3 Reasons It Could Be the Best or Worst Time for Housing

The housing story, by now, is old news. Two years ago, analysts were putting out reports that housing starts were at record lows and that, by logical measures and plain common sense, we were likely entering a housing boom. Whether you heeded the advice or not, it's clear that these reports were spot-on, if underplaying the start-and-stop nature of the industry. While the past is full of "I should have" and "if only," the only thing that matters is what you do now. There's still profit to be made from the housing market. Here are three facts that prove it.

1. Housing starts
Housing starts refers to, if you can imagine, the number of new homes being constructed in any given period of time. It's one of the key indicators of not only the housing industry, but also the health of the economy as a whole. Two years ago, there were reports that new housing starts were at 40-year lows, with some saying they were the lowest since we began keeping track.

That isn't the case anymore, but get this: Housing starts in February were up 27.7% from the prior year, according to Calculated Risk. While that is a substantial increase, the figure still puts us way below the historical 1.5 million (average from 1950-2000) and indicates a potential increase of 60% from February's 977,000.

2. Multi-family matter
Multi-family housing has shown the greatest growth of any segment, but some analysts and pundits are worried that regulators will nix the Low Income Housing Tax Credit -- a crucial federal program that helps lower families' rent burden by enabling developers to undergo projects that would be unprofitable without the credits. This regulatory risk is a possible reason that multi-family REITs haven't performed in line with the housing industry as a whole. REIT.com notes that the multi-family REIT sector has grown 3.9% so far this year -- well behind the 12.4% equity REITs on the whole have enjoyed. Decreasing the budget of the LIHTC or eliminating it would certainly cause a panic for multi-family developers, not to mention financially burdened families.

But even lawmakers in Washington can't ignore the rampant success of the LIHTC. In a research report from Cohn Reznick, we see that in the program's 25-plus-year history, it is enormously effective and efficient. Occupancy level in developments with LIHTC funding has averaged 96%. Considering turnover periods, that is essentially full capacity for coming up on three decades. Additionally, demand for these credits has consistently surpassed supply every year. This fact ensures that these tax dollars are used far more efficiently than most. Perhaps most importantly, from the government's standpoint, the program has a volume limit that allows for exact cost calculations. This is not an F-22 fighter jet runaway budget program.

3. Bargain hunting
In keeping with the theme from the last point, there are plenty of options for investors who may feel as if they are late to the game. Single-family developers such as Lennar (NYSE: LEN  ) and KB Homes (NYSE: KBH  ) have seen tremendous market gains in the past two years. The former's stock has appreciated nearly 120%, while the latter is up 90%. It is not to say that single-family developers will not perform in the coming months and years, but there may be greater opportunity with the lagging multi-family plays.

Take Camden Property Trust (NYSE: CPT  ) , for example. The stock is up around 16% over two years -- respectable, but incongruent with the industry trends. Since 2010, operating cash flow has increased more than 30%. The company pays a 3.5% dividend and trades at 16.5 times projected one-year earnings. For comparison, Lennar trades at 18 times earnings, while KB Homes trades at more than 20 times forward earnings.

There are plenty who say that multi-family rush is over for now, and that you've missed the opportunity. Even though developers are putting up new apartment buildings left and right, the market has yet to deem the space a growth area. This presents an interesting opportunity for those who still want a piece of the pie.

Community watch
You don't need to go on a multi-family REIT shopping spree, but take a closer look at these companies. They offer income for the dividend investor, and capital appreciation for those who believe the best is yet to come.

As always, keep an eye on the housing numbers as they come out, and remember that there is a gap between housing starts and completions -- this can manipulate month-to-month reports. For now, take comfort in knowing that there is still plenty of opportunity. You aren't too late.

More from The Motley Fool
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Is the iPad Mini About to Get a Price Cut?

The small-sized segment of the tablet market is where it's at. Growth of smaller tablets is expected to drive much of the gains in the broader market in the coming years, thanks in large part to the greater mobility that the form factor offers accompanied by attractive price points.

Apple's (NASDAQ: AAPL  ) foray downmarket with the iPad Mini is a testament to how powerful this trend will be, particularly after Amazon.com (NASDAQ: AMZN  ) and Google (NASDAQ: GOOG  ) proved that Steve Jobs was wrong when he said that 10-inch tablets are the perfect size. Even Microsoft (NASDAQ: MSFT  ) won't be able to ignore smaller tablets, and is likely preparing a 7-inch Surface as we speak.

The iPad Mini is perched at the high end of that market segment, though; its $329 starting price represents a significant premium to the $199 that buys you a Kindle Fire HD or Nexus 7.

The Mac maker has gotten aggressive in other parts of its business recently, dropping Retina MacBook Pro prices and making the iPhone 4 more affordable in emerging markets. Is the iPad Mini about to get a price cut?

Not exactly
KGI Securities analyst Ming-Chi Kuo thinks that Apple is preparing to roll out a more affordable iPad Mini model to fend off competition. This wouldn't necessarily be a price cut to the existing model, but rather a slightly modified variant. Kuo has made a name for himself within the Apple rumor mill thanks to being pretty accurate when it comes to supply chain rumblings.

The Retina iPad Mini is expected later this year, but Kuo believes Apple's still facing low yields on 7.9-inch Retina displays, which is why he thinks the company will release a lower-cost iPad Mini in the meantime. Apple could finagle lower component prices, use different production processes, remove the rear camera, or reduce storage capacity to achieve lower price points in the range of $199 to $249, according to Kuo.

Any such move wouldn't likely translate into major boosts in unit sales, but instead could defend market share from lower-cost rivals. Google's second-generation Nexus 7 is expected this summer, with a third-generation Kindle Fire due out shortly thereafter. Assuming rivals stand pat at $199, there's still a price umbrella under the iPad Mini.

It's highly debatable if Apple would release a low-cost iPad Mini. The company is typically hesitant to reduce prices just to grow market share, especially if it results in quality trade-offs. At the same time, it's still very like to release an affordable iPhone this year.

A cheaper iPad Mini could cause even more downward pressure on margins, as the iPad Mini already carries a lower gross margin. Kuo may have a strong track record, but I think he's wrong on this one.

While the tablet revolution is still in its infancy, there is still a debate raging as to whether Apple remains a buy. The Motley Fool's senior technology analyst and managing bureau chief, Eric Bleeker, is prepared to fill you in on reasons to buy and reasons to sell Apple, and what opportunities are left for the company (and your portfolio) going forward. To get instant access to his latest thinking on Apple, simply click here now.

The Single Biggest Risk at AIG

The 4 Favorite Stocks for Short-Sellers

Most investors own stocks in the hopes of seeing them rise in value over the years. But for short-sellers, betting against stocks is the name of the game, and profits come when share prices fall.

Short-selling has always had a somewhat questionable reputation among mainstream investors, with many companies prevailing on those negative attitudes to blame short-sellers for share-price declines. But often, short-sellers direct their efforts at companies that are fundamentally weak, and as a result, watching the short-interest figures that stock exchanges provide can clue you in to stocks that are especially risky or are facing major obstacles.

With that in mind, let's look at the four S&P 500 (SNPINDEX: ^GSPC  ) stocks that have the highest percentage of their available share-float sold short, according to the latest available figures from S&P Capital IQ.

J.C. Penney (NYSE: JCP  ) , short position: 55.5% of float and 25.6% of outstanding shares
This retailer's recent travails are well known, as J.C. Penney tried and failed to transform itself from a coupon-driven discount retailer to a more attractive destination for shoppers. With the Ron Johnson experiment having backfired, the company has recently started to move back toward its original focus, albeit trying to hang onto some of the progress it has made with store renovations and in-store specialty shops. Despite recent news that George Soros has taken a substantial position in the stock, short-sellers think that the retailer is doomed to eventual failure as its competitors have already taken advantage of its weakness.

GameStop (NYSE: GME  ) , short position: 38.1% of float and 37.2% of outstanding shares
GameStop has seen its stock rise sharply recently, hitting five-year highs as bullish investors look forward to a new wave of video game consoles expected to hit the market in the near future. Yet even though new consoles will drive sales for GameStop in the short run, short-sellers are focused on longer-term challenges to the retailer's business model. With increased digital distribution from gamemakers and other measures that make reselling old unwanted games more difficult, GameStop could lose a big portion of its used-game inventory, which is a major profit center for the company.

First Solar (NASDAQ: FSLR  ) , short position: 30.4% of float and 21% of outstanding shares
The solar industry has been hit hard by overcapacity, but First Solar shocked bears earlier this month with guidance on sales and earnings that was far above what industry analysts were expecting. Moreover, its purchase of TetraSun will help First Solar boost the efficiency of its solar modules, an area in which the company has long lagged some of its competitors. Short-sellers are feeling the squeeze as a result of much higher share prices recently, although the stock still trades well below its levels from early 2011. It'll be interesting to see whether they'll give in and cover their positions in light of the news.

U.S. Steel (NYSE: X  ) , short position: 29.4% of float and 29.3% of outstanding shares
The steel industry has struggled for a long time, and the continuing sluggishness in Chinese growth has led to major questions about how long investors may have to wait before demand for steel, along with the related commodities that go into producing it, starts to rise. Even with the shares at levels below their 2009 financial-crisis lows, U.S. Steel still has short-sellers believing the stock can fall lower still.

Don't sell yourself short
Just because these stocks have high short interest doesn't mean that you should sell them automatically. But short-sellers are focused on the risks involved with these companies, and you should be fully aware of those risks if you intend to own shares of their stock.

Investors and bystanders alike have been shocked by First Solar's precipitous drop since 2011, but with its most recent news, will First Solar's rebound continue? If you're looking for continuing updates and guidance on the company whenever news breaks, The Motley Fool has created a brand-new report that details every must know side of this stock. To get started, simply click here now.

Is Sysco's Stock Destined for Greatness?

Investors love stocks that consistently beat the Street without getting ahead of their fundamentals and risking a meltdown. The best stocks offer sustainable market-beating gains, with robust and improving financial metrics that support strong price growth. Does Sysco (NYSE: SYY  ) fit the bill? Let's take a look at what its recent results tell us about its potential for future gains.

What we're looking for
The graphs you're about to see tell Sysco's story, and we'll be grading the quality of that story in several ways:

Growth: Are profits, margins, and free cash flow all increasing? Valuation: Is share price growing in line with earnings per share? Opportunities: Is return on equity increasing while debt to equity declines? Dividends: Are dividends consistently growing in a sustainable way?

What the numbers tell you
Now, let's take a look at Sysco's key statistics:

Source: SYY Total Return Price data by YCharts.

Passing Criteria

3-Year* Change 

Grade

Revenue growth > 30%	21.4%	Fail
Improving profit margin	(32.2%)	Fail
Free cash flow growth > Net income growth	2% vs. (5.2%)	Pass
Improving EPS	(3.9%)	Fail
Stock growth (+ 15%) < EPS growth	37.6% vs. (3.9%)	Fail

Source: YCharts. * Period begins at end of Q4 2009.

Source: SYY Return on Equity data by YCharts.

Passing Criteria

3-Year* Change

Grade

Improving return on equity	(30.2%)	Fail
Declining debt to equity	0.5%	Fail
Dividend growth > 25%	12%	Fail
Free cash flow payout ratio < 50%	98.6%	Fail

Source: YCharts. * Period begins at end of Q4 2009.

How we got here and where we're going
Things do not look good for Sysco. The only metrics showing positive momentum are revenue and share price, but neither is good enough to earn a passing grade. Indeed, Sysco narrowly avoids a complete goose egg only because free cash flow hasn't fallen into negative territory -- but investors looking for stable dividends may be in for some frustration, as Sysco is effectively paying out all of its free cash flow as dividends right now. Has this food-service leader given up on future growth, or is this just a low period before the company starts moving again in the right direction?

Last year, my fellow Fool Sean Williams pointed out that Sysco should be able to outscale the problems of rising food costs that have plagued both farm providers and restaurant buyers. That hasn't necessarily been borne out, as you can see below:

Source: SYY Operating Margin TTM data by YCharts.

Sysco has avoided the margin compression suffered by chicken producers Tyson (NYSE: TSN  ) and Cal-Maine Foods (NASDAQ: CALM  ) and which was more deeply felt by smaller food-service operator Nash-Finch (NASDAQ: NAFC  ) . (It is omitted from this chart due to its drop into outright negative operating margin territory (a decline of roughly 250% in two years.) However, fellow food-service company United Natural Foods (NASDAQ: UNFI  ) has actually improved its margins, and restaurant chains both large and small (well, mid-size) have done an admirable job of holding the margin line in the face of rising input costs. So it appears that scale alone isn't enough to help Sysco outrun the rising costs of its products.

However, scale does appear to be enough to attract yield-hungry investors to the stock, which is now neck and neck with United Natural for two-year share-price growth, despite the fact that only one of the two (it's not Sysco) has enjoyed EPS growth to match over the same period. Investors may be considering Sysco's international expansion as the key to future gains, but margins need to grow again to show investors that they aren't pursuing a dividend bubble. Sysco's valuation is at the highest it's been in five years -- including pre-crisis levels -- which implies that future growth may be more muted than many would like.

Putting the pieces together
Today, Sysco has few of the qualities that make up a great stock, but no stock is truly perfect. Digging deeper can help you uncover the answers you need to make a great buy -- or to stay away from a stock that's going nowhere.

Solid companies selling at depressed prices have consistently helped generations of the world's most successful investors preserve capital, minimize risk, and achieve long-term, market-trampling returns. For one such company, read our free report: "The One REMARKABLE Stock to Own Now." Just click here to get started.

Keep track of Sysco by adding it to your free stock Watchlist.

Pfizer Stock Is All Grown Up

Pfizer (NYSE: PFE  )  stock surpassed $30 per share earlier this month. I remember when it was just a teenager.

It wasn't that long ago.

For most of 2011, Pfizer stock traded for less than $20 per share. Since then, it's up 40%, more than doubling the Dow. That's downright amazing for a large drugmaker with a market cap of nearly $24 billion.

Let's take a look at a few reasons for the increase.

It's a drugmaker
Or put another way, rising tides lift all boats.

Lately, investors have been willing to take on risk. Pfizer isn't as risky as a biotech -- the Nasdaq biotech index is up more than 70% since the beginning of 2012 -- but it still has some of the risks inherent with drug development.

Someone that was really good at timing the market -- do they exist? -- could make a bundle jumping into the biotech sector when the overall stock market was doing well and jump out when it was on the decline.

Pfizer stock offers something a little in between. It's not going to go on a massive run when things are hot, but it's a little recession-resistant and offers a cushion when the overall market heads south.

Rising dividends
All things being equal, a rising dividend should increase a share's stock price. If investors are happy with a certain dividend yield and the dividend goes up, investors should be willing to pay more for Pfizer shares to account for the higher dividend, thus bringing the dividend yield back down to the same level.

Since Pfizer cut its dividend after acquiring Wyeth, it's raised it four times from $0.64 annually to $0.96 annually. In addition to the sheer magnitude of the increase, multiple bumps of the dividend give investors confidence that Pfizer can continue the trend.

Even if Pfizer's shares don't increase, investors are getting paid more than 3% to hold Pfizer stock. That's considerably better than you could get in the bank, although owning shares is obviously riskier.

Correction
Perhaps the biggest input to Pfizer's run has nothing to do with what it's done or how the sector has performed, but how investors reacted in the lead up to the loss of exclusivity on Pfizer's top drug, Lipitor.

Investors could see Lipitor's patent expiration coming from miles away. Pfizer was in free fall from 2004 through 2009, culminating with the purchase of Wyeth. Investors were highly disappointed in how the pharma was spending its stockpile of cash. It's not like large acquisitions have been all that successful for Pfizer.

Investors were highly pessimistic about post-Lipitor Pfizer, but while revenue was down 10% from 2011 to 2012, adjusted earnings slipped just 4%.

It could have been a lot worse.

Good buy now?
Pfizer has guided for adjusted earnings per share between $2.20 and $2.30. At the midpoint, that's a P/E around 13, certainly not drop-dead cheap. The future of Pfizer stock will have a lot less to do with the industry, the dividend, or another correction, and more to do with upcoming and recently launched drugs.

Pfizer's blood thinner, Eliquis, was approved late last year. The drug, which Pfizer sells with Bristol-Myers Squibb (NYSE: BMY  ) , has multibillion-dollar potential because the current offering, warfarin, is difficult to use. While doctors are clamoring for a replacement, drugmakers developed three. In addition to Eliquis, there's also Johnson & Johnson's (NYSE: JNJ  ) Xarelto and Boehringer Ingelheim's Pradaxa. The blood thinner market is so large, I think there's plenty of room for all three.

That's true of rheumatoid arthritis, which has multiple blockbuster drugs serving patients. Pfizer's hoping that its oral medication, Xeljanz, can take down the current offerings, including Johnson & Johnson's Remicade, AbbVie's (NYSE: ABBV  ) Humira, and Enbrel, sold by Pfizer and Amgen (NASDAQ: AMGN  ) , which all have to be injected. It'll take awhile to capture sales from drugs that doctors are comfortable prescribing, but investors will be happy with just a fraction of the market -- Remicade topped $6 billion last year, Enbrel broke $4 billion, and Humira topped the list at $9.3 billion.

Neither Eliquis nor Xeljanz by itself will replace Lipitor. But it's a nice start to keep Pfizer stock rolling.

Another drugmaker looking to beat the patent cliff
This titan of the pharmaceutical industry stumbled into 2013 and continues to battle patent expirations and pipeline problems. Is Merck still a solid dividend play, or should investors be looking elsewhere? In a new premium research report on Merck, The Fool tackles all of the company's moving parts, its major market opportunities, and reasons to both buy and sell. To find out more click here to claim your copy today.

Sprint Gets SoftBank Permission to Explore DISH Bid

Does The Street Have United Online Figured Out?

United Online (Nasdaq: UNTD  ) is expected to report Q1 earnings on April 30. Here's what Wall Street wants to see:

The 10-second takeaway
Comparing the upcoming quarter to the prior-year quarter, average analyst estimates predict United Online's revenues will expand 0.5% and EPS will decrease -23.8%.

The average estimate for revenue is $243.4 million. On the bottom line, the average EPS estimate is $0.16.

Revenue details
Last quarter, United Online booked revenue of $219.0 million. GAAP reported sales were 0.5% higher than the prior-year quarter's $217.9 million.

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

EPS details
Last quarter, non-GAAP EPS came in at $0.14. GAAP EPS were -$0.15 for Q4 versus $0.14 per share for the prior-year quarter.

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

Recent performance
For the preceding quarter, gross margin was 45.8%, 400 basis points worse than the prior-year quarter. Operating margin was 5.8%, 730 basis points worse than the prior-year quarter. Net margin was -5.7%, much worse than the prior-year quarter.

Looking ahead

The full year's average estimate for revenue is $868.7 million. The average EPS estimate is $0.55.

Investor sentiment
The stock has a two-star rating (out of five) at Motley Fool CAPS, with 254 members out of 281 rating the stock outperform, and 27 members rating it underperform. Among 55 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 46 give United Online a green thumbs-up, and nine give it a red thumbs-down.

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on United Online is buy, with an average price target of $7.41.

Internet software and services are being consumed in radically different ways, on new and increasingly mobile devices. Is United Online on the right side of the revolution? Check out the changing landscape and meet the company that Motley Fool analysts expect to lead "The Next Trillion-dollar Revolution." Click here for instant access to this free report.

Add United Online to My Watchlist.

Is OSI Systems Good Enough for You?

Is Ford Turning Lincoln Around?

Lincoln's new MKZ Hybrid. Lincoln chief Jim Farley hinted on Wednesday that the hybrid version of the new sedan is selling better than expected. Photo credit: Ford Motor Company

Over the last few years, Ford's (NYSE: F  ) ability to execute its ambitious plans has been top-notch.

Near death just a few short years ago, the iconic automaker is now strong and profitable, with a big cash reserve to hedge against future downturns.

After years of being criticized for its small-car efforts, its compact Focus is now the world's best-seller. Its SUVs have been reborn as high-tech, fuel-efficient darlings of auto critics around the world. And its latest midsized sedan is good enough to finally have Toyota (NYSE: TM  ) worried.

Almost everything Ford has done recently has worked out well, often very well.

Everything, that is, except the revival of its old luxury brand, Lincoln. But that could be on the verge of changing.

Is a Lincoln revival finally taking hold?
Ford's global sales and marketing chief – and Lincoln's boss – Jim Farley hinted to reporters on Wednesday that sales of Lincoln's new MKZ might be on the verge of taking off. After a few months of un-Ford-like production glitches that slowed the new sedan's rollout, Farley said that the cars are finally reaching dealers' lots – and flying off of them.

Farley didn't give specific numbers, but he did say that "we should have a really great story to tell" when sales are reported after the end of the month. The MKZ is "turning very well", Farley said, referring to the time that cars are spending on dealers' lots before being sold, and he is "very happy" with sales results so far.

Farley said that the percentage of MKZ hybrids sold has exceeded his expectations, as has the new sedan's success in the coastal regions of the U.S., where Ford has historically lost ground to import brands.

Of course, one would expect Farley to present any news in the best possible light. But any success for the MKZ would represent a ray of hope for Lincoln. Recent news has been dismal: The new MKZ's sales through March were down almost 50% versus year-ago sales of the old model, presumably in part because of those production glitches, and Lincoln's overall sales are down about 24% so far in 2013.

A brand that has so far eluded Ford's turnaround magic
Lincoln has had an up-and-down history ever since Ford bought it way back in 1922. But lately, the trend has been more down than up: After Ford discontinued the airport-limo-favorite Lincoln Town Car a couple of years ago, critics began to wonder if there was any reason left for the brand to exist at all. A series of marketing and operational stumbles since then haven't helped.

But Ford sees a big reason to revive Lincoln, and it has a lot to do with the company's global ambitions. A successful luxury-car brand can deliver outsized profits, because luxury cars carry much better margins than mass-market vehicles.

Those profits get even better with the global scale available to a giant automaker, as parts that are invisible to most buyers can be shared with the automaker's more mundane models. Volkswagen (NASDAQOTH: VLKAY  ) is a great example of this: Its Audi brand accounts for only a small portion of its global sales, but delivers almost half of its profits.

A lot of that profit comes from China, where the luxury-car market is growing quickly. That example hasn't been lost on VW archrival General Motors (NYSE: GM  ) , which has put a huge effort into turning its Cadillac brand into a serious global contender – in part, to drive profit gains in China.

Ford seems set on following the same path, but so far, its old luxury brand hasn't made much noise. If that is indeed set to change soon, it will be very good news for the Blue Oval.

Worried about Ford?
If you're concerned that Ford's turnaround has run its course, relax – there's good reason to think that the Blue Oval still has big growth opportunities ahead. We've outlined those opportunities in detail, in the Fool's premium Ford research service. If you're looking for some freshly updated guidance to Ford's prospects in coming years, you've come to the right place – click here to get started now.

Can Marathon Petroleum Keep Its Profits Up?

On Tuesday, Marathon Petroleum (NYSE: MPC  ) will release its latest quarterly results. The key to making smart investment decisions on stocks reporting earnings is to anticipate how they'll do before they announce results, leaving you fully prepared to respond quickly to whatever inevitable surprises arise. That way, you'll be less likely to make an uninformed knee-jerk reaction to news that turns out to be exactly the wrong move.

Conditions in the refining industry have never been better, with a combination of factors bringing crude oil prices down while keeping gasoline and diesel prices high. Yet some storm clouds on the horizon could bring those favorable conditions to an end in the future. Let's take an early look at what's been happening with Marathon Petroleum over the past quarter and what we're likely to see in its quarterly report.

Stats on Marathon Petroleum

Analyst EPS Estimate	$2.16
Change From Year-Ago EPS	27%
Revenue Estimate	$19.8 billion
Change From Year-Ago Revenue	(2.3%)
Earnings Beats in Past 4 Quarters	4

Source: Yahoo! Finance.

How can Marathon Petroleum keep growing this quarter?
Analysts have boosted their earnings estimates on Marathon Petroleum sharply in recent months, with a $0.40 per share increase in their first-quarter estimates and a jump of more than $1 per share for their full-year 2013 calls. The stock is up 20% since late January, yet a 10% drop in the past month reflects more recent concerns going forward.

Marathon Petroleum has capitalized on the supply and demand disparities between U.S. producers and worldwide consumers of energy products. With high demand from resource-poor countries like Japan and South Korea as well as several Western European nations, Marathon, Valero (NYSE: VLO  ) , and Phillips 66 (NYSE: PSX  ) have all boosted their exports of refined products to more than half a million barrels at the end of 2012.

More recently, though, conditions for Marathon have gotten somewhat less favorable. The premium that energy companies have been willing to pay for Brent crude over U.S. oil has fallen recently, reducing the cost advantage that Marathon and its peers have over foreign refiners. On the regulatory front, Marathon has been buying up ethanol credits in an effort to forestall requirements to blend more ethanol into its gasoline, and proposed new EPA pollution-control regulations could cost Marathon and its peers huge amounts of money to make necessary improvements to facilities.

In Marathon's quarterly report, watch for how the refiner's relationship with spun-off midstream pipeline operator MPLX (NYSE: MPLX  ) is faring. With Marathon holding a majority stake in MPLX, its pipeline assets will play an increasingly important role in bringing midcontinent energy products to its refineries.

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Click here to add Marathon Petroleum to My Watchlist, which can find all of our Foolish analysis on it and all your other stocks.

Does Google Need to Change Its Business Plan?

At its very core, Google (NASDAQ: GOOG  ) is a search company. It has built several auxiliary businesses that are focused on augmenting the company's position in search, but all roads lead back to the search engine that has changed the way we communicate: To answer any question, "just Google it." Android may command a nearly 70% global smartphone market share, but the premise of Android is to drive Google's search business. The same can be said for Google's tablets, its cloud-based software applications, and every other pond in which the company plays.

The problem -- if you want to call it a problem yet -- is that the company is under attack from so many different angles that it may need to stop giving away so much good stuff in an effort to drive search. Android is the easiest place to see this phenomenon, as the company is seeing pressure from multiple directions pop up. The release of Facebook (NASDAQ: FB  ) Home has the potential to change the user experience of smartphones in general, but also to guide business from Google to Facebook. In addition, a new operating system originating in a collaboration among Samsung, Intel (NASDAQ: INTC  ) , and others will hit Android from another angle.

The Facebook Home problem
When Facebook Home was announced, CEO Mark Zuckerberg extolled the benefits of Android, explaining that without the totally open nature of the OS, Facebook would never have been able to release the new meta app. FB Home resides in the space between the OS and other apps, taking over, among other things, the home screen and lock screen. The user experience is completely transformed into a Facebook-driven one, but this has serious ramifications for Google.

Source: Facebook.

While Facebook Home doesn't currently include ads, with the real estate on the lock screen and home screen under the company's control, it is easy to see where they could be added. This has the potential to undermine Google's efforts in mobile advertising, but the issue runs deeper. As Facebook begins to dabble with its own search capabilities, by residing above the Android OS, it may have the power to disrupt users from turning to Google for their search needs. That is a problem.

Here comes Tizen
Near the end of the summer, Samsung is expected to roll out its first premium smartphone based on the new Tizen OS -- the native OS being developed with the help of Intel and several other Asian telecoms. Tizen is a reaction to the lack of popularity and functionality that Google commands in the Far East. Ever since the company pulled out of China, most wireless providers have opted to use Android but have cobbled together user interfaces that work in spite of Android, not in conjunction with it. Tizen is expected to improve the user experience and offer new functionality that Asian carriers can enhance, but it has the potential to deal Google a significant blow.

If it ain't broke ...
It is hard to imagine that Google would seriously alter the approach that has made it the veritable King of Tech, but the challengers aren't going to accept defeat and go away. The search-business plan has served Google extremely well and is deeply ingrained in its culture. Still, CEO Larry Page has made his focus on social media known to his employees and the world, and it should not be overlooked. This summer promises to be eventful as new challenges surface, and investors are well advised to remain vigilant.

Google is a great company, but once you're at the top, staying there is hard.

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2 New Dividend Payers That May Take Off

As a longtime follower of Amy Calistri's Daily Paycheck and Carla Pasternak's High-Yield Investing, I am well aware of the importance of dividend yield and reinvestment as the key to a successful retirement plan.

 

Dividend reinvestment can mean the difference between a comfortable retirement and a stressful one. Investing in companies with strong records of dividend increases and then reinvesting the proceeds is a surefire way to quickly build your portfolio.

Although more speculative than purchasing the proven dividend producers, I like to look off the beaten track for companies that have recently started paying dividends and have large cash reserves. In addition, the companies that catch my interest are either growing rapidly or are undergoing changes that may enable steady growth and increased dividend payouts over time.

With this in mind, here are two stocks that could soon turn into dividend machines.

Dunkin' Brands Group (Nasdaq: DNKN)
This company is famous for its Dunkin' Donuts and Baskin-Robbins franchises. In many areas of the U.S., Dunkin' Donuts rivals Starbucks (NYSE: SBUX) as the top coffee chain.

Founded in the 1950s, the company went public in 2011 at $19 a share. Shares have since doubled to a recent price near $40.

What I like most about Dunkin' Brands is its franchise-expansion method. This expansion tactic relies on the cash infusion of the individual franchisees to fuel growth. This means the company is able to return its excess cash to shareholders in the form a dividend rather than burning it in expansion efforts.

Dunkin' began paying a dividend last year and increased it by 27% in January. The dividend is currently 76 cents a share with a 2% yield. This may seem low, but profits are expected to increase by 15% during the next several years. The dividend is likely to increase along with profits. Technically, the company has been in a steady uptrend since mid-November.

Supported by the 50-day moving average, the stock has just tested support, bouncing higher. This creates a solid technical entry level with a 12-month target price of $43.

True Religion Apparel (Nasdaq: TRLG)
If you spend any time at your local mall, you are probably aware of True Religion jeans.

Having a cultlike following befitting its unusual name, True Religion operates 122 U.S. retail stores with a presence in 50 countries on six continents. Founded in 2002, the company has struggled recently to remain relevant in the face of heavy competition.

Last quarter, the company was able to squeeze out a 1.5% increase in comparable sales, but that came after a 4.7% drop in the previous quarter. Founder Jerry Lubell recently stepped down as CEO, providing the company a chance to re-evaluate its strategy.

I like that True Religion is forecasting 20% growth in international revenue and is planning to open 14 new international locations this year. Despite its struggles, the company boasts $200 million in cash and had sales of $467 million last year. This copious cash hoard equals $8.50 per share.

True Religion began paying a quarterly dividend of 2 cents a share in May 2012. If the new CEO can refocus the company on its roots in the moneymaking denim jeans market, and the international expansion turns out as expected, the dividend will have room to grow.

In addition, the company has begun a strategic review that includes a possible sale at up to $37 per share. Technically, the stock has hit resistance at $28. A breakout close above this level and a 12-month target price of $33 makes sense.

Risks to Consider: Even the most solid of companies can suffer from unexpected happenings. Dunkin' Brands is the less risky of the two companies. In contrast, the cultlike following of True Religion, combined with its management changes and possible buyout, makes it a tempting, if speculative, investment. Always use stops and position size properly when investing.

Action to Take --> I like Dunkin' Brands as a long-term hold. True Religion is a speculative play, suitable only for risk-embracing investors, but the jeans maker has major upside in terms of growth and dividends.

P.S. - Companies are able to pay dividends due to having excess cash to distribute to shareholders. In fact, corporate America is sitting on a $1.7 trillion "Dividend Vault" that has grown so large, companies will inevitably have to start paying this money to shareholders. To learn more about the "Dividend Vault" -- and how it just might save your retirement -- click here.

Google Launches Auto-Sync and Offline Files for Google Drive

Today, Google  (NASDAQ: GOOG  )  updated its online storage feature, called Google Drive, adding an auto sync feature for all documents, as well as the ability to view all documents when the user is offline.

Google Drive users can now view all of their Docs, Sheets, and Slides, as well as create and edit drawings even when users aren't connected to the Internet, according the company's Google+ page. There are a few requirements for using the new feature, including using Chrome OS or the Chrome browser, enabling offline mode in Google Drive, and having enough storage space on the device where the documents will be stored.

Google is rolling out the new feature over the next few days, so users already signed up for Google Drive offline mode should see the changes shortly. The company said users can get started with Google Drive offline mode by going to http://support.google.com/drive/bin/answer.py?hl=en&answer=2375012.

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Do You Believe In The 12 Rules Of Goldbuggery?

An investing mantra many equity investors live by is to "buy on the dip." It appears the same is true in the world of physical gold. As investors in gold futures and ETFs such as GLD and IAU seem to be tripping over themselves to get out of gold, demand for tangible gold is skyrocketing. A Reuters article from Friday morning highlights the rush across Asia to buy physical gold. In the United States, the Mint has already sold 153,000 ounces of gold coins in April, more than the combined totals from February and March. In fact, in the midst of the gold price collapse, on April 17, the United States Mint sold 63,000 ounces of gold. That one day total, by itself, eclipsed the 62,000 ounces of gold sold by the Mint in March.

In terms of silver, retail demand has also been quite remarkable, despite the breathtaking drop in price. If you want to purchase 1 ounce Silver American Eagles from APMEX (American Precious Metals Exchange), you'll have to wait a while or pay a hefty premium. Most of the years for which the 1 ounce Silver American Eagle exists are sold out. And for those years that are not sold out, you will pay premiums in excess of 25%. A 2007 Silver American Eagle, for example, has premiums as high as $8.49 over spot. That is a 36.55% markup based on the current silver price of $23.23. While there are other dealers offering prices a bit lower (the $28 per ounce region), the markups, on a percentage basis, are still quite steep.

I know there are those who get their physical gold exposure through GLD, IAU, or other exchange-traded products. In the world of silver, I know some investors buy SLV or SIVR for physical silver exposure. What the current spike in demand in the face of falling prices tells me is that the group of investors who believe you don't own physical gold and silver until you can hold it in your hand is alive and well. Instead of breaking the spirit of precious metals enthusiasts, the recent price drop seems to be viewed as a buying opportunity. I guess! someone forget to send these people a copy of Barry Ritholtz's "The Rules of Goldbuggery."

You may recognize Ritholtz's name from his appearances on CNBC and Bloomberg. If you would like to read a copy of his lengthy curriculum vitae, you can do so here. While I don't consider myself a gold bug, gold is one holding in my diversified portfolio. As a gold owner, I would like to take this opportunity to address Ritholtz's 12 rules of "Goldbuggery" from the perspective of one investor (myself) who is neither obsessed with gold nor full of the hatred toward gold that some seem to possess.

Ritholtz's twelve rules are in italics, followed by my comments:

1. Gold is a currency - In his comments supporting rule number one, Ritholtz says, "[Gold] is a permanent store of value." It appears to me that Ritholtz believes people who own gold view it both as a currency and as a store of value. That is not necessarily true. I, for example, do not own gold because I view it as an easy to use medium of exchange or because I want it to become the world's future medium of exchange. Instead, I view it solely as a store of value.

2. The price of gold cannot fall, it can only be manipulated lower - I recognize that the price of gold can both fall and be manipulated lower. Whether one or the other is happening at any given time is irrelevant to me. The price is what the price is. As I explained in "Gold's Epic Plunge Should Cause Reflection On Why You Own It," I find it important to have an appropriate balance of how much in precious metals I own relative to my entire portfolio. If you truly own gold as a store of value and you manage your liquidity in a way that does not require you to sell it, then the recent plunge in price should have no negative consequences for you. In fact, in the aforementioned article, I noted one positive that results from the recent declines: "My cash flow will improve as my storage costs, which represent a percentage of the total ! value of ! my precious metals holdings, will now decline."

3. If the price of gold is rising, it is doing so despite enormous and desperate efforts by manipulators to prevent the rise - See my comments in number two.

4. The world MUST return to the Gold Standard one day - I own both gold and silver, and I would much rather see a fiat currency system that was managed in a way in which I would feel as if I could own the fiat currency as a store of value rather than owning precious metals as stores of value. Unfortunately, such a system does not yet exist.

5. Central Bankers are printing money relentlessly, and this can only drive Gold prices higher - I disagree. If the massive amount of money being printed was actually getting into the hands of the majority of the world's citizens, rather than just into the hands of the financial sector and investors, I would venture to guess that gold's price would be heading much higher from here. Until everyday people start to get their hands on the trillions in fiat currency being electronically printed, then gold will likely fall in and out of favor with institutional investors (who have more influence on the price than do retail investors), as those institutional investors continually change their minds about whether high inflation is a near-term risk.

6. Gold works whether the economy is good or bad - In his comments supporting this rule, Ritholtz had this to say: "When we have a red hot economy, Gold is your hedge against inflation. When we have a bad economy, Gold is a safe harbor against collapse. It is a one way trade that never fails!" If you come across gold investors who think in that way, they have likely learned the tricks of the trade from equity investors. The die-hard, buy-and-hold-stocks-forever investors, more than any type of investor I have ever come across, are fabulous at playing the "good news is good news" and "bad news is good news" game. When I read Ritholtz's comments for rule number six, it imm! ediately ! reminded me of the comments we often hear from equity bulls regarding oil prices: If oil prices are declining, it is a tailwind for the consumer and good for stocks. If oil prices are rising, it is indicative of a strong economy and good for stocks. From my point of view, gold is a store of value. Whether the economy is good or bad, I don't care how gold's fiat currency price performs.

7. Gold will survive after the world economy crumbles - In the comments that followed this rule, Ritholtz poked fun at gold investors and mockingly called gold a "one way trade that never fails." I remain open to the possibility that should the current monetary system collapse, gold will, for some reason, not be convertible into whatever new fiat currency system comes into existence. There are risks to every investment one makes. Regarding that risk to gold, I have carefully considered it and decided the likelihood of that occurring is not enough to cause me to sell my gold.

8. Never admit that Gold is essentially a sucker's bet - To support rule number eight, Ritholtz said, "Never discuss how in the last century, gold has run up only be to trounced in repeated massive sell offs (always blame rule #2 for this). Do not discuss how this has happened in 1915-20, 1941, 1947, 1951-66, 1974-76 1981, 1983-85, 1987-2000 and 2008." His focus on gold's price performance over the decades tells me he does not view gold as a store of value, but rather as a financial asset that must generate a sufficient return in fiat currency terms. Owning something as a store of value has nothing to do with betting.

9. Gold is a rejection of government, and [its] control of fiat money and finance - In my opinion, gold is not a rejection of government and its control of fiat money. Instead, gold is a form of protection against the possibility that those who control the money supply mismanage their important responsibility.

10. All Gold discussions must contain ominous macro forecasts - Ritholtz supports thi! s rule wi! th the following comment: "Your description of why Gold is going higher must consist of spurious correlations, unprovable predictions, and a guarded expectation of bad things in the future." In a way, with just a few modifications, his comment reminds me of what some would claim equity analysts do (questionable correlations, unprovable predictions, and an eternally optimistic view of the future). I am a gold owner who prefers to remain neither hopelessly optimistic nor consistently pessimistic. Instead, I strive to be realistic.

11. Gold is always rallying in one currency or another - Who actually believes this?

12. China & India know the value of Gold; the Western world does not - Perhaps that is largely true. Although judging by the recent demand at the U.S. Mint and APMEX, it appears that some people in the West share China's and India's views on gold.

As a result of the recent price declines in gold and silver, they have become a very hot topic in the financial media. If you are someone considering a purchase of precious metals, be careful of the big premiums in silver. Additionally, remain aware that some commentaries (such as Ritholtz's) are seemingly more intent on capturing attention and arousing emotions than on helping you become a better investor.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. (More...)

Additional disclosure: I am long gold and silver

Evidence That the Economy Is Healing Barely Fuels Stocks

Blue-chip stocks are narrowly holding onto gains this afternoon following a big week for earnings, and a critical announcement about the health of the economy. With less than an hour left in the trading session, the Dow Jones Industrial Average (DJINDICES: ^DJI  ) is up by 10 points, or 0.07%.

Fueling the market today was an announcement from the Commerce Department that GDP grew by 2.5% in the first three months of the year. As my colleague John Divine discussed earlier this morning, the economy was aided by an uptick in personal consumption expenditures, which improved by 3.2% in the quarter. Growth was nevertheless weighed down by a decrease in government spending, which shrank by 8.4% over the same time period.

All in all, as the market's reaction demonstrates, the news was positive. It was a dramatic improvement, for instance, over the fourth quarter of last year, during which real GDP grew at an annual rate of only 0.4%. However, it's always important to remember that the first estimate of GDP is just that -- an estimate. To John's point, revisions typically differ from advance estimates by half a percentage point.

In terms of individual stocks, shares of Chevron (NYSE: CVX  ) are headed higher in afternoon trading after the oil giant reported first-quarter earnings (link opens PDF) before the bell. While the oil giant saw its revenue and net income decline by 6.4% and 4.5%, respectively, its earnings per share managed to come in ahead of estimates. For the three months ended March 31, the company earned $3.31 per share compared to the consensus estimate of $3.09 per share. Like ExxonMobil, which reported yesterday, Chevron's top and bottom lines were the latest victims of falling global oil prices.

Also headed higher today are shares of Boeing (NYSE: BA  ) , which are currently up by 1.4%. The move comes on the heels of Japan's announcement that the company's flagship 787 Dreamliner should soon be cleared to fly again, after its battery fix was approved by regulators in that country. On its conference call two days ago, Boeing's CEO expressed optimism that the problem will soon be in the rearview mirror, and that 787 deliveries will begin again in May.

Meanwhile, shares of Hewlett-Packard (NYSE: HPQ  ) are leading the Dow higher, up 3.1% at the time of writing. There doesn't seem to be any specific impetus for the move, and volume is in line with the average. Bloomberg News published an interesting article on the company this morning, noting that it published a list of the 195 smelters that supply materials for HP computers. As the news agency pointed, out, this is a rare occurrence given that the smelting stage is "where some of the most abhorrent labor violations and corrupt business activity can take place." To read more about this, click here.

Alternatively, shares of 3M (NYSE: MMM  ) continue to drag on the blue-chip index. The industrial conglomerate reported its earnings yesterday, sending shares in the company down nearly 3%. Like many of its peers on the Dow, 3M saw its revenue decline on a year-over-year basis, and felt compelled to lower its forward earnings guidance for the remainder of the year.

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The 3 Silliest Company Name Changes Ever

The best companies in the world invest huge amounts of money and energy into building name awareness. The right name can be worth tens of billions of dollars to a company, making it all the more important for companies to make the best choice.

Often, though, companies pick what seem on the surface to be ill-considered new names. Inspired by Thursday's announcement from Coinstar (NASDAQ: CSTR  ) to seek shareholder approval to change its name to Outerwall, here's a list of five company name changes that earned criticism and even outright mockery when they were first proposed.

2001: Altria
In late 2001, the company then known as Philip Morris made a proposal to change its name to Altria. The origin of the name was founded in the Latin word "altus," meaning "high," and was meant to associate the company with peak performance. The "tri" embedded in the name also emphasized the fact that the company at the time had three distinct divisions: domestic tobacco, international tobacco, and its Kraft Foods (NASDAQ: KRFT  ) beverage and food division.

Image copyright Altria Group.

The name change reflected the company's wish to have consumers and investors see beyond its tobacco business, which at the time was plagued by more substantial legal battles with billions in potential liability hanging in the balance. Shareholders approved the name change in 2002. The irony, of course, is that Altria has since spun off both Kraft and its Philip Morris International (NYSE: PM  ) global tobacco divisions, leaving Altria holding the old core Philip Morris USA division.

2011: Qwikster
Fortunately, this name change never actually took place, but for the short period that Netflix (NASDAQ: NFLX  ) considered it, Qwikster caused both an uproar among customers and a crisis of confidence for Netflix investors. The idea was to separate out Netflix's legacy DVD business from its faster-growing, higher-potential video streaming business and rename the DVD-delivery company Qwikster, with the streaming business keeping the Netflix name.

Image: Wikimedia Commons, photographed by user Coolcaesar.

But coming on the heels of a bungled rate-increase announcement that sent costs up as much as 60% for users who wanted to keep both services, the proposed Qwikster name became closely affiliated with the misstep. The stock also plunged, losing half its value -- more than $100 per share -- in less than a month from the time of the rate increase to the time Netflix backed away from the proposal.

2012: Mondelez International
Kraft has been associated with two different name-change controversies. Last year, the company broke into two parts, with its North American grocery division keeping the legacy Kraft name while its global snack-food business changed its name to Mondelez International (NASDAQ: MDLZ  ) . In explaining the change, the company said that Mondelez "is a newly coined word that evokes the idea of a world of 'delicious products.'"

The company helped come up with the idea by having an internal naming contest, in which more than 1,000 workers submitted ideas. Testing among groups of consumers didn't come up with any obvious negative associations, although some noted a similarity to a Russian word with undesirable associations.

Will Coinstar be No. 4?
Many investors have thought that Coinstar should change its name, but most expected Redbox to be the obvious choice for a new moniker, given the company's evolution beyond coin-counting to its DVD kiosks and its Redbox Instant streaming service. Coinstar CEO Scott Di Valerio said that Outerwall "unifies our growing portfolio of products and services under one name and reflects the company's ongoing commitment to think beyond the limits to make a better everyday possible for everyone." Whether shareholders end up agreeing at their annual meeting in June remains to be seen, but it's far from clear how the name reflects "future vision and limitless possibilities" -- and could end up leading to less brand-name awareness for the company.

For Netflix, avoiding the Qwikster quicksand was its first step in what has recently been a nearly full recovery for the stock. But can Netflix keep soaring? Find out in the Fool premium research report, where you'll learn about the key opportunities and risks facing the company, as well as reasons to buy or sell the stock. The report includes a full year of updates to cover critical new developments, so make sure to click here and claim a copy today.

Burger King has a Whopper of a Quarter as Earnings Double

Nick Ut/AP Burger King's first-quarter earnings more than doubled even though revenue fell, as the fast-food chain trimmed several restaurant-related expenses.

The Miami-based company had warned earlier this month that sales at established restaurants were expected to fall during the quarter, and they wound up declining 1.4 percent. That includes a 3 percent drop in the United States and Canada.

Burger King Worldwide Inc. (BKW) said Friday its net income rose to $35.8 million, or 10 cents a share, in the quarter that ended March 31. That's up from $14.3 million, or 4 cents a share, in the previous year's quarter when it was still private.

The company previously said adjusted earnings totaled 17 cents a share in the most recent quarter.

Revenue fell about 42 percent to $327.7 million. Analysts expected $305.8 million, according to FactSet.

Total restaurant expenses, which include things like food costs and payroll expenses, fell nearly 70 percent in the quarter to $108.1 million.

Burger King has been undergoing a revamp since it was purchased and taken private in 2010 by 3G Capital, a private investment firm run by Brazilian billionaires. The company has been selling more restaurants to franchisees, a move that lowers overhead costs. Instead of booking sales from those restaurants, that means Burger King would collect franchise fees instead.

In the first quarter, the company's restaurant revenues tumbled 69 percent to $121.1 million, but its franchise and property revenues rose 19 percent to $206.6 million.

Burger King's selling, general and administrative expenses also fell about 30 percent to $66.7 million in the quarter.

3G Capital also has slashed costs, signed international expansion deals and changed the U.S. menu to appeal to a wider audience. The moves came ahead of the company's return to public trading the New York Stock Exchange last June.

The company also is adjusting its strategy to focus on more menu deals, such as an offer for a $1.29 Jr. Whopper. McDonald's has been particularly aggressive in touting its Dollar Menu to boost traffic at a time when the restaurant industry is barely growing. Wendy's also revamped its value menu recently.

Burger King says its efforts to revamp the brand remain on track. But CEO Bernardo Hees, a 3G partner, is moving on later this year to head Heinz, another 3G investment. Chief Financial Officer Daniel Schwartz, also a 3G partner, will succeed Lees as CEO at Burger King.

Burger King shares finished at $18.06 on Thursday. They have traded between $12.91 to $20.20 since relisting.

Qualcomm the Bearer of Bad News for Apple and BlackBerry

When do record revenues, beating analyst earnings estimates, and generating a 35% jump in operating income result in a 5% drop in share price? The mobile industry's chipmaking and licensing leader Qualcomm (NASDAQ: QCOM  ) can tell you firsthand: Follow up positive financials with a distressing outlook for the established mobile-device market. Not good news for Qualcomm, but its high-end manufacturers, such as Apple (NASDAQ: AAPL  ) and BlackBerry (NASDAQ: BBRY  ) with its new Z10 and Q10 offerings, could really feel the pain.

Quarterly recap
Qualcomm's fiscal Q1 was impressive by most measures, compared with last year's Q1 and sequentially, its own forecasts for the quarter, and analyst expectations. As CEO Dr. Paul Jacobs put it, "We are pleased to announce record quarterly revenues." Jacobs also let investors know Qualcomm was pleased to raise its guidance for the balance of its fiscal year.

On a non-GAAP basis (less one-time expenses and/or income), Qualcomm really hit it out of the park, generating $2.2 billion in net income -- a 32% improvement over the year-ago period -- on a 29% jump in revenues. Qualcomm's free cash flow for the quarter was also up significantly -- 24% versus 2012 to $1.85 billion.

Then, Qualcomm let the other shoe drop.

Did I say that?
For Qualcomm -- and ultimately Apple, BlackBerry, and Nokia (NYSE: NOK  ) -- what should have been a red-letter day turned bad, primarily because of its projected shipments of 3G and 4G devices in 2013, and the increasing pricing pressures this year will bring. Qualcomm expects a 15% increase in handset and data device deliveries this year compared with 2012, which sounds great for the industry as a whole. But upon further review, the estimates are good for some, not so good for others.

Qualcomm is not alone in projecting continued growth in the mobile industry in 2013, a recent study by research firm IHS came up with the same conclusion. Unfortunately for Apple and BlackBerry, nearly all the estimated growth in mobile devices is likely to come from emerging markets. Of the 15% growth Qualcomm projects this year, 13% of it will happen in emerging regions including China and Latin America. Japan, Europe, and North America -- the primary targets of high-end phone manufacturers -- will see a paltry 2% improvement in device shipments this year compared with 2012.

The impact
Assuming Qualcomm's device delivery projections are correct, companies offering inexpensive phones -- global sales volume leaders Nokia and Samsung, for example -- will have an edge in these crucial markets. Nokia's latest entry in the mobile-phone sweepstakes is its Asha 210, designed and priced for emerging markets, with built-in social media features, a keyboard, and an estimated $72 cost, without a contract.

Both Apple and BlackBerry have hinted at introducing lower-cost phones, though don't expect either to offer anything close to the Nokia and Samsung alternatives. BlackBerry CEO Thorsten Heins addressed the question last month, making it clear he has no intention of entering the low-cost phone market, saying, "This is not BlackBerry." Heins went on to say that he is open to addressing pricing concerns with lower-cost devices, recognizing that high-growth areas like India simply aren't going to drop $800 on a Z10, but don't expect a $72 Asha 210-like phone from BlackBerry.

If the rumors are true, and they abound, Apple is walking the same path as BlackBerry: shunning the $99 phone concept, and instead opting for a happy medium between affordable and remaining on the middle to high end of the market.

The concern with inexpensive phones and devices -- and Apple's felt this acutely of late -- is maintaining decent margins selling less expensive units. BlackBerry's 40% operating margin noted in its recent earnings release was a highlight of its quarter. Striking a balance between limiting market share growth and maintaining margins is a conundrum to be sure, but one that needs to be addressed.

Qualcomm's estimates for mobile device shipments in 2013 means Apple and BlackBerry have some serious decisions to make: decisions Nokia's already made, and acted upon.

Nokia's struggled in a world of Apple and Android smartphone dominance. However, Nokia continues to focus on emerging markets and has banked its high-end smartphone future on the next generation of Windows phones. Motley Fool analyst Charly Travers has created a new premium report that digs into both the opportunities and risks facing Nokia to help investors decide if the company is a buy or sell. To get started, simply click here now.

Why Micrel Shares Jumped Temporarily

2 Big-Time Stocks Buy Into Natural Gas

There are many countries across the globe that utilize natural gas as transportation fuel. Argentina and Iran are among the world leaders. It is a trend that hasn't really picked up in the U.S. -- until now.

Natural gas is too cheap and too useful to ignore, and it is making inroads in the world of long-distance trucking. In this video, Fool.com contributor Aimee Duffy talks about the efforts of UPS (NYSE: UPS  ) and Wal-Mart (NYSE: WMT  )  to take advantage of this growing movement.

The movement toward alternative energy is gaining momentum. One potential opportunity in this field is Clean Energy Fuels, which focuses its natural gas efforts primarily on trucking and fleets. It's poised to make a big impact on an essential industry. Learn everything you need to know about Clean Energy Fuels in The Motley Fool's premium research report on the company. Just click here now to claim your copy today.

3 Highfliers Revisited: Where Are They Today?

One year ago last week, I wrote a comparative analysis of Google (NASDAQ: GOOG  ) , Apple (NASDAQ: AAPL  ) , and priceline.com (NASDAQ: PCLN  ) . I considered them to be "highfliers" because of their lofty stock prices, and I believe it timely and appropriate to revisit their performance over the past 12 months. After all, these companies provide a lot of cannon fodder for analysts and financial journalists alike, and lots of investors continue to revere them.

Google and Apple are also important because of their market capitalizations -- $263 billion and $368 billion, respectively -- and how they affects the companies' contribution to the performance of the S&P 500. My research has uncovered some surprising, if not startling, revelations about the long-term performance of the S&P 500 Index, and how some of the most favored companies in this index have actually underperformed. Anecdotal evidence suggests that the largest allocation in equity portfolios is the S&P 500, which has become a proxy for "the market." However, traditional indexes such as the S&P 500 have major flaws in their construction. For one thing, the indexes are market-cap weighted. By the time companies become large constituents of the index, they're often past their innovative and high-growth phases and more often than not act as a significant drag on performance. That's what has happened to both Google and Apple. Priceline has a market cap of "only" $34 billion, so its effect on the index is not as great.

According to Ned Davis Research, "popularity kills." Since 1972, the S&P 500 increased nearly 5,000%. Yet the top stock in the S&P 500 by market capitalization increased in value approximately 400%. With this in mind, let's see what I wrote last year:

Priceline's stock price increased 50.74% last quarter and currently sits around $755 a share. Similarly, Apple shares have increased 50.43% since the start of 2012 and are near $625 but off their recent high of $632. By contrast, Google shares have declined by 2.78% and are currently at $635 a share. ... The trend data reflects Priceline and Apple's significant price appreciations this year that have outpaced estimated growth rates ... We should expect the rate of price appreciation to abate.

Stock

Current Price / Level

April 2012 Price / Level

% Increase / Decrease

Market Cap

EQ Score

Priceline	$685	$755	(9.27%)	$34B	F
Apple	$393	$624	(37.01%)	$368B	B
Google	$800	$635	25.46%	$263B	D
S&P 500	1,555	1,370	13.50%	$13.28T	NA

Source: Yahoo! Finance.

Priceline's stock price declined 9.27%, but because its market cap is low relative to Apple or Google, its drop had less of an effect on the S&P 500's performance -- just -0.346%. By contrast, Apple's price decline had an exaggerated effect on the index's performance. Apple's market cap equals 27.7% of the index, so its negative 37% price decline lowered the index by 3.74%. Google, meanwhile, improved the index performance by 2.67%.

In the past, my research has incorporated a Motley Fool Earnings Quality score, or EQ, that taps into a database that ranks individual stocks. The database designates an "A" through "F" weekly ranking, based on price, cash flow, revenue, and relative strength, among other things. Stocks with poor earnings quality tend to underperform, so we look for trends that might predict future outcomes.

Google's EQ score last year at this time was "F," equivalent to a failing grade, but it improved recently to a "D." Apple improved from a "D" to a "B" during this time, and priceline.com has remained an "F." The model downgrades stocks that are overvalued relative to these metrics.

GOOG Gross Profit Margin Quarterly data by YCharts.

Google's chart doesn't reflect its most recent numbers, reported on April 18. However, the trends are apparent. The company's gross margin slipped from 65% to about 54%, and then back up to 60%, reflecting the increasing cost of goods sold. According to Capital IQ, the most recent gross margin came in at 57%. Revenue also declined last quarter to $13.21 billion but was reported at $13.97 billion for the latest quarter. The rising P/E ratio for the past 12 months of 24.42 reflects the stock price gains. According to Yahoo! Finance, this figure has increased slightly to 24.83.

AAPL Revenue Quarterly data by YCharts.

Apple reported its quarterly results April 23, but for investors with a long-term view, it shouldn't matter. Analysts expect Apple's revenue to be $42.59 billion, only an 8.7% improvement over last year. Earnings expectations of $10.07 a share will be less than in the same quarter a year ago. Apple's revenue and operating cash flow trend lines will probably remain sloping upward.

Foolish bottom line
Not many of us can withstand the precipitous price declines Apple and priceline.com have exhibited in recent months, yet we don't want to sit idly by while the major averages and indexes continue to rise. The point of this article, however, is that there are many companies in the S&P 500 with high-quality earnings that are positioned to help the index rise, and not drag it down. As always, Foolish readers should base investment decisions on earnings quality.

There's no doubt that Apple is at the center of technology's largest revolution ever and that longtime shareholders have been handsomely rewarded, with more than 1,000% gains. However, there is a debate raging as to whether Apple remains a buy. The Motley Fool's senior technology analyst and managing bureau chief, Eric Bleeker, is prepared to fill you in on both reasons to buy and reasons to sell Apple and what opportunities are left for the company (and your portfolio) going forward. To get instant access to his latest thinking on Apple, simply click here now.

Is HSBC Holdings an Exciting Emerging Market Play?

LONDON: Crippling austerity in Europe, and the prospect of fresh fiscal obstacles in the U.S. could put the brakes on growth rates in these regions. However, in developing geographies, a backdrop of accommodative central bank action, elevated commodity prices, and rising personal affluence levels have created an environment of exceptional commercial opportunity.

The divergence between the growth prospects of traditional and emerging markets is borne out by the International Monetary Fund's (IMF) latest growth projections, which expects developing nations and emerging markets to expand 5.3% and 5.7% in 2013 and 2014, respectively. By comparison, it anticipates that the U.S. economy will rise just 1.9% this year, and 3% in 2014, while eurozone GDP is forecast to dip 0.3% in 2013 before rebounding just 1.1% next year.

Bubbly activity in new geographies can create lucrative openings for many London-listed firms. Today, I'm looking at HSBC Holdings  (LSE: HSBA  ) (NYSE: HBC  )  and assessing whether their operations in these regions are likely to underpin solid earnings growth.

Asia-Pacific activity surges in 2012
Continued weakness in the bombed-out economies of Europe shoved groupwide pre-tax profit 6% lower, to $20.6bn last year, HSBC announced in March.

However, profits from key developing regions strode higher during the 12-month period. Profit before tax from Hong Kong rose 30% last year, to $7.6bn, while the rest of the Asia-Pacific territory recorded 40% profit growth to $10.4bn.

Combined, the whole Asia-Pacific region now accounts for almost nine-tenths of group profit, compared with around 60% in 2011. Meanwhile, activities in Latin America yielded pre-tax profits of $2.6bn, a 3% annual increase, although in the Middle East and North Africa, profit fell 10%, to $1.4bn.

But this pales in comparison to insipid performance in Europe, where operations slumped to a loss of $3.4bn in 2012 from profit of $4.7bn the previous year. Profit in North America also surged, to $2.3bn in 2012 from $100m, although this was due, in large part, to lower impairment charges.

HSBC expects surging economic growth in China to boost activity in 2013, as well as providing a shot in the arm from neighbouring countries, while it also anticipates growth in Latin America to gain traction as regional keystone Brazil picks up the pace. Although it expects the U.S. economic recovery to continue tentatively this year, political, economic, and regulatory woes in Europe are likely to weigh on operations there.

And recent data from the bank's divisions point to a continuation in its developing market growth story. Subsidiary The Saudi British Bank announced in mid-April that net profit rose 11%, to $253m in the first quarter. Customer deposits rose 9.4%, to $32.6bn, while loans and advances increased 11% to $27bn. Meanwhile, the bank's investment portfolio grew a massive 37.4%, to $8.6bn.

So is HSBC Holdings a buy?
Rocketing activity in emerging markets is expected to significantly boost revenues in coming years, and City analysts expect earnings-per-share growth of 31% and 12% in 2013 and 2014, respectively, to 64p and 71p. And a P/E reading of 10.9 and 9.8 for these years represents excellent value when viewed against a prospective earnings multiple of 12.7 for the whole banking sector.

Allied with an ultra-generous dividend policy -- brokers expect payouts of 33p in 2013, and 36.9p in 2014 to carry yields of 4.9% and 5.4%, respectively -- I believe that HSBC is a stunning stock market pick.

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What Wall Street Will Look Like in 50 Years

Fifty years ago, Goldman Sachs (NYSE: GS  ) was a partnership, most stock transactions occurred by face-to-face contact, and no one had ever heard of a credit default swap.

Wall Street changes, fast.

What will it look like 50 years from now?

That's anyone's guess, but I asked David Cowen, CEO of the Museum of American Finance and a financial historian, what he thought. Here's what he had to say (transcript follows):

Morgan Housel: As a historian who focuses on the past, what do you think Wall Street will look like, let's say, 50 years from now?

David Cowen: So, Morgan, you're asking me about my crystal ball and, as you allude to first, financial historians and economic historians look backwards first. There's a couple of sweeping trends: we alluded to one much earlier, which was the shift in paradigm to Asia, but I think the second one is the whole concept of Wall Street as a physical location. Right, it starts here: 1792 is one of the inaugural events, the Buttonwood Tree, and people have to come together at a physical space or add exchanges, and what we're seeing now is Wall Street is virtual. It's everywhere, and so the role of having to come to an actual physical place will be entirely, I believe, diminished, as we look forward.

More Expert Advice from The Motley Fool

With big finance firms still trading at deep discounts to their historic norms, investors everywhere are wondering if this is the new normal, or whether finance stocks are a screaming buy today. The answer depends on the company, so to help figure out whether Goldman Sachs is a buy today, I invite you to read our premium research report on the company today. Click here now for instant access!

A Contrarian Take on Junior Resource Stocks

 Things have gone from bad to worse in the junior resource stock sector...

 

Regular readers know we keep close tabs on the junior resource sector. It's one of the biggest "boom and bust" areas of the market. Get into the booms early and avoid the busts, and you can make a lot of money in these stocks.

 

We like to track the junior resource sector with the S&P/TSX Venture Index. You can think of it as the "Dow Industrials of small resource stocks." As you can see from the chart below, this index skyrocketed off its 2008-2009 crisis lows.

 

But since early 2011, it's been all bust... The index is down 62% from its 2011 high...

 

 

Any contrarian needs to have this sector on his radar. A bust this big always creates great values.

 

But make sure to note the far-right side of the chart. You'll see that the Venture Index just broke through to a fresh multiyear low. This sector is still a market in free fall. As the saying goes, it's dangerous to catch a falling knife.

 

Again, a massive decline like this always creates extremely negative sentiment and great bargains. But a speculative sector like junior resources can fall farther than anyone expects. That's why it makes sense to keep this sector on the radar... but wait until the market bottoms, and even shows signs of an uptrend, before committing big money.

 

 Speaking of resource stocks...

 

Many folks buy resource stocks and their underlying commodities with the idea that they are hedging themselves against inflation. And this strategy often works...

 

But you should also keep in mind that elite, blue-chip stocks are a terrific inflation hedge... probably even better than gold. Porter Stansberry has covered this idea here and here.

 

To show you how this idea is working, see our "performance chart" below. It plots the past four years' performance of blue chips Hershey (blue line) and Coca-Cola (red line) versus gold (gold line).

 

 

Once you account for dividends, Hershey has returned 168% in this time frame. Coke has returned 106%. Gold, which pays no dividends, is up 58%.

 

So, sure, gold has advanced as people have flocked to it as a store of wealth. But elite blue-chip stocks have done even better... with much less volatility.

 

– Brian Hunt

Today's 3 Best Stocks

It was a day of mixed emotions as a combination of earnings and economic data whipsawed the broad-based S&P 500 (SNPINDEX: ^GSPC  ) around the unchanged line for much of the trading day.

Apple (NASDAQ: AAPL  ) set the stage for the market and tech sector by reporting its second-quarter results last night. The bottom-line figure topped Wall Street's estimate as Apple delivered 37.4 million iPhones and 19.5 million iPads during the quarter and increased its cash balance to a monstrous $145 billion. Further, the company boosted its share repurchase authorizations by 500% and raised its quarterly payout 15%. Still, its conservative third-quarter forecast fell short of estimates once again and the Street seems generally unimpressed with a suddenly giving Apple.

On the economic front, durable goods orders for March dipped 5.7%, their worst drop in seven months according to the Commerce Department. Weak orders could be an indication that economic momentum is waning and, despite housing and labor market gains, the recovery may be slowing down.

All told, investors managed to buck the negativity (just barely) and focused on the fact that a majority of S&P 500 components have managed to top estimates thus far. On the day, the S&P 500 finished fractionally higher by 0.01 points (0.00%) to close at 1,578.79.

Leading the charge higher is solar panel specialist First Solar (NASDAQ: FSLR  ) , which advanced 11.8% after securing a deal to sell its 139MW Campo Verde solar farm to Southern Company and its partner Turner Renewable Energy. Utilities like Southern Co. are scrambling to incorporate renewable energies into their portfolio as the traditional costs of nuclear energy rise in price. First Solar continues to find itself in better shape each week as China's solar panel producers struggle under a molehill of debt, weak pricing, and U.S. tariffs on Chinese solar panels. With a treasure trove of backlogged deals, First Solar is realizing the benefits of producing highly efficient panels.

Independent oil and natural gas driller Newfield Exploration (NYSE: NFX  ) jumped 7.4% after its first-quarter profit results topped the Street's expectations. For the quarter, Newfield reported an adjusted profit of $0.45 as its domestic liquids production jumped 9%. Analysts had only been anticipating a $0.44 profit. Looking ahead, Newfield forecast a 12% quarter-over-quarter increase in domestic liquids production. With Newfield valued at only nine times forward earnings -- even though it does have quite a bit of natural gas in its asset portfolio (44%) -- it could be primed for further upside.

Finally, KFC and Taco Bell owner Yum! Brands (NYSE: YUM  ) advanced 7% following better-than-expected first-quarter earnings results. No one on Wall Street expected a great quarter to begin with from Yum! Brands given the avian flu scare in China and its previous ordeal concerning antibiotic levels in its chicken, but Yum! still delivered a much smaller profit decline than forecast. Same-store sales in China fell about 20%, yet the company still managed to deliver an adjusted profit of $0.70 per share, $0.10 ahead of estimates. In the U.S., it relied on 6% same-store sales growth at Taco Bell thanks to its expanded Doritos line of tacos. With the China scare likely a short-term growth inhibitor, Yum! looks poised to outperform over the long run.

Is the sun shining brightly on First Solar once again?
Investors and bystanders alike have been shocked by First Solar's precipitous drop over the past two years. The stakes have never been higher for the company: Is it done for good or ready for a rebound? If you're looking for continuing updates and guidance on the company whenever news breaks, The Motley Fool has created a brand-new report that details every must know side of this stock. To get started, simply click here now.

TD Bank Helps People Donate to Boston Marathon Victims

People in Massachusetts, Rhode Island, New Hampshire, Maine, and Connecticut can make donations to a fund to help victims of the Boston Marathon bombing and their families via TD Bank's (NYSE: TD  ) coin-counting machines.

All service fees will be waived for donations made through the bank's Penny Arcade through May 12, as part of TD Bank's "Coins for Caring" campaign. Customers and non-customers can take advantage of this giving mechanism. The money goes to The One Boston Fund. Donations can also be made at TD Bank locations that do not have Penny Arcades. Additionally, TD Bank donated $50,000 to The One Fund Boston independent of its "Coins for Caring" program.

The One Fund Boston was created by Massachusetts Gov. Deval Patrick and Boston Mayor Thomas Menino to provide aid to victims of the April 15bombing. According to reports, in its first week, the fund raised $20 million, including $5 million from individual donors.

TD Bank is based on Toronto, Canada, but has more than 1,300 locations along the East Coast of the U.S.

 

link

Manhattan Associates Beats Analyst Estimates on EPS

Manhattan Associates (Nasdaq: MANH  ) reported earnings on April 23. Here are the numbers you need to know.

The 10-second takeaway
For the quarter ended March 31 (Q1), Manhattan Associates met expectations on revenues and beat expectations on earnings per share.

Compared to the prior-year quarter, revenue grew. Non-GAAP earnings per share expanded significantly. GAAP earnings per share grew significantly.

Gross margins contracted, operating margins expanded, net margins grew.

Revenue details
Manhattan Associates tallied revenue of $96.6 million. The three analysts polled by S&P Capital IQ expected to see sales of $97.9 million on the same basis. GAAP reported sales were 5.6% higher than the prior-year quarter's $91.5 million.

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

EPS details
EPS came in at $0.74. The four earnings estimates compiled by S&P Capital IQ averaged $0.69 per share. Non-GAAP EPS of $0.74 for Q1 were 23% higher than the prior-year quarter's $0.60 per share. GAAP EPS of $0.68 for Q1 were 24% higher than the prior-year quarter's $0.55 per share.

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

Margin details
For the quarter, gross margin was 55.4%, 310 basis points worse than the prior-year quarter. Operating margin was 20.4%, 80 basis points better than the prior-year quarter. Net margin was 13.8%, 130 basis points better than the prior-year quarter. (Margins calculated in GAAP terms.)

Looking ahead
Next quarter's average estimate for revenue is $104.4 million. On the bottom line, the average EPS estimate is $0.83.

Next year's average estimate for revenue is $412.9 million. The average EPS estimate is $3.20.

Investor sentiment
The stock has a two-star rating (out of five) at Motley Fool CAPS, with 33 members out of 47 rating the stock outperform, and 14 members rating it underperform. Among 13 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 10 give Manhattan Associates a green thumbs-up, and three give it a red thumbs-down.

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Manhattan Associates is outperform, with an average price target of $65.50.

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Cree Beats on Revenue, Matches Expectations on EPS

Cree (Nasdaq: CREE  ) reported earnings on April 23. Here are the numbers you need to know.

The 10-second takeaway
For the quarter ended March 31 (Q3), Cree beat slightly on revenues and met expectations on earnings per share.

Compared to the prior-year quarter, revenue grew significantly. Non-GAAP earnings per share expanded significantly. GAAP earnings per share increased significantly.

Margins increased across the board.

Revenue details
Cree logged revenue of $348.9 million. The 25 analysts polled by S&P Capital IQ anticipated revenue of $343.6 million on the same basis. GAAP reported sales were 23% higher than the prior-year quarter's $284.8 million.

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

EPS details
EPS came in at $0.34. The 25 earnings estimates compiled by S&P Capital IQ averaged $0.34 per share. Non-GAAP EPS of $0.34 for Q3 were 70% higher than the prior-year quarter's $0.20 per share. GAAP EPS of $0.19 for Q3 were 138% higher than the prior-year quarter's $0.08 per share.

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

Margin details
For the quarter, gross margin was 38.1%, 320 basis points better than the prior-year quarter. Operating margin was 6.9%, 490 basis points better than the prior-year quarter. Net margin was 6.3%, 300 basis points better than the prior-year quarter. (Margins calculated in GAAP terms.)

Looking ahead
Next quarter's average estimate for revenue is $368.4 million. On the bottom line, the average EPS estimate is $0.37.

Next year's average estimate for revenue is $1.37 billion. The average EPS estimate is $1.28.

Investor sentiment
The stock has a three-star rating (out of five) at Motley Fool CAPS, with 1,092 members out of 1,182 rating the stock outperform, and 90 members rating it underperform. Among 219 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 201 give Cree a green thumbs-up, and 18 give it a red thumbs-down.

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Cree is outperform, with an average price target of $48.14.

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