Six Major Blowups of the Week: Chegg, Cisco, NII, Rackspace and More

Sometimes a major bull market just does not help some companies. Bad things can happen in good times. 24/7 Wall St. tracked some of the unusual disappointments from this last week and wanted to create a rogues gallery for its readers.

The hope is that some of these can get their acts together and recover. After all, investors love turnarounds. The problem is that not all turnarounds can turn around. Some industries change, and sometimes there are just shenanigans inside of companies.

These are the six seriously troubled companies we tracked this week. There were others that had atrocious weeks as well, but these were the ones we had some opinion on or had some insight to offer.

Chegg, Inc. (NYSE: CHGG) was the IPO disappointment of the week. Sure it has a lot of competition, but IPOs are supposed to be on fire now. Chegg managed to gain almost 3% on Friday to close at $9.13, but one must remember that the IPO price at $12.50 never saw the $12.50 open. The stock opened at $9.80 and closed at $8.88 on the first day, a move which will baffle IPO investors of growth companies who are buying an IPO at a time when major indexes are hitting new all-time highs. By the way, GSV Capital Corp. (NASDAQ: GSVC) was a runner-up loser along with Chegg, as this fund owned shares of Twitter and Chegg pre-IPO. The stock price was above $16 before the Twitter IPO and is now down to $12.03 after another 8.8% drop on Friday. Bye-bye.

Cisco Systems Inc. (NASDAQ: CSCO) was the biggest blowup of the week. Sure, other stocks had much larger percentage drops, but not among DJIA components. Its earnings blunder and guidance seem to be magnified by China and international companies pushing back over technology that may be allowing US spy agencies better access into data. All in all it was a huge disappointment. We tracked many analysts cutting their ratings after the report and the expected price target in a year fell by about 10%. John Chambers now has to rethink his turnaround and restructuring plan. Cisco managed a gain of less than 1% on Friday to $21.53, but this still closed down 10.3% from before the earnings report.

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NII Holdings Inc. (NASDAQ: NIHD) is trading as though the worst case scenario is headed its way. This is effective Nextel international, and the closure of its communications sites in Mexico sale did not seem to help matters. That call from a week earlier where HSBC abandoned ship after NII reported a wider loss, predicting that the stock would now go to $2.00 per share, is looking like that could be possible. This one fell another 8.6% to $2.63 on Friday on about 200% of normal volume, and the stock put in a new low over the last decade or so of $2.60 with wide losses expected in 2013 and 2014 on declining sales. Timber!

Rackspace Hosting, Inc. (NYSE: RAX) is supposed to be a winner from the small and mid-sized businesses moving to the cloud rather than in-house, but its earnings report early in the week showed that profits were down 40%. A rise in revenue was not assisted because higher expenses and operating costs are hurting here. Investors are getting used to disappointment here. A small gain of 1.3% to $42.21 on Friday was dwarfed by the losses earlier in the week as this was a $49.31 stock before earnings. That makes for another 14% post-earnings loss and now has the stock down by almost half from its 52-week high. Something has to give in here one way or another as well, because Rackspace still trades at 57-times expected 2014 earnings.

Tile Shop Holdings, Inc. (NASDAQ: TTS) managed to recover almost 12% on Friday to $14.50, but this one tanked on accusations of having third party transactions that would have inflated the company sales. Shares were down almost 40% on Thursday to $12.95 after having closed at $21.22 the day before. Now there are investigations and everyone is scared despite the company denying the claims and despite the company reaffirming its guidance. This one even traded 19 million shares on Thursday and 20 million on Friday, versus an average of what would be closer to 500,000 or so before the news. Anything tied to “accounting irregularities” sends investors running and brings the regulators and lawyers in.

YRC Worldwide Inc. (NASDAQ: YRCW) remains an entity that is at-risk by our count. The trucking company managed to swing back to a loss on worse than expected earnings, in-part blaming a shortage of drivers and also higher expenses. You would think that lower gasoline prices would be helping matters, but this turnaround just cannot seem to turn around. Shares were down some 20% on Wednesday after earnings, and the drop on Friday was another 6% down to $7.41. The overall drop from Monday’s close of $10.64 was just over 30%. With a wide loss expected in 2013 and another loss expected in 2014, combined with spotty revenue expectations, is it fair to worry about this company’s future?

America's Richest (and Poorest) Cities

Median household income in the United States remained relatively unchanged between 2011 and 2012, after falling 7% from the start of the recession. While the nation continues to recover based on other measures, it is not exactly encouraging news.

The nation's largest cities have followed a similar pattern. Income for most of the 366 metropolitan areas measured by the U.S. Census Bureau are flat in the last year, and many are still down significantly compared to 2008. According to the Census Bureau, Brownsville, Texas replaced McAllen, Texas as the country's poorest metro area. San Jose, Calif. took the top spot as the wealthiest metro area, replacing Washington, D.C. 24/7 Wall St. reviewed the metropolitan areas with the highest and lowest median incomes in the U.S.

Click here to see the 10 richest cities

Click here to see the 10 poorest cities

While income levels and poverty rates are not identical measures, low income and high poverty tend to go hand in hand. All 10 of the poorest metropolitan areas have higher percentages of residents living below the poverty rate, compared to the national figure of 15.9%. In Brownsville, the poverty rate is more than 36%, the highest in the nation.

According to Brookings Institution fellow Elizabeth Kneebone, one of the key determinants of income levels in a city are the kinds of jobs available. This includes jobs in technology, finance, high-skill manufacturing and professional services. Indeed, the wealthiest metropolitan areas have among the highest concentrations of these types of jobs.

Nationally, 10.9% of the population is employed in professional services like scientific and management roles. In places like Washington, D.C., and San Jose, it is much closer to 20% of the population. The low-income cities have far fewer residents in these occupations.

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At least due in part to this, low income areas tend to have a much smaller percentage of residents with post-secondary education. Nationally, just under 30% of the adult population has at least a bachelor's degree. In poorer places like Dalton, Ga., and Lake Havasu, Ariz., barely one in 10 adults have a bachelor's degree. Conversely, in each of the five wealthiest metro areas, the rate is well over 40%.

For the wealthy cities, Kneebone explained, "It's like a virtuous cycle: wealthier cities high have the industry and the jobs that attract highly educated workers, and if you have a highly educated workforce, you can attract those types of jobs into the region." Residents in the poorest cities face the opposite situation.

In the poorest areas, residents are much more likely to be employed in occupations that are low-skill, low-pay and require only modest education.

Not all agree that self-perpetuating poverty is a problem in these cities. Dr. Richard Burkhauser, a professor of public policy at the Cornell University, explained that people are always able to leave these places. "It's certainly true that if you don't move around, your chance of getting out of poverty is much tougher than if you move." However, a major theme in American history is that generations leave poor places and find jobs elsewhere, explained Burkhauser.

While income has not improved significantly in most of the nation's metropolitan areas, there are exceptions. Notably, San Jose's median household income grew by roughly $5,000 in a single year. Brookings senior research analyst and associate fellow Alec Friedhoff noted that the city's improvement isn't surprising considering it is one of most tech-heavy metro areas in the country. "High tech areas have really bounced back quickly, and San Jose was the one that bounced back the fastest," he noted.

Based on data from the U.S. Census Bureau's 2012 American Community Survey (ACS), 24/7 Wall St. identified the U.S. metropolitan statistical areas (MSAs) with the highest and lowest median household incomes. Based on Census Bureau treatment, median household income for all previous years is adjusted for inflation. We considered poverty, median home value and health insurance from the Census Bureau's ACS. We also reviewed unemployment data provided by the Bureau of Labor Statistics. Unemployment rates listed are full-year averages for 2012 and not monthly rates. All ranks are out of the 366 U.S. metropolitan areas measured in the ACS, except for unemployment rates, which are out of 372 areas measured by the BLS.

These are America's richest (and poorest) cities.

China's $500 million shadow bank rescue

China appears to have avoided a high-profile default that would have cost investors millions.

HONG KONG (CNNMoney) When is default a good thing?

That's the question being asked in China, where the murky rescue of a high-yield fund appears to have prevented a default that would have cost investors millions and undermined faith in the country's financial system.

But the 11th hour bailout by a mysterious third party has raised questions about China's readiness to let investors pay the price for failed investments and mounting risk in the country's shadow banking system.

Three years ago, a group of wealthy Chinese investors put 3 billion yuan ($500 million) into an investment trust -- the cheerfully named Credit Equals Gold #1 Collective Trust Product.

The product was marketed by Industrial and Commercial Bank of China, a state-owned enterprise that is one of the largest and most profitable banks in the world.

But the fund was designed and issued by China Credit Trust, one of the many shadow banks in China that offer loans to companies or individuals that may have trouble securing traditional bank financing.

In this case, the product was underpinned by a loan to a troubled mining operation in northern China that would later collapse as the price of coal plummeted. Investors were promised a juicy 10% annual return over three years, but were told earlier this month not to expect payment.

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Some of the investors, who reportedly put as much as $500,000 each into the fund, said ICBC should reimburse them since it had marketed the product.

ICBC insisted that it had never guaranteed the product, and had no legal responsibility to pay investors. The bank's chairman even went so far as to describe the episode as a learning opportunity for investors, shadow banks and ICBC.

State media reports suggest that opportunity has been missed, thanks to a bailout by an unnamed third party that ensures investors will recover their initial investment. Interest will not be paid.

Related story: China's richest man prefers U.K. deals over U.S.

A ! default could have prompted investors to pull their money from other trust products and stop providing the deposits needed to supply credit and fuel economic growth.

"A default would likely lead to a loss of confidence in China's trust and other shadow credit markets and a shrinkage of liquidity in those markets, and hence, a credit crunch," said UBS economist Tao Wang.

The bailout seems to have eliminated that risk. But some analysts argue that a default is needed to demonstrate Beijing's commitment to allow market forces to play a larger role in the economy, and to send a message to investors that high-yield investments carry significant risk.

"These bailouts further perpetuate the implicit government guarantee that investors have come to expect when they purchase financial products in China," wrote analysts at Bernstein Research.

Unless losses are allowed, investors will continue to pour money into unproductive projects, they added.

Related story: What's going on with China's latest credit crunch?

The rapid expansion of shadow banking has sparked worries in Beijing about the efficiency of the overall credit system, and some fear the $6.5 trillion sector has reached a scale where it could sap growth. Beijing has promised reforms, but some observers think the government is dodging the hard choices.

"[This] is just another example of China kicking the can down the road," the Bernstein analysts said.

AlphaSimplex's tactical fund has timely launch with shutdown

It might not have been designed to coincide with last week's federal government shutdown, but the Oct. 1 launch of the ASG Tactical U.S. Market Fund (USMAX) couldn't have been timelier.

The fund is the latest and first non-alternative fund from AlphaSimplex Group LLC, a $3 billion asset management firm headed by noted quantitative strategist Andrew Lo.

The basic strategy of the fund, which is managed by Jerry Chafkin, is to use futures contracts to hedge or leverage the exposure to an underlying stock portfolio that acts as a proxy for the domestic-equity market.

“Our objective was to create an equity fund that allowed investors to stay invested for the long term and not suffer through the extreme downturns that sometimes take investors out of the market,” Mr. Chafkin said.

Last week when Washington political infighting forced a partial government shutdown, it turned out to be Exhibit A in terms of a case for such a strategy.

A selling pattern that started Sept. 30 ahead of the scheduled midnight shutdown triggered enough volatility throughout the week to push the Dow Jones Industrial Average to close below the 15,000 mark for the first time in a month.

Even as most financial advisers and professional market analysts were either sitting tight or looking at the sell-off as a buying opportunity, the market panic continued as investors fled out of fear for the worst.

“We know that individual investors tend to underperform the indexes because they tend to bail out at the extremes, or they divest because they see something more attractive elsewhere and they chase performance,” Mr. Chafkin said.

The fund, which is designed as a core equity allocation, applies the same type of quant investing techniques for which AlphaSimplex has become known.

“When it comes to risk, investors are primarily concerned with the risk of loss, so we focus on downside risk as the key risk measure,” Mr. Chafkin said. “The greater the risk of loss, the less exposure we want to the market, and the lower the risk of loss, the more exposure we want to the market.”

When risk is high, the strategy employs the use of futures to take an offsetting position, which essentially sells futures as a way of hedging the equity exposure.

If the analysis suggests that the risk of loss is low, the fund has the ability to use futures to leverage the underlying portfolio for a total market exposure of up to 130%.

“We think this is a very timely product, but we also think it's important to understand it is not just designed to be a short-t! erm nirvana,” Mr. Chafkin said. “We recognize that equity returns are going to be inherently bumpy, and we're not going to be able to avoid every market where stocks lose money, but we're trying to use a risk-based discipline to limit the most extreme declines that tend to be the times when investors lose resolve.”

Reports: Barclays suspends 6 in rigging probe

LONDON (AP) — Barclays bank has suspended six traders amid an investigation into whether international currency markets were rigged, the BBC, the Financial Times and other outlets reported Saturday.

Barclays, Britain's second-largest bank, revealed on Wednesday that it was the subject of an investigation by regulators in Britain and other countries over "possible attempts to manipulate certain benchmark currency exchange rates."

More: Bevy of banks confirm they're target of forex probe

The bank said it was "reviewing its foreign exchange trading covering a several year period through August 2013 and is cooperating with the relevant authorities."

Barclays spokeswoman Aurelie Leonard declined to comment Saturday on reports that traders had been suspended.

Other banks including JPMorgan Chase, Citigroup and Switzerland's UBS have also said they are being investigated over currency trading, and Britain's RBS suspended two traders on Thursday in the same investigation.

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The investigation is the latest bad news for Barclays, which overhauled its top management after being fined $453 million for manipulating a key global interest rate and other wrongdoing.

The international currency-trading investigation has echoes of inquiries into manipulation of the London interbank offered rate, or Libor, which underpins trillions of dollars in transactions around the world. The financial world was shaken when it emerged that banks — including Royal Bank of Scotland, Barclays and UBS — were submitting false data to gain market advantages.

When a Giant Gain Causes Pain

Succeeding as an investor takes a strong mind, but a stronger heart. That is especially true when stocks plunge—or soar.
In his letter this week to investors in his hedge funds, manager David Einhorn of Greenlight Capital pointed to "the parabolic rise of a growing number of market-leading story stocks."

If you have explosive gains on stocks like Fannie Mae(FNMA) (up 968% over the past 12 months), Netflix(NFLX) (up 163% over the same period) or Priceline.com(PCLN) (up 74%), it isn't just time to reassess what you are investing in. It is time to reassess what kind of investor you are.

For proof, look no further than the remarkable story of Ross Miller and Mary O'Keeffe, a married couple who took a wild ride on a supersonic stock.

Mr. Miller, who died last May at age 59, was a professor of finance at the State University of New York in Albany. Every year, he had his classes analyze and track a stock in the news. But, says Ms. O'Keeffe, Mr. Miller never bought any of them, investing exclusively in diversified index funds—until last February, when that semester's stock caught his fancy.

It was Tesla Motors(TSLA), the manufacturer of electric cars, which he bought at around $38 a share.

The stock doubled in the next three months. Then Mr. Miller bought call options on Tesla—bets on a further rise in price that made roughly $30,000 in one week, according to Ms. O'Keeffe.

Early last May, Mr. Miller said to her, "I have something to confess to you." He had kept the options trade a secret from his wife. "I was so relieved that was what he was confessing," she says.

Decades earlier, as a young professor at the California Institute of Technology, Mr. Miller had become addicted to options trading, in which even small price movements can produce big gains or losses. "He made some money, then lost it all," Ms. O'Keeffe recalls. Mr. Miller then made a written commitment never to trade options again, placing the couple's two favorite stuffed animals next to the pledge and having them "witness" it.
So Mr. Miller felt the need to confess last year because he had violated one of his own rules of self-control. "I gave him absolution," Ms. O'Keeffe says.

But the options were making Mr. Miller "stressed out," she recalls. So he sold them and told his wife that if Tesla hit $200 a share, he would consider selling the stock, too.

Ten days later, Mr. Miller died of sudden heart failure.

"Nothing prepared me for the sudden responsibility of managing this," says his widow. "By training and intellectual preparation I should have been qualified, but I was utterly unprepared for how difficult it would be emotionally."

Ms. O'Keeffe hadn't merely been married to a finance professor who pioneered a method for estimating the value that fund managers provide for their investors.

Like her husband, Ms. O'Keeffe earned a Ph.D. in economics at Harvard University. She had taught a course on financial management for nonprofits. She and Mr. Miller ran a consulting firm that advised companies on how to manage financial risks. Ms. O'Keeffe, now 60, is a professor of public finance and tax policy at Union College in Schenectady, N.Y.

But as Tesla "gyrated wildly up and down," she says, the stock was "too stressful to watch." She sold most of it at around $140 a share in August. After the stock went up to $194 and down again, she sold the last of her shares at around $130 in November.

Tesla was back above $180 this week, but Ms. O'Keeffe doesn't care. "I have no regrets," she says. "I'm so glad not to have to think about it anymore."

What happened to Mr. Miller and Ms. O'Keeffe isn't unusual, say experts in the psychology of investing.

If you have a small stake in a company, you own the stock. But if that stake suddenly grows enormous, the stock owns you. Thinking rationally about it then can become all but impossible—even if you have a doctorate in economics.

No matter how closely you analyzed a stock when you bought it, if it has since gone way up, then it is time to start analyzing yourself, says Meir Statman, a professor of behavioral finance at Santa Clara University.

"What many people are afraid of when they have a stock with a big gain," he says, "is regret." So you need to figure out which will bother you more: selling the stock and then watching it go up even more, or not selling and then watching it go down.

To manage both kinds of regret on a highflying stock, consider selling, say, 20% in five equal installments at regular intervals. That reduces the risk of selling too soon and of holding too long. As Terrance Odean, a behavioral-finance professor at the University of California, Berkeley, puts it: "Investors should diversify emotionally as well as financially."

— Write to Jason Zweig at intelligentinvestor@wsj.com, and follow him on Twitter:@jasonzweigwsj

5 Things the Fed Hopes You'll Never Find Out

Most Americans assume the U.S. Federal Reserve is a powerful government institution that seeks only to safeguard the dollar, boost the economy and drive employment higher.

That's what the Fed wants you to think.

The illusion of the Fed as a stabilizing, positive government entity has more or less existed since its creation under dubious circumstances in 1913.

"It not only avoided the word bank, it cleverly implied federal, or government, control over the establishment of a pool of reserves that would backstop the new banking 'system,'" said Money Morning Capital Wave Strategist Shah Gilani.

Congress has played along the whole time, first by approving the legislation that created this beast and later by endowing the Fed with its "dual mandate" to combat both inflation and unemployment.

The real reasons the Fed was created, and many of the things it does to this day, would shock many Americans.

"If the American people truly understood how the Federal Reserve System works and what it has done to us, they would be screaming for it to be abolished immediately," Michael Snyder writes on his website, The Economic Collapse.

Five Shocking Facts About the Federal Reserve

1. It's Not Really Part of the Government

Few people realize that the Federal Reserve didn't even exist until about 100 years ago. It was cooked up by the top Wall Street bankers of the time in a secret meeting on an island in Georgia (A book about it is actually titled "The Creature of Jekyll Island.")

The bankers wanted a central bank partnered with the government to serve as a backstop for their institutions, which then were prone to panics and bank runs.

The 12 regional banks that make up the Federal Reserve are not owned by the U.S. Treasury, but by the nation's private banks. According to Factcheck.org, "about 38% of the nation's more than 8,000 banks are members of the [Federal Reserve] System, and thus own the Fed banks."

2. The Federal Reserve's Primary Purpose is to Serve the Banks

While the stated purpose of the Federal Reserve is its congressional "dual mandate," in practice serving the needs of the big banks still comes first.

"Central banks - of which the Federal Reserve is, by far, the world's largest and most powerful - serve banks first and foremost," Gilani said. "Secondly, they serve their host governments.  They are the ultimate tool of the rich and powerful."

During the years of the financial crisis, for example, in addition to the well-publicized bailouts, the Fed made $16 trillion in little-known loans to more than a dozen big banks.

According to a Government Accountability Office document, some of the major beneficiaries included Citigroup Inc. (NYSE: C), which received $2.513 trillion in loans; Morgan Stanley (NYSE: MS), $2.041 trillion; Merrill Lynch, $1.949 trillion; Bank of America (NYSE: BOA), $1.344 trillion; Bear Stearns, $853 billion; Goldman Sachs Group Inc. (NYSE: GS), $814 billion; and JPMorgan Chase (NYSE: JPM), $391 billion.

3. The Federal Reserve is Paying Big Banks Billions in Interest

To fund its massive quantitative easing (QE) program, the Fed has encouraged banks to deposit excess reserves in the Fed's accounts. The big banks have been more than happy to comply (see chart), as they get paid interest on any money they park at the Fed. Last year, the Fed paid out about $4 billion in interest to the big banks; Bloomberg News has estimated that the annual payments to the banks could soar as high as $77 billion a year by 2015, depending on how much interest rates rise by then.

4. The Fed Has Destroyed the Dollar

The Federal Reserve has utterly failed in one of its mandates - to manage interest rates to control inflation.  Since its creation in 1913, inflation in the U.S. has eaten away 96% of the value of the dollar. So the same item that cost $100 in 1913 would cost nearly $2,300 today. And the problem has grown worse over time; the dollar has lost 83% of its value just since 1970. Since the financial crisis, the Fed has accelerated the process with inflation-fueling policies like QE and zero interest rates.

5. The Federal Reserve Enables Government's Profligate Spending

Washington could never have accumulated its $16.85 trillion national debt - which in recent years has grown at a rate of more than $1 trillion a year - without the help of the Federal Reserve. The Fed is essentially the mechanism through which federal debt is created and monetized, making it easy for the government to spend trillions of dollars beyond what it collects in taxes.  It's little wonder that Washington looks the other way when the Fed is giving special treatment to the big banks.

The story of the Fed is a lot juicier than people think. To find out exactly how the Federal Reserve came into existence, read Shah Gilani explain all the sordid details.

Related Articles and News:

Money Morning:
Why Crime Pays for "Too-Big-To-Fail" Banks Money Morning:
Why We Can't Avoid Ben Bernanke's "Monetary Cliff" Bloomberg:
Fed Seen Paying Banks $77 Billion on Reserves The Economic Collapse:
11 Reasons Why The Federal Reserve Should Be Abolished GAO:
The Federal Reserve System July 2011 Report

1 Android Player That Wants to Piggyback on Apple

Get a glimpse of what's on the tech horizon with Foolish reports from the field at the 2014 International Consumer Electronics Show. Companies ranging from start-ups to Fortune 100 firms launch and showcase thousands of products at the event, which attracts visitors from around the world.

Chinese manufacturer Huawei looks to stand out in the Android crowd with reverse charging in its Ascend Mate 2. It's a solidly built 6-inch device, but do consumers really want to use one phone to charge another?

There were countless trends emerging from CES 2014 this year, but the real question for investors is how to capitalize on these revolutionary opportunities. Fortunately for you, David Gardner has an idea or two on how to invest in these new emerging technologies -- and how you can profit. Get in on the ground floor now by clicking here.

A full transcript follows the video.

Eric Bleeker: Hey, Fools. I'm Eric Bleeker, joined here by Evan Niu, and we are on the floor of CES.

We're at Huawei's exhibit. Even if you might not know Huawei, because they don't sell a lot of phones in the United States, it's a fast-growing Android manufacturer based out of China. They have a pretty varied business, also doing a lot of telecom equipment.

But specifically we are looking at the Ascend Mate 2, which is one of their newest flagship models. It has a 6-inch screen. What's getting a lot of attention about the Ascend Mate 2, however, is that you can charge other phones with it -- specifically, we've seen people talk about charging an iPhone with it.

I want to just kick this over to you quick, Evan. Is there any innovation here? Is this something that you could see other companies charging? Is there a reason to have two smartphones?

Evan Niu: It's kind of a silly value proposition. It's a very large phone; it has a very large battery, so it has the juice to spare. Huawei does say that it will charge any other phone -- either an Android phone or an iPhone -- but yeah, that begs the real question of, they're really expecting you to have two phones. Why do you need two phones to begin with?

It's just kind of a silly feature to add, and I don't really think it's particularly innovative. They put a reverse charger so it can output power as opposed to just input, but again, why? As a consumer, who goes out and says, "You know what? I need two phones. It would be really convenient if one phone would charge the other." It's just a weird proposition.

Eric: Yeah. The build quality on the phone is actually pretty good. We compared it favorably to Samsung phones, which is the Android market leader. I think one of the things that shows is a real dearth of ideas in the smartphone space. They're essentially black or white rectangles of varying sizes, and people are having a hard time differentiating them. We've seen curved phones, a lot of gimmicks that don't really have a lot of use.

It is interesting, too, that the battery on these 6-inch phones is so large it can charge other phones. You've got about a 4,000 mAh battery on that. An iPhone's about 1,400, so it shows the size and heft you have to have, as you get bigger screens.

But at the end of the day, it's a very competitive high-end market, so I think you're going to see a lot of companies, especially the non-leaders, trying to do these gimmicks to pick up share, but there's not a lot of share left to be had.

Evan: Huawei's doing very well in China. They're doing quite well in terms of their position in China, but in the U.S. market no one really knows them. They've also had some PR problems with the government not wanting Huawei to sell the telecom gear to it. ... I don't think they're going to make much traction on the smartphone consumer side.

Eric: Well, maybe after all the U.S. NSA stuff, we'll have our own tough time selling abroad. In any case, this is our look at Huawei. For all your CES news, check back to Fool.com. Fool on!

Vital to consider risk appetite while investing

Through this article we are sure that the 'investment process' we have outlined herein would help many investors strike the correct chord.

Before we understand the term risk appetite , let us try to understand by what is meant by "risk". To put it simply, risk is a result or outcome which is other than what is / was expected. While you assume risk as an investor, you could either make gains or suffer a loss; thus risk is nothing more than a state of uncertainty, and exists in every facet of life- including investments.

The term "risk appetite" refers to one's willingness to take risk. But it doesn't merely end with willingness to make a prudent investment decision; but in fact needs to be backed by a rationale considering risk determinants such as the following: 

Age:
Your age plays a vital role to determine your risk appetite. Thus the younger you are, more risk you can take and vice-a-versa. This is because you are in the accumulation or earning stage of your life cycle, where you have more number of working years before you retire. Likewise, if you start investing at an early age the tenure which you get (while investing in an investment avenue) is greater, which enables you to make more aggressive investments and create wealth over the long-term to meet your financial goals.

Income:
Similarly, your income too is an important determinant to gauge your risk appetite. This is because if you income is high enough, you can afford to take high risk and vice-versa.

Expenses:
Your outgoings also influence the risk which you can afford to take while investing. Thus although you may be having a high income, but your disposable income is petite you could be refrained from taking risk.

We think that in order to keep your financial health in pink in the long-term, it is important that you live within means and curtail your unnecessary expenses. It is this strategy which will enable you save a large portion of your monthly earnings, which can be deployed in suitable asset classes.

Nearness to goal:
Also if your investments are driven by an objective to meet a financial goal, that too would be a determinant for gauging your risk appetite. Thus if you are many years away from the financial goal you could afford to take more risk, while if you are not many years away from the financial goal you could be risk-averse.

Thus ascertaining risk appetite is a combination of these aforementioned factors, and equation of all these can help you test your risk tolerance.

It is noteworthy that while there are investment opportunities and avenues galore, you ought to take care and ensure that you are not cooking a recipe for disasters. As mentioned earlier, while there is information galore on investment avenues you ought to adopt caution and ensure that you are taking a wise investment decision which suits your needs and risk profile. There is no point in being carried away by an investment opportunity which has being hyped (even though it may be really worth it), if does not suit your risk profile. Moreover one should be wary of investment opportunities which harp on returns and does not emphasise on the risk involved.  As a matter of fact, in the absence of information related to risk, information isn't just incomplete, it's downright misleading.

So the next time you hear or read of investment opportunities and avenues ask yourself a simple question "Does this investment opportunity or avenue suit my risk profile, although it may deliver luring returns?" Remember, investing is not about how much return you like, but how much returns you can safely handle.

PersonalFN is a Mumbai based Financial Planning and Mutual Fund Research Firm

Google developing smart contact lens

SAN FRANCISCO — Google's vision for wearable technology took another ambitious leap forward Thursday when the world's largest Internet search company announced it is developing a smart contact lens.

The lens measures glucose in tears using a wireless chip and miniaturized glucose sensor. While at a very early stage, Google hopes the technology could help people manage diabetes better.

The project is the latest invention to emerge from the company's Google X unit, which works on long-term, risky new technology that may never become commercially successful but has the potential to change the way people live in drastic ways. The unit has already produced self-driving cars and connected eyewear called Google Glass.

Google said it went public with the contact lens project at an early stage because it is looking for expert partners who could bring the technology to market in the future.

Diabetes sufferers sometimes do not check their glucose levels as often as they should because those checks are usually disruptive or painful, such as pricking a finger to do a blood test. Researchers have been looking for less intrusive ways to check glucose, through sweat, saliva, urine or tears.

It's very difficult to measure glucose levels in the body with tears, partly because there's not much of the liquid available and it is hard to collect.

"We wondered if miniaturized electronics — think chips and sensors so small they look like bits of glitter, and an antenna thinner than a human hair — might be a way to crack the mystery of tear glucose and measure it with greater accuracy," Google said.

To make the contact lens, Google had to design its own tiny chips and mount them on very thin, flexible, plastic-like film. The chip and a sensor are embedded between two layers of soft contact lens material. A tiny pinhole in the lens lets tear fluid from the surface of the eye to seep into the glucose sensor. The prototypes can take a glucose level reading once every second, Google sa! id.

The project's co-founders, Brian Otis and Babak Parviz, worked together at the University of Washington. Parviz joined Google X to work on Google Glass and Otis followed soon after and started trying to build a contact lens from scratch.

Google said it has done "multiple studies" to test the comfort and functionality of the lens and explore how tear glucose correlates with blood glucose, particularly in people with diabetes. It is also talking about the technology with the Food & Drug Administration.

Advanced Micro Up on Analyst Upgrades - Analyst Blog

Top Insurance Companies To Invest In 2014

Advanced Micro Devices Inc. (AMD) surged 11.8% to $4.45 as several analysts upgraded the stock's ratings and price targets following its chip supply deals with Sony (SNE) and Microsoft (MSFT).

Advanced Micro has been providing chips for game consoles to lower its dependence on the declining personal computer market. The newly launched PlayStation 4 and new Xbox One video game consoles will feature its processor.

AMD's graphics business remains sluggish. While the graphics market itself has not done too well in the last quarter because of sluggishness in both computing and gaming sales, NVIDIA appears to have held up relatively better than the other players. The graphics processor market shrunk 3.2% from the fourth quarter of 2012 and 12.9% from the year-ago quarter. AMD's market share has been sagging in recent quarters partly because of its own miscalculations and partly because of inadequate inventories. But the trend could be reversing, since there were some gains in the last quarter. The company's game console wins and new product releases could help it regain lost ground.

The company is also diversifying its business into new embedded markets, including communication, industrial and gaming, among others. Further, AMD is targeting the tablet, hybrid and small-screen notebook segments with its Temash product family, built on its low-power Jaguar cores. This could be a potential growth driver for the company.

In Conclusion

We believe that a more conducive market, new game console wins, adoption of new products and good execution are expected to help AMD deal with the PC market weakness.

AMD's revenues in the first quarter of fiscal 2013 came in at $1.09 billion in the quarter, down 5.8% sequentially and 31.4% year over year. The quarter's revenues were slightly better than its guidance of a 9% sequential! decline (at the mid-point). The sequential decline was due to a 9% decrease in the Computing Solutions segment, partially offset by a 3% increase in Graphics segment's revenues.

Currently, Advanced Micro has a Zacks Rank #1 (Strong Buy). Another stock that is worth considering is Rambus Inc. (RMBS), which has a Zacks Rank #1 (Strong Buy).

Soda Companies Went Flat In Q2

Coca-Cola (NYSE:KO), PepsiCo (NYSE:PEP) and Dr. Pepper Snapple (NYSE:DPS) all sold less soda in the second quarter. Which, if any, is the stock to buy?

Soda's Not The Problem
Coke and Pepsi feel the obesity problem is all about calories--expending more and consuming less. Both have heavily promoted regular exercise along with the careful consumption of its products, many of which come in low- and no-calorie options. Putting aside the commonly held belief that its products are "liquid candy," I can see why they would feel this way.

SEE: Coca-Cola's Anti-Obesity Ad On Air

Go to any mall and you'll see cars idling by parking spaces that are full waiting for the driver of the vehicle to vacate the spot so they can park as close as possible to the mall entrance. That's just one of the many reasons why 38% of adults are obese. As for the 17% of kids that are obese, it all comes down to lack of freedom. It seems young people these days walk almost nowhere by themselves, escorted (in a car) by a parent or some other adult guardian. With the exception of those into skateboarding, you rarely see kids outside any more.

Personal responsibility seems to have gone out the window. Coke and Pepsi might make sugary drinks but given the calories are right on the cans, any effort to ban the sale or consumption of these products seems like a complete waste of time.

Declining Volumes
The disturbing reality for soda companies is that the business they had hoped to pick up with low-calorie options isn't working. In the second quarter Coke's sparkling beverage volumes in North America declined by 4%, Pepsi's by 5% and Dr. Pepper Snapple by 3%. According to Beverage Digest, the per capita soda consumption in America has been on the decline since 1998.

So what have each of the firms done to insulate themselves from the decline in soda consumption?

Pepsi's obviously done the most having acquired both Frito Lay (1965) and Quaker Oats (2000) over the years. In the second quarter its North American and Latin American food businesses generated $6.02 billion along with $1.36 billion in operating profit. This represents about 36% of its global revenue and 43% of operating profits. This doesn't include its food businesses in Europe, Asia, Middle East and Africa. It's the food business that has Nelson Peltz buying shares in both PepsiCo and Mondelez International (Nasdaq:MDLZ). Specifically, he wants Pepsi to buy Kraft Foods' (Nasdaq:KRFT) former snack business for $35 per share and then spin-off the beverage business creating $33 billion in cost synergies. Pepsi's management don't seem inclined to make the big acquisition. However, it might be open to making tuck-in deals for Diamond Foods (Nasdaq:DMND) and others.

Coke and Dr. Pepper Snapple both reported mediocre second-quarter earnings while PepsiCo's were relatively healthy by comparison. Not coincidentally, PepsiCo is the only one with a significant food business--one that is performing at maximum efficiency and profit. While Coke pushed its ownership interest in Britain's Innocent Smoothies in February to more than 90%, Seeking Alpha contributor Chris Katje recently wrote about the likelihood of the world's number one beverage company making a bid for Mondelez ahead of PepsiCo. Katje sees PepsiCo as a more likely buyer. That leaves Coke's food business with only Innocent's veggie and noodle pots, which makes it a non-entity in food. Dr. Pepper Snapple has no food investments to the best of my knowledge.

Bottom Line
In April I questioned whether PepsiCo's turnaround was real. I came to the conclusion that it needed to spit into two businesses. I recommended that unless it were to split into two, its shares, then trading at $82.77, should be bought in the high 60s. Three months later and it's gained about 3.5%, much less than the S&P 500.

However, its Q2 numbers were much better than Q1. As such, I think Pepsi becomes a safer buy at current prices than it would have been with another mediocre quarter. For me, it's definitely the stock to buy of the three. But you shouldn't rule out Mondelez--its acquisition by someone could be the catalyst needed to send the shares even higher.

Disclosure: At the time of writing, the author did not own shares of companies mentioned in this article.

Hot Growth Stocks To Buy For 2014

As human activity continues to generate staggering amounts of solid waste around the world, you can profit from turning trash into cash, says John Persinos, contributing editor to Personal Finance.

The world's growing garbage glut is a hassle for government officials, but it's an opportunity for investors to achieve defensive growth amid an accelerating but vulnerable economic recovery.

One dominant company in the handling, treatment, and disposal of solid waste is Waste Management (WM). With this industry leader, investors are paying for market dominance, relative predictability, good dividends, and high cash flow.

Nationwide, the number of active landfills has shrunk from nearly 8,000 in 1988 to fewer than 1,900 today. The US disposes enough trash every day to fill 50,000 garbage trucks, with 18,000 pounds of trash in each.

The search for new methods of disposal is becoming more frantic among federal, state, and municipal leaders in the US. There's enormous variation in waste capacity among the states.

Hot Growth Stocks To Buy For 2014: Eastern Insurance Holdings Inc.(EIHI)

Eastern Insurance Holdings, Inc., through its subsidiaries, provides workers compensation insurance and reinsurance products in the United States. The company?s Workers Compensation Insurance segment provides traditional workers compensation insurance coverage products, including guaranteed cost policies, policyholder dividend policies, retrospectively-rated policies, deductible policies, and alternative market products to employers. This segment distributes its workers? compensation products and services through its independent insurance agents primarily in Pennsylvania, Delaware, North Carolina, Maryland, Indiana, and Virginia. Its Segregated Portfolio Cell Reinsurance segment offers alternative market workers compensation solutions comprising program design, fronting, claims administration, risk management, segregated portfolio cell rental, asset management, and segregated portfolio management services to individual companies, groups, and associations. Eastern Insurance Holdings, Inc. is headquartered in Lancaster, Pennsylvania.

Advisors' Opinion:

• [By Lauren Pollock]

  ProAssurance Corp.(PRA) agreed to acquire Eastern Insurance Holdings Inc.(EIHI) for about $205 million, expanding the insurance company’s casualty insurance offerings. Eastern Insurance is a domestic casualty insurance group specializing in workers’ compensation products and services, among other things. ProAssurance plans to pay $24.50 in cash for each outstanding Eastern share, a 16% premium over Monday’s closing price.

Hot Growth Stocks To Buy For 2014: Intuitive Surgical Inc.(ISRG)

Intuitive Surgical, Inc. designs, manufactures, and markets da Vinci surgical systems for various surgical procedures, including urologic, gynecologic, cardiothoracic, general, and head and neck surgeries. Its da Vinci surgical system consists of a surgeon?s console or consoles, a patient-side cart, a 3-D vision system, and proprietary ?wristed? instruments. The company?s da Vinci surgical system translates the surgeon?s natural hand movements on instrument controls at the console into corresponding micro-movements of instruments positioned inside the patient through small puncture incisions, or ports. It also manufactures a range of EndoWrist instruments, which incorporate wrist joints for natural dexterity for various surgical procedures. Its EndoWrist instruments consist of forceps, scissors, electrocautery, scalpels, and other surgical tools. In addition, it sells various vision and accessory products for use in conjunction with the da Vinci Surgical System as surgical procedures are performed. The company?s accessory products include sterile drapes used to ensure a sterile field during surgery; vision products, such as replacement 3-D stereo endoscopes, camera heads, light guides, and other items. It markets its products through sales representatives in the United States, and through sales representatives and distributors in international markets. The company was founded in 1995 and is headquartered in Sunnyvale, California.

Advisors' Opinion:

• [By Keith Speights]

  At least one medical-device maker actually had a good first quarter. Robotic surgical systems maker Intuitive Surgical (NASDAQ: ISRG  ) grew its revenue by more than 23% year over year. First-quarter revenue of $611 million beat what analysts were expecting by $30 million. And Intuitive was shackled with the same medical-device tax that all the other aforementioned companies bore.

• [By Steve Symington]

  Still, customers who owned MAKO's RIO robots in 2012 only performed an average of just 6.7 monthly procedures per system last year, and monthly utilization per site fell to 6.6 procedures last quarter. By contrast, consider MAKO's soft-tissue counterpart in�Intuitive Surgical� (NASDAQ: ISRG  ) ,�whose customers performed around 13 procedures per month last year with each of Intuitive's da Vinci robots.�

• [By Sean Williams]

  Ascending to the top of the pack was robotic surgical device maker Intuitive Surgical (NASDAQ: ISRG  ) , which gained 4.8% after winning a lawsuit involving its da Vinci surgical system. The plaintiff in the case was a family that sued for $4.9 million following complications from a 14-hour prostate cancer surgery. The jury's verdict isn't too important from a monetary perspective for Intuitive so much as it reinforces the safety of its surgical devices, which are currently under investigation by the federal regulators. I certainly feel there could be further upside in Intuitive shares from here.

• [By Ben Levisohn]

  Investors sure aren’t acting like it, despite the major indexes mixed results. Forest Laboratories (FRX) gained 16% to $69 this week after it purchased another pharmaceutical company, while Constellation Brands (STZ) rose 15% to $80.05 after besting its earnings forecasts. Intuitive Surgical (ISRG) rose after a study found fewer complications from “robotic-assisted” prostate removal surgery.

Best High Tech Companies To Watch For 2014: Buffalo Wild Wings Inc.(BWLD)

Buffalo Wild Wings, Inc. engages in the ownership, operation, and franchise of restaurants in the United States. The company provides quick casual and casual dining services, as well as serves bottled beers, wines, and liquor. As of July 26, 2011, it had 773 Buffalo Wild Wings locations in 45 states in the United States, as well as in Canada. The company was founded in 1982 and is headquartered in Minneapolis, Minnesota.

Advisors' Opinion:

• [By Steve Symington]

  Buffalo Wild Wings (NASDAQ: BWLD  ) investors sure hope so, because Monday marked the official debut of the company's new "Game Changer Ale,"�which was created with the help of the folks at Redhook Brewery.

• [By Chris Hill]

  Shares of Buffalo Wild Wings (NASDAQ: BWLD  ) slipped today after the restaurant chain reported an 11% decline in first-quarter earnings. Same-store sales fell 1.4% for company-owned locations compared to a 2.2% decline in franchised locations. Does the disparity suggest bigger problems ahead? Does Buffalo Wild Wings still have room to grow? In this installment of MarketFoolery, our analysts discuss the future of Buffalo Wings.

• [By James Brumley]

  Earlier this year, McDonald’s (MCD) tiptoed into KFC’s territory — and even put Buffalo Wild Wings (BWLD) on notice — with the launch of its Mighty Wings chicken wings. Sales of the fried chicken wings have failed to take off as expected, though. As McDonald’s CEO Don Thompson (under)stated it, the wings’ price of $3.69 for five pieces was “not the most competitive.”

• [By Chris Hill]

  Bikinis Sports Bar & Grill has trademarked the term "breastaurant." Are restaurants like these a threat to "non-breastaurants" like Buffalo Wild Wings (NASDAQ: BWLD  ) ? In this installment of MarketFoolery, our analysts discuss what it all means for investors.

Hot Growth Stocks To Buy For 2014: Checkpoint Systms Inc.(CKP)

Checkpoint Systems, Inc. manufactures and markets identification, tracking, security, and merchandising solutions for the retail and apparel industry worldwide. The company operates in three segments: Shrink Management Solutions, Apparel Labeling Solutions, and Retail Merchandising Solutions. The Shrink Management Solutions segment provides shrink management and merchandise visibility solutions. It offers electronic article surveillance systems, such as EVOLVE, a suite of RF and RFID-enabled products that act as a deterrent to prevent merchandise theft in retail stores; and electronic article surveillance consumables, including EAS-RF and EAS-EM labels that work in combination with EAS systems to reduce merchandise theft in retail stores. This segment also provides keepers, spider wraps, bottle security, and hard tags, as well as Showsafe, a line alarm system for protecting display merchandise. In addition, it offers physical and electronic store monitoring solutions, incl uding fire alarms, intrusion alarms, and digital video recording systems for retail environments; and RFID tags and labels. The Apparel Labeling Solutions segment provides apparel labeling solutions to apparel retailers, brand owners, and manufacturers. It has Web-enabled apparel labeling solutions platform and network of 28 service bureaus located in 22 countries that supplies customers with customized apparel tags and labels. The Retail Merchandising Solutions segment offers hand-held label applicators and tags, promotional displays, and queuing systems. The company serves retailers in the supermarket, drug store, hypermarket, and mass merchandiser markets through direct distribution and reseller channels. Checkpoint Systems was founded in 1969 and is based in Thorofare, New Jersey.

Advisors' Opinion:

• [By John Udovich]

  Small cap Checkpoint Systems, Inc (NYSE: CKP) fights shoplifting or retail theft and other forms of�"shrink��that costs retailers over $112 billion worldwide last year (according to a study funded by the company), meaning it might be an interesting stock to take a closer look at and to compare its performance with that of SPDR S&P Retail ETF (NYSEARCA: XRT) and PowerShares Dynamic Retail ETF (NYSEARCA: PMR). Just how bad can shoplifting or shrink be for a retailer? Troubled retailer J.C. Penney Company, Inc (NYSE: JCP) has just reported that shoplifting took a full percentage point off the department store chain's profit margins during the quarter. Moreover and given that tens of millions of Americans are now facing higher health insurance costs thanks to Obamacare (which will likely impact consumer discretionary spending),�retailers�will need to find ways to shore up their margins and bottom lines by preventing�retail theft with solutions from company�� like Checkpoint Systems.

Hot Growth Stocks To Buy For 2014: TrueBlue Inc.(TBI)

TrueBlue, Inc. provides temporary blue-collar staffing services in the United States. It supplies on demand general labor to various industries under the Labor Ready brand; skilled labor to manufacturing and logistics industries under the Spartan Staffing brand; and trades people for commercial, industrial, and residential construction, and building and plant maintenance industries under the CLP Resources brand. The company also provides mechanics and technicians to the aviation maintenance, repair and overhaul, aerospace manufacturing, and assembly industries, as well as to other transportation industries under the Plane Techs brand; and temporary drivers to the transportation and distribution industries under the Centerline brand. It primarily serves small and medium-size businesses. The company was formerly known as Labor Ready, Inc. and changed its name to TrueBlue, Inc. in December 2007. TrueBlue, Inc. was founded in 1985 and is headquartered in Tacoma, Washington.

Advisors' Opinion:

• [By Jonathan Yates]

  Even though the stock market rallied on Federal Reserve Chairman Ben Bernanke's remarks with the Dow Jones Industrial Average (NYSE: DIA) and Standard & Poor's 500 Index (NYSE: SPY) surging, the long term winners will be stocks in the staffing industry such as Paychex(NASDAQ: PAYX), TrueBlue (NYSE: TBI), Robert Half (NYSE: RHI), and Labor SMART (OTCBB: LTNC).

• [By Jonathan Yates]

  For those looking to invest in real estate stocks, highly recommended is the Dr. Housing Bubble blog. In a recent posting, the "Dr." pointed out that there was a "Lost Generation" when it came to household income. That has not happened for those investing in staffing industry stocks such as Paychex (NASDAQ: PAYX), Robert Half International (NYSE: RHI), TrueBlue, Inc. (NYSE: TBI), and Labor SMART (OTCBB: LTNC).

Hot Growth Stocks To Buy For 2014: Thoratec Corporation(THOR)

Thoratec Corporation engages in the development, manufacture, and marketing of proprietary medical devices used for circulatory support. The company?s primary product lines include ventricular assist devices, such as HeartMate II, an implantable left ventricular assist device consisting of a rotary blood pump to provide intermediate and long-term mechanical circulatory support (MCS); and HeartMate XVE, an implantable and pulsatile left ventricular assist device for intermediate and longer-term MCS. Its ventricular assist devices also comprise Paracorporeal Ventricular Assist Device, an external pulsatile ventricular assist device, which provides left, right, and biventricular MCS approved for bridge-to-transplantation (BTT), including home discharge, and post-cardiotomy myocardial recovery; and Implantable Ventricular Assist Device, an implantable and pulsatile ventricular assist device designed to provide left, right, and biventricular MCS approved for BTT comprising hom e discharge, and post-cardiotomy myocardial recovery. The company also provides CentriMag, an extracorporeal full-flow acute surgical support platform that offers support up to 30 days for cardiac and respiratory failure. In addition, it offers PediMag and PediVAS extracorporeal full-flow acute surgical support platforms designed to provide acute surgical support to pediatric patients. The company sells its products through direct sales force in the United States, as well as through a network of distributors internationally. Thoratec Corporation was founded in 1976 and is headquartered in Pleasanton, California.

Advisors' Opinion:

• [By Brian Pacampara]

  What: Shares of medical device company Thoratec (NASDAQ: THOR  ) sank 12% today after its quarterly results missed Wall Street expectations. �

• [By Todd Campbell]

  Competing for heart pump market share
  Abiomed's products provide circulatory support for up to six hours and are designed for use in cardiac cath labs or during heart surgery, but competitors Thoratec (NASDAQ: THOR  ) and Heartware (NASDAQ: HTWR  ) target the intermediate- and long-term-use market instead.

Hot Growth Stocks To Buy For 2014: CNO Financial Group Inc. (CNO)

CNO Financial Group, Inc., through its subsidiaries, engages in the development, marketing, and administration of health insurance, annuity, individual life insurance, and other insurance products for senior and middle-income markets in the United States. The company markets and distributes Medicare supplement insurance, interest-sensitive and traditional life insurance, fixed annuities, and long-term care insurance products; Medicare advantage plans through a distribution arrangement with Humana Inc.; and Medicare Part D prescription drug plans through a distribution and reinsurance arrangement with Coventry Health Care. It also markets and distributes supplemental health, including specified disease, accident, and hospital indemnity insurance products; and life insurance to middle-income consumers at home and the worksite through independent marketing organizations and insurance agencies. In addition, the company markets primarily graded benefit and simplified issue life insurance products directly to customers through television advertising, direct mail, Internet, and telemarketing. It sells its products through career agents, independent producers, direct marketing, and sales managers. CNO Financial Group, Inc. has strategic alliances with Coventry and Humana. The company was formerly known as Conseco, Inc. and changed its name to CNO Financial Group, Inc. in May 2010. CNO Financial Group, Inc. was founded in 1979 and is headquartered in Carmel, Indiana.

Advisors' Opinion:

• [By David Fried, Editor, The Buyback Letter]

  Insurance holding company CNO Financial Group (CNO) and its insurance subsidiaries��rincipally Bankers Life and Casualty Company, Washington National, and Colonial Penn Life Insurance Company��erve pre-retiree and retired Americans.

• [By Jonas Elmerraji]

  Up first is CNO Financial Group (CNO), a mid-cap financial stock that's rocketed close to 60% higher since the calendar flipped over to January. Yup, it's been a great year for the market, but it's been a far better one for investors who own CNO. But that strong performance isn't showing any signs of slowing yet. In fact, CNO looks primed for even more upside in the fourth quarter.

  That's because CNO is currently forming a bullish pattern called an ascending triangle. The ascending triangle pattern is formed by a horizontal resistance level above shares -- in this case at $14.75 -- and uptrending support to the downside. Basically, as CNO bounces in between those two technical price levels, it's getting squeezed closer and closer to a breakout above that $14.75 resistance level. When that breakout happens, it's time to become a buyer.

  ACCO's price action isn't exactly textbook. After all, the pattern is coming in at the bottom of a downtrend, not after an uptrend. But ultimately, that doesn't change the trading implications of a move through that $7.50 level.

  Whenever you're looking at any technical price pattern, it's critical to think in terms of those buyers and sellers. Ascending triangles and other pattern names are a good quick way to explain what's going on in a stock, but they're not the reason it's tradable. Instead, it all comes down to supply and demand for shares.

  That $7.50 resistance level is a price where there has been an excess of supply of shares; in other words, it's a place where sellers have been more eager to step in and take gains than buyers have been to buy. That's what makes a breakout above it so significant. The move means that buyers are finally strong enough to absorb all of the excess supply above that price level.

  Don't be early on this trade.

• [By Vanin Aegea]

  I have heard many people comment about the insurance policies for cars, houses, life, assets, etc. The arguments always revolve around the same issue: Is it really necessary? What are the chances to be hit by a Hurricane, or to meet a sudden death? Well, nobody really knows. Some individuals however, sleep better when they know a policy backs their life investments. Here, I will look into three insurance companies that concentrate on different policies, or geographies. These are: China Life (LFC), and Conseco (CNO).

Hot Growth Stocks To Buy For 2014: Sara Lee Corporation(SLE)

Sara Lee Corporation engages in the manufacture and marketing of a range of branded packaged meat, bakery, and beverage products worldwide. Its packaged meat products include hot dogs and corn dogs, breakfast sausages, sandwiches and bowls, smoked and dinner sausages, premium deli and luncheon meats, bacon, beef, turkey, and cooked ham. It also offers frozen baked products, which comprise frozen pies, cakes, cheesecakes, pastries, and other desserts. In addition, Sara Lee provides roast, ground, and liquid coffee; cappuccinos; lattes; and hot and iced teas, as well as refrigerated dough products. The company sells its products under Hillshire Farm, Ball Park, Jimmy Dean, Sara Lee, State Fair, Douwe Egberts, Senseo, Maison du Caf

Stryker Increases Sales but Misses Estimates on Earnings

Stryker (NYSE: SYK  ) reported earnings on July 18. Here are the numbers you need to know.

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

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

Margins dropped across the board.

Revenue details
Stryker reported revenue of $2.21 billion. The 26 analysts polled by S&P Capital IQ wanted to see a top line of $2.19 billion on the same basis. GAAP reported sales were 5.0% higher than the prior-year quarter's $2.11 billion.

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 $1.00. The 29 earnings estimates compiled by S&P Capital IQ predicted $1.03 per share. Non-GAAP EPS of $1.00 for Q2 were 2.0% higher than the prior-year quarter's $0.98 per share. GAAP EPS of $0.56 for Q2 were 34% lower than the prior-year quarter's $0.85 per share.

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

Margin details
For the quarter, gross margin was 67.0%, 120 basis points worse than the prior-year quarter. Operating margin was 13.5%, 910 basis points worse than the prior-year quarter. Net margin was 9.6%, 580 basis points worse than the prior-year quarter. (Margins calculated in GAAP terms.)

Looking ahead
Next quarter's average estimate for revenue is $2.14 billion. On the bottom line, the average EPS estimate is $1.00.

Next year's average estimate for revenue is $8.96 billion. The average EPS estimate is $4.26.

Investor sentiment
The stock has a five-star rating (out of five) at Motley Fool CAPS, with 1,424 members out of 1,456 rating the stock outperform, and 32 members rating it underperform. Among 444 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 437 give Stryker a green thumbs-up, and seven give it a red thumbs-down.

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Stryker is outperform, with an average price target of $68.44.

Is Stryker the best health care stock for you? Learn how to maximize your investment income and "Secure Your Future With 9 Rock-Solid Dividend Stocks," including one above-average health care logistics company. Click here for instant access to this free report.

Add Stryker to My Watchlist.

Top Safest Stocks To Buy Right Now

The proposed northern portion of TransCanada's (NYSE: TRP  ) Keystone XL pipeline, which would transport massive quantities of mainly heavy crude oil from Alberta's oil sands to the U.S., has drawn harsh criticism from groups that oppose its construction largely on environmental grounds.

They argue that the pipeline would promote further development in Alberta's oil sands, a region whose oil production is thought to be significantly worse for the environment because it spews more greenhouse gases into the atmosphere than more conventional methods of oil production.

Some also argue that the type of oil the pipeline will carry ��heavy bituminous crude ��is more corrosive, more prone to spills than lighter types of oil, and much more costly and difficult to clean up once spilled. Let's take a closer look at this second argument and see what TransCanada is doing to ensure Keystone XL's utmost safety.

TransCanada's claims
TransCanada maintains that Keystone will meet or exceed federal pipeline standards. The company's CEO, Russ Girling, has said�that Keystone will be "the safest, most advanced pipeline ever built in North America." The company also suggests that, in addition to being closely monitored at all times, the pipeline will be equipped with a state of the art leak detection system.

Top Safest Stocks To Buy Right Now: Under Armour Inc.(UA)

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

Advisors' Opinion:

• [By Rich Smith]

  Put in perspective, that's more expensive than a share of sportswear maker Under Armour (NYSE: UA  ) , and twice the P/E of Nike (NYSE: NKE  ) . But that's OK. Because according to analyst estimates, Man Utd is likely to grow its profits at the astounding speed of 45% per year over the next four years -- twice as fast as Under Armour, and four times the speed of Nike. If all goes as planned, today's Man Utd share price of $17 and change will be only 26 times the earnings the club makes next year, and only 22 times 2015 earnings.

• [By Steve Symington]

  If you ever wondered how long�Under Armour� (NYSE: UA  ) would be able to maintain its current torrid pace of growth, the company's founding CEO Kevin Plank wants you to know they're only just getting started.

Top Safest Stocks To Buy Right Now: 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.

Top Insurance 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.

Advisors' Opinion:

• [By CRWE]

  Fluor Corporation�� (NYSE:FLR) Chairman and Chief Executive Officer, David Seaton, and Chief Financial Officer, Biggs Porter, will give a presentation to investors at the Credit Suisse 2012 Engineering & Construction Conference in New York on Thursday, June 7 at 9:00 a.m. Eastern Daylight Time.

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

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

Advisors' Opinion:

• [By Sarfaraz A. Khan]

  The Brazilian energy giant Petroleo Brasileiro S.A (PBR), more commonly known as Petrobras, has been eyeing a turnaround but so far, it has fallen short of expectations. It managed to deliver a decent performance in its last quarter, but its ADR has fallen by 21.45% this year. The company is controlled by the Brazilian government through its 63% voting power. Petrobras has struggled with profitability because the business has been used as a tool to curb inflation. The company is eyeing an uptake in production in H2-2013, but I believe that, for now, investors should avoid this stock.

• [By Matt DiLallo]

  That makes Petrobras (NYSE: PBR  ) one of the best pure-play stocks to buy if you want to invest in the growth of oil production. The company is investing heavily to explore and develop these massive oil fields with a goal to produce 1 million barrels of oil per day by 2016. But it's not the only company operating offshore: Seadrill (NYSE: SDRL  ) is another potential stock play here. One of the interesting things it's doing is looking at spinning off part its Brazilian business. This will help the company navigate the country's regulations while retaining upside as offshore oil production grows. It will also help the company to continue producing income to keep its top-tier dividend flowing back to investors.�

Why Alpha Natural Resources (ANR) Is Down Today

NEW YORK (TheStreet) -- Alpha Natural Resources  (ANR) was falling 4.6% to $6.21 in mid-day trading Thursday after Cowen Group downgraded the stock to Market Perform from Outperform.

Cowen noted challenged metallurgical coal fundamentals thanks to ample supply, fresh production and muted demand as the reasons for the downgrade of the Bristol, Va.-based producer. Cowen also lowered the target price to $7 from $9, which represents a 7.36% potential upside from Alpha Natural Resources' close on Wednesday.

Alpha Natural Resources has a one-year high of $10.20 and a one-year low of $4.78.

TheStreet Ratings team rates ALPHA NATURAL RESOURCES INC as a Sell with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:

"We rate ALPHA NATURAL RESOURCES INC (ANR) a SELL. This is driven by a number of negative factors, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its unimpressive growth in net income, weak operating cash flow, generally disappointing historical performance in the stock itself and feeble growth in its earnings per share."

Highlights from the analysis by TheStreet Ratings Team goes as follows: The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Oil, Gas & Consumable Fuels industry. The net income has significantly decreased by 893.0% when compared to the same quarter one year ago, falling from -$46.15 million to -$458.24 million. Net operating cash flow has decreased to $111.08 million or 34.77% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower. The share price of ALPHA NATURAL RESOURCES INC has not done very well: it is down 24.38% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time. ALPHA NATURAL RESOURCES INC has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has reported a trend of declining earnings per share over the past two years. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, ALPHA NATURAL RESOURCES INC reported poor results of -$11.06 versus -$3.25 in the prior year. This year, the market expects an improvement in earnings (-$2.28 versus -$11.06). The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, ALPHA NATURAL RESOURCES INC's return on equity significantly trails that of both the industry average and the S&P 500. You can view the full analysis from the report here: ANR Ratings Report

Stock quotes in this article: ANR 

Why the Street Should Love Cyberonics'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 Cyberonics (Nasdaq: CYBX  ) , 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, Cyberonics generated $69.3 million cash while it booked net income of $46.4 million. That means it turned 27.3% of its revenue into FCF. That sounds pretty impressive.

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 Cyberonics 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 44.9% of operating cash flow coming from questionable sources, Cyberonics 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 25.0% of cash flow from operations. Overall, the biggest drag on FCF came from changes in accounts receivable, which represented 12.9% of cash from operations. Cyberonics investors may also want to keep an eye on accounts receivable, because the TTM change is 4.8 times greater than the average swing over the past 5 fiscal years.

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.

If you're interested in companies like Cyberonics, 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.

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

Add Cyberonics to My Watchlist.

How Intuit Plans to Turbocharge Its Growth

Next Tuesday, Intuit (NASDAQ: INTU  ) will release its latest quarterly results. The key to making smart investment decisions on stocks reporting earnings is to anticipate how they'll do before they announce results, leaving you fully prepared to respond quickly to whatever inevitable surprises arise. That way, you'll be less likely to make an uninformed, kneejerk reaction to news that turns out to be exactly the wrong move.

Intuit is best known for its TurboTax and QuickBooks software suites for individuals and small businesses, helping to make complex tax and accounting tasks simpler. But the company has much bigger ambitions in seeking to go after other lucrative business segments. Let's take an early look at what's been happening with Intuit over the past quarter and what we're likely to see in its quarterly report.

Stats on Intuit

Analyst EPS Estimate	$2.93
Change From Year-Ago EPS	16.7%
Revenue Estimate	$2.18 billion
Change From Year-Ago Revenue	11.9%
Earnings Beats in Past 4 Quarters	3

Source: Yahoo! Finance.

How will Intuit sustain its growth path?
In recent months, analysts have had a few concerns about Intuit's long-term earnings prospects. Despite keeping estimates unchanged for the just-ended quarter, they've marked down their consensus for fiscal 2013 by $0.03 and doubled that markdown for fiscal 2014. Those concerns have stalled out the stock's advance, with the shares falling about 2% since mid-February.

We've already gotten a sense of how weak Intuit's results are likely to be next week from the earnings warning it issued in late April. Although the company said it expected to see TurboTax sales rise 4% in the fiscal year, that was far below Intuit's previous projection of 10% growth, as it cited a 2% reduction in IRS returns received in cutting revenue and net profit estimates for the quarter. It also came as a surprise given the company's more encouraging report from earlier in tax season that had suggested stronger growth.

As important as taxes are for Intuit, however, the company is working hard to move beyond that segment to cultivate a wider set of services, especially for businesses. Historically, Automatic Data Processing (NASDAQ: ADP  ) and Paychex (NASDAQ: PAYX  ) have largely carved up the market for payroll processing and HR services between them, with ADP tending to focus on the largest businesses, while Paychex looks to mid-sized and smaller businesses for its market. Intuit hopes to use its QuickBooks success as an entry point to offer not just payroll processing but also other high-growth services, such as health-care benefits processing, which has become a hot-button issue as Obamacare nears full implementation.

Intuit is also looking to serve banks and credit unions with a mobile application for online banking. With features like branch-search functions, funds transfer, and bill payment, Intuit's app appeals to smaller financial institutions that don't have the resources to build their own mobile applications in-house.

But one controversial issue that came up during the quarter stemmed from the company's participation in a group advocating against return-free tax filings. Despite the benefits to the public from simpler taxes, a ProPublica investigation identified Intuit as opposing the concept. Clearly, the harder it is to prepare tax returns, the more likely people are to use tax-preparation services like TurboTax.

In Intuit's quarterly report, look closely at the mix of sales between consumer and business products and services. In order for Intuit to challenge ADP and Paychex, it needs to show that business customers see the company as a legitimate alternative beyond its core software. The size of the opportunity, though, makes it essential that Intuit work hard to make the most of potential growth from serving businesses.

The best investing approach is to choose great companies and stick with them for the long term. The Motley Fool's free report "3 Stocks That Will Help You Retire Rich" names stocks that could help you build long-term wealth and retire well, along with some winning wealth-building strategies that every investor should be aware of. Click here now to keep reading.

Click here to add Intuit to My Watchlist, which can find all of our Foolish analysis on it and all your other stocks.

Better Bet Than Facebook?

The following video is from Thursday's Investor Beat, in which host Chris Hill, and analysts Jason Moser and Matt Koppenheffer dissect the hardest-hitting investing stories of the day.

Shares of Facebook (NASDAQ: FB  ) rose on Thursday. The social networking company reported that mobile revenue grew to 30% of the company's total advertising revenue. But Facebook wasn't the only big mover on Wall Street on Thursday. Shares of Yelp (NYSE: YELP  ) rose more than 25% after the reviews site posted a surge in first-quarter revenue. In this installment of Investor Beat, our analysts discuss Facebook and Yelp.

After the world's most-hyped IPO turned out to be a dud, many investors don't even want to think about shares of Facebook. But there are things every investor needs to know about this revolutionary company. The Motley Fool's newest premium research report shows that there's a lot more to Facebook than meets the eye. Read up on whether there is anything to "like" about it today to determine if Facebook deserves a place in your portfolio. Access your report by clicking here.

The relevant video segment can be found between 0:16 and 2:57.

Why I Just Bought More Under Armour Stock

I've made no secret of my fondness for apparel specialist Under Armour (NYSE: UA  ) over the past few years.

In fact, since I opened an outperform CAPScall on the stock at a split-adjusted $14.76 per share in January 2010, I've joyously watched it outperform the S&P 500 by more than 240% as of this writing.

UA data by YCharts.

Luckily, I had the conviction at the time to put my money where my mouth is, so the investment has also afforded me similar returns in my real-life portfolio.

Even so, and despite the huge run-up, I decided last week to add even more to my real-life position in Under Armour. 

Why now?
Don't get me wrong. In keeping with Foolish investment philosophies, I never buy a stock simply because it's gone up (or down, for that matter). After all, buying in an effort to catch that next exciting leg up can be a perfect recipe for disaster.

That said, truly great companies have a habit of setting new highs on a regular basis and, over the long-term, I expect Under Armour will prove one of those great companies. In fact, considering that The Motley Fool recently ranked Under Armour 10th in its list of the 25 best companies in America, it's safe to say many of my colleagues agree.

That's also one of the reasons I singled out Under Armour in February as one of three great stocks any investor could be happy to hold for the next 50 years. And yes, you read that right. Not five. Not 15.

Fifty.

A world of opportunity
Now I'm a relatively young fellow, but I should be a couple decades into retirement 50 years from now.

So what makes Under Armour so special? As I've noted before, Under Armour currently reigns in the performance apparel market it created, and the segment was still responsible for 76% of its $1.83 billion in 2012 sales. As a result, Under Armour is intelligently working to seize opportunities to diversify by branching out from its roots.

For one thing, Under Armour is aggressively expanding its presence in the athletic footwear market, for which the company saw its revenue increase 43% year over year in 2012 to $45 million. Rest assured, however, that Under Armour still has more than enough room to grow; according to recent research, the athletic footwear market is expected to reach nearly $85 billion globally by 2018 from $74 billion in 2011.

The catch? Footwear is obviously a crowded market, and behemoth competitors like Adidas (NASDAQOTH: ADDYY  ) and Nike (NYSE: NKE  ) have a lot to lose to bold up-and-comers like Under Armour. Heck, Under Armour even had to sue Nike recently after the larger company went so far as to release ad campaigns that appeared to blatantly copy some of UA's trademarked phrases.

Powering forward
In spite of the fierce competition, however, Under Armour has continued to forge ahead. Not only did its most recent quarter mark 13 consecutive quarters of 20% year-over-year net apparel sales growth, but also 11 consecutive quarters of achieving at least 20% overall net revenue growth.

If that weren't enough, consider that Under Armour has achieved nearly all this growth while its international revenue still only accounted for just 7% of total sales last quarter. When Under Armour starts focusing more on international growth, then, it's safe to say it should have little trouble maintaining its stated goals of at least 20% sales growth for the foreseeable future.

Foolish final thoughts
And that, my fellow Fools, is why I'm not particularly concerned about whether the last few years' meteoric rise in Under Armour's stock is sustainable. A few decades from now, I'm convinced investors will look back and wonder why they didn't buy Under Armour when it was just getting started.

More expert advice from The Motley Fool
If you're looking for another promising apparel stock, lululemon athletica has the potential to grow its sales by 10 times if it can penetrate its other markets like it has in Canada, but the competitive landscape is starting to increase. Can Lululemon fight off larger retailers and ultimately deliver huge profits for savvy investors? The Motley Fool answers these questions and more in its most in-depth Lululemon research available. Thousands have already claimed their own premium ticker coverage; gain instant access to your own by clicking here now.