How a shutdown could affect the economy

By passing a bill that funds the government except for Obamacare, House Republicans have launched a battle with Democrats that could result in a federal government shutdown.

NEW YORK (CNNMoney) It would be inconvenient and frustrating. But how much would a federal government shutdown affect the economy?

It depends on how long it lasts.

"The effects build over time: Two weeks is worse than one week, and three works is still worse than two weeks, and four is still worse than that," Congressional Budget Office Director Douglas Elmendorf said earlier this week.

Mark Zandi, chief economist and co-founder of Moody's Analytics, got more specific.

Zandi estimates that a shutdown that lasts just a few days might cost the economy two-tenths of a percentage point of annualized growth during the fourth quarter. That's the economic equivalent of a smidge.

But if a shutdown runs for three or four weeks? "[That] would do significant economic damage" -- reducing GDP by 1.4 percentage points for the quarter, Zandi said in congressional testimony.

The last time there was a shutdown that long was at the end of 1995, when the government was shut down twice for nearly four weeks combined.

The CBO estimated those shutdowns shaved only about half a percentage point off growth in the fourth quarter of that year.

CNN: House GOP votes to defund Obamacare

Zandi said he is assuming a greater hit this time for two reasons. The first is timing: The 1995 shutdowns started in the second half of the quarter. This time, if Congress fails to pass a funding bill, the shutdown will begin on Oct. 1, the start of a new quarter.

In addition, Zandi noted, "the economy is much more fragile today than in 1995-96 when the economy was on the verge of the tech boom."

Mohamed El-E! rian, the CEO of bond fund firm PIMCO, thinks a shutdown could have several negative effects.

"First, it increases uncertainty which makes companies less willing to invest in new plants, equipment and hiring. Second, it forces the Fed to continue with experimental policies, the impact of which are uncertain," El-Erian told CNN.

Much might depend, too, on just how much of the federal government remains running during a shutdown. The White House will have some discretion in determining what's essential and what's not.

Typically any federal program or agency charged with protecting life and property -- such as air traffic control and food inspections -- is deemed critical, so operations there are likely to continue uninterrupted. Also likely to continue would be benefit payments such as Social Security checks.

But much of the federal government would be shuttered, and the money those agencies would normally spend would be delayed. Hundreds of thousands of federal workers would be furloughed without pay.

Another factor that could affect the economy in a prolonged shutdown is consumer, investor and business psychology, Zandi said.

And there's no telling what their psychology would be if a shutdown runs concurrent with a major standoff over the debt ceiling, raising the risk of a U.S. default.

Will the Fed send mortgage rates higher?

NEW YORK (CNNMoney) Housing market experts are keeping a close eye on the Federal Reserve as they anxiously await word on whether the agency will start pulling back on its controversial stimulus program, known as quantitative easing.

Since September of last year, the Fed has been buying $85 billion in mortgage-backed securities and Treasury bonds a month to help support the economy. The purchases have been credited for the historically low mortgage rates seen this year, which ultimately helped stimulate home sales and boost prices.

But now the Fed is expected to announce that it will scale back on its bond-buying program -- a move that is expected to cause rates to slowly rise, said Doug Duncan, chief economist for Fannie Mae.

The mortgage market has already factored in a modest cutback in the Fed's purchases. Mortgage rates have risen 1.2 percentage points since May when Fed chairman Ben Bernanke mentioned the possibility of reducing the agency's bond-buying program. In June, he noted that the tapering could begin as early as September, if the economic recovery continued on course.

However, even if the Fed started cutting back on its bond purchases this month, many don't expect the cuts to be sizable. "The recovery has been weaker the past couple of months than what the Fed had been talking about," said Duncan. "It would be a surprise if they act aggressively."

Duncan said initial cuts to the bond-buying program likely won't exceed $10 billion a month and most of those cuts will be in Treasuries.

Those expectations were reinforced in a paper presented by Northwestern University economists Arvind Krishnamurthy and Annette Vissing-Jorgensen at an annual meeting for central bankers in Jackson Hole, Wyo., late last month. The economists found that the purchase of mortgage-backed securities served as a more effective stimulus than the purchase of Treasury bonds.

Should the Fed continue to purchase mortgage-backed securities at current rates, there is a chance mortgage rates could actually head lower, said Keith Gumbinger of HSH.com, a mortgage information provider.

Frank Nothaft, chief economist for Freddie Mac, expects the Fed to act slightly more aggressively. He anticipates that the agency will cut its purchases of Treasuries by about $10 billion a month and reduce its purchases of mortgage-backed securities by $5 billion. He expects the Fed to continu! e to scale back its purchases through mid-2014, when the program would end entirely.

As a result, Nothaft expects mortgage rates to climb to close to 5% by next June. Last week, the 30-year fixed rate averaged 4.6%.

Quiz: How much do you know about mortgages?

Despite higher mortgage rates, only a small number of potential homebuyers -- those who would have to struggle to afford a home in the first place -- would put the brakes on their purchases, said Nothaft.

Remaining buyers would probably welcome a slight cooling off in the housing market. Home prices were up 12.1% in June compared with a year earlier, according to the S&P/Case-Shiller home price index.

That kind of surge has stirred fears of a new housing bubble and many economists -- and homebuyers -- wouldn't mind seeing price gains come back to more normal levels.

5 Stupid Wall Street Sayings

Being more than 200 years old, the stock market has had time to foster a staggering number of axioms, tips, disciplines and lessons. Indeed, one thing there’s never a shortage of on Wall Street is advice.

Unlike stock trading itself, though, all that advice and all those commonly accepted truisms are neither regulated nor tested. Anyone can write and publish an investing book, and it’s even easier to post trading tips and lessons online. No premise actually needs to be verified to be made public, and even when a premise is supported by facts, those facts are rarely verified.

The end result? There are a bunch of short-sighted — and downright bad — investing adages floating around in the proverbial ether. Some are more misleading and destructive than others, but five of them are particularly problematic for investors who have a tendency to believe, and act on, everything they hear.

‘Buy companies, not stocks’

This might have been solid advice a couple of decades ago when a stock’s price was a reflection of a company’s operation, slightly adjusted higher or lower depending on the organization’s plausible outlook.

But that’s not how stocks are priced in the modern era.

For better or worse, the stock market in the 21st century is something of a chess match, where you’re trading largely based on how you feel the rest of the market is going to feel about a stock anywhere from five days to 12 months down the road. That shell game doesn’t leave much room for an actual value-based assessment of a company’s operation.

Most mainstream investing books still don’t acknowledge this reality, but veteran traders know it’s how the game is played these days.

‘The market is rigged’

The market may be tricky, inconsistent, exhausting, unduly-influenced, erratic and unpredictable, but it’s not rigged.

That’s going to be a tough pill to swallow for a few traders who are convinced they’re on the wrong end of too many losing trades because someone is conspiring against them. But the sooner they can come to grips with the truth, the sooner they can come to grips with the real reason they’re struggling to stay afloat in the world of stock-picking.

In reality, most traders (and new traders in particular) lose because they actually believe this business is as simple as it appears when looking in from the outside. It’s not unlike the joyous, easy-winning picture the casinos paint when encouraging consumers to take a quick trip to Las Vegas.

‘In the long run, value outperforms growth’

Aside from sticking with safe and stable names simply as a way to maintain your sanity, the industry often encourages a focus on value stocks by noting they actually yield better bottom results over the long haul. Problem: It’s only true sometimes. Other times, it’s completely untrue.

It’s been especially untrue the last few years. Since this point in the year back in 2003, the iShares Russell 1000 Growth Fund (IWF) has advanced 81%, while the iShares Russell 1000 Value Fund (IWD) has only advanced 67%.

In another 10-year segment, value might lead growth again, or it might not. That’s just it — the landscape of what works and what doesn’t is forever changing.

‘It’s a takeover candidate’

Odds are that you’ll never successfully step into a stock right in front of an acquisition for any reason other than luck. Suitors make a point of keeping the lid on M&A plans specifically to avoid front-running a buyout and driving up a price. And, in the rare case where news of an impending buyout is leaked, there’s always someone with closer ties that can act on the information sooner than you can (assuming you’re not in those particular board meetings).

And just for the record, theme-based buyout speculation doesn’t improve your chances of picking an acquisition target. Back in 2012 after Bristol-Myers Squibb (BMY) bought Amylin for control of its diabetes pipeline following the purchase of Neighborhood Diabetes by Insulet (PODD), pundits were sure it would spark a wave of other diabetes-driven acquisitions. Those other M&A candidates began getting bid up, but as it turns out, no more meaningful buyouts materialized in the diabetes space.

Ditto for the gene-mapping mania that was sparked by the Roche (RHHBY) acquisition of Illumina and the GlaxoSmithKline (GSK) purchase of Human Genome Sciences. By the time the gene-mapping M&A trend became obviously hot, the trend was over.

‘There’s always a bull market somewhere’

There’s actually a little bit of truth to this axiom that Jim Cramer turned into an outright cliche. There’s an important footnote missing from the idea, however.

While there might always be a bull market somewhere, there’s not always a bull market in the arenas where the average investor can actually invest. In 2008, for instance, stocks, gold, oil, real estate and even bonds lost value over the course of most of 2008.

Yes, all of those areas eventually recovered, but they all fell — a lot — in tandem for a long, miserable time.

As of this writing, James Brumley did not hold a position in any of the aforementioned securities.

SREI Infra's infrastructure bonds issue to open on Dec 31

Issue date and listing: The first tranche of the bonds (tranche 1 bonds) issue (tranche 1 issue) will open for subscription on December 31, 2011 and close on January 31, 2012 or earlier, as may be decided by the board of the company. The bonds issued under prospectus tranche � I would be for an amount not exceeding Rs 300 crore and are proposed to be listed on the BSE Limited.

Ratings: The bonds proposed to be issued have been rated 'CARE AA' by CARE. The rating of the bonds by CARE indicates high degree of safety with regards to timely servicing of financial obligations.

Issue structure: The issue would be in one or more tranches, for an amount not exceeding the shelf limit. The amount raised in the subsequent tranches shall not exceed the difference between the Shelf Limit and the aggregate amount raised by issue of bonds under the previous tranches. The minimum number of bonds per applicant is 1 bond and in multiples of 1 bond thereafter for resident individuals as well as for Hindu Undivided Family (HUF). An applicant may choose to apply for the tranche 1 bonds across the same series or different series. The mode of allotment for these tranche 1 bonds would be in dematerialized form, however the applicant may hold in the bonds in physical or dematerialized form.

These Bonds are being issued in four series with Interest rate of 8.90% per annum for Series 1 and Series 2 and 9.15% per annum for Series 3 and Series 4. Interest under Series 1 and Series 3 will be payable annually and interest under Series 2 and Series 4 will be payable cumulatively (compounded annually). All series of bonds will have a buy back option at the end of 5 years. The bonds have a maturity period of 10 years and 15 years and shall have a lock-in period of 5 years and can be traded thereafter on BSE. The face value per bond is Rs 1,000.

80CCF benefit: The bonds have been classified as long term infrastructure bonds as per the terms of Section 80CCF of the Income Tax Act. As notified under Section 80CCF, an amount, not exceeding Rs 20,000 per annum, paid or deposited as subscription to long term infrastructure bonds during the previous year relevant to the assessment year beginning April 01, 2012, shall be deducted in computing the taxable income of a resident individual or HUF. In the event that any applicant applies for bonds exceeding Rs 20,000 per annum, the aforesaid tax benefit shall be available to such applicant only to the extent of Rs 20,000 per annum.

The funds raised through the issue of the tranche 1 bonds will be utilized towards infrastructure lending as defined by Reserve Bank of India in the Regulations issued by it from time to time, after meeting the expenditures of, and related to the tranche 1 issue.

The lead managers to the tranche 1 issue are ICICI Securities Limited, Karvy Investor Services Limited, RR Investors Capital Services Private Limited and SREI Capital Markets Limited (a wholly owned subsidiary of the Company to be engaged only in marketing of the Tranche 1 Issue)  The co-lead managers to the issue are SMC Capitals Limited and Bajaj Capital Limited whilst Axis Trustee Services Limited is the Debenture Trustee to the Tranche 1 Issue.

Bull of the Day: Flower Foods (FLO) - Bull of the Day

Just because the Twinkie vanished off of store shelves doesn't mean that people don't want their snack cakes. Flower Foods Inc. (FLO) has been one of the direct beneficiaries of Hostess' demise. This Zacks Rank #1 (Strong Buy) has seen huge profits over the last 9 months.Flower Foods operates 44 bakeries that produce breads, buns, rolls, snack cakes and pastries to stores in the Southeast, Southwest and Mid-Atlantic states. Flower Foods has been on an acquisition streak. It had good timing when it bought the struggling Tastykake brand of snack cakes in 2011 for $175 million. Headquartered in Philadelphia, and founded in 1914, the brand is a direct competitor of Hostess snack cakes. When Hostess vanished off the store shelves, what was a snack cake fan supposed to do? If you could no longer get your ding-dong, you could buy the Tastykake cupcake or Kreamies instead.Hostess products disappeared off of shelves in November of 2012 but are expected to return on July 15. In the meantime, Flower Foods has seen a surge in business. Total sales were up 29.5% in the first quarter on the back of a 19.3% volume increase due to the absence of Hostess from the market, in both breads and snack cakes.But will it last? Analysts are encouraged that Flower has had shelf time when Hostess has not. How much of that will endure after Hostess comes back this month is unclear. But some consumers who tried Flower Foods' brands after Hostess disappeared may end up sticking with it.Buying Hostess' Bread BusinessOn July 8, Flower Foods confirmed that it had received regulatory approval from the Department of Justice to acquire 20 bakeries and 36 depots from Hostess Brands for $360 million. Flowers is buying the bread business, however, and not the Twinkies and other brands. The breads include Wonder, Nature's Pride, Merita, Home Pride and the Butternut brand.The transaction should close in a few weeks and then Flower Foods is expected to slowly roll out the re-openings.Double Digit Earnings GrowthWith Hostess out of action, it's n! ot surprising that 2013 is expected to be a very good year for Flower Foods. Earnings are expected to jump 41%.But while business is expected to cool in 2014, earnings are still forecast to rise another 12.1%.Flower Foods is scheduled to report second quarter results on Aug 13. It has recently turned around its earnings track record and has beaten the Zacks Consensus the last 2 quarters.Shares have only recently taken off after being dormant for the previous 5 years. Flower Foods is taking advantage of the demise of a competitor to boost its own market position. For investors looking for one of the "winners" in the bread and snack cake wars, Flower Foods would be it.Want More of Our Best Recommendations? Zacks' Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Then each week he hand-selects the most compelling trades and serves them up to you in a new program called Zacks Confidential. Learn More>>Tracey Ryniec is the Value Stock Strategist for Zacks.com. She is also the Editor of the Turnaround Trader and Value Investor services. You can follow her on twitter at @TraceyRyniec.

Maturing Pipeline Boosts Biogen Earnings

The growth is just getting started at Biogen Idec (NASDAQ: BIIB  ) . OK, so it's been ongoing for quite some time, but it certainly isn't about to end anytime soon. The company recently launched Tecfidera for multiple sclerosis in the United States, completed three regulatory filings, is expecting three market launches in 2014, and has major trials releasing data in 2015 and 2016. Oh, yeah, and it crushed the second quarter. Was there any bad news to be found?

Financially speaking ...
Biogen reported second-quarter sales of $1.7 billion, non-GAAP diluted EPS of $2.30, and non-GAAP net income of $549 million -- year-over-year increases of 21%, 26%, and 25%, respectively. That's a pretty ridiculous change in annual operating results. The stellar earnings prompted management to increase 2013 guidance for revenue growth, now expected to grow at a 22% to 23% clip, and non-GAAP diluted EPS to between $8.25 and $8.50.

There were two major catalysts boosting Biogen earnings over the past three months. First, Tysabri sales soared 38% year over year after the company acquired Elan's rights for the drug. Global sales actually decreased by 2% compared with the year-ago period, although the company did submit a Biologics License Application in Japan last month that will create a future growth opportunity. Second, Tecfidera launched with a loud bang after being approved on March 27. Total revenue for the drug registered at an impressive $192 million for the second quarter.

Biogen's quarter even beat out that of its oft-compared peer Celgene (NASDAQ: CELG  ) , which grew at least 17% in revenue, EPS, and income. I think the argument could be made that Biogen had better quarter.

Metric

Biogen

Celgene

Second0quarter revenue	$1.7 billion	$1.56 billion
Net income	$490.7 million	$478.1 million
Shareholders' equity growth in 2013	13.5%	(5%)

Sources: Biogen and Celgene press releases.  

I still think it's difficult to look past Celgene's impressive pipeline potential, which is probably the reason the company took the lead in the race for the largest market cap against Biogen. Nonetheless, both remain incredible growth stories for biotech investors. Just be careful about paying lofty premiums for that growth in the coming quarters.

Reasons for pessimism?
I may be digging a little bit here -- I admit it's tough to come up with negatives -- but Friday's announcement invalidating several Teva (NYSE: TEVA  ) patents for multiple sclerosis drug Copaxone could shake up the market quite a bit. Could the emergence of two cheap generics from Momenta and Mylan in the first half of next year take some steam out of Tecfidera's rise? I can't see it being good news for either Teva or Biogen, but I'm not sure it's a death sentence, either.

Foolish bottom line
Biogen remains one of the most promising names in biotech -- and growth stocks, for that matter. A solid second quarter and rising full-year guidance for 2013 only support that thesis further. Tecfidera will continue to lift revenue for the next several quarters -- or longer -- but investors shouldn't underestimate the risk that generic multiple sclerosis drugs pose. All in all, the enthusiasm for growth remains intact until larger risks reveal themselves. 

Can't keep up with Biogen or Celgene? Looking to take a break from the volatile biotech sector? Looking for ways to diversify into dividend-paying stocks? The Motley Fool's special report "Secure Your Future With 9 Rock-Solid Dividend Stocks" is a great way to kick-start your search. Just click here to get your free copy today.

This Simple Strategy Has Never Lost Money

I'm going to show you a simple strategy that has never lost money in the market.

A recent study by mega-investment firm Oppenheimer proved just as much. Don't worry, it's not some "too good to be true" story. But there are some caveats.

First, I could tell 100 people about this strategy... and I'd guess 99 of them would flat ignore it. That's despite the evidence I'll show you backing it up.

"That strategy is for suckers."

 

"Its time has passed."

"You have to be an idiot to think that would work today."

I know some people will say this -- because they already have. We asked some of our regular readers to give us their thoughts on this strategy. Those were the type of responses I heard from some people. I was shocked.

Second, you can't use this strategy for every stock. Use it on the wrong ideas, and you can still lose money. But across the market as a whole, it hasn't failed once in the past 60 years.

The truth is, you don't have to trade every day... or every week... or even every year to beat the market. In fact, your success actually increases with the fewer trades you make and the longer you hold.

The best proof comes from a recent study by Oppenheimer. They looked at the S&P 500... going all the way back to 1950. Over that time, the S&P 500 has NEVER suffered a loss in a 20-year period.

Of course, we all know you can't say the same for holding stocks for a year or two. When you hold stocks for a short period of time, your odds of losing money are much, much higher.

And you can lose a boatload of money in a hurry. In fact, in its worst one-year period, the S&P 500 dropped 44.8%.

No wonder Warren Buffett has always said his favorite holding period is "forever."

But it's surprising how many investors still fight it. The average holding period for an investment was seven years in 1940, according to William Hutchings of the Financial News. By 2010, that period had shrunk to just six months.

So while all the evidence points to longer holding periods being better for your portfolio... most investors are doing the exact opposite.

I even did a little digging on my own. I looked at the annual returns of the S&P 500 myself, going back to 1950.

You can see what I found in my chart... 

On a rolling annual basis, the S&P 500 has dropped 16 times over a one-year period since 1950... but zero times in any 20-year period.

The trend is clear. The longer you hold an investment, the better your chances of making money.

But unfortunately, you can't just buy any stock, hold it forever, and expect to come out ahead. The market is littered with Enrons, WorldComs, even General Motors. Holding forever didn't matter a lick with them.

What you have to do is find a handful of companies that enjoy huge (and lasting) advantages over the competition... companies that pay their investors each and every year by dishing out fat dividends... and companies buying back massive amounts of their own stock.

These are the kinds of companies that can make you money no matter what. Once you find them, the strategy is simple -- just buy their shares and hold "Forever."

My research team and I have done a ton of research on the impact of holding stocks "Forever." Here are a few success stories we've even heard from investors like you:

-- George A. from Seattle has a similar story. George says he bought $2,000 of Apple (Nasdaq: AAPL) and $2,000 of Amazon (Nasdaq: AMZN) back in October 2000. About 10 years later, he says his Apple shares are worth $60,100 and the Amazon shares are worth $11,600.

-- William M. is an investor in Boynton Beach, Fla., who says he's held over 60 stocks for more than 35 years. He bought just five shares of AT&T (NYSE: T) in 1950. Now, thanks to splits, spin-offs, and dividends, he owns 4,000-plus shares of the stock. Today he's been retired about 27 years, is a member of two private country clubs, and has homes in both Florida and Massachusetts.

With that as an inspiration, my Top 10 Stocks research staff and I pinpointed our "10 Best Stocks to Hold Forever." Because of the success of these stocks, we are re-releasing the report.

This project took about six months, and! it wasn&! #39;t cheap. By my back-of-the-napkin calculation, the total cost of gathering, analyzing and distributing this data comes to about $1.3 million.

But time has shown that these are 10 ideas that you can buy, forget about, and hold "Forever."

You can learn more about what we've uncovered -- including some names and ticker symbols -- by viewing our latest research here.

Don't Get Too Worked Up Over Marinemax's Earnings

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

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

Calling all cash flows
When you are trying to buy the market's best stocks, it's worth checking up on your companies' free cash flow once a quarter or so, to see whether it bears any relationship to the net income in the headlines. That's what we do with this series. Today, we're checking in on Marinemax (NYSE: HZO  ) , 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, Marinemax burned $17.8 million cash while it booked a net loss of $0.8 million. That means it burned through all its revenue and more. 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 Marinemax 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 40.6% of operating cash flow coming from questionable sources, Marinemax investors should take a closer look at the underlying numbers. Within the questionable cash flow figure plotted in the TTM period above, stock-based compensation and related tax benefits provided the biggest boost. Overall, the biggest drag on FCF came from capital expenditures.

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.

Selling to fickle consumers is a tough business for Marinemax or anyone else in the space. But some companies are better equipped to face the future than others. In a new report, we'll give you the rundown on three companies that are setting themselves up to dominate retail. 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 Marinemax to My Watchlist.

Inside Today's Brutal Apple Sell-Off

Amid a broadly downbeat day on the market, shares of Apple (NASDAQ: AAPL  ) are getting clobbered, down 5.1% as of 2:30 p.m. EDT. That puts the Mac maker at fresh 52-week lows and prices not seen since December 2011.

The biggest contributor to the drop was audio codec supplier Cirrus Logic's (NASDAQ: CRUS  ) preliminary results, which hit the wire last night. The company said it expects last quarter's revenue come to about $206.9 million, falling shy of the $210.2 million consensus estimate.

In addition, Cirrus is recording a net inventory reserve of $23.3 million, which includes $20.7 million related to a "decreased forecast for a high volume product as the customer migrates to one of Cirrus Logic's newer components." With Apple being the company's biggest customer by far and iPhones being the highest-volume product that Cirrus supplies components for, there's little doubt as to where the weakness is coming from.

Inventory reserves are created ahead of inventory writedowns, so Cirrus is expecting to take a loss on some of its inventory. The reserve is a high-end accounting estimate that's used while the company calculates its figures more specifically. Cirrus expects its gross margin to get hit by more than 10% (because the inventory reserve is charged as part of cost of goods sold).

Investor sentiment over Apple's near-term prospects have soured over the past few months as the company enters a lull in its product cycles and consumers potentially delay purchases in anticipation. The implication is that iPhone shipments are weak, which is directly impacting Cirrus Logic's top line and will subsequently put a dent in Apple's as well, even though Cirrus acknowledges that there's a migration to newer products taking place.

Apple reports earnings next Tuesday, and Cirrus will follow suit with its own full results next Thursday. Investors won't have to wait long to get more clarity on how the two are faring.

Amid Apple's sell-off, you're probably wondering whether Apple remains a buy. The Motley Fool's senior technology analyst and managing bureau chief, Eric Bleeker, is prepared to fill you in on reasons both to buy and to sell Apple, as well as what opportunities remain for the company (and your portfolio) going forward. To get instant access to his latest thoughts on Apple, simply click here now.

Suddenly, Twitter Is Looking Like the Next Facebook

Twitter's growing influence on Wall Street and around the world has real-money consequences. According to new research from eMarketer, the network will double its revenue from mobile advertising this year and is on track to produce $1 billion worth of ad sales in 2014.

In short: Twitter is succeeding where Facebook (NASDAQ: FB  ) and Yahoo! (NASDAQ: YHOO  ) have struggled to make gains. Among social networks, only LinkedIn (NYSE: LNKD  ) , with its consistent record of near-100% growth, is moving as fast.

Yet there's also more to this story than just Twitter, says Tim Beyers of Motley Fool Rule Breakers and Motley Fool Supernova.  Mobile use is climbing at such an extreme pace that tablets will soon outsell all types of personal computers, IDC Research predicts.  

Tim says investors should seeks stocks that are already poised to profit from this shift as they wait patiently for a Twitter IPO. Please watch this short video to get his full take, and then leave a comment to let us know which stocks you believe will profit from the rise of mobile computing.

It's incredible to think just how much of our digital and technological lives are almost entirely shaped and molded by just a handful of companies. 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.

Halftime Report – How Does Tesla Stock Look Now? (TSLA)

Popular Posts: 35 Blue-Chip Dividend Stocks Increasing Payouts in Q2 2014Why Warren Buffett Suggests Vanguard FundsHalftime Report – How Does Tesla Stock Look Now? (TSLA) Recent Posts: Halftime Report – How Does Tesla Stock Look Now? (TSLA) 35 Blue-Chip Dividend Stocks Increasing Payouts in Q2 2014 Why Warren Buffett Suggests Vanguard Funds View All Posts Halftime Report – How Does Tesla Stock Look Now? (TSLA)

Editor's note: This column is the latest update in our 10 Best Stocks for 2014 contest. Kyle Woodley's pick for the contest is Tesla Motors (TSLA).

Question: When are 60% returns in six months disappointing?

Answer: When the other guy is running off 140% returns.

I jest, I jest. There's nothing disappointing about the gains enjoyed by my 10 Best Stocks for 2014pick, Tesla Motors (TSLA). Sure, I'd love to be leading the pack like Jon Markman, whose Emerge Energy Services LP (EMES) pick has stormed forward some 140% this year, but … well, a silver medal at the midway point ain't too shabby.

I am, however, a bit less sanguine about where TSLA stock sits heading into the second half of the year.

Because whereas the outlook at Jan. 1 looked like a simple run to exponential growth, in the past six months … things got weird, in a couple of ways.

The Tesla Gigafactory

Earlier this year, TSLA announced plans to build a so-called Gigafactory, an ambitious $5 billion project that's expected to start producing lithium-ion batteries in 2017, and by 2020 produce more batteries for EVs than the world's total global production as of last year. In the process, Tesla estimates that the Gigafactory would reduce the per-kWh cost of battery packs by roughly 30%.

The big concern here, of course, is the sheer size and scale of the project.

For one, at $5 billion, the Gigafactory's cost represents a sixth of Tesla's overall market capitalization and roughly double TSLA's cash and short-term investments.

Plus, Tesla says the Gigafactory would produce enough battery packs annually to power about 500,000 vehicles (in addition to any other batteries the factory might produce for other purposes). To put that in perspective, Tesla Motors' goal for Model S deliveries this year is 35,000 cars.

Hopes of breakneck growth are a big part of why I picked Tesla to begin with, but now TSLA really needs that sales expansion to become reality if the company has any hope of keeping investors pleased.

Elon Musk Getting Charitable?

There are no hard numbers to tack onto this worry — merely conjecture about things we don't know, and a mind that no one can read.

In mid-June, Elon Musk announced that he was opening up all of Tesla Motors' patents for, more or less, the benefit of mankind. Musk's hope is that by making available some of the blueprints to his EV technology, the rest of the automotive world will catch up faster.

Shortly after that, we got reports that Tesla was talking to BMW (BAMXY) and Nissan (NSANY) about how to work together in expanding EV-charging networks — almost certainly Tesla's current Supercharger system.

The big worry, of course, is that Elon Musk really does care about the future of electric vehicles and a greener earth that he's willing to sacrifice corporate profits to get there. You wouldn't be blamed for thinking that — Musk has rankled shareholders before with brutally honest, investors-second comments, and he specifically pointed out in his blog post that the patents were made available "for the advancement of electric vehicle technology."

But a couple things put my mind to ease here.

Next Page

Open-source technology does not a business topple. Just ask Google (GOOG) how Android is faring. No one's exactly shaking over at Red Hat (RHT), either.

Also, Musk is smart enough to know it's hard to effect big change without big money. Musk is worth some $12 billion, but his Tesla stock holdings represent nearly half of that. Letting TSLA burn to the ground wouldn't further any of his goals, so he certainly wouldn't be the one striking the match. Thus, it's easy to believe Musk's insistence that "We believe that applying the open source philosophy to our patents will strengthen rather than diminish Tesla's position in this regard."

So, What Does This Mean for Tesla Stock?

Tesla has other concerns on the forefront — for instance, I'm not exactly thrilled that established, quality-producing BMW is getting generally favorable reviews for its electric i3. It's one thing to laugh when comparing the Model S with a Nissan Leaf or a Chevrolet Volt … but it's another when a German luxury powerhouse comes knocking on your door.

I'd say the Gigafactory gives me the most pause, however, and that's because (as I've mentioned before) I'm typically pretty risk-averse and hate dealing with the fun unknowns of innovative, untested, multiyear, multibillion-dollar projects.

Still — and maybe this is the worst reason to invest in (or keep holding) a particular stock — I remain bullish on Tesla if only because it hasn't let me down yet, and Elon Musk & Co. haven't really given me a reason to think it will anytime soon.

Besides, international expansion continues to go swimmingly, the Model X is now lined up to come out in early 2015, and the Model E is expected to be competitively priced against the Audi A4 and BMW 3-series.

Bottom Line

As we hit the halfway point of this contest, I increasingly think of this Tesla pick like I do relationships. After 60% gains and a little turbulence along the way, we've officially passed the wild, irresponsible puppy-love phase. Now, the conversations have turned a little more serious as we start to think about the uncertain future.

That doesn't mean that Tesla's bad. Far from it. TSLA has oodles of potential left.

You just have to be realistic about the potential implosions, and be mentally prepared to cut bait if things go south.

Practically, that means setting stop-losses to protect your gains … though I wouldn't suggest using that terminology in your next serious convo with your sweetheart.

Kyle Woodley is the Deputy Managing Editor of InvestorPlace.com. As of this writing, he was long TSLA. Follow him on Twitter at @KyleWoodley.

Marijuana Stocks Could be Scams, Warns SEC Watchdogs

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Marijuana stocks have federal regulators screaming. And it’s time to listen up.

Marijuana stocks are bad news, we’ve pointed out again and again. Of course, that doesn’t mean we’re bearish on the legalized pot industry… but the pitfalls of marijuana stocks for individual investors are far different than the business of growing, selling or even buying pot where it is legal.

Sometimes shares in a great company are still a sell because of, say, valuation. And sometimes shares in a dumpster fire are a buy because, for example, a turnaround plan is working.

Likewise, there is a difference between the potential of a new industry and the companies seeking to exploit it.

Medical marijuana looks to have a bright future, for instance, and if marijuana is ever legalized on the federal level, there will be marijuana stocks that will benefit. But they won’t be the scores of over-the-counter stocks investors are piling into today.

There seems to be a misguided belief that these marijuana stocks have to go up simply because they’re associated with marijuana. Personal computers were a huge deal back in the day, but not every PC stock was a home run.

True, the first-mover advantage can be a powerful leg up for a young company, but not when the companies in question are so sketchy they could easily be scams.

The Securities and Exchange Commission is getting more complaints from investors in marijuana stocks. Indeed, they suspended trading on five marijuana stocks already, punishing shares.

From questions regarding the accuracy of publicly-available information about these companies' operations to potential illegal activity, these marijuana stocks have incurred the wrath of federal regulators for good reason:

GrowLife (PHOT) FusionPharm (FSPM) CannaBusiness Group (CBGI) Advanced Cannabis Solutions (CANN) Petrotech Oil and Gas (PTOG) Marijuana Stocks Asking for Trouble

But it doesn’t end there. Investors should run away from all OTC marijuana stocks, including Medical Marijuana (MJNA), Cannabis Science (CBIS), CannaVest (CANV), MediSwipe (MWIP) and GreenGro Technologies (GRNH). As the SEC warns:

Fraudsters often exploit the latest innovation, technology, product, or growth industry – in this case, marijuana – to lure investors with the promise of high returns.  Also, for marijuana-related companies that are not required to report with the SEC, investors may have limited information about the company's management, products, services, and finances.  When publicly-available information is scarce, fraudsters can more easily spread false information about a company, making profits for themselves while creating losses for unsuspecting investors.

The bottom line is that these are OTC stocks with little or no publicly available, audited information. OTC stocks are also a playground for pump-and-dump con artists. Why would you take the risk of having your entire position stolen by a criminal?

The marijuana industry may very well be big business one day, and there will be plenty of legitimate, listed marijuana stocks to play when that happens. But that day is still a far way off.

Besides, even if they’re on the up-and-up, the marijuana stocks that are popular right now have terrible financials. Not one of them has the revenue, profit or outlook to justify crazy-high market capitalizations we are seeing among marijuana stocks right now.

Most of these penny stocks have never made a penny in profits. They are dodgy as hell; The SEC and FINRA are warning investors away for a reason. What more do you need?

Legalized marijuana will be a boon one day, but we’re not there yet. Penny stocks in and of themselves are far too risky to buy in almost every case. Chances are, you’re throwing your money away.

I don’t own any marijuana stocks — long or short — and I never will. When it comes to marijuana stocks, just say no. This won’t end well.

As of this writing, Dan Burrows did not hold a position in any of the aforementioned securities.

12 Reasons Why New Zealand's Economic Bubble Will End In Disaster

New Zealand's economy has been hailed as one of world's top safe-haven economies in recent years after it emerged from Global Financial Crisis relatively unscathed. Unfortunately, my research has found that many of today's so-called safe-havens (such as Singapore) are experiencing economic bubbles that are strikingly similar to those that led to the financial crisis in the first place.

Though I will be writing a lengthy report about New Zealand's economic bubble in the near future, I wanted to use this column to outline key points that are helpful for those who are looking for a concise explanation of this bubble.

View from Mission Bay, Auckland, New Zealand (Photo credit: Jaafar Alnasser Photography)

Here are the reasons why I believe that New Zealand's economy is heading for a crisis:

1) Interest rates have been at all-time lows for almost a half-decade

Ultra-low interest rate environments are notorious for fueling credit and housing bubbles, which is how the U.S. housing and credit bubble inflated last decade. New Zealand's interest rates have been at record lows for nearly five years, which is more than enough time for economic bubbles and related imbalances to form.

Here is the chart of New Zealand's benchmark interest rate:

Source: TradingEconomics.com

New Zealand's three-month interbank rate, base lending rate, and 10 year government bond yield are also at or near all-time lows. Like many countries that are experiencing bubbles in recent years, New Zealand's low interest rates are a byproduct of global "hot money" flows from the United States and Japan, which have both had zero interest rates and quantitative easing programs to boost their economies after the Global Financial Crisis.

Low interest rates in the U.S. and Japan encouraged capital to flow into higher yielding investments in countries such as New Zealand, which led to reduced bond yields and an 85 increase in the value of the New Zealand dollar against the U.S. dollar since 2009. To combat the export-harming currency appreciation and bolster the economy during the financial crisis, New Zealand's central bank reduced its short-term interest rates to all-time lows.

2) Property prices have doubled since 2004

Following the pattern of many nations outside of the hard-hit U.S., peripheral Europe, and Japan, New Zealand's housing prices have doubled in the past decade, forming a property bubble:

Source: Global Property Guide

3) New Zealand has the world's third most overvalued property market

The doubling of New Zealand's housing prices in the past decade far surpassed household income and rent growth, making the country's property market the third most overvalued in the world. New Zealand's home price-to-rent ratio is 77 percent above its historic average and its home price-to-income ratio is 26 percent above its historic average.

J.M. Smucker Company Misses Q3 Estimates; Cuts Outlook; Shares Fall (SJM)

Shares of The J.M. Smucker Company (SJM) fell over 5% on Friday morning after the company missed estimates and lowered its outlook for 2014.

SJM’s Earnings in Brief

SJM posted third quarter earnings of $166.7 million or $1.59 per share, up from $154.2 million, or $1.42 per share a year, ago. Excluding special items related to special projects, earnings were $1.66 per share, missing analysts’ view of $1.68 per share. Revenue dipped to 1.47 billion from $1.56 billion last year. Analysts expected to see revenue of $1.53 billion. Looking forward, SJM has cut its outlook for 2014 from an earnings estimate between $5.72 and $5.82 to a new range of $5.55 to $5.60. The company’s updated guidance falls well below analysts estimates of $5.78 per share.

CEO Commentary

CEO of SJM, Richard Smucker commented: “While we expect our fourth quarter earnings to be down compared to a strong quarter last year, we want to reiterate that our business fundamentals remain sound and our prospects for ongoing earnings growth continue.”

SJM’s Dividend

SJM declared its last 58 cent quarterly dividend on January 24. The dividend will be paid on March 3 to shareholders of record on February 14.

Stock Performance 

J.M. Smucker shares were down $5.19, or 5.46%, during pre-market trading Friday. The stock is down 8% YTD.

Herbalife Stock's Volatile on Buybacks and New Ackman Claims

Once again, Herbalife's(HLF) stock is bouncing around at the mercy of competing winds.

In yet another sign that Herbalife’s fate is only somewhat controlled by its management team, the nutritional supplement maker’s stock went on wild ride Monday. Herbalife opened up more than 4%, but then quickly gave back those gains. By mid afternoon, the stock dipped more than 1% before ultimately closing up more than 7%.

That rollercoaster ride came as investors weighed the company’s announcement that it would buy back $1.5 billion in stock, more than double its previous $653 million authorization, against news from outsiders who have been pushing and pulling on Herbalife’s stock price.

The first bit came from Herbalife bull William Stiritz, the CEO of Post Holdings(POST).

The market has viewed Post as a potential buyer of Herbalife, after Post’s CEO William Stiritz personally purchased a 6.7% stake in Herbalife. Last week one of Wall Street’s most bullish analysts on Herbalife joined Post Holdings as an adviser, raising even more questions about whether the cereal company might bid for Herbalife.

Yet Monday morning, Post announced a deal to buy Nestlé’s PowerBar sports nutrition unit. The price tag wasn’t disclosed, but there’s a concern that gobbling up this company could leave Post Holdings with less bandwidth to finance a bid for Herbalife, which has roughly five times the market cap of Post Holdings.

Should Post choose to bid, there could be a host of corporate governance questions for Mr. Stiritz to answer, i.e. whether he can or should personally profit from a buyout financed by the publicly-traded company he runs. But that’s a question for another day.

Later on Monday Herbalife’s loudest detractor Pershing Square’s Bill Ackman came out swinging yet again. He has been relatively quiet on the company of late. Yet his hedge fund Pershing Square released what they called an in-depth study on “deceptive practices and recruitment systems” of one of Herbalife’s top sellers in Canada.

Mr. Ackman promised that Pershing Square will continue to release details of deceptive practices executed by other top Herbalife sellers, including at least one member of the company’s board of directors.

While Mr. Ackman has been promising bombshells that could take down Herbalife for more than a year, these revelations and the fear of more to come only pushed the stock down a bit. Herbalife’s shares have more than doubled from the fall after Mr. Ackman first predicted that the company’s stock would fall to zero and publicly acknowledged a billion dollar bet against Herbalife’s stock.

Gold futures score a weekly gain of 2%

SAN FRANCISCO (MarketWatch) — Gold futures closed higher on Friday for the second consecutive session, scoring a weekly gain of nearly 2% as prices continued their rebound from last year's loss to finish at their highest level in nearly three weeks.

Following the prior session's surge, gold for February delivery (GCG4)  tacked on $13.40, or 1.1%, to settle at $1,238.60 an ounce on the Comex division of the New York Mercantile Exchange — their highest settlement since Dec. 16, FactSet data, tracking the most-active contracts, show. Futures prices, closed at $1,214 last Friday.

"While bargain hunting and short-covering may have been the initial catalyst for the pop off support [levels], we are now seeing more conviction buying premised on the third failure to sustain losses below $1,200," said Peter Grant, chief market analyst at precious-metals dealer USAGOLD.

"A theme among clients I've spoken to this week has been skepticism about the sustainability of the stock market rally," he said. "They're taking money off the table in equities and using it to bolster their gold holdings."

Silver prices gained along with gold Friday. March silver (SIH4) added 8 cents, or 0.4%, to $20.21 an ounce after an early slip below the $20 mark. Prices for the white metal had jumped almost 4% on Thursday and saw a gain of 0.8% for the week.

AFP/Getty Images

So far for gold, support is holding at $1,140 an ounce, said Adam Koos, president of Libertas Wealth Management Group.

"In the short term, we might be seeing the beginning of a bottoming process, but it's very early yet, he said.

On Thursday, gold futures soared by nearly $23 an ounce on reports of physical buyers looking for bargains. China, in particular, was believed to be behind the piqued appetite. The Lunar New Year falls at the end of the month, and that usually means a strong period of gold buying.

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"Since gold took such a beating last year, there are likely a lot of investors who took the opportunity in one of their rare positions with losses on the books to realize those losses for tax purposes," said Koos. Gold futures prices dropped 28% in 2013.

"Since the IRS Wash Sale Rule limits the repurchasing of securities for the purpose of tax loss harvesting to 31 days, there's a chance that we might start to see a bid come back into GLD mid-month, but we'll know for sure whether this hypothesis is remotely correct by month's end," he said, referring to the gold-backed exchange-traded fund, the SPDR Gold Trust (GLD) .

For now, Koos said he's "watching the show from the sidelines and waiting for more of a consolidation to occur with some upward momentum prior to adding a position" in gold.

But Julian Jessop of Capital Economics can be counted in the gold bug camp . "We see plenty of scope for gold to bounce back in 2014," he said in a recent note.

"Indeed, the poor performance in 2013 has left the precious metal looking attractive again compared to other assets, including equities. The bursting of the bitcoin bubble may even make gold look more appealing to Chinese investors," Jessop said.

Elsewhere in metals trading Friday, platinum for April delivery (PLJ4)  closed up $9.60, or 0.7%, to $1,414.20 an ounce — up about 2.6% from a week ago, while March palladium (PAH4)  rose 95 cents, or 0.1%, to $731.20 an ounce, for a 2.7% climb on the week.

High-grade copper for March delivery (HGH4) , however, fell nearly 3 cents, or 0.8%, to $3.355 a pound, set to extend Thursday's 0.4% session decline. For the week, prices lost 1%.

Other must-read MarketWatch stories:

It may soon be time to go for gold

Why you shouldn't worry about stocks' rough start to 2014

Caution: #shark approaching

Is The Best Buy Stock Run Over?

The shares of Best Buy Co. Inc. (NYSE: BBY) are up almost 250% this year. The company’s management has staged a turnaround, at least partially. But the progress is not great enough for Best Buy to have its current market capitalization of $14 billion. After all, its earnings from continuing operations last quarter were only $44 million. Even if that number soars, it likely will not be enough to justify the $14 billion valuation.

The theory behind the increased value of Best Buy is that its revenue is no longer shrinking, and it may recover this holiday season. In its most recently reported quarter, Best Buy had revenue of $9.4 billion, about flat with last year’s same quarter. Same-store sales for the period rose only 0.3%. The number only looks good because in the year-ago quarter same-store sales were off 5.1%.

Part of the enthusiasm about Best Buy is the strategic plan of new CEO Hubert Joly: drop prices below the competition and offer better in-store services. The problem with the first part of the program is that the move is likely to lower margins. The problem with the second is that consumers are used to shopping for consumer electronics at Amazon.com Inc. (NASDAQ: AMZN), where there is no service. The lack of service at Amazon is replaced by the convenience of shopping from home and the ability to browse a seemingly infinite number of consumer electronics products across a nearly limitless number of prices. A physical store has no means to match that.

So, the new wisdom about the high valuation of Best Buy is that it has beaten, or at least matched, Amazon in the prices and service aspects of consumer electronic sales. Yet, there is scant evidence of that. It will not be until holiday sales numbers are turned in by the two companies that Best Buy can be considered a winner, even on the most modest level. And “modest” is the problem. Even a small improvement in Best Buy’s revenue says nothing other than Amazon is not trampling it with quite the same force as a year or two ago. That does not mean the beating ever entirely ended.

Best Buy’s turnaround is nothing more than marching in place, which is not enough to cement a better future.

BlackRock’s Fink: There are ‘bubble-like markets again’

Laurence D. Fink Bloomberg News

BlackRock Inc. Chief Executive Officer Laurence D. Fink, whose company is the world’s largest money manager with $4.1 trillion in assets, said Federal Reserve policy is contributing to “bubble-like markets.”

“It’s imperative that the Fed begins to taper,” Fink said today at a panel discussion in Chicago, referring to the central bank’s $85 billion in monthly bond purchases. “We’ve seen real bubble-like markets again. We’ve had a huge increase in the equity market. We’ve seen corporate-debt spreads narrow dramatically.”

The Fed in September decided against reducing the bond purchases as economic growth remained muted. Following a partial U.S. government shutdown this month, policy makers will probably delay slowing the stimulus until March, according to a Bloomberg survey of economists conducted Oct. 17-18.

The Standard & Poor’s 500 Index has gained 24 percent this year, after advancing 13 percent in 2012. The extra yield investors demand to hold high-risk, high-yield bonds has dropped to 444 basis points from this year’s high of 534 in June, according to the Bank of America Merrill Lynch U.S. High Yield Index. That spread reached 440 basis points on Oct. 24, the narrowest since May 28.

“We have issues of an overzealous market again,” Fink said at the event, which was sponsored by the Paulson Institute

Cal-Maine Foods Earnings Fall; Meets Estimates (CALM)

On Monday, Cal-Maine Foods Inc (CALM) reported lower first quarter profits as its production costs increased.

The Jackson, MS-based company reported first quarter net income of $8.8 million, or 36 cents per share, down from $9.4 million, or 39 cents per share a year ago. On average, analysts expected to see earnings of 36 cents per share.

Total revenue for the quarter rose 17% to $319.5 million from $272.9 million last year.

CALM reported that its feed costs rose 7% during the quarter, but the company is expecting these costs to fall for the rest of FY2014.

Cal-Maine has also declared its next dividend payment of 6.8 cents. This dividend will be paid on November 14 to shareholders of record on October 30.

Cal-Maine Foods shares were mostly flat during pre-market trading Monday. The stock is up 22% YTD.

Less-Than-Shiny Gold Miners

NEW YORK (TheStreet) -- The precious metals rumor mill is in high gear once again. The contradictions are almost tantalizing.

The pantheon of gold gurus has a lot to say about this alluring symbol of wealth. On Friday the 13th (just that date alone can make some skittish) Goldman Sachs' (GS) head of commodities research Jeffrey Currie said in a TV interview that gold is about ready to dip further as the U.S. Federal Reserve withdraws stimulus and economic data improve.

The investment bank suggests there's risk gold bullion may even fall below $1,000 an ounce. Does Currie know something we don't, or is he a part of the 66% of analysts who believe the Fed will start taking its foot off the bond-buying pedal sooner than later?

The debt-ceiling, the Syrian drama and other tempests in a teapot may support gold prices in the short term, Currie said in the interview, but he strongly suggested gold will resume its decline into next year. He went on to say the firm's price target on gold for 2014 is $1,050, and during the ensuing correction the commodity may overshoot to the downside. "While we agree with the mid-cycle price somewhere around $1,200, we believe that at least near term it can overshoot to the downside, which is why we have $1,050" as a target, Currie said. "It clearly could trade below $1,000." [Read: Behind the Ethanol Scandal ] So how will investors respond to this melancholic prediction? If they read reports like the one written by Research Specialist Peter Krauth at Money Morning, they may beg to differ. Krauth wrote on Monday that "gold is set to surge." He claims one of the best indicators of the direction of gold's price is the Commodity Futures Trading Commission's Commitment of Traders (COT) report for gold. His premise suggests that the commodity traders tend to move in tandem and that these speculators "...are almost always wrong at extremes." "According to recent COT reports, speculators are so bearish on the gold price, their short positions are 70% higher than they have ever been throughout this 12-year secular gold bull market," Krauth explained.

His reasoning is based on the massive leverage that many futures contracts are traded on "up to 16 to 1 -- just a 6.4% rally in the gold price would obliterate all the capital of those fully leveraged contracts," Krauth postulates.

Just a small percentage rise in the gold price may lead to a massive short covering, "...which would feed on itself, pushing gold still higher and faster. Short covering rallies can lead to violent upside surges," he adds.

It's not hard to agree with his feeling that at the present time the negativity about gold hasn't been this great since gold's bull market began in 2001.

"After the extreme bearish sentiment of 2008, gold rallied 70% in a little over one year" Krauth reminded readers. The View from a Contrary Perspective There are only two things that get less respect than gold. Junk food and gold stocks are not high on any investor's food chain at the moment, and I'm not sure junk food isn't more venerated. [Read: Our 401(k)s Show We're Not Taking Investor Confidence Seriously ] Take the world's largest gold producer Barrick Gold (ABX). Shares of Barrick closed on Monday at $18.14, in spite of an analysis published by Two Fish Management valuing the company's stock above $44 a share. Barrick estimates its gold production this year will be 7.2 million ounces, over two million more ounces than the next biggest miner, Newmont Mining (NEM). There are a number of chinks in its armor. Its net debt is around $13 billion versus Newmont's $5 billion. Plus, Barrick has earned a sour reputation for its capital expenditures and shaky leadership. Let's take a look at both of these two famous gold producers, starting with a 1-year chart of ABX. The chart also includes its trailing twelve month (TTM) EBITDA earnings. ABX data by YCharts Barrick's earnings and sales growth depends on the price of gold staying afloat. In a recent interview CEO Jamie Sokalsky proclaimed, "This company has a more disciplined capital-allocation framework and is focused on cost control, portfolio optimization return on investment and free cash flow."

Newmont's one-year price chart with its TTM EBITDA earnings looks like the trajectory of a belly-flop dive off a high diving board. NEM data by YCharts

Many wonder if the gold miners can rejuvenate confidence among disenchanted investors. If Goldman Sach is correct about the direction of the price of the golden metal, that may be the final nail in the coffin.

If you decide to begin accumulating shares of ABX or NEM, it would be important to have a disciplined exit strategy that you can count on if shares head the wrong direction. [Read: When to Fix Up Your Home Before a Sale ]

If the precious metals sector can feign death one more time, it may be the buying opportunity of a lifetime. Watch Barrick as the harbinger of the group. For those of us who are long the stock, let's hope a well-respected activist investor starts accumulating shares. At the time of publication the author the author is long ABX and NEM. Follow @m8a2r1 This article was written by an independent contributor, separate from TheStreet's regular news coverage.

Marc Courtenay is the founder and owner of Advanced Investor Technologies, LLC, as well as the publisher and editor of www.ChecktheMarkets.com. Courtenay holds a Master's of Science degree in Psychology from California Polytechnic State University, and is a former senior vice-president of Investments for two major brokerage firms. He's been a fiercely independent investment "investigator" and a consulting contributor to the investment publishing world for over 30 years. In addition to his role as an investment publisher and analyst, he serves as a marketing consultant to the investment media industries. In his role as a financial editor, he specializes in unique investment strategies, overlooked stock investments, energy and resource companies, precious metals, emerging growth companies, the prudent use of option strategies,real estate related opportunities,wealth preservation, money-saving offers, risk management, tax issues, as well as "the psychology of investing". Because of his training and background in Clinical Counseling and Psychology, he enjoys writing about investor behavior, the �herd mentality, how to turn investment mistakes into investment breakthroughs and the stock market's behavioral trends and patterns. Follow @m8a2r1

At the Close: U.S. Stocks Edge Higher; CME Group Surges; Miners Fall

In a day that saw U.S. markets go from gains, to losses, and back again, stocks finished higher as investors decided that disappointing economic data was, in fact, good news, or something like that.

REUTERS

The Dow Jones Industrial Average (DJIA) gained 0.2% to 15,451, while the Standard & Poor's 500 (SPX) rose 0.3% to 1694.16 and the Nasdaq Composite (COMP) finished up  0.4% at 3,684.44.

This morning, investors decided to take a more bearish stance towards data that showed retail sales gain 0.2% in July, less than the 0.3% forecast by economists. As the day moved on, the focus turned to other aspects of the report–the upward revision in June’s number and the 0.5% gain in retail sales sans car purchases–and stocks rose.

I don’t want to make too much of the data, however. Clearly it was a Rorschach test of sorts, to see what you want to see. And really, investors are trying to gauge whether the Ben Bernanke and his buds at the Federal Reserve think the economy is strong enough to end its bond buying–and what it means for stocks if it does.

Hence, investors shouldn’t make too much of the day’s action–or lack thereof. The gap between the day’s high and low was just 0.8 percentage point, and the CBOE Volatility Index slid another 3.9% to 12.31, a sign that price swings in stocks are muted at best.

But even with markets trading in a range since July, there was plenty of action in individual stocks, even as earnings season nears an end. CME Group (CME), for instance, gained 4% to $74.44, its biggest move two months, after the exchange operator said trading volume in its Brent crude oil futures contracts climbed above 100,000 for the first time on Aug. 8. CME is trying to woo traders away from IntercontinentalExchange’s (ICE) dominant futures contract. Xerox (XRX), meanwhile, finished up 3.4% at $10.49 after Citigroup upgraded its stock to Buy from Neutral and the company announced that it would acquire a Canadian company.

Newmont Mining (NEM) fell 2.7% to $30.08, as gold fell 0.9% to $1322 an ounce. Blame that tapering speculation again. Alcoa (AA) fell 1.3% to $8.15–probably for the same reason–making it the Dow Jones Industrial’s biggest loser.

Still, the S&P 500 has been locked in a tight range for the last month, with just 2% separating the high and the low during that period. Don’t expect much excitement until investors get more clarity on the strength of the US. economy and the Fed’s tapering.

Looking for investment options? Bonds are your best bet

The economy is heading for a slowdown and bond yields are not far from peaks seen during the year.  This by itself is a good case for buying into bond yields and the risk return profile of investing in bonds is very much in your favour. Bond funds that invest in government and corporate bonds are an alternative if you do not want to invest directly in bonds.

Ten year benchmark government bond yields are trading at around 8.25% levels. The peak seen on the 7.80% 2021 government bond, which is the benchmark ten year bond, is 8.45%, seen in May 2011. Benchmark AAA corporate bonds of five and ten year maturities are trading at close to 9.5% levels, down from peaks of 9.75%. The current levels of bond yields are at close to three year highs and the levels are where they are due to inflation. Inflation as measured by the WPI (Wholesale Price Index) is running at 9.06% levels and is expected to come in higher for the month of June, due to the fuel price hikes by the government in June. The RBI has raised the benchmark policy rate, the repo rate by 275 bps over the last fifteen months as inflation kept steadily moving higher from levels of 5% to levels of 9% and above. The repo rate is at 7.50% at present.

The economy in the meanwhile has show signs of slowdown. The IIP (Index of Industrial Production) growth for the month of May 2011 came in at 5.6%, against market expectations of over 8%. The IIP growth for May 2010 was at 8.5%.  IIP growth for the month of April 2011 was at 5.7% taking the April-May 2011 average to 5.7%. While two months of weak industrial growth does not indicate a slowdown for the full year, the environment outside does suggest that the economy can slowdown faster than expected and force GDP growth numbers for 2011-12 to be revised downward from 8%.

The fall in IIP growth for May is to be seen in conjunction with the status of growth drivers in the economy. Monetary policy is tight and its effects are seen on credit growth, which has fallen from levels of 23.5% to levels of 20% over the last six months. Interest rate sensitive industries from auto to real estate are seeing a slowdown. Vehicle sales growth has dropped from high double digit growth levels to low single digit growth levels. Infrastructure spending is coming off due to tight liquidity and high interest rate conditions (as per industry leaders).  Financial services sector is facing issues of a weak capital market with broad equity indices still trading below levels seen in late 2007. High interest rates and weak capital markets are forcing corporates to put off expansion plans. There is clearly a case for the economy to slow down further.

The economic environment in the global front is not looking positive. Economic growth in the big economies of US, China and Japan is looking to come off. US unemployment rate at 9.2% has gone up from below 6% levels seen in 2006 and is not looking to go down soon. China is fighting inflation, which is trending at 6.4% levels and has raised rates and lowered growth forecasts. Japan is coming out of a natural disaster that closed down it nuclear facilities. Eurozone is facing a debt crisis and many countries in the Eurozone including Greece, Spain, Portugal, Italy and Ireland will see growth come off sharply on spending cuts, and this will bring down growth in the region.

Growth drivers absent, inflation drivers such as demand and commodity prices will also cool off leading to falling inflation expectations. In such a scenario, bond will do extremely well and at levels close to three year highs, chances of yields falling is much better than chances of yields rising. 

The author is editor www.investorsareidiots.com a financial web site for investors.

Energizer Upgraded to Strong Buy - Analyst Blog

On Jul 6, 2013, Zacks Investment Research upgraded Energizer Holdings Inc (ENR) to a Zacks Rank #1 (Strong Buy). With a strong return of 37.1% over the past one year and a positive estimate revision trend, Energizer is an attractive investment opportunity.

Why the Upgrade?

Strong second quarter results, innovative product pipeline, stringent cost control and the positive effects of the ongoing restructuring activity contributed to the upgrade.

Energizer reported second quarter results on May 1, 2013. Earnings of $1.80 per share jumped 47.5% from the year-ago quarter and comfortably surpassed the Zacks Consensus Estimate by 51 cents. This was the third consecutive quarter of positive earnings surprise with an average beat of 11.1%.

Based on the strong results, Energizer reiterated its fiscal 2013 earnings guidance in the range of $6.75 to $7.00 per share. The company expects earnings in the range of $2.75 to $3.00 in the second half of 2013 compared with $2.94 per share earned during the year-ago period

Although Energizer forecasts advertising expenses to increase in the latter half of 2013, restructuring savings are expected to increase at a much faster rate during the period. Energizer upped its restructuring outlook for fiscal 2013 to $50.0-$60.0 million from its earlier estimate of $25.0-$35.0 million.

As a result, gross savings from the restructuring project is expected to increase an additional $25.0 million to $225.0 million, of which $150.0 million is expected to be used for improving profitability, going forward.

The Zacks Consensus Estimate for fiscal 2013 increased 1.3% (9 cents) to $6.93 per share over the last 90 days. The current estimate is within the guidance range provided by Energizer. For fiscal 2014, the Zacks Consensus Estimate increased 0.5% (4 cents) to $7.61 per share over the same period.

The long-term expected earnings growth rate for Energizer is 11.0%.

Other Stocks to Consider:

Investors can also c! onsider other stocks that are doing well right now. These include Akamai Technologies (AKAM), Yahoo! (YHOO) and Moody's Corp (MCO). While Akamai and Yahoo! carry a Zacks Rank #1 (Strong Buy), Moody's carries a Zacks Rank #2 (Buy).

Aetna Inc: Fundamental Stock Research Analysis

Before analyzing a company for investment, it's important to have a perspective on how well the business has performed. Because at the end of the day, if you are an investor, you are buying the business. The FAST Graphs™ presented with this article will focus first on the business behind the stock. The orange line on the graph plots earnings per share since 1999. A quick glance vividly reveals the historical operating record of the company.

Aetna Inc. (AET) is one of the nation's leading diversified health care benefits companies, serving an estimated 44 million people with information and resources to help them make better informed decisions about their health care.

This article will reveal the business prospects of Aetna Inc through the lens of FAST Graphs – fundamentals analyzer software tool. Therefore, it is offered as the first step before a more comprehensive research effort. Our objective is to provide companies that have excellent historical records and appear reasonably priced based on past, present and future data and expectations.

A quick glance at the graph itself and the orange earnings justified valuation line will tell the readers volumes about how well the company has historically been managed and performed as an operating business. Simply put, the reader should ask whether this example is worthy of a greater investment of their time and effort based on the data as presented and organized. The FAST Graphs' unique advantage is the graphical articulation of the price value proposition.

Earnings Determine Market Price: The following earnings and price correlated F.A.S.T. Graphs™ clearly illustrates the importance of earnings. The Earnings Growth Rate Line or True Worth™ Line (orange line with white triangles) is correlated with the historical stock price line. On graph after graph the lines will move in tandem. If the stock price strays away from the earnings line (over or under), inevitably it will come back to earnings.

Earnings & Price Co! rrelated Fundamentals-at-a-Glance

A quick glance at the historical earnings and price correlated FAST Graphs™ on Aetna Inc shows a picture of undervaluation based upon the historical earnings growth rate of 10.1% and a current P/E of 11.2. Analysts are forecasting the earnings growth to continue at about 10.5%, and when you look at the forecasting graph below, the stock appears undervalued (it's outside of the value corridor of the five orange lines - based on future growth).

Aetna Inc: Historical Earnings, Price, Dividends and Normal P/E Since 1999

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Performance Table Aetna Inc.

The associated performance results with the earnings and price correlated graph, validates the principles regarding the two components of total return: capital appreciation and dividend income. Dividends are included in the total return calculation and are assumed paid, but not reinvested.

When presented separately like this, the additional rate of return a dividend paying stock produces for shareholders becomes undeniably evident. In addition to the 8.3% Annualized ROR (without dividend) (green circle), long-term shareholders of Aetna Inc., assuming an initial investment of $10,000, would have received an additional $1,124.33 in total dividends paid (blue highlighting) that increased their Annualized ROR (without dividend) from 8.3% to a Total Annualized ROR plus Dividends Paid of 8.6% versus 3.3% in the S&P 500.

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The following graph plots the historical P/E ratio (the dark blue line) in conjunction with 10-year Treasury note interest. Notice that the current price earnings ratio on this quality company is as normal as it has been since 1999.

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A further indication of valuation can be seen by examining a company's current P/S ratio relative to its historical P/S ratio. The current P/S ratio for Aetna Inc is .59 which is historically normal.

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Looking to the Future

Extensive research has provided a preponderance of conclusive evidence that future long-term returns are a function of two critical determinants:

1. The rate of change (growth rate) of the company's earnings

2. The price or valuation you pay to buy those earnings

Forecasting future earnings growth, bought at sound valuations, is the key to safe, sound and profitable performance.

The Estimated Earnings and Return Calculator Tool is a simple yet powerful resource that empowers the user to calculate and run various investing scenarios that generate precise rate of return potentialities. Thinking the investment through to its logical conclusion is an important component towards making sound and prudent commonsense investing decisions.

The consensus of 20 leading analysts reporting to Capital IQ forecast Aetna Inc's long-term earnings growth at 10.5%. Aetna Inc has medium long-term debt at 38% of capital. Aetna Inc is currently trading at a P/E of 11.2, which is below the value corridor (defined by the five orange lines) of a maximum P/E of 18. If the earnings materialize as forecast, based upon forecasted earnings growth of 10.5%, Aetna Inc's share price would $137.98 at the end of 2018 (brown circle on EYE Chart), which would represent a 16.5% annual rate of total return which includes dividends paid (yellow highlighting).

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Earnings Yield Estimates

Discounted Future Cash Flows: All companies derive their value from the future cash flows (earnings) they are capable of generating ! for their! stakeholders over time. Therefore, because earnings determine market price in the long run, we expect the future earnings of a company to justify the price we pay.

Since all investments potentially compete with all other investments, it is useful to compare investing in any prospective company to that of a comparable investment in low risk Treasury bonds. Comparing an investment in Aetna Inc to an equal investment in 10-year Treasury bonds illustrates that Aetna Inc's expected earnings would be 5.8 (purple circle) times that of the 10-year T-bond interest (see EYE chart below). This is the essence of the importance of proper valuation as a critical investing component.

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Summary & Conclusions

This report presented essential "fundamentals at a glance" illustrating the past and present valuation based on earnings achievements as reported. Future forecasts for earnings growth are based on the consensus of leading analysts. Although with just a quick glance you can know a lot about the company, it's imperative that the reader conducts their own due diligence in order to validate whether the consensus estimates seem reasonable or not.

Disclosure: No position at the time of writing.

Disclaimer: The opinions in this document are for informational and educational purposes only and should not be construed as a recommendation to buy or sell the stocks mentioned or to solicit transactions or clients. Past performance of the companies discussed may not continue and the companies may not achieve the earnings growth as predicted. The information in this document is believed to be accurate, but under no circumstances should a person act upon the information contained within. We do not recommend that anyone act upon any investment information without first consulting an investment advisor as to the suitability of such investments for his specific situation. A com! prehensiv! e due diligence effort is recommended.