Rockwood Holdings: Ceramics Divestiture Could Propel Shares To Fresh All Time Highs

Shares of Rockwood Holdings (ROC) traded with modest gains in Monday's trading session following the announcement of the divestiture of its ceramic business.

The company continues with its strategic transformation, which has already created a lot of value for its shareholders. Shares continue to trade at fair valuation multiples while the proceeds from the divestiture leave room for potential gifts to shareholders which could propel shares higher.

The Deal

Rockwood announced that is has entered into a definitive agreement to sell CeramTec, its ceramic business, to private equity firm Cinven. The European private equity firm will pay 1.49 billion euro for the business, the equivalent of $1.98 billion.

CeramTec which is based in Germany employs some 3,000 workers which supply its global customers through 18 facilities across the globe. The business holds strong market positions in niche markets for medical products, cutting tools and mechanical applications.

CEO and Chairman Seife Ghasemi commented on the rationale behind the divestiture:

"Successful execution of this transaction at an attractive multiple will bring Rockwood one significant step closer to our strategic objective and commitment to become a more focused specialty chemical company with a growth portfolio that best maximizes value and returns for our shareholders."

The ceramics unit generated annual revenues of $546.7 million for 2012, down 6.6% as reported, but up slightly in constant currencies. The unit reported a 4.8% decline in Adjusted EBITDA to $174.8 million.

The deal values the unit at 3.6 times annual revenues and 11-12 times adjusted EBITDA.

Cinven has already arranged financing for the transaction. The deal is expected to close in the third quarter of this year, following regulatory approval and permission from the EU Competition Clearance Authority.

Valuation

Rockwood ended its first quarter of 2013 with $491.1 million in cash and equivalents.! The company operates with $2.22 billion in short and long term debt, for a net debt position of around $1.73 billion.

The company generated annual revenues of $3.51 billion, down 4.4% on the year before. The company reported a 9.7% decline in adjusted EBITDA which came in at $778.9 million and net income of $383.5 million.

Factoring in the modest gains on Monday, with shares trading around $67 per share, the market values Rockwood at $5.2 billion. This values the firm's equity at 1.5 times annual revenues and 13-14 times annual earnings.

Rockwood currently pays a quarterly dividend of $0.40 per share, for an annual dividend yield of 2.4%.

Some Historical Perspective

Rockwood which was owned by KKR went public back in 2005. Shares roughly doubled from levels around $20 per share to highs of $40 in 2008. The financial crisis send shares to levels below $5 in 2009.

Shares steadily recovered to peak at $60 in 2011, and have seen modest returns ever since as shares are exchanging hands around all time highs of $67 at the moment.

Between 2009 and 2012, Rockwood increased its annual revenues by a cumulative 27% to $3.5 billion. Net earnings rose from merely $21 million to $383.5 million over the past year.

Investment Thesis

It seems that Rockwood has made a more than fair deal. By divesting CeramTec the company is shrinking its annual revenues by some 15%, and its adjusted EBITDA by 22%. In return it receives gross proceeds equivalent to 38% of its current market valuation and 29% of its enterprise value.

The selling price values CeramTec at 3.6 times annual revenues compared to an overall valuation of 1.5 times revenues. The unit is valued at 11-12 times annual EBITDA, compared to 6.7 times for the company itself.

While shareholders could expect some short term dilution, Rockwood is committed to create shareholder value. Rockwood receives enough cash to pay down its entire net debt position, thereby saving $86.7 million in interest expenses ov! er the pa! st year. More likely is the combination of debt reduction, a dividend hike and/or a repurchase of its own shares. The company could potentially make acquisitions boosting its core operations.

Last year I took a look at Rockwood's prospects when it acquired Talison Lithium. I concluded that it might be worthwhile for long term investors to do their research, after the company made a strategic acquisition in a long term growth industry. Rockwood continues to transform the business, thereby creating shareholder value with shares trading around all time highs.

From that point in time, back in August of 2012, shares have risen some 40% and they continue to trade at fair valuation levels. The prospects for short to medium term gifts to shareholders appear really good. The positive effects from the solid proceeds from the ceramic business could propel shares forward to fresh all time highs in the coming periods.

Source: Rockwood Holdings: Ceramics Divestiture Could Propel Shares To Fresh All Time Highs

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...)

Don't Chase Exotic Investment Ideas. Stick to the Basics!

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Israel OKs Exporting 40% of Its Natural Gas

JERUSALEM (AP) -- The Israeli Cabinet on Sunday approved exporting 40 percent of Israel's newfound natural gas reserves, keeping a larger amount for local consumption than originally expected.

Prime Minister Benjamin Netanyahu told his Cabinet the decision struck a balance between domestic needs and the concerns of the exploration companies that will drill for gas underneath the Mediterranean Sea.

"It ensures the needs of the citizens of the state of Israel, both by filling the state coffers with considerable funds from exports and by supplying the local market with cheap energy," Netanyahu said.

Last year, an advisory panel proposed exporting just over half of the country's gas, sparking protests by Israelis who said the country should keep most of its reserves to reduce energy prices at home.

Israel began pumping gas from the large Tamar field off its coast earlier this year. It is expected to begin exporting when a second, larger field goes online in 2016.

The consortium that has developed the fields, led by U.S. company Noble Energy, did not immediately comment on Sunday's decision. In the past, it has said it would have preferred the larger export levels.

Hebrew University professor Eytan Sheshinski, an expert on energy policy, said that despite the export numbers, he expected the energy companies to be satisfied with Sunday's decision.

"When the dust settles, they can live with this decision, and I think it didn't cross their red line," said Sheshinski, who headed a committee that gave policy recommendations to the Israeli government in 2010 on taxing natural gas exports.

Sunday's decision reserved 540 billion cubic meters of natural gas for the domestic market. Netanyahu said that amount would supply Israelis with natural gas for at least 25 years, a figure that Sheshinski said was largely accurate.

Earlier in the month, Environment Minister Amir Peretz said he wanted at least 600 billion cubic meters set aside for local use.

Last week, Netanyahu said that Israel seeks to earn $60 billion over the next two decades from the exports.

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European Stocks Drop on China Concern; Erste Group Falls

European stocks fell for a fifth day, erasing their gains for this year, as Goldman Sachs Group Inc. cut China's growth forecast amid concern banks at the world's second-largest economy face a cash crunch. U.S. index futures and Asian shares also dropped.

Erste Group Bank AG slid 5.3 percent as it planned a rights-share offer to repay state aid. Kazakhmys Plc tumbled to a four-year low after it backed a bid to take Eurasian Natural Resources Corp. private. Kabel Deutschland Holding AG rose 1.8 percent after Vodafone Group Plc offered to buy the German cable company for 7.7 billion euros ($10.1 billion).

The Stoxx Europe 600 Index lost 0.6 percent to 278.62 at 9:08 a.m. in London, for its longest losing streak in 13 months. The gauge is heading for a 7.4 percent drop in June, its first monthly loss since May 2012, as the Federal Reserve said last week it may end bond purchases next year if the U.S. economy strengthens in line with forecasts. Standard & Poor's 500 Index futures slid 0.6 percent and the MSCI Asia Pacific Index tumbled 1.9 percent to a six-month low.

"What we're seeing is a shift in the policy agenda of China which will take place in the next six to nine months," James Bevan, chief investment officer at CCLA Investment Management Ltd. in London, told Francine Lacqua on Bloomberg Television. "During that period, we will have continued volatility and continued uncertainty, but we'll have a real focus on exporting companies and a real appetite to constrain the domestic bubble that was property. It will be painful as the adjustment goes through."

The Stoxx 600 has slumped 10.2 percent since May 22, when Fed Chairman Ben S. Bernanke commented on stimulus paring.

China Outlook

Goldman Sachs cut its estimate for expansion in China's 2013 gross domestic product to 7.4 percent from 7.8 percent, citing weaker economic indicators and tightening of financial conditions.

China's benchmark money-market rates last week climbed to a record as its central bank refrained from using open-market operations to alleviate a cash crunch. The rates fell today for a second day.

German business confidence increased in June in line with economists' estimates, a report showed. The Ifo institute's business climate index, based on a survey of 7,000 executives, rose to 105.9 this month from 105.7 in May.

Europe's largest economy lowered next year's federal budget-deficit forecast to 6.2 billion euros from 6.4 billion euros projected in March, according to a German Finance Ministry document.

Erste tumbled 5.3 percent to 20.79 euros, its lowest price since Nov. 23. Austria's biggest lender said it will increase share capital by 660 million euros in the third quarter as it planned to redeem participation capital of 1.76 billion euros.

ENRC Offer

Kazakhmys, which owns 26 percent of ENRC, plunged 9.2 percent to 244.6 pence, its lowest price since March 2009. ENRC founders and the Kazakh government made an offer valuing the mining company at 3.04 billion pounds ($4.7 billion). The proposal offers shareholders $2.65 in cash and 0.23 Kazakhmys shares for each ENRC share held, according to a statement. ENRC fell 1.9 percent to 212.8 pence.

Kabel Deutschland advanced 1.8 percent to 85.58 euros. Vodafone, the world's second-biggest wireless carrier, raised its bid for Kabel Deutschland to 87 euros a share from the initial 80 euros. The German cable company's board is set to recommend the cash offer, Vodafone said in a statement.

Vodafone advanced 1.3 percent to 178.15 pence.

Fiat SpA rose 2.6 percent to 5.27 euros as people familiar with the matter said the Italian carmaker may triple its dividend earned from Chrysler Group LLC. Fiat, which holds a controlling stake of 58.5 percent in Chrysler, may collect $936 million in 2013, from a previous maximum of $300 million, after the U.S. automaker refinanced its debt with new covenants that eased restrictions on dividend payment.

Apple Stock Remains One of the Best Buys in Tech

It hasn't been a pretty rough ride for Apple (NASDAQ: AAPL  ) investors over the past several months. Despite a recent uptick, shares still sit some 20% lower than where they were six months ago. Investors naturally don't like losing money on their investments, but the Apple growth story is far from over. In fact, as we've seen management signal repeatedly over the past several months, the next chapter of Apple's great innovation story could be here sooner than many think.

In this video, Fool contributor Andrew Tonner discusses the Apple investment thesis and why those who are willing to tolerate the current pessimism should be handsomely rewarded in the coming months and years.

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Is It Time to Buy Yahoo! Stock?

Yahoo!  (NASDAQ: YHOO  ) stock keeps hitting new 52-week highs, so you may want to pick up a few shares. But you're scared.

While you may think the stock trades cheaply at a P/E of 7.5, there's good reason to believe that Yahoo! stock is expensive. When analyzing the company's business, critics contend that Yahoo!'s all-star CEO, recent string of acquisitions, and its foreign investments conceal a weak domestic business ill-suited for today's world.

But that's not the whole picture. Technology has changed, and Yahoo! has shown it has changed as well.

Looking at its business in a positive light, Yahoo! stock may, in fact, be a good buy today.

Is Yahoo! stock cheap?
Yahoo! stock reports a low P/E of 7.5, yet it may be higher.

Don't forget, Yahoo! owns a 35% stake in Yahoo! Japan and still owns a 20% stake in Alibaba, China's largest e-commerce company. Given that Yahoo! Japan trades for about $28 billion and Alibaba may soon IPO for $63 billion to $120 billion, Yahoo!'s financials may be hiding something .

Luckily, Fool contributor Alex Planes has done the math. Factoring in Yahoo! Japan and Alibaba's stake, he estimates that Yahoo! trades for a P/E between 8 and 14.

While 14 is still almost twice as much as Yahoo!'s reported P/E, the range is still relatively inexpensive. For comparison, remember that the S&P 500's traditional averages a P/E of 15.

You could argue that Yahoo! is expensive at a forward P/E of 16.8, but, for practicality's sake, let's not.

While you want to buy Yahoo! stock at its cheapest price, "it's far better to buy a good business at a fair price" -- per Charlie Munger. Whether the P/E is 14, 15 or 16, Yahoo! stock seems to trade at a fair price. So with that, let's take a look at Yahoo's business.

Does Yahoo! lack a "core strategy"?
Fool Travis Hoium thinks Yahoo! can't figure out what it's identity is. Unsure if it wants to be a search engine, a leader in display ads, or an Internet portal, he says:

Yahoo! has become an amalgamation of websites that don't seem to have any cohesion. As a finance person, I use Yahoo! Finance every day, but the site doesn't look anything like the main page, Flickr, shopping, or any of the company's other sites. Being a finance user simply doesn't draw me into the Yahoo! platform.

That's understandable. In the past, Yahoo! has done a terrible job of integrating its product together into a consistent feel. However, there are signs that this is changing.

Over the past year, Yahoo! redesigned key products. In December, it released a new interface for Mail. In the past two months, Yahoo! changed its front-page newsfeed and gave Flickr a facelift. While Yahoo! Finance still looks the same, you can bet that it'll have a new look soon.

Why?

Because Yahoo! has Marissa Mayer -- a product-focused CEO. Listed as one of Time Magazine's Most Influential People for 2013, Mayer -- according to Google Chairman Eric Schmidt -- touched the design of "virtually all of [Google's] major products and services."

Still, critics say she's in over her head. They say she is focused on outside, not organic, growth.

Will Yahoo!'s acquisitions pay off?
Yes, Yahoo! has made a staggering 11 acquisitions this year. While no one likes a company throwing around a bunch of money, it seems that these acquisitions were necessary to some extent. Whether because of talent or intellectual property, Yahoo! bought the start-ups in order to build up its mobile presence fast. Though only time will tell if these were smart decisions, I think that, given the war for talent in Silicon Valley, this was a smart move.

Perhaps the biggest acquisition-related criticism Mayer has received regards the $1.1 billion Tumblr deal. Apparently, Tumblr is a "loss-making" company that may simply be the latest "Flavor of the Month." If not done right, the deal could be a telltale sign that Yahoo! will become like Zynga. After buying OMGPOP, the creator of Draw Something, for $180 million, Zynga wrote off up to $95 million last October and is completely shutting the studio down to save another $80 million. If Zynga can't turn a profit soon -- it's delivered negative profits for the past two quarters -- then Zynga stock will continue to see another precipitous fall. Yahoo! watchers should take note: Tumblr could be the beginning of the end.  

But that's not likely. I think Tumblr has long-term value. 

As the 18th most visited website in the U.S. according to Alexa.com, Tumblr got to where it is thanks to its fanatically focused founder David Karp. In a recent Charlie Rose interview, you can see that David Karp is not the serial entrepreneur type -- creating companies to sell them off for huge profits. Spurning the need to raise money and instead focusing on developing the product, he's fanatically focused founder who's overseen Tumblr's skyrocketing growth.

In this sense, the deal seems more like Facebook  (NASDAQ: FB  ) acquiring Instagram or Amazon.com  (NASDAQ: AMZN  ) acquiring Zappos for about $1 billion each. In both cases, Instagram founder Kevin Systrom and Zappos CEO Tony Hsieh maintained independent control of their companies. While it's uncertain whether Instagram or Zappos have paid off, two things are for sure: Instagram usage keeps growing, while Facebook usage slows. And Zappos is still the Internet's largest online shoe store.

I don't doubt that Tumblr will maintain its place as the "best place to blog online."

Should you buy Yahoo!?
It depends. I think Mayer's Yahoo! is doing a great job at unifying and streamlining its products. While Yahoo! isn't moving as fast as you may like, the company has made acquisitions to bolster its mobile experience.

That said, the biggest question is whether Tumblr can actually drive value for Yahoo! shareholders. I think it will, but, if you're still weary, find solace in the fact that the stock is trading at a fairly cheap P/E. Perhaps you should buy a few shares today, just to keep Yahoo! on your radar. 

It's incredible to think just how much of our digital and technological lives are almost entirely shaped and molded by just a handful of companies. Find out "Who Will Win the War Between the 5 Biggest Tech Stocks?" in The Motley Fool's latest free report, which details the knock-down, drag-out battle being waged by the five kings of tech. Click here to keep reading.

Comprehensive Proof That the Housing Recovery Is Real

If you had any doubts about the housing recovery, then June should have assuaged you. The news was so good in the final week of the month, in fact, that it ignited the biggest three-day rally on the S&P 500 (SNPINDEX: ^GSPC  ) since January. What follows is a comprehensive list of reasons to believe in the ongoing improvement on the housing front.

Metric

Level

Increase/(Decrease) Over Prior Month

Increase/(Decrease) Over the Month Last Year

New Home Sales*	476,000 units	2.1%	29%
Existing Single-Family Home Sales*	4,600,000 units	5%	12.7%
Pending Home Sales*	112.3 index value	6.7%	12.1%
Housing Starts*	599,000 units	0.3%	16.3%
Median New Home Prices	$263,900	(3.2%)	10.3%
Existing Home Prices (FHFA Index)	200.8 index value	0.7%	7.4%
Existing Home Prices (Case-Shiller Index)	152.37 index value	2.5%	12.1%

Sources: National Association of Realtors, Commerce Department, Federal Housing Finance Agency, and S&P Dow Jones Indices.
*Seasonally adjusted annual rate.

Virtually all of the primary housing-market metrics are headed higher. 

New, existing, and pending home sales all climbed considerably in May on both a month-to-month and year-over-year basis. According to the Commerce Department, new home sales were at an annualized rate 476,000 units, 2.1% higher than April and a staggering 29% higher than the same month last year. The National Association of Realtors reported that existing-home sales were at an annualized rate of 4.6 million units, equating to a 5% monthly increase and a 12.7% annual increase. And the NAR also estimated that pending home sales -- that is, where a purchase contract has been signed but the closing has yet to occur -- were up last month by 6.7% over April and 12.1% over May 2012.

Meanwhile, the construction of new homes is following suit. Two weeks ago, the Commerce Department said that single-family housing starts were at a seasonally adjusted annual rate of 599,000 in May. This was 0.3% higher than April and 16.3% above May 2012. And lest there be any doubts about the trend in this regard, Lennar (NYSE: LEN  ) , the nation's third largest homebuilder by number of units sold (click here for a list of the top five) reported massive gains across its operations. Among other things, it announced a 27% increase in orders for new homes and a 55% increase in its backlog of homes ordered but waiting to be built. "Demand in all of our markets continues to outpace supply which is constrained by limited land availability and fewer competing home builders," Lennar CEO Stuart Miller said.

Finally, there's unanimity among the data that existing home prices are continuing to head higher. Last week the Federal Housing Finance Agency's broader home price index pegged the month-over-month growth rate at 0.7% and the year-over-year rate at 7.4%. And the narrower, but widely followed, Case-Shiller index put the improvements at 2.5% and 12.1%, respectively. The only negative news in this regard was that the median price of new homes ticked down by 3.2% in May. Though, given the imbalance between supply and demand in that market, as noted by Lennar's CEO, there's reason to conclude that this statistic is simply an anomaly.

So what does this mean going forward? That, of course, is the question on many an investor and macroeconomist's mind. Potential downside risk stems from the aggressive ascent of mortgage rates that we saw last week. On Thursday, Freddie Mac released data showing that the average interest rate on a conventional, conforming 30-year fixed rate mortgage increased to 4.46%. While this is still extremely inexpensive on a historical basis, as the average rate over the past 38 years is 8.65%, the weekly move was the largest since at least 1976, when the government-controlled entity first started recording the statistic.

On the other hand, the low supply in the housing market, thanks largely to the 20% to 25% of homeowners who are still underwater, would suggest that things should continue to improve irrespective of increasing interest rates. And on top of this, in a perverse way, the higher interest rates may even spur more homeowners to buy sooner rather than later. As a prospective homebuyer told CNBC's Diana Olick recently, "I'm afraid we're going to miss the boat." If this is true, it could amount to a massive boost to mortgage lenders such as Wells Fargo (NYSE: WFC  ) , which underwrites an estimated one in three domestic mortgages, and homebuilders such as D.R. Horton (NYSE: DHI  ) , which builds more houses than any other company in America. Suffice it to say, it would also provide stimulus to more peripheral operators such as Home Depot (NYSE: HD  ) , the nation's largest home-improvement retailer. In its most recent earnings, in fact, the company increased its revenue and earnings projections going forward for this very reason.

The Foolish bottom line
In sum, virtually all of the data right now is pointing toward a robust recovery in the housing market. Whether it's overheating or just starting to gain momentum remains to be seen. But either way, this is a critical area for investors to watch. As my colleague Morgan Housel has previously observed, "There hasn't been a strong economy without a strong housing market in modern history."

Discover the Motley Fool's top stock for 2013
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How Social Security Works for Divorced Spouses

Social Security is an important part of the financial plans that Americans set up for their retirement years. But many don't know how divorce affects the benefits they're entitled to collect.

In the following video, Fool contributor Dan Caplinger looks at situations in which divorced spouses can collect benefits based on an ex-spouse's work record. Dan notes that although the rules are different depending on whether your ex is still living or has passed away, there are certain common elements to both situations. Dan also looks at the different ways in which remarrying can affect your ability to collect benefits based on an ex-spouse's work history.

Social Security plays a key role in your financial security, and with millions of Americans relying primarily on the government program for their retirement income, it's more important than ever for you to make the most of the Social Security benefits you have coming to you. In our brand-new free report, "Make Social Security Work Harder For You," our retirement experts give their insight on making the key decisions that will help you boost your monthly benefits and ensure a more comfortable retirement for you and your family. The report is absolutely free, so click here to get your copy today.

Pentagon Watch: Where Did Your Tax Dollars Go This Week?

The U.S. military has a reputation as a somewhat secretive organization. But in one respect at least, it ranks among the most "open" of our government agencies. The Department of Defense is positively sunshine-y in the frequency and clarity with which it describes the contracts it issues to private companies, updating them daily on its website.

 So what has the Pentagon been up to this week?

The Department of Defense requested $614 billion in total funding for the current fiscal year 2013. Spread over 52 weeks, that works out to $11.8 billion in spending. And with about 47% of that money, historically, going to personnel costs, that leaves about $6.2 billion a week to spend on military hardware (planes, trains, and main battle tanks), infrastructure projects (such as resiting a VA hospital, dredging a river, or constructing an air base), services (engineering and software design work), and military supplies.

Last week, the Pentagon awarded contracts worth a combined $6.226 billion -- putting it right on target to spend all the money it's been allotted for this fiscal year, "sequester" notwithstanding. Where did the money go?

To Russia with cash
Well, probably the biggest news of the week, and certainly the most controversial, was a contact issued Monday to pay a Russian defense contractor, Rosoboronexport, $572.2 million (later revised down to $553.8 million) for 30 Russian Mi-17 transport helicopters -- that we will promptly hand over to the Afghan National Securities Forces. This follows on a decision one week earlier to hand a Brazilian company, Embraer (NYSE: ERJ  ) a $1 billion contract to build fighter planes for the Afghan Air Force.

Afghan military Mi-17 helicopters in flight. Source: Wikimedia Commons.

In one respect, therefore, it appears that sequestration of defense spending may be having an effect on U.S. defense contractors -- it's forcing the Pentagon to be more careful about how it spends its cash, and to give more business to low-cost defense contractors from other countries.

Nor is the Pentagon the only actor pinching its pennies. Last week, Boeing (NYSE: BA  ) also headed to Brazil to sign a deal cooperating with Embraer on the global marketing of the latter's KC-390 aerial refueling tanker.

Heavily into helicopters ...
Boeing also made news this week when it landed its second multibillion-dollar contract in as many weeks, for the sale of Chinook heavy lift helicopters. Two weeks ago, the U.S. Army ordered up $4 billion worth of the whirlybirds. This week, Boeing won a $3.4 billion contract to sell more Chinooks to the militaries of Turkey and the United Arab Emirates, with the U.S. government acting as the middleman.

U.S. Army CH-47 Chinook. Source: Wikimedia Commons.

... and softly into software
Another big winner for the week was Microsoft (NASDAQ: MSFT  ) . The Pentagon granted Mr. Softy a contract worth up to $412.2 million for Microsoft Blue Badge cardholder support. This contract, whereby Microsoft will assist the Defense Information Technology Contracting Organization with software design work, costs a lot -- in part because Microsoft is being asked to license access to its proprietary source code as part of the work.

Galaxy still flying
A smaller contract win, but still significant, was Lockheed Martin's (NYSE: LMT  ) receipt of a $27.9 million indefinite-delivery/indefinite-quantity contract to do software work upon Air Force C-5 Galaxy transport aircraft. The Pentagon has caught some flak over continued support for the Galaxy, whose basic design is now close to 45 years old. But the Galaxy remains the largest transport aircraft in the U.S. fleet, capable of carrying a half-dozen MRAPs, or five combat helicopters within its capacious cargo hold.

U.S. Air Force C-5 Galaxy hold. Source: Wikimedia Commons.

The Air Force is currently in the process of upgrading more than four dozen Galaxies under a comprehensive Reliability Enhancement and Re-engining Program. Once completed, the planes will be dubbed "Super Galaxies" -- C-5Ms, equipped with more power, a faster rate of climb, and the ability to operate off of runways 30% shorter than their predecessors require.

Opportunities on the horizon
That's about it for the highlights of last week's Pentagon contracting news, but now what should we be on the lookout for in the future? Well, probably the most interesting bit of news on that front was the announcement Thursday that the U.S. Defense Security Cooperation Agency has informed Congress of plans to sell $4 billion worth of services and equipment to the government of Saudi Arabia, as part of a plan to modernize the Saudi Arabian National Guard forces.

The contractor in charge of the project, Vinell Arabia, isn't exactly a household name here. But as it turns out, Vinell is a subsidiary of marquee defense contractor Northrop Grumman (NYSE: NOC  ) .

The upshot: Northrop Grumman's about to land a contract worth 16% of its annual revenue haul for a whole year. The contract hasn't been announced yet. No one knows about it -- except that now, you do.

Boeing operates as a major player in a multitrillion-dollar defense market in which the opportunities and responsibilities are absolutely massive. However, emerging competitors and the company's execution problems have investors wondering whether Boeing will live up to its shareholder responsibilities. The Fool's premium research report on the company provides investors with the must-know issues surrounding Boeing. They'll be updating the report as key news hits, so don't miss out -- simply click here now to claim your copy today.

A Down Dow Couldn't Hold These Stocks Back

In all the volatility that we've seen in the stock market lately, it's easy to forget just how well stocks have performed so far this year. Even accounting for today's 115-point decline today, the Dow Jones Industrials (DJINDICES: ^DJI  ) finished the first half of the year with its best performance since 1999, while the S&P 500 hasn't seen a better first-half performance in 15 years. Even with today's weak stock performance, other markets managed to hold their own, with bond yields declining very slightly, and gold prices bouncing back by about $20 per ounce from their recent plunge.

Even with the Dow down triple digits, four stocks managed to post gains today, led by Home Depot (NYSE: HD  ) , which rose 1.6%. The impact of rising mortgage rates hasn't taken the wind out of the home-improvement retailer's sails, as investors have seen the company not only survive, but thrive, in difficult housing environments before. Even as most homebuilder stocks declined today, Home Depot's resiliency shows its ability to find ways to boost sales whether people are buying new homes, or fixing up their existing ones.

Tech companies Intel (NASDAQ: INTC  ) and Hewlett-Packard (NYSE: HPQ  ) both ended in the green. For Intel, CEO Brian Krzanich met with reporters to discuss the company's strategic vision, with guidance both on mobile and Internet-based television initiatives. By emphasizing the importance of its Atom processor for smartphones and tablets, Intel is trying to make its mark after finally getting a high-profile place for another of its chips in Samsung's Galaxy Tab line of tablets. How Krzanich does in his opening months leading Intel could define the direction the stock moves for the foreseeable future.

Meanwhile, HP gained after winning a $322 million Defense Department contract yesterday. The contract involves work on integrating the Navy's intranet into the Next Generation Enterprise Network. HP will work alongside several other major partners, with the current one-year contract potentially open to extensions going out as far as 2018. Deals like this aren't a huge part of HP's overall business, but they do reflect well on public perception of the company's ability to get important jobs done.

Finally, ExxonMobil (NYSE: XOM  ) climbed a third of a percent. On a day when oil prices fell back to the $95 level, it's somewhat surprising to see Exxon buck the trend and move higher. But the key for Exxon's success will be its continuing quest for new assets, and opportunities like Exxon's exploratory zones off the South African coast are essential in helping the company keep production levels high, and revenue up.

If you're looking for some long-term investing ideas, you're invited to check out The Motley Fool's brand-new special report, "The 3 Dow Stocks Dividend Investors Need." It's absolutely free, so simply click here now and get your copy today.

Why Home Health Providers Hit a Brick Wall

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of home health providers Amedisys (NASDAQ: AMED  ) , Gentiva Health Services (NASDAQ: GTIV  ) , and LHC Group (NASDAQ: LHCG  )  swooned as much as 28%, 20%, and 15%, respectively, following a public proposal by the Centers for Medicare and Medicaid Services, or CMS, late yesterday that in-home health care reimbursements be cut by 1.5% in 2014.

So what: The bad news for the sector is that the 1.5% haircut is only the half of it. The proposal also calls for up to a 3.5% annual haircut in reimbursements from 2014 to 2017 for the national standardized 60-day episode rate. With Amedisys garnering more than 80% of its revenue from Medicare reimbursements and Gentiva Health more than 90%, you can clearly see why the sector has hit a brick wall. To add salt to the wound, RW Baird downgraded all three companies to "underperform" from "neutral."

Now what: The home health care sector represents quite the conundrum for investors. On one hand, the CMS is intent on cutting government reimbursement to for-profit companies that thrive off Medicare, which is all a part of the coming implementation of the Patient Protection and Affordable Care Act, commonly known as Obamacare. Simply put, the government can't keep paying out more money each year and appears to finally be drawing a line in the sand. Then again, an aging population of baby boomers is going to be a boon for the industry over the next two or three decades. For now, I'd suggest keeping to the sidelines and allowing the guidance for all three companies to do the talking in their upcoming quarterly reports.

Craving more input? Start by adding Amedisys, Gentiva Health Services, and LHC Group to your free and personalized watchlist so you can keep up on the latest news with the company.

Still in the dark about how Obamacare might affect you and your portfolio? Don't worry -- you're not alone. To help prepare investors for the massive changes coming to the American health care system, The Motley Fool created a special free report that makes this complex topic easily understandable. Download "Everything You Need to Know About Obamacare" and discover how the law may impact your taxes, health insurance, and investments. Click here for your free copy today.

Why IBM's Leading the Dow Downward This Morning

The stock market has definitely taken investors on a roller-coaster ride over the past few weeks, as uncertainties about the basic fundamental health of the economy and the role of central banks in stabilizing and fostering economic growth continue to linger. With various officials at the Federal Reserve taking slightly different positions in interpreting the central bank's recent actions and statements, investors have gotten whipsawed, and today, fears of a near-term reduction in the amount of bond-buying the Fed will do in the near future helped send stocks down. As of 10:45 a.m. EDT, the Dow Jones Industrials (DJINDICES: ^DJI  ) were down 92 points after having fallen triple-digits earlier in the morning.

The Dow suffered greater losses than the overall market largely because of the influence of IBM (NYSE: IBM  ) , which fell 2.6%. Rival Accenture (NYSE: ACN  ) , which is the major competitor against IBM in the lucrative information-technology consulting business, gave reduced guidance for full-year results when it reported earnings last night. Pointing to weakness in its consulting business, Accenture cut the midpoint of its earnings forecast range by about 2% and pushed down its expected range for revenue growth to just 3% to 4%. Accenture fell 13% on the news, but investors concluded that prospects for the entire industry were weak and therefore bid IBM down in sympathy. Since IBM's share price is by far the largest in the Dow, the loss had a big overall impact on the entire average.

Merck (NYSE: MRK  ) and Johnson & Johnson (NYSE: JNJ  ) also declined in early trade, with Merck down about 1% and J&J falling three-quarters of a percent on news that two biosimilar versions of the two companies' Remicade rheumatoid arthritis drug had gained recommendations from experts at the European Medicines Agency. Biosimilars have the potential to pose an equal threat to Remicade and other biologic treatments that generics have on traditional pharmaceuticals, but the biosimilar versions could still face challenges in getting widespread adoption. With both companies having rights to market the drug in various regions of the world, Merck and J&J both have an interest in keeping biosimilars out of the market.

Finally, outside the Dow, gold prices once again fell, dropping below the $1,200 per ounce level. Yet once again, gold-mining stocks rose, with the Market Vectors Gold Miners ETF rising nearly 5%. This disconnect isn't sustainable, but it shows the extent to which mining stocks got sold off -- to an even greater extent than bullion during gold's pullback over the past couple of years.

If you're looking for some long-term investing ideas, you're invited to check out The Motley Fool's brand-new special report, "The 3 Dow Stocks Dividend Investors Need." It's absolutely free, so simply click here now and get your copy today.

If You Hear Calls for a Market Crash, Don't Panic... Read This

There's big news going around the Stansberry & Associates office this month...

 

In his latest issue, our colleague Porter Stansberry told readers of his research service to prepare for a major market decline.

 

Porter believes all the borrowing and money printing going on at the world's central banks will produce a crisis that upends the currency, bond, and stock markets.

 

He's urging his readers to sell many (but not all) of their stock positions.

 

Porter is one of the most widely followed investment analysts in America... and he has a good track record with big market calls like this.

 

So what should you do about it?

 

 If you're a trader, you should be focused on limiting risk first and maximizing profits second. So it's worth thinking about how you would handle the kind of scenario Porter sees coming.

 

Fortunately, there's a very simple, safe plan available...

 

You let the market decide.

 

As we often say in our DailyWealth Trader service, the market is the judge, jury, and executioner of every trade. That's why we use predetermined stop prices on all our positions. If a stock we're following declines by a set amount, we exit the trade. If it doesn't... we can continue collecting profits.

 

We've seen both scenarios at work this year.

 

 Back in October, for example we recommended oil-services firm C&J Energy Services (NYSE: CJES). After our write-up, the stock jumped from about $19 to $25.

 

When you see a big, fast gain like that, it's a good idea to take steps to protect it. So we suggested tightening the stop loss on the trade...

 

 

We moved closer to the exit... and then the market told us it was time to go. While C&J's share price completed a "round trip" back down into the high teens this spring, readers who followed our advice walked away with a 17% gain.

 

 It doesn't always work that way, of course. Our readers bought shares of drugstore giant Walgreens (WAG) in early 2012. By February of this year, the position was showing a 33% gain. And we suggested tightening the stop loss.

 

 

Afterward, shares marched higher. Even after the recent market weakness, they're a chip-shot away from a new all-time high. Our readers can continue to make gains here until the market tells them otherwise.

 

 The S&P 500 ran up as much as 23% from its November bottom. In other words, the market packed two years' worth of gains into a matter of months. And many stocks soared to new all-time highs.

 

That was a "gift from the market gods." So if you're sitting on big gains today, it's a good idea to take steps to protect them. Consider tightening up your stops.

 

 We can't say whether the crisis Porter predicts is around the corner. Nobody can. It could be six months away... two years away... or not there at all.

 

Fortunately, you don't have to guess or predict. You can stay long your winning trades... and benefit if there's more upside... and use exit strategies that will protect our profits and capital if a downtrend occurs.

 

If you've planned the trades, all you need to do is trade the plan.

 

– Amber Lee Mason and Brian Hunt

Contrarian Commodity Traders Are Making a Big Mistake

 You can make a fortune in commodities buying when an asset has been "blown out" and left for dead.

 

That "contrarian" take allows you to buy cheap, safe assets.

 

Looking around these days, you might think coal producers qualify as a contrarian's commodity. For two years, the sector has been beaten bloody. Major coal producers are approaching their "end of the world" 2009 lows. How much worse can it get?

 

A lot worse. Now is not the time to buy. Let me explain...

 

 When you're talking about coal consumption here in the U.S., you're talking about electricity. In the early 2000s, the power sector used more than 90% of the coal produced in the country.

 

But electric power plants are using less coal... much less. In 2012, electric power plants consumed 824 million tons of coal. That's the lowest volume in 20 years. It's down 21% since its peak in 2007.

 

Coal's problem here is natural gas. As longtime readers know, natural gas is cheap, and we have plenty of it. The latest numbers show U.S. natural gas production is at an all-time high.

 

It's not that difficult for power plants to switch from coal to natural gas... In 2005, coal produced almost 50% of the country's power. Natural gas generated just 18%. In 2012, natural gas fueled a record 30%. Coal's contribution fell to 37%.

 

 In addition to reduced demand, coal producers are facing higher costs. New and proposed Environmental Protection Agency (EPA) regulations make operation and upgrading of coal plants very expensive.

 

Take the Big Sandy coal power plant in eastern Kentucky, for example. It consumes 2.5 million tons of coal per year. It would cost $1 billion to upgrade this plant to meet EPA regulations... But American Electric Power (AEP) plans to shut it down in 2015.

 

Collapsing demand is hurting coal prices. The benchmark Big Sandy Appalachian coal price has fallen 18% from its 2011 peak. And according to the Energy Information Administration (EIA), coal prices will remain where they are through 2014. But while coal prices are down and set to stay there, the costs of mining coal are as high as ever.

 

That's bad news for coal miners.

 

 Peabody (BTU) is the "ExxonMobil of coal"... It earned $3.55 per share in 2011. Last year, it reported a loss of nearly $3 per share. Shares have fallen from over $70 in 2011... to about $17 today. That's a massive 77% loss.

 

Peabody and its peers aren't just suffering a lack of U.S. demand. The global trends are against them, too... China accounts for over half of all the coal consumed in the world. Demand is still growing there, but the growth has slowed. And coal prices in Asia are down 30% from the 2011 peak.

 

You can see the global trend playing out in the Market Vectors Coal Fund (KOL). Some of its biggest holdings include U.S., Chinese, and Australian coal producers... along with companies like Joy Global, which makes mining equipment, and Westshore Terminals, a coal-shipping hub.

 

As you can see in the chart below, the big trend in KOL is down... and it just recently struck a new five-year low.

 

 

 A massive selloff like this might have you hunting in the "bargain bin" for great values. After all, the world is not going to stop burning coal altogether. It still accounts for a third of the U.S. power grid. And a billion Chinese folks still want to watch TV and chill their beer.

 

Eventually, coal will reach its "blown out and left for dead" bottom. It will offer traders a great setup (like the kind I think we have with uranium).

 

But right now, the fundamental picture is terrible, and it looks likely to stay that way for a while. The trend here is down... But there still hasn't been a massive "wash out" selling panic. It's not yet time to buy coal.

 

– Matt Badiali

Tilson: These Are 3 Big Catalysts for AIG Stock

Join The Motley Fool for a conversation with author, investor and philanthropist, Whitney Tilson. In addition to managing Kase Capital, Whitney has coauthored More Mortgage Meltdown: 6 Ways to Profit in These Bad Times, Poor Charlie's Almanack, and most recently The Art of Value Investing, a collection of interviews with over 200 successful value investors.

A full transcript follows the video.

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Brendan Byrnes: Let's switch gears and talk about AIG (NYSE: AIG  ) , which I believe is your biggest holding in Kase Capital. What are some catalysts, going forward for this company?

Whitney Tilson: I see a number. First of all, the business is just going very well. They just reported earnings last week. They blew buy consensus estimates by about 50%. The combined ratio -- one of the key metrics for insurance companies -- dropped about three full percentage points.

Certainly, just underlying performance of the business, and generally insurance, the kinds of insurance that they're in, pricing is strengthening around the world. It's not just AIG that's benefiting, but it helps to have a tailwind for the industry.

Secondly, AIG does not pay a dividend, has not been buying back stock, other than the government auctions as the government exited. But now I think their balance sheet is strong enough, now that the government has been completely bought out of AIG, I think the company has a lot of flexibility to do some good things on the capital front.

Then lastly, just cheapness. The stock's trading at about $0.66 of book value, so about a third discount to book. This is in a world where most insurers are trading at one times book value, so right there I see 50% upside, just on the valuation multiple, on a multiple of book.

I think there are two reasons why it's cheap. One is just general historical taint. People still think of AIG as this ward of the government and an immensely complex business. Neither of those is true anymore, but old perceptions die hard.

Secondly, the company still hasn't worked its way back to generating a decent return on equity. They have a 5% return on equity. I think they should get to 10% in the next couple of years, and that will help drive a revaluation as well.

The last thing I'll add on that, just by the way, is management just got their stock options struck, so they had very strong incentives to sandbag earnings, keep the stock price low...

Brendan: Buy back from the government at a low rate.

Whitney: ...to get the government out at a low price, and that worked. They got out, and the government sold out in the $30 a share range, and now the government's out, they've got their options struck, and now management incentives have completely reversed.

I think the quarter we saw that they just reported, where they blew by estimates, I see that happening for the next year or two, as I think they've got some spring-loaded earnings to report over the next year or so.

Why Canadian Solar's Shares Popped

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Canadian Solar (NASDAQ: CSIQ  ) jumped 13% today after signing a deal to expand manufacturing.

So what: The company agreed to partner with Samsung Renewable Energy to build a solar manufacturing facility in London, Ontario. The plant will begin construction in 2013 and will supply modules to plants like Samsung's 100 MW projects in Haldimand County and Kingston and Loyalist Township.  

Now what: This is a really great partnership for Canadian Solar and helps solidify it as one of the best manufacturers in China. Not a lot of details have been released about the financial impact this will have on Canadian Solar, and with the company reporting losses each quarter, I'm still leery, but strategically, this looks like a good move. Hopefully this will help push the company into profitability later this year or early next year on the back of higher utilization rates and stabilizing prices in the solar industry.

Interested in more info on Canadian Solar? Add it to your watchlist by clicking here.

Is This Dow Ticker One of the Best Stocks for Long-term Investors?

The Dow Jones Industrial Average (DJINDICES: ^DJI  ) is a tremendously exclusive club. The shortlist of 30 elite members is meant to reflect "the leading companies in the industries driving the U.S. stock market," and it typically represents about 25% to 30% of the American stock market's total market value. The components should be "leaders in their industries" with broad investor appeal and "long records of sustained growth." In short, these are 30 of the best stocks available anywhere.

But nothing lasts forever. Dow changes are rare but not unheard of. A falling share price is not reason enough to get kicked off the Dow, nor will a company get the boot for breaking the streak of sustained growth that got its foot in the door. Bad things happen to good companies, and the Dow will not panic needlessly. The index's managers like to keep member changes down to massive fundamental changes such as bankruptcies, buyouts, or changes in a component's core business.

With these criteria in mind, let's look at one Dow stock that might be on the bubble for replacement. Is this truly one of the best stocks in its operating sector anymore?

To my mind, the most questionable Dow member today is Hewlett-Packard (NYSE: HPQ  ) . If a changing core business is the main criterion for exclusion from the Dow, then HP most certainly qualifies.

The Silicon Valley veteran used to be the world's largest maker of PC systems by a wide margin, as well as a major player in enterprise-class servers. The swift rise of tablets and smartphones undermined HP's PC business at an extremely unfortunate time, as the company was also going through high-level management changes during the first years of the mobile revolution. Now HP's PC sales are dropping faster than the troubled overall market, and Lenovo threatens HP's sales throne.

HP is holding up better in the server market, but that's hardly enough to balance out the PC weakness. HP's enterprise divisions are also shrinking in a cloud of evaporating synergies. In fact, every division within the company is on the fritz.

Outsiders (including yours truly) are calling for a breakup into smaller but nimbler businesses. CEO Meg Whitman has been staving off the idea with a six-foot stick, but her hand may be forced if this sad state of affairs continues. The current strategy of chasing every end market with equal fervor is unlikely to pay off. A leaner, meaner HP with far tighter focus would do much better. Two or more independent operators would be even stronger, taken as a group.

Like Kraft (NASDAQ: KRFT  ) before it, a broken-up HP would almost certainly have to be replaced on the Dow. Neither Kraft nor its snack-food spinoff Mondelez (NASDAQ: MDLZ  ) has the monolithic heft that kept the old Kraft on the Dow, nor the sustained growth that might have qualified one section to qualify on its own. Both stocks are doing fine after the split -- Kraft is up a market-beating 14.7%, while Mondelez has risen a modest 3.5% -- but neither one makes a serious case for individual Dow membership.

This is exactly the future I see coming for HP. By choice or by force, the company will likely break up in the next couple of years. When that happens, HP's Dow days will be over. The enterprise half of HP just might stand a chance of membership on its own, but even that idea seems a stretch.

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Top 5 Rising Stocks To Watch For 2014

When consumers blink, investors get nervous. That's the simple message from today's early stock-market moves, as the latest reading on consumer sentiment fell to levels not seen for nine months. Moreover, with retail sales falling 0.4% last month and previous readings revised downward, consumers are clearly feeling a bit overextended in light of uncertainties regarding employment, government spending, and general economic growth. The impact on stocks was fairly muted, but it nevertheless pulled the Dow Jones Industrials (DJINDICES: ^DJI  ) off their record highs for a loss of 53 points, or 0.36%, by 10:55 a.m. EDT. The S&P 500 has suffered a larger decrease of 0.73%.

Somewhat surprisingly, though, that negative sentiment didn't make its way into consumer and retail stocks. Hope improvement retailer Home Depot (NYSE: HD  ) was the biggest gainer in the Dow early on, rising 1.6% and hitting another all-time high after getting an upgrade from analyst firm Jefferies. The environment for construction-related stocks has been so strong in light of the rebound in housing that former Home Depot division HD Supply filed for a $1 billion initial public offering, having gone private back in 2007. The enthusiasm suggests that investors aren't convinced that weak consumer sentiment will persist for long.

Top 5 Rising Stocks To Watch For 2014: Analog Devices Inc (ADI.O)

Analog Devices, Inc. (Analog Devices), incorporated on January 18, 1965, is engaged in the design, manufacture and marketing of a range of analog, mixed-signal and digital signal processing integrated circuits (ICs). The Company produces a range of products, including data converters, amplifiers and linear products, radio frequency (RF) ICs, power management products, sensors based on micro-electro mechanical systems (MEMS) technology and other sensors, and processing products, including DSP and other processors, which are designed to meet the needs of a base of customers. The Company's products are embedded inside many different types of electronic equipment, including industrial process control systems; instrumentation and measurement systems; wireless infrastructure equipment, and aerospace and defense electronics. The Company designs , manufactures and markets a range of ICs, which incorporate analog, mixed-signal and digital signal processing technologies. The Comp any's product portfolio includes both general-purpose products used by a range of customers and applications, as well as application-specific products. On March 30, 2012, the Company acquired Multigig, Inc.

Analog Products

The Company's product portfolio includes several thousand analog ICs. The Company's analog IC customers include original equipment manufacturers (OEMs) and customers who build electronic subsystems for integration into larger systems. The Company is a supplier of data converter products. Data converters translate real-world analog signals into digital data and also translate digital data into analog signals. The Company is also a supplier of amplifiers. Amplifiers are used to condition analog signals. The Company provides precision, instrumentation, intermediate frequency/radio frequency (RF), broadband, and other amplifiers. The Company also offers a range of precision voltage references, which are used in a range of application s. The Company's analog product line also includes a range! p! ortfolio of RF ICs covering the RF signal chain, from RF function blocks, such as phase locked loops, frequency synthesizers, mixers, modulators, demodulators, and power detectors, to broadband and short-range single chip transceiver solutions.

The Company's RF ICs support the requirements of cellular infrastructure and a range of applications in the Company's target markets. Also within the Company's analog technology portfolio are products, which are based on MEMS technology. This technology enables the Company to build small sensors, which incorporate an electromechanical structure and the supporting analog circuitry for conditioning signals obtained from the sensing element. The Company's MEMS product portfolio includes accelerometers used to sense acceleration, gyroscopes used to sense rotation, inertial measurement units used to sense multiple degrees of freedom combining multiple sensing types along multiple axis, and MEMS microphones used to sense audio . The Company's current revenue from MEMS products is derived from the automotive end market. In addition to the Company's MEMS products, its other analog product category includes isolators. The Company's isolators have been designed for applications, such as universal serial bus isolation in patient monitors, where it allows hospitals and physicians to adopt the advances in computer technology to supervise patient health and wirelessly transmit medical records. In smart metering applications, the Company's isolators provide electrostatic discharge performance. In satellites, where any malfunction can be catastrophic, the Company's isolators help protect the power system while enabling designers to achieve small form factors. Power management & reference products make up the balance of the Company's analog sales. Those products, which include functions such as power conversion, driver monitoring, sequencing and energy management, are developed to complement analog signal ch ain components across core market segments from micro ! power,! e! nergy-s! ensitive battery applications to power systems in infrastructure and industrial applications.

Digital Signal Processing Products

Digital Signal Processing products (DSPs) complete the Company's product portfolio. DSPs are optimized for numeric calculations, which are essential for instantaneous, or real-time, processing of digital data generated, from analog to digital signal conversion. The Company's DSPs are designed to be fully programmable and to execute specialized software programs, or algorithms, associated with processing digitized real-time, real-world data. Programmable DSPs are designed to provide the flexibility to modify the device's function using software. The Company's DSP IC customers write their own algorithms using software development tools provided by the Company and third-party suppliers. The Company's DSPs are designed in families of products, which share common architectures and therefore can execute the same software across a range of products. The Company's customers use the Company's products to solve a range of signal processing challenges across its core market and segment focus areas within the industrial, automotive, consumer and communications end markets. As an integrated part of the Company's customers' signal chain, there are other Analog Devices products connected to its processors, including converters, audio and video codecs and power management solutions.

The Company competes with Broadcom Corporation, Maxim Integrated Products, Inc., Cirrus Logic, Inc., Microchip Technology, Inc., Freescale Semiconductor, Inc., NXP Semiconductors, Infineon Technologies, ST Microelectronics, Intersil Corporation, Silicon Laboratories, Inc., Knowles Electronics, Texas Instruments, Inc. and Linear Technology Corporation.

Top 5 Rising Stocks To Watch For 2014: PTB Group Ltd(PTB.AX)

PTB Group Limited provides turbine engine repair and overhaul services in Australia, New Zealand, the Pacific Islands, North America, Asia, Africa, and Europe. The company specializes in the repair and overhaul of two engine types, the Pratt & Whitney PT6A and Honeywell TPE331. It also trades in aircraft airframes, turbine engines, and related parts; provides finance for aircraft and turbine engines sold to customers; and leases, rents, or hires aviation parts, including whole airframes and engines. The company was formerly known as Pacific Turbine Brisbane Limited and changed its name to PTB Group Limited in December 2006. PTB Group Limited was founded in 2001 and is based in Brisbane, Australia.

Hot Electric Utility Stocks To Buy Right Now: Frasers Commercial Trust Cppu (KT8U.SI)

Allco Commercial Real Estate Investment Trust invests is a diverse portfolio of real estate and real estate related assets, primarily focusing on office and retail assets. It owns properties in Singapore, Japan, and Australia. The company was founded in 2005 and is based in Singapore, Singapore. The registered name of Allco Commercial REIT has changed to Frasers Commercial Trust since its 17.7% stake acquisition by Frasers Centrepoint Ltd.

Top 5 Rising Stocks To Watch For 2014: African Queen Mines Ltd (AQ.V)

African Queen Mines Ltd., together with its subsidiaries, engages in the acquisition, exploration, and development of mineral properties in Africa. It primarily explores for gold, diamond, and other metals in Botswana, Namibia, Mozambique, Kenya, and Ghana. The company was incorporated in 2008 and is headquartered in Vancouver, Canada.

Top 5 Rising Stocks To Watch For 2014: ProAssurance Corporation(PRA)

ProAssurance Corporation, through its subsidiaries, provides medical and other professional liability insurance products to health care service, legal service, and other professional service providers in the United States. It primarily offers its products to physicians, dentists, chiropractors, optometrists, and allied health professionals. The company markets its products through an internal sales force, as well as independent agents. ProAssurance Corporation was founded in 1976 and is based in Birmingham, Alabama.

Best Logistics Stocks To Buy Right Now

Petroleum products logistics provider Buckeye Partners (NYSE: BPL  ) is out with its first-quarter earnings. It was a very solid quarter for the MLP with steady performance across its business segments. Let's take a closer look at how the company performed in three areas that I previewed as being the most important to watch.

The numbers
Buckeye beat analysts' expectations by delivering first-quarter income of $89.3 million, or $0.86 a unit, which exceeded the projection of $0.73 a unit. Revenue of $1.34 billion also beat expectations of $1.29 billion. Strong performance at Buckeye's terminal operations along with a big improvement at its energy services segment led to the�excellent�performance this quarter.

Buckeye reported distributable cash flow of $124.2 million which provided it with a coverage ratio of 1.21 times. This represented a very nice year-over-year increase to distributable cash flow which was $73.6 million last year and represented a coverage ratio just 0.78 times. Better overall business performance and the contribution from its growth projects provided a nice boost to the bottom line. The big news here is that the coverage ratio was high enough this quarter for the company to finally raise its distribution.

Best Logistics Stocks To Buy Right Now: TICC Capital Corp.(TICC)

TICC Capital Corp., a business development company, operates as a closed-end, non-diversified management investment company. The firm invests in both public and private companies. It invests in secured and unsecured senior debt, subordinated debt, junior subordinated debt, preferred stock, and common stock. The firm primarily invests in debt and/or equity securities of technology-related companies that operate in the computer software, Internet, information technology infrastructure and services, media, telecommunications and telecommunications equipment, semiconductors, hardware, technology-enabled services, semiconductor capital equipment, medical device technology, diversified technology, and networking systems sectors. It concentrates its investments in companies having annual revenues of less than $200 million and a market capitalization or enterprise value of less than $300 million. The firm invests between $5 million and $30 million per transaction. It seeks to exit its investments within 7 years. It serves as the investment adviser to TICC. The company was formerly known as Technology Investment Capital Corp. and changed its name to TICC Capital Corp. in December 2007. TICC Capital Corp. was founded in 2003 and is headquartered in Greenwich, Connecticut.

Best Logistics Stocks To Buy Right Now: PS Business Parks Inc.(PSB)

PS Business Parks, Inc., a real estate investment trust (REIT), together with its subsidiaries, engages in the acquisition, development, ownership, and operation of commercial properties primarily multi-tenant flex, office, and industrial space. As of December 31, 2007, the company owned and operated approximately 19.6 million rentable square feet of commercial space located in Arizona, California, Florida, Maryland, Oregon, Texas, Virginia, and Washington, as well as managed approximately 1.4 million rentable square feet. It also owned approximately 6.4 acres of land in Northern Virginia; 14.9 acres in Portland, Oregon; and 10.0 acres in Dallas, Texas for the development of commercial properties. PS Business Parks has elected to be taxed as a REIT under the Internal Revenue Code and would not be subject to federal income tax to the extent it distributes at least 90% of its REIT taxable income to its shareholders. The company was founded in 1983. It was formerly known as P ublic Storage Properties XI, Inc. and changed its name to PS Business Parks, Inc. in 1998. The company is based in Glendale, California.

Hot Oil Stocks To Buy For 2014: Precision Castparts Corporation(PCP)

Precision Castparts Corp. (PCC) manufactures and sells metal components and products worldwide. Its Investment Cast Products segment offers aerospace structural and airfoil castings; industrial gas turbine (IGT) castings; artificial hips and knees; parts for satellite launch vehicles; landing gear struts and engine inlets for unmanned aerial vehicles; impellers for pumps and compressors; components for armament systems; and alloys for other manufacturers of investment castings. The company?s Forged Products segment provides forged components for jet engines, including fan discs, compressor discs, turbine discs, seals, spacers, shafts, hubs, and cases; airframe structural components, such as landing gear beams, bulkheads, wing structures, engine mounts, struts, tail flaps, and housings; discs, spacers, and valve components for steam turbine and IGT engines; shafts, cases, and compressor and turbine discs for marine gas engines; mechanical and structural tubular forged produ cts for energy markets; and forged components for propulsion systems on nuclear submarines and aircraft carriers, as well as forgings for pumps, valves, and structural applications. PCC?s Fastener Products segment offers aerospace fasteners comprising bolts, nuts, nut plates, latches, expandable diameter fasteners, quick release pins, hydraulic fittings, bushings, inserts, collars, and other precision components. It also provides refiner plates and screen cylinders for the pulp and paper industry; metal-injection-molded and ThixoFormed components; grinder pumps and components for sewer systems; gas monitoring systems for the power generation industry; and thread-rolling and trimming dies, pins and steel, and carbide forging tools for fastener production. PCC sells its fastener products and services through a network of distributors and independent sales representatives, as well as through a direct sales and marketing staff. The company was founded in 1949 and is based in Por tland, Oregon.

Best Logistics Stocks To Buy Right Now: Financial Engines Inc.(FNGN)

Financial Engines, Inc. and its subsidiaries provide independent, technology-enabled portfolio management services, investment advice, and retirement income services to participants in employer-sponsored defined contribution plans. The company helps investors plan for retirement by offering personalized plans for saving and investing, as well as by providing assessments of retirement income needs and readiness. Its services include Professional Management, a discretionary managed account service designed for plan participants who want personalized and professional portfolio management services, investment advice, and retirement income services from an independent investment advisor; Online Advice, an Internet-based non-discretionary service that offers personalized advice to plan participants who manage their portfolios directly; and Retirement Evaluation, a retirement readiness assessment provided to plan participants upon plan rollout. The company delivers its services t o plan sponsors and plan participants primarily through connections to eight retirement plan providers in the United States. Financial Engines, Inc. was founded in 1996 and is headquartered in Palo Alto, California.

Best Logistics Stocks To Buy Right Now: Swift Transportation Company(SWFT)

Swift Transportation Company, through its subsidiary, Swift Transportation Co., LLC, operates as a multi-faceted transportation services company and truckload carrier in North America. The company offers its truckload services through dry van, temperature-controlled, flatbed, and specialized trailers; and rail intermodal services. It also provides freight brokerage and logistics management services to other trucking companies, as well as leases tractors and offers repair services. As of December 31, 2011, the company operated a tractor fleet of approximately 15,900 units, including 11,900 tractors driven by company drivers and 4,000 owner-operator tractors; 50,600 trailers; and 6,200 intermodal containers in the United States and Mexico. It serves various industries, such as retail, discount retail, consumer products, food and beverage, manufacturing, and transportation and logistics industries. The company, formerly known Swift Holdings Corp., and was founded in 1966 and is headquartered in Phoenix, Arizona.

Is a Great Company Necessarily a Great Investment?

A director at Deloitte Services LP and coauthor of The Three Rules: How Exceptional Companies Think, Michael Raynor joins the Fool to share his findings about what makes a company successful for the long haul.

In this video segment, Michael discusses the diversity of the Miracle Worker companies and how the fundamental rules allow companies to follow the same "recipe" using different ingredients. The full version of the interview can be seen here.

A full transcript follows the video.

The Motley Fool's chief investment officer has selected his No. 1 stock for the next year. Find out which stock it is in the brand-new free report: "The Motley Fool's Top Stock for 2013." Just click here to access the report and find out the name of this under-the-radar company.

Brendan Byrnes: If an investor is looking at your book and saying, "How do I go over that methodology? How do I look at companies this way?" what would you say to them when they're trying to evaluate a company?

Michael Raynor: That's a great question.

First of all, I'd say that our work is fundamental in nature. We're looking at company fundamentals and we try to understand companies that are great companies, rather than necessarily identifying companies that are going to be great investments.

Now, it does turn out, however, that companies that deliver superior profitability tend to have better total returns to shareholders than companies that don't deliver superior profitability. Being an adherent to the three rules, as far as our data are concerned, suggests good things for equity holders.

Brendan: I think you mentioned there are 18 companies in that upper echelon that you found. What's the one that impressed you the most?

Michael: That's an interesting question. I hadn't really thought about the "top of the Pops." I think they all impressed me in very different ways because they all had their own unique formula for delivering exceptional performance.

Again, that's why rule No. 3 is There Are No Other Rules. It's all about being better and driving revenue. In a sense, every company's got the same recipe but fundamentally different ingredients. It was the uniqueness of every one of them that I found so impressive and, frankly, so surprising.

Brendan: Could you maybe walk us through a few examples of specific companies amid those 18?

Michael: Sure. We have three categories of Miracle Workers. I'll give you one of each.

In our "Kept It" category -- these are companies that have been consistently miracle workers over their entire observed lifespan -- Abercrombie & Fitch (NYSE: ANF  ) is one that has really impressed us with their ability to adhere to those two rules, really through thick and thin, sometimes taking a lot of heat for it from the investor community, but sticking to their guns in ways that we find pretty impressive.

There are "Lost It" Miracle Workers; companies that were great for a while but then kind of came off the rails. A company like Maytag, for example, would fall into that category. They spent 20 years, from the middle '60s to the middle '80s -- one of the longest streaks of superior performance in our entire database -- but then really came off the rails, kind of lost their way, were unable to stay close to the rules.

They were acquired by Whirlpool (NYSE: WHR  ) , ultimately. Curiously, a lot of what you see Whirlpool doing with the Maytag brand looks suspiciously close to following the rules again, so that's promising, at least in our view.

Then finally, "Found It" Miracle Workers, companies that bounced around for a while -- kind of like wayward teenagers -- and then found their way. A company like Linear Technology (NASDAQ: LLTC  ) , for example, a semiconductor manufacturer, would fall into that category. It started out as a second source supplier for the USDOD [and] now makes a vast array of highly customized, very highly differentiated analog microprocessors.

Again, enormous diversity, but what ties them all together: Better Before Cheaper and Revenue Before Cost.

The Motley Fool's chief investment officer has selected his No. 1 stock for the next year. Find out which stock it is in the brand-new free report: "The Motley Fool's Top Stock for 2013." Just click here to access the report and find out the name of this under-the-radar company.

Senate Confirms Pritzker as Secretary of Commerce

Nokia Asha 501 Launches in Thailand and Pakistan Before Going Global

Best Life Sciences Stocks To Watch For 2014

No sooner had Life Technologies Corp. (NASDAQ: LIFE  ) announced its successful purchase of KDR Biotech last week, then out came Thermo Fisher Scientific (NYSE: TMO  ) with a $13.6 billion bid to buy Life Technologies itself.

This morning, Life Technologies announced that it has signed a definitive agreement to sell itself to Thermo Fisher for $76 per share, or about $13.6 billion in total plus assumption of $2.2 billion in net debt. That assumption raises the deal value to $15.8 billion in total, easily trumping what was being reported last week as an estimated $11 billion bid for Life Technologies from private equity powerhouses Blackstone, Carlyle Group, and KKR.

The deal must be approved by shareholders and needs regulatory approval.

Thermo Fisher CEO Marc N. Casper was quoted in the company press release as saying that "Life Technologies enhances all three elements of our growth strategy: technological innovation, a unique customer value proposition and expansion in emerging markets." Life Technologies and Thermo Fisher say the deal will build on their "technological strengths to accelerate results for life sciences customers working in proteomics, genomics and cell biology."

Best Life Sciences Stocks To Watch For 2014: Lake Shore Bancorp Inc.(LSBK)

Lake Shore Bancorp, Inc. operates as the holding company for Lake Shore Savings Bank that provides banking products and services. It offers various deposit products, including regular savings deposits, such as Christmas club, passbook, and statement savings accounts; NOW accounts; money market accounts; interest bearing and non-interest bearing checking accounts; interest bearing and non-interest bearing demand deposits; health savings accounts; retirement accounts; time deposits; and interest on lawyer accounts. The company also provides adjustable-rate and fixed-rate one-to four-family residential mortgage loans, commercial real estate loans, construction loans, home equity loans and lines of credit, and commercial business loans, as well as consumer loans, such as personal loans, home improvement loans, overdraft lines of credit, automobile loans, and guaranteed student loans. It operates nine branch offices in Chautauqua and Erie Counties, New York; and six automated t eller machines. The company was founded in 1891 and is headquartered in Dunkirk, New York. Lake Shore Bancorp, Inc. is a subsidiary of Lake Shore, MHC.

Best Life Sciences Stocks To Watch For 2014: Synergetics USA Inc.(SURG)

Synergetics USA, Inc., a medical device company, engages in the design, manufacture, and marketing of microsurgical instruments and consumables primarily for ophthalmology and neurosurgery markets in the United States and internationally. The company?s product lines focus upon precision engineered, microsurgical, handheld devices, and the microscopic delivery of laser energy, ultrasound, electrosurgery, aspiration, illumination and irrigation that are delivered in multiple combinations. It offers retinal surgical items, including handheld disposable and reusable forceps and scissors, fiberoptics for illumination and photocoagulation, cannulas, scrapers, and other reusable and disposable surgical devices. The company also provides bipolar electrosurgical generators; lesion generators used for minimally invasive pain treatment; and directional laser probes, as well as offers gauge instrumentation to the vitreoretinal surgical market. It sells its products through direct sale s employees, distributors, and independent sales representatives. The company was founded in 1991 and is headquartered in O?Fallon, Missouri.

Top Penny Companies For 2014: Aguila American Resources Ltd (AGL.V)

Aguila American Resources Ltd. engages in the exploration and development of mineral properties in Peru. It primarily explores for gold and uranium. The company principally holds interest in the Angostura property comprising 9 exploration concessions and 2 claims, covering approximately 6,800 hectares located in southern Peru in the Department of Apurimac. The company was founded in 1997 and is headquartered in Vancouver, Canada.

10 Shares to Avoid Market Madness

LONDON -- Shares that are relatively unaffected by extreme market moves are what market statisticians call "low beta" shares. Here are the 10 FTSE 100 shares with the lowest beta.

Company Price (pence) Beta P/E Yield % Market Cap (Million Pounds)

Severn Trent  (LSE: SVT  )	1,614	0.22	17.8	5.0	3,855
Reckitt Benckiser	4,654	0.30	17.3	3.0	33,399
National Grid	729	0.32	13.4	5.8	26,718
Randgold Resources  (LSE: RRS  )	4,208	0.32	17.1	0.8	3,879
Wm. Morrison Supermarkets	260	0.33	10.0	4.9	6,046
United Utilities  (LSE: UU  )	649	0.33	15.2	5.5	4,425
AstraZeneca  (LSE: AZN  )	3,112	0.35	9.1	5.8	38,959
SSE	1,489	0.39	12.7	5.9	14,359
Imperial Tobacco	2,295	0.41	10.9	5.1	22,343
RSA Insurance  (LSE: RSA  )	119	0.41	9.6	5.7	4,491

My thoughts on five of these are as follows.

Randgold Resources
Resources companies like Randgold are always a play on the changing market value of the underlying resource.

The price of gold has fallen 21% in the past 12 months. In that time, shares in Randgold are down 28%.

The way a stock's beta is calculated means that Randgold looks a steadier investment than it really is. While the shares have not previously exaggerated the movements of the wider market, they have still been a wild ride. In the past five years, the shares have traded as low as 1,580 pence in 2008, rising to 7,775 pence in November 2012.

Investors must decide where precious-metals prices are likely to go before taking a position in a share like Randgold.

RSA Insurance
Ten years ago, RSA was one of the most volatile shares in the FTSE 100. At that time, its business was hugely geared to the fortunes of the stock markets.

Today, RSA is a very different proposition. In the past 12 months, shares in RSA have traded in the range of 105 pence to 136 pence. In that time, the FTSE 100 has moved from a low of 5,450 to a high of 6,840.

Analysts are today forecasting that earnings per share for the company will hit 12.4 pence for 2013, rising to 12.9 pence next year. At today's price, that's a 2013 P/E of 9.6, falling to 9.2 times for the year after.

I expect RSA shares to offer a prospective yield for 2013 of 5.2%.

AstraZeneca
In the past month, shares in pharmaceutical giant AstraZeneca are down 10.7%. They haven't been this cheap since March.

AstraZeneca has long been criticized for the apparent lack of new drugs being developed by the company. There are signs that AstraZeneca is taking steps to address this. In the past month, AstraZeneca has announced the acquisition of two smaller companies, Omthera Pharmaceuticals and Pearl Therapeutics, for a total price that could rise to $1.5 billion.

Brokers expect that AstraZeneca will make $5.26 of EPS this year and pay a dividend to shareholders of $2.80 per share. At today's price, that puts AstraZeneca shares on a forward P/E of 9.1, with the prospect of a 5.8% yield for the year.

United Utilities
Shares in United Utilities' sector are frequently referred to as "defensives." Whatever is going on in the world, United's customers will always require its water and sewerage services. This means that the company's share price is largely immune from the events that affect most FTSE 100 companies. The result is a low-beta share that can be relied on to avoid the wildest market movements.

Therefore, I am shocked to see that the shares have lost 17% of their value in the past month. Of that drop, 3.5% came from when the shares went ex-dividend on June 19.

According to current forecasts, United shares are trading at a 2014 P/E of 15.2, with a prospective yield of 5.5%.

Severn Trent
Shares in Severn Trent rose sharply in May, when the water utility received a takeover offer from a consortium of investors. Sares spiked upwards to almost 2,100 pence. This offer was rejected and withdrawn in June. The shares are now at a level lower than they were before talks began.

According to the consensus broker forecasts, Severn Trent is today trading at 17.8 times estimates for 2014. Although that may sound expensive, Severn Trent's sales and profits are extremely reliable, given the regulated, monopolistic nature of its business.

A dividend of 80.4 pence is forecast for the year, putting the shares on a yield of 5%, rising to 5.3% next year.

Owning a portfolio of low-beta shares is perfect for investors that want to sleep at night without worrying about sudden bear market moves. For more solid shares, check out the latest free Motley Fool report from our team of analysts: "5 Shares to Retire On" is the Motley Fool's latest free analysis for private investors looking for long-term opportunities. Just click here to get your free copy today.

Bank of America: Get Your Act Together!

Street View Puts Google in Crosshairs of U.K. Regulators

Google (NASDAQ: GOOG  ) is in trouble over Street View, again.

Three years after admitting that its horizontal mapping service has indeed been accidentally collecting "fragmentary" personal data, such as email addresses and computer passwords, in the course of taking pictures for Google Maps, Google got served with an enforcement notice by the United Kingdom's Information Commissioner's Office Friday.

According to the ICO, Google has been ordered "to delete the remaining payload data identified last year within the next 35 days and immediately inform the ICO if any further disks are found. Failure to abide by the notice will be considered as contempt of court, which is a criminal offence." The ICO action comes in response to Google's revelation last summer, that it had discovered a few more computer disks still in its possession, containing illicitly obtained information.

Google notes that it has never "accessed" or viewed the contents of the disks in question, nor published any of the data collected thereon. For these and other reasons, ICO says Google's culpability does not rise to the level where it deserves to be fined -- but it does deserve a stern warning, and that's exactly what ICO just issued.

A separate ICO investigation into whether Google's privacy policies comply with EU data protection legislation is still ongoing.

Should I Buy Kingfisher?

LONDON -- I'm shopping for shares right now. Should I pop Kingfisher  (LSE: KGF  ) into my basket?

Storm warning
Last time I looked at Kingfisher, it had gone into a dive. Europe's largest home-improvement retailer had suffered a summer washout, losing an estimated 30 million pounds of profits in the U.K. and northern Europe as rain-soaked customers abandoned their gardens to the elements. Pre-tax profits had dropped 17% in what chief executive Ian Cheshire called his "toughest half" since taking charge in 2008. Tax hikes in France didn't help.

The weather forecast is pretty dismal as I write this, but the sun has been shining on Kingfisher's share price. It is up 25% over the past six months, against 7.6% for the FTSE 100, capping a strong five-year return of more than 200%. Yet its first-quarter trading results were wet and windy, with like-for-like sales down 4.2%, and a near 30% drop in profits to 114 million pounds. The culprit was the same: bad weather in Europe. You weren't the only one shivering indoors during this year's icy March and April. Kingfisher's customers were also sitting tight, having decided they could DIY another day. Sales of outdoor products fell 10%. Sales and profits were down 4.7% in the U.K. and Ireland and 5.6% in France. Economic storms didn't help, either.

Russian front
Like so many FTSE 100 favorites, Kingfisher has set its eyes on distant climes. Sales in Russia grew 17.4% to 91 million pounds, while B&Q China, which has 39 stores, saw sales rise 9.1% to 77 million pounds. Kingfisher also enjoyed a decent showing in Spain, thanks to new stores, but sales in Poland froze in the cold. I am increasingly impressed by the company's global reach. DIY has conquered the West. I don't see why the East won't fall as well. But there could also be headwinds, especially if the Chinese property market is as precarious as people say.

Latest figures suggest the U.K. housing market is picking up, but with inflation outpacing wages, the British consumer is still likely to struggle, while there are few signs of meaningful recovery in France. Then there's the weather. Whatever your views on climate change, the elements have been acting strangely lately, and Kingfisher's share price is very exposed.

Live and let DIY
After the recent share price run, it looks fully valued at 15.9 times earnings, against 12.7 for the FTSE 100. The yield of 2.7% also underperforms the index average of 3.63%. Forecast earnings-per-share growth of 6% to January 2014 and 11% to 2015 looks solid enough, and I would expect Kingfisher to perform strongly when the recovery finally beds in. Who doesn't want to do up their home once they've got a bit cash to spare? Some brokers are very keen. Most blame the weather for the company's recent difficulties. Jefferies has just upped its target price from 3.30 pounds to 4 pounds, and reiterated its buy call. I might buy Kingfisher, but only after it's been raining, and the share price is a bit soggier.

Kingfisher is good, but it isn't good enough to feature in our special report "5 Shares to Retire On." This free report by Motley Fool share analysts names five FTSE 100 favorites to secure your retirement. To find out more, download this report now. It won't cost you a penny, so click here.

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