Ten top tech gifts for the holidays

LOS ANGELES — You've gotten out your checkbook, or more likely, your credit card and are ready to start buying tech gifts for loved ones. We decided to offer an assist with our take on ten of the gifts people are talking about the most. First, the bad news: the top three are going to be a very tough score. The good news: the other seven should be easy to find.

The 2013 Hot List:

1. Apple's iPad Air and iPad mini with Retina. The bigger screen iPad Air — lighter, thinner and cooler than its predecessor — ships in 5-7 business days and starts at $499. This year's version of the iPad mini — now with a brighter and sharper Retina display and a heftier $399 price tag — sold out quickly when first released in November. Apple now says the Mini will be delivered within 5-10 business days when you order from the company's website.

Tip: You can order online at apple.com and pick up in an Apple retail store. On Black Friday, Apple is offering free shipping.

2. Xbox One and Sony PlayStation 4. Microsoft's and Sony's rebooting of their gaming systems-meet-entertainment center have sold out with initial sales of 1 million each, but online reports suggest some stores have units in stock.

Tip: If a video game console is on your must-have gift list, check nearby stores for details on when their next shipments arrive. That might help you snag one instead of paying higher prices on sites like eBay.

Tech gadgets make many a holiday wish list. The new Fitbit Force adds a display to the popular fitness tracker from Fitbit.  FitbitFullscreen The Xbox One on display at a Best Buy store in Evanston, Ill.  Nam Y. Huh APFullscreen The new Sony Playstation 4 on display at a BestBuy store in Chicago.  Nam Y. Huh APFullscreen Google's new Nexus 5 phone is the first device to run on the latest version of Google's Android operating system.  Uncredited APFullscreen This photo provided by Sonos shows an iPhone and Sonos Black Play 1. Sonos speakers run over Wi-Fi and need to be plugged into a power outlet. The speakers are designed to disperse sound in a wide radius and fill a room with sound.  KrugCapture APFullscreen Canon's SX280 HS is Wi-Fi enabled for easy sharing.  Jefferson Graham, USA TODAYFullscreen The Roku 3 is the latest in the popular line of media streaming devices.  RokuFullscreen This unobtrusive $35 TV dongle from Google is a simple way to stream media.  GoogleFullscreen Thinking about experimenting with automation in your home? The LED Hue light bulb by Philips lets you control your lights with your phone.  PhilipsFullscreenLike this topic? You may also like these photo galleries:ReplayAutoplayShow ThumbnailsShow CaptionsLast SlideNext Slide

3. Laptops. Ask the average student and you may get a request for a MacBook Air, which starts at $999, but if you're looking for something more affordable, many Windows 8 laptops are way more reasonably priced.

4. Chromecast. The most economical tech gift of the year? Look no further than the Google Chromecast, which beams YouTube, Netflix, HBO Goand Hulu from your smartphone or tablet to the TV. Cost: just $35.

5. Roku 3. Roku is a market leader in bringing Internet streaming to the TV. The Roku 3 box, $99, offers 750 "channels," in! cluding Ne! tflix, Hulu Plus, Amazon Prime, Vimeo and others. And it has the coolest remote we've ever seen — truly wireless, with a built-in headphone jack so you won't disturb others in the house.

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6. FitBit Force. The latest edition of the wristband monitor lets you track your steps, miles and sleep habits. It is easy to set up, and communicates via Bluetooth to your smartphone or tablet. Best of all, the battery charge lasts a week.

7. Sonos Play One. Remember when we used to string speaker wire all over the house to bring music to additional rooms? No longer, thanks to companies like Sonos, which makes portable audio systems that connect easily and wirelessly, and churn out Internet music from channels like Pandora, Spotify and your iTunes library. The new Play One is the smallest, most affordable Sonos speaker, at $199.

8. Nexus 5 phone: Here's one ofthe lowest priced, most full-featured smartphones to date. Google's Nexus 5 phone sells for just $349. With the Nexus 5, you're not locked in to a 2-year contract, as the phone isn't subsidized when you buy it from Google's online Google Play store.

9. Canon Powershot SX280: Yes folks, we still need cameras for great photos, even in the smartphone era. Pictures on the iPhone and Galaxy S4 are great, but you can't zoom in on the action, the flash is poor and there are limits for how long you can shoot a video. With the $199 SX280, you get a whopping 20X zoom, which will bring you way closer to the action, and you can put in a big fat memory card and not have to worry about running out of space. And the camera has Wi-Fi, just like a smartphone, so you can share directly from the camera to social networks and e-mail.

10. Philips Hue Connected Bulb. Want to impress your friends? Pick up the new $199 Hue system and adjust the lights in your home not with a dimmer but via a smartphone or tablet. Want to turn off the lights without r! eaching f! or the switch? The Hue can help you with that, and turn on automatically in the morning as well. Forgot to turn on the lights before you left home and want to keep snoopy burglars away? No problem — reach for the app from anywhere, and flick them on.

Readers: what's on your tech wish list? Let's chat about it on Twitter, where I'm @jeffersongraham.

Can Boeing’s Profit Margins Stay Aloft?

Shares of Boeing (BA) have taken off today after the airplane maker reported better-than-expected earnings on strong profits in its commercial-aircraft division. Can they stay aloft?

Associated Press

The Wall Street Journal has the details on Boeing’s earnings:

Boeing reported a profit of $1.16 billion, or $1.51 a share, up from $1.03 billion, or $1.35 a share, a year earlier. Core operating earnings—which adjusts to exclude pension components related to market fluctuations and other items—rose to $1.80 from $1.55. Revenue increased 11% to $22.1 billion.

Analysts polled by Thomson Reuters recently expected per-share earnings of $1.55 and revenue of $21.69 billion…

For the year, the company raised its per-share earnings estimate to $6.50 to $6.65, from its previously increased estimate for a per-share profit of $6.20 to $6.40. Boeing also affirmed its revenue view.

Boeing credited strong sales of commercial jets to emerging markets, which are building up their fleets to tap into travel by their rising middle class, and in Europe and the U.S, where airlines are upgrading their old airplanes. Margins in its commercial jet division rose to 11.9%, well ahead of Boeing’s own guidance.

Sterne Agee’s Peter Arment and Josh Sullivan applaud the commercial division’s results and thinks Boeing’s shares can head higher:

As expected, 3Q13 EPS beat but even more impressive was BCA margins exceeded expectations despite ramping deliveries of low margin 787s. The power of BA’s cash generation also began to show through in 3Q13 with $2.3 billion of free cash flows. Simple takeaway is stay long BA and we remain buyers at current levels given our long-term targets as the operating performance continues to provide upside to expectations…

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There are several catalysts still in front of BA, such as the 777X launch, the 787-10 orders coupled with extension of the 787 accounting block, and a new buyback authorization. BA continued its  repurchase program in 3Q13 with 7.6 million shares totaling $0.8 billion (current buyback plan totals $1.5 billion-$2 billion in 2013 vs. $1.8 billion now deployed). This commitment taps into the existing $3.5 billion authorization, which is likely reset towards the end of the year as BA completes its milestones for 2013. The 777X launch will occur in November.

RBC Capital Markets’ Robert Stallard acknowledges the strong numbers, but has some concerns:

The very strong BCA margin in the quarter, way ahead of Boeing guidance, is the key positive surprise in these results - and likely to prompt questions as to whether this is a ‘one off’, or whether such levels can be sustained going forward. With the focus on cash, investors are likely to be happy that Boeing is still doing a good job on cash generation, but with the mountain getting bigger we think investor would welcome a step up in the deployment of cash going forward. The boost in the 787 rate has been widely discussed in the past, though given that it doesn’t kick in till 2016, the benefits of this remains some way off.

Stallard rates Boeing, which has gained 69% this year, a neutral.

Boeing has risen 4.2% to $127.65 today, while jet maker Embraer (ERJ) has advanced 2.4% to $33.77 and BAE System (BAESY) has dropped 0.4%. Lockheed Martin (LMT) has ticked up 0.5% to $130.67 and Northrop Grumman (NOC) has jumped 3.7% to $105.25.

Commentary: The sad tale of Tom Perkins

SAN FRANCISCO – It's difficult writing a column while holding your nose, but I'll give it the old college try.

Repugnant as the task may be, it's necessary to fill in the general public on the travails of Tom Perkins, co-founder of venerable venture-capital firm Kleiner Perkins Caufield & Byers. Perkins had the unmitigated gall – OK, inexplicable ignorance – to compare the persecution of Jews in Nazi Germany with the Occupy Movement and recent anti-gentrification protests against the tech industry here.

In a letter to the Wall Street Journal this weekend, Perkins used the term kristallnacht to describe what's happening to the nation's 1%. "This is a very dangerous drift in our American thinking," Perkins wrote. "Kristallnacht was unthinkable in 1930; is its descendent 'progressive' radicalism unthinkable now?"

Kristallnacht ("night of broken glass") refers to a notorious incident in 1938, when Nazis killed at least 91 Jewish people and arrested 30,000.

The immediate blowback to Perkins was harsh – VC Marc Andreessen tweeted, "I wish to express my extreme displeasure with Tom Perkins. His positions just go to prove that he is the leading [a%()&#e] in the state." Perkins apologized to the Anti-Defamation League and on Bloomberg TV.

"It was a terrible word to have chosen. I, like many, have tried to understand the 20th Century and the incomprehensible evil of the Holocaust," Perkins said in a TV interview on Monday. "It can't be explained. Even to try to explain it is questionable. It's wrong. It's evil."

The public meltdown of Perkins is unfortunate and sad. He arguably helped build Silicon Valley and has been a generous, friendly source over the years.

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But his misguided letter highlights what many perceive as a self-entitled, boorish attitude among the affluent in tech and in other industries. That viewpoint has stoked a swell of res! entment here toward tech companies that enjoy the benefits of the city (read: tax breaks and sweetheart land deals) while turning a blind eye toward an alarming rise in monthly rental costs and evictions. Amid grand, percolating wealth, San Francisco struggles with services for the homeless, child care and public education.

A vocal few, like Salesforce.com Marc Benioff, are attempting to bridge the sides.

The bubble in which Perkins resides isn't new, but it is expanding. The disparity of wealth isn't just alarming in Silicon Valley: The 85 richest people have as much wealth as half the world's population, according to a report out of the World Economic Forum in Davos, Switzerland, last week.

What's happening in San Francisco is a microcosm of a bigger issue. Perhaps in the ghastly aftermath of the Perkins affair, we should thank him for shining klieg lights on a problem that is often overlooked but begs for attention.

Should You Consolidate Your Student Loan Debt?

Alamy If you're making separate student loan payments on each of your five or 10 student loans, you may want to consider consolidating your loans. Student loan consolidation can help get rid of the headache caused by keeping all those payments straight. But even though student loan consolidation streamlines your student loan repayment, it might not be the best option for you. Before applying for a consolidation loan with the Department of Education, you should know the advantages and disadvantages of student loan consolidation. Advantages of Consolidation Beside the single monthly payment, which is very convenient, a consolidation loan may provide additional student loan repayment plans. Most government-backed student loans offer at least a couple alternative repayment plans, but consolidated loans offer a variety of options, including income-based repayment plans. With a standard repayment plan, a consolidation loan may lower your total student loan payment. This is often because a consolidation loan's standard repayment plan can set you up to repay your loans in 15 to 30 years -- instead of the 10-year standard repayment plan for individual loans. Also, the overall interest rate of your student loans may be lower when you choose consolidation. When figuring the fixed interest rate for a consolidation loan, your lender will use the weighted average of your current loans' interest rates, rounded up to the neared 1/8 of a percent. This fixed interest rate may lower your overall student loan interest rate. Many older nonconsolidated student loans operate on a variable interest rate, and the rate can change every year on July 1. A consolidation loan's fixed interest rate means you make a predictable payment, even if student loan rates change. And if you lock in a low interest rate before the rates jump up in a rising-interest environment, you'll have even more of an advantage. Disadvantages of Consolidation One of the biggest issues with student loan consolidation is it can actually cause you to pay more in the long run. This is especially true if you extend your repayment terms, which can easily tack on tens of thousands of dollars' worth of interest payments. Also, if you happen to consolidate during times of falling interest rates, you may actually get locked into a higher interest compared to one you could secure down the road. Once you lock in that consolidation loan rate, there's not much you can do to change it -- even if interest rates are falling all around you. A final consideration to make when deciding whether or not to consolidate: Do your individual loans have extra perks? For instance, some lenders will reduce your interest rate if you pay on time, and other loans -- particularly PLUS loans -- offer flexible repayment options you can't get with a consolidation loan. Which is Right for You? Last year, Congress passed the Bipartisan Student Loan Certainty Act of 2013. The act requires that all new student loans will have a fixed interest rate for the life of the loan. The rates are still tied to the financial market, and they'll be determined in June each year. Loans taken out during the following award year (from July 1 to June 30) will have that year's fixed interest rate. Therefore, interest rates can still vary, but you'll know before signing the promissory note on a student loan what its interest rate will be forever. This means for new student loans, the advantage of a consolidation loan stabilizing your interest rate is a moot point. The bottom line: Sometimes consolidation loans are a good idea, but sometimes they aren't. If you're really struggling to make your student loan payments right now, a consolidation loan could save you in the short term but cost you more in the long term. But what if you can afford your payments, are enjoying relatively low interest rates and just want the convenience of a consolidated loan? Well, you might be better off just setting up automatic payments for each of your 15 student loan accounts. It's a hassle, but it will likely save you money in the long run. .

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One solution is to take advantage of some of the loan forgiveness opportunities that are already out there. The military, the federal government, and state governments offer dozens of programs that will wipe away at least part of your debt, in return for a few years of service. Most are tied to specific, in-demand professions in areas such as health care, law enforcement, and education. but others -- like the military, the Peace Corps, and AmeriCorps -- are open to people from a variety of majors and disciplines.

5 Stocks With Strong Earnings Growth — OME PHX LRCX ITG PHM

Popular Posts: 4 Pharmaceutical Stocks to Buy Now3 Communications Equipment Stocks to Buy Now9 Biotechnology Stocks to Buy Now Recent Posts: 10 Worst “Strong Sell” Stocks This Week — IRM CLI GFA and more 5 Stocks With Strong Earnings Growth — OME PHX LRCX ITG PHM 9 Restaurant and Resort Stocks to Buy Now View All Posts

This week, these five stocks have the best ratings in Earnings Growth, one of the eight Fundamental Categories on Portfolio Grader.

Omega Protein Corporation () produces protein-rich fish meal, fish oil, and solubles. OME gets A’s in Earnings Momentum, Analyst Earnings Revisions, Earnings Surprises, Cash Flow and Operating Margin Growth as well. .

Panhandle Oil and Gas Inc. Class A () explores for and develops oil and gas properties, and produces and sells oil and natural gas. PHX also gets A’s in Earnings Momentum, Operating Margin Growth and Sales Growth. .

Lam Research Corporation () manufactures, markets, and services semiconductor processing equipment used in the making of integrated circuits. LRCX also gets A’s in Earnings Momentum, Analyst Earnings Revisions and Operating Margin Growth. .

Investment Technology Group, Inc. () is an agency brokerage and financial technology firm that partners with asset managers globally to provide innovative solutions spanning the investment continuum. ITG also gets A’s in Earnings Momentum, Analyst Earnings Revisions and Earnings Surprises. .

PulteGroup, Inc. () sells and constructs homes, and purchases, develops, and sells residential land and develops active adult communities. PHM also gets A’s in Earnings Momentum, Analyst Earnings Revisions, Earnings Surprises, Cash Flow and Operating Margin Growth. The stock’s current trailing PE Ratio is 3.00. .

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Louis Navellier’s proprietary Portfolio Grader stock ranking system assesses roughly 5,000 companies every week based on a number of fundamental and quantitative measures. Stocks are given a letter grade based on their results — with A being “strong buy,” and F being “strong sell.” Explore the tool here.

Ackman Dumps Entire 17.7% Share of J.C. Penney

William Ackman too a huge stake in J.C. Penney Co. Inc. (NYSE: JCP) in the belief that its shares would soar on the basis of a turnaround. He helped bring in Ron Johnson from Apple Inc. (NASDAQ: AAPL) to become chief executive. Ackman also had a hand in pushing Johnson out. His ongoing battle with the J.C. Penney board led to his eventual resignation from the body. SEC filings showed that Ackman had put his Pershing Square Capital in a position to sell its stock.

Today, the transaction was completed and Ackman lost hundreds of millions of dollars as he walked away.

In an SEC filing, J.C. Penney reported:

SELLING STOCKHOLDERS
The following table sets forth the number and percentages of the beneficial ownership of shares of our common stock by the Selling Stockholders, and reflects the sale of the shares registered for resale and offered pursuant to this prospectus supplement. We refer to all such shares, collectively, as the "offered shares."

The number of shares beneficially owned by the Selling Stockholders is determined by SEC rules. The information does not necessarily indicate beneficial ownership for any other purpose. The percentage of shares beneficially owned before and after this offering is based on 220,455,870 outstanding shares of our common stock as of August 20, 2013. Since the Selling Stockholders may sell all, some or none of the offered shares, we cannot estimate the number of offered shares that will be sold or that will be owned upon completion of the offering. In the table below, we have assumed that the Selling Stockholders have sold all of the shares offered for resale by this prospectus supplement.

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Beneficial Owner Shares beneficially owned prior to the offering
Number of shares offered hereby
Shares beneficially owned after the offering
Number Percentage Number Percentage
William A. Ackman(1) 39,075,771 17.7% 39,075,771 — —
Pershing Square Capital Management, L.P.(1) 39,075,771 17.7% 39,075,771 — —
PS Management GP, LLC(1) 39,075,771 17.7% 39,075,771 — —
Pershing Square GP, LLC(2) 13,644,593 6.2% 13,644,593 — —
Pershing Square Holdings, Ltd. 8,718,176 4.0% 8,718,176 — —
Pershing Square, L.P. 13,369,366 6.1% 13,369,366 — —
Pershing Square II, L.P. 275,227 0.1% 275,227 — —
Pershing Square International, Ltd. 16,713,002 7.6% 16,713,002 — —
Total(3) 39,075,771 17.7% 39,075,771 — —

(1) Each of William A. Ackman, Pershing Square Capital Management, L.P. and PS Management GP, LLC beneficially own the shares held directly by
Pershing Square Holdings, Ltd., Pershing Square, L.P., Pershing Square II, L.P. and Pershing Square International, Ltd. pursuant to SEC rules.
(2) Pershing Square GP, LLC beneficially owns the shares held directly by Pershing Square, L.P. and Pershing Square II, L.P. pursuant to SEC rules.
(3) Represents the total number of shares offered hereby.

Walgreens prices vary as much as 55% at some stores, study finds

The same item can cost as much as 55% more depending on which Walgreens location you choose, a new study found.

NEW YORK (CNNMoney) Shop at the wrong Walgreens and you could end up paying significantly more than if you'd bought the exact same items at a store on the other side of town, a recent study found.

While some price variation occurs at Rite Aid (RAD, Fortune 500) and CVS (CVS, Fortune 500), Walgreens (WAG, Fortune 500) was the worst offender, with a single item costing as much as 55% more depending on a store's location, according to a study of 485 drugstore locations in New York, Los Angeles, Orange County, Calif., and Dallas-Forth Worth by the National Consumers League and labor union coalition Change to Win.

The study was based on the listed prices for a basket of 25 items, ranging from Tropicana Pure Premium orange juice to Huggies "Little Movers" diapers. Depending on the city, the chain was up to five times more likely to have store locations in the same market that charged different prices.

"It's a wake-up call I think for consumers," said Sally Greenberg, executive director of the National Consumers League "The expectation is that you're going to have the same prices within a chain."

In Dallas-Fort Worth, for example, Walgreens shoppers could pay $3 more for Folgers coffee depending on the location they chose or $3.50 extra for cold medication.

In New York City, a box of 10 Claritin allergy tablets cost anywhere from $10.49 to $15.99 depending on the Walgreens store. The same bottle of eye drops, meanwhile, cost $9.99 at a location in Queens and $15.49 a subway ride away on 57th street in Manhattan.

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The differences can add up. The basket of 25 items cost $38 -- or nearly 20% -- more at a Walgreens' flagship in New York City than it typically cost at other nearby locations.

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Walgreens spokesman Jim Graham said in a statement that the store's prices reflect the company's cost of doing business in different neighborhoods.

"Costs can vary from one location to another, even when they are a few blocks apart in dense urban areas, based on the store's cost of real estate, its hours of operation including whether it is open 24 hours, labor costs and the number of customers it serves each day, among other factors," he said.

Price ranges of at least 20% wer! e found among products at CVS stores, but such large price disparities were much less frequent than at Walgreens. At Rite Aid, "virtually no products" had that large of a price difference, according to the study.

CVS said that prices may vary at different stores based on local competition and other operational factors. Rite Aid did not respond to requests for comment.

To conduct the study, researchers checked prices at Walgreens, CVS and Rite Aid stores in New York City, Los Angeles and Orange County and Walgreens and CVS stores in Dallas-Fort Worth. There are no Rite Aid stores in Dallas-Fort Worth.

Want to find the store with the best prices? Follow these tips from the National Consumers League.

Ask about price matching: While they won't be able to match online prices, managers are often able to match prices from other store locations of the same chain.

Shop around: Keep track of prices of your drugstore staples at different chains and locations.

Feds to Arrest 2 Former JPMorgan Employees, Report Says

Jacquelyn Martin/APJPMorgan Chase CEO Jamie Dimon NEW YORK -- Federal authorities plan to arrest two former JPMorgan Chase & Co. employees on suspicion that they tried to conceal the size of the investment bank's $6 billion trading loss last year, according to a published report Friday. The New York Times, citing people briefed on the matter, reported that Javier Martin-Artajo and Julien Grout are expected to be arrested in London in coming days. Martin-Artajo oversaw JPMorgan's trading strategy in London, while Grout recorded the value of the soured investments, the newspaper reported. A federal grand jury voted to indict both on criminal fraud charges, according to the report. Federal investigators have concluded that Martin-Artajo directed Grout to falsify records and conceal more than $400 million in losses from their superiors at the bank, the newspaper reported. The charges against Martin-Artajo and Grout hinge on the cooperation of Bruno Iksil, a trader at JPMorgan (JPM) in London who placed the large bets that led to the loss, according to the report. Iksil, dubbed the "London Whale," isn't a target of the Justice Department or the Securities and Exchange Commission, according to a separate report in The Wall Street Journal. The U.S. attorney's office in New York declined to comment late Friday. A call left with the FBI office in New York wasn't immediately returned. The trading loss disclosed in 2012 was an embarrassment for the biggest U.S. bank and raised concerns about risk-taking at Wall Street banks four years after the financial crisis.

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Overstock Is Unbelievable - In a Good Way

Every week, Sam Antar or Gary Weiss will find something amiss with Overstock (OSTK). These two bloggers, combined, must be spending at least 16 hours a week researching and writing about a $125 million stock. According to their disclosures, they have no position.

Since I can't afford to spend that much time investigating individual trees, I'll stick to sharing my thoughts on what I perceive to be an extraordinary forest.

A tale of two retailers – part one, the importance of inventory turnover.

The guy selling used cars needs an inventory of, say, 20 cars to sell 1 today. That's an inventory of $200,000 for $10,000 of revenue. After buying a replacement car to top-up his inventory, paying the rent etc., he takes home $1,000. That's a 10% margin on an inventory turnover of 5%.

Our guy is married to a baker. She needs an inventory of about $20,000 (flour, yeast, etc.), to sell $10,000 worth of bread today. After buying some new flour and paying for costs, she too takes home $1,000. Her margin too is 10% but the inventory turnover is 50%.

The couple decides it's time to expand. They need just $1,000 per day to live on. They can invest the other $1,000. The wife tells him she can open an extra bakery within a month without going to the bank for a loan. He just can't believe it. His dad spent a decade repaying the loan they needed to setup the family business.

Overstock's numbers are unbelievable
[ Enlarge Image ]

Overstock's inventory turnover is better than the other retailers combined. Unbelievable! I'll be writing about it in part two of my "tale of two retailers."

Days payable is an indicator of how quickly a company pays its creditors. Overstock is beaten (just) by Costco (COST). Both companies, on average, pay their creditors within a month. In this business it's not unusual to keep your creditors waiting for two months or more. O! verstock and Costco are the exceptions.

Assuming Internet retail is a commodity, it stands to reason that Overstock should be able to raise gross margins to about 20% without losing a lot of market share to Amazon, Blue Nile or for that matter, Bluefly. Overstock has untapped pricing power.

So now you know why Francis Chou is long Overstock and why Costco is Charles Munger's favorite company.

A tale of two retailers - part two, Overstock.

Overstock is a couple (pun intended) of retailers.

Fifteen percent of revenue and roughly 100% of the inventory is carried by the direct business, a "classic" retail operation. They buy stuff (mainly closeout lots) and sell it (hopefully) at a profit.

The other 85% of revenue is from the fulfillment partner division. This is not a classic retailer, this is a broker. Overstock sells merchandise of other retailers, cataloguers or manufacturers ("fulfillment partners") through their website. This is a retailer without inventory! Here too, Overstock deals with closeout lots. The original manufacturer (say, Calvin Klein) doesn't want last year's watch to compete with this year's model. They won't be touting it on their own website or in their own shop — that's where Overstock comes in. Calvin Klein will list last years unsold watches on Overstock.com.

This division is growing at a fair clip. Again, this is a broker. Customers pay for the purchase upfront and Overstock pays the supplier later. This is inherently a negative equity business. The business model is not unlike Dell a decade ago.

Are they going bankrupt?

Summary: No.

$100 million of cash on $20 million of debt.

Should they choose to extend their "days payable" from the current 30 to a more normal 60 days, at least 1/12 of annual revenue converts into cash on the balance sheet: 1/12 * 1 billion => $85 million.

The "direct" business is in decline. Assuming it continues down that road, that inventory, at 0% gross m! argin, co! nverts into $25 million of cash.

Unlike a typical retailer, they don't need that cash to build seasonal inventory. It's truly excess cash.

Why is revenue flat? Why aren't they profitable?

As discussed, they don't need the cash. For now, they are content to invest for growth and kill the competition with low margins. Direct competitors are Bidz.com (toast) and Bluefly (no cash and negative FCF).

Sixty percent of revenue is from "home and garden" and 99% of revenue is from U.S.
Growth is tied to the housing market.

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So what is the company worth to me today ?

I would pay $ 160 million ($ 7 per share) for the entire company in an instant. I would defer payment of the creditors for an extra month (that would bring it in line with the competition) and use the $ 85m of cash thus generated plus the $ 100m that's already on the balance sheet to pay myself a $ 180 million dividend next month. I would then distribute ownership of the company to the employees and go fishing.

Prem Watsa says I'm a terrible analyst and a worse LBO artist. He says it's worth more, much more.

Read more:

recent 10k
Sam Antar and Gary Weiss
Gusto Duel submitted OSTK for the value ideas contest
Anh Hoang discussed OSTK
Citron Research covered the space; NOT bearish on Overstock !
Geoff Gannon on Overstock in 2006

Disclosure

This is not a recommendation to buy or sell anything. At the time of writing, I had no position in any of the stocks mentioned. Any and all questions welcome as usual.

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Should Priceline Reserve A Spot In Your Portfolio?

With shares of Priceline (NASDAQ:PCLN) trading around $911, is PCLN 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

Priceline is an online travel company that offers its customers hotel room reservations at a growing number of hotels worldwide through the Booking.com, priceline.com, and Agoda brands. In the United States, the company also offers its customers reservations for car rentals, airline tickets, vacation packages, destination services, and cruises through the priceline.com brand. It offers car rental reservations worldwide through rentalcars.com.

Companies like Priceline are well-positioned to accommodate consumers with travel arrangements at competitive prices into the future. As economies grow and continue to recover, consumers worldwide are looking at travel as an excellent way to spend discretionary income.

T = Technicals on the Stock Chart are Strong

Priceline stock has been flying higher over the last several years. The stock is now trading near all-time high prices and does not show any signs of slowing down just yet. 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, Priceline 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 Priceline options may help determine if investors are bullish, neutral, or bearish.

	Implied Volatility (IV)	30-Day IV Percentile	90-Day IV Percentile
Priceline Options	33.56%	96%	95%

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
August Options	Flat	Average
September 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 Increasing 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 Priceline’s stock. What do the last four quarterly earnings and revenue growth (Y-O-Y) figures for Priceline look like and more importantly, how did the markets like these numbers?

	2013 Q1	2012 Q4	2012 Q3	2012 Q2
Earnings Growth (Y-O-Y)	34.58%	27.50%	27.15%	37.05%
Revenue Growth (Y-O-Y)	25.52%	20.17%	17.45%	20.32%
Earnings Reaction	3.78%	2.56%	8.29%	-17.28%

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

P = Excellent Relative Performance Versus Peers and Sector

How has Priceline stock done relative to its peers, Expedia (NASDAQ:EXPE), TripAdvisor (NASDAQ:TRIP), Travelzoo (NASDAQ:TZOO), and sector?

	Priceline	Expedia	TripAdvisor	Travelzoo	Sector
Year-to-Date Return	46.97%	3.34%	45.44%	56.82%	27.46%

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

Conclusion

Priceline provides online travel as well as other accommodation arrangements in a range of countries to consumers and companies worldwide. The stock has been very hot over the last several years and is now trading near all-time high prices. Over the last four quarters, earnings and revenue figures have been on the rise which has really pleased investors in the company. Relative to its peers and sector, Priceline has been a year-to-date performance leader. Look for Priceline to continue to OUTPERFORM.

AEP Expects to Retire Over 3,000 MW of Coal by 2016

American Electric Power (NYSE: AEP  ) announced today that it is adding another coal-fired power plant to its growing list of soon-to-be-retired facilities.

This latest addition, a 585 MW Ohio facility, brings the utility's grand total to 3,123 MW of coal-fueled generation retired by 2016 for its Ohio subsidiary.

In its press release, AEP noted that both environmental regulation costs and "current market conditions" have made it very unlikely that the utility will continue to use this unit in the coming years, although there is a possibility of a potential natural gas refuel.

This latest decision won't affect AEP's 2013 operating earnings, but the company will take a $150 million to $170 million non-operating pre-tax hit in Q2. AEP also noted that it will continue to stick with its previous earnings growth rate guidance of 4% to 6%. 

Hot Financial Companies For 2014

Accounting for this latest retirement plan, AEP Ohio's total generation capacity will clock in at 10,725 MW, which will be "mostly" comprised of "clean coal" and natural gas plants, as well as a small hydro unit.

Diageo Gains Control of Indian Distiller

Diageo (NYSE: DEO  ) can add another company to its portfolio of international assets. The company said it has gained control of United Spirits, an India-based whiskey distiller. This was effected by the purchase of a nearly 15% stake in the firm from a company controlled by Indian tycoon Vijay Mallya for 31.3 billion rupees ($520 million). That gives Diageo a direct stake of just more than 25% in United Assets. In combination with existing voting and governance arrangements with Mallya, it provides Diageo control of the company.

In the press release announcing the news, the liquor multinational quoted CEO Ivan Menezes waxing enthusiastic about its position in the country. "India will become one of Diageo's largest markets and with its increasing number of middle class consumers looking for premium and prestige local spirits brands as income levels rise it will also become a major contributor to our growth ambitions," he said.

Diageo said United Spirits' results will be consolidated into its finances starting at the beginning of next year.

Why I'm Not Investing in Tesla – Yet

Tesla's Model S. Photo Credit: Tesla Gallery.

Investors would be hard pressed to find a hotter topic under discussion out there today than the bull versus bear case on Tesla (NASDAQ: TSLA  ) . If you were savvy enough to invest in Tesla six months ago, you're sitting pretty with a 223% increase in that time frame. Some investments never have that type of success before the companies close the doors and file for Chapter 11, so pat yourself on the back Tesla and Tesla-savvy investors. I cover the auto industry for The Motley Fool and I call it like I see it, always – that's what has me a little perplexed with Tesla as an investment. Here's why.

Numbers never lie?
If all you do is look at the trailing-12-month numbers, you'd obviously run away afraid of Tesla as an investment – you wouldn't touch it with a 10-foot pole. Scratching the surface more, you'll see its price to book ratio is around 72 compared to an industry average of 1.7. Its price to sales in the trailing 12 months comes in at a staggering 12.6 compared to the industry average of 0.6. However, in Tesla's case, those numbers aren't exactly fair for such a young company that's disrupting an industry due for a revolutionary product. 

Tesla's market cap totals roughly $12 billion right now. If you take a look at Ford (NYSE: F  ) and General Motors (NYSE: GM  ) they cap out at about $60 billion and $45 billion, respectively. That means that the market considers Tesla to be valued at roughly one-fifth of Ford and slightly more than one-fourth of GM. That seems pretty lofty if you consider that GM sold over 9 million vehicles globally last year, compared to Tesla's goal of breaking 20,000 this year.

Bullish investors are quick to point out that Tesla has crushed most competitors in the large luxury segment. Tesla's Model S outsold Audi's A8, BMW's 7-Series, and the Mercedes-Benz S Class. It should be mentioned that the Model S also largely trailed Cadillac's XTS through March. 

I'll also point out that bullish investors boast the fact that Tesla repaid its government loan back quickly, and has handled a voluntary recall rather impressively. Tesla also boasts a business-savvy CEO, Elon Musk, who seems to turn every business he touches into gold.

According to CNNMoney, Ben Schuman, an analyst at Pacific Crest Securities, said in regard to all the positive Tesla news: "[The] current stock price reflects flawless execution and has likely gotten ahead of itself."

Bearish investors are quick to point out that its valuation is astronomically high and that Tesla is but a small fish in a big pond. "There seems to be some euphoria," Takuo Katayama, an analyst at Daiwa Capital Markets, told CNNMoney. "I don't want to say it's unjustified, but it's getting there." 

My take on things
I find myself somewhere in between the bull and bear cases. I see a company that has a real solution, with an innovative product in an industry begging for a revolutionary vehicle. I see a CEO that understands business, and has a vision of where our future solutions will come from. I also see a company with shares trading at a future P/E ratio over 120. That's otherworldly compared to those of Ford and GM, both of which trade around 10 times.

I'm excited about the product and planned growth for Tesla as it hints toward a cheaper mass produced vehicle. It's squashing skepticism with early adopters because of its battery swapping capabilities and supercharging stations. Many intelligent people are bullish for good reasons, and 10-20 years down the line Tesla could be the investment that makes many in our generation rich.

All that said, it doesn't mean you can't get Tesla shares at a better price than what it trades at today. Tesla is priced for sheer perfection as we move forward, and even the best companies stumble. When that happens, and Tesla's valuation comes back down to earth, I'll heavily consider investing in the company. Until then, I think Tesla has come too far, too fast, as an investment – although the company itself is spectacular.

If you missed the boat on Tesla, fear not, there are two other excellent opportunities for huge gains in the rebounding automotive industry. A recent Motley Fool report, "2 Automakers to Buy for a Surging Chinese Market", names two global giants poised to reap big gains that could drive big rewards for investors. You can read this report right now for free – just click here for instant access.

Great News for Detroit's Big Three

It's been a busy couple weeks for Detroit automakers Ford (NYSE: F  ) and General Motors (NYSE: GM  ) . Both beat estimates across the board on their first-quarter-earnings reports and gave investors hope that the losses in Europe could be subsiding. Both companies also reported sales figures for the month of April, and buried in the numbers is some great news. Let's take a look at some details between sales and market share and see which automaker is gaining ground.

Sales and market share
Let's start by using total sales year to date and compare it to last year's. Out of the 20 top vehicles only eight had declines in sales from the previous year, while the rest had significant gains. Out of those eight models with sales declines, only two were domestic. Out of the 12 models with sales gains, eight were domestic. Here's a glimpse at the biggest movers by percentage.

All graphs by author; data from The Wall Street Journal.

Ford's newer models have been a hit with critics and consumers alike and it's starting to show with a nice surge in sales. The percentage change is nice to view, but it's important to keep it in perspective with overall sales numbers. Toyota (NYSE: TM  ) Camry declined compared to last year but still out sells any model in its segment – and is third overall. Here's a look at the 10 top vehicles in total year-to-date sales.

The two top spots go to the highly profitable F-Series and Silverado trucks – welcome news for investors. Ford also has the most models in the top 10 with three, followed by Toyota and Honda (NYSE: HMC  ) , each with two. If you're a Ford investor, things are continuing to look bright this year with nice improvements over last year. With those numbers we should expect Ford to take some market share – let's take a look.

Ford had the best jump in market share but still trails GM. Overall, Detroit's Big Three each made improvements on market share versus last year, while Toyota and Honda had slight declines. In fact, the Big Three are practically the only automakers to have any market share gains, as Nissan, Mazda, and Kia all posted losses while Hyundai remained flat.

Bottom line
These graphs point toward Ford doing extremely well, which is a great because Ford derives most of its profits from North America. It's far behind rivals in creating profits in emerging markets, but it's gaining ground. Ford's popular Fusion and Escape are making debuts in Europe and China shortly and it hopes to export similar strategy and success from the U.S. abroad. We're starting to see – for the first time in a while – market share in the U.S. swing back toward Detroit's big automakers. That's a huge deal; it's great news for investors who jumped on board in time to watch Ford and GM rebound.

Is there still time to buy Ford?
If you're concerned that Ford's turnaround has run its course, relax – there's good reason to think that the Blue Oval still has big growth opportunities ahead. We've outlined those opportunities in detail, in the Fool's premium Ford research service. If you're looking for some freshly updated guidance to Ford's prospects in coming years, you've come to the right place – click here to get started now.

Today's Dow-Leading Stock

The Dow Jones Industrial Average (DJINDICES: ^DJI  ) is relatively unchanged after a weaker than expected report on the housing market. As of 1:10 p.m. EDT the Dow is down 17 points, or 0.12%, to 14,532. The S&P 500 (SNPINDEX: ^GSPC  ) is up 0.18% to 1,558.

Today there was just one U.S. economic release: the National Association of Realtors existing-home sales, which dropped in March to a seasonally adjusted annual rate of 4.92 million. That's down 0.6% from February's 4.95 million and below analyst expectations of a rise to 5.03 million. While down for the month, the level of sales is still 10% above last March's level of 4.46 million.

US Existing-Home Sales data by YCharts.

The NAR said sales were lower because of the limited inventory of homes for sale. Total housing inventory increased just 1.6% to 1.93 million existing homes for sale, which translates to a 4.7-month supply. That's roughly 17% less than it was a year ago, when inventory was at a 6.2-month supply. NAR chief economist Lawrence Yun said: "The inventory improvement last month results from a seasonal gain, but conditions continue to broadly favor sellers. We need a housing supply of over 6 months to have a generally balanced market between home buyers and sellers, but it's unlikely we'll get there without greater increases in housing construction." The rising housing market was one of the driving forces of the U.S. economy in 2012; hopefully it will continue to improve.

Today's Dow leader
Today's Dow leader is Microsoft (NASDAQ: MSFT  ) , up 3.9%. There are two pieces of Microsoft news today potentially moving the stock. This morning it was reported that activist investor ValueAct Capital, run by Jeffrey Ubben, has taken a $2 billion stake in Microsoft. ValueAct takes a different approach from other activists in that it tries to build relationships with companies' management teams and works with them to unlock shareholder value. Typically, ValueAct invests in small-cap or mid-cap companies, so it is a bit of a surprise to see the firm investing in a mega-cap company like Microsoft.

The second headline is that Microsoft will reportedly bring back the "Start" button in its next update to Windows 8, according to The Verge. Windows 8 has been heavily criticized for its massive diversion from previous Windows designs -- an effort to provide a single-user experience across desktops, tablets, and smartphones. Consumers have been slow to warm to Windows 8, and market research firm IDC has blamed Windows 8, among other factors, for the past quarter's 14% drop in PC sales. Bringing back one of Windows' most recognizable features would be a comforting compromise for many Windows users. Despite slowing PC sales, Microsoft stock has been doing well, having reported better-than-expected earnings last Thursday.

More on Microsoft
It's been a frustrating path for Microsoft investors, who have watched the company fail to capitalize on the incredible growth in mobile over the past decade. However, the company is looking to make a splash in this booming market. In this brand-new premium report on Microsoft, our analyst explains that while the opportunity is huge, the challenges are many. He's also providing regular updates as key events occur, so be sure to claim a copy of this report now by clicking here.

Great Funds with Relatively Low Risk

When we assign Morningstar Analyst Ratings, we are thinking about a fund's risk-adjusted prospects; in short, "Are you getting paid for the risk you're taking?" questions Russel Kinnel in Morningstar FundInvestor.

Our Risk Relative to Category rating tells you if a fund's volatility is Low, Below Average, Average, Above Average, or High for its category.

We have a number behind those words, so I decided to pull some of the lowest of the low and highlight some Morningstar Medalists that have been at the very low end of volatility for their category.

Keep in mind that it's a relative to category measure—even a very low-risk emerging-markets fund is much more volatile than your typical intermediate-term bond fund.

American Century Equity Income (TWEAX:US) has produced nice returns, but it's the risk-adjusted returns that really look attractive. The fund tones down equity risk by holding a sleeve of convertible bonds in the 15% to 25% range. Phil Davidson is a cautious investor who tries to tamp down volatility.

Thus, this fund shines in down years by losing much less than the competition. In years like 2013, however, you expect it to lag on the upside.

Akre Focus (AKREX:US) typically has around 15% or so in cash and sometimes more. That helps to tone down volatility, but so does Akre's emphasis on quality, which gives the fund a mix of value and growth characteristics.

Manager Chuck Akre wants strong business models that can produce outstanding returns on capital, and he wants shareholder-oriented managers to run them.

This leads him to the steadier side of growth, investing with names like MasterCard and Moody's. It's a good thing, too, because Akre bets big on his favorites, with nearly 10% in MasterCard.

Aston Montag & Caldwell Growth (MCGFX:US) is another lower-risk growth fund. Manager Ron Canakaris and team look for stable growers trading at a modest price.

This leads them to large-cap, well-known names like Abbott Laboratories, Coca-Cola, and Google. Canakaris is 69 years old, but we still feel good about the fund's prospects.

I visited the firm in Atlanta and was pleased to see that it is in good shape, with a number of managers and analysts behind Canakaris who can take up the slack if he should retire. I'm also pleased that the firm is now employee-owned and Canakaris will sell back his shares when he retires.

Like American Century Equity Income, First Eagle US Value (FEVAX:US) has been a champ in down markets and a laggard in up markets.

However, its long-term returns are quite good, so it would seem that it's done a fine job rewarding shareholders. The fund plays defense in quite a few ways. It holds a big cash stake, but that's only one part of the story.

True to founder Jean-Marie Eveillard's philosophy, Matt McLennan and Abhay Deshpande are focused on capital preservation.

They look for companies with healthy balance sheets and profit margins, but whose shares are trading at a big discount to their estimates of intrinsic value. They like some gold or potash producers for their defensive characteristics.

The fund lost 1,391 fewer basis points than the S&P 500 Index (SPX) did in 2008, and 358 fewer in 2011, but it is lagging by 1,006 this year.

Generally, the best time to buy a fund like this is after a couple of years near the back of the pack, as that could mean risk is rising. No doubt, this fund's defenses will be valued yet again.

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