Healthy-Food Stocks for Healthy Profits?

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

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

The Fresh Market (TFM)

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

United Foods International (UNFI)

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

By Greg Harmon of Dragonfly Capital

Top Blue Chip Stocks To Own Right Now

LONDON -- Ace City investor Neil Woodford, who manages more than 拢20 billion of investors' money, has thrashed the market over the last five, 10 and 15 years. And he has done it again this year.

The master investor's Edinburgh Investment Trust has just announced its annual results. The fund delivered a 20.1% return for shareholders over its latest financial year, compared with a 16.8% gain by the FTSE All-Share index.

Woodford told us that while the market as a whole is no longer as cheap as it was, "some high quality, dependable growth companies remain significantly undervalued." He added that he remains convinced by "their potential to deliver attractive positive returns over the medium/long term, regardless of the economic headwinds we expect to prevail."

Blue chip Imperial Tobacco (LSE: IMT  ) (NASDAQOTH: ITYBY  ) and midcap defense firm Chemring (LSE: CHG  ) are two companies in which Woodford sees significant value. I'll tell you what he has to say about them in a minute.

Top Blue Chip Stocks To Own Right Now: Visa Inc.(V)

Visa Inc., a payments technology company, engages in the operation of retail electronic payments network worldwide. It facilitates commerce through the transfer of value and information among financial institutions, merchants, consumers, businesses, and government entities. The company owns and operates VisaNet, a global processing platform that provides transaction processing services. It also offers a range of payments platforms, which enable credit, charge, deferred debit, debit, and prepaid payments, as well as cash access for consumers, businesses, and government entities. The company provides its payment platforms under the Visa, Visa Electron, PLUS, and Interlink brand names. In addition, it offers value-added services, including risk management, issuer processing, loyalty, dispute management, value-added information, and CyberSource-branded services. The company is headquartered in San Francisco, California.

Advisors' Opinion:

• [By Ed Carson]

  The holiday season was hit or miss for many retailers, but indicators are that consumers were using plastic. Visa shares have risen steadily for the past seven months, with a strong 6% gain so far in 2013. Even in America, consumers continue to shift more from cash and checks to credit and debit cards. Overseas, consumers are adopting plastic, while some are bypassing cards and going straight to mobile payments. Visa wants to make sure it's part of that mobile solution.

  Visa earnings growth has decelerated for the past two quarters from 30% to 24% to 21%. Revenue growth in the latest quarter picked up to 15%, matching the best gains of the past two years.

Top Blue Chip Stocks To Own Right Now: Apple Inc.(AAPL)

Apple Inc., together with subsidiaries, designs, manufactures, and markets personal computers, mobile communication and media devices, and portable digital music players, as well as sells related software, services, peripherals, networking solutions, and third-party digital content and applications worldwide. The company sells its products worldwide through its online stores, retail stores, direct sales force, third-party wholesalers, resellers, and value-added resellers. In addition, it sells third-party Mac, iPhone, iPad, and iPod compatible products, including application software, printers, storage devices, speakers, headphones, and other accessories and peripherals through its online and retail stores; and digital content and applications through the iTunes Store. The company sells its products to consumer, small and mid-sized business, education, enterprise, government, and creative markets. As of September 25, 2010, it had 317 retail stores, including 233 stores in the United States and 84 stores internationally. The company, formerly known as Apple Computer, Inc., was founded in 1976 and is headquartered in Cupertino, California.

Advisors' Opinion:

• [By Kevin M. O'Brien]

  Apple Inc. (AAPL) will reach $500.00/share at some point in 2012. I view Apple as trading at an extreme discount right now. I am expecting to see a run-up in price ahead of the company's next earnings call on January 17, 2012. I am also expecting that this earnings release is going to be absolutely fantastic. It would be a wise choice to block out all the negative rumors and sentiment surrounding Apple right now. This is a stock that is so attractively priced right now that it will not stay at this level for very long. Check back with me after January 17th next year.

• [By Michael]

  This is another technology stock with great potential.  With each new release of an iPhone or iPad device, the stock continues to climb.  They have the “wow” factor down and I don’t see this changing any time soon.  Their new server farm in Charlotte, NC just went online as iCloud.  I think this is going to make a huge long term difference.  But in the short term, you have very regular releases of new versions of their flashy devices.  As long as they keep that up, the stock will continue to rise.  Although Steve Jobs is no longer here with us, he probably left a road map for Apple to fol low for the next 3-5 years.  The question will be whether Tim Cook will be able to execute on those plans.

10 Best Stocks To Buy For 2014: Philip Morris International Inc(PM)

Philip Morris International Inc., through its subsidiaries, engages in the manufacture and sale of cigarettes and other tobacco products in markets outside of the United States. Its international product brand line comprises Marlboro, Merit, Parliament, Virginia Slims, L&M, Chesterfield, Bond Street, Lark, Muratti, Next, Philip Morris, and Red & White. The company also offers its products under the A Mild, Dji Sam Soe, and A Hijau in Indonesia; Diana in Italy; Optima and Apollo-Soyuz in the Russian Federation; Morven Gold in Pakistan; Boston in Colombia; Belmont, Canadian Classics, and Number 7 in Canada; Best and Classic in Serbia; f6 in Germany; Delicados in Mexico; Assos in Greece; and Petra in the Czech Republic and Slovakia. It operates primarily in the European Union, Eastern Europe, the Middle East, Africa, Asia, Canada, and Latin America. The company is based in New York, New York.

Advisors' Opinion:

• [By Fitz Gerald]

  Philip Morris International Inc. (NYSE: PM), through its subsidiaries, engages in the manufacture and sale of cigarettes and other tobacco products in markets outside of the United States. The company has raised dividends every year since it was spun-off from Altria (MO) in 2008 and yields 3.70%.

• [By Stephen]

  Philip Morris (PM, $75.92). Cigarette maker has strong free cash flow, pricing power, a yield of roughly 4% plus dividend growth. Share bu ybacks a plus.

• [By Louis Navellier]

  Philip Morris International (NYSE:PM) is involved with the manufacture and sale of cigarettes and other tobacco products in over 180 countries across the globe. Year to date, PM stock is up 16%, compared to a loss of nearly 2% for the Dow Jones.

• [By Michael Brush]

  Philip Morris International (PM) has a dividend yield of 3.7%.

  This company is the world's second-biggest cigarette seller, after China National Tobacco. Philip Morris International controls the rights outside the United States to such brands as Marlboro, Virginia Slims and Parliament. So it's positioned to sell more cigarettes as smokers in rapid-growth emerging markets earn more and trade up to premium brands.
  

   

  Insiders continue to buy the stock, suggesting room for further appreciation. And, of course, tobacco's addictive nature assures steady revenue. If you oppose smoking for moral, health or other reasons, this stock is not for you. As an ex-smoker, I'd understand.

Top Blue Chip Stocks To Own Right Now: McDonald's Corporation(MCD)

McDonald?s Corporation, together with its subsidiaries, operates as a worldwide foodservice retailer. It franchises and operates McDonald?s restaurants that offer various food items, soft drinks, coffee, and other beverages. As of December 31, 2009, the company operated 32,478 restaurants in 117 countries, of which 26,216 were operated by franchisees; and 6,262 were operated by the company. McDonald?s Corporation was founded in 1948 and is based in Oak Brook, Illinois.

Advisors' Opinion:

• [By JON C. OGG]

  McDonald’s Corporation (NYSE: MCD) is at $85.08 and analysts have a consensus price target objective of $97.68.  It carries a 2.9% dividend yield and the stock is down 5% from its 52-week high.  McDonald’s trades at close to 6-times book value, but its return on equity is 37%.  S&P carries an “A” local long-term rating on the Golden Arches.  In the “you gotta eat somewhere” theory, McDonald’s seems to keep winning over and over and its shares and same-store sales keep rising handily.

• [By ETF_Authority]

  McDonald’s Corporation (MCD), together with its subsidiaries, operates as a foodservice retailer worldwide. The company has raised distributions for 35 years in a row. The 10 year annual dividend growth rate is 26.50%/year. The last dividend increase was 14.75% to 70 cents/share. Analysts are expecting that McDonald's will earn $5.73/share in 2012. I expect that the quarterly dividend will reach 77 cents/share in 2012. Yield: 2.80%

Top Blue Chip Stocks To Own Right Now: Chevron Corporation(CVX)

Chevron Corporation, through its subsidiaries, engages in petroleum, chemicals, mining, power generation, and energy operations worldwide. It operates in two segments, Upstream and Downstream. The Upstream segment involves in the exploration, development, and production of crude oil and natural gas; processing, liquefaction, transportation, and regasification associated with liquefied natural gas; transportation of crude oil through pipelines; and transportation, storage, and marketing of natural gas, as well as holds interest in a gas-to-liquids project. The Downstream segment engages in the refining of crude oil into petroleum products; marketing of crude oil and refined products primarily under the Chevron, Texaco, and Caltex brand names; transportation of crude oil and refined products by pipeline, marine vessel, motor equipment, and rail car; and manufacture and marketing of commodity petrochemicals, plastics for industrial uses, and fuel and lubricant additives. It a lso produces and markets coal and molybdenum; and holds interests in 13 power assets with a total operating capacity of approximately 3,100 megawatts, as well as involves in cash management and debt financing activities, insurance operations, real estate activities, energy services, and alternative fuels and technology business. Chevron Corporation has a joint venture agreement with China National Petroleum Corporation. The company was formerly known as ChevronTexaco Corp. and changed its name to Chevron Corporation in May 2005. Chevron Corporation was founded in 1879 and is based in San Ramon, California.

Advisors' Opinion:

• [By Louis Navellier]

  Chevron (NYSE:CVX) provides support to its subsidiaries in the following fields: petroleum operations, chemicals operations, mining operations, power generation and energy services. While many stocks on the NYSE have underperformed in 2011, Chevron stock is up 8% year to date.

Mitigating the Carbon Risk

The bell is tolling for cheap carbon, and this could present a risk to companies with significant carbon reserves on their balance sheets. A small but growing movement is under way to divest from the world's most carbon-intensive companies.

This isn't just the province of a radical fringe. President Obama called for divestment -- among other things -- in his climate change speech this past June. Norway's state pension fund just announced that it would exclude major coal and tar sands companies from its holdings.

Shareholders who aren't divesting are getting active. In this year's proxy season, Alpha Natural Resources (NYSE: ANR  ) and CONSOL Energy (NYSE: CNX  ) were forced to include shareholder resolutions on their ballots related to fossil fuel reserve valuation risks.

HSBC recently conducted an analysis of European oil majors' at-risk carbon reserves. The study found Norway's Statoil  (NYSE: STO  ) to be the worst affected, with approximately 17% of its market capitalization at risk. HSBC also calculated that 6% of BP's (NYSE: BP  ) reserves are at risk, along with 5% of Total's (NYSE: TOT  ) .

John Vechey of PopCap Games recently joined The Motley Fool for a climate change summit. Among his guests were Stu Dalheim, vice president of shareholder advocacy at Calvert Investments, and Todd Larsen, director of corporate responsibility for Green America. In the video below, Dalheim and Larsen consider the risks facing carbon and oil companies. How would they fare in a carbon-constrained environment? Change is likely to come, whether in the form of policy or climate events, and may be abrupt when it does.

With carbon at risk, lower-carbon fuels become a lot more attractive. One home-run investing opportunity has been slipping under Wall Street's radar for months. But it won't stay hidden much longer. Forward-thinking energy players like GE and Ford have already plowed sizable amounts of research capital into this little-known stock... because they know it holds the key to the explosive profit power of the coming "no choice fuel revolution". Luckily, there's still time for you to get on board if you act quickly. All the details are inside an exclusive report from The Motley Fool. Click here for the full story!

Is U.S. Energy Independence Still a Dirty Story?

While coal-to-gas switching -- the practice in which power plants use natural gas to create electricity rather than coal -- is expected to continue in the aggregate over the next several decades, you shouldn't count coal out of the fight anytime soon. In fact, many coal stocks – including Arch Coal (NYSE: ACI  ) , Peabody Energy (NYSE: BTU  ) , and Alpha Natural Resources (NYSE: ANR  ) look poised for a significant recovery on a near-term reversal in the coal-to-gas transition. Ultimately, while natural gas has shown strength recently and the explosion in shale gas production has increased the importance of gas, the U.S. is not likely to move away from coal as a critical source of power.

Shifting trends
Driven largely by the explosion in the supply of natural gas that resulted from expanding hydraulic fracturing, or fracking, natural gas gained significant market share over coal for the majority of 2012. Lower gas prices meant that it was cheaper to burn natural gas for power generation; when coupled with the fact that gas burns more cleanly than coal, the shift makes sense. As gas prices have begun to rise, however, there has been some reversal of this trend.

According to the Energy Information Administration, coal was responsible for 42% of power generation in 2011, but this contribution will fall to 35% by 2040. In addition to the proliferation of supply, one of the reasons for this shift is the one-way nature of many U.S. pollution laws. In many cases, coal-burning plants aren't clean enough to be built new, meaning that existing plants may be updated, but it's unlikely that new ones will come online. Furthermore, as some plants shifted to natural gas when prices fell, they won't be permitted to switch back. Despite these impediments, as natural gas prices have risen, there is still an incentive -- particularly on a global basis -- to switch back to coal.

Competing forces
One of the interesting phenomena to be aware of is that the forces that drive prices between natural gas and coal both feed on each other and compete. When gas prices are low and there is pressure to switch, this drives demand for gas and hurts demand for coal. As demand for gas increases, it has the potential to raise prices, which would in turn lower demand. As demand for both natural gas and coal competes, particularly for power generation, and finds some equilibrium, prices may stabilize.

What this ultimately means to you is that the prices of both gas and coal are largely being driven by the supply of gas and its price. Despite the high supply of gas, prices have risen, which will decrease demand to some extent. This increase can translate into the stock prices of the major supply companies -- those mentioned in coal, and Chesapeake Energy (NYSE: CHK  ) in natural gas.

Over the past three months (see the following chart), Chesapeake has been rising solidly with the broader market and the price of gas. Conversely, the prices of coal companies have been weak but look poised for a reversal. Furthermore, with Peabody offering a dividend yield of 2% and Arch Coal a yield of 2.9%, there's a strong income element that offers some protection. As such, these are two names worth considering for your energy portfolio at current levels.

Best Clean Energy Stocks To Own For 2014

CHK data by YCharts

In addition to Arch Coal and Peabody Energy, there are several other dividend stocks to consider. Dividend stocks can make you rich. It's as simple as that. While they don't garner the notability of high-flying growth stocks, they're also less likely to crash and burn. And over the long term, the compounding effect of the quarterly payouts, as well as their growth, adds up faster than most investors imagine. With this in mind, our analysts sat down to identify the absolute best of the best when it comes to rock-solid dividend stocks, drawing up a list in this free report of the only nine that fit the bill. To discover the identities of these companies before the rest of the market catches on, you can download this valuable free report by simply clicking here now.

What Golf Can Teach Investors

The same emotions a golfer feels on the course after making a double bogey is similar to the feelings investors get when they see an investment holding take a big one-day decline. Recent massive drops from Microsoft (NASDAQ: MSFT  ) and Boeing (NYSE: BA  ) , when those stocks fell more than 11% and 7% during a single day, are just two recent examples.

But as in golf, not acting on those emotions, letting the one bad hole roll off your back, and simply playing your game and sticking to a long-term mind-set is usually the best path to take.

5 Best Stocks To Invest In 2014

Fool contributor Matt Thalman has more in the following video.

The price of becoming the world's greatest investor is that Warren Buffett can no longer make many of types of investments that made him rich in the first place. Find out about one such opportunity in "The Stock Buffett Wishes He Could Buy." The free report details a sector of the economy Buffett's heavily invested in right now and exactly why he can't buy one attractive company in that sector. Click here to keep reading. 

Dow May Rise After Alcoa Beats the Street

LONDON -- Stock index futures at 7 a.m. EDT indicate that the Dow Jones Industrial Average (DJINDICES: ^DJI  ) may open up by 0.32% this morning, while the S&P 500 (SNPINDEX: ^GSPC  ) may open 0.41% higher. CNN's Fear & Greed Index is recovering fast from recent lows and is currently at 42, up from 28 one week ago.

European markets edged higher this morning as investors welcomed yesterday's strong performance from the Dow and the renewed stability in the eurozone, now that Greece's next aid payment has been agreed and the threat to Portugal's austerity program has receded. However, markets may still be feeding off future quantitative-easing potential -- the FTSE 100 was one of the biggest risers in Europe this morning after new data showed that U.K. manufacturing fell by 0.8% in May, or 2.9% on a year-on-year basis, suggesting that more QE may be likely in the U.K.

The NFIB monthly small-business index was released earlier this morning. A drop from 94.4 to 93.5 indicates a small decline in optimism among small-business owners. According to the NFIB's report, "While job creation plans increased slightly in June, expectations for improved business conditions remained negative."

May's Job Openings and Labor Turnover survey from the Department of Labor is due at 10 a.m. EDT. Companies due to report earnings today include clothing and footwear manufacturer Wolverine Worldwide, which reported record revenue of $587.8 million for its second fiscal quarter and adjusted earnings of $0.46 per share, beating the company's previous guidance for $0.31 to $0.35 per share.

Stocks that may be actively traded this morning include Alcoa (NYSE: AA  ) , which reported quarterly earnings of $0.07 per share last night, beating analysts' estimates of $0.06. However, it's worth remembering that these same analysts had heavily downgraded their estimates for the firm over the last month. Despite this, investors are likely to be encouraged by Alcoa's confirmation of its growth forecasts for China and the firm's expectation that global aluminum demand will exceed supply this year. Alcoa shares closed 1.4% higher last night, before its results were published, and they're 1% higher in premarket trading this morning.

Top 10 Growth Stocks To Own Right Now

Other companies that may be actively traded include Tesla, which is 2.9% higher in premarket trading following news that it will join the Nasdaq-100 on July 15. Global mining stocks rose this morning, buoyed by Alcoa's positive forecast for the Chinese economy, and a 1% rise in the price of gold this morning has helped to lift gold miners, with Barrick Gold up 3% in premarket trading.

Finally, let's not forget that the Dow's daily movements can add up to serious long-term gains. Indeed, Warren Buffett recently wrote, "The Dow advanced from 66 to 11,497 in the 20th Century, a staggering 17,320% increase that materialized despite four costly wars, a Great Depression and many recessions." If you, like Buffett, are convinced of the long-term power of the Dow, you should read "5 Stocks To Retire On." Your long-term wealth could be transformed, even in this uncertain economy. Simply click here now to download this free, no-obligation report.

Ford's Success Spurs Job Growth

Ford's World Headquarters. Photo Courtesy of Ford Motor Company.

When Alan Mulally took over as Ford's (NYSE: F  ) CEO in 2006 he knew that he had a big task ahead in turning the Blue Oval around. In the first two years, between 2006 and 2008, the company lost more than $30 billion – a ridiculous number. Yet, due to Mulally's "One Ford" vision and his executives' teamwork to cut costs and improve vehicle demand with higher-quality vehicles, Ford made a profit in 2009 – while other automakers were claiming bankruptcy. Ford continued on that path and finds itself in better shape than it's been in a decade. Let's take a look at its recent success and assess how close Ford is to achieving its goal of bringing jobs to its operations in the U.S.

Driving sales
Looking at the top-selling vehicles in the U.S. market this year it's quickly evident why Ford is a healthy company in hiring mode. It owns four of the nation's 15 top-selling vehicles, and its F-Series has owned the No. 1 spot for 31 years. The Escape and the Fusion both have a good chance to surpass 300,000 vehicles sold in the U.S. this year – something only the F-Series has done for Ford in the last nine years. Ford's also adding plant capacity to produce more Fusion's this fall because it's estimated to be running near or over maximum capacity.

Through June, Ford's F-Series sales – which account for the bulk of Ford's profits – are up 22% and more than 367,000 of the vehicles have been sold. The Escape and the Fusion are up 23.2% and 17.8%, respectively, representing sales of 156,626 and 161,146 in the same time period. 

With all that success and an industry SAAR at 15.98 million in June – its highest point in years – it only adds confidence in the market that Ford can safely add jobs. Ford plans to hire 3,000 salaried employees for the year, which is more than previously expected. As much as 80% of them will be technical professionals; it is Ford's largest hiring of salaried professionals in 13 years. 

Seasonally Adjusted Annual Rate. Information from Automotive News DataCenter.

These technical professionals will be employed for product development, manufacturing quality, and purchasing and information technology, according to Ford. "Engineers and technical professionals are in as much demand as our cars, trucks and SUVs," says Felicia Fields, Ford group vice president for human resources, in a Ford press release. "Global demand and increasing capacity in North America and Asia requires that we aggressively seek out technical professionals in order to continue our growth."

What's better, is that these 3,000 salaried employees aren't even included in the company's goal to create 12,000 hourly jobs in the U.S. by 2015. In April, Ford hired 2,000 hourly employees at its Kansas City assembly plant to make sure more production capacity was available for its profit-making F-Series truck. Last year it hired more than 6,200 hourly employees to create capacity at other plants producing newer vehicles. It's about 75% of the way to its goal of hourly job creation by 2015, and its salaried positions look to be growing healthily as well.

Bottom line
This is very positive for investors because Ford's second-quarter earnings report handily beat expectations on revenue and EPS. With additional hiring it only means the company is planning on continued vehicle demand and success. With Ford's most profitable products selling enough to increase its overall market share in the U.S. by more than any other full-line automaker, I think the rest of 2013 will be filled with extremely positive headlines and profits for Ford investors. Let the good times roll!

If you think you've missed out on Ford's stock price run-up, there's one big reason for you to still jump in: China. It is already the world's largest and fastest growing auto market and the best-positioned companies could return handsome profits for patient investors. A recent Motley Fool report, "2 Automakers to Buy for a Surging Chinese Market", names two global giants poised to reap big gains that could drive big rewards for investors. You can read this report right now for free -- just click here for instant access.

Wednesday's Top Upgrades (and Downgrades)

This series, brought to you by Yahoo! Finance, looks at which upgrades and downgrades make sense, and which ones investors should act on. Today, our headlines include an upgrade for homebuilder DR Horton (NYSE: DHI  ) , balanced by a downgrade for its rival PulteGroup (NYSE: PHM  ) . Meanwhile, a big mortgage lender -- JPMorgan Chase (NYSE: JPM  ) -- gets a downgrade of its own.

Let's begin with that one.

Foreclosing on JPMorgan
Shares of too-big-to-fail megabanker JPMorgan are mostly stagnant today, shrugging off the effects of a downgrade to hold from ace analyst Standpoint Research. That's actually not surprising, though, considering how the analyst phrased its comments today.

Noting that JP, up 61% in value over the past year, has just hit Standpoint's price target and is trading near "an all-time high", costing 1.1 times book value and more than 9.4 times earnings, Standpoint thinks now looks like a good time to sell "into this maturing rally and lock in gains." That said, Standpoint also admits the possibility that JP shares will continue rising into "the low $60s". The analyst simply doesn't believe that this possibility justifies taking the risk that the shares will move the other way.

I suspect that's the right call: 9.4 times earnings seems to me an entirely appropriate valuation on JPMorgan Chase shares, given the stock's 2.7% dividend yield and its projected 6.5% annual profits growth rate. (Which according to Yahoo! Finance, by the way, is a full two percentage points slower than the average banking stock.) Seems to me, the stock's not overpriced by any means. But it is fairly priced, and that suggests limited upside for now. Standpoint's right to be cautious.

Building up, and building down
Similarly, I find at least some sense in the changes of a pair of homebuilder ratings that Compass Point put out this morning. In twin announcements, Compass first downgraded PulteGroup (to neutral), and replaced it with DR Horton (at buy).

Why? Actually, when you look at the numbers, the answer's pretty obvious: DR looks a heck of a lot cheaper than Pulte. It costs 7.4 times trailing earnings, to Pulte's 24.4; sells for 1.9 times book value to Pulte's 3.3; and pays a small (0.7%) dividend where Pulte pays none. In all three respects, the stock certainly appears on its face to be a better bargain than Pulte...

Except that on closer examination, maybe it isn't.

For all the factors weighing in DR's favor, and against PulteGroup, Pulte does have two advantages over its rival, from an investor's perspective: It's growing faster, and boasts higher-quality profits.

Analysts predict that Pulte will post annualized profits growth in excess of 42% per year over the next five years. That's quite an advantage over the sub-8% prediction they have on record for DR. Plus, DR Horton is burning cash at the rate of more than $1.1 billion dollars a year, Pulte is piling up cash nearly as fast as DR is burning it. Over the past 12 months, Pulte's free cash flow has amounted to a whopping $801.5 million, a number more than 250% greater than the $300 million the company reported in GAAP profits.

As a result, Pulte shares currently trade for just 9.2 times free cash flow -- and are therefore arguably both cheaper than they appear, and cheaper than shares of DR Horton as well.

These numbers are subject to change, of course, and in rather short order. Both companies are expected to report earnings, and update their numbers tomorrow. But as of today, I have to disagree with Compass Point's analysis. Seems to me, despite all surface-level indications to the contrary, PulteGroup is actually the better bargain here.

Fool contributor Rich Smith has no position in any stocks mentioned. The Motley Fool owns shares of JPMorgan Chase & Co.

Hot Penny Stocks To Own For 2014

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 Choice Hotels (NYSE: CHH  ) were getting picked last by investors today, falling 11% after cutting EPS guidance in its quarterly report.

So what: The first-quarter results for the owner of Comfort Inn, Quality Inn, and Econo Lodge actually weren't bad. Choice missed EPS estimates by a penny, delivering earnings of $0.26, while revenue topped expectations by 1.5%, growing 6% to $136.9 million. Still, guidance for the coming year was disappointing, though management didn't offer an explanation for the cut. It now sees EPS of $1.87 to $1.91 versus an earlier projection of $1.96 to $1.98.

Hot Penny Stocks To Own For 2014: PennyMac Mortgage Investment Trust(PMT)

PennyMac Mortgage Investment Trust is based in the United States.

Hot Penny Stocks To Own For 2014: ChinaCast Education Corporation(CAST)

ChinaCast Education Corporation, together with its subsidiaries, provides post-secondary education and e-learning services in China. The company operates in two segments, E-learning and Training Service Group and Traditional University Group. The E-learning and Training Service Group provides post secondary education distance learning services that enable universities and other higher learning institutions to provide nationwide real-time distance learning services. It also provides K-12 educational services, such as broadcast multimedia educational content services to primary, middle, and high schools; and vocational/career training services. The Traditional University Group segment operates private residential universities that offer four-year bachelor?s degree and three-year diploma programs in finance, economics, trade, tourism, advertising, IT, music, foreign languages, tourism, hospitality, computer engineering, law, and art. The company also provides logistic service s. ChinaCast Education Corporation was founded in 1999 and is headquartered in Central, Hong Kong.

Best Stocks To Buy Right Now: Excellence Investments Ltd (EXCE)

Excellence Investments Ltd is an Israeli company active in the financial sector. The Company offers services to institutional and corporate clients, and high net worth individuals. The Company's services include global and domestic asset management, investment banking and underwriting, foreign exchange trade and advisory services, derivatives trading, brokerage, mutual fund and provident fund management, pension fund management and exchange traded funds (ETF).

Cheniere Energy Partners Declares Fresh Distribution

Why On Assignment's Earnings May Not Be So Hot

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 On Assignment (NYSE: ASGN  ) , 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, On Assignment generated $22.3 million cash while it booked net income of $61.9 million. That means it turned 1.5% of its revenue into FCF. That doesn't sound so great. 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 On Assignment 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 3.6% of operating cash flow, On Assignment's cash flows look clean. Within the questionable cash flow figure plotted in the TTM period above, other operating activities (which can include deferred income taxes, pension charges, and other one-off items) provided the biggest boost, at 24.6% of cash flow from operations. Overall, the biggest drag on FCF came from changes in accounts receivable, which represented 99.2% of cash from operations. On Assignment investors may also want to keep an eye on accounts receivable, because the TTM change is 2.2 times greater than the average swing over the past 5 fiscal years.

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.

Looking for alternatives to On Assignment? 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.

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

Add On Assignment to My Watchlist.

Top 5 Penny Companies To Own For 2014

Southwest Airlines� (NYSE: LUV  ) will raise its quarterly dividend fourfold, the company announced yesterday, increasing it to $0.04 a share from the current level of a penny. Annualized, this amounts to more than $100 million.

The quarterly dividend will be paid on June 26 to shareholders of record as of June 5. The dividend marks Southwest's 147th consecutive quarterly dividend payment.

The airline operator also announced�it was increasing its existing�$1 billion�share repurchase authorization to�$1.5 billion, of which�an initial�$250 million�will be bought back on an accelerated basis. So far, $725 million in share repurchases of the $1.5 billion authorization have been completed since August 2011, reducing shares outstanding by more than 10%.

Southwest CEO Gary C. Kelly�said: "Over the past 24 months, we have returned over 20% of our operating cash flows, or approximately�$770 million, to shareholders through share repurchases and dividends."

Top 5 Penny Companies To Own For 2014: Enstar Group Limited (ESGR)

Enstar Group Limited, through its subsidiaries, acquires and manages insurance and reinsurance companies in run-off. The company settles insurance and reinsurance claims. It also offers management and consultancy, claims inspection, and reinsurance collection services to its affiliates and third-party clients. The company operates in the United States, Bermuda, the United Kingdom, Europe, and Australia. Enstar Group Limited was formerly known as Castlewood Holdings Limited and changed its name to Enstar Group Limited. Enstar Group Limited was founded in 2001 and is based in Hamilton, Bermuda.

Top 5 Penny Companies To Own For 2014: Horizon Lines Inc.(HRZ)

Horizon Lines, Inc., through its subsidiaries, provides container shipping and integrated logistics services. It ships a range of consumer and industrial items, such as refrigerated and non-refrigerated foodstuffs, household goods, auto parts, building materials, and other materials used in manufacturing. The company offers container shipping services to ports within the continental United States, Puerto Rico, Alaska, Hawaii, Guam, the U.S. Virgin Islands, and Micronesia. Its integrated logistics services comprise rail, truck brokerage, warehousing, distribution, expedited logistics, and non-vessel operating common carrier operations. Horizon Lines, Inc. also offers terminal services. The company operates terminals in Alaska, Hawaii, and Puerto Rico; contracts for terminal services in seven ports in the continental United States; and the ports in Guam, Yantian, and Xiamen, China, as well as Kaohsiung, Taiwan. In addition, it offers inland transportation services. As of Dec ember 20, 2009, the company owned or leased approximately 20 vessels and 18,500 cargo containers. Horizon Lines, Inc. serves consumer and industrial products companies, as well as various agencies of the U.S. government, including the Department of Defense and the U.S. Postal Service. The company was founded in 1956 and is based in Charlotte, North Carolina.

Advisors' Opinion:

• [By Hutchinson]

  Horizon Lines (NYSE: HRZ) is the largest oceangoing shipping company in the United States with a dominant market position along protected shipping lanes. One look at the steady resurgence in shipping demand, coupled with the company’s improving financials, and it seems the worst is behind them — making now the perfect time to scoop up this stock at a discount.

  HRZ is up almost 30% since September, and I expect it to continue moving higher. Recent data show more goods are being manufactured, and they need to be shipped. Horizon will be one of the biggest beneficiaries.

  Buy HRZ on pullbacks under $5.

Top Stocks To Invest In 2014: Fushi Copperweld Inc.(FSIN)

Fushi Copperweld, Inc., through its subsidiaries, develops, designs, manufactures, markets, and distributes bimetallic wire products, principally copper-clad aluminum (CCA) and copper-clad steel (CCS). Its CCA and CCS conductors are used as a substitute for solid copper conductors in applications where specific electrical or physical attributes are necessary. The company markets its products under Copperweld and Fushi brand names. It primarily serves end-user applications in the telecommunication, electrical utility, and transportation markets. The company?s CCS products in the utility market are used in grounding applications, power cables, electrified railroad tracks, and tracer wires. It?s CCS and CCA wires in transportation market are used in original equipment and aftermarket applications for electrified rail applications, as well as in automobiles, trucks, motorcycles, commercial off road equipment, and trailers. The company sells its products through its direct sale s force, as well as through sales agents or distributors primarily in North America, Europe, North Africa, the Middle East, and the People?s Republic of China. Fushi Copperweld, Inc. is based in Beijing, the People?s Republic of China.

Top 5 Penny Companies To Own For 2014: HopFed Bancorp Inc.(HFBC)

HopFed Bancorp, Inc. operates as the holding company for Heritage Bank that provides various banking products and services primarily in western Kentucky, and middle and western Tennessee. The company offers a range of deposit products, including demand deposits, time deposits, money market accounts, passbook savings accounts, individual retirement accounts, and certificates of deposit. Its loan portfolio comprises one-to-four family residential loans, multifamily residential loans, construction loans, nonresidential loans, commercial real estate loans, and land and land development loans, as well as loans secured by deposits, other consumer loans, and commercial loans. The company, through its subsidiary, Fall and Fall Insurance Agency, sells life and casualty insurance products to individuals and businesses. HopFed Bancorp offers its products and services through its branch offices located in Hopkinsville, Murray, Cadiz, Elkton, Fulton, Calvert City, and Benton, Kentucky; and in Clarksville, Pleasant View, Ashland City, Kingston Springs, and Erin, Tennessee. The company was founded in 1879 and is headquartered in Hopkinsville, Kentucky.

Top 5 Penny Companies To Own For 2014: Jewett-Cameron Trading Company(JCTCF)

Jewett-Cameron Trading Company, Ltd., through its subsidiaries, engages in the warehouse distribution and direct sale of wood products and specialty metal products to home centers and other retailers primarily in the United States. It operates in four segments: Industrial Wood Products; Lawn, Garden, Pet, and Other; Seed Processing and Sales; and Industrial Tools and Clamps. The Industrial Wood Products segment processes and distributes industrial wood products; and provides treated plywood to boat manufacturers and the transportation industry. The Lawn, Garden, Pet, and Other segment wholesales wood products, including fencing and landscape timbers; and manufactures and distributes specialty metal products comprising dog kennels, proprietary gate support systems, perimeter fencing, and greenhouses. The Seed Processing and Sales segment processes, distributes, and sells agricultural seeds to distributors. The Industrial Tools segment imports and distributes products, inclu ding pneumatic air tools, industrial clamps, and saw blades. The company was founded in 1953 and is headquartered in North Plains, Oregon.

Intuitive Surgical Earnings: Down on da Vinci

Intuitive Surgical (NASDAQ: ISRG  ) officially announced its second-quarter earnings results on Thursday after giving preliminary figures last week. The news isn't any better for the robotic surgical systems maker. Shares dropped 13% following the earnings announcement.

Unsurprising numbers
On July 8, Intuitive said that it expected to report quarterly revenue of around $575 million and earnings of around $160 million. The company mentioned that while sales of instruments and accessories increased by 18%, sales of its da Vinci surgical systems fell by 6%. Intuitive said that this drop stemmed from "increased economic pressure on hospitals" and to "moderating growth" in benign gynecologic procedures.

Thursday's announcement confirmed most of the earlier information. Revenue for the second quarter came in at $579 million, a little higher than the preliminary figure given but still well below initial expectations. The figures provided last week for increases in instruments and accessories sales and declining da Vinci surgical systems sales were on target.

Intuitive reported earnings of $159 million, or $3.90 per diluted share. That's a paltry 2.8% increase year over year in earnings, but the per-share figure reflects a higher 4% jump due to share repurchases by the company. The average analysts' estimate was $4.04 per share.

Doubling down
Although the revenue and earnings numbers weren't a surprise to anyone, Intuitive Surgical stock still fell nearly as much as it did following the sneak peek last week. Why another drop on results that everyone knew were coming?

The primary reason stems from Intuitive's guidance for the rest of the year. Previous guidance given by the company called for full-year da Vinci procedure growth of 20% to 23% The company now expects 15%-18% growth. Due largely to this slower growth, Intuitive projects full-year revenue will be flat to 7% higher than revenue for 2012.

Another factor is a warning letter that Intuitive received from the U.S. Food and Drug Administration on Wednesday. Earlier in the second quarter, the FDA conducted an on-site audit and issued four observations. At the time, Canaccord Genuity analyst Jason Mills talked with Intuitive management and said that the issues were "primarily administrative in nature" and that each issue was "thoroughly addressed."

Now, though, the FDA is asking Intuitive Surgical to take additional steps to address two of the four issues. CEO Gary Guthart says that the issues are addressable and that Intuitive is taking all necessary steps for resolution.

Looking ahead
Clearly, the environment that Intuitive Surgical faces today is quite different from what it has encountered over the past few years as it grew rapidly. A company that grew revenue at a 25% annual rate over the past five years is now projecting possibly flat growth?

The reality is that Intuitive Surgical isn't a growth stock any longer -- at least not for now. As such, it doesn't deserve growth stock price-to-earnings multiples. That's why shares have plummeted so much.

Management doesn't expect the situation to improve significantly this year. Unless something changes, though, shares aren't likely to move back up to any major extent.

Having said that, this is still a good company in my view. I think the value of its products will win out over the long run. Intuitive certainly has some public relations issues to address with the da Vinci systems, but I think that it will overcome those hurdles. The FDA issues will be resolved. Life will go on.

After the latest sell-off, shares are trading well below even the lowest price target of 13 different analysts polled by Thomson/First Call. Analysts can be wrong -- and often are. I don't think they're all misjudging Intuitive, though. My view is that Intuitive will find its way again, but I'm not sure how long it will take to do so.

Even good companies can experience stock pullbacks like Intuitive Surgical has. Receiving juicy dividends, though, can help ease some of the pain. If you're on the lookout for high-yielding stocks, The Motley Fool has compiled a special free report outlining our nine top dependable dividend-paying stocks. It's called "Secure Your Future With 9 Rock-Solid Dividend Stocks." You can access your copy today at no cost! Just click here.

3 Signs to Watch With This Recovering Tech Giant

It's no secret that Microsoft (NASDAQ: MSFT  ) has been struggling to break into the booming mobile space. Its Surface? A flop. Windows Phone? Not selling. However, in an effort to remedy its mobile malaise, CEO Steve Ballmer recently enacted the most significant reorganization the company has seen in some time. However, with its long history of poor performance, this strategy remains somewhat suspect to many longtime tech observers. Thankfully, investors should see soon enough whether or not Microsoft is up to the task. In this video, Fool contributor Andrew Tonner breaks down three specific products investors should watch to see if this tech giant's finally turned a corner.

Our digital and technological lives are almost entirely shaped by just a handful of companies -- and there's no doubt Mr. Softy's one of them. Find out "Who Will Win the War Between the 5 Biggest Tech Stocks?" in The Motley Fool's latest free report, which details the knock-down, drag-out battle being waged by the five kings of tech. Click here to keep reading.

Despite the Dow's Fall, a Few Stocks Still Posted Gains

After three consecutive days of setting new all-time highs, the Dow Jones Industrial Average (DJINDICES: ^DJI  ) slid lower today, closing short of yesterday's high by 32 points, or 0.21%, and now rests at 15,451. Following suit, the other two major indexes also moved lower today. as the S&P 500 lost the most, with 0.37%, and the Nasdaq shed 0.25%.

The declines came on a day when two of the Dow's components released earnings before the markets opened: Johnson & Johnson and Coca-Cola. Neither company impressed investors, as Coke fell 1.9%, while Johnson & Johnson closed flat for the session. We might have expected the strong homebuilder sentiment report or the positive industrial production numbers to have moved markets upward in spite of the drop in these stocks, but it was not to be today.

There were a few shining stars within the Dow, however. The biggest winner on the index today was Intel (NASDAQ: INTC  ) , whose shares rose 1.29%. The company is scheduled to release quarterly earnings tomorrow, and investors may have been trying to jump in before tomorrow's release. My colleague Dan Caplinger noted earlier today the release will be a big one for the company, as it will be a great opportunity for investors to learn about new CEO Brian Krzanich's strategic vision for the company.

Caterpillar (NYSE: CAT  ) rose 0.88% after the release of the strong homebuilder confidence and industrial production numbers, the latter of which takes into account not only output from U.S. factories but also from mines and utility companies. And since Caterpillar is a big player in the mining equipment field, investors surely saw this report as good news for the company.

Another of the Dow's big winners was AT&T (NYSE: T  ) , which saw shares rise 0.93% today. The likely catalyst was a Wall Street Journal indicating that the wireless company will soon offer a plan for customers to upgrade their cell phones on a more frequent basis. This move may be an attempt to stop customers from leaving the No. 2 wireless carrier for T-Mobile, which recently announced a similar plan.  

More Foolish insight
The Motley Fool's chief investment officer has selected his No. 1 stock for this year. Find out which stock it is in the special 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.

Why Schlumberger Earnings Should Keep Pumping Higher

Schlumberger (NYSE: SLB  ) will release its quarterly report on Friday, capping an up-and-down quarter for the stock. With U.S. natural gas prices having risen somewhat from their lows last year and with oil prices remaining above $100 per barrel, Schlumberger earnings have the fundamental support in place to drive higher.

Yet in the oil-services industry, macroeconomic considerations can have a big impact on energy production and the activity that produces profits for its biggest players. Combine a large enough slowdown with high energy prices, and the risk of a disastrous drop in demand that could idle much of the work that Schlumberger does for its exploration and production company clients. Let's take an early look at what's been happening with Schlumberger over the past quarter and what we're likely to see in its quarterly report.

Stats on Schlumberger

Analyst EPS Estimate	$1.10
Change From Year-Ago EPS	4.8%
Revenue Estimate	$11.11 billion
Change From Year-Ago Revenue	6.4%
Earnings Beats in Past 4 Quarters	4

Source: Yahoo! Finance.

How can Schlumberger earnings keep rising faster?
In recent months, analysts have pulled back ever so slightly on their earnings views about Schlumberger, cutting a penny per share from their June-quarter estimates and double that from their full-year consensus. The stock has been stuck in the doldrums as well, rising about 1.5% since mid-April.

In general, Schlumberger is benefiting from favorable conditions in the energy industry, which features a lot of new exploration and production in previously untapped areas of the world. In its report from last quarter, company executives highlighted growth in offshore drilling, especially in deepwater finds that have proven to be challenging but lucrative opportunities for massive production boosts. At the same time, Schlumberger has been able to keep its margins high even as producers have made every effort to become more efficient and cut services costs.

But Schlumberger is facing increased competitive pressure. General Electric's (NYSE: GE  ) purchase of Lufkin Industries, which it completed at the beginning of July, signaled the conglomerate's interest in bolstering its growing presence in energy to provide more drilling and exploration services, making GE a threat to Schlumberger's dominance in the industry.

Still, Schlumberger has plenty of ammunition of its own to bolster its growth. The company recently closed on its OneSubsea joint venture with Cameron International (NYSE: CAM  ) to take even greater advantage of opportunities in subsurface production. With Cameron's design, manufacturing, and installation experience, Schlumberger hopes to bolster its own expertise in completing subsea wells and providing reliable equipment and give clients an integrated solution for their sea-drilling needs.

In Schlumberger's earnings report, watch for signs of how the company's efforts in China are going. Having, created strategic relationships with oil companies within China to assess potential for shale-gas production, Schlumberger should be able to use its vast knowledge as a big drawing point in finding profitable plays in the emerging nation that could eventually send its earnings much higher.

Schlumberger's a great play on the strength of the energy industry, but it's not the only one. To find some more currently intriguing energy plays, check out The Motley Fool's "3 Stocks for $100 Oil." For FREE access to this special report, simply click here now.

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

Canadian Stocks For 2014

Canadian Stocks For 2014