5 Retail Stocks to Buy Now

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Many retail stocks have gotten crushed by a lethal combination of disappointing earnings and lackluster guidance. However, there are some gems in the bunch that are doing well despite many economists expecting the worst holiday sales in years.

Of course, the macroeconomic environment remains challenging for all retailers, so it pays for investors to be selective. Many chains are growing increasingly concerned that consumers are increasingly expecting deals and will only respond to “once-in-a-lifetime offers” that crush companies’ profit margins. But there’s more to it than that.

Some retailers are facing some company-specific issues. Walmart (WMT), the largest retailer, has faced withering criticism for lacking enough workers to keep its store shelves stocked. An ill-advised expansion into Canada is hurting No. 2 retailer Target (TGT) while shoppers have fled Kohl’s ever since the chain began shifting away from national brands.

But the following stocks are best-of-breed performers that know how to navigate a tough consumer market.

#1 – TJX (TJX)

YTD gain: 46%
P/E: 21
52-week price target: $66.26 (6% potential upside)

Amazingly, earnings at TJX (TJX) — the parent of TJ Maxx, HomeGoods and Marshall’s — have grown for more than two years, even though the chain appeals to the same budget-conscious customers that seem to be avoiding Walmart and other discount retail stocks.

During the most recent quarter, same-store sales at TJX rose 5%, beating the company’s internal expectations of about 4%. HomeGoods alone reported a 10% gain in that key retail metric.

During the company’s recent earnings conference call, CEO Carol Meyrowitz struck a positive note, adding that TJX is “confident that we will become a substantially bigger company, driving both the top and bottom line. ”

#2 – Ralph Lauren (RL)

YTD: 16%
P/E: 22
Average 52-week price target: $195.60 (12% potential upside)

For a company that’s in the midst of a management change, Ralph Lauren (RL) doesn’t seem to be missing a beat.

Sure, net income in the latest quarter fell 4.2% to $205 million, or $2.23 per share. That’s down from $214 million, or $2.29 per share, a year earlier, as higher costs overshadowed gains in sales. But earnings came in better than the $2.20 per share analysts had expected, and revenue rose 2.8% to $1.92 billion. Ralph Lauren, whose brands include Polo, Club Monaco and Rugby, also hiked its dividend 13% to 45 cents.

“The diversity of the Ralph Lauren portfolio, the strength of our lifestyle positioning and our increasingly global reach are enviable assets that position us for strong long-term growth,” Jackwyn L. Nemerov, the company’s president, said during the recent earnings conference call. And that’s what makes this one of the strongest retail stocks out there.

#3 – Macy’s (M)

YTD: 33.6%
P/E: 14
Average 52-week price target: $54.44 (4.5% upside)

Macy’s (M) CEO Terry Lundgren may be the industry’s savviest leader.

Not only did M report better-than-expected quarterly earnings, but unlike many retailers, it had positive things to say about the holiday season, proclaiming the company was “entering the fourth quarter with confidence.”

There are many reasons for Lundgren’s success, including decision to better match goods to the local tastes of its 800 Macy’s stores and 36 Bloomingdale’s stores in 10 states. Lundgren also is ratcheting up the company’s ecommerce business, which should help it compete against online retail stocks.

#4 – Gap (GPS)

YTD: 29%
P/E: 14
Average 52-week price target: $46.22 (13%)

A lot of things have gone right for Gap (GPS) CEO Glenn Murphy.

Customers seem to like the fashions sold by the Gap and appreciate the value they get at Old Navy. The San Francisco-based recently posted a 43% gain in profit, along with a 2% jump in same store sales. That’s significantly better than the figures being put out by other retail stocks.

And that success hasn’t gone unnoticed by analysts. "Of all the apparel retailers, Gap is still better positioned to gain share," said Poonam Goyal, a retail analyst for Bloomberg Industries.

#5 – L Brands (LB)

YTD: 33%
P/E: 23
Average 52-week price target: $63.92 (1% upside)

Does Victoria have more secrets to share with investors?

L Brands (LB), the parent company of the iconic lingerie brand sure thinks so. Comparable store sales at Victoria’s Secret rose 4% in the most recent quarter, fueled by double-digit gains in bras, panties and fragrances.

But don’t think it’s just lingerie holding up LB stock — the rest of the company is also doing well. Gains at Bath & Body Works pushed overall same store sales up 3% in the most recent quarter.

All of these retail stocks are worth adding to your portfolios. But if you’re a selective investor, the ones with the biggest potential upside are Gap and Ralph Lauren.

As of this writing, Jonathan Berr did not hold a position in any of the aforementioned securities.

Change Agents: Robert Brunner's design arsenal

SAN FRANCISCO — On Halloween 1949, Time treated its readers to an illustrated cover of a mustachioed man surrounded by sleek planes, trains and appliances. Small type read: "Designer Raymond Loewy: He streamlines the sales curve."

Loewy died in 1986, an undisputed master of industrial design. But his passion for energizing everyday things — from Coke vending machines to the Greyhound bus — lives on in Robert Brunner, 55, who after a notable career at a range of companies including Apple is hitting his stride as a creator of objects of desire.

His timing is excellent, as we have returned to a Loewy-esque era, when a product's compelling look is as important as its flawless function.

"Our understanding of what good design is has matured," says Brunner. "Five years ago, the heroes were technologists. Today, the heroes are designers building out a user experience. You can have the most amazing technology in the world, but if it's not put in a form that's useful and desirable, you won't be successful."

Brunner has the artillery to back up that statement. Walk around the offices of Ammunition, Brunner's seven-year-old design firm, and you notice most of the computers glow with images of headphones. That's because the company's biggest design coup to date is Beats by Dr. Dre, the mushrooming upscale line of audio-related products spearheaded by both the rapper and producing legend Jimmy Iovine. Next week, Brunner and Iovine will be hitting the Consumer Electronics Show in Las Vegas, that annual hot house of envelope-pushing gadget design, to discuss how Beats products can evolve in 2014.

RE-IMAGINING THE HEADPHONE

While Dre and Iovine are responsible for the billion-dollar brainstorm — quality headphones for a generation raised on tinny ear buds — Brunner's critical stamp involved crafting an elegant single-letter logo on a headphone that dismissed a long-used, complex design architecture reminiscent of small suspension bridges for a simple, yet powerful arc anchor! ed by two padded circles.

"Everything out there didn't look cool, so Robert helped us create a personality, image and attitude," says Iovine, who brought Brunner in as a partner in the venture. "We wanted something exciting that could be marketed like a Guns 'N Roses or Nirvana album, like the headphones were the artists. It's been a great collaboration."

But if music isn't your thing, Brunner has other gadgets whose forms complement their function. Ammunition is responsible for Williams-Sonoma's first branded line of cookware and utensils, Larklife's fitness and sleep wristband and Barnes & Noble's Nook readers. There's also the Square Stand, which turns an iPad into a point-of-sale device, as well as the Octovo line of leather wallets, bags and smartphone cases.

If this sounds like an eclectic mix, that's by design.

“I say to companies, 'Give me your business problem, not just your design problem.' I'm interested in who you are, where you want to be and how I can get you there.”

— Industrial designer Robert Brunner

"We aim to come up with great-looking products that are effective out in the world," says Brunner, who has little interest in crafting one-off gems prized by a small group of aficionados. "A great piece of work has to have aesthetics, functionality and produce-ability. I say to companies, 'Give me your business problem, not just your design problem.' I'm interested in who you are, where you want to be and how I can get you there."

Robert Brunner.(Photo: Martin E. Klimek, for USA TODAY)

Loewy said the main goal of industrial design is "not to complicate the already difficult life of the consumer" and instead present pleasing things that make life simpler. But Brunner knows th! at his su! ccess is inextricably linked to more than that.

"As a species, our relationship with things fascinates me," he says. "Almost everyone has had the experience of falling in love with a thing. It does something, but you also come to cherish and be fascinated by it. That's what keeps me in business, those emotions. Some businesses don't get that, because it's not quantifiable. It's mysterious."

A NEW DESIGN ERA DAWNS

That said, many companies have gotten the design memo. Whether it's toothbrushes or smoke detectors, ovens or humidifiers, many of today's top-selling products tend to have a distinct element of whimsy added to their functionality.

"The simple fact of the matter is, we aren't as impressed anymore with technological breakthroughs; we care more about how a product makes us feel," says John Maeda, a graphic artist, computer scientist and artist who is the outgoing president of the Rhode Island School of Design.

"In the old days, buying a computer was like buying a car," he says. "Today, it's more like fashion; we consider those products in the same way we consider buying an expensive coat. It's less about needing it; we want it."

Maeda says applications to RISD are up 10%, something he ascribes to the growing importance of industrial design in all manner of consumer products. Brunner says the competition for young talent is increasingly fierce.

"It's crazy (for Ammunition) in recruiting and hiring," says Brunner. "People with design skills are very sought after, so that's driving our salary structure up. It's an interesting time."

The times were decidedly less design-focused when Brunner was coming of age in the '70s (AMC Pacer anyone?). As the son of Russell Brunner, an engineer who pioneered disc-drive design for IBM, and Elizabeth Brunner, a onetime fashion model turned painter and entrepreneur, Brunner "just grew up thinking that you had to make things."

A child of Silicon Valley, he went to San Jose State to study civil engineering, but af! ter heari! ng the compensation was better for electrical engineers, he switched majors. "But I wasn't happy," he says.

Until, that is, the day he walked past the campus model shop and stopped dead in his tracks. "I thought, 'I can do that,' so I switched to being a design major," he says, then laughs. "Pissed my dad off for a while. He liked to say, 'Industrial designers are the guys who spec the paint, and then it usually peels off.' "

POWERBOOK A PERSONAL TRIUMPH

In the mid '80s, Brunner was running his own small boutique design firm when he was asked to consult to Apple, which at that point did not have its own in-house design team. After much discussion, he was persuaded to join Apple in 1989 as the firm's first design leader, famously hiring Jony Ive, Apple's reigning design guru.

Although he left Apple in 1997, Brunner says his design philosophy is encapsulated by his crowning achievement in Cupertino: Apple's breakthrough laptop, the PowerBook.

"It is the most important thing I ever worked on there, and it's a point of pride for me whenever I see that almost every laptop today is patterned off of it," he says. "The important thing to understand is that it came about through a process of problem solving."

Brunner says his team had to accommodate the PowerBook's then-revolutionary rollerball mouse, along with "a keyboard and palm rest. And today, that simple layout remains. We got to that not because we said, 'We're going to create a new icon,' but because we worked the problem. And that's stuff about design that I love."

Next up on Brunner's digital drafting station are a variety of tech-driven projects, ranging from smart-home appliances to helping Dre and Iovine "leverage Beats' cultural consciousness" to help the brand dive deeper into the lifestyle space.

But if he could pick his own things to tinker with, the designer would find himself treading in Loewy's maverick shoes.

"I'm a car junkie, but while I did some taxi concepts for New York, it would be! great to! get to do something like a whole car," he says. "Also, I haven't done enough furniture. That whole industry is really rooted back East, but I'd love to do more of that. That's the classic stuff on a designer's bucket list — a car, a chair."

Loewy did both — including a throne-like Barcalounger and a rakish Studebaker Avanti — plus lots more during his 93 years on earth. By that count, Brunner is just getting started.

USA TODAY's Change Agents series highlights innovators and entrepreneurs looking to change business and culture with their vision. E-mail Marco della Cava atmdellacava@usatoday.com. Follow him on Twitter:@marcodellacava.

More new-car buyers opt for 7-year loans

More new-car buyers are stretching out their loan payments as long as possible -- as many as seven years -- and experts wonder if the trend is another financial time bomb.

While many buyers remember the days when ads touted 48-month loans, today the biggest growth is coming in loans lasting up to 84 months. That's longer than most people are expected to want to keep their new car.

The longest-term new-car loans -- 73 to 84 months -- have jumped 25.1% in the past year and now make up 19.5% of total new-car lending, according to Experian Automotive. All other loan-length categories, in fact, have become less popular as buyers shift to longer terms to get lower payments.

The next-shorter category -- 61 to 72 months and considered a very long loan only a few years ago -- now is 41.7% of new-car loans, Experian says. That's down 3.2% from a year ago, but it's still by far the biggest single loan-length category.

Short loans of 25 to 36 months -- the time limit that many financial planners and advisers recommend not be exceeded -- fell 24.7%, and the 37-to-48-month loan category was off 2.4%.

The phenomenon marks a turnabout from the Great Recession, when lenders were tight with even shorter term car loans. Now, low interest rates, near-record low loan delinquency rates, high average used-car prices and cars lasting longer all appear to be contributing to the trend.

Also having an effect: Old trade-ins. The average age of vehicles on the road is about 11 years, while the average transaction price of a new vehicle has gone from $25,703 in 2002 to $30,592 now, according to researcher TrueCar.

So people finally trading for a new model might have 11-year-old trade-ins worth nearly nothing, even as they try to buy new vehicle priced thousands of dollars more than when they last bought.

Long-term loans with lower payments might be the only answer for those buyers, even though they'll pay more overall than with a shorter loan.

At the average new-car interest rat! e of 3.94%, the monthly payment on a $28,000, 48-month loan would be $631.46. That works out to a $30,310.08 repayment, including the $2,310.18 in interest. Same deal, 84 months: $381.95 monthly payment, for a total of $32,083.80 paid, or $4,084.11 in interest.

Thus, the longer loan costs the borrower $1,773.93 more in interest.

"You end up 'upside down' (owing more than the car is worth) for a longer time," says Greg McBride, senior financial analyst for Bankrate.com. "You are going to pay down the balance at a snail's pace while the vehicle depreciates rapidly."

"It's definitely market driven," says Allen Foster, general manager of Smart Motors in Madison, Wis."Customers want a vehicle, but have a budget to work within." At his big Toyota dealership, 16% of loans now average 72 months or longer, up from 11% as recently as 2010.

Lee Auto Malls, a family-owned multi-brand dealer chain in Maine, is seeing longer-term loans and says it reflects stagnant incomes and tight family budgets at a time when new-car prices are rising.

Customers want to "keep a payment at $300 a month when a car is now $28,000," says Chairman Adam Lee. Finance companies are giving customers want they want, but he says "it scares me."

Lenders say, though, it's not necessarily cash-strapped customers who opt for the longer loans.

"It's people with higher credit" generally, says Toyota Credit spokesman Justin Leach. "A lot get paid off before hitting 84 months."

Will Take-Two Interactive Continue This Bullish Run?

With shares of Take-Two Interactive (NASDAQ:TTWO) trading around $18, is TTWO an OUTPERFORM, WAIT AND SEE, or STAY AWAY? Let's analyze the stock with the relevant sections of our CHEAT SHEET investing framework:

T = Trends for a Stock’s Movement

Take-Two Interactive is a developer, marketer, and publisher of interactive entertainment for consumers worldwide. The company develops and publishes products through its two wholly owned labels Rockstar Games and 2K, which publishes its titles under the 2K Games, 2K Sports, and 2K Play brands. Its products are designed for console gaming systems, handheld gaming systems, and personal computers, including smartphones and tablets. It delivers its products through physical retail, digital download, online platforms, and cloud streaming services. Rockstar Games is the developer and publisher of the brand Grand Theft Auto as well as other franchises, including L.A. Noire, Max Payne, Midnight Club, and Red Dead.

Recently, Take-Two Interactive announced record-setting first day retail sales of Grand Theft Auto V that exceeded expectations. Sell-through for the September 17 release exceeded $800 million worldwide, not including upcoming launches in Brazil and Japan, setting new records for Take-Two Interactive and the series. The retail figure translates to roughly $640 million wholesale, or around 12 million units, given higher foreign prices. First-day sales exceeded GTA IV sales, roughly $310 million, due in part to a much larger current console installed base, and topped Activision Blizzard's (NASDAQ:ATVI) recent Call of Duty games. Last year's Call of Duty: Black Ops 2 sold over $500 million, while Call of Duty: Modern Warfare 3 sold over $400 million in North America and the UK.

T = Technicals on the Stock Chart Are Strong

Take-Two Interactive stock has been surging higher over recent quarters. The stock is now trading near high prices not seen since early 2008. Analyzing the price trend and its strength can be done using key simple moving averages. What are the key moving averages? The 50-day (pink), 100-day (blue), and 200-day (yellow) simple moving averages. As seen in the daily price chart below, Take-Two Interactive is trading above its rising key averages, which signal neutral to bullish price action in the near-term.

(Source: Thinkorswim)

Taking a look at the implied volatility (red) and implied volatility skew levels of Take-Two Interactive options may help determine if investors are bullish, neutral, or bearish.

	Implied Volatility (IV)	30-Day IV Percentile	90-Day IV Percentile
Take-Two Interactive Options	52.01%	86%	85%

What does this mean? This means that investors or traders are buying a very significant amount of call and put options contracts as compared to the last 30 and 90 trading days.

	Put IV Skew	Call IV Skew
October Options	Flat	Average
November Options	Flat	Average

As of today, there is an average demand from call buyers or sellers and low demand by put buyers or high demand by put sellers, all neutral to bullish over the next two months. To summarize, investors are buying a very significant amount of call and put option contracts and are leaning neutral to bullish over the next two months.

On the next page, let’s take a look at the earnings and revenue growth rates and the conclusion.

E = Earnings Are Increasing Quarter-Over-Quarter

Rising stock prices are often strongly correlated with rising earnings and revenue growth rates. Also, the last four quarterly earnings announcement reactions help gauge investor sentiment on Take-Two Interactive’s stock. What do the last four quarterly earnings and revenue growth (Y-O-Y) figures for Take-Two Interactive look like and more importantly, how did the markets like these numbers?

	2013 Q2	2013 Q1	2012 Q4	2012 Q3
Earnings Growth (Y-O-Y)	45.38%	132.94%	312.50%	73.68%
Revenue Growth (Y-O-Y)	-36.91%	102.20%	75.93%	155.10%
Earnings Reaction	3.35%	0.91%	14.06%	0.53%

Take-Two Interactive has seen increasing earnings and revenue figures over the last four quarters. From these numbers, the markets have been upbeat about Take-Two Interactive’s recent earnings announcements.

P = Excellent Relative Performance Versus Peers and Sector

How has Take-Two Interactive stock done relative to its peers, Electronic Arts (NASDAQ:EA), Activision Blizzard (NASDAQ:ATVI), Microsoft (NASDAQ:MSFT), and sector?

	Take-Two Interactive	Electronic Arts	Activision Blizzard	Microsoft	Sector
Year-to-Date Return	70.66%	82.16%	60.08%	23.40%	42.73%

Take-Two Interactive has been a relative performance leader, year-to-date.

Conclusion

Take-Two Interactive is a developer and provider of interactive entertainment for the use in gaming systems, personal computer, smartphones, and tablets worldwide. The company is reportedly seeing stronger than expected sales from its latest release, Grand Theft Auto V. The stock has been surging higher in recent quarter and is currently trading near multi-year highs. Over the last four quarters, earnings and revenues have been on the rise which has produced upbeat investors. Relative to its peers and sector, Take-Two Interactive has been a year-to-date performance leader. Look for Take-Two Interactive to OUTPERFORM.

5 Best China Stocks To Own Right Now

While the news that Gap (NYSE: GPS  ) is planning on taking its Old Navy brand to China wasn't surprising, investors might not have foreseen the strength the company has in its convictions. On a call with investors yesterday, Gap's management said, "We see [the opportunity for global growth] particularly in some countries where in our category, you're talking about double-digit growth just to keep up with the market." That means China, Indonesia, Vietnam, and Cambodia, just to name a few.

The start of the push will come from franchise Old Navy locations in China, but with Gap's impressive array of brands, it's not going to be long before others come along.

The new opportunity
Gap is looking at Old Navy to be the first big push into new Asian markets. At first, stores will be franchise locations, with up to 85 open before the end of the year, with 10 of those being outlets. One of the biggest strengths that the company boasts is its impressive underlying operations. On yesterday's call, the company bragged that the structure now in place was buried in the P&L from 2008 to 2012, and now the cost to enter new locations is minimal.

5 Best China Stocks To Own Right Now: SmartHeat Inc.(HEAT)

SmartHeat Inc. manufactures, sells, and services plate heat exchangers (PHE) in the People?s Republic of China. It offers PHE units, which combine PHEs with various pumps, temperature sensors, and valves and automated control systems; heat meters for use in commercial and residential buildings; and spiral and tube heat exchangers. The company?s products are used in various applications that include energy conversion for heating, ventilation, and air conditioning; and industrial use in petroleum refining, petrochemicals, metallurgy, food and beverage, and chemical processing. SmartHeat sells PHE units under the brand name of Taiyu; and PHEs under the brand names of Taiyu and Sondex. It sells its products through sales force and a network of national distributors. The company is headquartered in Shenyang, the People?s Republic of China.

5 Best China Stocks To Own Right Now: Perfect World Co. Ltd.(PWRD)

Perfect World Co., Ltd., through its subsidiaries, engages in the research, development, operation, and licensing of online games primarily in the People?s Republic of China, the United States, and the Rest of Asia. It develops online games based on its game engines and game development platforms. The company?s 3D massively multiplayer online role playing games (MMORPGs) include Perfect World, an adventure and fantasy game with traditional Chinese settings; Legend of Martial Arts, an adventure story of Chinese swordsmen set in an ancient kingdom; and Perfect World II, which is set in a similar content and graphic background as Perfect World. It also offers Zhu Xian that is based on martial arts focused adventure set in a fantasy world; Chi Bi, a war story developed based on ancient Chinese history known as the Three Kingdoms; Hot Dance Party, a 3D online casual game; Pocketpet Journey West, a 3D MMORPG based on the classical novel of Chinese literature, Journey to the West ; Battle of the Immortals, a mysterious adventure, which enables game players to travel between eastern and western cultures, and adventures in historic sites and turf wars; and Fantasy Zhu Xian, a 2D turn-based MMORPG based on the Internet fantasy novel Zhu Xian. It also involves in the production and distribution of films, as well as television advertising activities. The company was founded in 2004 and is based in Beijing, the People?s Republic of China.

Advisors' Opinion:

• [By Eric Volkman]

  Perfect World's (NASDAQ: PWRD  ) fortunes might just be improved with a freshly announced new title. The company has revealed that its latest game, Fortuna, will be available starting on July 18. Set in Europe during the Age of Discovery, the browser-based title is a strategy/war game in which players vie to develop modest settlements into global empires. Fortuna features the usual cutthroat conventions of the strategy and combat genres, including the ability to throw armies into battle, and to form opportunistic alliances with other players.

• [By Lauren Pollock]

  Perfect World Co.'s(PWRD) third-quarter profit rose 40% due largely to a revenue boost from the Chinese company’s core online-games business. American depositary shares of Perfect World were up 6% at $20 premarket as the company’s results for the period beat expectations.

Top 5 Oil Stocks To Watch Right Now: Hampton Roads Bankshares Inc(HMPR)

Hampton Roads Bankshares, Inc. operates as the bank holding company for Bank of Hampton Roads (BOHR) and Shore Bank that provide community and commercial banking services primarily to individuals and small to medium-sized businesses. It offers traditional loan and deposit banking services, as well as telephone banking, Internet banking, remote deposit capture, and debit cards. The company also accepts commercial and consumer deposits that consist of various forms of demand and time accounts, including checking accounts, interest checking, money market accounts, savings accounts, certificates of deposit, and IRA accounts. In addition, it provides a range of commercial, real estate, and consumer lending products and services; commercial and industrial loans; construction loans; real estate-commercial mortgage; real estate-residential mortgage; and installment loans to individuals. Further, the company offers travelers? checks, coin counters, wire services, and safe deposit b ox services. Additionally, it provides letters of credit and standby letters of credit, and cash management products to commercial customers. The company also offers insurance products to businesses and individuals; securities, brokerage, and investment advisory services; and non-deposit investment products, including stocks, bonds, mutual funds, and insurance products, as well as engages in originating and processing mortgage loans. As of June 2, 2011, the company operates 48 banking offices in Virginia and North Carolina; and 8 banking offices in the eastern shore of Maryland and Virginia. It operates a network of sixty-seven ATM machines. The company was founded in 1961 and is headquartered in Norfolk, Virginia.

5 Best China Stocks To Own Right Now: Baidu Inc.(BIDU)

Baidu, Inc. provides Chinese and Japanese language Internet search services. Its search services enable users to find relevant information online, including Web pages, news, images, multimedia files, and blogs through the links provided on its Websites. The company also offers online community-based products and entertainment platforms; an instant messaging service; and a consumer-oriented e-commerce platform. In addition, it designs and delivers online marketing services and auction-based P4P services that enable its customers to reach users who search for information related to their products or services. The company serves online marketing customers consisting of small and medium sized enterprises, large domestic corporations, and Chinese divisions or subsidiaries of multinational corporations primarily operating in the medical, machinery, education, franchising, electronic products, e-commerce, ticketing, tourism, information technology, consumer products, real estate, entertainment, and financial services industries. It sells its online marketing services directly, as well as through its distribution network. The company was formerly known as Baidu.com, Inc. and changed its name to Baidu, Inc. in December 2008. Baidu, Inc. was founded in 2000 and is headquartered in Beijing, the People?s Republic of China.

Advisors' Opinion:

• [By Daniel Sparks]

  Up about 50% over the past six months, Baidu (NASDAQ: BIDU  ) has rapidly recovered from the Street's pessimism that seemed to drown the stock from its previous highs. The stock was certainly a buy six months ago, but is it still a buy today? Fool contributor Daniel Sparks thinks so. In the following video, he highlights three reasons why.

• [By Kevin Chen]

  Analyzing�IBM� (NYSE: IBM  ) , Baidu� (NASDAQ: BIDU  ) , Apple (NASDAQ: AAPL  ) ,�Google� (NASDAQ: GOOG  ) , and Nokia (NYSE: NOK  ) , Kevin calculates the return on research capital, or RORC. You can calculate this number yourself by taking this year's gross profit and dividing it by last year's R&D expenditures.

• [By Andrew Tonner]

  Search has long been one of the most profitable businesses in all of tech. This has been fantastic for Baidu (NASDAQ: BIDU  ) shareholders who have watched the company effectively dominate the search market in China for some time now. However, all that changed last year as rival Internet power Qihoo 360 (NYSE: QIHU  ) decided it wanted its own piece of this booming market. In fact, Qihoo recently raised the stakes by snapping up another rival in hopes of unseating Baidu from its top spot in this growth market. So how great a threat is this for Baidu? In this video, Fool contributor Andrew Tonner discusses how investors should interpret this very real threat.

• [By James Brumley]

  Investors were a little more alert when Chinese search engine Baidu�(BIDU) went public in 2005. But buy and large, they still missed the boat on spotting the “next Google” before the underlying stock took off.

5 Best China Stocks To Own Right Now: Home Inns & Hotels Management Inc.(HMIN)

Home Inns & Hotels Management Inc. develops, leases, operates, franchises, and manages a chain of economy hotels in the People?s Republic of China. The company operates its hotels under the Home Inn brand name. As of April 28, 2011, it had approximately 800 Home Inns in operation and 1,000 Home Inns sealed in franchise agreements. The company was incorporated in 2001 and is headquartered in Shanghai, the People?s Republic of China.

Advisors' Opinion:

• [By Seth Jayson]

  Home Inns & Hotels Management (Nasdaq: HMIN  ) reported earnings on May 13. Here are the numbers you need to know.

  The 10-second takeaway
  For the quarter ended March 31 (Q1), Home Inns & Hotels Management missed estimates on revenues and beat expectations on earnings per share.

Save yourself from fraudulent Chit Fund Investments

Sarita and her husband Shiva earn an income by working as a maid and a driver in the Vijayawada district of Andhra Pradesh. They invest a part of their income in the Dhanarashi Chit fund that is run by a local jeweller. When the first meeting was called for the auction of the fund, Sarita and her husband did not participate and chose to wait for better returns.

However, by the time Sarita was ready to bid, the jewellery shop was busted and the owners were caught by the police for fraudulent transactions. The police assured Sarita and other investors of the fund that their money would be returned; however, it's been over a year and they have still not received any news.

What are Chit Funds?

Chit funds are indigenous saving mechanism that is unorganised and run between friends, families and known persons. Chit funds are easy to join as there is very little paperwork to be submitted and the entire set up is based on trust.

They have been around for over 1000 years and are present in other countries too where they are popularly known as Rotating Savings and Credit Associations.

How do they function?

Suppose a group of 65 members come together and contribute Rs. 3,000 every month for 65 months. The corpus will collect Rs. 1, 95,000 in the first instalment. Every month, an auction will be held in which the members are allowed to bid for the chit fund amount collected that month and the person offering the lowest bid will be awarded the bid.

The bid will begin at a minimum discount of 5 percent (foreman/fund administrator's commission) and can go up to a maximum of 40 percent. Suppose the winning bidder is willing to offer a discount of 35 percent in the first month, then, she will get Rs 1,26,750.

The discount amount of Rs. 68,250 minus the 5 percent commission to the foreman will be distributed as dividend amongst all the members.

So, once the foreman is paid Rs 3,412.50 as commission, the balance amount of Rs 64,837.50 is distributed among the 65 members and each member is entitled to Rs 997.50 as dividend.

The dividend amount is adjusted with the next month's instalment to be paid by the members and hence the next instalment contributed will be Rs. 2002.50. 

The winner of the bid, also known as the "prized member" will have to continue contributing to the chit fund for all 65 months even though they are not allowed to bid again.

The members who wait till the end for lower discounts will be the ones who really make a profit in the fund. The returns are not assured as it depends largely on the bidding interest.

Why are they Popular?

Chit funds are one of the most popular investment vehicles in the country even though it is unregulated and the entire set up is built on trust. Small businessmen and low income group individuals can avail funds on time at nominal rates through bids.

Individuals who bid early in the chit funds do not earn any returns and end up paying an "effective" interest to avail the funds on an urgent basis.
It is difficult to assess the profit or loss a person makes from chit funds as the outcome is largely dependent on the bid results.

Often, persons who have bid early have been able to avail funds at lower rates than what they would have had to pay the bank on availing a loan.

Regulation

A Chit Fund Act, 1982, has been framed to regulate and control chit fund operation by various state governments, but unorganised chit funds are rampant in the country.

Since the chit fund need to deposit 100 percent value of the "pot" with the registrar of Chits prior to commencement of the chit scheme, small funds do not register themselves as then they will have to forego the auction for the first month as the foreman is paid the first month's fund to compensate him/her for the deposit made.

Different Types of Frauds

Chit fund frauds have become a major issue and happen for various reasons, such as:

• The foreman/fund manager disappears with the corpus amount.

• A member could default in instalment payment or disappear after winning the first bid.

• The discount rate might be rigged and a desperate member might end up paying a higher discount.

It is advisable to invest only in registered chit funds that have completed many chit funds in the past. The Ministry of Corporate Affairs has an exhaustive list of registered chit funds; however, many chit funds get unlisted, so do your research before investing. 

Secondly, only invest in a chit fund if you are confident that you will be able to complete all the instalments or you might end up paying a penalty. 

Considering the risks, it is inadvisable to invest in chit funds, but if you intend to join one, do your homework thoroughly as  there is very little scope of recovery in case of a scam.

    

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Where Will Activision Blizzard Go Next?

With shares of Activision Blizzard (NASDAQ:ATVI) trading around $17, is ATVI an OUTPERFORM, WAIT AND SEE, or STAY AWAY? Let's analyze the stock with the relevant sections of our CHEAT SHEET investing framework:

T = Trends for a Stock’s Movement

Activision Blizzard is a worldwide publisher of online, personal computer, console, handheld, and mobile interactive entertainment products. The company operates in three segments: Activision Publishing Inc., Blizzard Entertainment Inc., and Activision Blizzard Distribution. Through its segments, it publishes interactive entertainment software products and downloadable content. It also creates real-time strategy, role-playing PC games, and online subscription-based games in the multi-player online role-playing category, as well as distributes interactive entertainment software and hardware products. Online gaming is becoming increasingly popular — as a company at the root of this growing industry, Activision Blizzard stands to see significant gains.

Activision Blizzard is buying itself back from French media company Vivendi, repurchasing 429 million shares for $5.83 billion. Activision Blizzard is responsible for popular video game titles, like Call of Duty and World of Warcraft. The buyout comes in advance of the release of Sony's (NYSE:SNE) PlayStation 4 and Microsoft's (NASDAQ:MSFT) Xbox One.

T = Technicals on the Stock Chart are Strong

Activision Blizzard stock has seen a consistent uptrend over the last several months. The stock is now trading at highs for the year. Analyzing the price trend and its strength can be done using key simple moving averages.

What are the key moving averages? They are the 50-day (pink), 100-day (blue), and 200-day (yellow) simple moving averages. As seen in the daily price chart below, Activision Blizzard is trading above its rising key averages, which signals neutral to bullish price action in the near-term.

(Source: Thinkorswim)

Taking a look at the implied volatility (red) and implied volatility skew levels of Activision Blizzard options may help determine if investors are bullish, neutral, or bearish.

	Implied Volatility (IV)	30-Day IV Percentile	90-Day IV Percentile
Activision Blizzard Options	33.66%	0%	0%

What does this mean? This means that investors or traders are buying a very small amount of call and put options contracts, compared to the last 30 and 90 trading days.

	Put IV Skew	Call IV Skew
August Options	Flat	Average
September Options	Flat	Average

As of today, there is an average demand from call buyers or sellers and low demand by put buyers or high demand by put sellers, all neutral to bullish over the next two months. To summarize, investors are buying a very small amount of call and put option contracts, and are leaning neutral to bullish over the next two months.

On the next page, let’s take a look at the earnings and revenue growth rates, and what this means for Activision Blizzard’s stock.

E = Earnings Are Increasing Quarter-Over-Quarter

Rising stock prices are often strongly correlated with rising earnings and revenue growth rates. In addition, the last four quarterly earnings announcement reactions can help gauge investor sentiment on Activision Blizzard’s stock. What do the last four quarterly earnings and revenue growth (Y-O-Y) figures for Activision Blizzard look like, and more importantly, how did the markets like these numbers?

	2013 Q1	2012 Q4	2012 Q3	2012 Q2
Earnings Growth (Y-O-Y)	21.21%	300.00%	53.85%	-44.83%
Revenue Growth (Y-O-Y)	12.97%	25.66%	11.54%	-6.20%
Earnings Reaction	-5.70%	11.19%	-1.16%	-5.52%

Activision Blizzard has seen rising earnings and revenue figures over the last four quarters. From these numbers, it seems the markets have expected more from Activision Blizzard’s recent earnings announcements.

P = Average Relative Performance Versus Peers and Sector

How has Activision Blizzard stock done relative to its peers, Electronic Arts (NASDAQ:EA), Sony (NYSE:SNE), Zynga (NASDAQ:ZNGA), and the overall sector?

	Activision Blizzard	Electronic Arts	Sony	Zynga	Sector
Year-to-Date Return	62.71%	76.52%	92.41%	23.73%	42.71%

Activision Blizzard has been an average relative performer, year-to-date.

Conclusion

Activision Blizzard provides online entertainment products and services to a growing group of people worldwide. The company is now attempting to repurchase itself from its French owner. The stock has been on a strong surge higher in recent months, and is now trading near highs for the year. Over the last four quarters, it seems investors in the company have expected more, but earnings and revenue figures have been rising. Relative to its peers and sector, Activision Blizzard has been an average year-to-date performer. Look for Activision Blizzard to OUTPERFORM.

Can Target See a Turnaround?

With shares of Target (NYSE:TGT) trading around $61, is TGT an OUTPERFORM, WAIT AND SEE, or STAY AWAY? Let's analyze the stock with the relevant sections of our CHEAT SHEET investing framework:

T = Trends for a Stock’s Movement

Target operates general stores in the United States as well as online, where it sells merchandise at discounted prices. It operates in three segments: U.S. Retail, U.S. Credit Card, and Canadian. Target's online presence is designed to enable consumers to purchase products either online or by locating them in one of its stores with the aid of online research and location tools. Groceries, clothing, household items, and general merchandise can be found at Target, making it an efficient shopping experience for consumers throughout the nation.

As Target is seeking to salvage the damage after it confirmed that 40 million credit and debit card holders’ accounts may have been compromised during a security breach, three class-action lawsuits have been filed against the No. 2 U.S. discounter, according to media reports. More than $5 million in damages is being sought in the cases, two of which were filed in California and one in Oregon, USA Today reported.

T = Technicals on the Stock Chart Are Weak

Target stock has recently been pulling back over the last couple of quarters after reaching all-time highs. The stock is currently trading in the low end of its range and may need time to stabilize before heading higher. Analyzing the price trend and its strength can be done using key simple moving averages. What are the key moving averages? The 50-day (pink), 100-day (blue), and 200-day (yellow) simple moving averages. As seen in the daily price chart below, Target is trading below its rising key averages, which signal neutral to bearish price action in the near-term.

(Source: Thinkorswim)

Taking a look at the implied volatility (red) and implied volatility skew levels of Target options may help determine if investors are bullish, neutral, or bearish.

	Implied Volatility (IV)	30-Day IV Percentile	90-Day IV Percentile
Target options	19.99%	60%	58%

What does this mean? This means that investors or traders are buying a significant amount of call and put options contracts, as compared to the last 30 and 90 trading days.

	Put IV Skew	Call IV Skew
January Options	Steep	Average
February Options	Steep	Average

As of today, there is an average demand from call buyers or sellers and high demand by put buyers or low demand by put sellers, all neutral to bearish over the next two months. To summarize, investors are buying a significant amount of call and put option contracts and are leaning neutral to bearish over the next two months.

On the next page, let’s take a look at the earnings and revenue growth rates and the conclusion.

E = Earnings Are Mixed Quarter-Over-Quarter

Rising stock prices are often strongly correlated with rising earnings and revenue growth rates. Also, the last four quarterly earnings announcement reactions help gauge investor sentiment on Target’s stock. What do the last four quarterly earnings and revenue growth (Y-O-Y) figures for Target look like and more importantly, how did the markets like these numbers?

	2013 Q3	2013 Q2	2013 Q1	2012 Q4
Earnings Growth (Y-O-Y)	-43.75%	-10.38%	-25.96%	0.81%
Revenue Growth (Y-O-Y)	1.95%	2.01%	-0.95%	6.76%
Earnings Reaction	-3.45%	-3.60%	-4.01%	-1.45%

Target has seen decreasing earnings and increasing revenue figures over the last four quarters. From these numbers, the markets have not been too happy about Target’s recent earnings announcements.

P = Weak Relative Performance Versus Peers and Sector

How has Target stock done relative to its peers, Wal-Mart (NYSE:WMT), Costco (NASDAQ:COST), Kohl’s (NYSE:KSS), and sector?

	Target	Wal-Mart	Costco	Kohl’s	Sector
Year-to-Date Return	4.33%	14.06%	19.87%	29.32%	17.89%

Target has been a poor relative performer, year-to-date.

Conclusion

Target operates discount general stores across North America, where consumers continue to enjoy their shopping experience. The company is seeking to salvage the damage after it confirmed that 40 million credit and debit card holders’ accounts may have been compromised during a security breach. The stock is currently trading lower and may need some time to stabilize. Over the last four quarters, investors in the company have not been pleased, as earnings have been decreasing while revenues have been rising. Relative to its peers and sector, Target has been a poor year-to-date performer. WAIT AND SEE what Target does the rest of this quarter.

How to Outrun the "Dynamic Dunderheads" of Washington

From the Editor: You're receiving special access to Private Briefing today because Bill has found a must-see chart we want to share with everyone, given what's happening (or not happening) in D.C. He also reminds his readers to invest in the American firm "flying" above all this nonsense. The story begins in Bill's living room, of all places, back in 1966...

When the Batman TV series debuted in 1966, my family was no different than most other American households - and quickly grew to like the campy-but-cool action/comedy.

My folks bought me toy Batmobiles - including one that pulled the "Bat Boat" on a trailer. And my Dad - always looking for ways to spend time with his son (something that continues to this day) - brought home model kits of the crime-fighting duo's sleek black hotrod, and even an exciting looking "Batplane."

And the program episodes themselves - with their tongue-in-cheek humor and "special guest villains" - were an absolute hoot. The cliff-hanger structure used in many of the episodes is something I remember to this day: I would watch, enrapt, as the "Dynamic Duo" of Batman and Robin fell into the clutches of such evildoers as The Riddler, Catwoman, and The Joker, who would capitalize on their temporary advantage to taunt the "caped crusaders."

One particular scene has always stayed with me. In it, The Joker (actor Cesar Romero), is slipping away from his pursuers. He turns one last time, faces the two heroes, and with a hearty laugh challenges them to "Catch me if you can, Dynamic Dunderheads!"

I thought of this scene again yesterday - and with good reason. As investors we're trying to make our escape from a ballooning mess that could take down the U.S. economy. But in this "scene," you and I are the "good guys."

And Congress and the Obama administration are the "Dynamic Dunderheads."

Fortunately, there are ways for you to escape the onrushing crash whose violence will be magnified by America's burgeoning debt load and lack of financial discipline, by Washington's inability to focus on the issues that really matter - and by the unforeseen "X-Factors" that will continue to jump from the shadows in the months and years to come.

And here's the best escape to get clear of Washington's "Dynamic Dunderheads"...

Most Dividend Payers Will Outperform. But This First One Will Soar...

We've all seen the statistics that extoll the virtues of the dividend payers - for instance, that from 1980 to 2005, Standard & Poor's 500 Index dividend payers outperformed their non-dividend-paying counterparts by more than 2.6 percentage points a year (an outperformance that, over a long period, translates into major additional gains in a portfolio).

And there's lots of research that underscores the fact that dividend payers gain more than the market averages in bull markets and lose a lot less in bear markets.

But a chart (see below) depicting some recent research by Morningstar Inc. really caught my eye: It very nicely illustrates that dividend stocks will deliver this "outperformance" over the course of multiple bull-and-bear markets. From 2000 to 2012, a 12-year run that combined two bear markets and two recoveries, dividend payers outperformed the S&P 500 by 6% (7.7% vs. 1.7%).

Now we just had to pick the right stocks.

And we've targeted three that we believe will create a nice long-term payoff - meaning you'll escape the evil clutches of the "Dynamic Dunderheads" who live inside the Beltway.

Let's take a look.

Opportunity No. 1
Flying First Class

We'll start with The Boeing Co. (NYSE: BA), a longtime favorite of ours that's up 90% (96% including dividends) since we first recommended it two years ago. It's also up 57% since Jan. 18 - when we told subscribers to ignore the whole "Dreamliner battery" media frenzy and buy the stock while it was trading down. Boeing recently hit a record high of $120.38, but this is a great company with powerful global trends acting as a tailwind, and is a stock we believe you'll want to own for the long run.

This is a company that I've followed for years and know well - which is why it was one of the first stocks we recommended after launching Private Briefing. It clearly had some issues to work through, but has tackled most of them.

And Boeing's own projections show us the aerospace firm is pushing its throttles "to the stops" as it heads for the stratosphere.

In Boeing's latest annual forecast - a highly read document the company updates each year - the Chicago-based venture says there will be $4.8 trillion worth of passenger-jet sales over the next 20 years. That represents a 20% increase over the prediction that Boeing made just two years ago.

Boeing sees a need for 35,280 new passenger jets between now and 2032 - 41% of which will replace older, less-fuel-efficient jets. The rest are new airplanes that global carriers need to expand their fleets as worldwide travel continues to grow.

That tells us that there will continue to be a big-and-growing market for the commercial jets that Boeing builds. In the jumbo market, there are right now only two players - Boeing and rival Airbus NV. (Although Mainland China has announced its intent to get into the jumbo market, that won't be an easy move to make. And even if it succeeds in building a jumbo jet, it may have trouble finding buyers outside its own market.)

In a recent story about dividend-paying stocks, Barron's screened for companies that were "modest" payers, but that could likely be counted on for above-average payout growth.

It came up with three stocks - one of which was Boeing.

The experts that I work with here at Money Map Press are some of the best "thinkers" that I've ever dealt with. And by that I mean they're original thinkers. So while we make a special point about not following Wall Street's lead, we love to see it when the sell-siders follow ours. And that's what we've been seeing with Boeing, which has benefitted from a lot of ratings upgrades and target-price increases in July, August, and September.

Late last month, for instance, Sterne Agee analyst Peter Arment told clients in a research note that he sees a big upside for Boeing. Arment boosted his target price by $44 a share - all the way up to $164.

According to Arment, the Boeing story is all about free-cash-flow (FCF) generation. Arment now sees higher deliveries "resulting in very favorable FCF during 2014-2018." His $164 target price is based on a reasonable valuation multiple of 12 times 2015 cash flow.

But here's the real grabber: The company has $410 billion in order "backlog" - a number that's nearly five times Boeing's market cap. That gives investors a whole lot of "visibility" (predictability) when it comes to projecting company revenue.

Boeing has "5,000 aircraft in backlog and unmatched visibility," Arment said - ending his research note by stating that the stock is a "must-own."

Arment's target price is 38% higher than Boeing's recent market price.

Although the yield is only 1.65%, Boeing has boosted the dividend twice since we recommended the stock. Combine that with the strong fundamentals and big upside and you have yourself the makings of a hefty long-term winner.

Arment says Boeing is a "must own" - and we couldn't agree more.

Opportunity No. 2
An Exclusive Club

Every "analyst" or guru has a favorite company or two that they've made a point of following for years - even decades. For me, one of those companies is Boeing. But for resident tech guru Michael Robinson, that company...

Full Story: To access Bill's latest Private Briefing in its entirety, log in to your members-only dashboard. Not a member? Get all three companies Bill recommended Wednesday - plus daily access to $28,000 worth of our best investing ideas - for $7.99 a month. You're joining just in time, thanks to Bernanke's "deal with devil...

Why Accuray's Earnings May Be Less Than Awesome

It takes money to make money. Most investors know that, but with business media so focused on the "how much," very few investors bother to ask, "How fast?"

When judging a company's prospects, how quickly it turns cash outflows into cash inflows can be just as important as how much profit it's booking in the accounting fantasy world we call "earnings." This is one of the first metrics I check when I'm hunting for the market's best stocks. Today, we'll see how it applies to Accuray (Nasdaq: ARAY  ) .

Let's break this down
In this series, we measure how swiftly a company turns cash into goods or services and back into cash. We'll use a quick, relatively foolproof tool known as the cash conversion cycle, or CCC for short.

Why does the CCC matter? The less time it takes a firm to convert outgoing cash into incoming cash, the more powerful and flexible its profit engine is. The less money tied up in inventory and accounts receivable, the more available to grow the company, pay investors, or both.

To calculate the cash conversion cycle, add days inventory outstanding to days sales outstanding, then subtract days payable outstanding. Like golf, the lower your score here, the better. The CCC figure for Accuray for the trailing 12 months is 183.4.

For younger, fast-growth companies, the CCC can give you valuable insight into the sustainability of that growth. A company that's taking longer to make cash may need to tap financing to keep its momentum. For older, mature companies, the CCC can tell you how well the company is managed. Firms that begin to lose control of the CCC may be losing their clout with their suppliers (who might be demanding stricter payment terms) and customers (who might be demanding more generous terms). This can sometimes be an important signal of future distress -- one most investors are likely to miss.

In this series, I'm most interested in comparing a company's CCC to its prior performance. Here's where I believe all investors need to become trend-watchers. Sure, there may be legitimate reasons for an increase in the CCC, but all things being equal, I want to see this number stay steady or move downward over time.

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

Because of the seasonality in some businesses, the CCC for the TTM period may not be strictly comparable to the fiscal-year periods shown in the chart. Even the steadiest-looking businesses on an annual basis will experience some quarterly fluctuations in the CCC. To get an understanding of the usual ebb and flow at Accuray, consult the quarterly-period chart below.

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

On a 12-month basis, the trend at Accuray looks less than great. At 183.4 days, it is 54.5 days worse than the five-year average of 128.9 days. The biggest contributor to that degradation was DIO, which worsened 31.9 days when compared to the five-year average.

Considering the numbers on a quarterly basis, the CCC trend at Accuray looks OK. At 206.5 days, it is 41.8 days worse than the average of the past eight quarters. Investors will want to keep an eye on this for the future to make sure it doesn't stray too far in the wrong direction. With both 12-month and quarterly CCC running worse than average, Accuray gets low marks in this cash-conversion checkup.

Though the CCC can take a little work to calculate, it's definitely worth watching every quarter. You'll be better informed about potential problems, and you'll improve your odds of finding underappreciated home run stocks.

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

Add Accuray to My Watchlist.

AVG Technologies Crushes Earnings Estimates

AVG Technologies (NYSE: AVG  ) reported earnings on April 24. Here are the numbers you need to know.

The 10-second takeaway
For the quarter ended March 31 (Q1), AVG Technologies beat expectations on revenues and crushed expectations on earnings per share.

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

Gross margins dropped, operating margins increased, net margins grew.

Revenue details
AVG Technologies booked revenue of $104.7 million. The five analysts polled by S&P Capital IQ foresaw revenue of $97.2 million on the same basis. GAAP reported sales were 26% higher than the prior-year quarter's $83.0 million.

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

EPS details
EPS came in at $0.58. The six earnings estimates compiled by S&P Capital IQ predicted $0.38 per share. Non-GAAP EPS of $0.58 for Q1 were 71% higher than the prior-year quarter's $0.34 per share. GAAP EPS of $0.45 for Q1 were 114% higher than the prior-year quarter's $0.21 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 86.5%, 80 basis points worse than the prior-year quarter. Operating margin was 30.8%, 500 basis points better than the prior-year quarter. Net margin was 23.3%, much better than the prior-year quarter. (Margins calculated in GAAP terms.)

Looking ahead
Next quarter's average estimate for revenue is $99.9 million. On the bottom line, the average EPS estimate is $0.43.

Next year's average estimate for revenue is $413.3 million. The average EPS estimate is $1.81.

Investor sentiment
The stock has a two-star rating (out of five) at Motley Fool CAPS, with 22 members out of 27 rating the stock outperform, and five members rating it underperform. Among eight CAPS All-Star picks (recommendations by the highest-ranked CAPS members), six give AVG Technologies a green thumbs-up, and two give it a red thumbs-down.

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on AVG Technologies is outperform, with an average price target of $23.67.

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

Add AVG Technologies to My Watchlist.

Housing Sector's Alternative Mathematics

After the better than expected numbers for November housing starts were announced yesterday, MoneyShow's Jim Jubak, also of Jubak's Picks, crunched the numbers and found some possible solutions for how to play this upwards movement.

I think the market added two plus two and got five yesterday, after the release of better than expected numbers for November housing starts. That doesn't mean, however, that two plus two equals four isn't impressive enough to warrant a look from investors at specific stocks in the housing sector. Two that I think are attractive here are homebuilder Lennar (LEN) and flooring retailer Lumber Liquidators (LL).

In numbers reported yesterday morning, housing starts jumped 22.7% to 1.1 million in November from October levels. That was at well above the 950,000 starts expected by economists surveyed by Briefing.com.

That led to huge gains in housing stocks. Lennar climbed 6.3% on the day. D.R. Horton (DHI) closed up 6.4%. Lumber Liquidators rose 6.1%.

The direction of that move is correct, in my opinion. Housing starts now look likely to run at an average rate of one million a month. The relatively modest extent of the Federal Reserve's taper—a drop of just $5 billion a month, to $35 billion from $40 billion, in its purchases of mortgage-backed securities—isn't likely to push mortgage rates up significantly. And with short-term rates likely, the Fed said on December 18, to stay near 0% into 2015, and with inflation running at less than 2%, there just isn't much upward pressure on interest rates in general, and mortgage rates in particular.

In addition, the December 18 announcement of the beginning of a taper in asset purchases from the Fed, removes a good bit of the uncertainty that has been driving volatility in the housing sector for months. Lennar, for example, has bounced from low to high to low to high with every shift in the market's interpretation of the odds of a Fed taper. For example, on November 11, Lennar traded at $32.58 a share. That was down from $37.38 on October 29. In the December 18 rally, the shares recovered all the way to $37.43.

But there are problems in the sector that say to me, "Watch that math."

For example, the November 1.1 million starts was likely inflated by the uncertainty in September and October over the budget and the debt ceiling. A return to one million starts in December wouldn't be surprising. And it seems like homebuilders, especially, are looking at stagnant or declining margins in 2014. Lennar has told Wall Street that gross margins won't expand further in 2014 and are likely to remain flat at around 25%. That would be a drop from the 26.8% gross margins in the company's fiscal fourth quarter that ended in November 2013.

Those projections from Lennar say watch valuations across the sector. Lennar invested heavily in buying land early in this cycle, so the company is relatively less likely to feel pressure on margins from rising land costs as the housing cycle continues. I calculate a $40 a share target price for Lennar by July 2014. That's only a 7% gain from the December 18 close, so this stock would be much more attractive on the dip. (Investors might see that dip with the slower winter season, but spring weather usually pushes up prices in this sector.)

If you're looking for a dip in a housing related stock, I'd suggest Lumber Liquidators. The shares dropped from $119.44 on November 15 to $89.49 on December 13, before recovering to close at $99.50 on December 18. That's a 17% drop and it makes the gain to my target price of $129 by October 2014 an attractive 30%.

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5 Dividend Stocks That Disappointed in 2013

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It's been a very good year for the equity markets, and dividend stocks have been no exception.

Although the year-to-date performance of the S&P 500 Index at nearly 25% has surpassed the year-to-date performance of the benchmark dividend ETF, the iShares Select Dividend Index (DVY, +21.8%), many stalwart dividend plays have been putting smiles on income-oriented investors' faces.

Unfortunately, this story isn't about smiling faces.

This is about the dark side of the dividend story — particularly companies that laid a serious egg in 2013. By laying an egg, I mean these dividend stocks either suspended or severely slashed their payouts this year. That means if you bought these companies thinking you'd get income, sorry … you're out of luck.

Here are five (and then some) dividend stocks that turned into big disappointments in 2013.

Weight Watchers (WTW)

Trimming off the pounds is what Weight Watchers (WTW) products are designed to do. But in October, WTW cut the fat on its income stream, suspending its payment and citing the struggle to recruit new members as the reason for the dividend diet.

WTW stock plunged more than 20% in one session on the news — the biggest drop since the company went public in November 2001.

Weight Watchers hopes to use the estimated $39 million they will save on dividend payments to fund growth initiatives, and while I wish the company success, I recommend investors dump the diet plan and gorge on these 5 Sure-Fire Dividend Stocks to Buy instead.

Nokia (NOK)

Finnish mobile phone manufacturer Nokia (NOK) hung up on income investors in January, with the company dumping its dividend for the first time in more than two decades.

Nokia did manage to have a good year in terms of profits in 2013, and NOK stock has also performed very well, jumping more than 90% this year.

However, Nokia isn’t the same company anymore, having dumped its handset business onto Microsoft (MSFT). And again, it’s no longer a dividend play.

If you’re looking for an income-producing dividend stock to fill the void, consider the classic pure plays AT&T (T) and Verizon (VZ).

Banco Bilbao Vizcaya Argentaria (BBVA)

When it comes to suspending dividends, the Europeans don't want to be left out. In October, Spain's biggest financial institution, Banco Bilbao Vizcaya Argentaria (BBVA), cut its annual dividend by putting a cap on payouts for 2014 (and going forward) to 40% of profits.

Tough conditions in Spain's economy, and a pending Europe-wide asset review by the European Central Bank slated for next year, has caused BBVA to tighten its belt and keep as much cash on the balance sheet as it can. Unfortunately, that's at the expense of shareholders in country's premier bank.

While the company still plans to dole out dividends, it is altering 2013 payments that were slated to be paid out next year. For one, the cash payment due in January was cancelled. Also, BBVA said it would increase the dividend payout due in April to help compensate for the January suspension, but in the end, BBVA stock will end up cutting its total payouts from 2013 from 0.42 euros to 0.37 euros.

Pitney Bowes (PBI)

What do you do when you're essentially a print-oriented company trapped in a digital world?

If you're Pitney Bowes (PBI), you sacrifice shareholders by taking the knife to your dividend.

In late April, PBI cut its payout in half as the mail-and-document-services giant continued to struggle. Declining revenue and weaker demand for mail products meant shareholders were presented with a payout of 18.75 cents per share vs. the 37.5 cents that was delivered to their financial mailboxes before the April cut.

Including the initial dip following the company’s announcement, PBI stock actually is up more than 30% since hacking away at its dividend. Nonetheless, I suspect the digital writing is on the wall here for Pitney Bowes. As such, if you still own PBI stock for the dividend, you might want to mark it "return to sender."

Gold Mining Stocks (ABX, KGC, AU)

The final entries among the disappointing dividend stocks of 2013 all came from the gold mining sector, and as such, I didn't want to pick on just one.

Given that 2013 was the first down year for gold in a very long time, it should come as no surprise that gold mining stocks suffered in sympathy. That suffering caused the biggest gold producer, Barrick Gold (ABX), to cut its payout, which it announced on Aug. 1. ABX also took a writedown in the previous quarter, citing slumping bullion prices.

A day earlier, Kinross Gold (KGC) suspended its semiannual dividend, and it also announced a delay in its decision on future expansion of the mill at the Tasiast mine in Africa. Finally, about a week later, AngloGold Ashanti (AU) — the third-largest producer of the yellow metal — suspended its dividend on poor earnings due to declining gold prices.

With the luster now off on gold, the dividend income from mining stocks also is dead. I say scrap this dividend sector in 2014 until the shine returns.

Read More: 5 Sure-Fire Dividend Stocks to Buy

As of this writing, Jim Woods did not hold a position in any of the aforementioned securities.

Mid-Afternoon Market Update: Markets Mixed as iRobot Surges

Toward the end of trading Tuesday, the Dow traded up 0.06 percent to 15,894.40 while the NASDAQ rose 0.01 percent to 4,029.33. The S&P also fell, dropping 0.17 percent to 1,783.07.

Top Headline
FactSet Research Systems (NYSE: FDS) reported a 4.8% rise in its fiscal first-quarter profit and issued a weak earnings guidance for the current quarter.

FactSet Research expects current-quarter earnings of $1.20 to $1.23 per share, versus analysts' estimates of $1.25 per share. It expects revenue of $225 million to $228 million, versus analysts' estimates of $227 million.

FactSet Research's quarterly profit surged to $52.2 million, or $1.19 per share, from $49.8 million, or $1.11 per share, in the year-ago period. Excluding one-time items, its adjusted earnings came in at $1.22 per share. Its revenue climbed 5.6% to $223 million. The company had earlier expected earnings of $1.21 to $1.24 per share on revenue of $222 million to $225 million.

Equities Trading UP
KKR Financial Holdings LLC (NYSE: KFN) shot up 28.47 percent to $12.14 after the company agreed to be acquired by KKR & Co (NYSE: KKR) for $2.6 billion.

Shares of Frontier Communications (NASDAQ: FTR) got a boost, shooting up 9.09 percent to $4.80 after AT&T (NYSE: T) announced its plans to sell its Wireline Residential and Business Services and associated assets in Connecticut to Frontier for $2 billion in cash.

iRobot Corporation (NASDAQ: IRBT) was also up, gaining 17.06 percent to $36.64 after the company got upgraded by Raymond James to a Strong Buy and a $39 price target.

Equities Trading DOWN
Shares of FactSet Research Systems (NYSE: FDS) were down 5.92 percent to $110.18 after the company issued a weak earnings guidance for the current quarter.

Spectrum Pharmaceuticals (NASDAQ: SPPI) shares tumbled 9.77 percent to $8.18 after the company announced an offering of $100 million of convertible notes.

Rockwell Medical (NASDAQ: RMTI) was also down, falling 19.90 percent to $10.80 after Brean Capital initiated the company at a Sell rating and a $4 price target.

Commodities
In commodity news, oil traded down 0.31 percent to $97.18, while gold traded down 1.12 percent to $1,230.50.

Silver traded down 1.07 percent Tuesday to $19.89, while copper fell 0.18 percent to $3.32.

Eurozone
European shares were lower today. The Spanish Ibex Index dropped 0.91 percent, while Italy's FTSE MIB Index declined 1.63 percent. Meanwhile, the German DAX fell 0.86 percent and the French CAC 40 dipped 1.24 percent while U.K. shares tumbled 0.55 percent.

Economics
U.S. consumer prices came in flat in November, while the core CPI rose 0.2%. However, economists were projecting both the main CPI and core CPI to gain by 0.1%.

The U.S. current account deficit shrank to $94.8 billion in the third quarter, versus a downwardly revised $96.6 billion in the second quarter.

The ICSC-Goldman Sachs store sales index rose 4.8% in the week ended Saturday versus the earlier week.

The Johnson Redbook Retail Sales Index dropped 1.4% in the first two weeks of December versus November.

The NAHB housing market index rose to 58.00 in December, versus a prior reading of 54.00. However, economists were expecting a reading of 55.00.

The Federal Open Market Committee begins its 2-day meeting today.

The Treasury is set to auction 2-year notes.

Posted-In: Earnings News Guidance Eurozone Commodities Forex Econ #s Economics Hot Intraday Update Markets Movers Tech

(c) 2013 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.

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Top 10 Biotech Companies To Watch In Right Now

The medical device industry as a whole is under fire. Pricing pressures, the ongoing European recession, and tough competition have all come together to hit revenues at leading device makers. Medtronic (NYSE: MDT  ) hasn't been immune to those damages as the largest pure medical device maker, and its spine business -- its second-largest segment �by sales -- has seen revenue fall 5% over the last nine months as a result.

What's Medtronic's response? The company plans to cut 230 jobs at its spine business and slash costs by 5% in order to compensate for the falling sales. With other companies in the industry also seeing spine revenue lagging --�Stryker's (NYSE: SYK  ) own spine sales fell 4% in 2012 -- will this measure be enough? Motley Fool contributor Dan Carroll and health care analyst Max Macaluso discuss this question and more in the video below.

While you can certainly make huge gains in biotech and pharmaceuticals, 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.

Top 10 Biotech Companies To Watch In Right Now: Applied Nanotech Holdings Inc (APNT)

Applied Nanotech Holdings, Inc., incorporated on May 22, 1989, is engaged in nanotechnology research and development business. The Company's nanotechnology research involves performing contract research and development services for others to develop products and materials for new applications, and then leveraging this research by applying it to other similar applications in other industries. The Company also develops intellectual property (IP) around its products and technologies. The Company develops five technology platforms: nanosensor technology; nanocomposites, based on carbon nanotube composites; thermal management materials; nanoelectronics applications, and electron emission activities, primarily in the display area. The Company's electron emission IP is divided into display activities and non-display activities. Applied Nanotech Holdings, Inc. is the parent company. Applied Nanotech, Inc. (ANI) is a subsidiary of ANHI. During the year ended December 31, 2012, the Company formed EZDiagnostix, Inc., (EZDX).

Sensors

The Company develops sensors based on ion mobility sensor technology and differential mobility spectroscopy. The Company is involved in projects to develop Mercaptan and Methane sensors for uses in the natural gas industry. The Company is also applying this technology to other applications, including agricultural pathology, wound care, and breath analysis. The Company develops hydrogen sensor for use in the measurement of hydrogen in power transformer products. The Company develops carbon monoxide sensor that can last for 10,000 hours on a single battery. The Company's carbon nanotube technology is for use in biosensors. Sensors based on carbon nanotubes or other nanomaterials can be used to detect chemical, organic, or biological warfare agents, as well as explosives, hydrogen, ammonia and numerous other chemicals.

Nanocomposites

The Company is in the advanced stages of development of nanomaterials using carbon nanotube (CNT) and! other composites. Epoxies are used in industries with worldwide markets, with applications, including adhesives, paints, coatings, and composites. In addition to epoxy resins, the Company develops other types of resins, including polyesters and vinyl esters. Vinyl esters are used in a variety of industrial applications, including storage tanks, piping, and construction. The Company develops a process for coating nylon pellets with CNTs to improves electrical conductivity. Nylon 6 with improved electrical conductivity can be used for its anti-static qualities, electrostatic discharge, and electromagnetic/RF shielding.

Thermal Management

The Company markets thermal management material called CarbAl. CarbAl provides a passive thermal management solution for temperature control issues that plague electronics manufacturers. CarbAl is a carbon based metal nanocomposite comprised of 80% carbonaceous matrix and a dispersed metal component of 20% aluminum. The Company also develops a simplified version of CarbAl based on graphite.

Conductive Inks

The Company develops aluminum and silver inks and pastes that is ideal for use in the production of solar cells. The Company also develops aluminum paste that can be used in current solar cell production.

The Company competes with Zyvex Performance Materials, GSI Creos, Amroy Europe, Ltd., DuPont and Ferro

Advisors' Opinion:

• [By Anuchit Nguyen]

  India�� S&P BSE Sensex rose, holding at a three-year high, amid better-than-estimated corporate earnings. Engineering company Larsen & Toubro Ltd. (LT) rallied to a three-month high and Asian Paints Ltd. (APNT) surged about 6 percent after reporting profit that beat forecasts.

Top 10 Biotech Companies To Watch In Right Now: RXi Pharmaceuticals Corp (RXII)

RXi Pharmaceuticals Corporation (RXi), incorporated on September 8, 2011, is a development-stage company. The Company is a biotechnology company focused on discovering, developing and commercializing therapies addressing medical needs using RNA interference (RNAi)-targeted technologies. As of July 12, 2012, RXi was focusing on its internal therapeutic development efforts in fibrosis. RXI-109 is its RNAi product candidate, which is a dermal anti-scarring therapy that targets connective tissue growth factor (CTGF). The Company�� therapeutic platform consists of two main components: RNAi Compounds (rxRNA) and Advanced Delivery Technologies. RNAi compounds include rxRNAori, rxRNAsolo and sd-rxRNA, or self-delivering RNA. On April 26, 2012, it completed the spin-off transaction from Galena Biopharma, Inc. (Galena).

In January 2011, the Company announced research results in collaboration with Generex Biotechnology Corporation, and RXi�� wholly owned subsidiary Antigen Express, Inc., in developing vaccine formulations for immunotherapy. In January 2011, it announced initial results as part of its collaboration with miRagen Therapeutics, Inc. in creating microRNA mimics, or artificial copies of microRNAs, using the Company�� sd-rxRNA technology. In February 2011, it announced the initiation of RXi�� development program for RXI-109.

Best High Tech Stocks To Watch Right Now: Savient Pharmaceuticals Inc(SVNT)

Savient Pharmaceuticals, Inc., a specialty biopharmaceutical company, focuses on developing KRYSTEXXA, a biologic PEGylated uricase in the United States. The KRYSTEXXA is being developed as a treatment for chronic gout in patients refractory to conventional therapy. The company also sells and distributes branded and generic versions of oxandrolone, a drug used to promote weight gain following involuntary weight loss. It sells its products directly to drug wholesalers. The company, formerly known as Bio-Technology General Corp. and changed its name to Savient Pharmaceuticals, Inc. in June 2003. Savient Pharmaceuticals, Inc. was founded in 1980 and is headquartered in East Brunswick, New Jersey.

Advisors' Opinion:

• [By James E. Brumley]

  Since 2008's implosion from the stock, the interest in Savient Pharmaceuticals Inc. (NASDAQ:SVNT) has been waning. There was a brief burst of bullishness in September of last year, which stirred the bullish pot a little. But, when SVNT started to fade in October of that year - just as quickly as it had perked up - what lingering hopes there were for the stock finally started to melt away. By the middle of this year, pretty much everyone had written Savient Pharmaceuticals off as a lost cause. Big mistake. Over the last few days, SVNT has almost wiggled its way buck into a bullish zone.

• [By James E. Brumley]

  It's still too soon to say Savient Pharmaceuticals Inc. (NASDAQ:SVNT) is off and running. In fact, the stock's decidedly NOT off and running yet. But, it's not too soon to put SVNT on your watchlist of potential breakout candidates, as it's much closer to a breakout than most anyone can see.

Top 10 Biotech Companies To Watch In Right Now: Scancell Holdings PLC (SCLP.L)

Scancell Holdings PLC is a United Kingdom-based company. The Company�� principal activity of the consists of the discovery and development of monoclonal antibodies and vaccines for the treatment of cancer. In April 2012, the Company completed recruitment to the Phase 1 clinical trial of SCIBI. In May 2012, the Company commenced recruitment and treatment of the first patient in the second part of it Phase 1/2 clinical trial of SCIBI. The Phase 2 part of the trial is conducted in five United Kingdom centers in Nottingham, Manchester, Newcastle, Leeds, and Southampton. On August 15, 2012, the Company announced the development of a platform technology, Moditope.

Top 10 Biotech Companies To Watch In Right Now: Gentium SpA(GENT)

Gentium S.p.A., a biopharmaceutical company, focuses on the development and manufacture of its primary product candidate, defibrotide, an investigational drug based on a mixture of single-stranded and double-stranded DNA extracted from pig intestines. It develops defibrotide for the treatment and prevention of hepatic veno-occlusive disease (VOD), a condition that occurs when veins in the liver are blocked as a result of cancer treatments, such as chemotherapy or radiation, that are administered prior to stem cell transplantation. The company has completed a Phase III clinical trial of defibrotide for the treatment of severe VOD in the United States, Canada, and Israel; and a Phase II/III pediatric trial in Europe for the prevention of VOD. It also offers sulglicotide that is developed from swine duodenum, and has ulcer healing and gastrointestinal protective properties in South Korea; and urokinase, which is made from human urine to treat various vascular disorders, such as deep vein thrombosis and pulmonary embolisms. The company was formerly known as Pharma Research S.r.L. and changed its name to Gentium S.p.A. in July 2001. Gentium S.p.A. was founded in 1993 and is headquartered in Villa Guardia, Italy.

Advisors' Opinion:

• [By James Oberweis]

  Gentium Spa (GENT) is focused on the development and commercialization of its leading product, defibrotide, to treat certain complications arising from chemotherapy, and bone marrow and stem cell transplantation therapy.

• [By Sean Williams]

  A parabolic problem
  It has also been a year to remember for shareholders of biopharmaceutical company Gentium (NASDAQ: GENT  ) whose share price has catapulted approximately 600% off its lows thanks to growth in its lead drug Defibrotide (known as Defitelio in the European Union).

Top 10 Biotech Companies To Watch In Right Now: EntreMed Inc (ENMD)

EntreMed, Inc. (EntreMed), incorporated in 1991, is a clinical-stage pharmaceutical company. EntreMed's drug candidate is ENMD-2076, an Aurora A and angiogenic kinase inhibitor for the treatment of cancer. ENMD-2076 has completed Phase I studies in patients with advanced solid tumors, multiple myeloma and leukemia and is completing data for a multi-center Phase II study in patients with platinum resistant ovarian cancer. The Company�� other product candidates have includes MKC-1, ENMD-1198 and 2-methoxyestrdiol (2ME2, Panzem) for treatment of rheumatoid arthritis.

ENMD-2076 is a novel orally-active, Aurora A/angiogenic kinase inhibitor with potent activity against Aurora A and multiple tyrosine kinases linked to cancer and inflammatory diseases. ENMD-2076 is relatively selective for the Aurora A isoform in comparison to Aurora B. Aurora kinases are key regulators of the process of mitosis, or cell division, and are often over-expressed in human cancers. ENMD-2076 exerts its effects through multiple mechanisms of action, including anti-proliferative activity and the inhibition of angiogenesis. ENMD-2076 has demonstrated significant, dose-dependent preclinical activity as a single agent, including tumor regression, in multiple xenograft models (such as breast, colon, leukemia), as well as activity towards ex vivo-treated human leukemia patient cells.

Top 10 Biotech Companies To Watch In Right Now: Navidea Biopharmaceuticals Inc (NAVB.A)

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

Lymphoseek

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

AZD4694

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

RadioImmunoGuided Surgery

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

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

Top 10 Biotech Companies To Watch In Right Now: Multicell Technologies Inc (MCET)

MultiCell Technologies, Inc., incorporated on April 28, 1970, is a biopharmaceutical company. The Company is engaged in developing novel therapeutics and discovery tools to address unmet medical needs for the treatment of neurological disorders, hepatic disease, cancer and interventional cardiology and peripheral vessel applications. The Company�� portfolio of lead drug candidates is in various stages of discovery optimization, and preclinical and clinical development, and includes MCT-125, a Phase II therapeutic candidate for the treatment of PMSF, which has demonstrated efficacy in a 138-patient Phase IIa clinical trial; MCT-465, a preclinical synthetic dsRNA therapeutic candidate and potent immune enhancer for the treatment of solid tumor cancers, such as those expressing TLR-3; MCT-475, a discovery stage antibody therapeutic candidate used in combination with dsRNA for the treatment of solid tumor cancers, and MCT-485, a discovery stage dsRNA therapeutic candidate with tumor cytolytic properties for the treatment of certain cancers.

MultiCell is pursuing research and development targeting degenerative neurological diseases, including multiple sclerosis (MS) and cancer. The Company�� therapeutics business addresses significant unmet medical needs for the treatment of neurological disorders and cancer through modulation of the innate and adaptive immune response. The Company�� therapeutic development platform includes several patented techniques used to isolate, characterize and differentiate stem cells from human liver; control the immune response at transcriptional and translational levels through double-stranded RNA (dsRNA)-sensing molecules such as the Toll-like Receptors (TLRs), RIG-I-like receptor (RLR), and Melanoma Differentiation-Associated protein 5 (MDA-5) signaling; generate specific and potent immunity against key tumor targets through a novel immunoglobulin platform technology; and modulate the noradrenaline-adrenaline neurotransmitter pathway.

The Com! pany�� medical device development platform is based on the design a next-generation bioabsorbable stent, the Ideal BioStent, for interventional cardiology and peripheral vessel applications. The Company�� Ideal BioStent is a stent incorporating salicylate, the active component in aspirin, directly into the polymer chain. The Ideal BioStent also incorporates Sirolimus (rapamycin) in addition to salicylate, providing anti-restenotic therapy similar to commonly used drug-eluting metal stents.

MCT-125 for the treatment of fatigue in patients with multiple sclerosi

Fatigue is the most common symptom in MS. Overall, greater than 75% of persons with MS report having fatigue, and 50% to 60% report it as the worst symptom of their disease. The Company exclusively licensed the drug candidate LAX-202 from Amarin Neuroscience Limited (Amarin) for the treatment of fatigue in patients suffering from MS.

MCT-465, MCT-475 and MCT-485 for the treatment of cancer

MCT-465, MCT-475, and MCT 485 are in preclinical development, and are being investigated as prospective treatments for primary liver cancer and triple negative breast cancer. MCT-465 is a high molecular weight synthetic dsRNA (polyA:polyU, of 70bps) with immune-enhancing properties. MCT-485 is a low molecular weight synthetic dsRNA (polyA:polyU of 5bps) with direct tumor cytolytic properties. MCT-475 is a chimeric recombinant therapeutic antibody molecule that carries tumor-associated antigen peptide recognition in its complimentary determining region (CDR).

Top 10 Biotech Companies To Watch In Right Now: ARIAD Pharmaceuticals Inc.(ARIA)

ARIAD Pharmaceuticals, Inc., a biopharmaceutical company, focuses on the discovery, development, and commercialization of small-molecule drugs for the treatment of cancer. The company?s lead cancer product, ridaforolimus is being studied in multiple clinical trials in patients with various types of cancers, including metastatic sarcomas, breast cancer, endometrial cancer, prostate cancer, and non-small cell lung cancer. Its product pipeline also includes ponatinib, a pan BCR-ABL inhibitor in phase 2 clinical trial for applications in various hematological cancers and solid tumors; and AP26113, an anaplastic lymphoma kinase inhibitor in preclinical studies for the treatment of various cancers, including non-small cell lung cancer, lymphoma, and neuroblastoma. In addition, the company focuses on a drug discovery program centered on small-molecule therapies that are molecularly targeted to cell-signaling pathways implicated in cancer. Further, it licenses its ARGENT cell-sign aling regulation technologies to pharmaceutical and biotechnology companies to develop and commercialize therapeutic products, and to conduct drug discovery research. The company has collaboration and license agreements with Merck & Co., Inc. for the development, manufacture, and commercialization of ridaforolimus; and license agreements with Medinol Ltd. and ICON Medical Corp. to develop and commercialize stents and other medical devices to deliver ridaforolimus to prevent restenosis of injured vessels. ARIAD Pharmaceuticals, Inc. was founded in 1991 and is based in Cambridge, Massachusetts.

Advisors' Opinion:

• [By Brian Orelli]

  The other downside of this investment strategy is that it's not always clear when a decision will happen. Recently, the FDA has been making decisions well ahead of the goal set by the Pharmaceutical Drug User Fee Act, commonly referred to as the PDUFA date. ARIAD Pharmaceuticals� (NASDAQ: ARIA  ) , for instance, gained early approval for its leukemia drug Iclusig last year, and shares traded down by double digits after the widely expected announcement.

Top 10 Biotech Companies To Watch In Right Now: Cell Therapeutics Inc (CTIC)

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

Pixuvri

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

OPAXIO

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

Tosedostat

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

Brostallicin

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

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

Advisors' Opinion:

• [By John Udovich]

  If you have not been watching the biotech sector lately, you should start paying attention as the sector along with small cap biotech stocks like Cell Therapeutics Inc (NASDAQ: CTIC), BIND Therapeutics Inc (NASDAQ: BIND) and TNI BioTech (OTCMKTS: TNIB) continue to produce a steady stream of good news for investors thanks to positive industry trends. Moreover, Ophthotech Corp (NASDAQ: OPHT), Foundation Medicine Inc (NASDAQ: FMI), Evoke Pharma and Fate Therapeutics Inc (NASDAQ: FATE) are this week's biotech IPOs that will no doubt be watched closely by Wall Street and industry observers in general. With that in mind, consider the following biotech news or recent articles about the industry and the small cap players in it:

• [By John Udovich]

  Large and small cap cancer stocks Gilead Sciences, Inc (NASDAQ: GILD), Celgene Corporation (NASDAQ: CELG), Veracyte (NASDAQ: VCYT), Genomic Health, Inc (NASDAQ: GHDX), Cell Therapeutics Inc (NASDAQ: CTIC) and MetaStat Inc (OTCMKTS: MTST) have all been producing a steady stream of news lately for biotech investors looking for a way to cash in on the growth in development of�cancer treatments. Just consider the following news: