We've Expanded our Energy Portfolio to Ride U.S. Boom

By Ben Dickey

The U.S. economy continues to crawl along at a slow rate of GDP growth. We have seen sluggish quarterly expansions for several years now. This rate of growth is not sufficient to increase hiring.

For example, September retail sales posted disappointing results even with increased promotions. Back-to-school sales were slower than expected. This is causing some retailers to worry about the upcoming holiday sales. On a broader scale, wages for the middle class have not kept pace with inflation for more than five years.

As a result of this, consumer confidence is at the lowest point in six months. However, if you look closely, there are a few areas of growth. After years of very low interest rates, banks are beginning to see a pickup from commercial real estate loans. The commercial markets for shopping centers, apartments and warehouses are seeing an increase in demand and construction.

Property values are increasing and borrowers are showing an increase in willingness to borrow based on their improving credit quality. Another growth area is U.S. factories which have increased production for five straight months.

The Institute for Supply Management showed the October index rising from 56.2 in September to 56.4. In a further show of manufacturing strength, last week's Chicago Purchasing Managers index posted much higher numbers than expected. It rose to 65.9%, a 10 point jump.

I have been writing about the middle-tier exploration and production companies for some time. They continue to show large gains in production and reserves.

New statistics from the Energy Information Agency (EIA) show new drilling techniques are greatly increasing well efficiency.  These operating companies are learning more and more about the shale formations and are increasing initial flow rates as well as ultimate production from each well.

The EIA has ranked the Bakken in North Dakota and the Eagle Ford in Texas as the fastest growing production formations. These two formations accounted for 75% of the monthy increase in domestic liquids production in September. The increase in production is expanding faster than the industry has the ability to transport it.

This excess has caused WTI prices to drop, causing a widening spread to Brent prices. This also happened in 2012 and early 2013 until more shipping capacity came on line. In my opinion, the pipe lines and railroads may once again expand and bring prices back into equilibrium.

Until then the lower oil prices have lowered gasoline prices, which will help consumers. Even with a glut of gasoline, refiners are running wide open to produce more diesel fuel. The booming diesel fuel market in Europe, in my opinion, is giving our refiners very good margins on the fuel exported there.

Overseas economies are showing improvement. Spain has recently emerged from two years of recession as their central bank has reported the two year recession in the Euro zones fourth largest economy ended in the third quarter with a 0.1% growth.  Borrowing cost for Spain and others on the weak side of the Euro zone have fallen over the past year and the bloc saw tepid economic growth in the second quarter.

A return to growth in Spain adds to the expectations that the Euro zone is also emerging and will propel it to a positive third quarter expansion. The ZEW Euro zone macroeconomic expectation index rose to a four year high of 59.1 in October. In addition, industrial production expanded slightly more than expected.

Also a sudden surge in Chinese ore purchases has caused shipping rates to increase. Their imports of iron ore soared to a record in September. China has also increased purchases of copper leading to a 10% increase in prices.

Stronger-than-expected third quarter factory activity is lessening fears of a slow down in China. The Chinese official Manufacturing Purchasing Managers index increased to an 18 month high in October. Stronger demand from the industrialized world helped  the Asian economies to expand.

As the U.S. and international markets improve, we are well positioned to supply products to the world market. Globally, energy consumption has been slow to increase during the economic slowdown.

When consumption returns to historic levels, and as this demand drives prices higher, our ability to produce less expensive domestic energy will become an even larger advantage for U.S. companies.  As I stated previously, our domestic production increases from tight shale plays is providing the opportunity for U. S. companies to benefit from a lower energy cost as well as lower raw material cost.

The U.S. refiners are now shipping over 3.5 million barrels per day of refined products overseas. We have also moved up to become the second largest oil producer in the world, passing Saudi Arabia. Expansion of chemical plants to take advantage of lower natural gas and natural gas liquids is continuing at a rapid pace.

As I mentioned earlier, the mid-stream companies are expanding capacity. Natural Gas Liquids (NGL) production is expanding rapidly. Several of our holdings are among the leaders in this area.  Kinder Morgan Partners (KMP) and Enterprise Products Partners (EPD) are adding to their ability to transport, store, separate liquids, and export these products to expanding global markets.

We are adding to several of our positions in the energy sector. We continue to like EOG (EOG), Continental Resources (CLR), Oasis Petroleum (OAS), Sanchez Petroleum Corp (SN) and Whiting Petroleum (WLL).

In the oil field services business, SeaDrill (SDRL) increased their dividend to over 8% and beat the streets estimates on earnings in their most recent quarter. They have three new deep-water, floating drilling rigs being delivered from shipyards this year.

Deep-water drilling activity in the offshore West Africa and offshore Brazil areas should keep this company fully utilized for several more years. The Gulf of Mexico is experiencing a nice turnaround. The government has finally sold new leases. The deep-water rig level has been increasing and will continue to do so.

Just to restate, I believe the economy is slowly expanding in spite of the previously mentioned problems. That is why we are emphasizing investments in companies with good cash flow, good cash distributions and companies that operate in areas where they have a competitive advantage due to much lower energy costs and raw material input costs.

We prefer companies that generate good after tax returns.  With interest rates at historic lows, even as dividend taxes go up, the after tax returns are still higher than most investment grade debt.  There is a growing shift from very low yield bonds into equity. BSG&L is a long term investor. We believe if you are patient, build cash and buy good companies on pull backs, your portfolio has a chance for better-than-average growth over the long term.

The investments discussed are held in client accounts as of October 31, 2013. These investments may or may not be currently held in client accounts. The reader should not assume that any investments identified were or will be profitable or that any investment recommendations or investment decisions we make in the future will be profitable. Past performance is no guarantee of future results.

The post We've expanded our energy portfolio to ride U.S. boom appeared first on Smarter Investing

Covestor Ltd. is a registered investment advisor. Covestor licenses investment strategies from its Model Managers to establish investment models. The commentary here is provided as general and impersonal information and should not be construed as recommendations or advice. Information from Model Managers and third-party sources deemed to be reliable but not guaranteed. Past performance is no guarantee of future results. Transaction histories for Covestor models available upon request. Additional important disclosures available at http://site.covestor.com/help/disclosures. For information about Covestor and its services, go to http://covestor.com or contact Covestor Client Services at (866) 825-3005, x703.

Ben Dickey

BSG&L is a Texas-based registered investment adviser. Our founding principals, Ben Dickey and Kevin Londergan, have more than 30 years…

The following article is from one of our external contributors. It does not represent the opinion of Benzinga and has not been edited.

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Originally posted here...

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VMware Pops on Earnings Beat (Update 1)

This story has been updated with additional information on VMware's guidance.

NEW YORK (TheStreet) -- VMware (VMW) shares were advancing 8.61% to $89.77 in extended hours trading after the cloud infrastructure and virtualization company reported third-quarter 2013 earnings that topped expectations.

"VMware continues to build momentum globally, because we are uniquely positioned to help our customers transform to the mobile-cloud era of computing," CEO Pat Gelsinger explained in a statement. "Customers are making long-term commitments to VMware to help them liberate resources from their current environments and power their businesses into the future."

"We are very pleased with our third quarter performance, meeting or exceeding all of our key goals for the quarter," added Jonathan Chadwick, VMware's CFO.

The company said its net income for the third quarter accelerated by about 67% to $261 million as adjusted earnings increased 20% year over year to 84 cents a share on a 14% rise in revenue to $1.29 billion. The earnings results exceeded the Wall Street target of 82 cents a share on revenue of $1.29 billion, according to a Thomson Reuters poll of analysts. VMware said during its earnings call that it expects fourth-quarter revenue in the range of $1.45 billion to $1.48 billion and full year sales between $5.175 billion and $5.205 billion. License sales are expected to be between $670 million and $690 million in the fourth quarter and between $2.255 billion and $2.275 billion for fiscal 2013. Analysts polled by Thomson Reuters expect fourth-quarter revenue of $1.478 billion and full-year revenue of about $5.2 billion. The Palo Alto, Calif.-based firm said that the fourth quarter is typically its seasonally strongest quarter and it's expecting strength in its Enterprise License Agreement (ELA) business, which could drive a 40% rise in bookings in this 2010 to 2013 renewal cycle. Although the overall "dollar opportunity" of ELAs may not go up as fast as it did in previous years, the company's still expecting strength going into the back half of 2013. The company said it expects to bounce back in the area of end user bookings during the fourth quarter, a key strategic leg in its overall strategy, driven by a very strong worldwide pipeline. -- Written by Andrea Tse in New York >To contact the writer of this article, click here: Andrea Tse.>  

Stock Futures Slip Amid Washington Fiscal Drama

NEW YORK (TheStreet) -- Stock futures took on an overall downbeat tone Wednesday as the fiscal drama in Washington dragged on, and with the fast-approaching Oct. 17 deadline for raising the nation's debt ceiling looming.

While the U.S. budget talks are expected to reach some kind of resolution allowing for a resumption of non-core government services in a couple of weeks or less, there were still some jitters that it could go longer and potentially cause a greater dent to the economy recovery. Investors were also concerned that lawmakers could lapse into a gridlocked situation during their discussions on the bigger debt ceiling issue.

"Italy should demonstrate to the U.S. how a responsible legislature operates, with the vote of confidence in the Letta government expected to pass today (Berlusconi's PDL having signaled a willingness to support the government for now)," Paul Donovan, the London-based UBS economist, wrote in his daily remarks.

Top 10 Bank Stocks For 2014

Futures for the S&P 500 were falling 11.5 points, or 10.05 points below fair value, to 1,678. Futures for the Dow Jones Industrial Average were slumping 78 points, or 68.70 points below fair value, to 15,042. Futures for the Nasdaq were slipping 15.5 points, or 15.35 points below fair value, to 3,230. In company headlines, three of the top 20 investors in Microsoft (MSFT) are lobbying the software company's board to press for Bill Gates to step down as chairman, Reuters reported, citing people familiar with matter. Gates co-founded Microsoft 38 years ago. The move appears to be the first time that major shareholders are taking aim at Gates, Reuters noted, for the company's performance and share price. The three investors are concerned that Gates' role as chairman blocks the adoption of new strategies and would limit the power of a new CEO to make substantial changes. CEO Steve Ballmer said in August he would retire within 12 months. Real estate company Re/Max said its initial public offering of 10 million common shares was priced at $22 a share, higher than the expected price range. Meanwhile, Empire State Realty Trust (ESRT), the company that owns the Empire State Building, said it sold 71.5 million shares at $13 a share, the low end of its expected range of $13 to $15 a share. Seed company Monsanto (MON) is expected by analysts on Wednesday to post a fiscal fourth-quarter loss of 43 cents a share on revenue of $2.24 billion. Payroll process Automatic Data Processing is expected to provide a glimpse into labor market conditions with its private payroll employment report for September at 8:15 a.m. EDT. Employment is expected to have grown by 180,000, up from 176,000 in August. It's now expected the Bureau of Labor Statistics jobs report for September won't be released on Friday until the government resumes operations as usual. Boston Federal Reserve Bank President Eric Rosengren is expected to speak in Burlington, Vt., at 12 p.m., while Fed Chairman Ben Bernanke and St. Louis Federal Reserve Bank President James Bullard are anticipated to give opening remarks at the St. Louis Fed's Community Banking Research Conference at 3 p.m. The FTSE 100 in London was falling 0.83% and the DAX in Germany was behind by 0.57%. The Hong Kong Hang Seng finished up 0.55% while the Nikkei 225 in Japan closed down by 2.17%. The benchmark 10-year Treasury was rising 4/32, pushing the yield down to 2.642%. The dollar was falling 0.04% to $80.11 according to the U.S. dollar index. December gold futures contracts were surging $8.30 to $1,294.40 an ounce, while November crude oil futures were down by 31 cents to $101.73 a barrel. Follow @atwtse -- Written by Andrea Tse in New York >To contact the writer of this article, click here: Andrea Tse.>

The Beginning of the End for Facebook

NEW YORK (TheStreet) -- I've never been a big fan of Facebook (FB), definitely not the stock, and perhaps to a lesser extent, the application. The stock is ridiculously priced at 208 times trailing earnings, 48 times 2014 consensus earnings estimates, more than 10 times book value, and 18 times revenue. Keep in mind that these sentiments are from a value investor, who simply can't fathom those multiples, and growth investors would make the argument that those measures are irrelevant in Facebook's case. [Read: Dramatic 48-Hour Shift in Apple Sentiment] Indeed, the stock has been on a tear since mid-July, following a better-than-expected quarter after an aggressive push into mobile advertising, and shares are up nearly 80% since then. The stock has finally managed to eclipse its intraday high of $45 from its very first day of trading on May 12, 2012. The company now boasts of having more than 1 million advertisers; that's impressive, and one of the reasons that investors are re-engaged.

FB data by YCharts

There is no doubt that some investors have made money from owning the stock, and I am not discounting the possibility that shares may run even higher. We've seen countless examples of overvalued companies continuing to head higher, well beyond their true value. It's yet another example of the inefficiencies that make the markets and investor psychology so fascinating. Investors will continue to buy names, such as Facebook, that are priced for perfection.

In the past few days, two things happened, neither of which relates to the company's financials, that have me again questioning Facebook's prospects. Granted these are completely anecdotal in nature, and their relevance is more from the gut, than from the mind. In fact, I was not even planning on writing about Facebook today, but can't help myself. The first thing was an article in our newspaper entitled "Facebook's Fall From Cool," written by a local high school student. In the article, the young author proclaims that Facebook has become an "obligation," as opposed to a "source of entertainment." Now, that may be nothing new. The article itself caused me to quiz my own teenagers, who told me in no uncertain terms, that kids have turned away from Facebook, and would rather use Twitter or Instagram. [Read: Understanding Obamacare: 4 Things You Need to Know ] Now, the fact that Facebook bought Instagram last September is certainly not lost on me. The question is, when will the kids also tire of Instagram, and what will take its place? Perhaps Facebook will be the force behind the next hot social media application, but that is presuming a lot.

Top 5 Cheap Companies To Buy Right Now

The second thing that happened, which has dampened the little enthusiasm I had remaining for Facebook itself, was a series of posts by one of my own Facebook friends, who is a very decent guy.

Two days ago, he mentioned that he'd be undergoing a colonoscopy, likening it to April 15 -- tax day. That was fine, actually funny, but still much more than I, or anyone else needs to know.

Then late yesterday came the recap of the procedure, four paragraphs worth. Too much information, and enough to sour me from logging on, and reading about anyone's latest medical exploits, or how little Billy can now recite pi out to 400 decimals. They should perhaps rename it "Bragbook," or "TooMuchInformationIDon'tCareAboutBook."

Mark Zuckerberg has publicly stated that he never intended for Facebook to be cool. But I can't help but question the growing, albeit anecdotal, sentiment of Facebook fatigue. This does not mean that the company won't continue to earn millions of dollars. It just means, that in my view, it is hard to make the case that the company, currently valued at $112 billion, is worth more than either McDonald's (MCD), or Home Depot (HD), or DuPont (DD) and Walgreen (WAG) combined. There's often a disconnect between price and value, and we may once again be seeing it here. My gut could certainly be wrong, it would not be the first time. Follow @JonMHellerCFA This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.

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

How To Profit From 'The Death Of Cash'

The Wall Street crowd is starting to get the picture.

On the cover of a recent issue of Fortune magazine: "The Death of Cash," there was an article examining an impending transition that I've been talking about for some time.

The magazine examined some large companies as the drivers in this new technological push, which hinges largely on the continued adoption of portable devices, like cellphones, that can be used much like a credit or debit card. Its winners are Google (Nasdaq: GOOG) because of its Google Wallet initiative, which I was among the first to cover; eBay's (Nasdaq: EBAY) PayPal; Visa (NYSE: V); MasterCard (NYSE: MA); Apple (Nasdaq: AAPL) and Facebook (Nasdaq: FB).

 

Those are great companies that will lead the trend. But while everyone else is looking at the obvious "winners," it will take some time for this macro trend to move the needle for companies as big as these.

Instead, I've got my eye on a small company that's at the forefront of this game-changing trend.

I first told StreetAuthority readers about this game-changing technology in an article about another stock in this sector I like: payment processing firm Zebra (Nasdaq: ZBRA).

I like this concept for a lot of reasons. For one, I hate it when my credit card is taken out of my view. Two of my cards -- a debit card from my bank in Texas and my Capital One Visa -- were hacked recently, which meant both cards needed to be replaced. I didn't get stuck with any of the fraudulent charges, but replacing a card is still a hassle -- and securing the number on a special microchip would render fraud far more difficult.

It's also going to open up mobile payments to a whole new audience, notably among young people and a portion of the population that doesn't use banks. That's because not only is the credit card in Google Wallet available as a prepaid card -- no credit required -- it is also available on a prepaid smartphone through Virgin Mobile. This will certainly help push this technology into the mainstream.

And while I like Zebra as a way to profit from this technology, my research has led me to a stock I like even more.

As I said, it's not Google. Nor do I think it will be Sprint (NYSE: S), which runs the network, and it's not Citigroup (NYSE: C) or MasterCard, which administer the card Google Wallet uses.

Instead, the likely winner is a company most people have never heard of -- NXP Semiconductors (Nasdaq: NXPI). It makes the special chips that go in the phone that "talk" to cash registers. The technology is known as near-field communications (NFC), and NXP is the leader, with critica! l existing supplier relationships with all the major phone manufacturers, including Apple.

And mobile wallets are a booming business for NXP: It grew 19% in 2011, 41% in 2012 and is on track to grow 30% this year (to $1.26 billion), according to analysts at Merrill Lynch. These ID chips were just 16% of NXP's $4 billion revenue base in 2011, but should account for 35% of sales by 2015.

The real question for investors: Can NXP make money with its cutting-edge chips? After all, some chip makers offer boring products, and are content with gross profit margins of just 15% or 20%. "We'll make it up on volume," these chip makers say.

NXP doesn't need to offer up such excuses.

Thanks to a combined $5 billion in R&D spending over the past six years, this company's products are so advanced that NXP can charge top dollar for them. That strong pricing power fuels gross margins in excess of 45% and EBITDA margins of 30%.

And that's led to market-beating returns for investors so far...

I expect results like this to continue as NXP grows revenue from the mobile wallet market -- especially with Google behind it. I've covered this area in my Game-Changing Stocks advisory extensively (and will continue to update readers).

I think that alternative payment technologies are one of the hottest opportunities for aggressive growth investors right now. This is a rocket ship you need to book a ticket on.

P.S. --  291%... 340%... 389%... These are all real returns my subscribers enjoyed from my past annual predictions report. And I think my latest research, "The 11 Most Shocking Investment Predictions For 2014," has some new ideas with even greater potential. One of these predictions is about a new medical device that will allow you to diagnose any illness, anytime, anywhere... Another is about a bizarre plant from the Midwest that may well! end Amer! ica's dependence on foreign oil. To learn more about these opportunities, and how to profit from them, click here.

Healthy-Food Stocks for Healthy Profits?

At the same time that the US experiencing an obesity crisis, more people are turning to more healthy-eating alternatives, and Greg Harmon of Dragonfly Capital takes a technical look at two healthy-food stocks that could benefit.

When you think of healthy food, most people think of Whole Foods (WFM). The chart of that stock looks promising but it is set to report earnings today after the market close though. Many do not like to hold stocks through earnings and will avoid it. You can protect the position if you want to with options or wait until after the report to see the reaction. The other thing you can do is to broaden your horizons. Whole Foods is not the only healthy food stock. Two others The Fresh Market (TFM) and United Foods International (UNFI) might be better plays in the short run.

The Fresh Market (TFM)

The Fresh Market (TFM), has been rising off of a bottom in March. It recently went through a 'W' consolidation and jumped higher, but is now retesting the top of the 'W'. The relative strength index (RSI) has held the mid line during the pullback and remains bullish while the moving average convergence divergence indicator (MACD) is not as positive. A turn higher, back over 53.50 could be a catalyst for a long entry, but a fall under 52 sets a target for a measured move (MM) lower to 50. This stock does not report earnings until late August.

United Foods International (UNFI)

United Foods International (UNFI), has run higher in fits and starts from a double bottom at 47ish. The movement since late May has been a harmonic deep crab. It achieved the potential reversal zone (PRZ) and is now pulling back in a broadening descending wedge. Or is it a bull flag? The crab calls for a target lower at the 38.2% Fibonacci level, while the bull flag suggests a MM to 62.50. Whichever it gives first is the one to play. I guess the world is right to think of Whole Foods first. Both of these stocks will be moving but not likely before Whole Foods reports.

By Greg Harmon of Dragonfly Capital

5 Stocks Under $10 Worth Buying

If you've got ten bucks, I have some stock ideas for you.

I've been singling out attractive opportunities in low-priced stocks since my original "Ten Stocks Under $10" column a dozen years ago, and I've seen plenty of stocks with pocket-change prices generate incredible gains.

There are risks, and they are readily apparent given the recent volatility. There are often good reasons for stocks to be ignored or beaten down. However, a market rally can work wonders for the unloved with positive catalysts in their pockets.

Let's go over my five picks from March 2009 -- when low-priced stocks bottomed out -- to prove my point.

 Company

July 12, 2013

March 13, 2009

Gain

Sirius XM Radio	$3.72	$0.198	1,779%
Bare Escentuals*	$18.20	$3.66	397%
Focus Media*	$27.50	$5.74	379%
Geron	$1.54	$4.36	(65%)
Ford	$17.11	$2.19	681%

*Bare Escentuals was acquired for $18.20 a share in 2010. Focus Media was acquired for $27.50 a share in 2013.

The average gain of 634% in four years is pretty remarkable.

Even with Geron crashing as the lone stinker, the other four multibaggers have easily trounced the market by excelling in satellite radio, cosmetics, cars, and Chinese advertising -- and two have been acquired at healthy premiums.

Let's go over this month's picks.

Nam Tai Electronics  (NYSE: NTE  ) -- $6.78
Shares of Nam Tai took a hit three months ago after posting uninspiring quarterly results.

The contract manufacturer made a big play for the booming liquid crystal display modules for smartphones last year, but cutthroat competition drove prices and margins lower and customer orders are coming in below Nam Tai's original forecasts.

This is the bad news that got Nam Tai down to the single digits, but there's also an opportunity here. Demand for consumer electronics isn't going away, and Nam Tai is still profitable and growing. The stock is fetching a reasonable 12 times next year's projected earnings. Along the way, Nam Tai's quarterly dividend of $0.15 a share leaves the stock currently yielding a tempting 8.8%.

BlackBerry (NASDAQ: BBRY  ) -- $9.24
I hate BlackBerry in the double digits. It's a different story in the single digits.

Yes, this is a mess right now. BlackBerry is coming off a dreadful quarter where it sold just 2.7 million smartphones fueled by the BB10 mobile operating system that was supposed to make the wireless pioneer relevant again. Carriers slashing BlackBerry Z10 prices over the weekend will put even more margin pressure on the struggling company.

I saw the horrible quarter coming, and you probably did too.

Now it's time to assess the situation. As bad as things may be for BlackBerry's relevance, this is still a company with a healthy balance sheet flush with $3.1 billion in cash and equivalents. If things continue to head south, it can always improve its standing by spinning off either its hardware or software and services businesses.

Advanced Micro Devices (NYSE: AMD  ) -- $4.32
AMD isn't in a good place right now. Revenue is falling and losses are mounting as PC sales plunge for the fifth quarter in a row. AMD's push into graphics hasn't been enough.

However, a few analysts upgraded the spunky chip maker last week, betting on an eventual turnaround.

It won't happen right away, but something interesting will happen when the Xbox One and PS4 hit the market this holiday season: AMD will be powering the guts of all three major video game consoles. AMD has also received some early favorable buzz for new products in its FX series of chips.

Wall Street sees AMD resuming its revenue growth and returning to profitability next year, and that's good enough to warrant attention now.

Tremor Video (NYSE: TRMR  ) -- $7.97
Tremor went public at $10 a share late last month, and it's already a busted IPO.

The company seems to be at the right place at the right time. Tremor runs an online video advertising network at a time when everyone is gravitating to video content. Tremor's VideoHub platform analyzes in-stream video content to serve up optimal video ad campaigns. Its clients include all 10 of the largest automakers and all but one of the 10 largest packaged goods companies.

Growth is already there. In-stream video advertising rose 32% last year, and Tremor's top line popped 43% higher during this year's freshman quarter. Tremor is still delivering losses, but gross margins are expanding and net losses are shrinking.

Sure, it's not a good sign when an IPO falls apart in its first few weeks of trading, but the market eventually comes around when it can't ignore growth.

Office Depot (NYSE: ODP  ) -- $4.30
Shares of the office supply superstore chain have more than doubled since being singled out in this column last summer.

Refreshed confidence in corporate America is partly behind the rise, but the real news here is that Office Depot is set to merge with rival Office Max later this year. The second- and third-largest office supply retail chains announced their intentions to join forces in February, and just last week the two masters of file cabinets and copy toner cartridges approved the union.

The move is a no-brainer as both retailers are expected to post slight declines in sales this year. The combination should create cost savings in the form of materialized synergies -- and that's just good business.

Five for the road
These five stocks aren't trading in the single digits by accident. If I'm right about the catalysts, though, they may not be trading in the single digits for too much longer.

Finding promising stocks while they're still cutting their baby teeth is at the heart of the Rule Breakers newsletter that I write for. You can check it out for free this month with a 30-day trial subscription. There are roughly a half-dozen active stock recommendations in the growth stock research service trading for less than $10 at the moment. Check those out, and I'll be back with more on the third Monday of next month.

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

Campbell Soup Acquires Plum Organics

Campbell Soup (NYSE: CPB  ) has completed its acquisition of premium organic baby food provider Plum Organics. The company intends to operate Plum as a standalone business within Campbell's North American division. The acquisition will retain the baby food company's original management team, which includes its president and co-founder, Neil Grimmer.

In 2012, Plum generated approximately $93 million in revenue. The company is the No. 2 distributor of organic baby food, and the No. 4 overall baby food brand in the United States. Baby food is estimated to be a $2 billion industry in the U.S., and with the addition of the company's new line of products, Campbell expects to generate annual sales of more than $1 billion. 

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Mark Alexander, president of Campbell's North American division, is "thrilled" to welcome Plum into the Campbell's family of products: "Plum is generating great success in the marketplace, and we believe that Campbell's resources will help fuel further expansion of the 'Plum' brand within the fast-growing premium, organic food segment."

Is the Stock Market Getting Frothy?

Given that the Dow Jones Industrial Average (DJINDICES: ^DJI  ) recently crossed the 15,000-point threshold for the first time in history, it should come as no surprise that there's an ongoing debate about whether stocks are headed for another bubble.

The title of a recent CBS MoneyWatch article sums up the sentiment perfectly: "Stock Market Bubble: Red flag warning." According to the author, there's reason to believe that stocks are becoming "frothy" because margin debt -- that is, the debt that investors use to purchase stocks in the brokerage accounts -- is headed for another peak akin to the dot-com and housing bubbles. Here's a chart to demonstrate the point:

But there's another side to this story. Enter Josh Brown, author of The Reformed Broker -- a blog I encourage readers to check out. In a post published at the end of last week comparing the stock market in 1999 to today, Josh makes a convincing argument that all of this concern is much ado about nothing.

Here's a very rudimentary but essential thing to be aware of -- in 1999 the S&P 500 (SNPINDEX: ^GSPC  ) finished at 1469, earned 53 bucks per share, and paid out $16 in dividends. These are nominal figures, not adjusted for inflation.

The 2013 S&P 500 is earning double that amount -- over $100 per share. The index will also be paying out double the dividend this year, more than $30 per share, and returning even more cash with record-setting share repurchases.

This sounds pretty good; what's the catch?

What kind of premium, pray tell, are we paying for double the earnings and twice the dividend yield versus 1999's market? I'm so glad you asked -- turns out we're not paying any premium at all. We're paying a discount. 50% off. The current S&P 500 trades for a P/E of 14 versus 33 for 1999. So double the fundamentals for half the price.

Sound frothy to you?

Josh then goes on to discuss the Case-Shiller cyclically adjusted P/E ratio, or CAPE. For those of you who aren't familiar with this metric, it's a 10-year rolling average of the S&P 500's P/E ratio. Its advantages are twofold. In the first case, it's the most widely available historical valuation metric you can find for the broader market -- do a search for the S&P 500's historical P/E ratio, and it's basically the only game in town. And in the second case, as its name suggests, by controlling for cyclical variations in valuation multiples, it makes for a nice, smooth line to include in charts.

But, as Josh points out, there's a problem with relying on this metric to make contemporaneous investment decisions. That is, by including the last 10 years of valuations, the CAPE overstates the S&P 500's current multiple by nearly 38%. You can see this in the following chart, which compares the index's actual P/E ratio to the CAPE.

S&P 500 P/E Ratio data by YCharts

Suffice it to say, the current gap is a function of the financial crisis, shortly after which corporate earnings were eviscerated and thus valuation multiples shot through the roof. This trend was particularly robust in the financial space, where large banks such as Bank of America (NYSE: BAC  ) and Citigroup (NYSE: C  ) were forced to record massive losses because of overexposure to subprime mortgages.

So where does this leave us?

I believe that the truth lies somewhere in the middle. Let's take a look at one last chart (the explanation follows).

This is an index that compares the gross domestic product to corporate profits to the Dow -- all of which are adjusted for inflation. Over the long run, there's a strong correlation here -- if you work backwards from the Dow, this shouldn't be surprising. The overarching trend and magnitude of increase, in other words, is pretty closely aligned among the three variables.

Yet at any one time in particular, there are discrepancies. The most notable of these were the 1960s -- the so-called "Go-Go Years" -- and the time period surrounding both the dot-com and housing bubbles. In each case, the performance of stocks outpaced GDP. And in each case, these intervals were concluded in dramatic fashion by stock market crashes.

To get back to the present, if you look to the far right side of the chart you'll see that the Dow has once again eclipsed the GDP trend line -- it should be noted, moreover, that the extent of the eclipse is understated, since the data stops at the end of last year. If history is any guide, in turn, this is indeed indicative of an overheated market.

On the other hand, to Josh's point, corporate profitability appears to be a primary impetus for the climb -- though, as you can see, this was similarly the case in the mid-'60s, late '90s, and early '00s. In addition, we obviously have a long way to go before the present resembles anything like those previous bubbles.

My point here is this: Stocks are high. On a comparative basis, are they as high as they were during these earlier periods of excess? No. And could they go higher? Yes. Absolutely. In fact, I'm inclined to think they will in light of the Federal Reserve's ongoing liquidity measures. But these factors aside, it's important that investors have a decent idea of where we're at.

The Motley Fool's top stock for 2013
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Here are events that shook world in 2013

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While we are approaching the end of another calendar year, there are still some memories of 2012. The biggest fear in 2012 was: the world is coming to an end on 21st December, 2012. Well, it is more than a year – and the world has yet not ended.

At the same time, one may wonder if the world has changed dramatically. Let us look at some of the events that took place in 2013. These events shook our long-held beliefs.

In the beginning of the year, the safest asset – gold, after having a decade long bull run, saw weakness. What happened in April was unbelievable for most – In a sudden move, gold prices (in Indian Rupees) were down more than 20 percent from their peak. Barring a surge in July-August due to the weakness of Indian Rupee against world currencies, Gold has been quite lackluster throughout the year. Before the year began, it was believed to be a safe haven.

The popular belief was that in times of crisis, one rushes to Gold. Well, the safe haven is roughly 17 percent down compared to last year’s price.

One major belief challenged. The safe haven is no longer safe.

Then in July-2013, in a surprise (?) move, the Governor of Reserve bank of India increased overnight interest rates by 2 percent. This move was taken to check the fall in the value of Indian Rupee against world currencies. The Rupee did not recover, but another market felt the tremors – the money market.

In the mutual funds , there is a category of funds, known as liquid funds. The main objective of these funds is to provide a short-term parking place for surplus funds. When the Reserve Bank of India increased short-term interest rates, the NAVs of these liquid funds dropped – an event nobody was prepared for. Well, the NAVs recovered soon thereafter. However, that fortnight was a big negative surprise. Another safe haven lost.

If this was not enough, we had a commodity spot exchange going bust. (We will not get into the fundamentals of the case here, but would focus only on the fact that this was believed to be a robust market institution). This was another event that shook the confidence of people. How can an exchange go bust? Is it not supposed to be a safe place? If an exchange goes bust, what is left?

Do these events indicate that:
1. What was safe till end of 2012 was no longer safe?
2. It was end of the way the world operated, as we knew?

(On a lighter note, the “end-of-the-world” prediction was true.)

The reality is: the world has not changed. It is just that some of the risks manifested. The risks were always there. However, when we evaluate risks, very often we want to see the proof. Thus, if something has not happened in a while, we do not consider the presence of the risk. It is important to note that risk (like truth) does not disappear just because someone refuses to acknowledge it.

The first step in planning your investments would be that you accept that the risks are present, and there is a possibility (however remote) that these risks may manifest.

In order to invest your money, you need to manage the various risks – visible or invisible.

The year 2014 is not going to be different. There are risks in investments and there will be risks in investments. Sometimes these risks would not be apparent, but do not mistake that as permanent absence of the risks.

Happy 2014

- Amit Trivedi
The author runs Karmayog Knowledge Academy. Views expressed here are his personal views. He can be reached at amit@karmayog-knowledge.com .

Top 10 Undervalued Companies To Watch In Right Now

With economic weakness stretching from Europe to Asia to North America, there is no shortage of resource and commodity companies that appear to be trading below fair value. That's not quite so true in the steel sector, though, where valuations have seemingly held up a little better. Unlike global steel giant ArcelorMittal (NYSE:MT), which does appear to be meaningfully undervalued, South Korea's POSCO (NYSE:PKX) appears to be enjoying a relatively healthy benefit of the doubt from the Street. While I certainly wouldn't argue that POSCO will go along for the ride when investor sentiment on steel turns more positive, I think the margin of error here is too slight to make this a compelling buy today, even with the stock near a 52-week low.

When Good Is Bad
I think the biggest problem with POSCO is that it's such a well-run steel company and that fact is so widely known. POSCO is not only the world's third-largest steel producer, but it's well-known for having/developing superior technology and operating with exceptional efficiency. Accordingly, investors are happy to assign above-average multiples to the stock, not unlike the above-average multiples that American mini-mill operators Nucor (NYSE:NUE) and Steel Dynamics (Nasdaq:STLD) have long enjoyed due to their efficiency and technological sophistication.

Top 10 Undervalued Companies To Watch In Right Now: Schlumberger N.V.(SLB)

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

Advisors' Opinion:

• [By Aaron Levitt]

  For investors, oil stocks are certainly shining this earnings season. OXY and BP, as well previous reports by Schlumberger (SLB) and Halliburton (HAL), are proving that fact.

• [By Matt DiLallo]

  For example, Halliburton (NYSE: HAL  ) saw record first-quarter revenue of $7 billion. Declining rig counts and pricing pressures in North America were still more than offset by the company's international operations. Meanwhile,�Schlumberger's (NYSE: SLB  ) results seemed to mirror National Oilwell Varco's in that its revenue was up over the year-ago quarter but slipped sequentially. Again, though, the story here was strength internationally with weakness in North America. Further, both companies are very optimistic about the future and neither see any signs of a business slowdown.�

• [By Dr. Kent Moors]

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

• [By David Smith]

  Admittedly, Chevron (NYSE: CVX  ) is partnering with Saudi Aramco in production efforts in the Partitioned Zone between Saudi Arabia and Kuwait. And oil-field services and technology kingpin Schlumberger (NYSE: SLB  ) has planted major facilities in the country. But it seems that a more widespread use of western companies' capabilities could do wonders for Saudi reserves and production longevity.

Top 10 Undervalued Companies To Watch In Right Now: Caterpillar Inc.(CAT)

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

Advisors' Opinion:

• [By WALLSTCHEATSHEET.COM]

  Caterpillar is a provider of construction and related industrial products and services during a time where countries around the world are seeing expansion. A recent earnings release has investors not impressed with the company. The stock has remained neutral in recent months and looks poised to continue this path. Over the last four quarters, earnings and revenues have been decreasing which has produced conflicting feelings about the company. Relative to its peers and sector, Caterpillar has been a weak year-to-date performer. WAIT AND SEE what Caterpillar does in coming quarters.

• [By Dan Caplinger]

  Caterpillar (NYSE: CAT  ) lost half a percent, even as gold and silver prices posted modest gains. Caterpillar finds itself in a difficult position, as low metals prices will likely force many of its mining-company clients to delay or downsize purchases of capital equipment. Ordinarily, cyclical economic improvement would bode well for the company, but to the extent that improving conditions lead to less monetary accommodation from central banks, prices of metals could fall further, and jeopardize that part of Caterpillar's business, even if construction and infrastructure activity pick up. That will be a difficult line for the company to walk in the year ahead.

• [By Neha Chamaria]

  The market was a little wary, though, when some days prior to Oshkosh's announcement, leading construction equipment maker Caterpillar (NYSE: CAT  ) slashed its full-year revenue guidance significantly to $57 billion-$61 billion, from its earlier projection of $60 billion-$68 billion. But what investors should know is that Caterpillar is largely dependent on the beleaguered mining industry for revenue, unlike Terex. That's also the major reason why Caterpillar downgraded its guidance.

Best Clean Energy Stocks To Own Right Now: Tupperware Corporation(TUP)

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

Advisors' Opinion:

• [By Monica Gerson]

  Tupperware Brands (NYSE: TUP) is expected to report its Q3 earnings at $1.03 per share on revenue of $623.34 million.

  Varian Medical Systems (NYSE: VAR) is projected to post its Q4 earnings at $1.12 per share on revenue of $779.02 million.

• [By Eric Volkman]

  Tupperware Brands (NYSE: TUP  ) is reaching into its corporate bowl for a fresh payout to shareholders. The company has declared a quarterly dividend of $0.62 per share. This will be paid on July 8 to stockholders of record as of June 19. That amount matches the firm's previous distribution, which was paid in early April. Prior to that, Tupperware Brands was rather less generous, handing out $0.36 per share.

• [By Oliver Pursche]

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

• [By Dan Caplinger]

  Where growth will come from
  One area that Newell Rubbermaid still has to tap fully is emerging markets. The company has done a good job of expanding overseas, with 17% annual growth in Latin America. But with barely a quarter of its sales coming from outside the U.S. and Canada, the company has a lot further to go. Storage rival Tupperware (NYSE: TUP  ) gets fully 60% of its total revenue from emerging markets, and it too has seen impressive gains in South America as well as the Asia-Pacific region.

Top 10 Undervalued Companies To Watch In Right Now: Dollar Tree Inc.(DLTR)

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

Advisors' Opinion:

• [By Jon C. Ogg]

  Dollar Tree Inc. (NASDAQ: DLTR) was maintained as a Buy but was removed from the prized Conviction Buy list at Goldman Sachs.

  Duke Energy Corp. (NYSE: DUK) was raised to Buy from Hold with a $79 price target at Argus.

• [By Paul Ausick]

  Big Earnings Movers: Target Corp. (NYSE: TGT) is down 3.5% at $64.19. Sears Holdings Corp. (NASDAQ: SHLD) is down 2.9% at $59.93 on a wider loss and tepid outlook. Green Mountain Coffee Roasters Inc. (NASDAQ: GMCR) is up 14.1% at $70.57 indicating that investors liked the results posted after markets closed on Wednesday. Dollar Tree Inc. (NASDAQ: DLTR) is down 4.5% at $56.28. Abercrombie & Fitch Inc. (NYSE: ANF) is down 0.1% at $34.97.

• [By Ben Eisen]

  Perpetually struggling department store J.C. Penney Co. (JCP) �said it expects a sales boost this holiday season as it returns to a promotional strategy. But for the most part, retailers including Dollar Tree Inc. (DLTR) �, GameStop Corp. (GME) � and Abercrombie & Fitch Co. (ANF) � gave dour outlooks in their earnings reports.

Oil futures drop on stronger dollar and profit-booking

HONG KONG (MarketWatch) -- Oil futures dropped Thursday as the U.S. dollar jumped and oil investors booked profits from a previous rally after Fed's decision to taper its stimulus due to an improving economy.

January crude oil (CLF4)   dropped 8 cents, or 0.1%, to $97.72 a barrel in electronic trading.

Prices rose 58 cents, or 0.6%, to settle at $97.80 a barrel on Wednesday, the highest close for a most-active contract since Dec. 10, according to Factset data.

The Federal Reserve said on Wednesday that it would taper its monthly purchases of assets from the current rate of $85 billion to $75 billion next month, which markets take as a sign that the economy is improving and energy demand will increase.

Bloomberg The Royal Dutch Shell Plc Olympus tension leg platform is seen at dawn in Ingleside, Texas, U.S.

Oil futures traded lower on Thursday as oil traders booked profits after the Wednesday rally and the U.S. dollar got stronger, said ICICI Bank analysts in a note on Thursday.

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The dollar jumped above 104 yen Wednesday, its highest level in 2013, after the Fed announced its tapering move. The Fed's asset purchases have been seen as weakening the greenback.

However, "the losses remained capped amidst a decline in U.S. crude stockpiles by 2.94 million barrels," said the ICICI Bank analysts.

The U.S. Energy Information Administration, an agency of the U.S. Department of Energy (DOE), reported on Wednesday a drop of 2.9 million barrels in crude supplies for the week ended Dec. 13.

"Oil markets were firm in the wake of the weekly DOE update and the Fed's meager gesture to the so-called taper," wrote Stephen Schork, editor of the Schork Report on Thursday.

In other trading, Brent crude for February delivery (UK:LCOG4)   fell 25 cents, or 0.2%, to $109.38 a barrel.

Meanwhile, January natural gas (NGF14)   rose 6 cents, or 1.5%, to $4.31 per million British thermal units. January gasoline (RBF4)   stayed flat at $2.70 a gallon and January heating oil (HOF4)  was at $3.01 a gallon likewise.

Top 5 Financial Advisor Resolutions for 2014

Financial advisors are ebullient as the new year draws near, expecting 2013’s bull market to keep on rising into 2014.

A survey of 800 advisors conducted by the SEI Advisor Network, a provider of outsourced asset management and practice management programs, indicates that a huge proportion see good times ahead. Fully two-thirds are cautiously optimistic, while 18% count themselves as “excited.”

Fully 87% see an advancing market, with more than half predicting the Dow Jones Industrial Average will reach into the 16,500 to 17,500 range and another 10% envisioning the Dow about 17,500. (Another 21% see a modest rise in the 16,000 to 16,500 range and just 13% expect the Dow to be under 16,000 a year from now.)

A market pullback (41%), tapering (24%) and tax hikes (15%) were the most feared headwinds.

But with advisor sentiment so bullish overall, advisors — when turning to their own businesses — are prepared to grab the bull by the horns and resolved to concentrate on five key areas.

Their fifth-highest priority, supported by nearly half of all advisors surveyed, is to…

New Year’s Resolution #5:

Be More Selective of New Clients (48%)

Finding the right fit in an advisor-client relationship is increasingly important to some advisors who fear being condemned to a life sentence.

Relationships are inherently unequal. Some people have a natural, at times inexplicable, attraction to one another, and with others, there’s just no there there.

Business relationships can be even more fraught, as some clients will not follow, or respect, the advisor's advice and others will use the advisor as an emotional crutch.

For these and other reasons, a large segment of advisors are seeking to be more selective in 2014 and planning to practice politely saying no.

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Parallel to enforcing distance with some clients is advisors’ fourth highest New Year priority, which is to…

New Year’s Resolution #4:

Meet New Centers of Influence (59%)

Reaching out beyond one’s own narrow network is a business necessity, allowing an advisor to tap the disinterested third-party endorsement of other professionals who have established good will and credibility in your target market.

Classic financial advisor centers of influence (COIs) include the network of professionals who serve distinct but related needs of your best clients. Your clients’ CPAs or estate-planning attorneys likely engage clients similarly situated to your own.

By coordinating efforts on behalf of your common client, you can foster the mutual understanding and respect that leads to valuable referrals.

But, to be prepared to receive new high-end clients with high professional expectations, advisors’ third-ranking New Year’s resolution is to…

New Year’s Resolution #3:

Integrate Technology to Increase Efficiency (59%)

The new reality is that clients live in a digital world, even if the financial services industry is often behind the curve in the technology department.

Apart from client expectations, the ability to manage contacts, e-mail, calendaring and task lists in an integrated fashion should also yield significant increases in productivity.

Replacing legacy platforms with up-to-date offerings can aid prospecting, marketing and communications, and can improve client service.

Related to this goal is advisors’ second-highest priority for 2014, which is to…

New Year’s Resolution #2:

Systematize Internal Processes to Increase Efficiency (67%)

Beyond having the right technology nuts and bolts, advisors want a smooth workflow.

SEI’s practice management expert John Anderson put in this way in a recent blog post:

“In my experience, many firms are key person (advisor) dependent. Most of the knowledge around client relationships and key processes are in the heads of one or two people, and not documented. That is great if you want job security — but what about your staff, successors, or even a potential buyer? How can you expect your office to run smoothly and clients to remain satisfied if you are the only one that can do it?”

While office efficiency ranks high with advisors, their most fervent wish for 2014 is to…

New Year’s Resolution #1:

Increase Referrals From Current Clients (85%)

Referrals from existing clients is a perennial wish of advisors, and because it is so elusive, much ink has been spilled on the topic. Many advisors fear alienating a valuable client by seeming to be impertinent in asking for referrals.

And indeed enough clients have demonstrated their reluctance to provide them, so as to permanently frighten rejection-fearing advisors.

An SEI white paper offered this advice, described by ThinkAdvisor as follows:

“It’s best for advisors to define their ideal ‘five-star client’ and provide the description to their clients. That way, clients will better understand what their advisors are looking for and will be more engaged in the process.”

Here’s wishing a prosperous 2014 to advisors—with success in maintaining their resolutions!

---

Check out these related stories on ThinkAdvisor:

Charting Acacia Research's Latest Earnings Release

Acacia Research (Nasdaq: ACTG  ) reported earnings on April 18. Here are the numbers you need to know.

The 10-second takeaway
For the quarter ended March 31 (Q1), Acacia Research crushed expectations on revenues and missed estimates on earnings per share.

Compared to the prior-year quarter, revenue shrank significantly. Non-GAAP earnings per share dropped significantly. GAAP earnings per share contracted significantly.

Margins contracted across the board.

Revenue details
Acacia Research logged revenue of $76.9 million. The six analysts polled by S&P Capital IQ hoped for revenue of $55.2 million on the same basis. GAAP reported sales were 22% lower than the prior-year quarter's $99.0 million.

Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures may vary to maintain comparability with estimates.

EPS details
EPS came in at $0.47. The five earnings estimates compiled by S&P Capital IQ anticipated $0.50 per share. Non-GAAP EPS of $0.47 for Q1 were 57% lower than the prior-year quarter's $1.09 per share. GAAP EPS of $0.11 for Q1 were 90% lower than the prior-year quarter's $1.09 per share.

Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.

Margin details
For the quarter, gross margin was 76.0%, much worse than the prior-year quarter. Operating margin was 9.2%, much worse than the prior-year quarter. Net margin was 6.7%, much worse than the prior-year quarter. (Margins calculated in GAAP terms.)

Looking ahead
Next quarter's average estimate for revenue is $56.8 million. On the bottom line, the average EPS estimate is $0.52.

Next year's average estimate for revenue is $269.7 million. The average EPS estimate is $2.37.

Investor sentiment
The stock has a three-star rating (out of five) at Motley Fool CAPS, with 135 members out of 155 rating the stock outperform, and 20 members rating it underperform. Among 31 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 28 give Acacia Research a green thumbs-up, and three give it a red thumbs-down.

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Acacia Research is buy, with an average price target of $44.25.

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Netflix Inks 'Toons Agreement With Hasbro

Bugs Bunny they ain't, and they lack even the unvocalized theatrical brilliance of Wile E. Coyote and the Road Runner, but Hasbro's (NASDAQ: HAS  ) Littlest Pet Shop and Kaijudo characters apparently hold some attraction for the pre-tween viewers in this day and age.

Enough attraction, at least, that on Thursday, online video provider Netflix (NASDAQ: NFLX  ) announced that it has inked an agreement with Hasbro to make it the exclusive online streamer of both Hasbro Studios offerings Littlest Pet Shop and Kaijudo: Rise of the Duel Masters.

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According to a Netflix press release, the company is now the exclusive streamer in the U.S. of "five of Hasbro Studios' most popular shows -- My Little Pony Friendship Is Magic, Transformers Prime, Transformers Rescue Bots, Kaijudo: Rise of the Duel Masters, and Littlest Pet Shop." One month after the end of a "broadcast" season for each series, the whole series will become available for streaming on Netflix. Most of these shows are also already available, or soon will be, to Netflix viewers in Canada as well.

Financial terms of the licensing agreement were not disclosed.

In a statement, Netflix confirmed that it streamed "2 billion hours of kids content" to its members in 2012.

Twitter nixes changes to blocking feature

Twitter reversed course on changes to its blocking functionality that many users complained would leave the service more prone to abuse.

When a user blocks someone on Twitter, it prevents them from following or messaging that user, as well as add that account to their lists.

A change introduced yesterday by Twitter would have turned block into essentially a mute button, where users could remove their tweets from their Timeline, but the blocked user could still follow that user and reply to messages.

"We have decided to revert the change after receiving feedback from many users," said Michael Sippey, Twitter's vice president of product, in a blog post. "We never want to introduce features at the cost of users feeling less safe."

The changes caused an uproar on Twitter, highlighted by the trending hashtag #restoretheblock, raising worries that the move would make it easier for users to abuse and harass others.

Twitter continues to defend the revised block function, citing concerns blocked users could retaliate. "Some users worry just as much about post-blocking retaliation as they do about pre-blocking abuse," says Sippey.

He also says Twitter will continue to "explore features" to prevent abuse on the site.

Shares of Twitter are up 1.3% at $56.07 in morning trading.

Follow Brett Molina on Twitter: @bam923.

Chart of the Day: Where Did All the Volatility Go?

The 2013 U.S. stock market has been a snoozefest compared to recent years.

Yes, the S&P 500 is up a whopping 25% and has set a number of record highs this year. But a look at the day-to-day action shows the market has been much quieter than normal.

The S&P 500′s average daily move up or down has been 0.55% this year, compared to the historical 0.76% average move since 1928, according to Bespoke Investment Group. That means small, incremental moves throughout the year have added up to the big overall gain.

By comparison, the S&P 500 swung by more than 1.5% a day, on average, in 2008 during the depths of the financial crisis. And in 2011, when stocks were whipping around during the European debt crisis, a U.S. debt-ceiling debate and the downgrade of the U.S. credit rating, the S&P 500′s average daily move topped 1%.

The least volatile year was 1964, when the S&P 500 averaged only a 0.26% daily move.

Bespoke Investment Group

The chart above, courtesy of Bespoke, offers a look at the average daily moves of the S&P 500 over the past 85 years. Much of the 1950s and 1960s were relatively quiet periods in the markets, whereas volatility picked up in the late 1990s, early 2000s and again during the financial crisis.

Low volatility is also evident in the stock market’s sleepy fear gauge, the VIX. The CBOE’s volatility index is at 15.71 Thursday morning, well below its long-term average of around 20. Minus a few spikes here and there, the VIX has mostly hovered in the low- to mid-teens for much of the year.

While volatility is low, Bespoke points out there were even less volatile years which occurred as recently as the mid-2000s. From 2004 through 2006, the S&P 500 averaged daily moves of 0.54%, 0.52% and 0.47% apiece.

Bespoke’s calculations found there have been 28 years since 1928 in which the average daily move was lower than what has transpired in 2013.

The S&P 500 recently fell 0.2% to 1779.

The chart that’s scaring Wall Street

In recent days, a chart featuring two lines like the ones shown below has been circulating among trading desks, according to hedge-fund manager Douglas Kass. It certainly looks scary, pointing as it does to a 1929-magnitude crash in January.

But there isn't any need to run for the hills just yet. The chart's statistical validity is questionable, at best. Even many of those who insist it is worth paying attention to aren't predicting a crash.

The Wall Street Journal

The chart shows the performance of the stock market over the past 18 months alongside the path the Dow Jones Industrial Average (DJIA)  traveled in 1928 and 1929. In emailing it to his clients, Kass, president of Seabreeze Partners Management Inc., called the similarity "eerie." Read: Ghost of 1929 crash reappears.

According to Tom McClellan, editor of the McClellan Report, an investment newsletter, the Sept. 3, 1929, stock market top equates to this coming Jan. 14 — just five weeks from now.

David Leinweber, founder of the Center for Innovative Financial Technology at the Lawrence Berkeley National Laboratory, isn't impressed. In an email, he said that "if you looked at enough periods of the same length, you'd find all sorts of very similar pictures, most without a crash at the end."

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Leinweber views charts such as this one as an example of a potentially dangerous practice known as "data mining"— endlessly analyzing a database until you "discover" a pattern. The result of this practice is "the analytical equivalent of finding bunnies in the clouds. If you did enough poring, you would be bound to find that bunny sooner or later, but it would be no more real than the one that blows over the horizon," he said.

Kass, who has been outspokenly bearish on the U.S. stock market during a rally that has pushed the S&P 500 index (SPX)  up 26% this year, said he sent the chart out to his clients merely as "interesting food for thought." He said that, while he believes stocks are likely to produce below-average returns in coming years, he doesn't think there will be a crash.

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McClellan said that finding chart correlations is risky, since they "all break down eventually — it's just a matter of time." Unfortunately, "they usually break down the moment you are most counting on it."

Nevertheless, he said he will be closely watching whether the stock market in coming weeks continues to follow the pre-1929-crash script. If it does, and he concedes that this is a "big if," then his confidence will grow that the stock market's direction will turn down in January.

To be sure, a bear market could happen at any time, and drawing the analogy between now and the late 1920s can serve a helpful purpose: If you don't think you can stick with your stock holdings through a market decline, you should reduce them now to whatever level you would be comfortable holding through that decline.

There is another reason to consider selling some shares: The bull market has led equity positions to become a bigger part of overall portfolio values. That in turn means portfolios might be riskier than is appropriate. The end of the year is an ideal time to tweak portfolio allocations.

In this rebalancing, you would normally invest the proceeds of sales into asset classes that have performed poorly. That might mean buying bonds, however, since bonds have lost ground this year as the stock market has soared. That may seem hard to swallow if you expect the Federal Reserve to start pulling back on its bond purchases, which some think could push bond yields higher and prices lower.

Jason Hsu, chief investment officer at Research Affiliates, a money management firm based in Newport Beach, Calif., recommends looking at "absolute-return strategies" as you rebalance your portfolio. These strategies aim to produce consistent returns in all kinds of markets.

In theory, absolute-return strategies tend to march to the beats of their own drummers rather than rise and fall in lock step with either stocks or bonds. That could make them attractive if you, like Hsu, are unenthusiastic about the prospects for either stocks or bonds in coming years.

David Nadig, chief investment officer at IndexUniverse, a research firm, says there are several exchange-traded funds that offer absolute-return strategies. He said in an email that his firm's recommendations are based on a number of factors, including expenses, liquidity, and how closely the fund tracks the market to which it is benchmarked.

His firm's top pick among "absolute-return ETFs" is the IQ Hedge Multi-Strategy Tracker [ticker: QAI], with a 0.94% expense ratio, or $94 per $10,000 invested. The fund aims to match the average performance of a wide variety of hedge funds.

Another is the PowerShares DB G10 Currency Harvest fund [ticker: DBV], with a 0.75% expense ratio, which invests in the currencies of leading industrialized nations. A third ETF that Nadig's firm recommends is the WisdomTree Managed Futures Strategy fund (WDTI)  , with a 0.96% expense ratio; it bets on the directions of currencies, interest rates, and physical commodities.

Hsu also suggested diversifying equity holdings outside the U.S. He believes that three regions offer equity markets that are cheaper than the U.S.: Japan, Europe and emerging markets.

The ETFs linked to these respective regions that Mr. Nadig's firm favors are the iShares MSCI Japan fund (EWJ)  , with a 0.53% expense ratio; the iShares MSCI EMU Index fund (EZJ)  , also with a 0.53% expense ratio; and the iShares Core MSCI Emerging Markets fund (IEMG)  , with a 0.18% expense ratio.

More related commentary:

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When markets heat up, it’s time to be cowardly

Now that the stock market has reached all-time highs, you may be thinking yourself a coward for being reluctant to invest now.

But as a great man – OK, the Wizard of Oz — once said, you may be a victim of disorganized thinking. You are under the unfortunate impression that just because you run away, you have no courage. You're confusing courage with wisdom.

Cowardice can be a good thing, especially when the stock market is at record levels. And if you're really worried, you might consider the Cowardly Portfolio, first introduced here more than a decade ago. But it's time to make a few changes to the Cowardly Portfolio. It's OK. You'll be fine.

The Cowardly Portfolio simply introduces the notion that investing in stocks is not an all-or-nothing proposition. In its original formulation, it consisted of 50% in conservative stock funds, 30% intermediate-term government bonds, and 20% in money market funds. You won't get rich, because widely diversified people don't get rich, or at least rich quickly.

You will be somewhat shielded from short-term stock market fluctuations, however. When the Cowardly Portfolio made its last appearance, in September 2011, the portfolio had gained 41% over 10 years, vs. 31% for the Standard & Poor's 500-stock index. The period included at least part of the 2000-2002 bear market, and all of the 2007-2009 bear.

The past 10 years, the Cowardly Portfolio is up 71%, vs. 116% for the S&P 500 with reinvested dividends. The 10-year record for both has improved because the tech wreck is now off the books. The S&P 500 is beating the Cowardly Portfolio because it always will in a bull market.

The Cowardly Portfolio has worked well because bonds tend to rise in value when stocks fall, and cash acts as a cushion to both. But as we look around today's landscape, we see that the 10-year Treasury note yields about 2.74%.

William Bernstein, market adviser, neurologist and author of Deep Risk, suggests buying bonds at these levels could ! be an even bigger problem than buying stocks, at least over the long term. And that's because interest rates tend to rise and fall in long cycles, and when interest rates rise, bond prices fall. "From 1941 to 1981, the total return from U.S. and U.K. bonds was -70%," Bernstein says. "Stocks have never done that badly."

Analysts use a term called duration to measure the effects of interest rate risk. A bond fund with duration of 10 years will fall 10% in value if interest rates rise 1%, and vice versa. The 10-year T-note has averaged a 6.6% yield since 1962. Clearly, there's a fair amount of interest-rate risk in 10-year T-note, especially if rates pop up beyond the long-term average.

Your best bet: "Hold your nose and go short," Bernstein says. "If I buy a bank CD with a 1%, 2-year yield, I'll come out almost flat against inflation, and not be that badly hurt." Buy a bond fund with a 10-year duration, however, and you'll get your head handed to you when interest rates rise.

If you're a true coward, then, you might consider eliminating your 30% bond position for a series of staggered bank CDs. You won't earn much now, but as interest rates begin to rise in 2014 and 2015, you'll get higher yields and dodge the losses you'll take from a bond fund.

Changing from 20% cash and 30% bonds to 50% cash is so cowardly it borders on the craven. You could probably bump up your stock holdings to 60% and reduce cash to 40% without too much damage. Were stocks to fall 50%, your portfolio would fall 30%, which is survivable. And you'd have plenty of buying power if stocks became incredibly cheap.

And choosing a reasonably conservative stock fund could help, too. The Cowardly Portfolio has preferred equity-income funds, which invest in the stocks of large, dividend-paying companies. Three candidates:

• Fidelity Dividend Growth (ticker: FDGFX), up 22.0% annually the past five years.

• Nicholas Equity Income (NSEIX), up 21.3% a year the past five years.

• Parnassus Equi! ty Income! , (PRBLX), up 17.8% the same period.

All have annual expense ratios of less than 1%. For the truly cost-conscious, there's Vanguard Dividend Appreciation (VDAIX), up 15.9% annually the past five years. Expense ratio: 0.20%. Its actively managed counterpart, Vanguard Equity-Income (VEIPX), has outperformed the index, gaining 17.0% a year annually. The fund's expense ratio is 0.30% a year.

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The older you get, the more you should be worried about short-term risks, and the more a cowardly portfolio makes sense. If you're 70 and have no further source of income, market risk from stocks can be "Three-Mile-Island toxic," Bernstein says.

But for young investors, particularly for those investing at regular intervals, worrying about short-term market risks is foolish. "Young people should embrace shallow risks," Bernstein says. If the market falls 50% and you're investing regularly through a 401(k), you'll get the chance to invest at bargain prices. Worry about other things, like winged monkeys.

Follow John Waggoner on Twitter: @johnwaggoner.