Why Monro Muffler Brake Shares Fell

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 Monro Muffler Brake (NASDAQ: MNRO  ) were going in reverse today, falling as much as 11% after missing on all counts in its earnings report.

So what: The auto-repair service provider posted earnings per share of $0.42, below the analyst consensus at $0.45, while revenue growth of 21.9%, to $206.2 million, was not enough to match estimates of $210.5 million. Nearly all of that growth came from acquisition, as comparable sales rose just 1.2% in the quarter. Gross margin also fell 200 points due to a change in the sales mix toward lower-margin tires. Finally, Monro's EPS guidance for the current quarter at $0.41-$0.45 was below estimates of $0.47, and it lowered its full-year guidance from $1.65-$1.80, to $1.58-$1.70.

Now what: Management expressed confidence in the company's long-term prospects, but said that customers were putting off more expensive maintenance and repairs, pressuring sales. CEO John Van Heel also said that, over time, the company will be able to integrate the recently acquired stores to further drive profitability. I don't see any structural weakness here, but shares appear to have gotten ahead of themselves, up nearly 50% at one point this year. Monro may need a few extra quarters to grow into that valuation.

With the auto industry coming back strong, savvy investors are looking to China. It's already the world's largest auto market -- and it's set to grow even bigger in coming years. A recent Motley Fool report, "2 Automakers to Buy for a Surging Chinese Market," names two global giants poised to reap big gains that could drive big rewards for investors. You can read this report right now for free -- just click here for instant access.

5 Best Biotech Stocks To Watch For 2014

You want to invest in biotech. You hear about all the monstrous pops and mini-fortunes that are built overnight. The allure of catching a multibagger is an intoxicating idea -- netting one in your portfolio is even better. Simply put, the biotech industry offers investors something that few other investments can. So no one can blame you for targeting the next big stock.

However, that doesn't mean you get to cheat on the simple rules of investing. My fellow Fools have done an excellent job keeping biotech investors honest recently. Keith Speights laid out a list of pitfalls for beginners to avoid, while Dr. Brian Orelli reminded investors that not every press release is necessarily newsworthy. Today, I want to remind investors that diversity is still important within a biotech-heavy portfolio. Here's my ultimate biotech diversification strategy that focuses on three different kinds of growth.

5 Best Biotech Stocks To Watch For 2014: Prima BioMed Ltd (PRR)

Prima BioMed Ltd is a biotechnology company is engaged in the development and commercialization of medical therapies with a focus on oncology. Its product candidates in development include Cvac, an autologous dendritic cell vaccine for ovarian cancer, monoclonal antibodies for multiple tumour types, and an oral formulation for the human papilloma virus (HPV), vaccine. Its product candidate Cvac is a dendritic cell therapy, for which it is conducting a Phase IIb trial for the treatment of ovarian cancer. Cvac is designed to target the tumour antigen mucin-1, which is expressed at high levels on different tumour types. It also has two preclinical product development programs. In May 2011, Prima BioMed GmbH, a 100 % owned subsidiary of Prima BioMed Ltd, was incorporated in Germany. In May 2011, Prima BioMed Middle East FZLLC, a 100 % owned subsidiary of Prima BioMed Ltd, was incorporated in the United Arab Emirates.

5 Best Biotech Stocks To Watch For 2014: Cell Therapeutics Inc (CTIC)

Cell Therapeutics, Inc. (CTI), incorporated in 1991, develops, acquires and commercializes treatments for cancer. The Company�� research, development, acquisition and in-licensing activities concentrate on identifying and developing new ways to treat cancer. As of December 31, 2011, CTI focused its efforts on Pixuvri (pixantrone dimaleate) (Pixuvri), OPAXIO (paclitaxel poliglumex) (OPAXIO), tosedostat, brostallicin and bisplatinates. As of December 31, 2011, it developed Pixuvri, an anthracycline derivative for the treatment of hematologic malignancies and solid tumors. Another late-stage drug candidate of the Company, OPAXIO, is being studied as a potential maintenance therapy for women with advanced stage ovarian cancer, who achieve a complete remission following first-line therapy with paclitaxel and carboplatin. As of December 31, 2011, it also developed tosedostat in collaboration with Chroma Therapeutics, Ltd. (Chroma). On May 31, 2012, CTI completed its acquisition gaining worldwide rights to S*BIO Pte Ltd.'s (S*BIO) pacritinib.

Pixuvri

As of December 31, 2011, the Company developed Pixuvri, an aza-anthracenedione derivative, for the treatment of non-Hodgkin�� lymphoma (NHL), and various other hematologic malignancies, and solid tumors. Pixuvri was studied in the Company�� EXTEND, or PIX301, clinical trial, which was a phase III single-agent trial of Pixuvri for patients with relapsed, refractory aggressive NHL who received two or more prior therapies and who were sensitive to treatment with anthracyclines. On September 28, 2011, CTI announced that a second independent radiology assessment of response and progression endpoint data from its PIX301 clinical trial of Pixuvri was achieved with statistical significance. The results of the EXTEND trial met its primary endpoint and showed that patients randomized to treatment with Pixuvri achieved a significantly higher rate of confirmed and unconfirmed complete response compared to patients treated with standard chem! otherapy had a significantly increased overall response rate and experienced a statistically significant improvement in median progression free survival. Pixuvri had predictable and manageable toxicities when administered at the proposed dose and schedule in the EXTEND clinical trial in heavily pre-treated patients. In March 2011, the Company initiated the PIX-R trial to study Pixuvri in combination with rituximab in patients with relapsed/refractory diffuse large B-cell lymphoma (DLBCL). Pixuvri has also been studied in patients with HER2-negative metastatic breast cancer who have tumor progression after at least two, but not more than three, prior chemotherapy regimens. In the second quarter of 2010, the NCCTG opened this phase II study for enrollment. The study is closed to accrual and results are expected to be reported by the NCCTG later in 2012.

OPAXIO

OPAXIO is the Company�� biologically-enhanced chemotherapeutic agent that links paclitaxel to a biodegradable polyglutamate polymer, resulting in a new chemical entity. As of December 31, 2011, the Company focused its development of OPAXIO on ovarian, brain, esophageal, head and neck cancer. OPAXIO was designed to improve the delivery of paclitaxel to tumor tissue while protecting normal tissue from toxic side effects. In November 2010, results were presented by the Brown University Oncology Group from a phase II trial of OPAXIO combined with temozolomide (TMZ), and radiotherapy in patients with newly-diagnosed, high-grade gliomas, a type of brain cancer. The trial demonstrated a high rate of complete and partial responses and a high rate of six month progression free survival (PFS). Based on these results, the Brown University Oncology Group has initiated a randomized, multicenter, phase II study of OPAXIO and standard radiotherapy versus TMZ and radiotherapy for newly diagnosed patients with glioblastoma with an active gene termed MGMT that reduces responsiveness to TMZ. A phase I/II study of OPAXIO combined with radi! otherapy ! and cisplatin was initiated by SUNY Upstate Medical University, in patients with locally advanced head and neck cancer.

Tosedostat

In March 2011, the Company entered into a co-development and license agreement with Chroma Therapeutics, Ltd. (Chroma), providing the Company with marketing and co-development rights to Chroma�� drug candidate, tosedostat, in North, Central and South America. Tosedostat is an oral, aminopeptidase inhibitor that has demonstrated anti-tumor responses in blood related cancers and solid tumors in phase I-II clinical trials. Interim results from the phase II OPAL study of tosedostat in elderly patients with relapsed or refractory acute myeloid leukemia (AML) showed that once-daily, oral doses of tosedostat had predictable and manageable toxicities and results demonstrated response rates, including a high-response rate among patients who received prior hypomethylating agents, which are used to treat myelodysplastic syndrome (MDS), a precursor of AML.

Brostallicin

As of December 31, 2011, the Company developed brostallicin through its wholly owned subsidiary, Systems Medicine LLC, which holds rights to use, develop, import and export brostallicin. Brostallicin is a synthetic deoxyribonucleic acid (DNA) minor groove binding agent that has demonstrated anti-tumor activity and a favorable safety profile in clinical trials, in which more than 230 patients have been treated as of December 31, 2011. The Company uses a genomic-based platform to guide the development of brostallicin. A phase II study of brostallicin in relapsed, refractory soft tissue sarcoma met its predefined activity and safety hurdles and resulted in a first-line phase II clinical trial study that was conducted by the European Organization for Research and Treatment of Cancer (EORTC).

The Company competes with Bristol-Myers Squibb Company, Sanofi-Aventis, Pfizer, Roche Group, Genentech, Inc., Astellas Pharma, Eli Lilly and Company, Celgene, Telik, I! nc., TEVA! Pharmaceuticals Industries Ltd. and PharmaMar.

Best Blue Chip Companies To Buy For 2014: Galena Biopharma Inc (GALE)

Galena Biopharma, Inc. (Galena), formerly RXi Pharmaceuticals Corporation, incorporated on April 3, 2006, is a biotechnology company focused on discovering, developing and commercializing therapies addressing unmet medical needs using targeted biotherapeutics. The Company is pursuing the development of cancer therapeutics using peptide-based immunotherapy products, including its main product candidate, NeuVaxTM (E75), for the treatment of breast cancer and other tumors. NeuVax is a peptide-based immunotherapy intended to reduce the recurrence of breast cancer in low-to-intermediate HER2-positive breast cancer patients not eligible for trastuzumab (Herceptin; Genentech/Roche). On January 19, 2012, the Company initiated enrollment in its Phase 3 PRESENT clinical trial for NeuVax (E75 peptide plus GM-CSF) vaccine in low-to-intermediate HER2 1+ and 2+ breast cancer patients in the adjuvant setting to prevent recurrence (Clinicaltrials.gov identifier NCT01479244). The Prevention of Recurrence in Early-Stage, Node-Positive Breast Cancer with Low to Intermediate HER2 Expression with NeuVax Treatment study is a randomized, multicenter, multinational clinical trial that will enroll approximately 700 breast cancer patients. The Company�� Phase 2 trial of NeuVax achieved its primary endpoint of disease-free survival (DFS). On April 13, 2011, the Company completed its acquisition of Apthera, Inc.,(Apthera).

The Company focuses to start a Phase 2 trial comparing NeuVax in combination with trastuzumab (Herceptin) versus trastuzumab, alone, in a 300-patient, randomized study in the adjuvant breast cancer setting. The Company's second product candidate, Folate Binding Protein-E39 (FBP), is a vaccine, consisting of the peptides E39 and J65, aimed at preventing the recurrence of ovarian, endometrial, and breast cancers. On February 14, 2012, the Company announced the initiation of a Phase 1/2 clinical trial in two gynecological cancers: ovarian and endometrial adenocarcinomas. Folate binding protein has ! very limited tissue distribution and expression in non-malignant tissue and is over-expressed in more than 90% of ovarian and endometrial cancers, as well as in 20% to 50% of breast, lung, colorectal and renal cell carcinomas.

In April 2011, the Company acquired Apthera Inc and its NeuVax product candidate. The Company focuses on developing a pipeline of immunotherapy product candidates for the treatment of various cancers based on the E75 peptide, the advanced of which is NeuVax, which is targeted at preventing the recurrence of breast cancer. NeuVax has had positive Phase 1/2 clinical trial results for the prevention of breast cancer recurrence in patients who have had breast cancer and received the standard of care treatment (surgery, chemotherapy, radiotherapy and hormonal therapy as indicated). The Company had also initiated its Phase 3 PRESENT clinical trial of NeuVax for the prevention of breast cancer recurrence in early-stage low-to-intermediate HER2 breast cancer patients. NeuVax directs killer T-cells to target and destroy cancer cells that express HER2/neu, a protein associated with epithelial tumors in breast, ovarian, pancreatic, colon, bladder and prostate cancers. NeuVax is comprised of a HER2/neu-derived peptide called E75. E75 is a nine-amino acid sequence that is immunogenic (produces an immune response) and GM-CSF is a commercially available protein that acts to stimulate and activate components of the immune system such as macrophages and dendritic cells.

The Company also develops novel applications for NeuVax based on preclinical studies and phases 2 clinical trials which suggest that combining NeuVax and trastuzumab (Herceptin; Genentech/Roche) can increase antigen presentation by tumor cells by promoting receptor internalization and subsequent proteosomal degradation of the HER2 protein. The Company also is pursuing additional therapeutic indications for NeuVax that are in Phase 1/2 clinical trials. RXI-109, is a dermal anti-scarring therapy that targets! connecti! ve tissue growth factor (CTGF) and that may inhibit connective tissue formation in human fibrotic disease.

The Company competes with Roche Laboratories, Inc., Pfizer Inc., Bayer HealthCare AG, Sanofi-Aventis, US, LLC, Amgen, Inc., GlaxoSmithKline plc, Renovo Group plc, CoDa Therapeutics, Inc., Sirnaomics, Inc., FirstString Research, Inc., Merz Pharmaceuticals, LLC, Capstone Therapeutics, Halscion, Inc., Garnet Bio Therapeutics, Inc., AkPharma Inc., Promedior, Inc., Kissei Pharmaceutical Co., Ltd., Eyegene, Derma Sciences, Inc., Healthpoint Biotherapeutics, Pharmaxon, Excaliard Pharmaceuticals, Inc., Alnylam Pharmaceuticals, Inc., Marina Biotech, Inc., Tacere Therapeutics, Inc., Benitec Limited, OPKO Health, Inc., Silence Therapeutics plc, Quark Pharmaceuticals, Inc., Rosetta Genomics Ltd., Lorus Therapeutics, Inc., Tekmira Pharmaceuticals Corporation, Arrowhead Research Corporation, Regulus Therapeutics Inc. and Santaris.

5 Best Biotech Stocks To Watch For 2014: Navidea Biopharmaceuticals Inc (NAVB.A)

Navidea Biopharmaceuticals, Inc. (Navidea), formerly Neoprobe Corporation, incorporated in 1983, is a biopharmaceutical company focused on the development and commercialization of precision diagnostic agents. As of December 31, 2011, the Company�� radiopharmaceutical development programs included Lymphoseek (Lymphoseek, Kit for the Preparation of Technetium Tc99m for Injection), a radiopharmaceutical agent for lymph node mapping; AZD4694, an imaging agent, and RIGScan, a tumor antigen-specific targeting agent. In January 2012, the Company executed an option agreement with Alseres Pharmaceuticals, Inc. (Alseres) to license [123I]-E-IACFT Injection, also called Altropane, an Iodine-123 radiolabeled imaging agent, being developed as an aid in the diagnosis of Parkinson�� disease, movement disorders and dementia. In August 2011, the Company sold its gamma detection device line of business (the GDS Business) to Devicor Medical Products, Inc.

Lymphoseek

< p>

Navidea�� pipeline includes clinical-stage radiopharmaceutical agents used to identify the presence and status of disease. Lymphoseek (Kit for the Preparation of Technetium Tc99m for Injection) is a lymph node targeting agent intended for use in intraoperative lymphatic mapping (ILM) procedures and lymphoscintigraphy employed in the overall diagnostic assessment of certain solid tumor cancers. The lymph system is a component of the body�� immune system. The key components of the lymph system are lymph nodes-small anatomic structures that contain disease-fighting lymphocytes, filter lymph of bacteria and cancer cells, and signal infection in response to heightened levels of pathogens. In Navidea�� Phase III clinical studies of Lymphoseek, it detected over 99% of positive nodes identified by vital blue dye (VBD). As of December 31, 2011, Navidea, in co-operation with UC, San Diego affiliate (UCSD), completed or initiated five Phase I clinical trials, one multi-c enter Phase II trial and three multi-center Phase II trial! s ! involving Lymphoseek. Two Phase III studies were completed in subjects with breast cancer and melanoma. During the year ended December 31, 2011, data from NEO3-09 were released, which indicated that all primary and secondary endpoints for the study were met. As of December 31, 2011, third Phase III clinical trial for Lymphoseek in subjects with head and neck squamous cell carcinoma (NEO3-06) was in progress.

AZD4694

AZD4694 is a Fluorine-18 labeled precision radiopharmaceutical candidate for use in the imaging and evaluation of patients with signs or symptoms of cognitive impairment such as Alzheimer's disease (AD). It binds to beta-amyloid deposits in the brain that can then be imaged in positron emission tomography (PET) scans. Amyloid plaque pathology is a required feature of AD and the presence of amyloid pathology is a supportive feature for diagnosis of probable AD. Patients who are negative for amyloid pathology do not have AD. AZD4694 has b een studied in several clinical trials. Clinical studies through Phase IIa have included more than 80 patients to date, both suspected AD patients and healthy volunteers. No significant adverse events have been observed. Results suggest that AZD4694 has the ability to image patients quickly and safely with high sensitivity.

RadioImmunoGuided Surgery

As of December 31, 2011, RIGScan had been studied in a number of clinical trials, including Phase III studies. Navidea has conducted two Phase III studies, NEO2-13 and NEO2-14, of RIGScan in patients with primary and metastatic colorectal cancer, respectively. Both studies were multi-institutional involving cancer treatment institutions in the United States, Israel, and the European Union.

The Company competes with Pharmalucence, Eli Lilly, Bayer Schering, General Electric and GE Healthcare.

5 Best Biotech Stocks To Watch For 2014: Fuse Science Inc (DROP)

Fuse Science, Inc. ( Fuse Science), incorporated on September 21, 1988, is a consumer products holding company. The Company maintains the rights to sublingual and transdermal delivery systems for bioactive agents that can effectively encapsulate and charge many varying molecules in order to produce complete product formulations which can be consumed orally, applied topically or delivered otherwise sublingually or transdermally, thereby bypassing the gastrointestinal tract and entering the blood stream directly. The Fuse Science technology is designed to accelerate conveyance of medicines or nutrients relative to traditional pills and liquids and can enhance how consumers receive these products. In December 2012, the Company launched its initial DROP products, PowerFuse, an energy formulation in a concentrated drop and ElectroFuse, an electrolyte formula in a concentrated drop, online, with the expansion into targeted retail distribution channels.

The Company is developing formulations and devices, which are compatible with alternative delivery systems for energy, medicines, vitamins and minerals, among other bioactives. These alternative systems include, but are not limited to, sublingual, transdermal and buccal drug delivery methods. use Science has developed and continues to advance, in conjunction with its scientific team, sublingual and transdermal delivery systems for bioactives that can effectively encapsulate and charge varying molecules in order to produce product formulations which can be consumed orally, applied topically or otherwise delivered sublingually or transdermally, thereby bypassing the gastrointestinal tract and entering the blood stream directly. The delivery technology is consists of encapsulation vesicles and ion exchange permeation enhancers. This technology utilizes a gradient across the mucosa membrane to help deliver the bioactive more efficiently through the mucosa.

The Company�� products consist of EnerJel, PowerFuse and ElectroFuse. Ene! rJel is a topical product leveraging some of its technology, which is designed to address muscle fatigue and soreness, before, during and after physical activity. The product contains a natural anti-inflammatory and energy source which is directly applied to the problem area. PowerFuse contains natural ingredients, causes no sugar crash with zero calories and less than half the caffeine of an eight ounce cup of premium coffee. It is available in a great tasting Berry Blast Flavor. ElectroFuse contains natural ingredients, causes no sugar crash with zero calories, is easily portable and is available in a great tasting Salty-Sweet flavor.

Ford Is Hitting on All Cylinders

Ford (NYSE: F  ) reported second-quarter earnings of $1.2 billion on Wednesday, a profit that was driven by good – or at least, improving – results in Ford's operations all around the world.

Ford earned $2.6 billion, or $0.45 a share before taxes, handily beating Wall Street estimates that called for a result of $0.37 a share. Ford management also raised its full-year outlook for the company's profits.

The news drove Ford stock sharply higher. It closed on Wednesday at $17.37, up 2.54%, as investors digested the (very good) story behind Ford's regional earnings numbers.

A closer look with Ford's CFO
To get a deeper sense of that story, I spoke with Ford's chief financial officer, Bob Shanks. We reviewed the highlights for each of Ford's regional divisions in turn.

Shanks noted that, in the first quarter, Ford's three overseas divisions together posted a pre-tax loss of about $674 million. Ford's strong earnings in North America were more than enough to offset that loss, but it was still a big hit to the company's bottom line.

Things were different this time around. The three divisions together posted a loss of just $25 million, as big improvements in Ford's South America and Asia Pacific Africa regions nearly offset its loss in Europe – and that European loss was significantly lower.

Gains in all of Ford's overseas regions
Ford has gained market share and is getting better prices for its products in South America, Shanks said, thanks to its improved product line. But tough economic conditions in Brazil and unfavorable exchange-rate moves in other countries have kept profits tight. Still, Ford made $146 million in South America before taxes in the quarter, a solid result that represents a big improvement over recent totals.

The Ford EcoSport, an SUV based on the Fiesta's platform, is one of several new products doing well in South America, despite challenging conditions. Photo credit: Ford Motor Co.

It's a different story in Asia Pacific Africa, Ford's "catch-all" region, where massive expansion efforts in China and India have offset profit growth and kept the region near break-even in the last few quarters. Not so this time: Ford reported a pre-tax profit of $177 million for the region, its best ever.

I asked Shanks if that improvement in profit meant that Ford's investment cycle – the money it is paying out to build several new factories in Asia – had peaked. He said it hadn't, that Ford expects to be spending heavily on expansion for a few more quarters, and that the improved profits were driven largely by increased sales. Ford's sales in China are up over 40% so far this year.

The Ford Focus is one of China's best-selling cars. Photo credit: Ford Motor Co.

That's something for Ford investors to keep in mind: Ford made record profits in Asia despite big spending on a bunch of new factories. Once that spending is done and those factories are up and running, profits in this region – and for Ford as a whole – are likely to take a big jump up.

Europe is another place where Ford is likely to see significant gains over the next several quarters. New-vehicle sales in Europe are at 20-year lows, thanks to steep recessions, and most automakers in the region have booked big losses. Ford is no exception: The company lost $1.8 billion in Europe last year.

The Fiesta has been a European best-seller for years, but now it's being joined by more of Ford's global lineup. Photo credit: Ford Motor Co.

But there's a turnaround plan under way, and already we're seeing some signs that the plan is having a positive effect. Ford is in the process of closing three factories, a move that will lead to big restructuring charges in the near term but that should help boost earnings by 2015 or so.

Meanwhile, other moves are already helping. Ford has introduced several new products in Europe, and that has led to market share gains over the last couple of months. Shanks explained that the company has also made a big effort to go after only the most profitable kinds of sales, turning away from sales to rental-car fleets and emphasizing retail and high-margin commercial sales instead.

It's working: Ford's pre-tax losses in Europe in the second quarter narrowed to $348 million, down from $462 million last quarter – despite the significant restructuring charges that are already having an effect. That led Ford to raise its guidance: The company had expected to lose $2 billion in Europe this year, but now says that losses should be comparable to last year's, around $1.8 billion.

Ford remains very strong in its home market
Ford's turnaround in North America has put it in a very strong position here, and now that turnaround is being used as a template for Ford's overseas operations. But it's worth noting that Ford's earnings at home continue to be the key driver of the company's profits: Ford earned $2.3 billion in North America before taxes, up $319 million from the second quarter of last year.

Ford's stalwart F-150 and its Super Duty siblings are the company's biggest profit generators in North America. Photo credit: Ford Motor Co.

Strong sales of Ford's much-improved lineup of cars, including the Focus, the C-Max hybrid, and the hot new Fusion have all been big contributors. But the biggest contributor, as always, has been Ford's F-Series pickup line, which has benefited from an industrywide boom in full-sized pickup sales. Ford's operating margin in North America was 10.4%, an outstanding number.

The upshot: a good quarter, and signs of better things to come
As Shanks emphasized to me – and he's right – the story here is that Ford's success in North America is continuing even as all of its overseas regions are making progress.

For Ford shareholders, it's a great story: As the European turnaround continues and the Asian expansion starts to bear fruit, Ford stands to see significant increases in its overall profits over the next few years.

As those increases become more visible, Ford's stock price, already up over 28% so far in 2013, seems likely to keep moving upward.

Ford is laying the groundwork for huge sales growth in China over the next several years, growth that could drive major gains for Ford stock. A recent Motley Fool report, "2 Automakers to Buy for a Surging Chinese Market", says that Ford is one of two global auto giants poised to reap outstanding gains as China's auto boom continues to unfold. You can read this report right now for free – just click here for instant access.

Why the Dow Limped Into the Week

Three out of four blue-chip stocks backtracked on Monday as Wall Street considered June's slip in U.S. home orders and anticipated the beginning of the two-day Federal Open Market Committee meeting tomorrow. The slowdown in home sales, while sounding ominous, should be taken with a grain of salt: Sales fell just 0.4% from May, when they reached a six-and-a-half-year high. The Fed, while expected to keep rates absurdly low this week, has investors on edge as markets worry loose money policies may be ending soon. The Dow Jones Industrial Average (DJINDICES: ^DJI  ) fell 36 points, or 0.2%, to end at 15,521. 

Caterpillar (NYSE: CAT  ) stock refused to lose -- as it had in the previous four trading sessions -- and added 1.2% after announcing a $1 billion share buyback plan. The shares in particular will be bought back from a French bank. With a market cap around $54 billion, the repurchase agreement will materially reduce the number of shares outstanding, spreading the company's earnings among a smaller pool of shareholders. Caterpillar seems to think its stock is pretty cheap right now. It also bought back $1 billion of its stock in June. 

Telecom was the best-performing sector of the day, and Verizon Communications (NYSE: VZ  ) played its own bullish role, tacking on 0.9%. It's looking like more and more of a sure thing that Verizon will expand its wireless network into Canada to boost its pool of potential customers. The would-be Canadian competition is taking notice, too: The Canadian Industry minister is sitting down with the country's anxious top telecom execs today to ease their concerns over Verizon's invasion.

Hewlett-Packard (NYSE: HPQ  ) , on the other hand, hasn't been causing any skittish foreign execs to huddle with top lawmakers recently. While HP is the second-largest global PC vendor by volume, it was the first-largest last year. Not only that but the PC market itself is on a well-publicized secular decline caused largely by the surging tablet market, a fact highlighted in a Sunday New York Times article. HP shares lost 1.2% Monday.

Finally, Bank of America (NYSE: BAC  ) shed 1.4% as Philadelphia became the latest municipality to file suit against banks allegedly involved in the widespread Libor interest rate fixing case. Philadelphia claims that between 2009 and 2011, the city was essentially scammed out of more than $100 million by an illegal collusion by major banks misreporting real interest rates. In a separate case today, the Charlotte-based bank was sent back to court for mishandling a loan to a casino development project in the midst of the financial crisis.

The U.S. government has piled on more than $10 trillion of new debt since 2000. Annual deficits topped $1 trillion after the financial crisis. Millions of Americans have asked: What the heck is going on? The Motley Fool's new free report, "Everything You Need to Know About the National Debt," walks you through with step-by-step explanations about how the government spends your money, where it gets tax revenue from, the future of spending, and what a $16 trillion debt means for our future. Click here to read the full report.

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

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

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

Calling all cash flows
When you are trying to buy the market's best stocks, it's worth checking up on your companies' free cash flow once a quarter or so, to see whether it bears any relationship to the net income in the headlines. That's what we do with this series. Today, we're checking in on NiSource (NYSE: NI  ) , whose recent revenue and earnings are plotted below.

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

Over the past 12 months, NiSource burned $331.7 million cash while it booked net income of $483.2 million. That means it burned through all its revenue and more. That doesn't sound so great. FCF is less than net income. Ideally, we'd like to see the opposite.

All cash is not equal
Unfortunately, the cash flow statement isn't immune from nonsense, either. That's why it pays to take a close look at the components of cash flow from operations, to make sure that the cash flows are of high quality. What does that mean? To me, it means they need to be real and replicable in the upcoming quarters, rather than being offset by continual cash outflows that don't appear on the income statement (such as major capital expenditures).

For instance, cash flow based on cash net income and adjustments for non-cash income-statement expenses (like depreciation) is generally favorable. An increase in cash flow based on stiffing your suppliers (by increasing accounts payable for the short term) or shortchanging Uncle Sam on taxes will come back to bite investors later. The same goes for decreasing accounts receivable; this is good to see, but it's ordinary in recessionary times, and you can only increase collections so much. Finally, adding stock-based compensation expense back to cash flows is questionable when a company hands out a lot of equity to employees and uses cash in later periods to buy back those shares.

So how does the cash flow at NiSource look? Take a peek at the chart below, which flags questionable cash flow sources with a red bar.

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

When I say "questionable cash flow sources," I mean items such as changes in taxes payable, tax benefits from stock options, and asset sales, among others. That's not to say that companies booking these as sources of cash flow are weak, or are engaging in any sort of wrongdoing, or that everything that comes up questionable in my graph is automatically bad news. But whenever a company is getting more than, say, 10% of its cash from operations from these dubious sources, investors ought to make sure to refer to the filings and dig in.

With 22.3% of operating cash flow coming from questionable sources, NiSource investors should take a closer look at the underlying numbers. Within the questionable cash flow figure plotted in the TTM period above, other operating activities (which can include deferred income taxes, pension charges, and other one-off items) provided the biggest boost, at 17.4% of cash flow from operations. Overall, the biggest drag on FCF came from capital expenditures.

A Foolish final thought
Most investors don't keep tabs on their companies' cash flow. I think that's a mistake. If you take the time to read past the headlines and crack a filing now and then, you're in a much better position to spot potential trouble early. Better yet, you'll improve your odds of finding the underappreciated home-run stocks that provide the market's best returns.

Can your retirement portfolio provide you with enough income to last? You'll need more than NiSource. Learn about crafting a smarter retirement plan in "The Shocking Can't-Miss Truth About Your Retirement." Click here for instant access to this free report.

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

Add NiSource to My Watchlist.

2 Takeaways From Microsoft's Earnings Meltdown

Microsoft's (NASDAQ: MSFT  ) red-hot 2013 hit a major roadblock recently, when its hugely disappointing Q2 earnings announcement sent shares sinking by double digits. To be sure, there wasn't a lot to like in the news out of Redmond, as the company's precarious place in our increasingly mobile future was brought once again into full light. And while Foolish investors know better to focus on a single bad quarter, it's looking more and more like the issues facing the company will probably produce some pretty nasty long-term side effects for the software giant as well. In this video, tech and telecom analyst Andrew Tonner highlights two key themes that point to Microsoft's recent earnings report and what they mean for investors.

Unless something changes, and fast, it's looking more likely that Microsoft will lose its massive influence at a time when 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 among the five kings of tech. Click here to keep reading.

Maturing Pipeline Boosts Biogen Earnings

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

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

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

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

Metric

Biogen

Celgene

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

Sources: Biogen and Celgene press releases.  

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

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

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

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

Top 5 Safest Companies To Invest In 2014

Royal Dutch Shell and ExxonMobil both recently announced incredibly expensive, incredibly ambitious offshore projects in the Gulf of Mexico. The massive oil reserves that exist beneath the ocean floor are increasingly being targeted by the oil majors in their quest to increase production. In this video, Fool.com contributor Aimee Duffy looks at the company's behind three new offshore innovations that will make big oil's big challenge safer, and more efficient.

National Oilwell Varco is perhaps the safest investment in the energy sector due to its industry-dominating market share. This company is poised to profit in a big way; its customers are both increasing the number of new drilling rigs and updating aging fleets of offshore rigs. To help determine if it could be a good fit for your portfolio, you're invited to check out The Motley Fool's premium research report featuring in-depth analysis on whether NOV is a buy today. For instant access to this valuable investor's resource, simply click here now to claim your copy.

Top 5 Safest Companies To Invest In 2014: 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 ETF Authority]  

  Current Price: $47.68 12-month target: $80

  PBR plans to invest $174 billion by 2013 to support the largest oil discovery in 30 years. PetroBras has both the backing of the Brazilian government who invested over $30 billion and the Chinese private investors who have pledged over $20 billion to PBR’s discovery. Brazils government proposed to make PBR the only operator of all new offshore pre-salt oil fields yet to be exploited. PetroBras expects oil production to increased from 2.4 million barrels a day to around 5.7 million barrels a day by 2020. PBR has long-term views and have been expanding renewable energy programs such as solar, biofuel, and energy. Biofuel production is expected to increase 18% by 2013.
• [By David Sterman]

  Market Value: $173 billion
  Fall from 52-week high: 38%

  This Brazilian oil giant has lost $100 billion in market value since March 2011. That's a lot of dough. The sell-off is the result of a drop in oil prices, slightly stricter government policies regarding oil and gas royalties, and recent moves to issue more stock and debt to help fund business development. (Though the company now vows to stop issuing any more equity.)

  Indeed, this company has been sucking in cash for quite some time, generating a cumulative $40 billion in free cash flow loss in just the past two years. Pretty soon, though, losses will morph into outsized profits when the company's heavy investments to tap massive offshore oil fields finally bear fruit. In 2007, 2008 and again in 2009, Petrobras discovered three new offshore oil fields, known as Tupi, Jupiter, and yet-to-be-named site off of the state of Sao Paolo.

  It's the Tupi energy play that should pique your interest. It's the largest new find of oil since the Kashagan oil field was discovered in Kazakhstan in 2000 and instantly put Brazil's oil reserve base on par with industry giant Norway. Tally up all of its fields, and Petrobas' engineers estimate the country is sitting on more than 12 billion barrels of oil.

  The recent sell-off has put shares of Petrobras deep into bargain territory, trading at just 7.3 times projected 2011 profits and 1.2 times tangible book value.

• [By Dave Friedman]

  Institutional investors bought 78,663,680 shares and sold 101,125,380 shares, for a net of -22,461,700 shares. This net represents 0.23% of common shares outstanding. The number of shares outstanding is 9,872,826,100. The shares recently traded at $27.61 and the company’s market capitalization is $170,178,700,000.00. About the company: Petroleo Brasileiro S.A. – Petrobras explores for and produces oil and natural gas. The Company refines, markets, and supplies oil products. Petrobras operates oil tankers, distribution pipelines, marine, river and lake terminals, thermal power plants, fertilizer plants, and petrochemical units. The Company operates in South America and elsewhere around the world.

Top 5 Safest Companies To Invest In 2014: 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.

Top 5 Growth Stocks To Watch 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 Roger]

  Under Armour (NYSE:UA), a maker and designer of apparel, footwear and accessories that target sports enthusiasts, has more than doubled in one year. But despite the advance, many research firms still have a “strong buy” recommendation on the stock. And S&P recently revised its annual target to $93.

  Technically UA has advanced on a series of stair steps, sometimes called “base moves.”? These are very bullish formations that resemble cups. UA reversed up recently following a signal from our proprietary Collins-Bollinger Reversal (CBR) indicator. If the recent pullback to its 50-day moving average (blue line) holds, then the next move up should break the prior high with a target of $85.

  Traders could take risk positions now with a target of $85 to $90. But be careful and use stop-loss orders to protect against a violent reversal, which could drop prices back to support at $62 where this volatile stock could be bought again.

• [By Fernandez]

  Under Armour designs, develops, markets, and distributes performance apparel, footwear, and accessories for men, women, and youth primarily in the United States and Canada.
  

  You’ve probably seen the company’s “Protect This House” or “Click-Clack” commercials, and probably seen anyone from the weekend warrior to professional sports teams wearing the company’s moisture-wicking synthetic fabrics, which are designed to keep perspiration away from the skin, and regulate body temperature regardless of weather conditions.

  I must admit for full disclosure that I am an Under Armour nut, and own about 20 pairs of their shorts, shirts and shoes.

  I can attest from personal experience as a natural bodybuilder and athlete that the Under Armour apparel are the best workout clothing I have ever worn, and they look pretty darn cool too.

  Now let me make a clear distinction between a great company, and a great stock.

  Up until recently, Under Armour was the former, but not the latter.

  It has now entered into a zone where the valuation metrics, even in the face of a consumer slowdown, is looking more and more attractive.

  In fact, Under Armour just released earnings Monday.

  They were pretty much in line with analyst’s expectations, and then Under Armour slightly lowered their forward guidance for the remainder of 2008 based on those same consumer headwinds.

  The market liked what it heard sending shares up 20% (of course, the overall market was up 10%, so…). Shares have since rebounded further are now up almost 50% from their lows just last week!

  This leads me to my investment thesis in shares of Under Armour.

  I believe that Under Armour represents one of the quintessential brands of this decade when it comes to sports apparel, the way Under Armour’s fiercest rival Nike (NYSE: NKE) dominated the 90’s.

  Until now the valuation of the company was not commensurate with the! projected profit and growth, which I thought were way too high, and still might be, along with certain inventory related problems that the company now seems to be getting a handle on.

  Still, with the spike in share price, along with the uncertainty in the market and overall economy, I feel that we will still be able to purchase shares of this great company at a great price in the near future and that we’re seeing a bit of a short squeeze in shares of Under Armour.

  Why I Like the Company: One of the quintessential brands of this decade; Valuation is reaching reasonable to “cheap” levels depending on direction of consumer market and Under Armour’s stock price; Dedicated and fully invested founder with over 77% voting power via class B shares; Improved business fundamentals via better inventory controls and operational structure, and new product offerings; Further expansion available outside the U.S.; Relatively higher margins than competition

• [By Glenn]  

  Current Price: $27.27 12-month target: $37

  I see potential in opportunities for new product adjacencies, and expanding distribution worldwide. Footwear growth will continue to increase. Revenues for these products have increased over 69% in 2009. Adding to this I still see growth in Under Armour’s apparel sales, which are up 8%. Under Armor had yet to even break into the international market, which offers a plethora of new opportunities for this growing brand. I believe sales will rise drastically in 2010 driven by international sales, new women’s clothing line, and expansion within their own footwear line.

Top 5 Safest Companies 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.

Limelight Networks Picks New CFO

Tempe, Ariz.-based Limelight Networks (NASDAQ: LLNW  ) will soon have a new CFO.

On Wednesday, Limelight announced that current Chief Financial Officer Douglas Lindroth has entered a "transition period," after which he plans to leave the company to "pursue other business and professional interests." Replacing him will be new CFO Peter Perrone, who comes from Goldman Sachs' Merchant Banking Division, having experience in Internet infrastructure companies such as Limelight. He is a current member of Limelight's board of directors. He will step down from the Limelight board as he joins the firm as a senior vice president.

Perrone is joining Limelight as an employee on Aug. 19, and will transition to the CFO's post as Lindroth transitions out of it.

In a concurrent filing with the SEC, Limelight noted that it will be paying Perrone an annual salary of $325,000, plus:

An annual incentive bonus targeting $200,000. 350,000 Restricted Stock Units and 1 million stock options, both vesting over four years 100,000 more Restricted Stock Units vesting 30 days after he begins employment.

link

Google Unveils New Nexus 7

LinkedIn Can Become Facebook Before Facebook Can Become LinkedIn

This Sector Is About to See a Huge Jump in Profits

The crisis is OVER for big banks...

 

During the 2008-2009 credit crisis, financials were one of the worst-hit sectors. Without cash injections from our government, several big companies in this sector may have fallen into bankruptcy. That includes heavyweights like Citigroup and Bank of America.

 

But things are looking much better these days. And bank stocks are setting up to be huge winners over the next 12 months.

 

In the first few years following the crisis, banks faced huge headwinds. The housing market was still depressed. In short, there were tons of foreclosures (bad assets) on the balance sheet of banks. These homes couldn't be sold at market prices.

 

Plus, heavy regulation was on the way. Most new rules proposed by our government were designed to shrink banks – which in turn would lower profits.

 

Under these conditions, it did not make much sense to own banks.

 

However, many of these conditions have now reversed. And many banking stocks – despite their quick move higher over the past few months – stand to benefit greatly both in the short and long term.

 

Let me explain...

 

Over the past two months, interest rates have been on a tear. The 10-year Treasury bond yield is up 49%. And mortgage rates have jumped from 3.4% to 4% (an 18% increase) in the same time frame. These are both 15-month highs. And for interest rates... those are major moves in such a short period.

 

 

Rising interest rates are widely viewed as a negative for stocks. Borrowing costs for consumers and businesses are moving higher. Plus, higher interest rates could persuade investors to move their money out of stocks and into interest-paying alternatives.

 

But higher interest rates are great for bank stocks. That's because the spread between the cost to borrow money and the actual rates banks can charge their customers widens.

 

You see, banks have plenty of cheap money at their disposal. (The average interest rate on a savings account, for example, is about 0.44% right now.) But with interest rates on long-term debt rising, banks can lend that money back out at much higher rates – in a mortgage at 4%, for example.

 

The higher those rates go, the wider the spread gets... and the bigger the banks' profits.

 

Last week, JPMorgan CEO Jamie Dimon explained that if interest rates climbed 300 basis points (3%), his bank would make an extra $5 billion in profits.

 

And rising interest rates are not the only reason to own bank stocks...

 

Today, home prices are rising at their fastest pace in seven years. Keep in mind, many large banks wrote down billions of dollars in mortgages in the past few years. Now that the housing market is rebounding, some of these foreclosed homes can now be sold. If the housing market continues to rebound – which most experts predict – this will result in huge profits for banks going forward.

 

Also, banks have done a great job adapting to new regulations. Sure, new capital requirements have resulted in lower profits. But almost every management team in the banking industry has updated investors about their progress on these new rules in each passing quarter. Now that most have been implemented, this risk seems largely priced in to bank stocks here.

 

To play this banking trend, you can buy individual names like Bank of America (huge leverage to housing) or JPMorgan (major beneficiary of rising interest rates). Based on the catalysts mentioned above, I'm confident these two names will easily outperform the market in the short and long term.

 

Another good way to play this trend is to buy the Financial Select Sector SPDR Fund (XLF). Its top holdings include some of the biggest banks in North America. The yield on XLF is 1.6%, lower than the average S&P 500 company. But I expect earnings to grow at least three times faster over the next 12 months. That makes XLF, trading at 11 times earnings, dirt-cheap.

 

I suggest adding some financial exposure to your portfolio right away.

 

Good investing,

 

Frank Curzio

The 5 Best-Selling Vehicles in June

June was a phenomenal month for automakers, as the U.S. seasonally adjusted annual rate for light vehicles came in at 15.98 million vehicles, much higher than anything we've seen since the recession. For the first time in almost two decades, all three domestic automakers -- Ford (NYSE: F  ) , General Motors (NYSE: GM  ) , and Chrysler -- gained market share in the first quarter. With no further ado, here are the top five best-selling light vehicles in June.

1. Ford F-Series -- 68,009 units sold in June, up 23.6% from last year

F-Series. Photo credit: Ford Motor.

This should come as no surprise, since the F-Series has been America's best-selling vehicle for 31 years and the best-selling truck for 36 years. Ford has dominated the full-size pickup truck market and has done so in an impressive fashion since rival GM took a government bailout -- giving more consumers a big reason to buy Ford. Consumers and investors love the truck for different reasons. For consumers, it's a tough and tested work truck, with improved gas mileage to be an everyday vehicle as well. For investors, this vehicle brings in a majority of Ford's profits, so the better the sales are, the better investment Ford becomes. Everyone is happy this year.

2. Chevrolet Silverado -- 43,259 units sold in June, up 28.9% from last year

Chevy Silverado. Photo credit: General Motors.

GM's Chevy Silverado has some work to do. While being second place is still a big win, it trails Ford's F-Series by a large amount. Chevy also had to dish out a significant amount of incentives, as its 2014 model is rolling into the lots and competing with the 2013 model -- both with the same price tag. GM just kicked off its marketing and advertising campaign to try to boost sales to catch its longtime Ford rival. We probably won't see the Silverado top the F-Series anytime soon, but the gap could narrow over the summer months.

3. Toyota Camry -- 35,870 units sold in June, up 11.7% from last year

Toyota Camry. Photo credit: Toyota Motor.

Toyota's (NYSE: TM  ) Camry has long held the best-selling car position in the U.S. market. While it's up 11.7% compared with last year, a rising tide in June raised all boats -- it's actually down 2.9% for the year, compared with 2012. This is no surprise, as Nissan's Altima and Ford's Fusion are gaining ground quickly by introducing stylish designs in a normally bland segment. Sensing the competition, Toyota redesigned the Camry last year to give it more personality and a better interior. The midsize sedan segment is highly competitive, but Camry still stands on top because of its history of dependability and fuel efficiency.

4. Chevrolet Cruze -- 32,871 units sold in June, up 73.2% from last year

GM's Chevrolet Cruze. Photo credit: General Motors.

GM's Chevrolet Cruze made a splash this June, with its sales up significantly. GM's compact car changed things up in its segment when it was introduced in 2011, instantly challenging Honda's Civic or the Toyota Corolla -- an unusual event for domestic automakers. It's refreshing to see domestic automakers able to compete in small and fuel-efficient segments. Chevrolet's Cruze is a great sign for the future of GM, which has a long uphill battle to regain lost consumers from years of poor-quality vehicles and a government bailout.

5. Honda Accord -- 31,677 units sold in June, up 9.5% from last year

Honda Accord. Photo credit. Honda Motor.

Here's another winner in the ultra-competitive midsize sedan segment. Honda's (NYSE: HMC  ) 2013 Accord was redesigned and comes in much smaller and more spacious than its predecessor. Some critics were worried that the new Accord would follow in footsteps of Honda's Civic, which disappointed with a very plain interior. That isn't the case. The Accord has a much more premium feel, with higher-quality materials and a sleek look. It also added a little power to its 2.4-liter engine, while upgrading its V-6 to push out 278 hp.

Investing takeaway
Being in the top five for sales is hugely important for each automaker. It represents large volumes that can quickly gain or lose overall market share for each automaker. In GM and Ford's case, it means even more than market share. It decides the sales leader in the most profitable segment on the planet -- full-size trucks. Right now, the industry as a whole is seeing transaction prices increase, while incentive spending is down. As our economy gradually improves, this is a winning formula for all involved, and the automakers on top will be positioned to bring in a nice yearly profit. Expect Ford and Toyota to both bring in impressive second-quarter earnings reports.

Which two automakers are best positioned to bring huge profits for investors? A recent Motley Fool report, "2 Automakers to Buy for a Surging Chinese Market," names two global giants poised to reap big gains that could drive big rewards for investors. You can read this report right now for free -- just click here for instant access.

Boeing's KC-46 Tanker May Be Taking to the Skies Earlier Than You Think

Boeing (NYSE: BA  ) shareholders, rejoice! After a major design review in early July, Boeing's KC-46 Tanker looks like it's not only on schedule, but actually ahead of schedule. This is especially good news considering that during the development phase, cost overruns on the tanker soared to approximately $700 million -- for which Boeing is responsible. But with this latest review, Boeing may be set to move on to production. Here's what you need to know.

The KC-46A will replace the aging KC-135, seen here. Image: U.S. Air Force, via Wikimedia Commons. 

Good news
The final report for the Critical Design Review, or CDR, hasn't been released, but following the review Boeing released a statement stating: "Boeing believes the review went well and initial feedback from our customer has been positive. Final approval by the USAF is anticipated in the near future." 

If Boeing does get CDR approval, it'll be able to move onto tanker production, something Boeing and the Air Force eagerly anticipate. More good news? Boeing is scheduled to deliver the first 18 out of 179 tankers in 2017. But Boeing has said that if there aren't major issues reveal in the CDR, it expects to deliver the first completed tanker by the end of 2016.  

Considering the Air Force has said the KC-46 tanker is its No. 1 modernization priority as it replaces the aging KC-135, this may be especially good news for Boeing's reputation, which in the past hasn't fared as well. 

Major profits ahead
With a price tag of $52 billion, the KC tanker contract is one of the Pentagon's largest weapons initiatives. Further, some analysts estimate that with future parts and maintenance, the contract worth could climb to $100 billion. This is great news for Boeing, but it's also great news for its subcontractors on the project -- Honeywell International  (NYSE: HON  ) is supplying the auxiliary power unit and cabin pressure control unit, Northrop Grumman (NYSE: NOC  ) is supplying Large Aircraft Infrared Countermeasures, United Technologies' (NYSE: UTX  ) subsidiary Pratt & Whitney is supplying the engines, Rockwell Collins  (NYSE: COL  ) is supplying the integrated display system, and Raytheon is supplying the digital radar-warning receiver. All in all, this is a major initiative for defense contractors, and good news for Boeing is good news for all. 

The news regarding Boeing's CDR is certainly welcome, but there's still a lot to do before the tanker makes it to flight status. Still, so far Boeing has done an admirable job with the KC-46 tanker. Let's hope it keeps it up, because with $100 billion riding on the line, this is definitely something that could affect Boeing's stock.

Boeing's future profits look promising, and right now may be a great to to buy. However, there are some things to consider before purchasing its stock. A recent Motley Fool report, "3 Strong Buys for a Global Economic Recovery," outlines three companies, including Boeing, that could take off when the global economy gains steam. Click here to read the free full report!

Google Introduces Upgraded Maps App

Nearly a month after its acquisition of mobile map service provider Waze, Google (NASDAQ: GOOG  ) has updated its map app for both smartphones and tablets, the company announced today.

The new, upgraded Google Maps is compatible with both smartphones and tablets running Android OS, and will soon be available for Apple's (NASDAQ: AAPL  ) iPhones and iPads. Google's December 2012 release of Maps was not compatible with iPads.

According to Google's blog, the new Maps app has several enhanced features, including one-touch browsing, enhanced navigation, and Zagat reviews of local businesses. Similar to Waze, the new Google Maps allows users to access potential road condition problems, including incident details, and suggest an alternative route, if one is available.

Google also announced that beginning Aug. 9, Google Maps Latitude, which lets users share their location, and check-in features will no longer be compatible with the upgraded Maps, and will "be retired from older versions." Google also said its offline Maps feature is no longer available.

link

U.K. Stocks Drop From a Seven-Week High as ARM Declines

U.K. stocks slipped from their highest level in seven weeks, trimming the FTSE 100 (UKX) Index's fourth consecutive weekly gain, as Google Inc. and Microsoft Corp. posted worse-than-projected earnings.

ARM Holdings Plc (ARM) lost 2.6 percent, leading European technology companies lower before it publishes half-year results next week. IMI Plc (IMI) gained 2 percent as Citigroup Inc. listed the engineering company among its most preferred stocks.

The FTSE 100 declined 3.69 points, or 0.1 percent, to 6,630.67 at the close, paring a loss of as much as 0.6 percent in the final 30 minutes of trading in London. The gauge still advanced 1.3 percent this week as Federal Reserve Chairman Ben S. Bernanke said the U.S. central bank remains flexible on when to reduce its asset purchases. The FTSE All-Share Index lost 0.1 percent today, while Ireland's ISEQ Index fell 0.3 percent.

"An altogether more repressed sentiment prevails today," Brenda Kelly, a market strategist at IG Group, wrote in a note to clients today. "Disappointing earnings from the global technology sector threaten to take the wind out of the stock market's sails."

Google, the owner of the Internet's most popular search engine, posted second-quarter sales and profit that missed estimates as advertisers shifted their budgets toward mobile devices, lowering the average cost per click. Microsoft posted fiscal fourth-quarter profit that fell short of analysts' projections because of weaker demand for personal computers running its Windows operating system.

ARM Holdings lost 2.6 percent to 897.5 pence for its fourth decline this month. The company, which designs chips for devices running Google's Android software, will release half-year earnings on July 24.

British Banks

U.K. lenders dropped, with HSBC Holdings Plc (HSBA) slipping 0.5 percent to 737.5 pence. Investec Plc lowered its rating on the FTSE 100's heaviest stock to hold from buy. The stock's price doesn't reflect potential analyst cuts to net-interest margin and income forecasts, according to Investec.

Lloyds Banking Group Plc (LLOY) fell 1.1 percent to 69.25 pence. Two people familiar with the matter said the U.K. government has considered selling as much as 5 billion pounds ($7.6 billion) of the lender's shares. The state may sell a 5 to 10 percent stake as soon as September, the people said.

IMI increased 2 percent to 1,400 pence, extending its highest price since at least 1988. Citigroup analyst Mark Fielding predicted further "significant margin upside" for the company. He also cited its strong balance sheet.

Vodafone Group Plc (VOD) added 1.3 percent to 193.85 pence, its biggest advance in two weeks. The world's second-largest wireless carrier posted a smaller drop in first-quarter service sales than analysts had predicted as markets outside Europe improved.

Why Align Technology 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 Align Technology (NASDAQ: ALGN  ) , a medical device and software design company for the dental and orthodontics industry, jumped as much as 12% after reporting better-than-expected second-quarter results.

So what: For the quarter, Align reported solid growth in sales of its Invisalign clear aligner (by far, its primary revenue generator), which helped propel revenue higher by 12.5%, to $163.8 million. Profits grew by a tamer 3%, to $0.36 per share; but this was still higher than last year's $0.34 in EPS, and considerably higher than the $0.28 per share Wall Street had been expecting. The company did, however, note that it changed its policy to no longer charge its customers for so-called mid-course corrections. In the second-quarter, for instance, it reduced revenue by $2.7 million. Looking ahead, Align is forecasting $154.9 million to $160 million in sales for the third-quarter, with $0.28-$0.30 in EPS. The Street appears to have slightly loftier expectations of $0.31 in EPS, and $156.1 million in revenue at the moment.

Now what: Align certainly has shareholders who are looking for double-digit growth potential chomping at the bit to jump onboard, but I'm not nearly as excited. The two factors that concern me about Align are consumer spending habits, and its valuation. Consumer discretionary income just isn't there right now, and I can foresee Align having a more difficult time gaining new customers if taxes continue to increase, or if the job market even has the slightest downdraft. Similarly, Align isn't exactly cheap, either, at 29 times forward earnings. Having worked in the dental industry many moons ago, I can tell you firsthand how fickle consumers can be when it comes to spending money on themselves in slow-growth economic environments. For now, I'd suggest keeping to the sidelines, and watching Align from a safe distance.

One company you don't have to put caution tape around is The Motley Fool's chief investment officer's No. 1 stock selection for this year. Find out which stock it is in the special 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.

Is Pfizer Destined for Greatness?

Investors love stocks that consistently beat the Street without getting ahead of their fundamentals and risking a meltdown. The best stocks offer sustainable market-beating gains, with robust and improving financial metrics that support strong price growth. Does Pfizer (NYSE: PFE  ) fit the bill? Let's take a look at what its recent results tell us about its potential for future gains.

What we're looking for
The graphs you're about to see tell Pfizer's story, and we'll be grading the quality of that story in several ways:

Growth: Are profits, margins, and free cash flow all increasing? Valuation: Is share price growing in line with earnings per share? Opportunities: Is return on equity increasing while debt to equity declines? Dividends: Are dividends consistently growing in a sustainable way?

What the numbers tell you
Now, let's take a look at Pfizer's key statistics:

PFE Total Return Price data by YCharts.

Passing Criteria

3-Year* Change

Grade

Revenue growth > 30%	3.4%	Fail
Improving profit margin	89.3%	Pass
Free cash flow growth > Net income growth	161.8% vs. 95.7%	Pass
Improving EPS	94%	Pass
Stock growth (+ 15%) < EPS growth	88.9% vs. 94%	Pass

Source: YCharts. *Period begins at end of Q1 2010.

PFE Return on Equity data by YCharts.

Passing Criteria

3-Year* Change

Grade

Improving return on equity	86.1%	Pass
Declining debt to equity	(4.4%)	Pass
Dividend growth > 25%	33.3%	Pass
Free cash flow payout ratio < 50%	43.4%	Pass

Source: YCharts. *Period begins at end of Q1 2010.

How we got here and where we're going
Pfizer comes through with flying colors, missing out on a perfect score only because its revenue hasn't held onto its late 2010 highs. However, net income has boomed over the last two years and has been outpaced by free cash flow, a performance that's contributed to two passing grades today. But how might Pfizer increases its revenue in the coming years? Let's dig a little deeper to find out.

Earlier this week, Pfizer announced that tofacitinib (marketed as XELJANZ), a rheumatoid arthritis treatment, has been approved for patients who had an inadequate response to existing therapies in several countries around the world, including Switzerland, Argentina, Kuwait, the UAE, and Russia. Up to a third of RA patients don't adequately respond to available treatments, and about half stop responding to any particular DMARD treatment within five years, according to a Pfizer press release. And with millions of patients at stake, XELJANZ could become a blockbuster, despite having a rather awful name.

Palboclib, a treatment for breast cancer, which Pfizer licenses from Onyx Pharmaceuticals (NASDAQ: ONXX  ) recently received breakthrough therapy designation status from the Food and Drug Administration this year.  On the other hand, Pfizer's new chronic myeloid leukemia drug Bosulif has been rejected by the U.K.'s cost agency National Institute for Health and Clinical Excellence. You win some, you lose some.

Pfizer's most notable recent move was the spinoff of Zoetis (NYSE: ZTS  ) , its former animal-health subsidiary, earlier this year. Zoetis has lost a bit of steam since it hit the market earlier this year, underperforming its former corporate parent since February. However, interest was high enough in a recent exchange of Pfizer shares for Zoetis shares that the program was oversubscribed, and only about a quarter of the nearly 1.7 billion shares tendered were accepted for the transfer. That indicates a bit less excitement in Pfizer's future than its recent share performance might suggest -- roughly a quarter of Pfizer's entire float was tendered for the exchange.

Pfizer's board also authorized a new $10 billion share-repurchase program this past week. This new buyback, plus the remaining $3.9 billion from the existing buyback plan, adds up to nearly 7% of the company's current market cap. Over the past few years, Pfizer has embarked upon four different repurchase programs worth roughly $39 billion, including the latest authorization. Pfizer also plans to retire around $11.4 billion in shares with its Zoetis spinoff. That adds up to a pretty hefty nudge on EPS, but with shares moving toward all-time highs last reached during the dot-com bubble, investors should wonder if all these buybacks are really the best use of Pfizer's hoard.

Putting the pieces together
Today, Pfizer has many of the qualities that make up a great stock, but no stock is truly perfect. Digging deeper can help you uncover the answers you need to make a great buy -- or to stay away from a stock that's going nowhere.

One of the best parts of owning big pharma stocks is their attractive dividends, but smart investors know the importance of diversifying -- seeking high-yielding stocks from multiple industries. The Motley Fool's special free report "Secure Your Future With 9 Rock-Solid Dividend Stocks" outlines the Fool's favorite dependable dividend-paying stocks across all sectors. Grab your free copy by clicking here.

50 New Signs AIG's Management Is Setting Course for Shareholder Value

Investors in American International Group (NYSE: AIG  ) are enjoying some lift-off this morning as the insurer is up 1.6% just after 1 p.m. EDT. Though headlines this morning were singularly focused on one segment of the company's operations, the news shows a common focus of AIG's management that investors should be excited about for future opportunities for shareholder value.

Flying high
This morning's news centers around a new deal between AIG's International Leasing Finance Corp, an aircraft leasing company, and Embraer, the world's largest manufacturer of commercial jets up to 120 seats. ILFC has finalized an order for 50 new jets from Embraer, with the option for another 50 jets at a later time.

Though this headline isn't anything exceptional for a jet leasing firm, the interesting twist comes from the fact that AIG has been trying to sell ILFC for the past few years and is currently waiting for a group of Chinese financial firms to close a signed deal for the operations for $4.2 billion. The Chinese consortium has already missed two deadlines, so investors and Wall Street are watching to see if the deal goes through after all.

AIG's and ILFC's management has already stated they are focused on getting the current deal closed, but are open to new deals or an IPO if it cannot be resolved. In the mean time, the purchase of new jets for the leasing company is in response to customer demand, signaling that management is still willing to make commitments that will help the company in the long term should the current deal fall through.

So why should investors care?
It may not seem like it, but the purchase of new jets for ILFC is just one more example of AIG's management's focus on the long-term success of the company. Though there is a deadline for the sale of ILFC at the end of the month, ILFC's current CEO, Henri Courpron, isn't leaving it up to the buyers to satisfy customer needs if the deal does go through. Instead, moving forward with the purchase shows investors that the company is willing to spend the time and resources to keep the operations viable for the long term regardless of the sale.

AIG's management as a whole has been displaying the same sort of resolve in other areas of the business, most notably with capital distributions. Though analysts and shareholders have been calling for dividends and share repurchases, the company has refrained from reinstating either until other goals are met.

CEO Robert Benmosche has focused the firm's attentions on reducing debt, which has already saved the company millions in interest expenses. By doing so, Benmosche has set up AIG for leaner operations that may produce greater earnings as the economy continues to improve and revenue growth progresses. Though investors may be sullen about having to wait longer for capital distributions, the aim of management to make a leaner, more viable company going forward should be a welcomed strategy.

Reading between the lines
Though the purchase of some new jets may not seem to imply any bigger motivations of a company, if you analyze the intention of management in even the smallest actions, you can see how the pieces all fit together. With a capable and focused group of executives driving the insurer forward, AIG is not only set for the short term, but it will be ready to take advantage of the opportunities presented in the coming years of economic recovery.

Solid companies selling at depressed prices have consistently helped generations of the world's most successful investors preserve capital, minimize risk, and achieve long-term, market-trampling returns. Read about one such company in our free report: "The One REMARKABLE Stock to Own Now." Just click here to get started.

United Rentals Beats Analyst Estimates on EPS

United Rentals (NYSE: URI  ) reported earnings on July 16. Here are the numbers you need to know.

The 10-second takeaway
For the quarter ended June 30 (Q2), United Rentals met expectations on revenues and beat expectations on earnings per share.

Compared to the prior-year quarter, revenue grew significantly. Non-GAAP earnings per share increased significantly. GAAP earnings per share increased.

Margins grew across the board.

Revenue details
United Rentals reported revenue of $1.21 billion. The eight analysts polled by S&P Capital IQ looked for sales of $1.22 billion on the same basis. GAAP reported sales were 21% higher than the prior-year quarter's $993.0 million.

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

EPS details
EPS came in at $1.12. The 10 earnings estimates compiled by S&P Capital IQ predicted $1.08 per share. Non-GAAP EPS of $1.12 for Q2 were 70% higher than the prior-year quarter's $0.66 per share. GAAP EPS were $0.78 for Q2 compared to -$0.63 per share for the prior-year quarter.

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

Margin details
For the quarter, gross margin was 56.3%, much better than the prior-year quarter. Operating margin was 21.3%, 330 basis points better than the prior-year quarter. Net margin was 6.9%, much better than the prior-year quarter. (Margins calculated in GAAP terms.)

Looking ahead
Next quarter's average estimate for revenue is $1.33 billion. On the bottom line, the average EPS estimate is $1.63.

Next year's average estimate for revenue is $4.99 billion. The average EPS estimate is $4.82.

Investor sentiment
The stock has a three-star rating (out of five) at Motley Fool CAPS, with 209 members out of 228 rating the stock outperform, and 19 members rating it underperform. Among 74 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 71 give United Rentals a green thumbs-up, and three give it a red thumbs-down.

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on United Rentals is outperform, with an average price target of $64.83.

If you're interested in companies like United Rentals, you might want to check out the jaw-dropping technology that's about to put 100 million Chinese factory workers out on the street – and the 3 companies that control it. We'll tell you all about them in "The Future is Made in America." Click here for instant access to this free report.

Add United Rentals to My Watchlist.

BlackRock's Upcoming Earnings: What You Need To Know

BlackRock (NYSE: BLK  ) is expected to report Q2 earnings on July 18. Here's what Wall Street wants to see:

The 10-second takeaway
Comparing the upcoming quarter to the prior-year quarter, average analyst estimates predict BlackRock's revenues will grow 12.0% and EPS will grow 23.9%.

The average estimate for revenue is $2.50 billion. On the bottom line, the average EPS estimate is $3.84.

Revenue details
Last quarter, BlackRock booked revenue of $2.45 billion. GAAP reported sales were 8.9% higher than the prior-year quarter's $2.25 billion.

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

EPS details
Last quarter, non-GAAP EPS came in at $3.65. GAAP EPS of $3.62 for Q1 were 15% higher than the prior-year quarter's $3.14 per share.

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

Recent performance
For the preceding quarter, gross margin was 53.6%, 200 basis points better than the prior-year quarter. Operating margin was 38.5%, 230 basis points better than the prior-year quarter. Net margin was 25.8%, 40 basis points better than the prior-year quarter.

Looking ahead

The full year's average estimate for revenue is $10.22 billion. The average EPS estimate is $15.80.

Investor sentiment
The stock has a four-star rating (out of five) at Motley Fool CAPS, with 474 members out of 523 rating the stock outperform, and 49 members rating it underperform. Among 133 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 123 give BlackRock a green thumbs-up, and 10 give it a red thumbs-down.

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on BlackRock is outperform, with an average price target of $255.47.

Looking for alternatives to BlackRock? It takes more than great companies to build a fortune for the future. Learn the basic financial habits of millionaires next door and get focused stock ideas in our free report, "3 Stocks That Will Help You Retire Rich." Click here for instant access to this free report.

Add BlackRock to My Watchlist.

The Stark Truth Behind Goldman's Earnings "Beat"

U.S. stocks are roughly unchanged this morning, with the S&P 500 (SNPINDEX: ^GSPC  ) and the narrower, price-weighted Dow Jones Industrial Average (DJINDICES: ^DJI  ) down 0.11% and 0.7%, respectively, as of 10 a.m. EDT. The S&P 500 is shooting for its ninth consecutive "up" day; if it succeeds, it will mark the longest winning streak achieved since November 2004.

Hewlett-Packard's board gets some new blood
Dow component Hewlett-Packard (NYSE: HPQ  ) has just added former Microsoft technologist Ray Ozzie to its board of directors. On the one hand, Ozzie brings exceptional knowledge and experience of the technology industry to HP's board: He founded two software companies that were ultimately bought by industry heavyweights and inherited the role of "chief software architect" at Microsoft from Bill Gates himself. While such expertise is welcome, the real problem with HP's board is that it is rudderless. Meanwhile, Ozzie seems to me too independent and intellectual to fill the leadership gap.

Another bank, another beat
In the wake of the earnings beats by Wells Fargo, JPMorgan, and Citi, Goldman Sachs (NYSE: GS  ) is the latest among the too-big-to-fail set to top expectations. In fact, Goldman blew past the $2.82 consensus earnings-per-share estimate in the second quarter, earning $3.70.

Before we start handing out high-fives, let's keep that performance in perspective. Goldman is doing a decent job at keeping its personnel costs in check: Compensation and benefits eat up 43% of revenue, which is consistent with the first quarter. Nevertheless, this remains an organization run for its employees, not its shareholders. Indeed, for all its vaunted profitability, it's a thin stream of profit that trickles down to the latter group. Goldman's annualized return on average common shareholders' equity was just 10.5% in the second quarter. That's hardly the sort of number that makes investors salivate. In fact, analysts reckon it's barely above the bank's 10% cost of capital.

Besides, with the civil trial of former Goldman banker Fabrice Tourre having started yesterday, Goldman has more pressing concerns regarding another, highly prized form of capital: reputational capital.

Between the questionable business practices and the opaque balance sheets, many investors are understandably hesitant about investing in big banking stocks after the crash, but the sector has one notable standout. In a sea of mismanaged peers, it rises above as "The Only Big Bank Built to Last." You can uncover the top pick that Warren Buffett loves in The Motley Fool's new report. It's free, so click here to access it now.