Why Costco is beating Wal-Mart

This is not a good year for big department store chains and retailers. J.C. Penney (ticker: JCP ) lost more than half of its market value after the company's rebranding efforts failed to improve sales. Sears and Staples are burning cash, and could soon become mere entries in the archives of Wikipedia. To keep same-store sales growth in the 2% range, some companies are investing their gross margins and lowering prices even further, such as Wal-Mart Stores (WMT) .

The big exception here is Costco (COST). This year has been outstanding for the retailer, and with more than $100 billion in annual revenue, Costco keeps growing its top-line and making profits consistently. In the fourth quarter of 2013, the company saw 5% growth in U.S. same-store sales and 7% growth in international sales. Moreover, the company even managed to improve profitability by 1.3% despite the effect of negative currency fluctuations. So what is Costco doing different? Is Costco on its way to replace Wal-Mart and become the largest retailer in the world?

The Costco way versus the Wal-Mart way

Unlike Wal-Mart, Costco uses a paid-membership business model. Customers need to become Costco members in order to purchase merchandise at discounted price, paying at least $55 per year for the membership. This allows Costco to collect most of its profits 12 months in advance. Roughly 70% of the company's operating income is generated in this way.

The best part of the story is that although membership fees have increased over time, Costco is having no problem in expanding its membership network. In the fourth quarter of 2013, new membership increased 4%, taking the number of members to more than 71 million. Furthermore, most customers are satisfied with Costco's discounts and decide to renew their membership, as evidenced by the recent upsurge in annual membership renewals. In this way, Costco's main profit source is not only improving, it is also recurrent.

Aware of the benefits of having a strong community of cust! omers, Wal-Mart is expanding its Sam's Club subsidiary, which also uses a membership model. However, Sam's Club may be failing to capture market share from Costco. This is because Costco, apart from offering slightly lower price points on certain key products, is trying to improve its customer experience by implementing kind return policies, accepting several payment methods, and adding gift prizes. More importantly, Costco is always changing its brands and introducing new products in order to provide customers with a pleasant "treasure hunt" experience.

At this point, the main advantage that Wal-Mart has over Costco is its pricing power. With more than $400 billion in annual global sales, Wal-Mart can in theory impose the most favorable terms possible from its suppliers and vendors. However, if Costco continues opening 25-40 global warehouses per year, high-single-digit revenue growth rates should help to minimize the pricing power difference between Costco and Wal-Mart.

Lessons from J.C. Penney

The centenarian retailer J.C. Penney, which has not registered a quarterly profit in two years, is an example of how important it is to build and protect a loyal customer base in the competitive retail industry where differentiation is hard to achieve.

This year, the company replaced its famous sales and promotions to adopt an "everyday low price" strategy instead. Such a change may have contributed to build a new brand, but by suddenly abandoning a strong tradition -- last year the company offered more than 500 sales -- this policy also confused loyal customers.

Costco is a great pick for one simple reason: the company excels at building a strong, loyal customer community. This allows Costco to enjoy recurrent, recession-proof revenue, and to get most of its operating profit 12 months in advance via annual membership fees. This competitive advantage should protect the company from competitors such as Wal-Mart and Target, which enjoy stronger pricing power.

The Motley Foo! l is a US! A TODAY content partner offering financial news, analysis and commentary designed to help people take control of their financial lives. Its content is produced independently of USA TODAY.

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

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

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

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

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

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

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

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

Best Value Companies To Invest In 2014

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

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

European Stocks Climb for Ninth Day on Earnings Optimism

European stocks rallied for a ninth day, their longest winning streak since June 2010, as companies from Novartis AG to Reckitt Benckiser (RB/) Group Plc raised forecasts and the U.S. unemployment rate fell to an almost five-year low.

Novartis rose 2 percent, making the biggest contribution to the Stoxx Europe 600 Index's gains. Reckitt Benckiser jumped the most since February 2009. Tele2 AB tumbled to a four-year low after Sweden's second-largest phone company posted an unexpected loss and lowered its 2015 forecast for sales and profit. Telekom Austria AG slid 5.7 percent after buying frequency blocks at a spectrum auction.

The Stoxx 600 advanced 0.5 percent to 320.97, extending a five-year high. The gauge has increased 3.4 percent so far this month as U.S. lawmakers agreed to extend the government's borrowing powers until 2014 and ended a partial government shutdown.

"The tapering debate will never go away," Manish Singh, who helps manage $2 billion as head of investments at Crossbridge Capital in London, said. "While the jobs data didn't move the needle dramatically and the revision was positive, the rate of increase shows a slowdown, if anything. This means investors see the Fed remaining accommodative for longer, which is positive for equities."

National benchmark indexes advanced in 12 of the 18 western-European markets today. France's CAC 40 added 0.4 percent and Germany's DAX climbed 0.9 percent. The U.K.'s FTSE 100 advanced 0.6 percent.

Delayed Data

American payrolls climbed less than projected in September, data released more than two weeks later than scheduled showed today. The addition of 148,000 workers followed a revised 193,000 rise in August that was larger than initially estimated, Labor Department figures showed. The median forecast of 93 economists surveyed by Bloomberg called for a 180,000 advance. The unemployment rate fell to 7.2 percent, the lowest level since November 2008.

The Federal Open Market Committee will hold a two-day meeting beginning on Oct. 29. The Fed will delay the first reduction in its monthly bond purchases until March because the closure of federal agencies slowed fourth-quarter growth and interrupted the gathering of data, economists said in a Bloomberg News survey.

Novartis, Reckitt

Novartis AG (NOVN) climbed 2 percent to 69.25 Swiss francs after raising its full-year forecasts. Sales will increase at a low-to mid-single-digit percentage rate in constant currencies, and core operating income will match or exceed the previous year, Europe's biggest drugmaker said. In July, the company forecast a low-single-digit percentage decline in earnings in 2013, with sales rising at a similar rate.

Top 5 Stocks To Watch For 2014

Reckitt Benckiser, the maker of Nurofen painkillers and Durex condoms, jumped 5.2 percent to 4,734 pence. Full-year revenue will grow at least 6 percent, including acquisitions and divestments and excluding results from the pharmaceutical unit. The company had expected non-pharmaceutical revenue growth at the upper end of 5 percent to 6 percent in 2013, including acquisitions and disposals, and stable operating-profit margins.

"European earnings are mixed, but expectations were low," said Jean-Paul Jeckelmann, who helps manage $1.4 billion as chief investment officer at Banque Bonhote & Cie. in Neuchatel, Switzerland. "Guidances are that next year will be better and investors are pleased with this idea."

Special Dividend

Gjensidige Forsikring ASA rallied 8 percent to 109.40 kroner, its highest price since it sold shares to the public in December 2010. Norway's largest insurer said it will pay an extraordinary dividend of 6 kroner a share ($1.01) and will adopt a policy that targets a pay-out ratio of at least 70 percent of profit after tax from 2014.

Transocean Ltd. gained 4.8 percent to 43.96 francs, its biggest increase since January. The dual-listed offshore-drilling contractor will replace Dell Inc. in the S&P 500 after the close of trading on Oct. 28, S&P said in a statement late yesterday.

BHP Billiton Ltd. (BLT) rose 4.1 percent to 1,950.5 pence after the world's largest mining company upgraded its projection for full-year iron-ore production to 212 million tons from its earlier forecast of 207 million tons.

Tele2 slumped 12 percent to 75.65 kronor, leading a gauge of European telecommunications shares to its first loss in nine days. The company posted a third-quarter net loss of 171 million kronor ($26.7 million), missing the 518 million-kronor profit analysts had estimated. Tele2 also reduced its forecasts for 2015 sales to not more than 33.5 billion kronor and for earnings before interest, taxes, depreciation and amortization that year to a maximum of 7.3 billion kronor.

Spectrum Sale

Telekom Austria plunged 5.7 percent to 5.92 euros, its biggest drop since September 2012, after buying half of the 28 available frequency blocks in a spectrum auction in Austria for 1.03 billion euros ($1.41 billion). The prices paid by operators in the sale exceeded expectations, Raiffeisen Centrobank analyst Bernd Maurer said.

Deutsche Lufthansa AG declined 2.4 percent to 14.51 euros after saying it expects an operating result of 600 million euros to 700 million euros in 2014. That compares with 524 million euros last year, according to a company statement.

Benzinga Weekly Preview: Italian Senate To Decide Berlusconi's Fate

Next week will be a busy one for global markets with the US budget battle and the European Central Bank meeting, but politics in Italy could take center stage as the Italian Senate is expected to decide whether or not to force Silvio Berlusconi to resign due to his tax fraud conviction.

Berlusconi along with several members of his political party have threatened to take down the Italian government if he is forced to give up his position.

Key Earnings Reports

Next week investors will be waiting for several key earnings reports including Walgreen Co. (NYSE: WAG), Acuity Brands, Inc. (NYSE: AYI), and Monsanto Company (NYSE: MON)

Walgreen Co.

Walgreen is expected to report EPS of $0.72 on revenue of $17.95 billion, compared to last year's EPS of $0.63 on revenue of $17.07 billion.

On September 18th, the analyst team at Goldman Sachs gave Walgreen Company a Buy rating with a 12 month price target of $60.00. Goldman noted that Walgreen's recent acquisition of a 45 percent stake in Alliance Boots will likely drive EPS in fiscal year 2016.

"Investor feedback from our recent Drug Retailer coverage transfer suggests increasing focus on WAG's potential earnings power post "Step 2" of the Alliance Boots transaction. We thus introduce our scenario analysis, which implies potential for EPS accretion of 8-10% to our published $4.77 FY16E EPS if WAG successfully closes Step 2. Our base case pro forma EPS of $5.23 excludes any contribution from ABC equity income or tax upside from the Swiss location of the WAG/Boots purchasing JV"

On September 16th, Morgan Stanley gave Walgreens an Equal-weight rating; noting that the Pharmaceutical Services Negotiating Committee's announcement of a cut to generic drug reimbursement could impact Walgreens because of its 45 percent stake in Alliance Boots.

"WAG has exposure via its 45% stake in Alliance Boots. We estimate that the announced cut represents ~1.5% EBIT headwind (~£20M) to Alliance Boots, which accounts for ~25% of UK prescriptions. This should translate into a relatively modest impact to WAG's overall EBIT of < 25 bps."

Acuity Brands, Inc.

On October 1st, Acuity Brands is expected to report EPS of $1.02, compared to last year's EPS of $0.88.

At the beginning of August, Goldman Sachs gave Acuity a Neutral rating with a 12-month price target of $85.00. The analyst team at Goldman noted that the positives underlying the case for investment were already largely priced in.

"We initiate coverage of Acuity Brands – a lighting products company – with a Neutral rating and 3% downside to our $85, 12-month price target. We see several positives underlying the investment case for Acuity: (1) leverage to a recovery in US non-residential construction spending given US (c.90% of sales) and new construction (c.50%) exposure, (2) growth in retrofit volumes owing to energy efficiency demand (e.g., LED is 20% of sales), and (3) capital allocation. But, these positives appear priced in given valuation is at an all-time high, and LED cannibalization risk – while low near term – warrants positioning for a better entry point, in our view."

Monsanto Company

Monsanto is expected to report a loss of $0.43 per share, compared to last year's loss of $0.44 per share.

On September 19th, Piper Jaffray gave Monsanto an Overweight rating with a price target of $138.00. The analyst team chose to maintain the stock's rating but increase the price target from $135.00 as they expect Monsanto to at least match its 3 million acre cornfield target.

"After completing a state-by-state analysis of Brazil planting intentions, we are reiterating our Overweight rating on MON shares and believe investor concerns around lower South American corn acreage are overblown. It is true that total corn acreage is set to contract - roughly 7% by our estimation including both the summer and safrinha season crops. However, we believe the decline in hybrid corn acreage will be more modest and ultimately the increased adoption of biotech traits holds the key to Monsanto's profit growth in South American corn. Healthy soybean economics provide a strong incentive to plant Monsanto's Intacta trait package and, based on our channel checks, we believe it will at least match, if not exceed, its stated 3mil acre target."

Goldman Sachs took a more aggressive stance on Monsanto and issued a Buy rating with a price target of $124.00  on September 12th. The rating was given after an industry conference at which management indicated that corn seed prices are expected to increase by 5 to 10 percent in 2014.

"With today's presentation, MON made a compelling argument that when a farmer is evaluating seed choices, what matters is yield and maximizing return per acre rather than minimizing cost. We agree that newer, better hybrid seeds and advanced trait packages represent one of the best opportunities for farmers to improve their yields each year, as opposed to other inputs like fertilizer, farm equipment, and crop chemicals, which have less innovation and are somewhat discretionary in the amount of usage (please see our 8/12/13 note Corn price fade does not equal a MON earnings hit; reiterate CL-Buy for more details). We see management's initial 2014 pricing target of 5%-10% as supportive of this steady annual improvement in yield potential that is driving sustainable, consistent midhigh single digit corn seed pricing for MON. We also believe that this pricing goal will support high-teens EPS growth guidance for 2014 that we expect MON will provide with 4Q2013 earnings in October."

Key Economic Releases

The European Central Bank is set to meet on Wednesday instead of Thursday next week as Thursday is a German national holiday. The bank is largely expected to maintain current interest rates and reiterate the previous month's forward guidance; that rates will remain low for an "extended period".  Investors will be watching ECB President Mario Draghi's post meeting press conference closely for any clues about the eurozone's new long term refinancing operation.

The US government will also be under the microscope as an 11th hour decision about an emergency spending bill is likely on Monday. The difficult negotiations between Democrats and Republicans in Washington have set the stage for a tough battle about the nation's budget in the days to follow.

Daily Schedule

Monday

Earnings Releases Expected: Diamond Foods, Inc. (NASDAQ: DMND), Farmer Brothers Company (NASDAQ: FARM) Economic Releases Expected: US Chicago PMI

Tuesday

Earnings Expected From: Acuity Brands Inc (NYSE: AYI), Walgreen Co. (NYSE: WAG) Economic Releases Expected: Manufacturing PMI from France, Germany, the UK , the eurozone, the US and Canada; Australian and Brazilian trade balance.

Wednesday

Earnings Expected From: Accretive Health, Inc (NYSE: AH), Monsanto Company (NYSE: MON), UniTek Global Services, Inc. (NASDAQ: UNTK) Economic Releases Expected: Eurozone interest rate decision and PPI data, US National Employment Report, British construction PMI

Thursday

Earnings Expected From: Constellation Brands Inc (NYSE: STZ), International Speedway Corporation (NASDAQ: ISCA) Economic Releases Expected: Services PMI from Spain, France, Germany, the UK, the eurozone, and China; and eurozone retail sales

Friday

No Notable Earnings Expected Economic Releases Expected: German PPI, Indian PMI, US nonfarm payrolls

Posted-In: European Central Bank Federal Reserve Mario Draghi Silvio BerlusconiNews Eurozone Commodities Previews Global Econ #s Economics Federal Reserve After-Hours Center Markets Trading Ideas Best of Benzinga

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

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Deere Slips: UBS Cuts to Sell; Ag Equipment Can’t Escape Corn Price Decline

Shares of Deere & Co. (DE) are down $1.35, or 1.7%, at $80.97, after UBS‘s Steven Fisher this morning cut his rating on the stock to Sell from Neutral, and cut his price target to $72 from $96, writing that the company will “revert to more historical norms relative to corn price performance” as lower corn prices pressure demand for its farm equipment.

Deere’s stock performance — it is down 6% this year so far — has been better than the decline in corn prices, he writes. But that cannot last:

In March of this year, we became more cautious on Deere and we wrote that "corn prices were s.etting up for a sharp correction." Year to date, corn prices have declined 34%, while DE shares have declined 5%. We believe DE shares could weaken further, reverting to historical norms relative to corn prices. We expect lower corn prices to pressure cash receipts, and as a result, we expect ag equipment demand to weaken in 2014. In recent channel checks, farm equipment dealers have begun to express concern regarding 2014.

A Fool Looks Back

Hulu, you're such a tease.

Once again, a bidding war for the streaming video service gets called off by the owner. Hulu's bigwig studio partners announced on Friday that they'll be keeping Hulu, putting an end to yet another lame auction process.

DIRECTV (NASDAQ: DTV  ) seemed like a shoo-in to win the Hulu sweepstakes. The country's largest satellite television provider doesn't have much of an online presence, and snapping up Hulu and potentially making it exclusive to DIRECTV subscribers could've really helped justify the pay-TV provider's hefty monthly rates.

Hulu's consortium of present owners are committing to invest $750 million to take the site to the next level. Hulu is popular for its ability to stream television shows between a day to a week after they initially air, but Hulu could use a page out of the faster-growing digital smorgasbords and beef up its catalog.

We'll see how far $750 million goes, and then we'll see who falls for the inevitable auction process for Hulu.

Briefly in the news
And now let's take a quick look at some of the other stories that shaped our week.

The future of smartphones may be a battle of megapixels. Nokia (NYSE: NOK  ) formally unveiled the Lumia 1020, a Windows Phone making waves for its 41-megapixel lens. The sky's the limit for priceline.com (NASDAQ: PCLN  ) . Morgan Stanley analyst Scott Devitt upgraded the fast-growing travel website operator, boosting his price target to $1,010. It's the first analyst to cross the four figures in setting a goal for Priceline. Tesla Motors (NASDAQ: TSLA  ) was tapped to fill next week's vacancy in the Nasdaq 100. The electric-car maker has tripled in recent months, making it one of the 100 largest non-financial stocks in the exchange.

Beyond next week
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Top 5 Blue Chip Stocks For 2014

LONDON -- One of Warren Buffett's famous investing sayings is "Be fearful when others are greedy and greedy only when others are fearful" -- or, in other words, sell when others are buying and buy when they're selling.

But we might expect Foolish investors to know that, and looking at what Fools have been buying recently might well provide us with some ideas for good investments.

So, in this series of articles, we're going to look at what customers of The Motley Fool ShareDealing Service have been buying in the past week or so and what might have made them decide to do so.

A stereotypical blue chip
Unilever� (LSE: ULVR  ) (NYSE: UL  ) is a stereotypical blue-chip company -- it has an international reputation for quality and reliability, and has proved its ability to operate profitably, despite the vicissitudes of the stock market, to deliver rewards to its shareholders over the long term.

Unilever sells brands that everyone knows and that command consumer confidence and loyalty. It counts Marmite, PG Tips, Persil, Walls, Cif, Flora, Knorr, and Colman's in its stable of more than 400 brand names worldwide. There's even Pot Noodle, a brand many people claim to hate, although the fact that it holds a 49% value share of the "instant hot snack" market suggests otherwise.

Top 5 Blue Chip Stocks For 2014: International Business Machines Corporation(IBM)

International Business Machines Corporation (IBM) provides information technology (IT) products and services worldwide. Its Global Technology Services segment provides IT infrastructure and business process services, including strategic outsourcing, process, integrated technology, and maintenance services, as well as technology-based support services. The company?s Global Business Services segment offers consulting and systems integration, and application management services. Its Software segment offers middleware and operating systems software, such as WebSphere software to integrate and manage business processes; information management software for database and enterprise content management, information integration, data warehousing, business analytics and intelligence, performance management, and predictive analytics; Tivoli software for identity management, data security, storage management, and datacenter automation; Lotus software for collaboration, messaging, and so cial networking; rational software to support software development for IT and embedded systems; business intelligence software, which provides querying and forecasting tools; SPSS predictive analytics software to predict outcomes and act on that insight; and operating systems software. Its Systems and Technology segment provides computing and storage solutions, including servers, disk and tape storage systems and software, point-of-sale retail systems, and microelectronics. The company?s Global Financing segment provides lease and loan financing to end users and internal clients; commercial financing to dealers and remarketers of IT products; and remanufacturing and remarketing services. It serves financial services, public, industrial, distribution, communications, and general business sectors. The company was formerly known as Computing-Tabulating-Recording Co. and changed its name to International Business Machines Corporation in 1924. IBM was founded in 1910 and is based in Armonk, New York.

Advisors' Opinion:

• [By Dan Caplinger]

  Hewlett-Packard (NYSE: HPQ  ) will release its quarterly report on Tuesday, and investors have been increasingly nervous about the tech giant's ability to keep its long-term restructuring efforts moving forward. With rival IBM (NYSE: IBM  ) having faced tough conditions in the IT market and with Accenture (NYSE: ACN  ) squarely aimed at the same consulting customers that HP hopes to poach in its reorganization efforts, Hewlett-Packard faces pressure to start producing solid results from its strategic moves sooner rather than later.

• [By Dan Radovsky]

  But GE was not the first industrial giant to become interested in the Industrial Internet. IBM (NYSE: IBM  ) is the Big Kahuna of Big Data. Its five-year old Smarter Planet division has led the way.

• [By Jonathan Fishman]

  I have been following XRTX for the last couple of years as I cover the HDD industry very closely. XRTX sells HDD capital equipment, and following them helped me get a better feel for the CAPEX environment for the HDD duopoly. I witnessed XRTX's revenues plunge from about $455M a quarter back in 2010, to under $200M a quarter in Q1-13, a decrease of approximately 65% in revenues and more than 85% in net profits. This was mainly because NetApp (NTAP), once responsible for more than 45% of XRTX's Enterprise Data Storage Solution business, or $150M a quarter, started to source their disk arrays in-house. This trend was true with Dell (DELL) as well. I've summed up, NetApp's, Dell's and IBM's (IBM) contributions to XRTX's revenues for the past 8 quarters in the Enterprise Data Storage Solution segment.

• [By Cheryl Kaften]

  To remain relevant and competitive, current smart grid vendors -- among them ABB (NYSE: ABB  ) , General Electric (NYSE: GE  ) �, IBM� (NYSE: IBM  ) , �and�Siemens� (NYSE: SI  ) --�may have to make market adjustments, including partnerships, acquisitions, and advances of their own.

Top 5 Blue Chip Stocks For 2014: McDonald's Corporation(MCD)

McDonald?s Corporation, together with its subsidiaries, operates as a worldwide foodservice retailer. It franchises and operates McDonald?s restaurants that offer various food items, soft drinks, coffee, and other beverages. As of December 31, 2009, the company operated 32,478 restaurants in 117 countries, of which 26,216 were operated by franchisees; and 6,262 were operated by the company. McDonald?s Corporation was founded in 1948 and is based in Oak Brook, Illinois.

Advisors' Opinion:

• [By Jeremy Bowman]

  The Dow Jones Industrial Average (DJINDICES: ^DJI  ) closed out essentially where it started today as McDonald's (NYSE: MCD  ) earnings this morning cooled off what was an otherwise bullish day for Wall Street. While the Dow closed up just 2 points, or 0.01%, the S&P 500 gained 0.2%, ending at a record high for the third session in a row as a solid start to earnings season has lifted the market. About 64% of the S&P 500 companies that have reported so far have beaten earnings estimates. Only one economic report was released today, which showed June existing home sales coming at 5.08 million, slightly below May's mark of 5.14 million and below expectations at 5.28 million. Investors continue to be concerned that the housing recovery could cool off as mortgage rates have come up.

• [By Matt Thalman]

  Another company that has been battling the obesity issue and is falling today is McDonald's (NYSE: MCD  ) . Shares are down 1.04% after the company announced that key sales figures fell again in April. The company is blaming fears of the avian flu as reason for the weak performance in China. Sales fell 0.6% globally in April, even though the U.S. market increased by 0.7%. But the largest decline came from Europe, were sales dropped 2.4% during the month.�

Top Cheap Stocks To Invest In Right Now: Colgate-Palmolive Company(CL)

Colgate-Palmolive Company, together with its subsidiaries, manufactures and markets consumer products worldwide. It offers oral care products, including toothpaste, toothbrushes, and mouth rinses, as well as dental floss and pharmaceutical products for dentists and other oral health professionals; personal care products, such as liquid hand soap, shower gels, bar soaps, deodorants, antiperspirants, shampoos, and conditioners; and home care products comprising laundry and dishwashing detergents, fabric conditioners, household cleaners, bleaches, dishwashing liquids, and oil soaps. The company offers its oral, personal, and home care products under the Colgate Total, Colgate Max Fresh, Colgate 360 Advisors' Opinion:

• [By Eric Volkman]

  It's one of the steadiest dividend payers on the market, and it's continuing to fly level. Colgate-Palmolive (NYSE: CL  ) has declared a fresh quarterly common stock dividend, which is to be $0.34 per share, paid on August 15 to shareholders of record as of July 23. That amount matches the firm's previous distribution; this was paid in May. Prior to that, Colgate-Palmolive handed out $0.31 per share.

• [By Dividend Growth Investor]

  In a previous article, I outlined that it is getting more difficult to find quality dividend paying stocks to buy. Most of the usual suspects like Kimberly-Clark (KMB) or Colgate-Palmolive (CL) are very overvalued today, which prevents me from adding to my positions there. Other companies like Chevron (CVX) are attractively valued today, but unfortunately my portfolio is overweight in them. Currently I find the oil sector to be cheap and have some of the lowest P/E ratios in the market. However, I would hate to be concentrated in one sector which is exposed to the fluctuating prices in its commodity products.

• [By Dan Caplinger]

  One concern, though, is how the company handled news of Venezuela's currency devaluation. Clorox (NYSE: CLX  ) and Colgate-Palmolive (NYSE: CL  ) also felt the pinch, with Clorox taking about a $0.05 to $0.10 per-share earnings hit and Colgate losing about $0.50 per share. But they also addressed the potential devaluation more proactively than P&G did. Clorox actually�anticipated�the devaluation in its February earnings report, projecting the potential hit if a devaluation took place. Colgate didn't provide specific guidance in advance but clearly saw it as an issue, delivering on a promise to give prompt guidance revisions after the devaluation occurred.

Top 5 Blue Chip Stocks For 2014: Apple Inc.(AAPL)

Apple Inc., together with subsidiaries, designs, manufactures, and markets personal computers, mobile communication and media devices, and portable digital music players, as well as sells related software, services, peripherals, networking solutions, and third-party digital content and applications worldwide. The company sells its products worldwide through its online stores, retail stores, direct sales force, third-party wholesalers, resellers, and value-added resellers. In addition, it sells third-party Mac, iPhone, iPad, and iPod compatible products, including application software, printers, storage devices, speakers, headphones, and other accessories and peripherals through its online and retail stores; and digital content and applications through the iTunes Store. The company sells its products to consumer, small and mid-sized business, education, enterprise, government, and creative markets. As of September 25, 2010, it had 317 retail stores, including 233 stores in the United States and 84 stores internationally. The company, formerly known as Apple Computer, Inc., was founded in 1976 and is headquartered in Cupertino, California.

Advisors' Opinion:

• [By Doug Ehrman]

  Though making a meaningful smartphone comparison used to involve pitting Apple (NASDAQ: AAPL  ) against Google (NASDAQ: GOOG  ) in a duopoly, the other players in the market have become increasingly important to understanding the landscape. Microsoft's (NASDAQ: MSFT  ) Windows Phones have gained traction, BlackBerry (NASDAQ: BBRY  ) refuses to go away, and Samsung has carved out its own niche unlike any other. Any meaningful smartphone comparison now includes multiple devices across multiple operating systems, not to mention a look at the markets in which they compete.

• [By Rick Munarriz]

  Wearable computing is clearly going to be a big market. Google's (NASDAQ: GOOG  ) push for high-tech glasses is the real deal. This isn't science fiction anymore. Samsung last month announced that it's exploring a smart watch. Then we have Apple (NASDAQ: AAPL  ) , which has long been rumored to be working on a smart watch.

• [By Anders Bylund]

  The company famously lost the main camera spot in Apple's (NASDAQ: AAPL  ) iPhones back in 2011, replaced by BSI chips from Sony (NYSE: SNE  ) . OmniVision does sell chips to Apple today, but these are normally the skimpier and less profitable front-facing cameras. Then again, Apple's share of the global mobility space isn't as beefy as it once was, so it's easier to make up for a lost Apple socket with a couple of Android-based wins nowadays.

Top 5 Blue Chip Stocks For 2014: Chevron Corporation(CVX)

Chevron Corporation, through its subsidiaries, engages in petroleum, chemicals, mining, power generation, and energy operations worldwide. It operates in two segments, Upstream and Downstream. The Upstream segment involves in the exploration, development, and production of crude oil and natural gas; processing, liquefaction, transportation, and regasification associated with liquefied natural gas; transportation of crude oil through pipelines; and transportation, storage, and marketing of natural gas, as well as holds interest in a gas-to-liquids project. The Downstream segment engages in the refining of crude oil into petroleum products; marketing of crude oil and refined products primarily under the Chevron, Texaco, and Caltex brand names; transportation of crude oil and refined products by pipeline, marine vessel, motor equipment, and rail car; and manufacture and marketing of commodity petrochemicals, plastics for industrial uses, and fuel and lubricant additives. It a lso produces and markets coal and molybdenum; and holds interests in 13 power assets with a total operating capacity of approximately 3,100 megawatts, as well as involves in cash management and debt financing activities, insurance operations, real estate activities, energy services, and alternative fuels and technology business. Chevron Corporation has a joint venture agreement with China National Petroleum Corporation. The company was formerly known as ChevronTexaco Corp. and changed its name to Chevron Corporation in May 2005. Chevron Corporation was founded in 1879 and is based in San Ramon, California.

Advisors' Opinion:

• [By Arjun Sreekumar]

  What's next for the global LNG trade?
  Going forward, however, the rare drop last year is likely to be an anomaly, with the number of countries participating in the global LNG trade set to grow sharply. This year, BG Group forecasts that the global LNG trade will grow by a modest 5.4 million tons, bolstered by exports from Angola -- where Chevron (NYSE: CVX  ) recently shipped its first cargo from the Angola LNG plant -- and new terminals in Australia, as well as an increase in imports from Singapore and Malaysia, and an offshore facility in Israel.

• [By Rich Smith]

  On Tuesday, the Department of Defense awarded some $2.3 billion worth of contracts for "aviation turbine fuel." Most of the major oil and refining companies came away with contracts, including:

  Royal Dutch Shell (NYSE: RDS-A  ) subsidiary Equilon Enterprises, which claimed the largest award at an estimated $474.1 million in maximum value. Valero (NYSE: VLO  ) , winner of a nearly as large contract valued at up to $456.4 million. ExxonMobil (NYSE: XOM  ) , winner of a $405.1 million contract. Chevron (NYSE: CVX  ) , which won $391.4 million. Western Refining (NYSE: WNR  ) , awarded a $268.7 million supply contract.

  In addition, four other, smaller companies also won contracts. All nine contracts state June 30, 2014, as the deadline for delivery.

• [By Alex Planes]

  Tale of the tape
  Chevron (NYSE: CVX  ) has only been a current Dow component since 2008, but it first joined way back in 1930, when it was still Standard Oil of California. Chevron's dubious 1999 removal hindered the index's growth for years, but investors who held on enjoyed gains of nearly 150% before the oil supermajor was reinstated. Chevron has ranked as America's third largest company on the Fortune 500 for several years running, a position befitting one of the largest integrated oil and gas companies in the world.

BAE warns of shutdown risk to earnings

U.K. defense giant BAE Systems has warned a prolonged U.S. government shutdown would hurt its business.

LONDON (CNNMoney) The ripple effect of the U.S. budget impasse has started to be felt offshore, with British defense giant BAE Systems warning a prolonged federal government shutdown will hurt earnings.

The shutdown hasn't had a material impact on the group's finances yet, but a "protracted" government closure would, the company said in a statement.

Around 1,200 BAE employees across its intelligence and security, and support solutions businesses have been temporarily directed not to report to work.

The U.S. federal government has been partially shut down for 10 days. BAE Systems (BAESF) is one of the first international companies to sound an alarm over the financial damage the Washington standoff over a new budget could cause.

The shutdown has dealt a blow to other American government contractors. Companies including Lockheed Martin (LMT, Fortune 500) and United Technologies (UTX, Fortune 500) have seen shares slide and have had thousands of workers furloughed.

And last week, the National Defense Industrial Association wrote to lawmakers calling for an end to the government shutdown.

BAE employs about 35,000 people in the U.S., working on hundreds of contracts for the defense department. It derives about 40% of sales from America.

The shutdown comes at a time when BAE's U.S. operations are already under strain.

In its 2012 annual report, the company noted pressure from reduced activity in Iraq and Afghanistan, coupled with measures to reduce U.S. federal budget deficits.

Shares of BAE Systems (BAESF) slipped 0.2% in London trading, under-performing the FTSE 100, which gained 1.3%.

[video] Quick Take: Data to Watch Next Week

NEW YORK (TheStreet) -- Next week will be slow in terms of economic data, but two items to watch out for is the personal income report and the durable orders results. TheStreet's Brittany Umar is with Chris Versace, a contributor to Real Money Pro, with further insight. 

Umar pointed out the lack of wage fluctuations in the monthly jobs reports. Versace said the two data points he really focuses on in the personal income report are disposable income and the savings rate. 

He elaborated, explaining that disposable income was the amount of money consumers had for spending on goods that they want. Disposable income will be an important metric at this time of year, heading into the end of the holiday season.

The savings rate simply implies how much money consumers will have available to spend in the future, he said. 

Top 5 Cheap Stocks To Watch For 2014

Turning to the durable orders report, Versace said he wanted to see if it would reinforce the strong ISM report we saw from November.  He added that investors could remove certain data points, such as defense spending, to get a better feel for the overall economy.  While next week will be pretty quiet due to the holidays, Versace suggested investors keep an eye out for any companies that try and sneak out a negative announcement, in the hopes that it will go unnoticed during a slow week of trading. -- Written by Bret Kenwell in Petoskey, Mich. Follow @BretKenwell

Stock quotes in this article: SPY, DIA, QQQ, TLT 

Top 5 Financial Companies To Buy For 2014

Biotech investors are never safe from the quiet robber of wealth -- dilution. Although too many managers in the sector see raising cash at the expense of shareholders as relatively�victim-less, oftentimes debt markets just�aren't�an avenue available to these companies. But even investors who do their homework and feel good about a company's financial position can be caught off guard.

In this video, health-care analyst David Williamson takes a closer look at one such case, Isis Pharmaceuticals. Shares plunged 10% after a surprise announcement to raise $170 million. Watch and find out the reasoning behind Isis' surprise�announcement� and what investors should make of it.

Obamacare will undoubtedly have far-reaching effects. The Motley Fool's new free report, "Everything You Need to Know About Obamacare," lets you know how your health insurance, your taxes, and your portfolio will be affected. Click here to read more.�

Top 5 Financial Companies To Buy For 2014: Omega Healthcare Investors Inc.(OHI)

Omega Healthcare Investors, Inc. operates as a real estate investment trust (REIT) in the United States. The company invests in healthcare facilities, principally long-term healthcare facilities in the United States. It provides lease or mortgage financing to qualified operators of skilled nursing facilities (SNFs), as well as to assisted living facilities (ALFs), independent living facilities (ILFs), and rehabilitation and acute care facilities. As of March 31, 2011, the company?s portfolio of real estate investments consisted of 400 healthcare facilities, including 370 SNFs, 10 ALFs, 5 specialty facilities, fixed rate mortgages on 13 SNFs, and 2 SNFs that are held-for-sale located in 35 states. Omega Healthcare Investors, Inc. has been qualified as a REIT for federal income tax purposes. As a REIT, it would not be subject to federal corporate income taxes if it distributes at least 90% of its taxable income to its shareholders. The company was founded in 1992 and is bas ed in Hunt Valley, Maryland.

Advisors' Opinion:

• [By Cameron Swinehart]

  I recently took profits in a few positions including Microsoft (MSFT), The Sherwin-Williams Company (SHW), Omega Healthcare Investors (OHI) and Wells Fargo (WFC). From my perspective, the economic outlook doesn't support continued investment in those companies. A softening U.S economy and high debt levels will push investors into safe havens and real assets.

• [By Marc Bastow]

  Healthcare facilities REIT Omega Healthcare Investors (OHI) raised its quarterly dividend 2% to 48 cents per share, payable Nov. 15 to shareholders of record as of Oct. 31.
  OHI Dividend Yield: 5.81%

Top 5 Financial Companies To Buy For 2014: Britton & Koontz Capital Corporation(BKBK)

Britton & Koontz Capital Corporation operates as the holding company for Britton & Koontz Bank, National Association that provides commercial and consumer banking services in Adams and Warren Counties, Mississippi, and East Baton Rouge Parish, Louisiana, as well as in the adjoining counties and parishes in Mississippi and Louisiana. The company offers various deposit products, including personal and commercial checking accounts, money market deposit accounts, savings accounts, non-interest bearing deposits, negotiable order of withdrawal accounts, and certificates of deposit. Its loan portfolio comprises commercial, financial, and agricultural loans; real estate construction, residential, and other loans; installment loans; consumer loans; and overdrafts. In addition, the company provides automated clearinghouse services; safe deposit box facilities; brokerage services; automated teller machines; cash management services, including remote deposit, money transfer, direct de posit payroll, and sweep accounts; VISA credit cards; and letters of credit. As of May 17, 2011, it operated three full service offices in Natchez, two in Vicksburg, Mississippi; three in Baton Rouge, Louisiana; and a loan production office in Central, Louisiana. The company was founded in 1866 and is headquartered in Natchez, Mississippi.

Advisors' Opinion:

• [By Tim Melvin]

  HBCP recently announced a deal to buy Britton & Koontz Capital Corporation (BKBK) in a deal that will add eight branches and more than $300 million of assets to the bank. It also gains access to the Mississippi marketplace and increases Home Bancorp’s deposit base in Baton Rouge.

Best Medical Stocks To Watch For 2014: Gyrodyne Company of America Inc.(GYRO)

Gyrodyne Company of America, Inc., a real estate investment trust (REIT), engages in the investment, acquisition, ownership, and management of a portfolio of medical office and industrial properties in the northeast region of the United States. The company also involves in the development of industrial and residential properties. It focuses on acquiring, developing, owning, leasing, and managing medical, commercial, and industrial real estate. The company has elected to be taxed as REIT under the Internal Revenue Code. As a REIT, it would not be subject to federal income tax purposes, provided that it distributes at least 90% of its taxable income to its shareholders. The company was founded in 1946 and is headquartered in St. James, New York.

Advisors' Opinion:

• [By Sally Jones]

  Highlight: Gyrodyne Company of America (GYRO)

  The GYRO share price is currently $73.85 or 35.7% off the 52-week high of $114.80. The company does not pay a dividend.

• [By Geoff Gannon] >Syms (SYMSQ) where at some point the company�� entire value really depended on its balance sheet.

  Obviously when looking at things like real estate you don�� go by what it says on the balance sheet. You try to find a note on depreciation that breaks out land, buildings, etc. And gives information about how the company depreciates its property.

  And ��of course ��you look at the ��roperties��item in the 10-K. In the U.S., you then use the information you��e gathered to check county land records and things like that for more information about the property.

  Generally, you want to:

  路 Find out when the company bought the property

Top 5 Financial Companies To Buy For 2014: Banco Santander S.A.(STD)

Banco Santander, S.A. provides a range of banking and financial products. It accepts customer demand, time, and notice deposits, and international and domestic interbank deposits, as well as offers auto financing, personal loans, and credit cards; and automated cash dispensers, savings books updaters, telephone banking services, and electronic and Internet banking services. The company also engages corporate banking, treasury, and investment banking activities. It provides transaction banking services in cash management, trade finance, and basic financing; and corporate finance services for mergers and acquisitions, and asset and capital structuring, as well as involves in the origination activities and risk management, and distribution of structured products and debt in the credit markets; structuring and trading activities in financial markets of interest rate and exchange rate instruments; and activities relating to the equity markets. In addition, it engages in the des ign and management of mutual and pension funds, and life and general insurance products. The company operates primarily in Spain, the United Kingdom, other European countries, Brazil and other Latin American countries, and the United States. As of December 31, 2010, it had 6,063 branch offices in continental Europe; 1,416 branches in the United Kingdom; 5,882 branches in Latin America; and 721 branches in the United States. The company was formerly known as Banco Santander Central Hispano S.A. and changed its name to Banco Santander, S.A. in June 2007. Banco Santander, S.A. was founded in 1857 and is based in Madrid, Spain.

Advisors' Opinion:

• [By Chandan Dubey]

  This article will describe what a bank does. Then we will move on to reading the balance sheet of a bank. As an example, I take the balance sheet of one of my holdings, Banco Santander (STD).

Top 5 Financial Companies To Buy For 2014: Monarch Community Bancorp Inc.(MCBF)

Monarch Community Bancorp, Inc. operates as a bank holding company for Monarch Community Bank that provides various banking services in Branch, Calhoun, and Hillsdale counties of Michigan. The company offers various deposit products, including passbook and statement savings accounts, money market deposit accounts, NOW and demand accounts, interest bearing and non-interest bearing checking accounts, and certificates of deposit to consumers and businesses. It also provides a range of loan products comprising one-to-four family residential real estate loans; multi-family and commercial real estate loans; construction and land development loans; secured consumer loans, such as home equity loans and lines of credit, auto loans, manufactured housing loans, and loans secured by savings deposits; unsecured loans that include home improvement loans; and commercial business loans. In addition, the company, through its subsidiary, First Insurance Agency, offers insurance services. As of December 31, 2010, it operated five full service offices. The company was founded in 1934 and is headquartered in Coldwater, Michigan.

Report: IRS vendor owed $525M in back taxes

WASHINGTON (AP) — The Internal Revenue Service has been doing business with nearly 1,200 vendors that owe back taxes, including one unnamed contractor that owed a whopping $525 million, a new inspector general's report says.

Altogether, 1,168 IRS vendors owed back taxes totaling $589 million as of July 2012, according to the report released Tuesday. Only 50 were in a payment plan to pay off their debt.

"When the IRS conducts business with vendors that do not comply with federal tax laws, it conveys a contradictory message in relation to its mission to ensure compliance with the tax laws," said J. Russell George, Treasury inspector general for tax administration.

The IRS checks whether vendors owe back taxes when the agency awards contracts, the IRS said. But the IRS doesn't continuously monitor whether vendors are current in their tax bills after contracts are awarded, the report said.

George has recommended the IRS require an annual tax check for all contractors, but the agency says federal acquisition regulations don't authorize them.

The inspector general's office is prohibited by law from revealing the name of any delinquent vendors, including the one that owed $525 million. The report says most of the back taxes, including the biggest, were delinquent for less than a year.

The inspector general's office said its report excluded back taxes that were being contested, counting only those that were either agreed to by the taxpayer or ordered by a court.

About 7% of IRS vendors owed back taxes, the report said. However, it suggested the IRS may have been an unwilling business partner with most of them.

For example, the IRS must routinely pay fees to banks and other financial institutions when it orders them to turn over records about taxpayers, the report said. The agency also has to pay filing fees to state and county governments to file tax liens.

"Thus, even if these entities have unpaid tax debt, the IRS must still use their services," the repor! t said.

The IRS said 863 of the delinquent vendors — or about three-fourths — provided these types of services to the agency.

Federal law authorizes the IRS to withhold government payments to individuals and businesses that owe back taxes, the report said. The federal government can also exclude individuals or companies from doing business with the federal government for a variety of reasons, including failure to perform the terms of a contract or being convicted of a crime, the report said.

The IRS awarded contracts to three vendors that had been excluded from doing business with the federal government, the report said. However, the report said, IRS efforts to prevent such contracts were generally effective.

"The vast majority of vendors that conduct business with the IRS meet their federal tax obligations," the IRS said in a statement. "We appreciate (the inspector general's) acknowledgment that IRS has effective controls in place to prevent suspended and debarred vendors from receiving IRS contracts. We agreed with (the IG's) recommendations and are in the process of implementing them."

Evercore Partners Upgrades Fifth Third Bancorp to “Overweight”; Sees Additional Top-Line Growth Ahead (FITB)

Regional banker Fifth Third Bancorp (FITB) on Monday received a big upgrade from analysts at Evercore Partners.

The firm lifted its rating on FITB from “Equal Weight” to “Overweight” while boosting its price target to $23. That new target suggests a 15% upside to the stock’s Friday closing price of $20.09.

Evercore analyst Andrew Marquardt commented, “We are upgrading shares of FITB to OW (from EW) based on above avg top line growth/profitability, expense flexibility, continued AQ leverage, and strong capital/deployment.” Accordingly, the firm also lifted its earnings estimates for the company through 2015.

Fifth Third Bancorp shares were inactive in pre-market trading Monday. The stock has gained 32% since the beginning of 2013.

3 Reasons To Buy This Well-Known Retail Stock

My first day working in New York City included a ferry ride across the Hudson River and then a shuttle to the office. Despite the early hour, the hustle and bustle of Midtown Manhattan was intense.

 

When the shuttle approached my stop, I saw a long line of teenagers and adults behind red velvet ropes; the line extended around the corner of a wide block. I thought they were probably waiting for some celebrity meet-and-greet or rock concert, but then I noticed the line was in front of a clothing store that I had seen in a local mall but never paid much attention to.

The next day, I noticed the same hubbub in front of the same store, and over the next few weeks, I became used to the daily red-velvet rope lineup. Clearly, this wasn't a one-time sale or special event -- customers were willing to stand in line every single day!

Imagine operating a clothing store and seeing hundreds of eager customers line up and wait each day for a chance to get inside and shop. I thought: "What a great investment opportunity this retailer must offer! Clearly any company with the marketing skills to draw such attention is doing something right."

If you haven't guessed, I'm talking about Abercrombie & Fitch (NYSE: ANF), a New Albany, Ohio-based retailer of casual clothing. The company's marketing deftly combines wholesome Americana with an edgy, sexy vibe from the live models who attract teenage locals and tourists from around the globe to its flagship Fifth Avenue store.

Founded in 1893, Abercrombie currently operates 912 stores in the United States and 139 international locations. The company also sells clothes under the lower-priced Hollister brand. Based on the pseudo-history of fictional adventurer John M. Hollister, the Hollister line appeals to international customers with its theme and lower price point.

The company posted its full-year 2012 results in February, and overall, things are looking bullish. Net sales increased 8%, with international sales adding 36% and direct-to-consumer sales jumping 27%. However, U.S. sales slipped 1% on the year.

Here's why I'm bullish on Abercrombie:

1. A strong 2013 outlook
The company expects earnings per share (EPS) in the range of $3.35 to $3.45, which would represent growth of 15%.

2. Expansion plans
Abercrombie is going where the action is to increase business. It plans on opening two additional flagship stores in Seoul and Shanghai in addition to opening 20 international Hollister stores within the year. Over the next five years, the Hollister store count could climb to 70, and with international markets operating at higher productivity than the traditional U.S. stores, growth is nearly guaranteed.

3. Powerful marketing
Marketing is what drives business. Abercrombie's flagship Fifth Avenue store is a testament to its marketing savvy. Taking the company's product to clients in Asia and the United Arab Emirates is a brilliant move. While many in the United States and Europe may be burned out on this type of marketing, it remains new and edgy in the parts of the world where Abercrombie has expansion plans.

Despite the strong 2012 performance and solid outlook for 2013, Abercrombie's stock has been trading in a tight range between $46 and $52. Waiting for a breakout close above $52 makes technical sense.

Risks to Consider: Weakness in Europe and the slowing of sales in the United States have created headwinds for Abercrombie. This type of business is extremely connected to consumer sentiment and spending capacity. While the company is making smart moves into international markets, the European situation will continue to loom over performance and investor perception for the foreseeable future.

Action to Take --> Although I am bullish on Abercrombie overall, I would wait until the current price range is broken on the top end before entering the investment. As always, be sure to use stops and position size properly when investing.

P.S. -- StreetAuthority's Amy Calistri has one objective for readers of Stock of the Month... to provide one quality stock pick each month, with in-depth analysis in plain English that investors can understand. In fact, she just released a special presentation, "How to Beat the Stock Market... In Just 12 Minutes per Month," which tells you more about her strategy. Go here to learn more.

5 Monthly Dividend Stocks to Snag in 2014

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Even the best dividend stocks tend to have one major disconnect: Most of us pay our bills on a monthly cycle, yet most stocks that pay dividends do so only once per quarter. This can make budgeting a headache and adds an extra level of planning.

Sure, a diversified portfolio of the best dividend stocks will have payment dates spread across the calendar, but your income stream is still generally going to be lumpy and uneven. That’s why monthly dividend stocks would be vastly preferable for most investors.

And aside from budgeting concerns, there is another major reason why monthly dividend stocks are preferable: compounding. If you reinvest your dividends in additional shares instead of using the income for current needs, you compound your wealth significantly faster, as the number of shares paying you a dividend rises every single month.

On a $100,000 portfolio, this might amount to a couple hundred bucks over the course of a single year. But remember, compounding is not linear; it's exponential. Over the span of an investing lifetime, that "couple hundred bucks" from monthly dividend stocks can turn into tens of thousands of dollars. (If you want to see how the math works, check out Accounting Coach.)

Several income-focused mutual funds and closed-end funds do, in fact, pay monthly. But most are concentrated in low-yielding bonds, and if you're like me, you prefer to hand pick the best dividend stocks for both income growth and capital appreciation.

The good news: There are actually quite a few monthly dividend stocks to choose from. Let's take a look at some of my favorites.

Best Monthly Dividend Stocks - Realty Income

Dividend Yield: 5.9%

The first of our monthly dividend stocks is a REIT that calls itself the “Monthly Dividend Company” — Realty Income (O).

Realty Income paid its first dividend in 1970, before it was publicly traded, and hasn't slowed down since. It's paid 519 consecutive monthly dividends and raised its dividend 73 times — and in 64 consecutive quarters. That definitely makes Realty Income not just one of the best monthly income stocks, but one of the best dividend stocks period.

Since 1994, when Realty Income started trading on the NYSE, the REIT's annualized dividend has risen from 90 cents per share to $2.18 per share. At its current price, that amounts to a dividend yield of 5.9%.

Realty Income is one of those rare monthly dividend stocks that I believe you can truly buy, put in a drawer, and forget about for years. As a conservative, triple-net REIT, it's what I would call an “Armageddon-proof” investment. It owns a diversified portfolio of 3,800 properties across 49 states that are rented under long-term leases primarily to high-quality tenants.

The “typical” property for Realty Income would be your local Walgreens (WAG) or CVS (CVS) pharmacy — a high traffic, highly visible location that you pass on your daily commute. And under a triple-net lease, it is the tenant’s responsibility to take care of the property and to pay the taxes and expenses.  The landlord's only role is to collect the rent check. Not bad work, if you can find it.

I recently listed Realty Income as a stock you can “buy and hold forever,” and I would reiterate that recommendation today.

Best Monthly Dividend Stocks - American Capital Realty Properties

Dividend Yield: 7.6%

Next on the list of monthly dividend stocks is one of Realty Income's upstart competitors, American Capital Realty Properties (ARCP).

I call ARCP an “upstart” due to its short trading history (it's only been trading since 2011).  But the truth is, after its merger with Cole Properties (COLE), ARCP will be the largest triple-net REIT by market cap, and its total square footage will be nearly double that of Realty Income. And while ARCP stock has a short history, its executive team has an average of 20 years experience in the industry.

Because of its shorter trading history, this monthly dividend stock trades at a decent-sized discount to Realty Income. Based on its last monthly dividend of 8 cents, ARCP is one of the best dividend stocks, yielding 7.6%. That kind of yield is hard to come by these days unless you're willing to accept some pretty significant risk.

Writing for Barron's earlier this month, Vito Racanelli suggested that ARCP stock was 20% to 40% undervalued relative to its peers. I would agree, but I would also mention that I consider its peers (such as Realty Income) to be attractively priced as well.

If you're buying the stock for income, capital appreciation is a secondary concern. Still, no one complains when an income stock (especially one of our monthly dividend stocks) ends up generated high capital gains.

Best Monthly Dividend Stocks - Banco Bradesco and Banco Itau

Dividend Yield: 4.9% and 3.9%, respectively

And speaking of top dividend stocks with high capital gains potential, next on the list of are Brazilian banking groups Banco Bradesco (BBD) and Banco Itau (ITUB) — two monthly dividend stocks you must consider.

Sure, it's a little bit of a stretch to call Bradesco and Itau true “monthly dividend stocks.” Both are indeed stocks that pay dividends monthly, but the monthly dividends are pretty modest (the last monthly dividends were each under 1 cent). Much larger dividends are paid semiannually, giving the banks respectable trailing 12-months yields of 4.9% for BBD stock and 3.9% for ITUB stock. Still, the fact that these are monthly dividend stocks instills discipline in management, and I respect the nod to shareholder friendliness.

It has not been a kind year for investors in Latin America and in Brazil in particular. Most stock averages in the region are down for the year. The Brazilian currency, the real, started 2013 grossly overpriced, and slowing in China has taken the wind out of Brazil's sails.

But with 2013 now drawing to a close, the real is reasonably priced again, and much of the hot money has fled the region. If China picks up steam in 2014 — and I expect that it will — then I expect the Brazilian economy to come back to life.

And I expect investors to rediscover the region, along with these two monthly dividend stocks.

Best Monthly Dividend Stocks - Whitestone REIT

Dividend Yield: 8.7%

Returning to U.S. shores, the next of our monthly dividend stocks is Whitestone REIT (WSR), a smaller REIT that specializes in shopping centers.

I should start by making one point very clear: while I like Whitestone, it is a very different kind of REIT than Realty Income or American Realty Capital Properties. Its property portfolio is far less geographically diversified (with properties in just three states), and it is a much smaller company by market cap ($290 million).

Still, despite its small size, Whitestone has been inking deals with some heavy hitters of late, including Wal-Mart (WMT). And with the U.S. economy slowly shifting back into growth mode, Whitestone should decent rent growth going forward in its retail properties.

Whitestone currently yields 8.7%, making it the highest-yielding name on this list of monthly dividend stocks. Part of this is due to its lack of dividend growth; the stock has paid 9.5 cents per month since September of 2010.

I'm OK with that, though. As investors in monthly dividend stocks, we can collect that monthly dime per share indefinitely, reinvesting it to grow our share count.

Best Monthly Dividend Stocks - Student Transportation Inc.

Dividend Yield: 8.4%

Hot Blue Chip Stocks To Buy Right Now

Finally, for an off-the-wall pick, consider picking up shares of Student Transportation (STB), North America's third-largest operator of school buses.  Student Transportation doesn’t just operate more than 10,000 school buses and transport more than a million students daily across the United States and Canada. It’s a monthly dividend stock with a solid yield.

STB stock currently yields about 8.4%. But this is a riskier play than the other monthly dividend stocks on this list for a couple reasons. First, because the company has been aggressively expanding in recent years and has all of the expenses associated with rapid expansion, Student Transportation has been paying a decent chunk of its dividend from new debt issuance. This puts the dividend at risk if the capital markets tighten up or if expected growth fails to materialize.

And secondly, a decent chunk of the company's sales come from Canada, where it is headquartered, so currency risk is also an issue. I believe there is a good chance that the dollar will rally in 2014 as the Fed scales back its quantitative easing. This could cause Student Transport's dividend to fall slightly in U.S. dollar terms.

Still, while a little riskier than some of the other monthly dividend stocks, I like STB stock as a portfolio diversifier and I believe that its dividend is safe for at least the next several quarters.

Charles Lewis Sizemore, CFA, is the editor of Macro Trend Investor and chief investment officer of the investment firm Sizemore Capital Management. As of this writing, he was long O, ARCP and WMT. Click here to receive his FREE weekly e-letter covering market insights, global trends, and the best stocks and ETFs to profit from today's exciting megatrends.

U.S. stock futures trade flat

U.S. stock futures were moving in and out of positive territory on Wednesday as jitters set in at the prospect of an easing monetary policy.

"Markets have started to factor in the prospect of Fed tapering at the December meeting," said Daniel Martin of Capital Economics.

Ahead of the bell, Dow Jones industrial average index futures were up 0.1%, but Standard & Poor's 500 index and Nasdaq index futures slipped 0.1%.

The Federal Reserve's policy-making Federal Open Market Committee is scheduled to meet Dec. 17-18 in Washington.

The central bank's $85 billion of monthly bond purchases have kept U.S. interest rates low to encourage economic recovery but also sent a flood of money into stock markets worldwide in search of higher returns.

5 Best Low Price Stocks To Own Right Now

Asian stocks were mostly down Wednesday.

Japan's Nikkei 225 index fell 0.6% to 15,515.06 and Hong Kong's Hang Seng index dropped 1.5% to 23,387.68.

On Wall Street, stocks fell modestly Tuesday as investors took a breather from a string of record highs. The Dow fell 0.3% to 15,973.13. The S&P 500 lost 0.3% to 1,802.62. The Nasdaq composite shed 0.2% to 4,060.49.

TUESDAY: Dow falls below 16,000 as stocks pull back a bit

Benchmark U.S. crude for January delivery was down 3 cents to $98.48 in electronic trading on the New York Mercantile Exchange. The contract gained $1.17 to close at $98.51 on Tuesday.

Contributing: Associated Press

Top 5 China Stocks For 2014

Consistency ain't easy to come by in the markets. Still, the Dow Jones Industrial Average (DJINDICES: ^DJI  ) had been on a four-day win streak coming into Friday, and very nearly carried that momentum into the weekend. Ending less than a tenth of a point lower, at 14,865, Wall Street seemed to think that valuations were pretty fair, ahead of major earnings reports next week -- with a few exceptions:

Home Depot (NYSE: HD  ) got a big boost from a Jefferies analyst today, who raised the price target on the stock by 33%. While today's 2.4% gains were good enough for tops in the Dow, it's simply more of the same for the do-it-yourself home improvement outlet, whose shares have added 45% in the last year. A recovery in the housing market remains the major upside catalyst, but the analyst also thinks management could increase share buybacks.

Fast food behemoth McDonald's (NYSE: MCD  ) , one of the 11 Dow components set to announce earnings next week, added 1.6% Friday, briefly reaching 52-week highs. The company brought back former executive Steve Easterbrook to manage its global brand today. While the position may sound like a breeze -- most consumers seem to have a pretty good idea of what they're getting from Mickey D's -- recent concerns from China about an avian flu health scare threaten to harm the company's image, and its growth in Asia.

Top 5 China Stocks For 2014: 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.

Top 5 China Stocks For 2014: Suntech Power Holdings Co. LTD.(STP)

Suntech Power Holdings Co., Ltd., a solar energy company, engages in the design, development, manufacture, and marketing of photovoltaic (PV) products. The company also provides engineering, procurement, and construction services to building solar power systems for certain related party and third party customers. Its products include monocrystalline and multicrystalline silicon PV cells; PV modules; and building-integrated photovoltaics products. In addition, the company provides PV system integration services, including designing, installing, and testing PV systems used in lighting for outdoor urban public facilities, as well as in farms, villages, and commercial buildings; and project development services. Its products are used to provide electric power for residential, commercial, industrial, and public utility applications. The company sells its products through value-added resellers, such as distributors and system integrators; and to end users, such as project develo pers primarily in Germany, Italy, Spain, France, Benelux, Greece, the United States, Canada, China, the Middle East, Australia, and Japan. Suntech Power Holdings Co., Ltd. is headquartered in Wuxi, the People?s Republic of China.

Advisors' Opinion:

• [By Paul Ausick]

  Provided that the Chinese government either encourages or permits consolidation, any of these three could be an acquirer. The likeliest target, of course, is SunTech Power Holdings Co. Ltd. (NYSE: STP), which is reorganizing and which the government has already seemed to give up on. Other possible targets include ReneSola Ltd. (NYSE: SOL) and JinkoSolar Holding Co. Ltd. (NYSE: JKS).

• [By Travis Hoium]

  Stick with quality
  LDK Solar and Suntech Power (NYSE: STP  ) have already defaulted on debt, and the most leveraged Chinese manufacturers may follow others into full on bankruptcy (Suntech's subsidiary is already bankrupt, but the parent company isn't). Betting on leverage and hope for a recovery in China is a dangerous game, and investors should stick with high-quality manufacturers.

• [By Travis Hoium]

  It's been a little over a month since Suntech Power (NYSE: STP  ) refused to pay bondholders the money they were owed, which eventually left the company's Chinese operations in insolvency. The company isn't quite bankrupt yet, but all indications are that it's headed that way, because even Chinese banks want to liquidate operations.

• [By Travis Hoium]

  Case and point is the accounting fiasco that's brought Suntech Power (NYSE: STP  ) to its knees. The company's investment in Global Solar Fund S.C.A. unraveled last year and the company suddenly disclosed hundreds of millions of dollars in liabilities that investors weren't expecting. The stock has plunged, Suntech has missed debt payments, and the company's largest subsidiary is now in bankruptcy.

Top 10 Safest Stocks To Watch For 2014: 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 Kevin Chen]

  Two companies that seem on an unstoppable path of profits are Giant Interactive� (NYSE: GA  ) and NetEase (NASDAQ: NTES  ) .�Meanwhile, Shanda Games� (NASDAQ: GAME  ) and Perfect World� (NASDAQ: PWRD  ) haven't done as well.

• [By Rick Munarriz]

  Tuesday
  Perfect World (NASDAQ: PWRD  ) logs in with its quarterly results on Tuesday.

  Online gaming is hot in China, but Perfect World has seen better days. Analysts see revenue sliding 15% for the quarter, with earnings taking an even bigger 46% hit. Despite the uninspiring fundamentals, shares of Perfect World did hit a fresh 52-week high this past week. There are some potentially promising games in the pipeline, so clearly the market thinks Perfect World will turn things around.

• [By Paul Ausick]

  Before markets open Tuesday morning we are scheduled to hear results from Perfect World Co. Ltd. (NASDAQ: PWRD), Urban Outfitters Inc. (NASDAQ: URBN), Barnes & Noble Inc. (NYSE: BKS) which announced a new video app today, Best Buy Co. Inc (NYSE: BBY) which is included in our preview of this week�� results from retailers, Dick�� Sporting Goods Inc. (NYSE: DKS), Home Depot Inc. (NYSE: HD), J.C. Penney Co. Inc. (NYSE: JCP), and Trina Solar Ltd. (NYSE: TSL).

• [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.

Top 5 China Stocks For 2014: Bitauto Holdings Limited (BITA)

Bitauto Holdings Limited provides Internet content and marketing services for the automotive industry primarily in the People?s Republic of China. The company offers subscription services to new automobile dealers that enable them to list pricing and promotional information on its bitauto.com Website and partner Websites, and to interact with consumers through its virtual call center, as well as provides advertising service to dealers and automakers on its bitauto.com Website. It also offers listing services to used automobile dealers, which enable them to display used automobile inventory information through its ucar.cn Website and partner Websites; and advertising services to used automobile dealers and automakers with certified pre-owned automobile programs on its ucar.cn Website. In addition, the company provides digital marketing solutions, including Website creation and maintenance, online public relationship, online marketing campaigns, and advertising agent service s. Bitauto Holdings Limited was founded in 2000 and is headquartered in Beijing, the People?s Republic of China.

Advisors' Opinion:

• [By Evan Niu, CFA]

  What: Shares of Bitauto (NYSE: BITA  ) have plunged today by as much as 18% after the company reported first-quarter earnings.

  So what: Revenue in the first quarter added up to $38.6 million, which translated into non-GAAP profits of $3.7 million. The top and bottom lines were up 34.6% and 29.1% relative to a year ago, but investors were still left wanting more. The results were in line with Bitauto's guidance.

Top 5 China Stocks For 2014: Trina Solar Limited(TSL)

Trina Solar Limited, through its subsidiaries, designs, develops, manufactures, and sells photovoltaic (PV) modules worldwide. The company offers monocrystalline PV modules ranging from 165 watts to 185 watts in power output; and multicrystalline PV modules ranging from 215 watts to 240 watts in power output that provide electric power for residential, commercial, industrial, and other applications. It also involves in the design and production of various PV modules, such as colored modules for architectural applications and larger sized modules for utility grid applications based on customers? and end-users? specifications. Trina Solar Limited sells and markets its products primarily to distributors, wholesalers, power plant developers and operators, and PV system integrators. The company was founded in 1997 and is based in Changzhou, the People?s Republic of China.

Advisors' Opinion:

• [By Travis Hoium]

  Solar tariffs in Europe started at a low 11% rate last week, but if a deal between Europe, China, and even the U.S. isn't reached by Aug. 6 then they could go up to as much as 68%. This is clearly a negative development for Chinese manufacturers like Yingli Green Energy (NYSE: YGE  ) , LDK Solar (NYSE: LDK  ) , and Trina Solar (NYSE: TSL  ) , but it's not necessarily good for U.S. companies either. First Solar (NASDAQ: FSLR  ) has little presence in Europe right now and SunPower (NASDAQ: SPWR  ) won't see much benefit from tariffs either. In the end, tariffs are bad for nearly everyone, a sentiment Travis Hoium covers in the video below.�

Get Free Shipping on Online Holiday Purchases

There's a good chance you can avoid paying shipping costs on holiday gifts purchased online this year. More than 600 retailers already have signed up to participate in Free Shipping Day on December 18.

SEE ALSO: Why You Should Do Your Holiday Shopping Online

This year every merchant participating in this annual event will offer free shipping on all orders, with guaranteed delivery by Christmas Eve. Last year, at least one-third of the merchants had minimum purchase requirements. The homepage of Freeshippingday.com lists the participating merchants, however some may not be featured on the site until December 18 because they don't want consumers to know in advance that they'll be offering free shipping (so they'll continue shopping now), says Luke Knowles, creator of Free Shipping Day. He does expect many big-name retailers that have participated in the past but aren't listed on the site now to take part in Free Shipping Day. Also, many retailers will offer special discounts in addition to free shipping.

If you don't want to wait until December 18 to do your holiday shopping or the retailer of your choice isn't participating in Free Shipping Day, you might be able to get free shipping on orders now.

Top 10 Dividend Stocks To Buy For 2014

Some retailers, such as Zappos.com and Nordstrom.com offer free shipping all the time. And several retailers have been running free shipping offers (some with minimum purchase requirements) as part of holiday promotions. You also can find free shipping codes and coupons at FreeShipping.org.

Or you might be able to avoid paying for shipping by having your purchases shipped to a retailer's brick-and-mortar store. Best Buy, Target, Toys"R"Us and Walmart are among the merchants that have free in-store pickup.

Before jumping at a free-shipping deal, though, make sure you're getting the best price for an item. Use a price comparison site, such as Amazon.com or PriceGrabber.com, or the browser add-on PriceBlink to see whether another retailer is offering a similar item at a price that's low enough for you to come out ahead even without free shipping (if it isn't offered).