Loeb’s FedEx Stake Heightens Focus on Smith Succession

Investor Dan Loeb's decision to take a stake in FedEx Corp. (FDX) is poised to heighten scrutiny of the role played by Fred Smith, who has run the airfreight company since its founding more than 40 years ago.

Even as Loeb has said he's not seeking a leadership change, his Third Point LLC hedge fund brings a history of activism to Memphis, Tennessee-based FedEx. Loeb, 51, has an effort under way now to replace the chief executive officer of Sotheby's (BID) and spurred the resignation of a Yahoo! Inc. executive in 2011.

"At some point Smith's career is going to come to an end, and the appearance of an activist is a reminder," said Charles Elson, director of the John L. Weinberg Center for Corporate Governance at the University of Delaware. "Smith is a very overpowering figure. Loeb is an icon, too."

Smith, 69, holds the titles of chief executive officer, president and chairman at the world's largest cargo airline. He first described his concept for a reliable express airfreight carrier in a paper as a Yale University undergraduate and developed it while in the Marine Corps during the Vietnam War. The company began operating in 1971.

Along the way, Smith branched out into surface transportation by buying Caliber System Inc., which later became FedEx Ground, in 1998. He has maintained FedEx's classification of its drivers as independent contractors, unlike United Parcel Service Inc. (UPS)'s use of unionized employees.

Not Going

After signaling in 2010 he might leave as soon as 2013, Smith said last year "I'm not planning on going anyplace." He's overseeing a $1.7 billion plan to cut costs and boost earnings amid a shipping-market shift as customers opt for less-expensive options instead of overnight deliveries.

"We like the business," Loeb said Nov. 12 at the DealBook conference in New York, without specifying the size of his FedEx stake. He said he met with Smith last week in Memphis and won't push for his ouster.

Loeb's record ensures that executives will be mindful of his views even if he doesn't resort to an activist stance, Jim Corridore, a Standard & Poor's Capital IQ analyst in New York, said in an interview.

"I don't think that he always has to take agitation as a position -- sometimes you can just invest in a company," said Corridore, who reiterated his buy rating on Nov. 12 and projected FedEx would reach $180 within 12 months, 42 percent more than his previous target. "His mere presence on the list of shareholders will keep the company on its toes."

Share Performance

The shares rose 0.5 percent to $135.29 yesterday, extending this year's gain to 48 percent. That beat advances of 25 percent for the Standard & Poor's 500 Index and 37 percent for UPS, the biggest package-delivery company.

FedEx "has an effective process in place to select successors to the chairman of the board and other members of executive management," Jess Bunn, a spokesman, said in an e-mail. Smith "periodically" gives directors recommendations on successors, Bunn said.

FedEx has a history of promoting from within, and executives such as Chief Financial Officer Alan Graf are among possible successors to Smith, said S&P's Corridore. FedEx has no mandatory retirement age for CEO and Smith can keep his job as chairman until he turns 72.

"Fred's planning for succession is a point that has come up over the years," said Justin Yagerman, a Deutsche Bank AG analyst in New York who also has a buy recommendation on FedEx. "What the company's always said is that it has a deep bench."

Activists' Strategies

Activist funds generally acquire equity stakes in companies and try to force management and boards to make changes that boost share prices and investor returns. New York-based Third Point was founded by Loeb and this year disclosed stakes in companies including Sony, Nokia Oyj (NOK1V) and Sotheby's.

In this year's first half, activists' second-most-common strategy was the removal of a CEO, trailing only the quest for a board seat, according to data from Activist Insight, which tracks the industry. As recently as 2010, removing the CEO was sixth, the data show.

CEOs were replaced at Canadian Pacific Railway Ltd. (CP) and Procter & Gamble Co. (PG) after activist investor Bill Ackman pushed for shakeups. Greg Taxin's Clinton Group Inc. prompted management changes at Nutrisystem Inc. (NTRI) and Wet Seal Inc. (WTSL) in the past year.

Sotheby's adopted a shareholder-rights plan last month to protect itself from hostile takeovers after Loeb increased his stake in the auction house and called on the CEO to resign. Loeb didn't seek to dump CEOs after investments in Technicolor SA, Murphy Oil Corp. or Smurfit-Stone Container Corp.

Smith and FedEx should face less pressure than other Third Point targets because profits are improving and the CEO has agreed to a stock buyback program, Yagerman said.

"These are the two big things that activist investors are usually looking to agitate for," Yagerman said. For Loeb to take a stake is "a vote of confidence from someone who is held in high regard. The fact that he does want to keep Fred Smith in place lends credence to the way the company's managed right now."

Tesla Convertible Note Conversion May Affect Stock: StreetInsider

Shares of Tesla (TSLA) were back in the red after flirting with gains earlier in the afternoon. Part of the issue may be remarks made by Elon Musk after hours yesterday.

StreetInsider.com also has an interesting take on the stock today (subscription required):

With Tesla shares looking like they have a weight on them at around the $170 level, investors may look no further than the May 2013 convertible notes offering. Based on the terms of the convertible notes, if the share price holds up then after September 30 the notes may be convertible into approximately 5.3 million shares.

To counteract dilution from the convertible notes, Tesla entered info a convertible note hedge transactions whereby we have the option to purchase up to 5.3 million shares of our common stock at a price of approximately $124.52 per share. The cost of this transaction was offset by an agreement to sell warrants on approximately 5.3 million shares which give holders of the warrants the option to purchase up to approximately 5.3 million shares of our common stock at a price of $184.48 per share.

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Some traders have suggested the strange comments from CEO Elon Musk last night, that it’s “not crazy” to short the stock at this level, is some type of manipulation related to the convertible notes conversion.

Short interest has edged up in recent weeks, from 21.6 million shares, from 20.3 million as of mid-August.

But Tesla have also gotten good news this week, with Bloomberg noting that the company's plan to buy back its Model S cars could boost sales, and Dougherty reiterating its $200 price target on the stock.

3 Reasons Why You Need Inflation Protection Now

All this talk from A. Gary Shilling and others about the coming danger of deflation? Bleh.

That’s the message delivered in a recent whitepaper from Seth Masters.

The chief investment officer of Bernstein Global Wealth Management says deflation, that “persistent drop in the value of assets,” is unlikely any time soon.

Even if it does, Masters notes that investors already protect themselves from deflation through their bond purchases.

Rather inflation, although dire warnings of which have yet to materialize, is still the threat, Masters argues, and even modest amounts of inflation can be harmful—in some ways, even more so than deflation.  

“Inflation-protected assets will always have a place in investor’s portfolios because of heightened uncertainty, the availability of better inflation hedges and reasonable costs for inflation protection,” he writes. “While rare, inflationary periods are notoriously difficult to predict. History shows that major bouts of inflation often strike suddenly and without warning, which is what makes inflation particularly dangerous.”

He sees three key reasons why an allocation to inflation protection is even more compelling today: heightened uncertainty, the availability of better inflation hedges, and reasonable costs for inflation protection.

1). More Uncertainty — “Even in the best of times, there’s no reliable forecast of the future path of inflation,” he writes. “Today, however, uncertainty about economic policy and its impact on the price level have become especially high, mainly because no one can confidently predict exactly what will happen as the enormous monetary expansion since the global financial crisis is ultimately unwound.”

On the one hand, some view inflation as inevitable, given the pervasive climate of supportive monetary policy across developed economies, Masters notes. On the other hand, mixed economic data have kept the specter of deflation alive.

“Given the experimental and opportunistic nature of central bank policy measures, economists’ outlook for the breadth of possible inflation outcomes is highly divergent today. This heightens the risk of surprises, and makes inflation protection all the more vital.”

2). Better Hedges — Fortunately, better inflation hedges are available today than existed in past inflationary periods, he explains.

“From a portfolio construction standpoint, inflation hedges can be divided into two categories that complement a traditional portfolio: real bonds that protect risk-mitigating assets such as traditional bonds, and real assets that protect return-seeking assets such as stocks.”

Inflation-linked bonds such as Treasury Inflation-Protected Securities (TIPS) can provide very effective inflation protection for the bond portion of the asset mix. For taxable accounts, he also recommends a muni inflation strategy that layers inflation protection onto a municipal bond portfolio.

“Real assets, such as commodity futures, natural resource stocks, and inflation-sensitive REITs, generate cash flows tightly linked to important components of the overall price level. Shares in mining and other natural resource stocks, as well as some real estate companies, can also benefit from rising prices. Note that most individual real assets are quite volatile, and so it makes sense to diversify a real asset portfolio across a wide range of inflation-sensitive investments. We also see real assets as a good investment.”

3). Reasonable Costs — Reasonable costs represent the final rationale for adopting proactive inflation protection today, Masters concludes. TIPS are fairly priced, with a breakeven rate—or the difference in yield between inflation-protected securities and nominal bonds of the same maturity—of less than 2% for 10-year maturities.

“That’s not much of a premium to purchase inflation protection, especially compared to a high of 2.6% last fall when the Fed’s third round of quantitative easing was announced. Real assets are also sensibly priced relative to their fundamentals.”

5 Stocks Set to Soar on Bullish Earnings

DELAFIELD, Wis. (Stockpickr) -- Short-sellers hate being caught short a stock that reports a blowout quarter. When this happens, we often see a tradable short squeeze develop as the bears rush to cover their positions to avoid big losses. Even the best short-sellers know that it's never a great idea to stay short once a bullish earnings report sparks a big short-covering rally.

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This is why I scan the market for heavily shorted stocks that are about to report earnings. You only need to find a few of these stocks in a year to help enhance your portfolio returns -- the gains become so outsized in such a short time frame that your profits add up quickly.

That said, let's not forget that stocks are heavily shorted for a reason, so you have to use trading discipline and sound money management when playing earnings short-squeeze candidates. It's important that you don't go betting the farm on these plays and that you manage your risk accordingly. Sometimes the best play is to wait for the stock to break out following the report before you jump in to profit off a short squeeze. This way, you're letting the trend emerge after the market has digested all of the news.

Of course, sometimes the stock is going to be in such high demand that you risk missing a lot of the move by waiting. That's why it can be worth betting prior to the report -- but only if the stock is acting technically very bullish and you have a very strong conviction that it is going to rip higher. Just remember that even when you have that conviction and have done your due diligence, the stock can still get hammered if The Street doesn't like the numbers or guidance.

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If you do decide to bet ahead of a quarter, then you might want to use options to limit your capital exposure. Heavily shorted stocks are usually the names that make the biggest post-earnings moves and have the most volatility. I personally prefer to wait until all the earnings-related news is out for a heavily shorted stock and then jump in and trade the prevailing trend.

With that in mind, here's a look at several stocks that could experience big short squeezes when they report earnings this week.

Tesla Motors

My first earnings short-squeeze trade idea is electric car maker Tesla Motors (TSLA), which is set to release numbers on Tuesday after the market close. Wall Street analysts, on average, expect Tesla Motors to report revenue of $534.54 million on earnings of 11 cents per share.

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Just recently, Craig Irwin of Wedbush Securities upgraded shares of Tesla to outperform from neutral and raised his price target to $240 from $180 per share. "Tesla's not positioned to disappoint anytime soon. These guys are going to keep executing, keep making expectations for the foreseeable future," he said on CNBC's "Fast Money."

The current short interest as a percentage of the float Tesla Motors is extremely high at 26.1%. That means that out of the 77.88 million shares in the tradable float, 20.81 million shares are sold short by the bears. If the bulls get the earnings news they're looking for, then shares of TSLA could easily explode to the upside post-earnings as the bears rush to cover some of their bets.

From a technical perspective, TSLA is currently trending above both its 50-day and 200-day moving averages, which is bullish. This stock has been uptrending for the last few weeks, with shares moving higher from its low of $153 to its intraday high of $181.43 a share. During that move, shares of TSLA have been making mostly higher lows and higher highs, which is bullish technical price action.

If you're bullish on TSLA, then I would wait until after its report and look for long-biased trades if this stock manages to take out Tuesday's high of $181.43 to some more key overhead resistance at $185 a share with high volume. Look for volume on that move that hits near or above its three-month average action of 10.73 million shares. If we get that move, then TSLA will set up to re-test or possibly take out its next major overhead resistance levels at $188.79 to its all-time high at $194.50 a share. Any high-volume move above those levels will then give TSLA a chance to trend north of $200 a share.

I would simply avoid TSLA or look for short-biased trades if after earnings it fails to trigger that breakout and then drops back below its 50-day moving average at $173.53 (or below Tuesday's intraday low if lower) with high volume. If we get that move, then TSLA will set up to re-test or possibly take out its next major support areas at $160 to $153 a share. Any high-volume move below $153 will then give TSLA a chance to trend well below $150 a share.

Radian Group

Another potential earnings short-squeeze play is residential mortgage insurance player Radian Group (RDN), which is set to release its numbers on Thursday before the market open. Wall Street analysts, on average, expect Radian Group to report revenue of $211 million on a loss of 10 cents per share.

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This company recently reported that mortgage insurance delinquencies for September fell to 65,239 loans at the end of the month from 65,427 beginning primary delinquent inventory of loans. The company also reported $3.83 billion of primary new insurance was written in September.

The current short interest as a percentage of the float for Radian Group is extremely high at 25.8%. That means that out of the 160.34 million shares in the tradable float, 44.26 million shares are sold short by the bears. If the bulls get the earnings news they're looking for, then shares of RDN could easily rip sharply higher post-earnings as the shorts jump to cover some of their bets.

From a technical perspective, RDN is currently trending above both its 50-day and 200-day moving averages, which is bullish. This stock has been uptrending for the last two months, with shares moving higher from its low of $12.42 to its recent high of $15.15 a share. During that uptrend, shares of RDN have been mostly making higher lows and higher highs, which is bullish technical price action. That move has now pushed shares of RDN within range of triggering a major breakout trade post-earnings.

If you're in the bull camp on RDN, then I would wait until after its report and look for long-biased trades if this stock manages to break out above its 52-week high at $15.15 a share (or Wednesday's intraday high if higher) on high volume. Look for volume on that move that hits near or above its three-month average action of 4.15 million shares. If that breakout hits, then RDN will set up to enter new 52-week-high territory, which is bullish technical price action. Some possible upside targets off that breakout are $18 to $20, or even $22 a share.

I would simply avoid RDN or look for short-biased trades if after earnings it fails to trigger that breakout, and then drops below some key near-term support levels at $14.23 a share to its 50-day moving average of $13.91 a share with high volume. If we get that move, then RDN will set up to re-test or possibly take out its next major support levels at $12.95 to $12.50 a share, or even its 200-day moving average of $11.91 a share.

Ubiquiti Networks

Another potential earnings short-squeeze candidate is broadband wireless solutions provider Ubiquiti Networks (UBNT), which is set to release numbers on Thursday after the market close. Wall Street analysts, on average, expect Ubiquiti Networks to report revenue of $119.30 million on earnings of 40 cents per share.

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The current short interest as a percentage of the float for Ubiquiti Networks is pretty high at 10.7%. That means that out of the 24.78 million shares in the tradable float, 2.09 million shares are sold short by the bears. The bears have also been increasing their bets from the last reporting period by 70.1%, or by about 859,000 shares. If the bears get caught pressing their bets into a bullish quarter, then shares of UBNT could experience a big short squeeze post-earnings as the shorts rush to cover some of their bets.

From a technical perspective, UBNT is currently trending above both its 50-day and 200-day moving averages, which is bullish. This stock has been uptrending strong for the last three months, with shares moving higher from its low of $27.50 to its recent high of $43.99 a share. During that uptrend, shares of UBNT have been consistently making higher lows and higher highs, which is bullish technical price action. That move has now pushed shares of UBNT within range of triggering a big breakout trade post-earnings.

If you're bullish on UBNT, then I would wait until after its report and look for long-biased trades if this stock manages to break out above some near-term overhead resistance levels at $39.82 to its all-time high at $43.99 a share with high volume. Look for volume on that move that hits near or above its three-month average action of 782,837 shares. If that breakout hits, then UBNT will set up to enter new all-time high territory, which is bullish technical price action. Some possible upside targets off that breakout are $50 to $60 a share.

I would avoid UBNT or look for short-biased trades if after earnings it fails to trigger that breakout, and then drops back below some key near-term support levels at $36.74 a share to its 50-day moving average at $35.71 a share with high volume. If we get that move, then UBNT will set up to re-test or possibly take out its next major support levels at $33 to $30 a share.

Annie's

Another earnings short-squeeze prospect is natural and organic food player Annie's (BNNY), which is set to release numbers on Thursday after the market close. Wall Street analysts, on average, expect Annie's to report revenue of $57.12 million on earnings of 29 cents per share.

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The current short interest as a percentage of the float for Annie's is extremely high at 27.3%. That means that out of the 14.35 million shares in the tradable float, 3.73 million shares are sold short by the bears. The bears have also been increasing their bets from the last reporting period by 5.6%, or by about 198,000 shares. If the bears get caught pressing their bets into a strong quarter, then shares of BNNY could rip sharply higher post-earnings as the bears rush to cover some of their short positions.

From a technical perspective, BNNY is currently trending above both its 50-day and 200-day moving averages, which is bullish. This stock recently formed a double bottom chart pattern at $46.27 to $46.74 a share. Following that bottom, shares of BNNY have started to trend back above its 50-day moving average, and it's quickly pushing within range of triggering a big breakout trade.

If you're bullish on BNNY, then I would wait until after its report and look for long-biased trades if this stock manages to break out above some near-term overhead resistance at $49.89 a share to its all-time high at $52.38 a share with high volume. Look for volume on that move that hits near or above its three-month average action of 211,715 shares. If that breakout hits, then BNNY will set up to enter new all-time high territory, which is bullish technical price action. Some possible upside targets off that breakout are $60 to $70 a share.

I would simply avoid BNNY or look for short-biased trades if after earnings it fails to trigger that breakout, and then drops back below its 50-day moving average at $48.03 a share to more support at $46.74 to $46.27 a share with high volume. If we get that move, then BNNY will set up to re-test or possibly take out its next major support levels at $42 to $40 a share.

U.S. Silica

My final earnings short-squeeze play is silica sand supplier U.S. Silica (SLCA), which is set to release numbers on Wednesday after the market close. Wall Street analysts, on average, expect U.S. Silica to report revenue of $141.28 million on earnings of 41 cents per share.

The current short interest as a percentage of the float for U.S. Silica is extremely high at 37.4%. That means that out of the 35.45 million shares in the tradable float, 13.25 million shares are sold short by the bears. If this company can deliver the earnings news the bulls are looking for, then shares of SLCA could experience a large short-squeeze post-earnings.

From a technical perspective, SLCA is currently trending above both its 50-day and 200-day moving averages, which is bullish. This stock has been uptrending strong for the last five months, with shares soaring higher from its low of $19.16 to its recent high of $37.14 a share. During that uptrend, shares of SLCA have been consistently making higher lows and higher highs, which is bullish technical price action. That move has now pushed shares of SLCA within range of triggering a big breakout trade post-earnings.

If you're in the bull camp on SLCA, then I would wait until after its report and look for long-biased trades if this stock manages to break out above its all-time high at $37.14 a share (or Wednesday's intraday high if higher) with high volume. Look for volume on that move that hits near or above its three-month average volume of 1.28 million shares. If that breakout hits, then SLCA will set up to enter new all-time high territory, which is bullish technical price action. Some possible upside targets off that breakout are $50 to $55 a share.

I would avoid SLCA or look for short-biased trades if after earnings it fails to trigger that breakout, and then drops back below some key near-term support levels at $34 to $33 a share with high volume. If we get that move, then SLCA will set up to re-test or possibly take out its next major support levels at $31.66 to $30.63 a share, or even its 50-day moving average of $28.28 a share.

To see more potential earnings short squeeze plays, check out the Earnings Short Squeeze Plays portfolio on Stockpickr.

-- Written by Roberto Pedone in Delafield, Wis.

RELATED LINKS:

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>>Hack Earnings Season With These Serial Surprisers

Follow Stockpickr on Twitter and become a fan on Facebook.

At the time of publication, author had no positions in stocks mentioned.

Roberto Pedone, based out of Delafield, Wis., is an independent trader who focuses on technical analysis for small- and large-cap stocks, options, futures, commodities and currencies. Roberto studied international business at the Milwaukee School of Engineering, and he spent a year overseas studying business in Lubeck, Germany. His work has appeared on financial outlets including

CNBC.com and Forbes.com. You can follow Pedone on Twitter at www.twitter.com/zerosum24 or @zerosum24.

1 Risk Most Companies Acknowledge but Few Manage

What if I told you that there's a business risk out there that 90% of companies in the S&P Global 100 index perceive as legitimate, but that few are managing in any real fashion? What if I said further that while some companies view this risk on a 10-year time horizon, others are feeling its effects right this minute, and they're still not really handling it? You'd probably want to know what this risk is.

Well, it's climate change. I know, you may be rolling your eyes, or getting hot under the collar as you dismiss the whole notion as a liberal conspiracy. Hang with me for a bit, because this is no longer just academic. Stuff is happening now, and companies with no points to score are getting serious about understanding the threats climate change poses to their operations.

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Already feeling the pain
The science is pretty well settled on the proposition that climate change is adding to the frequency and intensity of extreme weather events. Companies are feeling the pain in some very direct ways. When the flooding happened in Thailand in 2011, for instance, Honda (NYSE: HMC  ) lost more than $250 million when its automobile assembly plants were inundated. Around the same time, severe flooding in Australia contributed to a 38% decline in insurer Munich Re's quarterly profits.

A new report out today from the Center for Climate and Energy Solutions (C2ES) provides a glimpse into the way major corporations are looking at this. Among climate change risks, they're most concerned about damage to facilities, loss of water or power supplies, higher costs, and disruption of supply and distribution chains. But C2ES notes that few companies have a truly robust strategy for dealing with climate change risk.

Why would that be? Well, it has a lot to do with uncertainty. C2ES attributes it to "a lack of information and tools to help them relate these risks to their specific business operations." Certainly, Ford's (NYSE: F  ) survey response seems to bear this out: "Based on [our] assessment
of the physical risks associated with climate change, we do not believe we can adequately predict the potential impacts of climate change on our business beyond noting the risk posed by natural or man-made disasters."

Action doesn't require certainty
But if business leaders always waited for certainty before taking action, would they ever get off the ground? Of course not. Agile companies are making plans and developing strategies right now.

One mechanism is to transfer climate change risk through insurance. C2ES describes how Merck (NYSE: MRK  ) works with its insurers to evaluate potential risks and to take corrective actions for all facilities in low-lying areas, or those in other ways exposed to severe weather risks.

Action doesn't just have to be on the risk side. GE (NYSE: GE  ) sees tremendous opportunity in being a part of the solution. In light of the threat climate change poses to fresh water supplies, the company is expanding its water technologies -- from wastewater treatment and reuse technologies to desalination equipment -- for use in power plants, agriculture, and manufacturing. Global spending on water infrastructure is projected to grow from $90 billion in 2010 to $131 billion in 2016. GE expects revenues from its water recycling technologies to grow by about 10% annually through at least 2016.

Getting it right
C2ES outlines how Weyerhaeuser (NYSE: WY  ) , one of the world's largest forest products companies, is setting a strong example in responding to this pressing challenge. Changes in climate influence the structure and function of forests, and projections show that effects going forward will be more severe and damaging than in the past. Weyerhaeuser's risk analysis relies on close monitoring of its timberlands using geographic- and species-specific forecasting models and sensing technologies. The company has regional research partnerships to study and protect its vulnerable water resources, and is developing tree varieties that can withstand drier summers.

Weyerhaeuser has also found opportunity in all of this. Weyerhaeuser Solutions, launched in 2011, helps others with large-scale land holdings to manage landscapes for optimal water supply and quality, reduce carbon footprints, and source bio-energy feedstocks, among other things.

The takeaway
The important message here is that it's not all doom and gloom. Through the dark veil of climate change, companies are emerging as management leaders and dynamic solution providers. Certainly the risk is grave, but so is the opportunity. Long-term investors would do well to include climate change as a factor in their stock analyses. Look for strong and candid discussion of the topic in 10-K risk sections, as well as initiatives to capture emerging opportunities. Because at this point, choosing to ignore climate change is a losing proposition in the long run.

So much of climate change risk management comes back to natural resource management. But do you know which natural resource is the most precious in the history of the world? It's not gold. Or even oil. But it's more valuable than both of them. Combined. And here's the crazy part: one emerging company already has the market cornered... and stands to make in-the-know investors boatloads of cash. We reveal all in our special 100% FREE report, "The 21st Century's Most Precious Natural Resource". Just click here for instant access!

The Most Effective Fast-Food Restaurant Advertisers

A newly released survey took a deep dive look into recent trends affecting fast food, including the effectiveness of advertising on new menu item sales, trends in value menus, and how health influences fast food visitation. Today we'll focus on the impact of ad spending on new menu item sales. I'll address value menu trends and the role of health in consumers' dining choices in future articles.

Survey says ...
Placed evaluated the likelihood of a consumer to buy a fast-food menu item within 30 days of seeing or hearing an advertisement for a new menu offering. Consumers who bought the advertised offering were considered "early menu adopters." Advertising was found to be most effective with early adopters for the following companies.

Yum! Brands (NYSE: YUM  )

Source: Wikimedia Commons.

Yum! Brands' advertising appears very effective, with all three of its fast-food restaurants (KFC, Taco Bell, and Pizza Hut) topping the list. In particular, Taco Bell  has drawn customers in droves, selling a half-billion Doritos Locos Tacos since their March 2012 launch. Amazingly, 53% of Taco Bell visitors in April reported purchasing the newly launched Cool Ranch-flavored Doritos Locos Taco. Yum! hopes new menu item sales like these will help the company meet its lofty goal of doubling Taco Bell's domestic annual sales by 2021.

McDonald's (NYSE: MCD  )

Source: Wikimedia Commons.

McDonald's has struggled with same-store sales declines since early last year and has been criticized for its bloated menu. The home of the Big Mac has expanded not only our waistlines but also its offering count, which has increased by 70% since 2007. The company has recently tried to lure consumers with even more items, including Quarter Pounder burgers, egg-white breakfast sandwiches, and Premium McWraps. The Placed survey found that roughly 42% of McDonald's visitors reported trying the McWrap in April. Consumers ranging in age from 25 to 44 had the highest tendency to order the McWrap, indicating the item's success in attracting a slightly younger demographic. 

Chipotle Mexican Grill (NYSE: CMG  )

Source: Wikimedia Commons.

With its focus on natural, locally sourced, and sustainably raised foods, Chipotle stands apart from the others. The fiery burrito maker has enjoyed tremendous growth over the past several years. Its cult-like following continues to lure customers. And, as the study found, so does the effectiveness of its advertising, which is typically considered more educational and grassroots compared with the typical fast-food promotions.

Interestingly, Chipotle's selling, general, and administrative expenses (which include advertising spend) come in at less than 7% of revenues. Compare that with a whopping 26% for Burger King Worldwide (NYSE: BKW  ) , 12% for Wendy's (NASDAQ: WEN  ) , 11% for Yum! Brands, and 8% for McDonald's. Chipotle proves that a trimmed-down SG&A as a percentage of revenues can be quite effective, especially when you boast a competitive advantage like differentiation through focus on quality.

Chipotle's stock has been on an absolute tear since the company went public in 2006. Unfortunately, 2012 hasn't been kind to Chipotle's stock, as investors question whether its growth has come to an end. Fool analyst Jason Moser's premium research report analyzes the burrito maker's situation and answers the question investors are asking: Can Chipotle still grow? If you own or are considering owning shares in Chipotle, you'll want to click here now and get started! 

"Sex Can Sell" Is a Fine Line to Walk: Victoria's Secret Just Stumbled

You've probably heard the slogan "Sex sells." While it's undoubtedly true in some circumstances, there are many situations where the opposite is true -- sex alienates consumers. Take, for example, L Brands' (NYSE: LTD  ) Victoria's Secret and its PINK "Bright Young Things" line. The official market for PINK is college-age girls; however, in January, Victoria's Secret's chief financial officer, Stuart Burgdoerfer, said: "When somebody's 15 or 16 years old, what do they want to be? They want to be older, and they want to be cool like the girl in college, and that's part of the magic of what we do at PINK."

Not surprisingly, this comment sparked outrage, as parents were a bit uncomfortable with the idea of having their young daughters wearing risque bottoms with the words "Feeling Lucky?" emblazoned on the back. Although Victoria's Secret responded to criticism by stating that the clothing line is not intended for young girls, the words of the CFO have done their damage. But what, if anything, does this mean for business?  

Source: Randy Robertson, via Wikimedia Commons. 

No, I don't want my middle-schooler wearing risque underwear
Why would a company risk consumers' wrath by creating a marketing campaign that seems aimed at underage girls? The answer: money. If a company thinks it'll make more money by advertising a certain way, it'll probably try it -- much to the chagrin of parents.

In the case of Victoria's Secret, such a cry of protest went up that the company quietly pulled many of the more provocative items from its online store. But even after that, many parents stated that they intend to continue boycotting Victoria's Secret. Further, such boycotts may, or may not, have a visible impact on Victoria's Secret's bottom line right now, but this incident has definitely hurt the company's image and reputation. And such a blow could definitely come back to bite the bottom line.

Is this an isolated incident?
Victoria's Secret isn't the only company to face consumers' wrath over marketing. In 2011, Abercrombie & Fitch (NYSE: ANF  ) released a "push-up" bikini, originally intended for 7-year-olds and up. Parents were outraged, and the blowback forced Abercrombie to rename the bikini and announce that it was for 12-year-olds and up. In 2006, U.K. company Tesco  (LSE: TSCO  ) came under fire for selling a stripper pole with the words "Unleash the sex kitten inside," in its toys and games section. CNN Money named the company's move one of the "101 Dumbest Moments in Business."  

How this can affect business
In addition to marketing inappropriate bikinis to underage girls, Abercrombie made a reputation for itself by advertising with scantily clad male and female models. Parents expressed outrage, but Abercrombie failed to heed the warning. For a while, it looked as if the outrage was nothing more than bluster. But since 2008, Abercrombie has seen a massive decline in operating profit. Yes, the economy took a downturn, but even now, with the economy improving, profits have failed to reach previous levels for Abercrombie.

Some advertisers argue that Abercrombie has failed to keep up with a new generation of teens who want a more individual style, and I bet that's true in some aspects. But consider a 2008 ChangeWave survey of 4,000 shoppers. According to the survey's results, Abercrombie was the store consumers said they're "least likely to shop at in the future." The primary reason? "Risque self-portrayal." Top responses included: "Seriously disagree with their philosophy," "Overly suggestive catalog," "Don't like their advertising scheme," "Moral values," and "I don't like the image they project." 

Do parents have the final say?
These results indicate that there's a potential long-term risk to overly sexual advertising aimed at children and young adults. A company may get away with such antics in the short term, but in the long term, are consumers really going to shell out money to a store they think is corrupting their kids? Probably not.

There's an active pushback among parents to stop what they consider to be the sexualization of young girls. As such, if a company is seen to be promoting just that, it's likely that company will face the wrath of boycotts, damage to its reputation, and eventual losses in revenue.

Know your consumer
It's easy to see how sex sells, but only to an appropriate audience. Consequently, companies that continue to push the boundaries of overly sexual advertising to inappropriate audiences are likely to end up with unhappy consumers. And those customers could be lost for life. If a company seems it's not getting the hint with overly suggestive advertising, investors may do well to question its financial future.

These companies may be missing the mark when it comes to consumers, but there are some retail companies that are doing everything right.  More important, they'll handsomely reward those investors who understand the landscape. You can read about the 3 Companies Ready to Rule Retail in The Motley Fool's special report. Uncovering these top picks is free today; just click here to read more.

Top 5 Low Price Stocks To Buy Right Now

Click the stock to track shares of Priceline.com.

NEW YORK (CNNMoney) The most expensive stock in the S&P 500 just got even pricier. Shares of Priceline.com soared again Monday, rising to an all-time high above $1,100.

In September, Priceline (PCLN, Fortune 500) became the first S&P 500 company to hit a four-digit price. Google (GOOG, Fortune 500) became the second to achieve the milestone last month. But Google is about 10% below Priceline newest peak of $1,109.50.

Though Priceline is up nearly 80% so far this year, analysts remain bullish. The average price target on Wall Street stands above $1,200 per share, up another 10% from current levels.

While Priceline shares are not cheap, they're not terribly overvalued either for being the leader in online travel. Shares are trading around 21 times 2014 earnings estimates. That makes it more expensive than rival Expedia (EXPE), but the stock is trading at a discount compared to Orbitz (OWW) and TripAdvisor (TRIP).

Top 5 Low Price Stocks To Buy Right Now: Kulicke and Soffa Industries Inc.(KLIC)

Kulicke and Soffa Industries, Inc. designs, manufactures, and sells capital equipment and expendable tools used to assemble semiconductor devices, including integrated circuits, high and low powered discrete devices, light-emitting diodes, and power modules. It also services, maintains, repairs, and upgrades its equipment. The company operates in two segments, Equipment and Expendable Tools. The Equipment segment manufactures and sells a line of ball bonders, heavy wire wedge bonders, stud bumpers, and die bonders. Its Ball bonders are used to connect very fine wires, primarily made of gold or copper, between the bond pads of the semiconductor device or die, and the leads on its package; Heavy wire wedge bonders are used in the power semiconductor and automotive power module markets; and Die bonders are used to attach a die to the substrate or lead frame, which will house the semiconductor device. This segment?s Stud bumpers mechanically apply bumps to die, while still in the wafer format, for some variants of the flip chip assembly process. The Expendable Tools segment manufactures and sells various expendable tools for a range of semiconductor packaging applications. Its products include capillaries, bonding wedges, and saw blades. The company?s customers primarily comprise semiconductor device manufacturers, outsourced semiconductor assembly and test providers, other electronics manufacturers, and automotive electronics suppliers in the United States and the Asia/Pacific region. Kulicke and Soffa Industries sells its products through manufacturers? representatives and distributors. The company was founded in 1951 and is headquartered in Singapore.

Advisors' Opinion:

• [By Brian Pacampara]

  Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, chip equipment maker Kulicke and Soffa Industries (NASDAQ: KLIC  ) has earned a coveted five-star ranking.

Top 5 Low Price Stocks To Buy Right Now: Fortune Oil(FTO.L)

Fortune Oil PLC, through its jointly controlled entities, focuses on investments and operations in oil and gas supply, and infrastructure projects in the People?s Republic of China. The company engages in the construction and operation of aviation oil storage and supply facilities; the storage of petroleum; the operation of jetty; the provision of piped natural gas, compressed natural gas, and transportation services; and the operation of gasoline stations. It also invests in the development of commercialization of coal bed methane gas projects primarily in Shanxi Province, as well as operates in the Liulin CBM block State Pilot Project. The company is headquartered in Wanchai, Hong Kong.

Top 5 Oil Companies To Buy Right Now: Weir Grp(WEIR.L)

The Weir Group PLC engages in minerals, oil and gas, and power and industrial businesses worldwide. Its Minerals segment designs and manufactures slurry handling equipment, including pumps, hydrocyclones, valves, and other complementary equipment primarily for the mining, flue gas desulphurization, and oil sands markets. The company?s Oil & Gas segment designs and manufactures pumps and ancillary equipment for upstream and downstream oil and gas markets, as well as engages in aftermarket service and support activities. Its Power & Industrial segment designs, manufactures, and provides aftermarket support for rotating and flow control equipment to the power sector. The company also offers equipment to the liquefied petroleum gas marine and onshore markets. The Weir Group PLC was founded in 1871 and is headquartered in Glasgow, the United Kingdom.

Top 5 Low Price Stocks To Buy Right Now: ProShares UltraShort S&P500 (SDS)

ProShares UltraShort S&P500 (the Fund), formerly UltraShort S&P500 ProShares, seeks daily investment results that correspond to twice the inverse daily performance of the S&P 500 Index. The S&P 500 Index is a measure of large-cap United States stock market performance. The S&P 500 Index is a capitalization-weighted index of 500 United States operating companies and real estate investment trusts (REITs) selected by an S&P committee through a non-mechanical process that factors criteria, such as liquidity, price, market capitalization, financial viability and public float.

The S&P 500 Index is a price return index. Reconstitution of the Index occurs both on a quarterly and on an ongoing basis. The Fund takes positions in securities and/or financial instruments that, in combination, should have similar daily return characteristics as 200% of the daily return of the index. The Fund�� investment advisor is ProShare Advisors LLC.

Advisors' Opinion:

• [By John Udovich]

  The so-called Hindenburg Omen predicting a major market crash is increasingly popping into the headlines; but regardless of whether or not you believe in the prophecy,�short ETFs like ProShares UltraShort S&P500 ETF (NYSEARCA: SDS), ProShares Short Dow30 ETF (NYSEARCA: DOG) and�ProShares UltraShort QQQ ETF (NYSEARCA: QID) can off you some protection or insurance. We have also periodically added short ETFs to our�SmallCap Network Elite Opportunity (SCN EO) portfolio as a�hedge against short-term�market downturns or�short-term trend reversals and right now, we have the ProShares UltraShort S&P500 ETF in our portfolio.

Top 5 Low Price Stocks To Buy Right Now: Raptor Pharmaceutical Corp.(RPTP)

Raptor Pharmaceuticals Corp. operates as a biotechnology company in the United States. The company is dedicated to speeding the delivery of new treatment options to patients by working to improve existing therapeutics through the application of highly specialized drug targeting platforms and formulation expertise. Its clinical stage development products include DR Cysteamine, which is in phase IIb for the treatment of cystinosis; phase IIa for the non-alcoholic steatohepatitis; and phase II for the treatment of Huntington?s disease. Raptor?s clinical-stage products also include Convivia that is in Phase IIa stage for the potential management of acetaldehyde toxicity due to alcohol consumption; and Tezampanel and NGX 426, which completed phase I stage for the treatment of migraine and pain. Its preclinical product candidates comprise HepTide for the treatment of Hepatocellular Carcinoma and Hepatitis; WntTide for the treatment of breast cancer; NeuroTrans for the treatmen t of neurodegenerative diseases; and Tezampanel and NGX 426 for the treatment of Thrombosis and Spasticity Disorder. Raptor Pharmaceuticals Corp. is headquartered in Novato, California.

Advisors' Opinion:

• [By Roberto Pedone]

  One biotechnology player that's starting to trend within range of triggering a big breakout trade is Raptor Pharmaceuticals (RPTP), which has a pipeline that includes both candidates from its proprietary drug targeting platforms and in-licensed and acquired product candidates. This stock is in play with the bulls so far in 2013, with shares up sharply by 151%.

  >>5 Hated Earnings Stocks You Should Love

  If you take a look at the chart for Raptor Pharmaceuticals, you'll notice that stock has been uptrending strong for the last six months, with shares soaring higher from its low of $5.50 to its recent high of $15.29 a share. During that uptrend, shares of RPTP have been consistently making higher lows and higher highs, which is bullish technical price action. That move has now pushed shares of RPTP within range of triggering a big breakout trade.

  Traders should now look for long-biased trades in RPTP if it manages to break out above some near-term overhead resistance levels at $14.99 a share to its 52-week high at $15.29 a share with high volume. Look for a sustained move or close above those levels with volume that hits near or above its three-month average volume of 844,332 shares. If that breakout triggers soon, then RPTP will set up to enter new 52-week-high territory, which is bullish technical price action. Some possible upside targets off that breakout are $18 to $20 a share, or even north of $20 a share.

  Traders can look to buy RPTP off any weakness to anticipate that breakout and simply use a stop that sits right below some key near-term support levels at $13.69 a share or at $13 a share. One can also buy RPTP off strength once it takes out those breakout levels with volume and then simply use a stop that sits a comfortable percentage from your entry point.

• [By Sean Williams]

  Raptor Pharmaceuticals (NASDAQ: RPTP  ) also gave shareholders something to cheer about when, on Tuesday, the company announced that the Food and Drug Administration had granted Procysbi, its nephropathic cystinosis drug, U.S. orphan drug status. Although FDA-approved drugs are protected by patent for a period of 20 years, the U.S. orphan drug status will keep biosimilar competition from competing against Raptor's Procysbi through April 30, 2020. In addition, on Friday Procysbi received a positive opinion from the European Medicine Agency's panel that the drug be recommended for approval in the EU. However, I'd caution calmer heads prevail here as the total market for the drug is only about 2,000 people worldwide and peak sales estimates in the U.S. are a mere $60 million.

• [By Sean Williams]

  Veloci-Raptor time?
  First up is Raptor Pharmaceuticals (NASDAQ: RPTP  ) with Procysbi (previously known as RP-103), its oral delayed and extended-release medication to treat nephropathic cystinosis. In trials, Procysbi proved to be non-inferior to the only other FDA-approved treatment for nephropathic cystinosis, known as Cystagon from Mylan (NASDAQ: MYL  ) .

• [By Sean Williams]

  This week saw two new drugs approved by the FDA: Raptor Pharmaceuticals' (NASDAQ: RPTP  ) Procysbi and Merck's (NYSE: MRK  ) Liptruzet.

Abenomics Year in Review Abe and Yen Get a Second Chance

Second Chances
Prime Minister Shinzo Abe embodies the Japanese economic comeback story. After all, he himself has come back for a second round as the head of the world's third-largest economy.

Shinzo Abe was elected for a second time at the end of 2012. He was ready to make his second attempt at the the Prime Minister role a more impactful than his previous tenure. This time he would not have to follow one of the greatest outliers in Japanese politics: Rockstar like Junichiro Koizumi. Abe as leader of the LDP, which was ousted in government for the first time in decades, had the momentum to restore the party to power. Lessons were learnt from his first time as PM. Abe even hired Koizumi's Chief Secretary to boost how he is perceived. He would be bold this time around, and he made bold promises to the Japanese people.

Head of the Bank of Japan
Deflation has gripped Japan for the last two decades. The more the price of goods continues to drop, consumers will await in the sidelines. Lower consumption translates to lower revenues for corporations and less wage increases as even the threat of inflation is not present. The key to Abe's economic revival has been to target inflation straight on. He set a 2 percent target that sent shockwaves through monetary policy circles. The Bank of Japan governor Shirakawa did not appreciate the comments that the central bank was not doing enough, when it was matching the Fed and the ECB almost step by step. Abe knew Shirakawa was not going to be the man he needed at the helm of the BoJ if he wanted to drive inflation higher. Shirakawa's term ended in March, 2013.

When Abe won the elections he had the political strength to reiterate the 2 percent inflation target. This sent a signal to potential central bank governor candidates. This was the top priority for the Abe government. The head of the Asian Development Bank Haruhiko Kuroda took the challenge and issued statements around the fact that the goal was possible in a 2 year time frame. He was confirmed in February 2013.

Abenomics: Three Arrows

The Shinzo Abe led government has devised a three-part approach to fixing the Japanese economy via three “arrows”: monetary stimulus, government spending, and structural reforms.

With Kuroda at the head of the BoJ the first arrow was fired in March. The Bank of Japan announced its plans to double the monetary base by buying more government bonds to reach the 2 percent inflation target. This immediately had a positive side effect. The Japanese Yen dropped and Japanese corporations enjoyed both a strong domestic stock market and healthier exports.

Yen Weakness Has Emerging Markets Calling For Currency War
The Yen has kept to the same direction that Abe has pointed to with his statements: down. In the year that Abe has been in power the yen has fallen more than 20% versus the U.S. dollar. A weaker currency has helped to boost exports and drive the local stock exchange to five-year highs. Finance ministers from around the world cried foul when the Japanese plan was announced. Brazil's FinMin was quoted as saying this was an act of currency war. The Group of 7 disagreed. They backed Japan, and as long the monetary policy measures are domestic, then it's not currency manipulation. During followup G7 and G20 meetings that message has been reiterated.

In order for those trends to continue, however, they must be followed by deeper structural changes. Though the Japanese trade deficit continues to expand as import prices inch upward. There has been a lot of proposals and planning around the other two arrows. The second arrow relates to government spending and how to avoid the paradox that the government needs to spend less as it already is heavily indebted, but at the same time stimulate the economy more. The Abe government has approved a sales tax hike that is responsible, but has hedged it with a stimulus plan to offset any growth slowing impact. Analysts are not as optimistic about this arrow as the monetary policy one as it has been somewhat compromised and there are doubts about it's the size of the stimulus and the timing of the sales tax.

Japan exports rose 16.5 percent in October from a year ago. The currency has devaluated close to 20% this year after the start of Abenomics in March. The Japanese economy has only partially benefited from the lower currency as the stock market and exports have risen. The flip side of that is that Japan is importing energy and food at a higher rate, which in fact have turned the country famous trade surplus into a deficit. Imports in the same period have risen 19 percent.

Gross Domestic Product in the third quarter was stronger than expected at 1.9%. Compared to the previous quarter gain of 3.8% it was a disappointment. Shinzo Abe continues to focus his efforts on inflation. Japan has been caught in a deflationary environment for over two decades. Importing inflation via a falling currency with energy and food prices denominated in foreign currencies have boosted the CPI, but its sustainability depends on the market having confidence that the yen will continue to weaken.

The first part of the Abe plan seems to be working. Boosted by the Bank of Japan the monetary policy has driven down the price of the currency and helped inflation rise. The other two parts of the plan have failed to gain traction. Wages need to go higher in order to keep up with inflation or consumer won't spend. Structural reforms need to be added to unlock the labour and direct investment market.

Japan's Self Defence Force
The geopolitical risk in the islands dispute between Japan and China hit a new high this year. China presented its new Air Defence Zone that includes the islands and reported the US had violated the unilaterally defined Air Zone. Japan's army has been a difficult subject from the Japanese since the end of the second world war, when a new constitution was signed that prevented Japan from forming an army. There is of course a work around, and that is what the Self Defence Force stands for. A change in the constitution is in the cards because the escalation in military activity and the fact that the US is put in a difficult decision of picking between two powerful allies.

The post Abenomics Year in Review Abe and Yen Get a Second Chance appeared first on MarketPulse.

The following article is from one of our external contributors. It does not represent the opinion of Benzinga and has not been edited.

Posted-In: Futures Forex Economics Markets

Originally posted here...

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Toys"R"Us to Open for 87 Hours

Retailers have opened early on Thanksgiving and kept locations open until midnight in November and December to draw customers in what increasingly appears to be a year of weak holiday sales. Toys”R”Us topped those practices as it announced it will keep its stores open 87 hours in a row. The decision could well cause a chain reaction across many of the country’s largest retailers, especially those that sell any products for children.

Toys”R”Us announced:

With one week to go before kids everywhere are snug in their beds with visions of toys, games and dolls dancing in their heads, Toys"R"Us® today announced that its stores nationwide will remain open for 87 consecutive hours, ensuring last-minute shoppers get their #WishinAccomplished. Beginning at 6am on Saturday, December 21 and continuing through 9pm Christmas Eve*, gift-givers can shop day and night for all of the toys kids want most, including those that can only be found at Toys"R"Us.

By making the move, Toys”R”Us has acknowledged that the race for retail sales that began on November as a marathon has become a sprint, and retailers, particularly those that have had trouble drawing customers, are out of time. In the retail world, when the time that matters most is the holidays, running out of it means the end of the possibility for these retailers to have a good year. Soon, retailers will face months of slower store traffic in the early part of 2014.

Customers will not have to wait long to see if other large retailers will match the Toys”R”Us hours. Toy sales are obviously a staple of year-end success. The largest retailers, particularly Target Corp. (NYSE: TGT) and Wal-Mart Stores Inc. (NYSE: WMT), have been promoting deals on video games, children’s clothes and sporting goods for young people on their websites. Walmart.com in particular has posted discounts on a wide array of toys and children’s apparel.

Walmart does have the advantage over many retailers because so many of its locations are open 24 hours a day. For the balance of the retail industry that relies on toy sales, Toys”R”Us has changed the rules of the game.

Craft Brewers Help Each Other Succeed

Far from cutthroat, the craft beer industry seems to revel in its collegiality. At the recent Craft Brewers Conference, Motley Fool analyst Rex Moore spoke to New Belgium CEO Kim Jordan about how much the various players have helped each other. New Belgium is the third-largest craft brewer, behind Boston Beer (NYSE: SAM  ) and Sierra Nevada.

Boston Beer's Samuel Adams brand helped to redefine beer and kick off the craft beer revolution in the United States. Success breeds competition, though, and while just a few years ago Boston Beer had claim over most of the craft beer shelf, today the field is crowded. Can Boston Beer rise above the rest, or will it be squeezed between small local breweries on one side and global beer giants on the other? To help you decide, we've compiled a premium research report filled with everything you need to know about Boston Beer's risks and opportunities. Just click here now to find out whether Boston Beer is a buy today.

Hot Cheap Stocks To Own Right Now

Danger Zone: Move, Inc (MOVE)

 

Check out this week’s Danger Zone Interview with Chuck Jaffe of Money Life and MarketWatch.com.

Online real estate service Move, Inc. (NASDAQ: MOVE) is in the Danger Zone this week. MOVE operates home and apartment listing sites Realtor.com and Move.com as well as the moving service information site Moving.com. 80% of MOVE’s revenue comes from advertising on these sites.

MOVE has had strong cyclical winds at its back in recent years, and the stock is up 95% year-to-date. The stock is richly valued, and several red flags hidden in the footnotes raise questions about the company’s ability to justify its stock price. MOVE operates in a niche field with significant competition from companies like Zillow (NASDAQ: Z) and Trulia (NASDAQ: TRLA), not to mention Yahoo (NASDAQ: YHOO), which has its own real estate listing site. Clever earnings management and the recovery in the housing market has helped propel MOVE upward this year, but don’t expect the ride to continue. The company is already lagging its competitors and continuing to lose market share.

Managing Earnings To Create The Illusion Of Profits

In 2012 and 2011, MOVE had two straight years of positive GAAP earnings for the first time since the height of the housing bubble. Despite the fact that its 2012 revenue was 30% less than in 2006, MOVE made a profit by cutting down on expenses. Specifically, MOVE cut back on discretionary spending costs like advertising. In 2012, advertising expenses were only $13 million, or 7% of revenue, while in 2008 advertising expenses were $32 million, or 12% of revenue. Without this $19 million decrease in advertising expense, MOVE would have lost money in 2012 rather than earn an operating profit (NOPAT) of $8 million as it did.

Figure 1: Advertising Expense, Revenue, and NOPAT

Sources:   New Constructs, LLC and company filings

That chart should worry investors, as decreasing advertising expenditures in a competitive, fragmented industry can significantly undermine future profits. This survey showed that nearly 80% of corporate executives are willing to sacrifice long-term value in order to hit earnings estimates in the near term. Cutting advertising expense can help in the short-term, but it will likely be a value-destroyer in the long term.

Losing Market Share

MOVE’s cost-cutting efforts are already creating problems. Despite it being a more established site, traffic on MOVE’s flagship Realtor.com has already been surpassed by Z, which spent 10% of its revenue on advertising in 2012, and TRLA, which increased its ad spending fivefold in 2012.

Z had an average of 61 million unique monthly visitors in 3Q13, a year over year increase of 69%, and TRLA had an average of 42 million unique monthly visitors, a year over year increase of 42%. MOVE, on the other hand, had only 28 million unique monthly visitors and 22% growth year over year. The sector as a whole might be growing, but MOVE is at the back of the pack and falling further behind.

Red Flags From the Footnotes

MOVE has several red flags hidden in its filings that either take away from the cash flow available to shareholders in the future or cast doubt on the company’s ability to create more cash flow.

Employee Stock Option liabilities: MOVE has 7 million options outstanding, which at its current price represents a liability of $67 million, or 11% of its market cap. Outstanding stock options are a dangerous liability as they increase in value as the stock price goes up.

Off-balance sheet debt: MOVE has no reported debt, but it does have $23 millionin operating lease obligations, which represents about $20 million in off-balance sheet debt when discounted to its present value.

Asset write-downs: Since 2006, MOVE has accumulated write-downs of nearly $50 million, or 50% of reported net assets. Large write-downs are a sign of management allocating capital poorly. This history of write-downs should make investors skeptical of the prospects for recent acquisitions TigerLead and Relocation.com.

Asset write-downs are generally disclosed on the income statement, but one has to dig into the footnotes to find the reasons for them. Outstanding stock options and operating leases are not disclosed on the income statement and can only be found in the financial footnotes of a company’s annual Form 10-K.

Dangerous Valuation

Even without the competitive headwinds it faces, MOVE is priced beyond any reasonable growth expectation. MOVE’s current valuation of $14.75/share implies that the company will grow after-tax profit (NOPAT) by 25% compounded annually for 19 years. I’m not sure that any investor out there is willing to make a straight-faced argument that MOVE can meet those expectations.

MOVE hit its five-year high in mid-October and has since lost nearly 20% of its value. Z and TRLA have similarly seen big drops in the past two months. It appears that investors are souring on the online real estate business as a whole. Normally, I caution against investors trying to short momentum stocks, but it looks as though the momentum for MOVE has already been stopped. At these levels, MOVE represents an attractive shorting opportunity with significant downside remaining.

Top Stocks To Invest In

If we give MOVE credit for 14% compounded annual NOPAT growth for 20 years, the stock is worth only $2.50 today. I think MOVE could be a potential acquisition target for a large company like Google (NASDAQ: GOOG) or Facebook (NASDAQ: FB), so adding a generous buy out premium we can put the fair valuation at about $5/share. I don’t see any company buying out MOVE with its current market cap of $585 million because it would probably be cheaper to develop their own site instead.

I don’t see any real upside for MOVE. The company is growing revenue, but extraordinary revenue growth is already baked into its price. Competitors like Zillow are already attracting more traffic, and the threat of entry by a larger company looms over the industry. MOVE is overpriced and falling behind in a competitive industry.

Avoid ETFs and Mutual Funds with MOVE

Investors should avoid Advisors’ Inner Circle Fund: Rice Hall James Micro Cap Portfolio (MUTF:RHJSX) due to its 2.1% allocation to MOVE and Dangerous overall rating.

Sam McBride contributed to this article.

Disclosure: David Trainer and Sam McBride receive no compensation to write about any specific stock, sector, or theme.

The following article is from one of our external contributors. It does not represent the opinion of Benzinga and has not been edited.

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Delta Air Lines: Please Sir, Can I Have Some More?

Delta Air Lines (DAL) has gained 133% so far this year, but that hasn’t stopped the folks at Barclays from putting it “at the top of [its] airlines list for 2014.”

Bloomberg News

Sure that gain is huge, both on its own terms and relative to its competitors. Delta has outgained nearly all its peers, as Southwest Airlines (LUV) has gained 82% in 2013, Alaska Air (ALK) has risen 68% and United Continental (UAL) is up 61%. Spirit Airlines (SAVE), with a 144% rise, was one of the few airlines to trump Delta.

So why is Barclays still bullish? David Fintzen and team explain why they left Delta’s investor meeting yesterday feeling optimistic:

The focus was rightfully on the 'sustainability' question that we think remains central to the long-term upside in DAL shares. Specifically, a long-term operating margin target of 10-12% was encouraging, but also strikes us as realistic given the initiatives (re-fleeting, etc) underway. Secondly, we were encouraged by comments that margin improvement can still come from the 'core' of the network, not just the outliers. It's hard for us to quantify, but setting a high threshold (i.e. not simply accepting an 8% margin) in a route/city/hub strikes us as a seemingly simple mindset change that matters (and needs to become engrained in the industry). On the cost side, similarly, multiple comments around 'restoring balance to the supply chain' strike us as similarly hard to quantify, but indicative of an expectation to push margins higher.

Delta has gained 1.9% to $28.19 today at 1:48 p.m., while United Continental has risen 3.4% to $37.83, Spirit Airlines has advanced 2.2% to $43.32, and Southwest, which was upgraded by Merrill Lynch today, has jumped 3.6% to $18.62. Alaska Air has dropped 1.3% to $72.49.

Your Year-End Financial To-Do List

Alamy Here are 10 ways to take advantage of tax breaks, financial strategies and opportunities to boost your savings by year-end. 1. Add more money to your 401(k). You can contribute up to $17,500 to your 401(k) for 2013 ($23,000 if you're 50 or older or will be by the end of the year), and you have until Dec. 31 to reach that limit. You can't just add extra money into the account yourself; the pre-tax contributions must be made through payroll deduction. Ask your employer's payroll department what steps you need to take to increase your contributions starting with your next December payday. Some employers also let you contribute a lump sum directly from a year-end bonus, before the money is paid and taxed. See How to Increase 401(k) Contributions for more information about giving your retirement plan a boost at the end of the year.

Best Tech Stocks To Invest In Right Now

Bloomberg News

InvestmentNews caught up with LPL Financial LLC chief executive Mark Casady yesterday at the firm's annual adviser conference to ask him about some of the firm's recent developments, including its technology improvements, efforts to start a bank and regulatory scrutiny.

InvestmentNews: Is the announcement of a package of technology upgrades really LPL playing catch-up on its technology?

Mr. Casady: Not now. I would have said that a year ago. The [enhanced] trading system, the new account view, which is the way end clients look at data, and with mobile access as well, we're right there in terms of clients and mobile access.

Best Tech Stocks To Invest In Right Now: Cubist Pharmaceuticals Inc.(CBST)

Cubist Pharmaceuticals, Inc., a biopharmaceutical company, focuses on the research, development, and commercialization of pharmaceutical products that address unmet medical needs in the acute care environment. The company markets CUBICIN (daptomycin for injection), a once-daily, bactericidal, intravenous, antibiotic with activity against gram-positive organisms, including methicillin-resistant staphylococcus aureus. Its clinical development product pipeline consists of CXA-201, which is in the phase III clinical trial for patients with complicated urinary tract infections; and in phase II clinical trial for patients with complicated abdominal infections. The company is also developing CXA-201 for the treatment of hospital acquired pneumonia. In addition, its product under development comprises CB-183,315, an oral, bactericidal lipopeptide with in vitro bactericidal activity against C. difficile, for the treatment of clostridium difficile-associated diarrhea (CDAD). Further , the company?s pre-clinical programs include therapies to treat various bacterial infections and agents to treat acute pain. Additionally, it promotes MERREM I.V. (meropenem for injection), a carbapenem class intravenous antibiotic, in the United States under a commercial services agreement with AstraZeneca Pharmaceuticals, LP; and DIFICID as the treatment for CDAD in adults under the co-promotion agreement with Optimer Pharmaceuticals, Inc. The company also has collaborations with Forma Therapeutics, Inc. to discover and develop antibacterial compounds; an agreement with the Broad Institute to transform natural products discovery; a collaboration with Hydra Biosciences, Inc., to develop ion channel drugs; and a collaboration agreement with Alnylam Pharmaceuticals, Inc., for the development and commercialization of Alnylam's RNAi therapeutics as a therapy for the treatment of respiratory syncytial virus. The company was founded in 1992 and is headquartered in Lexington, Mas sachusetts.

Advisors' Opinion:

• [By Sean Williams]

  What: Shares of Cubist Pharmaceuticals (NASDAQ: CBST  ) , a biopharmaceutical company devoted to developing acute care therapies, added 12% following the announcement of its second-quarter earnings results.

• [By Jake Keator]

  Shares of Cubist Pharmaceuticals (NASDAQ: CBST  ) exploded upward on Friday, finishing up over 9%. The company reported strong second-quarter results Thursday, beating average analyst estimates for both revenue and EPS. Total net revenues were $258.8 million, up 12.2% over Q2 2012, while non-GAAP diluted EPS was $0.42. Average analyst estimates were $254.73 million for revenue and EPS of $0.38.

Best Tech Stocks To Invest In Right Now: Savient Pharmaceuticals Inc(SVNT)

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

Advisors' Opinion:

• [By James E. Brumley]

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

• [By James E. Brumley]

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

5 Best China Stocks For 2014: Crs Electronics Inc (LED.V)

CRS Electronics Inc. develops, manufactures, and sells light emitting diode (LED) lighting products for interior and exterior architectural lighting applications primarily in North America. It offers child safety systems for school buses; exterior lighting on school buses based on incandescent and LED technology; LED based space lighting products; and LED lamps and fixtures for retail and commercial markets. The company is also involved in the contract manufacturing of LED light boards. CRS Electronics Inc. was incorporated in 1998 and is headquartered in Richmond Hill, Canada.

Best Tech Stocks To Invest In Right Now: Take-Two Interactive Software Inc.(TTWO)

Take-Two Interactive Software, Inc. publishes, develops, and distributes interactive entertainment software, hardware, and accessories worldwide. The company develops and publishes software titles for various gaming and entertainment hardware platforms, including PlayStation3 and PlayStation2 computer entertainment systems, PlayStation Portable system, Xbox 360 video game and entertainment system, and Wii and DS systems, as well as for the personal computer and games for Windows. It offers products through its wholly owned labels Rockstar Games and 2K, which publishes titles under 2K Games, 2K Sports, and 2K Play. The company, through its subsidiary, Jack of All Games, also distributes software, hardware, and accessories in North America. Its proprietary brand franchises include Grand Theft Auto; Sid Meier's Civilization; Max Payne; Midnight Club; Manhunt; Red Dead Revolver; Bully; BioShock; Sid Meier's Railroads!; Sid Meier's Pirates!; Carnival Games; and Top Spin, as wel l as licensed brands comprise the sports games Major League Baseball 2K; NBA 2K; and NHL 2K. The company sells its software titles to retail outlets through direct relationships with large retail customers and third party distributors. Its customers include mass merchandisers, specialty retailers, video stores, electronics stores, toy stores, national and regional drug stores, and supermarket and discount store chains. The company was founded in 1993 and is headquartered in New York, New York.

Advisors' Opinion:

• [By WALLSTCHEATSHEET.COM]

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

• [By Rick Aristotle Munarriz]

  AFP/Getty Images This should be a great time for GameStop (GME). This month's introduction of Sony's (SNE) PlayStation 4 and Microsoft's (MSFT) Xbox One should ring like dinner bells drawing diehard gamers to GameStop's stores. GameStop has assembled a network of 6,488 small-box locations across 15 different countries to cash in on moments like this. It has hosted midnight release parties for both consoles, and with demand exceeding supply, it's a safe bet that a lot of prospective buyers will be circling around their local GameStop locations as new systems arrive throughout the holiday shopping season. However, this may not be as jolly a holiday season as bulls were expecting this time. Blue Christmas GameStop delivered blowout quarterly results on Thursday morning. Sales and earnings clocked in ahead of expectations, but the stock still opened sharply lower because the chain served up a weak profit outlook for the new quarter. It has been seven and eight years, respectively, since Sony and Microsoft updated their consoles, and because of that, the holiday season is supposed to be huge for GameStop. The retailer is forecasting comparable store sales to grow by as much as 9 percent, and that may seem low since these new platforms aren't cheap. The Xbox One sells for $499. The PS4 fetches $100 less, but that price doesn't include the $60 camera accessory gamers will need to buy to get it up to speed with motion-based operations. However, the real shocker in GameStop's report is that it's only looking for a profit between $1.97 a share and $2.14 a share. Even at the high end, we're looking at earnings that are short of the $2.16 a share it earned a year ago and the $2.15 a share that Wall Street was expecting. The two likely culprits for the soft bottom line are weak software and pre-owned sales. And it remains to be seen if either of those two categories will truly bounce back. Thinking Outside of the Xbox Hardware has always been GameStop's lowest margin

• [By Tim Beyers]

  GTA V, the latest in Take-Two Interactive's (NASDAQ: TTWO  ) multibillion-dollar Grand Theft Auto franchise. A recent trailer for the new game has garnered more than 6 million views as of this writing. Don't be surprised if this game, which is due to hit stores in September, captures the bulk of the buzz coming out of E3.

Best Tech Stocks To Invest In Right Now: Leap Wireless International Inc.(LEAP)

Leap Wireless International, Inc., together with its subsidiaries, provides digital wireless services under the ?Cricket? brand name in the United States. The company offers unlimited local and the U.S. long distance services from various Cricket service area and unlimited text messaging services, as well as mobile Web, 411 services, navigation, and data back-up. It also provides BridgePay, a flexible payment option for customers to use and pay for the company?s cricket wireless service; handsets and devices with various features; cricket broadband service, an unlimited mobile broadband service that allows customers to access the Internet through their computers; Cricket PAYGo Service, a pay-as-you-go unlimited prepaid wireless service designed for customers who prefer the flexibility and control offered by traditional prepaid services; and Muve Music Service, an unlimited music download service for mobile handsets in select cricket markets. In addition, the company off ers voice and data roaming services. It markets its cricket handsets and services, primarily through company-owned retail stores and kiosks, as well as through authorized dealers and distributors, including premier dealers, local market authorized dealers, national mass-market retailers, and other indirect distributors. As of December 31, 2010, the company offered services in 35 states and the District of Columbia to approximately 5.5 million customers. Leap Wireless International, Inc. was founded in 1998 and is headquartered in San Diego, California.

Advisors' Opinion:

• [By Neha Marwah]

  This is not all. The second largest wireless operator is also in the process of closing a deal with regional carrier Leap Wireless (LEAP) in a transaction of $1.2 billion and by assuming a net debt of $2.8 billion. The regional carrier postponed its shareholders vote for the proposed acquisition as it was required to make corrections in prior financial statements.

• [By Andrew Tonner]

  Scale has always been the name of the game in the telecom industry. Even dating back to the days of the AT&T (NYSE: T  ) monopoly of the mid-20th century, telecom companies have always grown through acquisition. The financial crisis only temporarily slowed this trend, but we've seen the buyout boom in this space resume with a fury over the last 12 months. We recently saw the latest domino fall as giant AT&T agreed to snap up smaller pre-paid wireless player Leap Wireless (NASDAQ: LEAP  ) . In this video, Fool contributor Andrew Tonner breaks down the deal and what it means for investors in this sector.

• [By Evan Niu, CFA]

  What: Shares of Leap Wireless (NASDAQ: LEAP  ) have leapt higher today by more than double, up by 116% at the high, following news that AT&T (NYSE: T  ) has agreed to acquire the pre-paid carrier.

• [By Eric Volkman]

  Leap Wireless (NASDAQ: LEAP  ) will no longer be an independent company. It has agreed to be acquired by telecom giant AT&T (NYSE: T  ) , both firms announced in a joint press release. The price is $15 per share in cash, for a total of around $1.19 billion.

Sysco Buys Rival US Foods for $3.5 Billion

David J. Phillip/APSysco's Houston corporate office. HOUSTON -- One of the largest food supply companies is buying one of its key rivals, creating an even larger, global distribution company. Sysco is buying privately held US Foods for about $3.5 billion in cash and stock. When the deal closes, Sysco expects the addition of US Foods to boost its annual sales by about 46 percent to around $65 billion. Sysco shares jumped as much as 26 percent Monday, setting an all-time high. Houston's Sysco will pay $3 billion in common stock and $500 million in cash. It will also assume or refinance about $4.7 billion in debt. That puts the total value of the deal at about $8.2 billion. Sysco President and CEO Bill DeLaney said that the two companies have highly complementary core strengths including large product portfolios. For the fiscal year that ended in June, Sysco's sales totaled $44.41 billion. It trucks food and cooking supplies to about 425,000 customers through 193 locations in the U.S., Bahamas, Canada, Ireland and Northern Ireland. US Foods' customers include independent and chain restaurants, health care and hospitality companies, and government and educational institutions. Major stakeholders in the company, based just outside of Chicago, in Rosemont, Ill., include Clayton, Dubilier & Rice and Kohlberg Kravis Roberts & Co. Representatives from both of those investment firms will join Sysco's board. When the deal closes, US Foods shareholders will own about 87 million shares, or about 13 percent, of Sysco's common stock. The buyout has been approved by the boards of both companies. Sysco said it expects the deal, which is set to close in the third calendar quarter of 2014, to immediately boost its profit after adjusting for acquisition-related costs and expenses. It's also expected to create annual cost savings of at least $600 million after three or four years. Moody's Investors Service placed all of Sysco's ratings, including its investment-grade "A1" long-term rating, under review for possible downgrade. Moody's said that while the deal makes sense and the price seems fair, a downgrade is likely given the amount of debt Sysco will assume. In midday trading, Sysco (SYY) shares rose $4.20, or 12 percent, to $38.53 after peaking at $43.39 earlier in the day. The company's shares have risen about 8 percent since the beginning of this year. Pre-made soups can contain a large number of ingredients containing GMOs. For instance, Campbell's (CPB) popular condensed Tomato Soup lists high fructose corn syrup as its second biggest ingredient. According to the Non-GMO Project, nearly 88 percent of all corn planted in the United States is GMO.

The 4 Stocks That Moved the Market on Thursday

Markets opened lower Thursday morning and all three major indexes finished the trading day lower as well. The Nasdaq Composite fell just 0.12% at the closing bell, while the DJIA and the S&P 500 both closed down more than 0.4%.

Among heavily traded DJIA stocks, Microsoft Corp. (NASDAQ: MSFT) traded more than 100 million shares on Thursday, well over twice its daily average volume of around 44 million shares. The decline is almost entirely due to a statement from Alan Mulally, CEO at Ford Motor Co. (NYSE: F), that he has no plans to do anything but retire from Ford at the end of next year. Mulally was widely believed to be the front-runner to replace Steve Ballmer. Microsoft's shares closed at $38.00, down 2.41%, in a 52-week range of $26.28 to $38.98.

Another DJIA stock leading the decline today is JPMorgan Chase & Co. (NYSE: JPM). On a general macroeconomic note, the big bank is likely taking a few lumps from the big GDP number released today which many investors think will spur the Fed to begin tapering its asset buying program. JPMorgan was also hit by a hacker attack that swept up data from 465,000 credit card accounts. And if that wasn't enough, investors are getting the jitters over next week's announcement of final regulations for implementing the Volcker rule. JPMorgan's stock closed down 2.4% at $55.82 in a 52-week range of $41.11 to $58.14.

Goldman Sachs Group Inc. (NYSE: GS), like JPMorgan, will get hit by new restrictions on trading that are part of the Volcker rule. An analyst today said that Goldman could see revenues shrink by up to 12% or so as a result of the trading prohibition. Shares for this Dow 30 stock closed down 1.86% at $165.56 in a 52-week range of $115.62 to $171.58.

A fourth DJIA component, Cisco Systems Inc. (NASDAQ: CSCO), saw its share price absolutely collapse after it announced third quarter earnings. Shares are down more than 15% since early November and, while there is no new bad news today, there's no new good news either. Aside from an enlarged share buyback program, Cisco doesn't appear to have any idea what to do next. Cisco's stock closed at $20.91 on Thursday, down 1.6% in a 52-week range of $19.16 to $26.49.