Whither Japan Stocks: Panasonic, Sony, And Sharp

Last Friday, October 11, was a strong up day for the Tokyo market.  The Nikkei 225 rose 210 yen, or 1.5%, to 14,404, a fourth consecutive up day.

Sony executive vice president and Sony Computer Entertainment president Kazuo Hirai bows to apologize for the massive theft of personal data from users of the company's PlayStation Network and Qriocity online services, at a press conference at the Sony headquarters in Tokyo on May 1, 2011. Sony said on May 1 it would 'shortly' begin restoring its PlayStation Network and Qriocity following a major security breach that compromised millions of users. (Image credit: AFP/Getty Images via @daylife)

(Today, the 15th, it rose slightly to 14,441.)  Boosting the market has been a reversal of the yen's recent strengthening trend which was mainly an adverse market reaction to the Yellen nomination. The Japanese currency is now around 98.5 yen/dollar, close to its recent lows.

At the present level, the Nikkei 225 is off its YTD high of 15,627 set on May 22, but it is even further above the YTD low of 10,487 set on January 23. Short term moving averages have been rising.  My sense, as posted previously, is that further broad market gains are likely.

Amid Friday's general market cheer and rising prices, we note with interest the substantially different performance of the stocks of Japan's three leading consumer electronics companies, Panasonic (OTC:PCRFY), Sony (NYSE:SNE), and Sharp (OTC:SHCAY). All three are in the throes of massive and painful restructurings, on-going market evaluation of which has been the main factor driving their stock prices. Hint for what comes below:  on Friday in Tokyo, Panasonic was up 2.8%, Sony was up 1.05%, and Sharp lost 2%. Today, the 15th, the movement was Panasonic up 0.63%, Sony us 0.99%, and Sharp dropping a further 2.39%.

Last week Panasonic announced that by March 31, 2014 it would completely end production of plasma television panels and stop all related sales globally. Previously the company had targeted exiting this product business a year later, in FY 2014, which ends March 2105. It had already stopped R&D. Now the company decided it would not drag out the withdrawal and would immediately close (and sell) the one factory in Japan located in Amagasaki City, Hyogo Prefecture, still producing the panels.

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According to the October 9 Nihon Keizai Shimbun, in the two fiscal years ended March 31, 2013, Panasonic had lost annually over JPY 750 billion (USD 7.7 billion) in the plasma TV business.   This volume of bleeding had to be stopped.  From the mid-2000s Panasonic invested over JPY 500 billion (USD 5.1 billion) in the Amagasaki factory. By now equipment is fully depreciated and the book value of buildings is only JPY 40 billion (USD 408 million). A write-off of this and other costs of the plasma TV business is not expected to prevent Panasonics main business from returning to profits.

Sony was also in the news on October 11, with its CEO Hirai Kazuo declaiming in an interview with the Nihon Keizai Shimbun the ambition to raise Sony's share of the world smartphone market from the current 6th place to 3rd. Hirai is nothing if not ambitious.

Hirai believes Sony can leverage its digital camera and television technology to produce a differentiated, competitive smartphone that can capture market share from Samsung and Apple. Engineers from Sony's camera and TV divisions have been transferred to its smartphone R&D division for the task of producing a market-leading product. "Good products have started to come out," Hirai said.

Sony posits that the global smartphone market will continue to expand by double digits.  In Japan Sony is competing with the iPhone being sold by NTT Docomo.  After one year, Hirai believes Sony's Xperia device is taking market share from Apple. Interestingly, reflecting that operating resources are limited, Hirai hinted that Sony would focus on the domestic and European markets and not attempt a full sales campaign the U.S. and China.

Hirai reported that restructuring continues "according to plan" in Sony's money-losing electronics and television divisions, such that a return to profitability is in sight. In TVs, the restructuring has meant winnowing models and reducing unit production while rolling out the more competitive 4K television model which it is hoped will recapture market share.

Hirai did not comment on Sony's computer sales, but reports are that the company is reducing sales forecast numbers. A Sony SVP in charge of computer sales was quoted in the October 8 Nihon Keizai Shimbun as saying that this fiscal year's sales budget of 6.2 million units, down 18% from the previous year, will be hard to achieve. The forecast had been lowered in August and will probably be lowered again. It seems that consumers have been migrating away from computers to tablets.

Which brings us to Sharp. Friday's stock price drop within an up market, and today's further decline, occurred as the company completed a public offering of 400 million shares. Some 120-128 million of the shares—the maximum allowed—were offered to foreign investors.  Price per share for both domestic and foreign investors was 279 yen.  (The stock closed on Friday at 293 and today at 286.) Sharp is netting some JPY 119.1 billion (USD 1.2 billion) from the new issue.  But the company had hoped to sell the shares for 348 yen and net JPY 149 billion.

Whither Japan's three iconic electronics brands?  No doubt they will all survive.  I do not own any of them but if I did it would be Panasonic.  As I have suggested in earlier posts, of the three companies, Panasonic is in all ways the strongest. It also seems to have been executing—and with a growing sense of urgency–the most effective restructuring strategy.  Here is some more data:

Panasonic:  ADR price $9.72.  10/15 TSE close 961.  PBR 1.85 times. Forward PER 46.85 times.  Dividend yield 1.08%. EPS yield 2.19%. TSE YTD high 993 (5/22); low 502 (1/9).

Sony:  ADR price $19.75.  10/15 TSE close 1,938.  PBR 0.88 times. Forward PER 38.84 times. Dividend yield 1.3%. EPS yield 2.57%. TSE YTD high 2413 (5/22); low 918 (1/9).

Sharp:  ADR price:  $2.89.  10/15 TSE close 286.  PBR 2.79 times. Forward PER 69.65 times.  Dividend yield: nil. Forward EPS yield 1.41%. TSE YTD high 633 (5/21); low 234 (4/3).

How To Hedge Against A Government Shutdown

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Rising tensions in Washington have trigged anxiety in the stock market. Investors are climbing a wall of worry. But those who want to protect their portfolio in the event of a government shutdown or contentious debt-ceiling debate might consider hedging with put options.

In a note published today, Goldman Sachs analysts Robert Boroujerdi, John Marshall, Michael Chanin and Krag Gregory say not much gfear has been priced into put options for either the S&P 500 or stocks with higher exposure to government spending. As a result, they suggest one of the following hedging strategies:

Buy the optimal SPX puts to hedge a 5% down-move: Buying a November 1650 put on the S&P 500 index costs 1.2% and Goldman estimates a 2.7-to-1 payout if the index falls 5% by mid-October. Beware of government exposure: The firm tracks a basket of more than 100 companies that derive at least 20% of their revenue from the government. Though the list includes defense contractors and tech giant, more than half of the names are health-care companies, including Amgen (AMGN), HCA (HCA) and UnitedHealth Group (UNH). Buy puts on stocks with high government exposure: November puts on government-exposed names cost 2.4% on average (5% out of the money strike).

Two dividend paying stocks to consider today

Every week, I look at the list of weekly dividend increases, in order to uncover hidden opportunities. I also use it in order to review the dividend performance of the companies in my portfolio. In this article, I am going to highlight a couple companies, which raised dividends. I weeded out companies that has low current yields or had low streaks of dividend increases. I looked at the initial statistics such as earnings and dividend growth over the past decade, and I found them promising enough to put in focus, and place on my list for further research.

The two dividend paying companies in focus today include:

Lockheed Martin Corporation (LMT), a security and aerospace company, engages in the research, design, development, manufacture, integration, and sustainment of advanced technology systems and products for defense, civil, and commercial applications in the United States and internationally. The company raised its quarterly dividend by 15.60% to $1.33/share. This marked the eleventh consecutive annual dividend increase for this dividend achiever. Over the past decade, Lockheed Martin has managed to increase dividends at a rate of 24.70%/year. The company is projected to earn $9.46/share in 2013 and $9.64 by 2014.

Currently, Lockheed Martin trades at 13.60 times forward earnings and yields 4.10%. Values like this are hard to come by in the current environment. I analyzed the company back in 2010, and liked everything except for the fact it hadn't raised distributions for ten years in a row. I plan on reviewing the company in more detail in a future post, and make a decision on whether I should buy it or not.

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Accenture plc (ACN) provides management consulting, technology, and business process outsourcing services worldwide. The company raised its semi-annual dividend by 15% to 93 cents/share. This marked the ninth consec! utive annual dividend increase for Accenture. Over the past five years, Accenture has managed to increase dividends at a rate of 28.70%/year. The company is projected to earn $4.47/share in 2014 and $4.94 by 2014.

Currently, Accenture trades at 16.60 times forward earnings and yields 2.50%. I like how the company has managed to grow earnings and dividends over the past decade, and I also like the strong brand name that company has.

I am going to place these quality companies on top of my list for further research. I like the fact that I still can find value even in an overextended market like todays.

Full Disclosure: None

OBJE Gaming App Begins Beta Testing for $86B Market (OTCBB:OBJE, ASX:TEX, OTCQX:TEXQY)

OBJ Enterprises, Inc. (OBJE)

Today, OBJE has shed (-2.78%) down -0.010 at $.350 with 53,388 shares in play thus far (ref. google finance Delayed: 11:42AM EDT June 27, 2013), but don't let this get you down.

Beta testing has begun on Creature Tavern, the exciting new gaming app being developed by Obscene Interactive, the gaming division of OBJ Enterprises, Inc. in conjunction with Novalon Games. The much-anticipated Creature Tavern leads OBJE's pursuit of a share of the potentially lucrative global gaming market, which is expected to reach $86.1 billion by 2016.

The mobile gaming app market has never been hotter, as mobile gadgets such as smartphones and tablets are expected to continue their ascent while the demand for portable gaming consoles declines. Combined, mobile gadgets will take a 27.8 percent share of the global gaming market by 2016, up nearly 10 percentage points compared to this year.

Take a look at OBJ Enterprises, Inc. (OBJE) 5 day chart:

Target Energy Limited (TEXQY) (TEX)

Target Energy Limited (OTCQX:TEXQY, ASX:TEX) (http://targetenergy.com.au/) is an oil and gas exploration and production company listed on the Australian Securities Exchange and trading under ticker “TEX” and OTC Markets trading under ticker “TEXQY”.

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Today (June 27), Target Energy Limited ticker (OTCQX:TEXQY) has remained (0.00%) +0.000 at $7.00 thus far (ref. google finance Delayed: 9:32AM EDT June 27, 2013 – Close), and Target Energy Limited on the Australian Securities Exchange ticker (ASX:TEX)  surged (+4.92%)+0.003 at $.064 with 230,000 shares in play at the close (ref. google finance June 27, 2013 – Close).

Target Energy Limited previously reported that the company is continuing drilling operations at the Pine Pasture #3 oil well on their East Chalkey Oil Field in Parish, Louisiana. The Company had independent studies which indicated that put upside recoverable reserves for Pine Pasture #3 range between 250,000 and 450,000 barrels of oil. In addition, the report also revealed that the East Chalkey Field has an upside estimate of 4 million barrels of oil.

To view Target Energy Limited video click link http://crwetube.com/media/target-energy-ltds-managing-director-laurence-roe .

Keep in mind, Target Energy Limited production increased by +320% in 2013 following successful Permian Basin drilling campaign. In April, the Company was generating in excess of $400,000 per month in net sales revenue. The Company's ongoing 2013 drilling programs in Permian Basin and Louisiana are likely to add significantly to their production and reserves.

Now take a look at Target Energy Limited (TEXQY) 5 day chart:

Amedisys Jumps 22% on KKR Stake

That zipping sound you hear is home-health provider Amedisys‘ (AMED) 24% surge on news that private-equity giant Kohlberg Kravis Roberts & Co. has a stake of more than 8% in the stock.

CRT Capital analyst Sheryl Skolnick, a critic of company management, upgrades to “fair value” this morning and essentially tells clients to get out of KKR’s way, since the firm could end up ushering in a new board and management:

There are times when this analyst will ‘take on’ shareholders with differing views and there are times when she knows, from long experience, not to even think about it. This is one of the latter times ….

We know that when activists get involved, strange and interesting things happen, even (especially?) with entrenched managements. For the record, we think it unlikely that this part of KKR will take AMED private: filing a 13-D that almost surely takes the stock up would be that act of amateurs, in our view, not the act of a savvy firm like KKR. Some may conclude from the language of the 13-D that KKR may not actually become active. We reviewed it and found it nearly identical to other activists’ initial statements: then things changed. Thus, a new Board and management does seem likely and is indeed the strategy we advocated in our 4/3/13 report and THAT is the root cause of our upgrade.

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But for the 13-D we would NOT have upgraded. Indeed, we were in the midst of preparing a strong reiteration of our view that AMED cannot be fixed by this CEO and his Board. We reiterate that view here and strongly suspect that any activist likely has or will reach that same conclusion.

3 Warnings for Google Investors

While Google (NASDAQ: GOOG  ) has seemed nearly unstoppable lately, that is exactly what investors had once thought about Microsoft and, more recently, Apple. In the video below, Fool.com contributor Doug Ehrman discusses three potential issues that the search thing could face which will be important for investors to monitor. First is the fact that Google's performance had made the stock fairly expensive on a valuation basis. Second, while Google expects to see significant growth in mobile advertising, the paradigm shift in online ads could shake things up. And finally, as we all learned with Apple, a company's image as an innovator can change quickly in a short amount time.

The three concerns discussed are not necessarily harbingers of doom, but rather things to watch for as time goes by and Google looks to maintain dominance.

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.

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4 Stocks Making Big Moves

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

Adobe Systems' (NASDAQ: ADBE  )  second-quarter profits fall 66%. Shares of NVIDIA  (NASDAQ: NVDA  ) hit a new 52-week high. Tesla Motors (NASDAQ: TSLA  ) issues its first-ever recall. And Men's Wearhouse (NYSE: MW  ) fires company founder and pitchman George Zimmer. In this installment of Investor Beat, Jason and Charly discuss four stocks making big moves.

NVIDIA was ahead of the curve launching its mobile Tegra processor, but investing gains haven't followed as expected, with the company struggling to gain momentum in the smartphone market. The Motley Fool's brand-new premium report examines NVIDIA's stumbling blocks, but also homes in on opportunities that many investors are overlooking. We'll help you sort fact from fiction to determine whether NVIDIA is a buy at today's prices. Simply click here now to unlock your copy of this comprehensive report.

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The relevant video segment can be found between 1:54 and 4:09.

American Express Stock Won't Succumb to a Sluggish Dow

The Dow Jones Industrial Average (DJINDICES: ^DJI  ) has started the new week with a whimper, though it's getting plenty of help from American Express' (NYSE: AXP  ) gains. Despite the credit card giant's 1.4% share price gain, the Dow is down 20

points as of 2:25 p.m. EDT in what has been an up-and-down day so far. Stocks are mixed evenly between risers and gainers, but a few Dow members are making substantial moves today. Let's check out the biggest stories you need to know about.

American Express shakes off the Dow doldrums
American Express won't be held back by the Dow's gains today. The credit card stock has pulled in gains of 25% year to date for the fifth-best performance on the Dow in 2013. Shareholders got a boost last week when digital payment service Paymill began accepting American Express for its service, but this stock's steady rise has been about more than just singular events.

With consumers tentatively growing optimistic -- consumer confidence reached a nearly six-year high recently despite the tax hike earlier in the year and sequestration's budget cuts -- American Express and other credit card companies are poised to capitalize on the economy's recovery. On the other hand, credit cards and card debt are on a slow downswing, which is a dangerous trend for these companies in the very long term. But for now, at least, American Express investors have little reason to worry.

Joining American Express in the winners' circle today, Caterpillar (NYSE: CAT  ) stock has edged up 0.6%, even as the company's sales continue to fall. The industrial giant revealed today that total retail sales in the three months ending in April fell 9% -- an improvement on the prior-year quarter's 11% drop but still troubling for any turnaround investors. This stock is likely to struggle so long as economic conditions remain depressed in Europe and the recent Chinese slowdown continues. One beacon of hope for Caterpillar has been Latin America, where sales jumped 28% in the three-month period. However, a painful 18% drop in North American sales tempered that gain.

On the other side of the Dow, Cisco (NASDAQ: CSCO  ) shares continue to feel the fallout from last week's poor earnings result: The tech stock has lost another 1.9% today to lead the Dow lower. Despite the miss, Cisco's sales in emerging markets speak of a bright future for this company's geographical expansion. The company's India revenue climbed 29% in the last quarter, while China sales managed to gain 8% despite recent regional difficulties. If Cisco can continue to push into these technologically developing nations, it will be able to weather sales drops in other regions more easily in the future.

Finally, Merck (NYSE: MRK  ) shares are also on the downswing today, losing 1.6% to rank among the leading Dow laggards. The FDA confirmed the effectiveness of Merck's promising insomnia drug suvorexant today. This would ordinarily be a cause for celebration, but the agency also noted that the drug might only be safe at lower doses -- a judgment that disappointed investors. The FDA singled out the drug's potential to inflict daytime drowsiness, a condition that could impair driving. It's a tough blow for Merck, which has been looking to potential blockbuster drugs like suvorexant to help sales recover from the losses inflicted by patent expirations on top pharmaceuticals recently.

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

4 Stocks Under $10 Making Big Moves

DELAFIELD, Wis. (Stockpickr) -- At Stockpickr, we track daily portfolios of stocks that are the biggest percentage gainers and the biggest percentage losers.

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Stocks that are making large moves like these are favorites among short-term traders because they can jump into these names and try to capture some of that massive volatility. Stocks that are making big-percentage moves either up or down are usually in play because their sector is becoming attractive or they have a major fundamental catalyst such as a recent earnings release. Sometimes stocks making big moves have been hit with an analyst upgrade or an analyst downgrade.

Regardless of the reason behind it, when a stock makes a large-percentage move, it is often just the start of a new major trend -- a trend that can lead to huge profits. If you time your trade correctly, combining technical indicators with fundamental trends, discipline and sound money management, you will be well on your way to investment success.

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With that in mind, let's take a closer look at a several stocks under $10 that are making large moves to the upside today.

Curis

Curis (CRIS) engages in the research, development, and commercialization of cancer therapeutics. This stock closed up 7% to $2.74 in Thursday's trading session.

Thursday's Range: $2.56-$2.77

52-Week Range: $2.44-$4.74

Thursday's Volume: 768,000

Three-Month Average Volume: 727,547

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From a technical perspective, CRIS ripped sharply higher here right above its 52-week low of $2.44 with above-average volume. This move pushed shares of CRIS into breakout territory, since the stock took out some near-term overhead resistance at $2.64. Shares of CRIS closed above that breakout level since the stock closed at $2.74. Market players should now look for a continuation move higher in the short-term if CRIS manages to take out Thursday's high of $2.77 with strong volume.

Traders should now look for long-biased trades in CRIS as long as it's trending above Thursday's low of $2.56 or above $2.44 and then once it sustains a move or close above $2.77 with volume that hits near or above 727,547 shares. If we get that move soon, then CRIS will set up to re-test or possibly take out its next major overhead resistance level at $2.91. Any high-volume move above $2.91 will then give CRIS a chance to tag $3.20 to its 50-day moving average of $3.40.

RF Industries

RF Industries (RFIL) is engaged in the design, manufacture and marketing of interconnect products and systems, including coaxial and specialty cables, fiber optic cables and connectors, and electrical and electronic specialty cables. This stock closed up 6% to $9.58 in Thursday's trading session.

Thursday's Range: $9.05-$9.73

52-Week Range: $4.15-$14.84

Thursday's Volume: 140,000

Three-Month Average Volume: 219,716

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From a technical perspective, RFIL spiked sharply higher here right above some near-term support at $8.68 with lighter-than-average volume. This stock recently dropped sharply lower from $14.84 to its low of $8.58. During that move, shares of RFIL have been consistently making lower highs and lower lows, which is bearish technical price action. That said, shares of RFIL have now started to reverse its downtrend and break out above some near-term overhead resistance levels at $9.40 to $9.42. Market players should now look for a continuation move higher in the short-term if RFIL manages to clear its 50-day moving average of $9.75 with strong volume.

Traders should now look for long-biased trades in RFIL as long as it's trending above Thursday's low of $9.05 or above $8.68 and then once it sustains a move or close above its 50-day at $9.75 with volume that hits near or above 219,716 shares. If we get that move soon, then RFIL will set up to re-test or possibly take out its next major overhead resistance level at $10.50. Any high-volume move above $10.50 could then send RFIL towards $11 to $12.

First Marblehead

First Marblehead (FMD) is a specialty finance company focused on education loan programs for K-12, undergraduate and graduate students in the U.S., as well as tuition planning, tuition billing, refund management and payment technology services. This stock closed up 10% to $7.02 a share in Thursday's trading session.

Thursday's Range: $6.21-$7.17

52-Week Range: $5.90-$19.20

Thursday's Volume: 81,000

Three-Month Average Volume: 60,870

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From a technical perspective, FMD spiked sharply higher here right above its 52-week low of $5.90 with above-average volume. This stock has been downtrending badly for the last two months and change, with shares falling from its high of $10.50 to its recent low of $5.90. During that move, shares of FMD have been making mostly lower highs and lower lows, which is bearish technical price action. That said, this move on Thursday now has shares of FMD looking ready to reverse its downtrend and potentially enter a new uptrend.

Traders should now look for long-biased trades in FMD as long as it's trending above Thursday's low of $6.21 and then once it sustains a move or close above Thursday's high of $7.17 with volume that hits near or above 60,870 shares. If we get that move soon, then FMD will set up to re-test or possibly take out its next major overhead resistance levels at its 50-day moving average of $8.20 to $8.30. Any high-volume move above those levels will then give FMD a chance to tag its next major overhead resistance levels at $8.88 to $9.53.

Ziopharm Oncology

Ziopharm Oncology (ZIOP) is a biopharmaceutical company engaged in the development and commercialization of small molecule and synthetic biology approaches to new cancer therapies. This stock closed up 1.5% to $3.99 in Thursday's trading session.

Thursday's Range: $3.91-$4.08

52-Week Range: $1.49-$5.95

Thursday's Volume: 917,000

Three-Month Average Volume: 1.35 million

>>5 Stocks Under $10 Set to Soar

From a technical perspective, ZIOP spiked modestly higher here right off its 50-day moving average of $3.87 with lighter-than-average volume. This move is quickly pushing shares of ZIOP within range of triggering a big breakout trade. That trade will hit if ZIOP manages to take out Thursday's high of $4.08 to some more near-term overhead resistance levels at $4.25 to $4.34 with high volume.

Traders should now look for long-biased trades in ZIOP as long as it's trending above some key near-term support at $3.72 or above more support at $3.42 and then once it sustains a move or close above those breakout levels with volume that hits near or above 1.35 million shares. If that breakout triggers soon, then ZIOP will set up to re-test or possibly take out its next major overhead resistance levels at $5 to $5.24. Any high-volume move above those levels will then give ZIOP a chance to tag its 52-week high at $5.95.

To see more stocks that are making notable moves higher today, check out the Stocks Under $10 Moving Higher portfolio on Stockpickr.

-- Written by Roberto Pedone in Delafield, Wis.

RELATED LINKS:

>>3 Hot Stocks to Trade (or Not)

>>5 Cash-Rich Stocks That Could Pay Triple the Gains in 2014

>>4 Stocks Rising on Unusual Volume

Follow Stockpickr on Twitter and become a fan on Facebook.

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

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

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

The Truth About Amazon's Drones

BALTIMORE (Stockpickr) -- The day before Cyber Monday, Amazon.com (AMZN) CEO Jeff Bezos announced that his company was working on delivery technology that would disrupt the industry: autonomous drones that fly your Amazon orders right to your door.

>>5 Stocks Ready to Break Out

Amazon shareholders should be thrilled about the announcement -- but not because Amazon Prime Air could change how customers receive packages from Amazon. Instead, shareholders should be thrilled because Bezos & Co. generated some incredible buzz for Cyber Monday just by showing off some pricey toys.

The truth is, that's just about all Amazon's drones really are at this point. And for Amazon, that's probably a good thing; after all, introducing drone delivery introduces a host of problems.

I'm not just speaking as a stock analyst here; I'm also an active, licensed pilot. From both a regulatory and a practical viewpoint, Amazon Prime Air doesn't add up -- at least not the way that it was shown to us on TV.

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So today, I'll show you the truth about Amazon's drones. More important, I'll show you why Amazon has a much easier path to disrupting the delivery business after all.

Regulatory Hurdles

The most obvious barrier to drone delivery is regulatory. Recall, it took about two decades for the Federal Aviation Administration to OK the use of Angry Birds during all phases of flight on airlines. The FAA is probably the slowest-moving government agency -- and it's by design.

The FAA doesn't want any surprises when it enacts a new rule.

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That means that any big changes to the Federal Aviation Regulations are drawn out. While the FAA is mandated to integrate unmanned aircraft into the national airspace system by 2015, the agency is behind schedule, and most of the focus has centered around remotely controlled UAVs, not autonomous ones like the ones Amazon is touting.

The amount of additional testing required to demonstrate that Amazon's octocopters can safely self-navigate to the FAA's standards is going to be immense -- and very costly. Couple that with the fact that many of the more densely populated U.S. cities are blanketed with restrictive Special Flight Rules Areas (in New York and Washington D.C.) and heavily trafficked Class B airspace, and suddenly the regulatory challenges increase.

The best example probably comes from Amazon's Prime Air promo clip shown on 60 Minutes: Amazon and the FAA both confirmed that Amazon's drones are currently illegal here at home, so the firm had to shoot its video clip overseas.

Will the System Work?

All of the regulatory challenges assume that Amazon's Prime Air will work as advertised in the first place.

Amazon's presentation gave us a pretty good idea of the niche that Prime Air would be used for: shipping small items under five pounds within a 10-mile radius of a distribution center within 30 minutes. It certainly sounds like an attractive service, especially when you consider the fact that it covers around 86% of the items Amazon delivers.

But the logistics seem a little questionable.

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For an Amazon drone to make the 10-mile trek one way in 30 minutes, it would need to be traveling at a brisk 20 miles per hour, and that assumes a direct flight path from the distribution center to the destination. If the FAA allows drones to fly "highways in the sky," it could add significant mileage to a trip. That also doesn't factor in shipment preparation times. If it takes 10 minutes for Amazon's teams to prepare an order, we're talking about a 30 mile-per-hour ground speed to make a 30-minute delivery.

For a two-foot-square aircraft, that's a scale speed of around 300 miles per hour for a full-scale helicopter. On a breezy day, scale speeds of 500 miles per hour may be necessary to hit that same 30-minute delivery time.

We don't know how much Amazon's drones are going to cost. Package delivery firm DHL is testing drones of its own that currently run $54,900 each -- and that's for a vehicle with half the payload of Amazon's octocopters. It's reasonable to think that Amazon will be able to acquire a fleet of octocopters in a few years for much less than that -- until you amortize R&D costs for FAA certification across each aircraft.

Because Prime Air can only carry one item at a time, Amazon needs at least one aircraft for every order that it receives from the time one drone gets sent out to the time it returns for another pickup (longer if we add recharging to the equation).

The costs will be material, and so will the load on the airspace system; it would take around 1,500 drones to replace every semi trailer that comes out of an Amazon distribution center.

That means that margins are also a consideration. While AMZN's five-pound payload covers the majority of its shippable offerings, it doesn't cover the majority of the offerings that have the most margin available to cede to a costly new shipping method. Amazon's highest-margin products are things that don't get delivered at all, such as eBooks and Amazon Web Services.

Capture the Drone

We shouldn't forget about the challenges along the trip.

Some drones will be intentionally damaged and stolen. Weather will ground others. And accidents will take out more of them.

When drones reach their destinations, will Amazon be on the hook for maiming children and animals with eight sets of spinning rotors? Or will it add cost and decrease payload by adding guards to its octocopters?

Since Amazon Prime Air will be marketed toward customers who live in densely populated areas (10 miles from a distribution center), what happens when someone who lives in an apartment on a busy street makes a Prime Air order? Does it get dropped 10 yards from the door to the building?

A System That Works

All of the drone talk seems even crazier when you consider the fact that Amazon is investing huge amounts of money in its own present-day delivery infrastructure. Amazon Fresh, a grocery delivery service, sports a growing fleet of trucks making same-day deliveries to customers in Los Angeles, San Francisco and Seattle.

We already have a mature road infrastructure in the U.S., with increasingly fuel-efficient trucks that can carry hundreds of packages in a single run. Better yet, by keeping delivery in-house with its own trucks, Amazon can also handle hassles (like returns) more easily than ever before. If Amazon is thinking about moving its distribution centers closer to cities, cutting out the middleman with Amazon Fresh makes far more sense than drones ever did.

In fact, if the firm is so bent on cutting humans out of the delivery process, autonomous delivery trucks make a lot more sense than drones do too. After all, our road system is meticulously mapped, road conditions are far more predictable and consistent than air conditions are, and trucks don't need to return home after every delivery.

But autonomous vehicles, like drones, aren't investible right now. They're too pie-in-the-sky to be on your radar as an Amazon investor. In the meantime, it makes sense for Amazon to continue to build on its Amazon Fresh service in additional markets, human drivers and all.

There's no question that Amazon is a "castle in the sky" stock. It hasn't had a P/E ratio under 100 since 2011, and less than 2% of the firm's market cap is covered by cash on its balance sheet. Translation: AMZN isn't cheap by any stretch of the imagination. But momentum is still very much intact, and that means that the time is right for Amazon to make meaningful investments while costs of capital are low and its valuation is rich.

Don't expect to see drones making dropoffs at your house by 2015 -- but same-day delivery still looks like a promising enhancement for AMZN.

-- Written by Jonas Elmerraji in Baltimore.

RELATED LINKS:

>>3 Big Stocks on Traders' Radars

>>5 Stocks Under $10 Set to Soar

>>Hedge Funds Hate These 5 Big Stocks -- but Should You?

Follow Stockpickr on Twitter and become a fan on Facebook.

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

Jonas Elmerraji, CMT, is a senior market analyst at Agora Financial in Baltimore and a contributor to

TheStreet. Before that, he managed a portfolio of stocks for an investment advisory returned 15% in 2008. He has been featured in Forbes , Investor's Business Daily, and on CNBC.com. Jonas holds a degree in financial economics from UMBC and the Chartered Market Technician designation.

Follow Jonas on Twitter @JonasElmerraji

Analysts Debate: Is Starbucks Still a Top Stock?

The Motley Fool has been making successful stock picks for many years, but we don't always agree on what a great stock looks like. That's what makes us "motley," and it's one of our core values. We can disagree respectfully, as we often do. Investors do better when they share their knowledge.

In that spirit, we three Fools have banded together to find the market's best and worst stocks, which we'll rate on The Motley Fool's CAPS system as outperformers or underperformers. We'll be accountable for every pick based on the sum of our knowledge and the balance of our decisions. Today, we'll be discussing Starbucks (NASDAQ: SBUX  ) , the world's largest coffee-shop chain.

Starbucks by the numbers
Here's a quick snapshot of the company's most important numbers:

Statistic

Result (TTM or Most Recent Available)

Market cap	$44.3 billion
Price/book	8.5
Price/sales	3.2
Forward P/E	22.6
Cash/debt	$2.46 billion / $0.55 billion
Total stores	18,278
Revenue breakdown (mrq)	Americas: $2.84 billion Channel Development: $0.38 billion Europe/Middle East/Africa: $0.31 billion China/Asia Pacific: $0.21 billion
Competitors	Dunkin' Brands (NASDAQ: DNKN  ) Green Mountain Coffee Roasters (NASDAQ: GMCR  )

Sources: Yahoo! Finance, Starbucks 10-Q. mrq = most recent quarter.

Source: Wikimedia commons. 

Sean's take
There's not much to say about Starbucks that its first-quarter earnings report in January didn't already spell out for investors. China is a hot spot of growth, with the China/Asia Pacific region delivering 28% revenue growth, while global same-store sales throughout the remainder of the company remain strong -- up 6%, thanks to incredible branding, increase traffic, solid pricing power, and a knack for staying ahead of the innovative curve.

Earlier this week, I broke down Starbucks' outperformance into three rudimentary building blocks. I saw the company first as an innovator that remodeled and refreshed its stores to make them more inviting and reworked its food line to appeal to healthier eaters.

Next, I envisioned Starbucks as an emulator that saw a concept from another vendor and ran with it. This is what prompted Starbucks to develop its own single-serve brewing and espresso machine known as the Verismo to take on Green Mountain's dominant Keurig system, and this is also what drove it to emulate Whole Foods Market (NASDAQ: WFM  ) by striking deals with local and organic growers to bring more nutritious food choices and drinks into its stores.

Finally, I saw the collaborative side of Starbucks that keeps its friends close and its enemies closer. When Dunkin' Brands formed a strategic partnership with Green Mountain in February 2011, Starbucks followed suit just weeks later with a partnership of its own with Green Mountain.

Click here if you'd like to read a more thorough analysis of my thoughts on Starbucks, but the simple answer is that yes, it's a buy, even now. Starbucks is a dominant force in coffee that refuses to be stopped, and there is plenty of room for it to grow overseas, or even expand sales domestically through new food and drink offerings.

Alex's take
I took a more fundamental look at Starbucks' opportunity than Sean, which is a rarity -- usually he's the one who comes at the stock with a bunch of numbers that I hadn't considered. My thoughts on Starbucks were pretty straightforward heading in. Sure, it's a highly valued stock, but it's been highly valued relative to the rest of the market for years. If there's not a reason, then the market must be wrong. So, is the market wrong?

Company

P/E Ratio

Net Margin

Trailing 12-Month Earnings Growth 

Starbucks	31.8	10.5%	11.9%
Dunkin Brands	42.5	16.5%	214.5%
Green Mountain	24.9	9.1%	21.3%
McDonald's (NYSE: MCD  )	19.3	19.8%	(0.7%)

Sources: YCharts and Yahoo! Finance.

Starbucks is doing better than McDonald's, which has been trying its level best to expand beyond cheap burgers and McNuggets into the coffee "experience," at least in terms of earnings growth. It's not growing as fast as Dunkin -- but that improvement should be heavily discounted, as the doughnut maker has only a few quarters of reported earnings so far. It gets an advantage over Green Mountain probably on the strength of brand presence and a high net margin for operating so many retail beverage stores. More importantly, it's not overvalued relative to itself. The company's two-year average valuation is fewer than three points below its current valuation.

More importantly, Starbucks has demonstrated pricing power in an industry notoriously reliant on the cost of commodity foodstuffs. When coffee bean prices rose, Starbucks managed to increase its store prices, and from the look of things, it did so beyond the cost of the coffee. When coffee prices fell again, Starbucks held the line -- and its new, fatter margins:

SBUX Profit Margin Quarterly data by YCharts.

While McDonald's hasn't seen margins deteriorate, they have weakened slightly, which is not a trend you want to see out of any globe-spanning restaurateur. On the other hand, Starbucks' margins have never been higher. If coffee prices go back up, Starbucks already knows it can raise prices and justify itself to consumers, and consumers will pay up.

I just don't see Starbucks losing its touch any time soon. That's why I'm giving it a thumbs-up as well. It may not grow as rapidly as it has exiting the last recession, but it should easily beat the market for years to come. You can read more about my reasoning by clicking here.

Travis' take
I'll admit that I'm one of the few people in the U.S. who doesn't drink coffee and has rarely stepped foot into a Starbucks. But that doesn't mean I don't appreciate what Starbucks has built and how it plans to grow in the future.

Sean laid out the company's strategy nicely, and Alex gave a fundamental reason the stock is a buy, but I'll look at Starbucks from a more emotional level. After all, coffee is an emotional drink. It wakes drinkers up in the morning and has some sort of soothing effect I'll never fully understand, bringing consumers back time and time again. This creates an emotional connection with the flavor, ambiance, and experience that is Starbucks and generates consistent returns for shareholders.

So when I looked at Starbucks' stock, I looked at it from a brand perspective. Somehow, Starbucks has managed to evolve and adapt as tastes and consumer demands have changed. It's making home brew systems, tea offerings, and even other healthy drinks. The company has a way of changing with the times, and it all comes back to the brand that is Starbucks.

It's hard to define the value of a brand, but if we look at the history of brands such as Coca-Cola, Nike, McDonald's, and Disney, we can see that they create a staying power. There will be ebbs and flows in the business, but for investors buying for the long term, a brand acts as a moat keeping competitors out.

In my detailed look at Starbucks earlier this week, I pointed to Caribou Coffee as an example of a company that couldn't get past the Starbucks brand. The product is arguably just as good and definitely more creative (if you like that kind of thing), but even in Caribou's backyard at the University of Minnesota and Minnesota-based Target, Starbucks is king.

We could argue P/E ratios and margin trends all day, but I'm giving Starbucks a thumbs-up because I think it has the brand and the management to be a stock you can buy and forget about for a decade. That's exactly the kind of stock I'm looking for.

The final call
I hope you've had your coffee for the day, because that would indeed the very rare unanimous CAPScall of outperform. The interesting aspect of our deeper dive into Starbucks is that we all see value in the company, yet from different angles. Travis doesn't even drink coffee yet understands the branding and adaptation value that Starbucks can offer. Alex, an avid coffee drinker, approached Starbucks from a fundamental standpoint and saw a company with amazing pricing power and robust margins. I (Sean) angled my outperform call based on Starbucks' past, present, and future growth strategies, noting that it's a leader in innovation, emulation, and collaboration. Added together, that's a pretty convincing case for a long-term outperform CAPScall.

You can read more about our previous CAPScalls by visiting our TMFYoungGuns CAPS portfolio where we are currently outperforming the market by 382 points.

Should Green Mountain fear the Verismo?
With Green Mountain as cheap as it's ever been, many investors are wondering whether this is the end of the former market darling, or the perfect entry point for an enormous rebound. You can find our recommendation for how to play the company in our new premium research report. In it you'll find everything you need to know about Green Mountain, including whether it's a buy at today's prices. Click here for instant access.

Will the New Coca-Cola Be More Successful Than New Coke?

If, Coca-Cola’s (KO) stock price is anything to go by, the beverage company has been in need of a new look for a while now. And last night it delivered big changes that it hopes will beget a more successful, new Coca-Cola, not the success of New Coke.

European Pressphoto Agency

Coca-Cola has gained 8.7% this year, while PepsiCo (PEP) has risen 18% and Monster Beverage (MNST) has advanced 17%. Dr. Pepper Snapple (DPS) is up 7.9% in 2013.

So what’s actually changed? Let Deutsche Bank explain:

Coke announced the resignation of Steve Cahillane, former head of the Americas and on the short list of candidates to ultimately succeed Chairman and CEO Muhtar Kent when the time comes. As part of this move, former President of North America Sandy Douglas is returning to his old role while continuing to hold his position as Global Chief Customer Officer. Additionally, Coca-Cola Refreshments, the company’s owned and currently refranchising North American bottling operations will become part of the bottler triage group, Bottling Investments Group, run by President Irial Finan. With so much in flux and a no or low calorie naturally flavored soft drink using proprietary and exclusive Reb X likely forthcoming next year, the timing of these changes is interesting and hopefully signals an acceleration in the pace of US bottler divestitures.

Credit Suisse’s Michael Steib believe the moves bring additional clarity for investors:

While these are significant steps, ultimately the goal is to return the North American business to more of an organizational separation of concentrate manufacturer and bottler – CEO Kent has always stressed the company's commitment to the traditional franchise model. Investors have been waiting for information regarding the next stages and we think today's announcements should provide much-needed clarity.

Alliance Bernstein’sAli Dibadj and team say Coca-Cola’s announcement actually makes the situation murkier. They write:

To us, the specific timing of this announcement is odd—6:46pm on a slow December evening, right on the heels of a thorough round of investor meetings where it was suggested that nothing is afoot. We cannot help but wonder what might be going on behind the scenes. Moreover, although we had perceived increased desire for KO’s next refranchisement moves over the past few days among investors and bottlers, we have always argued that an increasing profit pool may be an important prerequisite for a successful, sustainable refranchisement. Under that assumption, with the recent weakness of the company’s and the category’s North American pricing and volume performance—and in particular KO’s recent pricing “irrationality”—the timing of this organizational change simply seems baffling to us. Does KO believe that a favorable North America operating environment is nonessential to refranchisement, or is it expecting its financial results in this key market to soon improve from here? Could the company be incentivized by other factors (e.g., housing the business under BIG so that it can effectively buy more time to fix the problems that may be bigger than management had previously realized)?

Net-net, we believe that the changes may not all be positive despite the indicated possibility of refranchisement acceleration…

Shares of Coca-Cola have gained 0.2% to $39.30 today, while PepsiCo has dropped 0.5% to $80.91, Dr. Pepper Snapple has risen 0.7% to $47.65 and Monster Beverage has ticked down 0.1% to $61.54.

Report: Foreclosure crisis is winding down

The foreclosure crisis is nearing an end and won't derail the housing rebound underway in many parts of the country, real estate research firms say.

Foreclosure activity in November was down 37% from a year ago and 15% from October, RealtyTrac reports today.

November foreclosure starts fell to their lowest level since December 2005 — before the historic housing bust began. Starts offer an indication of future numbers of distressed homes on the market.

"The depth and breadth of the decrease provides strong evidence that we are entering the ninth inning of this foreclosure crisis," says Daren Blomquist, RealtyTrac vice president.

Foreclosures may stage a "weak rally" in some markets next year as the last of the distressed homes left over from the recession are dealt with, he says. A foreclosure comeback that poses any major threat to the housing recover is "highly unlikely," he says.

States with the highest foreclosure rates in November were Florida, Delaware, Maryland, South Carolina and Illinois, RealtyTrac says. Rates are based on filings at every stage of the process — default notices, scheduled auctions and bank repossessions — so some homes may be counted more than once.

“We are entering the ninth inning of this foreclosure crisis.”

— Daren Blomquist, RealtyTrac vice president

Those states all require foreclosures to go through the courts, which typically means they take longer.

With the exception of Florida, other states hard hit by foreclosures, including California and Arizona, have cleared distressed homes from the market faster, largely because of speedier foreclosure processes and strong buying demand from investors, says Jed Kolko, chief economist of real estate website Trulia.

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More than 7.7 million homes were lost to bank repossession via foreclosure, short sale or some other distressed sale since! late 2006, RealtyTrac estimates.

The foreclosure crisis "is almost over in many parts of the country," Kolko says. While the crisis used to be most pronounced in states with steep home price declines, including Arizona and California, it's now concentrated in states with slow foreclosure processes, Kolko says.

Florida had both steep home price declines and a slow foreclosure process.

In November, that state was home to eight of the top 10 larger U.S. metropolitan regions with the highest foreclosure rates, led by Jacksonville, Miami and Port St. Lucie, RealtyTrac says.

While still leading in terms of foreclosure activity, those eight Florida metros nonetheless posted a year-over-year decline, the data show.

Overall, Florida foreclosure filings fell almost 23% in November year-over-year, less than the national average. They were down 61% in California, 59% in Arizona and 55% in Nevada.

Can General Motors Break Higher?

With shares of General Motors (NYSE:GM) trading around $40, is GM an OUTPERFORM, WAIT AND SEE, or STAY AWAY? Let's analyze the stock with the relevant sections of our CHEAT SHEET investing framework:

T = Trends for a Stock’s Movement

General Motors designs, manufactures, and markets cars, crossovers, trucks, and automobile parts worldwide. The company markets its vehicles primarily under the Buick, Cadillac, Chevrolet, GMC, Opel, Holden, and Vauxhall brand names, as well as under the Alpheon, Jiefang, Baojun, and Wuling brand names. It sells cars and trucks to dealers for consumer retail sales as well as to fleet customers in daily rental car companies, commercial fleet customers, leasing companies, and governments.

General Motors' North American head said he believes the automaker will see a sales bump once the U.S. government exits its remaining stake in the company. Anonymous sources also told the Wall Street Journal that the government could sell its remaining stock in General Motors as soon as this week. The government has said that it plans to leave the company by the end of the year; the U.S. Treasury still owns 31.1 million shares in the Detroit-based automaker. GM has bounced back since its bailout in 2009 but still suffers from an image problem because of the government assistance, including the disparaging nickname "Government Motors."

T = Technicals on the Stock Chart are Strong

General Motors stock has been in a range over the last couple of quarters. The stock is currently surging higher as it trades near highs for the year. Analyzing the price trend and its strength can be done using key simple moving averages. What are the key moving averages? The 50-day (pink), 100-day (blue), and 200-day (yellow) simple moving averages. As seen in the daily price chart below, General Motors is trading above its rising key averages, which signal neutral to bullish price action in the near-term.

(Source: Thinkorswim)

Taking a look at the implied volatility (red) and implied volatility skew levels of General Motors options may help determine if investors are bullish, neutral, or bearish.

	Implied Volatility (IV)	30-Day IV Percentile	90-Day IV Percentile
General Motors options	31.04%	73%	70%

What does this mean? This means that investors or traders are buying a very significant amount of call and put options contracts, as compared to the last 30 and 90 trading days.

	Put IV Skew	Call IV Skew
December Options	Flat	Average
January Options	Flat	Average

As of today, there is an average demand from call buyers or sellers and low demand by put buyers or high demand by put sellers, all neutral to bullish over the next two months. To summarize, investors are buying a very significant amount of call and put option contracts and are leaning neutral to bullish over the next two months.

On the next page, let’s take a look at the earnings and revenue growth rates and the conclusion.

E = Earnings Are Mixed Quarter-Over-Quarter

Rising stock prices are often strongly correlated with rising earnings and revenue growth rates. Also, the last four quarterly earnings announcement reactions help gauge investor sentiment on General Motors’s stock. What do the last four quarterly earnings and revenue growth (Y-O-Y) figures for General Motors look like and more importantly, how did the markets like these numbers?

	2013 Q3	2013 Q2	2013 Q1	2012 Q4
Earnings Growth (Y-O-Y)	-49.44%	-16.67%	-3.33%	6.49%
Revenue Growth (Y-O-Y)	3.72%	3.88%	-2.32%	3.47%
Earnings Reaction	3.24%	-1.10%	3.01%	0.03%

General Motors has seen decreasing earnings and rising revenue figures over the last four quarters. From these numbers, the markets have had conflicting feelings about General Motors’s recent earnings announcements.

P = Excellent Relative Performance Versus Peers and Sector

How has General Motors stock done relative to its peers, Ford Motor (NYSE:F), Toyota Motor (NYSE:TM), Tesla Motors (NASDAQ:TSLA), and sector?

	General Motors	Ford Motor	Toyota Motor	Tesla Motors	Sector
Year-to-Date Return	41.59%	28.19%	30.64%	329.30%	34.47%

General Motors has been a relative performance leader, year-to-date.

Conclusion

General Motors continues to change its business as it looks to entice companies and consumers with its new and improved vehicles. The company's North American head said he believes the automaker will see a sales bump once the U.S. government exits its remaining stake in the company. The stock has been in a range over the last couple of quarters but, is currently surging higher. Over the last four quarters, earnings have been decreasing while revenues have been rising, which produced conflicting feelings among investors. Relative to its peers and sector, General Motors has been a relative year-to-date performance leader. Look for General Motors to OUTPERFORM.

Is Yahoo A Buy At Current Prices?

With shares of Yahoo (NASDAQ:YHOO) trading around $38, is YHOO an OUTPERFORM, WAIT AND SEE or STAY AWAY? Let's analyze the stock with the relevant sections of our CHEAT SHEET investing framework:

T = Trends for a Stock’s Movement

Yahoo is a technology company that provides search, content, and communication tools on the web and on mobile devices worldwide. It operates Yahoo.com, which offers Yahoo Search, Yahoo News, Yahoo Sports, Yahoo Finance, Yahoo Entertainment and Lifestyles, and Yahoo Video. Being such a large content provider, Yahoo is able to reach a significant amount of consumers across the globe. As the internet attracts an increasing number of participants, look for Yahoo to continue to be a major player.

Yahoo ran to its highest perch since January 2006 earlier, after bouncing sharply off its rising 10-day moving average earlier this week. Despite YHOO flexing its technical muscle, puts have gained in popularity today and are trading at two times the average intraday volume. The most sought-after position among this group of option players is the stock’s January 2014 34-strike put.

T = Technicals on the Stock Chart are Strong

Yahoo stock has been exploding to the upside in the last several months. The stock is currently trading near all time highs and looks set to continue. Analyzing the price trend and its strength can be done using key simple moving averages. What are the key moving averages? The 50-day (pink), 100-day (blue), and 200-day (yellow) simple moving averages. As seen in the daily price chart below, Yahoo is trading above its rising key averages which signal neutral to bullish price action in the near-term.

(Source: Thinkorswim)

Taking a look at the implied volatility (red) and implied volatility skew levels of Yahoo options may help determine if investors are bullish, neutral, or bearish.

	Implied Volatility (IV)	30-Day IV Percentile	90-Day IV Percentile
Yahoo options	31.64%	30%	28%

What does this mean? This means that investors or traders are buying a minimal amount of call and put options contracts, as compared to the last 30 and 90 trading days.

	Put IV Skew	Call IV Skew
December Options	Flat	Average
January Options	Flat	Average

As of today, there is an average demand from call buyers or sellers and low demand by put buyers or high demand by put sellers, all neutral to bullish over the next two months. To summarize, investors are buying a minimal amount of call and put option contracts and are leaning neutral to bullish over the next two months.

On the next page, let’s take a look at the earnings and revenue growth rates and the conclusion.

E = Earnings Are Mixed Quarter-Over-Quarter

Rising stock prices are often strongly correlated with rising earnings and revenue growth rates. Also, the last four quarterly earnings announcement reactions help gauge investor sentiment on Yahoo’s stock. What do the last four quarterly earnings and revenue growth (Y-O-Y) figures for Yahoo look like and more importantly, how did the markets like these numbers?

	2013 Q3	2013 Q2	2013 Q1	2012 Q4
Earnings Growth (Y-O-Y)	-6.67%	66.67%	52.17%	-2.15%
Revenue Growth (Y-O-Y)	0.33%	-6.78%	-6.62%	1.64%
Earnings Reaction	-0.86%	10.34%	-0.37%	-3.00%

Yahoo has seen mixed earnings and revenue figures over the last four quarters. From these numbers, the markets have been pleased with Yahoo’s recent earnings announcements.

P = Excellent Relative Performance Versus Peers and Sector

How has Yahoo stock done relative to its peers, Google (NASDAQ:GOOG), AOL (NYSE:AOL), Microsoft (NASDAQ:MSFT), and sector?

	Yahoo	Google	AOL	Microsoft	Sector
Year-to-Date Return	95.28%	51.16%	50.05%	44.25%	61.18%

Yahoo has been a relative performance leader, year-to-date.

Conclusion

Yahoo is an Internet bellwether that provides a multitude of services to consumers and companies worldwide. The company ran to its highest perch since January 2006 earlier, after bouncing sharply off its rising 10-day moving average earlier this week. The stock has been moving higher in recent quarters and is now trading near all time highs. Over the last four quarters, earnings and revenues have been mixed, which has pleased investors about earnings announcements. Relative to its peers and sector, Yahoo has been a year-to-date performance leader. Look for Yahoo to OUTPERFORM.

How to get the most from long-term care policies

No one wants to spend time reading an insurance policy. But if you're concerned about your long-term care, you'll read it carefully.

As with all insurance policies, you should check the company's ratings through an independent rater, such as A.M. Best. You want your insurance company to be around in 20 years when you need it. What else to look for, according to attorney Frank Darras of Ontario, Calif.

LONG-TERM INSURANCE: Peace of mind at a price

• A record of low premium increases. In September, John Hancock raised some of its long-term care premiums 40%, Darras says. "Look for the companies with the lowest premium increases the past 10 years." Two suggestions: Northwest Mutual and New York Life.

• Flexibility on at-home care providers. Some companies won't pay spouses or relatives for providing care, Darras says. You'd probably prefer a resident relative to provide some care. "You have people who didn't read the terms of the policy, didn't have anyone explain it to them," Darras says. "They get services, the carrier denies it, and it's a legitimate denial."

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Having a policy that allows resident relatives to provide care eliminates 90% of claims disputes, he says. And it allows a greater degree of comfort. "If I have the money to stay at home, I don't want a stranger changing my diaper," Darras says.

You should choose a policy with a minimum three-year payout. People who need full-scale nursing home care will need it for about that long, Darras says.

Once you start collecting, make sure you have someone to help you with the process. Some companies make the process cumbersome, Darras says, knowing that old, sick people often can't keep up with the claims process. And some companies will want a plan of care, signed by a doctor, before they'll pay out. Avoid companies with offshore claims centers.

Small denials can add up ! for insurance companies, Darras says. "If you trim a few days here and there, times a million policyholders, it adds up to real money."

Follow John Waggoner on Twitter: @johnwaggoner.

Top 10 Tech Companies To Buy Right Now

From the impact of Obamacare to cutting-edge research, biotech buyouts to FDA decisions, the Motley Fool's health-care team sits down each week�to discuss the most fascinating developments in health care and their implications for long-term investors. In this week's edition, the team talks about the coming trend of penalizing unhealthy employees, the importance of drug branding, the avian flu outbreak, one stock investors need to watch, and more.

In the following segment, health-care analyst David Williamson discusses the week's biggest movers and shakers, including a trio of stocks receiving the FDA's new "breakthrough" designation. Watch and find out what it means for investors.

What macro trend was Warren Buffett referring to when he said "this is the tapeworm that's eating at American competitiveness"? Find out in our free report: "What's Really Eating at America's Competitiveness." You'll also discover an idea to profit as companies work to eradicate this efficiency-sucking tapeworm. Just click here for free, immediate access.

Top 10 Tech Companies To Buy Right Now: VocalTec Communications Ltd.(CALL)

magicJack VocalTec Ltd. provides voice over Internet protocol services over various platforms. It also offers magicJack, a competitive local exchange carrier. The company was formerly known as VocalTec Communications Ltd. and changed its name to magicJack VocalTec Ltd. on May 20, 2011. magicJack VocalTec Ltd. is based in Netanya, Israel.

Advisors' Opinion:

• [By Alex Planes]

  The market for Vonage's services, particularly VoIP, is highly competitive, with MagicJack VocalTec (NASDAQ: CALL  ) also working to drive prices down in the consumer market. Vonage has a few tricks up its sleeve, such as free video calls to in-network subscribers,�but given the rather small Vonage user base, this may not be enough to encourage growth. However, Vonage may not need gimmicks to drive growth when its restructuring has already produced real cost savings. Fellow Fool Michael Lewis points out that the company now anticipates another $100 million in annual revenue by 2014 -- not quite enough to push it over 30% cumulative revenue growth for another passing grade, but good enough to get back into positive territory.

• [By John Udovich]

  Many investors or consumers alike are probably familiar with VoIP stocks magicJack VocalTec Ltd (NASDAQ: CALL) and Vonage Holdings Corp (NYSE: VG), but small cap VoIP stock Deltathree, Inc (OTCMKTS: DDDC) has surged more than 700% over the past two trading days. That�� pretty extraordinary, but what is the whole story about Deltathree and could it be more compelling than other VoIP stocks like�magicJack VocalTec Ltd and Vonage Holdings Corp?

• [By Lauren Pollock]

  MagicJack VocalTec Ltd.(CALL) has repurchased $13 million in shares held by founder Daniel Borislow, who in turn agreed to end any further involvement with the beleaguered Internet-phone company’s operations. Investors cheered the news, sending shares up.

Top 10 Tech Companies To Buy Right Now: Dell Inc.(DELL)

Dell Inc. provides integrated technology solutions in the information technology (IT) industry worldwide. It designs, develops, manufactures, markets, sells, and supports mobility and desktop products, including notebooks, workstations, tablets, smartphones, and desktop PCs, as well as servers and networking products. The company offers storage solutions, including storage area networks, network-attached storage, direct-attached storage, and various backup systems. It also provides IT and business services comprising transactional services, such as support, managed deployment, enterprise installation, and configuration services; outsourcing services, including data center and systems management, network management, life cycle application development and management, and business process outsourcing services; and project-based services consisting of IT infrastructure, applications, business process, and business consulting services. In addition, the company offers third-part y software products comprising operating systems, business and office applications, anti-virus and related security software, and entertainment software; and peripheral products, such as printers, televisions, notebook accessories, mouse, keyboards, networking and wireless products, and digital cameras. Further, it provides financial services, including originating, collecting, and servicing customer receivables related to the purchase of its products and third-party technology products. The company sells its products and services directly through its sales representatives, telephone-based sales, and online sales; and through retailers, third-party solution providers, system integrators, and third-party resellers. It serves corporate businesses, law enforcement agencies, small and medium businesses, consumers, and public institutions that include government, education, and healthcare organizations. Dell Inc. was founded in 1984 and is headquartered in Round Rock, Texas.

Advisors' Opinion:

• [By Rich Duprey]

  Leading investor proxy advisory firm Institutional Shareholder Services came out in favor of Michael Dell's bid to take�Dell (NASDAQ: DELL  ) private for $24.4 billion, the tech firm announced today.

• [By Adam Levine-Weinberg]

  Despite significant improvements to its long-term business prospects -- and a skyrocketing stock price -- HP shares still traded for just 7.3 times expected 2013 earnings as of Wednesday's close. By contrast, Dell (NASDAQ: DELL  ) is on the verge of going private for more than 13 times expected 2013 earnings (or nine times earnings if you exclude excess cash). Even though Dell is even more heavily concentrated in the troubled PC industry, many highly respected investors are insisting that the company is worth far more than the proposed buyout price.

• [By Rich Smith]

  Yesterday, the Pentagon announced awards of just $347 million in new contracts to contractors. Some were not the kind of companies you'd expect. For example:

  Dell (NASDAQ: DELL  ) landed a $9.6 million contract to supply the U.S. Army with desktop computers and tablets. Cardinal Health (NYSE: CAH  ) won $18.6 million as a contract modification exercising an option year on a contract to supply various Army, Navy, Air Force, and Marine Corps locations, and federal civilian agencies, with laboratory supplies through April 12, 2014.

  On the other hand, traditional defense contractors are still earning money by working for the Pentagon. On Tuesday, Raytheon (NYSE: RTN  ) was awarded a $35.2 million order for AN/ALE-50 towed decoys, which aircraft can deploy to distract incoming missiles. Raytheon is expected to complete deliveries on this contract by March 31, 2015.

• [By Tim Melvin]

  Carl Icahn had the other side of the Herbalife trade and has also made big-time moves in Dell (DELL), Apple (AAPL) and Netflix (NFLX) over the past few months. And�Daniel Loeb of Third Point Partners just revealed a large stake in Nokia (NOK) this week.

Top 10 Undervalued Companies To Buy For 2014: Keppel Tele & Tran (K11.SI)

Keppel Telecommunications & Transportation Ltd, an investment holding company, provides integrated services and solutions for logistics and data centre businesses. The company�s Logistics segment provides port operations, integrated logistics services, supply chain solutions, warehousing, distribution, container storage and repairs, and freight forwarding services in Singapore, Malaysia, China, and Vietnam. It provides temperature-controlled storage, automobile management, international freight management, warehousing and distribution, conventional trucking, nationwide long-haul trucking, ocean/air-freight, warehouse/inventory management, custom brokerage, local and long-haul trucking, last mile delivery, multi-modal, and cross-docking distribution transfer services, as well as air, sea, and rail freight forwarding services. This segment also offers non vessel-operating common carrier, feeder services, trucking services, third party logistics, procurement, and other value -added services. Its Data Centre segment owns and operates data centre facilities; provides co-location services, including business continuity and disaster recovery services in Singapore, Ireland, Australia, the United Kingdom, and Malaysia. This segment also offers co-location suites and technical support to its customers. Keppel Telecommunications & Transportation Ltd is also involved in the installation and maintenance of communications systems; provision of telecommunications services; and trading and provision of communications systems and accessories. The company was founded in 1890 and is headquartered in Singapore. Keppel Telecommunications & Transportation Ltd is a subsidiary of Keppel Corporation Limited.

Top 10 Tech Companies To Buy Right Now: Ebix Inc(EBIX)

Ebix, Inc. provides on-demand software and e-commerce solutions to the insurance industry. The company operates data exchanges, which connects multiple entities within the insurance markets and enables the participant to carry and process data from one end to another in the areas of life insurance, annuities, employee health benefits, risk management, workers compensation, and property and casualty (P&C) insurance. It is also involved in designing and deploying broker systems comprising three back-end systems consisting of eGlobal for multinational P&C insurance brokers; WinBeat for P&C brokers in the Australian and New Zealand markets; and EbixASP for the P&C insurance brokers in the United States. In addition, the company offers business process outsourcing services, which include certificate origination, certificate tracking, claims adjudication call center, and back office support. Further, it focuses on designing and deploying on-demand and back-end carrier systems, s uch as Ebix Advantage and Ebix Advantageweb targeted at small, medium, and large P&C carriers in the United States and internationally that operate in the personal, commercial, and specialty line areas of insurance. Additionally, Ebix, Inc. provides software development, customization, and consulting services to various companies in the insurance industry, such as carriers, brokers, exchanges, and standard making bodies. The company was formerly known as Delphi Systems, Inc. and changed its name to Ebix, Inc. in December 2003. Ebix, Inc. was founded in 1976 and is headquartered in Atlanta, Georgia.

Advisors' Opinion:

• [By Evan Niu, CFA]

  What: Shares of Ebix (NASDAQ: EBIX  ) have soared today by as much as 14% after the company agreed to sell itself to a Goldman Sachs (NYSE: GS  ) affiliate.

• [By John Huber]

  Two Examples of Stocks where Value became the Catalyst
  Dell Inc. (DELL) and Ebix Inc. (EBIX) are two stocks that I've followed for some time now as both have shown up on Greenblatt's screen for months. I list these together because they have numerous similarities: Both got cheap because of certain problems, both have similar quality metrics such as above-average returns on capital, both are involved in a pending buyout, and both have CEOs with large stakes in the business.

• [By John Huber]

  Dell (DELL) and Ebix (EBIX) are two stocks that I've been following for some time. Both have shown up in Joel Greenblatt's screen for months, and I've considered both to be potential investment candidates. Both have CEO's with large ownership stakes, both have negative sentiment surrounding the stock (for different reasons), both look cheap using basic value metrics, and both have traded above their deal price, signaling the market might expect a higher bid.

Top 10 Tech Companies To Buy Right Now: Inergetics Inc (NRTI)

Inergetics, Inc., formerly Millennium Biotechnologies Group, Inc., incorporated on November 9, 2000, is a holding company for its sole operating subsidiary, Millennium Biotechnologies, Inc. (Millennium). The Company through its subsidiary Millennium, engages in the research, development, and marketing of specialized nutritional supplements as an adjunct to medical treatments for select medical conditions, as well as for athletes seeking improved recovery and advanced performance. The Company markets products, which are targeted toward immuno-compromised individuals undergoing medical treatment for diseases, such as cancer, as well as wound healing and post-surgical healing and geriatric patients in long-term care facilities among other conditions. In January 2013, the Company acquired Bikini Ready and SlimTrim brands from Whole Products Group.

The Company�� product portfolio include, Resurgex Select, Ready-To Drink Resurgex Essential and Ready-To-Drink Resurgex Essential Plus. Resurgex Select is a whole foods-based, calorically dense, high-protein powdered nutritional formula developed for cancer patients undergoing chemotherapy or radiation treatments. Resurgex Essential and Resurgex Essential Plus represent Millennium�� Ready-to-Drink product line and are being sold into the Long-Term Care geriatric markets.

Resurgex Select

Resurgex Select is a whole foods-based nutritional product that is designed to be used throughout the course of cancer treatment (chemotherapy, radiation, etc.), as many times patients lose weight and cannot consume adequate nutrition. This product combines dietary fiber (3 g), low sugar (5 g), and high protein (15 g) with no added antioxidants to be a high-calorie (350 calorie) supplement. It is available in three flavors (Vanilla Bean, Chocolate Fudge, and Fruit Smoothie) and each can be mixed with water, milk, juices, or in soft cold foods, such as yogurt, apple sauce or pudding.

Surgex

Surgex (www.surgexspor! ts.com), is a nutritional support formula that aims to address the concerns of many elite athletes who suffer from symptoms, such as fatigue, lean muscle loss, lactic acid buildup, oxidative stress, and stressed immune systems. This formula is designed to improve recovery parameters in efforts to enhance the performance of professional and collegiate athletes.

Resurgex Essential

The Essential line is a ready-to-drink alternative to Ensure and Boost designed to be marketed into the long-term care channel. Resurgex Essential has 250 whole food calories containing no corn syrup or corn oil. The product also contains fruit and vegetable extracts, and FOS Fiber to provide calories and taste.

The Company competes with Nestle and Abbott Laboratories Inc.

Top 10 Tech Companies To Buy Right Now: Ellipsiz Ltd (E13.SI)

Ellipsiz Ltd., an investment holding company, provides probe card, distribution, and service solutions to the semiconductor, electronics manufacturing, and telecommunication industries. The company�s Distribution and Services Solutions segment engages in the distribution of equipment and tools for semiconductor and electronics manufacturing, integrated circuit (IC) failure analysis, IC reliability testing, and printed circuit board assembly testing and inspection; and provision of equipment maintenance support engineering services, including systems integration. This segment also provides facilities management services comprising turnkey facilities hookup and turnkey wafer fabrication equipment relocation, as well as chemicals, gas, and abatement management services; test characterization services, such as qualification and reliability testing; and refurbishment services for pumps used in wafer fabs, as well as trades in consumable products for hospital, pharmaceutical, e lectronic, and food processing industries. The company�s Probe Card Solutions segment is involved in the design, manufacture, repair, and sale of probe card solutions for the semiconductor manufacturing industry. It operates in Singapore, Malaysia, China, Thailand, the Philippines, Taiwan, Vietnam, India, Japan, New Zealand, Europe, and the United States. The company was formerly known as SingaTrust Ltd. and changed its name to Ellipsiz Ltd. in 2001. Ellipsiz Ltd. was founded in 1992 and is headquartered in Singapore.

Top 10 Tech Companies To Buy Right Now: I.D. Systems Inc.(IDSY)

I.D. Systems, Inc. develops, markets, and sells wireless solutions for managing and securing enterprise assets, including industrial vehicles, such as forklifts, airport ground support equipment, rental vehicles, and transportation assets primarily in North America. The company offers integrated wireless solutions that enable customers to control, monitor, track, and analyze their enterprise assets. Its campus-based fleet management products include On-Asset Hardware, which provides an autonomous means of asset control and monitoring; Wireless Asset Managers that link mobile assets being monitored with customer?s computer network or to a remotely hosted server; Server Software, which manages data communications between the system?s database and either the Wireless Asset Managers or On-Asset Hardware; and Client Software, which restricts access and limits corruption of system information, as well as minimizes network bandwidth usage. The company?s remote asset management products comprise On-Asset Hardware, which addresses various remote asset types, such as dry van trailers, refrigerated trailers, domestic containers, and railcars, as well as customer-specific requirements; and VeriWise Intelligence Portal, a hosted Website that provides Internet access to client asset information. The company also offers direct feed of the data to customer through XML or Web services. In addition, it provides maintenance, customer support, and consulting services. I.D. Systems markets and sells its wireless solutions to a range of customers in the commercial and government sectors operating in various markets, such as automotive manufacturing, retailers, shippers, freight transportation companies, heavy industry, retail and wholesale distribution, aerospace and defense, homeland security, and vehicle rental directly, as well as through indirect sales channels, such as industrial equipment dealers. The company was founded in 1993 and is headquartered in Wo odcliff Lake, New Jersey.

Advisors' Opinion:

• [By John Udovich]

  Yesterday, small cap identity protection stock Lifelock Inc (NYSE: LOCK) surged 15.64% after reporting better-than-expected third quarter earnings thanks in part to playing on the security fears of consumers, meaning its probably time to take a look at it along with two other security stocks, I.D. Systems, Inc (NASDAQ: IDSY) and View Systems Inc (OTCBB: VSYM), which can also play up the fear factor:�

Top 10 Tech Companies To Buy Right Now: Merge Healthcare Incorporated.(MRGE)

Merge Healthcare Incorporated provides health information technology interoperability solutions. It provides products ranging from standards-based development toolkits to clinical applications. The company offers Merge iConnect, an interoperable image exchange and management suite; cardiovascular information systems to bring automation to the cardiac cath lab; radiology solutions to integrate images and information; lab information systems; orthopaedic software to automate workflow and digital templating; clinical trials tools to transform data into intelligence; and perioperative solutions to streamline the pre-surgical experience. It also offers advanced image viewers, developer toolkits, and related hardware products. The company?s products are used by healthcare providers, vendors, and researchers. Merge Healthcare Incorporated was founded in 1987 and is based in Chicago, Illinois.

Advisors' Opinion:

• [By Roberto Pedone]

  Another stock that's starting to move within range of triggering a breakout trade is Merge Healthcare (MRGE), which develops software solutions that facilitate the sharing of images to create a more effective and efficient electronic health care experience for patients and physicians. This stock hasn't done much in 2013, with shares up just over 8% so far.

  If you take a look at the chart for Merge Healthcare, you'll notice that this stock has been trending sideways since it gapped down in August, with shares moving between $2.35 on the downside and $2.98 on the upside. Shares of MRGE are now starting to trend back above its 50-day moving average of $2.65 a share. That move is quickly pushing the stock within range of triggering a big breakout trade above the upper end of its sideways trading chart pattern.

  Market players should now look for long-biased trades in MRGE if it manages to break out above some near-term overhead resistance levels at $2.82 to $2.98 a share, and then once it takes out its 200-day moving average at $3.08 and its gap down day high of $3.20 a share with high volume. Look for a sustained move or close above those levels with volume that hits near or above its three-month average action o 793,997 shares. If we get that move soon, then MRGE will set up to re-fill some of its previous gap down zone from August that started at $4.60 a share.

  Traders can look to buy MRGE off any weakness to anticipate that breakout and simply use a stop that sits right below some key near-term support levels at $2.55 to $2.54 a share, or below that recent low of $2.35 a share. One can also buy MRGE off strength once it clears those breakout levels with volume and then simply use a stop that sits a comfortable percentage from your entry point.

Top 10 Tech Companies To Buy Right Now: Loral Space and Communications Inc.(LORL)

Loral Space & Communications Inc. operates as a satellite communications company. The company?s Satellite Manufacturing segment designs and manufactures satellites, space systems, and components used for fixed satellite services, direct-to-home (DTH) broadcasting, mobile satellite services, broadband data distribution, wireless telephony, digital radio, digital mobile broadcasting, military communications, weather monitoring, and air traffic management applications in commercial and government sectors. Loral Space & Communications Inc.?s Satellite Services segment provides broadcast, enterprise, and consulting services. This segment owns and leases a satellite fleet that provides high-bandwidth services to broadcasters, cable networks, and DTH service providers. It also offers satellite transmission services for the broadcast of news, sports, and live events coverage enabling broadcasters to conduct on-the-scene transmissions. In addition, this segment operates very smal l aperture terminal (VSAT) networks in North America, and manages various VSAT terminals at customer sites, as well as provides the installation and maintenance of the end user terminal, the VSAT hub, and satellite capacity services. Further, it offers Internet protocol-based terrestrial extension services; Ka-band two-way broadband Internet services; satellite capacity and end-to-end services for data and voice transmission to telecommunications carriers; fixed satellite services to the United States and Canadian governments; and satellite consulting services. The company also owns and operates an X-band satellite, which provides X-band communications services to government users. As of December 31, 2011, it had 12 in-orbit satellites and 2 satellites under construction. The company operates in the United States, Canada, Europe, the Middle East, Africa, Asia, Australia, Latin America, and Caribbean. Loral Space & Communications Inc. was founded in 1996 and is headquartered in New York, New York.

Top 10 Tech Companies To Buy Right Now: Orbotech Ltd.(ORBK)

Orbotech Ltd. engages in designing, developing, manufacturing, marketing, and servicing yield-enhancing and production solutions for specialized applications in the supply chain of the electronics industry. The company?s products include automated optical inspection (AOI), automated optical repair, laser direct imaging, digital legend printing, laser drilling, laser plotters, computer-aided manufacturing, and engineering solutions for printed circuit boards (PCBs) and other electronics component manufacturing; and AOI, test, repair, and process monitoring systems for flat panel display (FPD) manufacturing. It also develops and markets character recognition solutions and services primarily to banks, financial institutions, and other payment processing institutions for use in check and healthcare payment processing. In addition, the company is involved in the research and development of products for the deposition of anti-reflective coating on crystalline silicon photovolta ic wafers for solar energy panels. It primarily serves manufacturer of PCB, FPD, liquid crystal displays, and other electronic components worldwide. The company was formerly known as Optrotech Ltd. and changed its name to Orbotech Ltd. as a result of its merger with Orbot Systems Ltd. in October 1992. Orbotech Ltd. was founded in 1981 and is headquartered in Yavne, Israel.

Advisors' Opinion:

• [By Seth Jayson]

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

• [By John Emerson]

  Orbotech (ORBK) and Rudolph Technologies (RTEC) Sizable Net-Nets in the AOI Sector

  As noted previously, I rode the elevator up and then back down on Camtek (CAMT), a tiny Israeli automated optical inspection (AOI) company. By late 2008 the company had fallen to below $1 per share. Both of Camtek�� larger rivals, RTEC and ORBK, had dropped to absurdly low levels by November 2008. I used the opportunity to switch out of CAMT and some of my other losing propositions in favor of these superior companies. In the process, I created a large amount of tax loss carry-forwards which would allow me to minimize my future taxation when I decided to sell these cyclical entities.