How Marks and Spencer Measures Up as a GARP Investment

LONDON -- A popular way to dig out reasonably priced stocks with robust growth potential is through the "Growth At A Reasonable Price," or GARP, strategy. This theory uses the price-to-earnings to growth (PEG) ratio to show how a share's price weighs up in relation to its near-term growth prospects -- a reading below 1 is generally considered decent value for money.

Today, I am looking at Marks and Spencer (LSE: MKS  )  to see how it measures up.

What are Marks and Spencer's earnings expected to do?

  2014 2015

EPS Growth	6%	9%
P/E Ratio	13.7	12.6
PEG Ratio	2.4	1.4

Source: Digital Look.

City forecasters expect Marks and Spencer to bounce back from the poor earnings performance of recent years, with growth penciled in this year and next after last year's 6% earnings per share (EPS) fall.

The British retailer's PEG rating for the year ending March 2014 runs ahead of the PEG value benchmark of 1, although it is set to dive much lower in the following 12-month period. Meanwhile Marks and Spencer's price-to-earnings (P/E) ratio during the next two years is expected to remain above the threshold of 10 -- any reading below this is considered good value.

Does Marks and Spencer provide decent value against its rivals?

  FTSE 100 General Retailers

Prospective P/E Ratio	17.1	24.1
Prospective PEG Ratio	4.8	2.2

Source: Digital Look.

Marks and Spencer compares extremely favorably to the FTSE 100 when judging both forward PEG and P/E ratios.

But although the retailer is far cheaper than its sector rivals when tallying up the P/E rating only, its slightly higher PEG multiple suggests that its growth prospects are not as appealing when compared with its sector peers. Indeed, concerns over continued weakness in the company's clothing division has kept its P/E rating suitably lower.

Even though Marks and Spencer's numbers exclude it as a traditional GARP stock, I believe that the firm provides a potentially fruitful turnaround story for those seeking decent growth over the longer term.

Multichannel strategy to drive multiyear growth
Marks and Spencer announced this month that underlying pre-tax profit slipped 5.8% last year to 665 million pounds, with group sales rising just 1.3% during the period to 10 billion pounds. In its key domestic markets, total sales rose just 0.9% during the period, although like-for-like sales actually fell 1%.

The retailer continues to suffer from insipid clothing demand, which pushed General Merchandise sales 4.1% lower on a like-for-like basis during the year. Enduring difficulties for the British High Street, combined with ongoing travails at its clothing department, are likely to constrain Marks and Spencer's growth potential at home.

To combat this, however, the company is actively pursuing opportunities abroad to boost earnings over the long term, and operations here provided a glimmer of hope in its otherwise dreary year-end report. International sales rose 4.5% from 2013, and the chain is looking to add another 15% in fresh retail space this year including new store openings in India and China.

In addition, the firm is also taking a multifaceted approach to future growth through the opening of new stores, franchise establishment, and a massive improvement to its online services. Its drive toward becoming an "international multi-channel retailer" saw sales across its various channels rise an impressive 16.6% in 2013, driven by better online services, which gave mobile and tablet PC sales a 200% leg up.

I expect a transformed, multinational Marks and Spencer to post robust earnings expansion in the coming years, although the company may experience further near-term turbulence in the meantime.

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It’s Official: Windows 8 Is a Design Failure

For all the hubbub over Windows 8's new design, and how it's better suited to the newer generation of interactive touchscreen devices, Microsoft's (NASDAQ: MSFT  ) most loyal customers want a PC they recognize. Windows 8 is a design failure for these users.

How do we know? The good folks at The Register quote data from PC management firm Soluto that says more than half of all Windows 8 users ignore the new start menu in order to preserve old habits. Touchscreen laptop and tablet owners also largely avoid Windows 8's most advanced features. No wonder sales haven't lived up to expectations, says Tim Beyers of Motley Fool Rule Breakers and Motley Fool Supernova.

Mr. Softy's problem is that it hasn't trained users to accept disruptive changes in design and development in the same way that Apple (NASDAQ: AAPL  ) has. Instead, Windows customers expect Microsoft to be stable and predictable. Modernizing -- as Microsoft did with Windows 8 -- means risking alienating big chunk of the installed base, Tim says.

Do you agree? Please watch the video to get Tim's full take, and then let us know how you're using Windows 8.

A hard road for Mr. Softy
Is the brave new world of smart devices an opportunity for Microsoft, or a threat? A Motley Fool analyst answers this question and more in a new premium report on Microsoft. The report includes regular updates as key events occur, so make sure to claim your copy now by clicking here.

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Apple Raises the Bar

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

In an appearance at the All Things Digital Conference, Apple (NASDAQ: AAPL  ) CEO Tim Cook said that his company has "some incredible plans" and that his staff "has several more game changers" in the pipeline. Is Cook smart to raise expectations? The Apple CEO also said that he's not a fan of Google (NASDAQ: GOOG  ) Glasses. Will Google Glasses catch on with consumers? In our lead story on Investor Beat, Motley Fool One's Jason Moser and Motley Fool Asset Management's Tim Hanson weigh in on the battle between Apple and Google.

Apple has a history of cranking out revolutionary products... and then creatively destroying them with something better. Read about the future of Apple in the free report, "Apple Will Destroy Its Greatest Product." Can Apple really disrupt its own iPhones and iPads? Find out by clicking here.

The relevant video segment can be found between 0:18 and 2:26.

10 Best Computer Hardware Stocks To Own Right Now

The small-sized segment of the tablet market is where it's at. Growth of smaller tablets is expected to drive much of the gains in the broader market in the coming years, thanks in large part to the greater mobility that the form factor offers accompanied by attractive price points.

Apple's (NASDAQ: AAPL  ) foray downmarket with the iPad Mini is a testament to how powerful this trend will be, particularly after Amazon.com (NASDAQ: AMZN  ) and Google (NASDAQ: GOOG  ) proved that Steve Jobs was wrong when he said that 10-inch tablets are the perfect size. Even Microsoft (NASDAQ: MSFT  ) won't be able to ignore smaller tablets, and is likely preparing a 7-inch Surface as we speak.

The iPad Mini is perched at the high end of that market segment, though; its $329 starting price represents a significant premium to the $199 that buys you a Kindle Fire HD or Nexus 7.

10 Best Computer Hardware Stocks To Own Right Now: Solco Ltd(SOO.AX)

Solco Ltd, together with its subsidiaries, engages in the distribution of solar panels and water pumping products in Australia and internationally. It products include GridPower solar power kits that provide electricity to homes or businesses, as well as delivers surplus power back into the electrical grid; and Sun Mill solar pump kits, which combine solar panels with pumps to deliver the required supply of water. The company also provides various inverters; and Morning Star for off grid and recreational applications. In addition, Solco produces turnkey systems for producing polymer hot water systems; and engages in the power generation projects through strategic joint venture partnerships. It offers its products to corporate and government clients, and residential customers. The company was formerly known as Solar Energy Systems. Solco Ltd was founded in 1989 and is based in Belmont, Australia.

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Twin Butte Energy Ltd. engages in the acquisition, exploration, development, and production of petroleum and natural gas properties in Western Canada. The company�s principal properties include the Frog Lake property, Silverdale area, Freemont area, and Primate area located in the Lloydminster region of Saskatchewan and Alberta, Canada. It has approximately 220,000 net undeveloped acres of land. The company was founded in 2006 and is headquartered in Calgary, Canada.

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Emerald Oil & Gas NL engages in the exploration and development of oil and gas properties. The company holds interests in various oil and gas properties located in Colorado, Wyoming, Kentucky, and Texas in the United States, as well as in offshore Western Australia. The company is based in West Perth, Australia.

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Unity Energy Corp. engages in the acquisition and exploration of mineral resource properties in Canada. It primarily explores for uranium in its various properties located in the Athabasca Basin; and for gold in the province of Saskatchewan. The company was formerly known as Gold Key Capital Corp. and changed its name to Unity Energy Corp. in December 2009. Unity Energy Corp. was incorporated in 2006 and is based in Vancouver, Canada.

10 Best Computer Hardware Stocks To Own Right Now: Torotrak(TRK.L)

Torotrak plc engages in the design and development of traction drive systems for vehicle makers and transmission manufacturers in Europe, North America, India, and Japan. The company licenses its patented traction drive technology for use in main drive transmissions for vehicles, such as buses, trucks, and small cars; variable drive pressure charging for fuel economy; and mechanical flywheels that recover braking energy. It also provides engineering consultancy services, including supporting projects through advice and helping customers to apply the Torotrak plc?s technology. The company was founded in 1988 and is based in Leyland, the United Kingdom.

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Carpetright plc, together with its subsidiaries, engages in the retail sale of floor coverings. It sells a range of carpets, rugs, vinyls, laminates, and associated accessories, as well as beds. The company also sells its products through online. It operates 679 stores in the United Kingdom and the Republic of Ireland, as well as in the Netherlands and Belgium. The company was founded in 1988 and is based in Purfleet, the United Kingdom.

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Convio, Inc. provides on-demand constituent engagement solutions that enable nonprofit organizations (NPOs) to raise funds, advocate for change, and cultivate relationships with donors, activists, volunteers, alumni, and other constituents in North America. Its integrated solutions include Convio Online Marketing (COM) platform, and Convio Common Ground CRM, a constituent relationship management application. The COM platform enables NPOs to harness the potential of the Internet and social media as new channels for constituent engagement and fundraising. The Common Ground delivers next-generation donor management capabilities, and integrates marketing activities across online and offline channels. The company also offers Convio Open, an open platform that allows NPOs to evolve their online marketing strategies; and Convio Go!, a structured program consisting of selected COM modules and specialized cohort-based services designed for mid-market NPOs new to online marketing an d fundraising. Convio, Inc.?s software enables its clients and partners to customize and extend its functionality. In addition, it provides account management, technical support, and deployment services, as well as strategic planning, campaign management, Web design, data analytics, benchmarking, campaign analytics, data integration, training, data warehousing, business intelligence, analytics/modeling, strategic consultation, and marketing execution services. The company sells its solutions through a direct sales force, as well as through a network of partners, including interactive agencies, direct marketing agencies, public affairs firms, and complementary technology companies. Convio, Inc. serves approximately 1,400 NPO clients, including charities. The company?s clients deliver approximately 4 billion emails to 140 million email addresses to accomplish their missions. Convio, Inc. was founded in 1999 and is headquartered in Austin, Texas.

10 Best Computer Hardware Stocks To Own Right Now: Southcoast Financial Corporation(SOCB)

Southcoast Financial Corporation operates as the holding company for Southcoast Community Bank that provides commercial banking services in South Carolina. The company offers deposit services, which comprise business and personal checking accounts, NOW accounts, savings accounts, money market accounts, various term certificates of deposit, individual retirement accounts, and other deposit services. It also provides secured and unsecured, short-to-intermediate term loans for commercial, consumer, and residential purposes. The company?s consumer loans include car loans, home equity improvement loans secured by first and second mortgages, personal expenditure loans, education loans, and overdraft lines of credit; commercial loans for businesses to provide working capital, expand physical assets, or acquire assets; loans secured by real estate mortgages for the acquisition, improvement or construction, and development of residential and other properties; residential real esta te loans; non-farm and non-residential loans; commercial real estate loans; real estate construction loans; and land development loans. In addition, it offers residential mortgage loan origination services, safe deposit boxes, business courier services, night depository services, telephone banking, MasterCard brand credit cards, tax deposits, and automated teller machine services. The company operates offices in Mt. Pleasant, Charleston, Moncks Corner, Johns Island, Summerville, Goose Creek, and North Charleston, South Carolina. Southcoast Financial Corporation was founded in 1998 and is headquartered in Mt. Pleasant, South Carolina.

10 Best Computer Hardware Stocks To Own Right Now: Sonde Resources Corp(SOQ.TO)

Sonde Resources Corp. engages in the exploration, acquisition, development, and production of petroleum and natural gas properties in western Canada and north Africa. Its principal properties include assets in Drumheller, Kaybob/Windfall, and Boundary Lake/Eaglesham areas located in west-central Alberta. The company has interest in 380,362 gross/268,120 net acres in western Canada. It also has a 100% working interest in the 768,000 acre joint oil block offshore Tunisia and Libya. As of December 31, 2011, it had proved plus probable reserves of 9,507 barrels of oil equivalent. The company was formerly known as Canadian Superior Energy Inc. and changed its name to Sonde Resources Corp. in June 2010. Sonde Resources Corp. was founded in 1983 and is headquartered in Calgary, Canada.

10 Best Computer Hardware Stocks To Own Right Now: 1st Century Bancshares Inc(FCTY)

1st Century Bancshares, Inc. operates as the holding company for 1st Century Bank, National Association that provides commercial banking services to family and closely held middle market businesses, professional service firms, high net worth individuals, real estate investors, entrepreneurs, and local residential community in Los Angeles area, California. The company accepts various deposit products, including business and personal checking accounts, money market accounts, certificates of deposits, attorney-client trust accounts, and trust accounts. Its loan portfolio comprises business and personal lines of credit and term loans; tenant improvement and equipment financing; bridge and/or specific purpose loans; commercial, industrial, and multi-family real estate lending; personal home equity loans and lines of credit; and credit cards for business and personal use. The company also offers cash management and on-line banking services, as well as debit cards. It operates th rough a branch office and private banking center at Los Angeles. The company was founded in 2003 and is based in Los Angeles, California.

Is This Electric-Car Rival Making a Comeback?

In the following video, Fool consumer-goods/industrials analyst Blake Bos discusses how the current natural gas boom has spurred interest in hydrogen-fueled cars. 

The expansion of natural gas infrastructure resulting from increased gas production would make it easier in the future to support hydrogen-powered vehicles, Blake says.

There are environmental concerns regarding the production of hydrogen from natural gas.  However, Blake shares research that points out a potential long-term issue with the current battery technology that Tesla Motors (NASDAQ: TSLA  ) and other manufacturers use. Blake also identifies international companies that are embracing hydrogen technology, including Honda (NYSE: HMC  ) and Toyota (NYSE: TM  ) .

Tesla's plan to disrupt the global auto business has yielded spectacular results. But giant competitors are already moving to disrupt Tesla. Will the company be able to fend them off? The Motley Fool answers this question and more in our most in-depth Tesla research available. Get instant access by clicking here now.

Why Big Lots Shares Plunged

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

What: Shares of discount retailer Big Lots (NYSE: BIG  ) sank 10% today after its current-quarter and full-year guidance disappointed Wall Street.

So what: Big Lots' first-quarter results -- adjusted EPS of $0.61 on revenue of $1.31 billion -- managed to meet estimates, but downbeat guidance for the rest of 2013 is forcing analysts to recalibrate their growth expectations. While same-store sales in its Canadian business jumped 13.2%, a 2.9% decline in the U.S., where Big Lots generates most of its business, suggests that its domestic growth opportunities remain limited.

Now what: Management now sees full-year adjusted EPS of $2.87 to $3.12 on revenue growth of 1% to 2%, below its previous outlook of $3.05-$3.25 and 2%-3%.

"I am delighted to join Big Lots and welcome the opportunity to build on the strong franchise," said newly hired CEO David Campisi in a conference call with analysts. "I can assure you that we are moving quickly and I look forward to updating you on our progress."

With the stock now off about 20% from its 52-week highs and trading at a forward P/E of around 10, buying into that optimism might be worth looking into.

Interested in more info on Big Lots? Add it to your watchlist.

A Short and Sweet Bull Case for Apple Stock

Top 5 Low Price Companies To Own For 2014

U.S. policymakers have dragged their feet on a�definitive�answer for liquefied natural gas, or LNG, exports for quite a while, and several countries are taking advantage of the delay. With over $150 billion at stake, companies in Australia, Canada, and Papua New Guinea have made a strong push to build out LNG export terminals to capture the lucrative Asia-Pacific market.

In this video, Fool.com contributor Tyler Crowe explains how the concentration of possible LNG export�facilities along the U.S. Gulf Coast will not help the country capture this market, and how there are several companies that are betting on better success on other shores. Investors shouldn't completely fret, though, because many American companies are the ones setting up shop overseas.

The growing production of natural gas from hydraulic fracturing and horizontal drilling is flooding the North American market and resulting in record-low prices for natural gas. Enterprise Products Partners, with its superior integrated asset base, can profit from the massive bottlenecks in takeaway capacity by taking on large-scale projects. To help investors decide whether Enterprise Products Partners is a buy or a sell today, click here now to check out The Motley Fool's brand new premium research report on the company.

Top 5 Low Price Companies To Own For 2014: Hammerson Prop Ord(HMSO.L)

Hammerson plc is a publicly owned real estate investment trust. The firm engages in investing, developing, and managing retail properties. It invests in real estate market of Europe with a focus in United Kingdom, Germany, and France. The firm primarily invests in shopping centers, retail parks, and offices. It was formerly known as The Hammerson Property Investment and Development Corporation plc, Hammerson Property and Investment Trust, and L.W. Hammerson & Co. Hammerson is based in London, the United Kingdom.

Top 5 Low Price Companies To Own For 2014: Cobra Electronics Corporation(COBR)

Cobra Electronics Corporation engages in the design and marketing of two-way mobile communication and mobile navigation products in the United States, Canada, and Europe. It operates in two segments, Cobra Consumer Electronics and Performance Products Limited. The Cobra Consumer Electronics segment principally offers radar detection products, photo-enforcement and safety detection products, citizens band radios, power inverters and jumpstarters, two-way radios, and marine electronics, as well as mobile navigation for professional drivers. It sells its products directly to retailers, such as mass marketers, consumer electronics specialty stores, department store chains, warehouse clubs, television home-shopping and internet retailers, direct-response merchandisers, home centers, specialty stores, and travel center, as well as through two-step wholesale distributors that carry its products to fill orders for travel centers, small department stores and appliance dealers, duty -free shops on cruise lines, and export and marine products. The Performance Products Limited segment offers personal navigation devices under the Snooper Truckmate, Snooper Ventura, Snooper Sapphire Plus, and other trade names; GPS-enabled speed camera location detectors under the Snooper My Speed, Snooper 3 Zero, and other trade names; proprietary AURA database that provides drivers with advance notice of upcoming speed camera and hazard locations; E-Bike, a compact folding electric bike; and WPT250M tracker, a tracking device that uses GPS, GPRS, and GSM technology to monitor the location of boats, vehicles, pets, or individuals with an accuracy of 2.5 meters. The company was founded in 1961 and is based in Chicago, Illinois.

Hot Clean Energy Companies To Own In Right Now: Star Scientific Inc.(CIGX)

Star Scientific, Inc., together with its subsidiaries, engages in the development, implementation, and licensing of tobacco curing technology that prevents the formation of carcinogenic toxins present in tobacco and tobacco smoke, primarily the tobacco-specific nitrosamines (TSNA). It is also involved in the development, manufacture, marketing, and sale of very low-TSNA dissolvable smokeless tobacco products, including ARIVA compressed powdered tobacco cigalett pieces, STONEWALL Hard snuff, and modified risk tobacco products. In addition, the company develops pharmaceutical products that have a botanical, tobacco-based component to treat tobacco dependence and various neurological conditions, including Alzheimer?s disease, Parkinson?s disease, schizophrenia, and depression. Further, Star Scientific engages in the development of non-nicotine nutraceutical products designed to assist individuals who seek a smoking alternative, as well as related non-nicotine products for t he maintenance of healthy metabolism. It sells its smokeless tobacco products through tobacco distributors and wholesalers in the United States. The company was founded in 2000 and is based in Glen Allen, Virginia.

Top 5 Low Price Companies To Own For 2014: Checkpoint Systms Inc.(CKP)

Checkpoint Systems, Inc. manufactures and markets identification, tracking, security, and merchandising solutions for the retail and apparel industry worldwide. The company operates in three segments: Shrink Management Solutions, Apparel Labeling Solutions, and Retail Merchandising Solutions. The Shrink Management Solutions segment provides shrink management and merchandise visibility solutions. It offers electronic article surveillance systems, such as EVOLVE, a suite of RF and RFID-enabled products that act as a deterrent to prevent merchandise theft in retail stores; and electronic article surveillance consumables, including EAS-RF and EAS-EM labels that work in combination with EAS systems to reduce merchandise theft in retail stores. This segment also provides keepers, spider wraps, bottle security, and hard tags, as well as Showsafe, a line alarm system for protecting display merchandise. In addition, it offers physical and electronic store monitoring solutions, incl uding fire alarms, intrusion alarms, and digital video recording systems for retail environments; and RFID tags and labels. The Apparel Labeling Solutions segment provides apparel labeling solutions to apparel retailers, brand owners, and manufacturers. It has Web-enabled apparel labeling solutions platform and network of 28 service bureaus located in 22 countries that supplies customers with customized apparel tags and labels. The Retail Merchandising Solutions segment offers hand-held label applicators and tags, promotional displays, and queuing systems. The company serves retailers in the supermarket, drug store, hypermarket, and mass merchandiser markets through direct distribution and reseller channels. Checkpoint Systems was founded in 1969 and is based in Thorofare, New Jersey.

Advisors' Opinion:

• [By Michael]

  OK, so Checkpoint (CKP: 13.80 0.00%) probably isn’t going to see its stock price double in 2011. However, the stock gained 35% in 2010 with earnings expected to climb 13%. Next year, Wall Street sees earnings growth accelerating to 25%. Despite the impressive growth rate, the stock trades at only 16x next year’s earnings estimates and analysts have a $25 price target for CKP.

Top 5 Low Price Companies To Own For 2014: The Bancorp Inc.(TBBK)

The Bancorp, Inc. operates as the holding company for The Bancorp Bank that provides various commercial and retail banking and related products and services to small and mid-size businesses and their principals. The company?s deposit products include checking accounts, savings accounts, health savings accounts, money market accounts, individual retirement accounts, certificates of deposit, and stored value and payroll cards, as well as commercial accounts, such as general commercial checking, small business checking, business savings, and business money market accounts. Its loan portfolio comprises commercial term loans, commercial mortgage loans, commercial lines of credit, 1-4 family construction loans, direct lease financing, and commercial construction, acquisition, and development loans; and consumer loans comprising loans for consumers to finance personal residences, automobiles, home improvements, and for other purposes. The company also provides other banking serv ices, which include private label banking and merchant card processing services; and Internet banking services. It serves Philadelphia, Delaware, Chester, Montgomery, Bucks, and Lehigh counties in Pennsylvania; New Castle county in Delaware; and Mercer, Burlington, Camden, Ocean, and Cape May counties in New Jersey. The company was founded in 1999 and is based in Wilmington, Delaware.

Gulf Keystone Petroleum Issues Update on Move to Official List

LONDON -- The shares of Gulf Keystone Petroleum  (LSE: GKP  ) gained 0.5 pence to 150.5 pence this morning after the oil group provided an update on its planned move to the Official List of the London Stock Exchange.

Gulf Keystone said it would initially make an application for its shares to be admitted to the Standard Segment of the Official List.

The firm also said it intended to apply for a Premium Segment listing when it met all the necessary regulatory requirements.

Companies admitted to the Standard Segment of the LSE's Official List do not have to comply with certain eligibility requirements, such as demonstrating an acceptable three-year trading record, and do not have to abide by certain rules concerning significant and related-party transactions.

As part of the transition to the Official List, Gulf Keystone announced today that it had decided to split the roles of chairman and chief executive.

The group confirmed a search process had commenced for an independent non-executive chairman, as well as for at least one other independent non-executive director.

Todd Kozel, Gulf Keystone's current executive chairman and chief executive, said: "AIM has served Gulf Keystone well. However, for some time we have been of a size where we would be better suited to the Main Market. Consequently the splitting of my role as CEO with that of an Independent Non-Executive Chairman further signals Gulf Keystone's continuing commitment to high standards of corporate governance in preparation for our previously announced proposed move to the Official List."

Gulf Keystone has been trading on AIM, the LSE's junior market, since September 2004. Its market cap has since grown from £122 million to £1.2 billion after the company discovered up to 15 billion barrels of oil in the Kurdistan region of Iraq.

Certainly such returns emphasise how the resources sector can produce wealth-changing gains to ambitious investors.

And that's why The Motley Fool has published this exclusive oil report to help you lock in such profits.

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iWatch? iTV? How About Just an iSomething, Apple?

The pressure's on Apple (NASDAQ: AAPL  ) .

CEO Tim Cook kicked off the AllThingsD's D11 conference yesterday, and once again he's selling the invisible.

"We have several more game changers in us," Cook said.

When the matter of iTV -- Apple's long-rumored full-fledged smart television -- came up, he repeated the company line about the lack of satisfaction with the current viewing experience. He labeled smart TV as "an area of incredible interest" to Apple, but left it at that.

If this sounds familiar, you're not alone.

"When I go into my living room and turn on the TV, I feel like I have gone backwards in time by 20 to 30 years," said Cook to in a Rock Center interview last year. "It's an area of intense interest. I can't say more than that."

Well, since Cook's lips are sealed on that topic, the conversation turns to wearable devices, and with Samsung rolling out S Health wellness accessories to go with the Galaxy S4 and Google arming tech early adopters with computing glasses, the only real surprise is that Apple has yet to hit us with a smart watch or a fitness bracelet.

Well, Apple has incredible interest in that, too.

Cook knows all about wearable computing. He wears a Nike FuelBand that he showed off at the conference. He's been wearing the fitness tracking bracelet since it rolled out 15 months ago. Why not? He sits on Nike's board.

However, for all of the chatter about the iTV and the iWatch, we're stuck with iNothing.

Apple fans will argue that the company won't put out a product until it's right, but that's not true. We've seen more buggy iPhone releases than not lately. Apple fans can argue that the products aren't yet technologically feasible, but we're already seeing Google, Samsung, and even Nike leading the charge here.

Remember when Apple was the one that dictated the conversation? Remember when nobody wanted a smartphone with a touchscreen keyboard? Remember when nobody wanted a tablet? Apple showed them, but lately Apple is doing too much talking, and not enough of the innovating.

Cook is right. Apple probably does have some more game changers on the way. However, it better change the game while it's still worth playing.

There wasn't any pressure for Apple to raise the bar last holiday season. The stock had hit an all-time high in late September. However, Apple doesn't have that kind of flexibility this time around, especially when two new gaming consoles may shatter iTV dreams and a Kickstarter-bankrolled company wound up being the first one to hit the market with a smart watch.

Be great, Apple -- but don't be late.

Five enter, one leaves
It's incredible to think just how much of our digital and technological lives are almost entirely shaped and molded by just a handful of companies. Find out "Who Will Win the War Between the 5 Biggest Tech Stocks?" in The Motley Fool's latest free report, which details the knock-down, drag-out battle being waged by the five kings of tech. Click here to keep reading.

Priceline.com to Float Convertible Notes; Share Buyback Program Expanded

Priceline.com (NASDAQ: PCLN  ) is preparing to launch a pair of new capital initiatives. The first is the flotation of up to $1 billion in convertible notes that mature in 2020 and will be convertible into cash, stock, or a combination of the two. The interest rate and other features of the securities will be negotiated between priceline.com and the offering's initial purchaser. In addition, if certain circumstances are met, the company intends to grant that initial purchaser a 30-day option to buy up to an additional $150 million in principal value of the notes, to cover overallotments.

The monies will help fund an expansion of priceline.com's common stock repurchase program, which has been widened by $1 billion. The company says it will use the proceeds of the convertible notes to buy back an initial $450 million worth of its shares in "privately negotiated, off-market transactions." Following that, repurchases may be effected via open market buys or other private deals.

Hot Gas Utility Companies To Invest In 2014

The Dow Jones Industrial Average (DJINDICES: ^DJI  ) is struggling to hold on to the gains it made last week, falling as much as 108 points this morning. Sitting at a 65-point loss at 11 a.m. EDT, the index is suffering from another batch of disappointing economic news from both inside and out of the U.S. On the other hand, two of the Dow's few winners this morning are reaping the rewards of positive earnings news from a rival.

Seasonal slump?
This morning's news that homebuilders' confidence fell for the third month in a row, as well as news of reductions in New York manufacturing, was another blow to the Dow and the economy in general. For the past two weeks, the markets have endured report after report of softening growth in the economy, spurring some analysts to believe that we've hit a seasonal slowdown.

Hot Gas Utility Companies To Invest In 2014: Pac Nth West Cap C Com Npv (PFN.TO)

Pacific North West Capital Corp. engages in the acquisition, exploration, and development of platinum group metal (PGM), and precious and base metal properties primarily in Canada. It explores for PGM, gold, silver, and base metal properties in British Columbia, Ontario, Saskatchewan, and Alaska. The company primarily holds a 100% interest in the River Valley PGM project that consists of 410 mining claims in 38 claim units covering approximately 6,600 hectares located in the Sudbury region of Ontario. Pacific North West Capital Corp. was founded in 1996 and is headquartered in Vancouver, Canada.

Hot Gas Utility Companies To Invest In 2014: Syms Corp(SYMS)

Syms Corp operates a chain of ?off-price? apparel retail stores under the Syms and Filene?s Basement names in the United States. Its stores offer a range of in-season merchandise for men, women, and children. The company?s in-season merchandise includes men?s tailored clothing and haberdashery; women?s dresses, suits, and separates; children?s apparel; and men?s, women?s, and children?s shoes. Its Filene?s stores also offer a selection of jewelry and home goods. As of August 28, 2010, the company operated a chain of 48 off-price apparel stores located predominantly on the east coast. Syms Corp was founded in 1959 and is headquartered in Secaucus, New Jersey.

Top 10 European Companies To Own In Right Now: Xaar(XAR.L)

Xaar plc engages in the development and commercial exploitation of a patented inkjet printing technology in Asia, Europe, the Middle East, and the Americas. Its product line comprises inkjet development systems, printheads, printhead matrix, inks, ink supply systems, and drive electronics. The company also provides training and consulting services. Its products are used in graphics, packaging, and industrial print sectors. Xaar plc was founded in 1990 and is headquartered in Cambridge, the United Kingdom.

Hot Gas Utility Companies To Invest In 2014: Hunt Mining Corp(HMX.V)

Hunt Mining Corp., through its subsidiaries, engages in the exploration and development of precious metals in Argentina. It focuses on gold, silver, and base metal projects. The company holds rights in 3l mineral concessions covering approximately 286,792 hectares in Santa Cruz Province, Argentina. Its principal property includes the La Josefina gold and silver project covering approximately 528 square kilometer land package in the Deseado Massif mineral district, Argentina. The company was founded in 2006 and is based in Liberty Lake, Washington.

Hot Gas Utility Companies To Invest In 2014: American Water Works(AWK)

American Water Works Company, Inc. provides water and wastewater services to residential, commercial, industrial, public, and other customers in the United States and Canada. As of December 31, 2010, the company served approximately 15 million people with drinking water, wastewater, and other water-related services in approximately 30 states and 2 Canadian provinces. It owned approximately 90 surface water treatment plants, 600 groundwater treatment plants, 1,200 groundwater wells, 60 wastewater treatment facilities, 1,300 treated water storage facilities, 1,300 pumping stations and 100 dams, and 49,000 miles of mains and collection pipes. American Water Works Company also enters into public/private partnerships, including operation and maintenance contracts; and design, build, and operate contracts for the provision of services to water and wastewater facilities for municipalities and the United States military. In addition, it enters into contracts to operate and maintai n water and wastewater facilities for the United States military, municipalities, the food and beverage industry, and other customers; and provides services to domestic homeowners to protect against the cost of repairing broken or leaking pipes inside and outside their homes. Further, the company provides biosolids management, transport, and disposal services to municipal and industrial customers. Additionally, it offers granular carbon technologies and products for cleansing water and wastewater, wastewater residuals management services, and water and wastewater facility engineering services. The company was founded in 1886 and is based in Voorhees, New Jersey.

Advisors' Opinion:

• [By JON C. OGG]

  American Water Works Company, Inc. (NYSE: AWK) recently closed at $27.41 and analysts have a consensus price target objective of $31.60.  It carries a 3.4% dividend yield and the stock is down a very rare 10.7% from its 52-week high (almost never pulls back 10%).  The price to book value is 1.16 and its return on equity is almost 7%.  S&P has a rating of BBB+ with a stable outlook for its local long-term ratings.  This is the biggest independent water utility operator in the United States with some business in Canada, giving it very limited exposure to currency issues.  Bei ng the water utility offers perhaps the best defensive mechanism of all: no one can really live without water.

Hot Gas Utility Companies To Invest In 2014: (FXPT)

Fox Petroleum Inc., a development stage company, engages in the identification, exploration, acquisition, and development of prospective oil and gas properties. It holds oil and gas interests in a United Kingdom onshore license; and joint venture interests in Texas. The company was formerly known as Nova Resources Inc. and changed its name to Fox Petroleum Inc. in February 2007 to reflect the new direction of its business of oil and gas exploration and development activities. Fox Petroleum Inc. was founded in 2004 and is based in New York, New York.

Advisors' Opinion:

• [By Tom Bishop]

  Fox Petroleum Inc. (PINK: FXPT)?is up 6.20% to $0.0539. Yesterday, the company?announced preliminary estimates from 3-D seismic data obtained from Renfro Energy’s Cameron Meadows lease. The president of Fox Petroleum?said that the company had 3-D seismic on the property for more than five years and the zone it is investigating through the 3-D seismic have reserve potential of 200,000 to 500,000 barrels of oil. Last week, FXPT announced that acquisition of Renfro Energy and Cameron Parish Pipelines. Renfro is an asset holding company created to house existing oil and gas assets located in Texas, Oklahoma and for acquisitions in Louisiana. Fox Petroleum said that it expects to complete the acquisition of Renfro and Cameron Parish by the end of October. (PINK: FXPT), (FXPT)

The Problem With Google Glass Isn't Just Privacy; It's Us

This week, Cesear's Palace became the first casino to ban Google (NASDAQ: GOOG  ) Glass. The ban comes from a more broad law in Nevada that says that the use of recording devices and computers isn't allowed when gambling. Similarly, movie theaters ban recording devices, and recently even a bar in Seattle banned users from using the device while enjoying a drink.

Not surprisingly, lawmakers have already jumped into the Glass fray, and some, such as West Virginia state official Gary G. Howell have proposed bans on wearing the device while driving. And just a few days ago, a group of House members sent a letter to Google's Larry Page, requiring answers by June 14 on how Google will incorporate privacy protections into Google Glass.

But is this really a brave new world we need to protect ourselves from, or just more of what we already have, repackaged into a different design?

Tech history repeats itself
While considering the relevant issue of Google Glass' privacy concerns, I did a quick search for articles from a decade ago about the use of camera phones. As ridiculous as it sounds now, there was a time when many people were up in arms about phones that had tiny cameras built onto the back of them, and many questioned their usefulness.

A New York Times article from 2003 talked about a Chicago law that was under consideration that would make it illegal to use camera phones in public bathrooms, locker rooms, and showers. The article said the problem with camera phones is that they were increasing in number and camera quality was getting much better. At the time, there were only 160 million cell phones in the U.S., and the camera quality was less than 1 megapixel (ah, the good old days).

Clearly, technological capacity and quality have changed, but concerns about how to handle them, and how to regulate them, are almost exactly the same as a decade ago. Sure, you can't wear your phone while driving, but you sure as heck can text with the dang thing when you're not supposed to.

Google Glass bans and privacy protections aren't going to go away, but they shouldn't be the main theme for consumers, or technology investors. Companies are going to continue creating products that push us outside the limits we've placed on technology. Apple, for example, has been rumored to be working on a smart watch, while competitor Samsung has already said it's working on a device. If the device comes out, it'll probably spur new questions, concerns, and possibly backlash from lawmakers. It's understandable to question the need and usefulness of new technology, but it's also shortsighted to write it off prematurely.

Many (including Yours Truly) scoffed at camera phones 10 years ago, but when I whip out my phone to shoot video of my kids, I see its value. Do I use it when I drive, or in a public restroom? No way. But its capabilities have their merits.

Google Glass may fail. It may weird too many people out and cause too many privacy concerns. Or it might be a tipping point into an age where wearable computers transform our lives just like the first computer, cell phone, smartphone, and tablet did. It's still too early to give Google Glass that much credit, but it's also too early to write it off. We may figure out a way to adapt the new technology into our lives without giving up all of our privacy. We've certainly done it before.

It's incredible to think just how much of our digital and technological lives are almost entirely shaped and molded by just a handful of companies. Find out "Who Will Win the War Between the 5 Biggest Tech Stocks" in The Motley Fool's latest free report, which details the knock-down, drag-out battle being waged among the five kings of tech. Click here to keep reading.

Stocks: 'The best game in town'

The stock market is super strong, hitting new all time record highs. Its bullish momentum keeps gaining strength. The Dow Industrials have surged above 15000 and the market is likely headed much higher.

We all know the Fed's easy money policies have fueled the boom in stocks. So much money has been created, it had to go somewhere -- and so far it's going into the stock market.

Many investors are doubtful. They're convinced the rise in stocks is just a Fed fueled bubble. But it really doesn't matter... Whether it's the Fed's bubble policies or not, the point is, stocks are bullish and you want to be in the market.

For now, stocks are the best game in town. They're much stronger than bonds, the metals, commodities and currencies.

Think about it... investors have nowhere to go. With interest rates near record lows and paying next to nothing, a savings account or CD simply doesn't make sense. And while that's not good for savers, it's very good for the stock market, making it more attractive.

Currently, the economy is improving but it remains sluggish. That pretty much guarantees the Fed will keep interest rates low and the money flowing.

This is a great combo, especially combined with record corporate profits and reasonable valuations. Plus, the stock market looks ahead, so its rise is also a positive sign for an improving economy.

Baby boomers heading into retirement age are not getting any income from their savings or cash retirement accounts. That means they have to increase their risk factor somewhat by going more heavily into stocks to make up for near zero interest rates.

For starters, investors have primarily been buying into the bigger, high quality dividend paying stocks. These are the blue chip stocks that're considered the safest for long-term growth and income via consistent dividends.

These are stocks like Johnson & Johnson (JNJ), Coca Cola (KO) and Wal-Mart (WMT), which we've been recommending and they've been good performers.

But now investors are kicking it up a notch. Tech stocks are picking up steam and so are some of the global stock markets. Here too, low interest rates and strong earnings are fueling the rises.

Tech stocks, for example, are still very cheap. And the same is true of many of the world stock markets.
Plus, don't forget, there's still a mountain of cash sitting on the sidelines and most money managers are bullish. This alone could drive stocks to sharply higher levels.

There's an old saying in the stock market and it's so true... "Don't fight the Fed." Well, we're not. We're staying with the Fed and we hope you are too.

The bottom line is this... As long as the Fed keeps buying bonds, providing easy money, and keeps interest rates at super low levels, stocks are going to rise further.

We believe stocks are headed higher. For new buyers it would be ideal to buy on a downward correction, especially if the "sell in May and go away" syndrome comes to pass. But the ideal moment may not come. So we'd go ahead and buy at least some now, and then buy more when stocks do correct. In other words, average in.

Currently, we'd buy new positions in Powershares Nasdaq (QQQ), Dow Diamonds (DIA), iShares S&P Global 100 (IOO) and DJ Telecom (IYZ) as well as our newest recommendations, the iShares DJ Transportation (IYT) and Consumer Discretionary SPDR (XLY).

The 5 Most Energy Abundant Countries

Let's play the word association game!

I will name the three most used fossil fuels and you tell me the first country that comes to mind

Oil. 

Natural Gas.

Coal. 

For me, the three countries that came to mind were (1) Saudi Arabia, (2) Russia, and (3) China. Whenever we talk about these types of fuel, these three always seem to be the first to come to mind because they are the largest producers. Overall, though, which of these countries has the most energy? 

Obviously, not all energy sources were created equal, so let's even the playing field the best way possible by evaluating the country on its total thermal generation capacity, or BTU equivalency. The data for this was the most recent value given from BP's World Statistical Review of World Energy 2012 and is measured in quadrillion BTU. For a little perspective, one quadrillion BTU is about 173 million barrels of oil, enough to fuel American oil demand for 9.5 days.

5. Venezuela: 1,893.89 quadrillion BTU
While many may think that Saudi Arabia contains the largest oil reserves in the world, it's not true. Ever since the technology was available to extract heavy oil, Venezuela's proven reserves -- a measure of a resource that is both technically and economically recoverable -- have skyrocketed. Today, it is estimated that the country has 296 billion barrels of oil, 74% of which is Orinoco belt-heavy.

Even though the country has so much oil, it has struggled to keep up production growth and has asked for outside help. This week, Venezuela has signed financing deals with Chevron (NYSE: CVX  ) , Schlumberger (NYSE: SLB  ) , and Russia's Rosneft that will total $5.6 to expand production. The country hopes to increase production from 3 to 5 million barrels per day by 2015.

4. Iran: 2050.17 quadrillion BTU
No matter how much the U.S. may enforce sanctions on Iran, it doesn't change the fact that it is sitting on some of the most expansive oil and gas reserves in the world. Of all the countries on this list, it is the only one where natural gas represents its most abundant resource, about 58% of total energy reserves. 

In spite of tough sanctions on oil exports from Iran, China has been a big client. China imports about 500,000 barrels per day. It is far and away Iran's largest client.

3. China: 3055.17 quadrillion BTU
China is the worlds largest coal producer, by a long shot. Its production in 2011 represented 49.5% of the world's total coal output. The next closest producer, the U.S., was responsible for only 14.1% of global output. What is even more startling about this figure is that China still imported 192 million tons of coal in 2011. 

The massive hunger for coal from China is not only driving its domestic market but has a profound effect on the U.S. market as well. Arch Coal (NYSE: ACI  ) hopes to quadruple exports by 2020, and Alpha Natural Resources (NYSE: ANR  ) currently has the capacity to double its exports. 

2. Russia: 6041.28 quadrillion BTU
Russia is a giant of natural gas, the national gas company Gazprom and Norway's Statoil (NYSE: STO  ) represent 40% of total natural gas imports in Europe, and that is just half of it. Back in March, Gazprom signed a memorandum of understanding (MOU) with PetroChina's (NYSE: PTR  )  state-owned parent company to deliver 1.34 trillion cubic feet per year starting in 2018. The MOU is a long time coming -- the two countries have been working on this deal for more 15 years.

1. United States: 6414.07 quadrillion BTU
Bet you didn't expect to see us here, did you? If you knew how much coal we have, though, you wouldn't be surprised. The U.S. has 237 billion tons of coal. That is enough to fuel all electricity generation in the U.S. for almost 150 years. It also represents more than 90% of all fossil fuel reserves in the United States. 

If you think that coal is going to die a painful death in the U.S. I'm sorry, but it just ain't going to happen.

What a Fool believes
There should be one small caveat to these figures: They are from 2011. Since then, the U.S.' and several other countries' energy landscapes have been fundamentally changed because of shale gas and tight oil. The total proven reserves for the U.S. are in such flux that the Energy Information Administration hasn't updated our proven reserve figure in more than two years. As technology advances and we start to understand these new sources, these numbers are going to change. In fact, if technology advances enough, the U.S. could start to claim its trillions of barrels of oil as proven reserves. 

The energy space is in flux thanks to the boom in unconventional oil and gas. The emergence of new technology has presented several new investment opportunities. In fact, The Motley Fool's chief investment officer has picked one under-the-radar energy company as his no.1 stock for 2013. Find out which stock it is in the brand-new free report: "The Motley Fool's Top Stock for 2013." Just click here to access the report and find out the name of this under-the-radar company.

L Brands's Earnings Beat Last Year's by 17%

L Brands (NYSE: LTD  ) reported earnings on May 22. Here are the numbers you need to know.

The 10-second takeaway
For the quarter ended May 4 (Q1), L Brands met expectations on revenues and beat expectations on earnings per share.

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

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

Revenue details
L Brands reported revenue of $2.27 billion. The 21 analysts polled by S&P Capital IQ expected revenue of $2.25 billion on the same basis. GAAP reported sales were 5.3% higher than the prior-year quarter's $2.15 billion.

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

EPS details
EPS came in at $0.48. The 25 earnings estimates compiled by S&P Capital IQ predicted $0.46 per share. GAAP EPS of $0.48 for Q1 were 17% higher than the prior-year quarter's $0.41 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 41.5%, 40 basis points worse than the prior-year quarter. Operating margin was 13.7%, 10 basis points better than the prior-year quarter. Net margin was 6.3%, 50 basis points better than the prior-year quarter. (Margins calculated in GAAP terms.)

Looking ahead
Next quarter's average estimate for revenue is $2.51 billion. On the bottom line, the average EPS estimate is $0.53.

Next year's average estimate for revenue is $10.92 billion. The average EPS estimate is $3.15.

Investor sentiment
The stock has a three-star rating (out of five) at Motley Fool CAPS, with 567 members out of 664 rating the stock outperform, and 97 members rating it underperform. Among 229 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 216 give L Brands a green thumbs-up, and 13 give it a red thumbs-down.

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on L Brands is outperform, with an average price target of $51.73.

Is L Brands the right retailer for your portfolio? Learn how to maximize your investment income and "Secure Your Future With 9 Rock-Solid Dividend Stocks," including one above-average retailing powerhouse. Click here for instant access to this free report.

Add L Brands to My Watchlist.

The Latest Jobs Report: Not Entirely What It Seems

On the first Friday of each month, the government issues a much-awaited status report on employment in America. The jobs report is typically followed by celebratory coverage if more jobs were added and prognostications of doom if jobs were lost. Making sense of the jobs report isn't so simple, though. Here are nine things to keep in mind:

1. A big jump is nice, but if unemployment is still high, then the nation is still in a lot of pain, with many households in deep trouble. The last jobs report, for example, revealed that 165,000 non-farm jobs were added in April. But unemployment was at 7.5%, and the non-farm payroll count was 2.6 million jobs lower than its peak level in early 2008.

2. Trends matter, as much or more, than the actual gains or losses. If you look at a graph of the monthly jobs reports, you'll see that we've been posting gains for several years now, which bodes well. The rate of growth isn't as rapid as many would like, though. We're moving in the right direction, but not quickly.

3. Cumulative numbers matter, too. If recent jobs reports have been offering both positive and negative numbers, it's worth stepping back to take in the big picture: Overall in, say, the last year, have jobs been growing or shrinking? Even if the recent reports all offer gains, are they adding up to a lot of improvement, or have there mainly been a series of small gains?

4. Context and benchmarks also matter. As Ezra Klein explained in The Washington Post last year, a solid monthly gain in a healthy economy would be about 120,000 jobs added. Thus, a gain of 50,000 should be viewed as disappointing. And if we're trying to claw back from a recession and steep unemployment, we'd ideally like to see much more than 120,000. Meanwhile, compare the recent 7.5% unemployment rate to the 4.4% rate reported in 2006 and 2007.

5. Also important are the kinds of jobs added or lost. In April, for example, the manufacturing sector saw no gains or losses, when we'd much rather see gains.

6. Keep in mind, too, that the numbers in a recent jobs report are preliminary, and get revised later, either up or down. For example, in May, the jobs report for February was boosted considerably, from an initial gain of 268,000 jobs to a 332,000-job gain. The March number was hiked, too, from 88,000 to 138,000 jobs added. So a just-announced good number may soon enough be even better, or considerably worse. Indeed, a gain can become a loss, and vice versa. In other words, a just-released jobs report really doesn't matter as much as we might think it does.

7. The jobs report doesn't just exclude farm jobs. It also excludes many people who have simply given up on finding a job. It sheds some light on the issue, though, by reporting the labor-force participation rate, reflecting the percentage of working-age folks who are employed or looking for work. (We can never expect 100%, due to students, stay-at-home parents, and others.) In recent years, this number has been declining rather steadily, as our economy has been taking a long time to heat up again. It generally doesn't bode well if more and more people have given up.

8. There are more details available to those interested, too. For example, while the overall unemployment rate in April was 7.5%, it was 24.1% for teenagers, 13.2% for African-Americans, and 9% for Hispanics. The "long-term unemployed," who have been seeking work for at least 27 weeks, saw their ranks shrink by 258,000, but remain at a significant 4.4 million.

9. As you're probably realizing, the jobs report isn't just about one number. It offers updates on several key measures of our economic health. So consider the number of non-farm jobs gained or lost, yes, but also assess the unemployment rate, the labor-force participation rate, and revisions to previous numbers. And for a richer picture, dig even deeper.

The next jobs report, for May, is due on June 7. Keep the above factors in mind, and you can make more sense of it.

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1 Retailer With a Clear Plan

After the market closed yesterday, Gap (NYSE: GPS  ) announced its April sales and released a forecast for its first-quarter earnings. Comparable sales in April were up 7% this year, although investors should keep in mind that Easter was in March this year and April in 2012. Looking at the broader picture, first-quarter comparable sales were up 2%, with Gap and Old Navy both posting a 3% increase and Banana Republic coming in flat.

Investors were excited about the company's forecast earnings per share, which Gap estimated at between $0.68 and $0.69. Up to this point, analysts had anticipated $0.57 per share. The stock was up more than 5% by midday today.

A growth trend for Gap
Even though Gap's quarterly comparable sales growth trend was down compared to last year, it's still a great trend for the company. The overall trend continues to be one of growth, and the quarterly gains that Gap has managed this year on top of the gains it saw last year indicates that the recovery plan -- which was the undertaking this time last year -- has successfully translated into a new growth plan.

The growth plan contains two big initiatives -- international expansion and secondary brand growth. Specifically, the company has called out Gap China, Old Navy Japan, and Athleta as being big focuses over the course of the year.

International expansion
Gap China opened more than 30 stores last year, supported by a heavy marketing push. As CEO Glenn Murphy said on the company's annual earnings call, "If you don't build a brand in China, you are not going to make it." This year, that branding is going to drive the addition of 35 more Gap China locations.

In addition to China, Gap is going to be pushing its Old Navy brand in Japan. Last year, Gap added online stores for Gap and Banana Republic in Japan, but the focus is still on Old Navy. The brand is going to get 15 to 20 new stores this year. One issue for the Old Navy push that investors should watch out for is the weak yen. Gap has built some weakness into its forecasts, but even since the end of last year, the yen has fallen sharply.

All of this good news works best if you ignore that Gap has to compete with all sorts of companies for its customers. As Murphy also pointed out, without good marketing, China has "too many new entrants, too much competition." Guess? has had some success in China and South Korea recently, and last quarter China revenue jumped close to 30%.

Athleta's potential
Apart from the international expansion, Gap is going to focus on expanding its Athleta yogawear line. Last year, the company more than tripled its total store count, from 10 to 35. In 2013, it plans to almost double that number, adding 30 more stores by the end of the year. Of course, Athleta is sitting in second place -- at best -- behind lululemon athletica (NASDAQ: LULU  ) . Lululemon has more than 200 locations, and comparable-store sales are running in the high single digits, even with the company's sourcing problems.

Even with the competition and international challenges, Gap seems well poised to take advantage of the plan that it's laid out. The last pitfall that investors need to watch out for is the problem of multitasking. Gap has a lot of irons in the fire, and other companies have had issues keeping the core in mind as they expand secondary lines and locations. I think management can handle it, and I'm expecting more good things from Gap this year.

Lululemon has the potential to grow its sales by 10 times if it can penetrate its other markets like it has in Canada, but the competitive landscape is starting to increase. Can Lululemon fight off larger retailers and ultimately deliver huge profits for savvy investors? The Motley Fool answers these questions and more in its most in-depth Lululemon research available. Thousands have already claimed their own premium ticker coverage. Gain instant access to your own by clicking here now.

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More Expert Advice from The Motley Fool

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

Northrop Wins Navy Laser Contract

Northrop Grumman (NYSE: NOC  ) is helping the U.S. Navy develop its next-generation laser gun.

On Tuesday, Northrop announced that it has been awarded a Navy R&D contract to help "mature" solid state laser technology for use in shipboard defense. If testing bears fruit, the Navy ultimately hopes to build a prototype laser weapon system to test its usefulness aboard warships. The value of Tuesday's contract award was not disclosed.

Northrop has already worked on similar laser gun projects for the Navy, helping to demo the first-ever high-energy laser fired at sea in the 2011 Maritime Laser Demonstration. It was also involved in the Laser Weapon Test demonstration that made headlines last month, and it played an integral part in the Air Force's Airborne Laser program several years ago, before the ABL program was canceled.

The challenge for Northrop now will be to progress past R&D work and demonstration projects to -- as Steve Hixon, the company's vice president for directed energy at Northrop Grumman Aerospace Systems, puts it -- "help the Navy mature the weapon system for use by sailors in the real world." 

Smiths Group Seals a Healthy Improvement in Profits and Sales

LONDON -- The shares of Smiths Group  (LSE: SMIN  ) were flat at 1,336 pence during early London trade this morning after the detection technology firm confirmed its revenues and underlying profits were higher in the last nine months than last year's corresponding period.

Smiths Group owns John Crane, the world's leading producer of industrial seals, which represents around a third of Smiths' business. The seal specialist enjoyed "sustained underlying revenue growth" for the period, with operating margins benefiting from improved pricing and productivity.

John Crane's order book meanwhile was bolstered beyond last year's volumes, and as a result, Smiths raised its sales outlook for the division to "ahead of the same period last year".

The company's most lucrative segment, Smiths Medical, sells health care equipment predominantly in the United States. Smiths restated today that the division's profitability would be hurt this year by the US Medical Device tax introduced in January.

Medical revenues were ahead of expectations, however, driven by sales of hardware and disposable items in emerging markets.

With a market cap of £5.2 billion, Smith's shares trade at 14 times expected earnings, and offer a prospective dividend yield of 3%.

Of course, whether that valuation, today's update and the future prospects for the health care industry all combine to make shares of Smiths a buy remains your decision.

However, if you're looking for a higher-yielding investment opportunity, you may want to look at "The Motley Fool's Top Income Stock For 2013."

The Fool's choice has one of the most impressive dividend track records on the London market, and provides a market-beating 5% yield.

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What Should You Do If You Knew a Market Correction Was Coming?

Over the past few years, we've all seen a number of analysts, experts, and wealthy admired investors call for a market correction. Whether you believe the predictions are correct or not, you still have to wonder: What should you do to prepare yourself when a correction does come along?

Preparation
When preparing your portfolio for a correction, you should first confirm that your initial investing thesis for each holding remains intact. Always have an investing thesis in mind when you buy, and keep it handy so you can review it when you're wondering how that thesis is holding up. Knowing why you purchased a stock and learning from both good and bad decisions you've made will not only help you make better chooses, but it will also increase your overall returns.

If any of your investing theses have fallen apart or played out, you then need to decide whether you should sell, or determine whether a new reason to continue holding shares has presented itself. Only during this review period is it wise to sell.

Next, determine whether your positions are still equally weighted or whether some have become too large of a percentage of your portfolio. If you own 10 stocks and each one represented 10% of your portfolio when you bought them, but now one stock has doubled while the others increased by 15%, you'll want to consider paring back the holding that doubled, bringing it back into alignment with the other stocks in terms of dollar value. Doing so ultimately lowers your risk, so that if that one stock bombs in the coming months, your total portfolio won't take such a massive hit. But before you make any selling decisions, you first need to decide what percentage is too large for any one holding to become.

Now that you've done a lot of selling, you can start buying. With the proceeds from your big winners and the stocks you no longer have a good investing thesis for, you can either purchase additional shares of current holdings, buy new stocks you've been watching, or hold the cash until the predicted correction hits and buy stocks at cheaper prices than they're currently selling for.

But as I hinted at, the pundits are constantly calling for a pullback -- and in some ways, they're always correct. My colleague Dan Caplinger recently commented that over the past 100 years, the market experiences on average a 5% correction three times per year, a 10% correction once annually, and a 20% correction once every three and a half years.

Based on these figures, you should review your positions once every four months to be safe. I'd also suggest checking in toward the end of earnings season, so that any information you decide to act on is current.

So what should you do if you knew the Dow Jones (DJINDICES: ^DJI  ) and S&P 500 (SNPINDEX: ^GSPC  ) was going to drop 5% or 10% tomorrow? Well, in one sense we all know a correction is coming. It's inevitable that the market will reverse course and head lower in the coming months or years. So if you're performing this kind of portfolio review regularly, then besides buying stocks with your extra cash after prices fall, the best thing to really do is ... do nothing. Don't panic. And by all means, don't sell. Sit back and relax, read the morning paper, sleep well at night, and know deep down that your money is safe and that the market will once again rebound and your assets will soon continue their appreciation journey.

More Foolish insight
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.

The 5 Cheapest Stocks in the S&P 500

The S&P 500 (SNPINDEX: ^GSPC  ) has never been higher; in fact, if you had invested in March 2009 -- the Great Recession's market bottom -- you'd be looking at a 150% return in just over four years. That might make you think stocks are too expensive, but if you look at a few individual companies in the S&P 500, that's not necessarily the case.

One way to measure whether a stock is "cheap" is by its price tag. That's not the best measure, though; it's highly influenced by how many shares a company has outstanding. A different metric to use is a company's price-to-earnings ratio. This tells you how much a stock is worth, relative to how much money its company made over the past year. Right now, the average S&P 500 stock trades for a P/E of 19.3. 

But even when we find companies with low P/E ratios, it doesn't necessarily mean they're a good investment -- these stocks could be trading cheaply for a reason. To dig deeper, let's investigate the five cheapest stocks in the S&P 500.

5. Yahoo! (NASDAQ: YHOO  ) , P/E of 7.7
The Yahoo! homepage is the fourth-most visited website in both America and the world. Over the past three years, earnings have increased 135%. With numbers like these, you'd expect Yahoo! to be trading for higher, but there are two big concerns that have historically held the stock down.

The first is plain old-fashioned competition from the likes of Google. The second has to do with turnover in the executive suite. There have been five CEOs or interim CEOs for Yahoo! since co-founder Jerry Yang left in 2009.

However, the company's newest leader, Marissa Mayer, has been winning praise for finally giving the company a long-term vision. In fact, just this week, Yahoo! acquired Tumblr for $1.1 billion, giving Yahoo! access to a popular mobile platform with a younger generation of users.

4. Western Digital (NASDAQ: WDC  ) , P/E of 7.5
Western Digital designs and manufactures data storage devices. The storage devices are used in PCs, Web servers, and network storage devices.

The exact types of devices Western designs are referred to as hard disk drives. Currently, they are in heavy demand to meet the ballooning data storage needs of just about every industry. Revenue and earnings have increased by about 75% over the past three years.

But investors need to beware. It is widely believed that solid-state drives will be the wave of the future -- primarily because they have no moving parts. Today, SSDs are too expensive for most customers, but as their prices come down, they could take away Western's core HDD business.

3. Valero Energy (NYSE: VLO  ) , P/E of 7.4
Valero is a major oil refiner and distributor based out of San Antonio, Texas. Beyond typical crude oil refining, Valero also has a hand in biofuels and ethanol.

The company's stock has almost doubled in the past year, yet it still trades for a cheap valuation. While Valero can be at the whim of volatile commodity prices, management seems to think there are good times ahead. The company recently bought 1,600 new rail cars to transport close to 30,000 barrels bitumen per day, and it's constructing a new refining facility in California.

If management is right, there could be a lot of upside to this oil stock.

2. Seagate Technology  (NASDAQ: STX  )  , P/E of 6.5
To understand Seagate and what it does, simply go back and read about Western Digital. These two companies combined control 90% of the world's HDD market.

One of the reasons Seagate trades for cheaper than Western is that its balance sheet isn't as healthy. Whereas Western has $4 billion in cash and $2 billion in long-term debt, Seagate has $1.9 billion in cash and $2.5 billion in debt. Though Seagate offers up a tempting 3.7% dividend yield, investors should consider the balance sheet and what SSDs will do to Seagate's core business in the future.

1. CF Industries  (NYSE: CF  ) , P/E of 6.4
CF is an Illinois-based company that makes fertilizers for the agricultural industry. Over the past few years, business has been booming, with earnings rising 275% in the past three years. This is largely because demand for the company's fertilizers has been in high demand, and input costs have been held down by record-low natural gas prices.

The big worry here is twofold. First, if natural gas prices rise -- which they've already begun doing -- input costs will rise. Second, if there's any dip in demand for CF's fertilizers, revenue will dip. Many of those concerns are already priced into the stock, but they're still worth considering before you buy in.

Dig deeper than just P/E
As I said, Seagate pays a significant and growing dividend and seems able to generate the cash flow to support it, but a global slowdown in demand for digital memory storage has begun to put pressure on margins. Is Seagate worthy of your investment consideration (and dollars)? The Motley Fool answers this question and more in our most in-depth Seagate research available for smart investors like you. Thousands have already claimed their own premium ticker coverage, and you can gain instant access to your own by clicking here now.

Could This Company Be Marvell-ous?

These days it seems difficult to be a Marvell Technology (NASDAQ: MRVL  ) investor. Naysayers are quick to claim the semiconductor maker's competition is too great, and that the company is dying along with the PC industry. It also doesn't help that in December 2012, Marvell's share price reached $7.26, its lowest point in two years. But after the company's Q1 earnings call on May 23, it looks like Marvell might be staging a comeback. Here's why.

Changing the conversation
While quarterly revenue declined to $734 million, Marvell still beat many analyst expectations, which were around $720 million. According to CEO Dr. Sehat Sutardja, this was because of a "better than normal seasonal demand" in the company's networking and storage markets.

Though its financials have a lot of room for improvement, Marvell is still generating revenue as the PC market declines, while also reaching into the mobile processor arena. The latest offering to come through the pipeline has been Marvell's PXA1088 chip, which boasts processing capabilities, HD video, and Internet connectivity for tablets and smartphones. As fellow Fool Michael Lewis put it, if the company was really going down with the PC ship, it would have been done for a long time ago. Instead, Marvell has grown annually at roughly 10.6% over the past five years.

Critics have blasted Marvell for stepping into mobile, a tight industry that is only becoming more competitive. The company is all too aware of the drama in mobile, having recently been swapped out by BlackBerry for Qualcomm as prime chip maker. Since then, Marvell has adapted a new strategy by becoming a major chip provider to different geographies, including China Mobile's  (NYSE: CHL  )  line of Samsung Galaxies. At 17.3%, Samsung had the largest smartphone market share in China during Q1, so it's wise for Marvell to want to hitch itself to this wagon.

Buybacks make the man
Another noteworthy aspect of Marvell's earnings report was that the company had repurchased 20 million shares (worth $200 million) during the past quarter. It's generally a positive sign when a company chooses to buy back a significant amount of shares -- it boosts the value of however much stock an investor is already holding. But for Marvell, a company currently declining in revenue and shifting its earnings strategies, it might come off as a bit strange.

Taking a look at the cash flow statement, however, it becomes clearer that Marvell has the means to rally investor morale with a share buyback. The company had approximately $626 million in free cash flow at the beginning of 2013, and no long-term debt. In short, Marvell could repurchase $200 million worth of shares and still have a healthy amount of cash left over. A buyback plus a quarterly dividend with a 44% payout ratio could help many investors stick with this company during a troubled time.

Picking up the pieces
It might be a long time before Marvell gets back into the good graces of Wall Street, but don't count this chip maker out just yet. The company is taking on some savvy business strategies to boost revenue, and is treating investors to a healthy dividend and a substantial share buyback. Marvell is jumping from the sinking PC ship, and while its life raft could use a little inflating, it's by no means a goner.

It's incredible to think just how much of our digital and technological lives are almost entirely shaped and molded by just a handful of companies. Find out "Who Will Win the War Between the 5 Biggest Tech Stocks?" in The Motley Fool's latest free report, which details the knock-down, drag-out battle being waged by the five kings of tech. Click here to keep reading.

Warren Buffett's New Multibillion-Dollar Business

Berkshire Hathaway (NYSE: BRK-B  ) recently poached a few top executives from AIG (NYSE: AIG  ) . What are Warren Buffett's billion-dollar plans? And where does that leave AIG? Play the video below to find out.

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

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More Expert Advice from The Motley Fool

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

Hot Long Term Stocks To Invest In Right Now

The all-new 2014 Chevrolet Silverado. Photo: General Motors.

General Motors (NYSE: GM  ) knows how important its new Chevy Silverado and GMC Sierra pickups are -- very important. If they're successful, huge sales and massive profits await. If not, it'll be a disaster for the General, plain and simple.

GM isn't messing around anymore. In this video, Fool contributor John Rosevear looks at GM's latest surprising move in its all-out effort to ensure that the Silverado and Sierra are impressing new customers from Day One.

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.

Hot Long Term Stocks To Invest In Right Now: Atlantic American Corporation(AAME)

Atlantic American Corporation, through its subsidiaries, provides life, health, property, and casualty insurance products in the United States. Its property and casualty insurance products include business automobile insurance coverage for state governments, local municipalities, and other large motor pools and fleets, as well as personal property, inland marine, and general liability insurance products. The company also provides surety bond coverage for school bus transportation and subdivision construction, as well as performance and payment bonds. In addition, it offers ordinary and term life insurance, Medicare supplement, and other accident and health insurance products. The company markets its policies through independent agents. Atlantic American Corporation was founded in 1968 and is based in Atlanta, Georgia.

Hot Long Term Stocks To Invest In Right Now: Telik Inc (TELK.PH)

Telik, Inc. (Telik), incorporated in 1988, is a clinical-stage drug development company focused on discovering and developing small molecule drugs to treat cancer. The Company discovers its product candidates using the Company�� drug discovery technology, Target-Related Affinity Profiling (TRAP). TELINTRA, its principal drug product candidate in clinical development, is a small molecule glutathione analog inhibitor of the enzyme glutathione S-transferase P1-1 (GST P1-1). TELCYTA, its other product candidate, is a small molecule cancer drug product candidate designed to be activated in cancer cells.

Clinical Product Development

TELINTRA is the Company�� lead small molecule product candidate in clinical development for the treatment of blood disorders, including cancer. It has a mechanism of action and acts by inhibiting GST P1-1, an enzyme that is involved in the control of cellular growth and differentiation. Inhibition of GST P1-1 results in the activation of the signaling molecule Jun kinase, a regulator of the function of blood precursor cells. Preclinical tests show that TELINTRA is capable of causing the death or apoptosis of leukemic or malignant blood cells, while stimulating the growth and development of normal blood precursor cells. TELINTRA has been studied in Myelodysplastic Syndrome (MDS) using two formulations. A liposomal formulation was developed for intravenous administration of TELINTRA and was used in Phase I and Phase II studies in MDS patients. The results from the Phase II intravenous liposomal TELINTRA clinical trials demonstrated that TELINTRA treatment was associated with improvement in all three types of blood cell levels in patients with all types of MDS, including those in intermediate and high-risk groups. An oral dosage formulation (tablet) was subsequently developed and results from a Phase I study with TELINTRA tablets showed clinical activity and the formulation to be well tole rated. In June 2011, the Company initiated a Phase II clini! c! al trial to evaluate TELINTRA tablets. In October 2011, the Company initiated an additional Phase IIb clinical trial to evaluate TELINTRA tablets. '

The activity and safety profile of tablet formulation allowed the Company to complete a Phase II trial of TELINTRA tablets in MDS. The primary objective of the Phase II TELINTRA tablet study was to determine the efficacy of TELINTRA. A multivariate logistic regression analysis was conducted to identify MDS disease prognostic factors associated with erythroid improvement response rates, including prior MDS treatment, age, gender, the international prognostic scoring system (IPSS), risk, Eastern Cooperative Group performance status, years from MDS diagnosis, MDS World Health Organization subtypes, anemia only versus anemia plus other cytopenias, dose schedule and starting dose. Results from this study show that TELINTRA is the first GSTP1-1 enzyme inhibitor shown to cause clinically reductions in red blood cell transf usions, including transfusion independence in low to intermediate-1 risk MDS patients, as well as improvement in platelet count and white blood cell levels in certain patients. TELINTRA, administered orally twice daily, appeared to be convenient and flexible for chronic treatment administration.

TELCYTA is a small molecule drug product candidate that the Company is developed for the treatment of cancer. TELCYTA binds to GST. TELCYTA has been evaluated in multiple Phase II and Phase III clinical trials, including trials using TELCYTA as monotherapy and in combination regimens in ovarian, non-small cell lung, breast and colorectal cancer. Results from these clinical trials indicate that TELCYTA monotherapy was generally well-tolerated, with mostly mild to moderate side effects, particularly when compared to the side effects and toxicities of standard chemotherapeutic drugs. When TELCYTA was evaluated in combination with standard chemotherapeutic drugs, the tolera bility of the combinations was similar to that expected! of e! ac! h drug ! alone.

Clinical activity including objective tumor responses and/or disease stabilization was reported in the TELCYTA Phase II trials; however, TELCYTA did not meet its primary endpoints in the Phase III studies. Positive results from a Phase I-IIa multicenter, dose-ranging study of TELCYTA in combination with carboplatin and paclitaxel as first-line therapy for patients with non-small cell lung cancer, or NSCLC, were published in a peer reviewed publication. Clinical data demonstrated positive results of TELCYTA in combination with carboplatin and paclitaxel in the treatment of first-line lung cancer followed by TELCYTA maintenance therapy. As of December 31, 2011, the Company had an on-going investigator-led study at a single site of TELCYTA in patients with refractory or relapsed mantle cell lymphoma, diffuse B cell lymphoma, and multiple myeloma.

Preclinical Drug Product Development

The Company has a small molecule compound, TLK60 404, in preclinical development that inhibits both Aurora kinase and VEGFR kinase. Aurora kinase is a signaling enzyme whose function is required for cancer cell division, while VEGF plays a key role in tumor blood vessel formation, ensuring an adequate supply of nutrients to support tumor growth. These lead compounds prevented tumor growth in preclinical models of human colon cancer and human leukemia by inhibiting both Aurora kinase and VEGFR kinase. A development drug product candidate, TLK60404, has been selected.

The Company, using its TRAP technology has discovered TLK60357, a novel, potent small molecule inhibitor of cell division. TLK60357 inhibits the formation of microtubules that are necessary for cancer cell growth leading to persistent G2/M cancer cell cycle block and subsequent cell death. This compound demonstrates potent broad-spectrum anticancer activity against a number of human cancer cells. This compound also displays oral efficacy in multipl e, standard preclinical models of cancer. TLK6059! 6, a pote! nt! VGFR kin! ase inhibitor, blocks the formation of new blood vessels in tumors. Oral administration of TLK60596 to animal models of human colon cancer reduced tumor growth.

Best Machinery Companies To Watch In Right Now: Safe Bulkers Inc(SB)

Safe Bulkers, Inc. provides marine drybulk transportation services worldwide. The company transports various bulk cargoes, primarily coal, grain, and iron ore. As of July 15, 2011, it had a fleet of 16 drybulk vessels, with an aggregate carrying capacity of 1,443,800 deadweight tons. The company?s fleet consists of Panamax, Kamsarmax, Post-Panamax, and Capesize class vessels, as well as 11 further contracted additional drybulk new build vessels to be delivered at various times through 2014. Safe Bulkers, Inc. was incorporated in 2007 and is based in Athens, Greece.

Advisors' Opinion:

• [By Beacon Equity]

  Safe Bulkers Inc. (NYSE: SB) is down 10.69% to $8.27 on above-average volume of 1.97 million shares. The drybulk shipping company has priced its public offering of 5 million shares of its common stock at $8.40 per share. (NYSE:SB), (SB)

Hot Long Term Stocks To Invest In Right Now: Continental Coal Limited(CCC.AX)

Continental Coal Limited engages in the production and sale of thermal coal in South Africa. It primarily holds interests in the Vlakvarkfontein mine; and the Ferreira project. It also holds interests in various development projects in South Africa, as well as exploration projects in Botswana. The company was formerly known as Continental Capital Limited and changed its name to Continental Coal Limited in July 2009. Continental Coal Limited is based in West Perth, Australia.

Hot Long Term Stocks To Invest In Right Now: Exar Corporation(EXAR)

Exar Corporation, a fabless semiconductor company, engages in the design, sub-contract manufacture, and sale of silicon, software, and subsystem solutions for industrial, telecom, networking, and storage applications. Its product portfolio includes power management and interface components, communications products, storage optimization solutions, network security, and applied service processors. The company?s products has applications in portable electronic devices, set top boxes, digital video recorders, telecommunication systems, servers, enterprise storage systems, and industrial automation equipment. Exar Corporation sells its products to distributors and original equipment manufacturers or their contract manufacturers worldwide. It markets its products through independent sales representatives, distributors, direct sales organization, and catalog distributors. The company was founded in 1971 and is headquartered in Fremont, California.

3 Stocks That Blew the Market Away

Don't settle for ordinary quarterly reports.

Every week, I take a look at three companies that beat market expectations, since I believe that it's the biggest factor in a stock beating the market. Leaving Wall Street's pros with stunned expressions can be a good thing. It usually means that the companies have more in the tank than analysts figured. Capital appreciation typically follows.

Let's take a look at a few companies that humbled the pros over the past few trading days.

We can start with Dangdang (NYSE: DANG  ) . Shares of the Chinese online retailer soared 24% last week after posting a narrower quarterly deficit than Wall Street was expecting. Dangdang's loss of $0.15 a share was less than the $0.19 a share in red ink that analysts were forecasting.

This is the third consecutive quarter in which Dangdang has posted a smaller loss than the pros were projecting.

InterOil (NYSE: IOC  ) was another gusher. The energy explorer's profit of $0.08 a share during the first quarter may not seem like much. Net income actually clocked in 58% lower than it did a year earlier. However, Wall Street was actually bracing for a quarterly deficit. InterOil stock moved 18% higher on the week.

Finally, we have Brocade Communications (NASDAQ: BRCD  ) landing ahead of the prognosticators.

The networking storage specialist came through with a profit of $0.17 a share. Analysts figured that Brocade's earnings would be flat with the $0.15 a share it reported a year earlier. Brocade's beat came despite revenue coming in slightly below Wall Street estimates, translating into an even bigger positive surprise in terms of net margins.

It wasn't necessarily pretty for Brocade. Unlike Dangdang and InterOil, which rewarded investors with double-digit percentage gains last week, investors weren't swayed by Brocade's performance. A big reason for the letdown -- beyond coming up short on the top line -- is that the company's guidance for the current quarter is well below where analysts are presently perched.

Beating profit targets is just one ingredient in the recipe for superior market returns.

Moving in the right direction
It's important to keep watching the companies that surpass expectations. Over time, it will be a lucrative experience for investors as the market rewards the overachievers. That's the kind of surprise that we look for in the Rule Breakers newsletter service. Want in? Check out a 30-day trial subscription.

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.