Profit growth slips at Chinese banks

BEIJING — Profit growth at China's major banks continued to decline in the third quarter as they dealt with a maturing Chinese economy and interest-rate pressure.

The impact of a summer cash squeeze also continued to be felt, with China Minsheng Banking Corp. (HK:1988)   (CMAKY)  blaming its relatively large borrowing from other banks for crimping its profitability.

In mid-June, the interest rate at which Chinese banks lend to one other spiked after banks found themselves running low on cash and China's central bank declined to inject more money into the system. Analysts say the central bank was trying to stop banks from funding corporate lending using shorter-term interbank loans.

Minsheng, the eighth-largest bank by assets, said Wednesday that between July and September its profit rose 6.3% from a year earlier, to 10.37 billion yuan ($1.7 billion). But its interest income, which accounts for more than 70% of operating revenue, rose by only 2.97%.

The bank said the gap between what it charges for loans relative to its costs narrowed, "owing to interest-rate fluctuations" and its relatively large interbank business. In August, Minsheng Chairman Dong Wenbiao said in an interview that the bank was gradually restructuring to be less dependent on interbank borrowing.

China's major banks, which have huge deposit bases, are less dependent on borrowing from other banks to meet their funding needs, but for many smaller banks interbank borrowing had become an increasingly important part of their business. With interbank rates jumping higher again over the past week, bankers say they can no longer rely on other banks as a consistently cheap source of credit.

China's biggest banks, an important source of funds in China's state-guided economy, continued to post robust profits by international standards. But profitability continues to fall from growth rates that regularly exceeded 20% during China's boom years, as the country's economic growth has slowed and the banks have faced pressure to make more funding available.

Industrial & Commercial Bank of China Ltd. (HK:1398)   (CN:601398)  , which also reported its earnings Wednesday, said its profit rose by 7.6% to 67.2 billion yuan in the third quarter, well below the 15% expansion it posted a year earlier. The slower growth was due to sluggish interest income, which rose by 4.1%. The bank didn't give a reason for the smaller-than-expected increase.

Chinese companies disclose less information in their quarterly earnings reports, which, unlike annual and half-year reports, are unaudited.

Bank of China Ltd. (HK:3988)   (BACHY)   (CN:601988)  said its third-quarter net profit rose 14% to 39.49 billion yuan. In the same period last year, it rose 17%.

Agricultural Bank of China Ltd.'s (HK:1288)   (ACGBF)   (CN:601288)   third-quarter net profit rose 15% to 45.64 billion yuan, down from 16% growth a year earlier.

Bad loans continued to inch up, but they remained low by international standards. ICBC's nonperforming loan ratio was 0.91% at the end of the quarter, up from 0.87% at the end of June.

Economists say banks regularly roll over loans to local governments and state firms that the borrowers would otherwise struggle to repay, helping keep the official bad-loan level low.

Record Stock Prices & Record Margin Debt Do Not a Stock Bubble Make...Yet

The Dow Industrials, the Standard & Poor's 500 and the NYSE Index are all at record peaks. The amount of margin debt being used to purchase stocks on the NYSE is at a record high also (see chart). And the expectation of record low interest rates for some many months to come, primed by the Fed's purchase of bonds and mortgages, promises to many that the returns in the stock market are not about to diminish anytime soon.

Credit: Barry Ritholtz, Fidelity.

As well, stock indexes across the globe also have the benefit of easy money; Japan's Nikkei is up 35% this year, 50% more than the S & P 500, up 23.4%, Germany's DAX, a gain of 18%, France's CAC, 17%, and the FTSE in the UK, 14%. Is this a new utopia, or the makings of a  bubble in the stock market? All those many investors, who had not a clue about the oncoming bubble in home prices in 2006, must be plainly worried about the tremendous surge in common stock prices due in great part to the prime pumping of central banks everywhere.

Consulting some of the most astute bubble analysts led us to a brilliant  woman economist, Sarah Bloom Raskin, a Governor  of the Federal Reserve, who gave a most clairvoyant talk in July at the Exchequer Club Luncheon in Washington, D.C. where she laid out the stepping stones for an asset bubble and admitted that they are very difficult to predict. "While we may not be able to predict bubbles, we understand them to be a product of particular actions and choices by financial institutions and their regulators," she said.

For example, a bubble can start in a low interest rate climate like today where investors borrow money to seek higher yields by purchasing some specific higher-yielding asset, and once those assets rise in value these investors or others who are drawn in, might borrow even more money on the higher valuation, which usually makes these same assets climb even more in value. Presto! You have created a record amount of debt at what seems a bargain in the very little interest rate you are paying. You have also raised the problem of huge unstable short-term lending, from sources such as uninsured deposits, commercial paper or repo transactions in order to fund the loans.

Does this sound familiar? It should remind you of 2007-2008 when massive short-term borrowing was going to leverage up massive amounts of unstable long term mortgages and derivative contracts packed with these unstable long term mortgages. In other words, "bubbles are characterized by increased leverage" and when those assets being leveraged, be they stocks or mortgages, are about to lose a meaningful portion of their value, all that debt is very hard to pay back. Presto! You are in a crisis about to turn into a panic of seeking liquidity.

"Indeed," said Ms. Raskin, "a dramatic decline in the price of a significant asset can reduce household wealth, spending and aggregate demand. When such effects on wealth, credit availability and aggregate demand are large enough, the real economy can suffer a significant recession. And, of course, lower employment and incomes further depress asset prices and borrowers' ability to repay loans, with further adverse effects on financial institutions and their ability to extend credit."

So, is today's stock market, selling at only 15 times expected earnings, by no means a peak multiple of corporate profits, in any way similar to the boom and bust in housing where home prices plunged on average 30% throwing the financial system into chaos? (A reminder that stocks also lost close to half their value as they were liquidated by insolvent, soon to be bailed out financial institutions.)

Can Starbucks Brew Up a Record 2013?

Starbucks's (NASDAQ:SBUX) rebound from the financial crisis has been nothing short of extraordinary—the stock is up more than 750 percent since 2009. As worldwide coffee consumption continues to rise, the mega-roaster is predicted to grow around 20 percent in the next five years. Does Starbucks’s relatively high price justify its growth prospects? Let's use our CHEAT SHEET investing framework to decide whether Starbucks is an OUTPERFORM, WAIT AND SEE, or STAY AWAY.

C = Catalysts for the Stock's Movement

With domestic revenues up 10 percent last quarter, Starbucks looks poised to maintain its foothold in the U.S. The company has made three large acquisitions over the past few years: La Boulange, Evolution Fresh, and Teavana. These new brands will diversify Starbucks product offerings and capitalize on the growing tea and juice markets. Additionally, Starbucks just extended its partnership with Green Mountain Coffee Roasters (NASDAQ:GMCR). Maintaining the relationship with Green Mountain is important for Starbucks—who controls 16 percent of the K-Cup market—as they look to expand their channel development unit both domestically and internationally.

While Starbucks still has room to expand in the domestic marketplace, its real growth prospects lie overseas. The company's most recent quarterly report illustrated its strong international growth—global same-store sales grew 6 percent from the previous year's quarter. China is a hugely important market—in fact, Barclay’s estimates that Chinese coffee consumption will grow 40 percent each year until 2015. The company added 64 new locations in China during the quarter and plans to add an astounding 1,500 stores in more than 70 cities in the next two years. With plans to open close to ten thousand stores in Brazil, India, and China in the next decade, Starbucks should have no trouble sustaining its growth rate of around 20 percent.

E = Earnings Are Increasing Year-over-Year

When deciding if a company is a good investment—especially one as richly valued as Starbucks—it's important that the company shows strong and consistent earnings growth. Starbucks's quarterly earnings have grown in four of the last five quarters on a year-over-year basis. The most recent quarterly number of $0.51—which beat analysts' estimates of $0.48—showed a 27.5 percent increase from the previous year's quarterly figure of $0.40. Additionally, operating margins increased by 180 basis points. Shareholders have been feeling the growth, as Starbucks has increased its dividend, currently yielding 1.2 percent, and has authorized 26 million share repurchases for the coming year.

	2013 Q1	2012 Q4	2012 Q3	2012 Q2	2012 Q1
Qtrly. EPS	$0.51	$0.57	$0.46	$0.43	$0.40
EPS Growth YoY	27.50%	14.00%	-0.51%	19.44%	17.65%
Revenue Growth YoY	11.26%	10.59%	10.96%	12.67%	14.73%

*Data sourced from YCharts

**Note: Technically, Starbucks just completed its second quarter of fiscal 2013.

T = Technicals on the Stock Chart are Strong

Starbucks is currently trading around $68.80, well above both its 200-day moving average of $59.38 and its 50-day moving average of $65.39. The stock has experiencing a strong uptrend in the last year—up around 30 percent in the past 12 weeks. Starbucks recently experienced a 'golden cross' at the beginning of this year—the 50-day moving average surpassed the 200-day moving average, implying that investor optimism is strong. The stock broke through to a new 52-week high of $69.52 on Thursday.

 

Conclusion

Under CEO Howard Shultz's strong leadership, Starbucks should continue to grow at around 20 percent per year. Competitor Dunkin' Donuts (NASDAQ:DNKN) has made strides in increasing its national presence, but does not have the scale or brand equity of Starbucks needed to become an international player. Like any 'higher-end' brands, there is an inherent risk that consumers will substitute Starbucks with cheaper products should the economy experience another recession; still, Starbucks has shown its ability to bounce back from adverse economic conditions in the past. The stock just hit a new 52-week high on Thursday, and might be overbought right now; investors looking to establish a long position should buy on the dips. 'A-level' management, steady profitability, and solid growth prospects justify the stock's high price. Starbucks is an OUTPERFORM.

The Stock Market's Problem

Moneyshow's Jim Jubak discusses what he sees as the stock market's current problem and what this may mean once the summer is over.

You could argue that well, a little complacency never hurt anybody.  Tell that to the Trojans.  The problem right now in the stock market as I see it is that the VIX, which is a measure of how much traders are willing to pay to get rid of risk in the market.  The VIX go up as people’s willingness to pay more goes up as the market is perceived as riskier and it goes down when the people perceive the market as less risky. 

Right now, it’s at a really, really low level.  It’s back to where it was before the 2007 global financial crisis.  VIX is a pretty good contrarian indicator that when risk is received as this low, it’s usually a sign that the market is over complacent, that people are not very fearful.  The cliche is that a rally or a market that’s moving up climbs a wall of fear. 

What happens is as the market moves higher, people who have been on the sidelines and because they were afraid of the market come in.  When the VIX is really, really low it indicates there aren’t a whole lot of people ought there who are afraid this market waiting to come.  The question is as a rally progresses what you’d really like to see is more money coming in as stocks go higher. 

With a VIX this low you’d have to ask well, who’s going to come in?  Where is the next group of money to drive this higher?  We are after all at all-time historic highs on the S&P so it’s an important question.  Right now, it’s August and it’s very hard to tell anything in August.  Volumes dry up especially in the last couple of weeks in August as lots of people go away or stop paying attention so it’s not clear that you can draw conclusions from this. 

To me right now the market feels kind of listless, looking for direction, some profit taking.  My real worry, however, is not August but September when everyone comes back and we suddenly get to focus on the Fed and when it’s going to taper and of course the threat to shut down the U.S. government at the end of September.  Those don’t strike me as good things, and I would suspect that at that point the VIX will start to go up which is usually not a good time for stocks in general because that means money is coming out the market as people start to feel that it’s riskier.

This is Jim Jubak for the MoneyShow.com video network.

Why Sohu Shares Sank

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 Chinese web-portal Sohu.com (NASDAQ: SOHU  ) plunged 10% today after its quarterly results and outlook disappointed Wall Street.

So what: The stock has soared in 2013 on bullishness over Sohu's online video segment, but today's second-quarter revenue miss -- $338.90 million versus $340.27 million -- coupled with in-line guidance is forcing analysts to rein in their enthusiasm a bit. And while online ad revenue spiked 49% over the year-ago period, year-over-year operating expenses also jumped 43%, suggesting that Sohu's competitive environment remains particularly intense.

Now what: Management now sees third-quarter revenue of $358 million-$370 million, in line with the average analyst estimate of $362 million. "In the first half of 2013, we invested intensively in some key initiatives for video, search, games and mobile," said Co-President and CFO Carol Yu. "I am confident the momentum will continue into the remaining months in 2013 and beyond." Of course, with the stock still up about 90% from its 52-week lows and trading at a forward P/E of 20, I'd wait for an even more a pullback before betting on that.

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Can These 5 Pillars Save RadioShack's Bacon?

Another quarter has passed for RadioShack (NYSE: RSH  ) and things are still looking pretty bleak for the once high-flying electronics retailer. This past quarter revealed that while The Shack's heart is still beating, it's on life support, and I'm doubtful it will come off anytime soon.

Mmmmmm... bacon
The key to The Shack's success depends on "five pillars" that will guide the turnaround strategy. Let's take a look at these five pillars and dissect what they really mean:

Repositioning the brand: Sounds great, but the fact of the matter is, the more time that passes, the less relevant RadioShack's brand is, which makes it even more difficult to reposition.

Revamping product assortment: One of the biggest problems RadioShack faces is that consumers can get what they sell virtually anywhere; there's no real differentiation at this point. And this problem is only growing worse.

Reinvigorating stores: The stores are part of the problem indeed, but I'm not sure reinvigorating them is going to make much of a difference. For the most part it's a matter of convenience, not the experience.

Operational efficiency: This is a must. Margins all the way across have fallen off a cliff for these guys, and if they don't pull it together it's over, Johnny.

Financial flexibility: Anytime a company calls out their financial flexibility in the release as "total liquidity," red flags should go up. This means they are looking at everything they have; it's not necessarily a good thing. Total liquidity of $818 million doesn't matter much if sales aren't going anywhere. And when we look at how RadioShack's most recent sales stack up against some formidable competitors, it's a tough road ahead:

Company

TTM Revenue
(in millions)

TTM Net Income
(in millions)

RadioShack	$4,189	($206.8)
Best Buy	$48,191	($720.1)
Wal-Mart	$470,339	$17,041
Target	$73,140	$2,800

TTM = trailing 12 months.

Give me the "how"
Management is bringing in a team to try to help turn this boat around. AlixPartners, a global business advisory firm specializing in turnarounds, is in the mix now along with Peter J. Solomon Company, which is an investment banking firm. Both hires are signs that RadioShack is digging in to try to figure out how to deal with a difficult situation, and they may very well have some creative ideas. But former CFO Dorvin Lively isn't sticking around to find out. He's taken off for greener pastures, and an interim CFO (a director at AlixPartners) has been named in light of his departure.

The Foolish bottom line
I can't say I'm all that optimistic where RadioShack's future is concerned, but maybe there's some potential here. While sales have remained flat over the last five years, management's pillars are at least an effort to get things moving. For me, though, they speak more to the "what" as opposed to the "how." And it's the "how" that really matters, isn't it? If RadioShack turns this ship around, it will be epic. I for one, though, will not be holding my breath.

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Hot Energy Stocks To Invest In Right Now

America's energy boom is creating a lot of hype around the possibility of energy independence. Unfortunately, reality may not live up to the hype. The chances that we will be able to cut ties with the global oil market are very slim, so we will continue to do business with foreign countries to import oil for the foreseeable future.�

Crude oil is a very intricate global commodity, and the type of we're finding doesn't meet the optimal range for refineries in the United States. Ultimately, this means that even if we're able to produce more oil than we're able to consume, we will still need certain types of oil to make our operations run smoothly. Besides, if we can buy oil from another country for less than what it costs to make it, then why not?

Tune into the following video for the conversation with Fool analysts Joel South and Michael Olson as well as Fool.com contributor Tyler Crowe, as they discuss the myth of energy independence and why the complexities of the oil market will hamper any chances that it will happen.

Hot Energy Stocks To Invest In Right Now: Natural Gas(NG)

NovaGold Resources Inc., through its subsidiaries, engages in the exploration and development of mineral properties primarily in North America. The company primarily explores for gold, silver, copper, zinc, and lead ores. It holds interests in the Donlin Creek property covering 81,361 acres and the Ambler property comprising 90,614 acres located in Alaska; and the Galore Creek property comprising 293,838 acres located in northwestern British Columbia, Canada. The company was formerly known as NovaCan Mining Resources (1985) Limited and changed its name to NovaGold Resources Inc. in March 1987. NovaGold Resources Inc. was founded in 1984 and is based in Vancouver, Canada.

Advisors' Opinion:

• [By Dan Caplinger]

  NovaGold Resources (NYSEMKT: NG  ) will give investors its quarterly report on Wednesday. But the mining company has already seen its stock plunge in the wake of crashing gold prices, and NovaGold earnings results aren't likely to give investors much good news barring a big surprise.

• [By Rich Duprey]

  The worst performer in the sector was NovaGold Resources (NYSEMKT: NG  ) , which fell 13% yesterday as it scrambles to make sense of its Donlin Gold project in Alaska, the biggest known undeveloped gold deposit anywhere. The joint venture with Barrick has essentially been in limbo since NovaGold's partner said last year it no longer made economic sense to pursue it.

• [By Monica Gerson]

  NovaGold Resources (NYSE: NG) is expected to post a Q3 loss at $0.03 per share.

  Premier Exhibitions (NASDAQ: PRXI) is projected to post its Q2 earnings.

• [By Holly LaFon]

  He increased his holdings in gold companies in the fourth quarter accordingly. Gold stocks he found attractive in the fourth quarter are: Novagold Resources (NG), Randgold Resources (GOLD), Iamgold Corp. (IAG), Barrick Gold Corp. (ABX), Agnico Eagle (AEM) and International Tower Hill (THM).

Hot Energy Stocks To Invest In Right Now: Range Resources Corporation(RRC)

Range Resources Corporation, an independent natural gas company, engages in the acquisition, exploration, and development of natural gas properties primarily in the Appalachian and southwestern regions of the United States. The company?s Appalachian region drilling and producing activities include tight-gas, shale, coal bed methane, and conventional natural gas and oil production in Pennsylvania, Virginia, Ohio, and West Virginia. It owns 4,969 net producing wells, approximately 2,750 miles of gas gathering lines, and approximately 1.8 million gross acres under lease. The company?s Southwestern drilling and producing activities cover the Barnett Shale of North Texas, the Permian Basin of West Texas and eastern New Mexico, the East Texas Basin, the Texas Panhandle, and the Anadarko Basin of Western Oklahoma. It owns 1,954 net producing wells, as well as approximately 886,000 gross acres under lease. As of December 31, 2010, Range Resources Corporation had had 4.4 Tcfe of pr oved reserves. It sells gas to utilities, marketing companies, and industrial users. The company was formerly known as Lomak Petroleum, Inc. and changed its name to Range Resources Corporation in 1998. Range Resources Corporation was founded in 1975 and is headquartered in Fort Worth, Texas.

Advisors' Opinion:

• [By Dave Forest]

  Consider Range Resources (NYSE: RRC). The company now trades at an enterprise value of $15.5 billion. And yet the after-tax value of its reserves at year-end 2012 was just $3.2 billion.

• [By David Smith]

  Also during Fox's revisit to the Barnett, Range Resources (NYSE: RRC  ) suffers a degree of ignominy for having drilled beneath a couple's 8,000-square-foot "dream house". As in a similar display in the first version, the owner is able to demonstrate flames shooting from his lighted garden hose.

• [By Chad Fraser]

  This started to change in 2004, when Range Resources (NYSE: RRC)—one of the Marcellus shale stocks we’ll look at below—began extracting gas from the shale rock using horizontal drilling and hydraulic fracturing.

Top 10 Financial Companies To Watch In Right Now: Hoku Corporation(HOKU)

Hoku Corporation operates as a solar energy products and services company primarily in the United States. It focuses on manufacturing polysilicon, a primary material used in the manufacture of photovoltaic (PV) modules; and designing, engineering, and installing turnkey PV systems and related services in Hawaii using solar modules purchased from third-party suppliers. The company was formerly known as Hoku Scientific, Inc. and changed its name to Hoku Corporation in March 2010. Hoku Corporation was incorporated in 2001 and is headquartered in Honolulu, Hawaii.

Hot Energy Stocks To Invest In Right Now: Nuverra Environmental Solutions Inc (NES)

Nuverra Environmental Solutions, Inc., formerly Heckmann Corporation, incorporated on May 29, 2007, provides environmental solutions to protect, enhance and advance environmental sustainability. Nuverra provides full-cycle environmental solutions to a national customer base consisting of two distinct end markets: Shale Solutions and Industrial Solutions.

The Company is focused on the removal, treatment, recycling, transportation and disposal of restricted solids, fluids and hydrocarbons for E&P customers. It also provides a one-stop-shop for energy recovery, re-refining and recycling of used motor oil and oily wastewater; plus a closed loop spent antifreeze program for retail, automotive and manufacturing customers. Nuverra specializes in providing environmentally compliant and sustainable solutions to a national footprint of customers.

Shale Solutions

Shale Solutions provides environmental solutions for unconventional oil and gas exploration and production, including the delivery, collection, treatment, recycle, and disposal of restricted environmental products used in the development of unconventional oil and natural gas fields. The Company operates in select shale areas in the United States, including the Marcellus/Utica, Eagle Ford, Bakken, Haynesville, Barnett, Permian, Mississippian Lime and Tuscaloosa Marine Shale areas. It serves customers seeking fresh water acquisition, temporary water transmission and storage, transportation, treatment or disposal of fresh water and complex water flows, such as flowback and produced brine water, in connection with shale oil and gas hydraulic fracturing drilling or hydrofracturing operations. The Company also transports fresh water for production and provides services for site preparation, water pit excavations and remediation.

Industrial Solutions

Industrial Solutions provides environmental and waste recycling solutions to its customers through collection and recycling services for waste prod! ucts, including UMO, which the Company processes and sells as RFO, oily water, spent antifreeze, used oil filters and parts washers, and provision of complementary environmental services for a diverse commercial and industrial customer base. Industrial Solutions operates a scalable network infrastructure of 34 processing facilities, approximately 385 tanker trucks, vacuum trucks and trailers and over 200 railcars. With a geographic presence in 19 states in the Western United States stretching from Washington to Texas, Industrial Solutions provides its services to a diverse range of more than 20,000 commercial and industrial customer locations.

Advisors' Opinion:

• [By Brian Stoffel]

  Nuverra Environmental Solutions (NYSE: NES  )
  Until recently, Nuverra used to be known as Heckmann, but the goal of the company remains the same: to meet all of the water needs of North America's energy industry. Over the past few years, Nuverra has built out an impressive network of pipes, injection wells, water treatment plants, and trucking fleets that help streamline water usage.

Hot Energy Stocks To Invest In Right Now: Southern Union Company(SUG)

Southern Union Company, together with its subsidiaries, engages in the gathering, processing, transportation, storage, and distribution of natural gas in the United States. It operates in three segments: Transportation and Storage, Gathering and Processing, and Distribution. The Transportation and Storage segment engages in the interstate transportation and storage of natural gas in the Midwest and from the Gulf Coast to Florida. It also provides liquefied natural gas (LNG) terminalling and regasification services. The Gathering and Processing segment involves in gathering, treating, processing, and redelivering natural gas and natural gas liquids (NGLs) in Texas and New Mexico. It operates a network of approximately 5,500 miles of natural gas and NGL pipelines, 4 cryogenic processing plants with a combined capacity of 415 MMcf/d, and 5 natural gas treating plants with a combined capacity of 585 MMcf/d. The Distribution segment engages in the local distribution of natural gas in Missouri and Massachusetts. This segment serves residential, commercial, and industrial customers through local distribution systems. The company was founded in 1932 and is based in Houston, Texas.

Hot Energy Stocks To Invest In Right Now: Frank s International NV (FI)

NA

Advisors' Opinion:

• [By Namitha Jagadeesh]

  Herro�� fund has beaten 96 percent of its peers in the last five years, data compiled by Bloomberg show. He owns shares in Daimler AG (DAI), the Stuttgart, Germany-based maker of luxury cars, and Fiat Industrial SpA (FI), the maker of commercial and agriculture vehicles spun off from Fiat SpA in 2011.

• [By Ben Levisohn]

  Frank’s International�(FI) has gotten a boost this morning after UBS started coverage of the oil-equipment company’s stock as a Buy. Analyst Angie Sedita�lists the four reasons why she calls the company a “hidden gem:”

  Bloomberg

  (1) Strong company operations – technical strengths, strong execution, above�average margins.
  (2) Highly attractive geographic exposure – 74% of revenues are driven by the offshore markets (US and international) and 45% from international activity.
  (3) Visible growth profile ��offshore and international markets offers the�highest growth opportunities in the market (ultra-deepwater fleet expected to grow 40% by 2016).
  (4) Financial strength ��almost no debt, solid FCF yield (3%) and dividend (1.5% yield).

  Sedita says the stock could rise to $33, 14% from its last price of $29.06.

  Frank’s has gained 3.4% today, while Weatherford (WFT) has gained 0.9% after a Wells Fargo upgrade.�Tesco�(TESO) has dropped 0.2% to $16.52,�Baker Hughes�(BHI) has fallen 0.6% to $49.98 and�National-Oilwell�(NVO) is off 0.5% at $78.48.

Risk from Madoff scam remains at JPMorgan

The nation's largest bank isn't out of financial jeopardy for its business link to the Bernard Madoff fraud scandal.

The court-appointed trustee trying to recover billions Madoff stole in the now-infamous Ponzi scheme petitioned the U.S. Supreme Court this month, asking it to issue the final word on whether JPMorgan Chase should pay for taking little action on suspicious activity in the account Madoff held at the bank.

The petition also argues that Swiss banking giant UBS, global bank HSBC and other financial institutions should share legal liability with JPMorgan for failing to stop the fraud.

"Madoff did not sustain this unprecedented fraud for more than two decades by himself," David Rivkin, the counsel for trustee Irving Picard, wrote in the Oct. 9 petition. "Instead, he was aided by a network of financial institutions, feeder funds and individuals who funneled investments" into Madoff's firm, provided financial services "and (of course) skimmed off substantial amounts for their efforts."

The petition asks the Supreme Court to review a federal appeals court decision in June that upheld lower court rulings that barred the trustee from pursuing financial recovery from the financial institutions. The lower courts ruled the federal law that empowers the trustee limits him to customer claims against Madoff's now-insolvent business.

The high court set a Dec. 9 deadline for the banks and feeder funds to file legal responses. They have repeatedly said they acted in good faith and could not have detected or stopped Madoff's scheme.

Formally known as a writ of certiorari, the petition represents a legal long shot. The Supreme Court agrees to accept only a fraction of the thousands of cases submitted for review. But Picard's petition argues that several federal appeals courts around the nation have issued differing rulings on similar matters. The Supreme Court sometimes reviews such cases to resolve legal discrepancies.

David Sheehan, Picard's chief counsel, maintained ! the trustee has legal authority "to pursue compensation from any third party that collaborates with a broker to defraud its customers."

JPMorgan "was foremost among (financial institution) collaborators, standing at the very center of Madoff's fraud for over 20 years," Picard's petition argues.

Billions of dollars flowed through Madoff's retail checking account at the New York-based bank "in suspicious and repetitive round-trip transactions." Madoff was assumed to be making investments on behalf of thousands of mom-and-pop clients, celebrities, charities and financial institutions, and the account funds weren't "segregated in any fashion," the petition argued.

According to the trustee's petition, JPMorgan's chief risk officer, John Hogan, warned colleagues about 18 months before the fraud collapsed that "there is a well-known cloud over the head of Madoff and that his returns are speculated to be part of a Ponzi scheme." But the bank response was to assign a junior employee "to see what a Google search could turn up about Madoff," the petition argues.

Despite its suspicions, JPMorgan ultimately invested with several feeder funds that funneled money to Madoff. But unlike thousands of other investors, JPMorgan Chase redeemed more than $276 million before the scheme crumbled. At that time, the bank sent a suspicious activity report about Madoff to the United Kingdom's Serious Organized Crime Agency.

"But these revelations came too late to do anyone, save JPM, any good," the petition argued.

Madoff confessed to the fraud in December 2008 and pleaded guilty the following year without standing trial. He's now serving a 150-year federal prison term. Accountants and other experts assisting Picard determined that the scam ran up nearly $20 billion in losses. Five former Madoff employees are currently on trial in New York on charges they were knowing participants in the scheme.

JPMorgan could also face criminal liability for its long financial relationship with Madoff. Th! e New Yor! k Times reported Thursday that federal authorities and the bank have discussed a deferred prosecution agreement in which the bank would pay a financial fine and make acknowledgments concerning its Madoff-related activity.

The Times account, which cited information from people briefed on the inquiry, reported that JPMorgan could also be required to hire an independent monitor.

The Manhattan U.S. Attorney's office declined to comment. JPMorgan spokesman Joe Evangelisti reiterated previous statements that all personnel "acted in good faith" with regard to Madoff's banking.

Separately, JPMorgan is negotiating a potential record-setting $13 billion settlement to address the role the bank and its subsidiaries played in marketing mortgage-backed securities during the run-up to the 2008 financial collapse. The tentative agreement is expected to include a mixture of fines and consumer relief.

Contributing: USA TODAY's Ed Brackett

Zynga Inc (ZNGA) Q3 Earnings Preview: What To Expect?

Zynga, Inc. (NASDAQ:ZNGA) will hold a conference call to discuss financial results for its third quarter on Oct. 24, 2013, at 2:00 p.m.Pacific Time (5:00 p.m. Eastern Time), following the release of its financial results after the close of market.

San Francisco, California-based Zynga is a leading provider of social game services. Zynga's popular games include Zynga Poker, Words With Friends, Scramble With Friends, Gems With Friends, Draw Something, FarmVille 2, ChefVille, CityVille, Bubble Safari and Ruby Blast.

Wall Street expects Zynga to report a loss of 4 cents a share, according to analysts polled by Thomson Reuters. In the same period last year, Zygna reported breakeven results. Zynga sees third quarter loss of 2 to 5 cents a share.

In the last three quarters, Zynga's earnings have managed to top Street view, with upside surprise ranging between 75 and 133.3 percent. However, the Street's enthusiasm for Zynga's earnings have diminished as the consensus loss estimate has widened by 2 cents in the past 90 days. On the positive side, two analysts have raised their third quarter expectations for Zynga in the past 30 days.

Quarterly revenues are expected to decline 43.9 percent to $143.35 million from $255.61 million a year-ago. In the past four quarters, the company's revenue growth has been -31, -18, flat and 3 percent, respectively. The company forecasts revenue of $175 million to $200 million.

The comments of Mattrick during the second quarter call "we expect to see more volatility in our business than we would like over the next two to four quarters," doesn't bode well for the third quarter results.

Zynga is taking substantial steps to restructure its business away from web-based social PC games in an attempt to narrow its focus on mobile gaming, and the transition toward mobile gaming is likely to weigh on its earnings.

Recently, co-founder Justin Waldron left the company to pursue other goals and Zynga have lost its position as the top game-maker f! or Facebook to King.com, which develops "Candy Crush Saga." King.com has a monthly active user base of 159.4 million versus Zynga's 131.5 million, according to AppData. This shows fewer users are playing Zynga games on Facebook.

Daily active users (DAUs) of Zynga fell 45 percent to 39 million in the second quarter of 2013. Monthly active users (MAUs) decreased 39 percent to 187 million and monthly unique users (MUUs) also fell 36 percent to 123 million.

The magnitude of the reductions indicates a faster-than-anticipated deterioration for web-based social games and possibly a more challenging transition ahead for the company as it shifts toward more fragmented mobile gaming platforms. In this scenario, bookings would be a key metric. Bookings were $188 million for the second quarter of 2013, a decrease of 38 percent from last year.

Through the first two months of the third quarter, worldwide desktop comScore data for Zynga showed a 31.4 percent YoY decline in unique visitors globally, but a 2.8 percent increase in total minutes and a 22 percent increase in total page views.

U.S. mobile data (iPhone + Android) showed weaker trends, with unique visitors declining 27.2 percent YoY and mobile minutes slipping 14.1 percent.

During the quarter, the company hired Don Mattrick as CEO. Mattrick hails from Microsoft's Xbox business and succeeded founder Mark Pincus. Pincus remains the Chairman and Chief Product Officer of Zynga.

Following his appointment, Mattrick announced an organization restructure that led to the departure of three executives – David Ko (Chief Operating Officer), Cadir Lee (Chief Technology Officer), and Colleen McCreary (Chief People Officer) – and a realignment of other leaders. Recently, co-founder Justin Waldron just left the company to pursue other goals.

Investors expect Mattrick to provide further details on the company's new organizational structure and operating priorities on the upcoming conference call.

"We estimate online game rev! enue will! be $162mm, down 43% YoY," UBS analyst Eric Sheridan wrote in a note to clients.

Dojo Mojo and Castleville Legends were among the major releases during the quarter, though Zynga also launched Words with Friends in seven new languages (Spanish, Italian, Portuguese, Danish, Dutch, Russian and Swedish).

Late in the second quarter, Zynga launched Hidden Shadows and Eden to Green (the latter developed by iNiS), which is expected to have a greater contribution in the third quarter than in second.

During the second quarter earnings call, Zynga announced that the company would not pursue real money gaming licenses in U.S. jurisdictions. That said, the company's real money gaming offerings in the UK (ZyngaPlusPoker and ZyngaPlusCasino) remain active.

"We look forward to hearing more about management's plans regarding the international real money gaming opportunity, as well as thoughts on revisiting the U.S. opportunity in the future, Sheridan said.

For the second quarter, Zynga's loss narrowed to $15.8 million or 2 cents a share from $22.8 million or 3 cents a share last year. Excluding items, adjusted loss was 1 cent a share. Zynga's revenues for the second quarter dropped to $230.7 million from $332.5 million last year.

Zynga has reported third quarter results just once in its short history as a public company, trading up 12 percent following those results. The stock has outperformed the market by about 34 percent this year.

Not Everyone's Lovin' It

Even though it is, and will probably always be, the world's largest chain of hamburger fast food restaurants in the world, the forecast for this company's growth has started to look a little bleak, writes MoneyShow's Jim Jubak, also of Jubak's Picks.

McDonald's (MCD) customers are getting squeezed and so, therefore, is McDonald's.

For the third quarter, comparable store sales grew by just 0.7% in the United States. That's down from 1% comparable store sales growth in the second quarter. Global comparable sales climbed by 0.9%. Wall Street had been expecting 1% growth.

McDonald's did beat analyst earnings estimates of $1.52 a share by a penny, but that wasn't enough to offset a rather gloomy forecast for growth. In October, the company said it expects flat comparable store sales. The shares finished down 0.64% at the close on October 21.

In the United States, new menu items such as pumpkin-spice lattes and Mighty Wings didn't draw enough new spending to offset the company's need to focus on value pricing, as lower income customers continue to cut their spending. The problem seems to be worse, though, than at competitors. Wall Street analysts project that McDonald's will grow revenue by just 2.4% in 2013, compared to the National Restaurant Association's estimate of 4.9% growth for the US quick-service dining sector.

Reflecting those problems, operating margin at McDonald's company-owned restaurants fell to 18.7% in the quarter, from 19.1% in the third quarter of 2012.

Unfortunately, the company's US customers aren't the only ones feeling squeezed, or the only ones cutting their spending. In Europe, comparable store sales climbed 0.2%. In the Asia/Pacific, Middle East, and Africa region, comparable store sales fell 1.4% in the quarter and operating income dropped 12%, mostly thanks to unfavorable exchange rates. (In constant currencies, operating income fell just 4%.)

The company didn't offer investors any immediate cheer. In the fourth quarter, McDonald's expects comparable store sales growth to be in line with results in recent quarters and margins would fall, the company said, at something like recent rates of decline. Commodity costs, up 2.5% in the third quarter in the United States, won't help: For the full year, commodity costs will climb 1.5% to 2%, the company said. Currency effects will take five to six cents out of 2013 earnings per share.

Full disclosure: I don't own shares of any of the companies mentioned in this post in my personal portfolio. When in 2010 I started the mutual fund I manage, Jubak Global Equity Fund, I liquidated all my individual stock holdings and put the money into the fund. The fund did not own shares of McDonald's as of the end of June. For a complete list of the fund's holdings as of the end of June see the fund's portfolio here.

5 Stocks With Bad Operating Margin Growth — SYUT CTEL HKTV IMMU FMBI

Popular Posts: 6 Biotechnology Stocks to Buy Now16 Oil and Gas Stocks to Sell Now6 Software Stocks to Buy Now Recent Posts: 5 Stocks With Crummy Sales Growth — KYTH NAVB CTEL HKTV CUR 5 Stocks With Bad Operating Margin Growth — SYUT CTEL HKTV IMMU FMBI 5 Stocks With Strong Operating Margin Growth — IDT MX CALL AHS ICA View All Posts

This week, these five stocks have the worst ratings in Operating Margin Growth, one of the eight Fundamental Categories on Portfolio Grader.

Synutra International, Inc. (NASDAQ:) manufactures infant formula and other nutritional products. SYUT also gets F’s in Earnings Growth, Earnings Momentum, Analyst Earnings Revisions, Equity, Cash Flow, and Sales Growth. .

City Telecom (H.K.) Ltd. (NASDAQ:) provides fixed telecommunications networks and international telecommunications services for residential and corporate customers. CTEL gets F’s in Earnings Growth and Sales Growth as well. .

Hong Kong Television Network Ltd. Sponsored ADR (NASDAQ:) engages in the provision of multimedia production and contents distribution business, and other multimedia related activities in Hong Kong. HKTV also gets F’s in Earnings Growth and Sales Growth. .

Immunomedics, Inc. (NASDAQ:) develops, manufactures, and sells diagnostic imaging and therapeutic products. IMMU also gets F’s in Earnings Growth, Equity, Cash Flow, and Sales Growth. .

First Midwest Bancorp, Inc. (NASDAQ:) is the holding company for First Midwest Bank. FMBI also gets an F in Earnings Growth. The stock’s trailing PE Ratio is 26.90. .

Louis Navellier’s proprietary Portfolio Grader stock ranking system assesses roughly 5,000 companies every week based on a number of fundamental and quantitative measures. Stocks are given a letter grade based on their results — with A being “strong buy,” and F being “strong sell.” Explore the tool here.

Get A Fat Special Dividend With This 'Big Data' REIT Conversion

I love it when rain keeps falling on a company whose future is sunny. 

News that the Internal Revenue Service was scrutinizing this company's application to become a real estate investment trust (REIT) sent the shares down 5.5% in one day last month. Regardless of whether the company is allowed to change its corporate status, the fact that it's applied to do so means upward of $420 million in additional taxes over the next four years.

 

This company's shares also took a beating on April's first-quarter earnings report, plummeting 12% when revenue and profits missed lofty analyst expectations. Even though revenue increased 17% over the previous year and the company's gross margin was an outstanding 50%, analysts expected 7 cents more in earnings per share. Investors punished the stock, and short-sellers are swarming, with almost 17% of the shares outstanding borrowed and sold.

But all this just gives investors a chance to pick up a growth story that might soon be announcing a 10% special dividend. This company is in one of the hottest sectors of the tech world, and it's made a commitment to returning money to shareholders.

The Growth Industry That Doesn't Have To Pick Sides
The tech world is notoriously competitive, and investors usually have to pick the winner of the next software or hardware battle. 

Witness the battle over mobile supremacy between Apple (Nasdaq: AAPL) and Samsung (OTC: SSNLF). Growth in the sector doesn't necessarily mean that both will profit as they fight over prices, software and rounded corners.

Investors in Internet search giant Baidu (Nasdaq: BIDU) understand this all too well. Rival Qihoo 360 (NYSE: QIHU) has stolen Baidu's spotlight and helped drive a 40% loss in BIDU over the past two years. Almost 400 million new Internet users in China since 2006 could not keep the country's largest search engine from losing the battle between PCs and mobile devices.

The growth in data center needs means that providers are not forced to compete in a no-holds-barred deathmatch. The number of Internet users worldwide doubled between 2006 and 2011, from 1.04 billion in 2006 to more than 2 billion users, and that still leaves 5 billion people to be connected. The number of smartphones in use around the world is expected to jump 400% to 2 billion by 2015.

With growth happening everywhere, investment for new centers and equipment is expected to exceed $35 billion this year. These are not services that can be outsourced to one or two locations around the globe -- they must be built close to clients. When your clients are every Internet and data user on the planet, then you're going to need more data centers. 

In this industry, it's a race to put up enough locations to serve exploding demand.

Equinix (Nasdaq: EQIX) is an $8.7 billion provider of data center services to protect and connect the information assets of enterprises and network providers across the globe. The company serves more than 4,000 companies with managed IT infrastructure and co-location services, as well as connecting companies directly to their customers with its own interconnection platform. 

In September 2012, Equinix's board approved the conversion to a REIT, with January 2015 as the target conversion date. Converting to a REIT could save Equinix between $55 million and $130 million a year on taxes. 

News broke that the IRS was scrutinizing the company's eligibility for REIT status last month, and EQIX was hit hard. It's now down 20% from its $230 peak this year.

At odds with the IRS is the treatment of interconnection fees Equinix receives for services like power and telecom networking. The fees brought in $272 million in 2012, or about 14% of total revenue. Other data center REITs like CoreSite Realty (NYSE: COR) do not account for these fees as tax-exempt, so to qualify for REIT status, the company may need to change its accounting and pay taxes on the portion of revenue. Three other data center companies -- CoreSite, Digital Realty Trust (NYSE: DLR) and DuPont Fabros Technology (NYSE: DFT) -- are already operating as REITs, so there is a powerful precedent for Equinix's approval. 

The downside to filing for REIT status is that the company will need to pay between $340 million and $420 million in depreciation recapture taxes for reclassifying its assets as real estate. The amount is payable over four years and already modeled into the company's projections.

Revenue in 2012 came from a broad variety of services, including networking (26%), cloud and IT services (24%), financial services (21%), content and digital media (20%), and enterprise (9%). Revenue has grown by an annualized 28% since 2008 while costs have grown at a slower 24% pace, meaning that margins are improving with higher sales. Gross margins are expected to be an outstanding 68% for 2013, about the industry average.

Ownership in the stock is at 115% of shares outstanding because of extremely strong institutional holders and the 16.8% of shares shorted. Some big hitters own Equinix, including Coatue Management (8.9%), Goldman Sachs (4.9%), Lone Pine Capital (4.6%) and Paulson & Co. (4.2%). The fact that more shares are owned than issued means that any strength in the stock could quickly lead to a short squeeze as short-sellers are required to cover their borrowed shares. This could happen on any favorable notice by the IRS.

Make A Quick 10% Return And Keep The Shares For Your Dividend Portfolio
On top of its regular distribution once it's been granted REIT status, Equinix expects to issue a special distribution of $700 million to $1.1 billion in undistributed accumulated earnings and profits. The annual report lays out the plan to do this in a combination of 20% cash and 80% stock after a favorable ruling from the IRS, with the distribution to be mostly completed before 2015. Splitting the difference on the $700 million to $1.1 billion, a special distribution of $900 million would amount to $18.75 a share, or just over 10% of the current share price.

An analysis of the company's cash flow backs up the argument for a healthy dividend.

This amounts to a dividend of $10.91 per share and a yield of 6% on current price. Although most companies do not pay out all distributable cash, a distributed cash flow-to-dividend ratio of 1.5 is common and would yield a $7.25 dividend for a 4% yield. This yield should easily be sustainable and still leaves plenty of cash for capital expenditures and growth.

Analysts at Wells Fargo agree. They estimate that the company is worth much more, giving it an "outperform" rating and a valuation range of between $277 and $293 per share.

Risks to Consider: Even with the 20% drop in the shares, the stock is trading at an expensive 61 times trailing earnings and could fall further if the IRS declines to grant it REIT status.

Action to Take --> Other data center companies have been allowed to convert, and it should only be a matter of time before Equinix receives good news. The stock has some strong upside catalysts and could be a good addition to your REIT portfolio.

P.S. -- Stocks like Equinix are similar to a special group of securities we call "Forever" stocks. These are world-dominating companies that pay investors a fat dividend, dig a deep moat around their business to fend off competitors and buy back massive amounts of stock, boosting the value for the rest of the shares. They're solid enough stocks to buy, forget about and hold "Forever." To learn more about these stocks -- including some of their names and ticker symbols -- click here.

Sector Watch: Numerous Billionaires Hold Apparel on 52-week Low

A high number of billionaire investors hold today's featured apparel companies including American Eagle Outfitters (AEO), Urban Outfitters (URBN) and Body Central Corp. (BODY), as revealed by the GuruFocus 52-week low screener.

The three companies selected are popular youth-oriented or lifestyle brands. They are highlighted to show numerous billionaire investors, signifying possible deep value as the companies navigate through a 52-week low.

Sector Watch: Retail – Apparel & Specialty

The apparel and specialty retail sector in the U.S. currently has 22 out of 180 companies on a 52-week low. The sector low ratio is 0.12.

Highlight: American Eagle Outfitters (AEO)

The AEO share price is currently $14.19 or 38.2% off the 52-week high of $22.97. Its yield is 2.50%.

Down 37% over 12 months, American Eagle Outfitters has a market cap of $2.74 billion and is traded at a P/B of 2.30.

Founded in 1977, American Eagle Outfitters offers a range of clothing, accessories and personal care products under the American Eagle Outfitters and 'aerie' brands. In early 2013, the company operated 893 American Eagle Outfitters stores and 151 aerie stand-alone stores, as well as 49 franchised stores in 13 countries. The company also sells and ships merchandise to 81 countries worldwide through its e-commerce sites.

The company reported financial results for the second quarter ending Aug. 3, 2013, with revenue of $727 million, off 2% from last year's quarterly revenue of $740 million. The company's gross profit is down by 11%, with $245 million for the reporting quarter, and operating income decreased by 56% to $29 million. Earnings per share were reported at $0.10, down from the same quarter of last year with an adjusted EPS of $0.21, representing a drop of 52%.

Guru Action: Eleven gurus currently hold AEO shares and there is insider trading.

As of June 30, 2013, Chuck Royce is the top Guru stakeholder, holding 12,820,100 shares, after increasing his po! sition by 13.99%. His shares represent 6.65% of shares outstanding. As of the second quarter, Royce bought 1,573,367 shares at an average price of $19.22 for a loss of 26.2%. He has averaged a loss of 8% on 17,883,737 shares bought at an average price of $15.43. He has also lost 19% on 6,659,537 shares sold at an average price of $17.56 per share.

Tracking share price, revenue and net income:

[ Enlarge Image ]

Highlight: Urban Outfitters (URBN)

The URBN share price is currently $37.01 or 17.7% off the 52-week high of $44.96. Its yield is 00.0%.

Up 0% over 12 months, Urban Outfitters Inc. has a market cap of $5.45 billion and is traded at a P/B of 3.60. The P/E is 20.70.

Incorporated in 1976, Urban Outfitters Inc. is a lifestyle specialty retail company that operates under the Urban Outfitters, Anthropologie, Free People and Terrain brands. The wholesale segment operates under the Free People and Leifsdottir brands. The company also offers its products and markets its brands directly to the consumer through its e-commerce websites with the same brand names.

The company reported financial results for the three months ending July 31, 2013, with a record net income of $76 million and earnings of $0.51 per diluted share. The company's total net sales have increased by 12% over the same period a year ago.

Guru Action: Seven gurus currently hold URBN shares and there is active insider selling.

As of June 30, 2013, Jim Simons is the top Guru stakeholder, holding 1,545,400 shares, after increasing his position by 21.72%. His shares represent 1.05% of shares outstanding. As of the second quarter, Simons bought 275,800 shares at an average price of $41.26 for a loss of 10.3%.

Across a five-year history, he has averaged a loss of 11% on 1,545,400 shares bought at an average price of $41.37.

Tracking share price, revenue and net income:

[ Enlarge Image ]

Highlight: Body Central Corp. (BODY)

The BODY share price is currently $5.36 or 60% off the 52-week high of $13.39. Its yield is 0.00%.

Down 48% over 12 months, Body Central Corp. has a market cap of $85.5 million and is traded at a P/B of 1.00.

Body Central Corp. is a multi-channel specialty retailer that operates apparel stores, and also conducts direct business via catalogs and a website. The company offers women's clothing, jewelry, accessories and shoes.

Body Central Corp. reported financial results for the second quarter of 2013, with net revenues of $75.1 million, down from $79.4 million for same quarter of 2012. The company reported a net loss of $12.8 million for the second quarter of 2013, compared to a net income of $3.4 million in the second quarter of 2012. As of the end of June 2013, the company operates 286 stores.

Guru Action: Five gurus currently hold BODY shares and there is one 2013 insider trade.

As of June 30, 2013, Chuck Royce is the top Guru stakeholder, holding 408,400 shares, after make a new buy at an average price of $11.05 per share and taking a loss of 51.50%.

Tracking share price, revenue and net income:

[ Enlarge Image ]

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GuruFocus Real Time Picks reports the stock purchases and sales that Gurus have made within the prior 2 weeks. The report time lag can be as short as 2 days after the date of the transaction. This feature is for Premium Members only.

Check out the GuruFocus special feature 52-week low screener to find the stocks hitting new lows but are still held by top investor Gurus and Insiders.

Will VW Fall Behind in China?

Volkswagen (NASDAQOTH: VLKAY  ) is a powerhouse in China. It's VW brand sells more than any other brand, and the company's overall sales are second only to market leader General Motors (NYSE: GM  ) -- and VW already makes more money in China than GM.

But lately, VW's growth in China hasn't been keeping up with the overall market. In this video, Fool.com contributor John Rosevear looks at VW's latest sales numbers -- and at some of the factors that could be putting a damper on the German giant's growth plans.

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

Markets Pop On Weak Dollar Events

China, Shutdown, Evans Contribute To Dollar's Pain

Global trade has an enormous impact on both the financial markets and worldwide economy. Therefore, when the currency that serves as the guidepost for valuing assets drops 1%, it impacts investor decisions across all asset classes. Thursday's tone was set in the currency pits as the U.S. Dollar Index (UUP) dropped more than 1%, which is a big move for a currency (see upper right corner in chart below). This week UUP was also turned back at a logical point of resistance (see line A), which provided further support for a weak-dollar friendly allocation.

Bad News Means More Stimulus

The Federal Reserve respects the impact of the dollar's value on emerging economies. An economic warning from China not only increased the odds of additional Chinese stimulus, but it also increased the odds of a Fed taper "push back." Stocks like the idea of postponing the tapering process. From Reuters:

China's exporters face a difficult time in coming months as demand from emerging markets slows, the Chinese trade ministry warned on Thursday after the latest trade data showed sales to Southeast Asia slowed sharply in September. But China is ready to take measures to support its exporters to ensure the trade sector grows 8 percent this year as targeted, Commerce Ministry Spokesman Shen Danyang said, allowing exporters to see "mild growth" in the next few months.

Shutdown May Shut Down Fed's Taper

The Fed desperately wants to back away from its non-traditional forms of monetary stimulus (QE). The news from China will not assist in that cause, nor will the recent government shutdown in the United States. From Bloomberg:

The government shutdown and debt-ceiling debate prompted Fitch Ratings on Oct! . 15 to put the U.S. on watch for a possible credit downgrade. S&P said yesterday the impact of the impasse was worsening by the day and had shaved at least 0.6 percent off of fourth quarter growth, taking $24 billion out of the economy. The ratings agency forecast 2 percent annualized growth in the fourth quarter, down from the 3 percent seen last month.

Three Cheers For "No Taper"

Charles Evans added some additional fuel to the weak-dollar fire when he cited a lack of data as another reason to postpone tapering of the Fed's bond buying program: From Bloomberg:

Federal Reserve Bank of Chicago President Charles Evans, an outspoken advocate of pressing on with Fed stimulus, said the central bank should not begin reducing the pace of asset purchases as the data used to gauge the economy's health stopped during the government shutdown. "Only the data can tell us how much progress we've made and they aren't saying much right now," Evans said today in a speech prepared for delivery in Madison, Wisconsin. "The data available in September were inconclusive, and since then, incoming information has been silenced with the federal government shutdown."

Investment Implications - Foreign Assets Benefit

In Thursday's ETF analysis, evidence is presented that supports increasing demand for assets that get a tailwind from a weak U.S. dollar, including emerging markets (EEM) and foreign stocks (EFA). Casting a wider economic net, our market model told us to start buying stocks last week even with the threat of a U.S. default. Wednesday, we continued with our incremental allocation shifts by adding some exposure to the energy sector. Thursday, we sat tight holding long positions in small caps (IJR), Europe (FEZ), emerging markets and technology (QQQ). The upper bounds of the bullish S&P 500 trend channel shown below may offer some resistance to the market's near vertical ascent.

Source: Markets Pop On Weak Dollar Events

Disclosure: I am long EEM, EFA, QQQ, IJR, FEZ. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article. (More...)

Sandisk Corp. (SNDK) Q3 Earnings Preview: Signs Point To Good Things To Come

SanDisk Corp. (SNDK) will host a conference call Wednesday, Oct. 16, 2013 at 2 p.m., Pacific to discuss its third quarter 2013 financial results.

Wall Street anticipates that SNDK will earn $1.32 for the quarter. iStock expects the NASDAQ 100 member to beat Wall Street's consensus number. The iEstimate is $1.46, a fourteen cent upside surprise.

Sandisk Corporation designs, develops, manufactures, and markets flash storage card products that are used in various consumer electronics products. The company offers removable cards under the SanDisk Ultra, SanDisk Extreme, CompactFlash, and SanDisk Extreme PRO brands; embedded products under the iNAND brand; and digital media players under the Sansa brand.

In the last four quarters, the flash memory maker has topped Wall Street's consensus every time by an average of 30%, which would put EPS much higher than our iEstimate at $1.72.  Last quarter's surprise of 30.10% (on the average coincidentally) dove shares from $59 and change to more than $63 following the profit news.

The bottom line is always celebrated, but it is management's forward guidance that propels or repels the stock price.

According to onstrategies.com, "Given current price trends, some analysts expect Flash to reach parity with disk in the next 12 – 18 months (or maybe sooner), there will be less reason for your next transaction system to be disk-based. In fact there is good reason to be a bit skeptical on how soon supply of SSD Flash will ramp up adequately for the transaction system market; but SSD Flash will gradually make its way to prime time."

Put into English, demand should continue to improve for companies like SanDisk Corp. (SNDK). Unlike hard drives, internal Solid State Drive prices in USD have remained relatively steady since March; whereas hard drives prices have steadily declined according to pcpartpicker.com.

The combination of relatively steady prices and the upward slope of demand should work favorably for SanDisk and peers, which hopefully leads to top-end guidance from management Wednesday afternoon.

SNDK's financial statements are also working in favor of the NASDAQ stock and its shareholders. Year-over-year (YoY) revenues grew 42% in Q2 while total expenses rose at a much, much slower pace of 8.8%.

That usually means a fat jump in margins, which is what we see as YoY net margin spiked to 17.73% from 1.26%. That's probably why investors reacted so positively following last quarter's quarterly checkup.

We find no problems one the balance sheet as inventory actually fell during 43% revenue growth. Meanwhile, accounts receivable barely budged higher. This pairing is usually a sign of demand outstripping supply; a dynamic that usually benefits shareholders and companies, again.

Overall: The iEstimate and market trends suggest that SanDisk Corp. (SNDK) should top the analysts' consensus and conditions are ripe for upbeat management guidance

Apple Taps Burberry CEO Angela Ahrendts for Retail Chief

Peter Foley/Bloomberg via Getty ImagesBurberry Group CEO Angela Ahrendts. LONDON -- Christopher Bailey, the designer credited with restoring the cachet to fashion brand Burberry, is to become chief executive next year when long-standing boss Angela Ahrendts will move to Apple. The 157-year-old British fashion house, famous for its camel, red and black check pattern, said Tuesday that Ahrendts would step down by mid-2014 after which Bailey would combine his role as chief creative officer with chief executive. News the 42-year-old Yorkshireman would hold both positions sparked concern among some analysts that he might be taking on too much, and sent shares in the group down 6 percent in early trading, valuing the business at 6.6 billion pounds. "There will undoubtedly be relief that Mr. Bailey, the driving force behind the brand for the last 12 years, is staying," Morgan Stanley (MS) said in a note to clients. "But we anticipate some investor concern about combining the chief creative officer and CEO roles, which are both time consuming and require very different skill sets." Ahrendts, who has been Burberry (BURBY) boss for eight years, during which time its share price has soared about 250 percent, will take up a newly created position at Apple as a senior vice president with oversight of retail and online stores. She will report directly to CEO Tim Cook. Ahrendts will be looking to do better than the last chief executive of a British company who left London to join Apple (AAPL) -- John Browett who quit Dixons to lead the iPad and iPhone maker's global retail expansion in 2012. He left six months later. Bailey joined Burberry in 2001 and has held the major creative role for six years, helping to rebuild the group after it became a victim of its own success in the 1990s when its trademark pattern was embraced by the mass market, losing its appeal to its core wealthy clientele. Under Ahrendts and Bailey, the group has refocused on the luxury market, increased its store base and expanded rapidly in emerging markets such as China, and it reported first-half results Tuesday showing the benefits of that approach. "The strategies which have underpinned our success in recent years will remain unchanged as Christopher has been an integral part in developing these over the last 12 years," chief financial officer Carol Fairweather told reporters. 'Profoundly Moved' Burberry, which boasts Cara Delevingne and Jourdan Dunn as faces of the brand, reported retail revenue up 17 percent to 694 million pounds ($1.11 billion) in the six months to Sept. 30 -- in line with analyst forecasts. Its total revenue was 1.03 billion pounds, up 14 percent. "I am profoundly moved and humbled to be asked to take on the CEO role at this company that means so much to me," said Bailey. "I also feel privileged to be keeping my role as chief creative officer, as I believe that creativity and innovation have been at the heart of our success in the last ten years." Shares in Burberry, up 41 percent over the last year, recovered some of their losses in early trading to be down 3.8 percent at 1,524 pence at 3:50 a.m. Eastern time. "The impressive update has been overshadowed by the news that the chief executive will be leaving the company next year," brokers Hargreaves Lansdown said. Burberry's first-half revenue growth was driven by robust demand for outerwear and large leather goods. Retail sales from stores open at least a year grew by 13 percent, helped by double-digit growth in the Asia Pacific and the Europe, Middle East, India and Africa divisions and high-single digit growth in the Americas. Burberry said in May first-half pretax profit would be below last year's 173 million pounds as its focus shifts from wholesale markets -- sales through non-Burberry stores -- to high-growth Latin American and Asian retail sales from Burberry branded stores. Percentage of U.S. population who visited in March: 14.2%  Revenue: $73.3 billion  1-year stock price change: 27.56%  Store category: Discount & variety stores

What to Watch on Wall Street This Week: Earning and Upgrades

Alamy You can never know in advance all the news that will move the market in a given week, but some things you can see coming. From a new tablet from Amazon to Microsoft giving Windows an overdue makeover, here are some of the items that will help shape the week that lies ahead on Wall Street. Monday -- Bank on It: We're just getting started with earnings season, but Monday will be relatively quiet on that front. One of the few companies kicking off the week with fresh financials will be Wintrust (WTFC), a financial holding company with $18 billion in assets. It operates 15 different community bank subsidiaries with 100 different locations. It may not be the same kind of snapshot of the financial industry that we got this past Friday when bigger banks reported, but we can't ignore the importance of community banks in gauging the state of the economic turnaround. Tuesday -- Pop Stars: Coca-Cola (KO) reports on Tuesday, and if that isn't enough we will have PepsiCo (PEP) checking in on Wednesday. Coke and Pepsi have been battling one another for years, but in some ways, they're united against common adversaries these days. Between the growing popularity of making sodas at home, and critics taking them on over the health implications of consuming too many sugary (or artificially sweetened) drinks, it's a whole different kind of cola war these days. Investors looking for growth may want to look elsewhere. Analysts see Pepsi's revenue inching just 2 percent higher when it reports. It's worse for Coca-Cola, with Wall Street targeting a 2 percent decline in sales. Wednesday -- Paypal Day: eBay (EBAY) reports its third quarter results on Wednesday. There was a time when eBay was strictly an online flea market, but these days we're seeing PayPal become a bigger part of the model. Yes, eBay also owns PayPal, the most popular way to settle online transactions outside of plastic. PayPal has started to expand its reach into traditional retailers, making it possible for someone to check out at a physical storefront using PayPal. Analysts see revenue and earnings growing by 15 percent for the quarter, and it's a fair bet that PayPal will be the one carrying the company again this period. Thursday -- Microsoft Gets a Do Over: It's been a year since Microsoft (MSFT) rolled out Windows 8. The operating system -- built from the ground up with tablets and other touch-screen experiences in mind -- was supposed to breathe new life into the struggling PC industry. It fell short. PC sales have fallen every quarter since the Windows 8 roll out, and while the software giant has sold a ton of licenses, users have had mixed feelings about the platform. Windows 8.1 will be available online on Thursday as an upgrade, tackling many of the customization flaws in the original version. A hard copy of the software will be available at retailers a day later. It may not be enough to rescue the PC industry, but at least it will give computer users something different to kick around. Friday -- Another Kindle is Born: There will be Surfaces, iPads, and other tablets hitting the market later this month, but on Friday we get to see Amazon.com's (AMZN) latest toy when the 7-inch Kindle Fire HDX hits the market. Amazon is pricing the new device aggressively, as it did for its previous models. Despite a rich spec sheet, the Kindle Fire HDX starts at just $229. Amazon isn't out to turn a profit on the hardware. It knows that the real money waits in the digital downloads that can be purchased through its ecosystem. A neat feature here is Mayday, through which visual tech support will be available for free. Techies won't be able to see you through the tablet's camera, but they will be able to see what you're doing and tackle what ails your Kindle Fire. Let's hope that the early adopters don't abuse the perk.

Google Plans to Show Users' Photos, Names in Ads

Marcio Jose Sanchez/AP Google wants your permission to use your name, photo and product reviews in ads that it sells to businesses. The Internet search giant is changing its terms of service starting Nov. 11. Your reviews of restaurants, shops and products, as well as songs and other content bought on the Google Play store could show up in ads that are displayed to your friends, connections and the broader public when they search on Google. The company calls that feature "shared endorsements." Google (GOOG) laid out an example of how this could happen: "Katya Klinova," her face and five-star review appear underneath an ad for Summertime Spas. You can opt out of sharing your reviews. Google said Friday that the name and photo you use in its social network, Google Plus, is the one that would appear in the ad. Google has said the social network has 390 million active users per month. "We want to give you -- and your friends and connections -- the most useful information. Recommendations from people you know can really help," the company said in an explanation of the changes. The Mountain View, Calif., company already had a similar setting for its "+1" button, which it introduced in 2011. It had experimented temporarily with putting "+1" endorsements with users' identities in ads, but it hasn't had them up recently. The company said Friday that the choice a user made about allowing for "+1" endorsements would be the default setting for shared endorsements. Also, if a user chooses to limit an endorsement to certain circles of friends or contacts, that restriction will be respected in any ads that use the endorsement.

5 Worst Sectors to Avoid This Week

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This week, the Computer and Personal Electronics, Energy Services, Computer and Personal Electronics, Oil and Gas, and Marine sectors look weak according to Portfolio Grader.

With 78% of its stocks (74 out of 95) rated “sell,” the Metals and Mining sector is struggling this week. Out of the Metals and Mining stocks, Cliffs Natural Resources (NYSE:), Walter Energy (NYSE:), and Thompson Creek Metals Company Inc. (NYSE:) are near the bottom with F’s. Over the last 12 months, Walter Energy is the worst performer in this sector, with a 74.6% decline.

The Energy Services sector is trailing behind others this week, with 61% of its stocks (34 out of 56) rated a “sell”. Nuverra Environmental Solutions, Inc. (NYSE:), GulfMark Offshore, Inc. Class A (NYSE:), and Key Energy Services, Inc. (NYSE:) are all currently earning F’s. The worst performer in this sector is Key Energy Services, Inc., which saw its price sink 44.5% in the last 12 months.

The Computer and Personal Electronics sector is lagging this week with 60% of its stocks (12 out of 20) rated a “sell”. Diebold, Incorporated (NYSE:), QLogic Corporation (NASDAQ:), and Hewlett-Packard Company (NYSE:) are pushing the sector down with F grades. Hewlett-Packard Company is the worst performer in this sector, with a 15.4% decline in the last 12 months.

The Oil and Gas sector looks weak, with 59% of its stocks (123 out of 208) rated a “sell”. Enerplus Corporation (NYSE:), Swift Energy Company (NYSE:), and Newfield Exploration Company (NYSE:) are dragging down the sector overall, each earning a low grade of F. Overall, Swift Energy Company is the poorest performer in this sector. Its share price has dropped 56.4% in the last 12 months.

The Marine sector is dragging, with 57% of its stocks (4 out of 7) rated a “sell”. With a grade of D, Diana Shipping (NYSE:) and Navios Maritime Partners LP (NYSE:) are weighing down the sector. DryShips (NASDAQ:) also ranks a low F.

Louis Navellier’s proprietary Portfolio Grader stock ranking system assesses roughly 5,000 companies every week based on a number of fundamental and quantitative measures. Stocks are given a letter grade based on their results — with A being “strong buy,” and F being “strong sell.” Explore the tool here.

This Fuel Cell Stock is Leading the Charge ... and Should Be (BLDP, FCEL, PLUG)

Had shares of its peers and competitors performed as well, it may not even be worth bringing up. But, Plug Power Inc. (NASDAQ:PLUG) shares have done significantly better than FuelCell Energy Inc. (NASDAQ:FCEL) and Ballard Power Systems Inc. (NASDAQ:BLDP) since the end of March. And, PLUG has performed considerably better than FCEL and BLDP have since mid-August. This is more than "just a little volatility." This is a leader breaking away from the pack after a very long lull. Thing is, there's plenty more room for Plug Power to keep running.

First and foremost, all three of these stocks - along with most of the fuel cell industry's names - have performed much better over the past several months than they had during the prior several years. Plug Power Inc. shares have gained more than 400% since their February plunge, after losing (and this isn't a misprint) nearly 100% of their value following the 2004 peak. Ballard Power Systems Inc. shares have more than doubled since December of last year following an 86% decline from their 2008 high. FuelCell Energy Inc. shares gave up about 90% of their value between the late-2007 high of $13.14 and their late-2011 low of $0.80, but after drawing a line in the sand there (and testing it two more times in the meantime), have hammered out a 53% advance ... and that's factoring in 25% pullback since May's highs. And, BLDP, FCEL, and PLUG all three seem to have shrugged off their old downtrends and formed new bullish channels.

What's the deal? Given the participation rate, it looks as if the fuel cell industry is finally on the rebound, now that demand has actually caught up with investor expectations. It was bound to happen sometime. All that being said, Plug Power appears to be the top pick for newcomers.

Yes, from a technical perspective PLUG looks and feels overbought, and maybe it is... a little. But, it's a buy-on-the-dip scenario here. The stock has not only crossed above all of its key moving average lines, but all the moving averages have made bullish crosses of one another, and all of them are pointed higher too. In other words, the stock's got bullish momentum in multiple timeframes. That many investors (and kinds of investors) can't be wrong

It's the fundamental side of the stock, however, that's not only driving all this interest, but driving the actual buying of the stock.

Although it may not have been reflected in the stock's price, 2011 was actually a decent year for pre-profit Plug Power Inc. Sales cranked up from 2010's $19.5 million to $27.6 million. There was something of a lull in 2012, when the company's top line only reached $26.2 million, and investors began to fear the worst again...

... until something curious started to happen a couple of quarters ago. Since Q3 of 2012, we've seen three straight quarters of consecutive sales growth. And, the pace of revenue puts the company on track to do $31.3 million in sales this year, which would be its best year ever. The pros are looking for an incredible $60 million in revenue for 2014, which would nearly double this year's sales. Lofty? Yes, though not out of the realm of possibility. Even if PLUG "only" improves this year's revenue by 50% in 2014, though, that would still be a huge victory.

Oh, and the lofty growth outlook isn't an outrageous pie-in-the-sky, hope-and-dream-for-the-best kind of outlook either. The company has been piecing together new deals and expanding old relationships to put up some very impressive numbers in the very foreseeable future.

 With all of that being said, there's another less tangible reason newcomers to the fuel cell party may want to choose Plug Power over a name like FuelCell Energy Inc. or Ballard Power Systems Inc. - PLUG has become noticeably more active on the publicity front, which tends to happen when a company know it's got plenty to tout - and will have plenty to tout - in its near future. Case in point? It's hosting an information conference call tomorrow, and it's got nothing to do with earnings (which are due sometime early next month). The company is describing the topic as a general business update, but here in the shadow of last month's public offering that raised $10 million, it's pretty clear the company has something big going on that it needed funds for.

The best part of all? As bullish as PLUG has been of late, the market has yet to even really notice and start creating a buzz around this and other natural gas stocks. Once the same euphoria from about three or four years ago materializes again, that's when the heat could really get turned up on these stocks.

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Top 5 Dividend Companies To Own For 2014

Telecom industry services provider�CSG Systems (NASDAQ: CSGS  ) announced today�that it would initiate the payment of a quarterly dividend to investors, marking the first time in company history it has done so.

The board of directors said the quarterly dividend of $0.15 per share is payable on July 25 to the holders of record at the close of business on July 10. Going forward, it expects to pay dividends each year in September, December, March, and June.�

CSG Systems President and CEO Peter Kalan said: "Since our inception, we have demonstrated that we can grow revenues at or above the market, make important investments to help us get broader and deeper in our clients' operations, and generate strong, predictable cash flows. These characteristics have provided us with a strong balance sheet and the flexibility to continue to invest in our business while at the same time, return capital to our shareholders."

The regular dividend payment equates to a $0.60-per-share annual dividend, yielding 2.8% based on the closing price of CSG Systems' stock on June 24.

Top 5 Dividend Companies To Own 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 Tim McAleenan Jr.]

  And lastly, Mankiw mentions emerging markets. If you want to bet against the United States dollar and own a company that generates all of its profits outside the United States, it could be useful to take a look at Philip Morris International (PM). Asia makes up 37% of its profits. The Middle East, Africa, and Eastern Europe make up 27% of its profits. Smoking rates in countries like Indonesia are increasing at 10-25% annual rates. The Marlboro brand is gaining market share in Asia. The company is planning aggressive expansion into Central Africa. If you want emerging markets exposure, Philip Morris International could be a decent way to cover your bases.

Top 5 Dividend Companies To Own For 2014: Cinemark Holdings Inc(CNK)

Cinemark Holdings, Inc. and its subsidiaries engage in the motion picture exhibition business. As of June 30, 2011, it operated 436 theatres with 4,983 screens in 39 states of the United States, as well as in Brazil, Mexico, and 11 other Latin American countries. The company is headquartered in Plano, Texas.

Advisors' Opinion:

• [By John Udovich]

  The shares of small cap IMAX Corporation (NYSE: IMAX) have slipped more than 10% this week on growth concerns - meaning it might be a good idea to take a closer look at the stock plus its performance�verses other cinema stocks like Carmike Cinemas, Inc (NASDAQ: CKEC), Cinemark Holdings, Inc (NYSE: CNK) and Regal Entertainment Group (NYSE: RGC) along with the PowerShares Dynamic Leisure & Entertainment ETF�(NYSEARCA: PEJ).

Best Performing Companies To Own In Right Now: Psychemedics Corporation(PMD)

Psychemedics Corporation provides testing services for the detection of abused substances through the analysis of hair samples primarily in the United States. The company provides commercial testing and confirmation by mass spectrometry using various practices for cocaine; marijuana; PCP; methamphetamine, including Ecstasy; and opiates comprising heroin, hydrocodone, hydromorphone, and oxycodone. Its tests provide information that indicates the approximate amount of drug ingested, as well as historical data, which shows a pattern of individual drug used over a period of time. The company offers its services to employers for applicant and employee testing, as well as to physicians, treatment professionals, law enforcement agencies, school administrators, parents concerned about their children?s drug use, and other individuals or entities engaged in business where drug use or potential drug use is an issue. Psychemedics markets its corporate drug testing services primarily t hrough its own sales force; and home drug testing service, PDT-90, through the Internet and retail distributors. The company was founded in 1985 and is based in Acton, Massachusetts.

Top 5 Dividend Companies To Own For 2014: NGP Capital Resources Company(NGPC)

NGP Capital Resources Company is a business development company specializing in investments in small and mid size and middle market companies. The firm typically invests in acquisitions, buyouts, growth and development, revitalization, restructuring, recapitalizations, and special situations. It invests in energy companies with a focus on oil and gas exploitation, development, and production business; upstream businesses that acquire, develop, and produce oil, natural gas, and coal; midstream businesses that gather, process, store, and transport oil and natural gas; power generation and distribution; oil field services and other energy services; and alternative energy and other similar energy related businesses. The firm primarily invests between $10 million and $100 million in its portfolio companies. It invests in the form of secured, senior, and subordinate debt; convertible debt; preferred equity; project equity; production payments, net profits interests, and similar investments; and mezzanine loans and may receive equity investments in portfolio companies in connection with such investments. The firm makes asset and project based investments in private companies and can also invest in public companies. NGP Capital Resources Company was founded in 2004 and is based at Houston, Texas. It is a subsidiary of NGP Energy Capital Management.

Top 5 Dividend Companies To Own For 2014: RGC Resources Inc.(RGCO)

RGC Resources, Inc., through its subsidiaries, engages in the distribution of natural gas in Virginia. It is primarily involved in the regulated sale and distribution of natural gas to residential, commercial, and large industrial and transportation customers through underground mains and service lines in Roanoke, Virginia, and the surrounding localities. The company also provides non-regulated services. In addition, it offers information technology consulting services, as well as utility and regulatory consulting services to other utilities. The company operates approximately 1,045 miles of transmission and distribution pipeline; owns and operates eight metering stations; and a liquefied natural gas storage facility located in Botetourt County. RGC Resources, Inc. was founded in 1912 and is based in Roanoke, Virginia.