Top 5 High Dividend Companies To Buy For 2014

Many investors look to the so-called BRIC nations (Brazil, Russia, India and China) for emerging growth opportunities. However, these investors may be overlooking one emerging powerhouse in Southeast Asia.

Overall, as an investor, I particularly like emerging-market dividend stocks for 2013. Companies in the MSCI Emerging Markets Index have increased dividend payments steadily for the past 10 years. Unlike earnings, dividend payments have been far steadier, with payout ratios mostly in the 30% to 40% range.

Additionally, as many of these companies mature, the potential to increase dividend payouts is high -- companies in emerging markets often have lower debt levels than firms in developed markets. The number of emerging stocks with high dividend yields in the MSCI World Index has increased from 60 in 1995 to more than 300 last year.

Top 5 High Dividend Companies To Buy For 2014: Avid Technology Inc.(AVID)

Avid Technology, Inc. provides digital media content-creation products and solutions for audio, film, video, broadcast professionals, artists, and creative enthusiasts in the Americas, the Asia-Pacific, Europe, the Middle East, and Africa. The company offers various software and hardware professional video-editing solutions, including Media Composer product line, which is used to edit television programs, commercials, and films; NewsCutter and iNews Instinct editors for news production; and Avid Symphony Nitris DX and Avid DS, which are used during the online or finishing stage of post production. It also provides Pinnacle Studio and Avid Studio, which provide consumers and entry-level videographers with the ability to create professional-looking videos; broadcast newsroom graphics, ingest, play-to-air, and automation device control solutions that assist broadcasters as they bring programs from concept to air; and Avid ISIS shared storage system to store, share and manage large quantities of digital media assets. In addition, Avid Technology, Inc. offers Pro Tools digital audio software and workstation solutions that facilitate the audio production process; a range of complementary open audio and video control surfaces and consoles; ICON system for tactile control of Pro Tools software and hardware; VENUE, a family of console products for mixing audio for live sound reinforcement. Further, the company provides Fast Track recording interface products to deliver audio quality plus hands-on controls; MIDI keyboards/controllers and digital pianos, which are used by musicians in the recording studio and for live performances; speakers for use with desktop computer systems and in studios; and Sibelius-branded software allows users to create, edit, and publish musical scores. Additionally, it also offers project management, installation, integration, planning, training, and support services. The company was founded in 1987 and is headquartered in Bu rlington, Massachusetts.

Top 5 High Dividend Companies To Buy For 2014: Inter-Rock Minerals Inc.(IRO.V)

Inter-Rock Minerals Inc. engages in the production and marketing of specialty dolomite minerals for the beef, cattle, and dairy cow feed industries in the United States. The company also involves in the exploration of gold and copper mineral properties. Its property portfolio includes the Sentinel Peak, a gold property comprising 22 claims that covers 440 acres, as well as Cove Copper project consisting of 12 unpatented claims in Humbolt County, Nevada. The company also holds claims in a gold mining district of northwest Nevada. Inter-Rock Minerals Inc. is based in Toronto, Canada.

Best Defensive Stocks For 2014: Sangamo BioSciences Inc.(SGMO)

Sangamo Biosciences, Inc. engages in the research, development, and commercialization of zinc finger DNA-binding proteins (ZFPs) for gene regulation and gene modification in the United States. Its ZFPs could be engineered to make ZFP transcription factors (ZFP TFs), proteins that could be used to turn genes on or off; and ZFP nucleases (ZFNs), proteins that enable to modify DNA sequences in various ways. The company?s principal ZFP therapeutic include SB-509, a plasmid formulation of a ZFP TF activator of the vascular endothelial growth factor-A (VEGF-A) gene that is in a Phase 2b clinical trial for the treatment of severe diabetic neuropathy; and in a Phase 2 clinical trial in for the treatment of amyotrophic lateral sclerosis, as well as in preclinical animal studies for spinal cord injury, traumatic brain injury, and stroke. It is also developing SB-728-T, a ZFN-modified T-cell product, which is in Phase 1/2 clinical trial and two Phase 1 trials for the treatment of HI V/AIDS. In addition, the company develops SB-313xTZ, a ZFN-based therapeutic that is in Phase 1 clinical trial for the treatment of glioblastoma multiforme, a type of brain cancer. Further, it has preclinical development programs of ZFP therapeutics in the areas of Parkinson?s disease, hemophilia B, and neuropathic pain; and neuroregenerative programs in spinal cord injury, traumatic brain injury, and stroke. Additionally, the company has research stage programs in the areas of monogenic diseases and genetic conditions that result from a defect in a single gene, including hemophilia and other hemoglobinopathies, and immunodeficiencies. It has collaboration agreements with Sigma-Aldrich Corporation; Dow AgroSciences LLC; Pfizer Inc.; Genentech, Inc.; Open Monoclonal Technology, Inc.; and F. Hoffmann-La Roche Ltd and Hoffmann-La Roche Inc. The company was founded in 1995 and is headquartered in Richmond, California.

Top 5 High Dividend Companies To Buy For 2014: Senior Eng Grp(SNR.L)

Senior plc designs, manufactures, and markets high technology components and systems worldwide. The company operates through two divisions, Aerospace and Flexonics. The Aerospace division offers aerospace ducting systems, aerospace fabricated components, aerospace machined components, bellows and seals, couplings and valves, hydraulic and fuel systems, machined aero structures, machined airframe and interiors, and sensors and monitoring systems. The Flexonics division provides automotive common rail, drain tube, exhaust connector, flexible tube, heat exchangers, and high pressure lines; fabric expansion joints; fuel cells; industrial air ducts, dampers and diverters, flexible tubing, and metal bellows; and metal expansion joints and spring hangers. Senior plc serves original equipment producers in the aerospace, defense, diesel engine, exhaust system, land vehicle, and energy markets. The company was formerly known as Senior Engineering Group plc and changed its name to Se nior plc in 1999. Senior plc was incorporated in 1933 and is headquartered in Rickmansworth, the United Kingdom.

Top 5 High Dividend Companies To Buy For 2014: Magnum Hunter Resources Corp (MHR)

Magnum Hunter Resources Corporation (Magnum Hunter), incorporated in June 1997, is an independent oil and gas company engaged in the exploration for and the exploitation, acquisition, development and production of crude oil, natural gas and natural gas liquids, primarily in the states of West Virginia, Ohio, Texas, Kentucky and North Dakota and in Saskatchewan, Canada. The Company is also engaged in midstream operations, including the gathering of natural gas through its ownership and operation of a gas gathering system in West Virginia and Ohio, named as its Eureka Hunter Pipeline System. The Company�� portfolio includes Marcellus/Utica Shales in West Virginia and Ohio, the Eagle Ford Shale in south Texas, and the Williston Basin/Bakken Shale in North Dakota and Saskatchewan, Canada. As of December 31, 2011, its proved reserves were 44.9 million barrels of oil equivalent and were approximately 48% oil. In August 2012, the Company closed on the acquisition of 1,885 net mineral acres located in Atascosa County, Texas. With this acquisition, the Company has approximately 7,278 gross acres and 5,212 net acres located in Atascosa County, Texas.

On May 3, 2011, it acquired NuLoch Resources Inc. In April 2011, Triad Hunter, its wholly owned subsidiary, acquired certain Marcellus Shale oil and gas properties located in Wetzel County, West Virginia. On April 13, 2011, it acquired NGAS Resources, Inc. In February 2012, Triad Hunter acquired leasehold mineral interests located primarily in Noble County, Ohio.

Eagle Ford Shale Properties

Eagle Ford Shale is located in Gonzales, Lavaca, Atascosa and Fayette Counties, Texas. The Eagle Ford Shale properties are held primarily by its wholly owned subsidiary, Eagle Ford Hunter, Inc. As of February 27, 2012, the Company�� Eagle Ford Shale properties included approximately 54,000 gross (24,000 net) acres primarily targeting the Eagle Ford Shale oil window, principally in Gonzales and Lavaca Counties, Texas. As of December 31! , 2011, proved reserves attributable to the Eagle Ford Shale properties were 5.4 million barrels of oil equivalent, of which 94% were oil and 24% were classified as proved developed producing, and 5.4 million barrels of oil equivalent. As of February 27, 2012, its Eagle Ford Shale properties included 18 gross (10 net) productive wells, of which it operated 14.

Williston Basin Properties

The Williston Basin is spread across North Dakota, Montana and parts of southern Canada. The basin produces oil and natural gas from a range of producing horizons, including the Madison, Bakken, Three Forks/Sanish and Red River formations. As of February 27, 2012, the Company�� Williston Basin properties included approximately 413,003 gross (122,561 net) acres. As of December 31, 2011, proved reserves attributable to the Williston Basin properties were 8.9 million barrels of oil equivalent, of which 94% were oil and 42% were classified as proved developed producing, and 8.8 million barrels of oil equivalent. As of February 27, 2012, the Williston Basin properties included approximately 288 gross (98.9 net) productive wells.

The Williston Hunter United States property acreage is located in Divide and Burke Counties, North Dakota, with its primary production from the Bakken Shale and Three Forks/Sanish formations. As of February 27, 2012, its Williston Hunter United States properties included approximately 36,355 net acres in the Williston Basin in North Dakota. As of February 27, 2012, the Williston Hunter United States properties included approximately 105 gross (9.5 net) productive wells. The Company�� Williston Hunter Canada property is located primarily in Enchant, near Vauxhall, Alberta, Canada, at Balsam near Grande Prairie, Alberta, Canada and at Tableland, near Estevan, Saskatchewan, Canada. As of February 27 2012, the Williston Hunter Canada properties included approximately 107,270 gross acres (79,693 net acres). At December 31, 2011, the Williston Hunter Canada prope! rties inc! luded approximately 65 gross productive wells. As of December 31, 2011, Williston Hunter Canada had 41,797 gross (32,944 net) acres of land that is prospective for Bakken and Three Forks/Sanish oil in the Tableland field. The Enchant property consists of 10,720 acres. As of December 31, 2011, 48 wells (44.1 net) were producing on this acreage. As of December 31, 2011, the Company owned approximately 43% average interest in 15 fields located in the Williston Basin in North Dakota consisting of 151 wells, and approximately 15,000 gross (6,450 net) acres.

Appalachian Basin Properties

The properties acquired in the NGAS acquisition are held by its wholly owned subsidiary, Magnum Hunter Production, Inc. As of February 27, 2012, its Appalachian Basin properties included a total of approximately 484,412 gross (412,323 net) acres, located primarily in the Marcellus Shale, Utica Shale and southern Appalachian Basin. At December 31, 2011, proved reserves attributable to its Appalachian Basin properties were 29.9 million barrels of oil equivalent, of which 27% were oil and 59% were classified as proved developed producing, and 30.2 million barrels of oil equivalent. As of February 27, 2012, the Appalachian Basin properties included approximately 3,112 gross (2,257 net) productive wells, of which we operated approximately 88%.

As of February 27, 2012, it had approximately 58,426 net acres in the Marcellus Shale area of West Virginia and Ohio. The Company�� Marcellus Shale property is located principally in Tyler, Pleasants, Doddridge, Wetzel and Lewis Counties, West Virginia and in Washington, Monroe and Noble Counties, Ohio. As of February 27, 2012, the Company operated 33 vertical Marcellus Shale wells and 16 horizontal Marcellus Shale wells. As of February 27, 2012, approximately 63% of its leases in the Marcellus Shale area were held by production.

Other Properties

The Company�� East Chalkley field is located in Cameron Parish, Louisiana.! The fiel! d consists of approximately 714 gross acres (443 net acres). This developmental project is an exploitation of bypassed oil reserves remaining in a natural gas field located at depths between 9,300 and 9,400 feet. As of February 27, 2012, the Company operated the East Chalkley field and owned an approximately 62% working interest and an approximately 42.7% net revenue interest in the field. Other properties of the Company are located in Nacogdoches, Colorado, Lavaca, Bee, Fayette and Wharton Counties, Texas and Desoto Parish, Louisiana. As of February 27, 2012, these properties consisted of an aggregate of approximately 7,050 gross (1,188 net) acres.

Best Wireless Telecom Companies To Invest In 2014

In the following video, Motley Fool industrials analyst Blake Bos gives investors a little perspective on one of the often-ignored risks with Boeing (NYSE: BA  ) . He takes a look back to Lockheed Martin (NYSE: LMT  ) in the late sixties, and gives investors the cautionary tale of what happened to the company when one of its major suppliers, Rolls Royce, went into bankruptcy. Could Boeing be at risk for a similar supplier calamity?

Boeing operates as a major player in a multi-trillion-dollar market in which the opportunities and responsibilities are absolutely massive. However, emerging competitors, and the company's execution problems, have investors wondering whether Boeing will live up to its shareholder responsibilities. In our premium research report on the company, two of The Motley Fool's best minds on industrials have collaborated to provide investors with the key, must-know issues surrounding Boeing. They'll be updating the report as key news hits, so don't miss out -- simply click here now to claim your copy today.

Best Wireless Telecom Companies To Invest In 2014: Northern Spirit Resources Inc.(NS.V)

Northern Spirit Resources Inc., a junior oil and natural gas company, engages in the exploration and production of oil and gas properties in Canada. It holds interests in properties located in the Cadogan, Klein, Sounding Lake, and Veteran areas of Alberta; and the Hoosier area of Saskatchewan. The company is based in Calgary, Canada.

Best Wireless Telecom Companies To Invest In 2014: Integrated Silicon Solution Inc.(ISSI)

Integrated Silicon Solution, Inc., a fabless semiconductor company, designs and markets integrated circuits for digital consumer electronics, networking and telecommunications, mobile communications, automotive electronics, and industrial markets. Its primary products include low and medium density DRAM; and high speed and low power SRAM. The company?s low and medium density DRAM products are used in wireless local area networks (WLANs), base stations, networking switches and routers, fiber to the home (FTTH), DSL and cable modems, set top boxes, digital cameras, MP3, flat panel TVs, LCD TVs, HDTVs, video phones, Voice over Internet Protocol, printers, disk drives, tape drives, audio/video equipment, instrumentation, global positioning systems (GPS), telematics, infotainment, smart meters, and other applications. Its SRAM products are used in WLANs, cell phones, base stations, networking switches and routers, FTTH, DSL modems, LCD TVs, set-top boxes, GPS systems, instrumen tation, engine control systems, medical equipment, telematics, audio and video equipment, satellite radio, POS terminals, fax machines, copiers, tape drives, and other applications. Integrated Silicon Solution, Inc. also designs and markets application specific standard products, including high performance serial EEPROMs for use in TVs, networking systems, modems, telephone sets, security systems, video games, automobiles, and other consumer products; and SmartCards that have applications in transportation passes, payment cards, health care cards, and other cards that store secure data. The company markets and sells its products in Asia, the United States, and Europe through direct sales force, independent sales representatives, and distributors. Integrated Silicon Solution, Inc. was founded in 1988 and is headquartered in San Jose, California.

Advisors' Opinion:

• [By Arohan]

  ISSI is another memory chip designer and marketer. It is a fabless semiconductor company so it outsources its manufacturing. The market currently values the company at $283 million ascribing a PE ratio of 4.75. The company has delivered an EPS growth of 39% in the last 5 years and its future outlook appears to be of modest growth as well, with a slight decline in the up coming year. The company has $88 million in cash and no debt and is well positioned to handle the slowdown in demand next year.

Top 10 Tech Stocks To Own Right Now: Greenlight Capital Re Ltd.(GLRE)

Greenlight Capital Re, Ltd., through its subsidiaries, operates in the property and casualty reinsurance business in the United States, Europe, the Caribbean, and internationally. The company?s frequency business includes contracts containing smaller losses emanating from multiple events and enables the clients to increase their own underwriting capacity; and severity business consists of contracts with the potential for significant losses emanating from one event or multiple events. It offers personal and commercial property, general and marine liability, motor liability, motor physical damage, professional liability, financial, health, medical malpractice, and workers? compensation reinsurance products. Greenlight Capital Re, Ltd. sells its products primarily through reinsurance brokers. The company was founded in 2004 and is headquartered in Grand Cayman, the Cayman Islands.

Best Wireless Telecom Companies To Invest In 2014: Jubilee Gold Inc. (JUB.V)

Jubilee Gold Inc. operates as a mining company in Canada. The company engages in the identification, acquisition, evaluation, and exploration of gold properties in Ontario and New Brunswick. Jubilee Gold Inc. is based in Toronto, Canada.

Can Germany Stave Off Europe's Economic Crunch?

Europe's ongoing recession is doing no favors for investors in the region's largest and strongest economy, Germany. The DAX (DAXINDICES: ^DAX  ) stock index inched up by a few tenths of a percent this week and has made strong gains over the past month, but Germany's economy is hardly a standard-bearer even among its worse-off European peers. Is the German economy still safe for your investment, or it this traditional European leader starting to slow?

Population falling, unemployment rising
Germany faces a population problem. The country has Europe's lowest birth rate, with just 1.36 children born per women. As with other advanced economies facing the same dilemma, Germany's declining population will eventually lead to fewer taxpayers and productive workers to support an aging population. The population drop has come even faster than feared: German census results released this week showed that the country's citizenry declined by 1.5 million people more than assumed, reducing its population to just 80.2 million people from a projected 81.7 million.

Still, Germany's youth, while declining in numbers, are much better off than their fellow Europeans. The country's youth unemployment stands at just 8%, whereas the worst-hit European nations struggle with youth unemployment well into the double digits. In Spain, more than half the country's youth is unemployed. Yet even German unemployment has been rising recently, marking a fourth straight month of increases in May, when the nearly 3 million people out of work far surpassed estimates. Combined with declining retail sales in April, the trend marks an ominous sign that Europe's malaise is spreading into its bastion of economic strength.

Europe's economic woes have been hitting German companies hard. Sporting-goods and clothing company Adidas (NASDAQOTH: ADDYY  ) has grown its profit and margins recently, but the company's sales lagged in the first quarter, particularly in Western Europe, where revenue fell by 6%. This week, Adidas attempted to prop up its lagging Reebok division -- which the company purchased for $3.8 billion in 2006 -- by rebranding the segment with the symbol of its highly successful CrossFit program. There's no telling whether that's enough to turn around unprofitable Reebok and boost Adidas' margins further, but CrossFit has become a big success as a fitness program in Europe and the U.S.

Capitalizing on CrossFit's success will be vital for Adidas if it wants to catch up with rivals such as Nike (NYSE: NKE  ) . Nike has beaten Adidas by growing revenue despite slowing sales in China and even managing to grow brand sales in Europe last quarter. Continued economic recovery in the U.S. should help both firms, but unless China and Europe can turn things around, Adidas may not have enough firepower to close the gap with its American rival.

Deutsche Telekom (NASDAQOTH: DTEGY  ) has also been looking to expand geographically in order to cement growth. Germany's top telecommunications firm is reportedly looking to purchase competition in Eastern Europe. According to The Wall Street Journal, it seeks to acquire GTS Central Europe, a Warsaw-based network provider, for more than $775 million. Deutsche Telekom has targeted Eastern and Central Europe as a major focus despite the region's economic sluggishness, and acquiring GTS is a way to pick up a data network in the region as Eastern Europe develops.

How can you invest internationally?
Investors are hopeful that German stocks can beat Europe's blues, but you don't have to go globetrotting if you want to diversify your portfolio geographically. Profiting from our increasingly global economy can be as easy as investing in the U.S. of A. The Motley Fool's free report "3 American Companies Set to Dominate the World" shows you how. Click here to get your free copy before it's gone.

Even More Reasons to Buy Costco

It's been a good earnings season for the high-end brands. Michael Kors, Saks, and Tiffany have all made waves, managing to avoid the slowdown that came with cold weather in the beginning of the year. On the bulk side, it's been a different story. Wal-Mart (NYSE: WMT  ) and Target (NYSE: TGT  ) both failed to impress, with the companies blaming weather and tighter purse strings for their woes. Luckily, one brand rose above the chatter to make real progress -- unsurprisingly, it was Costco (NASDAQ: COST  ) . 

The retailer had a jump in comparable sales, a good push in membership fees, and beat analyst estimates for earnings per share. The real key is that second point -- growing its customer base. Because Costco relies on fee-paying customers, it has to keep growing that base and keeping the masses happy. So far, it's been a good year on all fronts.

Adding buyers to grow the business
Over the first two quarters this year, Costco grew its membership base by 1.6 million people. Through those quarters, North American members were renewing at a rate of almost 90%. That's one of the most important numbers in Costco's reporting, because it shows investors just how happy consumers are with this brand. 

Over the third quarter, fees from memberships rose 12%, which helped push overall earnings per share up from $0.88 a year ago to $1.04 this year -- analysts were looking for $1.03. The membership fees are like gold dust, for investors and the business. Not only do the fees renew at that 90% rate, they also have a low cost basis. Over the last quarter, that low cost helped Costco increase operating margin from 2.8% in fiscal 2012 to 3% this year.

The growth of membership is what has kept Costco out in front of Wal-Mart and Target. Both of those companies rely on two combining factors to grow their businesses. First, customers have to be price-conscious enough to want to shop at a discounter. Then, the companies have to be the best place for those buyers to shop. While Target has made strides with its in-house brands, it still relies on low prices to get the job done.

The beauty of membership
Costco's membership program sidesteps the second part of that equation. By making people pay for a membership, it becomes their default shopping location for many items. Even if it doesn't have the absolute lowest price, it doesn't matter because members are predisposed to shop there.

Costco's membership system basically takes advantage of our human nature to act irrationally in the face of sunk costs. We spend $100 on a pool membership and then berate ourselves every weekend that we don't go, even though no amount of going will get us $100 back. So, too, Costco members will buy from Costco even when it doesn't make the most sense, since they already put money into that darn membership.

In short, the growing membership base all but guarantees that Costco is going to be able to grow its revenue in future quarters. The business thrives on its members, and it treats them well. As the base continues to grow, investors can look forward to more strong earnings and more great news from Costco.

Costco's low prices haven't just benefited customers -- shareholders have walloped the market, returning 11,000% over the past two decades. However, with prices near all-time highs, is the ride over for Costco investors? To answer that and more, The Motley Fool's compiled a premium research report with in-depth analysis on Costco. Simply click here now to gain instant access to this valuable investor's resource.

This Year's Most Popular Trade Looks Ready to Blow Up

 It's time for our annual "dollar bashing."

 

It's not intentional... not really. It's not our fault that every year, right around this time, currency traders lose their minds. Then they lose their wallets.

 

It has become a Memorial Day tradition. This year, though, it comes with a twist...

 

 During each of the past three years, the most popular trade on the planet – going into Memorial Day weekend – was to be long the dollar and short the euro. Traders were betting on Europe falling apart. That seemed like an entirely reasonable conclusion at the time. After all, Greece was threatening to default on its debts. Spanish banks were on the brink of collapse. Italy, Ireland, and Portugal were all facing liquidity issues.

 

But the world has a habit of not coming to an end. And popular trades have a habit of blowing up.

 

Back in 2010, we warned you the long-dollar/short-euro trade was going to capsize. And it did. The dollar fell 10% in two months.

 

In 2011, the dollar rallied 5% going into Memorial Day weekend. It gave up all those gains just one month later.

 

Last year, we once again warned that the most popular trade on the planet was going to blow up. Sure enough, the dollar dropped 6% and hit a new low for the year by the end of the summer.

 

Today, the dollar index is trading at its highest level in three years. Currency traders don't seem to care about the Fed's constant money printing eroding the dollar's value. They're buying the buck anyway. And this year, they're selling the yen.

 

 The Japanese yen has fallen to its lowest level relative to the dollar in five years. Take a look...

 

 

In December, the Bank of Japan announced its own form of "quantitative easing" in an effort to reflate Japan's struggling economy. The move pushed Japan's stock market sharply higher over the past few months. But it has destroyed the yen.

 

The yen has fallen more than 20% in 2013. That's an enormous move for a currency. And currency traders are piling on. The most popular currency trade on the planet right now is to be long the dollar and short the yen.

 

Like the most popular trades for each of the past three years, this one is going to blow up. Take a look at this one-year chart of the yen/dollar exchange rate...

 

 

You can see the bullish falling-wedge pattern on the chart and the strong positive divergence on the MACD momentum indicator. If the yen can break the wedge to the upside and rally above 57, we could see a sharp and sudden rally that takes the yen up to 64 and maybe even as high as 72 over the next few months.

 

Currency traders on the wrong side of this move could get wiped out.

 

 So here's the bottom line...

 

Popular trades rarely work out. Over the past three years, currency traders have taken on huge positions being long the dollar and short the euro. And all those trades exploded on them.

 

This year, the most popular trade is to be long the dollar and short the yen. But we're entering a seasonal period of dollar weakness, and the chart of the yen has a bullish look to it.

 

This year's most popular trade looks ready to blow up, as well.

 

– Jeff Clark

Top International Stocks To Own For 2014

PepsiCo (NYSE: PEP  ) stock is already up more than 22% on the year. However, a potential merger between Mondelez International (NASDAQ: MDLZ  ) and Pepsi could send Pepsi stock into the stratosphere. As the world's largest snack-food company, Pepsi is finding new growth opportunities in emerging markets where snack-food consumption is just starting to take hold. Pepsi's strong position in the global snacks business has led to speculation that the company could make a bid for Mondelez.

As you may remember, Kraft Foods (NASDAQ: KRFT  ) spun off its North American grocery business last year and changed its name to Mondelez International. With billion-dollar brands under its belt including Oreo and Cadbury chocolate, joining forces with Pepsi could put both companies on the fast track to growth in emerging markets, such as China and India.

Top International Stocks To Own For 2014: BlackRock Inc (BLK)

BlackRock, Inc. (BlackRock) is an independent investment management firm. The Company provides a range of investment and risk management services. The Company serves its clients as a fiduciary, and derives all of its revenues from client business. It invests in capital markets globally. Its clients include taxable, tax-exempt and official institutions (including pension funds, endowments, insurance companies, corporations, financial institutions, central banks and sovereign wealth funds) as well as retail investors and high net worth individuals. Its product range includes single- and multi-asset class portfolios investing in equities, fixed income, alternatives and/or money market instruments. It offer its products directly and through intermediaries in a range of vehicles, including open-end and closed-end mutual funds, iShares exchange-traded funds (ETFs) and other exchange-traded products ( ETPs), collective investment funds and separate accounts. The Company also offers its BlackRock Solutions (BRS) investment systems, risk management and advisory services to institutional investors. In March 2012, it acquired Claymore Investments, Inc. from Guggenheim Partners, LLC.

Equity and Fixed Income

Equity and fixed income assets under management (AUM) include a range of active and passive strategies. Merger-related outflows in equities and fixed income, respectively, due to manager concentration.

Multi-Asset Class

BlackRock�� multi-asset class team manages a range of bespoke mandates. Investment solutions include a combination of long-only portfolios and alternative investments, as well as tactical asset allocation overlays. As of December 31, 2011, institutional investors represented 63% of multi-asset class AUM, while retail and high net worth investors accounted for 37%. Flows were almost evenly split as well. During the year ended December 31, 2011, with 55% of multi-asset class AUM managed for clients based in the Americas, 38% in Europe, the Mi! ddle East and Africa (EMEA) and 7% in Asia-Pacific. As of December 31, 2011, asset allocation and balanced products represented 56% of multi-asset class AUM. As of December 31, 2011, fiduciary management services accounted for 22% of multi-asset class AUM. As of December 31, 2011, target date and target risk funds is 22% of multi-asset class AUM.

Alternative Investments

As of December 31, 2011, the alternative investment client base was predominantly institutional, representing 73% of alternatives AUM with retail and high net worth investors comprising an additional 9% of AUM. As of December31, 2011, iShares consisted 18% of ending AUM. The geographic mix was well diversified, with 56% of AUM managed for clients in the Americas, 22% for clients in EMEA and 22% for clients in Asia-Pacific. The BlackRock Alternative Investors (BAI) group coordinates its alternative investment efforts, including product management, business development and client service. The products offered under the BAI umbrella are: core, which includes hedge funds, funds of funds and real estate offerings, and currency and commodities. Offerings include high yield debt and core, value-added and opportunistic equity portfolios. It also offers open-end hedge funds and similar products and closed-end funds. These products include a range of active and passive products managed through institutional separate accounts.

Cash Management and Securities Lending

Cash management products include taxable and tax-exempt money market funds and customized separate accounts. Portfolios may be denominated in the United States dollar, euro or pound sterling. As of December 31, 20110, its cash management clientele is institutional, with 84% of cash AUM managed for institutions and 16% for retail and high net worth investors. The investor base was also domestic, with 70% managed for investors in the Americas and 30% for clients in other regions, almost all EMEA-based.

Active Strategies

! The Company offers two types of active strategies: those that rely primarily on fundamental research and those that utilize primarily quantitative models to drive security selection and portfolio construction. As of December 31, 2011, active long-term AUM consisted of 23% equities, 52% fixed income, 18% multi-asset and 7% alternatives.

Active Equity

A range of products are offered, including global and regional portfolios; value, growth and core products; large, mid and small cap strategies, and selected sector funds. BlackRock manages active equity portfolios for a range of institutional and retail and high net worth investors globally. Approximately 48% of its active equity AUM was managed for investors based in the Americas, 38% in EMEA and 14% in Asia-Pacific.

Active Fixed Income

Fixed income mandates are tailored to client-specified liabilities, accounting, regulatory or rating agency requirements, or other investment policies. As of December 31, 2011, of BlackRock�� total active fixed income AUM, 81% was managed on behalf of institutional investors and 19% for retail and high net worth investors. The client base reflects 70% of active fixed income AUM managed for investors in the Americas, 21% for EMEA domiciled clients, and 9% for investors in the Asia-Pacific region.

Multi-Asset and Alternatives

During 2011, 97% of AUM in multi-asset class mandates, and 76% of AUM in alternative investments are managed in active strategies. As of December 31, 2011, equity products consisted 64% of institutional index AUM. Fixed income products represented 35% of institutional index AUM. Less than 1% of institutional index AUM is in alternatives or multi-asset class products.

iShares / ETPs

During 2011, the Company introduced 45 new ETPs, maintaining dual commitment innovation and responsible product structuring. Its product range offers investors the building blocks required to assemble diversified portfolio! s. As of ! December 31, 2011, its iShares product mix included 71%, in equity offerings, and 26%, in fixed income ETPs and 3%, in multi-asset class and alternative investments. In addition, the Company is an ETF manager in Mexico and has products in Chile, Peru, Brazil, Australia, Hong Kong and Japan. In addition, the Company is the ETP manager in Latin America.

BlackRock Solutions

BlackRock offers investment systems, risk management, outsourcing and advisory services under the BlackRock Solutions brand name. Its Aladdin operating platform serves as the investment system for BlackRock and institutional investors globally. BRS also offers comprehensive risk reporting through the Green Package and risk management advisory services, interactive fixed income analytics through its Web-based calculator, AnSer, middle and back office outsourcing services and investment accounting. Clients have also retained BRS��Financial Markets Advisory (FMA) group for a range of engagements, such as valuation and risk assessment of illiquid assets, portfolio restructuring, workouts and dispositions of distressed assets and financial and balance sheet strategies.

Transition Management Services

BlackRock also offers transition management services, involving the temporary oversight of a client�� assets as they transition from one manager to another or from one strategy to another. It provides service that includes project management and implementation based on achieving execution consistent with the client�� risk management tolerances. The average transition assignment is executed within three weeks. These portfolios are not included in AUM unless BlackRock has been retained to manage the assets after the transition phase.

Risk & Quantitative Analysis

Across all asset classes, the Risk & Quantitative Analysis (RQA) group at BlackRock provides risk management advice and independent risk oversight of the investment management processes, identifies and hel! ps manage! counterparty and operational risks, coordinates standards for firm wide investment performance measurement and determines risk management-related analytical and information requirements.

Advisors' Opinion:

• [By James K. Glassman]

  BlackRock (BLK) has a market capitalization of $35.82 billion. The company employs 10,400 people, generates revenue of $9.081 billion and has a net income of $2.339 billion. The firm’s earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $3.54 billion. The EBITDA margin is 39.02 percent (the operating margin is 35.78 percent and the net profit margin 25.76 percent). 
  
  Financial Analysis: The total debt represents 3.54 percent of the company’s assets and the total debt in relation to the equity amounts to 25.41 percent. Due to the financial situation, a return on equity of 9.05 percent was realized. Twelve trailing months earnings per share reached a value of $12.86. Last fiscal year, the company paid $5.50 in the form of dividends to shareholders. 
  
  Market Valuation: Here are the price ratios of the company: The P/E ratio is 15.96, the P/S ratio is 3.83 and the P/B ratio is finally 1.46. The dividend yield amounts to 2.92 percent and the beta ratio has a value of 1.49. 

• [By Louis Navellier]

  BlackRock (NYSE:BLK) is an independent investment management firm. In the last year, BLK stock is up 10%. BlackRock stock gets a “B” grade for the magnitude in which earnings projections have increased over the past months.

Top International Stocks To Own For 2014: Aberdeen International Inc (AAB.TO)

Aberdeen International Inc. operates as an investment and merchant banking company focusing on small capitalization companies in the resource sector. It intends to acquire equity participation in pre-IPO and early stage public resource companies with undeveloped or undervalued resources. The company also offers various merchant banking services, including short-term investments, bridge financing, and advisory works, as well as listing vehicles, such as shell companies. In addition, it invests in mineral properties, primarily gold. The company was formerly known as International Catalyst Ventures Inc. and changed its name to Aberdeen International Inc. in November 2001. Aberdeen International Inc. was incorporated in 1987 and is headquartered in Toronto, Canada.

5 Best Blue Chip Stocks To Invest In 2014: Pace Micro Technology(PIC.L)

Pace plc engages in the design, development, and distribution of technologies and products for managed subscription television, telephony, and broadband services. Its products portfolio includes digital satellite set-top boxes, high definition personal video recorders, digital cable set-top boxes, gateway devices, and MPEG set-top boxes. The company also offers component and service management systems; and software-based conditional access and DRM products. In addition, it provides engineering design and software applications to its set-top box and gateway customers, as well as offers related support services, including solution delivery, customer care centers, and consulting. The company operates primarily in the United Kingdom, Europe, Latin America, and North America. Pace plc was founded in 1982 and is headquartered in Saltaire, the United Kingdom.

Top International Stocks To Own For 2014: Office Depot Inc.(ODP)

Office Depot, Inc., together with its subsidiaries, supplies office products and services. Its North American Retail division sells an assortment of merchandise, such as general office supplies, computer supplies, business machines and related supplies, and office furniture under various labels, including Office Depot, Viking Office Products, Foray, Ativa, Break Escapes, Niceday, and Worklife through its chain of office supply stores. It also provides printing, reproduction, mailing, shipping, and other services, as well as personal computer support and network installation service. As of December 25, 2010, this division operated 1,147 office supply stores in the United States and Canada. The company?s North American Business Solutions division sells nationally branded and private brand office supplies, technology products, furniture, and services to small- to medium-sized customers through a dedicated sales force, catalogs, and Internet. Its International division sells o ffice products and services through direct mail catalogs, contract sales forces, Internet sites, and retail stores using a mix of company-owned operations, joint ventures, licensing and franchise agreements, alliances, and other arrangements. As of December 25, 2010, it sold its office products to customers in 53 countries in North America, Europe, Asia, and Latin America. This division operated, through wholly-owned or majority-owned entities, 97 retail stores in France, Hungary, South Korea, and Sweden; and participates under licensing and merchandise arrangements in South Korea, Thailand, India, Israel, Japan, and the Middle East. The company was founded in 1986 and is headquartered in Boca Raton, Florida.

Advisors' Opinion:

• [By Hilary Kramer]

  Another stock I like is Office Depot (NYSE:ODP), which is what I call a “Fallen Angel” stock in my book. The company is probably a familiar name to you, thanks to its sizable retail operations in the U.S.

• [By Robert Cotter]

  Office Depot, Inc. operates a chain of office product warehouse stores in North America, Europe, Asia and Central America. The Company sells branded merchandise and provides business services primarily to small and medium-sized businesses and the home office market.

  Office Depot (NYSE:ODP) has a potential upside of 85.3% based on a current price of $2.51 and analysts' consensus price target of $4.65. The stock should run into initial resistance at its 50-day moving average (MA) of $3.14 and subsequent resistance at its 200-day MA of $4.39.

Top International Stocks To Own For 2014: Hudson Investment Group Ltd (HGL.AX)

Hudson Investment Group Limited, through its subsidiaries, engages in the investment, development, and management of commercial properties in Australia and New Zealand. It also processes and distributes attapulgite, an industrial clay material used in the domestic and industrial absorbent, industrial oil refining, agricultural, and horticultural industries, as well as produces a range of consumer products, such as pet litter and clean-up products. In addition, the company is involved in the exploration and development of coal mining leases; and provision of corporate financial, and car parking services. Further, it invests in listed and unlisted shares and businesses. The company is headquartered in Sydney, Australia.

Can Canada Convince Its Oil Sands Critics?

Canada feels like it is getting picked on by Europe. This week, Canada's natural resources minister issued a warning to EU countries regarding their discriminatory treatment of Canadian oil sands. While Europe labeling oil sands as a "greenhouse gas intense oil source" might not hurt Canada's bottom line right now, the country is trying more to squash the bad rap Canadian oil sands have had lately. That very same label is one of the biggest reason people are blocking TransCanada's (NYSE: TRP  ) Keystone XL pipeline. 

Canada does have some reason to fight back because Europe is already importing other heavy crudes that Canada claims is just as greenhouse gas intense as oil sands. In this video, Fool.com contributor Tyler Crowe looks at the validity of Canada's claim and asks what oil sands can do to get things headed in the right direction.

So much of the sucess of the North American Energy boom hinges on adequate pipeline infrastrucutre to get product to makret, and Kinder Morgan is right in the center of it all. In The Motley Fool's premium research report on Kinder Morgan, we break down the company's growing opportunity – as well as the risks to watch out for – in order to uncover whether it's a buy or a sell. To determine whether this dividend giant is right for your portfolio, simply click here now to claim your copy of this invaluable investor's resource.

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More Expert Advice from The Motley Fool

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

Why the Dow Likes Bad Economic News

To any ordinary person, the recent movements in the stock market don't make much intuitive sense. Today, for instance, news that weekly jobless claims rose and revised U.S. GDP figures were weaker than expected would lead most non-investors to expect the stock market to decline. Yet in the upside-down world of Federal Reserve monetary policy, investors have taken bad news for the economy as good news for the markets, in the belief that a longer period of Fed intervention through quantitative easing and low interest rates will boost the stock market. At least for now, the Dow Jones Industrials (DJINDICES: ^DJI  ) are reflecting this recent trend, gaining 63 points by 10:45 a.m. EDT, marking a turnaround from yesterday's triple-digit losses. The broader market is also higher, showing that the phenomenon applies beyond the Dow.

When the Dow's movements don't make sense, it's more important to focus on fundamentals in your investing. For instance, Caterpillar (NYSE: CAT  ) has struggled recently because of its high exposure to the slowing Chinese economy, and that has held the stock back despite the Dow's record run. Yet with an attractive valuation of just 11 times trailing earnings, Caterpillar offers a margin of safety even if the reductions in future earnings estimates that we've seen recently continue. You'd have to see substantial further deterioration in the global economic environment before Caterpillar's stock would look expensive at these levels.

Tech stocks have also offered attractive values to investors willing to take on the risk of turnaround projects. Both Intel (NASDAQ: INTC  ) and Cisco Systems (NASDAQ: CSCO  ) trade at below-market multiples, in large part because of concerns about heightened competition among big tech companies and a transition toward broader offerings throughout the IT space, rather than niche segments of the market. Investors fear that Intel won't be able to diversify beyond its PC-chip dominance and that Cisco will lose its place atop the networking space while failing to get a foothold in broader IT services. Yet low valuations -- Intel and Cisco trade on respective P/Es of 12 and 13.5 -- discount their current business prospects far more than appears justified, even given concerns about low IT spending levels throughout the industry.

Beyond the fundamentals, though, news plays an important role in short-term stock movements. Outside the Dow, microturbine producer Capstone Turbine (NASDAQ: CPST  ) soared 8.8% after receiving its second large order in the past week. After getting word of a purchase from real-estate and investment firm Related Companies on Tuesday, Capstone got an order today from Southern California Gas to buy three of its C65 uninterruptible power-source units for use at the gas company's data center. Given the relatively small size of the business, which sports sales of only about $122 million over the past year, orders like this have a material effect on Capstone and also draw the attention of other prospective buyers.

The overall lesson, though, is not to let the Dow's Fed-affected moves confuse you. By keeping focused on the long run, you'll avoid drawing bad conclusions from the market's short-term jumps and plunges.

Once a highflying tech darling, Cisco is now on the radar of value-oriented dividend-lovers. Get the lowdown on the routing juggernaut in The Motley Fool's premium report. Click here now to get started.

Why Vector Group Is Poised to Underperform

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

With that in mind, let's take a closer look at Vector and see what CAPS investors are saying about the stock right now.

Vector facts

Headquarters (founded)	Miami, Fla. (1911)
Market Cap	$1.4 billion
Industry	Tobacco
Trailing-12-Month Revenue	$572.3 million
Management	CEO Howard Lorber CFO Bryant Kirkland
Return on Capital (average, past 3 years)	21.9%
Cash/Debt	$434.3 million / $645.6 million
Competitors	Lorillard Reynolds American

Sources: S&P Capital IQ and Motley Fool CAPS.

On CAPS, 9% of the 298 members who have rated Vector believe the stock will underperform the S&P 500 going forward.

Just last week, one of those Fools, All-Star NovaTodd, tapped Vector as a particularly unsustainable income opportunity:

This company has been paying out a dividend that exceeds free cash flow for five years now. There has also been a consistent trend of dilution that has been eroding existing shareholder's value. Herbert Stein's dictum that "if something cannot go on forever, it will stop" is probably relevant here. I'm betting on a dividend cut at some point which will likely send shares tumbling.

While you can certainly make quick gains in speculative high-yield stocks, the best investing approach is to choose great companies and stick with them for the long term. The Motley Fool's free report "3 Stocks That Will Help You Retire Rich" names stocks that could help you build long-term wealth and retire well, along with some winning wealth-building strategies that every investor should be aware of. Click here now to keep reading.

Don't Get Too Worked Up Over Kimball International's Latest Numbers

Here at The Motley Fool, I've long cautioned investors to keep a close eye on inventory levels. It's a part of my standard diligence when searching for the market's best stocks. I think a quarterly checkup can help you spot potential problems. For many companies, products that sit on the shelves too long can become big trouble. Stale inventory may be sold for lower prices, hurting profitability. In extreme cases, it may be written off completely and sent to the shredder.

Basic guidelines
In this series, I examine inventory using a simple rule of thumb: Inventory increases ought to roughly parallel revenue increases. If inventory bloats more quickly than sales grow, this might be a sign that expected sales haven't materialized. Is the current inventory situation at Kimball International (Nasdaq: KBAL.B  ) out of line? To figure that out, start by comparing the company's inventory growth to sales growth. How is Kimball International doing by this quick checkup? At first glance, pretty well. Trailing-12-month revenue increased 3.5%, and inventory increased 0.9%. Comparing the latest quarter to the prior-year quarter, the story looks decent. Revenue increased 6.0%, and inventory grew 0.9%. Over the sequential quarterly period, the trend looks healthy. Revenue grew 2.2%, and inventory dropped 6.6%.

Advanced inventory
I don't stop my checkup there, because the type of inventory can matter even more than the overall quantity. There's even one type of inventory bulge we sometimes like to see. You can check for it by examining the quarterly filings to evaluate the different kinds of inventory: raw materials, work-in-progress inventory, and finished goods. (Some companies report the first two types as a single category.)

A company ramping up for increased demand may increase raw materials and work-in-progress inventory at a faster rate when it expects robust future growth. As such, we might consider oversized growth in those categories to offer a clue to a brighter future, and a clue that most other investors will miss. We call it "positive inventory divergence."

On the other hand, if we see a big increase in finished goods, that often means product isn't moving as well as expected, and it's time to hunker down with the filings and conference calls to find out why.

What's going on with the inventory at Kimball International? I chart the details below for both quarterly and 12-month periods.

Source: S&P Capital IQ. Data is current as of latest fully reported quarter. Dollar amounts in millions. FY = fiscal year. TTM = trailing 12 months.

Source: S&P Capital IQ. Data is current as of latest fully reported quarter. Dollar amounts in millions. FQ = fiscal quarter.

Let's dig into the inventory specifics. On a trailing-12-month basis, finished goods inventory was the fastest-growing segment, up 20.6%. That can be a warning sign, so investors should check in with Kimball International's filings to make sure there's a good reason for packing the storeroom for this period. On a sequential-quarter basis, work-in-progress inventory was the fastest-growing segment, up 0.3%. Kimball International seems to be handling inventory well enough, but the individual segments don't provide a clear signal.

Foolish bottom line
When you're doing your research, remember that aggregate numbers such as inventory balances often mask situations that are more complex than they appear. Even the detailed numbers don't give us the final word. When in doubt, listen to the conference call, or contact investor relations. What at first looks like a problem may actually signal a stock that will provide great returns. And what might look hunky-dory at first glance could actually be warning you to cut your losses before the rest of the Street wises up.

Looking for alternatives to Kimball International? It takes more than great companies to build a fortune for the future. Learn the basic financial habits of millionaires next door and get focused stock ideas in our free report, "3 Stocks That Will Help You Retire Rich." Click here for instant access to this free report.

Add Kimball International  to My Watchlist.

Coke Stock Leads Dow’s 106-Point Decline

Why Perfect World Shares Found Their Happy Place

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Perfect World (NASDAQ: PWRD  ) , a China-based online video game developer, soared as much as 13% after the company reported better-than-expected first-quarter results.

So what: For the quarter, Perfect World reported a nearly 12% decline in year-over-year revenue to $100.6 million with adjusted EPS falling to $0.49. However, these results were considerably better than the $98.8 million in revenue and $0.47 in EPS that Wall Street was expecting. CEO Robert Xiao accepted that sales have recently been soft, but is keeping the company focused on its pipeline of upcoming games. Looking ahead, Perfect World forecast second-quarter revenue in a range of $105.6 million to $110.7 million, which is slightly higher than the $104.1 million consensus estimate.

Now what: Perfect World's results certainly speak to the uncertainty surrounding the gaming sector all over the world, but the thesis behind the run higher today makes sense. Much of the gaming console and content commoditization that we've witnessed in the U.S. just isn't mature enough to occur in China, leaving plenty of room for margin expansion for developers like Perfect World. In addition, the company is loaded with cash and it pays a handsome 3% yield. It could take time before the results turn markedly higher here, but the growing wealth of China's middle-class is certain to keep developers at Perfect World busy.

Craving more input? Start by adding Perfect World to your free and personalized watchlist so you can keep up on the latest news with the company.

Is this another "perfect" stock?
The Motley Fool's chief investment officer has selected his No. 1 stock for the next year. Find out which stock it is in the brand-new free report: "The Motley Fool's Top Stock for 2013." Just click here to access the report and find out the name of this under-the-radar company.

Should I Buy Smiths Group?

LONDON -- For a country that is said to have lost its industrial base, there are plenty of flourishing engineering companies in the FTSE 100, such as £5.2 billion Smiths Group  (LSE: SMIN  ) . This is more than an engineer, it's a global technology business whose five divisions cover everything from contraband detection to medical devices, energy and communications. Should I buy it?

Smiths Group has just published a market-pleasing interim management statement, showing rising underlying revenue across all five of its divisions in the nine months to May 4. Underlying headline operating profit also rose, as did headline operating margin, with the exception of Smiths Medical, where profits have been knocked by a new U.S. medical device tax, and substantial investment in sales and marketing.

Cautious investment
Investor enthusiasm has been tempered by recent management caution, which has been warning of tough trading conditions to come, and loss of revenues due to government spending cuts. Yet the share price has had a solid 12 months, rising 32% against 24% for the FTSE 100 as a whole. Over three years it has slightly underperformed, rising 28% against 32% for the index. Investors can't complain, but they won't be breaking out the bubbly either.

Smiths Group is bagging a steady supply of new contracts. Recent wins include a €17.8 million deal to supply Azerbaijan customs with high-energy cargo scanners, an order to supply 10 Spanish airports with 120 high-speed x-ray scanners, and a two-year contract to provide £18m of biological testing equipment to the Ministry of Defence. As with many FTSE stalwarts, it is making faster progress overseas, with emerging market sales recently rising 9% to represent 15% of group revenues. Management reckons it can deliver "significant opportunities to generate value for shareholders over the medium-term".

Go for growth
At £13.35 a share, Smiths Group is valued at 14.6 times earnings. Its 2.8% yield is below the FTSE 100 average of 3.4%, although it is covered 2.4 times, which gives scope for further progression. In March, management hiked the dividend 6% to 12.5 pence. Credit Suisse and JP Morgan Cazenove have just reiterated their respective outperform/overweight ratings with target prices of £14.20 and £15, which confirms my view that Smiths Group is a solid portfolio hold, if hardly a raging buy.

There are more exciting growth opportunities out there. Motley Fool analysts have found what they believe is the single best U.K. growth stock of this year. That's why they have named it Motley Fool's top growth stock of 2013. To find out more, download our free report. It won't cost you a penny, so click here now.

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Here's What David Einhorn Has Been Buying and Selling

Every quarter, many money managers have to disclose what they've bought and sold, via "13F" filings. Their latest moves can shine a bright light on smart stock picks.

Today, let's look at highly regarded value investor David Einhorn and Greenlight Capital, which he founded. Einhorn's investing success as well as his advocacy of financial transparency and accountability have attracted many fans. Although he isn't afraid to short stocks, he prefers going long, and looks for situations where he feels a stock is mispriced.

The company's reportable stock portfolio totaled $6.6 billion in value as of March 31, 2013.

Interesting developments
So what does Greenlight's latest quarterly 13F filing tell us? Here are a few interesting details:

The biggest new holdings are Oil States International and Hess (NYSE: HES  ) . Other new holdings of interest include Spirit AeroSystems (NYSE: SPR  ) . Hess has been transforming itself into a pure-play exploration and production company as its sheds its downstream operations (i.e., refineries, gas stations, etc.). It bungled things in the Eagle Ford shale region, though, managing to lose money where others are making it. Hess has also been a in a proxy fight with activist investment company Elliott Management, with an agreement reached just a few days ago that offers Elliott some seats on the board. Elliott had wanted to split the company in three. Meanwhile, some see Hess as a more attractive takeover target now.

Spirit AeroSystems, an offshoot of Boeing with strong ties to the plane maker as a supplier, has had its skeptics. That's partly due to its supplying parts for Boeing's 787, which has experienced a lot of turbulence coming out of the gate. There are reasons to be hopeful, though, such as its $36 billion backlog and first-quarter revenue and net income up 14% and 10%, respectively, over year-ago levels.

Greenlight Capital upped its stake in Apple and reduced its stake in companies such as Seagate Technology (NASDAQ: STX  ) and Computer Sciences (NYSE: CSC  ) . Seagate looks like a cheap stock, with its P/E ratio around 6.5. The hard-drive specialist has been whacked by the decline of the PC, but there's still hope, as cloud computing takes off and requires storage and if solid-state drives grow in demand. Seagate is optimistic about its high-capacity drives and is addressing the tablet market, too. It also offers 3.7% dividend yield, which it has been aggressively hiking while also buying back shares.

Information technology outsourcing and service provider CSC saw its shares dip recently, after delivering non-blowout quarterly results. Its future might be brighter than its present, though, as it shifts its focus toward more profitable software and service work. The company is under new management and has been turning itself around, with some seeing it as attractive now.

Finally, Greenlight's biggest closed positions included Ensco and Xerox (NYSE: XRX  ) . Xerox has been retooling itself, aiming for higher margins. It now gets about half its revenue from services instead of hardware, including some long-term government contracts. Xerox boosted its dividend by 35% earlier this year, signaling confidence from management.

We should never blindly copy any investor's moves, no matter how talented the investor. But it can be useful to keep an eye on what smart folks are doing. 13-F forms can be great places to find intriguing candidates for our portfolios.

While Seagate Technology pays a significant and growing dividend and seems able to generate the cash flow to support it, a global slowdown in demand for digital memory storage has begun to put pressure on margins. Is Seagate worthy of your investment consideration (and dollars)? The Motley Fool answers this question and more in our most in-depth Seagate research available for smart investors like you. Thousands have already claimed their own premium ticker coverage, and you can gain instant access to your own by clicking here now.

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

Dow Charges Higher on Economic Reports

Stocks took no time getting back to work after the long weekend today as the Dow Jones Industrial Average (DJINDICES: ^DJI  ) was flying out of the gate this morning. The blue chips were up more than 200 points before 10:30 a.m., but cooled off later in the day to finish up 106 points, or 0.7%. The gains were driven by two key pieces of economic data showing strong jumps and central banks in Europe and Japan indicating that lax monetary policies will remain in place. The gains were enough to give the Dow another all-time closing high.

Coming out before markets opened, the Case-Shiller 20-City Index showed the biggest gain in home prices in seven years, jumping 10.9% in March from a year ago, ahead of expectations of 10.2% gain. Though the news is two months old, it shows that the spring home-buying season has added further fuel to the housing recovery. Prices in the west including Phoenix, Las Vegas, and San Francisco grew the fastest.

Later in the morning, the consumer confidence report from the Conference Board showed an increase from 68.1 in April to 76.2 in May, easily topping projections of 72.5. The rating was the highest for the month of May since before the recession and its measurement of consumer attitudes hit its highest mark since February 2008.

Microsoft (NASDAQ: MSFT  ) was the biggest beneficiary of today's rally, finishing up 2.2%. The gains seemed to come from investment research firm CLSA raising its price target on the Windows maker and reiterating its outperform rating, saying that investor sentiment is finally recognizing Microsoft's opportunity in enterprise solutions and cloud computing. Separately, market research provider IDC said PC shipments would fall 7.8% this year, instead of the 1.3% it projected earlier. The company also said tablet sales will surpass those for laptops this year and PCs in general in 2015. The report would appear to be bad news for Microsoft, which is heavily dependent on PC's and showed up late to the tablet party.

Among the few stocks to miss today's rally were AT&T (NYSE: T  ) and Verizon (NYSE: VZ  ) , falling 1.6% and 1.1%, respectively. At least one analyst believes that Google (NASDAQ: GOOG  ) Fiber, a super high-speed network that the search giant is rolling out in three American cities as an alternative to traditional phone lines and cable could be a serious threat to the telecoms. Like many of Google's projects, the goal of Fiber is not fully clear, but long term it could disrupt the current broadband/cable paradigm. Among other packages, Google is offering free Internet with a $300 setup fee in those select cities.

It's been a frustrating path for Microsoft investors, who've watched the company fail to capitalize on the incredible growth in mobile over the past decade. However, with the release of its own tablet, along with the widely anticipated Windows 8 operating system, the company is looking to make a splash in this booming market. In a new premium report on Microsoft, a Motley Fool analyst explains that while the opportunity is huge, so are the challenges. The report includes regular updates as key events occur, so make sure to claim a copy of this report now by clicking here.

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More Expert Advice from The Motley Fool

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

Why CapLease Shares Soared

Best Managed Healthcare Companies To Watch For 2014

Home and small-business security company ADT (NYSE: ADT  ) debuted on the markets in October of last year as a spinoff of conglomerate Tyco. While spinoffs are often misunderstood or neglected investment opportunities, this one came out priced high and covered well, eliminating the opportunity for a value play. Since its IPO, the stock has only ticked up around 6% while sales and profits continue to rise. In the past quarter, the company added more than 300,000 new customers, with plenty of room to grow. It's no doubt that ADT is an industry leader, but is the stock still too expensive to warrant a buy?

Earnings recap
ADT brought in $821 million for the first quarter -- a hair under 2% growth over last year's number. As mentioned by management, overall sales growth has been limited since the company decided to switch over to completely ADT-owned systems. This helps the company protect its intellectual property, which is more important for long-term product sustainability than short-term revenue growth.

Best Managed Healthcare Companies To Watch For 2014: Diamond Hill Financial Trends Fund Inc.(DHFT)

Diamond Hill Financial Trends Fund, Inc. operates as a closed ended equity fund managed by Diamond Hill Capital Management, Inc. The fund invests in the public equity markets of the United States. It invests in stocks of all-cap companies. The fund invests in financial service sector, including banks, thrifts, finance companies, brokerage and advisory firms, real estate-related firms, insurance companies, and financial holding companies. The fund was formerly known as John Hancock Financial Trends Fund Inc. Diamond Hill Financial Trends Fund, Inc. was founded in 1989 and is based in the United States.

Best Managed Healthcare Companies To Watch For 2014: Renaissance Minerals Limited(RNS.AX)

Renaissance Minerals Limited operates as a gold exploration company in Australia. It primarily explores for gold, nickel sulphide, and copper-zinc deposits. The company principally holds interests in Cambodian Gold Project located in the eastern region of Cambodia; Eastern Goldfields Project located in Western Australia; and Quicksilver Project located in Alaska. Renaissance Minerals Limited was incorporated in 2009 and is based in Subiaco, Australia.

Top 5 Blue Chip Stocks To Buy Right Now: Safe Bulkers Inc(SB)

Safe Bulkers, Inc. provides marine drybulk transportation services worldwide. The company transports various bulk cargoes, primarily coal, grain, and iron ore. As of July 15, 2011, it had a fleet of 16 drybulk vessels, with an aggregate carrying capacity of 1,443,800 deadweight tons. The company?s fleet consists of Panamax, Kamsarmax, Post-Panamax, and Capesize class vessels, as well as 11 further contracted additional drybulk new build vessels to be delivered at various times through 2014. Safe Bulkers, Inc. was incorporated in 2007 and is based in Athens, Greece.

Advisors' Opinion:

• [By Beacon Equity]

  Safe Bulkers Inc. (NYSE: SB) is down 10.69% to $8.27 on above-average volume of 1.97 million shares. The drybulk shipping company has priced its public offering of 5 million shares of its common stock at $8.40 per share. (NYSE:SB), (SB)

Best Managed Healthcare Companies To Watch For 2014: Gildan Activewear Com Npv (GIL.TO)

Gildan Activewear Inc. engages in the manufacture and sale of apparel products primarily in the United States, Canada, and Europe. It sells T-shirts, fleece, and sport shirts to wholesale distributors under the Gildan brand name. The company also provides its activewear products for work and school uniforms and athletic team wear, and other purposes to convey individual, group, and team identity. In addition, it offers apparel, which includes socks, underwear, and activewear products primarily to U.S. retailers; and athletic, casual, and dress socks for U.S. retailers. Further, the company holds contractual licensing relationships for the Under Armour and New Balance brands for socks; and manufactures and distributes activewear products for consumer brands, including T-shirts and sport shirts under the Anvil brand. It markets its sock products under the various brands, including Gold Toe, PowerSox, SilverToe, Auro, All Pro, GT, and Gildan brands. The company was formerly k nown as Textiles Gildan Inc. and changed its name to Gildan Activewear Inc. in March 1995. Gildan Activewear Inc. was founded in 1984 and is headquartered in Montreal, Canada.

Best Managed Healthcare Companies To Watch For 2014: BGC Partners Inc.(BGCP)

BGC Partners, Inc. operates as a financial intermediary to the financial markets specializing in the brokering of various financial products. It provides electronic marketplaces, including government bond markets, spot foreign exchange, foreign exchange options, corporate bonds, and credit default swaps in various financial markets through its eSpeed- and BGC Trader- branded trading platform which can be accessed through its high speed data network, over the Internet, or third party communication networks. The company?s brokerage services include trade execution, broker-dealer services, clearing, processing, information, and other back office services, as well as cover various products, including fixed income securities, interest rate swaps, foreign exchange, equities, equity derivatives, credit derivatives, commodities, futures, and structured products. It also provides financial technology solutions, market data, and analytics related to financial instruments and markets . In addition, the company offers customized screen-based market solutions, which enables its clients to develop a marketplace, trade with their customers, issue debt, trade odd lots, access program trading interfaces, and access its network and intellectual property. Further, it licenses intellectual property portfolio and software solutions to various financial markets participants; and provides software development, software maintenance, customer support, infrastructure, and internal technology services to support electronic trading platforms. The company serves banks, broker-dealers, investment banks, trading firms, hedge funds, governments, investment firms, professional trading firms, futures commission merchants, and other professional market participants and financial institutions in the United States, the United Kingdom, France, Asia, Europe, Africa, the Middle East, and other Americas. The company was founded in 1999 and is based in New York, New York.

Best Managed Healthcare Companies To Watch For 2014: China Jo-Jo Drugstores Inc.(CJJD)

China Jo-Jo Drugstores, Inc. owns and operates a retail pharmacy chain in the People?s Republic of China. Its stores sell various medicinal products, including prescription and over-the-counter drugs, nutritional supplements, traditional Chinese medicine products, personal care products, family care products, and medical devices, as well as convenience products including consumable, seasonal, and promotional items. The company also has licensed doctors, who provide consultation, examination, and treatment of common ailments. In addition, its stores include medical clinics that offer urgent care, traditional Chinese medicines, and minor outpatient surgical treatments. The company operates a chain of approximately 55 drugstores under the Jiuzhou Grand Pharmacy Quannuo Grand Pharmacy, and Lydia Grand Pharmacy brand names. The company is headquartered in Hangzhou, the People?s Republic of China.

This Past Week's Big Dow Losers

Investors took a quiet ride this week, as the Dow Jones Industrial Average (DJINDICES: ^DJI  ) rose or fell nearly 100 points during intra-day trading before reversing course the past three days of the week. The roller coaster investors boarded start on Wednesday, with Federal Reserve Chairman Ben Bernanke testifying before Congress that the Fed's bond-buying program could end in the coming months -- and based on the central bank's meeting minutes, which were also released on Wednesday, it seems a number of Fed members think the quantitative easing programs should come to an end sooner rather than later.

This news sent shock waves throughout the markets as investors grappled with the thought that cheap money could soon be a thing of the past. Consequently, the Dow fell 51 points, or 0.33%, during the past five trading days, and now the blue-chip index sits at 15,303. The S&P 500 fared slightly worse, losing 0.99% last week, while the Nasdaq fell 1.13%. Twenty of the Dow's 30 components ended the week lower than were they began it.

Before we hit the Dow losers, let's look at the index's big winner of the week: Hewlett-Packard (NYSE: HPQ  ) . Shares of Meg Whitman's turnaround project rose 13.82% this past week after the company released quarterly earnings. The company beat expectations on both the top revenue line and the bottom profit line despite a 10% drop in sales. But the real reason shares popped is that Whitman is doing what she promised investors she'd do, which is turn the company around and make it less reliant on the PC industry. She told analysts that the company, which is about 18 months into its five-year turnaround plan, is a little ahead of schedule with that turnaround, and that was something investors loved hearing.  

The big losers
As we saw with Hewlett-Packard going from one of the worst performers two weeks ago to the best Dow component this past week, Cisco (NASDAQ: CSCO  ) did the opposite and went from the best performer two weeks ago, after gaining 14.88% in five days, to becoming one of the worst stocks this week, after losing 2.92%. The most likely cause for the decline is that short-term traders were selling shares after the big run-up last week. The stock is up only 19.88% year to date, so after it rose nearly 15% in one week, taking profits off the table seemed surely seemed like a good idea to a number of market participants. There was also a report this week in which a Zacks analyst questioned Cisco's growth prospects. It's believed that IT spending in general will slow in the coming months and that EMC will pose a threat to some of Cisco's business units.  

Shares of Verizon (NYSE: VZ  ) fell lower by 3.67% this past week, making it the worst Dow performer. The company is facing a number of headwinds, and this week it may have taken on a few more. The experts at TechHive rated Verizon's rival AT&T No. 1 for the second year in a row as having the fastest wireless LTE network. Even though Verizon can claim it has the largest network, most consumers live in major metropolitan areas that are covered by both AT&T and Verizon, so having the fastest network makes a big difference. Verizon continues to build out its network and will probably soon begin updating it to a faster speed, so investors shouldn't take this news as a reason to sell.  

And finally, just as insurance investors seemed to have overcome the negative pull of superstorm Sandy, the Midwest was hit with a tornado that devastated suburbs of Oklahoma City. The tornado is probably the reason shares of Travelers (NYSE: TRV  ) fel 3.35% this past week, making the company the second worst performing Dow component during the past five trading sessions. But while this storm will probably weigh on Travelers' bottom line, as we saw with Sandy and other storms, the company plans for these types of events and will end up probably performing better than most expect. Anyone investing in insurance companies should fully understand that these events will happen, and when they do, not to panic-sell, but hold firm and wait for better days.

A few other Dow losers this week:

Microsoft, down 1.72% Alcoa, down 1.51% Caterpillar, down 1.66% AT&T, down 1.84% Intel, down 0.58% United Technologies, down 2.37% Walt Disney, down 1.63% McDonald's, down 1.23%

More Foolish insight
The massive wave of mobile computing has done much to unseat the major players in the PC market, including venerable technology names like Hewlett-Packard. However, HP's rapidly shifting its strategy under the new leadership of CEO Meg Whitman. But does this make HP one of the least-appreciated turnaround stories on the market, or is this a minor blip on its road to irrelevance? The Motley Fool's technology analyst details exactly what investors need to know about HP in our new premium research report. Just click here now to get your copy today.

Why the Street Should Love Grupo Aeroportuario del Pacifico's Earnings

Although business headlines still tout earnings numbers, many investors have moved past net earnings as a measure of a company's economic output. That's because earnings are very often less trustworthy than cash flow, since earnings are more open to manipulation based on dubious judgment calls.

Earnings' unreliability is one of the reasons Foolish investors often flip straight past the income statement to check the cash flow statement. In general, by taking a close look at the cash moving in and out of the business, you can better understand whether the last batch of earnings brought money into the company, or merely disguised a cash gusher with a pretty headline.

Calling all cash flows
When you are trying to buy the market's best stocks, it's worth checking up on your companies' free cash flow once a quarter or so, to see whether it bears any relationship to the net income in the headlines. That's what we do with this series. Today, we're checking in on Grupo Aeroportuario del Pacifico (BMV: GAP B), whose recent revenue and earnings are plotted below.

Source: S&P Capital IQ. Data is current as of last fully reported fiscal quarter. Dollar values in millions. FCF = free cash flow. FY = fiscal year. TTM = trailing 12 months.

Over the past 12 months, Grupo Aeroportuario del Pacifico generated $150.9 million cash while it booked net income of $153.0 million. That means it turned 37.2% of its revenue into FCF. That sounds pretty impressive. However, FCF is less than net income. Ideally, we'd like to see the opposite.

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

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

So how does the cash flow at Grupo Aeroportuario del Pacifico look? Take a peek at the chart below, which flags questionable cash flow sources with a red bar.

Source: S&P Capital IQ. Data is current as of last fully reported fiscal quarter. Dollar values in millions. TTM = trailing 12 months.

When I say "questionable cash flow sources," I mean items such as changes in taxes payable, tax benefits from stock options, and asset sales, among others. That's not to say that companies booking these as sources of cash flow are weak, or are engaging in any sort of wrongdoing, or that everything that comes up questionable in my graph is automatically bad news. But whenever a company is getting more than, say, 10% of its cash from operations from these dubious sources, investors ought to make sure to refer to the filings and dig in.

With questionable cash flows amounting to only -4.5% of operating cash flow, Grupo Aeroportuario del Pacifico's cash flows look clean. Within the questionable cash flow figure plotted in the TTM period above, changes in taxes payable provided the biggest boost, at 2.5% of cash flow from operations. Overall, the biggest drag on FCF came from capital expenditures, which consumed 31.2% of cash from operations.

A Foolish final thought
Most investors don't keep tabs on their companies' cash flow. I think that's a mistake. If you take the time to read past the headlines and crack a filing now and then, you're in a much better position to spot potential trouble early. Better yet, you'll improve your odds of finding the underappreciated home-run stocks that provide the market's best returns.

Can your retirement portfolio provide you with enough income to last? You'll need more than Grupo Aeroportuario del Pacifico. Learn about crafting a smarter retirement plan in "The Shocking Can't-Miss Truth About Your Retirement." Click here for instant access to this free report.

We can help you keep tabs on your companies with My Watchlist, our free, personalized stock tracking service.

Add Grupo Aeroportuario del Pacifico to My Watchlist.

Tesla Continues to Shine: Is the Sky the Limit?

Electric-car pioneer Tesla Motors (NASDAQ: TSLA  ) reported stellar Q1 results on Wednesday afternoon, driving shares up as much as 29% in after-hours trade to a new all-time high above $70. As my Foolish colleague John Rosevear reported, Tesla managed to produce more than 5,000 cars in the quarter, though it only recognized 4,900 as revenue. This still allowed Tesla to post a $0.12 adjusted profit on revenue of $562 million. Both numbers easily beat expectations.

With Tesla stock surging ever higher -- based on the after-hours price it has doubled since I highlighted its good prospects in late February -- investors may naturally wonder if the market is getting ahead of itself. After all, nearly 50% of Tesla's publicly traded float had been sold short as of mid-April, suggesting that many people doubt the company's prospects. However, I believe that Tesla still has plenty of upside. The electric-car market is in its infancy, and Tesla is well-positioned to be the top player.

Model S demand is strong
One of the most encouraging pieces of information conveyed by Tesla's management in the quarterly shareholder letter was that the rate of Model S orders currently exceeds production capacity. Tesla raised its 2013 production guidance from 20,000 to 21,000, and it sounds like the company may want to ramp up production even further if recent demand trends continue.

The Tesla Model S (courtesy of Tesla)

Moreover, as Tesla cars are delivered in any particular market, orders increase there. This suggests that Tesla owners are recommending the car, and that people who see a Tesla Model S in action are more likely to go buy one subsequently. One of the biggest risks to the Tesla investment case is that the electric-car movement might just be a fad: i.e. a few "green" enthusiasts will pay up for one, but there is no lasting demand. Tesla's initial data seems to refute this notion.

The long-term thesis
Model S demand may be strong, but after Wednesday's after-hours surge, Tesla has an $8 billion market cap. Meanwhile, General Motors (NYSE: GM  ) , which -- along with its joint venture partners -- sold 9.3 million vehicles last year, is worth just $44 billion. Does Tesla, which has one relatively low-volume product, deserve to be in the same "market-cap league" as a global automaker like GM?

Based on Tesla's emerging dominance of the electric-car market, I think the answer is yes. In the U.S., the Model S is already outselling GM's Chevy Volt, Nissan's LEAF, and Toyota Motor's (NYSE: TM  ) Prius plug-in. Meanwhile, Tesla's fellow electric-car start-up, Fisker, is on the verge of liquidation.

Tesla already has an edge over its larger competitors in terms of electric powertrain and battery technology: that's why Toyota and Mercedes are paying to share that technology for their electric vehicles. Production of the Model S will allow Tesla to improve its operational expertise and pave the way for new models, potentially including a lower-cost (and higher-volume) car.

Tesla's growing network of Supercharger charging stations will provide another long-term competitive advantage. Toyota, GM, and others have largely shied away from fully electric vehicles, prioritizing plug-in hybrids instead, since they don't cause "range anxiety". However, this means that after a short drive in fully electric mode, you just have an overly expensive hybrid.

Tesla has taken a completely different approach. It has built several "Supercharger" stations in strategic locations on the east and west coasts where Tesla owners can "refuel" their cars relatively quickly -- and for free. As Tesla gains more scale and continues to roll out Supercharger stations, it could ensure that Tesla cars are the only fully electric vehicles that are viable for long-distance travel. That could give Tesla pricing power that one rarely sees in the auto industry.

Foolish conclusion
Tesla is leading the electric car revolution, while building a potentially durable moat through its proprietary powertrain technology and Supercharger network. If Tesla can follow through on its goal of making electric cars affordable for mainstream consumers, the company could gain a dominant share of a large addressable market. This suggests that Tesla will continue to be a long-term winner.

Near-faultless execution has led Tesla Motors to the brink of success, but the road ahead remains a hard one. Despite progress, a looming question remains: Will Tesla be able to fend off its big-name competitors? The Motley Fool answers this question and more in our most in-depth Tesla research available for smart investors like you. Thousands have already claimed their own premium ticker coverage, and you can gain instant access to your own by clicking here now.

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More Expert Advice from The Motley Fool

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3 Signs It Will Be Time To Buy This Well-Known Retailer

It's no secret that J.C. Penney (NYSE: JCP) has become a retail disaster over the past five years.

The top line has fallen each year since 2007, from sales of $19.9 billion to last year's $12.9 billion. Earnings have followed suit, slipping from 2007's profit of $1.15 billion to a net loss of $985 million in 2012.

 

In an attempt to stop the bleeding, J.C. Penney's biggest shareholder, billionaire hedge-fund manager Bill Ackman, was forced to abruptly remove CEO Ron Johnson from his post last month.

Few may disagree with the reason for the decision, and many would agree that making such a change in the midst of a mess is likely only to aggravate the retailer's woes and add to the list of reasons not to become a shareholder.

But sometimes the best time to step into a stock is when it's a train wreck. It can often be a headache, but when done right, the person brought in to clean up the mess can help investors make a lot of money.

To show you what I mean, take a look at what happened with Yahoo (Nasdaq: YHOO). StreetAuthority's Amy Calistri told her Stock of the Month readers that Yahoo was a "buy" back in August of last year, three weeks after Marissa Mayer took the reins of a company many thought was unsalvageable.

The stock's up about 50% since then and still going strong, largely on the heels of Mayer's focus on mobile and smarter acquisitions.

So what needs to happen at J.C. Penney to drive its stock to Yahoo-like success? Three things:

1. There can be no doubt as to the one thing Ron Johnson unwisely axed during his short tenure at J.C. Penney's, and the one thing Ullman needs to reinstate now: well-advertised, crystal-clear, theme-driven sales, complete with newspaper inserts and TV commercials. We've seen a glimpse of a return to this approach already, but consumers have yet to see the 590 promotions J.C. Penney was running each year before Johnson took over.

As insane as that frequency of sale-based advertising seems, especially at $2 million a pop, it was still more effective than Johnson's "everyday value" approach. It's effective because it's the approach the company had trained its best customers to respond to for decades. Old habits die hard, and new ones are tough to start.

2. Back to basics. The conversion of J.C. Penney stores into a "shop within a shop" venue had its merits, which Johnson was quick to tout. The shops' sales per square foot were phenomenal, hovering around $260 per year compared with an average of $134 per year for other areas of its stores. The math, however, never quite added up.

While the shops were doing well, overall sales were falling at double-digit rates; 2012's revenue was lower by 25%. Translation: Either the upside of the specialty shops was being overestimated, or the weakness from the rest of the store was being understated; it may have been a mixture of both.

Regardless, it's pretty clear that the focus on higher-profile brand names like Joe Fresh and Liz Claiborne was more than upending sales of basics like socks and underwear. Ullman needs to get that bread-and-butter business back.

3. While missions one and two are fairly specific, the third item on Ullman's agenda is a little more ambiguous, though still palpable. He needs to assure investors that the capitalization structure is stable.

Between significant credit-rating downgrades from Moody's and Standard & Poor's, a $1.75 billion senior secured loan from Goldman Sachs that's costing the company an extra $100 million each year, a capital expenditure plan that took $810 million out of the coffers last year (a plan that is likely to linger into 2013), and rumors of a strategic Chapter 11 bankruptcy filing, shareholders are understandably worried about being on the wrong end of a bad situation. Investors will need to trust that dilution -- or a total wipeout -- isn't on the table before the stock can really take flight.

Risks to consider: A failure to complete all three of these tasks could prove to be a drag on the stock, but the biggest threat posed to J.C. Penney shareholders remains the stores' performance. Rising sales could solve a lot of problems, and even if Ullman can cross these tasks off of his to-do list, it might all be for nothing unless it translates into measurable revenue growth within a couple of quarters.

Action to take --> For the time being, no action is needed other than observation. But if it soon becomes clear Ullman is taking care of these three particular issues, wading back into a J.C. Penney position could make good sense. It may feel a little uneasy to step in and try to catch a falling knife before the repair work is done. However, waiting until it's clear the company is back on track may mean a great deal of gains from the stock have been missed; the market has a way of handicapping the future pretty effectively. If you can find that sweet spot between the J.C. Penney's green shoots and it being in full bloom again, Yahoo-like upside in relatively short order isn't out of the question.

P.S. -- StreetAuthority's Amy Calistri has one objective for readers of Stock of the Month... to provide one quality stock pick each month, with in-depth analysis in plain English that investors can understand. In fact, she just released a special presentation, "How to Beat the Stock Market... In Just 12 Minutes per Month," which tells you more about her strategy. Go here to learn more.