Top Stocks For 2014, Best Stocks To Buy 2014: October 2013

10/31/2013

5 Stocks Under $10 on the Verge of Breakouts

DELAFIELD, Wis. (Stockpickr) -- At Stockpickr, we track daily portfolios of stocks that are the biggest percentage gainers and the biggest percentage losers.

>>5 Stock Trades to Take This Week

Stocks that are making large moves like these are favorites among short-term traders because they can jump into these names and try to capture some of that massive volatility. Stocks that are making big-percentage moves either up or down are usually in play because their sector is becoming attractive or they have a major fundamental catalyst such as a recent earnings release. Sometimes stocks making big moves have been hit with an analyst upgrade or an analyst downgrade.

Regardless of the reason behind it, when a stock makes a large-percentage move, it is often just the start of a new major trend -- a trend that can lead to huge profits. If you time your trade correctly, combining technical indicators with fundamental trends, discipline and sound money management, you will be well on your way to investment success.

>>5 Hated Earnings Stocks You Should Love

With that in mind, let's take a closer look at a several stocks under $10 that are making large moves to the upside today.

NeoPhotonics

NeoPhotonics (NPTN) is a designer and manufacturer of PIC-based modules and subsystems for bandwidth-intensive, high-speed communications networks. This stock closed up 3.5% to $7.54 in Tuesday's trading session.

Tuesday's Range: $7.32-$7.57

52-Week Range: $4.75-$9.77

Tuesday's Volume: 69,000

Three-Month Average Volume: 124,923

>>5 Stocks Ready to Break Out

From a technical perspective, NPTN trended higher here right above its 50-day moving average of $7.19 with lighter-than-average volume. This stock has been uptrending strong for the last three months, with shares moving higher from its low of $6.20 to its recent high of $7.98. During that uptrend, shares of NPTN have been making mostly higher lows and higher highs, which is bullish technical price action. That move has now pushed shares of NPTN within range of triggering a major breakout trade. That trade will hit if NPTN manages to take out Tuesday's high of $7.57 to some near-term overhead resistance at $7.98 with high volume.

Traders should now look for long-biased trades in NPTN as long as it's trending above its 50-day at $7.19 or above $7 and then once it sustains a move or close above those breakout levels with volume that's near or above 124,923 shares. If that breakout hits soon, then NPTN will set up to re-test or possibly take out its next major overhead resistance levels at $9 to $10.

Mast Therapeutics

Mast Therapeutics (MSTX), a biopharmaceutical company, develops novel therapies for serious or life-threatening diseases with significant unmet needs. This stock closed up 8.1% to 51 cents per share in Tuesday's trading session.

Tuesday's Range: $0.47-$0.51

52-Week Range: $0.40-$0.82

Tuesday's Volume: 957,000

Three-Month Average Volume: 1.32 million

>>5 Stocks Set to Soar on Bullish Earnings

From a technical perspective, MSTX spiked sharply higher here right above its 50-day moving average of 46 cents per share with decent upside volume. This stock recently formed a double bottom chart pattern at 48 cents to 47 cents per share. Shares of MSTX are now starting to trend within range of triggering a big breakout trade. That trade will hit if MSTX manages to take out some near-term overhead resistance levels at 55 cents to its 200-day moving average at 57 cents per share with high volume.

Traders should now look for long-biased trades in MSTX as long as it's trending above its 50-day at 46 cents and then once it sustains a move or close above those breakout levels with volume that hits near or above 1.32 million shares. If that breakout hits soon, then MSTX will set up to re-test or possibly take out its next major overhead resistance levels at 67 cent to 74 cents, or even 76 cents per share.

Zeltiq Aesthetics

Zeltiq Aesthetics (ZLTQ) develops and commercializes medical products such as CoolSculpting System, a non-invasive product for the selective reduction of body fat. This stock closed up 7.3% to $9.81 in Tuesday's trading session.

Tuesday's Range: $9.17-$9.87

52-Week Range: $3.20-$9.90

Tuesday's Volume: 595,000

Three-Month Average Volume: 231,600

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From a technical perspective, ZLTQ spiked sharply higher here right above its 50-day moving average of $8.77 with above-average volume. This stock has been uptrending strong for the last six months, with shares moving higher from its low of $4 to its recent high of $9.90. During that uptrend, shares of ZLTQ have been consistently making higher lows and higher highs, which is bullish technical price action. That move has now pushed shares of ZLTQ within range of triggering a near-term breakout trade. That trade will hit if ZLTQ manages to take out Tuesday's high of $9.87 to its 52-week high at $9.90 with high volume.

Traders should now look for long-biased trades in ZLTQ as long as it's trending above its 50-day at $8.77 or above $8.50 and then once it sustains a move or close above those breakout levels with volume that hits near or above 231,600 shares. If that breakout hits soon, then ZLTQ will set up to enter new 52-week-high territory, which is bullish technical price action. Some possible upside targets off that breakout are $12 to $13.

Pingtan Marine Enterprise

Pingtan Marine Enterprise (PME) is a blank check company formed for the purpose of acquiring an operating business that has its main operations in the people's republic of China. This stock closed up 10.4% to $2.85 in Tuesday's trading session.

Tuesday's Range: $2.60-$2.87

52-Week Range: $1.31-$12.50

Tuesday's Volume: 86,000

Three-Month Average Volume: 53,295

From a technical perspective, PME ripped sharply higher here with above-average volume. This move is quickly pushing shares of PME within range of triggering a near-term breakout trade. That trade will hit if PME manages to take out some near-term overhead resistance at $2.94 with high volume.

Traders should now look for long-biased trades in PME as long as it's trending above some near-term support at $2.27 and then once it sustains a move or close above $2.94 with volume that hits near or above 53,295 shares. If that breakout triggers soon, then PME will set up to re-test or possibly take out its next major overhead resistance levels at $3.63 to $4.20. Any high-volume move above those levels will then give PME a chance to tag $5.

SGOCO Group

SGOCO Group (SGOC) is engaged in product design and brand development in the Chinese flat panel display market. This stock closed up 8.1% to $3.45 in Tuesday's trading session.

Tuesday's Range: $3.10-$3.46

52-Week Range: $0.70-$4.57

Tuesday's Volume: 103,000

Three-Month Average Volume: 287,558

From a technical perspective, SGOC bounced sharply higher here right off its 50-day moving average of $3.21 with lighter-than-average volume. This move is quickly pushing shares of SGOC within range of triggering a big breakout trade. That trade will hit if SGOC manages to take out some key overhead resistance levels at $3.74 to $3.84 with high volume.

Traders should now look for long-biased trades in SGOC as long as it's trending above its 50-day at $3.21 or above Tuesday's low of $3.10, and then once it sustains a move or close above those breakout levels with volume that hits near or above 287,558 shares. If that breakout triggers soon, then SGOC will set up to re-test or possibly take out its 52-week high at $4.57.

To see more stocks that are making notable moves higher today, check out the Stocks Under $10 Moving Higher portfolio on Stockpickr.

-- Written by Roberto Pedone in Delafield, Wis.

10/29/2013

How you subsidize the minimum wage

Nearly four million Americans earn the minimum wage of $7.25 per hour, according to the Bureau of Labor Statistics.

That's not a lot of money. Even clocking in 40 hours a week, a minimum wage job will bring in just barely $1,000 a month after taxes -- and about half of minimum-wage employees work less than 30 hours a week. Nationwide, the average rent on a one-bedroom apartment is $1,091 a month. A portion of minimum-wage workers are teenagers or college students living with their parents or roommates, but any way you spin it it's hard for one person to get by in America on less than $1,000 a month, let alone a family.

So how do millions of Americans do it? This statistic helps explain it:

More than half of fast food workers have to rely on public assistance programs since their wages aren't enough to support them, a new report found.

According to a University of California Berkeley Labor Center and University of Illinois study out Tuesday, 52% of families of fast food workers receive assistance from a public program like Medicaid, food stamps, the Earned Income Tax Credit and Temporary Assistance for Needy Families. That's compared to 25% of families in the workforce as a whole.

The report estimated that this public aid carries a $7 billion price tag for taxpayers each year

Assuming fast-food workers are good proxy for minimum-wage workers, this actually explains a lot. If it sounds impossible to get by on less than $1,000 a month, that's because it probably is, and most minimum-wage workers don't. They earn a wage that isn't sufficient to support them, and various government assistance programs make up the difference.

Public assistance isn't just for those out of work, down on their luck, or in a short-term bind. It's for those who are gainfully employed but earning such a low wage they can't sustain themselves. Which is to say: The reason fast-food and other low-wage employers can get away with paying so little is because taxpayers subsidize the slack. The rep! ort estimates McDonald's (ticker: MCD ) subsidy alone is worth $1.2 billion a year, which equates to more than a fifth of its 2012 profits.

Here's one way to think about this. Since 1969, the real (inflation-adjusted) minimum wage has declined by about 30%, from more than $10 an hour to $7.25 an hour. During that period, the percentage of Americans receiving food stamps surged.
This isn't all causation. Food-stamp eligibility has shifted throughout the years, and changes in unemployment shifts the number eligible for assistance.

But we know three things. One, there's a positive correlation between the real minimum wage falling and the number of Americans on food stamps rising. Two, wages as a percent of GDP are near an all-time low, and corporate profits as percent of GDP are near an all-time high. Three, the issues that anger Americans more than almost any other are the weak jobs market and high government spending. All three of these are related to each other.

I don't have an solution for it. Maybe assistance needs to be cut, forcing workers to raise pay. Maybe the minimum wage needs to be raised, relieving the number of Americans on assistance. Either way, remember the first lesson of economics: There is no such thing as a free lunch.

The Motley Fool is a USA TODAY content partner offering financial news, analysis and commentary designed to help people take control of their financial lives. Its content is produced independently of USA TODAY.

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5 Stocks Set to Soar on Bullish Earnings

DELAFIELD, Wis. (Stockpickr) -- Short-sellers hate being caught short a stock that reports a blowout quarter. When this happens, we often see a tradable short squeeze develop as the bears rush to cover their positions to avoid big losses. Even the best short-sellers know that it's never a great idea to stay short once a bullish earnings report sparks a big short-covering rally.

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This is why I scan the market for heavily shorted stocks that are about to report earnings. You only need to find a few of these stocks in a year to help enhance your portfolio returns -- the gains become so outsized in such a short time frame that your profits add up quickly.

That said, let's not forget that stocks are heavily shorted for a reason, so you have to use trading discipline and sound money management when playing earnings short-squeeze candidates. It's important that you don't go betting the farm on these plays and that you manage your risk accordingly. Sometimes the best play is to wait for the stock to break out following the report before you jump in to profit off a short squeeze. This way, you're letting the trend emerge after the market has digested all of the news.

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Of course, sometimes the stock is going to be in such high demand that you risk missing a lot of the move by waiting. That's why it can be worth betting prior to the report -- but only if the stock is acting technically very bullish and you have a very strong conviction that it is going to rip higher. Just remember that even when you have that conviction and have done your due diligence, the stock can still get hammered if The Street doesn't like the numbers or guidance.

If you do decide to bet ahead of a quarter, then you might want to use options to limit your capital exposure. Heavily shorted stocks are usually the names that make the biggest post-earnings moves and have the most volatility. I personally prefer to wait until all the earnings-related news is out for a heavily shorted stock and then jump in and trade the prevailing trend.

>>5 Stocks Under $10 Set to Soar

With that in mind, here's a look at several stocks that could experience big short squeezes when they report earnings this week.

Herbalife

My first earnings short-squeeze play is network marketing and personal products player Herbalife (HLF), which is set to release numbers on Monday after the market close. Wall Street analysts, on average, expect Herbalife to report revenue of $1.19 billion on earnings of $1.14 per share.

If Herbalife can report a 10% growth in earnings for the third quarter, that would extended its streak of double-digit growth for a 16th consecutive quarter. Revenue is projected to rise by 19%, which would be also mark the 16th consecutive quarter of double-digit sales growth.

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The current short interest as a percentage of the float for Herbalife is extremely high at 21.1%. That means that out of the 84.19 million shares in the tradable float, 30.21 million shares are sold short by the bears. If the bulls get the earnings news they're looking for, then this stock could easily see a monster short-squeeze develop post-earnings.

From a technical perspective, HLF is currently trending well below its 200-day moving average and just below its 50-day moving average, which is bearish. This stock has been uptrending modestly for the last month, with shares moving higher from its low of $61.70 to its recent high of $68.60 a share. During that uptrend, shares of HLF have been making mostly higher lows and higher highs, which is bullish technical price action. That move has now pushed shares of HLF within range of triggering a near-term breakout trade post earnings.

If you're bullish on HLF, then I would wait until after its report and look for long-biased trades if this stock manages to break out above some near-term overhead resistance at $68.60 a share with high volume. Look for volume on that move that hits near or above its three-month average action of 3.31 million shares. If that breakout hits, then HLF will set up to re-test or possibly take out its 52-week high at $74.94 a share. Any high-volume move above that level will then give HLF a chance to tag $80 to $90 a share post-earnings.

I would simply avoid HLF or look for short-biased trades if after earnings it fails to trigger that breakout and then drops back below some key near-term support levels at $63.07 to $61.70 a share with high volume. If we get that move, then HLF will set up to re-test or possibly take out its next major support levels at $57 to $50 a share.

Questcor Pharmaceuticals

Another potential earnings short-squeeze trade idea is biopharmaceuticals player Questcor Pharmaceuticals (QCOR), which is set to release its numbers on Tuesday after the market close. Wall Street analysts, on average, expect Questcor Pharmaceuticals to report revenue of $199.70 million on earnings of $1.29 per share.

>>5 Biotech Stocks Under $10 for Your Watch List

The current short interest as a percentage of the float for Questcor Pharmaceuticals is very high at 22.3%. That means that out of the 54.61 million shares in the tradable float, 13.05 million shares are sold short by the bears. The bears have also been increasing their bets from the last reporting period by 12.6%, or by about 1.45 million shares. If the bears are caught pressing their bets into a bullish quarter, then shares of QCOR could rip sharply higher post-earnings as the bears rush to cover some of their bets.

From a technical perspective, QCOR is currently trending above both its 50-day and 200-day moving averages, which is bullish. This stock has been uptrending strong for the last month, with shares moving higher from its low of $53.09 to its intraday high of $69.40 a share. During that uptrend, shares of QCOR have been making mostly higher lows and higher highs, which is bullish technical price action. That move has now pushed shares of QCOR within range of triggering a near-term breakout trade.

If you're in the bull camp on QCOR, then I would wait until after its report and look for long-biased trades if this stock manages to break out above some near-term overhead resistance at $69.40 a share, and then once it clears its 52-week high at $74.76 a share with high volume. Look for volume on that move that hits near or above its three-month average action of 1.94 million shares. If that breakout triggers, then QCOR will set up to enter new 52-week-high territory, which is bullish technical price action. Some possible upside targets off that breakout are $85 to $90 a share.

I would simply avoid QCOR or look for short-biased trades if after earnings it fails to trigger that breakout and then drops back below its 50-day moving average of $63.32 a share with high volume. If we get that move, then QCOR will set up to re-test or possibly take out its next major support levels at $58 to $53 a share.

Blue Nile

One potential earnings short-squeeze candidate is online retailer of diamonds and jewelry Blue Nile (NILE), which is set to release numbers on Thursday before the market open. Wall Street analysts, on average, expect Blue Nile to report revenue of $99.82 million on earnings of 16 cents per share.

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The current short interest as a percentage of the float for Blue Nile is very high at 17.8%. That means that out of the 11.58 million shares in the tradable float, 2.18 million shares are sold short by the bears. This is a large short interest on a stock with a very low tradable float. Any bullish earnings news could easily spark a big short-squeeze for shares of NILE post-earnings.

From a technical perspective, NILE is currently trending above both its 50-day and 200-day moving averages, which is bullish. This stock has been uptrending for the last few weeks, with shares moving high from its low of $36.56 to its recent high of $40.99 a share. During that uptrend, shares of NILE have been making mostly higher lows and higher highs, which is bullish technical price action. That move has now pushed shares of NILE within range of triggering a near-term breakout trade.

If you're bullish on NILE, then I would wait until after its report and look for long-biased trades if this stock manages to break out above some near-term overhead resistance levels at $40.99 to $42.34 a share to its 52-week high at $43 a share with high volume. Look for volume on that move that hits near or above its three-month average action of 116,368 shares. If that breakout triggers, then NILE will set up enter new 52-week-high territory, which is bullish technical price action. Some possible upside targets off that breakout are $50 to $60 a share.

I would avoid NILE or look for short-biased trades if after earnings it fails to trigger that move, and then drops back below its 50-day moving average of $38.73 a share with high volume. If we get that move, then NILE will set up to re-test or possibly take out its next major support levels at its 200-day moving average of $35.86 a share to $34 to $33 a share.

Walter Energy

Another earnings short-squeeze prospect is coal producer and exporter Walter Energy (WLT), which is set to release numbers on Wednesday before the market open. Wall Street analysts, on average, expect Walter Energy to report revenue of $454.81 million on a loss of $1.02 per share.

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The current short interest as a percentage of the float for Walter Energy is extremely high at 33.9%. That means that out of the 59 million shares in the tradable float, 21.06 million shares are sold short by the bears. The bears have also been increasing their bets from the last reporting period by 2.1%, or by about 436,000 shares. If the bears are caught pressing their bets into a strong quarter, then shares of WLT could easily rip sharply higher post-earnings as the shorts rush to cover some of their bets.

From a technical perspective, WLT is currently trending above its 50-day moving average and below its 200-day moving average, which is neutral trendwise. This stock has been uptrending strong for the last two months and change, with shares moving higher from its low of $9.96 to its recent high of $16.30 a share. During that uptrend, shares of WLT have been consistently making higher lows and higher highs, which is bullish technical price action. That move has now pushed shares of WLT within range of triggering a big breakout trade post-earnings.

If you're bullish on WLT, then I would wait until after its report and look for long-biased trades if this stock manages to break out above some near-term overhead resistance levels at $16.29 to $16.30 a share with high volume. Look for volume on that move that hits near or above its three-month average action of 7.77 million shares. If that breakout triggers, then WLT will set up to re-test or possibly take out its next major overhead resistance levels at $20 to $22.50 a share.

I would simply avoid WLT or look for short-biased trades if after earnings it fails to trigger that breakout, and then drops back below its 50-day moving average at $14.24 a share to more support at $13.50 a share with high volume. If we get that move, then WLT will set up to re-test or possibly take out its next major support levels at $12 to $11.50 a share.

WebMD Health

My final earnings short-squeeze play is online health care information services player WebMD Health (WBMD), which is set to release numbers on Tuesday after the market close. Wall Street analysts, on average, expect WebMD Health to report revenue of $129.74 million on earnings of 9 cents per share.

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The current short interest as a percentage of the float for WebMD Health is pretty high at 9.7%. That means that out of the 42.26 million shares in the tradable float, 4.26 million shares are sold short by the bears. If the bulls get the earnings news they're looking for, then shares of WBMD could spike sharply higher post-earnings as the bears jump to cover some of their bets.

From a technical perspective, WBMD is currently trending above both its 50-day and 200-day moving averages, which is bullish. This stock has been uptrending strong for the last month and change, with shares moving higher from its low of $28.03 to its recent high of $36.22 a share. During that move, shares of WBMD have been making mostly higher lows and higher highs, which is bullish technical price action. That move has now pushed shares of WBMD within range of triggering a big breakout trade post-earnings.

If you're in the bull camp on WBMD, then I would wait until after its report and look for long-biased trades if this stock manages to break out above its 52-week high at $36.22 a share (or Tuesday's intraday high if greater), and then above some past resistance at $40.24 a share with high volume. Look for volume on that move that hits near or above its three-month average volume of 841,772 shares. If that breakout triggers, then WBMD will set up to enter new 52-week high territory, which is bullish technical price action. Some possible upside targets off that breakout are $48 to $50 a share.

I would avoid WBMD or look for short-biased trades if after earnings it fails to trigger that breakout, and then drops back below some near-term support at $34 a share with high volume. If we get that move, then WBMD will set up to re-test or possibly take out its next major support levels at its 50-day moving average of $31.65 a share to $30 to $28 a share.

To see more potential earnings short squeeze plays, check out the Earnings Short-Squeeze Plays portfolio on Stockpickr.

-- Written by Roberto Pedone in Delafield, Wis.

10/28/2013

Tesla Model S gets Consumer Reports' recommendation

The Tesla Model S earned 99 out of a possible 100 points in Consumer Reports' tests.

NEW YORK (CNNMoney) In May, Consumer Reports called the Telsa Model S the best car it had ever tested, but it still wouldn't recommend it.

That was because the magazine hadn't yet gathered enough reliability data on the still-new model. Well now the survey data is in, and Consumer Reports has officially given the Tesla (TSLA) Model S the sought-after red checkmark.

The Tesla Model S is now Consumer Reports Recommended.

The Model S isn't perfect, according to its owners, but none have reported any problems with the car's battery-powered electric drive system or with the enormous iPad-like touch screen inside the cabin.

The problems that have been reported have had to do with things like squeaks, rattles and malfunctioing sunroofs and door locks.

Overall, the reliability rating for the Model S was average, according to the magazine. But that rating, combined with the car's stellar test scores, was enough to earn the recommendation.

The Model S earned a score of 99 out of a possible 100 in the magazine's performance tests, which ties for the highest score any car has ever received. It would have scored even higher except for the fact that it has to be recharged on long trips, Jake Fisher, head of auto testing for Consumer Reports, said in May. Fisher called the car's performance "off the charts."

Depending on price, the Model S has a driving range of between 208 and 265 miles. A full charge takes about six hours from an ordinary 240 volt outlet, according to Tesla. The car can be charged much more quickly at one of the "supercharger" stations Tesla has installed along various highways in the country. Tesla is also rolling out quick battery swapping capability at some of those stations.

The Model S has already won awards from car magazines like Motor Trend and Automobile, but Consumer Reports is widely regarded as being the most influential magazine among car shoppers. Consumer Reports, published by nonprofit Consumer's Union, purchases all the cars it tests and does not accept paid ads.

Tesla's next vehicle is supposed to be the Tesla Model X crossover SUV but, after that, the company's plans call for a less expensive car and, possibly, other products.

Did Verizon Make A Smart Move?

The recent purchase of Vodafone's remaining interest in Verizon Communications creates an interesting opportunity says Jim Jubak, but it probably is not the one you think.

I normally don't like to buy stocks that are predicated on a company not executing its strategy, but I think if you're looking at the recent deal between Vodafone and Verizon—over the Verizon wireless partnership, that's exactly what you see when you look at Vodafone. So Verizon and Vodafone had a partnership that controlled Verizon wireless. Verizon has spent $172 billion, some ungodly amount of money, to go out and buy the stake in Verizon wireless that it didn't have, so it gets the whole thing.

What Vodafone gets is a lot of cash, and what Vodafone has said looking around is, "Uh-oh, if we have a lot of cash and if we don't put it to work, we become an acquisition candidate ourselves." Because we've got a lot of cash, we've got some decent assets, and, in fact, right now, it looks like we're a pretty good pure play on Europe for a company like AT&T, that wants to build up its market share in the Euro zone.

So, the strategy that Vodafone is going to pursue to try to avoid becoming an acquisition candidate itself is to go out and make small acquisitions. There aren't a whole lot of acquisitions, you can buy a few players in Europe, you can buy some players in the emerging markets. The idea is that they'll be able to spend down their cash, at least the cash that remains after they have paid their dividend, and Verizon is also going to pay part of those prices in stock, so they won't have all cash, but basically, the idea is that you spend enough money so that you don't have a lot of cash sitting there, so that an acquirer can't use your cash to basically acquire you, and that's the strategy.

Now, I'm hoping that once the dust is cleared, that Vodafone is reasonably priced enough, so that I might actually be able to put some money on the hope that this strategy doesn't succeed, because I think Vodafone, as an acquirer of other small wireless companies is a whole lot less interesting as an investment, than Vodafone as a company that's going to be acquired. The likely acquirer, looking at markets, you know, looking at the size of the companies and various sundry pieces of who owns pieces of what, is AT&T. So, what I'm looking for is Vodafone being able to spend $5 billion, $6, $7, $8 billion, but still having a lot of cash, being a very attractive candidate, and there being some bid from AT&T for those assets in Europe. That, I think, would be the best thing that would happen if you're an investor in Vodafone is for Vodafone's strategy not to work.

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

10/27/2013

Bitcoin Remains Not Viable And Borderline Illegal

Have you had a chance to fully investigate what, exactly, Bitcoin is? No doubt you've seen it splashed across CNBC's front page at some point over the past year and if you haven't familiarized yourself with it, allow me to help: Bitcoin is insanity.

Well, actually, Bitcoin is a type of online digital currency (or cryptocurrency) based on the creation and transfer of an open source protocol that is independent of central banks or any other type of governance. Bitcoin's website describes it as "open source P2P digital currency." Put simply, it's an independent digital currency, catching popularity because it's the first of its kind; and conversely carrying what this author believes to be insane risk for the very same reasons.

Seeking Alpha contributor "Squeeky Wheel" does a superlative job of laying out the technical landscape behind exactly how Bitcoin works from the encryption and transfer. I strongly suggest that everyone looking for an extremely in depth explanation of how Bitcoin transfers take place read this article; it's one of the most thorough and easiest articles on Bitcoin I've had the pleasure of reading.

Put concisely, Squeeky explains the basics of how transactions work:

Bitcoin spenders announce all their transactions to the Bitcoin network. These are picked up by anyone which wishes to participate in verifying Bitcoin transactions - these are called 'miners'. Each miner takes each announced transaction and checks that it both, has right signature and data entries, and has not been seen before (ensuring this is a first-spend); if both pass the transaction is added into the newest 'block' of data. The miner then hashes the block. The one-way hash function is a mathematic function [y = hash(x)], with the special properties that 1) it is easy to compute y given x, but impossible to compute x from y and 2) small changes in x create big and random changes in y. So it is very easy to check that we agree on the outcome of the hash of a particular bloc! k, but it is very hard to get a particular hash value. In the Bitcoin protocol, the miners must get a hash for the block below a specified target value; if they don't, they add a random number - called a nonce - to the end of the block and try again. The miners will try billions of possible nonces before they successfully 'mine' the block. As a reward for the verification work, the winning miner gets to include a small transaction to himself - this is the source of the money supply. The new block is announced to all the other miners, who then verify the block and if it follows the rules, the miners all start on the next block. If the other miners think something is wrong, if they think someone is trying to cheat, they will reject the proposed block and continue to mine it for themselves.

There's a couple of major arguments that bulls are using to support Bitcoin that, in theory - not practice - make sense.

1. The Ideal of an Independent Currency

The first is that since Bitcoin is a community governed currency, nothing can be done in terms of hoarding it, issuing more, or manipulating it without the entire consensus of the group.

In other words, it takes advantage of some of the principles that make other open source items (like Linux and Wikipedia) awesome. There is a serious argument for doing anything open source - I'm still waiting on the day that we have open source style companies, run not just by shareholders - but by equals that do not carry position or governance. Bitcoin is on the right track here with the way that they've come up with a communal system for mutual accountability.

Furthermore, with the recent developments in Cyprus and other places economically, Bitcoin aficionados seem to ignore the fact that we already have two non-renewable gauges used to protect yourselves against disaster, gold (GLD, IAU) and silver (SLV). These two precious metals are still not getting the action they deserve as currency hedges, so what makes bulls think that Bitcoins are goin! g to?

Not only that, but the major point that makes the precious metals much more of a better hedge and/or commodity is the fact that they are held in reserves by the major banks. Banks like Bank of America (BAC) and the Federal reserve hold gold in reserve. In other words, they are recognized globally as fall-backs to currency inflation.

2. Potential to Explode in Value Despite Deflation

Like with any other commodity that one would invest in, Bitcoin is getting a significant amount of play from investors due to the fact that the value could rise significantly in the future. It's an extremely speculative set of circumstances, but the fact that the Bitcoin is going to capped at 21mm units means that unlike currency, we cannot print or make more. Giving it a non-renewable feel (at least until some point when a government takes it over and figures out a way to make more) gives Bitcoin a lot of "buy and hold" appeal.

(click to enlarge)

As you can see from the chart above, the price of a Bitcoin has risen to well over $100 on buyers' panic that someday - although again beyond extremely speculative - if Bitcoin becomes the currency 2.0 on the world scale, it has the potential to be exponentially more valuable than it is now in 2013.

Bitcoin bears have tons of arguments against the currency:

1. Security

Yes, so far Bitcoin has been extremely secure, with the exception of one security incident in 2010 - when the currency was at its extreme nascent stages.

Monaterism reports on the August 2010 bug:

The August 2010 issue was caused by a vulnerability in Bitcoin's verification process, which did not account for transactions so large that they overflowed the permitted size.

On August 15th 2010, over 184 billion Bitcoins were generated in a transaction, and sent to two addresses on the network.

The usual checks fo! r this fa! iled because of the sheer size of the transaction, and because of a further vulnerability of the system that allows the input and output of a transaction to differ, in case a processing fee has been deducted.

Users spotted the unusual transaction within 1.5 hours, a patch was available within about four hours, and the 'correct' version of the network was making its way from peer to peer about five hours after the malicious transaction was first recorded.

2. Bitcoins are the Preferred Currency of Criminals Online

With anonymity and aversion from the laws that govern the world's currencies, Bitcoin has become a commonly used currency for criminals online.

Because there is little to zero regulation behind Bitcoin usage, it's easily the favorite for people that participate in potentially illegal activities, like online drug dealing and online gambling in areas where it isn't legal. If this continues, it becomes very easy for the government to step in, label Bitcoin a ponzi scheme or money laundering operation, and shut it down.

3. Not Backed By Major Banks/Governments/Anybody

The fact that Bitcoins aren't backed or regulated by any major government or institution means a couple of things:

They're likely to agitate and draw bad attention from major banks and governments who are likely to not accept them. You don't need to be a finance major to know that going against "the institution" is usually a great way to get your project canned very quickly.They have no real protection against fraud or security breaches - unlike things we have now like fraud protection on our credit cards and bank accounts.

4. Public Approval and Trust/Paypal

If you're like me and you're convinced that the governments of the world are not going to take kindly to someone trying to usurp their respective currencies, you understand why bears argue that public trust is going to be a hard thing to come by. Bitcoin, to have a market, is going to have to win over the trust of hundreds o! f thousan! ds (if not millions) of people to become a currency that's taken seriously - and it's going to have to do this before being taken out by governments, hackers, and other people that would have an interest in Bitcoin failing.

Furthermore, the conveniences that Bitcoin offers us in terms of not having to have a physical exchange of money are already cornered by Paypal and direct links to bank accounts. Ideally, the concept works. But with banks having direct deposit, bills drawing from your bank account, and Paypal to take care of the rest, we hardly ever touch our money nowadays anyway. Conversely, if we wanted to carry physical money, we wouldn't be able to do so.

What's New and My Analysis

In the news again, it was reported by CNBC.com on Saturday morning that the US had seized $28 million in Bitcoin from a man linked to running an online drug market:

U.S. authorities have seized an estimated $28 million in the digital currency bitcoins from the alleged owner of "Silk Road," the online marketplace for drugs and criminal activity that law enforcement shut down three weeks ago.

Federal prosecutors in New York said Friday that the 144,336 bitcoins, a digital currency widely used on the defunct site, were discovered on computer hardware belonging to Ross William Ulbricht, known online as "Dread Pirate Roberts," who was arrested Oct. 1 in San Francisco and charged with various conspiracy counts. They said it represented the largest ever bitcoin seizure.

This is one of many stories that are linking the online currency to illegal activity. It's not going to be long before the government declares that Bitcoin itself is illegal because it is part and parcel to illegal activity online.

To me, the Bitcoin craze is complete insanity. In addition, there's been talk of a Bitcoin ETF - which is simply lunacy.

Investing in Bitcoin is an extremely risky proposition - investing in a Bitcoin ETF, should it come to fruition, is even worse. Yes, there is a ! chance th! at they could continue to appreciate in the coming years - just as they've done in the past two years - but investors need to know that the mere fact of Bitcoin even existing in years to come is nothing near a guarantee.

The facts are that you need to be all right with taking a 100% loss in whatever money you invest in the upcoming Bitcoin empire.

From a macro view, this makes the point for me that we're heading down a risky path as investors - one where there's eventually going to be ETFs that are derivatives of each other and carry insane amounts of risk.

Forbes recently reported about the bad direction we're heading in:

Many obscure ETFs like Direxion's leveraged semiconductor fund can be hazardous to investors who aren't careful. These leveraged funds are designed for day-traders and backed by derivatives. Though providers warn that these funds are not meant to be held as long-term assets, many investors miss the fine print.

The SEC launched a review of all funds last March, deferring applications for "actively managed and leveraged ETFs that particularly rely on swaps and other derivative instruments to achieve their investment objectives" in the meantime.

"There has been a lot of concern generally about derivatives in the last few years, and specifically in our division about the use of derivatives by investment companies, including ETFs," says Elizabeth Osterman, head of the exemptive applications office of SEC's Division of Investment Management. "Our decision to defer the review of exemptive applications for derivatives-based ETFs reflects concerns about whether granting exemptive relief for those funds would be consistent with required regulatory standards in light of those concerns."

In 2012, there were a record number of ETF closures, citing competition, super saturation of the market, and competition for managers fees:

A record number of exchange traded fund closures in 2012 and Russell Investments shutting down i! ts passiv! e ETF business illustrate the tough competition in the industry.

A total of 71 exchange traded products have announced closures in the U.S. this year, breaking the previous record from 2008, the Financial Times reports.

Although ETF assets continue to rise, profitability is falling as managers slash fees to compete and gain market share, according to the article.

From a macro perspective, this is things moving in the wrong direction again for us. As we saw with the housing bubble, so many of the signs that things were going wrong were based on the derivative trading that these ETFs can also be the vehicle for. I'd advise all investors to take caution when dealing with speculative ETFs and non-government regulated/approved currency, as they sometimes crash or disappear as quickly as they appear, and to keep themselves in check and with the basics when they trade.

As always, I wish all investors the best of luck.

Source: Bitcoin Remains Not Viable And Borderline Illegal

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. (More...)

Wednesday's Top News Headlines

Here are today's top news headlines from Fool.com. Check back throughout the day as this list is updated, and follow us on Twitter at TMFBreaking.

Ford's Second-Quarter Earnings Beat Estimates

Starbucks Teams Up With Danone

Cal-Maine Settles Egg Antitrust Class Action Claims

Northrop to Run Wyoming's Medicaid, CHIP Programs

VIVUS Names New CEO and Chairman

Former Bristol-Myers Exec Settles Insider-Trading Charges for $324,777

Hercules Offshore: Workers Safe, Rig Damage Unknown

Duke Energy Agrees to Cut Rate Increase by Nearly 50%

SUPERVALU Names New CFO

HanesBrands to Acquire Maidenform in $575 Million Deal

Bombardier Delays First Flight of CSeries Plane

Transocean Loses Round in Fight Over Deepwater Horizon Documents

Renren Games Inks Analytics Partnership

Lockheed's First Littoral Combat Ship Loses Propulsion at Sea

Alibaba Joining Smart TV Market

Former Entergy Employee Arrested on Charges of Falsifying Documents

Crude Oil Supplies Drop for 4th Straight Week

Nokia Launches Lumia 625

New Home Sales Hit Recovery High

Live Nation Goes Green With New Food Options

Ford, Toyota End Hybrid-Truck Collaboration

Manufacturing Growth Hits 4-Month High

10/26/2013

10 Best Financial Stocks To Own For 2014

Stupidity is contagious. It gets us all from time to time. Even respectable companies can catch it. As I do every week, let's take a look at five dumb financial events this week that may make your head spin.

1. Frank LINN
LINN Energy (NASDAQ: LINE ) took a hit after revealing that the SEC is launching an inquiry into the company's hedging strategies, accounting metrics, and the proposed purchase of Berry Petroleum.

LINN's been a serial acquirer. It's been snapping up smaller oil and natural gas providers in this highly fragmented sector. LINN racked up $2.9 billion in purchases last year alone and the Berry deal would put it well above that in 2013.

Accounting can get tricky as companies go on buying sprees, but investors tend to steer clear once regulators start launching investigations.

The silver lining for daring income chasers is that LINN's yield just got ridiculously juicy. It declared a monthly cash distribution this week that translates into an annualized yield of 12.7% on the units based on Wednesday's close.

10 Best Financial Stocks To Own For 2014: Dorchester Minerals L.P.(DMLP)

Dorchester Minerals, L.P. engages in the acquisition, ownership, and administration of producing and non-producing natural gas and crude oil royalty, net profits, and leasehold interests in the United States. Its net profits interests represent net profits overriding royalty interests in various properties owned by the operating partnership; and royalty properties consist of producing and nonproducing mineral, royalty, overriding royalty, net profits, and leasehold interests located in 574 counties and parishes in 25 states. Dorchester Minerals Management LP serves as the general partner of Dorchester Minerals, L.P. The company was founded in 1982 and is based in Dallas, Texas.

10 Best Financial Stocks To Own For 2014: BancFirst Corporation(BANF)

BancFirst Corporation operates as the holding company for BancFirst that provides commercial banking services to retail customers and small to medium-sized businesses in the non-metropolitan trade centers of Oklahoma and the metropolitan markets of Oklahoma City, Tulsa, Lawton, Muskogee, Norman, and Shawnee. It offers various deposit services, such as checking, negotiable order of withdrawal, savings, money market, sweep, club, and individual retirement accounts, as well as certificates of deposit. The company?s loan portfolio comprises commercial loans offered to small to medium-sized businesses in light manufacturing, local wholesale and retail trade, commercial and residential real estate development and construction, services, agriculture, and energy industries; commercial mortgages; working capital lines of credit; and other forms of asset-based financing. BancFirst?s loan portfolio also includes agricultural loans; small business administration guaranteed loans; an d financing for automobiles, residential mortgage loans, home equity loans, and other personal loans. In addition, the company offers funds transfer services, collections, safe deposit boxes, cash management services, retail brokerage services, insurance, and overdraft protection and autodraft services. Further, it provides trust services, as well as acts as executor, administrator, trustee, and transfer agent; and item processing, research, and correspondent banking services. Additionally, the company involves in the investment management and administration of trusts for individuals, corporations, and employee benefit plans; and provision of investment options. As of July 19, 2011, it operated 89 banking locations serving 50 communities in Oklahoma. The company was formerly known as United Community Corporation and changed its name to BancFirst Corporation in November 1988. BancFirst Corporation was founded in 1984 and is headquartered in Oklahoma City, Oklahoma.

Top 10 Growth Stocks For 2014: Putnam Premier Income Trust(PPT)

Putnam Premier Income Trust is a closed ended fixed income mutual fund launched and managed by Putnam Investment Management, LLC. The fund is co-managed by Putnam Investments (U.K.) Limited and The Putnam Advisory Company, LLC. It invests in the public fixed income markets across the globe. The fund primarily invests in U.S. high-grade and high-yield bonds with an average credit quality of BBB by S&P Corporation. It benchmarks the performance of its portfolio against the Barclays Capital Government Bond Index. Putnam Premier Income Trust was formed on February 29, 1988 and is domiciled in the United States.

10 Best Financial Stocks To Own For 2014: Singapore Exchange Limited (S68.SI)

Singapore Exchange Limited operates as an integrated securities and derivatives exchange in Singapore and related clearing houses. The company provides listing, trading, clearing, depository, market data, and connectivity services; and member services and issuer services for the securities and derivatives market, as well as counterparty guarantee services. Its security products include stocks, American depository receipts, business trusts, company warrants, global depository receipts, real estates investment trusts, securities borrowing and lending, stapled securities, certificates, exchange traded funds, exchange traded notes, extended settlement, and structured warrants; and fixed income products comprise retail bonds, retail preference shares, SGS bonds, and wholesale bonds. The company�s derivative products include equity index, interest rates, and dividend index; commodities comprise agriculture, energy, and metals; and bulk commodities include freight, foreign excha nge forwards, interest rate swaps, and oil. It also operates SGX AsiaClear, a clearing platform for over-the-counter traded financial derivatives for technically specified rubber 20 (TSR20) rubber contract, bulk commodities, freight, interest rate swaps, and oil derivatives, as well as operates as a commodity exchange. In addition, the company provides data and information services, such as securities book, SGX derivatives quote, SGX news, SGX securities and derivatives market direct feed, SGX live data and news, historical market data, and broker services; and computer services and maintenance, and software maintenance services. Singapore Exchange Limited was incorporated in 1999 and is based in Singapore.

10 Best Financial Stocks To Own For 2014: Mint Technology Corp.(MIT.V)

Mint Technology Corp., through its subsidiary, Mint Middle East LLC, provides vertically integrated prepaid card and payroll services in the Middle East. The company manages the issuance, administration, customer support, payment processing, set-up, sponsorship, and reporting of the cards and related activities. It designs, packages, delivers, and manages MasterCard and Visa branded payment programs for global acceptance and utility for credit card issuers, retailers, and member associations. The company also plans to provide alternative payment solutions, including microcredit, mobile top-up, and money remittance services to the unbanked sector of the working population in other countries in the Middle East and North Africa. Mint Technology Corp. is based in Toronto, Canada.

10 Best Financial Stocks To Own For 2014: Stratus Properties Inc.(STRS)

Stratus Properties Inc. engages in the acquisition, development, management, operation, and sale of commercial, hotel, entertainment, and multi-family and single-family residential real estate properties located primarily in the Austin, Texas area. It operates the W Austin Hotel & Residences project located on a 2-acre city block in downtown Austin; and residential real estate properties, including developed, under development, and undeveloped properties in the Barton Creek community, the Circle C community and Lantana, and the condominium units at the W Austin Hotel & Residences project. The company also engages in the leasing of commercial properties comprising two office buildings at 7500 Rialto Boulevard; office and retail space at the W Austin Hotel & Residences project; and a retail building and a bank building in the Barton Creek Village, as well as two retail buildings, including a bank building and the Parkside Village project in the Circle C community. Stratus Pr operties Inc. was founded in 1992 and is headquartered in Austin, Texas.

10 Best Financial Stocks To Own For 2014: Banco Santander S.A.(STD)

Banco Santander, S.A. provides a range of banking and financial products. It accepts customer demand, time, and notice deposits, and international and domestic interbank deposits, as well as offers auto financing, personal loans, and credit cards; and automated cash dispensers, savings books updaters, telephone banking services, and electronic and Internet banking services. The company also engages corporate banking, treasury, and investment banking activities. It provides transaction banking services in cash management, trade finance, and basic financing; and corporate finance services for mergers and acquisitions, and asset and capital structuring, as well as involves in the origination activities and risk management, and distribution of structured products and debt in the credit markets; structuring and trading activities in financial markets of interest rate and exchange rate instruments; and activities relating to the equity markets. In addition, it engages in the des ign and management of mutual and pension funds, and life and general insurance products. The company operates primarily in Spain, the United Kingdom, other European countries, Brazil and other Latin American countries, and the United States. As of December 31, 2010, it had 6,063 branch offices in continental Europe; 1,416 branches in the United Kingdom; 5,882 branches in Latin America; and 721 branches in the United States. The company was formerly known as Banco Santander Central Hispano S.A. and changed its name to Banco Santander, S.A. in June 2007. Banco Santander, S.A. was founded in 1857 and is based in Madrid, Spain.

Advisors' Opinion:

[By Chandan Dubey]
This article will describe what a bank does. Then we will move on to reading the balance sheet of a bank. As an example, I take the balance sheet of one of my holdings, Banco Santander (STD).
[By Holly LaFon]
Charlie: Yes, I have a question. Do you think the opportunity is more in stocks or in debt, or both? If you look at Spain, the biggest companies in Spain, one is a bank, Bank Santander (STD). The other is Telefonica (TEF), a phone company. What other opportunities do you see there?

10 Best Financial Stocks To Own For 2014: Virginia Commerce Bancorp(VCBI)

Virginia Commerce Bancorp, Inc. operates as the bank holding company for Virginia Commerce Bank that provides business and consumer banking services. The company accepts various deposit products comprising demand deposits, savings and money market accounts, and time deposits. It also originates commercial loans, commercial real estate loans, lines of credit, equipment financing, construction loans, letters of credit, residential mortgages, personal loans, auto loans, and home equity loans and lines of credit. In addition, the company offers merchant bankcard, electronic funds transfer, lock-box, remote deposit capture, online banking, investment, safe deposit boxes, and other customary banking services. It serves small-to-medium sized businesses, including firms that have contracts with the U.S. government, associations, retailers, industrial businesses, professionals and their firms, business executives, investors, and consumers. The company serves the Northern Virginia s uburbs of Washington, D.C. consisting of Arlington, Fairfax, Fauquier, Loudoun, Prince William, Spotsylvania, and Stafford Counties; the cities of Alexandria, Fairfax, Falls Church, Fredericksburg, Manassas, and Manassas Park; and the Washington, D.C., as well as the nearby Maryland counties of Montgomery and Prince Georges. It operates through 28 branch offices, 1 residential mortgage office, and 1 investment services office. The company was founded in 1988 and is headquartered in Arlington, Virginia.

10 Best Financial Stocks To Own For 2014: Stamford Land Corporation Ltd (H07.SI)

Stamford Land Corporation Ltd, an investment holding company, owns and operates a portfolio of luxury hotels in Australia, Singapore, and New Zealand. It operates hotels and resorts under the Stamford Grand North Ryde, Sir Stamford Circular Quay, Stamford Plaza Sydney Airport, Stamford Grand Adelaide, Stamford Plaza Adelaide, Stamford Plaza Melbourne, Stamford Plaza Brisbane, and Stamford Plaza Auckland names. It also engages in the investment, construction, development, and trading of residential apartments, and retail and commercial buildings. In addition, the company is involved in providing travel agency services; importing, exporting, and dealing in wall coverings, interior decorations, and furnishing products; and offering management and consultancy services. Stamford Land Corporation Ltd is based in Singapore.

10 Best Financial Stocks To Own For 2014: Community Partners Bancorp(CPBC)

Community Partners Bancorp operates as the holding company for Two River Community Bank, a state-chartered commercial bank that provides a range of commercial and retail banking services to small and medium-sized businesses, not-for-profit organizations, professionals, and individuals principally in Monmouth and Union counties, New Jersey. The company offers a range of deposit products, including non-interest bearing or lower cost interest bearing checking accounts, savings accounts, money market accounts, and certificates of deposit accounts. It also provides various loan products consisting of construction loans for residential dwellings, apartment buildings, restaurants, shopping centers, and owner-occupied business properties; commercial business loans; commercial real estate loans for the acquisition of new property or the refinancing of existing property; residential real estate and consumer loans, including residential mortgages, home equity lines of credit, equity loans, personal loans, automobile loans, and overdraft protection; participation loans; and small business administration loans. In addition, the company offers safe deposit boxes, night depositories, wire transfers, money orders, travelers? checks, automated teller machines, direct deposits, telephone and Internet banking services, and corporate business services. It operates 15 banking offices in Middletown, Allaire, Atlantic Highlands, Cliffwood, Manasquan, Navesink, Port Monmouth, Red Bank, Tinton Falls, West Long Branch, Westfield, Cranford, and Fanwood, New Jersey. The company was founded in 2000 and is based in Middletown, New Jersey.

10/25/2013

DaVita: Low-Beta Buffett Buy

Stock split expert Neil Macneale, editor of 2-for-1, explains his stock split strategy and highlights his latest buy recommendation—a health care firm that counts Warren Buffett among its large shareholders.

Steve Halpern: We're here today with Neil Macneale, editor of 2-for-1 Stock Split Newsletter. How are you doing, Neil?

Neil Macneale: I'm just great. How are you?

Steve Halpern: Very good. For those not familiar with your newsletter, let me point out that you compile an ongoing model portfolio, in which you add one stock a month, and each stock you add is selected from among those that have announced two for one stock splits. Could you explain to listeners why you look to the stock split universe for your recommendations?

Neil Macneale: Yes, well, the biggest reason is that it narrows the field and I'm only looking at a few companies a month, which makes my job a lot easier.

But, the important point is that there was a study done some years back in the 90s that showed that the group of companies that split their stocks outperforms the market over a period of two or three years.

So, if you can concoct a portfolio that's made up entirely of companies that have, and you buy them shortly after their split announcement, and hold them for two to three years, you are basically invested in a group of companies that, by definition, or statistically, will beat the market, so that's my reasoning.

Steve Halpern: We haven't seen a lot of stock split announcements lately. Is there anything that you can read from that?

Neil Macneale: Well, historically, over the 17 years I've been doing this, it seems that every time the market gets nervous, regardless of how well individual companies are doing, the Boards of Directors tend to be a little reticent to split the stock.

The stock split is basically a signal into their thinking, in terms of what they see for the future of their business over the next couple of years, and any time there's that much worry in the market, I think that, psychologically, they're just reluctant to announce the split.

Steve Halpern: There seems to be a particularly large number of high-priced stocks that have chosen not to split. Off-hand I could think of Apple, Amazon, Priceline, Netflix, and Google, which moved up to the $1000 level.

Given your expertise in analyzing splits, I'm curious what you think about these high-priced companies and why they might be deciding not to split their shares.

Neil Macneale: It's an interesting question, and I have no hard data on that at all. I've never tried to dig into the thinking of the Boards of Directors of those companies that you mentioned.

But, of course, the granddaddy of them all is Berkshire Hathaway, and Warren Buffet, I think, just feels like splits are kind of a waste of a time. The only time he ever did it was when he had to meet the conditions of a merger with the railroad. Let's see, I can't remember the name, right off-hand.

Anyway, in the case of all those companies that you mentioned, I think it's kind of a high-tech or Silicon Valley status symbol, really, to have a high-priced stock and I think we'll look back in the future and see this as kind of a fad.

Otherwise, I just can't really explain it, because the companies out in the heartland are still announcing splits, even though it's obviously not at the rate that I'd like to see.

Steve Halpern: Well, you mentioned Buffet and, interestingly, the latest edition to your portfolio, DaVita HealthCare Partners (DVA) is a stock that is liked by Warren Buffet. He holds a long-term position in it, so you're in good company with this new holding. Could you tell us a little about the stock?

Neil Macneale: Well, DaVita HealthCare Partners is a provider of dialysis services. They have about 1,800 clinics across the country—most of the country. It's a well-run business.

The growth has been around 9% a year average for the last five years, both top and bottom line, but, in spite of that, they have a reasonable P/E ratio, 21.

I particularly like the fact that it has a beta of 0.55, which is just about half of the volatility of the market in general, so that's very appealing.

It would be nice if they paid a dividend, but you can't everything, so...I did like the company. It was our number two pick in September.

But instead of that, I chose to go to Tractor Supply (TSCO), which was a favorite of mine from the past. But DaVita is a good company. I didn't really like to pass it up in September. I was glad to have the opportunity to buy it in October.

Steve Halpern: So, in fact, you looked at DaVita from its stock split the month earlier, because there weren't any stock splits in the current month, correct?

Neil Macneale: That is correct, yes. I go back as far as six months if the list is too small and I need some more choices. I'll go back and look at the split announcements from the past, up to six months or so.

Steve Halpern: Well, we appreciate you taking the time today. Thank you for joining us.

Neil Macneale: You're quite welcome, Steve. Thank you for the opportunity.

Subscribe to 2-for-1 Stock Split Newsletter here...

How Southwest Makes Boeing Stock Look Great Right Now

At one time, Southwest Airlines (NYSE: LUV ) and its upstart peers wouldn't fly long-haul routes because it was either too difficult or unprofitable to do so. But now Boeing (NYSE: BA ) is building the extended range 737 MAX while Airbus has the A320neo. Think of them as smaller-scale versions of the 787, says Motley Fool contributor Tim Beyers in the following video.

The extended range of both aircraft, which are expected to enter service between 2015 and 2017, makes it more likely that smaller carriers will compete for longer-haul routes such as Los Angeles to Honolulu or New York to London. And while that's no doubt good news for Boeing stock, it's bad news for legacy carriers, Tim says.

Who wins? We won't know for years, but Southwest is already the leading buyer of the MAX, and as such, seems to be a likely benefactor. There's also Alaska Airlines (NYSE: ALK ) , which already flies from the continental west coast to various destinations in the Hawaiian Islands. The airline has ordered 37 of the planes to upgrade its fleet.

Regardless, the big point for investors in Boeing stock is that, in making more fuel-efficient aircraft, the company could be hurting its legacy carrier customers by making it easier for discount airlines to enter the longer-haul markets they've dominated for so long.

Now it's your turn to weigh in. Does rising interest in the MAX get you more interested in Boeing stock? Please watch the video to get Tim's full take, and then leave a comment to let us know what you think.

Want more ideas? Boeing certainly isn't the only American company whose products are seen throughout the world. The Motley Fool profiles more winners in the making in the free report "3 American Companies Set to Dominate the World". A simple click gets you a free copy for a limited time.

10/24/2013

Judge Cites Jobs' Words in Ruling That Apple Conspired to Raise e-Book Prices

NEW YORK (AP) -- Apple (NASDAQ: AAPL ) broke antitrust laws and conspired with publishers to raise electronic book prices, a federal judge ruled Wednesday, citing "compelling evidence" from the words of the late Steve Jobs.

U.S. District Judge Denise Cote said Apple knew that no publisher could risk acting alone to try to eliminate Amazon.com's $9.99 price for the most popular e-books so it "created a mechanism and environment that enabled them to act together in a matter of weeks to eliminate all retail price competition for their e-books."

The Manhattan jurist, who did not determine damages, added: "The evidence is overwhelming that Apple knew of the unlawful aims of the conspiracy and joined the conspiracy with the specific intent to help it succeed."

Apple spokesman Tom Neumayr said the Cupertino, Calif.-based company planned to appeal. "Apple did not conspire to fix e-book pricing and we will continue to fight against these false accusations," he said. "We've done nothing wrong."

Assistant Attorney General Bill Baer called the ruling "a victory for millions of consumers who choose to read books electronically."

He said the judge agreed with the Justice Department and 33 state attorneys general that executives at the highest levels of Apple orchestrated a conspiracy with five major publishers.

"Through today's court decision and previous settlements with five major publishers, consumers are again benefiting from retail price competition and paying less for their e-books," he said.

Apple attorney Orin Snyder had told Cote previously that she would set a "dangerous precedent" if she concluded that Apple manipulated e-book prices as it entered the market in 2010. He did not immediately respond to a message for comment Wednesday.

Neumayr said Apple's introduction of the iBookstore "gave customers more choice, injecting much needed innovation and competition into the market, breaking Amazon's monopolistic grip on the publishing industry."

The government claimed Apple and the publishers agreed to a pricing policy that forced millions of consumers to pay several dollars more for most online books. In her ruling, Cote said "compelling evidence of Apple's participation in the conspiracy came from the words uttered by Steve Jobs, Apple's founder, CEO and visionary."

She quoted Jobs, who died in 2011, as saying he understood publishers' concerns that Amazon's $9.99 price for new releases was eroding the perceived value of their products and that Apple was willing to try pricing e-books at $12.99 and $14.99. She noted that Jobs bought an e-book for $14.99 at the launch of Apple's e-book store and told a reporter that day that Amazon's $9.99 price for the same book would be irrelevant because soon all prices will "be the same."

"Apple has struggled mightily to reinterpret Jobs' statements in a way that will eliminate their bite," Cote wrote in the 160-page opinion. "Its efforts have proven fruitless."

Cote said damages could be determined at a later point, though she did not immediately schedule a trial on them.

The state attorneys general are seeking unspecified damages. The federal government is seeking an order that Apple be banned for two years from agreements that let publishers rather than retailers set prices and that the company be prohibited from future antitrust law violations. The Justice Department also is asking Apple to establish an antitrust compliance program and antitrust training for executives and to put in place an independent monitoring trustee.

The trial had featured testimony from executives for Apple, publishers and Seattle-based Amazon.com. Witnesses from the publishing industry conceded that they were disappointed that Amazon.com was selling e-books so inexpensively when Apple came along in late 2009 with plans for its e-book store.

"Through their conspiracy they forced Amazon (and other resellers) to relinquish retail pricing authority and then they raised retail e-book prices," Cote wrote. "Those higher prices were not the result of regular market forces but of a scheme in which Apple was a full participant."

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Fidelity late but not too late with new ETFs

fidelity, vanguard, etfs, mutual funds, blackrock

Bloomberg News

Fidelity Investments is making its first big leap into the exchange-traded fund arena Thursday with the launch of 10 sector ETFs, but the question remains: Is it too little, too late?

Several analysts are saying, "No."

"ETFs still have a long way to go before they catch up to mutual funds, and there's still room for entrants," said Mike Rawson, an analyst at Morningstar Inc. "I think we should wait a few years to see what else Fidelity is able to do."

(Featured Data: 3Q's Best- and Worst-Performing Equity ETFs)

Ten years ago, Fidelity launched its first and only ETF: the $262 million Fidelity Nasdaq Composite Tracking ETF (ONEQ). It hasn't launched another since and has largely missed out on the ETF boom.

Total assets in the ETF market have increased to $1.6 trillion this year, from $125 billion in 2003, making Fidelity's share of the market a mere sliver, according to data from BlackRock Inc., the largest ETF manager and a subadviser to Fidelity's sector ETFs.

"They haven't had a clear ETF strategy, and they haven't pursued it [as] aggressively as they should have," Mr. Rawson said. "Even though [ETFs] are small in relation to the mutual fund market, their flows are large."

TOUGH COMPETITION

Fidelity faces heavy competition. There now are more than 1,500 ETFs, up from less than 150 10 years ago. And the number of companies launching them has grown to 58, from less than 10 in 2003, according to BlackRock.

Waiting, however, may have been Fidelity's best strategy, said Jim Lowell, editor of the Fidelity Investor newsletter.

The company held off until now to ensure that ETFs didn't become commoditized too quickly and potentially unprofitable as a business, he said.

The delay also has allowed the company to enter at a time when it can be competitive on costs.

Fidelity's 10 sector ETFs will charge 12 basis points in management fees, according to a filing with the Securities and Exchange Commission.

That compares with the 14 basis points that The Vanguard Group Inc. charges on its sector ETFs, which were the cheapest available.

"This isn't a knock on the door. This is a punch in the face over at Vanguard," Mr. Lowell said.

"Fidelity can afford to commoditize sector ETFs further and faster ... There's a huge business opportunity here," he said.

State Street Global Advisors, which manages the largest suite of sector ETFs, charges 18 basis points.

"A price war is inevitable," Mr. Lowell said.

Fidelity "can get in there ! and undercut on price where they simply couldn't in the last decade. This is a market share moment," Mr. Lowell said.

Vanguard is "not nervous" about having the added competition from Fidelity, said spokesman David Hoffman.

The 10 comparable Vanguard sector ETFs make up 5% of the $300 billion in the company's total U.S. ETF business, he said.

"We're never engaged in a price war," Mr. Hoffman said.

"We're a low-cost leader across the board," he said. "I think investors can expect to see that in the future.”

Kevin Quigg, the global head of ETF sales strategy for State Street, said that investors should focus their attention on total cost of ownership of the sector ETFs.

The company's sector SPDR ETFs were the second line of ETF products it brought to market, he said.

"We have through time lowered our expense ratios from a scale perspective as we have the ability to pass it on to our shareholders," Mr. Quigg said. "They are bringing products in the same space, and at the end of the day, investors decide."

Fidelity has every reason for wanting to dive into the ETF market.

Since 2008, Fidelity's active U.S. equity funds have suffered $87 billion in net outflows, according to data from Morningstar.

By contrast, the company's passively managed index funds have had positive net inflows of $15 billion since 2008.

The new Fidelity funds merit attention, said financial adviser Andrew Wang, senior vice president of Runnymede Capital Management.

"I'm certainly going to take a look at them," he said. "Expenses are definitely something that we want to be cognizant of."

OTHER ADVISERS WARY

Other advisers don't see low cost as a reason to get too excited about the new Fidelity lineup.

"It's not something that made me jump out of my seat," said Matt Reiner, chief investment officer at Capital Investment Advisors. "I don't know how exciting they'll be to strategists."

Mr. Reiner's firm manages $1.3 billion in assets through a combination of ETFs and other investments, mainly us! ing State! Street's SPDR funds in the ETF arena.

David Blain, president of BlueSky Wealth Advisors, agrees that prices alone might not be enough to give Fidelity leverage in the market.

"For us, ETFs form the core of the portfolio, and it's just not something that gets switched out very often," he said. "To me, it's a marketing gimmick."

Although there are critics, Mr. Rawson said that Fidelity's strong brand name, established brokerage platform and numerous managers are key factors working in the firm's favor with the launch of the new ETFs.

The company isn't taking the new venture lightly and is investing heavily to make up for lost ground, he said.

"I think they view this as a very serious strategy," Mr. Rawson said.

"They have very competitive index products," he said. "It would only make sense for them to have ETFs to go along with that."

Mr. Lowell, who is also the chief investment officer at Adviser Investments, said that he will be looking into the products at his firm, which has close to $3 billion in assets under management.

"We'd be foolish not to," he said.

Citing regulatory restrictions ahead of the launch, Fidelity spokeswoman Erica Birke declined to comment.

10/23/2013

Hot Safest Companies To Buy Right Now

BOSTON (TheStreet) -- There's nothing worse than you or a loved one falling victim to crime, so here's a look at five U.S. communities you can move to where murders, rapes or less-serious incidents such as car thefts rarely occur.

"These places are fantastic choices if you're looking for a safe and stable community," says Andrew Schiller of NeighborhoodScout.com, which recently named the Safest Cities in the U.S. by analyzing crime data for every community with 25,000 residents or more.

NeighborhoodScout compiles its list each year by reviewing crime statistics that local police departments report to the FBI covering all murders, robberies, aggravated assaults, burglaries, larceny/thefts auto thefts and forcible (as opposed to statutory) rapes.

Hot Safest Companies To Buy Right Now: Petroleo Brasileiro S.A.- Petrobras(PBR)

Petroleo Brasileiro S.A. primarily engages in oil and natural gas exploration and production, refining, trade, and transportation businesses. The company?s Exploration and Production segment involves in the exploration, production, development, and production of oil, liquefied natural gas (LNG), and natural gas in Brazil. This segment supplies its products to the refineries in Brazil, as well as sells surplus petroleum and byproducts in domestic and foreign markets. Its Supply segment engages in the refining, logistics, transportation, and trade of oil and oil products; export of ethanol; and extraction and processing of schist, as well as holds interests in companies of the petrochemical sector in Brazil. The Gas and Energy segment involves in the transportation and trade of natural gas produced in or imported into Brazil; transportation and trade of LNG; and generation and trade of electric power. In addition, the segment has interests in natural gas transportation and d istribution companies; and thermoelectric power stations in Brazil, as well engages in fertilizer business. The Distribution segment distributes oil products, ethanol, and compressed natural gas in Brazil. The International segment involves in the exploration and production of oil and gas, as well as in supplying, gas and energy, and distribution operations in the Americas, Africa, Europe, and Asia. Further, the company involves in biofuel production business. Petroleo Brasileiro was founded in 1953 and is based in Rio de Janeiro, Brazil.

Advisors' Opinion:

[By Todd Shriber, ETF Professor]
That may not be a direct bearish call on Petrobras (NYSE: PBR), Brazil's state-owned oil giant, but it was less than a year ago at the Ira Sohn Conference that Chanos called Petrobras and Vale (NYSE: VALE), the world's largest iron ore producer two of his favorite shorts.
[By Tyler Crowe]
Petrobras (NYSE: PBR ) , Brazil's national oil company, is planning on spending $237 billion over the next seven years to double its oil output to about 5 million barrels per day. On a per-year basis, that much money is the same as one-third of what all U.S. exploration and production companies will spend combined. ��

Hot Safest Companies To Buy Right Now: Under Armour Inc.(UA)

Under Armour, Inc. develops, markets, and distributes performance apparel, footwear, and accessories for men, women, and youth primarily in the United States, Canada, and internationally. It offers products made from moisture-wicking synthetic fabrics designed to regulate body temperature and enhance performance regardless of weather conditions. The company provides its products in three fit types: compression (tight fitting), fitted (athletic cut), and loose (relaxed) extending across the sporting goods, outdoor, and active lifestyle markets. Its footwear offerings comprise football, baseball, lacrosse, softball, and soccer cleats; slides; performance training footwear; and running footwear. The company also provides baseball batting, football, golf, and running gloves, as well as licenses bags, socks, headwear, custom-molded mouth guards, and eyewear that are designed to be used and worn before, during, and after competition. Under Armour sells its products through retai l stores, as well as directly to consumers through its own retail outlets and specialty stores, Website, and catalogs. The company was founded in 1996 and is headquartered in Baltimore, Maryland.

Advisors' Opinion:

[By Steve Symington]
A little over three weeks ago, I wrote about a new trademark infringement lawsuit filed against Baltimore-based athletic apparel specialist Under Armour (NYSE: UA ) .
[By Daniel Sparks]
Competition
Though Nike does boast impressive gross margins compared to its footwear competitors, three of them, Adidas, Puma, and Under Armour (NYSE: UA ) , are large enough to cause some disruption in some of Nike's markets.

Top 10 Tech Stocks To Invest In 2014: Goldman Sachs Group Inc.(The)

The Goldman Sachs Group, Inc., together with its subsidiaries, provides investment banking, securities, and investment management services to corporations, financial institutions, governments, and high-net-worth individuals worldwide. Its Investment Banking segment offers financial advisory, including advisory assignments with respect to mergers and acquisitions, divestitures, corporate defense, risk management, restructurings, and spin-offs; and underwriting securities, loans and other financial instruments, and derivative transactions. The company?s Institutional Client Services segment provides client execution activities, such as fixed income, currency, and commodities client execution related to making markets in interest rate products, credit products, mortgages, currencies, and commodities; and equities related to making markets in equity products, as well as commissions and fees from executing and clearing institutional client transactions on stock, options, and fu tures exchanges. This segment also engages in the securities services business providing financing, securities lending, and other prime brokerage services to institutional clients, including hedge funds, mutual funds, pension funds, and foundations. Its Investing and Lending segment invests in debt securities, loans, public and private equity securities, real estate, consolidated investment entities, and power generation facilities. This segment also involves in the origination of loans to provide financing to clients. The company?s Investment Management segment provides investment management services and investment products to institutional and individual clients. This segment also offers wealth advisory services, including portfolio management and financial counseling, and brokerage and other transaction services to high-net-worth individuals and families. In addition, it provides global investment research services. The company was founded in 1869 and is headquartered in New York, New York.

Hot Safest Companies To Buy Right Now: Fluor Corporation(FLR)

Fluor Corporation, through its subsidiaries, provides engineering, procurement, construction, maintenance, and project management services worldwide. Its Oil & Gas segment offers design, engineering, procurement, construction, and project management services to upstream oil and gas production, downstream refining, chemicals, and petrochemicals industries. This segment also provides consulting services comprising feasibility studies, process assessment, and project finance structuring and studies. The company?s Industrial & Infrastructure segment offers design, engineering, procurement, and construction services to the transportation, wind power, mining and metals, life sciences, manufacturing, commercial and institutional, telecommunications, microelectronics, and healthcare sectors. Its Government segment provides engineering, construction, logistics support, contingency response, management, and operations services to the United States government focusing on the Departme nt of Energy, the Department of Homeland Security, and the Department of Defense. The company?s Global Services segment offers operations and maintenance, small capital project engineering and execution, site equipment and tool services, industrial fleet services, plant turnaround services, temporary staffing services, and supply chain solutions. Its Power segment provides engineering, procurement, construction, program management, start-up and commissioning, and operations and maintenance services to the gas fueled, solid fueled, plant betterment, renewables, nuclear, and power services markets. The company also offers unionized management and construction services in the United States and Canada. Fluor Corporation was founded in 1912 and is headquartered in Irving, Texas.

Advisors' Opinion:

[By CRWE]
Fluor Corporation�� (NYSE:FLR) Chairman and Chief Executive Officer, David Seaton, and Chief Financial Officer, Biggs Porter, will give a presentation to investors at the Credit Suisse 2012 Engineering & Construction Conference in New York on Thursday, June 7 at 9:00 a.m. Eastern Daylight Time.
[By The Energy Report]
JH: One of the areas where the U.S. for decades has been the leading technological power is in small nuclear reactors. We've used them on our aircraft carriers and on our nuclear submarines safely and efficiently. The U.S. has an advantage in understanding small modular nuclear reactors. One of the companies that we have followed for a long time that's working on that is Babcock & Wilcox Co. (BWC). There's also Fluor Corp. (FLR), which is working on small modular nuclear reactors. President Obama and the Department of Energy are funding research on the implementation of small modular nuclear reactors.
[By Louis Navellier]
Fluor Corporation (FLR) is one of the world�� leading heavy construction and engineering firms. I don’t want to imply that this is a bad company because it is actually a very good one. However, Fluor has divisions including Oil & Gas, Industrial Infrastructure, Government, Global Services and Power. Virtually all of them are seeing limited spending as a result of the global slowdown and reduced government spending around the world. The stock is up more than 23% this year, but earnings are actually down on flat revenues. Analysts have been lowering their estimates for the rest of this year as well as 2014, and the stock is currently rated as a by Portfolio Grader. When the economy recovers, I expect will see this company’s fundamentals improve substantially … but until that happens investors should avoid the stock.
[By Rich Duprey]
South America has become an unsettled region to mine in. Newmont Mining (NYSE: NEM ) had its Peruvian Conga project brought to a short stop over environmental concerns, while Vale (NYSE: VALE ) recently abandoned an Argentinean project because of the country's policies.�Costs for Pascua-Lama have ballooned over the past decade and now stand at about $8.5 billion, putting it at risk of becoming an albatross around the miner's neck even before the court decision. Barrick even resorted to bringing in engineering specialist Fluor (NYSE: FLR ) to expand the scope of its project management before the court order.

10/22/2013

The Case For Making Home Ec Mandatory in High School

Serious student cutting fabric in home economics classroom Alamy Do you ever wonder why and how America got into the biggest financial crisis since the Great Depression? The answer is actually pretty simple: It's because you didn't take home ec in high school. I know, I know: When discussing America's economic woes, it's easy to fall into the trap of blaming the entire financial crisis on a single cause. But while it's fun to blame every problem on entitlement spending or low tax rates, the military industrial complex or socialists, Barack Obama or Antonin Scalia, the truth is usually more complex. Then again, complex explanations only work if the audience is equipped to understand them. And that's where home economics comes in. When most people think of home ec, the first things that come to mind are skills like cooking and sewing. In a broader sense, however, teaching those things was only a small part of why the course was created -- and what it offered students. As Ruth Graham recently noted in the Boston Globe, the overarching goal of home economics was to help young people learn how to run an efficient household -- and that included basic financial skills like how to make a budget, balance a checkbook and shop efficiently. Beyond that, however, home ec skills like cooking, cleaning and sewing are themselves money-savers. Homemade meals tend to be cheaper -- and healthier -- than convenience foods. The abilities to sew adequately, clean efficiently and comparison shop can save a household untold amounts of money. A Victim of Its Own Success, and the Times In some ways, home ec was done in by its own success: As basic household skills became almost ubiquitous, critics of the class could reasonably ask why it was necessary to teach it in schools. At the same time, home ec's focus on household skills seemed to be enforcing gender norms -- a factor that put it in the crosshairs of feminist critics like Robin Morgan. By the 1990s, when it changed its name to Family and Consumer Sciences, the class had become an anachronism, a relic left over from the days of "The Donna Reed Show" and "Father Knows Best."

10/21/2013

This One's Heating Up, That One's Cooling Off (RSOL, ABIO, ACYD, PRKR)

Last Thursday when I suggested American Community (OTCMKTS:ACYD) was a stock that should be shed immediately, and replaced with a position in Real Goods Solar, Inc. (NASDAQ:RSOL), I didn't win a lot of friends. After all, ACYD was the market's newest darling, in the middle of a red-hot runup, while RSOL was "just another solar name" that happened to be lucky enough to stumble its way above a key support line. Well, I hate to be the one to day I told you so, but, I told you so. American Community shares are down 35% since then, while Real Goods Solar shares are up 36% in the meantime. Both stocks seem pretty well entrenched in their current trends too.

I don't come hear to pat myself on the back, however. I come hear to let you know the same conditions that made American Community overbought and ripe for a reversal and suggested Real Goods Solar, Inc. was ready to rally are now saying - respectively - ParkerVision, Inc. (NASDAQ:PRKR) shares are due for a pullback and Arca Biopharma Inc. (NASDAQ:ABIO) is on the verge of a big bullish thrust.

As for ParkerVision, yes, it soared on Thursday and Friday of last week, on huge volume to boot. But, it may have been a little bit too much, too fast. There was so much volume behind the 118% surge from PRKR that there's really nowhere else left to go for stock. This morning's strong open looks like it just solidified the fact that there are no more buyers left at these lofty prices; we've seen nothing but selling ever since.

Arca Biopharma Inc., on the flipside, appears to be getting comfortable above a major line in the sand at $1.50. That level was a tough ceiling between June and September, but once ABIO fought its way above that level late last month, the resistance turned into support (and it's proven itself as a support line since then). Now the 20-day moving average line appears to acting as s support level too, suggesting the bulls are brewing up another pushoff from the newly-formed floor. But, this is a case where waiting for the breakout move may be too late.

As was the case with ACYD and RSOL, these aren't terribly long-term, fundamental-based calls on ABIO or PRKR. But, as was also the case with American Community and Real Goods Solar, the size of the likely short-term swings from ParkerVision and Arca Biopharma are too big to simply ignore or not capitalize on.

If you'd like to get more trading ideas and insights like this one, sign up for the free SmallCap Network daily e-newsletter. It's full of stock picks, market calls, and more.

Hot Casino Stocks To Own For 2014

Cotai is no doubt the hottest area of Macau for gaming and Wynn Resorts' (NASDAQ: WYNN ) results from the first quarter are another data point showing one of the downsides to this trend. Macau's gaming revenue overall was up 14.8% in the first quarter, but Wynn's revenue was only up 4.4% because its only resort is on the Macau Peninsula. Casinos won't average 14.8% growth across the board because Las Vegas Sands' (NYSE: LVS ) Sands Cotai Central added some capacity vs. last year but we definitely see gaming dollars moving to Cotai, which hurts Wynn.

Cotai is where it's at
Wynn is the first of Macau's operators to report earnings so this is our first peek into earnings trends. The VIP segment was down 15.3% from a year ago despite a higher-than-expected win percentage. VIP dollars can swing wildly based on junket movement and, with Galaxy and Las Vegas Sands opening new junket rooms, Wynn has lost out on some business there.

Mass-market win did show some strength, growing 13.6% to $243.1 million. Win percentage jumped to 35.5%, which is abnormally high, and Steve Wynn pointed out that this has been driven by player behavior. In Macau, players will go to the casino cage to get chips instead of putting money down on the table as we do in the U.S. So when win is divided by table game drop, this lowers the denominator, effectively raising the win rate even though Wynn may not have been particularly lucky in the quarter. For more on how win rate is calculated, check out my guide to understanding casino earnings.

Hot Casino Stocks To Own For 2014: Boyd Gaming Corporation(BYD)

Boyd Gaming Corporation, together with its subsidiaries, operates as a multi-jurisdictional gaming company in the United States. As of December 31, 2011, the company owned and operated 1,042,787 square feet of casino space, containing approximately 25,973 slot machines, 655 table games, and 11,418 hotel rooms. It also owned and operated 16 gaming entertainment properties located in Nevada, Illinois, Louisiana, Mississippi, Indiana, and New Jersey. In addition, the company owns and operates a pari-mutuel jai-alai facility located in Dania Beach, Florida, as well as a travel agency in Hawaii. Further, it holds a 50% controlling interest in the limited liability company that operates Borgata Hotel Casino and Spa in Atlantic City, New Jersey. Boyd Gaming Corporation was founded in 1988 and is headquartered in Las Vegas, Nevada.

Advisors' Opinion:

[By Travis Hoium]
What: Shares of Boyd Gaming (NYSE: BYD ) jumped 10% today after the company got an analyst upgrade.

So what: Morgan Stanley upgraded shares to overweight today, and gave the stock a $12 price target. The analyst cited the potential for online gaming as the driver of the stock, potentially bringing as much revenue to the industry as Las Vegas and Atlantic City combined. �
[By Dan Caplinger]
The real question is whether Zynga can hold off experienced casino operators if online gambling becomes a reality. Already, alliances are forming, with Boyd Gaming (NYSE: BYD ) and MGM Resorts (NYSE: MGM ) having linked up with bwin.party -- the same company Zynga tapped for its real-money Zynga Poker -- to help Boyd take advantage of newly legal online gambling in New Jersey. Zynga has the obvious edge with its social savvy, but established casino companies will have huge incentives to defend their turf if Zynga starts to make a serious dent in the industry.
[By M. Joy, Hayes]
Industry trends
Other businesses in the industry also have copious related-party transactions. In particular, founder-led businesses Wynn Resorts (NASDAQ: WYNN ) and Boyd Gaming (NYSE: BYD ) �reported a large number of such transactions in their 2013 proxies, including employment of relatives, employee use of company services, and employee use of company-owned property. MGM Resorts International (NYSE: MGM ) , on the other hand, didn't have to report any related-party transactions in its 2013 proxy.

Hot Casino Stocks To Own For 2014: Penn National Gaming Inc.(PENN)

Penn National Gaming, Inc. and its subsidiaries own and manage gaming and pari-mutuel properties in the United States. It operates approximately 27,000 gaming machines; 500 table games; and 2,000 hotel rooms in 23 facilities in 16 jurisdictions, including Colorado, Florida, Illinois, Indiana, Iowa, Louisiana, Maine, Maryland, Mississippi, Missouri, New Jersey, New Mexico, Ohio, Pennsylvania, West Virginia, and Ontario. The company was formerly known as PNRC Corp. and changed its name to Penn National Gaming, Inc. in 1994. Penn National Gaming, Inc. was founded in 1982 and is based in Wyomissing, Pennsylvania.

Advisors' Opinion:

[By Roberto Pedone]

Penn National Gaming (PENN) is a diversified, multi-jurisdictional owner and manager of gaming and pari-mutuel properties. This stock closed up 1.4% at $56.13 in Monday's trading session.

Monday's Volume: 1.11 million

Three-Month Average Volume: 824,334

Volume % Change: 73%

From a technical perspective, PENN jumped modestly higher here right above some near-term support at $54.71 with above-average volume. This move is quickly pushing shares of PENN within range of triggering a breakout trade. That trade will hit if PENN manages to take out some near-term overhead resistance at $57.44 to some past resistance at $58 with high volume.

Traders should now look for long-biased trades in PENN as long as it's trending above Monday's low $55.65 or above more support at $54.71 and then once it sustains a move or close above those breakout levels with volume that this near or above 824,334 shares. If that breakout hits soon, then PENN will set up to re-test or possibly take out its 52-week high at $59.93. Any high-volume move above $59.93 will then give PENN a chance to hit $65.

Top Tech Companies To Own For 2014: Pinnacle Entertainment Inc.(PNK)

Pinnacle Entertainment, Inc. owns, develops, and operates casinos, and related hospitality and entertainment facilities in the United States. It operates casinos, such as L'Auberge du Lac in Lake Charles, Louisiana; River City Casino and Lumiere Place in St. Louis, Missouri; Boomtown New Orleans in New Orleans, Louisiana; Belterra Casino Resort in Vevay, Indiana; Boomtown Bossier City in Bossier City, Louisiana; and Boomtown Reno in Reno, Nevada. The company also operates River Downs racetrack in southeast Cincinnati, Ohio. As of May 26, 2011, it operated seven casinos and one racetrack. The company was formerly known as Hollywood Park, Inc. and changed its name to Pinnacle Entertainment, Inc. in February 2000. Pinnacle Entertainment, Inc. was founded in 1935 and is based in Las Vegas, Nevada.

Advisors' Opinion:

[By Travis Hoium]
What: Shares of Ameristar Casinos (NASDAQ: ASCA ) and Pinnacle Entertainment (NYSE: PNK ) fell as much as 11% today after the government brought into question the merger of the two companies.

Hot Casino Stocks To Own For 2014: MGM Resorts International(MGM)

MGM Resorts International, through its subsidiaries, primarily owns and operates casino resorts in the United States. The company?s resorts offer gaming, hotel, dining, entertainment, retail, and other resort amenities. It also owns and operates golf courses and a golf club. As of December 31, 2010, the company owned and operated 15 properties located in Nevada, Mississippi, and Michigan; and has 50% investments in 4 other casino resorts in Nevada, Illinois, and Macau. In addition, MGM Resorts International has an agreement with the Mashantucket Pequot Tribal Nation, which owns and operates a casino resort in Connecticut, to carry the ?MGM Grand? brand name. The company was formerly known as MGM MIRAGE and changed its name to MGM Resorts International in June 2010. MGM Resorts International was founded in 1986 and is based in Las Vegas, Nevada.

Advisors' Opinion:

[By M. Joy, Hayes]
Industry trends
Other businesses in the industry also have copious related-party transactions. In particular, founder-led businesses Wynn Resorts (NASDAQ: WYNN ) and Boyd Gaming (NYSE: BYD ) �reported a large number of such transactions in their 2013 proxies, including employment of relatives, employee use of company services, and employee use of company-owned property. MGM Resorts International (NYSE: MGM ) , on the other hand, didn't have to report any related-party transactions in its 2013 proxy.

Hot Casino Stocks To Own For 2014: (XTRN)

Las Vegas Railway Express Inc. focuses to re-establish a conventional passenger train service between the Las Vegas and Los Angeles metropolitan areas. It plans to establish a ?Vegas-style? passenger train service. The company is based in Las Vegas, Nevada.