c) remarks by Tesla's CEO Elon Musk in an August 2013 interview that the company's valuation was rich, and (d) analysts' average target price of $152.90 as of Sept. 19, 2013 (which was 14% lower than Tesla's record closing price of $177.92 on that day), would a trader be justified in taking a bearish position on the stock?

Let's assume for the sake of argument that the trader is bearish on Tesla and expects it to decline by March 2014. Here's how the short selling versus put buying alternatives stack up:

Short sale on TSLA: Assume 100 shares sold short at $177.92 Margin required to be deposited (50% of total sale amount) = $8,896

Maximum theoretical profit (assuming TSLA falls to $0) = $177.92 x 100 = $17,792

Maximum theoretical loss = Unlimited

Scenario 1: Stock declines to $100 by March 2014 – Potential profit on short position = (177.92 – 100) x 100 = $7,792

Scenario 2: Stock is unchanged at $177.92 by March 2014 – Profit / Loss = $0

Scenario 3: Stock rises to $225 by March 2014 – Potential loss on short position = (177.92 – 225) x 100 = - $4,708

Buy Put Options on TSLA: Buy one put contract (representing 100 shares) with strike at $175 expiring in March 2014. This $175 March 2014 put was trading at $28.70 / $29 as of Sept. 19, 2013. Margin required to be deposited = Nil

Cost of put contract = $29 x 100 = $2,900

Maximum theoretical profit (assuming TSLA falls to $0) = ($175 x 100) - $2,900 (cost of put contract) = $14,600

Maximum possible loss = Cost of put contract = -$2,900

Scenario 1: Stock declines to $100 by March 2014 – Potential profit on put position = (175 – 100) x 100 less the $2,900 cost of the put contract = $7,500 – $2,900 = $4,600

Scenario 2: Stock is unchanged at $177.92 by March 2014 – Profit / Loss = Cost of the put contract = -$2,900

Scenario 3: Stock rises to $225 by March 2014 – Potential loss on short position = Cost of put contract = -$2,900

As can be seen, with the short sale, the maximum possible profit of $17,792 would occur if the stock plummeted to zero. On the other hand, the maximum loss is potentially infinite (loss of $12,208 at a stock price of $300, $22,208 at $400, $32,208 at $500 and so on).

With the put option, the maximum possible profit is $14,600, while the maximum loss is restricted to the price paid for the puts, or $2,900.

Note that the above example does not consider the cost of borrowing the stock to short it, as well as the interest payable on the margin account, both of which can be significant expenses. With the put option, there is an up-front cost to purchase the puts, but no other ongoing expenses.

One final point – the put options have a finite time to expiry, or March 2014 in this case. The short sale can be held open as long as possible, provided the trader can put up more margin if the stock appreciates, and assuming that the short position is not subject to "buy-in" because of the large short interest.

Applications – Who Should Use Them and When?

Because of its many risks, short selling should only be used by sophisticated traders familiar with the risks of shorting and the regulations involved. Put buying is much better suited for the average investor than short selling because of the limited risk. For an experienced investor or trader, choosing between a short sale and puts to implement a bearish strategy depends on a number of factors – investment knowledge, risk tolerance, cash availability, speculation vs. hedging, etc. Despite its risks, short selling is an appropriate strategy during broad bear markets, since stocks decline faster than they go up. Short selling carries less risk when the security being shorted is an index or ETF, since the risk of runaway gains in them is much lower than for an individual stock. Puts are particularly well suited for hedging the risk of declines in a portfolio or stock, since the worst that can happen is that the put premium is lost because the anticipated decline did not materialize. But even here, the rise in the stock or portfolio may offset part or all of the put premium paid. Implied volatility is a very important consideration when buying options. Buying puts on extremely volatile stocks may require paying exorbitant premiums, so make sure the cost of buying such protection is justified by the risk to the portfolio or long position. Never forget that a long position in an option – whether a put or a call – represents a wasting asset because of time-decay. Conclusion

Short selling and using puts are separate and distinct ways to implement bearish strategies. Both have advantages and drawbacks, and can be effectively used for hedging or speculation in various scenarios.

Investment Ideas From Day 1 of the NY Value Investing Congress

NEW YORK (TheStreet) -- I'm in New York this week, attending the 9th Annual New York Value Investing Congress, which I consider to be a can't miss event. As usual, I walked away from day 1 with a few interesting ideas, and some homework.

John Mirshekari, co-portfolio manager of Fidelity Low-Priced Stock (FLPSX), who specializes in industrial names, made an interesting case for engineering name URS (URS). The company has made some rather expensive acquisitions over the years, but Mirshekari believes that there is change in the air at URS. Last Friday, the company pledged to return at least $500 million to shareholders in 2014 and 2015, which he sees as a positive. Mirshekari believes that URS could be worth $98 a share in two years, more than 80% above current levels.

Clifton Robbins of Blue Harbour Group, presented the bullish case for women's retailer Chico's FAS (CHS). Retailers, and especially women's retailers are not my typical cup of tea, but Robbins presentation was compelling enough that I'll at least be doing some additional digging on this name.

Robbins believes that the chain which currently has 1427 locations could grow to 2,200. He points to the stores smaller size, and considerably higher sales per square foot than competitors such as Ann Taylor (ANN), Coldwater Creek (CWTR) and Talbot's as another positive. Of Chico's brands, Robbins is especially bullish on the company's Soma stores, which he likened to Victoria's Secret for women over age 30. Chico's currently trades for 13 times 2015 consensus analyst estimates. The balance sheet is solid with $302 million, or nearly $2 per share and no debt. CHS data by YCharts Legendary value investor Mark Boyar presented the case for Madison Square Garden (MSG), an asset rich name which owns among other assets, The New York Knicks, New York Rangers, Madison Square Property and associated air rights. The stock has pulled back recently from the $62 range to $55, and Boyar was critical of the $125 million deal the company recently announced for a 50% stake in the artist management business of Eagles manager Irving Azoff. Boyar believes that MSG could be taken private by the Dolan family, which controls nearly 70% of the company's voting rights. MSG data by YCharts

Joe Altman and Chris Kyriopoulos of Compound Capital made the case for Covanta (CVA) which is in the waste disposal business. But interestingly, the company converts waste into energy at its 40 state of the art facilities providing electricity to one million homes in North America. Last month, the company signed a 20 year agreement with New York City to dispose of 800,000 tons of municipal waste per year.

Covanta is not exactly cheap at 38 times 2014 consensus earnings estimates, but given the fact that the landfills are filling up quickly, waste to energy may be the future of waste disposal. It is estimated that the replacement cost of the company's tangible assets would be between $6 and $9 billion, and with a current enterprise value of $5 billion, Covanta may also be an asset play. Finally, the company has reduced shares outstanding by more than 15% since 2010, which in my view is another positive. CVA data by YCharts

Day two of the 9th New York Value Investing Congress kicks off this morning.

At the time of publication the author held no positions in any of the stocks mentioned. Follow @JonMHellerCFA This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.

Jonathan Heller, CFA, is president of KEJ Financial Advisors, his fee-only financial planning company. Jon spent 17 years at Bloomberg Financial Markets in various roles, from 1989 until 2005. He ran Bloomberg's Equity Fundamental Research Department from 1994 until 1998, when he assumed responsibility for Bloomberg's Equity Data Research Department. In 2001, he joined Bloomberg's Publishing group as senior markets editor and writer for Bloomberg Personal Finance Magazine, and an associate editor and contributor for Bloomberg Markets Magazine. In 2005, he joined SEI Investments as director of investment communications within SEI's Investment Management Unit. Jon is also the founder of the Cheap Stocks Web site, a site dedicated to deep-value investing. He has an undergraduate degree from Grove City College and an MBA from Rider University, where he has also served on the adjunct faculty; he is also a CFA charter holder.

Hot Performing Stocks To Own For 2014

I have searched for highly profitable companies that pay very rich dividends and that are in a short-term uptrend and in a mid-term uptrend. Stocks in an uptrend are performing well and are in a buying mode. Those stocks would also have to show a very low trailing and forward P/E ratio.

I have elaborated a screening method, which shows stock candidates following these lines. Nonetheless, the screening method should only serve as a basis for further research. All the data for this article were taken from Yahoo Finance and finviz.com. The screen's formula requires all stocks to comply with all following demands:

The forward dividend yield is greater than 3.90%. The payout ratio is less than 85%. Trailing P/E is less than 12. Forward P/E is less than 12. The stock price is above the 20-day simple moving average (short-term uptrend). The stock price is above the 50-day simple moving average (mid-term uptrend).

After running this screen on August 16, 2013, before the market open, I discovered the following four stocks:

Hot Performing Stocks To Own For 2014: GLG Life Tech Corp(GLGL)

GLG Life Tech Corporation engages in the research and development, growing, refining, production, and distribution of stevia extract to the food and beverage industry worldwide. Stevia extract is a natural sweetener extracted from the stevia plant. The company has a strategic alliance with Cargill, Incorporated to supply stevia extract to Cargill for manufacturing a natural and zero-calorie sweetener brand called TRUVIA. GLG Life Tech Corporation was founded as a public company in 2005 and is headquartered in Vancouver, Canada.

Hot Performing Stocks To Own For 2014: Archer Petroleum Corp (ARK.V)

Archer Petroleum Corp. engages in the acquisition, exploration, and evaluation of oil and gas properties and other energy producing properties primarily in Canada. It has an option to purchase a 100% interest in the Pardoe Lake Uranium Project located on the eastern edge of the Athabasca Basin, Saskatchewan. The company was formerly known as Agrotech Greenhouses Inc. and changed its name to Archer Petroleum Corp. in April 2010. Archer Petroleum Corp. is headquartered in Vancouver, Canada.

Top 10 Safest Stocks To Own For 2014: Troy Resources Nl (TRY.TO)

Troy Resources Limited engages in the exploration and production of gold and silver properties. It holds 100% interests in the Andorinhas project located in the Para State of north central Brazil; and the Casposo project situated in the San Juan province, Argentina. The company was founded in 1984 and is based in West Perth, Australia.

Hot Performing Stocks To Own For 2014: McCormick & Company Inc (MKC)

McCormick & Company, Incorporated (McCormick) manufactures, markets and distributes spices, seasoning mixes, condiments and other flavorful products to the food industry, retail outlets, food manufacturers and foodservice businesses. The Company�� sales, distribution and production facilities are located in North America and Europe. Additional facilities are based in China, Australia, Mexico, India, Singapore, Central America, Thailand and South Africa. The Company operates in two business segments: consumer and industrial. During the fiscal year ended November 30, 2011, the Company�� consumer business contributed 59% of sales and 79% of operating income and the industrial business contributed 41% of sales and 21% of operating income.

McCormick�� products are sold directly to customers and also through brokers, wholesalers, and distributors. In the consumer segment, products are resold to consumers through a range of retail outlets, including grocery, mass merchandise, warehouse clubs, discount, and drug stores under a range of brands. In the industrial segment, products are used by food and beverage manufacturers as ingredients for their finished goods and by food service customers as ingredients for menu items to enhance the flavor of their foods. Customers for the industrial segment include food manufacturers and the foodservice industry supplied both directly and indirectly through distributors.

Consumer Business

The Company�� brands in the Americas include McCormick, Lawry�� and Club House. The Company also markets brands, such as Zatarain��, Thai Kitchen and Simply Asia. In Europe, the Middle East and Africa (EMEA) its brands include the Ducros, Schwartz and Kamis brands of spices, herbs and seasonings and a line of Vahine brand dessert items. In the Asia/Pacific region its primary brand is McCormick, with the exception of India where its joint venture owns and trades under the Kohinoor brand. The Company�� customers span a variety of retail o! utlets that include grocery, mass merchandise, warehouse clubs, discount and drug stores, served directly and indirectly through distributors or wholesalers. In addition to marketing its products to these customers, the Company is also a supplier of private label items, also known as store brands. More than 250 other brands are sold in the United States with additional brands in international markets.

Industrial Business

In its industrial business, the Company provides a range of products to multinational food manufacturers and foodservice customers. The foodservice customers are supplied both directly and indirectly through distributors. Its range of products include seasoning blends, natural spices and herbs, wet flavors, coating systems and compound flavors. In addition to a broad range of flavor solutions, we strive to achieve customer intimacy.

Hot Performing Stocks To Own For 2014: BHP Billiton Limited(BHP)

BHP Billiton Limited, together with its subsidiaries, operates as a diversified natural resources company worldwide. The company engages in the exploration, development, and production of oil and gas; mining and refining of bauxite into alumina, and smelting of alumina into aluminum metal; and mining of copper, silver, lead, zinc, molybdenum, uranium, gold, diamonds, and titanium minerals, as well as development of potash deposits. It also involves in the mining and production of nickel products, manganese ore, and manganese metal and alloys, as well as in the mining of iron ore, metallurgical coal, and thermal coal. BHP Billiton Limited sells its copper, lead, and zinc concentrates, and alumina to smelters; copper cathodes to wire rod mills, brass mills, and casting plants; uranium oxide to electricity generating utilities; rough diamonds to diamond buyers and diamond manufacturers; nickel products to stainless steel, specialty alloy, foundry, chemicals, and refractory ma terial industries; metallurgical coal to steel producers; and energy coal to power stations, power generators, and industrial users. The company, formerly known as BHP Limited, was founded in 1885 and is headquartered in Melbourne, Australia.

Hot Performing Stocks To Own For 2014: Joyas International Hldgs Ltd (E9L.SI)

Joyas International Holdings Limited, an investment holding company, engages in the design, manufacture, trading, packaging, and sale of metal gift, jewelry, and packaging products. It operates in three segments: Metal Gift Products, Jewelry Products, and Packaging and Other Items. The Metal Gift Products segment provides fashion accessories, including lipstick holders, compact mirrors, perfume atomizers, cufflinks, tie pins, and smoking accessories; desk top accessories, such as writing instruments, writing pad holders, calculators, and photo frames; computer accessories comprising keyboards, mice, and mouse pads; table top accessories, including candle stands, serving items, and bar ware; and time items, such as desk, travelling, carriage, functional, and pocket clocks. It designs and manufactures these products for international brands and designer labels, and other corporations to be used as corporate gifts. This segment sells its metal gift products under the Argent b rand name through its franchisees. It exports its products to Europe, the United States, and Asia, as well as sells through its franchisees� retail outlets in the People�s Republic of China and Hong Kong. The Jewelry Products segment involves in the design of jewelry products and subcontracts the manufacture of these products to independent third party subcontractors. It serves jewelry agents and retailers in Hong Kong and internationally. The Packaging and Other Items segment engages in designing, manufacturing, and selling packaging products. This segment also manufactures and sells print items, such as designed boxes for gift packaging, coasters, cloth bags, and board games. Joyas International Holdings Limited was incorporated in 2006 and is based in Kowloon, Hong Kong.

Hot Performing Stocks To Own For 2014: Imris Inc He Company] (IM.TO)

IMRIS Inc. provides integrated image guided therapy solutions that deliver information to clinicians during surgical or interventional procedures in Canada, the United States, Europe, the Asia Pacific, and the Middle East. The company designs, manufactures, and markets VISIUS Surgical Theatre, a multifunctional surgical environment that incorporates magnetic resonance (MR) imaging, CT imaging, fluoroscopy, computed tomography, and x-ray angiography into multi-purpose surgical suites to provide intra-operative imaging for medical applications. It also provides ancillary products and services. The company�s solutions serve the neurosurgical, cerebrovascular, and cardiovascular markets worldwide. IMRIS Inc. is based in Winnipeg, Canada.

Hot Performing Stocks To Own For 2014: Timberline Resources Corporatio(TBR.V)

Timberline Resources Corporation engages in the exploration and development of mineral properties in the western United States. It primarily explores for gold, silver, and copper. The company?s principal property includes Lookout Mountain Project located in Nevada. It also owns other projects at various stages of exploration in the Battle Mountain/Eureka gold trend in north-central Nevada. The company was formerly known as Silver Crystal Mines, Inc. and changed its name to Timberline Resources Corporation in February 2004. Timberline Resources Corporation was incorporated in 1968 and is headquartered in Coeur D?Alene, Idaho.

Home Prices Rising — in China

Since August 2012, house prices in 69 of 70 Chinese cities have risen an average of 7.5%, leading to fears of a housing bubble in the Middle Kingdom. Higher prices are encouraging more development, and prime property in Beijing and Shanghai is selling for record prices.

At the same time that prices are jumping in some cities, the country is plagued with "ghost cities" like Jing Jin City, just an hour east of Beijing, where 3,000 villas and other high-end amenities go begging for residents. And there are more ghost cities spread all over the country.

Earlier this year, Shanghai's local government ordered banks to stop making loans for purchases of third homes. In Beijing, the government limited single residents to a single home. Both cities said that a 20% capital gains tax on profits from property sales would be strictly enforced.

The deputy director of the country's Ministry of Housing and Urban-Rural Development has said that 80% of home purchasers are first-time buyers who want to improve their living conditions, not investors looking to flip homes for a profit. The central government denies that a bubble is developing, despite some regional issues.

A real estate researcher estimates that, based on the record sales prices for land in Beijing and Shanghai, housing prices will rise 50% in a year. Another researcher recently told China Daily, "It is the combination of local governments, companies and banks taking advantage of the higher prices that contributes to skyrocketing prices."

Twelve Bull Market Stocks That Need Stock Splits: Google, Apple, Amazon and More

Stock splits have long been cheered by the investing community. After all, this gives retail investors the chance to get back in a stock at a more reasonable share price. You may recall the endless stock splits that were seen in the late 1990s and just after 2000, when so many technology and growth stocks were doubling, then tripling and more in share prices.

Some investors and some corporate managers consider a stock split a mere share price gimmick. The problem is that the public only has so much money. If a stock trades at $400 per share, an order of a traditional 100 shares from a retail investor generates a purchase price of $40,000 to buy the stock. An overwhelming percentage of the U.S. population cannot even come up with $10,000 as an emergency expense, let alone to buy shares as an investment.

It is undeniably a bull market. We have even seen a technical analyst prediction calling for the new all-time highs to continue, taking the S&P 500 up from 1,700 to 2,000, and then a secular bull market rally to over 2,500. If we really are entering the next secular bull market after more than a decade of a bear market, then it only seems logical that companies will want to start splitting their stocks again.

24/7 Wall St. has compiled a list of stocks that really should consider making stock split announcements. Maybe it is a bull market gimmick, but a wave of stock splits from key stocks could reinvigorate the mood and outlook of investors who have grown to have disdain and serious trust issues regarding the stock market.

Our screen deals with companies that have a very high stock price, all well over $100 and $200. All of them should be household names, and they are just about all members of the S&P 500 Index. We also selected stocks that are actively traded and liquid. These companies are all still growing, and some have issued stock splits in the past.

We have included how much it would cost an investor to buy 100 shares. Also included is a backgrounder for each company, and we have added color on each. Each company’s stock split history has been included, if applicable.

Amazon.com Inc. (NASDAQ: AMZN)
> Cost for 100 shares: $30,000

Amazon.com trades roughly at $300 now, and its 52-week range is $218.18 to $313.62. Its market cap is close to $137 billion, and Jeff Bezos has taken Amazon into almost every single facet of retail consumer products. The company has been a disrupting force for all retail segments as well. Amazon split its stock three different times in the most recent great technology boom and bull market: two for one in 1998, and three for one later in 1998 and lastly two for one in 1999. Its last stock split took shares to the equivalent of about $60 on par with today’s price of $300.

Apple Inc. (NASDAQ: AAPL)
> Cost for 100 shares: $46,500

Apple was the bull market king until the stock peaked at $705 in 2012. Now the company’s lead against technology peers has narrowed, it is dependent on new product excitement, which has been elusive, and the leadership today just does not have the same clout as the great Steve Jobs. With shares trading around $465, Apple’s 52-week range is $385.10 to $705.07, and its market cap of $422 billion makes it the largest single public company. Apple is now paying a dividend and is approved for share buybacks, so a dividend split would not be out of line. Apple has even had three different two-for-one stock splits: in 2005, 2000 and 1987. Apple’s most recent stock split took its shares to roughly $44 in today’s price terms, so it has risen tenfold despite it latest stock price woes. Here is some food for thought: Apple consumers still pay almost the same for one share as they do for many of the company’s retail products.

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AutoZone Inc. (NYSE: AZO)
> Cost for 100 shares: $44,000

Does the great auto parts seller named AutoZone remind you of a stock that would trade above $400 per share? With its shares around $440, it has a 52-week trading range of $341.98 to $452.19. This industry leader has a $15.6 billion market capitalization as well. AutoZone has split its stock on a two-for-one basis twice, but back in 1994 and 1992. In today’s share price terms, that most recent split was around $27 back then, and that means its stock has risen sixteenfold since then. How many customers going into an AutoZone would think that a stock price of $440 or so seems right? We do not even see a dividend from AutoZone as it reinvests earnings into growth.

Is Under Armour Poised for Long-Term Success?

With shares of Under Armour (NYSE:UA) trading at around $55.92, is UA an OUTPERFORM, WAIT AND SEE or STAY AWAY? Let's analyze the stock with the relevant sections of our CHEAT SHEET investing framework:

C = Catalyst for the Stock's Movement

Under Armour has been given an OUTPERFORM rating here since December. Have circumstances changed? The consumer has weakened, but Under Armour continues to achieve results. There's a reason for this.

To understand Under Armour, you must understand CEO Kevin Plank. This is a guy who had $40,000 in credit card debt when he started the company from his grandmother's basement. Since he has already been at the bottom, he knows what it feels like to be there, and he knows he could handle it if that situation were to present itself once again. Therefore, he has no fear. A man with no fear is a dangerous man, and Kevin Plank fits that description in a business sense.

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The shorts have been wrong on this stock for quite some time. What the shorts might not understand is that the more they bet against the company, the more motivation they provide for Mr. Plank. He likes to think of himself and his associates as eternal underdogs. This allows them to keep a chip on their shoulder, and they always feel as though they have something to prove. Of course, the ultimate goal is beating Nike Inc. (NYSE:NKE). This would be an extremely difficult, if not impossible, feat. Then again, those who have bet against Mr. Plank thus far have lost. Under Armour is taking a wise approach by aiming to take a little market share at a time, and it's certainly not backing down from Nike on the legal front. Don't get the wrong idea, though. Nike is still the clear favorite. Luckily, there is room for both companies.

Current positives for Under Armour include:

Consistent revenue improvements on an annual basis Consistent earnings improvements on an annual basis Highly innovative company Adding 10 Factory House stores this year Expanding margins (lower input costs) Analysts like the stock: 12 Buy, 14 Hold, 2 Sell Recently beat expectations Improvements in all segments Strong guidance International revenue increased 41 percent year-over-year Apparel revenue increased 22 percent year-over-year Footwear revenue increased 26.9 percent year-over-year Net revenue in Accessories increased 21.8 percent year-over-year Licensing revenue increased 18.8 percent year-over-year

Other than the threat of a slowdown in the global economy (a major threat), the only significant negative for Under Armour is an expected increase in capital expenditures.

Now let's take a look at some comparative numbers. The chart below compares fundamentals for Under Armour, Nike, and Lululemon Athletica (NASDAQ:LULU).  Under Armour has a market cap of $5.89 billion, Nike has a market cap of $55.90 billion, and Lululemon has a market cap of $10.80 billion.

	UA	NKE	LULU
Trailing   P/E	49.38	24.39	40.43
Forward   P/E	30.51	20.44	29.21
Profit   Margin	6.34%	9.22%	19.74%
ROE	16.07%	21.89%	36.35%
Operating   Cash Flow	$198.27 Million	$2.64 Billion	$280.11 Million
Dividend   Yield	N/A	1.40%	N/A
Short   Position	18.80%	0.90%	37.00%

 

Let's take a look at some more important numbers prior to forming an opinion on this stock.

E = Equity to Debt Ratio Is Strong         

The debt-to-equity ratio for Under Armour is stronger than the industry average of 0.50. Debt management has been good.

	Debt-To-Equity	Cash	Long-Term Debt
UA	0.07	$255.72 Million	$60.44 Million
NKE	0.03	$4.04 Billion	$321.00 Million
LULU	0.00	$590.18 Million	$0

 

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T = Technicals Are Strong  

Under Armour has been a strong performer over the past several years.

	1 Month	Year-To-Date	1 Year	3 Year
UA	9.22%	15.23%	13.10%	214.70%
NKE	6.15%	21.87%	14.96%	71.29%
LULU	20.36%	-1.56%	0.44%	278.10%

 

At $55.92, Under Armour is trading above all its averages.

50-Day   SMA	51.62
100-Day   SMA	50.32
200-Day   SMA	52.53

 

E = Earnings Have Been Strong                              

Revenue and earnings have both consistently improved on an annual basis.

	2008	2009	2010	2011	2012
Revenue   ($)in   billions	725.24M	856.41M	1.06	1.47	1.84
Diluted   EPS ($)	0.38	0.46	0.67	0.92	1.21

 

When we look at the previous quarter on a year-over-year basis, we see an increase in revenue and a decline in earnings.

	3/2012	6/2012	9/2012	12/2012	3/2013
Revenue   ($)in   millions	384.39	369.47	575.20	505.86	471.61
Diluted   EPS ($)	0.14	0.06	0.54	0.47	0.07

 

Now let's take a look at the next page for the Trends and Conclusion. Is this stock an OUTPERFORM, a WAIT AND SEE, or a STAY AWAY?

T = Trends Might Support the Industry

Increased taxes, underemployment, and the possibility of entitlement cuts are all potential negatives for the industry. However, Under Armour has been able to fight through headwinds (so far).

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Conclusion

Under Armour is without a doubt a long-term winner, but the stock market is too hot right now for any real conviction, especially since Under Armour is trading at 49 times earnings. Nike wouldn't be the best safe haven in a bear market, but it would be safer than Under Armour. That said, for investors who are capable of withstanding a hit and willing to purchase more on the way down if the stock gets hit, Under Armour is a long-term OUTPERFORM. This should be a safe long-term approach since Under Armour is highly likely to grow in the coming decades. It's certainly not going anywhere.

Will eBay Stock Attract a Bid?

With shares of eBay (NASDAQ:EBAY) trading around $53, is EBAY 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

Ebay provides online platforms, tools, and services to help individuals and merchants with online and mobile commerce in the U.S. and around the world. Its marketplaces segment operates e-commerce platform eBay.com, and vertical shopping sites. The company operates through three segments: Marketplaces, Payments, and GSI. Ultimately, through its tools and platforms, eBay assists individuals and merchants around the globe engage in online and mobile commerce.

Ebay delivered a profit, but missed Wall Street's expectations for revenue. The revenue miss is a negative sign to shareholders seeking high growth from the company. Despite the recent hiccup, commerce continues to move online at an increasing rate, and companies like eBay are poised to see rising profits.

T = Technicals on the Stock Chart are Strong

Ebay stock has been steadily rising over the last several years. The stock is now trading at prices not seen since the mid-2000s. 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, eBay is trading 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 eBay options may help determine if investors are bullish, neutral, or bearish.

	Top Blue Chip Companies To Invest In Right Now Implied Volatility (IV)	30-Day IV Percentile	90-Day IV Percentile
eBay Options	25.60%	0%	0%

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

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

As of today, there is average demand from call buyers or sellers, and low demand by put buyers or high demand by put sellers, all neutral to bullish over the next two months. To summarize, investors are buying a very minimal 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 what that means for eBay’s stock.

E = Earnings Are Increasing Quarter-Over-Quarter

Rising stock prices are often strongly correlated with rising earnings and revenue growth rates. The last four quarterly earnings announcement reactions can also help gauge investor sentiment on eBay’s stock. What do the last four quarterly earnings and revenue growth (Y-O-Y) figures for eBay 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)	12.50%	27.15%	37.05%	72.68%
Revenue Growth (Y-O-Y)	14.10%	17.41%	20.31%	29.09%
Earnings Reaction	-6.73%*	8.29%	-17.28%	-5.26%

Ebay has seen increasing earnings and revenue figures over the last four quarters. From these numbers, it seems the markets have not been too pleased with eBay’s recent earnings announcements.

* As of this writing

P = Weak Relative Performance Versus Peers and Sector

How has eBay stock done relative to its peers, Amazon (NASDAQ:AMZN), Overstock (NASDAQ:OSTK), Mercadolibre (NASDAQ:MELI), and the overall sector?

	eBay	Amazon	Overstock	Mercadolibre	Sector
Year-to-Date Return	5.08%	20.90%	144.58%	36.40%	18.49%

Ebay has been a weak relative performer, year-to-date.

Conclusion

Ebay is an established company that has made a name for itself pioneering internet commerce. The company recently issued an earnings report that didn’t impress the markets. While the stock has been on a powerful run, it’s been trading sideways for the last several months. Over the last four quarters, investors in the company have not been too pleased, though earnings and revenue figures have been steadily increasing. Relative to its peers and sector, eBay has been a poor year-to-date performer. WAIT AND SEE what eBay does this coming quarter.

Credit Suisse Sees Panic Taking Over in Apple Stock

Credit Suisse is not impressed at all with Apple Inc. (NASDAQ: AAPL) and its new iPhone 5 models. We agree, as does Bank of America/Merrill Lynch with its key downgrade this morning. That analyst downgrade was one of sentiment, but Credit Suisse’s downgrade of Apple is far worse because it involves a lowering of estimates and expectations. Tim Cook is still chasing the ghost of Steve Jobs and the Apple iPhone 5 refresh (and de-minimus model) are just not enticing any new interest.

The firm downgraded Apple shares to Neutral from Outperform, and the firm has a $525 price target. Credit Suisse’s downgrade basically says “so much for the low end” and is lowering the firm’s 2014 earnings expectations as a result. Kulbinder Garcha said

As expected, Apple yesterday announced the iPhone 5s and iPhone 5c which both feature the newly redesigned iOS 7. In aggregate, we remain disappointed with Apple’s decision to remain a premium priced smartphone vendor, and this continues to competitively expose the company and limits its TAM and growth. Given a lack of TAM expansion and lower iPhone sales potential, we lower earnings per share by 8% for Fiscal Year 2014 and downgrade to Neutral.

The only good news is that Credit Suisse actually is still higher than what it calls consensus earnings. The lowered earnings per share target for 2014 is down to $44.48 from $48.22 per share, and the firm listed the consensus at $42.38 in earnings per share, which matches what Thomson Reuters lists as the consensus earnings estimate.

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Apple shares were down around $482 when we first identified that Merrill Lynch Apple downgrade, and now shares were down just under $470 for a 5% drop right after the open on Wednesday.

As a reminder, $460 is where some serious support should be if things get much worse, because that is where the 50-day and 200-day moving averages come into play.

The Trouble with Jakks Pacific (JAKK)

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Background: Jakks Pacific (JAKK) is a company which I started following after it was suggested as a special situation by Adib Motiwala [gurufocus]. Oaktree Capital approached Jakks with an interest to acquire it at $20 a share. The company was trading at around $15 at that time. In September 2011, Oaktree went public with the offer but Jakks management adopted poison pill in an attempt to rebuff the plan [bloomberg]. The company now trades at $5 and change. The question is, is it cheap enough to buy?

Holdings: Oaktree, founded by Howard Marks, made an offer of $20. David Dreman holds 5.9% of the company. The management holds 2.3%, chiefly because of stock rewards. This is surprising because the current CEO was the co-founder of the company.

Business: I don't particularly like Jakks' business. On the surface, it is toy-maker and marketer but it does not own (almost) any of the brands. It licences the trademarks from companies who own the brands, e.g. Disney (DIS), Warner Bros, Star Wars, Hello Kitty, Nickelodeon. Once it licenses them, it produces toys and other consumer products and sells them in Toys 'R' Us, Walmart and Target (these three represents 41% of the sales for the last six months). It has to pay an upfront guarantee and also license fees in return of using the brand name.

There are several problems with the business, the chief being children outgrowing toys at a much younger age, in favor of more interactive and high technology products. The life cycle of individual products is also decreasing and they are becoming obsolete sooner. The toys that Jakks sells at the mega stores like Walmart are not really top notch quality. This also acts as a detriment for customers who expect quality, and functionality (for example: Hasbro, Mattel and Lego toys).

[ Enlarge Image ]

Fueled by acquisitions, the company's sales increased quite dramatically and had nearly tripled by 2008. But the situation turned during the recession and the sales are plummeting. The company gave another sales warning last quarter.

Profitability & Cash flows: The cash flow history of the company is strong. But this does not complete the picture. The company's gross margin has declined year after year. Given that the company does not own the brands, it acts as a "laborer" for the license owners. Companies like Disney take a guarantee and charge license fees from Jakks, which gets stuck with producing and selling the toys and assuming all business risk. It has to manufacture the toys, and hope that it remains famous until it can earn enough money to justify the fee it paid. It seems that with time, the situation has become bleaker.

Management: The company generated a lot of cash in the last 10 years -- at an average rate of $52.6 million a year. The management made some really awful acquisitions and wrote off nearly $400 mn of goodwill in 2008. To put that figure in perspective, the company had a market cap of $500 million at that time (it has a market cap of $112 million now).

The question is - why did the company not sell itself to Oaktree? Taking a page from Charlie Munger there is a one word explanation -- incentives.

As I pointed out, it is surprising that the management, which includes the cofounder as the CEO, holds less than 3% of the company. This too is due to option and stock rewards.

[ Enlarge Image ]

For the management, the company is a golden egg laying goose. Their profit is aligned with increasing the sales and not by realizing ! value for! the shareholders by the sale of the company.

[ Enlarge Image ]

For a company with such a small market cap, the executive compensation is truly outrageous. The five directors get paid an average of $200k. They sit of the compensation committee and group Jakks with its "peers" -- Activision, Electronic Arts, Hasbro, Leapfrog, Mattel ... for the purpose of deciding the executive compensation. I just want to make it clearer that Jakks is not in the same peer group as these other companies. Chiefly because they own their brands. Furthermore, they don't just produce the toys but also design and own the intellectual rights for new ones. Even if they outsource the production of their products, they will still earn money on the licensing fees.

Balance sheet: The company has $69 million in cash and $96 mn in long term debt. Although not particularly burdensome, I must point out that all this debt is convertible. In situation of extreme duress the shareholders will be diluted if the debt is converted into shares. The balance sheet is quite strong at the moment. If the company continues to lose money -- the situation might not remain so.

Bottomline -- I don't know why Oaktree offered $20 a share for the company. At the time of the offer, the company had a much better balance sheet with nearly $200 million in net cash. It might be that Oaktree expected to sell the business for a higher price. When the going gets tough, there are a wave of acquisitions and bankruptcies. Synergies could be achieved to drive the gross margin higher -- if the company makes toys of its own brands.

I will advise staying away from the company. I don't like the business and I don't like the management. I will cede that at these prices the incentive of the management will be to turn the company around. Given their ! history o! f acquisitions, I lack faith in their ability to do so.

Will Walmart “Made in America” Movement Hurt China?

Wal-Mart Stores Inc. (NYSE: WMT) recently held what it called its “Walmart U.S. Manufacturing Summit.” One of the purposes of the meeting was to promote new initiatives to build more of its products in America, thereby helping gross domestic product and employment. On paper this should hurt the fortunes of Walmart’s suppliers in China and probably Mexico. Actually these companies have little to fret about. The Walmart plan to help the U.S. economy barely qualifies as a small step.

Consider the promise the world’s largest retailer made at the event:

Walmart's commitment to buy an additional $50 billion in U.S.-made products over the next 10 years and featured announcements from suppliers that, combined, are expected to infuse more than $70 million into factory growth and create more than 1,000 domestic jobs.

The creation of 1,000 domestic jobs comes while 11.5 million Americans are unemployed and 4.2 million have been out of work for 27 weeks or longer, which qualifies them to fall into the “long-term unemployed” category.

Somehow, Walmart got U.S. Secretary of Commerce Penny Pritzker and General Electric Co. (NYSE: GE) Chairman and CEO Jeff Immelt to show up at the event. The Commerce Secretary can show up at the opening of an envelope. Commerce has not been a top-tier cabinet position for decades. And Immelt has been a net exporter of jobs, a criticism that he faced when President Obama made him the chairman of the Council on Jobs and Competitiveness. It has been widely suggested that Immelt concentrate on troubles at GE and not waste his efforts elsewhere.

Taken as a whole, both the summit and its claims are bogus. That means Walmart’s overseas suppliers have nothing to fear. The claims from the summit make the gathering barely worth having:

"Jump-starting the manufacturing industry and rebuilding the middle class requires a national effort by companies, industry leaders, lawmakers and others," said Bill Simon, president and CEO of Walmart U.S. "Together, we can help spark a revitalization of U.S.-based manufacturing, using new technology and new innovations to make production in the United States affordable and feasible."

A much better case can be made that Walmart’s actions have not been good for U.S. employment, and as a matter for fact have undermined it. Reuters reported in an article late last year:

Its China ties have also drawn scrutiny. Wal-Mart was among the pioneers in buying from China after it joined the World Trade Organisation in 2001, which helped drive down prices in Wal-Mart’s stores but added to the U.S. trade deficit and left the company open to complaints that it was hurting U.S. jobs.

Wal-Mart said as recently as 2008 that it directly exported about $9 billion a year out of China, and third-party suppliers shipped another $9 billion, although it no longer provides that information on its website.

The company’s 10-year plan to ”infuse more than $70 million into factory growth and create more than 1,000 domestic jobs” is an insult to anyone who might suppose that Walmart has an interest in helping American manufacturing.

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The whipsaw action continues for the broad-based S&P 500 (SNPINDEX: ^GSPC  ) with its third-straight move of greater than 1%. Today, renewed commodity weakness, as well as the weight of the world again falling on Apple's (NASDAQ: AAPL  ) shoulders, helped push the market decisively lower.

Commodities continue to be a talking (and selling) point for investors, with oil falling another $2 and gold down modestly yet again. This could be on the heels of a Tuesday update from the International Monetary Fund, which lowered its global growth forecast to 3.3% this year, down from 3.5%. Slower growth could mean less oil and metal demand, which is weighing heavily on commodities as a whole.

The big drag today, however, was tech giant Apple, which dipped below $400 per share at one point because of a weak preliminary revenue figure from one of its suppliers, Cirrus Logic. Cirrus' preliminary revenue of $206.9 million in the fourth quarter came in modestly shy of the $210.2 million Wall Street had been looking for. But, more importantly, Cirrus gets about 70% of its revenue from Apple, so it could signify upcoming weakness in iPhone and iPad sales for Apple's upcoming second-quarter report.

Top 5 Gold Companies For 2014: CME Group Inc.(CME)

CME Group Inc. operates the CME, CBOT, NYMEX, and COMEX regulatory exchanges worldwide. The company provides a range of products available across various asset classes, including futures and options on interest rates, equity indexes, energy, agricultural commodities, metals, foreign exchange, weather, and real estate. It offers various products that provide a means of hedging, speculation, and asset allocation relating to the risks associated with interest rate sensitive instruments, equity ownership, changes in the value of foreign currency, credit risk, and changes in the prices of commodities. CME Group owns and operates clearing house, CME Clearing, which provides clearing and settlement services for exchange-traded contracts and counter derivatives transactions; and also engages in real estate operations. Its primary trade execution facilities consist of its CME Globex electronic trading platform and open outcry trading floors, as well as privately negotiated transact ions that are cleared and settled through its clearing house. In addition, the company offers market data services comprising live quotes, delayed quotes, market reports, and historical data services, as well as involves in index services business. CME Group?s customer base includes professional traders, financial institutions, institutional and individual investors, corporations, manufacturers, producers, and governments. It has strategic partnerships with BM&FBOVESPA S.A., Bursa Malaysia Derivatives, Singapore Exchange Limited, Green Exchange, Dubai Mercantile Exchange, Johannesburg Stock Exchange, and Bolsa Mexicana de Valores, S.A.B. de C.V., as well as joint venture agreement with Dow Jones & Company. The company was formerly known as Chicago Mercantile Exchange Holdings Inc. and changed its name to CME Group Inc. in July 2007. CME Group was founded in 1898 and is headquartered in Chicago, Illinois.

Top 5 Gold Companies For 2014: Goldcorp Incorporated(GG)

Goldcorp Inc. engages in the acquisition, exploration, development, and operation of precious metal properties in Canada, the United States, Mexico, and Central and South America. It produces and sells gold, silver, copper, lead, and zinc. The company was founded in 1954 and is headquartered in Vancouver, Canada.

Advisors' Opinion:

• [By Christopher Barker]

  Every ship needs an anchor, and for gold investors looking to navigate the admittedly rough seas of the gold mining industry, I can think of no greater anchor than Goldcorp. With the important caveat that some of the company's substantial challenges faced during 2012 could present further selling pressure in early 2013 as forward production guidance takes a bit of a haircut, I agree with Credit Suisse analyst Anita Soni that any such weakness may present a meaningful buying opportunity. I won't go into great detail here, since investors can access my premium research report on Goldcorp for further discussion of the substantial long-term investment opportunity in the shares of this quality producer.

• [By Smith]

  Although its name does little to denote this, Goldcorp is a well-positioned silver play for 2011, according to the analysts we surveyed.

  “The name is one that people tend to think of it as gold, but it's in the top 20 of silver producers globally with about 13 million ounces a year ,” says Peter Sorrentino of Huntington Funds.

  Morningstar analyst Min Tang-Varner recently raised her fair value estimate for Goldcorp by $12 a share to $48 after the company reported a 28 per cent rise in revenue for the third quarter ended Sept. 30 compared with the year before.

  This, despite 4 per cent decline gold production, as revenue received a boost from $1,239/oz realized gold prices and $19.15/oz silver prices.

  Tang-Varner tells investors that the reduction of Goldcorp's cash cost by $100/oz from the prior quarter to $260/oz due to higher silver, copper and zinc production and the run-up in their prices, was “rather extraordinary.”

  Sorrentino says Goldcorp is a stock that investors would be “wise to consider” if they were looking for a name that would be discovered suddenly as a major silver play, without feeling that they were overpaying for it.

  Goldcorp also prices everything that it does in Canadian dollars, which should reduce currency risks for investors in Canada.

10 Best Energy Stocks To Buy For 2014: Goldman Sachs Group Inc.(The)

The Goldman Sachs Group, Inc., together with its subsidiaries, provides investment banking, securities, and investment management services to corporations, financial institutions, governments, and high-net-worth individuals worldwide. Its Investment Banking segment offers financial advisory, including advisory assignments with respect to mergers and acquisitions, divestitures, corporate defense, risk management, restructurings, and spin-offs; and underwriting securities, loans and other financial instruments, and derivative transactions. The company?s Institutional Client Services segment provides client execution activities, such as fixed income, currency, and commodities client execution related to making markets in interest rate products, credit products, mortgages, currencies, and commodities; and equities related to making markets in equity products, as well as commissions and fees from executing and clearing institutional client transactions on stock, options, and fu tures exchanges. This segment also engages in the securities services business providing financing, securities lending, and other prime brokerage services to institutional clients, including hedge funds, mutual funds, pension funds, and foundations. Its Investing and Lending segment invests in debt securities, loans, public and private equity securities, real estate, consolidated investment entities, and power generation facilities. This segment also involves in the origination of loans to provide financing to clients. The company?s Investment Management segment provides investment management services and investment products to institutional and individual clients. This segment also offers wealth advisory services, including portfolio management and financial counseling, and brokerage and other transaction services to high-net-worth individuals and families. In addition, it provides global investment research services. The company was founded in 1869 and is headquartered in New York, New York.

Top 5 Gold Companies For 2014: Claude Resources Inc.(CGR)

Claude Resources Inc. engages in the acquisition, exploration, and development of precious metal properties, as well as production and marketing of minerals in Canada. It primarily explores for gold in northern Saskatchewan and northwestern Ontario. The company holds interests in the Seabee gold mine located at Laonil Lake, northern Saskatchewan; and the Madsen property that consists of 6 contiguous claim blocks totaling approximately 10,000 acres, located in the Red Lake Mining District of northwestern Ontario. It also holds interest in the Amisk Gold project, which covers an area of 13,800 hectares in the province of Saskatchewan. The company was founded in 1980 and is based in Saskatoon, Canada.

Advisors' Opinion:

• [By Christopher Barker]

  Hardly a johnny-come-lately, Claude Resources initiated small-scale gold production from its flagship Seabee mine in Saskatchewan in 1991. Just last year, Claude added the Santoy 8 mine to that operation to offer a touch of timely growth. Meanwhile, the operation hosts a number of compelling exploration targets like the recently discovered Neptune zone. After 10 of 15 recent drill holes from Neptune featured visible gold, including a nice high-grade intercept of 84.66 g/t over 3.2 meters, prospects are building for Claude to add some additional years to this time-tested operation.

  While I welcome the existing cash flow from Seabee, my investment thesis for Claude Resources centers around a pair of exciting exploration properties: the Amisk joint venture project southeast of Seabee and the Madsen property at Red Lake, Ontario. At Madsen, historical gold production between 1938 and 1976 yielded 2.4 million ounces at an average grade of 9 g/t. To date, Claude has identified an indicated resource of 928,000 ounces at a comparable grade. At Amisk, drill intercepts of eye-catching thickness suggest strong potential for a profitable open pit operation, including an intercept of 2.16 g/t over 241 meters! The deposit's 921,000 indicated gold-equivalent ounces represent only an early stage hint of the deposit's full potential. The stock is a top-10 holding for Sprott Asset Management, and a core holding for this Fool as well.

Top 5 Gold Companies For 2014: Newmont Mining Corporation(Holding Company)

Newmont Mining Corporation, together with its subsidiaries, engages in the acquisition, exploration, and production of gold and copper properties. The company?s assets or operations are located in the United States, Australia, Peru, Indonesia, Ghana, Canada, New Zealand, and Mexico. As of December 31, 2009, it had proven and probable gold reserves of approximately 93.5 million equity ounces and an aggregate land position of approximately 27,500 square miles. The company was founded in 1916 and is headquartered in Greenwood Village, Colorado.

RIA Growth Inevitable as Brokers Go Indie: S&P Capital IQ

Brokers’ move to independence is one of the fastest growing trends in the wealth management industry, and RIA practices are poised for even more growth as commissions give way to asset-based management fees, according to a recent S&P Capital IQ report.

Most registered investment advisors charge a management fee based on client assets that are either under supervision or actively managed, and today's advisers are more focused on monitoring existing holdings and reviewing suitable investments for purchase, said S&P Capital IQ equity analyst Kenneth Leon in a MarketScope Advisor report published on Aug. 23.

“We think independence would be the best response” for brokers who make the switch to RIA licensed practices,” Leon wrote. “We think management fees are the right approach for client services, rather than commissions or transaction fees, and they give broker-dealer firms a more predictable revenue stream than before.”

Leon cited “positive implications” in the fast-growing RIA trend for large firms that serve advisors, including Morgan Stanley (MS), LPL Financial Holdings (LPLA), Raymond James Financial (RJF), Charles Schwab (SCHW) and TD Ameritrade (AMTD).

He also criticized the pre-2008 pump-and-dump practices of brokerages, saying that independent RIAs have discretion as to managing client portfolios and making recommendations on asset allocation.

“Transactions fees are also lower, as RIAs are compensated away from brokerage commissions,” Leon wrote. “More than a decade ago, brokerage firms would get their brokers hyped up to dial for dollars and churn client accounts with the stock idea of the day or load mutual funds that enabled the broker to get compensated two ways — trading commissions from client activity, and the wholesale relationship with select mutual funds.”

Cerulli Associates projects the combined RIA and dually registered market share to make up 24.7% of the advisory industry in 2014, up from 18.6% in 2010, Leon said, also noting Cerulli’s finding that hybrid RIAs are the fastest growing segment, at 15% of the advisor industry in 2012 versus 7% in 2004.

Looking to individual firms’ performance, Leon pointed out that broker-dealer firms such as Morgan Stanley have set marketing strategies in place to move away from transaction fees to managed fees and now seek to boost the wrap fee structure based on total client assets.

Meanwhile, in the late 1990s, trading revenue comprised 60% of Charles Schwab's total revenue, compared with 17% today, “and management expects it to be around 10% by 2018,” Leon wrote. “The two largest revenue streams for SCHW are asset management and administrative fees and net interest revenue. We think SCHW is ahead of the pack, as industry experts estimate that advisors derive 46% of their revenue from asset-based fees and 45% from brokerage commissions. Most of the major firms are targeting a much higher percentage of asset-based fees in the next few years.”

For advisors thinking of moving out of established wirehouses or large brokerage firms, the process can be a long sales cycle for any custodial firm trying to bring an investment advisor to an independent model as an RIA, Leon noted.

“Sometimes, large, independent broker-dealers like LPL Financial will have conversations with advisors at wirehouses for one to two years before they're ready to make a move,” he wrote. “Frequently, it is teams and not a single broker coming out of a wirehouse and going independent. SCHW says it has a $30 billion sales funnel of potential investment advisors that may join their firm as RIAs. Historically, about one-third will exit a wirehouse and join one of the custodian firms.”

---

Read RIA blogger Mike Patton in 6 Years Post Independence, Rethinking the Value of Financial Planning at ThinkAdvisor.

10 Best Tech Stocks To Watch For 2014

You'd think the world's biggest search engine company would have a harder time keeping a secret. There have been hints for a while that Google (NASDAQ: GOOG  ) might be sniffing around Amazon.com's (NASDAQ: AMZN  ) online retail territory, but no one could tell whether this was fact or fiction, until now.

According to�TechCrunch,�Google has begun testing Shopping Express, its same-day delivery service. The service is only available to Google employees in the San Francisco Bay area, but it is still generating buzz throughout the industry. Google is no stranger to trying new products in specific locations only to have them go nowhere fast. Shopping Express could be different, and if it is, it could be a huge boon for a company that's already a juggernaut.

10 Best Tech Stocks To Watch For 2014: Alliance Fiber Optic Products Inc.(AFOP)

Alliance Fiber Optic Products, Inc. engages in the design, manufacture, and marketing of a range of fiber optic components and integrated modules incorporating these components to communications equipment manufacturers and service providers in North America, Europe, and Asia. The company offers interconnect devices that are used to connect optical fibers and components; couplers and splitters that are used to divide and combine optical power; and dense wavelength division multiplexing (DWDM) devices that separate and combine multiple specific wavelengths. Its connectivity products include connectivity modules; optical connectors, adapters, and cable assemblies; fused and planar fiber optical splitters and couplers; optical tap couplers and ultra low polarization dependent loss tap couplers; amplifier wave division multiplexing (WDM) couplers; optical fixed attenuators; and fused fiber WDM couplers. The company?s optical passive products comprise filter WDMs, amplifier fil ter WDMs, DWDMs, coarse WDMs, compact coarse WDMs, add/drop DWDM filters, optical isolators, optical bypass switches, and automatic variable optical attenuators. Its products are deployed in long-haul networks that connect cities; metropolitan networks that connect areas within cities; last mile access networks that connect to individual businesses and homes; and enterprise networks within businesses. The company sells its products to communications equipment manufacturers who incorporate its products into their systems and sell them to network service providers, as well as to other component manufacturers for resale or inclusion in their products. Alliance Fiber Optic Products, Inc. was founded in 1995 and is headquartered in Sunnyvale, California.

10 Best Tech Stocks To Watch For 2014: Spice I2i Limited (M09.SI)

S i2i Limited provides voice, data, and computing services worldwide. It also engages in the research, development, and distribution of telecommunication handsets, and related products and services, as well as design and marketing of telecommunication software. The company offers VoIP services to carriers, enterprises, service providers, and consumers. Its voice and data services comprise PC-Phone service that allows users to make calls from their PC to any phone in the world; GCC service, which enables users to make calls via IP infrastructure; IDD, mobile VoIP, and VoIP telephony service to corporate users and consumers; and enterprise service that allows corporate users to make calls via their existing corporate PABX and Internet access. The company�s voice and data services also include wholesale terminating services to carriers and service providers; technology licensing that offers connectivity and interoperability solutions to telecommunication carriers and wholesa le clearing houses; ISP service, which offers various data services, including broadband, leaseline access, private network, network security, hosted services, and IT solutions to corporate users and consumers; and Internet infrastructure, e-business applications consulting, project management, and systems support services, as well as business process outsourcing services and customer relationship management. In addition, it is involved in the supply, rental, maintenance, and servicing of computer hardware and peripheral equipment; system integration services relating to computer equipment and peripherals, storage systems, and network products; and computer advising and consultation activities, training of personnel and sales, and services of computer software. The company was formerly known as Spice i2i Limited and changed its name to S i2i Limited in July 2011. S i2i Limited was incorporated in 1993 and is headquartered in Singapore.

Top Stocks To Watch For 2014: American Software Inc (AMSWA)

American Software, Inc. (American Software), incorporated in 1970, develops, markets and supports a portfolio of software and services that delivers enterprise management and collaborative supply chain solutions to the global marketplace. American Software operates three business segments: Supply Chain Management (SCM), Enterprise Resource Planning (ERP) and Information Technology (IT) Consulting. The SCM segment consists of Logility, Inc. (Logility), which provides collaborative supply chain solutions for forecasting, production, distribution and management of products between trading partners. The ERP segment consists of American Software ERP, which provides purchasing and materials management, customer order processing, financial, e-commerce, flow manufacturing and manufacturing solutions, and New Generation Computing (NGC), which provides business software to both retailers and manufacturers in the apparel, sewn products and furniture industries. The IT Consulting segment consists of The Proven Method, Inc., an IT staffing and consulting services firm. The Company also provides support for its software products, such as software enhancements, documentation, updates, customer education, consulting, systems integration services, and maintenance.

Supply Chain Management

The Company�� wholly owned subsidiary Logility provides SCM solutions, an integrated set of supply chain planning, inventory optimization, manufacturing, and transportation and logistics solutions. Logility provides SCM solutions to streamline and optimize the market planning, management, production, and distribution of products for manufacturers, suppliers, distributors, and retailers. As of April 30, 2011, Logility�� customer base is approximately 1,250 companies located in more than 74 countries. Logility markets and sells the Demand Solutions product line to the global small and midsize enterprise (SME) market through the global VAR distribution network of Demand Management, Inc. (DMI). Logility also ! offers the Logility Voyager Solutions suite.

Logility Voyager Solutions is an integrated software suite that provides SCM, including collaborative planning, strategic network design, multi-echelon inventory optimization, optimized supply sourcing, production management, warehouse management, and collaborative logistics capabilities. Logility Voyager Solutions incorporates performance management analytics for decision support for processes, such as demand management, inventory and supply optimization, manufacturing planning and scheduling, transportation planning and management and sales and operations planning (S&OP).

The Logility Voyager Solutions software suite is modular and scalable to meet the management requirements of global organizations involving products with manufacturing or distribution networks. In addition, the Logility Voyager Solutions suite interfaces with a range of existing enterprise applications deployed on a range of technical platforms. Logility Voyager Solutions accelerates S&OP, as well as strategic partner collaboration. Voyager Sales and Operations Planning enables companies to streamline and accelerate the entire S&OP process. Voyager Collaborate enables companies to communicate across their organizations and share supply chain information with external trading partners.

Voyager Fashion Forecasting helps improve profits with capabilities that address the collection launches for fashion-driven businesses. Voyager Demand Planning helps reconcile differences between business planning and detailed product forecasting. Voyager Life Cycle Planning provides control to model each phase in a product�� sunrise-to-sunset lifecycle, including introduction, maturity, replacement, substitution and retirement. Voyager Event Planning integrates marketing strategies with forecasting, distribution and logistics planning to calculate the impact of promotional plans and demand shaping strategies, such as price discounts, coupons, advertising, special pack! aging and! product placement.

Logility Voyager Solutions enables enterprises to set inventory targets at each node of a multi-echelon distribution network to match strategic inventory goals and service levels. Voyager Inventory Optimization optimizes inventory investments across multi-echelon manufacturing and distribution networks to meet business and service level objectives for supply chains with multiple stages of inventory. Logility Voyager Inventory Planning allows enterprises to measure the tradeoff of inventory investment and desired customer service levels.

Logility Voyager Solutions optimizes material, inventory, production and distribution assets by synchronizing supply and demand. Voyager Supply Planning optimizes sourcing and production decisions to balance supply, manufacturing and distribution constraints based on corporate goals. Voyager Replenishment Planning provides visibility of future customer demand, corresponding product and material requirements, and the actions needed to satisfy those demands. Voyager Manufacturing Planning creates optimized constraint-based manufacturing schedules and compares multiple schedule scenarios to determine the optimal trade-off between manufacturing efficiencies, inventory investments and greenhouse gas emissions.

Logility Voyager Solutions provides capabilities for optimizing both warehouse and transportation operations. Voyager WarehousePRO provides shipping and inventory accuracy by optimizing the flow of materials and information through distribution centers. Voyager Transportation Planning and Management provide a multi-modal solution for savings of time, effort and money. It enables automated shipment planning, shipment execution and freight accounting. Demand Solution�� supply chain software provides a transition from spreadsheet management to robust reporting and tracking. Demand Solutions offers two separate product suites: traditional and DSX. The Demand Solutions application suite predict future demand and m! ake infor! med decisions to optimize inventory turns, customer service levels and profitability. Demand Solutions Forecast Management provides a demand planning solution that fits virtually any industry and deploys. Demand Solutions Requirements Planning incorporates collaborative planning capabilities to streamline supply activities from the production line through delivery.

Demand Solutions Collaboration offers a certified collaborative planning, forecasting and replenishment (CPFR) compliant collaborative planning solution that streamlines communications between a company and its customers and suppliers. Demand Solutions Sales & Operations Planning automates and continually analyzes the annual business planning process. Demand Solutions Advanced Planning and Scheduling is a production scheduling solution that supports both the process and discrete enterprise environment and produces accurate schedules taking into account machines, personnel, tooling and inventory constraints. Demand Solutions View (DS View) extends the value of Demand Solutions, empowering users to aggregate, rotate, filter, sort and otherwise manipulate large volumes of data into meaningful information. Demand Solutions Retail Planning enables manufacturers, distributors and retailers to collaboratively produce, ship and replenish product based on point-of-sale (POS) data.

Enterprise Resource Planning

The Company�� enterprise solutions are global solutions that link critical functions throughout an enterprise. The e-Intelliprise solution is a Web-based ERP system that a customer can run over the Internet, Intranet or Extranet utilizing the IBM iSeries servers. This allows functions within the ERP system to be deployed over the Internet using a Webpage capability. The e-Intelliprise solution is a global system, capable of operating in multiple languages and logistical organizations. Its e-applications are solutions for conducting business on the Internet that can Web-enable specific business functions t! hrough in! tegration with existing ERP or legacy systems. The e-applications are available for the applications, which include e-procurement, e-store, e-expenses, e-forms, e-payables, e-receivables, Purchase Order Tracking and Vendor Collaboration, Requisition Tracking, Shipment Tracking, e-process management and e-connect a seamless, XML-enabled data exchange.

The Company�� product line consists of software and services that operate on three strategic computer platforms, which includes IBM System z Mainframe or compatible, IBM System i (AS/400), and Intel-based servers and clients that operate Windows 2000, 2003, XP and Vista. It has written its products in various standard programming languages used for business application software, including ANSI COBOL, Micro Focus COBOL, C, C++, Visual Basic, JAVA, JAVA2 and other programming languages. Many have both on-line and batch capabilities.

IT Consulting

The Proven Method, Inc., the Company�� wholly owned subsidiary, is a technology services firm that specializes in assisting customer base to solve business issues with technology solutions. The solutions the Company provides ranges from Web applications to complex Business Intelligence applications and solutions. Business Intelligence consists of the development and implementation of a reporting process for dealing with data and multiple business entities/components. Its customers are Internet savvy and knowledgeable in wireless solutions, social networking and channeling implementations, server and desktop virtualization, and deployment of interactive applications. The Proven Method has customers, such as Aon, IBM, UPS, Norfolk Southern, Xerox, SunTrust Bank, Coca-Cola Enterprises, Kubota Manufacturing of North America, The Home Depot, AT&T, State of Georgia, CompuCom, Zep Inc, Chick-fil-A, Global Payments, Verizon, Catlin Group Ltd, Federal Home Loan Bank of Atlanta, Fulton Paper, Aaron Rents, AutoTrader.com, Nalco Chemical, Georgia Tech Research Institute and numerous ot! her custo! mers throughout the United States.

The Company competes with SAP, Oracle, Infor, JDA Software and Red Prairie.

10 Best Tech Stocks To Watch For 2014: Cymer Inc.(CYMI)

Cymer, Inc., together with its subsidiaries, engages in the development, manufacture, and marketing of light sources for the manufacturers of photolithography tools in the semiconductor equipment industry. It offers installed base products in support of chipmaker customers used in their advanced wafer patterning production processes. The company also supplies deep ultraviolet light sources to lithography tool manufacturer customers, who integrate the light source into their wafer steppers and scanners, which they then provide to chipmakers. Its products include 193 nanometers (nm) ArF immersion light sources, 193 nm ArF dry light sources, and 248 nm KrF light sources. In addition, the company invests in the development of extreme ultraviolet sources for chip manufacturing. Further, it develops, integrates, markets, and supports silicon crystallization tools used in the manufacture of various types of displays, including high-resolution low temperature poly-silicon liquid c rystal displays and organic light emitting diode displays; and installed base products for use in photolithography systems used in the manufacture of semiconductors. Additionally, the company offers spare and replacement parts for light sources. Cymer, Inc. markets its products in the United States, Europe, Japan, Taiwan, South Korea, Singapore, and China. The company was founded in 1986 and is headquartered in San Diego, California.

10 Best Tech Stocks To Watch For 2014: Ditech Networks Inc.(DITC)

Ditech Networks, Inc. designs, develops, and markets telecommunications equipment for use in wireline, wireless, satellite, and Internet protocol telecommunications networks worldwide. It offers voice quality enhancement solutions that enable service providers to deliver end-to-end communications to their subscribers, as well as voice applications solutions. The company?s mobile voice quality products include Broadband Voice Processor-Flex, a broadband voice processor system for interface support; Quad II T1 and Quad II E1, which are single modules for echo cancellation and built-in voice enhancement; and Quad Voice Processor-T1 and Quad Voice Processor-E1 that are narrowband voice processors for supporting echo cancellation and the suite of voice quality assurance and experience intelligence software. It also provides voice-to-text transcription services; and voice-based interface with Web and Web-based based applications, including social networking and calendar applicat ions. Ditech Networks, Inc. markets its products through direct sales force, distributors, value-added resellers, system integrators, and agents. The company was formerly known as Ditech Communications Corporation and changed its name to Ditech Networks, Inc. in May 2006. Ditech Networks, Inc. was founded in 1983 and is headquartered in Mountain View, California.

10 Best Tech Stocks To Watch For 2014: NetLogic Microsystems Inc.(NETL)

NetLogic Microsystems, Inc., a fabless semiconductor company, together with its subsidiaries, designs, develops, and sells processors and integrated circuits used in mobile wireless infrastructure, data center, enterprise, metro Ethernet, and edge and core infrastructure networks. Its product portfolio includes multi-core communications processors, knowledge-based processors, high-speed 10/40/100 gigabit Ethernet physical layer devices, network search engines, and ultra low-power embedded processors. These products are designed into various systems, such as switches, routers, wireless base stations, access aggregation, radio network controllers, security appliances, networked storage appliances, service gateways, and connected media devices offered by original equipment manufacturers. The company markets and sells its products through its direct sales force and distributors, as well as through independent sales representatives worldwide. NetLogic Microsystems, Inc. was fou nded in 1995 and is based in Santa Clara,, California.

10 Best Tech Stocks To Watch For 2014: Nortech Systems Incorporated(NSYS)

Nortech Systems Incorporated operates as a contract manufacturing company. It manufactures wire harness cable and printed circuit board assemblies, electronic sub-assemblies, higher level assemblies, and complete devices. The company also provides value added services and technical support, including design, testing, prototyping, and supply chain management; and repair services on circuit boards used in machines in the medical industry. In addition, it engages in the design, manufacture, and post-production service of electronic and electromechanical medical devices for diagnostic, analytical, and other life-science applications. Nortech Systems Incorporated serves various industries that include aerospace and defense; medical; and the industrial markets, which include industrial equipment, transportation, vision, agriculture, and oil and gas. The company markets its products through sales force and independent manufacturers? representatives. Nortech Systems Incorporated was founded in 1981 and is headquartered in Wayzata, Minnesota.

10 Best Tech Stocks To Watch For 2014: SS&C Technologies Holdings Inc.(SSNC)

SS&C Technologies Holdings, Inc. provides software products and software-enabled services to financial services providers primarily in the United States, Canada, Europe, the Asia Pacific, and Japan. Its software products and services allows its clients to automate and integrate front-office functions, such as trading and modeling; middle-office functions, including portfolio management and reporting; and back-office functions comprising accounting, performance measurement, reconciliation, reporting, processing, and clearing. The company?s products and services comprise management/accounting, real-time trading systems, treasury operations, financial modeling, loan management/accounting, property management, money market processing, and training products. Its software-enabled services consist of financial data acquisition, transformation, and delivery services; and business process outsourcing investment accounting and investment operations, hosting of its application softw are, automated workflow integration, automated quality control mechanisms, and interface and connectivity services. The company also offers on- and offshore fund administration services; outsourced administration services and software; real-time trade matching utility and delivery instruction database; securities data services; and broker-neutral and platform-neutral connectivity services. It serves institutional asset management, alternative investment management, and financial institutions vertical markets, as well as commercial lenders, corporate treasury groups, insurance and pension funds, municipal finance groups, and real estate property managers. The company was formerly known as Sunshine Acquisition Corporation and changed its name to SS&C Technologies Holdings, Inc. in June 2007. SS&C Technologies Holdings, Inc. was founded in 1986 and is headquartered in Windsor, Connecticut.

10 Best Tech Stocks To Watch For 2014: Misys(MSY.L)

Misys plc engages in the development, management, and licensing of software products and solutions to the financial services industry. It offers various banking solutions in the areas of cash management, Islamic banking, lending, payments and financial messaging, retail banking, trade services, universal banking, bankfusion, wealth management, wholesale banking, and risk management and compliance, as well as various online solutions to deliver banking services. The company also provides treasury and capital markets solutions for syndicated lending, commercial lending, Islamic treasury, structured products, OTC derivative trading, risk and compliance management, treasury systems, post trade processing, collateral management and margining, and central counterparty clearing, as well as cross-asset solutions and quick start solutions. In addition, it offers business intelligence solution that helps financial institutions to monitor their performance in the areas of financial a nalysis, profitability analysis, credit risk, operational risk, and regulatory reporting. Further, the company provides buy-side solutions, which offer cross-asset portfolio and risk management services covering investment management, risk management, middle/back office, and accounting. Additionally, it develops and supports open source software solutions for the healthcare, financial, and carbon markets. The company has operations primarily in the United Kingdom and rest of Europe, the Asia Pacific, the United States, the Middle East, and Africa. Misys plc was founded in 1979 and is headquartered in London, the United Kingdom.

10 Best Tech Stocks To Watch For 2014: Telus Corporation Com Npv (T.TO)

TELUS Corporation provides telecommunications products and services primarily in Canada. Its telecommunications products and services include wireless, data, Internet protocol (IP), voice, and television. The company operates through two segments, Wireless and Wireline. The Wireless segment provides digital personal communications, equipment sales, and wireless Internet services. The Wireline segment offers voice local and voice long distance services; data services, which include television, and managed and legacy data services, as well as Internet, enhanced data, and hosting services; and other telecommunications services. As of December 4, 2012, it has 13 million customer connections, including 7.6 million wireless subscribers, 3.5 million wireline network access lines, 1.3 million Internet subscribers, and 635,000 TELUS TV customers. TELUS Corporation was founded in 1993 and is based in Burnaby, Canada.