Two Harbors Keeps Dividend Steady

Mortgage-backed securities REIT Two Harbors Investment (NYSE: TWO  ) announced today its second-quarter dividend of $0.31 per share, $0.01 per share lower than it paid last quarter.

Two Harbors had also issued a special dividend last quarter to distribute the company's shares of Silver Bay Realty Trust (NYSE: SBY  ) . It had received 17.8 million shares of Silver Bay stock in exchange for contributing its portfolio of over 2,200 single-family homes to Silver Bay, concurrent with the closing of Silver Bay's IPO in December of 2012.

The board of directors said the quarterly dividend is payable on July 23 to the holders of record at the close of business on June 28. The rmREIT has made quarterly payouts to investors since 2008. 

The regular dividend payment equates to a $1.24-per-share annual dividend, yielding 2.3% based on the closing price of Two Harbor Investment's stock on June 12.

TWO Dividend data by YCharts

Don't Get Too Worked Up Over Lithia Motors's Earnings

Although business headlines still tout earnings numbers, many investors have moved past net earnings as a measure of a company's economic output. That's because earnings are very often less trustworthy than cash flow, since earnings are more open to manipulation based on dubious judgment calls.

Earnings' unreliability is one of the reasons Foolish investors often flip straight past the income statement to check the cash flow statement. In general, by taking a close look at the cash moving in and out of the business, you can better understand whether the last batch of earnings brought money into the company, or merely disguised a cash gusher with a pretty headline.

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

Source: S&P Capital IQ. Data is current as of last fully reported fiscal quarter. Dollar values in millions. FCF = free cash flow. FY = fiscal year. TTM = trailing 12 months.

Over the past 12 months, Lithia Motors burned $184.4 million cash while it booked net income of $85.6 million. That means it burned through all its revenue and more. That doesn't sound so great. FCF is less than net income. Ideally, we'd like to see the opposite.

All cash is not equal
Unfortunately, the cash flow statement isn't immune from nonsense, either. That's why it pays to take a close look at the components of cash flow from operations, to make sure that the cash flows are of high quality. What does that mean? To me, it means they need to be real and replicable in the upcoming quarters, rather than being offset by continual cash outflows that don't appear on the income statement (such as major capital expenditures).

For instance, cash flow based on cash net income and adjustments for non-cash income-statement expenses (like depreciation) is generally favorable. An increase in cash flow based on stiffing your suppliers (by increasing accounts payable for the short term) or shortchanging Uncle Sam on taxes will come back to bite investors later. The same goes for decreasing accounts receivable; this is good to see, but it's ordinary in recessionary times, and you can only increase collections so much. Finally, adding stock-based compensation expense back to cash flows is questionable when a company hands out a lot of equity to employees and uses cash in later periods to buy back those shares.

So how does the cash flow at Lithia Motors look? Take a peek at the chart below, which flags questionable cash flow sources with a red bar.

Source: S&P Capital IQ. Data is current as of last fully reported fiscal quarter. Dollar values in millions. TTM = trailing 12 months.

When I say "questionable cash flow sources," I mean items such as changes in taxes payable, tax benefits from stock options, and asset sales, among others. That's not to say that companies booking these as sources of cash flow are weak, or are engaging in any sort of wrongdoing, or that everything that comes up questionable in my graph is automatically bad news. But whenever a company is getting more than, say, 10% of its cash from operations from these dubious sources, investors ought to make sure to refer to the filings and dig in.

With 11.9% of operating cash flow coming from questionable sources, Lithia Motors investors should take a closer look at the underlying numbers. Within the questionable cash flow figure plotted in the TTM period above, other operating activities (which can include deferred income taxes, pension charges, and other one-off items) provided the biggest boost. Overall, the biggest drag on FCF came from capital expenditures, which consumed 51.5% of cash from operations.

A Foolish final thought
Most investors don't keep tabs on their companies' cash flow. I think that's a mistake. If you take the time to read past the headlines and crack a filing now and then, you're in a much better position to spot potential trouble early. Better yet, you'll improve your odds of finding the underappreciated home-run stocks that provide the market's best returns.

The rich are different than you and me: They might not notice the moneymaking stories right under our noses. In our new report, "Middle-Class Millionaire-Makers: 3 Stocks Wall Street's Too Rich to Notice," we give you three Peter Lynch-inspired buy-what-you-know stocks for the 99%. Click here for instant access to this free report.

We can help you keep tabs on your companies with My Watchlist, our free, personalized stock tracking service.

Add Lithia Motors to My Watchlist.

Pentagon Splits Orders for Supply of Cisco, Related HD Equipment

Three firms split a $45 million U.S. Department of Defense contract to supply the Defense Media Activity department at Fort Meade, Md., with Cisco satellite decoders and HD encryption systems. Curiously, however, none of these companies was actually named Cisco (NASDAQ: CSCO  ) itself.

Instead, the winners who will compete among themselves to fulfill the $45 million firm-fixed-price, multiple-award, indefinite-delivery/indefinite-quantity contract include privately held Bluewater Communications Group LLC, small-cap Globecomm Systems (NASDAQ: GCOM  ) , and TVC Communications LLC, of Annville, Penn., a small subsidiary of larger electronics distributor WESCO International (NYSE: WCC  ) . All three will now be competing against each other to win the Pentagon's business on individual task orders for the Cisco and other HD equipment on order.

This contract exercises the "option" year on a pre-existing contract, and is expected to run through Aug. 31, 2014.

Top 5 Low Price Companies To Watch For 2014

With natural gas prices rising off recent record lows, it begs the question, when will drillers restart stalled drilling programs? As the nation's top natural gas producer, ExxonMobil's (NYSE: XOM  ) thoughts on the subject are important to listen to. The company's plan is to let its natural gas production decline by 5% this year and only marginally grow production in the future due to the recent low prices.

However, last quarter the company sold its gas for an average of $3.32 per thousand cubic feet, which was the highest price in more than a year. When asked about its natural gas plans in the U.S. now that prices are rising, Exxon's vice president of investor relations, David Rosenthal, stated that the company doesn't "tend to take the last two data points and draw a trend line and react." Meaning that the company isn't ready to change its plans just yet.

Top 5 Low Price Companies To Watch For 2014: USA Technologies Inc.(USAT)

USA Technologies, Inc. supplies cashless, remote management, reporting, and energy management solutions for the unattended point of sale market primarily in the United States. The company offers networked devices and associated services that enable the owners and operators of stand-alone distributed assets, such as vending machines, kiosks, personal computers, photocopiers, and laundry equipment the ability to remotely monitor, control, and report on the results of these distributed assets, as well as the ability to offer their customers cashless payment options. Its products include Intelligent Vending, an ePort connect solution for the vending industry; Kiosk, an ePort solution that offers an electronic payment option and Web-based remote monitoring and management for various kiosk types; eSuds, a solution for the commercial laundry industry; Business Express, which provides self-service business center solutions to the hotel and motel industry; and ePort Transact soluti on for the self-service business center devices, such as printers and copy machines. The company also manufactures and sells energy conservation products comprising VendingMiser, CoolerMiser, VM2IQ and CM2IQ, SnackMiser, and PlugMiser for various existing equipment, including refrigerated vending machines and glass front coolers. USA Technologies, Inc. was founded in 1992 and is based in Malvern, Pennsylvania.

Advisors' Opinion:

• [By Michael]

  USA Technologies is a supplier of cashless, remote management, reporting and energy management services.

  Shares of USA Technologies ramped higher in January after the company said revenue in its fiscal second quarter jumped 60% from a year earlier to $6 million, while its net loss narrowed to a penny a share from a loss of 19 cents. Shares pulled back slightly in March after USA Technologies announced it raised nearly $11 million in a private placement of common stock.

  Current Share Price: $2.35 (March 29)

  First Quarter Total Return: 128%

  Analyst Ratings: Janney Montgomery Scott is the only research firm with coverage of USA Technologies, rating the stock a "hold" with a price target of $1.25.

  TheStreet Ratings has a "sell" recommendation on USA Technologies, citing disappointing return on equity.

Top 5 Low Price Companies To Watch For 2014: Freescale Semiconductor Inc (FSL)

Freescale Semiconductor, Ltd. provides embedded processing solutions for automotive, networking, industrial, and consumer markets worldwide. The company�s embedded processor products comprise microcontrollers, such as ultra low power, low end 8-bit, and 32-bit products with on-board flash memory, which provide the digital logic or intelligence for electronic applications; single-and multi-core microprocessors; and applications processors with embedded memory, and special purpose hardware and software for multimedia applications. It also offers wireless connectivity products for low power wireless communications functionality; communications processors that perform tasks related to control and management of digital data, and network interfaces; and radio frequency (RF) devices, which consist of power transistors, amplifiers, receivers, and tuners for amplifying RF signals. In addition, the company provides analog, mixed-signal, and power management integrated circuits (ICs ) that include switches, power management devices, battery and motor control devices, CAN/LIN network transceivers, and signal conditioners that perform audio processing, backlight management/control, power management, and charging functions; sensors comprising pressure, inertial, magnetic, and proximity sensors, which act as an interface between an embedded system and external environment; and cellular products consisting of baseband processors, power management ICs, and RF subsystems. It sells its products to original equipment manufacturers, distributors, original design manufacturers, and contract manufacturers through its direct sales force and distributors. The company was formerly known as Freescale Semiconductor Holdings I, Ltd. and changed its name to Freescale Semiconductor, Ltd. in April 2012. The company was incorporated in 2006 and is headquartered in Austin, Texas. Freescale Semiconductor, Ltd. is a subsidiary of Freescale Holdings L.P.

Top Stocks To Watch Right Now: Spectra Energy Corp(SE)

Spectra Energy Corp, through its subsidiaries, engages in the ownership and operation of a portfolio of complementary natural gas-related energy assets in the United States and Canada. The company operates in four segments: U.S. Transmission, Distribution, Western Canada Transmission and Processing, and Field Services. The U.S. Transmission segment engages in the transportation and storage of natural gas for customers in various regions of the northeastern and southeastern United States and the Maritime Provinces in Canada. Its natural gas pipeline systems consist of approximately 19,000 miles of transmission pipelines; and storage capacity comprises 305 billion cubic feet in the United States and Canada. The Distribution segment engages in the natural gas storage, transmission, and distribution in Western Canada and the United States. This segment has approximately 37,600 miles of distribution main and service pipelines serving approximately 1.3 million residential, comme rcial, and industrial customers. The Western Canada Transmission and Processing segment provides natural gas transportation, and gas gathering and processing services; and provides services to natural gas producers to remove impurities from the raw gas stream including water, carbon dioxide, hydrogen sulfide, and other substances. This segment serves local distribution companies, end-use industrial and commercial customers, marketers, and exploration and production companies. The Field Services segment gathers and processes natural gas, as well as fractionates, markets, and trades natural gas liquids. It engages in gathering raw natural gas through gathering systems located in nine natural gas producing regions consisting of the Mid-Continent, Rocky Mountain, east Texas-north Louisiana, Barnett Shale, Gulf Coast, South Texas, Central Texas, Antrim Shale, and Permian Basin. The company is headquartered in Houston, Texas.

Top 5 Low Price Companies To Watch For 2014: BKM Management Ltd(BKM.AX)

BKM Management Limited, through its subsidiaries, engages in the operation of modeling agencies in Australia. The company also operates health spa, bar, and entertainment complex in China, as well as engages in the oil trading business. BKM Management Limited was founded in 1997 and is based in Armadale, Australia.

Top 5 Low Price Companies To Watch For 2014: AcelRx Pharmaceuticals Inc.(ACRX)

AcelRx Pharmaceuticals, Inc., a specialty pharmaceutical company, focuses on the development and commercialization of therapies for the treatment of acute and breakthrough pain in the United States. The company develops ARX-01, a Sufentanil NanoTab PCA system, which completed Phase II clinical trial for acute post-operative pain. The Sufentanil NanoTab PCA system consists of sufentanil, a high therapeutic index opioid; NanoTabs, a non-invasive sublingual dosage form; and a handheld PCA device that enables simple patient-controlled delivery of NanoTabs in the hospital setting and eliminates the risk of programming errors. Its products also include ARX-02, a Sufentanil NanoTab BTP Management System that completed Phase II clinical trial for the treatment of cancer breakthrough pain; and ARX-03, a Sufentanil/Triazolam NanoTab, which completed Phase II clinical trial to provide mild sedation, anxiety reduction, and pain relief for patients undergoing painful procedures in a ph ysician?s office. The company was formerly known as SuRx, Inc. and changed its name to AcelRx Pharmaceuticals, Inc. in August 2006. AcelRx Pharmaceuticals, Inc. was founded in 2005 and is headquartered in Redwood, California.

Cable Companies Are Missing the Point on Sports

The battle for your viewing dollars continues to intensify, and many cable and satellite providers have begun to protest over the high cost of sports programming. While Comcast (NASDAQ: CMCSA  )  and DIRECTV (NASDAQ: DTV  ) are looking at average viewership, they're asking the wrong question. Disrupting the overall industry is the growing availability of streaming sports through the various leagues and online versions of Disney's (NYSE: DIS  ) ESPN.

In the following interview with the Fool's Alison Southwick, Fool.com contributor Doug Ehrman discusses the reaction of some of these providers and poses an important and important question: Are providers asking the right question when they look at the value of sports programming, or are sports more all-or-nothing: Either you have them or you don't?

Sports isn't the only area of contention in the battle. The future of television begins now -- with an all-out $2.2 trillion media war that pits cable companies such as Cox, Comcast, and Time Warner against technology giants such as Apple, Google, and Netflix. The Motley Fool's shocking video presentation reveals the secret Steve Jobs took to his grave and explains why the only real winners are these three lesser-known power players that film your favorite shows. Click here to watch today!

3 Regional Banks Continuing to Crush the Market

During bank-earnings season, the Big Four U.S. banks typically dominate the headlines:

"Bank of America Gets Down to Business" -- The Wall Street Journal

"JPMorgan Continues Strong Earnings Run" -- Zacks.com

"Citigroup Profit Jump 42% on Stronger Markets" -- Reuters

However, some regional banks are posting more impressive numbers and flying under the radar. In this video, Motley Fool banking analyst David Hanson discusses recent results from PNC Financials Services (NYSE: PNC  ) , KeyCorp (NYSE: KEY  ) , and Huntington Bancshares (NASDAQ: HBAN  ) .

Many investors are terrified about investing in both big and smaller regional banking stocks after the crash, but the sector has a few notable stand-outs. In a sea of mismanaged and dangerous peers, one rises above as "The Only Big Bank Built to Last." You can uncover the top pick that some of the world's best investors love in The Motley Fool's new report. It's free, so click here to access it now.

To follow The Fool's coverage of financial stocks, click here!

You can follow David on Twitter.

Can Smartphones Make Driving Safer?

One trend you should be aware of as an investor is that of the "connected car". Your vehicle can connect with the outside world through a dedicated modem, such as General Motors' (NYSE: GM  ) 17-year-old OnStar service, or -- increasingly these days -- through your smartphone.

At the recent Connected Car Conference in New York City, Roger Lanctot of Strategy Analytics spoke about the role of smartphones and modems in the vehicle: Beside entertainment, they can help sell cars, route motorists, and facilitate commerce through various payment options for tolls, parking, etc. Done properly, a connected car even can save lives and make driving safer.

Our roving reporter Rex Moore attended the conference, and was able to speak to Roger about the role of the smartphone in the car. Today's video delves into how auto manufacturers are addressing the safety issue.

Who's really smart?
Want to get in on the smartphone phenomenon? Truth be told, one company sits at the crossroads of smartphone technology as we know it. It's not your typical household name, either. In fact, you've probably never even heard of it! But it stands to reap massive profits NO MATTER WHO ultimately wins the smartphone war. To find out what it is, click here to access the "One Stock You Must Buy Before the iPhone-Android War Escalates Any Further..."

Is ARC Document Solutions's Cash Flow Just For Show?

Although business headlines still tout earnings numbers, many investors have moved past net earnings as a measure of a company's economic output. That's because earnings are very often less trustworthy than cash flow, since earnings are more open to manipulation based on dubious judgment calls.

Earnings' unreliability is one of the reasons Foolish investors often flip straight past the income statement to check the cash flow statement. In general, by taking a close look at the cash moving in and out of the business, you can better understand whether the last batch of earnings brought money into the company, or merely disguised a cash gusher with a pretty headline.

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

Source: S&P Capital IQ. Data is current as of last fully reported fiscal quarter. Dollar values in millions. FCF = free cash flow. FY = fiscal year. TTM = trailing 12 months.

Over the past 12 months, ARC Document Solutions generated $14.9 million cash while it booked a net loss of $26.6 million. That means it turned 3.7% of its revenue into FCF. That sounds OK.

All cash is not equal
Unfortunately, the cash flow statement isn't immune from nonsense, either. That's why it pays to take a close look at the components of cash flow from operations, to make sure that the cash flows are of high quality. What does that mean? To me, it means they need to be real and replicable in the upcoming quarters, rather than being offset by continual cash outflows that don't appear on the income statement (such as major capital expenditures).

For instance, cash flow based on cash net income and adjustments for non-cash income-statement expenses (like depreciation) is generally favorable. An increase in cash flow based on stiffing your suppliers (by increasing accounts payable for the short term) or shortchanging Uncle Sam on taxes will come back to bite investors later. The same goes for decreasing accounts receivable; this is good to see, but it's ordinary in recessionary times, and you can only increase collections so much. Finally, adding stock-based compensation expense back to cash flows is questionable when a company hands out a lot of equity to employees and uses cash in later periods to buy back those shares.

So how does the cash flow at ARC Document Solutions look? Take a peek at the chart below, which flags questionable cash flow sources with a red bar.

Source: S&P Capital IQ. Data is current as of last fully reported fiscal quarter. Dollar values in millions. TTM = trailing 12 months.

When I say "questionable cash flow sources," I mean items such as changes in taxes payable, tax benefits from stock options, and asset sales, among others. That's not to say that companies booking these as sources of cash flow are weak, or are engaging in any sort of wrongdoing, or that everything that comes up questionable in my graph is automatically bad news. But whenever a company is getting more than, say, 10% of its cash from operations from these dubious sources, investors ought to make sure to refer to the filings and dig in.

With 68.3% of operating cash flow coming from questionable sources, ARC Document Solutions investors should take a closer look at the underlying numbers. Within the questionable cash flow figure plotted in the TTM period above, other operating activities (which can include deferred income taxes, pension charges, and other one-off items) provided the biggest boost, at 9.8% of cash flow from operations. Overall, the biggest drag on FCF came from capital expenditures, which consumed 59.8% of cash from operations.

A Foolish final thought
Most investors don't keep tabs on their companies' cash flow. I think that's a mistake. If you take the time to read past the headlines and crack a filing now and then, you're in a much better position to spot potential trouble early. Better yet, you'll improve your odds of finding the underappreciated home-run stocks that provide the market's best returns.

Looking for alternatives to ARC Document Solutions? 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.

We can help you keep tabs on your companies with My Watchlist, our free, personalized stock tracking service.

Add ARC Document Solutions to My Watchlist.

Hot Dividend Companies To Buy For 2014

Air Products & Chemicals (NYSE: APD  ) is a selection for the real-money Inflation-Protected Income Growth portfolio. Like any investment, it needs to be reviewed from time to time to see if it's still worth owning. In the brief video below, portfolio manager Chuck Saletta reviews its valuation, balance sheet, and dividends, and decides whether to hold on to the stock or let it go.

To follow the iPIG portfolio as buy and sell decisions are made, watch Chuck's article feed by clicking here. To join The Motley Fool's free discussion board dedicated to the iPIG portfolio, simply click here. For more information on the Graham Equation used for the valuation estimates, see the article at this link.

For more great dividend-oriented investments
If you're on the lookout for stocks that reliably pay you to own them, The Motley Fool has compiled a special free report outlining our nine top dependable dividend-paying stocks. It's called "Secure Your Future With 9 Rock-Solid Dividend Stocks." You can access your copy today at no cost! Just click here.

Hot Dividend Companies To Buy For 2014: Fuel Tech Inc.(FTEK)

Fuel Tech, Inc. uses a suite of advanced technologies to provide boiler optimization, efficiency improvement, and air pollution reduction and control solutions to utility and industrial customers worldwide. It operates through two segments, Air Pollution Control Technologies and FUEL CHEM Technologies. The Air Pollution Control Technologies segment includes technologies, such as low and ultra low NOx Burners, over-fire air systems, NOxOUT and HERT selective non-catalytic reduction systems, and advanced selective catalytic reduction systems to reduce NOx emissions in flue gas from boilers, incinerators, furnaces, and other stationary combustion sources. This segment distributes its products through direct sales force and agents. The FUEL CHEM Technologies segment uses chemical processes in combination with advanced computational fluid dynamics and chemical kinetics modeling boiler modeling for the control of slagging, fouling, corrosion, opacity, and other sulfur trioxide-r elated issues in furnaces and boilers through the addition of chemicals into the furnace using Targeted In-Furnace Injection technology. This segment?s programs improve the efficiency, reliability, and environmental status of plants operating in the electric utility, industrial, pulp and paper, waste-to-energy, university, and district heating markets; and are installed on combustion units in North America, Europe, China, and India for treating various solid and liquid fuels, including coal, heavy oil, biomass, and municipal waste. It provides operational, financial, and environmental benefits to owners of boilers, furnaces, and other combustion units. The company was founded in 1987 and is headquartered in Warrenville, Illinois.

Advisors' Opinion:

• [By Carlson]

  Fuel Tech, Inc. is an integrated company that uses a range of advanced technologies to provide boiler optimization, improvement and air pollution reduction and control solutions to utility and industrial customers globally. Its EPS forecast for the current year is 0.23 and next year is 0.4. According to consensus estimates, its topline is expected to grow 21.56% current year and grow 20.26% next year. It is trading at a forward P/E of 22.11. Out of eight analysts covering the company, two are positive and have buy recommendations and six have hold ratings.

Hot Dividend Companies To Buy For 2014: Novatel Wireless Inc.(NVTL)

Novatel Wireless, Inc. provides wireless broadband access solutions for the mobile communications market worldwide. It operates in two segments, Mobile Computing Products and machine-to-machine (M2M) Products and Solutions. The Mobile Computing Products segment offers MiFi Intelligent Mobile Hotspots, which provide connectivity option for Wi-Fi-enabled devices, such as the iPad, Kindle, tablets, PCs, MP3 players, and gaming devices; USB and PC-Card modems for wireless access; and embedded modules for use in laptop PCs, netbooks, tablets, and other electronic products to provide wireless broadband access. This segment also offers MobiLink mobile communications software suite, an object-oriented application that enables access to connectivity features, such as SMS, multimedia messaging, and virtual private networking, as well as provides video telephony and wireless local area networks management capabilities; and MiFi DLNA Server, which operates on MiFi hotspots and enables user to access and play movies, music, and photos. It serves wireless operators, laptop PC and other original equipment manufacturers, distributors, and various companies in other vertical markets. The M2M Products and Solutions segment provides asset-management solutions utilizing wireless technology and M2M communications devices. It offers Spider MT, SA, and AT integrated solutions and accessories for monitoring and managing mobile and fixed assets, vehicle tracking and telemetric, and workforce tracking and management; Enabler III and HS embedded solutions for various products or equipment to communicate with other computers; and N4A software and design services, including software and design services primarily for asset management solutions. This segment serves transportation companies, industrial companies, manufacturers of medical devices and geographical-location aware devices, and providers of security systems. The company was founded in 1996 and is headquartered i n San Diego, California.

Top Value Companies To Invest In Right Now: Uravan Minerals Inc. (UVN.V)

Uravan Minerals, Inc., a development stage mineral exploration company, engages in the acquisition, exploration, and development of mineral properties in Canada. The company primarily explores for buried uranium deposits, as well as for rare earth elements, and nickel-copper-platinum group element deposits in under-explored areas. Its principal properties include the Outer Ring/Math, Johannsen, Halliday, Stewardson, Thluicho, and Poplar Point uranium projects located in the Athabasca Basin, northern Saskatchewan; the Garry Lake uranium project situated in the northeast Thelon Basin; and the Rottenstone nickel-copper-platinum group element property located in Saskatchewan. Uravan Minerals, Inc. is headquartered in Calgary, Canada.

Show Me the Money, G&K Services

Although business headlines still tout earnings numbers, many investors have moved past net earnings as a measure of a company's economic output. That's because earnings are very often less trustworthy than cash flow, since earnings are more open to manipulation based on dubious judgment calls.

Earnings' unreliability is one of the reasons Foolish investors often flip straight past the income statement to check the cash flow statement. In general, by taking a close look at the cash moving in and out of the business, you can better understand whether the last batch of earnings brought money into the company, or merely disguised a cash gusher with a pretty headline.

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

Source: S&P Capital IQ. Data is current as of last fully reported fiscal quarter. Dollar values in millions. FCF = free cash flow. FY = fiscal year. TTM = trailing 12 months.

Over the past 12 months, G&K Services generated $80.6 million cash while it booked net income of $49.9 million. That means it turned 8.9% of its revenue into FCF. That sounds OK.

All cash is not equal
Unfortunately, the cash flow statement isn't immune from nonsense, either. That's why it pays to take a close look at the components of cash flow from operations, to make sure that the cash flows are of high quality. What does that mean? To me, it means they need to be real and replicable in the upcoming quarters, rather than being offset by continual cash outflows that don't appear on the income statement (such as major capital expenditures).

For instance, cash flow based on cash net income and adjustments for non-cash income-statement expenses (like depreciation) is generally favorable. An increase in cash flow based on stiffing your suppliers (by increasing accounts payable for the short term) or shortchanging Uncle Sam on taxes will come back to bite investors later. The same goes for decreasing accounts receivable; this is good to see, but it's ordinary in recessionary times, and you can only increase collections so much. Finally, adding stock-based compensation expense back to cash flows is questionable when a company hands out a lot of equity to employees and uses cash in later periods to buy back those shares.

So how does the cash flow at G&K Services look? Take a peek at the chart below, which flags questionable cash flow sources with a red bar.

Source: S&P Capital IQ. Data is current as of last fully reported fiscal quarter. Dollar values in millions. TTM = trailing 12 months.

When I say "questionable cash flow sources," I mean items such as changes in taxes payable, tax benefits from stock options, and asset sales, among others. That's not to say that companies booking these as sources of cash flow are weak, or are engaging in any sort of wrongdoing, or that everything that comes up questionable in my graph is automatically bad news. But whenever a company is getting more than, say, 10% of its cash from operations from these dubious sources, investors ought to make sure to refer to the filings and dig in.

With 11.8% of operating cash flow coming from questionable sources, G&K Services investors should take a closer look at the underlying numbers. Within the questionable cash flow figure plotted in the TTM period above, other operating activities (which can include deferred income taxes, pension charges, and other one-off items) provided the biggest boost, at 7.5% of cash flow from operations. Overall, the biggest drag on FCF came from capital expenditures, which consumed 30.7% of cash from operations.

A Foolish final thought
Most investors don't keep tabs on their companies' cash flow. I think that's a mistake. If you take the time to read past the headlines and crack a filing now and then, you're in a much better position to spot potential trouble early. Better yet, you'll improve your odds of finding the underappreciated home-run stocks that provide the market's best returns.

Looking for alternatives to G&K Services? 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.

We can help you keep tabs on your companies with My Watchlist, our free, personalized stock tracking service.

Add G&K Services to My Watchlist.

European Stocks Advance as Volvo, EasyJet Shares Jump

European stocks rose, rebounding from yesterday's first drop in five days, as data signaled euro-area manufacturing is expanding for the first time in two years and companies from Volvo AB to EasyJet Plc posted results. U.S. index futures gained and Asian shares were little changed.

Volvo gained 3.1 percent as the world's second-largest truckmaker reported operating profit that beat estimates. EasyJet jumped 5.3 percent after saying quarterly sales rose 11 percent on higher capacity utilization and revenue per seat. Syngenta AG (SYNN) fell 3.9 percent after the biggest maker of crop chemicals posted first-half profit and revenue below forecasts.

The Stoxx Europe 600 Index added 0.5 percent to 300.85 at 9:06 a.m. in London. The gauge declined yesterday as a measure of U.S. manufacturing unexpectedly slumped. Standard & Poor's 500 Index futures rose 0.2 percent today, while the MSCI Asia Pacific Index fell 0.1 percent.

"I've been positively surprised by the earnings season so far," said Michael Woischneck, who helps oversee about $9.3 billion at Lampe Asset Management in Dusseldorf, Germany. "Companies are holding up quite well and guidance from CEOs seem to show they are confident with their road maps ahead. I'm not saying I expect the next big boom in Europe, but there are signs that the economy is not getting worse."

Manufacturing, Services

Preliminary data today showed euro-area manufacturing is expanding this month for the first time since July 2011. A manufacturng index based on a survey of purchasing managers increased to 50.1 from 48.8 in June, Markit Economics said. Economists in a Bloomberg survey had predicted 49.1. A reading of 50 is the dividing line between expansion and contraction.

In Germany, manufacturing unexpectedly expanded in July and services growth accelerated, signaling that the recovery in Europe's largest economy is building momentum.

In the U.S., Commerce Department data may show purchases of new houses increased to a 484,000 pace last month, the highest level since June 2008, according to the median forecast in the Bloomberg survey.

Volvo gained 3.1 percent to 96.10 kronor. Earnings before interest and taxes fell to 3.26 billion kronor ($505 million) in the second quarter, from 7.71 billion kronor a year earlier. Profit beat the 3.22 billion-kronor average by analysts in a Bloomberg survey.

EasyJet Rallies

EasyJet rose 5.3 percent to 1,407 pence after saying sales rose to 1.14 billion pounds ($1.75 billion) in the third quarter. The low-cost carrier said in an interim statement that it predicts second-half revenue per seat to increase by as much as 6 percent from a year earlier, assuming constant currency levels.

ARM Holdings Plc, which designs chips used in Apple Inc.'s devices, advanced 2.7 percent to 922.5 pence. Revenue increased 26 percent to 171.2 million pounds in the second quarter, beating the 165.1 million pounds predicted by analysts, as demand grew for advanced graphics and processing technology.

Syngenta fell 3.9 percent to 371.40 Swiss francs after posting first-half adjusted earnings of $15.92 a share, which missed the average analyst projection for $17.15. Revenue increased to $8.39 billion, less than the $8.64 billion forecast by analysts.

The number of shares trading hands in Stoxx 600-listed companies was 21 percent lower than the average of the past 30 days, data compiled by Bloomberg shows.

Ford's Lawsuit and Survey Woes

It's no secret that life is good in the auto industry right now: Transaction prices are up, incentives are down, and June's SAAR was at its highest level in years. That makes for more profitable earnings reports, which are due to be released tomorrow for Ford (NYSE: F  ) and Thursday for General Motors. Industry quality is also up much higher both for domestic automakers and the global auto industry in general. One problem is still plaguing many automakers -- designing a quality infotainment system. That's the reason behind a lawsuit against Ford and also why the company ranked so low in J.D. Power & Associates Initial Quality Study 2013.

Lawsuit
Last Monday, a proposed class action lawsuit was filed against Ford claiming the MyFord Touch and the Lincoln infotainment system are defective. The largest complaint being that the system freezes periodically and fails to respond to voice and touch commands.

Ford's attempted to fix the problem but has had little success; apparently, designing an effective infotainment system is like pulling teeth. "I've had companies tell me they would rather develop a new car from the ground up than a new entertainment system," said Tom Mutchler, program manager of vehicle interface at Consumer Reports, according to the CBS Boston affiliate.

After many updates, upgrades, and extended warranties people are still claiming Ford's infotainment system is the weakest point in the company's vehicles and the cause of its low rank in J.D. Power & Associates Initial Quality Study. "Automakers are investing billions of dollars into designing and building vehicles and adding technologies that consumers desire and demand, but the risk is that the vehicle design, or the technology within the vehicle, in some cases may not meet customer needs," said David Sargent, vice president of global automotive at J.D. Power, in a press release.

The MyFord Touch system that's brought on the lawsuit and the low rank in the J.D. Power study isn't good, but in reality its problems are minor in the grand scheme of owning a car. Proof of that can be found in recent brand loyalty studies. Ford dominated the BrandIndex survey with a score of 31; in second place is Honda, with a score of 19.5.

Information via BrandIndex mid-year survey.

BrandIndex runs the survey by asking respondents if they've heard anything positive or negative about the brand recently, including lawsuit headlines. Ford, even with all its MyFord Touch issues, is still dominating competitors with its positive brand image, evidence that many more positive comments are made than negative. All the positive buzz has helped Ford keep more of its customers coming back for additional vehicles. According to R.L. Polk & Co, Ford was the only brand in the first quarter this year to have a brand loyalty above 60%.

Bottom line
It's easy for lawsuit headlines and poor rankings from quality surveys to grab the attention of the masses, but we have to keep in perspective that, in the grand scheme of things, Ford is doing extremely well with its vehicles. Proof of that is found in the BrandIndex survey, R.L. Polk survey, and even in Ford's gain in market share this year -- the most of any full-line automaker. Ford investors shouldn't worry too much about the recent lawsuit and focus more on what should be a great second-quarter earnings report tomorrow morning.

Ford is working its way to be a major player in the worlds most important auto market, but will it succeed and return massive profits to its investors? 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.

Hot Warren Buffett Companies To Watch In Right Now

Join The Motley Fool for a conversation with author, investor and philanthropist, Whitney Tilson. In addition to managing Kase Capital, Whitney has coauthored More Mortgage Meltdown: 6 Ways to Profit in These Bad Times, Poor Charlie's Almanack, and most recently The Art of Value Investing, a collection of interviews with over 200 successful value investors.

A full transcript follows the video.

The Motley Fool's chief investment officer has selected his No. 1 stock for the next year. Find out which stock it is in the brand-new free report: "The Motley Fool's Top Stock for 2013." Just click here to access the report and find out the name of this under-the-radar company.

Brendan Byrnes: What's your biggest worry about Berkshire (NYSE: BRK-B  ) ? Did Doug Kass bring up anything on the bearish side that made you say, "Wow?" It seemed like more he regurgitated a lot of the bear argument: "Warren Buffett, at some point, is going to be gone." "It's so big, how much bigger can it get?" Are you buying those?

Hot Warren Buffett Companies To Watch In Right Now: KDR Industrials Ltd (KDR)

KDR Industrials Ltd., formerly North American Medical Services Inc., through its wholly owned subsidiaries, North American Medical Services Inc. (NAMS-Nevada), NuCelle Inc. (NuCelle) and N.A.M.S. Capital Corp. (NAMS-CC), is engaged in the manufacture and sale of skin treatment formulations, products, and systems bearing brand of NuCelle and Mandelic Marine Complex. NuCelle�� provides skin care formulations for all skin types, sensitive, ethnic, trouble-prone, and aging. The Company operates two product lines: NuCelle Rx and NuCelle Mandelic Marine Complex. Its NuCelle Rx, physician only line of products, is formulated for, and distributed to physicians and medical professionals. Its NuCelle Mandelic Marine Complex, the aesthetician only line of products, consists of a five step regimen, including Mandelic Wash, Mandelic Mint Scrub, Mandelic Toner, Mandelic Laser-lift Serum and Mandelic Anti-Oxidant Treatment Moisturizer.

Hot Warren Buffett Companies To Watch In Right Now: Citizens Holding Company(CIZN)

Citizens Holding Company operates as the bank holding company for The Citizens Bank of Philadelphia that provides commercial and personal banking products and services in Mississippi. Its deposit products primarily include demand deposits, savings accounts, and time deposit accounts. The company?s loan portfolio comprises secured and unsecured loans; letters of credit; mortgage loans; installment loans; credit card loans; real estate loans, including, single and multi-family housing, farm, residential and commercial construction, and commercial real estate loans; commercial, industrial and agricultural production loans; and consumer loans. It also provides personal and corporate trust services; and credit life and title insurance. The company operates main office in downtown Philadelphia, and 22 branches in Neshoba, Newton, Leake, Scott, Attala, Lauderdale, Oktibbeha, Winston, Kemper, Forrest, and Lamar counties, Mississippi, as well as a loan production office in Biloxi, Mississippi. Citizens Holding Company was founded in 1908 and is headquartered in Philadelphia, Mississippi.

5 Best Stocks To Buy For 2014: China Sunsine Chem Hldgs Ltd. (CH8.SI)

China Sunsine Chemical Holdings Ltd., an investment holding company, engages in the manufacture and sale of rubber chemical products in the People's Republic of China and internationally. The company primarily offers rubber accelerators comprising Accelerator MBT for dry rubber and latex applications; Accelerator MBTS and Accelerator MBS used in the manufacture of synthetic rubber and natural rubber; Accelerator CBS for use in the manufacture of tires, shoes, tubes, cables, and other rubber goods; Accelerator TBBS for use in rubber products and tires; Accelerator DCBS for the manufacture of tires, belts, and shock absorbers; Accelerator DPG for the production of tires, boards, shoes, and other industrial rubber goods; and Accelerator TMTD that is used in the production of tires, inner tube of tires, shoes, and cables, as well as used as germicides and insecticides in agriculture, and lubricant additives. Its products also include anti-scorching CTP, an anti-scorching agent for the vulcanization process to prevent rubber materials from burning; anti-oxidant RD for the manufacture of tires, motorcycles births, bicycles births, rubber, plastics, adhesive tapes, wires, cables, and other rubber products; and insoluble sulphur, a vulcanizing agent for rubber. China Sunsine Chemical Holdings Ltd. offers its products under the Sunsine brand. It serves tire manufacturers; manufacturers of other related products, such as shoes, belts, and hoses; and rubber chemicals distributors. The company is based in Singapore. China Sunsine Chemical Holdings Ltd. is a subsidiary of Success More Group Ltd.

Hot Warren Buffett Companies To Watch In Right Now: Urodynamix Technologies Ltd. (URO.V)

Venturi Ventures Inc. focuses on exploiting its Advanced Verification of Integration Dose technology. The company sublicensed its technology for further development and marketing. It also seeks new business opportunities. The company was formerly known as Urodynamix Technologies Ltd. and changed its name to Venturi Ventures Inc. in August 2011. Venturi Ventures Inc. is headquartered in North Vancouver, Canada.

Hot Warren Buffett Companies To Watch In Right Now: Akorn Inc.(AKRX)

Akorn, Inc. engages in the manufacture and marketing of diagnostic and therapeutic ophthalmic pharmaceuticals products, niche hospital drugs, and injectable pharmaceuticals in the United States and internationally. It offers products in various specialty areas, including ophthalmology, antidotes, anti-infectives, pain management, anesthesia, and vaccines. The company?s Ophthalmic segment markets diagnostic products, including mydriatics and cycloplegics, anesthetics, topical stains, gonioscopic solutions, angiography dyes, and others primarily for use in the office setting. This segment also offers therapeutic products, such as antibiotics, steroids, steroid combinations, glaucoma medications, decongestants/antihistamines, and anti-edema medications to wholesalers, chain drug stores, and other national account customers; and non-pharmaceutical products, which include various artificial tear solutions, preservative-free lubricating ointments, and eyelid cleansers. In addit ion, the Ophthalmic segment provides a line of over-the-counter dry eye and other eye health products principally under the TheraTears brand name through a chain drug stores and big box retailers, as well as directly to optometrists, ophthalmologists, and other eye care practitioners and clinics. The company?s Hospital Drugs and Injectables segment provides a line of niche hospital drug and injectable pharmaceutical products comprising antidotes, anti-infectives, controlled substances for pain management and anesthesia, and other pharmaceutical products to hospitals through the wholesale distribution channel. Its Contract Services segment manufactures ophthalmic and injectable pharmaceutical products for third party pharmaceutical customers based on their specifications. The company serves physicians, optometrists, hospitals, wholesalers, group purchasing organizations, pharmacy chains, and other pharmaceutical companies. Akorn, Inc. was founded in 1971 and is headquartered in Lake Forest, Illinois.

Hot Warren Buffett Companies To Watch In Right Now: Targa Resources Inc.(TRGP)

Targa Resources Corp., through its general and limited partner interests in Targa Resources Partners LP, provides midstream natural gas and natural gas liquid (NGL) services in the United States. It engages in gathering, compressing, treating, processing, and selling natural gas, as well as storing, fractionating, treating, transporting, and selling NGLs and NGL products. The company owns interests in or operates approximately 11,372 miles of natural gas pipelines and approximately 800 miles of NGL pipelines, with natural gas gathering systems covering approximately 13,500 square miles and 22 natural gas processing plants with access to natural gas supplies in the Permian Basin, the Fort Worth Basin, the onshore region of the Louisiana Gulf Coast and the Gulf of Mexico. It owns and operates 39 storage wells with a net storage capacity of approximately 65 million barrels; and 16 storage, marine, and transport terminals with above ground storage capacity of approximately 1.4 million barrels. Targa Resources Corp. sells its services to refineries, petrochemical manufacturers, propane distributors, multi-state retailers, independent retailers, and other industrial end-users. The company was founded in 2003 and is based in Houston, Texas.

OPEC Starting to Feel the Sting of U.S. Oil Production

In the past several years, the U.S. has grown its oil production at the fastest rate since the 1960s, and the country was the fastest-growing oil producer in the world between 2011 and 2012. For a while, OPEC hasn't been sweating the threat of U.S. production. Only a couple months ago its leaders announced that it has no plans to change its production volumes despite the change in the global oil landscape. Well, that idea has been completely turned on its head: OPEC recently announced that it is considering a plan to cut its output ceiling by 500,000 barrels per day by the end of the year in order to keep oil prices at profitable levels for the oil cartel. 

In some ways this is a feel-good story for American energy production, but what does it actually mean for the energy space? For one thing, it is a sign that oil prices will probably remain high for a while longer, which should be a relief for companies with major exploration and development projects going on. Chevron (NYSE: CVX  ) recently said that it saw a drop in production in part due to lower oil prices, so a reduction in OPEC's output could be a good sign for Chevron and its peers as they try to bring their major projects to fruition. Tune into the video below where Fool.com contributor Tyler Crowe looks deeper into why OPEC is reconsidering the surge in U.S. production, and highlights some of the companies that could benefit from this move. 

With so many players vying to get a piece of the American energy pie, finding the right plays among the crowd could help pad your investment nest egg. For this reason, the Motley Fool is offering a comprehensive look at three energy companies set to soar during this transformation in the energy industry. Let us help you discover these companies by checking out the special free report, "3 Stocks for the American Energy Bonanza." Simply click here to access your report -- it's absolutely free. 

What Makes Dow Dividends So Important

Many investors rely on dividends for the income they need from their portfolios. But even if you don't need income right now, dividends represent a key part of your overall investment returns.

Dividends are especially important for the Dow Jones Industrials (DJINDICES: ^DJI  ) , with each of its 30 component companies making dividend payments to their shareholders. By comparing the changes in a stock's price with the total return that shareholders earn when you reinvest dividends, you can put a figure on just how important those dividends are. Let's look at the Dow stocks for which dividends made the biggest difference to investors.

Stock

5-Year Price Change Without Dividends

5-Year Total Return With Dividends

Verizon (NYSE: VZ  )	44.8%	103.2%
Home Depot (NYSE: HD  )	146.3%	186.9%
Pfizer (NYSE: PFE  )	47.3%	85.6%
AT&T (NYSE: T  )	(4%)	28%
Merck (NYSE: MRK  )	17.6%	47.6%

Source: S&P Capital IQ.

Nowhere is the benefit of dividends clearer than in the telecom sector, with Verizon topping the list and AT&T close behind. Given their high dividend yields, which come in at around 4% for Verizon and nearly 5% for AT&T, it's no surprise to see a big impact. But especially noteworthy is the fact that AT&T hasn't managed to see its share price advance at all since early 2008, yet the stock's payout has transformed what would have been a modest loss into a respectable average annual return of about 5%. For Verizon, which has been more successful in growing its business, dividends have more than doubled its total return from what its price change suggests.

Home Depot shows just how beneficial dividends can be for a stock that's performing well. With just over a 2% yield, the home-improvement retailer isn't known for its payouts. But thanks to strong performance in the light of gains in efficiency and a rebounding housing market, even those modest dividends were enough to add more than 40 percentage points to the stock's total return.

Meanwhile, big pharma stocks Merck and Pfizer show some of the same characteristics that you find in among the telecoms. Pfizer has done a better job than Merck of posting share-price gains even in the light of major patent expirations for both companies, yet both stocks have seen substantial portions of their total returns come from their solid dividend yields, both of which fall in the 3% to 4% range.

Count on dividends
Whether you invest in the Dow or elsewhere in the market, don't discount the value of dividends. Often, they'll be the most important factor in producing a positive return on your investment.

Find out how Merck hopes to boost its returns while overcoming its patent-cliff challenges by reading our new premium research report on Merck, in which the Fool tackles all of the company's moving parts, its major market opportunities, and reasons to both buy and sell. To find out more click here to claim your copy today.

Why Gilead Sciences Is Poised to Keep Poppin'

Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, biotech giant Gilead Sciences (NASDAQ: GILD  ) has earned a respected four-star ranking.

With that in mind, let's take a closer look at Gilead, and see what CAPS investors are saying about the stock right now.

Gilead facts

Headquarters (founded)	Foster City, Calif. (1987)
Market Cap	$85.1 billion
Industry	Biotechnology
Trailing-12-Month Revenue	$10.0 billion
Management	Chairman/CEO John Martin President/COO John Milligan
Return on Equity (average, past 3 years)	36.5%
Cash/Debt	$1.9 billion / $8.0 billion
Competitors	Bristol-Myers Squibb  GlaxoSmithKline Pfizer

Sources: S&P Capital IQ and Motley Fool CAPS.

On CAPS, 97% of the 2,253 members who have rated Gilead believe the stock will outperform the S&P 500 going forward.

Just yesterday, one of those Fools, TMFTailwind, succinctly summed up the Gilead bull case for our community:

Very profitable company, and I expect [Gilead's] streak of profitability to continue to increase. No significant patent expiration until 2018. With the current success in the HIV market, if the company can find success in a new category via R&D efforts, this could turn out to be a big winner.

If you want market-thumping returns, you need to put together the best portfolio you can. Of course, despite a strong four-star rating, Gilead may not be your top choice.

We've found another stock we are incredibly excited about -- excited enough to dub it "The Motley Fool's Top Stock for 2013." We have compiled a special free report for investors to uncover this stock today. The report is 100% free, but it won't be here forever, so click here to access it now.

Why Acacia Research's Shares Dropped

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

What: Shares of Acacia Research (NASDAQ: ACTG  ) fell 11% today after the company released disappointing earnings.

So what: Revenue dropped 54% in the second quarter, to $23.1 million, and the company lost $12.5 million, or $0.26 per share, during the quarter. On an adjusted basis, the company earned $0.13 per share, but even that was well below the $0.47 analysts expected. 

Now what: Results can fluctuate wildly quarter to quarter but the general trend for Acacia is downward, and that's concerning. For the six months ended June 30, the company's revenue fell 33%, and earnings dropped 67%, mainly due to higher litigation costs. The bottom line is that this is a highly risky stock, and technology companies that may license their patents don't necessarily see the patent portfolios as the deterrent management hoped it would be.

.Interested in more info on Acacia Research? Add it to your watchlist by clicking here.

Top 5 Warren Buffett Companies To Own For 2014

Warren Buffett's track record and the performance of his conglomerate�Berkshire Hathaway (NYSE: BRK-B  ) speaks for itself. No can question the high-quality businesses that he has�assembled under one umbrella. AIG (NYSE: AIG  ) , on the other hand, served as a prime example of a low-quality and poorly managed business during the financial crisis.

However, as AIG cleans itself up and looks toward the future, is its stock a more attractive long-term play than Buffett's giant? In this video, Motley Fool financials analysts David Hanson and Matt Koppenheffer debate which stock offers investors the most opportunity.�

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

Top 5 Warren Buffett Companies To Own For 2014: American Public Education Inc.(APEI)

American Public Education, Inc., together with its subsidiary, American Public University System, Inc., provides online postsecondary education focusing on the needs of the military and public service communities. The company operates through two universities, American Military University (AMU) and American Public University (APU) serving approximately 110,000 students in the United States and internationally. The universities share a common faculty and curriculum, which includes 87 degree programs and 69 certificate programs in disciplines related to national security, military studies, intelligence, homeland security, criminal justice, technology, business administration, education, nursing, and liberal arts. The company was founded in 1991 and is headquartered in Charles Town, West Virginia.

Top 5 Warren Buffett Companies To Own For 2014: Expedia Inc.(EXPE)

Expedia, Inc., together with its subsidiaries, operates as an online travel company in the United States and internationally. It provides travel products and services to leisure and corporate travelers, offline retail travel agents, and travel service providers through a portfolio of brands, including Expedia.com, hotels.com, Hotwire.com, Expedia Affiliate Network, Classic Vacations, Expedia Local Expert, Expedia CruiseShipCenters, Egencia, eLong, Inc., and Venere Net SpA. The company?s travel offerings consist of airline tickets, hotel rooms, car rentals, destination services, cruises, and package travel provided by various commercial airlines, lodging properties, car rental companies, destination service providers, cruise lines, and other travel product and service companies on a stand-alone and package basis. It also facilitates the booking of hotel rooms, airline seats, car rentals, and destination services from its travel suppliers; and acts as an agent in the transa ction, passing reservations booked by its travelers to the relevant travel provider. The company was founded in 1996 and is headquartered in Bellevue, Washington.

Advisors' Opinion:

• [By James K. Glassman]

   Like rival Priceline.com, online travel company Expedia is focusing on international growth. Along with its namesake site, the company runs Hotels.com and Hotwire.com, as well as the European online hotel booking site Venere.com. Expedia also has a majority stake in eLong.com, a Chinese online travel agency. Expedia also recently acquired Nordic travel company Via Travel. 
  
  Expedia had cash flow of $1.0 billion in 2011, with depreciation of $155 million and capital expenditures of $208 million. The company recently announced that it is boosting its quarterly dividend by 4 cents, to 13 cents a share; at $52.91, the stock yields 1.0%.

Best Stocks To Own For 2014: Autobytel Inc.(ABTL)

Autobytel Inc. operates as an automotive marketing services company in the United States. It assists automotive retail dealers and manufacturers to market and sell new and used vehicles to consumers through its online purchase request referrals, dealer marketing products and services, and online advertising programs and data products. The company provides vehicle purchase request programs, including new vehicle purchase request program, which allows consumers to submit requests for pricing and availability of specific makes and models; used vehicle purchase request program that allows consumers to search for used vehicles according to specific search parameters, such as the price, make, model, mileage, year, and location of the vehicle; and finance purchase request program designed to provide consumers the opportunity to obtain vehicle financing and other services from dealers or finance institutions. Its network of company-owned consumer-facing automotive Websites compris e Autobytel.com, which provide consumers the information and tools to aid them with their automotive purchase decisions and the ability to submit inquiries requesting dealers to contact the consumers for purchasing or leasing vehicles. In addition, the company provides products and services that assist dealers in connecting with in-market consumers and closing vehicle sales. The company, formerly known as Autobytel.com Inc., was founded in 1995 and is headquartered in Irvine, California.

Top 5 Warren Buffett Companies To Own For 2014: Silvercorp Metals Inc (SVM.TO)

Silvercorp Metals Inc., together with its subsidiaries, engages in the acquisition, exploration, development, and mining of precious and base metal properties in China and Canada. It operates four silver-lead-zinc mines comprising the Ying, TLP, HPG, and LM mines located in the Ying Mining District in the Henan Province of China. The company also holds interests in the XBG silver-gold-lead-zinc mine with a mining permit covering 26.36 square kilometers (km2); and the XHP silver-gold-lead-zinc mine comprising a 14 km2 mining permit located in the Ying Mining District in Henan Province of China. In addition, it engages in operating the BYP gold-lead-zinc project in Hunan Province, and mining at the GC silver-lead-zinc project in Guangdong Province in China. The company was formerly known as SKN Resources Ltd. and changed its name to Silvercorp Metals Inc. in May 2005. Silvercorp Metals Inc. is headquartered in Vancouver, Canada.

Top 5 Warren Buffett Companies To Own For 2014: PulteGroup Inc.(PHM)

PulteGroup, Inc., through its subsidiaries, engages in homebuilding and financial services businesses primarily in the United States. The company?s homebuilding business includes the acquisition and development of land primarily for residential purposes within the United States; and the construction of housing on such lands. It offers various home designs, including single-family detached, townhouses, condominiums, and duplexes under the Pulte Homes, Del Webb, and Centex brand names. As of December 31, 2011, its homebuilding operations offered homes for sale in approximately 700 communities. The company?s financial services business consists of mortgage banking and title operations. It arranges financing through the origination of mortgage loans for its homebuyers; sells such loans and related servicing rights; and provides title insurance policies as an agent, and examination and closing services to its home buyers. The company was formerly known as Pulte Homes, Inc. an d changed its name to PulteGroup, Inc. in March 2010. PulteGroup, Inc. was founded in 1956 and is headquartered in Bloomfield Hills, Michigan.

Say Hello to the New Alkermes

It's not easy to reinvent yourself in the biotechnology sector, but that's exactly the path that Alkermes (NASDAQ: ALKS  ) CEO Richard Pops has decided to take his company.

Source: Michael Chen, Flickr.

Over the last half-decade, we've witnessed a huge surge in the number of biotech companies that are geared toward treating orphan diseases (those that affect 200,000 or fewer people). There's absolutely nothing wrong with this given that people with rare diseases need treatment as well, and there can often be big profits in it for companies that put in the time and research dollars.

Alexion Pharmaceuticals (NASDAQ: ALXN  ) , for example, is currently worth more than $21 billion because of its focus on rare diseases. Its lone drug approved by the Food and Drug Administration, Soliris, is the most expensive drug in the world and is approved to treat a rare blood disorder known as paroxysmal nocturnal hemoglobinuria and atypical hemolytic uremic syndrome. This year alone, Soliris is expected to top $1.5 billion in sales.

The downside is that rare-disease drugs sometimes cost more to make than the company can actually recoup. That and competition among peers is growing with companies realizing what potential rare disease research can offer.

This is why Pops decided he needed to steer his company down a different path and focus Alkermes on treating chronic diseases -- but with a twist.

Headed in a new direction
Yesterday, during its annual research and development meeting with analysts and investors, Alkermes unveiled its new plan: target large chronic diseases, but also specific subsets of the population within those diseases that may benefit from its improvements and technology. Alkermes plans to accomplish this by introducing three new early-stage compounds, and focusing on the development of other ongoing mid- and late-stage studies.

The bulk of the excitement stems from Alkermes' soon to be early stage clinical studies: an MMF prodrug to treat multiple sclerosis, ALKS-7106 for the treatment of pain, and RBD-1419, a cancer immunotherapy based on IL-2 and its receptors. 

Monkey see, monkey do (better)
I believe the "wow" of Alkermes analyst day was the company's assertion that it's going to attempt to formulate a next-generation version of Biogen Idec's (NASDAQ: BIIB  ) recently approved MS-relapse reducing drug Tecfidera. Without getting too technical, Tecfidera is a dimethyl fumarate prodrug, whereas Alkermes is attempting to develop a drug that'll convert to monomethyl fumarate, or MMF, in the body. The goal being to potentially develop an MS treatment that could be taken as little as once a day to help with patient dosing, and that's considerably safer than Tecfidera, especially for those who have to take the drug over the long term. Tecfidera in its own right is a considerably safer MS drug than many of its competitors, so this could be a tough drug to dethrone. Alkermes plans to initiate early-stage studies on its MMF prodrug by mid-2014.

ALKS-7106 for the treatment of pain has big potential as it encompasses a broad audience, but it'll need to overcome the common stigma of pain drugs with regard to easy abuse potential. According to the press release, Alkermes will be introducing newer technology that will make its opioid-based drug more resistant to abuse. It should be curious to see how well this performs as there aren't many successful abuse-resistant drugs, or companies developing those drugs for that matter. Acura Pharmaceuticals (NASDAQ: ACUR  ) , for instance, successfully brought moderate-to-severe painkiller Oxecta to market in 2011 (which it subsequently licensed to Pfizer) and a bioequivalent version of decongestant pseudoephedrine to market last year, but sales of neither drug has exactly taken off. Like with its MMF prodrug, Alkermes anticipates a mid-2014 clinical trial launch date.

The third exciting early-stage candidate is RBD-1419, a cancer immunotherapy that's designed to stimulate and enhance the body's own immune system to deliver an effective anti-tumor response against malignant and metastatic cancer. Specifically, RBD enhances interleukin-2, a protein responsible for sending messages between white blood cells, which may encourage them to more aggressively attack cancerous cells -- which in Alkermes' model is based on metastatic lung cancer. Alkermes anticipates engaging in investigation new drug-enabling activities with RBD-1419 sometime next year.

But there's much more
Investors certainly seemed pleased with Alkermes' new studies, but let's not forget that it also announced the initiation of a mid-stage study on its antipsychotic medication ALKS-3831, and has other late-stage studies in the works.

ALKS-3831 could represent a major improvement for those suffering from schizophrenia. The drug is a combination of a new opioid modulator, ALKS-33, and Eli Lilly's (NYSE: LLY  ) Zyprexa that will target a level of equal of better treatment of symptoms while looking to lessen or eliminate one of the most serious side effects of taking Zyprexa -- rapid weight gain. In addition to patients who experience weight gain, Alkermes' press release notes ALKS-3831 could be effective in patients who receive a dual diagnosis of substance abuse disorder. Top-line results from this study should be available by the first half of 2015. 

ALKS-5461 is another exciting mental disorder drug candidate that Alkermes recently reported positive mid-stage data on. Designed to treat major depressive disorder, Alkermes' oral, non-addictive, opioid-modulating drug met its primary endpoint of changing the baseline in depressive symptoms over the course of four weeks for a patient pool of 142 people. Peak sales estimates for the drug are around $500 million, but it could have far higher potential given the difficult nature of the disease to treat. Let's not forget that Vanda Pharmaceuticals reported in January that tasimelteon failed to meet its primary endpoint in treating MDD in an early phase trial, so bringing an effective treatment to market isn't nearly as easy as it might sound.

What's a shareholder to do?
What to do next if you're an Alkermes shareholder is probably the toughest question to answer.

On one hand, Alkermes has already moved higher by nearly 100% from its 52-week lows and is years away from bringing these novel early-stage studies to market. On the other hand, the full-year earnings report from Alkermes' existing product pipeline delivered robust growth. For fiscal 2013, Alkermes delivered revenue growth of 48% to $575.5 million.

The bottom line is that Alkermes is healthfully profitable and saw cash flow generation soar from just $23 million in 2012 to $157.3 million in fiscal 2013. This cash flow is the key to funding new research and certainly makes Alkermes a compelling biopharmaceutical company that should, at minimum, be on your watchlist considering the forthcoming nature of CEO Richard Pops regarding the company's pipeline.

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3 Reasons Why Google Will Shine Tomorrow

Google (NASDAQ: GOOG  ) is gearing up to report quarterly results tomorrow afternoon, and it's easy to be worried.

The stock hit a new all-time high this week, fueling expectations that may be hard to live up to tomorrow. Smaller rival Yahoo! (NASDAQ: YHOO  ) posted disappointing growth metrics yesterday. Analysts also see Google growing its earnings per share by less than 7%, possibly questioning if Google is really worth 20 times this year's projected profitability.

Well, don't fret. Let's go over a few reasons why Big G may come out of this just fine.

1. Yahoo! isn't Google
Yahoo! may have set a dreary tone for online advertising yesterday afternoon by posting an 11% slide in display advertising revenue. However, Yahoo! has been marching to its own beat for years, and thankfully for Google it's not the same as what the online advertising leader is playing.

Yahoo! also posted an 8% decline in cost-per-click -- excluding Korea -- but made it up in volume with a 21% spike in the number of clicks. Now that is a trend that we've seen at Google in recent quarters, but this is really a more damaging indicator for Microsoft (NASDAQ: MSFT  ) than it is for Google. Microsoft's Bing is the one powering Yahoo!'s paid search, and it naturally doesn't have the pricing power and breadth that Google commands globally. Since Microsoft takes a 12% cut of Yahoo!'s action here, that is the company that may be following Yahoo!'s lead when it reports tomorrow.

(Yes, Google and Microsoft both report tomorrow.)

2. Google beats more often than not
For a company that doesn't provide guidance, Google has historically found a way to land ahead of Wall Street forecasts.

It's not perfect, but Google has posted better-than-expected earnings in three of the past four quarters. In a welcome trend, its biggest beat came just three months ago when it landed 9% ahead of the analyst average.

So, sure, analysts are only targeting net income per share to climb by a mere 7% tomorrow -- but the smart money has to be betting on something slightly better. 

3. Don't underestimate the innovator that Big G has become
A lot of people see Google as the top dog in search and online advertising, but the dot-com darling is more than just that. Let's not even talk about Android, where Google's mobile platform is the world's mobile operating system of choice for smartphones (and to a lesser extent, tablets).

Google has become a game changer in some pretty unexpected ways. From wearable computing with its Google Glass to broadband connectivity with Google Fiber, this is a company that's thinking way outside of the search box.

Recent chatter has tied Google to rolling out a nationwide Web-based TV service, pushing to commercialize its self-driving car technology, and even introducing an Android-propelled video game console.

Google probably won't use its earnings call to officially announce that it's entering new niche markets, but innovation is clearly in its DNA. It wouldn't surprise anyone if it did spring some ambitious goals for expanding its bar-raising creations, leading analysts to broaden their perspectives for what's possible here.

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2 American Icons to Buy, 2 You Should Be Selling

When it comes right down to it, nothing is more American than the desire to achieve and to profit. In fact, buying great American companies has been a winning strategy of mine over the years. The key is to buy the right ones at the right time.

With that in mind, I thought I would take a look at some great American companies and see how they stack up in today's market.

Home Depot (NYSE: HD) is one of the truly great American success stories. The company started in 1978 with two stores in Atlanta and has been the fastest-growing retailer in U.S. history. Today the company has 2,257 stores in the U.S., Mexico and Canada. It's the world's largest home improvement retailer -- and with the real estate markets starting to improve, Home Depot is in the sweet spot for future growth.

As American's situation continues to improve, they will feel more comfortable spending money to fix up their houses and improve their yards. And Home Depot's dominance of the marketplace means the company will see a lot of this spending. Portfolio Grader, my proprietary stock grading tool, has ranked the stock a "Buy" all year -- this month the stock was upgraded to an "A" and is a "Strong Buy."

Kellogg (NSYE: K) was founded in 1906 by W.K. Kellogg and his brother Dr. John Kellogg. The company used aggressive advertising, giveaways and premiums to rapidly gain market share in the domestic market. Eventually the company expanded internationally; today it is one the largest food companies in the world, with a large portfolio of cereals, snacks and other food items.

 

In 2012 Kellogg purchased the Pringles lineup of snacks from Procter & Gamble (NYSE: PG), making it the world's second-largest snack food company. Kellogg's already strong fundamentals have been improving with the economy and the shares were upgraded back in April -- this stock is also currently a "Strong Buy."

The unfortunate truth is that not all great companies make great investments. There are times during the market and economic cycle where conditions don't favor even the very best of companies. When these great companies are out of step with the stock market, investors should stand on the sidelines.

Here are two giants of U.S. industry whose stocks should be sold right now:

IBM (NYSE: IBM) has dominated the computer and IT space for decades, but right now those industries are growing at a snail's pace. IBM is one of the most innovative companies in the world, with offices in 170 countries around the globe, but the pace of business is still too slow for substantial fundamental improvement.

This great company will be a great stock again at some point, but for now, investors would be wise to avoid the shares. The stock was downgraded back in May to a "D" rating, and IBM shares have retained their "sell" recommendation since then.

So it goes with Coca-Cola (NYSE: KO). The distinctive outline of a Coca-Cola bottle defines America in many foreign countries, and it is the dominant soft drink company in the world. However, sales growth will be in the low single digits for the next few years as business conditions around the world remain soft.

Right now, not enough people want to buy the world a Coke for the fundamentals to improve substantially, so expect the stock to continue to lag. KO was recently downgraded to a "D," and thus should be avoided or sold by growth-oriented investors.

The U.S. has seen some of the most revolutionary and important companies from inside its borders, and we have a reputation for the type of innovation and hard work that builds great companies. But in spite of their greatness, they are all subject to the cycles and whims of the economy. The fundamentals of these great companies will be in the sweet spot for investors at times and at others they simply will not be positioned for profits.

P.S. -- I've seen booms, plunges and meltdowns (and everything in between) over the last 14 years as editor of Blue Chip Growth. Yet I've consistently delivered high double-digit annual returns to my followers, while growing many of them into triple-digit gainers, using our "3-Step Pullback Profits Formula." Once you apply it yourself, you could transform every market top into a profit-pulling opportunity and every crash into a long-term fortress of wealth. If you want to make money even if everyone else is losing theirs -- click here now. This Special Edition of Blue Chip Growth shows you how.

5 Best Penny Stocks To Own Right Now

When things go bad for high-profile Wal-Mart (NYSE: WMT  ) , it can get ugly. The discount retailer has hit another public relations speed bump given its guilty plea to charges of improper disposal of hazardous waste, with pollutants having gone down sanitation drains in California. The company will pay a pretty penny: an $81 million fine, which also covers related allegations in Missouri.

In its press release, Wal-Mart explained that the charges stem from activities that took place years ago, that regulators did not allege specific environmental impact, and that it now has comprehensive environmental programs in place. It gave examples of its more responsible methods for disposing of such waste after it began implementing stringent environmental measures in 2006, some of which the EPA�says go above and beyond regulatory laws.

5 Best Penny Stocks To Own Right Now: Comtech Telecommunications Corp.(CMTL)

Comtech Telecommunications Corp. engages in the design, development, production, and marketing of products, systems, and services for advanced communications solutions in the United States and internationally. It operates in three segments: Telecommunications Transmission, Mobile Data Communications, and RF Microwave Amplifiers. The Telecommunications Transmission segment provides satellite earth station equipment and systems, over-the-horizon microwave systems, and forward error correction technology, which are used in various commercial and government applications, including backhaul of wireless and cellular traffic, broadcasting (including HDTV), IP-based communications traffic, long distance telephony, and secure defense applications. The Mobile Data Communications segment provides mobile satellite transceivers, and computers and satellite earth station network gateways and associated installation, training, and maintenance services; supplies and operates satellite pac ket data networks, including arranging and providing satellite capacity; and offers microsatellites and related components. The RF Microwave Amplifiers segment designs, develops, manufactures, and markets satellite earth station traveling wave tube amplifiers (TWTA) and broadband amplifiers. Its amplifiers are used in broadcast and broadband satellite communication; defense applications, such as telecommunications systems and electronic warfare systems; and commercial applications comprising oncology treatment systems, as well as to amplify signals carrying voice, video, or data for air-to-satellite-to-ground communications. The company serves satellite systems integrators, wireless and other communication service providers, broadcasters, defense contractors, military, governments, and oil companies. Comtech markets its products through independent representatives and value-added resellers. The company was founded in 1967 and is headquartered in Melville, New York.

5 Best Penny Stocks To Own Right Now: Kohlberg Capital Corporation(KCAP)

Kohlberg Capital Corporation is a private equity and venture capital firm specializing in buyouts and mezzanine investments. It focuses on mature and middle market companies. The firm structures its investments through senior debt, second lien debt, secured and unsecured subordinated debt, mezzanine debt, and equity. It invests in all sectors except cyclical industries. The firm invests equity in both minority and control transactions alongside other equity investors. It invests through its own balance sheet. Kohlberg Capital Corporation is based in the New York, New York.

10 Best Stocks To Buy For 2014: Jewett-Cameron Trading Company(JCTCF)

Jewett-Cameron Trading Company, Ltd., through its subsidiaries, engages in the warehouse distribution and direct sale of wood products and specialty metal products to home centers and other retailers primarily in the United States. It operates in four segments: Industrial Wood Products; Lawn, Garden, Pet, and Other; Seed Processing and Sales; and Industrial Tools and Clamps. The Industrial Wood Products segment processes and distributes industrial wood products; and provides treated plywood to boat manufacturers and the transportation industry. The Lawn, Garden, Pet, and Other segment wholesales wood products, including fencing and landscape timbers; and manufactures and distributes specialty metal products comprising dog kennels, proprietary gate support systems, perimeter fencing, and greenhouses. The Seed Processing and Sales segment processes, distributes, and sells agricultural seeds to distributors. The Industrial Tools segment imports and distributes products, inclu ding pneumatic air tools, industrial clamps, and saw blades. The company was founded in 1953 and is headquartered in North Plains, Oregon.

5 Best Penny Stocks To Own Right Now: Ocean Bio-Chem Inc.(OBCI)

Ocean Bio-Chem, Inc. engages in the manufacture, marketing, and distribution of various appearance and maintenance products for boats, recreational vehicles, automobiles, and home care markets under the Star brite brand name, as well as private label formulations in the United States and Canada. The company?s marine product line consists of polishes, cleaners, protectants, and waxes of various formulations. This line also includes motor oils, boat washes, vinyl cleaners, protectants, teak cleaners, teak oils, bilge cleaners, hull cleaners, silicone sealants, polyurethane sealants, polysulfide sealants, gasket materials, lubricants, antifouling additives, and anti-freeze coolants, as well as brushes, poles and tie-downs, and other related marine accessories. Its automotive product line comprises hydraulic, gear, and motor oils; anti-freeze and windshield washes; and automotive polishes, cleaners, and associated appearance items. Ocean Bio-Chem also offers cleaners, polishes , detergents, fabric cleaners and protectors, silicone sealants, water proofers, gasket materials, degreasers, vinyl cleaners, protectors, toilet treatment fluids, and anti-freeze coolants to the recreational vehicle/power sports markets. In addition, it blends and packages various chemical formulations, as well as manufactures PVC and HDPE blow molded bottles. Further, the company offers StarTron enzyme fuel treatment for diesel and gas engines, as well as for the recreational vehicles, including snow mobiles, all terrain vehicles, and motorcycles. It sells its products to retail outlets through retailers and distributors. The company was formerly known as Star brite Corporation and changed its name to Ocean Bio-Chem, Inc. in 1984. Ocean Bio-Chem, Inc. was founded in 1973 and is headquartered in Fort Lauderdale, Florida.

5 Best Penny Stocks To Own Right Now: (ENTI)

Encounter Technologies, Inc. operates as an online video distribution and technology company that launches proprietary syndication platforms and offers a range of video technology and distribution services to other companies. The company develops and programs solutions for the online streaming, distribution, and networking, as well as for the social network and distribution platforms. It offers end-to-end technology and online marketing services, including design, build, hosting, and online marketing support. The company primarily operates GlobalAdOn.com, a patented technology for the yellow pages publishing industry. Its sales and management platform facilitates the sales and video production process for Internet yellow page publishers and their sales forces, as well as integrates and facilitates various processes, such as video shoot, sales rep, and publisher. The company was formerly known as Encounter.com, Inc. and changed its name to Encounter Technologies, Inc. in De cember 2009. Encounter Technologies, Inc. is based in Fort Myers, Florida.

Advisors' Opinion:

• [By Stock Chaser]

  Encounter Technologies, Inc. (PINK:ENTI) is up 75% at $0.0007 with an intraday high of $0.0008. Encounter Technologies announced today that they are in strategic discussions with Pegasus Tel, Inc.

The Biggest Threat to Coca-Cola Earnings

Coca-Cola (NYSE: KO  ) is scheduled to release its quarterly earnings report tomorrow, and the soft-drink giant is a prime example of how the slowdown in the global economy has affected prospects for multinational companies that have relied on going beyond their home countries to find profit opportunities. Even though most of the stocks in the Dow Jones Industrials (DJINDICES: ^DJI  ) have a multinational component, Coca-Cola in particular has benefited from the worldwide reach of its top-ranked brand: Well more than half its revenue and nearly three-quarters of its profit come from outside North America.

Lately, though, Coca-Cola's growth in its international markets has slowed as Europe has suffered economic headwinds and growth rates in emerging-market areas like Latin America and the Pacific region have slowed. Are the good times over for the company? Let's take an early look at what's been happening with Coca-Cola over the past quarter and what we're likely to see in its quarterly report.

Stats on Coca-Cola

Analyst EPS Estimate	$0.63
Change From Year-Ago EPS	3.3%
Revenue Estimate	$12.97 billion
Change From Year-Ago Revenue	(0.9%)
Earnings Beats in Past 4 Quarters	3

Source: Yahoo! Finance.

Will Coca-Cola earnings stay fizzy or fall flat this quarter?
In recent months, analysts have been a little bit pessimistic about Coca-Cola's earnings prospects, cutting $0.02 per share off their June-quarter estimates and a penny per share from their full-year 2013 and 2014 consensus earnings figures. The stock has seen similarly unenthusiastic performance, with shares up less than 1% since early April.

Lately, Coca-Cola has been having a serious growth problem. In its previous quarter, the company saw revenue decline by about 1%, and although it managed to beat earnings and sales expectations, earnings per share didn't provide any year-over-year growth, even when adjusting for unusual items. International volume growth of 5% sounds reasonably strong, especially given larger gains of 8% to 18% in areas like Thailand, India, and Russia. But China was weak, and with the continued pressure on the Chinese economy, those difficulties might persist for quite a while.

In order to bolster growth, Coke has made a number of innovative moves. Its Freestyle fountain machine has started to gain in popularity, as restaurant chains including Burger King (NYSE: BKW  ) have signed on to put machines in their stores. Burger King will implement the mix-and-match soda machines in its company-owned locations, likely hoping to benefit from their novelty factor, as many of Burger King's restaurants give customers direct access to fountain drinks. Coca-Cola could also use the machines as an environmentally friendly rebuttal to SodaStream (NASDAQ: SODA  ) and its attacks on the drink giant, as Freestyle doesn't require bottling and therefore has the same advantages as SodaStream's home carbonators. SodaStream's campaigns have been fairly effective in highlighting the value of its own product, although it's a stretch to blame Coca-Cola's struggles on the carbonator-maker. Meanwhile, in its efforts to help make its product more available even in areas without electricity, Coca-Cola started an initiative to provide small solar-power kits to kiosk owners in Kenya.

Coca-Cola is also fighting against health concerns about its products. It joined PepsiCo (NYSE: PEP  ) in offering a lower-calorie soft drink with a combination of regular and non-caloric sweeteners. With the help of CEO Indra Nooyi, Pepsi has done a good job of leading the health-conscious fight, with its snacks division also seeking ways to improve on the healthfulness of its products. Coke responded in May, announcing its global anti-obesity campaign that will combine low-calorie drinks with program sponsorships to encourage physical activity.

In the Coca-Cola earnings report, be sure to watch for signs of how the company is dealing with the macroeconomic stresses it faces across the world. With dollar strength potentially weighing on its earnings, look past those figures at volume growth and other important considerations to figure out whether Coca-Cola can get its earnings growing quickly enough to justify its somewhat rich valuation.

Profiting from our increasingly global economy can be as easy as investing in your own backyard. The Motley Fool's free report "3 American Companies Set to Dominate the World" shows you how. Click here to get your free copy before it's gone.

Click here to add Coca-Cola to My Watchlist, which can find all of our Foolish analysis on it and all your other stocks.