Should I Buy Royal Dutch Shell or SSE?

LONDON -- Energy producer Royal Dutch Shell  (LSE: RDSB  ) (NYSE: RDS-B  ) and utility firm SSE  (LSE: SSE  ) (NASDAQOTH: SSEZY  ) are both FTSE 100 income stalwarts, with dividend yields of 5% or more.

I already own shares in both companies, but would like to top up my holding in one of them. Which company currently looks the better buy?

Shell vs. SSE
Let's start with a look at a few key figures for each company:

 

Royal Dutch
Shell

SSE

Price-to-earnings ratio	8.1	13.2
Dividend yield	5.1%	5.4%
5-year average dividend growth rate	3.6%	7.8%
1-year share price growth	10.9%	18.3%

The FTSE 100 has risen by 25% over the last year, meaning that despite decent gains, the share prices of both SSE and Shell have underperformed the index.

However, SSE has been the stronger performer of the two, probably helped by its 14-year record of above-inflation dividend growth. SSE's dividend has grown by an average of 7.8% per year over the last five years -- more than twice Shell's dividend growth.

I think that SSE's current P/E of 13.2 is sufficient for a firm that cannot be expected to deliver strong growth, but Shell's current P/E of just 8.1 looks very attractive to me, especially given the firm's 5.1% dividend yield.

What's next?
If government bond yields start to rise, then utility shares tend to fall in order to preserve their yield advantage over bonds. We've seen this happening this week -- so are utility stocks about to slide, and is Shell about to come back into favor?

Analysts' forecasts are notoriously unreliable, but FTSE 100 companies generally get the benefit of the most comprehensive analysis, and tend to deliver fewer surprises than smaller companies.

With that in mind, let's take a look at some forward-looking numbers for these firms' current financial years:

 

Royal Dutch
Shell

SSE

Forecast P/E ratio	8.3	13.2
Forecast dividend yield	5.1%	5.6%
Forecast dividend growth	8.1%	4.5%
Forecast earnings growth	10%	1.5%

Analysts are expecting Shell to increase its full-year dividend by 8.1% this year. The firm's first-quarter dividend rose by 5%, so an 8% increase over the whole year doesn't look unrealistic.

Although lower, SSE's forecast dividend increase of 4.5% should keep its payout firmly ahead of inflation, and equates to a juicy prospective yield of 5.6%, at the firm's current share price of 1,560 pence.

Which share should I buy?
As a shareholder in both companies, my aim is to top up my holdings at the most attractive prices possible, with a view to long-term capital appreciation and a rising dividend yield on cost.

Based on this, the decision is easy: Shell is a better buy than SSE at current prices, and will probably be the next addition to my portfolio.

The best FTSE 100 dividends?
Shell and SSE are both tempting income buys, but neither of them was selected for the Motley Fool's latest special report, "5 Shares to Retire on"

The Fool's team of expert analysts crunched the numbers on every share in the FTSE 100 when researching this free report, and the five companies they chose all offer high-quality, reliable dividends.

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Does Honeywell Pass Buffett's Test?

We'd all like to invest like the legendary Warren Buffett, turning thousands into millions or more. Buffett analyzes companies by calculating return on invested capital, or ROIC, to help determine whether a company has an economic moat -- the ability to earn returns on its money above that money's cost.

In this series, we examine several companies in a single industry to determine their ROIC. Let's take a look at Honeywell International (NYSE: HON  ) and three of its industry peers to see how efficiently they use cash.

Of course, it's not the only metric in value investing, but ROIC may be the most important one. By determining a company's ROIC, you can see how well it's using the cash you entrust to it and whether it's actually creating value for you. Simply put, it divides a company's operating profit by how much investment it took to get that profit. The formula is:

ROIC = net operating profit after taxes / Invested capital

(Get further detail on the nuances of the formula.)

This one-size-fits-all calculation cuts out many of the legal accounting tricks (such as excessive debt) that managers use to boost earnings numbers, and it provides you with an apples-to-apples way to evaluate businesses, even across industries. The higher the ROIC, the more efficiently the company uses capital.

Ultimately, we're looking for companies that can invest their money at rates that are higher than the cost of capital, which for most businesses is between 8% and 12%. Ideally, we want to see ROIC above 12%, at a minimum, and a history of increasing returns, or at least steady returns, which indicate some durability to the company's economic moat.

Here are the ROIC figures for Honeywell and three industry peers over a few periods.

Company

TTM

1 Year Ago

3 Years Ago

5 Years Ago

Honeywell	12.8%	9%	8.6%	12.5%
Johnson Controls (NYSE: JCI  )	5.7%	7.5%	8.6%	9.8%
BorgWarner (NYSE: BWA  )	12.7%	13.6%	5.9%	8.3%
Exide Technologies (NASDAQ: XIDE  )	2.9%*	5.4%*	4.7%*	4.1%*

Source: S&P Capital IQ. TTM = trailing 12 months.

*Because Exide Technologies did not report an effective tax rate for any of the listed years, we used a 25% rate.

Both Honeywell and BorgWarner meet our 12% threshold for attractiveness. But while BorgWarner shows significant growth in its returns from five years ago, Honeywell's returns are roughly the same as they were then. Johnson Controls' and Exide's returns are less than half of our 12% threshold, and both offer lower current returns than they had five years ago.

In 2012, Honeywell benefited from its exposure to some of the most resilient areas of a struggling economy. This year, the company is likely to suffer from the possibility that one of its largest clients, Boeing (NYSE: BA  ) , will not be able to meet its commitments due to labor disputes and problems with its 787 Dreamliner. However, Honeywell does have other clients, including Textron, that may help cushion any hits associated with cuts in demand from Boeing.

Johnson Controls is involved in both the building control and HVAC market and in the auto components market. Johnson controls serves some of the biggest automobile companies, including Ford (NYSE: F  ) and General Motors (NYSE: GM  ) . However, as the competitive position of these companies weakens, Johnson Controls needs to find new growth opportunities. While the company tried to improve its competitive position through the acquisition of A123 Systems' assets, it lost out to Chinese company Wanxiang America. While this failed bid may have been bad for Johnson Controls, it was good for Exide, which will not suffer from the competitive advantages Johnson would have gained through this acquisition.

Like Johnson Controls, BorgWarner also benefits from its relationship with large automobile companies like Ford. However, it also faces pressure to continue offering the best technological innovations and keeping costs down in order to maintain its supplier relationship with these companies.

Businesses with consistently high ROIC show that they're efficiently using capital. They also have the ability to treat shareholders well, because they can then use their extra cash to pay out dividends to us, buy back shares, or further invest in their franchise. And healthy and growing dividends are something that Warren Buffett has long loved.

It's Time to Buy Xerox Stock. Here's Why.

It might not be obvious to the casual observer, but right now, today, Xerox (NYSE: XRX  ) stock offers one of the best values available in the IT industry. Why?

Three reasons.

Xerox stock is cheap
When you stack up Xerox stock against two of its rivals in the international "business process outsourcing" industry -- Accenture (NYSE: ACN  ) and IBM (NYSE: IBM  ) -- it's clear that Xerox is one of the cheapest options out there. Its 9.7 price-to-earnings ratio falls 32% below the P/E of IBM. It sells for a whopping 45% discount to the price of a share of Accenture.

And as is so often the case, with a low valuation comes a big boost in dividend yield. Xerox stock currently yields a tidy 2.6% dividend. That's as compared with Accenture and IBM, both of which yield less than 2%.

Xerox: A cheap price for low expectations
Why aren't investors paying up for Xerox stock (yet)? Part of the reason, one presumes, is because no one's expecting the stock to do very much over the next five years. Of the three firms named, Xerox currently sports the lowest projected growth rate.

But while that sounds bad, if you turn this fact on its head, low expectations might actually turn out to be good news for investors in Xerox stock. After all, if no one's expecting much growth out of the company, then Xerox has a low hurdle to clear.

It has to be easier for Xerox stock to exceed expectations for 6.7% earnings growth, after all, than it will be for Accenture to deliver better than 11.4% growth. (And with sales growth alone having averaged 5.4% annually over the past five years, there's every reason to believe Xerox can at least hit its targets going forward).

Xerox stock pays you best
Perhaps most important to investors, though, is the simple fact that out of the three big IT companies discussed here, Xerox is the one generating the most cash from its business -- and it gives you the biggest free cash flow bang for your buck.

Measured by dividing a company's market capitalization (the price you pay for Xerox stock) into its free cash flow (the money your investment generates for you), Xerox offers investors easily the best "free cash flow yield" of the three companies named. Put even more simply, for every $1 you invest in a share of Xerox stock today, you can expect the company to generate nearly 17.4 cents worth of real, cash profits on your investment.

XRX Free Cash Flow Yield data by YCharts

Xerox may ultimately use this cash to pay you bigger dividends (although its 2.6% dividend is already pretty big), to buy back shares (increasing the size of your stake in the company for every share it takes off the table), or to reinvest in its business and maintain its lead over rivals for years to come. Any way you look at it, though, Xerox's ability to generate cash offers investors a great reason to invest.

And that, Fools, is the reason I think now's a great time to buy Xerox stock.

If you're an investor who prefers returns to rhetoric, you'll want to read The Motley Fool's new free report "5 Dividend Myths ... Busted!" In it, you'll learn which stocks provide premium growth and whether bigger dividends are better. Click here to keep reading.

Does Exelon Pass Buffett's Test?

We'd all like to invest like the legendary Warren Buffett, turning thousands into millions or more. Buffett analyzes companies by calculating return on invested capital, or ROIC, to help determine whether a company has an economic moat -- the ability to earn returns on its money above that money's cost.

In this series, we examine several companies in a single industry to determine their ROIC. Let's take a look at Exelon (NYSE: EXC  ) and three of its industry peers to see how efficiently they use cash.

Of course, it's not the only metric in value investing, but ROIC may be the most important one. By determining a company's ROIC, you can see how well it's using the cash you entrust to it and whether it's actually creating value for you. Simply put, it divides a company's operating profit by how much investment it took to get that profit. The formula is:

ROIC = net operating profit after taxes / Invested capital

(Get further detail on the nuances of the formula.)

This one-size-fits-all calculation cuts out many of the legal accounting tricks (such as excessive debt) that managers use to boost earnings numbers, and it provides you with an apples-to-apples way to evaluate businesses, even across industries. The higher the ROIC, the more efficiently the company uses capital.

Ultimately, we're looking for companies that can invest their money at rates that are higher than the cost of capital, which for most businesses is between 8% and 12%. Ideally, we want to see ROIC above 12%, at a minimum, and a history of increasing returns, or at least steady returns, which indicate some durability to the company's economic moat.

Here are the ROIC figures for Exelon and three industry peers over a few periods.

Company

TTM

1 Year Ago

3 Years Ago

5 Years Ago

Exelon	2.8%	3.7%	6.5%	7.2%
Southern (NYSE: SO  )	4.3%	4.8%	5.1%	5.2%
Duke Energy (NYSE: DUK  )	3.1%	3.9%	3.1%	3.9%
Dominion Resources (NYSE: D  )	5%	5.1%	5.2%	4.5%

Source: S&P Capital IQ. TTM=trailing 12 months.

Dominion Resources has the highest returns on invested capital at 5%, and it has maintained returns close to those rates over the past five years. Exelon and Duke Energy both offer 3% or so returns on invested capital. While Duke has managed to keep its returns close to the 3% range over the past five years, Exelon's returns have steadily declined over the five-year period. Southern has performed a bit better, but it too has seen ROIC decline over the past five years.

Exelon has exposure to a wide range of energy sources, including nuclear, renewable, and fossil-fuel energy. This helps shelter the company from declines in demand for a particular energy source. For example, new regulations requiring coal-fired plants to convert to gas-fired plants initially looked like they would deal a much larger blow to companies like Southern and Duke, which relied heavily on fossil fuels, than it did to the more diversified Exelon.

However, significant declines in natural gas prices later allowed these rivals to lower production costs to make up for the expenses associated with these conversions, which undermined Exelon's competitive advantage. Increased demand related to lower natural gas prices has also helped Dominion as it delivers natural gas to individual consumers through its utility business and transports and stores natural gas through its pipelines and storage systems.

Businesses with consistently high ROIC show that they're efficiently using capital. They also have the ability to treat shareholders well, because they can then use their extra cash to pay out dividends to us, buy back shares, or further invest in their franchise. And healthy and growing dividends are something that Warren Buffett has long loved.

 

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3 Secret Winners From Natural Gas Exports

Is It Time to Buy This Under-the-Radar Refiner?

I've been following refining outfit PBF Energy (NYSE: PBF  ) pretty closely since its IPO in December. I'll be very honest: I like this company. However, its fourth-quarter earnings were an incomplete picture, given it had spent all of two weeks as a public company, and I've been waiting for its first-quarter results to see how public status is treating PBF, and how it is faring in the market overall. Today I'll look at how things panned out, and whether or not this refiner is all it's cracked up to be. (There will be no more refining puns.)

Q1 results
PBF reported strong first-quarter results, including a dramatic turnaround in operating income. The refiner recorded $100 million, compared to a loss of $164 million last year. Adjusted net income came in at $46.7 million, compared to a loss of $122.6 million in 2012.

Despite this, management was still disappointed in earnings, citing down-time at its Toledo facility because of a fire as one reason, and the rising cost of ethanol credits as another. PBF estimated the drag on EBITDA from these two factors was more than $90 million.

The other important thing to note, obviously, is margin. Gross margin averaged $9.13 per barrel, breaking out by region to $19.50 per mid-continent barrel and $5.14 per East Coast barrel. The East Coast market is known to be the bane of the refining industry, and we can see that clearly when we compare Valero's (NYSE: VLO  ) higher system-wide average price of $10.59 per barrel.

PBF even had a higher mid-continent price per barrel than Valero, who recorded $17.41, but it was not enough to overcome the East Coast price. For the record, both companies were blown away by mid-continent refiner HollyFrontier (NYSE: HFC  ) , which recorded gross margin of $23.32 per barrel.

Looking ahead
PBF anticipates doubling its budgeted spending on those troublesome ethanol credits, known as RINS, from $60 million to $120 million, but it also expects to recoup a significant portion of that in higher fuel costs. That is more or less a non-issue as far as I'm concerned. What I am more focused on is the East Coast margin story, so let's take a closer look at that.

PBF delivered an average of 17,000 barrels per day of Canadian heavy crude by rail in the first quarter, and 38,000 barrels of Bakken crude, totaling 55,000 barrels per day via rail. The Bakken deliveries have already increased to 70,000 bpd, and second-quarter deliveries should reach 80,000 bpd, before hitting 100,000 bpd by the end of the year. Similarly, the Canadian crude volumes are expected to reach 24,000 bpd in the second quarter, before hitting 80,000 bpd by the end of the first quarter of 2014.

This is huge, and higher volumes of cheaper crude will go a long way toward driving up gross margin per East Coast barrel. Management is expecting improved results from East Coast operations in the second quarter.

Buy or watch?
There are external factors that affect PBF that investors can't know or control, like oil prices, but there really is a lot to like about the future of PBF Energy, including the increase of domestic feedstock at its East Coast refineries, and the fact that PBF is ramping up its export game. The refiner expects to consistently ship 20,000-25,000 bpd of middle distillate to foreign markets. One last thing to keep in your back pocket: PBF is exploring the potential for a midstream spin-off, which could result in yet another revenue stream, as well as an additional investment opportunity for those who love master limited partnerships.

Given all of this, I would say at the very least PBF Energy presents an incredibly intriguing opportunity right now, and interested investors should get cracking on their research.

If you're on the lookout for some currently intriguing energy plays, check out The Motley Fool's "3 Stocks for $100 Oil." For FREE access to this special report, simply click here now.

Top Canadian Companies To Invest In 2014

Even as the market hits new highs, there are still plenty of good stocks out there to invest in these days. With oil prices still rather elevated and natural gas off its recent lows, energy stocks are a great place to place your hard-earned investing dollars. That's why the following three companies -- which have above-average shareholder payouts, excellent long-term growth prospects, and solid balance sheets -- top my list of the best stocks to invest in today.

ConocoPhillips (NYSE: COP  )
Among the large independent exploration and production companies, ConocoPhillips has the characteristics I look for in a long-term investment. The company has a steady growth plan, which will see it boost its production and margins by 3%-5% annually through 2017, with multiple opportunities to keep growing beyond that date. In addition to its exceptional growth opportunities here in the states, Conoco's operations span the globe, including positions in the Canadian oil sands, Australian natural gas exports, and European offshore oil. That diversification has helped keep the company from suffering the fate of many of its landlocked U.S.-based peers.�

Top Canadian Companies To Invest In 2014: Yamana Gold Inc.(AUY)

Yamana Gold Inc. engages in gold and other precious metals mining, and related activities, including exploration, extraction, processing, and reclamation. It also explores for copper, molybdenum, zinc, and silver metals. The company's portfolio includes 7 operating gold mines namely Chapada; El Pen Advisors' Opinion:

• [By Barker]

  I believe I have touted Yamana Gold's clear prowess as a deep-value favorite from every possible angle. With arguably the lowest downside risk of any stock in the sector, I join fellow value hounds in waiting patiently for the market to recognize the full value of these shares.

Top Canadian Companies To Invest In 2014: Everest Re Group Ltd.(RE)

Everest Re Group, Ltd., together with its subsidiaries, underwrites reinsurance and insurance in the United States (the U.S.), Bermuda, and international markets. The company operates in five segments: U.S. Reinsurance, U.S. Insurance, Specialty Underwriting, International, and Bermuda. The U.S. Reinsurance segment writes property and casualty reinsurance, on both a treaty and facultative basis, through reinsurance brokers, as well as directly with ceding companies within the United States. The U.S. Insurance segment offers property and casualty insurance primarily through general agents, brokers, and surplus lines brokers in the U.S. The Specialty Underwriting segment writes accident and health, marine, aviation, and surety business within the U.S. and worldwide through brokers and directly with ceding companies. The International segment offers non-U.S. property and casualty reinsurance. The Bermuda segment provides reinsurance and insurance to worldwide property and cas ualty markets and reinsurance to life insurers through brokers and directly with ceding companies, as well as offers reinsurance to the United Kingdom and European markets. The company was founded in 1973 and is based in Liberty Corner, New Jersey.

Top 10 Canadian Companies To Watch In Right Now: Celadon Group Inc.(CGI)

Celadon Group, Inc., through its subsidiaries, provides transportation services between the United States, Canada, and Mexico. It offers a range of truckload transportation services, including long-haul, regional, less-than-truckload, intermodal, and logistics services. The company transports various types of freight comprising tobacco, consumer goods, automotive parts, home products and fixtures, lawn tractors and assorted equipment, light bulbs, and various parts for engines. It also operates an e-commerce business that provides discounted fuel, tires, insurance, and other products and services to small and medium-sized trucking companies through its website, www.truckersb2b.com. In addition, the company provides warehousing and trucking services, as well as freight brokerage services. Celadon Group, Inc. was founded in 1985 and is based in Indianapolis, Indiana.

Advisors' Opinion:

• [By Cutler]

  Celadon Group, Inc. is engaged in the business of truckload carriers. As a dry van truckload carrier, the Company transports full trailer loads of freight from origin to destination without intermediate stops or handling. Its EPS forecast for the current year is 0.61 and next year is 0.93. According to consensus estimates, its topline is expected to grow 6.56% current year and 11.07% next year. It is trading at a forward P/E of 17.96. Out of 10 analysts covering the company, eight are positive and have buy recommendations, one has a sell recommendation and one has a hold rating.

Top Canadian Companies To Invest In 2014: Wells Fargo & Company(WFC)

Wells Fargo & Company, through its subsidiaries, provides retail, commercial, and corporate banking services primarily in the United States. The company operates in three segments: Community Banking; Wholesale Banking; and Wealth, Brokerage, and Retirement. The Community Banking segment offers deposits, including checking, market rate, and individual retirement accounts; savings and time deposits; and debit cards. Its loan products comprise lines of credit, auto floor plans, equity lines and loans, equipment and transportation loans, education loans, residential mortgage loans, health savings accounts, and credit cards. This segment also provides equipment leases, real estate financing, small business administration financing, venture capital financing, cash management, payroll services, retirement plans, loans secured by autos, and merchant payment processing services; purchases sales finance contracts from retail merchants; and a family of funds, and investment managemen t services. The Wholesale Banking segment offers commercial and corporate banking products and services, including commercial loans and lines of credit, letters of credit, asset-based lending, equipment leasing, international trade facilities, trade financing, collection services, foreign exchange services, treasury and investment management, institutional fixed-income sales, commodity and equity risk management, insurance, corporate trust fiduciary and agency services, and investment banking services. This segment also provides banking products for commercial real estate market, and real estate and mortgage brokerage services. The Wealth, Brokerage, and Retirement segment offers financial advisory, brokerage, and institutional retirement and trust services. As of December 31, 2010, the company served its customers through approximately 9,000 banking stores in 39 States and the District of Columbia. Wells Fargo & Company was founded in 1929 and is headquartered in San Franci sco, California.

Advisors' Opinion:

• [By Philip]

  Wells Fargo's (WFC) forward P/E was 7.9, based on Friday's closing price of $25.40 and consensus 2012 EPS estimate of $3.22. The shares trade just over the company's reported book value of $24.13, as of Sept. 30.

  Out of 895 publicly traded U.S. bank and thrift stocks -- excluding those trading on the Pink Sheets -- 273 trade for less than $5 a share, according to data supplied by SNL.

  We narrowed down the list down to 21 names with three-month daily average trading volume of more than 50,000 shares.

  We further pared the list to the five names with the most upside implied by mean price targets among analysts polled by FactSet, limiting the group to bank and thrift holding with "Buy" ratings from at least half the covering analysts.

• [By Elissa]

  Wells Fargo engages in banking, insurance, consumer services, mortgage, and investment activities in the United States and abroad. It acquired Wachovia in 2008 and now runs more than 9,000 stores worldwide.

Top Canadian Companies To Invest In 2014: Silver Wheaton Corp(SLW)

Silver Wheaton Corp., together with its subsidiaries, operates as a silver streaming company worldwide. The company has 14 long-term silver purchase agreements and 2 long-term precious metal purchase agreements whereby it acquires silver and gold production from the counterparties located in Mexico, the United States, Canada, Greece, Sweden, Peru, Chile, Argentina, and Portugal. Silver Wheaton Corp. is headquartered in Vancouver, Canada.

Advisors' Opinion:

• [By Christopher Barker]

  Parallel to my selection of major producer Goldcorp among my top 10 gold stocks for 2012, Silver Wheaton might appear a relatively conservative pick as compared to the stable of smaller-cap growth stories that fill out the rest of the list. But don't let Silver Wheaton's hefty market capitalization fool you; this is a stock from which I continue to expect multi-bagger gains as this long-term bull market for silver matures. What's more -- with an enterprise value that equates to just $5.63 per total-resource ounce of silver (or $10.77 per ounce of proven and probable silver reserves) the stock remains dirt cheap! It's not quite as cheap as it was when I treated readers to a truly uncommon opportunity just over 3 years ago, but just watch how this stock responds as the market comes to terms with the likelihood of silver penetrating the all-time high near $50 per ounce and blasting into fresh record territory. Keep in mind, Fools, that Silver Wheaton is targeting about a 70% production surge by 2015, to reach a monumental 43 million ounces of silver per year!

  Silver Wheaton has been a bit quiet lately with respect to adding new silver stream agreements to the pipeline, and personally I suspect the hiatus is likely linked to an adjustment of its signature rate structure (paying roughly $4 per ounce delivered into a stream agreement) to account for a much-transformed silver price environment. But I do note with interest the company's recent appointment of mining analyst Haytham Hodaly -- as senior vice president for corporate development -- to aid in the negotiation of new silver streams. I do not expect the pause to last through 2012, and view the prospects for one or two major new stream announcements as likely stock catalysts for 2012. And as Silver Wheaton's newly established dividend policy of distributing 20% of cash from operations collides with a rising silver price, I expect Silver Wheaton to remain a major focal point of global silver investment demand.

Top Canadian Companies To Invest In 2014: Innovaro Inc(INV)

Innovaro, Inc. provides a comprehensive portfolio of end-to-end innovation solutions primarily in the United States and the United Kingdom. It helps clients develop compelling strategies to drive and catalyze growth, source externally developed technologies, create added value from their intellectual property, and gain foresight into marketplace and technology developments that affect their business. The company operates in two segments, Strategic Services and Technology Services. The Strategic Services segment offers strategic innovation consulting; business model and product development consulting; identify and develop new segments and markets; and create and act on game-changing strategies. The Technology Services segment provides futures scenario development and planning; custom and syndicated research; online information services; IP consulting; IP and market landscape analysis; technology search; In- and out-licensing; online marketplaces; and partner search and prof iling services. Its clients include consumer goods, consumer packaged goods, retail, medical, telecommunications, chemicals, media, financial services, energy, utilities, and government agencies. The company was formerly known as UTEK Corporation and changed its name to Innovaro, Inc. in July 2010. Innovaro, Inc. is based in Tampa, Florida.

Advisors' Opinion:

• [By Bill]

  Formerly known as Utek Corp., Innovaro helps companies enhance their innovation capabilities and create value from their intellectual property.

  The stock spiked in February after Innovaro announced that it had entered into a consulting-services agreement with a major Asian telecommunications company. On Feb. 28 and March 22, following increased volume and a rapid increase in share price, Innovaro said the NYSE Amex had contacted the company and requested a press release regarding the increased market activity. Both times Innovaro declined to do so.

  Current Share Price: $3.12 (March 29)

  First Quarter Total Return: 118%

  Analyst Ratings: No Wall Street firm has coverage of Innovaro. In addition, TheStreet Ratings doesn't currently have a rating on Innovaro.

Has Masco Made You Any Real Money?

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

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

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

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

Over the past 12 months, Masco generated $112.0 million cash while it booked a net loss of $100.0 million. That means it turned 1.4% of its revenue into FCF. That doesn't sound so great.

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

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

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

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

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

With 84.9% of operating cash flow coming from questionable sources, Masco investors should take a closer look at the underlying numbers. Within the questionable cash flow figure plotted in the TTM period above, other operating activities (which can include deferred income taxes, pension charges, and other one-off items) provided the biggest boost, at 37.4% of cash flow from operations. Overall, the biggest drag on FCF came from capital expenditures, which consumed 52.9% of cash from operations.

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

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

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

Add Masco to My Watchlist.

Best Restaurant Companies To Invest In 2014

Starbucks (NASDAQ: SBUX  ) had better watch its back. Literally.

Earlier this month, the coffeehouse chain announced a plan to expand its business significantly in Indonesia and the Philippines, opening 100 new stores in the former over three years and 100 new stores in the latter over four. Today, the company's archrival, Dunkin' Brands (NASDAQ: DNKN  ) is following hard on Starbucks' heels with an announcement that it, too, is headed to Southeast Asia.

Granted, for now Dunkin' says it's only entering the Filipino market, and not Indonesia. Granted, too, Dunkin' is spearheading its move into the country with its Baskin-Robbins brand, rather than with its coffee-and-donut shops. But still -- where Starbucks has trodden, Dunkin' is following.

Dunkin' says its plan is to develop the B-R brand in the Philippines, opening as many as 50 stores in the island nation over the next five years. It's signed a master licensing agreement with local operator IceDream to help with the expansion, noting that the company has "a deep understanding of the Filipino consumer and a proven track record of success in the local restaurant industry."

Best Restaurant Companies To Invest In 2014: New Sage Energy Corp(NSG.V)

New Sage Energy Corp., a development stage company, focuses on the exploration and development of oil and gas properties in the U.S. Gulf States region and Latin America. The company was formerly known as Consolidated New Sage Resources Ltd. and changed its name to New Sage Energy Corp. in May 2007. New Sage Energy Corp. was incorporated in 1980 and is headquartered in Toronto, Canada.

Best Restaurant Companies To Invest In 2014: Consolidated Communications Holdings Inc.(CNSL)

Consolidated Communications Holdings, Inc., together with its subsidiaries, provides telecommunications services to residential and business customers in Illinois, Texas, and Pennsylvania. Its telecommunications services include local and long-distance services, high-speed broadband Internet access, standard and high-definition digital television, digital telephone services, custom calling features, private line services, carrier access services, network capacity services over its regional fiber optic network, and competitive local exchange carrier (CLEC) services. The company also offers telephone directory publishing services, wholesale transport services on its fiber-optic network in Texas, billing and collection services, inside wiring services, and maintenance services. In addition, it provides automated calling services for correctional facilities; and sells and supports telecommunications equipment, such as key, private branch exchange, and IP-based telephone system s to business customers in Texas and Illinois. The company serves residential customers, and universities and hospitals, as well as retail, commercial, light manufacturing, and service industry accounts in Illinois; manufacturing and retail industries, hospitals, local governments, and school districts in Texas; and small to mid-sized businesses, educational institutions, and healthcare facilities in Pennsylvania. As of December 31, 2011, it had 227,992 local access lines, 110,913 digital subscriber lines, 34,356 Internet protocol digital television subscribers, 9,199 voice over Internet protocol, and 89,774 CLEC access line equivalents. The company was founded in 1894 and is headquartered in Mattoon, Illinois.

Top Building Product Stocks To Buy Right Now: Park Electrochemical Corporation(PKE)

Park Electrochemical Corp., an advanced materials company, engages in the development, manufacture, marketing, and sale of high-technology digital and radio frequency/microwave printed circuit materials products principally for the telecommunications, Internet infrastructure, and high-end computing markets. It also provides advanced composite materials, parts, and assemblies for the aerospace markets; and involves in the design and manufacture of composite aircraft and space vehicle parts. The company?s printed circuit materials are used to fabricate complex multilayer printed circuit boards and other electronic interconnect systems, including back-planes, wireless packages, high speed/low-loss multilayers, and high density interconnects. It operates in North America, Europe, and Asia. The company was founded in 1954 and is headquartered in Melville, New York.

Best Restaurant Companies To Invest In 2014: Trinidad Energy Svcs Income(TDG.TO)

Trinidad Drilling Ltd. provides drilling, coring, and barge-drilling services to the oil and natural gas industry in North America. Its fleet consists of 54 land drilling rigs and 20 pre-set and coring rigs operating in Canada; 62 land drilling rigs and 5 barge drilling rigs that operate in the shallow waters of the Gulf of Mexico; and 3 drilling rigs operating in Mexico. The company was founded in 1996 and is headquartered in Calgary, Canada.

Best Restaurant Companies To Invest In 2014: Bacanora Minerals Ltd (BCN)

Bacanora Minerals Ltd. (Bacanora) is an exploration-stage company. The Company is a mining company engaged in exploration for mineral deposits in Mexico. The Company�� mineral properties include Tubutama Borate, Magdalena Borate and Sonora Lithium. The Company�� exploration activities include Borate Properties and Lithium Property. Mineramex Limited is the Company�� wholly owned subsidiary, whose assets consist of 99.9% interest of Minera Sonora Borax, S.A. de C.V. (MSB) and 60% interest of Minerales Industriales Tubutama, S.A. de C.V. (MIT). Tubutama Borate project consists of six mining concessions with a total area of 1,661 hectares. The concessions are located 15 kilometers from the town of Tubutama, and they are 100% owned by MIT. The Magdalena Borate project consists of seven concessions, with a total area of 15,508 hectares. The concessions are located 15 kilometers from the city of Magdalena and the city of Santa Ana, and are 100% owned by MSB.

Hot Companies To Own For 2014

Earnings season has begun, and next Tuesday Johnson & Johnson (NYSE: JNJ  ) will release its latest quarterly results. The key to making smart investment decisions on stocks reporting earnings is to anticipate how they'll do before they announce results, leaving you fully prepared to respond quickly to whatever inevitable surprises arise. That way, you'll be less likely to make an uninformed, knee-jerk decision.

Johnson & Johnson is a behemoth in the health care space, with a business that includes not only its well-known consumer health and personal-care products, but also a thriving pharmaceutical business and an extensive line of medical devices. The breadth of its offerings has given it a place among the Dow Jones Industrials (DJINDICES: ^DJI  ) . However, with so much going on at J&J, can the company hold itself together and take advantage of new growth opportunities? Let's take an early look at what's been happening with Johnson & Johnson over the past quarter and what we're likely to see in its quarterly report.

Hot Companies To Own For 2014: Severfield-reeve(SFR.L)

Severfield?Rowen Plc, together with its subsidiaries, engages in the design, fabrication, and erection of structural steelwork, claddings, and ancillary products in the United Kingdom and internationally. It offers design, structural and plated section fabrication, and erection services of structural steelwork for bridges, car parks, city centers and retail shops, commercial offices, education facilities, hospitals, industrial and process fields, stadiums and leisure facilities, power stations, residential buildings and hotels, transport and related facilities, and warehouse and distribution sectors. The company was formerly known as Severfield-Reeve Plc and changed its name to Severfield-Rowen Plc as a result of its acquisition of Rowen Structures in 1999. Severfield?Rowen Plc was founded in 1978 and is based in Thirsk, the United Kingdom.

Hot Companies To Own For 2014: Daimler AG (DDAIF.PK)

Daimler AG (Daimler), incorporated on May 6, 1998, develops, manufactures, distributes and sells a range of automotive products, mainly passenger cars, trucks, vans and buses. It also provides financial and other services relating to its automotive businesses. The Company offers its automotive products and related financial services primarily in Western Europe and in the North American Free Trade Agreement (NAFTA) region, which consists of the United States, Canada and Mexico. During the year ended December 31, 2009, the Company derived approximately 46% of its revenue from sales in Western Europe and 21% from sales in the United States. It operates in five segments: Mercedes-Benz Cars, Daimler Trucks, Mercedes-Benz Vans, Daimler Buses and Daimler Financial Services. Its other business interests consist primarily of its equity investments in the European Aeronautic Defence and Space Company EADS N.V. (EADS) and in Tognum AG. In October 2009, Deutsche Bank AG completed t he disposal of its interest in the Company. In June 2011, Daimler AG and Rolls-Royce Holdings PLC had secured around 94% interest in Tognum AG-DJ.

Mercedes-Benz Cars

Mercedes-Benz Cars designs, produces and sells Mercedes-Benz passenger cars, Maybach luxury sedans and smart micro compact passenger cars. During 2009, Mercedes-Benz Cars contributed approximately 51% of the Company�� revenue. The Company offers Mercedes-Benz passenger cars with a range of diesel and gasoline engines. Under the AMG brand, it offers versions of Mercedes-Benz vehicles with V8 or V12 engines in all classes, except in the A-, B-, R-, GL- and GLK-Classes. The Mercedes-Benz passenger car product range consists of S-Class, E-Class, C-Class, A-/B-Classes and ML-/R-/G-/GL-/GLK-Classes.

The S-Class is a line of luxury sedans, which are available in short and long wheelbase versions. In June 2009, the Company introduced a new generation of the S-Class sedans, includ ing a hybrid version, the new S 400 BlueHYBRID. The S-Clas! s ! sedans are complemented by the CL, a top-of-the-line two-door coupe, and the SL, a luxury roadster. The E-Class is a line of luxury sedans, coupes, convertibles and station wagons. It also offers the CLS, a four-door coupe based on the E-Class. The C-Class is a line of compact luxury sedans and station wagons. The CLC Sports Coupe and the SLK, a two-seat roadster, complement the C-Class product family.

The A-Class is a front wheel drive compact and the B-Class is a front wheel drive 4-door Compact Sports Tourer (CST). The Company does not offer the A- and B-Classes in the United States. The ML-Class is a line of sport utility vehicles with permanent all-wheel drive. The R-Class is a line of SUV Tourers, which is available in a short and a long wheelbase version. The GL-Class is a line of seven seat luxury sport utility vehicles. The GLK-Class is a line of compact sport utility vehicles. The G-Class is a line of cross country vehicles with permanent four-wheel d rive that come in a short and a long wheelbase version, and as a convertible. Under the Maybach brand, the Company offers a line of luxury sedans with outstanding luxury, comfort, and individuality. Maybach sedans are available in a short and a long wheelbase version, including the Maybach 57S and 62S as sportier variations. The smart brand represents a micro compact car concept. It offers two models, the smart fortwo coupe and the smart fortwo cabrio.

Daimler Trucks

Daimler Trucks manufactures and sells trucks and specialty vehicles under the brand names Mercedes-Benz, Freightliner, Western Star, Thomas Built Buses and Fuso. During 2009, Daimler Trucks contributed approximately 21% of its revenue. During 2009, the Company ceased production of trucks under the Sterling brand name. The Company�� European Mercedes-Benz truck lines consist of the Actros and the Axor in the heavy-duty category, the Atego in the medium-duty category, and the specialt y vehicles Econic and Zetros. The Unimog, a four-wheel! drive! v! ehicle ! for special purpose applications, complements the line-up. In Turkey and Brazil, it manufactures heavy-duty and medium-duty trucks for the respective local and certain export markets. Its Mercedes-Benz trucks range from 6 metric tons gross vehicle weight (GVW) to 41 metric tons GVW.

The Company�� United States subsidiary, Daimler Trucks North America LLC, manufactures trucks and buses (based on truck chassis) in Classes 3 through 8 (from 9,000 lbs. GVW to 160,000 lbs. GVW) and sells them under the Freightliner, Western Star, and Thomas Built Buses brand names, primarily in the NAFTA region. It also manufactures chassis for trucks, buses, walk-in vans and motor homes in Classes 3 through 7 (from 10,000 lbs. GVW to 33,000 lbs. GVW). During 2009, Freightliner introduced a new version of the Coronado, an on-highway truck. It Japan-based subsidiary, Mitsubishi Fuso Truck and Bus Corporation (MFTBC), offers a truck portfolio and several bus lines, primarily for the Japanese and other Asian markets. The line-up includes the Canter trucks (light-duty), the Fighter trucks (medium-duty) and the Super Great trucks (heavy-duty) and also certain bus models (Rosa and Aero). MFTBC also sells trucks in Africa, Australia, Europe, Latin America and the United States.

Mercedes-Benz Vans

Mercedes-Benz Vans designs, manufactures and sells vans under the brand names Mercedes-Benz and Freightliner. During 2009, Mercedes-Benz Vans contributed approximately 8% of its revenue. The Company offers three lines of Mercedes-Benz vans between 1.9 metric tons (t) and 7.5t gross vehicle weight (GVW): the Vario, the Vito/Viano and the Sprinter. In the NAFTA region it sells the Sprinter under the Freightliner brand name and, since January 1, 2010, also under the Mercedes-Benz brand name. As of December 31, 2009, subsidiaries of Chrysler Holding LLC sold the Sprinter in the United States under the Dodge and Freightliner brand names, and i n Canada under the Dodge brand name.

Daimler ! B! uses

!

Daimler Buses is a global supplier in the worldwide bus market. During 2009, Daimler Buses contributed approximately 5% of the Company�� revenue. Its product portfolio includes city buses, coaches, intercity buses, midi buses and bus chassis. It sells complete buses under the Mercedes-Benz and Setra brands in Europe, under the Mercedes-Benz brand name in Mexico, and under the Setra and Orion brand names in the United States and Canada. In addition, Daimler Buses produces and sells worldwide a range of bus chassis under the brand name Mercedes-Benz.

Daimler Financial Services

The Company�� financial services activities contributed approximately 15% of its revenue during 2009. It consists principally of financing and leasing services supporting its Mercedes-Benz and other vehicle businesses. The financial services the Company offers consist mainly of customized financing and leasing packages for its retail and wholesale customers in the automotive sector. It also provides financing to its dealers for vehicle inventory and property, plant and equipment purchases, and it offers insurance brokerage and fleet management services, including dealer property and casualty insurance. In Germany, the Company operates a licensed bank, the Mercedes-Benz Bank. The Mercedes-Benz Bank offers financial services to its customers and employees in Germany. These services include leasing and sales financing services, car savings plans, credit cards and demand deposit accounts. In addition, the Mercedes-Benz Bank operates branches in Great Britain and Spain to refinance the local dealer portfolios.

The Company competes with BMW, Volkswagen, Fiat, Ford, General Motors, PSA, Renault, Tata Motors, Toyota, Honda, Nissan, Suzuki, Scania, Iveco, Volvo, DAF, Navistar International, Paccar, Hino, Isuzu, MAN Commercial Vehicles, Irisbus and Agrale.

Hot Biotech Companies To Invest In Right Now: Exoma Energy Ltd (EXE.AX)

Exoma Energy Limited engages in the exploration of oil and gas properties in Australia. The company explores for conventional oil, shale oil, and gas and coal seam gas contained in coal and carbonaceous shales. Exoma Energy Limited holds a 50% interest in 5 exploration permits covering an area of approximately 27,000 square kilometers of the Eromanga and Galilee Basins in Central Queensland. The company is headquartered in Brisbane, Australia.

Hot Companies To Own For 2014: Red Robin Gourmet Burgers Inc.(RRGB)

Red Robin Gourmet Burgers, Inc., together with its subsidiaries, develops, operates, and franchises casual-dining restaurants in the United States and Canada. As of February 16, 2012, the company operated 465 Red Robin restaurants, including 328 company-owned restaurants and 137 restaurants operating under franchise agreements. Its restaurants offer gourmet burgers, as well as various salads, soups, appetizers, entrees, desserts, and signature Mad Mixology alcoholic and non-alcoholic specialty beverages Red Robin Gourmet Burgers, Inc. was founded in 1969 and is headquartered in Greenwood Village, Colorado.

Advisors' Opinion:

• [By Conrad]

  Red Robin Gourmet Burgers, Inc. (RRGB) is trading around $26.35. Red Robin is a gourmet burger restaurant based in Colorado. The relative strength index is about 65. The 50 day moving average is $23.78 and the 200 day moving average is $21.04. The fact that the 50 day moving average has crossed over the 200 dma indicates a bullish uptrend called a Golden Cross Formation. These shares have traded in a range between $16.85 to $29.10 in the last 52 weeks. RRGB is estimated to earn about $1 per share in 2011. You can see the repeated insider buying here.

  Who is buying at Red Robin: A number of insiders have been buying, mostly directors and the level of insider buying easily totals more than $100,000 in the past several weeks alone. This stock is trading well above the recent moving averages, so I would wait for pullbacks before considering a buy here.

Hot Companies To Own For 2014: Homeserve Ord 12 1/2p(HSV.L)

HomeServe plc provides home emergency and repair services to the household customers in the United Kingdom, France, Spain, and the United States. It offers services related to plumbing and drainage services, electrics, gas and oil central heating, external water supply pipe, internal gas supply pipe, appliance repairs, pest infestations, locksmith, and glazing repairs. The company offers home repair and appliance warranty policies through partnerships with utility companies and household appliance manufacturers. It serves approximately 4.9 million customers. The company was founded in 1993 and is based in Walsall, the United Kingdom.

Hot Companies To Own For 2014: Ku6 Media Co. Ltd.(KUTV)

Ku6 Media Co., Ltd. operates as an online video company in the People?s Republic of China. It operates ku6.com, an online video portal that provides news, reports, and other interactive entertainment programs for its users, as well as offers a video platform for sharing and watching user-generated content. The company also operates juchang.com that provides copyrighted content, such as movies, television series, and other video programs sourced from its content partners. In addition, it offers Internet audio solutions, including online radio channels, built-in radio for online games, and other services to customers through its online audio advertising business. The company is based in Beijing, China.

Are Same-Day Deliveries Bad for Shippers?

Same-day delivery remains an area of intense interest for eBay (NASDAQ: EBAY  ) and Google (NASDAQ: GOOG  ) . It offers the promise of almost instant gratification when shopping online, which could potentially drive more commerce online. Both of these companies have teamed up with local retailers in an effort to save on transportation costs and shipping time. If successful, this could threaten shippers like UPS (NYSE: UPS  ) and FedEx (NYSE: FDX  ) . In this video, Fool contributor Steve Heller sits down with Erin Miller to discuss what same-day deliveries could mean for shippers.

As one of the most dominant Internet companies ever, Google has made a habit of driving strong returns for its shareholders. However, like many other Web companies, it's also struggling to adapt to an increasingly mobile world. Despite gaining an enviable lead with its Android operating system, the market isn't sold. That's why it's more important than ever to understand each piece of Google's sprawling empire. In The Motley Fool's premium research report on Google, we break down the risks and potential rewards for Google investors. Simply click here now to unlock your copy of this invaluable resource.

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The Motley Fool's chief investment officer has selected his No. 1 stock for the next year. Find out which stock in our brand-new free report: "The Motley Fool's Top Stock for 2013." I invite you to take a copy, free for a limited time. Just click here to access the report and find out the name of this under-the-radar company.

1 Big Retailer Stumbles, Falls Behind

This morning's earnings release from Target (NYSE: TGT  ) contained a few surprises -- and not the good kind. The retailer failed to hit the bar analysts had set up, and the stock had fallen 3.5% by midday. The biggest issue for Target is the slowdown in foot traffic. The resulting shortfall forced the company to drop its overall earnings forecast for the full year. In short, things are not looking great over at Target, and it might be time for investors to bow out.

Target misses the boat
The retailer cited softness in its apparel sales, a problem that has plagued apparel retailers all year. The long winter meant that customers were less likely to start buying spring clothes early in the year. That reluctance meant that the total number of transactions suffered, accounting for a 1.9% drop in comparable sales for Target. The company was able to regain a bit of ground, though, due to an increase in average transaction size. The combination of the two left Target with a 0.6% decline in comparable store sales.

Trickle that down to earnings per share, and the company was staring down a 5% drop, from $1.11 per share in 2012 to $1.05 this year. The fall meant that management had no choice but to drop its yearly earnings-per-share expectations, down from $4.85-$5.05 to $4.70-$4.90.

What should Target investors do?
Compared to others in the sector, Target is middle-of-the-pack. The leader is clearly Costco (NASDAQ: COST  ) , which has managed to pull in more customers through its bulk discounting. While the company has not reported its current quarter earnings yet -- the report comes out at the end of the month -- monthly comparable sales have been rising.

Costco has managed to buck the issues that seem to have hampered Target. Last quarter, Costco recorded more transactions, with larger average transactions, both of which resulted in a 5% favorable comparable-sales increase for the quarter.

If Costco is the front-runner of the business, Wal-Mart (NYSE: WMT  ) looks increasingly like it's bringing up the rear. The company blamed inflation, weather, income tax returns, and health care tax in its recent poor showing. Comparable sales fell 1.5% last quarter, and Wal-Mart management was quick to point the finger outside of the company. Even with those issues,it managed to increase earnings per share.

The problem for Target investors is that the cost of moving to a better-performing business may not make sense. Although Target has failed to keep up with returns for the S&P 500 over the last 12 months, it's still up 22%. That's roughly in line with Wal-Mart's return, but well short of the 37% that Costco has gained.

That success comes at a cost, though. While Wal-Mart and Target both trade at P/Es below 16, Costco is trading at 26. If I were invested in Target, I'd seriously consider a switch of allegiance. Target seems to be stumbling -- by no means failing, just stumbling -- while Costco is soaring.

Before you sell or buy any of these retailers, make sure to check out our detailed report on Costco, containing in-depth analysis on the company and one year of free updates on important company news. Simply click here now to gain instant access to this valuable investor's resource.

Today's 3 Best Stocks

There's hardly any certainty in the market, but even I have to admit it's become almost comical that the Nasdaq Composite has hit a new high (including intraday highs) in 17 straight sessions while the broad-based S&P 500 (SNPINDEX: ^GSPC  ) has now risen 19 consecutive Tuesdays. It's an odd pattern, but certainly one that's allowed traders to build upon this year's incredible gains.

Today, yet again, without a lack of important economic data, leadership from some of the nation's biggest companies helped drive the S&P 500 higher. Particularly, home-improvement retail chain Home Depot (NYSE: HD  ) jumped nearly 3% after reporting better-than-expected first-quarter results and raising its full-year outlook. Home Depot finds itself in the sweet spot with commercial construction rebounding and many homeowners still well underwater in their homes and looking to remodel. It's certainly a company you can trust moving forward.

For the day, the S&P 500 finished higher by 2.87 points (0.17%) to close at 1,669.16, another new record. In spite of the tame move, three S&P 500 components had monstrous moves higher today.

Medical-device maker Medtronic (NYSE: MDT  ) led the pack higher today, tacking on 4.9% after reporting its fourth-quarter results. Skeptics had been concerned with the impact of the medical-device excise tax heading into this report, but Medtronic silenced them with continued steady growth. For the quarter, sales rose by 4% to $4.46 billion as adjusted EPS rose to $1.10. Comparatively, the Street was expecting just $1.03 in EPS on $4.38 billion in revenue. International sales were the big key for Medtronic, with its all-important pacemaker and defibrillator line of products seeing sales rise by 3%. Furthermore, emerging-market revenue rose by 14% on a constant currency basis for the quarter. As long as Medtronic continues to exploit strength in burgeoning growth markets, this will remain a solid investment over the long run.

Shares of drugmaker Merck (NYSE: MRK  ) also vaulted higher by 4.7% following a presentation at the UBS Global Healthcare Conference yesterday. Clearly, investors and analysts alike are happy with what they heard from Merck and are encouraged by the pharmaceutical giant's pipeline. However, as Foolish health-care analyst Max Macaluso points out, Merck's pipeline isn't without its uncertainties. As Max notes, the company's insomnia drug Suvorexant certainly isn't a lock for approval when it goes before the Food and Drug Administration later this summer.

Finally, auto-parts retailer AutoZone (NYSE: AZO  ) put the pedal to the metal and advanced 4.6% following the release of its third-quarter results. For the quarter, net sales increased 4.5% to $2.2 billion as EPS rose at a much faster 16% clip. AutoZone attributed the better results to a rougher winter, which helped its replacement-parts business. However, I remain decidedly pessimistic on AutoZone at these levels. Comparable-store sales actually saw a 0.1% decline, and the company has been fueling EPS growth primarily through share buybacks instead of actual growth. AutoZone is carrying an insane amount of debt on its books that seems to rise with each passing quarter and could threaten to put the company in a bind if it ever falls into a rough growth patch. 

Can Merck beat the patent cliff?
This titan of the pharmaceutical industry stumbled into 2013 and continues to battle patent expirations and pipeline problems. Is Merck still a solid dividend play, or should investors be looking elsewhere? In a new premium research report on Merck, the Fool tackles all of the company's moving parts, its major market opportunities, and reasons to both buy and sell. To find out more click here to claim your copy today.

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The Motley Fool's chief investment officer has selected his No. 1 stock for the next year. Find out which stock in our brand-new free report: "The Motley Fool's Top Stock for 2013." I invite you to take a copy, free for a limited time. Just click here to access the report and find out the name of this under-the-radar company.

Why Berkshire's Brooks Is Winning the Race

Berkshire Hathaway (NYSE: BRK-A  ) (NYSE: BRK-B  ) subsidiary Brooks Sports is drawing quite a bit of attention from Buffett devotees these days. The running-shoe maker has sprinted to 34% volume growth in both 2011 and 2012, with U.S. sales growth hitting the tape at 43% by the end of last year.

Our roving reporter Rex Moore caught up with Brooks CEO Jim Weber at the recent Berkshire shareholder meeting in Omaha. In this segment of a multipart series, Rex asks Jim what the company is doing differently to achieve this record growth.

Is Berkshire for you?
Thanks to the savvy of investing legend Warren Buffett, Berkshire Hathaway's book value per share has grown a mind-blowing 586,817% over the past 48 years. But with Buffett aging and Berkshire rapidly evolving, is this insurance conglomerate still a buy today? In The Motley Fool's premium report on the company, Berkshire expert Joe Magyer provides investors with key reasons to buy as well as important risks to watch out for. Click here now for instant access to Joe's take on Berkshire!

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More Expert Advice from The Motley Fool

The Motley Fool's chief investment officer has selected his No. 1 stock for the next year. Find out which stock in our brand-new free report: "The Motley Fool's Top Stock for 2013." I invite you to take a copy, free for a limited time. Just click here to access the report and find out the name of this under-the-radar company.

Hot Food Companies To Invest In 2014

LONDON -- Shares in Associated British Foods (LSE: ABF  ) gained more than 8% today to close at 1,999 pence following an "excellent set of interim results" for the 24 weeks ended March 2.

Along with today's share price spike, shareholders will be pleased with the 22% increase in adjusted earnings per share to 41.9 pence, while the net interim dividend was raised 10% to 9.35 pence, due to be paid on July 5.

ABF management stated the interim results "exceeded our expectations at the start of the year," with adjusted pre-tax profit soaring 25% to 452 million pounds, operating profit lifting 20% to 496 million pounds, and group revenue up 10% to 6.3 billion pounds. Cash flow continued to be strong in the first half, which is encouraging for investors tempted by the share.

Hot Food Companies To Invest In 2014: Nestle SA (NESN.VX)

Nestle SA is a Swiss Company engaged in the nutrition, health and wellness sectors. It is the holding company of the Nestle Group, which comprises subsidiaries, associated companies and joint ventures throughout the world. It has such business units as Food and Beverage, Nestle Waters and Nestle Nutrition. It is also active in the pharmaceutical sector. It divides its products into Powdered and liquid beverages, Water, Milk products and Ice cream, Nutrition, Prepared dishes and cooking aids, Confectionery, PetCare and Pharmaceutical products. In February 2011, the Company acquired CM&D Pharma Ltd.

Hot Food Companies To Invest In 2014: Seaboard Corporation(SEB)

Seaboard Corporation operates as a diversified agribusiness and transportation company worldwide. Its Pork division engages in hog production and pork processing; and the production and sale of fresh and frozen pork products, such as lunchmeat, ham, bacon, sausage, loins, tenderloins, and ribs, as well as further processed pork products, including raw and pre-cooked bacon to further processors, foodservice operators, grocery stores, distributors, and retail outlets under the Prairie Fresh and Daily's brand names. This division also produces and sells biodiesel from pork and other animal fats to third parties. The company?s Commodity Trading and Milling division sources, transports, and markets wheat, corn, soybean meal, rice, and other commodities, as well as operates flour, feed, and maize milling businesses. Its Marine division provides containerized cargo shipping service to 26 countries between the United States, the Caribbean Basin, and central and South America; and operates a terminal at the Port of Miami, an off-dock warehouse for cargo consolidation and temporary storage, and a cargo terminal at the Port of Houston for temporary storage of bagged grains, resins, and other cargo. As of December 31, 2010, it operated 10 owned and approximately 29 chartered vessels; and dry, refrigerated, and specialized containers and other related equipment. The company?s Sugar division produces and refines sugar cane, produces alcohol, and purchases and resells sugar to retailers, soft drink manufacturers, and food manufacturers in Argentina. Its Power division operates as an independent power producer in the Dominican Republic operating 2 floating barges with a system of diesel engines with combined capacity of approximately 112 megawatts of electricity. Seaboard Corporation also purchases and processes jalapeno peppers in the United States. The company was founded in 1928 and is based in Shawnee Mission, Kansas. Seaboard Corporation is a subsidiary of Seaboard Flour LLC.

Top 10 Clean Energy Stocks For 2014: Nash-Finch Company(NAFC)

Nash-Finch Company operates as a wholesale food distributor in the United States. The company?s Military segment distributes grocery products to the United States military commissaries and exchanges in the United States and the District of Columbia, Europe, Puerto Rico, Cuba, the Azores, Egypt, and Bahrain. Its Food Distribution segment sells and distributes various branded and private label grocery products and perishable food products to approximately 1,500 independent retail locations through its 14 distribution centers. This segment also provides various services, including promotional, advertising, and merchandising programs; installation of computerized ordering, receiving, and scanning systems; retail equipment procurement assistance; accounting, budgeting, and payroll contract services; consumer and market research; remodeling and store development services; supply chain through Internet services; and securing existing grocery stores. The company?s Retail segment operates corporate-owned grocery stores under the Sun Mart, Econofoods, AVANZA, Family Thrift Center, Pick ?n Save, Family Fresh Market, Prairie Market, Saver?s Choice, Wally?s Supermarkets, and Wholesale Food Outlet banners primarily in the states of Colorado, Iowa, Minnesota, Nebraska, North Dakota, Ohio, South Dakota, and Wisconsin. This segment?s conventional grocery stores offer a range of grocery products and services, such as fresh meat counters, delicatessens, bakeries, eat-in cafes, pharmacies, banks, and floral departments, as well as provide check cashing, fax services, and money transfer services. As of December 31, 2011, the company served 93 retail stores operating under the IGA banner and 50 retail stores under the Food Pride banner; and operated 43 conventional supermarkets, 1 AVANZA grocery store, 1 Wholesale Food Outlet grocery store, and 1 Saver?s Choice store. Nash-Finch Company was founded in 1885 and is based in Minneapolis, Minnesota.

Hot Food Companies To Invest In 2014: Ruddick Corporation(RDK)

Ruddick Corporation, through its subsidiaries, engages in the operation of a regional chain of supermarkets primarily in the southeastern and mid-Atlantic United States, and the District of Columbia. The company?s supermarkets offer an assortment of groceries, produce, meat and seafood, delicatessen items, bakery items, and wines, as well as non-food items, such as health and beauty care, general merchandise, and floral products; and pharmaceutical products. As of October 2, 2011, Ruddick Corporation operated 204 supermarkets, 136 in North Carolina, 36 in Virginia, 13 in South Carolina, 6 in Maryland, 5 in Tennessee, 3 in Delaware, 3 in the District of Columbia, 1 in Florida, and 1 in Georgia. The company was founded in 1891 and is headquartered in Charlotte, North Carolina.

Hot Food Companies To Invest In 2014: SuperValu Inc.(SVU)

SUPERVALU INC., together with its subsidiaries, operates retail food stores in the United States. Its stores offer grocery, general merchandise, health and beauty care, pharmacy, and fuel products. The company operates stores under the Acme, Albertsons, Cub Foods, Farm Fresh, Hornbacher?s, Jewel-Osco, Lucky, Shaw?s, Shop ?n Save, Shoppers Food & Pharmacy, and Star Market banners, as well as in-store pharmacies under the Osco and Sav-on banners. It operates approximately 2,394 traditional and hard-discount retail food stores, including 899 licensed Save-A-Lot stores. The company also offers supply chain services, which include wholesale distribution of products to independent retailers, including single and multiple grocery store independent operators, regional and national chains, mass merchants, and the military customers, as well as provides logistics support services. SUPERVALU was founded in 1871 and is based in Eden Prairie, Minnesota.

Hot Food Companies To Invest In 2014: Chiquita Brands International Inc. (CQB)

Chiquita Brands International, Inc., together with its subsidiaries, engages in the distribution and marketing of bananas and fresh produce under the Chiquita and other brand names worldwide. The company operates in three segments: Bananas, Salads and Healthy Snacks, and Other Produce. The Banana segment sources, transports, markets, and distributes bananas to retailers and wholesalers, and chain stores. It also engages in the cultivation and production of bananas. The Salads and Healthy Snacks segment offers value-added salads under the Fresh Express and other labels; and fresh vegetable and fruit ingredients used in foodservice, healthy snacks, and processed fruit ingredient products. This segment also provides fresh-cut products, such as lettuce, tomatoes, spinach, cabbage, and onions to foodservice distributors who resell these products to foodservice operators. It distributes Fresh Express branded products to food retailers, foodservice distributors, and quick-service restaurants; and fresh produce foodservice offerings primarily to third-party distributors for resale principally to quick-service restaurants in the United States. The Other Produce segment engages in sourcing, marketing, and distributing fresh fruits and vegetables other than bananas in Europe and North America. It offers grapes, pineapples, melons, kiwis, tomatoes, and avocados. The company was founded in 1899 and is headquartered in Cincinnati, Ohio.

Is This Netflix's Next Qwikster-Sized Mistake?

Netflix (NASDAQ: NFLX  ) has been friendly to outside developers for many years. The company provided easy-to-use data access tools, giving rise to a cottage industry. Netflix even ran a tool-building contest with a million-dollar prize, until privacy hawks shut down that idea. And many of the company's in-house tools have been exported as open-source projects.

These initiatives have built a strong technology base, and a thriving ecosystem around the core operation. In many ways, that's exactly how Facebook (NASDAQ: FB  ) killed MySpace and rose to social media stardom. Why not follow that template, especially since Netflix CEO Reed Hastings serves on Facebook's board of directors?

But Netflix is backing down from that developer-friendly policy these days. In this video, Fool contributor and longtime Netflix shareholder Anders Bylund explains why this move makes him very nervous.

The tumultuous performance of Netflix shares since the summer of 2011 has caused headaches for many devoted shareholders. While the company's first-mover status is often viewed as a competitive advantage, the opportunities in streaming media have brought some new, deep-pocketed rivals looking for their piece of a growing pie. Can Netflix fend off this burgeoning competition, and will its international growth aspirations really pay off? These are must-know issues for investors, which is why The Motley Fool has released a premium report on Netflix. Inside, you'll learn about the key opportunities and risks facing the company, as well as reasons to buy or sell the stock. The report includes a full year of updates to cover critical new developments, so make sure to click here and claim a copy today.

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The World's 5 Most Debt-Ridden Countries

No economic conversation has captured the public's eye quite like the explosion of national debt. From the U.S. to Europe to Asia, leading economies have staved off the worst of the recession by incurring runaway debts that have blossomed to the size of GDP -- or greater.

But which nation is leading this unfortunate race to the debtor's bottom? Among the largest 50 economies worldwide, here are the five most debt-burdened nations, according to IMF estimates for 2013. Investors beware: These lagging leaders may not be the countries you expected.

No. 5: Ireland, 122% Debt/GDP
Kicking things off in fifth place is Ireland, one of the hardest-hit nations in the recession. The crisis slammed the country's GDP and devastated the country's economy; Irish unemployment still lingers above 14% five years after the depths of the recession. Despite the eurozone's recession, however, hope remains for Ireland: The European Commission expects Ireland's GDP to grow 1.1% this year, the third-fastest rate in the eurozone. By 2015, the IMF expects Ireland's unemployment rate to fall below 13% -- not good, but progress nonetheless.

Despite the bleak reality of the Irish economy, investors have capitalized on at least one of Ireland's top stocks. The Bank of Ireland (NYSE: IRE  ) has dropped nearly 98% over the past five years, but the stock has gained more than 92% over the past year. Should you invest in this beaten-down riser? Probably not. While this stock has done well lately, Ireland's recovery -- as well as Europe's -- is still too fragile to bet on risky financial picks like this. Stick to larger, less exposed, and less risky financial stocks in Europe if you're tempted by the sector's regional offerings.

Ireland's debt could fall out of the top 5 if the country's growth outpaces spending, but for now, the Irish economy's meager growth ranks among the leaders in one of the worst economic regions on Earth. That's not a sign that this debt will fall meaningfully soon, and the IMF expects Irish debt to remain above 105% of GDP by 2018.

No. 4: Portugal, 122% Debt/GDP
Spain's neighbor on the Iberian Peninsula hasn't had it any easier throughout the European debt crisis. The recession has crushed the Portuguese economy despite the country's ongoing bailout program, and debt has been racked up despite the country's harsh austerity program designed to rein in spending. Portugal's government recently proposed a new stimulus program, but while that could help the country's lagging businesses, it won't help bring down its skyrocketing debt. With more public-sector job cuts on the table, unemployment at 18%, and GDP expected to fall 2% this year, this country's far from a turnaround.

Investors, stay away. While Portugal Telecom's (NYSE: PT  ) hefty 5.4% dividend yield and recent moves into developing nations such as China and Brazil might lure investors looking for a beaten-down stock to buy cheap, this pick's anything but ready to rise. The company's Portuguese-based revenue has fallen substantially recently, along with its return on equity. If you're looking for a turnaround candidate, Portugal's floundering economy is one of the last places you should look.

No 3: Italy, 130% Debt/GDP
Let's have a big hand for Italy, Europe's third-largest economy -- and the third-most-indebted top-50 economy in the world. While nations such as Spain and Cyprus have dominated the debt talk in Europe, Italy has slowly dug itself into a giant hole. By posting a seventh straight quarter of economic contraction to start 2013, Italy now finds itself in its longest recession since the country began keeping quarterly economic records in 1970. Throughout the turmoil, Italy's debt has steadily climbed, rising 10 percentage points in the last two years as the Italian government attempts to keep its economy from sinking even further.

There's little to like here for investors. The iShares MSCI Italy Index (NYSEMKT: EWI  ) ETF dove earlier this year with the nation's tumultuous election. While it has recovered since and has posted 30% gains over the past 52 weeks, the Italy ETF has lost 1.3% this year. Italy's economic woes and this ETF's performance aren't one and the same, however. If the European Central Bank continues to lower interest rates as it has in the past, this ETF could rise even as the nation's recession lingers on. However, Italy's a risky proposition at best, and with other, more stable markets surging, there's no reason to take a flier on this pick.

In short, don't expect Italy's debt to come down much in coming years -- nor should you expect its economy to please any economists. The IMF predicts Italian debt to fall less than 7 percentage points over the next five years.

No. 2: Greece, 179% Debt/GDP
Ah, Greece. We were all wondering when Europe's most notorious debt-plagued economy would show up. The Mediterranean nation ranks first in debt among the recession-wallowing continent. The eurozone recently "commended" Greece's fiscal performance in 2012, but don't let that fool you: The Greek economy contracted 5.3% in the first quarter. Harsh austerity measures should help drag down this debt, as the IMF forecasts Greek debt to sink to 144% of GDP by 2018, but those same measures have driven up unemployment to an eye-popping 27%.

Select Greek stocks have done well in the past year, but this is undoubtedly a risky region for investors. Even global Greek stocks such as Navios Maritime (NYSE: NM  ) , which has gained 35% this year and offers an enticing 5.1% dividend at a low payout ratio, face plenty of challenges. Navios is still plagued by the Baltic Dry Index's nosedive, as well as a substantial 105% debt-to-equity ratio. Until shipping rebounds, Navios and its fellow Greek shippers won't be tossing lifesavers to anyone's portfolio.

No. 1: Japan, 245% Debt/GDP
The world's most debt-burdened nation is also home to 2013's best stock market. Here's a debt crisis that investors can get behind.

Japan's debt isn't so much the product of recession -- as with the European nations above -- as it is a consequence of the country's two decades of stagnation combined with new Prime Minister Shinzo Abe's ultra-aggressive stimulus tactics. Abe's hope is that easy money will ignite the Japanese economy after years of sluggish growth, which would help ease this inordinately high debt. If the plan fails, however, Japan will be stuck with a monster debt just in time for an aging population to tax social systems to the brink. That's a bad combination for this economy's future.

In the meantime, however, investors have plenty to gain across the Pacific. Abe's stimulus is great news for the country's financial sector, and brokerage firms such as Nomura Holdings (NYSE: NMR  ) have capitalized on Japanese stocks' wild gains. With the yen weakening against the dollar, investors continue to pour money into Japanese stocks -- a cycle that will continue to fuel Nomura's success and reward the firm's shareholders. The company recorded its best quarterly profit in seven years last quarter, and while Nomura's stock certainly isn't cheap right now, it has a bright future so long as this rally continues.

America's debt misses the list
While the U.S. public debt didn't make the top five, don't think America is in a better spot. The IMF estimates American debt to be 108% of GDP and expects that number to fall to just 106% by 2018. The U.S.'s slow but steady rise out of the recession should help lessen the debt's impact, but if the country doesn't get a grip on its debt soon, America could well rise up the ranks of the debtors.

Profiting from our increasingly global economy can be as easy as investing in the U.S. of A. The Motley Fool's free report "3 American Companies Set to Dominate the World" shows you how. Click here to get your free copy before it's gone.

Strong Consumer Sentiment Pulls Markets Higher

This morning it was reported that the Thomson Reuters/University of Michigan preliminary index on consumer sentiment rose to 83.7 for May. That's the highest reading since July 2007 and up from 76.4 during April. While analysts were expecting an increase, the median forecast in a Bloomberg survey pinned the gain at 77.9.

This positive economic data has given investors the confidence to continue the bull rally, and as of 12:55 p.m. EDT the Dow Jones Industrial Average (DJINDICES: ^DJI  ) is up by 55 points, or 0.35%, while the S&P 500 and the Nasdaq are up 0.43% each.

Although the report indicates that consumer sentiment is high, a number of retailers, including Wal-Mart (NYSE: WMT  ) , are still reporting that customers remain wary. Looking at the whole, Americans seem to have easily dealt with both the payroll tax increase and sequestration, but Wal-Mart is still claiming that its customers haven't, and the evidence suggests that Wal-Mart may be right. Same-store sales fell 1.4% this past quarter after Wal-Mart had beaten same-store sales numbers for the previous six straight quarters. Additionally, Wal-Mart had to lower its prices on groceries and daily necessities during the quarter. After falling 1.7% yesterday, shares of Wal-Mart are down another 1% today.

Shares of Walt Disney (NYSE: DIS  ) are down 0.8% today after they were downgraded from "overweight" to "neutral" by an analyst at Atlantic Equities this morning. The analyst did, however, increase the price target from $65 per share to $74. 

Shares of Merck (NYSE: MRK  ) and Pfizer are down 1.7% and 1.3%, respectively. Shares of Merck are likely lower because of the 13F recently filed by famed investor Stanley Druckenmiller. In the past, Druckenmiller was in charge of a portfolio for George Soros and ran Duquesne Capital, but now he simply manages his own money and has to file with the SEC. Going into the 2013, Merck had been one of Druckenmiller's top holdings, but he has totally liquidated the position.

While he still has large positions in Pfizer and Eli Lilly, anyone investing in the industry may be nervous about the move to dump Merck. At this time all the large pharmaceutical companies look to be on rather equal footing, so if Druckenmiller doesn't like one, why would he like any of them?  

Can Merck beat the patent cliff?
This titan of the pharmaceutical industry stumbled into 2013 and continues to battle patent expirations and pipeline problems. Is Merck still a solid dividend play, or should investors be looking elsewhere? In a new premium research report on Merck, the Fool tackles all of the company's moving parts, its major market opportunities, and reasons both to buy and to sell. To find out more, click here to claim your copy today.

Why NQ Mobile Shares Got Crushed

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 NQ Mobile (NYSE: NQ  ) got crushed today, down by 13% at the low after the company reported earnings.

So what: Revenue in the first quarter totaled $33.2 million, which resulted in non-GAAP earnings per share of $0.19. The top line came out slightly ahead of the $33 million consensus estimate, while the bottom line was right on target. NQ now has 111.1 million average monthly active users.

Now what: Second-quarter outlook expects revenue to be in the range of $38.5 million to $38.8 million, and the company raised its full-year sales forecast by $1 million on both the low end and high end. Revenue for 2013 should be $179 million to $184 million. It was a record quarter in terms of sales, but investors were left wanting more. Shares have rallied substantially so far this year, so some profit taking could be occurring as well.

Interested in more info on NQ Mobile? Add it to your watchlist by clicking here.

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PotashCorp Raises Dividend by 25%

PotashCorp's (NYSE: POT  ) quarterly dividend is starting to sprout. The company announced it will distribute $0.35 per share of its common stock, which will be handed out on Aug. 2 to shareholders of record as of July 12. This amount is an even 25% higher than the company's previous disbursement of $0.28 per share, which was paid earlier this month.

In the press release announcing the move, the company pointed out that this marks the fifth time it has raised its payout since 2011.

The new dividend annualizes to $1.40 per share. That yields 3.2% at PotashCorp's most recent closing stock price of $43.38.

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