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.

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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.