Thursday, February 28, 2013

Are You Hard-Wired to Boil Over?

Nobody wants to be that hothead who flies off the handle in the face of some everyday annoyance, causing others to roll their eyes and wonder, "What's wrong with him?"

But people who experience extreme reactions to stress�from a racing heart to full-blown rage�may be hard-wired to do so, researchers are finding. It isn't known how many people are highly reactive to stress, but the tendency can endure for years or a lifetime.

People who overreact often can't explain why a minor project setback or a child's spilled juice can unleash a volcanic response.

"They think they're weird, wondering, 'Why don't other people react like this?' " says Lois Barth, a New York-based life coach who works with stress-reactive people on performing better at work and reaching personal goals. "But many people can't help it."

Getty Images

'Stress reactors' have outsize responses to everyday pressures and annoyances.

Calming strategies for people who tend to have a big reaction to stress:

  • Try to be aware of what situations most stress you out.
  • Set daily routines that minimize hot-button stress moments such as traffic jams or last-minute deadlines.
  • When you feel yourself about to have a stress outburst, try to replace negative or fearful thoughts with positive ones.
  • Breathe deeply from the diaphragm when stressed, which activates the body's natural calming signals.
  • Build enjoyable exercise into your daily routine. Aim for at least half an hour five days a week.
SOURCES: Judy Martin, WorkLifeNation.com and Robert Lawrence Friedman, Stress Solutions Inc.

Children who grow up amid parental conflict, harsh punishment or instability�or who are raised by anxious, intrusive parents�often develop a lifelong attitude of vigilance for threats and hazards, according to a 2011 study in Neuroscience and Biobehavioral Reviews, which drew on about 400 published peer-reviewed papers. Such a background can predispose people to respond more quickly and vehemently when a perceived problem arises, the study says.

A normal stress response entails a speeding-up of the heart rate and breathing, followed by a rise in bloodstream levels of the stress hormone cortisol. Within an hour or two after the stressor subsides, these indicators typically fall back to normal. People who exhibit a highly reactive "vigilant" pattern, however, show a bigger, sharper response and calm down less readily.

Some become defensive or aggressive, while others become fearful and withdrawn, says the study, led by Marco Del Giudice, an assistant professor of psychology at the University of Turin in Italy. It isn't known what proportion of the population is wired this way. A study of 256 children, published last year in Developmental Psychology, found 10% fit the vigilant pattern.

"A vigilant person is hypersensitive, reacting at a biological level and putting more effort and energy into warding off threats, real or perceived," says Bruce J. Ellis, a co-author of the study and a professor of family and consumer sciences at the University of Arizona in Tucson.

"Understanding that different people are programmed to react differently to stress can help individuals understand their own behavior and manage their health, relationships and decisions," says Dr. Ellis.

An extreme or chronic stress response, for example, is linked to heart disease, digestive problems and hypertension.

But it can also be adaptive, helping people perform well in the face of threats, Dr. Ellis says. Animal studies show baby rats who receive less care and grooming by their mothers in infancy tend to have higher levels of stress hormones, and to perform more poorly than other rats when calm, he says. But under stress, they perform better, showing improved learning and memory.

Victoria Pynchon was immersed in parental fighting as a child, conditioning her to argue as well as anticipate and react promptly to threats, she says. As an adult, she chose to become a corporate litigator, a profession in which being argumentative is an advantage, says Ms. Pynchon, of Los Angeles. "To be combative, to refuse to cooperate, to respond sharply when someone on the other side is being a jerk to you, is part of the game." She says she often met challenges with anger, at work and beyond.

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  • Sue Shellenbarger answers readers' questions

Stress-response patterns aren't set in stone, says Dr. Del Guidice. Some life transitions, such as entering puberty, trigger hormonal changes that may alter the stress response. Also, people may become more or less reactive if their environment changes.

Most stress-reactive people become aware early that they spend more time being angry and worked up than others. The resulting anxiety and health problems often spark a search for remedies. "They really have to understand their wiring in order to dial it down," Ms. Barth says.

When Ms. Pynchon realized after 12 years as a lawyer that her work stress was fueling health problems, she shifted gears and began writing fiction to "re-connect with my creative spirit," she says. She also found more rewarding work as a mediator and co-founded She Negotiates, a negotiation-training firm.

Working with New York stress-management consultant Judy Martin, she began exercising daily and practicing meditation while walking or swimming. Instead of lashing out when challenged, she pauses to notice "the moment, maybe just a nanosecond, when you make the decision whether you're going to blow up or walk away," says Ms. Pynchon. "And I've been able more and more to capture that moment, and do something different."

Psychotherapist Robert Lawrence Friedman, president of Stress Solutions, a Forest Hills, N.Y., training and consulting firm, teaches clients a similar, four-step method to "put on the brakes," starting with thinking or saying aloud the word "stop." Then, he says, they should take a deep breath, focus on what they're thinking, then consciously replace any angry or fearful thoughts with the most positive one they could have.

Mr. Friedman says one client used the technique when a truck cut him off on the highway. Instead of flying into road rage, the man deliberately told himself "making that turn was obviously more important to him than driving safely. Who cares? I'm fine."

Tinkering with daily routines can also help. Some stress-reactive people time their commutes to avoid traffic, set time limits on stressful meetings or schedule onerous tasks at times when they aren't tired or hungry, says Ms. Martin, founder of WorkLifeNation.com, a website on managing stress.

She recommends planning breaks to ease frustration and renew energy. These could consist of three- to seven-minute deep-breathing exercises for relaxation, a calming walk or other pursuits that lend meaning or perspective. One manager she worked with took breaks to write humorous haiku poems about office life.

Some stress-reactive people restructure their lives. One New York City woman says she's planning to move her entire family to a smaller town in Arizona this spring, with a goal of reducing tensions and conflict in her environment.

To be sure, people who are innately sensitive to stress don't always become overreactive. Some grow up in safe, nurturing environments, and although they react swiftly to challenges, they have more self-control and calm down quickly, the study says. Childhood adversity doesn't always hard-wire people to be stress reactors, either. Some kids grow up in somewhat stressful environments but manage to cope. According to the 2011 study, they have a more muted or "buffered" stress response.

Write to Sue Shellenbarger at sue.shellenbarger@wsj.com

The Rebirth of Apple

On this day in economic and financial history...

In 1996, Apple (NASDAQ: AAPL  ) was a floundering relic of the '80s, left behind by a monster bull market that was rapidly making erstwhile competitor Microsoft (NASDAQ: MSFT  ) into the world's biggest public company. Everything changed on Feb. 7, 1997, when Apple brought its founder back into the fold by acquiring Steve Jobs' NeXT.

We all know what happened next (no pun intended). Jobs quickly hustled his way back into the executive office when then-CEO Gil Amelio was unceremoniously dumped months later. He streamlined the company's bloated product line and forged a controversial partnership with Microsoft that brought the two rivals closer together. Then came the iMac, the iPod, the iPhone, and the iPad. With these new products came a skyrocketing share price: It grew 2,000% in Jobs' first decade.

By the time Jobs resigned in 2011 to battle the cancer that would ultimately claim his life, Apple's stock had increased by 9,420% from the day of its NeXT acquisition. It will go down in history as one of the best acquisitions of all time, but not for the reason anyone had expected. All Apple sought at the time was a better operating system. That day, the real operating-system upgrade was installed in Apple itself.

With Steve Jobs gone, Apple's future no longer seems quite as bright. What lies in store for the world's leading consumer-electronics company? Is it still worth its weight in iPads, or is the Jobs Era now succeeded by a time of mediocre stewardship? You can learn more about Apple's prospects in our exclusive premium research reports. In these reports, you'll find all the information you need to decide whether or not Apple still deserves a place in your portfolio. Click here to subscribe today.

Entertainment for the boom and bust
The days bookending Feb. 7 gave rise to three of the early modern age's most iconic artists. On Feb. 6, 1937, in the depths of the Great Depression, John Steinbeck's Of Mice and Men was first published, introducing his Depression-era sensibilities to a broad public audience. On Feb. 7, 1914, Charlie Chaplin first waddled into the hearts of America with his classic Little Tramp character in the silent film Kid Auto Races at Venice. A year later, on Feb. 8, 1915, D.W. Griffith's groundbreaking (and highly controversial) film Birth of a Nation premiered in Los Angeles.

The United States was in the midst of a profound transformation during this time. At the turn of the century, 60% of the country lived in rural regions. By 1930 only 44% were rural dwellers. Electricity, automobiles, and telecommunications were spreading rapidly. Chaplin managed the transition from the Roaring Twenties to the Great Depression better than Griffith. His hapless Tramp proved an ideal character for films exploring both the incredible and bewildering technological progress and the economic collapse that resulted from blind optimism in that progress. Steinbeck's Of Mice and Men also became a successful piece of cinema in 1939, owing to its play-like format (Steinbeck himself adapted the book for the stage later in 1937).

In the 23 years separating the birth of the Tramp from George and Lennie, the Dow Jones Industrial Average (DJINDICES: ^DJI  ) increased by 125%. However, this obviously obscures the tremendous rise (to a maximum gain of 360%) and precipitous fall (to a maximum loss of 50%) that occurred in the interim. Investing in this time of transformation could have brought incredible wealth, but only if you could keep your head.

A light in dark places
Baltimore has a long history of "firsts" in the U.S. One such notable first in corporate history occurred in Baltimore on Feb. 7, 1817, when the first public gas streetlamp lit up a block south of the City Hall. A few months prior, museum keeper Rembrandt Peale had petitioned the City Council to light the streets, and so the lamp-lighting inaugurated the service of the first public gas utility in the United States, the Gas Light Company of Baltimore. Today, that company is Baltimore Gas and Electric, a subsidiary of Exelon (NYSE: EXC  ) . It's Maryland's largest gas and electric utility, with 650,000 natural-gas customers and 1.2 million electric customers.

As the nation moves increasingly toward clean energy, Exelon is perfectly positioned to capitalize on having the largest nuclear fleet in North America. Combine this strength with an increased focus on renewable energy, a recent merger with Constellation, and a best-in-class dividend, and Exelon is on a short list of top utilities. To determine whether Exelon is a good long-term fit for your portfolio, you're invited to check out The Motley Fool's premium research report on the company. Simply�click here now�for instant access.

Whiting Petroleum Beats on Both Top and Bottom Lines

Whiting Petroleum (NYSE: WLL  ) reported earnings on Feb. 27. Here are the numbers you need to know.

The 10-second takeaway
For the quarter ended Dec. 31 (Q4), Whiting Petroleum beat expectations on revenues and beat expectations on earnings per share.

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

Margins increased across the board.

Revenue details
Whiting Petroleum logged revenue of $577.1 million. The 21 analysts polled by S&P Capital IQ expected to see revenue of $536.8 million on the same basis. GAAP reported sales were 17% higher than the prior-year quarter's $492.0 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 $0.83. The 32 earnings estimates compiled by S&P Capital IQ averaged $0.74 per share. Non-GAAP EPS of $0.83 for Q4 were 21% lower than the prior-year quarter's $1.05 per share. GAAP EPS of $0.69 for Q4 were 30% higher than the prior-year quarter's $0.53 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 75.6%, 30 basis points better than the prior-year quarter. Operating margin was 26.0%, 450 basis points better than the prior-year quarter. Net margin was 14.2%, 140 basis points better than the prior-year quarter.

Looking ahead
Next quarter's average estimate for revenue is $566.2 million. On the bottom line, the average EPS estimate is $0.85.

Next year's average estimate for revenue is $2.43 billion. The average EPS estimate is $3.80.

Investor sentiment
The stock has a five-star rating (out of five) at Motley Fool CAPS, with 687 members out of 708 rating the stock outperform, and 21 members rating it underperform. Among 106 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 103 give Whiting Petroleum a green thumbs-up, and three give it a red thumbs-down.

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Whiting Petroleum is outperform, with an average price target of $60.00.

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  • Add Whiting Petroleum to My Watchlist.

Visa, MasterCard Hit By Durbin Legislation, But Banks Might Be Real Targets

Shares of Visa (V) are off $7.65, or 9%, at $78.08, and Mastercard (MA) is down $22.01, or 10%, at $210.30, after the Senate voted 64 to 33 to cut so-called swipe fees placed on debit card transactions.

The measures, sponsored by Senator Dick Durbin (Dem., Illinois), would allow the Fed Reserve to cap fees imposed by Visa and Mastercard on merchants when they process transactions, fees that can at times be higher than the value of the transaction itself.

Durbin, attacking the “outrageous” fees, remarked that “In a time of recession, when we need small businesses to step up and create jobs, this is a way to move forward,” according to the Journal’s Greg Hitt and Michael Crittendon.

In a note on the matter this morning, FBR Capital analyst Scot Valentin notes that Visa gets 32% of its global payment volumes from U.S. debit card transactions, while MasterCard gets 18% of its global purchase volumes from the U.S.

Investors were placing a “relatively low probability of passage” on the measure, he writes — a big negative surprise, then.

However, he notes that banks, which issue the actual card, will “bear the majority of the financial brunt of any potential reduction in interchange fees.”

So how are the card issuers doing this morning?

Bank of America (BAC) is down 22 cents, or 1.3%, at $16.65; Citigroup (C) is down 7 cents, or 1.7%, at $4.02; Capital One (COF) is down $2.09, or 5%, at $42.82; and Discover Financial Services (DFS) is off 53 cents, or 4%, at $14.26.

Valentin advises buying Visa and MasterCard on the dip, writing:

We would use a substantial sell-off in either stock as a buying opportunity as we continue to believe the secular shift from paper forms of payment to plastic/electronic underpins the companies’ above average long-term earnings growth rates.

Want The Inside Scoop? Watch The Guys That Invest for a Living

Investing is an essential part of an insurance company's operations. While the primary revenue generator will always be premiums, investing their capital allows insurance firms to expand business operations, return capital to investors, and buffer against losses. One insurer that is particularly adept at investing is Markel (NYSE: MKL  ) .

Standing alone
The niche-market policy purveyor distinguishes itself from its peers with its investment philosophy: While others will put most of their eggs in the bond-market basket, Markel focuses heavily on corporate equities, which makes its investments inherently riskier, but can provide much higher returns.

Often called the mini Berkshire Hathaway (NYSE: BRK-B  ) , Markel's investment philosophy is lead by CIO Tom Gayner. Much like Buffet's track record with Berkshire, Gayner has impressed the Street since his start with the company in 1990. During his time with Markel, the company's become a 20-bagger�thanks to Gayner's cumulative return of almost 102% return over the past 10 years. One of our CAPS members has even equated an investment in Markel to an investment in a well-managed hedge fund.

The importance of being earnest
Based on the company's 2012 results, it's $282 million in net investment income is equivalent to 56% of the company's comprehensive income to shareholders of $503.8 million. With investments playing such a large roll in the company's business, it's clear that the choices Gayner and his team make have to be great ones. So for investors in need of some direction or ideas, taking a gander at how Gayner invests Markel's capital may not be a bad place to start.

Lucky for us, the recent release of buying and selling data for Markel's portfolio paints a pretty clear picture of the company's direction.

Power on
Receiving the most attention from Markel in the fourth quarter was the energy sector -- from mining operations, suppliers, and producers.

Company Sept. 30, 2012 Change in Shares Dec, 31, 2012 �� Change in Shares
Alpha Natural Resources (NYSE: ANR  ) 186,00056,500
Arch Coal� (NYSE: ACI  ) -56,000
Norfolk Southern (NYSE: NSC  ) 21,40050,700
Natural Resource Partners� (NYSE: NRP  ) 55,00046,400
Peabody Energy (NYSE: BTU  ) 135,00045,000
National Oilwell Varco� (NYSE: NOV  ) 20,00018,000
CARBO Ceramics (NYSE: CRR  ) 86,00018,000
CONSOL Energy (NYSE: CNX  )
15,00015,000

Source: S&P Capital IQ.

With the developments made over the past year in domestic natural gas and oil production, most energy related companies have seen an uptick in investor interest. Coupled with the prospect of being energy independent in the next 20 years, it's no wonder that Markel would be interested in joining the party.

As you can see from the table above, Markel has been racking up shares of the energy companies over the past few quarters. What is not included in the table is telling -- the majority of companies represented above received no love from Markel before September. This shows that the push toward the energy sector is a growing trend -- something our energy analysts could talk about for days.

At the other end of the spectrum
Heavy cuts hit the financial sector's share of Markel's portfolio, though it is mostly attributable to a 880,000 sale of Union First Market Bankshares Corp. (NASDAQ: UBSH  ) . Markel is a 10% owner of the company and has been steadily selling shares for the past few quarters. Gayner has continued this trend, with a reported 1.69% decrease in Markel's holdings on Feb. 15.

The fourth quarter did hold some positive investment trends for several other financials:

Company Sept. 30, 2012 Change in Shares Dec. 31, 2012 Change in Shares
Calamos Asset Management (NASDAQ: CLMS  ) 10,000100,000
Alliance Holdings (NASDAQ: AHGP  ) 81,50085,000
Moody's (NYSE: MCO  ) 30,00065,400

Source: S&P Capital IQ.

The increase in Moody's shares may be a clever move on Markel's behalf. The ratings agency has come under fire (along with Standard & Poor and others) for spurring on the bad behavior that fueled the financial crisis, but it remains an important part of the financial sector and is unlikely to fall a great deal permanently. Moody's has recently implemented tougher practices for rating residential mortgage-bonds, with less issuer-friendly terms -- something likely to drive away some business, but ultimately a sign to Main Street that it's cleaning up its operations.

The more you know
Gayner, Buffet, Berkowitz, and others are great resources that you can tap into for ideas and for advice, but as always, make sure you're doing your homework and vetting out any investment options. Though we don't know all of the factors that Gayner and his team analyzed before investing, the trends discernible from their activity is very informative. This is just one more opportunity to educate yourself before jumping in with both feet.�

Warren Buffett's long track record of success has made him one of the best investors of all time. With the Buffett at the helm, Berkshire Hathaway has�grown book value per share at a compounded annual rate of 19.8% for nearly 50 years! Despite an incredible historical track record, investors have to understand the key issues to watch moving forward. To help investors, the Fool's resident Berkshire Hathaway expert Joe Magyer has created this�premium research report�on the company. Inside, you'll receive ongoing updates as key news hits, as well as reasons to both buy and sell the stock. Claim a copy by�clicking here now.

The Sad, Shocking News From JPMorgan Investor Day

I wrote yesterday I'd be reporting on more key findings from the JPMorgan Chase (NYSE: JPM  ) investor day, held Tuesday, and I doubt there will be a more key finding than this: The superbank will be cutting 17,000 jobs over the next two years.�

The fewer defaults, the fewer the processors
CEO Jamie Dimon himself made the announcement. Most of the cuts will come from the consumer and mortgage sides of the bank, but the mortgage business will be taking the brunt of the damage by far, with expected layoffs between 13,000 and 15,000.

Dimon attributed the layoffs to (1) a better housing market, which means fewer people handling the defaults, and (2) improvements in automation, which means fewer people needed to do, well, everything. (I have my own thoughts on that second point.)�

A sad but sound move
According to Financial Times, Bank of America (NYSE: BAC  ) has the "largest default servicing business," and is also expecting to cut staff in its mortgage business as the housing market improves.�

I hate hearing about job cuts. I've been through plenty myself, and as a child watched my dad go through too many. So as cliche as it sounds, I feel the pain of these people about to be let go, made worse by the fact we still have so many people unemployed in this country.

But the flip side is, an improving housing market correlates with an improving economy. According to the National Association of Homebuilders, housing and related services can contribute up to 18% to GDP. So a better housing market should mean a better economy, which should mean more jobs for everyone.

And facts are facts: If mortgage defaults are coming down, and it looks like the trend will continue, then what choice does a business have except to let the people go who do that work? It wasn't that long ago it seemed like the housing market would never come around. Likewise, it probably seemed mortgage-default servicers would be needed into perpetuity.

And if JPMorgan and B of A expect to cut from the mortgage side, expect to see Citigroup (NYSE: C  ) and probably even Wells Fargo (NYSE: WFC  ) do it, too. Tally this up as a sound, if disturbing, move on the part of JPMorgan.

I'll be reporting more of my key findings from JPMorgan Chase investment day, so stay tuned. In the meantime, if you want to learn more about JPMorgan from the Motley Fool's Senior Banking Analyst, check out our new Motley Fool report on the superbank.�Ilan Moscovitz will tell you where the key�opportunities�for JPMorgan lie, where its core�growth�will come from, and the potential�business risks. You'll also get even more expert analysis of its�leadership team. For immediate access, just click here now.

Has Marathon Oil Become the Perfect Stock?

Every investor would love to stumble upon the perfect stock. But will you ever really find a stock that provides everything you could possibly want?

One thing's for sure: You'll never discover truly great investments unless you actively look for them. Let's discuss the ideal qualities of a perfect stock, then decide if Marathon Oil (NYSE: MRO  ) fits the bill.

The quest for perfection
Stocks that look great based on one factor may prove horrible elsewhere, making due diligence a crucial part of your investing research. The best stocks excel in many different areas, including these important factors:

  • Growth. Expanding businesses show healthy revenue growth. While past growth is no guarantee that revenue will keep rising, it's certainly a better sign than a stagnant top line.
  • Margins. Higher sales mean nothing if a company can't produce profits from them. Strong margins ensure that company can turn revenue into profit.
  • Balance sheet. At debt-laden companies, banks and bondholders compete with shareholders for management's attention. Companies with strong balance sheets don't have to worry about the distraction of debt.
  • Money-making opportunities. Return on equity helps measure how well a company is finding opportunities to turn its resources into profitable business endeavors.
  • Valuation. You can't afford to pay too much for even the best companies. By using normalized figures, you can see how a stock's simple earnings multiple fits into a longer-term context.
  • Dividends. For tangible proof of profits, a check to shareholders every three months can't be beat. Companies with solid dividends and strong commitments to increasing payouts treat shareholders well.

With those factors in mind, let's take a closer look at Marathon Oil.

Factor

What We Want to See

Actual

Pass or Fail?

Growth

5-year annual revenue growth > 15%

(23.2%)

Fail

1-year revenue growth > 12%

6.8%

Fail

Margins

Gross margin > 35%

65.2%

Pass

Net margin > 15%

10.1%

Fail

Balance sheet

Debt to equity < 50%

37.7%

Pass

Current ratio > 1.3

0.74

Fail

Opportunities

Return on equity > 15%

8.9%

Fail

Valuation

Normalized P/E < 20

6.34

Pass

Dividends

Current yield > 2%

2.1%

Pass

5-year dividend growth > 10%

3.4%*

Fail

Total score

4 out of 10

Source: S&P Capital IQ. Total score = number of passes. * Reflects adjustment for spinoff.

Since we looked at Marathon Oil last year, the company gave back the two points it gained from 2011 to 2012. The stock has recovered from a slump early in 2012 and is essentially flat over the past year.

After having spun off its downstream operations into Marathon Petroleum (NYSE: MPC  ) more than a year ago, Marathon has operated all year as an exploration and production company. As such, it has built a course for much more aggressive growth than it sought as an integrated energy company. On top of its portfolio of dependable revenue-producing assets, Marathon seeks to strengthen its presence in the fast-growing Eagle Ford and Bakken regions, as well as exploring new areas such as eastern Africa, Norway, and Iraq.

But Marathon is already in an enviable position because it has focused its efforts on maximizing its already oil-rich production. Chesapeake Energy (NYSE: CHK  ) and EOG Resources (NYSE: EOG  ) have had to go through extensive paring of their assets in order to try to reduce their natural gas exposure and increase oil and liquids production, but with Marathon paying the bulk of its attention to already established oilfields, it managed to nearly double its liquids production between mid-2011 and the end of 2012. Yet even based on proven oil reserves, the company is valued very inexpensively.

In its most recent quarter, however, Marathon disappointed investors by missing earnings estimates. Despite higher revenue and better production, the company suffered from rising expenses for exploration activity, which soared 70% compared to the previous year. A huge provision for income taxes also weighed on results.

For Marathon to improve, it needs to keep revenue moving upward and focus on building up its returns on equity. If it can do that and keep its dividend payout rising, then Marathon could get a lot closer to perfection in the years ahead.

Keep searching
No stock is a sure thing, but some stocks are a lot closer to perfect than others. By looking for the perfect stock, you'll go a long way toward improving your investing prowess and learning how to separate out the best investments from the rest.

As impressive as Marathon looks, energy investors would be hard-pressed to find another company trading at a deeper discount than Chesapeake Energy. To find out whether Chesapeake is the best buy in the energy industry, don't miss out on our premium report on the company, in which our top energy analyst looks at the company's prospects and potential roadblocks. Simply click here now to access your copy, and as an added bonus, you'll receive a full year of key updates and expert guidance as news continues to develop.

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

Estée Lauder Companies Beats on Both Top and Bottom Lines

Est�e Lauder Companies (NYSE: EL  ) reported earnings on Feb. 5. Here are the numbers you need to know.

The 10-second takeaway
For the quarter ended Dec. 31 (Q2), Est�e Lauder Companies beat slightly on revenues and beat expectations on earnings per share.

Compared to the prior-year quarter, revenue increased and GAAP earnings per share expanded.

Margins increased across the board.

Revenue details
Est�e Lauder Companies reported revenue of $2.93 billion. The 17 analysts polled by S&P Capital IQ wanted to see revenue of $2.90 billion on the same basis. GAAP reported sales were 7.1% higher than the prior-year quarter's $2.74 billion.

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

EPS details
EPS came in at $1.16. The 21 earnings estimates compiled by S&P Capital IQ forecast $1.05 per share. GAAP EPS of $1.13 for Q2 were 13% higher than the prior-year quarter's $1.00 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 80.6%, 70 basis points better than the prior-year quarter. Operating margin was 22.7%, 40 basis points better than the prior-year quarter. Net margin was 15.3%, 80 basis points better than the prior-year quarter.

Looking ahead
Next quarter's average estimate for revenue is $2.39 billion. On the bottom line, the average EPS estimate is $0.47.

Next year's average estimate for revenue is $10.24 billion. The average EPS estimate is $2.57.

Investor sentiment
The stock has a one-star rating (out of five) at Motley Fool CAPS, with 169 members out of 233 rating the stock outperform, and 64 members rating it underperform. Among 85 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 65 give Est�e Lauder Companies a green thumbs-up, and 20 give it a red thumbs-down.

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Est�e Lauder Companies is outperform, with an average price target of $68.24.

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  • Add Est�e Lauder Companies to My Watchlist.

DELL: FYQ4 on Tap; Will There Be ‘Guidance’?

Shares of Dell (DELL) are up a penny at $13.82 in advance of the company’s fiscal Q4 report this afternoon.

The Street is modeling $14.12 billion in revenue and 39 cents EPS, excluding some costs.

A point of disagreement between analysts is whether there will be a forecast for this quarter given the ongoing effort to take Dell private on the part of CEO Michael Dell, private equity firm Silver Lake, and Microsoft (MSFT).

Abhey Lamba with Mizuho Securities USA writes that he expects revenue to miss “slightly” but profit to be in line with expectations.

“The quarter should indicate continued weakness in PCs and servers while networking should show some growth,” writes Lamba, adding that the company seems to have walked away from less-profitable segments of PCs during the quarter:

Gartner�s 4Q12 data and our checks indicated that Dell remained highly focused on the profitability of its transactions and shied away from lower margin PC business, especially if it did not include any data center component. The company experienced over 20% decline in units shipped during C4Q12, which will impact its performance in the quarter. In servers, macro remains an overhang on the overall market while networking will likely post double digit growth for Dell.

Also this morning, Brian Marshall with ISI Group reiterates a Neutral rating, writing that the company may meet revenue estimates but miss on the bottom line with perhaps 36 cents.

Unlike Lamba, he actually does expect an outlook for this quarter, writing:

Although CEO Michael Dell could be somewhat limited in what he can say with respect to his offer to take the company private, investors will look for clues on his willingness to see the deal through either at the current price or slightly higher. If current results and the Apr-13 outlook come in above expectations, odds that the deal is completed around the current price will diminish.

A short while ago, David Katz, the chief investment officer of Matrix Asset Advisors, was on CNBC sharing a fairly positive view on Dell and the proposed LBO:

We think Dell is going to be a successful business. They have made great strides to be a server and software and networking business, and they’re not getting any credit for that. The PC is not going away, and the server and software and networking business is going to be a long-term business. [Regarding PC competition] We think Dell will respond rationally, and Hewelett-Packard (HPQ), although they put out a press release, really does have some problems. We just think it’s going to be a little bit easier [for Dell] as a private company. You don’t have to answer to analysts every quarter if you miss by $50 million on revenue or a penny on earnings.

Top Stocks For 2/28/2013-18

Xerox Corporation (NYSE:XRX) increased 0.51% to close at $11.83. XRX traded 6.55 million shares for the day and its earning per share remained $0.50. Xerox Corporation (Xerox) provides a portfolio of document systems and services for businesses of any size. This includes printers, multifunction devices, production publishing systems, managed print services (MPS) and related software. The Company also offers support and supplies, such as toner, paper and ink as part of its document technology offerings. It operates in three segments: Production, Office and Other.

Juniper Networks, Inc. (NYSE:JNPR) decreased 1.89% to close at $34.32. JNPR traded 6.19 million shares for the day and its earning per share remained $0.84. Juniper Networks, Inc. designs, develops and sells products and services that together provide its customers with network infrastructure that creates responsive and trusted environments for accelerating the deployment of services and applications over a single network. The Company�s infrastructure segment offers scalable routing and switching products that are used to control and direct network traffic from the core, through the edge, aggregation and the customer premise equipment level.

VeriFone Systems, Inc. (NYSE:PAY) increased 8.46% to close at $39.87. PAY traded 5.85 million shares for the day and its earning per share remained $0.77. VeriFone Systems, Inc., formerly VeriFone Holdings, Inc., is engaged in secure electronic payment solutions. The Company�s customers include primarily financial institutions, payment processors, as well as independent sales organizations. In January 2010, the Company announced that it has acquired the Clear Channel Taxi Media business from Clear Channel Outdoor Holdings, Inc.

FirstEnergy Earnings: Can This 5.5% Dividend Deliver?

FirstEnergy (NYSE: FE  ) reported earnings on Monday, and Mr. Market was unimpressed. The utility missed top-line sales expectations but managed to coast by on earnings. With a sizable 5.5% dividend yield and one of the largest customer bases around, there's a bull story behind every bear. Let's take a deeper look at the company, see what it's offering, and decide whether first energy deserves a spot in your portfolio.

Number crunching
Bad news first for FirstEnergy: revenue. The utility reported $3.5 billion in sales for Q4 2012, a miserly 28% below analyst estimates �and 7.6% lower than 2011's fourth quarter. Falling sales have proven to be a common trend for utilities this quarter, but FirstEnergy's flop puts it at the top of the bottom.

On a more positive note, the company squeaked by with $0.80 earnings per share, matching Wall Street expectations. Earnings also came in $0.03 higher than last year's Q4, but 2012's overall results took a $0.91 per-share hit from pension costs and other charges.

For FY 2012, FirstEnergy's sales clocked in at $15.3 billion and earnings logged $1.84 diluted EPS. Compared with 2011, sales fell 5.2%, while EPS dropped by just over 20%.

Can FirstEnergy finish?
Like many utilities, FirstEnergy operates both regulated utilities and unregulated energy generation divisions. Regulated business offers slow and steady growth (if the company keeps on top of regulatory requests and approvals), while generation can be a company's ticket to big returns or cash-sucking expenditures.

FirstEnergy's 10 utilities account for 64% of the company's sales, while 18,000 MW of generation pulled in the remaining 36%. The decent split offers some risk diversification, but FirstEnergy's fuel sources provide some cause for concern. The company currently relies on coal for about 60% of its total generation capacity and expects to spend $985 million on EPA compliance measures over the next several years.

Source: First Energy 2013 Credit Suisse Energy Summit Presentation.�

FirstEnergy's also adding on to its 20,000-plus miles of transmission line. The company plans to spend around $700 million in the next three years, which should provide an additional source of steady revenue.

Capital expenditures cut cash from the balance sheet, but spending now could mean savings down the road. Here's how FirstEnergy stacked up against competitors for 2011:

Company

Capex ($M)

Capex-to-Sales Ratio (%)

FirstEnergy

2,281

22%

Atlantic Power (NYSE: AT  )

115

40%

Duke Energy (NYSE: DUK  )

4,363

30%

Southern (NYSE: SO  )

4,525

26%

Exelon (NYSE: EXC  )

1,329

7%

Source: Yahoo! Finance.

Although Exelon (NYSE: EXC  ) brings up the rear, it's taking its capex seriously. The company recently announced that it will slash its dividend by 40% in 2013 to fund new nuclear and renewable initiatives. Southern's (NYSE: SO  ) spending is helping to shift the utility away from coal, with $16.5 billion slotted for capex in the next two years alone. Duke Energy (NYSE: DUK  ) is undergoing a massive modernization project and will ultimately spend around $12 billion to retire 6,800 MW of costly coal plants and add on cheaper/cleaner energies. With the smallest sales around by a long shot, Atlantic Power's (NYSE: AT  ) supersized capex-to-sales ratio makes sense for a company with growth on its mind.

Dividend dynamite?
FirstEnergy's 5.5% annual dividend yield is nothing to yawn at, and income investors could look to this utility as a long-term cash cow. But all dividends are not created equal, and the staying power of any dividend is even more important than its current payout.

FE Cash Div. Payout Ratio TTM data by YCharts

FirstEnergy has crept its way to the bottom of the pool over the past few years, creating a less-than-rosy outlook for this company's future distributions.

Foolish bottom line
In an inarguable sign of disapproval, Mr. Market has pushed FirstEnergy's stock down around 5% since its earnings announcement. Its latest quarter didn't win it any favors, and the company's long-term value add remains to be seen. The utility is spending decent money to keep itself competitive, but it has quite a bit of catching up to do compared with Exelon's nuclear fleet and Duke's major progress. With an unstable dividend to boot, I'm putting FirstEnergy on the backburner for now.

For a company with much of its modernization spending behind it, Exelon is perfectly positioned to capitalize on having the largest nuclear fleet in North America. Combine this strength with an increased focus on renewable energy, and Exelon's recent merger with Constellation places�Exelon and its best-in-class dividend on a short list of top utilities. To determine whether Exelon is a good long-term fit for your portfolio, you're invited to check out The Motley Fool's premium research report on the company. Simply�click here now�for instant access.

ITV Unveils Special Dividend

LONDON -- ITV� (LSE: ITV  ) , the U.K. commercial television network responsible for ITV1, 2, 3, 4 and CITV, released full-year results today that saw external revenue increase by 3% to 2,196 million pounds and adjusted profit before tax up 17% to 464 million pounds with profit before tax increasing 6% to 348 million pounds. All areas of the business saw growth, with total non-net advertising revenue up 12% to 1,036 million pounds and ITV studios revenue increasing 16% to 712 million pounds. Online, pay, and interactive revenue also increased by 26% 102 million pounds.

The steady growth figures resulted in a lift in the earnings per share of 16% to 9.2 pence. In addition, a final dividend was proposed of 1.8 pence, giving a full-year dividend of 2.6 pence (2011: 1.6 pence) and a special dividend of 4 pence.

Adam Crozier, ITV chief executive, said:

We're now almost three years into our Transformation Plan and our strong performance is delivering growth right across ITV, enabling us to build a stronger and more balanced business.

In 2012 we achieved double digit earnings growth for the third year running, in a broadly flat advertising market. We now have non-advertising revenues of more than 1 billion pounds, an increase of 114 million pounds or 12% year on year, fueled by a strong performance in ITV Studios and our Online, Pay & Interactive business.

A key part of the Transformation Plan is building an international content business. ITV Studios achieved strong organic growth both in the U.K. and overseas, with revenues up by 100 million pounds to 712 million pounds, driven by our ongoing investment in creative talent and developing new programs. We're now building on our healthy creative pipeline with selective acquisitions in key and emerging creative markets.

Investors have reacted favorably in early trading. ITV's share price has risen by 1.5% to 122 pence. Three years of sustained growth in turnover and profits show all the signs of a company focused on thriving in the digital, online and interactive era. ITV plan to achieve cost savings of 20 million pounds in 2013, which will in turn fund investments in content pipeline, technology and online. The fact that ITV feels it can generate enough cash to invest in the growth of the business and pay out a special dividend should be heartening news. We could be seeing the beginning of a period of strong growth.

If ITV can continue to achieve its transformation plan targets, it could be a rewarding year for investors with some significant growth opportunities.�If you are interested in tapping into similar opportunities, then take a look at�this free report, which could help you on your way.

The report explains how taking a contrarian view and backing unloved companies can be vital steps on the path to the�magic 1,000,0000 pounds milestone. Maybe one day, a resurgent ITV could be the share that transforms your wealth.

Just�click here�to download the report today. But hurry, all Fool reports are free for a limited time only.

link

Wednesday, February 27, 2013

Pactera Technology International Beats on Both Top and Bottom Lines

Pactera Technology International (Nasdaq: PACT  ) reported earnings on Feb. 27. Here are the numbers you need to know.

The 10-second takeaway
For the quarter ended Dec. 31 (Q4), Pactera Technology International beat expectations on revenues and beat expectations on earnings per share.

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

Margins shrank across the board.

Revenue details
Pactera Technology International logged revenue of $142.2 million. The four analysts polled by S&P Capital IQ foresaw a top line of $136.5 million on the same basis. GAAP reported sales were much higher than the prior-year quarter's $64.9 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 $0.24. The four earnings estimates compiled by S&P Capital IQ forecast $0.23 per share. Non-GAAP EPS of $0.24 for Q4 were 4.3% higher than the prior-year quarter's $0.23 per share. GAAP EPS were -$0.22 for Q4 against $0.14 per share for the prior-year quarter.

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

Margin details
For the quarter, gross margin was 33.5%, 270 basis points worse than the prior-year quarter. Operating margin was -12.3%, much worse than the prior-year quarter. Net margin was -10.2%, much worse than the prior-year quarter.

Looking ahead
Next quarter's average estimate for revenue is $176.0 million. On the bottom line, the average EPS estimate is $0.25.

Next year's average estimate for revenue is $759.1 million. The average EPS estimate is $1.01.

Investor sentiment

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Pactera Technology International is outperform, with an average price target of $12.67.

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Why Federal-Mogul Shares Plunged

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

What: Shares of Federal-Mogul (NASDAQ: FDML  ) were stalling out today, falling as much as 14% after reporting a weak quarterly earnings report.

So what: The maker of powertrains and other auto components suffered a similar fate as other industry peers as weakness in Europe drove the company to a loss once again. The auto-parts maker said it plans to restructure through 2015, and will shift capacity from Western Europe to cheaper locales like Asia, Mexico, and Eastern Europe. For the quarter, Federal-Mogul posted an adjusted loss of $0.41 a share against expectations of a $0.15 per-share profit. Revenue, meanwhile, fell 3% to $1.6 billion on a 13% decline in industrial engine production and a 14% drop in European light vehicle production.

Now what: Today's drop is only the latest folly for Federal-Mogul, which has lost more than half its value in the past year. Including all charges, the company lost $1.18 per share for 2012, and with restructuring likely to continue hampering the bottom line until 2015, consistent profitability may be at least a few quarters away. The major carmakers have signaled that European conditions should improve by the second half of the year. I might check back on Federal-Mogul then. You can do the same by adding the stock to your Watchlist here.

Hershey Misses Where it Counts

Hershey (NYSE: HSY  ) reported earnings on Jan. 31. Here are the numbers you need to know.

The 10-second takeaway
For the quarter ended Dec. 31 (Q4), Hershey beat expectations on revenues and missed estimates on earnings per share.

Compared to the prior-year quarter, revenue increased and GAAP earnings per share increased.

Gross margins grew, operating margins contracted, net margins shrank.

Revenue details
Hershey chalked up revenue of $1.75 billion. The 12 analysts polled by S&P Capital IQ looked for a top line of $1.71 billion on the same basis. GAAP reported sales were 12% higher than the prior-year quarter's $1.57 billion.

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

EPS details
EPS came in at $0.74. The 17 earnings estimates compiled by S&P Capital IQ forecast $0.76 per share. GAAP EPS of $0.66 for Q4 were 6.5% higher than the prior-year quarter's $0.62 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 43.1%, 140 basis points better than the prior-year quarter. Operating margin was 15.4%, 100 basis points worse than the prior-year quarter. Net margin was 8.6%, 50 basis points worse than the prior-year quarter.

Looking ahead
Next quarter's average estimate for revenue is $1.82 billion. On the bottom line, the average EPS estimate is $1.05.

Next year's average estimate for revenue is $6.99 billion. The average EPS estimate is $3.60.

Investor sentiment
The stock has a three-star rating (out of five) at Motley Fool CAPS, with 527 members out of 634 rating the stock outperform, and 107 members rating it underperform. Among 197 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 174 give Hershey a green thumbs-up, and 23 give it a red thumbs-down.

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Hershey is outperform, with an average price target of $75.06.

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Dow Unchanged Ahead of Coca-Cola Earnings

LONDON -- Stock index futures at 7 a.m. EST indicate that the Dow Jones Industrial Average (DJINDICES: ^DJI  ) may open up by a nominal three points this morning, while the S&P 500 (SNPINDEX: ^GSPC  ) may open a fraction of a point lower.

Today's economic data highlights include December's job openings report, at 10 a.m. EST, and the federal budget for January, due at 2 p.m. EST. However, the real focus during trading hours is likely to be on corporate earnings, with several big names due to update the markets today.

Coca-Cola, Marsh & McLennan Companies, Goodyear Tire & Rubber, and Reynolds American are all due to report earnings before the markets open this morning. Avon Products reported early, unveiling fourth-quarter earnings per share of $0.37, beating analysts' expectations of $0.27 per share. Shares in Facebook may also be actively traded after the opening bell following a downgrade by brokers Stanford C. Bernstein, which left the company's shares 3% lower in premarket trading this morning.

Investors may be cautious ahead of President Obama's State of the Union address at 9 p.m. EST tonight, in which he is expected to outline new plans for spending on infrastructure, education, and renewable energy, according to reports. President Obama is also expected to discuss the fiscal cliff -- the package of spending cuts that still needs to be negotiated before the March 1 deadline.

European markets
European markets moved higher this morning, possibly helped by a statement from G7 finance ministers confirming that they "will not target exchange rates" in response to growing fears that countries will start competing to devalue their currencies in order to boost export-led growth. In the U.K., inflation remained unchanged at 2.7% for the fourth consecutive month in January, while yields rose at an auction of new Spanish and Italian government debt, reflecting the current political tensions in both countries.

At 7 a.m. EST, the DAX was up 0.15%, the CAC 40 was up 0.35%, the FTSE MIB was up 0.15%, and the IBEX 35 was up 0.96%. In London, the FTSE 100 (FTSEINDICES: ^FTSE  ) was 0.36% higher, led by Barclays, which was up 5% after it published its final results. The bank's adjusted profit rose by 26% last year, and it has confirmed it intends to axe 3,700 staff in a bid to cut costs and boost returns. Banking-sector peers Lloyds Banking and Royal Bank of Scotland also rose strongly, gaining 3.8% and 2.5%, respectively.

If you're looking for shares that can outperform the wider market, you need to look beyond the news headlines. This free Motley Fool report, "The Top Growth Share For 2013," highlights a share that gained 38% in 2012, during which time the wider market rose just 6%. The company is a household name, and its earnings per share have risen by 44% since 2009 -- so click here now to download your free copy of this report while it is still available.

Top Stocks For 1/29/2013-6

First Liberty Power Corp (FLPC.OB) has completed a gravity survey of Lida Valley for exploration of lithium resources. The survey was conducted by Hasbrouck Geophysics Corp which disclosed in its report that Lida Valley possesses multiple deep systems that could be a catch basin for lithium brine.

Harbrouck�s Geophysicist Jim Hasbrouck said, “Interpretation of the modeled gravity data indicates several areas of increased bedrock depths or lower bedrock elevations. These areas may be conducive for concentration of lithium bearing brines.”

First Liberty Power Corp�s President and CEO Glyn Garner commented, “We are very encouraged by these positive results. With this gravity survey now complete we can move forward with our exploration program, the Company now has the data needed to plan phase two of exploration in the Lida Valley Playa.”

First Liberty Power Corp. is an innovative and aggressive U.S. based exploration and Development Company, headquartered in Nevada. First Liberty Power, Corp. is positioning itself to be at the vanguard of the United States efforts to free itself from foreign oil and achieve its goal of clean sustainable energy self sufficiency.

First Liberty Power Corp. holds the rights to an 84 claim, 12,800 acre property located in close proximity to the Lithium brine rich, Clayton Valley, Nevada. The Clayton Valley Lithium deposits has been known and tapped for decades.

The Chemtall Lithium Silver Peak facility, the largest Lithium brine production facility in the U.S, was opened in 1967 and has been producing lithium carbonate from brines ever since. First Liberty’s 66 Vanadium � Uranium mineral lode claims are located in the historically productive San Juan County, Utah.

First Liberty�s objective is to develop these opportunities and to seek other strategic mineral resources to capitalize on the anticipated explosive demand for sustainable clean power that will allow them to tap into the rapidly growing green energy movement that is revolutionizing and recasting the way the world is powered.

The United States has made clean sustainable energy and green house gas reduction one of the key issues of its domestic energy policy. Included in this policy is a pledge to eliminate oil imports from the Middle East and Venezuela within a decade and to slash the U.S. carbon dioxide emissions by more than 30% by the year 2020.

�Today, we have the chance to achieve a real breakthrough: the plug-in hybrid�Hybrid engines save gasoline by switching back and forth from battery to gasoline power��With a plug-in hybrid, commuters can drive back and forth to work, recharge their cars overnight, and go a month or more without a trip to the gas station.� – White House Chief of Staff Rahm Emanuel.

Can Western Union Beat These Numbers?

Western Union (NYSE: WU  ) is expected to report Q4 earnings on Feb. 12. Here's what Wall Street wants to see:

The 10-second takeaway
Comparing the upcoming quarter to the prior-year quarter, average analyst estimates predict Western Union's revenues will compress -2.3% and EPS will wane -12.5%.

The average estimate for revenue is $1.40 billion. On the bottom line, the average EPS estimate is $0.35.

Revenue details
Last quarter, Western Union tallied revenue of $1.42 billion. GAAP reported sales were 0.8% higher than the prior-year quarter's $1.41 billion.

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

EPS details
Last quarter, non-GAAP EPS came in at $0.46. GAAP EPS of $0.45 for Q3 were 18% higher than the prior-year quarter's $0.38 per share.

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

Recent performance
For the preceding quarter, gross margin was 44.0%, 50 basis points better than the prior-year quarter. Operating margin was 26.4%, 30 basis points worse than the prior-year quarter. Net margin was 19.0%, 200 basis points better than the prior-year quarter.

Looking ahead

The full year's average estimate for revenue is $5.64 billion. The average EPS estimate is $1.67.

Investor sentiment
The stock has a four-star rating (out of five) at Motley Fool CAPS, with 1,584 members out of 1,635 rating the stock outperform, and 51 members rating it underperform. Among 461 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 447 give Western Union a green thumbs-up, and 14 give it a red thumbs-down.

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Western Union is hold, with an average price target of $21.74.

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The Truth About the COMEX


This article is written by Claudio Grass, managing director of Global Gold in Switzerland.

Trading precious metals over the COMEX entails numerous risks and is a tool used by the power elites to manipulate the gold market. We at Global Gold are therefore convinced that when it comes to gold, nothing comes close to holding the physical and unencumbered ownership of gold outside of the banking system. In this article we will provide an introduction on how trading on the COMEX works. How it is used to manipulate gold prices and explain why, due to its risk, investors should stay away from this type of “paper gold” market.

The COMEX is a futures market. When you buy (or sell) gold over COMEX, you are not gaining (or giving up) physical ownership of a metal, but rather promising to buy (or sell) gold at some future date at a predefined price. The counterparty to all transactions is the exchange; it steps in when an individual on the long or short side defaults. The exchange sets the initial margin. This needs to be deposited before a party can enter into any transaction. On a daily basis the losses and gains are either subtracted or added. If the margin falls under a specific level (the so-called maintenance margin) the broker calls the client (margin call) and asks for additional funds to be deposited. We should however mention that the margin is only a fraction of the contract value and therefore the whole exchange is built on pretty shaky ground.

It is fair to say that most gold and other precious metals contracts on the COMEX do not end up being physically settled at all. They are offset beforehand. Offsetting means that you enter into a transaction opposite to the one you initially entered. If you bought a gold future for example, you sell the same contract and take your profit or loss without having any further obligation or taking possession of the metal. Most traders on the COMEX are uninterested in physical delivery; preferring to speculate on price movements in gold prices. This can be clearly seen when one compares the open contracts of April, which has 250’000 open contracts and the February contract (which can be delivered at any time), which has a mere 2’000 contracts outstanding.

Now, after understanding how the COMEX works you might be wondering how the gold price manipulation is taking place. Ted Butler was among the first ones to bring this matter to the attention of the general public. At the other side of the Atlantic, Dimitri Speck  uncovered and analyzed this phenomenon mathematically into great detail. Gold price manipulation can take place either by increasing the supply of gold or reducing the price expectations. The selling of gold by major Western central banks and gold leasing is aimed at increasing the supply; thus reducing the price. With regards to the COMEX the second aspect is important; namely the reduction of the price expectations.

If one analyzes the gold price during the day, one can see a systematic manipulation taking place during early COMEX trading; were the price systematically and drastically loses in value. We at Global Gold are convinced that this artificially created volatility is done to drive investors away from gold.

Due to the fact the gold is a durable good and the COMEX is a physically settled market the spot price and futures price move pretty much in line. A manipulation on the COMEX therefore also affects the price of the physical gold market (which is another important aspect to consider). As we mentioned above, the COMEX requires a margin. However, the margin is so tiny that to sell one million dollars worth of gold you need to deposit less than 40’000 USD.  This makes the COMEX prone to manipulation (because using little amounts the price can be moved into the desired direction). Furthermore, the induced price declines are amplified as more and more investors decide (or are forced to) to sell their positions.

Leaving these manipulations aside, we would like to stress that due to the risks involved in COMEX trading we would strongly advise against using the COMEX for gold transactions. To further explain why, we would like you to look at some different scenarios.

What would happen if all open contracts on the COMEX would not be offset and physical delivery would be demanded?

To answer this question let’s look at the total open interest for gold and silver and compare it to the mining production. These figures are shown in the table below:

All open contracts for gold and silver are equivalent to 53% and 88% of the total yearly mining production. If all persons holding futures decide not to roll (offset) their position, physical settlement would be simply impossible and the house of cards called COMEX would collapse. Even if one uses the total supply for precious metals instead of the mining production the picture doesn’t really change. The open silver contracts amount to around 72% of the total yearly silver supply (Estimated by the Silver Institute). The value of the outstanding contracts in gold is higher than the total gold reserves of Switzerland and Austria together!

What would happen if an extraordinary number of people demanded physical delivery?

We define an extraordinary number as an amount which is well above the historical average, without coming close to all contracts as in the previous example. This can become a problem if the following happens simultaneously:

  • The COMEX acts as counterparty for all transactions; the person selling the precious metal (the short) and the COMEX have to be in default collectively.
  • The margin acts as a certain buffer; meaning if the price of the precious metal is not massively impacted by the demand for physical delivery. The margin should suffice to buy gold at spot and make delivery.

A scenario like this would lead to a massive increase in the price for gold and silver. Resulting in the sellers on the COMEX frantically buying all the precious metals they can get their hands on; to be able to make the promised delivery to the depositories.  Due to the disproportionality of amount of gold and silver needed to the supply, prices are likely to spike so strongly that physical delivery would be deemed to be impossible. “The shorts” would simply not have enough cash to buy all the metals needed to fulfill their obligation. Due to the vast amount of contracts the COMEX would also be unable to step in (default) and the long investors would suffer heavy losses or even a total loss on their positions.

What happens if an extreme, let’s say 20%, price jump occurs over the weekend?

The current margin for gold contracts is less than 4% of the contract value. A lot of the market participants in the futures markets are highly leveraged. Such a jump in the price would lead to massive amounts of defaults. Furthermore, due to the high amount of contracts outstanding, it is highly unlikely that the COMEX would be able to jump in, resulting with long investors suffering heavy losses or even a total loss on their positions.

What other risk does COMEX trading entail?

Another thing to remember is that although the COMEX is highly regulated, there have been instances in the past where fraud on a massive scale has taken place. One such example is the MF Global fiasco in 2011; client funds were used to speculate on behalf of the firm. Nearly two years later clients have not yet received their funds, and it is still unclear how much of their funds (which were in segregated accounts) they will ever see again. This videoreveals the ties between the firm and the government.

Our conclusion:  When you buy gold over COMEX you are not gaining physical ownership of gold. You are basically buying a promise by the short (and COMEX) that you can get delivery of gold at specific time in the future. As we described above, buying such “paper gold” entails the very real risk of default and therefore we advise against its usage. Here at Global Gold Switzerland, we are convinced that gold should only be held physically and without the use of leverage. We see gold and other precious metals as a form of insurance policy. Not only as an insurance policy against the constant devaluation of paper currencies, but also as an insurance policy to protect the owner in extreme scenarios. Including but not limited to a collapse of our monetary system. Built on the same foundation, as our fractional reserve banking system the COMEX can simply not hold this promise.

Ask yourself… Would you enter a fire insurance policy if there were a pretty good chance you won’t be paid a thing if your house burns down?

*Post courtesy of Claudio Grass, managing director of Global Gold in Switzerland.

Global Gold offers investors the possibility to acquire and safely store physically allocated gold, silver, platinum, and palladium in Switzerland. We believe it is every individual´s right to have the protection of a precious metals portfolio. Financial security for the global investor has never been more important. Read more about Global Gold Switzerland.

 

Top Ways for Advisors to Gain Clients: ATA Survey

The most successful way for advisors to gain new clients is through referrals from existing clients, according to a survey released Tuesday by Advisors Trusted Advisor.

While referrals were reported as the most successful way to gain new business, the most popular marketing tactic was face-to-face networking at client events. The second most successful way to gain new business is through referrals from other professionals. The second most popular marketing tactic was speaking at seminars.

Social media and cold calling ranked last on advisors' lists of favorite marketing tactics, but ATA principal Mike Slemmer noted that social media does play a part in advisors' practices.

"Comparing these data to ATA's 2009 survey on business building, LinkedIn use has more than doubled and -- more significantly -- those responding that their firm disallows social media use has been halved, to 33% from 65%," Slemmer said in a press release. "Moreover, the comments reflected a wide range of uses for social media that we didn't see in the 2009 results."

Firm owners or principals are still the main source of sales for survey respondents, but the rate fell from 56% in the 2009 survey to 52%. In 2009, 10% of firms said dedicated sales executives were their main source of sales; in 2010, 16% of respondents agreed.

"This reflects what we are seeing -- that more advisors are realizing that effective sales skills, and those people that have them, are increasingly necessary to growing a business in the very competitive wealth management industry," Slemmer added.

Full results from the survey were not immediately available. ATA surveyed 262 advisors in November and December 2010 to compile the report.

UNS Energy Beats on Both Top and Bottom Lines

UNS Energy (NYSE: UNS  ) reported earnings on Feb. 26. Here are the numbers you need to know.

The 10-second takeaway
For the quarter ended Dec. 31 (Q4), UNS Energy beat expectations on revenues and beat expectations on earnings per share.

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

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

Revenue details
UNS Energy reported revenue of $348.3 million. The two analysts polled by S&P Capital IQ looked for revenue of $330.0 million on the same basis. GAAP reported sales were the same as the prior-year quarter's.

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 $0.18. The four earnings estimates compiled by S&P Capital IQ predicted $0.16 per share. GAAP EPS of $0.18 for Q4 were 18% lower than the prior-year quarter's $0.22 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 28.8%, 50 basis points better than the prior-year quarter. Operating margin was 12.3%, 20 basis points better than the prior-year quarter. Net margin was 2.2%, 20 basis points worse than the prior-year quarter.

Looking ahead
Next quarter's average estimate for revenue is $337.5 million. On the bottom line, the average EPS estimate is $0.18.

Next year's average estimate for revenue is $1.51 billion. The average EPS estimate is $2.58.

Investor sentiment
The stock has a four-star rating (out of five) at Motley Fool CAPS, with 59 members out of 62 rating the stock outperform, and three members rating it underperform. Among 23 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 22 give UNS Energy a green thumbs-up, and one give it a red thumbs-down.

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on UNS Energy is outperform, with an average price target of $43.60.

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Martin Marietta Materials Increases Sales but Misses Estimates on Earnings

Martin Marietta Materials (NYSE: MLM  ) filed its 10-K on Feb. 22. Here are the numbers you need to know.

The 10-second takeaway
For the quarter ended Dec. 31 (Q4), Martin Marietta Materials beat expectations on revenues and missed estimates on earnings per share.

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

Gross margins shrank, operating margins expanded, net margins grew.

Revenue details
Martin Marietta Materials notched revenue of $504.1 million. The 11 analysts polled by S&P Capital IQ wanted to see revenue of $471.1 million on the same basis. GAAP reported sales were 20% higher than the prior-year quarter's $421.0 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 $0.47. The 12 earnings estimates compiled by S&P Capital IQ predicted $0.52 per share. GAAP EPS of $0.47 for Q4 were 47% higher than the prior-year quarter's $0.32 per share. (The prior-year quarter included $0.14 per share in earnings from discontinued operations.)

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 15.2%, 140 basis points worse than the prior-year quarter. Operating margin was 8.7%, 270 basis points better than the prior-year quarter. Net margin was 4.3%, 80 basis points better than the prior-year quarter.

Looking ahead
Next quarter's average estimate for revenue is $402.6 million. On the bottom line, the average EPS estimate is -$0.34.

Next year's average estimate for revenue is $2.21 billion. The average EPS estimate is $3.21.

Investor sentiment
The stock has a two-star rating (out of five) at Motley Fool CAPS, with 154 members out of 180 rating the stock outperform, and 26 members rating it underperform. Among 63 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 57 give Martin Marietta Materials a green thumbs-up, and six give it a red thumbs-down.

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Martin Marietta Materials is outperform, with an average price target of $102.22.

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A Great Year for Housing, and a Terrible Day for Martha Stewart

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

In today's installment, housing had its best year since 2006 last year, and retailers such as Home Depot (NYSE: HD  ) and Lowe's (NYSE: LOW  ) are showing it in their sales growth. Meanwhile, Martha Stewart and her brand, Martha Stewart Living Omnimedia (NYSE: MSO  ) , just had their worst day of 2013. These stories, plus today's biggest movers, and two stocks we'll be following closely this week.

More great advice from The Motley Fool
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Tuesday, February 26, 2013

Steven Madden Hits Estimates in Solid Quarter

Steven Madden (Nasdaq: SHOO  ) reported earnings on Feb. 26. Here are the numbers you need to know.

The 10-second takeaway
For the quarter ended Dec. 31 (Q4), Steven Madden met expectations on revenues and met expectations on earnings per share.

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

Margins grew across the board.

Revenue details
Steven Madden reported revenue of $315.5 million. The 10 analysts polled by S&P Capital IQ expected a top line of $315.0 million on the same basis. GAAP reported sales were 13% higher than the prior-year quarter's $279.8 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 $0.72. The 11 earnings estimates compiled by S&P Capital IQ forecast $0.71 per share. Non-GAAP EPS of $0.72 for Q4 were 31% higher than the prior-year quarter's $0.55 per share. GAAP EPS of $0.74 for Q4 were 35% higher than the prior-year quarter's $0.55 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 39.3%, 380 basis points better than the prior-year quarter. Operating margin was 15.4%, 160 basis points better than the prior-year quarter. Net margin was 10.4%, 190 basis points better than the prior-year quarter.

Looking ahead
Next quarter's average estimate for revenue is $292.5 million. On the bottom line, the average EPS estimate is $0.57.

Next year's average estimate for revenue is $1.36 billion. The average EPS estimate is $3.07.

Investor sentiment
The stock has a three-star rating (out of five) at Motley Fool CAPS, with 211 members out of 234 rating the stock outperform, and 23 members rating it underperform. Among 68 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 60 give Steven Madden a green thumbs-up, and eight give it a red thumbs-down.

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Steven Madden is outperform, with an average price target of $50.90.

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Top Stocks To Buy For 2/26/2013-1

Owens Corning (NYSE:OC) witnessed volume of 7.67 million shares during last trade however it holds an average trading capacity of 1.32 million shares. OC last trade opened at $34.25 reached intraday low of $30.53 and went -9.56% down to close at $30.85.

OC has a market capitalization $3.85 billion and an enterprise value at $6.13 billion. Trailing twelve months price to sales ratio of the stock was 0.86 while price to book ratio in most recent quarter was 1.14. In profitability ratios, net profit margin in past twelve months appeared at 18.29% whereas operating profit margin for the same period at 6.52%.

The company made a return on asset of 2.75% in past twelve months and return on equity of 27.41% for similar period. In the period of trailing 12 months it generated revenue amounted to $4.97 billion gaining $39.78 revenue per share. Its year over year, quarterly growth of revenue was -2.10% holding -50.00% quarterly earnings growth.

According to preceding quarter balance sheet results, the company had $61.00 million cash in hand making cash per share at 0.49. The total of $1.93 billion debt was there putting a total debt to equity ratio 51.34. Moreover its current ratio according to same quarter results was 1.69 and book value per share was 29.80.

Looking at the trading information, the stock price history displayed that its S&P500 52 Week Change illustrated 11.81% where the stock current price exhibited down beat from its 50 day moving average price of $36.30 and remained below from its 200 Day Moving Average price of $35.69.

OC holds 124.80 million outstanding shares with 107.47 million floating shares where insider possessed 11.94% and institutions kept 90.90%.

Jason Gay: Super Bowl XLVIII: Unleash The Sizzle

We are a little less than a year out from Super Bowl XLVIII in New York/New Jersey and there's been a lot of chatter about the elements and what a big old nasty blizzard could mean for the game. Sports Business Journal reported the other day that the NFL was considering all of its foul-weather options, including the possibility of playing a day early (Super Bowl Saturday!) or pushing it forward into the week. All of that sounds quite panicky. The whole point of playing a Super Bowl in a place where foul weather could happen is that foul weather could happen. You ever hear people in Green Bay talking about moving a game to Saturday? No. Snow at a Super Bowl should be the fantasy. I appreciate that XLVIII is an enormous logistical event (like, you have to make sure power works more than half of the game!) and that we all need to be prepared. But do not deny the appeal of the obvious. Should a snowstorm whirl its way into the metro area around 6 p.m. on Feb. 2, 2014, you're going to be talking about that New York/New Jersey Super Bowl forever.

Associated Press

Bruce Springsteen in 1984.

But if we're on the subject of preparedness, it's not too early to get started on the halftime entertainment. The New York Post and the Star-Ledger reported that XLVIII officials are also worried how the weather could hurt a halftime show. Hmm. I doubt that's going to diminish the pressure upon a NYNJ Super Bowl to unleash the sizzle.

That's right: I said "unleash the sizzle," like you are holding a dove and a top hat, and I'm sitting behind a desk with a cigar in the Brill Building. This city is this city and it will obviously try to top everybody's else's prior halftime act. It can't be too local�the Times Square Naked Cowboy is no go, for example. Let's consider some legitimate possibilities. Odds are strictly a goof here; do NOT wager more than two or three mortgage payments.

Bruce Springsteen (12-1): Yes, obviously, of course, I'm with you 100%: The Boss is the no-brainer, the natural, easiest crowd-pleaser. If you could book it you would book it. Chris Christie would drive him to midfield. But Springsteen did a Super Bowl not long ago�in Tampa, in 2009�and that was after a long time of being asked. Though he did a capable job, he seemed a little freaked out by the sheer absurdity of the Super Bowl experience. Bruce does not need the Super Bowl. He can sell out nine nights in the Meadowlands reading the menu from Applebee's.

Bon Jovi (5-1): Have written this before but I believe there's something perfect about a Bon Jovi halftime show at this Super Bowl; in many respects I like it better than Bruce, just for the sheer Jersey Joviosity of it, and many locals seem to agree. (An online poll in the Record asking readers their halftime pick was running 63% for Bon Jovi to 8% for Springsteen.) Jon Bon Jovi (a mega football fan) would be completely into it; he's probably practiced the entire halftime show in his bathroom mirror.

Jay-Z (2-1): Shawn Carter is 43, the emperor of modern hip-hop, but he'd still be seen as a fresher choice than Springsteen or Bon Jovi.

The Super Bowl halftime has had hip-hop artists but never a solo hip-hop headliner, so there's history to be made there, and Carter has lots of experience playing major events�Glastonbury, etc. You will get the signature moment with Carter's anthem "Empire State of Mind." Alicia Keys comes free. Plus there's Mrs. Carter, who knows a thing or two about the halftime show. Just have a feeling it comes together for Jay-Z; a year out, he's probably the favorite.

Billy Joel (20-1): Joel is an excellent performer; he does have the hits; your Mom still has three of his CDs on heavy circulation in her Camry; everybody loves "Scenes From An Italian Restaurant." Give him an outside shot. Though we'd have to get it in writing that he won't play "We Didn't Start the Fire."

Lady Gaga (12-1): A New Yorker! Modern edgysuperstar! A sports fan!

But�on the DL currently with an injured hip. Just had to cancel the remainder of her tour. Might not be ready for a halftime show. But should be ready to sign long-term deal with Yankees.

Lou Reed (200-1): I don't think this is a realistic possibility but would be worth it just for the crabby news conference.

Talking Heads (800-1): If Roger Goodell reunited the Talking Heads all would be forgiven forever. David Byrne could ride his bike through the Lincoln Tunnel.

Wu-Tang Clan (70-1): Legends. Plus, if you put all of their ages together they are as old as the Who.

Justin Timberlake (5-1): Part of me feels that the NYNJ Super Bowl just bags any attempt to regionalize and goes for the biggest star it can find. Timberlake is close. Of course he was involved in the Janet Jackson fiasco but nobody cares about that anymore except for seven or eight people who eat cold oatmeal for lunch and yell at trees.

Beyonc� (1,000-1): You ate at Chipotle three times this week. You can handle two Beyonc� Super Bowls in a row.

I think the pick comes from the above list. Maybe the Eagles? There, I said it. Maybe the Eagles. Maybe it's some kind of all-star smush-together; Bon Jovi and Springsteen have performed together; Jay-Z and Springsteen campaigned together during President Obama's re-election. What about Billy Joel and Gaga? OK probably not Billy Joel and Gaga.

They will work it out. It will probably be cold and it will probably be fine. Except for this: It's too bad it couldn't have been the Ramones. The Ramones Super Bowl halftime show. That would have been amazing.

Write to Jason Gay at Jason.Gay@wsj.com

Why Carnival Is Poised to Underperform

Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, cruise-line operator Carnival (NYSE: CCL  ) has received a distressing two-star ranking.

With that in mind, let's take a closer look at Carnival and see what CAPS investors are saying about the stock right now.

Carnival facts

Headquarters (Founded)

Miami (1974)

Market Cap

$28.7 billion

Industry

Hotels, resorts and cruise lines

Trailing-12-Month Revenue

$15.4 billion

Management

Chairman/CEO Micky Arison (since 2003)
Vice Chairman/COO Howard Frank

Return on Equity (Average, Past 3 Years)

7.5%

Cash/Debt

$465.0 million / $8.9 billion

Dividend Yield

2.7%

Competitors

Genting Hong Kong Limited
Royal Caribbean Cruises (NYSE: RCL  )
TUI

Sources: S&P Capital IQ and Motley Fool CAPS.

On CAPS, 27% of the 508 members who have rated Carnival believe the stock will underperform the S&P 500 going forward.

Just last week, one of those Fools, portastatic, highlighted Carnival as a particularly untimely selection:

Public perception and financial ramifications following recent issues, including "sewer ship" and [Costa Concordia] disaster will weigh down [Carnival]. Decreased bookings will follow. Thumbs down for the next year.

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Some Big Hitters Pulling the Dow Up Today

It hit another record, folks. Early in trading yesterday, the Dow Jones Industrial Average (DJINDICES: ^DJI  ) outdid itself once again to claim a new multiyear record. But with the good comes the bad, and later in trading�the index fell a total of 216 points -- 154 in the final hour of trading alone. Economic, international, and earnings news are the driving forces behind the index's resemblance to a heart-rate monitor this morning.

Economic
Great news this morning regarding the housing market spurned on some increased trading. Both the Case-Shiller and FHFA home price indexes showed growth in December. C-S reported a 0.9% increase since November and a 6.8% improvement year over year -- the largest yearly gain seen since 2006. The FHFA reported similar numbers, with a 0.6% gain over November's results and a 5.5% yearly improvement. Consumer confidence data was also released this morning, with a big improvement in February. The index jumped 11.2 points to 69.6 from January's 58.4 -- a reverse of the slide in confidence we've seen over the past three months.

Based on this positive news, the market spiked in early trading, with the Dow reaching 13,908 just after 10 a.m. ET. But another factor dissolved that gain -- Fed Chairman Ben Bernanke's semiannual testimony before the Senate Banking Committee. This morning and tomorrow, Bernanke is expected to touch on the Fed's current QE policy. Investors may have had a knee-jerk reaction, causing a sudden drop for the index. But news that Bernanke signaled the continuation of the stimulus program reversed any break in investor confidence -- the index is back on the upswing.

International
Also plaguing the markets is the uncertainty surrounding Italy's elections for control of the Senate. Though it appears that the country's center-left coalition won a narrow victory for the lower-house of the Parliament, there is no clear winner for the Senate, causing concern that the absence of a majority will result in an ineffective government -- and jeopardize the European economy's struggling recovery.

Earnings
Home Depot (NYSE: HD  ) hit a home run with its earnings release last night, shooting the stock up 5%-plus so far this morning. The largest home improvement retailer reported increased revenue from the housing market recovery and from Hurricane Sandy-related sales. Depot beat analyst estimates pretty handily and continued to outshine its biggest rival, Lowe's,�for the 15th consecutive quarter. The retailer also announced that it would be increasing its dividend by 34% to $0.39 per share, along with a $17 billion share repurchase authorization.

Other winners
Wal-Mart (NYSE: WMT  ) is also on the rise this morning. After a tough day yesterday, investors may have reverted to the belief that as the economy weakens, Wal-Mart is strengthened -- aka the Wal-Mart Indicator. But there are other factors, such as the truth behind the retail giant's slogan "Everyday low prices." A study was started in 2009 to measure the gap between prices at competing retailers. A recent update to the study shows that Wal-Mart's "self-funded" prices allow the behemoth to maintain large price gaps that undermine its competitors, like Target (NYSE: TGT  ) . The most recent results showed a 4% difference between the two retailers, the largest gap since 2009. Target hasn't had a lower-priced sample than Wal-Mart since 2011.

Intel (NASDAQ: INTC  ) is also up this morning as the techie continues to push its new dual-core Atom System on Chip platform for smartphones and tablets, called Clover Trail+. Intel has been a latecomer to the mobile game, but will also be offering a new 4G LTE modem that can support multiple devices -- all in an effort to steal back some of the market share from ARM. Intel has also taken another big step, by agreeing to manufacture chips on behalf of Altera, in a move that will open up its impressive manufacturing capabilities to customers on a large-scale basis. This may allow Intel to begin fighting for a spot at the Apple table -- a very lucrative place for a tech manufacturer to be.

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