Oryon Technologies Inc. (PINK:ORYN) Ready to Light Up Portfolios by Lighting up Everything Else

Oryon Technologies, Inc. (PINK:ORYN) is manufacturer of next-generation lighting technology that has developed multiple patents relating to electroluminescent (or 'EL') lighting, trademarked as ELastoLite(r). Elastolite is a thin, flexible, crushable, water-resistant lighting system with multiple applications such as safety apparel, sporting goods, consumer goods, membrane switches, and others. These markets includes outerwear, industrial safety, municipal safety, military, athletic apparel, men's, women's and children's clothing, shoes and gear, and together they generate over $250 billion in annual revenues. Given the nature of� the EL technology though, it has universal application potential.

Oryon Technology Overview

The unique advantages of ELastoLite(r) provides industrial designers with the flexibility to use EL in ways not possible up until now.

What Is ELastoLite(r)? Unlike reflective tapes, an electroluminescent lamp emits light by the direct conversion of electrical energy into light through energized phosphors. Although electroluminescent lamp technology is not new, ELastoLite(r) broke through restrictive barriers that limited the growth of electroluminescent technology be creating an electroluminescent material that is a polyurethane ink structure which can be painted directly onto nearly any surface, and dries solid as well as flexible.

In other words, it's a flexible, ribbon-like material that emits light when powered by a nominal amount of electricity, like a common battery. However, it can be designed in any shape or size, and can emit multiple colors.

Specifically, Oryon's EL solution is a 3-part system - lamp (lighted surface), connection circuit, and battery/inverter.

• Lamp (Lighted Surface): a micro-thin film, more like a fabric, that is durable, malleable, and washable and that can be heat-transferred, in-molded, compression-molded or printed onto/into a substrate or base material.
• Connection Circuit: Technologically advanced conductive thread to transfer power to lamp from power source.
• Battery/Inverter: Highly efficient and small power generator that can be powered by Alkaline or Rechargeable (like cell phone battery) batteries.

It's entirely possible many investors have already utilized or witnessed the technology without even realizing it. It provides the backlighting for many cell phone key pads now, and the technology was how the lighted costumes 'glowed' in 2010's movie 'TRON: Legacy'.� �

ELastoLit is also cool and power efficient, emitting no heat. As such, it can be used for any purpose... signage, branding insignias or decoration on clothing (making it well-suited for safety vests and law enforcement apparel).� It can be applied directly to the garment/product through heat transfer, or in conjunction with other materials. It's also machine washable and dryable, and its useful life span virtually exceeds the life span of most garments.

It's not just a fabric-based material though. It can be molded onto plastics and other substrates. It's also durable, meaning the material painted onto items can be used in the harshest of environments, which makes it ideal for safety lighting. Better still, and unlike reflective tapes, it can be seen from any angle. Also unlike reflective tapes, it is an active light source. Reflective tapes require an external light source to function effectively. ELastoLit does not.

Oryon's technology is heavily patented with over 55 patents issued or pending worldwide.

ORYN Company Overview

Oryon is a technology company focused on leveraging proprietary technology to not only incorporate light where it was not possible before, but to further develop the technology and intellectual property for the advancement of limitless applications.

Oryon Technologies acquired the initial elastomeric electroluminescent lighting technology patents and intellectual property in 2002 and began the developmental process of establishing commercial channels in various markets. One of Oryon's early successes in commercializing its IP was licensing the use of the technology in cell phone key pads which led to the back lighting of the key pad in the Motorola RAZR, which has sold over 125 Million units.

ELastoLite(r) has been featured in apparel products sold by Nike, Lands' End and Marmot Mountain Ltd. In fact, Oryon achieved significant market validation in the apparel, textile and 'sports gear' arena through test marketing of ELastoLite(r) in over 100,000 apparel and gear items sold by Marmot Mountain and Lands' End.

It's not just the apparel industry that's showing interest, however. Hollywood took notice of Oryon's revolutionary lighting application and commissioned the use of ELastoLite(r) technology for the costumes in the 2010 Disney blockbuster film "Tron:Legacy" and for some costumes in the television series "Terra Nova".

Each one of these applications and associated development has positioned Oryon to capitalize on their future applications and product development.

For the time being, Oryon will continue developing and marketing the ELastoLite(r) brand in the key markets that have already demonstrated acceptance and performance. Once critical mass is achieved in those key markets, Oryon aims to expand into molded specialty products, including applications for the defense, automotive and point-of-sale sectors. Ultimately, the company believes that its technology and intellectual property will have a role in almost every industry, and the company plans to introduce significant added-value to an almost limitless number of products and technologies. As for the timeline...

Due to the immense size and divergent requirements of the multiple industries Oryon can target - and in order to optimize resources - the company will focus and initially limit the applications and industries in which it can make the most immediate and greatest impact, and which present both high level volume and profit potential. These markets are the apparel, textiles, footwear and subsequently membrane switch markets.

The initial marketing focus will be on apparel - a market Oryon has already started to penetrate. Within the target textile markets, approximately 7 billion units are shipped each year. This includes outerwear, industrial safety, municipal safety, military, athletic apparel, men's, women's and children's clothing, toys, footwear, sports gear and clothing accessories. These markets generate over $250 billion annually and are second only in size to the food industry.

Other markets the company expects to find market with in the near-term are toys, safety gear, enhanced-visibility-wear, outdoor equipment (machinery and structure), signage (like point of sale), and more.

Further down the read, Oryon expects to generate revenue in markets like in-molded products (cell phones and keypads), automotive dashboard and controls, costumes, household appliances, security systems, outdoor advertising and displays, military equipment, and more.
�� �
The company has plans even bigger than that, however. Other fields the company is developing a product for include biometric fingerprint sensors (in which Oryon holds two promising patents), and high speed roll-to-roll printing that will allow Oryon to offer cost effective solutions for floor lighting, greeting cards, printed flexible batteries and solar cells. These new technological developments could provide many outstanding future growth opportunities for Oryon.

Oryon Technology Management

Tom Schaeffer
President, Chief Executive Officer and Director

Mr. Schaeffer has over 30 years experience in sales and marketing, specializing both in new product introductions to mature industries and finding niches for existing products in emerging categories. Schaeffer has owned and operated Active Concepts, a sales and marketing company servicing the licensed sports industry, since 1982. He began his sales and marketing career with Blue Ribbon Sports in the late '70's as one of the original sales representatives of the company that would become known as Nike. Schaeffer was hired by the Dallas Cowboys to develop their merchandising department, which included hiring and training the national sales force and established the sales and marketing guidelines and national account base for the Cowboys, independent of the NFL. Schaeffer co owns Vino Family Vineyards in Napa Valley, California. Mr. Schaeffer brings his experience in textiles, sportswear, product development, manufacturing, supply chain management, B2B and B2C business building at national and international levels to Oryon, where he acts as the catalyst for domestic and international growth.

Mark E. Pape
Treasurer, Chief Financial Officer, Secretary and Director

Mr. Pape is a financial executive with over 30 years of experience in senior financial management, investment banking and auditing. He has served as the chief financial officer of Affirmative Insurance Holdings, Inc., Home Vestors of America, Inc., LoanCity.com, United Dental Care, Inc. and American Income Holding, Inc. In addition, he has served on the board of directors and audit committees of public, private and nonprofit organizations and as the VP of Strategic Planning for Torchmark Corporation, an S&P 500 company. Mark has extensive entrepreneurial financial experience having been the President and CEO of R.E. Technologies, Inc., a start-up technology venture and CFO of LoanCity.com, a venture capital-backed e-commerce mortgage-bank. From 1979 through 1991, Mr. Pape worked as an investment banker at several firms, including Bear, Stearns & Co. Inc., The First Boston Corporation and Merrill Lynch Capital Markets. Mr. Pape has been a Certified Public Accountant since 1975. He holds an MBA from Harvard Business School, a Masters in Hotel and Food Service Management from Florida International University and an AB degree from Harvard College.

Dan Gulden
Vice President Global Business Development

Mr. Gulden brings over 20 years of experience in creating, building and successfully managing global relationships that are critical in today's economy. His background in performance apparel, product development, sales, marketing and supply chain management will greatly assist in moving Oryon Technologies forward. Other areas of expertise include strategic planning and execution, strategic partnerships, acquisitions, restructuring and change management. Mr. Gulden began his career with Cabela's during a period of rapid expansion. At Lands' End Mr. Gulden managed multiple departments with businesses in excess of $200,000,000. In addition he has also worked with private equity firms on potential company acquisitions and valuations. Mr. Gulden hold a BA degree in Economics and International Business from St. Olaf College.

Dr. Leslie D. Major
Chief Technology Officer

Dr. Major has over 30 years experience in manufacturing operations, specializing in high reliability optoelectronic components, assemblies and subsystems for US and foreign defense contractors, the medical community and commercial accounts.� He also managed a contract assembly division with plants in Juarez, Mexico and the United States providing semiconductor assembly, electrical assembly, mechanical assembly and electro-mechanical assemblies.� Dr. Major was one of the original members of the management team of Texas Optoelectronics, Inc and served as Executive Vice President of Operations and a member of the Board of Directors until its sale in 2003, when he started Major Enterprises, LLC provide consulting services.� Dr. Major has a BS in Chemistry from Rensselaer Polytechnic Institute and a MS and PhD from Case Western Reserve University in Metallurgy and Materials Science.

ORYN Outlook & Analysis

What sort of revenue potential is on the table for this startup company? Nine times out of ten, a pre-revenue startup company is long on talk, and short on a marketable idea - the outfit significantly overestimates the value of its product. Oryon is one of those rare 'one of ten' gems that has an amazingly marketable idea, but has yet to start tooting its own horn. That's the crux of the opportunity for new ORYN investors today - the product is ready to roll, but the story hasn't yet started to spread.

As for the revenue, on the upside, the applications of ELastoLite are virtually limitless... apparel, industrial safety, special effects, signage, and more. On the downside, Oryon isn't going to capture the bulk of the sales of those items. It will only capture a small percentage of the total revenue driven by sales of those items. In other words, if a shirt that incorporates the ELastoLite technology retails for $30, ORYN won't pocket that $30. It will only pocket a small fraction of that total price, either by licensing the technology, or by providing the EL 'ink' that is used to fabricate the shirt.

That said, the benefit of all those nickels and dimes easily adds up to what is still a massive amount of potential.

As was noted above, the apparel industry ships 7 billion items per year. Even if only 1% of those articles of clothing utilizes Oryon's EL technology, that's still 70 million units that will generate licensing fees or revenue for the company. Even if usage of the technology nets Oryon $1.00 per garment (likely a low estimate), that's still $70 million in revenue for this $26.7 million company... an outrageous price/sales ratio.

And remember, the EL technology has an untold number of potential applications, each of which puts a few more dollars in the company's pockets. ELastoLite realistically is a technology that could yield hundreds of millions of dollars in annual revenue.

Be that as it may, newcomers and current owners may first want to focus on the sales potential of the market Oryon has already said it is going to first focus on - apparel - as the basis for any foreseeable valuation.

Assuming that hypothetical $70 million in apparel-based revenue is on target, and assuming the average price/sales ratio of 2.4 applies to ORYN, one could reasonably make the case that the company is actually worth $168 million, meaning the stock is due to appreciate 529% as it penetrates the apparel market. That's an aggressive number to say the least, and Oryon certainly won't justify it in the immediate future. It does offer some perspective of the long-term potential though.

In the meantime, as sales begin to roll in and the story gets told, it wouldn't be unreasonable for ORYN to go ahead and justify a small, risk-adjusted portion of that potential upside. Even just modest revenue - in the range of a few million dollars - would verify the company's viability enough to suit the market.� Once Oryon becomes 'real' in doing so, a doubling in price within the foreseeable future isn't out of the question. That would put shares somewhere in the $1.70 area, which may be a decent mindset to start with (though always thinking defensively goes hand in hand with this sort of speculative trading).

That being said, traders should feel a sense of urgency here. ORYN only began trading a couple of weeks ago. While it got started with a bullish bang, the stock's fallen back to $0.88 after peaking at $1.33 on the 14th. A problem? Quite the opposite - an opportunity.

The early volatility can be chalked up to the fact that it's effectively a new company, and a new stock; both are still getting their bearings. The pop and subsequent dip now, however, suggests the dust is settling. That's when the underlying story starts to dictate how and where shares trade. Clearly the story is a compelling one, and we anticipate a strong upside move directly from here.

Holding:No Position Disclosure: SmallCap Network has been compensated $9,000 from Colburg Media Inc. for market awareness and other advertising services on ORYN.

Kinross Gold: Ready to shine?

Gold may not tarnish, but gold stocks do. In fact, it seems they tarnish more than most stocks when they have problems.

Kinross Gold Corporation (KGC) is one such company. Between 2002 and 2008, the stock soared nine-fold, matching its peers in the industry, but since then it has fallen more than 60%.

It has had a couple of bad quarters recently that call into question management�s ability to get the job done.

The latest boondoggle was Kinross recording a $2.94 billion "non-cash" charge for the company's Tasiast project in Mauritania, leading to a loss for the year.

On the flip side, however, on an operational basis, 2011 was the best performance in the company's history. Despite its stumbles, it produced 2.6 million gold-equivalent ounces, growing revenue 31% to $3.94 billion.
Furthermore, in the face of rising costs for fuel (substantial in mining), cash margins grew 32% to $906 per ounce sold. "Cash" in this instance means, excluding corporate costs. It�s a legitimate measure, though it�s the bottom line that counts in the end.

Given these results, it seems to me that Kinross simply bit off more than it could chew with some of its recent acquisitions.

It�s cranking out a lot of gold in some places, but blowing it in others. That conclusion aligns with the company�s decision to scale back some operations, cutting back on plans at specific mines for the time being.

I think it�s a wise decision that should pay dividends later. Which reminds me, the company�s cash flow is excellent (remember, the write-off doesn�t effect current cash, just past investment), so Kinross raised its dividend 33%. It only comes to about 1.5% annualized, but it�s cash coming in.

The real reason to buy Kinross comes down to something else, however. After all the recent trouble, write-offs, etc., the company�s proven and probable reserves are being valued by the market at less than $130 an ounce.

"Proven and probable" is a legally prescribed definition. It means the gold can be economically mined, though it doesn�t specify at what margin. But at that price, there�s likely to be a lot of room for profits.

If the company doesn�t get its act together, I can see a bigger company like Barrick, Newmont or Goldcorp scooping it up. It�s small enough at $12 billion to be edible, but large enough to add meaningfully to an acquirer�s girth.

We will start with a small position because of my reservations about gold in the short-term, and the market overall. Buy Kinross Gold up to $12.




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• The 'Quest' for rare earth
• Goldcorp: 'My favorite major'

Copper in 2011: A Beijing Opera

Year 2010 had been good to almost all investment classes. Stocks, bonds, commodities, and the dollar are all moving higher in tandem, a first of such unison since 2005. Among them, commodities are leading the pack-- partly on dollar weakness, as well as propped up by world’s central banks quantitative easing.

Base metals, in particular, are further supported as China keeps on trucking with double-digit growth, despite that most of the world practically stood still during the worst global recession since World War II.

If you think Gold's 30% gain last year is impressive, one base metal -- Copper -- outshined the precious metal by rallying 33% on the year, and reached an all-time record in London, New York, and a 3-1/2 year high in Shanghai. Copper futures for March delivery on the Comex in New York stood at $4.4470 a pound at year-end, a record settlement.

Noteworthy Institutional 5% Ownership Filings This Week In Healthcare And Tech

Many leading funds, including Fidelity Investments, Wellington Management and QVT Financial, filed forms 13-D and 13-G (and form 4) with the SEC this week (March 12th to March 15th, 2011), indicating that they had amended their ownership in U.S. traded public companies operating in the healthcare and tech sectors. The following are the most notable institutional trades based on our analysis of those filings (for more info on Forms 13-D and 13-G, and how to interpret that, please refer to the end of this article):

Adtran Inc. (ADTN): ADTN is a leading global provider of networking and communications equipment, with a portfolio of more than 1,400 solutions for use in the last mile of today's telecommunications networks. Its solutions enable voice, data, video and Internet communications across fiber-optic, copper-based and wireless network infrastructures. On Monday, Boston-based mega fund Wellington Management, with $254 billion in 13-F assets in its Q4 filing, filed SEC Form 13G/A indicating that it holds 6.64 million or 10.4% of outstanding shares, an increase from the 4.04 million shares it held at the end of Q4.

ADTN released disappointing Q1 guidance earlier today, projecting 22-25c in earnings v/s analyst estimates of 45c, and revenues at $130-$135 million v/s estimates of $175 million. The stock, however, had already corrected significantly, down 20% so far in March, on the back of a couple of analyst downgrades earlier this month. Also, going forward, the company was optimistic due to an improvement in March order rates, projected that the slowdown was behind them. As a result, shares were up slightly today, trading at 13 forward P/E compared to the average of 22.1 for its peers in the telecommunications equipment group.

Besides ADTN, Wellington also filed SEC Forms 13G/A on Monday for Coventry Health Care Inc. (CVH) and Exelixis Inc. (EXEL). CVH is a provider of managed healthcare services through HMO, PPO and POS plans, and Medicare and Medicaid products, and Wellington indicated in its filing that it holds 14.21 million shares or 10.1% of outstanding shares, an increase from the 13.71 million shares it held at the end of Q4. EXEL develops small-molecule therapies for the treatment of cancer, and Wellington indicated in its filing that it holds 15.32 million shares or 10.3% of outstanding shares, an increase from the 12.12 million shares it held at the end of Q4.

Neurogesx Inc. (NGSX): NGSX is engaged in developing and commercializing novel pain management therapies, based on known chemical entities. On Monday, Fidelity Investments filed SEC Form 13G indicating that it holds 2.97 million or 10.0% of outstanding shares, a new position in its portfolio. NGSX shares have been in strong retreat since last month on negative news on its sNDA for Qutenza (Capsaicin), for the management of pain associated with HIV associated neuropathy. First, in early February, shares fell on news that the FDA panel voted 12-0 against Qutenza, and then last week shares fell again after the company received a CRL (Complete Response Letter) for its sNDA from the FDA.

Intermune Inc. (ITMN): Intermune is a development-stage biotech company engaged in the development and commercialization of therapies in the areas of pulmonology and fibrotic diseases. On Monday, New York-based shareholder activist hedge fund QVT Financial, with over $1.2 billion in 13-F assets at the end of Q4, filed SEC Form 13G indicating that it holds 5.92 million or 8.9% of outstanding shares, an increase from the 5.57 million shares it held at the end of Q4. QVT has been gradually building a position in ITMN, having added 0.77 million shares in Q3 and 2.04 million shares in Q4.

General Discussion

Form 13-D is commonly referred to as the "beneficial ownership report," and is required when a person or a group of persons acquires beneficial ownership of more than 5% of the voting class of a company's equity securities; form 13-G is the abbreviated version of the form that is allowed under certain circumstances.

The information in forms 13-D and 13-G is extremely timely as it is required to be filed within 10 days after the purchase, in contrast to 13-F quarterly filings by Institutions that are filed every three months. The information contained in 13-F filings, thereby, can as much as 18 weeks old by the time it is disseminated to the public. Furthermore, by virtue of their 5% ownership in public companies, the information contained in the 13-D and 13-G filings indicates only high confidence or high conviction moves by institutions and insiders, and hence can be interpreted to be of greater relevance to the investment community than the 13-F quarterly filings. Furthermore, 13-D and 13-G filings often are a precursor to a hostile takeover, company breakups and other "change of control" events, and often they will include a letter to management explaining the reason for their taking a large stake in the company.

Credit: Fundamental data in this article were based on SEC filings, Zacks Investment Research, Thomson Reuters and Briefing.com. The information and data is believed to be accurate, but no guarantees or representations are made.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Disclaimer: Material presented here is for informational purposes only. Nothing in this article should be taken as a solicitation to purchase or sell securities. Before buying or selling any stock you should do your own research and reach your own conclusion. Further, these are our "opinions" and we may be wrong. We may have positions in securities mentioned in this article. You should take this into consideration before acting on any advice given in this article. If this makes you uncomfortable, then do not listen to our thoughts and opinions. The contents of this article do not take into consideration your individual investment objectives so consult with your own financial adviser before making an investment decision. Investing includes certain risks including loss of principal.

How Low Can Kinross Gold Go?

Shares of Kinross Gold (NYSE: KGC  ) hit a 52-week low on Friday. Let's take a look at how it got there and whether cloudy skies remain in the forecast.

How it got there
Gold mining companies are quietly getting trounced worse than just about any other sector in the market over the past month, despite the yellow metal they sell hardly budging.

Like most mining companies, Kinross Gold is suffering from a mixture of higher labor, diesel, power, and royalty costs which are increasing its cash cost per ounce and making it less efficient to mine. But perhaps the most troublesome factor plaguing Kinross is that the overwhelmingly inflating costs of building a mine have caused it to delay the build-out on some of its properties -- most notably the Tasiast mine in Mauritania, which necessitated a $2.94 billion writedown in the fourth quarter.

As I said, this isn't the first time we've seen mine-building costs get in the way of a company's bottom line. Agnico-Eagle Mines' (NYSE: AEM  ) Goldex mine is closed for safety issues, which nonetheless forced the company to take a very large impairment charge in its recent quarter. Newmont Mining (NYSE: NEM  ) recorded a $1.61 billion loss last quarter on a writedown of its Hope Bay mine in Canada.

How it stacks up
Let's see how Kinross Gold stacks up next to its peers.

KGC data by YCharts.

Considering that gold is on an 11-year winning streak, mining stocks have vastly underperformed the yellow metal.

Company	Price/Book	Price/Cash Flow	Forward P/E	5-Year Revenue CAGR
Kinross Gold	0.8	6.7	7.2	34.2%
Newmont Mining	1.7	7.3	8.3	15.7%
Barrick Gold (NYSE: ABX  )	1.6	7.1	6.3	20.5%
AngloGold Ashanti (NYSE: AU  )	2.4	5.5	6.1	19.5%

Sources: Morningstar and author's calculations. CAGR = compound annual growth rate.

There are values to be had throughout the entire mining sector -- it's just that each stock in the sector comes with its own extra baggage that investors need to cope with. Barrick Gold and AngloGold Ashanti, for instance, are dealing with rising labor and fuel costs, which are rapidly increasing their mining costs. Newmont and Kinross are blasting shareholders with one-time writedowns due to project delays which, in turn, often reduces near-term production outlooks. Still, it's very difficult to overlook the undeniable value that the gold sector has become.

What's next
Now for the real question: What's next for Kinross Gold? The answer is going to depend on whether Kinross Gold can keep its costs under control and whether or not it can maximize shareholder value if it decides to sell its stakes in certain mines.

Our very own CAPS community gives the company a four-star rating (out of five), with an overwhelming 95.7% of members expecting it to outperform. Although I have shunned Kinross Gold up to this point, I'm now ready to make a CAPScall of outperform on the stock.

Part of the reason I'm so bullish on Kinross now is its possible sale of two mine interests: its 50% interest in the Crixas mine in Brazil, which is co-owned with AngloGold Ashanti, and its 25% interest in the Cerro Casale mine, which is majority owned by Barrick Gold. Crixas contributed to 7% of Kinross' South American gold production last year while Cerro Casale's proven and probable reserves (in Kinross' case) stand at 5.8 million ounces of gold, 14.7 million ounces of silver, and 14.4 billion pounds of copper. In short, Kinross has a mountain of reserves that it can turn into cash in an instant to fund other projects if it chooses to.

Outside of this, Kinross is just plain cheap if you ignore the one-time writedown. Investors have dismissed what was a record quarter of production in favor of focusing on the one-time writedown. To me, that seems like the perfect time to make a bullish call on the stock.

If you'd like the inside scoop on three more stocks that will help you retire rich, then simply click here for access to our latest special report -- it's free!

Craving more input on Kinross Gold? Start by adding it to your free and personalized watchlist. It's a free service from The Motley Fool to keep you up to date on the stocks you care about most.

Overseas Shipholding tanks on dividend halt

SAN FRANCISCO (MarketWatch) � Investors bailed from Overseas Shipholding Group Inc. Friday, sending the company�s shares down as much as 15% after management halted its first-quarter dividend payment of 22 cents a share.

Overseas Shipholding OSG �said it�s conserving cash to weather a challenging global economic environment that�s hurt shippers. The industry�s coping with lower average spot rates, too many new ships built when bank credit was cheap that are now outstripping demand, and higher fuel prices.

The Baltic Dry Index, which tracks worldwide shipping rates for dry-bulk cargoes in four vessel classes, is down 60% since Jan. 1 and now plumbing lows last seen early in 2009, when global trade seized up in the wake of the U.S. financial meltdown. Read story on global shipping rates.

Read Asian shipping stocks headed for storm.

The dividend suspension is another blow for investors and Overseas Shipholding, the New York-based company that handles transporting oil, coal and grain products around the world.

/quotes/zigman/237320/quotes/nls/osg OSG 9.73, -0.43, -4.23%

The company cut its dividend in half last August, and its shares are now down 70% over the last 12 months, compared to a 1.7% gain for the Dow Jones Transportation Average DJT , of which the company is an index constituent.

Overseas Shipholding said it�s also eliminated 2011 cash bonuses for senior management and reduced board member compensation.

For the nine months ended Sept. 30, Overseas Shipholding posted a loss of $143 million, up from $79 million in the same 2010 period. Revenue declined 3% to $792 million.

In afternoon trading, Overseas Shipholding sank 12% to $10.45. Also in the sector, Nordic American Tankers NAT � fell 3% to $13.84, Teekay Tankers TNK �lost 1% to $4 and DryShips Inc. DRYS �fell 1% to $3.03.

ETFs To Invest In The Next Facebook

With all of the buzz and excitement building around Facebook’s IPO, it’s likely that some investors are wishing they could have gotten in on the ground floor. Private equity investments are known for incredibly lucrative returns, in addition to having more than a handful of barriers to entry. The reality is that the average investor likely misses out on a�sizable�chunk of profits to be made before many companies go public; such as Zynga, Groupon, Zillow, Pandora, and LinkedIn, just to name a few. Luckily, the evolution of the exchange-traded product structure has brought forth instruments capable of delivering exposure to private equity investments [see also Doomsday Special: 7 Hard Asset Investments You Can Hold in Your Hand].

The appeal of private equity exposure is two-fold; first and foremost, this asset class has historically been uncorrelated to broad equity markets, making it a worthy diversifying agent for any portfolio. Second, this corner of the market provides investors with a basket of�opportunities�that may include owning the next revolutionary internet company before it debuts on a public stock exchange.

Private Equity On A Public Exchange

UBS offers investors a way to tap into the universe of private equity investments with the E-TRACS Wells Fargo Business Development Company Index Fund (BDCS). Business Development Companies are involved in lending money to small and mid-sized companies, bearing a close�resemblance�to private equity firms. Also,�similar�to MLPs, these�entities�are eligible for advantageous tax treatment [see Five Commodity MLPs With Sky High Yields]. In fact, BDCs pay little to no corporate taxes as long as they pay out at least 90% of their profit and capital gains as taxable dividends. This ETN had a recent annual index yield of 9.78% [see�BDCS Fact Sheet].

Perhaps the most noteworthy feature of this exchange-traded note is that it offers exposure to a previously difficult-to-reach corner of the financial market, while also generating a potentially handsome dividend yield. BDCS has amassed nearly $10 million in assets under management since launching in late April of 2011. This ETN tracks an index that is designed to measure the performance of 26 Business Development Companies that are listed on the New York Stock Exchange or NASDAQ. Top holdings include lesser-known�Financial Equities, such as Ares Capital, Apollo Investment, BlackRock Kelso Capital, and Main Street Capital. Although the total number of holdings may seem shallow, investors should remember that each of these companies holds a portfolio of�component�investments, effectively offering�exposure�to more than 1,000 privately held companies through a single ticker.

Like all ETNs, BDCS exposes investors to the credit risk of the issuing�institution, in this case UBS. Those who are looking to make a leveraged bet on this corner of the market may opt for BDCL; this ETN offers 2x monthly leveraged exposure to the same index as BDCS.

[For more ETF analysis, make sure to sign up for our�free ETF newsletter�or try a�free seven day trial to ETFdb Pro]

Make Money in Energy Stocks the Easy Way

Exchange-traded funds offer a convenient way to invest in sectors or niches that interest you. If you expect the energy industry to thrive as our global demand for power continues to grow, the Vanguard Energy ETF (NYSE: VDE  ) could save you a lot of trouble. Instead of trying to figure out which companies will perform best, you can use this ETF to invest in lots of them simultaneously.

The basics
ETFs often sport lower expense ratios than their mutual fund cousins. The energy ETF's expense ratio -- its annual fee -- is a very low 0.19%.

This ETF has performed rather well, beating the S&P 500 over the past five years. As with most investments, of course, we can't expect outstanding performances in every quarter or year. Investors with conviction need to wait for their holdings to deliver.

With a low turnover rate of 11%, this fund isn't frantically and frequently rejiggering its holdings, as many funds do.

What's in it?
Several of this ETF's components made strong contributions to its performance over the past year. Natural gas specialist Spectra Energy (NYSE: SE  ) gained 27% over the past year, with investors likely impressed by its big revenue and earnings gains. Over the past year, revenue rose 9%, and earnings 28%. The company recently announced plans to spend $500 million expanding its pipeline shipping capacity to handle rising shale gas volumes.

Other companies didn't add as much to the ETF's returns last year, but could have an effect in the years to come. Chesapeake Energy (NYSE: CHK  ) , for example, shed 9%. It's the nation's largest natural gas producer, with promising Texas oil fields, among other assets. Still, it has deservedly earned many investors' scorn for its lavish�executive compensation�and�shareholder-unfriendliness.�

Marathon Petroleum� (NYSE: MPC  ) has shed about 14% since its first day of trading after splitting off from�Marathon Oil. Now a major refiner, Marathon Petroleum has been�expanding its capacity�and can also get more sweet crude processing work from various shale projects. (My colleague Dan Caplinger sees it as one of eight stocks that have it all.)

Halliburton (NYSE: HAL  ) , down about 8%, is expected to benefit from rising oil prices and continued global drilling activities that will require its services. It still faces uncertain outcomes, though, from its role in the big Gulf oil spill.

The big picture
Demand for energy isn't going away anytime soon. A well-chosen ETF can grant you instant diversification across any industry or group of companies -- and make investing in and profiting from it that much easier.

Learn about the best dividend ETFs. And if you're looking for some great investments beyond ETFs, consider these 10 stocks for your retirement portfolio.

Has Valero Energy Made You Any Real Money?

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 Valero Energy (NYSE: VLO  ) , 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, Valero Energy generated $2,663 million cash while it booked net income of $1,607 million. That means it turned 2.4% of its revenue into FCF. That doesn't sound so great. Since a single-company snapshot doesn't offer much context, it always pays to compare that figure to sector and industry peers and competitors, to see how your business stacks up.

Company	TTM Revenue	TTM FCF	TTM FCF Margin
Valero Energy	$112,584	$2,663	2.4%
ExxonMobil (NYSE: XOM  )	$419,535	$27,638	6.6%
Marathon Oil (NYSE: MRO  )	$69,892	$3,759	5.4%
Alon USA Energy (NYSE: ALJ  )	$6,607	($0)	(0%)

Source: S&P Capital IQ. Data is current as of last fully reported fiscal quarter. Dollar values in millions. FCF = free cash flow. TTM = trailing 12 months.

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 Valero Energy 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 30.5% of Valero Energy's operating cash flow coming from questionable sources, investors should take a closer look at the underlying numbers. Within the questionable cash flow figure plotted in the TTM period above, other operating activities (which can include deferred income taxes, pension charges, and other one-off items) provided the biggest boost, at 9.9% of cash flow from operations. Overall, the biggest drag on FCF came from changes in accounts receivable, which represented 44.7% of cash from operations.

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.

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

• Add Valero Energy to My Watchlist.
• Add ExxonMobil to My Watchlist.
• Add Marathon Oil to My Watchlist.
• Add Alon USA Energy to My Watchlist.

Apple: Is There Still Scope To Innovate?

Apple (AAPL) is arguably reaching a crossroads in its development. As Christopher Waller, a fellow contributor points out in his article, Apple essentially started with larger computer screens and a smaller iPod screen, and filled in all the screen size gaps before getting to where we are now. The iPod Nano is probably the smallest screen size that is possible while still maintaining functionality, and the iMac 27-inch screens are large enough for any computer. So the argument then goes that Apple has exhausted the possibilities, filled the avenues for development, and has nowhere left to go. This argument, however, misses out a key factor. This factor is user interaction.

What many people often forget is that Apple has not only been revolutionary in developing devices with functionality that has never been seen before, but it has also been revolutionary in how users interact with their devices. On the whole, Apple does not invent the concepts itself, they are normally already in small-scale production, but what it does do is take good ideas and develop them into the best products in the market.

The Mouse

It all started when Steven Jobs paid a visit to the Xerox (XRX) research labs, where he found a computer with which one could interact using a 'mouse'. At the time this was unheard of, and was only being used at Xerox for specialist functions, but Jobs saw the potential. He developed the concept of clickable icons and in 1983 launched the first Apple computer that used a mouse called the Apple Lisa. While the initial product was not a huge success, it was the precursor to almost every computer of the next thirty years, and users now had an intuitive way to interact with their computers. The mouse was born.

The Click Wheel

Apple Mac computers continued for many years, with varying success, but Apple's next enormous product was the "1000 songs in your pocket" iPod. Previous MP3 players had incorporated interaction in the form of forwards and backwards buttons, but when wanting to cycle through lists of songs this proved inefficient and slow. Jobs saw the potential for something quicker, and developed the click wheel. The click wheel is now taken for granted, and considered a thing of the past, but at the time this was a brilliant and revolutionary idea, changing the way in which users could select information on a much smaller device than a computer.

The Touch Screen

Again Apple went through many years of product development, and with iPods booming it was doing very well, but come 2007, it was beginning to lose the edge over the MP3 market and desperately needed something new. Fortunately, the iPod Touch had been developed, and was launched that year providing a completely new MP3 experience. Again, touchscreen MP3s had existed before, but none of them really worked and most were slow and unresponsive.

The perfection of iPod Touch's beautiful crisp screen allowed users to freely and intuitively interact with their machines and opened iPods up to a new market of less tech-savvy consumers. The added bonus of the installed accelerometer gave a gaming experience like none other, whereby users could tilt and turn the device to simulate real life actions, giving the Touch had another dimension, and adding to its subsequent success.

Siri

Touch screens on Apple products have been developing every year since Apple released the iPod Touch. Newer generations were released, the iPhone was released, and the iPad was released, all of which were built on the basic model of the iPod Touch (albeit with slightly different functionality). Apple filled in the gaps in terms of touchscreen screen size, from Nano through iPhone to iPad (potentially with a smaller version soon to be released). A larger touch screen, perhaps as part of a computer, is still a possibility, but the portable device gaps have been filled.

The next form of interaction therefore had to be touch free, and so Siri was born. iPhone users (and potentially, after release, iPad 3 users too) are now able to interact with their devices simply using voice command. The concept has been around for a very long time, but has never really worked, and only time will tell whether Siri is also a novelty, or whether it is really hitting upon something new. I'm sure that Siri will gradually be incorporated into all Apple devices, allowing everything to have a voice controlled nature. However, it is already clear that is not going to be a booming success on a device that already has a touchscreen, and needs to be improved greatly before being incorporated into a device without one.

Where next?

From basic hand movements, to spinning a wheel, to touching a screen, to speaking to the device, it could be argued that there is little scope left for new methods of interaction.

One only needs to look around to realize that this is not true. Sci-Fi movies for a start can give insights into potential regions for development in the future (just look at how many 'crazy' gadgets in old movies are now possible). In Minority Report, there are series of large screens with images that can be manipulated by the user waving his hands in the air and in Avatar there are touch screen tablets and desktops, and files can be dragged from one to the other if the devices are placed next to each other.

In other technology, multiple gaming devices are including motion sensitive feedback in their games (the Xbox Kinect for example) allowing users to genuinely go through the motions of the characters on screen, and in military technology pilots can shoot missiles from Apache helicopters by looking where they want to shoot. The Sci-Fi examples provide an idea (however impossible they currently seem) of where future development could go, and the other examples show where development has begun already. As always, Apple need not reinvent the wheel, but it can do what it does best, and repackage the creative ideas in an attractive but mass-market fashion, making the technology available to all.

Conclusion

The message here is that Apple is not finished. Sure the stock has made it past $500bn market cap to become the largest company in the world, and sure lots of others have failed upon reaching that benchmark, but the possibilities are still there for Apple if it can make them work. Technology has not reached a dead end, and if Apple can venture into news forms of user interaction, then the fact that it has filled in all the screen size gaps will no longer matter. Of course, it comes down to whether it succeeds in innovating and developing as it has done in the past, but as I discuss in this article, there is no reason why it shouldn't.

I am not attempting to put a new valuation on Apple, or even suggesting that it is necessarily the right time to buy. However, I hope this article has made the point that Apple has not reached the end. It has shown in the past that it can constantly improve and with just some of the possibilities listed above, there could be nothing standing in the way of continued astounding growth. Innovation is not dead, and so the stock growth potential is not either.

Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in AAPL over the next 72 hours.

Finding The Best Rate For Bad Credit Loans

Even though poor credit loans have the reputation of being accompanied with sky high interest rates, there are lots of times that shopping around for the loans that are available and using the available info via the web to compare loan prices and calculate the best repayment terms can help you to spend less, even if you’re paying for a poor credit car loan.

Finding the right interest rate for a bad credit loan could be as easy as comparing the rates which are available but also taking measures to improve the credit score or the relationship with the company.

Choosing a loan from a company that you’ve developed prior history with can be one of the most efficient way to find the greatest interest rate for the car loan and ensure that you are able to pay the lowest interest rate that is possible via the vehicle loan.

It’s important to know which kinds of institutions provide the lowest rates for the car loans, too as knowing how to shop around for loans.

Credit unions have been recognized to offer the lowest rates on vehicle loans that are available and for those with bad credit, collateral within the form of equity in the home or an additional vehicle that’s owned even a small cash deposit that is locked in through the term of the vehicle loan could be an efficient way to gain a secured loan, that can be attained with interest rates that are comparable towards the other loans which are available to select from.

Using the web, you can compare multiple rates for the bad credit loans that are available. By inputting the information into the personal computer one time, there are frequently multiple quotes that you can obtain.

You can follow up on three of these quotes with a phone call to the lending institution and therefore be capable to discover the greatest rates.

Utilizing the rate info, too as the terms of the loan can be an efficient way to find the greatest price for a poor credit car loan and this can allow you to save one of the most amount of money.

Mikael Whyde is a professional writer and an expert on machine screws and related topics.

House Democrats Call for More Funding for SEC

As President Barack Obama readies to give his State of the Union speech Tuesday night, in which he is said to focus on jobs, innovation and cooperation, leading Democrats on the House Financial Services Committee gathered on Capitol Hill Tuesday morning to sound an alarm bell over the Securities and Exchange Commission’s (SEC) current lack of funding to police the securities market.

Rep. Paul Ryan, R-Wis., the new chairman of the House Budget Committee who will deliver the Republican response on Tuesday night to the State of the Union, will talk about his plan to privatize Social Security and Medicare. Republicans, who now control the House, have not only voted in favor of repealing healthcare, but they’ve also vowed to defund the Dodd-Frank Act during the 112th Congress and to freeze non-military discretionary spending at Fiscal Year 2008 levels.

This freeze will have a negative impact on agencies like the SEC. Rep. Maxine Waters, ranking member on the House Financial Services Capital Markets Subcommittee, said during the Tuesday morning press briefing regarding SEC funding that “it’s interesting that Republicans have chosen 2008 as the year on which to base their funding cuts,” seeing as that was the year the nation’s financial markets collapsed and that 2008 was also when lawmakers “realized that the resources we had provided to the regulators of those markets had been sadly lacking. This was especially the case at the SEC.”

Waters noted that from 2005 to 2007, the SEC lost 10% of its staff, and from 2005 to 2009 the SEC’s investments in information technology declined 50%.

Rep. Spencer Bachus, R-Ala., chairman of the House Financial Services Committee, released a statement after the Democrats spoke stating that his committee will "closely examine the Dodd-Frank mandated SEC organizational reform study and the SEC's formal budget request to identify wasteful, inefficient and outdated regulatory programs and operations to better allocate the SEC's financial and human resources."

Bachus continued that while he's "committed to ensuring" the SEC "works more effectively in the future" he's disappointed that with previous increases in funding, the SEC failed to detect and stop the Bernie Madoff Ponzi scheme.  

Waters went on to say that the Dodd-Frank Act “will prevent the next crisis by authorizing the SEC to regulate derivatives and credit ratings agencies and provide oversight of investment advisors and broker-dealers.” In order to do this, she said, “the SEC needs additional funding. Unfortunately, House Republicans don’t want the SEC to staff up or to even maintain their current staffing levels.” If funded at FY 2008 levels, Waters said, “the SEC would have to lay off hundreds of staff and cut its IT budget down to $86 million, a level that would not allow it to implement the new systems it needs to protect the nation’s securities markets.”

Congress failed to award the SEC self-funding in the recently passed Senate spending bill, and it looks as though any hopes of securing self-funding during the new Congress are fading. As Rep. Scott Garrett, R-N.J., the Chairman of the House Financial Services Subcommittee on Capital Markets and Government-Sponsored Enterprises, said in a statement after the leading Democrats spoke: “During our country’s current debt crisis, all branches of government--including Congress--have to tighten their belts and find ways to make their money go further.” A “dramatic spending increase to fund the SEC and CFTC, as envisioned by the authors of the Dodd-Frank legislation, would further the mindset that our nation’s problems can be solved with more spending, not more efficiency. Government agencies must learn to operate effectively within their budgets like American families and businesses do every day as we work to get our fiscal house in order.”

Lack of SEC funding also increases the chances that the securities regulator will have to appoint a self-regulatory organization (SRO) to help it oversee advisors. In its recently released report to Congress on the potential need for an SRO, the SEC gave lawmakers three options for advisor oversight—user fees, an SRO, and help from the Financial Industry Regulatory Authority (FINRA).

The 112th Congress has been sworn in—with its 106 new members, 87 of which are Republicans—and the Republican agenda of “breaking down” Dodd-Frank has already begun. As William Donovan, a partner in the financial services practice at the law firm Venable in Washington notes, Rep. Spencer Bachus, R-Ala., chairman of the House Financial Services Committee, intends on reviewing the Dodd-Frank Act “provision by provision” while Rep. Randy Neugebauer, R-Texas, the incoming chairman of the House Financial Services Subcommittee on Oversight and Investigations, “reportedly was considering the introduction of legislation that would push back all regulatory deadlines contained in the Dodd-Frank Act by one year.”

Given Republican control of the House and the fact that only three Republicans voted in favor of passing Dodd-Frank, Donovan says, “the Republican majority may well be able to push a roll back of effective dates through the House; however, with Democratic control (albeit by a slim margin) in the Senate and President Obama likely to veto such a roll back if it were to pass Congress, prospects for such a roll back being enacted into law are at best a very long-shot.”

U.S. stocks face jobs data, Iran tensions

LOS ANGELES (MarketWatch) � U.S. stocks have shined this year, but investors may find a reason to book gains next week if labor-market figures prove a disappointment, analysts say.

�It�s all jobs, all week. Jobs, jobs, jobs will dominate,� action on Wall Street, said Mark Lamkin, chief investment strategist at Lamkin Wealth Management, in Louisville, Ky.

Click to Play U.S. week ahead: Unemployment

Markets will focus on Friday�s jobs report and unfolding events in Europe.

The key February unemployment report from the U.S. Labor Department won�t arrive until Friday. But �whisper numbers� that suggest a poor report is in the pipeline, soft figures from weekly jobless claims or discouraging data from ADP�s report on private-sector hiring could trigger a pullback in equities, said Lamkin.

The U.S. equity market will be coming off a notable week. The Dow Jones Industrial Average DJIA �logged its first close above 13,000 since May 2008. The blue-chip index also marked its fifth consecutive month of advances as it closed February higher by 2.5%. The S&P 500 Index SPX �rose 4.1% last month � its third straight monthly win � and the Nasdaq Composite COMP �broke above the 3,000 level for the first time since December 2000. Read more in Friday�s market snapshot.

A view of labor market conditions will also come on Monday through the February services-activity report from the Institute for Supply Management and the Commerce Department�s report on factory orders in January.

�Manufacturing is where we need to see some labor pickup,� said Keith Springer, president of Springer Financial Advisors, in Sacramento, Calif. �It�s one thing to get a job in the services industry, but it�s another thing if factories are starting to hire if orders are picking up.�

Unless there�s �blowout� number for the nonfarm payrolls report on the upside, said Lamkin, �I think the easy money has been made and a decent number has been factored in.�

MARKETS | Expanded markets coverage
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Wall Street analysts early this year had largely projected total return on the S&P 500 Index at 8% to 12% for the year, he noted.

The S&P 500�s total return is now over 9%, according to Standard & Poor�s. With those gains coming so quickly, �people are going to take profits.�

�But we are already at 8%, 9%, so people are going to take profits.�

Economists polled by MarketWatch currently expect the U.S. economy to have added 213,000 jobs last month, and the unemployment rate to stay at 8.3%. January�s jobs report easily outstripped expectations with the addition of 243,000 jobs and a slip in the unemployment rate to 8.3% from 8.5%, with job growth in nearly every sector. See MarketWatch's economic calendar.

The �ongoing decline� in U.S. claims for unemployment insurance �sets the economy up for a 240,000 rise in private payrolls in February,� said analysts at Barclays Capital Research to clients, adding they expect the unemployment rate to slip to 8.2%.

With strengthening but still fragile labor-market conditions, investors will also look for reads on consumer spending in quarterly results from specialty retailers Aeropostale Inc. ARO , Men�s Wearhouse Inc. and Zumiez Inc. ZUMZ �. Reports are also due from tax-preparation services provider H&R Block Inc. HRB �and power-plants operator Dynegy Inc. �. Read more in Stocks to Watch for Monday.

Consumer spending remains a concern for Wall Street, particularly as retail gasoline prices have climbed each day for more than 30 past days. Prices have surged past $4 a gallon in some parts of the country, such as California. Read about the rise in retail gas prices in Commodities Corner.

�We�re on the precipice of changing consumer spending habits,� with $4 a gallon gas already a reality for millions of drivers, said Lamkin. Weaker consumer confidence and spending �could derail this market.�

Some analysts point to the rise in gas prices as stemming in part from the recent rally in crude futures, largely because of worries about potential supply disruptions from Iran. Oil on Thursday spiked past $110 a barrel following Iranian reports about a pipeline explosion in Saudi Arabia. Saudi Arabian officials said the reports were untrue.

Three weeks of gains were snapped on Friday, with oil for April delivery �ending down 2% at $106.70 a barrel on the New York Mercantile Exchange. Read more on oil futures.

Equity and oil market players are likely to assess a speech this weekend by President Barack Obama on Iran�s nuclear ambitions and U.S.-Israel relations. On Monday, President Obama and Israeli Prime Minister Benjamin Netanyahu will meet at the White House. Read analysis of oil market walking �Iran�s tightrope.�

Concerns �that mounting tensions over Iran will spill over into action,� may have fueled Friday�s �strong bid in risk-free assets,� such as Treasuries, Richard Gilhooly, an interest-rate strategist at TD Securities, told clients Friday. Read more on bonds.

Ahead of the Friday�s jobs report, Federal Reserve Chairman Ben Bernanke last week noted during congressional testimony the improvement in the labor market. Equities had moved lower as many market players interpreted his comments as a hint to not to expect a third round of quantitative easing to aid the U.S. economy.

Springer disagrees with that view. �[Bernanke] knows� recent improvement in the overall economy has been driven by the second round of quantitative easing, �and once this wears off, the economy sinks again. He wants to be ahead of the curve.�

Covering Most of iShares Barclays 20+Year Treasury Bond

The short of iShares Barclays 20+ Year Treasury Bond (TLT) is our one remaining true short of any size but with the distress in the issue the past few weeks, I am going to cover here, and see if there can be an oversold bounce in the next week to re-engage. Frankly I am not sure what would cause a bounce, since the US has no viable plan to act responsibly and continues to issue debt as if it's going out of style, but for a "slow money" trade (much like a currency) it's moved quite a bit in 3 weeks.

Does Rite Aid Measure Up?

Margins matter. The more Rite Aid (NYSE: RAD  ) keeps of each buck it earns in revenue, the more money it has to invest in growth, fund new strategic plans, or (gasp!) distribute to shareholders. Healthy margins often separate pretenders from the best stocks in the market. That's why we check up on margins at least once a quarter in this series. I'm looking for the absolute numbers, so I can compare them to current and potential competitors, and any trend that may tell me how strong Rite Aid's competitive position could be.

Here's the current margin snapshot for Rite Aid over the trailing 12 months: Gross margin is 26.4%, while operating margin is 1.2% and net margin is -1.6%.

Unfortunately, a look at the most recent numbers doesn't tell us much about where Rite Aid has been, or where it's going. A company with rising gross and operating margins often fuels its growth by increasing demand for its products. If it sells more units while keeping costs in check, its profitability increases. Conversely, a company with gross margins that inch downward over time is often losing out to competition, and possibly engaging in a race to the bottom on prices. If it can't make up for this problem by cutting costs -- and most companies can't -- then both the business and its shares face a decidedly bleak outlook.

Of course, over the short term, the kind of economic shocks we recently experienced can drastically affect a company's profitability. That's why I like to look at five fiscal years' worth of margins, along with the results for the trailing 12 months, the last fiscal year, and last fiscal quarter (LFQ). You can't always reach a hard conclusion about your company's health, but you can better understand what to expect, and what to watch.

Here's the margin picture for Rite Aid over the past few years.

Source: S&P Capital IQ. Dollar amounts in millions. FY = fiscal year. TTM = trailing 12 months.

Because of seasonality in some businesses, the numbers for the last period on the right -- the TTM figures -- aren't always comparable to the FY results preceding them. To compare quarterly margins to their prior-year levels, consult this chart.

Source: S&P Capital IQ. Dollar amounts in millions. FQ = fiscal quarter.

Here's how the stats break down:

• Over the past five years, gross margin peaked at 27.3% and averaged 26.8%. Operating margin peaked at 2.0% and averaged 1.1%. Net margin peaked at 0.2% and averaged -3.9%.
• TTM gross margin is 26.4%, 40 basis points worse than the five-year average. TTM operating margin is 1.2%, 10 basis points better than the five-year average. TTM net margin is -1.6%, 230 basis points better than the five-year average.

With recent TTM operating margins exceeding historical averages, but net margins still negative, Rite Aid still has some work to do.

If you take the time to read past the headlines and crack a filing now and then, you're probably ahead of 95% of the market's individual investors. To stay ahead, learn more about how I use analysis like this to help me uncover the best returns in the stock market. Got an opinion on the margins at Rite Aid? Let us know in the comments below.

• Add Rite Aid to My Watchlist.

Raven Industries Catches Analysts Sleeping Again

Raven Industries (Nasdaq: RAVN  ) reported earnings yesterday. Here are the numbers you need to know.

The 10-second takeaway
For the quarter ended Jan. 31 (Q4), Raven Industries crushed expectations on revenues and crushed expectations on earnings per share.

Compared to the prior-year quarter, revenue improved significantly, and GAAP earnings per share improved significantly.

Margins grew across the board.

Revenue details
Raven Industries chalked up revenue of $96.3 million. The one analyst polled by S&P Capital IQ expected net sales of $78.4 million on the same basis. GAAP reported sales were 36% higher than the prior-year quarter's $70.7 million.

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

EPS details
EPS came in at $0.60. The one earnings estimate compiled by S&P Capital IQ forecast $0.48 per share. GAAP EPS of $0.60 for Q4 were 46% higher than the prior-year quarter's $0.41 per share.

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

Margin details
For the quarter, gross margin was 28.9%, 200 basis points better than the prior-year quarter. Operating margin was 17.2%, 280 basis points better than the prior-year quarter. Net margin was 11.4%, 90 basis points better than the prior-year quarter.

Looking ahead
Next quarter's average estimate for revenue is $112.7 million. On the bottom line, the average EPS estimate is $0.89.

Next year's average estimate for revenue is $399.9 million. The average EPS estimate is $2.93.

Investor sentiment
The stock has a four-star rating (out of five) at Motley Fool CAPS, with 463 members rating the stock outperform and 15 members rating it underperform. Among 174 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 171 give Raven Industries a green thumbs-up, and three give it a red thumbs-down.

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Raven Industries is outperform, with an average price target of $61.

Over the decades, small-cap stocks, like Raven Industries have provided market-beating returns, provided they're value priced and have solid businesses. Read about a pair of companies with a lock on their markets in "Too Small to Fail: Two Small Caps the Government Won't Let Go Broke." Click here for instant access to this free report.

• Add Raven Industries to My Watchlist.

ADP Employment Beats Survey; Futures Slightly Lower

This morning. After fair value adjustment, equity futures are slightly lower. Markets have resumed their confirmed uptrend, but begin the day near key resistance points. March SPX futures are at 1302.70, down -1.59 points after fair value adjustment. Next SPX resistance is at 1314.59. Next support is at 1294.87.

Tuesday, equity markets extended Monday’s gains and more than recovered Friday’s losses. The SPX and DJI ended above their respective 1,300 and 12,000 milestones and at new multi-year highs. On the day, the Nasdaq and NYSE composite posted the best returns, rising +1.89% and +1.85%, respectively. The SPX and DJI ended +1.67% and 1.25% higher. For the 2nd consecutive day, volumes were lower on all the major exchanges, but well above 50-day moving averages. Trading desks report that the greater activity was in futures and ETFs rather than individual issues. Volatility declined markedly, ending well below 18, from just under 20 at Monday’s close. Key resistance points are 1307 (equal to yesterday’s close) and 1313 (the August 2008 pre-Lehman high). The number of distribution days was unchanged, with 4 on the NASDAQ and NYSE, and one on the DJI and SPX in the past 25 trading days.

Overnight, the Nikkei and Hang Seng closed higher, up +1.78% and +1.81%, respectively. Chinese markets are closed for the lunar New Year. The Nikkei’s strength was attributed to strong earnings reports from several of its largest industrials and an improving U.S. economic outlook. In Europe, the Eurostoxx50, FTSE, and DAX are mixed, +0.15%, +0.69%, and -0.02%, respectively. Egypt-related concerns are diminishing. On the EuroStoxx, financials are the 3rd best performer, up +1.12%. Eurozone sovereign debt tightened significantly today.

LIBOR trends remain unremarkable. Overnight USD LIBOR declined slightly to 0.23500% from 0.23600% Tuesday, but down from 0.25188% at year-end. USD 3-month LIBOR was unchanged at 0.31050%, and down compared to 0.30281% at year-end. In early trading, the dollar is slightly better against the euro and yen, but weaker against the pound. The euro trades at US$1.3809, compared to US$1.3829 Tuesday and US$1.3694 the prior day. For the 9th consecutive day, the euro closed above its 50-, 100-, and 200-day moving averages and appears overbought at these levels. The dollar trades at ¥81.47, compared to ¥81.35 Tuesday and ¥82.04 the prior day. Treasury yields are higher, with 2- and 10-year maturities yielding 0.609% and 3.414%, respectively, compared to 0.601% and 3.439% Tuesday. The yield curve spread narrowed to +2.805% compared to +2.838% the prior day. In the past year, the 2- and 10-year spread has varied from a low of +1.959% on August 26, 2010, and a high of +2.89% on February 17, 2010. Commodities are mixed, with lower petroleum and higher natural gas, slightly lower precious metals, higher aluminum and copper, and higher agricultural prices.

U.S. news and economic reporting. This morning’s focus is the January ADP employment report at 8:15. The ADP reported the addition of 187K jobs, better than survey’s 140K jobs. December was revised lower to 247K, from 297K.

Overseas news. Bank of England officials made hawkish remarks on the need to increase interest rates now to avoid larger increases later. In January, unemployment in Spain increased more than expected. Ireland’s Fine Gael and Labour parties want to renegotiate the terms of the country’s bailout agreement and provide less protection to senior bondholders.

Company news/research:

• GNW - reports 4Q10 EPS loss of -$0.28 compared to consensus estimates of a +$0.16 profit
• LAZ – reports 4Q10 operating EPS of $0.76 compared to consensus estimates of $0.63
• NDAQ – reports 4Q10 EPS of $0.69 compared to estimates of $0.51
• The Morgan Stanley Financial Services Conference continues today with presentations by BK, CIM, WBS, BMO, TCBI, BBT, NLY, NTRS, NYB, HBAN, C, BPFH, NTRS, and COF.

4Q2010 Earnings. The quarter’s first earnings results have so far exceeded EPS and revenue expectations. Of the 217 S&P500 companies that reported earnings to date, 72% (157 of the 217) beat operating EPS estimates, versus the historical average of 62%. Companies beat by an average of +6.7% (versus a historical average of +2%). EPS is up +43.6% over the prior year. Though challenged in the current operating environment, 150 companies (79%) reported increased revenues and 155 companies (71%) beat revenue estimates.

With all 24 BKX members reporting, 75% (18 out of 24) beat operating EPS estimates. Bank revenues disappointed slightly, missing estimates by -0.59% on average. Fifteen banks (63%) reported increased revenues over the prior year’s quarter and 17 banks (71%) beat revenue estimates.

Tuesday’s equity markets. On lower but moderate volume, all of the major indexes closed higher with the DJI closing at 12,040.16, its first close in excess of 12,000 in 2½ years. The SPX closed at 1301.50, its first close above 1300 since August of 2008. Investors found multiple reasons to buy stocks, with positive earnings reports from Pfizer (PFE), UPS, and Archer Daniels Midland (ADM), as well as better than expected January ISM report, which showed manufacturing activity at its fastest pace in nearly seven years. The VIX declined once again on Tuesday to 17.63, down -9.73% from 19.96. Traders reported strong order volume with some aggressive short covering as the expected by many technicians did not materialize and equity markets sustained Monday’s upward trend.

The SPX closed at a key resistance level 1307. The next key resistance level is 1313 (the August 2008 pre-Lehman high). If the SPX can pierce that level, subsequent resistance is at 1321 and 1341, which were June 2008 intermediate levels. Alternatively, a retracement to the 50-day moving average (1252.16) would be a -4.24% decline, hardly a correction. Technical indicators are generally positive. All the major indexes closed above their respective 200-week and 20-, 50-, 100-, and 200-day moving averages. Markets are in a bullish configuration, with the 50-day moving averages above respective 200-day moving averages. New 52-week net highs declined to +96, below its 136.7 10-day moving average. The relative strength indicator closed at 66.31, up from Monday’s close of 57.88, approaching the top of a neutral range.

All market segments closed higher, with basic materials, financials, and oil and gas the best performers, up at least +1.88%. Telecommunications, utilities, and consumer goods, were the weakest segments.

Financials were among the leaders, though the large cap names continued to outperform the regional KRX. The XLF, BKX, and KRX advanced +2.07%, +2.58%, and +1.90%, respectively. While the broader indices are have recovered their post-September 2008 losses, bank stocks have not, with the BKX closing -6.18% below its April 2010 highs and -34.1% below its best level of 82.55 in September 2008.

NYSE Indicators. Volume fell for the 2nd consecutive day, falling -9.13% to 1.095 billion shares, from 1.199 billion shares Monday, and compares to a 996.4 million share 50-day moving average. Market breadth was positive, and up volume led down volume. Advancing stocks led decliners by +1962 (compared to +1155 Monday), or 4.50:1. Up volume led down volume by 7.43:1.

Valuation. The SPX trades at 13.6x estimated 2011 earnings (increased to $96.02 from $95.59) and 12.0x estimated 2012 earnings (increased to $108.92 from $108.40), compared to 13.5x and 11.9x respective 2011-12 earnings yesterday. The 10-year average median Price/Earnings multiple is 20.0x. Since the beginning of 2010, analysts increased 2011 and 2012 earnings estimates by +3.8%, and +4.6%, respectively. Analysts expect 2011 and 2012 earnings to exceed 2010 earnings ($82.88) by +15.8% and +31.4%, respectively.

Large-cap banks trade at a median 1.56x tangible book value and 14.2x 2011 consensus earnings, compared to 1.54 tangible book value and 13.7x 2011 earnings yesterday. These compare to the 10-year average median multiples of 3.08x tangible book value and 15.9x earnings. Analysts expect 2011 large-cap bank earnings to exceed 2010 operating earnings by +30.5%. In 4Q2010, large-cap banks earned $17.92 (the sum of 31 banks’ operating EPS), compared to $16.21 in 3Q2010. In 4Q2010, the BKX earned $2.99 per share, compared to $1.42 per share in 3Q2010.

SPX. On lower volume, the SPX rose +21.47 points, or +1.67%, to 1307.59. Volume fell -11.4% to 825.82 million shares, down from 932.36 million shares Monday, above the 781.02 million share 50-day moving average. For the 72nd consecutive day, its 50-day moving average closed above its 200-day moving average (1252.16 versus 1156.84, respectively). The SPX closed above its 200-week moving average (1181.75).

The SPX gapped higher through resistance at the open. The index breached 1295 within trading’s first five minutes and moved higher continuously through the morning in an aggressive short-covering rally. The SPX broke above 1300 by 10:25, above 1305 by 12:15, and topped out at 1308 at 1:00. The index traded sideways through the close, as buyers supported the index’s early gains. The intra-day high of 1308.86 came at 3:51 and the index closed just below that level. The index closed +4.61% above its 50-day moving average, closing above that average for the 103rd consecutive day, and +13.08% above its 200-day moving average. The 20-, 50-, 100-, and 200-day moving averages rose.

Technical indicators are positive. The SPX closed at its highest level since June 25, 2008, closed above 1300 for the first time since August 28, 2008, closed above its April highs for the 42nd straight session, and remained above its 20-day moving average. The directional momentum indicator is positive, with a stable trend. Relative strength rose to 66.27 from 57.43, the high end of a neutral range. Next resistance is at 1314.59; next support is at 1294.87.

BKX. On lower volume, the KBW bank index closed at 54.37, up +1.37 points or +2.58%. The index closed +26.50% above its August 30 closing low of 42.98, the trough of the recent prior correction, but -6.18% below its April 23rd closing high.

Financials outperformed the market, and large-cap banks outperformed regionals. The BKX’s morning rally alternated between steep and gradual ascents. Most of the day’s gains occurred within two 30-minute windows. The index gapped higher through resistance at the open and continued a sharp rally through 10:00, reaching 53.80 (a +1.51% move from the prior day’s close). The index traded sideways to the 53.90 level through 11:25, when another sharp rally took hold, sending the index another +0.83% higher. The index breached 54.00 by 11:30 and 54.20 by 11:40. Reaching an intra-day high of 54.42 by 1:00, the BKX traded sideways through the rest of the afternoon and into the close. The index closed above 50 for the 30th straight day. Volume fell -0.03% to 128.41 million shares, down from 128.45 million shares Monday, and below the 160.76 million share 50-day average.

Technical indicators are positive. The BKX closed above its 20-, 50-, 100-, and 200-day moving averages (53.31, 50.79, 48.75, and 49.00, respectively), closing above the 200-day average for the 37th straight session. The 20-, 50-, and 100-day averages increased while the 200-day decreased. The 50-day moving average closed (by +1.78 points) above the 200-day moving average, closing above it for the 14th straight day. The 100-day moving average closed (by -0.26 points) below the 200-day moving average, signaling a cross late this week or early next week. The directional movement indicator is positive, and trend strength stabilized. Relative strength rose to 61.16 from 53.80, moving to the higher end of a neutral range. Next resistance is 54.86; next support at 53.45.

Disclosure: I am long GNW, CIM, WBS, NLY, C, COF.

Top Stocks For 4/14/2012-19

WellCare Health Plans, Inc. (NYSE:WCG) announced that Alec Cunningham, chief executive officer, will present at the Raymond James 31st Annual Institutional Investors Conference. The presentation will occur on Tuesday, March 8, 2011, at 8:40 a.m. Eastern Time. The presentation will be webcast live. In addition, a replay of the webcast will be available beginning approximately one hour following the conclusion of the live broadcast and for 30 days thereafter. Both the live presentation and the replay will be available via the Company’s web site at www.wellcare.com.

WellCare Health Plans, Inc. provides managed care services for government-sponsored healthcare programs in the United States. The company offers Medicaid and Medicare plans, including health plans for families, children, aged, blind, and disabled, as well as prescription drug plans.

The healthcare industry remains in a state of turmoil and crisis. Each year, the cost of insurance skyrockets. The need for affordable healthcare alternatives has never been greater. The U.S. Census Bureau recently released the following information to the public:

46.6 million people, or 15.9% of the U.S. population, were without health insurance coverage in 2005, up from 45.3 million Americans, or 15.6% of the population, in 2004, an increase of 1.3 million people;
The percentage of people covered by employment-based health insurance decreased from 59.8% to 59.5% between 2004 and 2005;
8.3 million children under the age of 18, or 11.2% of all children under the age of 18, were without health insurance in 2005; and
In 2005, the uninsured rate for Hispanics was 32.7% compared to 15.9% for all members of the U.S. population, and of the 46.6 million Americans who are uninsured, 14.1 million were Hispanics.

National Health Partners, Inc. (NHPR.OB), a national healthcare membership organization, creates, markets, and sells membership programs to underserved markets in the healthcare industry in the United States. Its programs provide an alternative to individuals who seek to reduce their healthcare costs not covered by insurance, or who are unable to obtain healthcare insurance due to their medical history, age, or occupation.

The company, through its CARExpress membership programs, offers CARExpress health discount programs and CARExpress Plus membership programs. National Health Partners CARExpress health discount programs cover various aspects of healthcare, including physicians, hospitals, ancillary services, dentists, prescription drugs, vision care, hearing aids, chiropractic services, alternative care, 24-hour nurseline, medical supplies, and equipment, as well as long-term care facilities, which include skilled nursing facilities, assisted living facilities, respite care, and home health care. These programs include comprehensive care, supplemental care, preferred, dental and vision care, prescription and vision care, and tiered pharmacy discount programs. Its CARExpress Plus membership programs offer CARExpress Plus Platinum, CARExpress Plus Gold, and CARExpress Plus Silver programs that provide members point of service discount on their healthcare expenses at the time of service.

Crown Equity Holdings Inc. (OTCBB:CRWE) announced that its subsidiary company, Crown Tele Services Inc. (http://www.crownteleservices.com) is still moving forward after dissolving its joint venture with Communication Expert Corporation and will gradually start rolling out its internet based voice and video service IP-PBX solutions this year.

Hosted IP-PBX gives enterprises of all sizes the most efficient phone system calling features typically offered to only the largest enterprises. No in-house systems or software to purchase, manage and maintain is required for the phone system to function

Hosted IP-PBX lets you share a number of incoming phone lines among a larger number of extensions, so it’s not necessary to pay for a separate line for every office employee or workstation, which saves money. But the implementation and ongoing maintenance of an VOIP PBX system requires a type of expertise that your IT staff may not have. And if you go with a commercial product, the up-front costs for the hardware and software may be high.

With data, Internet and telephone solutions from Crown TeleServices, your business, large or small, will get the telecommunication services it needs to succeed. After all, business isn�t just about making contacts. It�s about making strong connections. Connections that can help you get more accomplished in less time.

Crown Equity Holdings Inc., together with its digital network, currently provides electronic media services specializing in online publishing and Web sites, which bring together targeted audiences and advertisers that want to reach them. Crown Equity Holdings Inc. offers internet media-driven advertising services, which covers and connects a range of marketing specialties, as well as search engine optimization for clients interested in online media awareness.

W.R. Berkley Corporation (NYSE:WRB) announced the appointment of Nelson Tavares to the newly created office of senior vice president � claims. Mr. Tavares� appointment is effective immediately. Mr. Tavares has over 20 years of experience in the property casualty insurance industry, having served as a senior executive at a leading international insurance company where he was the global head of large and complex claims. He earned a Bachelor of Arts degree in Economics and Multinational Corporate Studies from Upsala College.

W.R. Berkley Corporation, through its subsidiaries, operates in the property casualty insurance business in the United States and internationally. The company operates in five segments: Specialty, Regional, Alternative Markets, Reinsurance, and International.

Kraft Foods Inc. (NYSE:KFT) the Board of Directors has declared a regular quarterly dividend of $0.29 per common share of Class A stock. This dividend is payable on April 14, 2011, to stockholders of record as of March 31, 2011.

Kraft Foods Inc., together with its subsidiaries, manufactures and markets snacks, confectionery, and quick meal products worldwide. The company offers snacks, including cookies, crackers, salted snacks, and chocolate confectionary; beverages, including coffee, packaged juice drinks, and powdered beverages; cheese, including natural, process, and cream cheeses; and grocery, including spoonable and pourable dressings, condiments, and desserts.

JCP Losing “Significant” Market Share, Says Analyst; Will The Street Wait?

Same-store sales numbers released on Thursday showed strong gains for numerous retailers that report their sales on a monthly basis. JC Penney (JCP) decided last month to stop reporting sales on a monthly basis, and instead release its figures quarterly. That could help the company keep shareholders focused on the long game: JCP is in the midst of a major strategy shift led by new CEO Ron Johnson, who is asking for patience.

But even if JC Penney is keeping its monthly figures secret, the Street is using results from other retailers to try to figure out how the company is doing. And this month’s gains by some JCP competitors have them worried.

“Sales strength out of Macy’s (M), TJX Cos. (TJX), Ross Stores (ROST), Target (TGT) and Old Navy/Gap (GPS) we think implies significant share loss at JCP,” wrote Morgan Stanley analyst Michelle Clark.

Johnson, who came to JCP after leading Apple’s (AAPL) wildly successful retail operations, has little to worry about for the time being. The hedge funds that advocated for him to be hired are willing to wait for results. Johnson is rebranding the company, buying Liz Claiborne (LIZ) brands, partnering with Martha Stewart Living Omnimedia (MSO) , and making wide cost cuts, all strategies that will take awhile to play out.

Of course, that doesn’t mean the Street will continue to support the stock.

2 Below-Book Stocks With Big Upside, Limited Risk

By David Sterman

Building a sizable retirement nest egg requires a great deal of flexibility.

When the economy is expanding, you need to dig deep for the best growth stocks. These are the names that can see their price-to-earnings (P/E) multiples expand to very lofty heights as investors extrapolate robust growth rates for several years.

But this hasn't been the case in 2011. The economy has muddled along at a tepid growth rate, and may not build a head of steam until later in 2012 or perhaps in 2013. While this lasts, your investment focus needs to retain a defensive posture as capital preservation becomes just as important as capital appreciation.

That's why, throughout the year, I've been focusing on companies that sport very strong balance sheets. Any time you can find a company with a market value that is well lower than the net assets sported on the balance sheet, you can sleep better at night.

I put together a list of stocks trading for less than 80% of tangible book value. Each is expected to post full-year profits in 2011 and 2012, so book value is likely to rise even higher from here. Let's take a look:

Rebuilding a tattered reputation

Whenever you see a stock trading at just 39% of tangible book value, it certainly catches your eye, but you know there has to be a catch. And when it comes to TravelCenters of America (TA), which operates more than 200 truck stops across North America, there are a pair of them.

First, the company was saddled with very expensive leases from its landlord, Hospitality Properties Trust (HPT), which owns the underlying real estate and facilities at each truck stop. This explains why the company lost a collective $300 million from 2007 to 2010.

Second, management, aided by a too-friendly board of directors, has been lavished with too much compensation, according to some on Wall Street. It's unclear what steps the company is taking to improve its corporate governance (and hence its reputation on Wall Street), but the income statement is now markedly healthier, since TravelCenters was able to renegotiate much better lease terms from HPT. Citigroup estimates the company would have lost $5 million in 2010 if these lease terms had been in effect last year, instead of the $65 million actual loss.

Better still, the lower lease costs, coupled with an uptick in traffic, are putting TravelCenters on a path to finally make money in 2011. Analysts anticipate earnings per share (EPS) hitting $0.67 this year, and look for a 20% jump in 2012 to $0.81, simply based on recent operating trends. Per-share profits could get a boost in 2013 as well, because the company is in pursuit of existing truck stops to acquire. According to management, every new site that is purchased adds roughly $0.02 to EPS. These gains largely come from increased usage of the company's Fuel Card, earning the company roughly $4 in extra profit for each gas tank that gets filled up, as funds don't need to be remitted to the major credit card processors.

Citigroup's Susan Anderson says shares are worth around six times projected 2012 EBITDA, or $8. That's nearly 100% upside from current levels. And this target price is still below the $11 per share in tangible book value. It may take a few quarters for this trade to work, though. TravelCenters may still lose money in the December and March quarters, and the stock may only really respond when an expected bulge in profits arrives in the June quarter.

Ready for rough seas

It's no secret European consumers may not be spending much money on leisure in 2012. Luckily for Royal Caribbean Cruises (RCL), the region represents less than 10% of revenue (compared with 45% for rival Carnival Cruise Lines (CCL)). Still, this has been cold comfort to Royal Caribbean investors, who have seen the stock fall nearly 50% this year, compared with a 30% loss for Carnival.

Investors are right in shunning all cruise line stocks. The industry has been so focused on market share that profits have taken a back seat. Adding a lot more new ships to the mix each year has led to price wars and weak profit margins. But that's about to change, according to Goldman Sachs. Their analysts are "increasingly optimistic that cruise operators are shifting their focus to enhancing existing hardware and improving 'same ship' profits, and away from building new ships." To boost the profitability of each voyage, Carnival and Royal are adding a wide range of new amenities that are already boosting the amount of money passengers spend onboard. "This shift to 'same store' from 'more stores' could be a structural change and could reverse the decade-long decline in ROIC (return on invested capital)," according to Goldman.

It may take some time for the industry discipline to pay off. Analysts expect EPS for Royal to rise roughly 13% in 2012 to about $3.10, but it may be wiser to assume profits stay stuck around $2.75 for a while (as will likely be the case in 2011) in case the global economy remains challenged. At this price, however, the stock is still inexpensive at less than 10 times projected profits.

More to the point, the cruise line operator's fleet of ships is now being undervalued, as the company is trading at just $0.70 on the dollar in terms of tangible book value. If recent improving employment trends can be sustained and Royal Caribbean is able to meet the current 2012 EPS forecasts, then that P/E multiple may expand up to the 12-13 range, implying a stock price move up from the mid $20s into the low to mid-$30s (which would still be below the stock's book value per share).

Risks to Consider: These below-book stocks typically lack near-term catalysts and are unlikely to move higher until the broader market does. Given the current global economy, it may take a few quarters before any upward price movement happens.

The approach you need to take to these stocks is my preferred method of investing -- especially in this market. The key here is the opportunity to capture decent upside in these names -- likely in tandem with the broader market -- while having more clearly-defined downside protection, since they already trade below book value.

TravelCenters and Royal Caribbean are out of favor at the moment, but are taking steps to improve their long-term profitability. These are my two favorite picks from the results of my screen. But you may want to look into other names in the list to see if you find a different opportunity to profit as well.

Disclosure: Neither D. Sterman nor StreetAuthority, LLC hold positions in any securities mentioned in this article.

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