Fannie and Freddie Defy Obama, Look Invincible

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NEW YORK (TheStreet) -- Just a couple of years ago it looked like no one in Washington wanted to let Fannie Mae (FNMA) and Freddie Mac (FMCC) live, but the government sponsored entities (GSEs) have lately found defenders in unlikely places and are even showing signs of being independent of the Obama Administration.

The surprising resilience of the mortgage giants comes ahead of a scheduled vote in the Senate Banking Committee Tuesday on legislation sponsored by Sens. Tim Johnson (D., SD) and Mike Crapo (R., ID) aimed at winding down Fannie and Freddie, a stated goal of President Obama.

While the bill is expected to pass the Senate Banking Committee with at least 12 votes, it will likely require approval from 15 of the 22 committee members to have a chance at passing the full Senate, argues FBR Capital Markets analyst Ed Mills in a report published Monday.

Even then, passage in the House is seen as a near impossibility given that House Financial Services Committee Chairman Jeb Hensarling (R., Texas) has sponsored his own housing reform legislation which, as Mills describes it "fully privatizes the housing industry." While the Johnson Crapo bill winds down Fannie and Freddie, it still leaves a large role for the government. An unusual combination of conservative and liberal groups have opposed the Johnson Crapo bill for various reasons. And a slowing home sales market appears unlikely to help matters. Moody's Analytics on Monday estimated the proposal will cause mortgage rates to rise by 0.41-0.58%. But opposition to the bill took a dramatic turn late on Friday, as The Wall Street Journal published a total of five separate documents from Fannie, Freddie and their regulator, the Federal Housing Finance Administration. Over 90 pages, single spaced, with small type, the documents (which were not intended for publication) listed a host of concerns. If the legislation were to pass, "the risk Freddie Mac would not be able to carry out its Core Policy Function is extremely high," read one of the documents, an April 16 letter from Freddie Mac CEO Donald Layton to FHFA Director Melvin Watt. A draft memo of "identified issues" from the FHFA to the Senate Banking Committee states the legislation could create "regulatory confusion and potential for arbitrage." The memo also argues Johnson Crapo would allow large banks to "further their dominance" in the housing finance market. "Large banks could (and do) play several roles (originator, aggregator, guarantor and servicer), thus dominating the housing finance market -- but they would be primarily regulated by the Federal banking agencies, whose regulatory focus is safety and soundness of individual institutions and not on the functioning of the housing finance system," the memo states.

FBR Capital Markets' Mills sees "long odds for the bill to become law this year." And next year could be even more difficult, since Johnson is retiring and the likely next Chairman of the Senate Banking Committee, whether Sherrod Brown (D., Ohio) or Richard Shelby (R., Ala.) are both seen as opponents of the legislation. Several giant hedge funds as well as mutual fund company Fairholme Funds have invested in Fannie and Freddie common and preferred shares. The Fannie and Freddie preferred shares, which were essentially worthless after they were put into government conservatorship, have now recovered nearly half their original value. The common shares in the two entities, which were also essentially worthless now have a market value of about $34 billion.

The securities sold off sharply when the Johnson Crapo legislation was unveiled, since it leaves little if any value for private shareholders. Still, private investors are suing the government and much of the value residing in the shares may be attributable to the potential success of the litigation. In any case, publication of the issues raised by the GSEs and their regulator appeared to have little impact in trading of the common shares on Monday. Fannie finished down 1.04% at $3.80, while Freddie shares gave up 0.51% to close at $3.88.

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Stock quotes in this article: FNMA, FMCC 

Spotify Won't Stream Any Miracles Out of Sprint

PORTLAND, Ore. (TheStreet) -- Oh really, Spotify? You're going to jump on with Sprint  (S) and totally take over that carrier's entire streaming market?

That's great. Let us know if it works out for you any better than a partnership with AT&T  (T) worked for Beats Music.

Streaming music companies are like goldfish swimming around a little plastic rock formation and bubbling diver statue: They have absolutely no memory and are always surprised by what's in the fishbowl. In the streaming community's case, the companies involved are continuously stunned by the fact that there's more than one such service in the app store and that mobile device owners would choose someone else's over theirs.

Or that someone would chose a service that requires less effort and is available for free. My colleague Rocco Pendola took Beats Music to task for its hubris earlier this week. He noted that the presence of cranky old rock curators like Trent Reznor failed to earn Beats any fans outside the esoteric music snob set, but didn't mention that Beats' touted deal with AT&T to offer unlimited downloads hasn't helped shore up the streaming service in the least. As Apple  (AAPL) discovered with iTunes Radio -- and its failing attempt to use streaming to sell music downloads -- the streaming audience cares as much about downloads as Run DMC fans care about Reverend Run's reality TV family.

Stock quotes in this article: S, T, AAPL, P 

If/when Spotify announces its deal with Sprint next week, it'll be touting a subscription plan with the nation's No. 3 wireless company that Consumer Reports places at the bottom of the pile for value, voice and 4G reliability. The value and quality of your audio tend to be big selling points for streaming customers, but Spotify is likely more concerned with capturing a small fraction of Sprint's 50 million users (Spotify's estimated paid listener base is 9 million worldwide) than with sparkling audio.

It just shouldn't expect miracles. Keep in mind that Beats' deal with the No. 2 carrier and its 110 million customers has led to a conversion rate -- from free trials to paid usage -- that's only put Beats' subscriber count "in the low six figures," according to Billboard. As Kantar Media points out, AT&T had $1.8 billion to blow on marketing last year. Sprint spent a fraction of that at $765 million.

We keep hearing a lot about "potential" when it comes to streaming music. iTunes Radio has the potential to turn around digital music sales that dipped for the first time last year, but only 1% to 2% of all listeners ever click the "buy" button. Beats Music has the potential to increase its audience tenfold overnight thanks to AT&T's subscription base and could take over the world as Pandora  (P) stays in the states, but more people watch early round National Hockey League playoff games in the United States than pay for Beats' service.

Spotify could get a big boost from the Sprint partnership, or it could realize that it just slapped its premium audio into the slowest car in the wireless lot. The reality is that Pandora still has a massive 31% stake in the streaming market, while the next closest competitor -- ClearChannel's online terrestrial radio offering iHeartRadio -- taking 9%. Spotify comes in at No. 4, which means more people would rather listen to standard radio online than listen to what Spotify is offering. Spotify could be fine with that. It's a great niche and one that Nielsen Soundscan monitors with great interest, noting that subscription streaming rose from little more than 25 billion streams in 2012 to 34 billion in 2013. With music executives putting 1,500 streams at the equivalent of a full digital album, streaming equivalent albums have increased by 10.1 million units so far this year as download sales dropped by roughly 9 million units. But it's facing competition that's not only more familiar, but requires a lot less interaction to craft playlists with. Oh, and they don't require subscriptions or conversion -- just a solid connection. Perhaps that's why Verizon Wireless has steered clear of these partnerships to this point. By opening its ecosystem to all devices and all streaming apps, Verizon levels the playing field and allows users to decide for themselves which service offers the best value. Even with Beats tying itself to AT&T and Spotify lashing its hopes to Sprint, listeners seem to have drawn their conclusions -- and carriers haven't altered them one bit. -- Written by Jason Notte in Portland, Ore. >To contact the writer of this article, click here: Jason Notte. >To follow the writer on Twitter, go to http://twitter.com/notteham. >To submit a news tip, send an email to: tips@thestreet.com. RELATED STORIES: >>Beats Music Thinks It's Netflix -- But It's Wrong >>Vinyl Is Streaming Music's Flipside >>Mainstream and Country Join Hands, Sing 'God Bless America'

Stock quotes in this article: S, T, AAPL, P  Jason Notte is a reporter for TheStreet. His writing has appeared in The New York Times, The Huffington Post, Esquire.com, Time Out New York, the Boston Herald, the Boston Phoenix, the Metro newspaper and the Colorado Springs Independent. He previously served as the political and global affairs editor for Metro U.S., layout editor for Boston Now, assistant news editor for the Herald News of West Paterson, N.J., editor of Go Out! Magazine in Hoboken, N.J., and copy editor and lifestyle editor at the Jersey Journal in Jersey City, N.J.

Ex-BofA finance chief reaches $7.5M settlement

Former Bank of America finance chief Joe Price will pay $7.5 million to settle charges he failed to alert investors about forecasts of $9 billion in losses at Merrill Lynch before bank shareholders approved the purchase of the brokerage in 2009.

Announced Friday by the New York attorney general's office, the settlement resolves one of the last remaining major actions filed against individual corporate executives in the wake of the national financial crisis. Former Bank of America chief executive Ken Lewis agreed to a similar $10 million settlement in March.

As part of the settlement, Price also agreed to an order barring him from serving as an officer or director of any public company for 18 months. He neither admitted nor denied any wrongdoing.

Price had previously denied doing anything improper and said he had raised questions with bank lawyers about whether the losses should be disclosed, his attorney, William Jeffress, said Friday. The former executive agreed to the settlement "to end the toll of the litigation on himself, his family and his career," said Jeffress, who indicated Bank of America is funding the cost.

The nation's second-largest bank agreed to buy the New York-headquartered brokerage and investment manager in late 2008 during the height of the financial crisis. The acquisition was completed in January 2009 after shareholders approved the deal.

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A New York lawsuit filed in 2010 alleged that Charlotte-based Bank of America and its top executives improperly withheld information about the true extent of Merrill Lynch's ballooning losses.

"Today's action sends a message that conduct harming investors, shareholders and the public will not go unpunished," Attorney General Eric Schneiderman said. "I'm pleased to close the final chapter in our litigation over Bank of America's merger with Merrill."

Schneiderman continued! the case originally filed by predecessor Andrew Cuomo, who's now New York's governor.

Merrill Lynch, which absorbed Bank of America's securities unit, has become one of the bank's most profitable business units in recent years.

What's Next for Outerwall?

The Motley Fool is on the road in Seattle! Recently we visited Coinstar -- now officially renamed Outerwall  (NASDAQ: OUTR  ) -- to speak with CFO-turned-CEO Scott Di Valerio about the 22-year-old company's well-known coin-cashing machines, as well as its more recent acquisition of Redbox, and future initiatives to expand into other aspects of the automated retail market.

In this video segment, Scott reveals some digital offerings the company is developing to complement its physical services, including PayPal options on Coinstar machines, gift card exchanges, and event ticketing through Redbox. The full version of the interview can be watched here.

A full transcript follows the video.

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Austin Smith: What's next in the pipeline for Coinstar? You guys obviously are rolling out a lot of new devices, looking at new automated kiosks. What else is there for users, that they should be looking forward to over the next few years?

Scott Di Valerio: We're going to continue to look and bring great automated retail solutions. Certainly, with our coin line of business we are rolling out the PayPal, so that's a great opportunity for people to lever their PayPal accounts and do some things they want to do there.

We also have a business in the coin business called Gift Card Exchange, where you can exchange your gift cards that you've been getting for years, at stores that you might not go to, or stores that you have a little bit of money left on those cards, and get those turned in for cash.

We think that's going to be a very interesting business for us. We're starting to roll that business out. There's around 50 kiosks in the market today, and we'll expand that out over the next year to capture that, and also be looking to do that with both your physical gift card, but also your digital gift cards, to be able to be the place where you're turning in your gift cards and then we're remonetizing those out.

As I look at Redbox, for example, we're obviously beginning to roll out Redbox Instant in a broader fashion, along with Verizon (NYSE: VZ  ) . We're testing tickets out, and we're putting in some very good CRM and loyalty programs that will roll out in the third and fourth quarters that will continue to extend out that Redbox brand and value; simplicity, convenience, and entertainment.

We are the No. 1 place for people to watch new release content. We want to be the No. 1 place that people come to for overall entertainment.

If I look at the business broader, we think there are some great opportunities to bring new products into the marketplace, but also to extend them out, both from a physical perspective as well as from an online perspective, and keep marrying those two things up as we go forward.

Facebook, Inc.'s Monster Quarter in 3 Must-See Charts

Going into Facebook's (NASDAQ: FB  ) first-quarter earnings report today, the stakes were undoubtedly high. Not only has the company been growing its top and bottom line faster than anyone expected, but the market has also priced into the stock some wildly bullish expectations. Facebook stock trades at about 100 times earnings. But despite the Street's euphoric outlook for the company, Zuckerberg and Co. delivered yet again in Q1. Here's the story in three charts.

Increasingly mobile
In the third quarter of 2012, 0% of Facebook's revenue came from mobile. Back then, the Street was dubious: Could Facebook meaningfully monetize the limited real estate on a small smartphone display?

Today, investors have their answer: When it comes to monetizing mobile, Facebook is the master. In the company's first quarter of 2014, Facebook confirmed that it is still succeeding on mobile -- better than ever, actually. Just a year and a half after it introduced mobile ads, mobile ad revenue now accounts for 59% of Facebook's total ad revenue.

Data for chart retrieved from SEC filings for quarters shown.

Accelerating growth
Facebook isn't just growing -- it's growing faster every quarter. In Q1, Facebook continued this trend. With the help of a growing base of monthly and daily active users, improving user engagement, higher quality ad products, new ad products, and larger spending from marketers, Facebook was able to post a record year-over-year ad revenue growth rate as a public company in Q1.

Data for chart retrieved from SEC filings for quarters shown.

Benefiting from monstrous operating leverage
Facebook showed off the power of its enviable operating leverage in its first-quarter results. Operating income soared 188% on a 72% boost in year-over-year revenue. Facebook can thank its robust operating margin of 43% (up nicely from 26% in the year-ago quarter) for that. On a non-GAAP basis, Facebook's operating margins reached 55%, up from 39% last year. Facebook's Q1 figures even trump Google's Q1 non-GAAP operating margin of 32%.

The growing leverage has resulted in some wild growth in operating income.

Data for chart retrieved from SEC filings for quarters shown. Non-GAAP rates were used due to large and volatile charges as a percentage of total revenue in Facebook's earlier quarters as a public company.

Facebook's overall results crushed expectations. The consensus analyst estimate was for Facebook to report non-GAAP earnings per share of $0.24 and year-over-year revenue growth of 60%. Instead, Facebook posted non-GAAP EPS of $0.34 and revenue growth of 72%.

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While Facebook's first-quarter results are impressive, they don't necessarily make the stock a buy. Trading at such a considerable premium to earnings, it would be very difficult to argue that Facebook trades at a discount to fair value these days. Does this mean current Facebook shareholders should take their profits if the stock trends higher on this news? Not at all, the social network's excellent performance is just more evidence that Zuckerberg and his team of programmers have what it takes to continue to disrupt advertising and woo big marketing budgets.

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Move Over Botox: Four Small Cap Stocks Focused on the Aesthetics Market (CUTR, CYNO, PHMD & ELOS)

Large cap serial acquirer Valeant Pharmaceuticals International Inc (NYSE: VRX) is teaming up with activist investor Bill Ackman to pursue large cap Botox maker Allergan, Inc (NYSE: AGN), but stocks like Cutera, Inc (NASDAQ: CUTR), Cynosure, Inc (NASDAQ: CYNO), PhotoMedex Inc (NASDAQ: PHMD) and Syneron Medical Ltd (NASDAQ: ELOS) actually offer investors more exposure to the growing anti aging and aesthetics market (Note: See my recent article: These Small Caps Seek to Treat Your Crow's Feet and Double Chin (RVNC & KYTH)). To begin with, Valeant Pharmaceuticals International has a wide focus on neurology, dermatology and infectious diseases but acquiring the maker of Botox won't be its first foray into the aesthetic market because earlier this year, the company completed its acquisition of Solta Medical Inc (NASDAQ: SLTM) - a designer, developer, manufacturer and marketer of energy-based medical device systems for aesthetic applications. And while Allergan, Inc may be most well known for Botox, its actually a pretty big company focused on a diverse range of areas, including ophthalmic pharmaceuticals, dermatology, neuroscience, urology and cosmetics – meaning the following stocks offer investors better exposure to the aesthetics market:

Cutera, Inc. A developer, manufacturer, marketer and seller of laser and light based medical devices, small cap Cutera, Inc has an installed base of approximately 4,000 laser solutions with aesthetic solutions focused on:

Hair Removal: Full body treatments. Non-Ablative: Popular for excessive skin redness, large pores and pigment issues. Fractional + Ablative Resurfacing: Invasive with moderate downtime to address issues such as deep wrinkles and to promote overall skin quality. Vascular: treats broad range of vascular conditions including the face and lower extremities such as a variety of common leg veins.

Back in mid March, Cutera, Inc announced it was unveiling two new systems at the 72nd American Academy of Dermatology conference in Denver, Colorado, that was scheduled for March 21-25 with these new products being targeted to core physicians for the hair removal, tattoo removal and benign pigmented lesion segments of the growing aesthetic market. A month earlier, Cutera, Inc reported fourth quarter revenues of $22.24 million verses $22.53 million and a net loss of $278,000 verses net income of $1.08 million along with full year revenues of $74.594 million verses $77.277 million and a net loss of $4.747 million verses $6,548 million. The CEO commented:

"Excluding the decline in our Podiatry business, our US revenue grew in the fourth quarter of 2013 by 23%. We believe that our market is healthy and we are focused on improving our market share. As such, we are actively expanding our North American sales team to better represent our expanding portfolio of products."

On Monday, Cutera, Inc fell 0.56% to $10.73 (CUTR has a 52 week trading range of $8.25 to $12.19 a share) for a market cap of $150.65 million plus the stock is up 6.45% since the start of the year, down 3.8% over the past year and up 63.8% over the past five years.

Cynosure, Inc. A developer and manufacturer of a broad array of light-based aesthetic and medical treatment systems, small cap Cynosure, Inc's products are used to provide a diverse range of treatment applications such as hair removal, skin revitalization and scar reduction, as well as the treatment of vascular lesions. In mid February, Cynosure, Inc reported that fourth quarter revenues increased 75% to $74.5 million while revenues for the full year of 2013 were up 47% to $226.0 million from $153.5 million partly due to the acquisition of Palomar Medical Technologies in June 2013. The CEO commented:

"Fourth-quarter revenues reflected successful cross-selling of the Cynosure and Palomar aesthetic laser systems by our combined North American sales force, as well as the complementary nature of our international distribution network. It has been just over seven months since we acquired Palomar, and our integration is now substantially complete thanks to the skill, energy and dedication of our integration teams. Since June we have combined key functional areas including Sales, Marketing, Compliance, Quality Assurance, Clinical, Field & Depot Service, Finance, Legal and, most recently, Information Technology. We are currently transitioning the Palomar product line to our contract manufacturing model. We expect this process, along with the expansion of our Westford headquarters to accommodate the Burlington workforce, to be completed by the end of the second quarter of this year."

The CEO went on to comment that:

"Our integration is largely complete, our products are performing well and we have multiple R&D projects, including flagship products, energy delivery systems and technology enhancements, slated for introduction over the next two years. Adding to this momentum, we have a very strong balance sheet and are well on our way toward achieving the targeted $8 million to $10 million in synergies from the Palomar acquisition in 2014."

On Monday, Cynosure, Inc rose 0.69% to $24.94 (CYNO has a 52 week trading range of $21.09 to $31.48 a share) for a market cap of $555.24 million plus the stock is down 5.6% since the start of the year, down 4.1% over the past year and up 290.3% over the past five years.

PhotoMedex Inc. A global skin health company providing integrated disease management and aesthetic solutions to dermatologists, professional aestheticians and consumers, small cap PhotoMedex provides proprietary products and services that address skin diseases and conditions, including psoriasis, vitiligo, acne, actinic keratosis (a precursor to certain types of skin cancer) and photo damage. Thanks to its December 2011 merger with Radiancy Inc, PhotoMedex added a range of home-use devices under the no!no!™ brand, for various indications including hair removal, acne treatment and skin rejuvenation plus the company also offers a professional product line for acne clearance, skin tightening, psoriasis care and hair removal sold to physician clinics and spas. In mid March, PhotoMedex announced that a recent Saturday no!no!™ Hair Pro3 broke another beauty sales record when consumers purchased more than 10,500 units for total retail sales exceeding £1.7 million ($2.8 million) in a 24-hour special event on the major television home shopping channel in the UK. PhotoMedex also reported that fourth quarter revenues rose 16% to $63.5 million and net income came in at $3.2 million verses $5.9 million while full year revenues increased 2% to $224.7 million and net income came in at $18.4 million verses $22.5 million. The CEO commented:

"International expansion is a significant component of our growth strategy for our no!no! brand. In the fourth quarter we initiated media testing in Brazil with encouraging results. In addition, we continue to build our brand awareness in Germany and Great Britain and are confident we have the pieces in place for a very successful year ahead with each major business segment making significant contributions to our growth in 2014."

Otherwise and back in mid February, PhotoMedex announced it would acquire LCA-Vision Inc (NASDAQ: LCAV), which provides laser vision correction services under the Lasik Plus brand, for about $106 million or $5.37 per share for a premium of 26.3% to the stock's previous closing price of $4.25. On Monday, PhotoMedex rose 1.41% to $15.15 (PHMD has a 52 week trading range of $10.51 to $17.05 a share) for a market cap of $286.38 million plus the stock is up 18.6% since the start of the year, down 1.7% over the past year and up 44.3% over the past five years.

Syneron Medical Ltd. A leading global aesthetic device company based in Israel with a comprehensive product portfolio and a global distribution footprint, small cap Syneron Medical's technology enables physicians to provide advanced solutions for a broad range of medical-aesthetic applications, including body contouring,  hair removal, wrinkle reduction, improving the skin's appearance through the treatment of superficial benign vascular and pigmented lesions, and the treatment of acne, leg veins and cellulite. The company sells its products under two distinct brands: Syneron and Candela. Earlier this month, Syneron Medical announced that it had received FDA 510(k) clearance to market the UltraShape™ System for non-invasive reduction of abdominal circumference via fat cell destruction and the company also announced its proprietary Sublative™ technology had received the CE Mark indication for the effective treatment of striae (stretch marks) and acne scars. Back in mid February, Syneron Medical reported fourth quarter revenue of $64.282 million verses $72,760 million (that quarter had included a large multi-site PAD order) along with net income of $4.0 million verses net income of $4.1 million. The Chairman commented:

"In 2013 we made several strategic changes to our leadership team and operational plan focused on positioning the Company to achieve revenue growth and expanded profitability. We made good progress with these changes during the fourth quarter, including the continued expansion of our North American sales force, the advancement of our new product initiatives, including our UltraShape and VelaShape III products, and the streamlining of our operating infrastructure. We also entered into a global joint venture with Unilever for home beauty devices that allows us to benefit from the growth potential of the joint venture while eliminating the financial demands of building a consumer business."

He concluded by saying that they believe that over the longer term, Syneron Medical is positioned to achieve "well above market, double-digit revenue growth and improved operating leverage." On Monday, Syneron Medical fell 4.41% to $10.85 (ELOS has a 52 week trading range of $8.04 to $13.32 a share) for a market cap of $397.44 million plus the stock is down 11.5% since the start of the year, up 22.3% over the past year and up 69.85 over the past five years.

Finally, here is a look at the long term performance of all four small caps verses the performance of large cap Allergan:

As you can see from the above chart, small cap Cynosure followed by large cap Allergan have had the best performances while the performance of Cutera, PhotoMedex and Syneron Medical Ltd has been more mixed.

Netflix tops $1B in revenue and beats estimates

Bolstered by a burgeoning roster of paying customers and profits that exceeded expectations, Netflix says it plans to increase prices for new subscribers.

The company on Monday announced that its subscriber base grew more than expected — adding 4 million — to 48 million members worldwide. Its net profit of $53 million, or 86 cents per share, beat analysts' estimates of 83 cents a share. It also beat the company's own forecast of $48 million and earnings per share of 78 cents.

Some time in the next three months, the company plans to raise prices $1 or $2 for new members globally — a move that could also temper subscriber churn. That's because existing member monthly fees would remain at current pricing (such as $7.99 or $11.99 in the U.S., for two-stream or four-stream tier subscriptions) for a "generous time period," the company said. The lower fee could counteract the tendency for some users to cancel after binge-watching a season of House of Cards and sign up later for no penalty.

Netflix, which currently has 35.7 million U.S. subscribers, continues its drive toward a domestic base of 60 million to 90 million.

The company is acting from a position of strength, says Mark Mahaney, managing director of Internet for investment banking firm RBC Capital Markets. "Across the Internet, we're seeing companies like Amazon, Pandora and Netflix ... raising prices one way or another," he says. "I don't think too many consumers are going to be put off by spending a dollar or two a month for the quality, the quantity of content that Netflix has."

Shares of Netflix rose in after-hours trading, up more than 6% to $369.50, having closed at $348.49 before the Los Gatos, Calif.-based company released its earnings at the market's close.

Netflix stock has been volatile. It climbed to nearly $455 after the streaming service in February announced a deal with Comcast to ensure high-quality streaming of Netflix content for Comcast Net customers. Since then, the stock has taken a hit in ! the wake of last month's reports that Apple and Comcast were teaming up for an as-yet unannounced streaming TV service.

Among Netflix's good first-quarter signs was an increased rate of growth in new U.S. streaming subscribers, an additional 2.3 million, compared with 2 million in the same quarter last year. Signs were bright for such initiatives as the DVD mail service and international business. Netflix's international base grew to by 1.75 million during the quarter to 12.7 million and accounted for about 25% of total revenue.

In his letter to shareholders Monday, Netflix CEO Reed Hastings expressed his opposition to Comcast's proposal to buy Time Warner Cable, notwithstanding his own recent deal with Comcast. "Comcast is already dominant enough to be able to capture unprecedented fees from transit providers and services such as Netflix," he said.

Netflix will release Season 2 of its hit 'Orange is the New Black' on June 6.(Photo: Netflix)

Contributing: Roger Yu

2 Things Investors Should Watch Very Closely This Week

Allow me to make a bold claim. In my opinion, this is the most important week in April for stocks and the economy, as two unusually significant economic reports are scheduled for release on Tuesday and Wednesday, either of which could exert a big impact on the S&P 500 (SNPINDEX: ^GSPC  ) .

The first, which I discussed at length yesterday, is the National Association of Realtors' report on March existing-home sales. The gravity of this can't be overstated, as the housing market is a principal component of the American economy.

Although the pace of existing-home sales has increased consistently since the middle of 2010, everything seemed to change last year. After peaking at a seasonally adjusted annual rate of 5.38 million in July of last year, they've since taken a nosedive. Most recently, the figure dropped to 4.6 million in February.

With the spring selling season just around the corner, the question is whether the downturn is a temporary blip, caused perhaps by extreme weather from earlier in the year, or whether it's a genuine correction. If it's the former, there's little reason for concern. If it's the latter, there may very well be.

Along these same lines, the second report will shed light on the homebuilding industry. On Wednesday, the government is scheduled to release its estimate of new home sales for March.

The figure for February, while not as dire as the market for previously owned homes, similarly suggested that the momentum in the housing market may have taken a turn for the worse, as new home sales were down by 3.3% compared to January. Again, the thing to watch is whether the downturn is temporary or here to stay, at least for the time being.

In sum, if you're an investor or are otherwise interested in the economy, then I'd strongly encourage you to keep a close eye on both of these events.

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Twitter Shares Rise 73% in First Trades on NYSE

There's no doubt that Twitter is trending. The microblogging service launched its initial public offering Thursday with great fanfare. Mark Lennihan/AP But not many individual investors were able to scoop up shares of the seven-year-old company at the IPO price. That's because the big boys -- institutional investors such as mutual funds and hedge funds -- grabbed those. So the question is -- in 140 characters or less -- should you buy in now that it's trading like any other issue? There's no easy answer, but we'll run through some of the pros and cons. First, Twitter (TWTR) is off to a fast start. The initial offering of 70 million shares was priced at $26 dollars, and the first trade was at $45.10 a share. That's a 73 percent jump. Trading, no doubt, will be very volatile for at least the next few days. Proponents like it because Twitter has become part of the vernacular, especially for people age 18-to-34 -- those most targeted by advertisers. They live in the Twitterverse, sending out messages of up to 140 characters. Some are as mundane as what you had for lunch today. Others are earthshaking such as when Twitter played a key role in the Arab Spring revolution. You can post your messages, and you follow other people who post. Entertainers Katy Perry, Justin Bieber and Lady Gaga all have more than 40 million followers. President Obama has nearly that many. The company has 232 million users worldwide, and its user base is still growing rapidly, up 39 percent from a year ago. The IPO price was raised several times in the weeks leading up the Thursday debut here, but still came in at what analysts consider a reasonable level, at least in comparison Facebook (FB) and other social networking companies. Now for some of the cons. The biggest negative is that Twitter has never made any money; never turned a profit. And it doesn't expect to earn a profit until 2015 at the earliest. Twitter is often compared to Facebook, but remember, Facebook was growing at a faster pace when it was the same size as Twitter is now. So it's public offering comes at an earlier stage of development. Analysts say the company's effort to monetize its huge fan base is still at an early stage. It hasn't proven that advertisers can successfully appeal to its audience, and that users won't be turned off be turned off by too many adds. And Twitter's pace of growth has slowed for seven consecutive quarters. There are still plenty of skeptics who say Twitter could be a flash in the pan. They say there's no guarantee it will even survive. The bottom line is, many advisers say there is no urgency to get into the stock right now. It's likely to be volatile of the coming days and weeks. So you might want to take a little bit of time to judge the company and its stock market value, before taking a leap of faith.

Some tweet gaffes have arisen from companies poking fun at -- or making light of -- deadly serious events. Such was the case with a Kenneth Cole tweet gone awry. The fashion designer took heavy flak last winter for a tweet that riffed off the pro-democracy protests in Egypt's Tahrir Square to hawk his new collection: "Millions are in Uproar in Cairo. Rumor has it they heard our new spring collection is now available online," he tweeted. The attempt at a comical spin was not well received.

1. Kenneth Cole Winks at Egypt's Unrest to Hawk a Sale

"The company attempted to leverage dry humor and make a gentle, joking reference to current events, however Cairo is clearly not the best opportunity," Wisneski says.

10 Oil and Gas Stocks to Buy Now

Popular Posts: Hottest Energy Stocks Now – RIG ESV DO ATW7 Biotechnology Stocks to Buy Now10 Best “Strong Buy” Stocks — UA POWR QIHU and more Recent Posts: 15 Oil and Gas Stocks to Sell Now 6 Internet and Web Service Stocks to Buy Now 10 Oil and Gas Stocks to Buy Now View All Posts

The grades of 10 oil and gas stocks are better this week, according to the Portfolio Grader database. Every one of these stocks has an “A” (“strong buy”) or “B” overall (“buy”) rating.

Chesapeake Midstream Partners () ups its rating to a B (“buy”) this week after earning a C (“hold”) in the week before. Chesapeake Midstream Partners owns, operates, develops, and acquires natural gas, natural gas liquids, and oil gathering systems, as well as other midstream energy assets in the United States. .

This week, Vertex Energy, Inc. () is making solid headway. The company’s rating improves to an A (“strong buy”) from last week’s B (“buy”) rating. Vertex Energy is a middle market consolidator, refiner and re-refiner of distressed petroleum streams, such as used oil, transmix, fuel oils and off-specification commercial chemical products. .

This is a strong week for Diamondback Energy, Inc. (). The company’s rating climbs to A from the previous week’s B. The stock price has risen 6% over the past month, better than the 1.3% decrease the Nasdaq has seen over the same period of time. .

PVR Partners, L.P. () is seeing ratings go up from a C last week to a B this week. PVR Partners owns and operates a network of natural gas pipelines and processing plants that provide gathering, transportation, compression, processing, dehydration and related services to natural gas producers. The stock’s dividend yield is 2.2%. .

Carrizo Oil & Gas, Inc. () shows solid improvement this week. The company’s rating rises from a B to an A. Carrizo Oil & Gas is engaged in the exploration, development, production and transportation of natural gas and oil, mainly in the United States. .

U.S. Energy Corp. () earns a B this week, jumping up from last week’s grade of C. U. S. Energy explores for oil and natural gas. .

Frontline () is seeing ratings go up from a C last week to a B this week. Frontline owns a fleet of very large crude carriers and Suezmax tankers that transport crude oil and oil products between ports. .

Niska Gas Storage Partners () gets a higher grade this week, advancing from a C last week to a B. Niska Gas Storage is an independent owner and operator of natural gas storage assets in North America. The stock price has pushed upwards for the past two days, reaching $15.54. Shares of the stock have been changing hands at an unusually rapid pace, twice the rate of the week prior. .

Top Defensive Companies To Buy Right Now

The rating of Advantage Oil & Gas () moves up this week, rising from a C to a B. Advantage Oil & Gas is actively engaged in the business of oil and gas exploitation, development, acquisition and production. .

Cross Timbers Royalty () earns an A this week, jumping up from last week’s grade of B. Cross Timbers Royalty is an express trust in the United States. The stock finished at $31.09 per share, after two days of consecutive gains. The stock has a dividend yield of 3.1%. .

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.

Jim Cramer Breaks Down Google, IBM, Goldman Sachs and Chipotle's Confusing Earnings

NEW YORK (TheStreet) -- TheStreet's Jim Cramer discusses the "confusing" earnings of Chipotle  (CMG), Google  (GOOG), IBM (IBM) and Goldman Sachs  (GS).

Firstly, he says Chipotle reported "just OK" earnings, but this is a "revenue story," as the company reported comparable-store sales growth of 13%. Cramer was looking for 9% growth, calls 13% "extraordinary" and says investors should buy Chipotle on any weakness.

IBM missed on earnings and revenue but Cramer would still buy it because "it is a second-half story."

Cramer also does not want to back away from Google at all because it sells at 18 times earnings with a 19% growth rate. He reasons portfolio managers will always ultimately gravitate to companies that offer that kind of growth rate for that kind of multiple. He points out it does not happen immediately, though, and people must go through models. Cramer believes both IBM and Google will both be trading higher in two weeks. Finally, Cramer calls Goldman Sachs "impenetrable" but says the key takeaway is that it trades at slightly more than one times book value. This means if the company closed and gave cash back to investors, then the investors would more or less break even. Must Watch: Jim Cramer on Chipotle, IBM, Google, and Goldman Sachs Earnings STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more. ---------- Separately, TheStreet Ratings team rates CHIPOTLE MEXICAN GRILL INC as a "buy" with a ratings score of B+. TheStreet Ratings Team has this to say about their recommendation:

"We rate CHIPOTLE MEXICAN GRILL INC (CMG) a BUY. This is driven by some important positives, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its robust revenue growth, good cash flow from operations, solid stock price performance, impressive record of earnings per share growth and compelling growth in net income. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity."

Highlights from the analysis by TheStreet Ratings Team goes as follows:
The revenue growth came in higher than the industry average of 3.8%. Since the same quarter one year prior, revenues rose by 20.7%. Growth in the company's revenue appears to have helped boost the earnings per share. Powered by its strong earnings growth of 29.74% and other important driving factors, this stock has surged by 55.43% over the past year, outperforming the rise in the S&P 500 Index during the same period. Turning to the future, naturally, any stock can fall in a major bear market. However, in almost any other environment, the stock should continue to move higher despite the fact that it has already enjoyed nice gains in the past year. CHIPOTLE MEXICAN GRILL INC has improved earnings per share by 29.7% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, CHIPOTLE MEXICAN GRILL INC increased its bottom line by earning $10.46 versus $8.75 in the prior year. This year, the market expects an improvement in earnings ($13.00 versus $10.46). The net income growth from the same quarter one year ago has significantly exceeded that of the Hotels, Restaurants & Leisure industry average, but is less than that of the S&P 500. The net income increased by 29.8% when compared to the same quarter one year prior, rising from $61.35 million to $79.62 million. Net operating cash flow has increased to $140.07 million or 11.13% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -31.17%. You can view the full analysis from the report here: CMG Ratings Report STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

Stock quotes in this article: CMG, IBM, GOOG, GOOGL, GS 

Separately, TheStreet Ratings team rates INTL BUSINESS MACHINES CORP as a "buy" with a ratings score of B+. TheStreet Ratings Team has this to say about their recommendation:

"We rate INTL BUSINESS MACHINES CORP (IBM) a BUY. This is driven by a few notable strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its growth in earnings per share, expanding profit margins, good cash flow from operations, increase in net income and notable return on equity. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself."

Highlights from the analysis by TheStreet Ratings Team goes as follows:
INTL BUSINESS MACHINES CORP has improved earnings per share by 11.7% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, INTL BUSINESS MACHINES CORP increased its bottom line by earning $15.02 versus $14.41 in the prior year. This year, the market expects an improvement in earnings ($17.96 versus $15.02). The gross profit margin for INTL BUSINESS MACHINES CORP is rather high; currently it is at 56.58%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 22.32% trails the industry average. Net operating cash flow has slightly increased to $6,528.00 million or 2.86% when compared to the same quarter last year. Despite an increase in cash flow, INTL BUSINESS MACHINES CORP's cash flow growth rate is still lower than the industry average growth rate of 15.13%. The net income growth from the same quarter one year ago has exceeded that of the IT Services industry average, but is less than that of the S&P 500. The net income increased by 6.0% when compared to the same quarter one year prior, going from $5,833.00 million to $6,184.00 million. Despite the weak revenue results, IBM has outperformed against the industry average of 20.1%. Since the same quarter one year prior, revenues slightly dropped by 5.5%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share. You can view the full analysis from the report here: IBM Ratings Report

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

Stock quotes in this article: CMG, IBM, GOOG, GOOGL, GS 

Separately, TheStreet Ratings team rates GOOGLE INC as a "buy" with a ratings score of B+. TheStreet Ratings Team has this to say about their recommendation:

"We rate GOOGLE INC (GOOGL) a BUY. This is driven by a number of strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures, reasonable valuation levels, good cash flow from operations and compelling growth in net income. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself."

Highlights from the analysis by TheStreet Ratings Team goes as follows:
GOOGL's revenue growth has slightly outpaced the industry average of 16.1%. Since the same quarter one year prior, revenues rose by 16.9%. Growth in the company's revenue appears to have helped boost the earnings per share. Although GOOGL's debt-to-equity ratio of 0.06 is very low, it is currently higher than that of the industry average. Along with this, the company maintains a quick ratio of 4.28, which clearly demonstrates the ability to cover short-term cash needs. Net operating cash flow has increased to $5,238.00 million or 12.18% when compared to the same quarter last year. In addition, GOOGLE INC has also modestly surpassed the industry average cash flow growth rate of 11.64%. The net income growth from the same quarter one year ago has exceeded that of the Internet Software & Services industry average, but is less than that of the S&P 500. The net income increased by 17.0% when compared to the same quarter one year prior, going from $2,886.00 million to $3,376.00 million. You can view the full analysis from the report here: GOOGL Ratings Report

Best Shipping Stocks To Own Right Now

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

Stock quotes in this article: CMG, IBM, GOOG, GOOGL, GS 

Separately, TheStreet Ratings team rates GOLDMAN SACHS GROUP INC as a "buy" with a ratings score of B+. TheStreet Ratings Team has this to say about their recommendation:

"We rate GOLDMAN SACHS GROUP INC (GS) a BUY. This is driven by a few notable strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its attractive valuation levels, expanding profit margins, notable return on equity and increase in stock price during the past year. We feel these strengths outweigh the fact that the company has had sub par growth in net income."

Highlights from the analysis by TheStreet Ratings Team goes as follows:
The gross profit margin for GOLDMAN SACHS GROUP INC is rather high; currently it is at 52.26%. Regardless of GS's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, GS's net profit margin of 22.95% compares favorably to the industry average. Regardless of the drop in revenue, the company managed to outperform against the industry average of 7.7%. Since the same quarter one year prior, revenues slightly dropped by 4.4%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share. The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. When compared to other companies in the Capital Markets industry and the overall market, GOLDMAN SACHS GROUP INC's return on equity is below that of both the industry average and the S&P 500. In its most recent trading session, GS has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year. You can view the full analysis from the report here: GS Ratings Report

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

Stock quotes in this article: CMG, IBM, GOOG, GOOGL, GS  Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

2 Reasons to Sell Deckers Outdoor Stock

I'm going to attempt something a little odd today, Fools. Even though Deckers Outdoor (NASDAQ: DECK  ) stock makes up just less than 1% of my real-life holdings, I'm going to be giving you two reasons to consider selling the stock today.

Why am I doing this?

Recently, Nobel Prize winner Daniel Kahneman visited Fool headquarters in Virginia. While visiting, he talked about how a number of different biases can lead us to believe we can predict the future with relative certainty. In reality, he argued, we are just deluding ourselves.

It got me to thinking about how I don't write enough about the risks of owning the stocks I own. So, though I don't plan on selling my Deckers stock right now, I think it's healthy for me to practice and model this behavior.

1. Betting on fashions can be a dangerous game
If you're investing in an electrical utility company, you can rest easy knowing that people will continue using electricity for the foreseeable future. The fashion industry is an entirely different beast. Fashion trends can change at the drop of a hat, and the cause for changes in these trends can be difficult, if impossible, to predict.

Top 5 Financial Stocks To Buy Right Now

One need only look at the plight of a company such as Abercrombie & Fitch (NYSE: ANF  ) to understand how sensitive a fashion company's stock price can be. In a 2006 interview of CEO Mike Jeffries with Salon magazine that resurfaced last month, Jeffries stated: "A lot of people don't belong [in our clothes], and they can't belong. Are we exclusionary? Absolutely." That, combined with disappointing sales numbers for the first quarter, sent shares down by 13% in just two trading days.

Deckers isn't looking at PR problems like that, but the company does relies on its two biggest brands for the bulk of the company's revenue. In 2012, Deckers' line of Ugg boots contributed 58% of all sales for the company, and Teva sandals chipped in another 8%. Though these two brands have been around for some time, there's no way to know if they'll continue to be popular with the next generation of consumers.

For example, last year, sales of Uggs were down 10.5%, and Teva sales dropped 8.5%, through the company's wholesale channel. Obviously, if this represents the beginning of a trend, Deckers' core products could be in a long-term decline.

2. High input costs
One thing that differentiates Uggs and has helped them maintain their popularity is Deckers' refusal to use cheaper substitutions for the boots' sheepskin components.

Source: TexasDex, via Wikimedia Commons. 

The problem is that Deckers has had to pay much higher prices for its sheepskin than in years past. In 2011, sheepskin prices were 27% higher than in 2010. Gross margins contracted by a huge 820 basis points in 2012, primarily because of the continued increase in prices.

Unless Deckers decides to use other substances for Uggs, which is highly unlikely, input costs for sheepskin will always be an important risk factor for investors to remember.

How I'll proceed
As it stands, Deckers is a pretty small investment for me. From what I can tell, sheepskin prices should be stabilizing soon. Famed value investor Whitney Tilson also recently published findings that should encourage Deckers shareholders: 75% of respondents said they view Ugg boots as functional, not fashionable, 60% said they were likely or certain to buy more Uggs when they needed new boots, and 77% said there was a good chance they would recommend Uggs to others.

Given these facts, I'm comfortable holding my shares.

Meanwhile, if you'd like to look into safer investments in the retail field, I suggest you read up on the 3 Companies Ready to Rule Retail -- from The Motley Fool's recent special free report. I own two of the three stocks, and combined, they make up 16% of my real-life holdings. Uncovering these top picks is free today; just click here to read more.

Janney Ups Visa, MasterCard To Buy After Selloff

It's been a good week for Visa (V) and MasterCard (MA)—two days in and they've enjoyed two rounds of upgrades.

Today, the bullishness comes from Janney Montgomery Scott's Thomas McCrohan and Leonard DeProspo, who boosted their ratings on both names to Buy.

For Visa, the upgrade came with a target price increase from $210 to $240 and they write that the recent selloff in the name provides an attractive entry point "to own one of the better business models in payments." They count the company's powerful network, worldwide brand, and its role in influencing payment standards among its core strengths, and note that the increase of mobile payments has also served to increase the number of places where Visa is accepted.

They write that strong margin expansion in the past year and a half means that mid-to-high teens earnings per share growth is possible even if margins contract this quarter and next, as the company's guidance suggests.

More thoughts below:

Changes to FANF fees beginning April 1, 2015. Last week, Visa modified its FANF pricing (Fixed Acquirer Network Fee) to include a 15 bps volume-based charge for sub-merchants of payment aggregators. Previously, payment aggregators only paid one lump sum payment of $40,000 per month, which created a cost advantage for aggregators versus traditional acquirers and ISOs that were required to pay a separate FANF fee per merchant location. The new FANF pricing is 15 bps of monthly volume, which translates into $30 million of incremental high-margin fee income for Visa based on $20 billion of aggregator volume.

Fiscal 2014 EPS guidance achievable. First quarter margins of 65.8% were a record, and were 230 bps above the previous record (FQ1-2012). FY 2014 EPS guidance calls for mid-to-high teen growth but assumes higher operating expense in 2Q and 3Q and ongoing F/X headwinds from current turmoil in emerging markets. Mid-to-high teen EPS growth appears reasonable given the 3-year average growth of 25.5%. Our FY 2014 margin estimate is 63%, resulting in 16% EPS growth.

Litigation risks moderating. The recent appeal court hearing greatly reduces the risk of further changes to debit card network routing, and Walmart's (WMT) recent appeal to the anti-trust settlement was moved from Arkansas to Brooklyn. Based on prior rulings, the courts in Brooklyn will likely be more sympathetic to Visa than to Walmart.

Lack of any credible disruptive threats. Disruption remains a consistent theme, but the majority of advances we have witnessed so far are occurring on the edges of the network as opposed to the payment network itself.

As for MasterCard, McCrohan and DeProspo have an $81 price target on the stock, up $3. Again, their reasoning is the same, as they see the pullback in the stock as a good entry point, and believe it shares the same core strengths as Visa.

More details:

Recent deal with Sam's Club continues co-brand momentum. MasterCard recently won the Sam's Club co-branded credit card portfolio in a competitive take-away from Discover (DFS). When we met with management of MasterCard in December 2013, the CEO indicated that MA was winning 60% of the co-brand deals out for bid (e.g. Bass Pro Shops, Hawaiian Airlines, Virgin America). Sam's Club is one of the three leading membership-based warehouse clubs in the United States. Recent regulatory filings disclosed that Sam's Club accounts for 12% of total Wal-Mart revenue, which equates to $57 billion in total revenue.

Co-brand momentum gives us confidence fiscal 2014 revenue guidance achievable. The company provides 3-year financial targets as opposed to annual guidance, but for 2014, management has indicated they expect net revenue growth at the low-end of its 3-year target range of 11%-14%. Our 2014 revenue growth estimate of 12.9% is above street expectations of 11.5%.

Litigation risks moderating. The recent appeal court hearing greatly reduces the risk of further changes to debit card network routing, and Walmart's appeal to the recent anti-trust settlement was moved from Arkansas to Brooklyn. Based on prior rulings, the courts in Brooklyn will likely be more sympathetic to Visa than Walmart.

Lack of any credible disruptive threats. Disruption remains a consistent theme, but the majority of advances we have witnessed so far are occurring on the edges of the network as opposed to the payment network itself.

 

Getting a big tax refund may not be a good thing

Eagerly awaiting your big tax return?

Well, according to some experts, your big payday this April may not be anything to take pride in.

"Often the very people who celebrate receiving a refund are those who are most in need of extra money in their pocket each month," said Gail Cunningham, a spokesperson for the National Foundation for Credit Counseling.

According to a February NFCC poll, 56% respondents "plan to always receive a refund each year," compared to just 28% who intentionally plan to "intentionally plan to never receive a refund."

NEED TAX HELP: Get the latest news and advice

Cunningham points out that a refund of $3,000 adds up to about $250 in extra taxes each month – cash that may make the difference between missing a car payment or bouncing a rent check for many lower-income Americans.

And if you're not living paycheck to paycheck, you're still giving the Internal Revenue Service what amounts to an interest-free loan instead of putting your money to work by paying down debt or investing it so that cash grows.

"Why would you not maximize any asset that could work for you?" asks Chris Woehrle, an Assistant Professor of Taxation at The American College of Financial Services.

Costs vs. Benefits of a Big Return

Of course, Woerhle says he understands why people rely on tax refunds as "enforced savings."

"Most people find it difficult to pay themselves 5%, 10% or any percent," he said. He also added that for those fearing any additional bills, overpaying is preferable to getting a surprise obligation in the spring when the balance of their taxes are due.

But Cunningham of the NFCC says the costs far outweigh the benefits. There are a host of other methods to ritualize saving, many of which are much more flexible than overpaying Uncle Sam and waiting for your April tax refund.

After all, the IRS won't send out the check early if your car breaks down.

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Cunningham recommends visiting the withholding calculator on IRS.gov, inputting a little information about your income and family situation, and then adjusting your taxes on form W-4. That will ensure that you don't overpay on your taxes in the current tax year.

CAN'T MAKE APRIL 15: Should you ask for an extension on filing taxes?

As for 2013 taxes, if you're too late to prevent a big refund there are still responsible things you can do with that check.

"The overarching answer is to put the money toward what is putting you most at risk," Cunningham said.

She advises:

First, catch on bills. "For instance, if you're about to be evicted from your home, or your car is about to be repossessed, use the money to resolve those immediate problems," Cunningham said.

Next, pay down debt. Your "debt utilization ratio" is the second highest weighted element of the credit scoring model, says Cunningham, so having a line of credit near the maximum is a big ding on your credit score. If no account is near the limit, then focus on the highest interest rate or highest balance loan that "is doing you the most financial harm."

Build savings. Most finance experts recommend three to six months of salary saved up for emergencies. If you don't have this nest egg, Cunningham said, you can build one quickly with your tax refund.

Think ahead. Rather than wait for the car to break down or the roof to start leaking, use the tax refund while you have it to perform overdue maintenance on your car or home, Cunningham said.

Invest in Yourself: Taking a course to learn new job skills can be money well spent.

Lastly, Do Something Fun!: If all these financial ducks are in a row, Cunningham said, don't hesitate to spend it. "After all, it's your money, the money you worked all year to earn, and Uncle Sam is simply giving it back to you," she said.

Jeff Reeves is the editor of InvestorPlace.com and ! the autho! r of The Frugal Investor's Guide to Finding Great Stocks.

Top 5 Solar Stocks To Own For 2015

There's never a shortage of losers in the stock market. Let's take a closer look at five of this past week's biggest sinkers.

Company

June 14

Weekly Loss

Himax Technologies (NASDAQ: HIMX  )

$5.39

21%

lululemon athletica (NASDAQ: LULU  )

$66.15

19%

First Solar (NASDAQ: FSLR  )

$44.71

16%

McEwen Mining (NYSE: MUX  )

$2.10

14%

Liquidity Services (NASDAQ: LQDT  )

Top 5 Solar Stocks To Own For 2015: JinkoSolar Holding Company Limited(JKS)

JinkoSolar Holding Co., Ltd., together with its subsidiaries, engages in the manufacture and sale of solar power products in China and internationally. The company provides solar modules, silicon wafers and ingots, and solar cells, as well as processing services, including silicon wafer tolling services. It sells its products under the JinkoSolar brand name. The company?s customers include distributors, project developers, and system integrators. It trades its products under short-term contracts and by spot market sales. The company also produces accessory materials for solar power products, such as solar aluminum frame, solar junction box, aluminum materials windows, and other metal component parts. JinkoSolar Holding Co., Ltd. was founded in 2006 and is based in Shangrao, the People?s Republic of China.

Advisors' Opinion:

• [By Paul Ausick]

  Provided that the Chinese government either encourages or permits consolidation, any of these three could be an acquirer. The likeliest target, of course, is SunTech Power Holdings Co. Ltd. (NYSE: STP), which is reorganizing and which the government has already seemed to give up on. Other possible targets include ReneSola Ltd. (NYSE: SOL) and JinkoSolar Holding Co. Ltd. (NYSE: JKS).

• [By Travis Hoium]

  JinkoSolar (NYSE: JKS  ) �and Canadian Solar (NASDAQ: CSIQ  ) have slightly better balance sheets and they're focusing on expanding into systems, which will smooth out demand. JinkoSolar has a $1 billion financing deal with the China Development Bank to build projects, not just manufacturing capacity, which will help demand. Canadian Solar has built a huge systems business in Canada, including a $310 million, 130 MW project last month, and signed 18 MW of deals in South Carolina last week. The systems business generates stable demand and allows companies to compete more than on price alone, which helps margins.�

Top 5 Solar Stocks To Own For 2015: EMCORE Corporation(EMKR)

EMCORE Corporation, together with its subsidiaries, provides compound semiconductor-based products for the broadband, fiber optics, satellite, and solar power markets. The company operates in two segments, Fiber Optics and Photovoltaics. The Fiber Optics segment offers broadband products, including cable television, fiber-to-the-premises, satellite communication, video transport, and defense and homeland security products; and digital products comprising telecom optical, enterprise, laser/photodetector component, parallel optical transceiver and cable, and fiber channel transceiver products. This segment?s products enable information that is encoded on light signals to be transmitted, routed, and received in communication systems and networks. The Photovoltaics segment provides gallium arsenide (GaAs) multi-junction solar cells, covered interconnected cells, and solar panels for satellite applications; and concentrating photovoltaic (CPV) power systems for commercial and utility scale solar applications, as well as GaAs solar cells and integrated CPV components for use in other solar power concentrator systems. The company markets its products through its direct sales force, external sales representatives and distributors, and application engineers worldwide. EMCORE Corporation was founded in 1984 and is headquartered in Albuquerque, New Mexico.

Advisors' Opinion:

• [By CRWE]

  EMCORE Corporation (Nasdaq:EMKR), a leading provider of compound semiconductor-based components and subsystems for the fiber optic and solar power markets, reported that it is ramping production and shipping the Opticomm-EMCORE NEXTGEN OTP-1DVI2A1SU insert cards for the Optiva platform.

5 Best Construction Stocks To Watch Right Now: Real Goods Solar Inc.(RSOL)

Real Goods Solar, Inc. operates as a residential and commercial solar energy integrator primarily in California and Colorado. The company provides engineering, procurement, and construction services. It offers various turnkey solar energy services, including design, procurement, permitting, build-out, grid connection, financing referrals, and warranty and customer satisfaction services. The company installs residential and small commercial systems that range between 3 kilowatts and 1 megawatt output. It also engages in the retail sale of renewable energy products. The company was founded in 1978 and is based in Louisville, Colorado.

Advisors' Opinion:

• [By Bryan Murphy]

  Last Thursday when I suggested American Community (OTCMKTS:ACYD) was a stock that should be shed immediately, and replaced with a position in Real Goods Solar, Inc. (NASDAQ:RSOL), I didn't win a lot of friends. After all, ACYD was the market's newest darling, in the middle of a red-hot runup, while RSOL was "just another solar name" that happened to be lucky enough to stumble its way above a key support line. Well, I hate to be the one to day I told you so, but, I told you so. American Community shares are down 35% since then, while Real Goods Solar shares are up 36% in the meantime. Both stocks seem pretty well entrenched in their current trends too.

• [By Bryan Murphy]

  If you were lucky enough to be in an American Community (OTCMKTS:ACYD) position anytime before October 8th, then congratulations - you're up big. Now get out. Instead, use freed-up that capital to take on a position in Real Goods Solar, Inc. (NASDAQ:RSOL), which looks like it's at the beginning of a good-sized rally.

Top 5 Solar Stocks To Own For 2015: Peabody Energy Corporation(BTU)

Peabody Energy Corporation engages in the mining of coal. It mines, prepares, and sells thermal coal to electric utilities and metallurgical coal to industrial customers. The company owns interests in 30 coal mining operations located in the United States and Australia, as well as owns joint venture interest in a Venezuela mine. It is also involved in marketing, brokering, and trading coal. In addition, the company develops a mine-mouth coal-fueled generating plant; and Btu Conversion projects that are designed to convert coal to natural gas or transportation fuels; and clean coal technologies. As of December 31, 2011, it had 9 billion tons of proven and probable coal reserves. The company was founded in 1883 and is headquartered in St. Louis, Missouri.

Advisors' Opinion:

• [By Travis Hoium]

  Coal stocks have been bludgeoned again this week, after President Obama gave little indication he was going to give the industry leeway in new environmental regulations. Arch Coal (NYSE: ACI  ) , Alpha Natural Resources (NYSE: ANR  ) , and Peabody Energy (NYSE: BTU  ) are all facing long-term challenges finding demand for thermal coal, and they're not dissipating any time soon. In the following video, Fool contributor Travis Hoium covers why he thinks coal stocks are a bad buy.�

• [By Robert Rapier]

  This is obviously an item of significant interest for fossil fuel companies and shareholders. In fact, in February several investor groups filed shareholder resolutions with 10 fossil fuel companies, including ExxonMobil (NYSE: XOM), Chevron (NYSE: CVX), Devon (NYSE: DVN), Kinder Morgan (NYSE: KMI) and Peabody Energy (NYSE: BTU), seeking an assessment of the possibility that some of their fossil fuel reserves may become stranded under a low-carbon scenario.

• [By Ben Levisohn]

  The last six months have been good to coal miners like Alpha Natural Resources (ANR), Walter Energy (WLT), Consol Energy (CNX) and Peabody Energy (BTU), which all gained more than 10%. The last month, not so much, as many have experienced double-digit losses.

Top 5 Solar Stocks To Own For 2015: Renesola Ltd.(SOL)

ReneSola Ltd, together with its subsidiaries, engages in the manufacture and sale of solar wafers and solar power products. It offers virgin polysilicons, monocrystalline and multicrystalline solar wafers, and photovoltaic cells and modules. The company also provides cell and module processing services. Its products are used in a range of residential, commercial, industrial, and other solar power generation systems. The company sells its solar wafers primarily to solar cell and module manufacturers. It principally operates in Mainland China, Singapore, Taiwan, Hong Kong, Korea, India, Australia, Germany, Italy, Spain, Belgium, France, the Czech Republic, and the United States. The company was founded in 2003 and is based in Jiashan, the People?s Republic of China.

Advisors' Opinion:

• [By Rich Duprey]

  Photovoltaic module and wafer manufacturer ReneSola (NYSE: SOL  ) has been contracted to�provide 7,200 250-watt high-efficiency polycrystalline solar PV modules for a project in Roswell, N.M.

Mario Draghi hedges on ECB's stimulus options

WASHINGTON -- European Central Bank President Mario Draghi on Saturday acknowledged the challenges of using U.S.-style bond purchases to jolt the euro zone from weak growth and said officials may instead have to consider other measures.

Draghi, who spoke to reporters after the International Monetary Fund's annual spring meeting in Washington, D.C., gave no indication that the ECB is closer to deciding whether to launch a stimulus program to combat low inflation that threatens to slow the region's nascent emergence from recession.

Last week, he said ECB policymakers unanimously agreed that they were prepared to use "unconventional" tools, besides lowering interest rates.

Low inflation can lead to deflation, or falling wages and prices that prompts consumers to put off purchases, which slows growth and makes it tougher for governments, businesses and consumers to pay off debts. The area's inflation fell to an annual rate of 0.5% in March, well below the ECB's 2% target.

Draghi said Saturday, "We see no evidence that people are postponing their spending patterns." ECB officials, he said, expect growth to accelerate toward the 2% target later this year as food and energy prices pick up. He added that low inflation has its advantages, such as making products and services more affordable for consumers.

But acknowledging the perils of falling prices, he added, "We should not be complacent."

Many economists expect the ECB to purchase massive amounts of bonds to push down long-term interest rates, similar to the program the Federal Reserve undertook in the aftermath of the 2008 financial crisis and is now winding down. But Draghi conceded the size of the eurozone asset-backed bond market is limited to about $100 billion, noting that corporate borrowing in Europe is mostly done through banks.

"We may need to consider other unconventional measures," he said.

He was not more specific. But in an interview, IMF First Deputy David Lipton said the ECB could buy assets dir! ectly from bank balance sheets, instead of in the bond market.

Another option is the ECB could push near-zero interest rates into negative territory, meaning banks would have to pay to park their money at the ECB, theoretically prodding them to lend the money instead.

Draghi also downplayed the ability of monetary policy to address the region's 12% unemployment rate. "If you think monetary policy can fix all the problems in the world, you're wrong," he said.

6 Internet and Web Service Stocks to Buy Now

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The grades of six internet and web service stocks are better this week, according to the Portfolio Grader database. Every one of these stocks has an “A” (“strong buy”) or “B” overall (“buy”) rating.

Commtouch Software Ltd () is bumping up its rating from a C (“hold”) to a B (“buy”) this week. Commtouch Software provides messaging, antivirus, and Web security solutions to OEM customers, enterprises, and service providers primarily in Israel, North America, Europe, and Asia. In Portfolio Grader’s specific subcategory of Sales Growth, CTCH also gets an A. .

Akamai Technologies, Inc. () improves from a C to a B rating this week. Akamai Technologies provides services for accelerating and improving the delivery of content and applications over the Internet. .

IntraLinks Holdings, Inc. () boosts its rating from a C to a B this week. IntraLinks Holdings provides Software-as-a-Service solutions for managing content, exchanging business information and collaborating within and among organizations. .

Sohu.com, Inc.’s () ratings are looking better this week, moving up to a B from last week’s C. Sohu.com is an Internet media company that serves as a daily source of information, communication and entertainment for millions of Chinese consumers. .

The rating of OpenTable, Inc. () moves up this week, rising from a C to a B. OpenTable provides free, real-time online restaurant reservations for diners through an online booking service. .

Jiayuan.com International Ltd. Sponsored ADR () gets a higher grade this week, advancing from a C last week to a B. Jiayuan. com International is an online Chinese dating company. .

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.

Stocks Hitting 52-Week Lows

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Coeur Mining (NYSE: CDE) shares touched a new 52-week low of $8.97 after the company reported its Q1 production results and maintained its 2014 production outlook.

Republic Airways Holdings (NASDAQ: RJET) shares reached a new 52-week low of $8.33. Republic Airways' trailing-twelve-month profit margin is 1.98%.

Alliqua (NASDAQ: ALQA) shares reached a new 52-week low of $7.33. Alliqua shares have jumped 114.86% over the past 52 weeks, while the S&P 500 index has gained 16.64% in the same period.

American Realty Capital Healthcare Trust (NASDAQ: HCT) shares touched a new 52-week low of $10.19. American Realty Capital Healthcare Trust's trailing-twelve-month EPS is -$0.15.

Posted-In: 52-Week LowsNews Movers & Shakers Intraday Update Markets

© 2014 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.

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Is the Stock Market Getting Frothy?

Given that the Dow Jones Industrial Average (DJINDICES: ^DJI  ) recently crossed the 15,000-point threshold for the first time in history, it should come as no surprise that there's an ongoing debate about whether stocks are headed for another bubble.

The title of a recent CBS MoneyWatch article sums up the sentiment perfectly: "Stock Market Bubble: Red flag warning." According to the author, there's reason to believe that stocks are becoming "frothy" because margin debt -- that is, the debt that investors use to purchase stocks in the brokerage accounts -- is headed for another peak akin to the dot-com and housing bubbles. Here's a chart to demonstrate the point:

But there's another side to this story. Enter Josh Brown, author of The Reformed Broker -- a blog I encourage readers to check out. In a post published at the end of last week comparing the stock market in 1999 to today, Josh makes a convincing argument that all of this concern is much ado about nothing.

Here's a very rudimentary but essential thing to be aware of -- in 1999 the S&P 500 (SNPINDEX: ^GSPC  ) finished at 1469, earned 53 bucks per share, and paid out $16 in dividends. These are nominal figures, not adjusted for inflation.

The 2013 S&P 500 is earning double that amount -- over $100 per share. The index will also be paying out double the dividend this year, more than $30 per share, and returning even more cash with record-setting share repurchases.

This sounds pretty good; what's the catch?

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What kind of premium, pray tell, are we paying for double the earnings and twice the dividend yield versus 1999's market? I'm so glad you asked -- turns out we're not paying any premium at all. We're paying a discount. 50% off. The current S&P 500 trades for a P/E of 14 versus 33 for 1999. So double the fundamentals for half the price.

Sound frothy to you?

Josh then goes on to discuss the Case-Shiller cyclically adjusted P/E ratio, or CAPE. For those of you who aren't familiar with this metric, it's a 10-year rolling average of the S&P 500's P/E ratio. Its advantages are twofold. In the first case, it's the most widely available historical valuation metric you can find for the broader market -- do a search for the S&P 500's historical P/E ratio, and it's basically the only game in town. And in the second case, as its name suggests, by controlling for cyclical variations in valuation multiples, it makes for a nice, smooth line to include in charts.

But, as Josh points out, there's a problem with relying on this metric to make contemporaneous investment decisions. That is, by including the last 10 years of valuations, the CAPE overstates the S&P 500's current multiple by nearly 38%. You can see this in the following chart, which compares the index's actual P/E ratio to the CAPE.

S&P 500 P/E Ratio data by YCharts

Suffice it to say, the current gap is a function of the financial crisis, shortly after which corporate earnings were eviscerated and thus valuation multiples shot through the roof. This trend was particularly robust in the financial space, where large banks such as Bank of America (NYSE: BAC  ) and Citigroup (NYSE: C  ) were forced to record massive losses because of overexposure to subprime mortgages.

So where does this leave us?

I believe that the truth lies somewhere in the middle. Let's take a look at one last chart (the explanation follows).

This is an index that compares the gross domestic product to corporate profits to the Dow -- all of which are adjusted for inflation. Over the long run, there's a strong correlation here -- if you work backwards from the Dow, this shouldn't be surprising. The overarching trend and magnitude of increase, in other words, is pretty closely aligned among the three variables.

Yet at any one time in particular, there are discrepancies. The most notable of these were the 1960s -- the so-called "Go-Go Years" -- and the time period surrounding both the dot-com and housing bubbles. In each case, the performance of stocks outpaced GDP. And in each case, these intervals were concluded in dramatic fashion by stock market crashes.

To get back to the present, if you look to the far right side of the chart you'll see that the Dow has once again eclipsed the GDP trend line -- it should be noted, moreover, that the extent of the eclipse is understated, since the data stops at the end of last year. If history is any guide, in turn, this is indeed indicative of an overheated market.

On the other hand, to Josh's point, corporate profitability appears to be a primary impetus for the climb -- though, as you can see, this was similarly the case in the mid-'60s, late '90s, and early '00s. In addition, we obviously have a long way to go before the present resembles anything like those previous bubbles.

My point here is this: Stocks are high. On a comparative basis, are they as high as they were during these earlier periods of excess? No. And could they go higher? Yes. Absolutely. In fact, I'm inclined to think they will in light of the Federal Reserve's ongoing liquidity measures. But these factors aside, it's important that investors have a decent idea of where we're at.

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DigitalGlobe Beats on EPS But GAAP Results Lag

DigitalGlobe (NYSE: DGI  ) reported earnings on May 7. Here are the numbers you need to know.

The 10-second takeaway
For the quarter ended March 31 (Q1), DigitalGlobe missed estimates on revenues and beat expectations on earnings per share.

Compared to the prior-year quarter, revenue grew significantly. Non-GAAP earnings per share didn't move. GAAP earnings per share shrank to a loss.

Margins dropped across the board.

Revenue details
DigitalGlobe chalked up revenue of $127.6 million. The nine analysts polled by S&P Capital IQ wanted to see a top line of $137.8 million on the same basis. GAAP reported sales were 47% higher than the prior-year quarter's $87.0 million.

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

EPS details
EPS came in at $0.08. The five earnings estimates compiled by S&P Capital IQ predicted -$0.36 per share. Non-GAAP EPS of $0.08 were the same as the prior-year quarter. GAAP EPS were -$0.96 for Q1 compared to $0.08 per share for the prior-year quarter.

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

Margin details
For the quarter, gross margin was 67.9%, much worse than the prior-year quarter. Operating margin was -31.7%, much worse than the prior-year quarter. Net margin was -47.5%, much worse than the prior-year quarter. (Margins calculated in GAAP terms.)

Looking ahead
Next quarter's average estimate for revenue is $159.2 million. On the bottom line, the average EPS estimate is -$0.05.

Next year's average estimate for revenue is $644.9 million. The average EPS estimate is -$0.19.

Investor sentiment
The stock has a four-star rating (out of five) at Motley Fool CAPS, with 100 members out of 106 rating the stock outperform, and six members rating it underperform. Among 24 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 23 give DigitalGlobe a green thumbs-up, and one give it a red thumbs-down.

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on DigitalGlobe is outperform, with an average price target of $32.06.

Looking for alternatives to DigitalGlobe? It takes more than great companies to build a fortune for the future. Learn the basic financial habits of millionaires next door and get focused stock ideas in our free report, "3 Stocks That Will Help You Retire Rich." Click here for instant access to this free report.

Add DigitalGlobe to My Watchlist.

Meritor to Sell 50% Stake in Brazilian Joint Venture

In an effort to strengthen its balance sheet, auto-parts supplier Meritor (NYSE: MTOR  ) agreed to sell the 50% stake it has in a Brazilian joint venture for $195 million in cash and other consideration.

Meritor's investment in Suspensys Sistemas Automotivos joint venture was started in 2002 and was primarily engaged in the manufacture and sale of air and mechanical suspension systems for trucks, buses, and trailers, as well as trailer axles, third axles, hubs, and drums.

Because the auto-parts supplier remains committed to its trailer business in North America and expects to continue supplying its customers in the region, Meritor Chairman, CEO, and President Chip McClure said, "We are pleased to have entered into this agreement and look forward to using the proceeds from the sale to support our continued efforts to strengthen our balance sheet."

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The joint venture contributed $28 million in revenues for Meritor's fiscal 2012, down 12.5% from the year-ago period. The sale is expected to be consummated by Meritor's fiscal year end and is subject to regulatory approvals and other customary conditions.