Why Today's War Between Dow Stocks Ended in a Draw

Today's market action looked like a repeat of scenes we saw back in 2000 and 2001, when the tech sector posted regular and consistent share-price declines, even as many so-called "old-economy" stocks held up reasonably well. The same disparity occurred today, with the big damage coming from Microsoft's 11% plunge. Yet, strength from industrial and pharmaceutical stocks helped keep the Dow Jones Industrials (DJINDICES: ^DJI  ) from losing huge amounts of ground, and the Dow finished the day down just five points, while the S&P 500 (SNPINDEX: ^GSPC  ) eked out gains on the day.

Microsoft's poor showing rippled throughout the tech sector, as Dow component Hewlett-Packard (NYSE: HPQ  ) also saw substantial losses that amounted to more than 4.5%. As much as HP would like to move away from its PC-heavy hardware business in light of Microsoft's poor showing, the turnaround story there will take a long time to play itself out. In the near term, the same pressures that have hit other PC-related stocks are likely to weigh on HP's results. Nevertheless, if you believe that the company's long-term strategy will be successful, then the already-known bad news from PC demand shouldn't affect your investing thesis, and lower prices should make the stock more attractive.

In addition to General Electric's big gains for the day after reporting earnings, pharma stocks Johnson & Johnson (NYSE: JNJ  ) and Pfizer (NYSE: PFE  ) both posted nice gains of more than 2%. For J&J, an analyst downgrade of rival Merck yesterday highlighted the competitive threat that J&J's Invokana diabetes drug could pose to its existing blockbuster Januvia. With high hopes for Invokana, if J&J can tap into a portion of the billions of dollars that Januvia has brought in over the years, it could create a meaningful boost in earnings, even for a company of J&J's size. Meanwhile, Pfizer reportedly decided not to try to outbid Amgen for cancer-drug producer Onyx Pharmaceuticals, even as investors in Onyx have bid the shares well beyond Amgen's original $120 offer. Buying promising pipelines is a valid strategy, but having the discipline not to overpay is essential, and shareholders are right to reward Pfizer today.

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

Why Zynga Shares Tanked

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 Zynga (NASDAQ: ZNGA  ) are down about 7% today, after losing more than 10% in early trading. The market is not satisfied with Zynga's second-quarter guidance, in spite of a surprising earnings beat yesterday.

So what: Zynga's first-quarter earnings came in with a profit of $0.01 per share, ahead of not only Wall Street's $0.04 loss-per-share consensus, but Zynga's own guidance, as well. However, revenue of $263.6 million was below the $264.8 million analyst consensus, and it also represented an 18% year-over-year decline, which is pretty bad no matter which way you slice it. Zynga's second-quarter guidance of between $225 million and $235 million in revenue, and a loss of $0.04 to $0.03 per share is below expectations -- Wall Street sought a loss of $0.01 per share, and $261.7 million in revenue.

Now what: What else is wrong? Daily active users are way down year over year, from 65 million, to 52 million (a 21% decline), and down 8% sequentially, from 56 million in the fourth quarter. Monthly unique users also posted double-digit declines of 13% year over year, and 15% sequentially, arriving at a figure of 150 million for the first quarter. Company executives recognize that this is a "transition" year, but investors can't hang around on hopes and promises -- Zynga needs to show real results to justify real gains.

Zynga's post-IPO performance has been dreadful, and investors are beginning to wonder if it's "game over" for this company. Being so closely tied to the world's largest social network can be a blessing and a curse. You can learn everything you need to know about Zynga and whether it's a buy or a sell in our new premium research report. Don't even think about picking up shares before you read what our top analysts have to say about Zynga. Click here to access your copy.

Top 10 Bank Stocks For 2014

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Top 10 Bank Stocks For 2014: Comerica Inc (CMA)

Comerica Incorporated (Comerica) is a financial services company. Comercia operates in four segments: the Business Bank, the Retail Bank, Wealth Management and the Finance Division. As of December 31, 2011, Comerica owned two active banking and 49 non-banking subsidiaries. The Company's Business Bank meets the needs of middle market businesses, multinational corporations and governmental entities by offering products and services, including commercial loans and lines of credit, deposits, cash management, capital market products, international trade finance, letters of credit, foreign exchange management services and loan syndication services. On July 28, 2011, Comerica acquired Sterling Bancshares, Inc. (Sterling), a bank holding company.

The Company's Retail Bank includes small business banking and personal financial services, consisting of consumer lending, consumer deposit gathering and mortgage loan origination. In addition to a range of financial services provided to small business customers, this business segment offers a range of consumer products, including deposit accounts, installment loans, credit cards, student loans, home equity lines of credit and residential mortgage loans.

Wealth Management offers products and services consisting of fiduciary services, private banking, retirement services, investment management and advisory services, investment banking and brokerage services. This business segment also offers the sale of annuity products, as well as life, disability and long-term care insurance products. The Finance segment includes Comerica�� securities portfolio and asset and liability management activities. This segment is engaged in managing Comerica�� funding, liquidity and capital needs, performing interest sensitivity analysis and executing strategies to manage Comerica�� exposure to liquidity, interest rate risk and foreign exchange risk.

The Other category includes discontinued operations, the income and expense impact of equity an! d cash, tax benefits not assigned to specific business segments and miscellaneous other expenses of a corporate nature. In addition, Comerica delivers financial services in its four markets: Midwest, Western, Texas and Florida. The Midwest market consists of Michigan, Ohio and Illinois. The Western market consists of the states of California, Arizona, Nevada, Colorado and Washington. California operations represent the the Western market. The Texas and Florida markets consist of the states of Texas and Florida, respectively. Other Markets include businesses with a national perspective, Comerica�� investment management and trust alliance businesses, as well as activities in all other markets, in which Comerica has operations, except for the International market. The International market represents the activities of Comerica�� international finance division, which provides banking services to foreign-owned, North American-based companies and to international operations of North American-based companies.

Advisors' Opinion:

• [By Halah Touryalai]

  US banks face a Japan-lite scenario where revenues are  pressured from sluggish economic growth and lower interest rates.  As a mostly plain vanilla bank, Comerica should feel these pressures via sluggish traditional banking revenues without the offsets that others have, such as in mortgage and capital markets.  Net interest margin contraction will likely outweigh any positive from loan growth.  The one risk in being too negative is the chance that they sell to a larger competitor, though at a nice premium to its tangible book value, the stock is not as attractive as other potential takeover candidates.

Top 10 Bank Stocks For 2014: Western Alliance Bancorporation (WAL)

Western Alliance Bancorporation (WAL) is a bank holding company. The Company provides full-service banking and lending to locally owned businesses, professional firms, real estate developers and investors, local non-profit organizations, high net worth individuals and other consumers through its three wholly owned subsidiary banks (the Banks): Bank of Nevada (BON), operating in Southern Nevada; Western Alliance Bank (WAB), operating in Arizona and Northern Nevada, and Torrey Pines Bank (TPB), operating in California. In addition, the Company�� non-bank subsidiaries, Shine Investment Advisory Services, Inc. (Shine) and Western Alliance Equipment Finance (WAEF), offer an array of financial products and services to small to mid-sized businesses and their proprietors, including financial planning, custody and investments, and equipment leasing nationwide. It operates in four segments: Bank of Nevada, Western Alliance Bank, Torrey Pines Bank and Other.

The Company provides a range of banking services, as well as investment advisory services, through its consolidated subsidiaries. As of December 31, 2011, WAL owned an 80% interest in Shine. As of December 31, 2011, the Company owned a 24.9% interest in Miller/Russell & Associates, Inc. (MRA), an investment advisor. MRA provides investment advisory services to individuals, foundations, retirement plans and corporations.

Lending Activities

Through the Company�� banking segments, the Company provides a variety of financial services to customers, including commercial real estate loans, construction and land development loans, commercial loans, and consumer loans. Loans to businesses consisted 89.2% of the total loan portfolio at December 31, 2011. Loans to finance the purchase or refinancing of commercial real estate (CRE) and loans to finance inventory and working capital that are additionally secured by CRE make up the majority of its loan portfolio. These CRE loans are secured by apartment buildings, professional of! fices, industrial facilities, retail centers and other commercial properties. As of December 31, 2011, 49% of its CRE loans were owner-occupied. Owner-occupied commercial real estate loans are loans secured by owner-occupied nonfarm nonresidential properties for which the primary source of repayment (more than 50%) is the cash flow from the ongoing operations and activities conducted by the borrower who owns the property. Non-owner-occupied commercial real estate loans are commercial real estate loans for which the primary source of repayment is nonaffiliated rental income associated with the collateral property.

Construction and land development loans include multi-family apartment projects, industrial/warehouse properties, office buildings, retail centers and medical facilities. Commercial and industrial loans include working capital lines of credit, inventory and accounts receivable lines, mortgage warehouse lines, equipment loans and leases, and other commercial loans. Commercial loans are primarily originated to small and medium-sized businesses in a variety of industries. Consumer loans are generally offered at a higher rate and shorter term than residential mortgages. Its consumer loans include home equity loans and lines of credit, home improvement loans, credit card loans, and personal lines of credit. As of December 31, 2011, its loan portfolio totaled $4.68 billion, or approximately 68.4% of its total assets.

Investment Activities

All of the Company�� investment securities are classified as available-for-sale (AFS) or held-to-maturity (HTM). As of December 31, 2011, the Company had an investment securities portfolio of $1.48 billion, representing approximately 21.7% of its total assets. As of December 31, 2011, its investment securities portfolio consisted of the United States Government sponsored agency securities, Municipal obligations, Adjustable-rate preferred stock, Mutual funds, Corporate bonds, Direct the United States obligation and government-! sponsored! enterprise (GSE) residential mortgage-backed securities, private label residential mortgage-backed securities, Community Reinvestment Act (CRA) investments, Trust preferred securities, Private label commercial mortgage-backed securities, and Collateralized debt obligations.

Sources of Funds

The Company offers a variety of deposit products, including checking accounts, savings accounts, money market accounts and other types of deposit accounts, including fixed-rate, fixed maturity retail certificates of deposit. As of December 31, 2011, the deposit portfolio consisted of 27.5% non-interest bearing deposits and 72.5% interest-bearing deposits. Non-interest bearing deposits consist of non-interest bearing checking account balances. In addition to its deposit base, it has access to other sources of funding, including Federal Home Loan Bank (FHLB) and Federal Reserve Bank (FRB) advances, repurchase agreements and unsecured lines of credit with other financial institutions.

Financial Products and Services

In addition to traditional commercial banking activities, the Company offers other financial services to customers, including Internet banking, wire transfers, electronic bill payment, lock box services, courier, and cash management services. Through Shine, a full-service financial advisory firm, the Company offers financial planning and investment management.

5 Best Stocks To Own For 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 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.

• [By Sherry Jim]

  Miller had $361 Million WFC shares at the end of December. WFC gained 24.7% during the last 12 months and outperformed the SPY by 3.2 percentage points. Stock holdings increased by 18.5% during the last quarter and WFC returned 9.1% since then. Warren Buffett was extremely bullish about Wells Fargo during the fourth quarter, adding another 6+ Million shares to his $11+ Billion WFC holdings.

• [By Buffett]

   Buffett loves a fat pitch -- a stock priced so low that buying it almost guarantees a home run. So when worries that a recession would hit Wells Fargo (WFC) and its heavy exposure to real-estate loans hammered the bank's stock in the 1990, Buffett bought.

  There's a similar scenario at play today. So the bank's stock once again looks cheap. Morningstar, a fairly strict value-stock shop, has its highest (five-star) rating on the stock, with a buy limit of $31.50. That means the stock looks like a great buy now, trading at around $28.90.

  Banking is a commodity business -- meaning that it's hard for bankers to distinguish their offerings enough to stand out. Buffett hates these kinds of businesses. So what does he still own Wells Fargo? Several reasons, say Buffett experts. First, Wells Fargo management gets top grades, says Todd Lowenstein, portfolio manager of the HighMark Value Momentum Fund (HMVMX). Buffett typically gravitates toward companies with outstanding management teams.

  Evidence of the management strength at Wells Fargo, says Lowenstein, can be seen in its consistently above-average return on assets, a measure of how well a company produces profits. The bank also has lower loan delinquency and foreclosure rates than competitors, another sign of prudence. And Wells Fargo management is frugal, a quality Buffett famously loves. The bank is currently working on reducing expenses by $1.5 billion a quarter. Management showed that it allocates capital wisely, a quality Buffett likes, when it bought Wachovia bank on the cheap during the credit crisis and turned itself into a national bank. Buffett owns 342.6 million shares, making it one of his largest holdings, according to Tickerspy. (All ownership stats in this piece come from Tickerspy.)

• [By James K. Glassman]

   San Francisco–based Wells Fargo (symbol: WFC) is one of the country's biggest banks, with more than 11,000 branches in 39 states. It makes more loans to home buyers and small-business owners than any other U.S. bank. And it's one of the most profitable banks, with a net profit margin of 18.1% -- better than that of most of its peers. That means that even in a slow-moving economy, the bank should hold up well. Wells, which reported record earnings in the second quarter, raised its dividend in 2011 and 2012. The stock yields 2.7% and trades at 9 times expected 2013 earnings.

Top 10 Bank Stocks For 2014: U.S. Bancorp(USB)

U.S. Bancorp, a financial services holding company, provides various banking and financial services in the United States. It generates various deposit products, including checking accounts, savings accounts, money market savings, and time certificates of deposit accounts. The company originates a portfolio of loans comprising commercial loans and lease financing; commercial real estate; residential mortgage; and retail loans consisting of credit cards, retail leasing, home equity and second mortgages, and other retail loans. It also offers wholesale lending, equipment finance, small-ticket leasing, depository, treasury management, capital markets, foreign exchange, and international trade services to middle market, large corporate, commercial real estate, and public sector clients. In addition, U.S. Bancorp provides telebanking and automated teller machine (ATM) services, as well as cash management services. The company, through other subsidiaries, provides trust, private banking, financial advisory, investment management, retail brokerage services, insurance, and custody and fund services; and payment services, including consumer and business credit cards, stored-value cards, debit cards, corporate and purchasing card services, consumer lines of credit, and merchant processing. U.S. Bancorp primarily serves individuals, estates, foundations, business corporations, and charitable organizations. It operates a network of approximately 3,031 banking offices and 5,310 ATMs. The company was founded in 1863 and is headquartered in Minneapolis, Minnesota.

Advisors' Opinion:

• [By James K. Glassman]

  52-Week High: $35.46
  
  52-Week Low: $25.43
  
  Annual Revenue: $17.2 billion
  
  Projected 2013 Earnings Growth: 7.3% 
  
  The venerable investment firm Brown Brothers Harriman, which has catered to wealthy families since 1818, has launched some excellent mutual funds in recent years. The managers of BBH Core Select look for stocks that sell for a "meaningful discount" from their judgment of a firm’s intrinsic, or true, value, thus providing what financial scholar Benjamin Graham called a "margin of safety." A prime holding for the past eight years has been Minneapolis-based U.S. Bancorp (symbol: USB), one of the best-run banks in the world. Its stock has risen 35% in the past year, but the P/E is still reasonable at 10, and the 2.5% dividend yield gives you more income than a ten-year Treasury bond.

• [By James K. Glassman]

   The venerable investment firm Brown Brothers Harriman, which has catered to wealthy families since 1818, has launched some excellent mutual funds in recent years. The managers of BBH Core Select look for stocks that sell for a "meaningful discount" from their judgment of a firm’s intrinsic, or true, value, thus providing what financial scholar Benjamin Graham called a "margin of safety." A prime holding for the past eight years has been Minneapolis-based U.S. Bancorp (symbol: USB), one of the best-run banks in the world. Its stock has risen 35% in the past year, but the P/E is still reasonable at 10, and the 2.5% dividend yield gives you more income than a ten-year Treasury bond.

• [By Louis Navellier]

  U.S. Bancorp (NYSE:USB) provides its customers with lending and depository services, cash management, foreign exchange and trust and investment management services. Since this time last March, USB is up 19%. USB stock gets an “A” grade for operating margin growth, a “B” grade for earnings growth, a “B” grade for its ability to exceed the consensus earnings estimates on Wall Street, a “B” grade for the magnitude in which earnings projections have increased over the past months, an “A” grade for cash flow, and a “B” grade for return on equity. 

• [By Philip van Doorn]

  U.S. Bancorp (USB_) of Minneapolis, for example, recorded a 2012 operating return on average assets (ROA) of 1.62%, according to Thomson Reuters Bank Insight, making it one of the best performers among large-cap banks. This performance was not an aberration, as the company was in the top five for return on average equity among actively traded U.S. bank stocks from the beginning of 2006 through the third quarter of 2012.

Top 10 Bank Stocks For 2014: Fifth Third Bancorp(FITB)

Fifth Third Bancorp operates as a diversified financial services holding company in the United States. The company?s Commercial Banking segment offers credit intermediation, cash management, and financial services; lending and depository products; and foreign exchange and international trade finance, derivatives and capital markets services, asset-based lending, real estate finance, public finance, commercial leasing, and syndicated finance for business, government, and professional customers. Its Branch Banking segment provides deposit and loan, and lease products to individuals and small businesses. This segment?s products include checking and savings accounts, home equity loans and lines of credit, credit cards, loans for automobile and personal financing needs, and cash management services. The company?s Consumer Lending segment engages in the mortgage and home equity lending activities, such as origination, retention, and servicing of mortgage and home equity loans ; and other indirect lending activities, which include loans to consumers through mortgage brokers and automobile dealers. Its Investment Advisors segment offers investment alternatives for individuals, companies, and not-for-profit organizations. It offers retail brokerage services to individual clients, and broker dealer services to the institutional marketplace. This segment also provides asset management services; holistic strategies to affluent clients in wealth planning, investing, insurance, and wealth protection; and advisory services for institutional clients, as well as advises the company?s proprietary family of mutual funds. As of December 31, 2011, the company operated 1,316 full-service banking centers, including 104 Bank Mart locations; and 2,425 automated teller machines in 12 states in the midwestern and southeastern regions of the United States. The company was founded in 1862 and is headquartered in Cincinnati, Ohio.

Top 10 Bank Stocks For 2014: Signature Bank (SBNY.O)

Signature Bank (the Bank) is a full-service commercial bank with 25 private client offices located in the New York metropolitan area serving the needs of privately owned business clients and their owners and senior managers. The Bank offers a variety of business and personal banking products and services through the Bank, as well as investment, brokerage, asset management and insurance products and services through its wholly owned subsidiary, Signature Securities Group Corporation (Signature Securities), a licensed broker-dealer and investment adviser. Through Signature Securities, it also purchases, securitizes and sells the guaranteed portions of the United States Small Business Administration (SBA) loans. The Bank offers a variety of deposit, escrow deposit, credit, cash management, investment and insurance products and services to its clients. As of December 31, 2011, the Bank maintained approximately 78,000 deposit accounts, 6,900 investment accounts, 8,600 loan a ccounts and 14,300 client relationships. In April 2012, it formed a new subsidiary, Signature Financial, LLC.

The Bank offers a range of products and services oriented to the needs of its business clients, including deposit products, such as non-interest-bearing checking accounts, money market accounts and time deposits; escrow deposit services; cash management services; commercial loans and lines of credit for working capital and to finance internal growth, acquisitions and leveraged buyouts; permanent real estate loans; letters of credit; investment products to help better manage idle cash balances, including money market mutual funds and short-term money market instruments; business retirement accounts, such as 401(k) plans, and business insurance products, including group health and group life products. It offers a range of products and services oriented to the needs of its high net worth personal clients, including interest-bearing and non-interest-bearing checking accounts, with optional features, such as debit/ a! u! tomated teller machine (ATM) cards and overdraft protection and, for its clients, rebates of certain charges, including ATM fees; money market accounts and money market mutual funds; time deposits; personal loans, both secured and unsecured; mortgages, home equity loans and credit card accounts; investment and asset management services, and personal insurance products, including health, life and disability.

Lending Activities

The Bank�� commercial and industrial (C&I) loan portfolio is consisted of lines of credit for working capital and term loans to finance equipment, company owned real estate and other business assets, along with commercial overdrafts. Its lines of credit for working capital are generally renewed on an annual basis and its term loans generally have terms of 2 to 5 years. The Bank�� lines of credit and term loans typically have floating interest rates, and as of December 31, 2011, approximately 61% of its outstanding C&I loan s were variable rate loans. As of December 31, 2011, funded C&I loans totaled approximately 15% of its total funded loans. The Bank�� real estate loan portfolio includes loans secured by commercial and residential properties. It also provides temporary financing for commercial and residential property. As of December 31, 2011, funded real estate loans totaled approximately $5.74 billion, representing approximately 80% of its total funded loans. It issues standby or performance letters of credit, and can service the international needs of its clients through correspondent banks. As of December 31, 2011, its commitments under letters of credit totaled approximately $235.7 million. Its personal loan portfolio consists of personal lines of credit and loans to acquire personal assets. As of December 31, 2011, its consumer loans totaled $11.8 million, representing less than 1% of its total funded loans.

Investment and Asset Management Products and Services

Investment and asset management products and servi! ces a! re! provid! ed through the Bank�� subsidiary, Signature Securities. Signature Securities is a licensed broker-dealer. Signature Securities is an introducing firm and, as such, clears its trades through National Financial Services, Inc., a wholly owned subsidiary of Fidelity Investments. Signature Securities is also registered as an investment adviser in New York, New Jersey, Pennsylvania and Florida. It offers an array of asset management and investment products, including the ability to purchase and sell all types of individual securities, such as equities, options, fixed income securities, mutual funds and annuities. The Bank offers transactional, cash management type brokerage accounts with check writing and daily sweep capabilities. It also offers retirement products, such as individual retirement accounts (IRAs) and administrative services for retirement vehicles, such as pension, profit sharing, and 401(k) plans to its clients. Signature Securities offers wealth management servi ces to its high net worth personal clients. Together with its client and their other professional advisors, including attorneys and certified public accountants, it develops a financial plan that can include estate planning, business succession planning, asset protection, investment management, family office advisory services, bill payment, art and collectible advisory services and concentrated stock services.

Sources of Funds

The Bank offers a variety of deposit products to its clients. Its business deposit products include commercial checking accounts, money market accounts, escrow deposit accounts, lockbox accounts, cash concentration accounts and other cash management products. Its personal deposit products include checking accounts, money market accounts and certificates of deposit. The Bank also allows its personal and business deposit clients to access their accounts, transfer funds, pay bills and perform other account functions over the Inte rnet and through ATM machines. As of December 31,! 2011, it! m! aintained! approximately 78,000 deposit accounts representing $11.70 billion in client deposits, excluding brokered deposits.

Insurance Services

The Bank offers its business and private clients an array of individual and group insurance products, including health, life, disability and long-term care insurance products through its subsidiary, Signature Securities. The Bank does not underwrite insurance policies. It only acts as an agent in offering insurance products and services underwritten by insurers.

Top 10 Bank Stocks For 2014: Ampco-Pittsburgh Corporation(AP)

Ampco-Pittsburgh Corporation and its subsidiaries manufacture and sell custom-engineered equipment in the United States and internationally. It operates in two segments, Forged and Cast Rolls, and Air and Liquid Processing. The Forged and Cast Rolls segment produces forged hardened steel rolls used in cold rolling for the producers of steel, aluminum, and other metals; and cast iron and steel rolls for hot and cold strip mills, medium/heavy section mills, and plate mills. The Air and Liquid Processing segment manufactures finned tube and plate finned heat exchange coils for the commercial and industrial construction, as well as for process and utility industries; custom air handling systems used in commercial, institutional, and industrial buildings; and a line of centrifugal pumps for the refrigeration, power generation, and marine defense industries. The company was founded in 1929 and is based in Pittsburgh, Pennsylvania.

Advisors' Opinion:

• [By EntreBankph.com]

  Aboitiz Power Corporation (AP) is a publicly-owned holding company listed with the Philippine Stock Exchange that, through its subsidiaries and affiliates, is a leader in the Philippine hydroelectric power generation industry and has interests in some of the largest privately-owned distribution utilities in the Philippines. Since its incorporation in 1998, AP has accumulated interests in both hydroelectric power generation facilities and in thermal plants.

Top 10 Bank Stocks For 2014: J P Morgan Chase & Co(JPM)

JPMorgan Chase & Co., a financial holding company, provides various financial services worldwide. Its Investment Bank segment provides various investment banking products and services, including advising on corporate strategy and structure, capital-raising in equity and debt markets, risk management, market-making in cash securities and derivative instruments, prime brokerage, and research services serving corporations, financial institutions, governments, and institutional investors. The company?s Commercial Banking segment provides lending, treasury, investment banking, and asset management services to corporations, municipalities, financial institutions, and not-for-profit entities. Its Treasury & Securities Services segment offers cash management, trade, wholesale card, and liquidity products and services to small and mid-sized companies, multinational corporations, financial institutions, and government entities. It also holds, values, clears, and services securities, cash, and alternative investments for investors and broker-dealers, and manages depositary receipt programs worldwide. JPMorgan?s Asset Management segment provides investment and wealth management to institutions, retail investors, and high-net-worth individuals. This segment offers investment management in equities, fixed income, real estate, hedge funds, private equity, and liquidity products, as well as trust and estate, banking and brokerage services, and retirement services. Its Retail Financial Services segment offers retail banking and consumer lending services that include checking and savings accounts, mortgages, home equity and business loans, and investments through ATMs, online banking, and telephone banking, as well as auto dealerships and school financial-aid offices. The company?s Card Services segment issues credit cards and processes various credit card payments. JPMorgan Chase & Co. was founded in 1823 and is headquartered in New York, New York.

Advisors' Opinion:

• [By Philip van Doorn]

  JPMorgan Chase (JPM_) is another interesting example of a stock that investors are punishing, apparently for last year's hedging debacle. The company's 2012 ROA was 0.94%. The shares closed at $47.16 Friday, trading for just 8.2 times the consensus 2014 EPS estimate of $5.75.

  
  

  Stifel Nicolaus estimates that JPMorgan's 2014 ROA will be 0.95%. Mutascio said JPMorgan "now trades at the lowest P/E multiple within our large-cap bank coverage universe" -- 8.2 times versus 9.7 times, and that the company's "size, exposure to re-regulation, and the 'London Whale' fiasco all probably combine to play a role in the discounted valuation."
• [By Kathy Kristof]

  Shares of JPMorgan Chase (JPM) continue to be held back by a London trading debacle that cost the bank a whopping $6.2 billion, says analyst Erik Oja, of S&P Capital IQ. Although a congressional report was highly critical of the company's leadership, including chairman and CEO Jamie Dimon, Oja considers JPMorgan to be among the nation's best-managed banks. "It is still one of the top investment banks in the world and is likely to have good growth," he says. At $47.49, the stock sells for 8.7 times estimated 2013 earnings of $5.48 per share. Oja considers JPMorgan a bargain and thinks it will hit $55 in a year. The stock, incidentally, yields an above-average 3.2%.

Top 10 Bank Stocks For 2014: Northern Trust Corporation(NTRS)

Northern Trust Corporation, through its subsidiaries, provides asset servicing, fund administration, asset management, and fiduciary and banking solutions for corporations, institutions, families, and individuals worldwide. The company offers corporate and institutional services, including global master trust and custody, trade settlement, and reporting; fund administration; cash management; investment risk and performance analytical services; investment operations outsourcing; and transition management and commission recapture services. It also provides personal financial services, such as personal trust, investment management, custody, and philanthropic services; financial consulting; guardianship and estate administration; brokerage services; and private and business banking services, as well as customized products and services. In addition, the company offers active and passive equity and fixed income portfolio management, as well as alternative asset classes comprisin g private equity and hedge funds of funds, and multi-manager products and advisory services. Further, it engages in fund administration, investment operations outsourcing, and custody business that provides specialized services to a range of funds, which include money-market, multi-manager, exchange-traded funds, and property funds for on-shore and off-shore markets. Additionally, the company provides administrative and middle-office services consisting of trade processing, valuation, real-time reporting, accounting, collateral management, and investor servicing. Northern Trust Corporation was founded in 1889 and is based in Chicago, Illinois.

Top 10 Bank Stocks For 2014: First Horizon National Corp (FHN)

First Horizon National Corporation (FHN), incorporated in 1968, is a bank holding company. The Company provides financial services through its subsidiary, First Tennessee Bank National Association (the Bank), and its subsidiaries. The Company�� two brands First Tennessee and FTN Financial provide customers with a range of products and services. First Tennessee provides retail and commercial banking services throughout Tennessee. FTN Financial (FTNF) is engaged in fixed income sales, trading, and strategies for institutional clients in the United States and abroad. FHN has four operating business segments: regional banking, capital markets, corporate, and non-strategic. As of December 31, 2011, the Bank had $16.4 billion in total deposits and $16 billion in total net loans. As of December 31, 2011, the Company�� subsidiaries had over 200 business locations in 17 the United States states, Hong Kong, and Tokyo, excluding off-premises automated teller machines (ATMs). As of December 31, 2011, the Bank had 183 branch locations in four states, which include 172 branches in metropolitan areas of Tennessee; two branches in northwestern Georgia; seven branches in northwestern Mississippi, and two branches in North Carolina. As of December 31, 2011, FTN Financial products and services were offered through 18 offices in total, including 16 offices in 14 states plus an office in each of Hong Kong and Tokyo.

The regional banking segment offers financial products and services, including traditional lending and deposit taking, to retail and commercial customers in Tennessee and surrounding markets. Regional banking provides investments, financial planning, trust services and asset management, credit card, cash management, and first lien mortgage originations within the Tennessee footprint. In addition, the regional banking segment includes correspondent banking, which provides credit, depository, and other banking related services to other financial institutions.

The capital markets se! gment consists of fixed income sales, trading, and strategies for institutional clients in the United States and abroad, as well as loan sales, portfolio advisory, and derivative sales. The corporate segment consists of gains on the extinguishment of debt, unallocated corporate expenses, expense on subordinated debt issuances and preferred stock, bank-owned life insurance, unallocated interest income associated with excess equity, net impact of raising incremental capital, revenue and expense associated with deferred compensation plans, funds management, low income housing investment activities, and charges related to restructuring, repositioning, and efficiency. The non-strategic segment consists of the wind-down national consumer lending activities, legacy mortgage banking elements, including servicing fees, and the associated ancillary revenues and expenses related to these businesses. Non-strategic also includes the wind-down trust preferred loan portfolio and exited businesses along with the associated restructuring, repositioning, and efficiency charges.

As of December 31, 2011, the Company provided services through its subsidiaries, which include general banking services for consumers, businesses, financial institutions, and governments; through FTN Financial fixed income sales and trading, underwriting of bank, loan sales, advisory services and derivative sales; discount brokerage and full-service brokerage; correspondent banking; transaction processing, such as nationwide check clearing services and remittance processing; trust, fiduciary, and agency services; credit card products; equipment finance; investment and financial advisory services; mutual fund sales as agent; retail insurance sales as agent, and mortgage banking services.

As of December 31, 2011, the commercial, financial, and industrial (C&I) portfolio was eight billion dollars, and is consisted of loans used for general business purposes, and consisted of relationship customers in Tennessee and certain n! eighborin! g states, which are managed within the regional bank. Products include working capital lines of credit, term loan financing of owner-occupied real estate and fixed assets, and trade credit enhancement through letters of credit. As of December 31, 2011, the unpaid principal balance (UPB) of trust preferred loans totaled $447.2 million with the UPB of other bank-related loans totaling approximately $161.8 million. The commercial real estate portfolio includes both financings for commercial construction and non-construction loans. This portfolio is segregated between income commercial real estate (CRE) loans which contain loans, lines, and letters of credit to commercial real estate developers for the construction and mini- permanent financing of income-producing real estate, and residential CRE loans. The residential CRE portfolio includes loans to residential builders and developers for the purpose of constructing single-family detached homes, condominiums, and town homes. As of December 31, 2011, the residential CRE portfolio was $.1 billion. As of December 31, 2011, the consumer real estate portfolio was $5.3 billion, and is composed of home equity lines and installment loans. As of December 31, 2011, the credit card and other portfolios were $.3 billion, and primarily include credit card receivables, automobile loans, and over-the-counter (OTC) construction loans and other consumer related credits.

FHN�� investment portfolio consists of debt securities, including government agency issued mortgage-backed securities (MBS) and government agency issued collateralized mortgage obligations (CMO). During the year ended December 31, 2011, Government agency issued MBS and CMO, and other agencies averaged $2.9 billion. During 2011, the United States treasury securities and municipal bonds averaged $79.5 million. During 2011, investments in equity securities averaged $222.3 million.

During 2011, short-term funds (certificates of deposit greater than $100,000, federal funds purchased (! FFP), sec! urities sold under agreements to repurchase, trading liabilities, and other short-term borrowings) averaged $3.6 billion. During 2011, other borrowings increased to $.3 billion. Term borrowings include senior and subordinated borrowings and advances with original maturities greater than one year. During 2011, average term borrowings averaged $2.6 billion.

The Company competes with Regions Bank, SunTrust Bank, Wells Fargo Bank N.A., Bank of America N.A., and Pinnacle National Bank.

Advisors' Opinion:

• [By Dan Freed]

  Trading at a 17% discount to peers in terms of tangible-book value, JPMorgan says First Horizon's valuation "reflects a mediocre franchise and one of the best management teams in the business."

  The report adds that management is moving the bank to become "one of the most profitable banks in the industry over time," and it "[encourages] investors to buy the stock at current levels and ahead of an expected 15-20% ROE and the valuation improvement that should coincide with this level of profitability."

NVR Whiffs on Earnings

NVR (NYSE: NVR  ) reported earnings on July 22. Here are the numbers you need to know.

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

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

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

Revenue details
NVR recorded revenue of $1.01 billion. The seven analysts polled by S&P Capital IQ predicted sales of $1.02 billion on the same basis. GAAP reported sales were 31% higher than the prior-year quarter's $771.1 million.

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

EPS details
EPS came in at $10.11. The eight earnings estimates compiled by S&P Capital IQ averaged $12.14 per share. GAAP EPS of $10.11 for Q2 were 13% higher than the prior-year quarter's $8.97 per share.

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

Margin details
For the quarter, gross margin was 16.6%, 130 basis points worse than the prior-year quarter. Operating margin was 8.4%, 10 basis points better than the prior-year quarter. Net margin was 5.0%, 110 basis points worse than the prior-year quarter. (Margins calculated in GAAP terms.)

Looking ahead
Next quarter's average estimate for revenue is $1.09 billion. On the bottom line, the average EPS estimate is $14.80.

Next year's average estimate for revenue is $4.08 billion. The average EPS estimate is $50.54.

Investor sentiment
The stock has a two-star rating (out of five) at Motley Fool CAPS, with 250 members out of 518 rating the stock outperform, and 268 members rating it underperform. Among 161 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 83 give NVR a green thumbs-up, and 78 give it a red thumbs-down.

Best Safest Companies To Invest In Right Now

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on NVR is hold, with an average price target of $959.43.

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Why Home Health Providers Hit a Brick Wall

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 home health providers Amedisys (NASDAQ: AMED  ) , Gentiva Health Services (NASDAQ: GTIV  ) , and LHC Group (NASDAQ: LHCG  )  swooned as much as 28%, 20%, and 15%, respectively, following a public proposal by the Centers for Medicare and Medicaid Services, or CMS, late yesterday that in-home health care reimbursements be cut by 1.5% in 2014.

So what: The bad news for the sector is that the 1.5% haircut is only the half of it. The proposal also calls for up to a 3.5% annual haircut in reimbursements from 2014 to 2017 for the national standardized 60-day episode rate. With Amedisys garnering more than 80% of its revenue from Medicare reimbursements and Gentiva Health more than 90%, you can clearly see why the sector has hit a brick wall. To add salt to the wound, RW Baird downgraded all three companies to "underperform" from "neutral."

Now what: The home health care sector represents quite the conundrum for investors. On one hand, the CMS is intent on cutting government reimbursement to for-profit companies that thrive off Medicare, which is all a part of the coming implementation of the Patient Protection and Affordable Care Act, commonly known as Obamacare. Simply put, the government can't keep paying out more money each year and appears to finally be drawing a line in the sand. Then again, an aging population of baby boomers is going to be a boon for the industry over the next two or three decades. For now, I'd suggest keeping to the sidelines and allowing the guidance for all three companies to do the talking in their upcoming quarterly reports.

Craving more input? Start by adding Amedisys, Gentiva Health Services, and LHC Group to your free and personalized watchlist so you can keep up on the latest news with the company.

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A Chinese Investment That's Working Beautifully

Moneygram International Beats on Both Top and Bottom Lines

Moneygram International (Nasdaq: MGI  ) reported earnings on July 25. Here are the numbers you need to know.

The 10-second takeaway
For the quarter ended June 30 (Q2), Moneygram International beat expectations on revenues and beat expectations on earnings per share.

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

Margins expanded across the board.

Revenue details
Moneygram International reported revenue of $365.1 million. The 11 analysts polled by S&P Capital IQ hoped for revenue of $355.7 million on the same basis. GAAP reported sales were 11% higher than the prior-year quarter's $330.1 million.

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

EPS details
EPS came in at $0.32. The 13 earnings estimates compiled by S&P Capital IQ predicted $0.31 per share. Non-GAAP EPS of $0.32 for Q2 were 14% higher than the prior-year quarter's $0.28 per share. GAAP EPS were $0.27 for Q2 compared to -$0.35 per share for the prior-year quarter.

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

Margin details
For the quarter, gross margin was 36.4%, much better than the prior-year quarter. Operating margin was 11.6%, much better than the prior-year quarter. Net margin was 5.2%, much better than the prior-year quarter. (Margins calculated in GAAP terms.)

Looking ahead
Next quarter's average estimate for revenue is $365.0 million. On the bottom line, the average EPS estimate is $0.34.

Next year's average estimate for revenue is $1.44 billion. The average EPS estimate is $1.23.

Investor sentiment
The stock has a one-star rating (out of five) at Motley Fool CAPS, with 192 members out of 231 rating the stock outperform, and 39 members rating it underperform. Among 54 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 45 give Moneygram International a green thumbs-up, and nine give it a red thumbs-down.

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Moneygram International is outperform, with an average price target of $20.17.

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Why Unisys Shares Popped

3 Glistening Oil Stocks From the "Golden Triangle"

Netflix Approaching Its Apple Moment

Over the past year, Netflix (NASDAQ: NFLX  ) and Apple (NASDAQ: AAPL  ) have traded places in the minds of many investors. A year ago, Apple was a Wall Street darling that was nearing its all-time high above $700, with many analysts predicting a run to $1000 or higher. Meanwhile, Netflix stock was down in the dumps, trading for as little as $53 -- a far cry from its all-time high of more than $300 in 2011.

Apple vs. Netflix 1 Year Stock Performance, data by YCharts.

As the two companies prepare to report June-quarter earnings this week, Netflix has surged back toward its all-time high, while Apple has been languishing below $450 for most of the year. Yet the two companies face surprisingly similar strategic landscapes, with market saturation posing a potential threat to future growth.

A similar timeline
The recent histories of Netflix and Apple parallel each other in many ways. Today, Netflix and Apple each have one signature product that consumers identify with the brand more than anything else. For Netflix, it's the company's streaming-video service; for Apple, it's the iPhone.

Both of these products were introduced in 2007. However, neither product was fully formed at that time. The Netflix "Watch Instantly" service was just a free perk for subscribers to its DVD-by-mail service, and users were only allotted a certain number of hours of viewing per month. The iPhone was only available through AT&T in the U.S. initially, and the App Store did not even exist until 2008.

In the U.S., the iPhone did not become widely available until 2011, when it finally launched on the Verizon and Sprint networks. By then, the iPhone had received most of the upgrades that differentiate today's iPhone from the original 2007 version. Netflix developed its streaming service at a similar pace. The streaming-only plan launched in late 2010, and in 2011 it was separated from the DVD-by-mail service.

A different perception
Apple's iPhone and Netflix's streaming-video service have been in the market for a similar length of time. Investors have become increasingly worried over the past year that the iPhone has already saturated the market. These fears seem overblown, but given 55 million U.S. iPhone users as of May, it's true that Apple cannot sustain rapid user-base growth in the U.S. for much longer.

Yet comparatively few people seem to be concerned that Netflix may be approaching its own saturation point in the U.S. Indeed, the company is trading for more than 85 times forward earnings estimates, indicating that Wall Street expects the company to post rapid growth well beyond 2014.

Netflix ended Q1 with 29.2 million U.S. streaming subscribers and projected that this would grow to as many as 30 million subscribers by the end of Q2.

This may seem like a much lower market penetration than the iPhone. However, Netflix allows -- and even encourages -- family members to share an account, whereas smartphones obviously cannot be shared effectively. As a result, Netflix's addressable market in the U.S. is, at most, the 115 million households here, whereas there are already 141 million U.S. smartphone users.

If you limit Netflix's addressable market to households with broadband Internet, the market size drops to 88 million households. By that standard, Netflix has already captured 34% of its addressable market, whereas the iPhone has 39% of the U.S. smartphone market, and smartphones overall have 59% of the U.S. mobile-phone market.

So what?
All of these statistics may seem meaningless out of context. The key point for investors is that Netflix's domestic streaming business is just a year or so behind the iPhone in terms of market saturation. Both products entered the U.S. market around the same time, and the iPhone's growth trajectory has been just slightly ahead of Netflix's.

Just one year ago, Apple stock was rocketing higher on the back of high hopes for the upcoming iPhone 5. Today, Netflix stock is rocketing higher on the back of high hopes for its recent foray into original programming. However, just as Apple investors have received a harsh reality check in the last year, Netflix investors are likely to get one in the next year or two as the company approaches saturation of the U.S. market. When the saturation issue comes to the fore of Netflix investors' concerns, the stock could take a long tumble due to its rich valuation.

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Top Gold Companies To Own In Right Now

The decline in gold and silver was fast and sharp as panic selling set in, resulting in major technical damage. Currently, gold is technically bearish and it could fall further.

We recently recommended lowering your metals position from 30% to 15% of your total portfolio, and we maintain that recommendation.

Lower your positions in the shares and ETFs like SPDR Gold Trust (GLD), iShares Gold Trust (IAU) and iShares Silver Trust (SLV). Keep the proceeds in U.S. dollars for the time being.

Primarily keep your physical gold and silver core positions; that is, coins and bullion you plan to keep over the long haul, riding through periods of weakness.

Top Gold Companies To Own In Right Now: Northgate Minerals Corporation(NXG)

Northgate Minerals Corporation, together with its subsidiaries, engages in exploring, developing, processing, and mining gold and copper deposits in Canada and Australia. Its principal producing assets include 100% interests in the Fosterville and Stawell Gold mines in Victoria, Australia; and the Kemess South mine located in north-central British Columbia, Canada. The company was formerly known as Northgate Exploration Limited and changed its name to Northgate Minerals Corporation in May 2004. Northgate Minerals Corporation was founded in 1919 and is headquartered in Toronto, Canada.

Advisors' Opinion:

• [By Cutler]

  Northgate Minerals Ltd Common (AMEX:NXG): This equity had 11,186,665 shares sold short as of Aug 31st, as compared to 12,721,260 on Aug 15th, which represents a change of -1,534,595 shares, or -12.1%. Days to cover for this company is 2 and average daily trading volume is 6,342,426. About the equity: Northgate Minerals Corporation is a gold and copper mining company. The Company has mines in areas of Canada and Australia.

• [By Barker]

  I'm not the only Fool who perceives compelling value in the shares of this 90-year-old gold company. My colleague Andrew Sullivan made Northgate his inaugural selection within the Fool's Rising Star Portfolio Series. With anticipated production from Young-Davidson beginning in early 2012, and consistent exploration success at multiple properties, I consider this recently stagnant stock among the clearest rising stars in the gold patch.

• [By Christopher Barker]

  I've been reminding Fools to consider positioning for Northgate Minerals' golden explosion for months, and patient gold investors continue to await the day when Northgate's powerful prospects are more fully reflected in the shares. Construction of the critical Young-Davidson mine continues right on schedule, and first production now stands about two quarters away. That means Northgate is reasonably likely to achieve its 2012 production target of 300,000 ounces, followed by 350,000 ounces in 2013. Meanwhile, Northgate recently drilled "one of the best holes ever intersected on the property" -- featuring 4.31 grams of gold per ton over a very wide 79.6-meter segment -- from a new discovery zone outside of the existing 2.8 million-ounce reserve.

  If Young-Davidson were Northgate's sole asset, these shares would still be undervalued here at about $2.60 per share. With a preliminary assessment looming for the reworked Kemess Underground project, a new drill program at the Awakening Gold project in Nevada, and two operating gold mines in Australia, Northgate figures among the clearest bargains in the gold patch.

Top Gold Companies To Own In Right Now: Agnico-Eagle Mines Limited(AEM)

Agnico-Eagle Mines Limited, through its subsidiaries, engages in the exploration, development, and production of mineral properties in Canada, Finland, and Mexico. The company primarily explores for gold, as well as silver, copper, zinc, and lead. Its flagship property includes the LaRonde mine located in the southern portion of the Abitibi volcanic belt, Canada. The company was founded in 1953 and is based in Toronto, Canada.

Advisors' Opinion:

• [By Vatalyst]

  With headquarters in Canada, Agnico-Eagle is a gold producer that has been around for a while with operations in Canada, Finland and Mexico and the United States that has paid a cash dividend for 29 consecutive years. AEM gained 25% over the year and reported 83.5% growth in quarterly earnings. It has a market capitalization of $11.4 billion and a trailing P/E ratio of 34x with expectations of earning $0.55 per share. AEM, like other operators like it, are likely a better bet than ETF trust options like SPDR Gold Shares (GLD).

Top Stocks To Own For 2014: First Majestic Silver Corp.(AG)

First Majestic Silver Corp. engages in the production, development, exploration, and acquisition of mineral properties with a focus on silver in Mexico. The company owns interests in La Encantada Silver Mine comprising 4,076 hectares of mining rights and 1,343 hectares of surface land located in Coahuila; La Parrilla Silver Mine consisting of mining concessions covering an area of 69,867 hectares; and San Martin Silver Mine comprising approximately 7,841 hectares of mineral rights and approximately 1,300 hectares of surface land rights located in Jalisco. It also holds interests in Del Toro Silver Mine consisting of 393 contiguous hectares of mining claims and an additional 129 hectares of surface rights located in Zacatecas; Real de Catorce Silver Project comprising 22 mining concessions covering 6,327 hectares located in San Luis Potosi state; and Jalisco Group of Properties consisting of mining claims totalling 5,240 hectares located in Jalisco. The company was founded in 1979 and is headquartered in Vancouver, Canada.

Advisors' Opinion:

• [By Goodwin]

  The shares closed at $88.19, down $1.1, or 1.23%, on the day. Its market capitalization is $77.08 billion. About the company: Siemens AG manufactures a wide range of industrial and consumer products. The Company builds locomotives, traffic control systems, automotive electronics, and engineers electrical power plants. Siemens also provides public and private communications networks, computers, building control systems, medical equipment, and electrical components. The Company operates worldwide.

Top Gold Companies To Own In Right Now: Iamgold Corporation(IAG)

IAMGOLD Corporation, together with its subsidiaries, engages in the exploration, development, and production of mineral resource properties worldwide. It primarily explores for gold, silver, zinc, copper, niobium, diamonds, and other metals. The company holds interests in eight operating gold mines, a niobium producer, a diamond royalty, and exploration and development projects located in Africa and the Americas. Its advanced exploration and development projects include the Westwood project in Canada; and the Quimsacocha project, which consists of 3 mining concessions covering an aggregate area of approximately 8,030 hectares in Ecuador. The company was formerly known as IAMGOLD International African Mining Gold Corporation and changed its name to IAMGOLD Corporation in June 1997. IAMGOLD Corporation was founded in 1990 and is based in Toronto, Canada.

Advisors' Opinion:

• [By Christopher Barker]

  Although I have not shed my long-standing contention that Yamana Gold offers one of the more deeply discounted vehicles for long-term gold exposure, lately my outlook for IAMGOLD has turned particularly bullish. With a looming spin-off of a 10% to 20% stake in the company's reliably profitable Niobec niobium mine, and the recent sale of its interest in a pair of high-cost gold operations in Ghana for $667 million, IAMGOLD finds itself in terrific financial shape to execute an aggressive $1.2 billion expansion imitative at existing operations.

  Considering the $1.6 billion net asset value (after tax) that IAMGOLD recently assessed for the Niobec mine alone, and a presumed hoard of more than $1.2 billion (in cash, cash equivalents, and gold bullion held for investment), at a market capitalization of $6.9 billion I find extreme comfort in the market's resulting valuation for IAMGOLD's 15.2 million ounces of attributable gold reserves.

Top Gold Companies To Own In Right Now: Australian Dollar(AU)

AngloGold Ashanti Limited primarily engages in the exploration and production of gold. It also produces silver, uranium oxide, and sulfuric acid. The company conducts gold-mining operations in South Africa; continental Africa, including Ghana, Guinea, Mali, Namibia, and Tanzania; Australia; and the Americas, which include Argentina, Brazil, and the United States. It also has mining or exploration operations in the Democratic Republic of the Congo, Guinea, and Colombia. As of December 31, 2010, the company had proved and probable gold reserves of 71.2 million ounces. The company has a strategic alliance with Thani Dubai Mining Limited to explore, develop, and operate mines across the Middle East and parts of North Africa. AngloGold Ashanti Limited, formerly known as Vaal Reefs Exploration and Mining Company Limited, was founded in 1944 and is headquartered in Johannesburg, South Africa.

Advisors' Opinion:

• [By Mel Daris]

  AngloGold Ashanti (AU), a South African company, is trading for $33 and pays a dividend which yields 3.20%. The stock has an astonishing P/E of 1,015. Its net income totaled $112 million last year, but negative cash flows of $620 million. It holds net tangible assets of $4.3 billion and its balance sheet has not grown nearly as quickly as the other companies on this list. AngloGold has two new mines coming online in Congo and Colombia.

Top Gold Companies To Own In Right Now: Thompson Creek Metals Company Inc.(TC)

Thompson Creek Metals Company Inc., through its subsidiaries, engages in mining, milling, processing, and marketing molybdenum products in the United States and Canada. The company?s principal properties include the Thompson Creek Mine and mill in Idaho; a metallurgical roasting facility in Langeloth, Pennsylvania; and a joint venture interest in the Endako Mine, mill, and roasting facility in British Columbia. It also holds interests in development projects comprising the Davidson molybdenum property and the Berg copper-molybdenum-silver property located in northern British Columbia; the Howard?s Pass property, a lead and zinc project situated in the Yukon territory-northwest territories border; and the Maze Lake property, a gold project located in the Kivalliq district of Nunavut. The company produces molybdenum products, primarily molybdic oxide and ferromolybdenum, as well as soluble technical oxide, pure molybdenum tri-oxide, and high purity molybdenum disulfide. As o f December 31, 2010, its consolidated recoverable proven and probable ore reserves totaled 462.2 million pounds of contained molybdenum in the Thompson Creek Mine and the Endako Mine. The company was formerly known as Blue Pearl Mining Ltd. and changed its name to Thompson Creek Metals Company Inc. in May 2007. Thompson Creek Metals Company Inc. is based in Denver, Colorado.

Advisors' Opinion:

• [By Christopher Barker]

  My recent survey of bargain-basement stock valuations among gold miners identified Thompson Creek Metals as a glaring opportunity for value investors. The miner sports two world-class molybdenum mines with 534 million pounds of reserves between them, along with an array of attractive development projects in the pipeline. Foremost among those is the Mt. Milligan copper and gold project, where Thompson Creek expects to launch itself into the ranks of intermediate gold producers with production commencing in late 2013.

  With 6 million ounces of gold reserves, accompanied by 2.1 billion pounds of copper, Mt. Milligan will deliver about 262,100 ounces of gold per year for the first six years of a 22-year mine life, averaging 194,500 ounces annually over that entire span. Although 25% of that gold production is already spoken for through a gold stream agreement with Royal Gold (Nasdaq: RGLD  ) , Thompson Creek Metals is sure to enjoy a powerful cash-flow explosion.

Why Balfour Beatty, Punch Taverns, and Xaar Should Beat the FTSE 100 Today

LONDON -- The FTSE 100 (FTSEINDICES: ^FTSE  ) initially started this week in the same glum mood as it ended last week, but it soon snapped out of its doldrums to gain more than 1% by 8 a.m. EDT. The index is overcoming weakness in the mining sector after recent news from China suggested that the country's growth will be a little lower than previously expected.

But there are companies doing well in some other sectors. Here are three from the various FTSE indexes that are having a good day and look set to beat the general market.

Balfour Beatty (LSE: BBY  )
Balfour Beatty shares are getting a much-needed boost this morning, picking up 4.1% to 225 pence on the announcement of a new contract. The infrastructure developer has landed the job of building the Providence Tower residential scheme in London in a deal worth £110 million. Situated at New Providence Wharf, the building will be the tallest that Balfour Beatty has built in the U.K., reaching 43 floors. Construction is due to start this summer, with completion expected by December 2015.

What this will do for the firm's current year remains to be seen, but City analysts were forecasting a 35% drop in earnings per share before today. That forecast still puts the shares on a modest P/E of 9.5, so is this a buying opportunity? Only you can decide that.

Punch Taverns (LSE: PUB  )
An update for the 12 weeks to May 25 sent the shares of Punch Taverns up 4.4% to 13.3 pence, with the price now up 60% over the past 12 months. With like-for-like trends improving, the pub company says it is "on track to meet full year profit expectations," though current City estimates do suggest a 25% fall in EPS.

But of more importance, the firm has announced a new plan to restructure its debt, which is complex and currently stands at about £2 billion. If the current proposal is accepted, cash interest payments should be reduced to about £32 million per year.

Xaar (LSE: XAR  )
The big move of the day is a 23.7% rise in inkjet technologist Xaar's shares to 789 pence. The shares are up about 270% over the past 12 months now, with today's boost coming from news of soaring sales in the period from January to May. With last year bringing in revenue of £86.3 million, the firm now expects to exceed that by about 50%.

Before today, analysts were forecasting a 30% rise in EPS for the year to December, and that may well have to be revised upward now.

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Great Job, Now You're Fired

"As a founding CEO, over the past 22 years, Leland has secured four drug approvals, an unheard-of achievement for a small pharmaceutical company. He has taken VIVUS (NASDAQ: VVUS  ) from start-up to what it is today."
-- Samuel Colin, senior managing partner at First Manhattan, VIVUS' largest shareholder.

But "what it is today" apparently isn't good enough for Colin. After a heated proxy fight, Colin succeeded in ousting VIVUS' CEO Leland Wilson.

Rather than waiting to see which of the two slates of board nominees shareholders would vote in, First Manhattan and management reached a compromise. If you can call it that; First Manhattan clearly got the better end of the deal because, apparently, it was going to win anyway.

In addition to ousting Wilson, four other board members will resign from the board to make way for six of First Manhattan's nominees. The board will be expanded from nine to 11 members, with First Manhattan's choice for the CEO spot, Anthony Zook, taking the 11th spot.

If you haven't been keeping score at home that's:

First Manhattan: 7
Old management: 4

New management! Different Story?
Zook, who served as executive vice president for global commercial operations at AstraZeneca until February, has his work cut out for him. VIVUS' obesity drug Qsymia hasn't been flying off the shelves since it launched last September; in the first quarter, sales amounted to just $4.1 million.

It's not like VIVUS wasn't putting in the effort. In the first quarter, the company spent $44.7 million on selling, general, and administrative expenses to hock Qsymia.

Obesity is a big market with lots of patients, but doctors have been reluctant to try drugs, given the side-effect issues of Wyeth's fen-phen, Abbott Labs' Meridia, and Sanofi's Acomplia, especially when diet and exercise are generally safer.

Patients also haven't warmed up to the drug, given its cost. At the end of the first quarter, VIVUS had secured insurance coverage for about one-third of insured patients, but much of that is at the Tier 3 level, where co-pays can be as high as $50 to $100. By the end of the year, VIVUS is shooting for 50% coverage, but there's still a long way to go before the sticker shock disappears.

Neither the doctors' concerns nor the patients' cost issues are going to change under new management. Best-case scenario for investors is that the new management is able to find help from a large pharma partner that can put a little more muscle behind the launch.

VISUS' direct competitors in the obesity space both have large partners. Arena Pharmaceuticals (NASDAQ: ARNA  ) secured a marketing deal with Eisai to market Belviq, and Orexigen (NASDAQ: OREX  ) will have help from Takeda once its obesity drug Contrave is approved.

Both companies got $50 million up front, over $1 billion in potential milestone payments, and royalties in deals signed before their drugs were even on the market. Presumably, VIVUS could get even more now, because it has an approved drug.

It isn't clear exactly why VIVUS didn't sign a post-approval marketing deal. My best guess is the company couldn't get the terms that management thought it deserved. We'll have to wait and see if the new management is willing to settle for less, or can drive a better deal.

If management can secure a deal, buying now could be a good move, but it's also risky to count on a pharma partner to step up. To counter that risk, consider diversifying into dividend-paying stocks. The Motley Fool's special report, "Secure Your Future With 9 Rock-Solid Dividend Stocks," is a great way to kick-start your search. Just click here to get your free copy today.

Why Middleby Doesn't Chase Customers

In the video interview below, Motley Fool CEO Tom Gardner speaks with Middleby (NASDAQ: MIDD  ) CEO Selim Bassoul. Since becoming CEO in 2000, Bassoul has led a remarkable transformation at Middleby, turning the cooking equipment maker's stock into a nearly 50-bagger over that time. In the video below, Bassoul discusses how the company can continue its rapid growth.

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Tom Gardner: I want to talk about your philosophy of serving your customers, and I want to talk about it in the context of the pursuit of new customers and the service of existing customers, because we just talked about this beforehand and I found it pretty fascinating, how you view what your goals are with regard to your customer base.

Selim Bassoul: Our goal is 100% customer retention. We chase very little new customers. We are not interested in chasing new customers. We believe that you should retain the same customers, pamper them, surround them and protect them, and the way we do that is simple. So feature and benefit, a value proposition, but the biggest thing that has been a big success for me is that I spend most of my time not visiting my own customers. I visit customers of my competitors, because those customers tell me what the competitors are doing right and wrong, and take it back and apply to my own...

Gardner: Now most people would think that that was your attempt to steal those customers from your competitors.

Bassoul: No, no, I have no attempt. When I go in and meet with those customers, they say, Selim, we don't choose Middleby. I said, "Great. All I want to know is why you use my competitors." And the reason is my customers love us. Our customers love us. They can't tell me what's wrong with my equipment. I take an example of Papa John's, who uses exclusively our ovens. They don't know our competitors. They have never used the competitor's oven. It's my obligation duty to go back and tell them, this is a competing chain that chooses my competitors, and let me tell you what they get and what they don't get. The good stuff I take it back to my company and apply it to my customers.

The World's Largest Gold Mine Hits Another Snag

Even given some of the good news coming out of the gold sector recently – including dovish comments from the Fed and positive news from both Newmont Mining (NYSE: NEM  ) and Gold Fields (NYSE: GFI  ) – Barrick Gold (NYSE: ABX  ) has been unable to avoid further delays at Pascua-Lama. The stock has traded higher along with its peers, but investors should still maintain a cautious view. When complete, the mine is expected to be the largest gold mine in the world, which will only be meaningful when it is functional.

ABX data by YCharts

In the video below, Fool.com contributor Doug Ehrman discusses the delay and what it could mean for the company.

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The Real Reason Stocks Perked Up This Morning

Every eye on Wall Street this morning is focused on Federal Reserve Chairman Ben Bernanke, who began giving his twice-yearly congressional testimony before the House Financial Services Committee this morning. With pundits scrutinizing Bernanke's words in search of clarification on the timing of the eventual reduction in the Fed's long-standing quantitative-easing program, the market hasn't shown much reaction to the usual balancing act of trying to prepare investors for tapering while avoiding a panic like the one that hit the bond market last month. As of 11 a.m. EDT, the Dow Jones Industrials (DJINDICES: ^DJI  ) are up a modest 20 points, while broader market measures are moderately higher.

But irrespective of Bernanke's comments, the real reason the stock market is poised to advance is that U.S. economic conditions have improved and appear likely to continue improving. Even in light of rising interest rates that could have hurt parts of its business, Bank of America (NYSE: BAC  ) has climbed 1.5% on a 63% jump in its second-quarter profit. The cost-cutting measures B of A has made are just one example of the huge gains in efficiency that we've seen across corporate America, and it's paying off in higher profit margins and rising earnings. In addition, as the employment picture starts to get brighter, consumer-driven businesses have started to rebound more sharply, and that in turn should filter through to more industrially focused companies as well.

Admittedly, not every company in the Dow is responding favorably today. American Express (NYSE: AXP  ) has dropped 4% in advance of its earnings release after the close today, as one analyst downgraded the company's stock in light of high valuations. Analyst firm Buckingham also said the potential for a cap on transaction fees that the European Union is considering imposing could hurt the card company's profits.

McDonald's (NYSE: MCD  ) has fallen more than 1% on a downgrade from Janney Capital, which cut earnings expectations by half a percent and reduced same-store sales estimates for June and July. The fast-food giant has struggled to keep growth up despite headwinds in some international markets and increased competition within the U.S. market.

On the whole, though, investors appear to take the Fed at its word when it says it won't change its accommodative stance more quickly than the market can handle. For investors, that's good news for right now and for the long run as well.

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Tuesday's Top Upgrades (and Downgrades)

This series, brought to you by Yahoo! Finance, looks at which upgrades and downgrades make sense, and which ones investors should act on. Today, our headlines focus on the restaurant sector, where one analyst has just downgraded shares of Buffalo Wild Wings (NASDAQ: BWLD  ) , while a second analyst has initiated coverage on... just about everybody else. Let's dig right into the details, beginning with the new coverage.

Good (and not so good) eatin'
Tuesday was a big day for restaurant stock investors, as investment banker Stifel Nicolaus "initiated coverage" on everyone who is anyone (and a few companies who aren't anyone) in the casual dining segment. Panera, Ruby Tuesday, Brinker -- pretty much every restaurateur out there got a rating of some sort or other. Only a handful got actual buy ratings from Stifel, however. And as we're about to see, even those few didn't deserve the buy ratings...

Let's focus in on a couple of the higher-profile plays on eating out: Pizza Hut operator Yum! Brands (NYSE: YUM  ) and Cheesecake Factory (NASDAQ: CAKE  ) . Taking them one at a time...

Yum! Brands
According to the financial number-crunchers at finviz.com, Yum! sports a 23.4 P/E ratio. Finviz's assertion that Yum! costs nearly 66 times free cash flow, however, is a bit off. In actual fact, S&P Capital IQ data confirm that the stock's only trading for about 34 times its annual cash profits.

But even so -- that's a higher valuation than the P/E makes things seem. And given that Yum! only pays a 1.9% dividend yield, and is only expected to grow its earnings at about 11% annually over the next five years, any way you look at it, the price on this stock looks much, much higher than it should be to offer investors a decent chance at earning a profit from investing in it.

Long story short, I'm going to have to disagree with Stifel. Yum! Brands is fully as overpriced as I said it was earlier this month.

Cheesecake Factory
At first glance, Cheesecake Factory bears a similar valuation to Yum!'s. Its P/E is almost a mirror image of Yum!'s at 23.4 times earnings. The Factory has a couple of things working in its favor, however, that Yum! Brands lacks.

For one thing, it's generating more free cash flow than it reports as net income under GAAP, rather than less. $114 million in cash profits generated last year gives Cheesecake Factory a more palatable 20-times-FCF valuation on its stock.

Cheesecake Factory is also growing faster than Yum!, with an expected growth rate approaching 14%. And Cheesecake Factory has no net debt, versus the $1.5 billion more debt than cash on Yum!'s balance sheet.

All in all, I find Cheesecake Factory a tastier investing proposition than Yum!. It's still not cheap enough to entice me personally, but I like it a lot more than Stifel's Yum! pick.

Buffalo Wild Wings
Now, let's wrap up with the big restaurant downgrade of the day. R.W. Baird cut its rating on Buffalo Wild Wings one notch, to "neutral," this morning. It also clipped $7 off its targeted stock price, lowering that to $105. That's the good news. The bad news is that while Baird was right to downgrade, it didn't cut Buffalo Wild far enough.

Costing more than 34 times earnings today, Buffalo Wild is, on its face, too expensive for the 18% earnings growth estimates that Wall Street assigns it. With no dividend to redeem it, the shares are clearly overpriced.

Even worse than the lack of a dividend at Buffalo Wild, however, is the lack of any free cash flow whatsoever with which to pay a dividend. Over the past 12 months, this restaurant chain reported earning more than $55 million. But its cash flow statement clearly shows that the firm actually burned through more than $10 million in free cash flow.

Put another way, its business ate cash, rather than serving it up to shareholders. To my mind, that's no way to run a business. It's no way to run a restaurant, either. And it means Baird was right to downgrade this stock... and probably should have downgraded Buffalo Wild Wings even more steeply than it did.

Fool contributor Rich Smith has no position in any stocks mentioned. The Motley Fool recommends and owns shares of Buffalo Wild Wings and Panera Bread.

SodaStream Should Bounce Back

The market fizzed higher last week, but SodaStream (NASDAQ: SODA  ) went the other way.

Shares of the company behind the beverage appliance that turns tap water into sparkling soda tumbled 12% last week, as buyout chatter fizzled.

It also doesn't help that we appear to be coming out of what was a ho-hum quarter for soda consumption.

Coca-Cola Enterprises (NYSE: CCE  ) -- the regional bottler of pop that rules over Western Europe -- hosed down its near-term prospects last month.

"Throughout 2012 and so far this year, we have faced challenging operating conditions, including persistent underlying macroeconomic weakness, significant headwinds from poor weather, the prolonged impact of a sharp excise tax increase in France, and a dynamic competitive environment in Great Britain," CEO John Brock warned ahead of a conference presentation.

It's not just a leading bottler smarting. Coca-Cola (NYSE: KO  ) itself reports tomorrow, and it's probably not going to be as refreshing as its namesake soft drink. Analysts see a marginal uptick in profitability and a 1% decline in revenue.

SodaStream would seem to be caught up in the same headwinds facing Coca-Cola Enterprises and Coca-Cola. Sugary soft drinks are being played up as unhealthy refreshments for children, and the unseasonably cool spring, and rainy June, probably scaled back demand for soft drink satisfaction.

Coca-Cola Enterprises has challenges across the Atlantic, but Western Europe is SodaStream's largest market, accounting for nearly half of the company's revenue.

However, SodaStream has managed to post double-digit revenue growth in Europe through at least the first quarter of this year. Western Europe is still mired in an economic funk, but the value proposition of making carbonated beverages at home is resonating in SodaStream's more-established overseas markets.

Against the flattish reports that Coca-Cola should report tomorrow and Coca-Cola Enterprise will announce next week, SodaStream is expected to hold up considerably well when it reports at the end of the month. Analysts see revenue and earnings per share climbing 26% and 27%, respectively.

Both Coca-Cola and SodaStream trade at 18 times next year's earnings. Doesn't your portfolio deserve the company that's actually growing at a clip that justifies that kind of multiple?

SodaStream will bounce back. If it doesn't happen in the next few days, SodaStream's report on July 31 should remind investors about the disruptor's potential for growth in a flat industry.

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Buy This Coal Miner At A Deep Discount

Beleaguered shareholders of this coal miner probably feel like Lee Dorsey in the classic 1966 song "Working in the Coal Mine":

"Lord! I'm so tired! How long can this go on?"

That's a good question. It's been a wild ride for Walter Energy (NYSE: WLT) over the past seven years.

The share price is lower than it was during the apex of the financial crisis. But while there was a massive sell-off of all types of assets in 2008 and 2009, current conditions seem much more stable.

So what gives?

The End Of The Supercycle
With explosive economic growth in emerging markets such as the BRIC nations (Brazil, Russia, India and China) has come a rapid escalation in commodity prices based on what has seemed like an insatiable need for raw materials. Commodity producers and investors have enjoyed very good returns. How good? This 10-year chart of the S&P GSCI Commodity Index says it all.

But these days? Not so much.

As the U.S. dollar strengthens, commodity prices (contracts are priced in dollars) soften internationally by sheer market mechanics.

However, the psychological reasons for the downturn stem mainly from the fear of an economic slowdown in the emerging markets (primarily China) and the continued weakness in global demand due to the slow recovery in the U.S. and the persistent malaise in the eurozone economies.

But what does all of this have to do with a coal producer in Birmingham, Ala.? Plenty.

The Other 'Clean Coal'?
An important input commodity, coal -- especially U.S.-produced coal -- has seen its price rise and fall violently in recent years. The first part of the 21st century saw thermal coal prices rise nearly fourfold from around $40 per short ton to $140 in 2008, which coincided with the global financial crisis. Since then, prices have settled back to around $55 per short ton.

 

In the industrialized world, coal is primarily used for two things: as fuel to help generate electricity and to make coke for steel manufacturing.

A large, fast-growing economy such as China uses a lot of coal for both purposes. However, China is also the world's largest coal producer, with the United States a distant second.

Should a slowdown in China affect what happens to coal domestically? Not really, but federal government regulation can.

Since both Bush administrations and the first Obama administration, the U.S. has had virtually no concrete energy policy. It's no secret that the current administration is no fan of coal from an environmental standpoint.

Compounding those worries, large power producers have switched en masse to natural gas as a cheap, clean fuel source. Obviously, that doesn't help prop up prices. So it makes sense that the stocks of domestic coal producers have been beaten up over the past few years.

However, Walter produces primarily high-quality metallurgical coal that is used in steelmaking. Is the market throwing the baby out with the bathwater?

Buried Treasure
The company's numbers look terrible: negative earnings for 2013 with an analyst consensus of a loss of $1.43 a share; weak Chinese demand (although China is a large coal producer, they produce very little high-quality metallurgical coal); and coking coal prices down 18% to a recent price of around $140.

To give the market even less confidence, Walter recently postponed proposed refinancing of $1.6 billion in term loans, citing market conditions. Most investors wouldn't touch this idea with a 10-foot pole. But look beneath the surface.

	This overland conveyer transports coal from Walter Energy's mining operations in Alabama.

Walter Energy is in a fairly simple business: It owns and produces a tangible asset. Conservative estimates put Walter Energy's tangible book value at around $16 a share. Much of that is tied to the company's coal reserves (coal in the ground). That wasn't a big deal when shares were trading north of $100, but with shares staggering around $11.50, it's a different story -- that's 45% upside. The value is literally buried in the ground. But the story gets better.

As far as the metallurgical segment -- Walter's bread and butter -- goes, demand has stabilized, albeit at lower levels. According to the U.S. Energy Information Administration, coking coal domestic demand for 2013 should slip about 1.4% from last year, to 20.5 million tons. Not a disaster. 

Imports are a different story. Last year, import demand stood at 125.7 million tons. This year's forecast is pretty grim at 107.1 million tons, a 14.8% drop. However, the 2014 forecast for coking coal imports appears stable at 108.4 million tons. A modest increase of just 1.2% leaves some room for an upside surprise. 

As far as Walter Energy is concerned, the picture, believe it or not, is getting brighter. Forget about 2013: Sales should come in at around $2.1 billion versus $2.5 billion last year, which would be an ugly 16% drop. However, forecasts for 2014 call for sales of $2.3 billion, which would be an impressive 9.5% improvement over 2013. 

Cash flow is also improving. After a negative 98 cents per share last year, free cash flow has turned positive to about 48 cents per share. That's expected to climb more than 170% next year to a projected $1.31 per share. The company will accomplish this through tighter capital controls and eliminating the dividend. 

While I normally don't like to see dividend cuts, this is necessary for the survival of the company and actually adds more value to a deeply undervalued stock.

Last, the hope of all stock investors: Walter Energy is rumored to be a takeover candidate. Whenever certain sectors become depressed, consolidation often follows. Possible suitors have included Alpha Natural Resources (NYSE: ANR), Brazilian miner Companhia Siderurgica Nacional (NYSE: SID) and Warren Buffett's Berkshire Hathaway (NYSE: BRK). Based on the unlocked assets at Walter, that idea is right up the Oracle of Omaha's alley.

Risks to consider: By its nature, contrarian deep-value investing is extremely risky. As an investor, you're buying into an idea or event that may very well fail to materialize. As a business, Walter Energy is in a precarious position. One way to protect yourself would be to use a stop-loss order 15% to 20% below your purchase price. Another way would be to use options to hedge your long position. (My colleague Amber Hestla-Barnhart covered this in great depth.) Finally, the coal industry is depressed and very sensitive economically. Continued global economic weakness would likely suppress this idea.

Action to take --> Walter Energy is clearly undervalued, based on the company's improving internals and improving macro conditions, a 12-month price target of $16 would bring the company back to its book value. Shares currently trade around $11.50. This would represent a 40% return. The annual 50-cent-a-share dividend gives the stock a yield of about 4.4%. Don't count on it being that high forever, but this will help the company in the long run.

P.S. -- While coal mining has put investors in position to profit big from Walter Energy, we've discovered another natural resource in the U.S. that could lead to a third industrial revolution. One analyst is predicting a stock could rise 1,566%. Another stock has already jumped over 1,000% and is expected to keep going. To learn more, click here.