Diamonds, Suits, Handbags. What More Could Wall Street Want?

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

The major indexes hardly moved today, with the Dow Jones rising just 0.26 points, or less than 0.01%, while the S&P 500 moved up by only 0.01%. Nevertheless, a number of retailers made some big moves this afternoon, even amid all the warnings, both on and off Wall Street, that this holiday shopping season is going to be a big disappointment. Perhaps those warnings won't apply to the companies that made a splash today.

It all started with high-end jeweler Tiffany (NYSE: TIF  ) reporting quarterly earnings before the opening bell this morning. The company posted a 50% increase in net earnings, amounting to $0.73 per share, well above the $0.49 Wall Street was expecting, and a 7% increase in sales, which hit $911 million -- again better than the $889 million analysts were looking for.

The bulk of the gains came from the Asia-Pacific region, as an increase in fashion jewelry and colored diamonds experienced higher-than-normal demand. Tiffany experienced a 27% increase in sales in the Asia-Pacific region, while it saw only a 4% and 7% jump in the Americas and Europe. In addition, the company revised its full-year guidance higher after the strong quarter to an earnings-per-share range of $3.65 to $3.75, up from $3.50 to $3.60 per share. Shares of Tiffany ended the day higher by 8.68%.  

The positive results from the high-end retailer helped pushed shares of Coach (NYSE: COH  ) higher by 3.3% today, even though the stock was downgraded this morning. Analysts at Standpoint Research who just about a month ago slapped a "buy" rating on the fashion accessories company told investors to now hold, with the stock of the mid-high-end handbag designer having increased by around 15% from the initial call.  

And finally, the fight over who has a better suit heated up today, as Men's Wearhouse (NYSE: MW  ) made a bid to buy out competitor for Jos. A. Bank (NASDAQ: JOSB  ) for $55 per share. This offer comes just weeks after Jos. A. Bank offered to buy Men's Wearhouse -- a bid that was quickly turned down. It's clear that the two sides want to make a deal, but it's not so clear how much the acquisition will cost. Shares of Jos. A. Bank rose 11.25% today and closed at $56.29, $1.29 above the offer price, while investors bid Men's Wearhouse shares up 7.5% to $50.60 per share. A united company would probably be more efficient and command higher margins, but if the purchase price is too high, it doesn't make sense for either side to purse a takeover. Current investors should sit back and be happy with any price they get, but it's probably not worth the risk to throw new money at either company right now.

A deeper Foolish perspective
Not impressed with any of the retailers mentioned here? No worries! In one of The Motley Fools newest special free reports, "The Death of Wal-Mart: The Real Cash Kings Changing the Face of Retail," you're sure to find what you're looking for. In the report you'll see how these two cash kings are able to consistently outperform, and how they're planning to ride the waves of retail's changing tide. You can access it by clicking here.

Stocks to Watch: Foot Locker, Ann, PetSmart

Among the companies with shares expected to actively trade in Friday’s session are Foot Locker Inc.(FL), Ann Inc.(ANN) and PetSmart Inc.(PETM)

Foot Locker’s fiscal third-quarter profit slipped 1.9%, as the athletic-apparel retailer’s higher expenses masked growth in same-store sales. Foot Locker’s same-store sales rose 4.1% in the quarter, keeping up a growth trend that has lasted for several years and helping results beat expectations. Shares edged up 2.8% to $37.80 premarket.

Ann’s fiscal third-quarter earnings edged up 1.1% as the women’s apparel retailer posted stronger revenue, despite weaker margins and a sales decline at its Ann Taylor Factory business. Top- and bottom-line results beat views, but margins narrowed more than the company expected. Shares dropped 1.9% to $35.60 premarket.

PetSmart’s fiscal third-quarter earnings rose 12% on higher revenue from its pet services business. But it gave a weak current-quarter outlook and narrowed its sales outlook for the year. Shares edged down 1.6% to $73.40 premarket.

Violin Memory Inc.’s fiscal third-quarter loss widened, with higher operating expenses masking increased revenue and wider margins. Shares slumped 46% to $3.25 premarket as the company offered downbeat revenue guidance for its fiscal fourth quarter.

Fresh Market Inc.'s(TFM) fiscal third-quarter profit inched up 1.6% as top line was boosted by new store openings and rising demand at existing locations. But shares slid 15% to $42.96 in premarket trading, as growth for the period was weaker than analysts expected and the specialty grocer trimmed its full-year profit outlook.

Intel Corp.(INTC) predicted revenue will be about flat in 2014, as a decline in sales of chips for personal computers counters sales growth in other product areas. Shares dropped 3.2% to $24.43 premarket.

Ross Stores Inc.’s fiscal third-quarter profit rose 7.6%, driven by a bump in sales. However, shares were down 7.8% at $74.01 premarket as sales growth underperformed expectations and the company offered guidance for its fiscal fourth quarter below analysts’ estimates.

Aruba Networks Inc.’s fiscal first-quarter earnings loss widened on higher operating costs that offset the wireless-networking equipment maker’s revenue growth. Shares were up 12% at $19.23 in premarket trading as adjusted earnings and revenue beat expectations.

Marvell Technology Group Ltd.’s fiscal third-quarter earnings grew 50% as the chip maker recorded higher revenue amid improving demand from mobile, wireless and storage customers. Shares grew 5% to $14.52 premarket, as results for the period topped expectations and Marvell issued a rosy view for the current quarter.

Autodesk Inc.’s fiscal third-quarter profit nearly doubled, due in large part to lower restructuring expenses while slight top-line growth was driven by an increase in subscription revenue.

Celgene Corp.(CELG) received a positive opinion for its pancreatic-cancer treatment Abraxane from the European Medicines Agency’s Committee for Medicinal Products for Human Use, paving the way for potential approval of the treatment.

Gap Inc.'s(GPS) fiscal third-quarter profit grew 9.4% as the apparel retailer reported particularly strong sales in markets abroad and higher online sales. The company, which affirmed its full-year earnings outlook, also disclosed its board approved a new $1 billion share-repurchase program.

Hibbett Sports Inc. posted a 2.5% jump in sales, driven by a strong back-to-school season, while higher store operating costs weighed on the bottom line. Results beat estimates, and the retailer raised the lower end of its earnings guidance for the year.

Intuit Inc.’s fiscal first-quarter loss narrowed as the tax software company benefited from double-digit revenue growth and gains from the sale of two business segments.

Mentor Graphics Corp.’s fiscal third-quarter profit fell 17% as the chip-design software company recorded a jump in expenses that masked a slight uptick in revenue.

Pandora Media Inc.(P) swung to a fiscal third-quarter loss as the Internet-radio provider spent more on content and sales and marketing, masking a jump in revenue as users listened to more music.

Professional services provider Towers Watson & Co. agreed to acquire employee benefits company Liazon Corp. for $215 million in cash to boost its benefits services business. The benefits and personnel company is interested in Liazon for its online benefits marketplace for companies and employees.

United Parcel Services Inc.(UPS) will raise overall prices across many ground service and air freight services an average of 4.9% next year, the latest shipping company to indicate an uptick in pricing.

Japanese Stocks Carrying Momentum Toward May Peak on Yen

Japanese stocks are poised to surpass this year's high set in May as a stronger U.S. economy weakens the yen and Prime Minister Shinzo Abe's reflation policy leads to wage increases, according to BNP Paribas Investment Partners SA and SMBC Nikko Securities Inc.

Japan's Nikkei 225 Stock Average capped a 7.7 percent jump last week, the steepest rally in almost four years, after Janet Yellen, the nominee to succeed Ben S. Bernanke as Fed chairman, said she will ensure bond-buying isn't ended until she sees a robust recovery. A 3.1 percent gain would take the equity gauge past a 5 1/2-year high reached May 22. The yen dropped past 100 versus the dollar last week for the first time in two months.

"U.S. quantitative easing will be reduced eventually, but that won't have much of a negative impact because it happens on the back of the strong economic recovery," said Gentoku Kiyokawa, Tokyo-based head of the Japanese investment management department at BNP Paribas. "Japanese stocks will keep climbing toward their May high and pass that level by the end of this year."

Japanese equities surged the most among developed markets in 2013 as policy makers at home and in the U.S. bolstered growth with unprecedented stimulus measures. The rally petered out last month as investors weighed the impact of a sales-tax increase on the domestic economy and stronger U.S. data that signaled the Fed may pare asset purchases sooner. BNP Paribas' bullishness contrasts with Saison Asset Management Co. and Sompo Japan Nipponkoa Asset Management Co., which say Japanese stocks are now rising too far, too fast.

Biggest Gains

Pioneer Corp. led gains on the Nikkei 225 (NKY) last week, surging 20 percent as the maker of car stereos posted an operating profit of 569 million yen ($5.7 million) for the six months ended September. Analysts had expected a 2.5 billion-yen loss, according to estimates compiled by Bloomberg. Fast Retailing Co., Asia's biggest apparel chain and the stock with the heaviest Nikkei 225 weighting, jumped 16 percent.

The broader Topix index climbed 5.3 percent in the five days through Nov. 15, with brokerages leading an advance by all 33 of the gauge's industry groups. The Standard & Poor's Index rose 1.6 percent in the U.S. on the week, gaining to an all-time high after Yellen said the economy and labor market are performing "far short of their potential" and must improve before the central bank can begin reducing monetary stimulus.

As well as watching the Fed, investors in Japan are weighing whether Prime Minister Abe will succeed with the so-called third arrow of his program dubbed Abenomics. The strategy, which has so far relied on increased government spending and a doubling of monthly bond buying by the central bank to more than 7 trillion yen, helped spur the Nikkei 225's 46 percent advance this year.

Rally Catalysts

The Bank of Japan, which holds a two-day meeting this week, has pledged to achieve 2 percent inflation in two years. Large Japanese companies will boost winter bonuses by 5.79 percent this year, the most since 1990, according to the preliminary results of a survey released on Nov. 13 by the Keidanren business lobby group.

"Catalysts for Japanese stocks are how convinced people will be about further monetary easing by the BOJ and wage increases," Ryota Sakagami, chief strategist at SMBC Nikko Securities in Tokyo, wrote in a note on Nov. 15. "They are likely to happen sooner or later. Now Japanese shares are rising on back of the stable global economy, the market might as well start pricing in those catalysts earlier."

Sakagami expects the Topix to rise to 1,350 at the end of this year, 9 percent higher than its Nov. 15 close and a level unseen since June 2008.

Less Bullish

Not all investors are as bullish.

The rally in Japanese stocks will reverse if optimism about the Fed's policy starts fading, said Tetsuo Seshimo, a Tokyo-based portfolio manager at Saison Asset Management, which oversees about 78 billion yen. The Nikkei 225 plunged 20 percent after Bernanke in May mentioned the possibility of tapering.

While pledging her support for stimulus, Yellen also reassured U.S. lawmakers last week that she does not see the era of low interest rates and quantitative easing continuing indefinitely.

"The picture is exactly the same this time, and the market will collapse if there's talk about the Fed's tightening," Seshimo said. "The current rally has been solely based on U.S. monetary easing. That worries me."

Prices for Japanese equities already reflect the U.S. economic recovery and Yellen's support for longer stimulus, leaving them vulnerable to declines, said Goya Nakao, a senior investment manager at Sompo Japan Nipponkoa Asset.

Correction Coming

"Cherry-picking in the share market won't last long," Nakao said by phone on Nov. 15. "Stocks won't be able to avoid having a correction in the near term and the Nikkei will go back to a range between 14,000 and 15,000."

The Nikkei 225 last week climbed above 15,000 for the first time since May and closed on Nov. 15 at 15,165.92. The measure was little changed at 15,164.30 at the close today in Tokyo, while the Topix added 0.2 percent to 1,241.67.

Foreign investors are more optimistic, adding Japanese stock positions in the week through Nov. 8 for the fourth increase in five weeks. They've sunk $111.3 billion into the market this year, Finance Ministry data show.

Japan's equities are benefiting from a sliding yen, with the nation's currency capping its third consecutive weekly drop against the greenback and trading past 100 per dollar on Nov. 14 for the first time since Sept. 11. The yen traded at 100.08 against the greenback today.

A weaker yen boosts the value of overseas revenue for Japanese exporters. Of the companies on the Topix that have reported quarterly earnings this season and for which Bloomberg compiles estimates, 61 percent exceeded analysts' profit expectations.

The currency's decline may send Japanese stocks above the May high by year-end, according to Kazuyuki Terao, Tokyo-based chief investment officer of Allianz Global Investors Japan Co.

"I thought the yen would stay in its stalemate, but it fell below 100 per dollar, which is big," Terao said. "Once confidence builds in the yen's downtrend, I think exporters will be bought more."

Yelp Holders Yelping on Wider Loss and Stock Offering

Yelp Inc. (NYSE: YELP) may have the greatest peer-review website out there, but its earnings report is leaving a lot of investors holding the bag after a serious surge. Yelp’s quarterly loss widened out to -$2.3 million. This comes to -$0.04 in earnings per shares (EPS). The loss a year ago was only at -$0.03 EPS and the Thomson Reuters consensus estimate was only at -$0.01 EPS.

An issue that may further cloud the earnings report is that Yelp has telegraphed that it plans to sell up to $250 million in Class A shares.

Where the story gets better is on revenue growth. Sales were up 68% to $61.2 million, above the $59.4 million expected by analysts. Yelp’s SG&A, measuring sales and marketing, were up about 60% to $34.1 million. Monthly unique users rose by 41^ to some 117 million. Business accounts were up 61%. Roughly 42% of ads were served up to mobile devices, and about 62% of the search came from mobile as well.

Yelp offered up guidance for the coming quarter of $66 million to $67 million in revenue versus analyst expectations of about $64.8 million.

Where things get dicey for Yelp is in how much the stock has risen, on top of that stock offering. Shares were up 1.8% at $68.83 at the closing bell versus a 52-week range of $16.32 to $75.37. That is a gain of over 300% from the end of 2012. With a market cap of $4.5 billion at the close, Yelp traded at 20-times expected 2013 revenue ahead of the earnings report.

Yelp’s stock price was already lower by about 2% to 3% after the reported earnings, but news of this stock offering after such a huge run up in price now has shares down close to 6% at $65.30 in the after-hours trading session.

U.S. wants BofA to pay $2.1B in penalties

NEW YORK (AP) — Federal prosecutors want a judge to order Bank of America to pay $2.1 billion in penalties for knowingly selling bad home loans, more than double the amount the government had sought in the case.

In documents filed Wednesday, the government said it wants Bank of America to make a payment based on its total revenue from the fraud instead of the profit it made.

The U.S. had wanted Bank of America to pay about $864 million over losses it incurred after it bought thousands of home loans made by Countrywide Financial in 2007 and 2008 during the housing boom. A jury found Bank of America liable for knowingly selling the bad loans to mortgage giants Fannie Mae and Freddie Mac. The jury also returned the verdict against Countrywide and a former executive, Rebecca Mairone.

U.S. attorney Preet Bharara made the request for the penalty — the maximum allowed — in documents filed Wednesday with the U.S. District Court in Manhattan.

Bank of America spokesman Lawrence Grayson said the government is seeking too much money and has conceded that the losses from the loans were less than $864 million.

"This claim bears no relation to a limited Countrywide program that lasted several months and ended before Bank of America's acquisition of the company," he said. "We will present the relevant facts in a detailed response soon."

Countrywide, once the biggest mortgage lender in the U.S., played a major role in the collapse of the housing market because of its heavy reliance on subprime mortgages. Facing serious financial challenges, it was acquired by Bank of America in 2008 in an all-stock deal valued at about $4 billion.

Fannie Mae and Freddie Mac received about $187 billion in aid from taxpayers when the government rescued them during the financial crisis, after they incurred massive losses on risky mortgages.

The two companies don't directly make loans to borrowers. They buy mortgages from lenders, package them as bonds, guarantee them against default and ! sell them to investors. That helps make loans available.

Grayson said Bank of America has until Feb. 26 to respond to the latest filing, and oral arguments are scheduled for March 13.

Shares of Charlotte, N.C.-based Bank of America were up 1.3% to $16.88 at midday.

Can Caterpillar Continue to Rise Post-Earnings?

With shares of Caterpillar (NYSE:CAT) trading around $90, is CAT an OUTPERFORM, WAIT AND SEE, or STAY AWAY? Let's analyze the stock with the relevant sections of our CHEAT SHEET investing framework:

T = Trends for a Stock’s Movement

Caterpillar is a manufacturer of construction and mining equipment, diesel and natural gas engines, industrial gas turbines, and diesel-electric locomotives. It operates in two segments: Machinery and Power Systems, and Financial Products. Infrastructure investment is increasing around the world, in particular, in developing countries. A global supplier of industrial equipment, like Caterpillar, is poised to see rising profits from this trend. As long as countries continue to grow and develop, Caterpillar will provide the tools essential to create this progress.

Caterpillar posted a stronger-than-expected quarterly profit on Monday as cost cuts and an uptick in demand for its building equipment offset continued weak sales to the mining industry. The results, together with a better-than-estimated preliminary profit forecast for 2014 and a new $10 billion share repurchase plan, sent Caterpillar’s stock up as much as 7 percent in early trading on the New York Stock Exchange.

“We expected there would be a decline in mining sales in 2013, and it turned out to be worse than we anticipated,” Doug Oberhelman, the chair and chief executive officer, said in a statement. “As a result, we took substantial actions to reduce costs which helped mitigate the impact on profit.” Caterpillar, which cut nearly 10,000 jobs globally last year, said it was beginning to see “some signs of improvement in the world economy, which should be positive for sales” down the road. It expects construction-equipment sales, which jumped 20 percent in the most recent quarter, to rise another 5 percent in the coming year.

T = Technicals on the Stock Chart Are Strong

Caterpillar stock has remained fairly neutral over the last couple of years. The stock is currently surging higher and looks poised to continue. Analyzing the price trend and its strength can be done using key simple moving averages. What are the key moving averages? The 50-day (pink), 100-day (blue), and 200-day (yellow) simple moving averages. As seen in the daily price chart below, Caterpillar is trading above its rising key averages, which signal neutral to bullish price action in the near-term.

(Source: Thinkorswim)

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

	Implied Volatility (IV)	30-Day IV Percentile	90-Day IV Percentile
Caterpillar options	21.07%	43%	40%

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

	Put IV Skew	Call IV Skew
February Options	Flat	Average
March Options	Flat	Average

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

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

E = Earnings Are Mixed Quarter-Over-Quarter

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

	2013 Q4	2013 Q3	2013 Q2	2013 Q1
Earnings Growth (Y-O-Y)	N/A	-42.91%	-42.91%	-44.73%
Revenue Growth (Y-O-Y)	4.71%	-18.38%	-15.83%	-17.34%
Earnings Reaction	4.40%*	-6.06%	-2.43%	2.83%

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

* As of this writing

P = Excellent Relative Performance Versus Peers and Sector

How has Caterpillar stock done relative to its peers, Deere (NYSE:DE), General Electric (NYSE:GE), Cummins (NYSE:CMI), and sector?

	Caterpillar	Deere	General Electric	Cummins	Sector
Year-to-Date Return	-1.43%	-6.05%	-11.00%	-11.60%	-5.16%

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

Conclusion

Caterpillar is a provider of construction and related industrial products and services during a time where countries around the world are seeing expansion. The company reported fourth quarter earnings that came out stronger than expected. The stock has remained neutral in recent months, but is currently suring higher. Over the last four quarters, earnings have been decreasing while revenues have been rising which has left investors pleased. Relative to its peers and sector, Caterpillar has been a relative year-to-date performance leader. Look for Caterpillar to OUTPERFORM.

In more homes, the roof overhead is a rented one

In the aftermath of a historic housing bust, rented single-family homes are on the rise in communities from coast to coast.

At least a fifth of all occupied single-family homes were rentals last year in 32 of the nation's top metropolitan regions, according to a USA TODAY analysis of U.S. Census Bureau data. That's up from seven metros in 2006.

Rates: National average on 30-year mortgage falls to 4.5%

The growth reflects changes brought by the housing boom and bust and the enduring financial hardships imposed by the recession. Millions of homeowners lost homes to foreclosure and were forced to become renters, while others delayed homeownership.

Nationwide, 18% of occupied single-family homes last year were rentals, up from nearly 15% in 2006, show data based on the American Community Survey, an annual Census Bureau survey.

Prices: Home price gains slowing as market recovers

The metros with the most growth in single-family rentals are those where foreclosures were most rampant.

Among them were Las Vegas, where almost 29% were rentals, up more than 10 percentage points from 2006.

Florida's Cape Coral area was more than 25%, another 10-point gain.

Stockton, Calif., was about 24% in 2006 — now it's above 32%, the highest share among the 100 metro regions in USA TODAY's study.

Metros outside the top foreclosure hot spots have also seen larger growth in single-family rentals than the national average, including Memphis, Dallas, Denver and Seattle, the data show.

Sales: Is the housing market making a major shift?

In those metros, more homeowners may be turning homes into rentals to meet strong demand, says Svenja Gudell, Zillow economist.

Single-family rents in Denver were up 5.6% in August year-over-year, vs. a 1.9% national rise, Zillow data show.

"There are a lot of folks who've decided to rent homes out, vs. sell," says Kim Klapac, Colorado Springs Realtor.

City officials say they prefer rented-out homes to v! acant ones, which lead to blight. In many cases, today's single-family home renter lost a home to foreclosure.

"There's a lot of good-quality renters out there," says Micah Runner, interim economic development director in Stockton. "The issue can be when the homes are owned by people outside of the area and it's harder to get them to fix stuff."

More rentals may also lead to more classroom turnover in local schools, because renters tend to move more often than owners, says Southern California research economist John Husing.

Wealth generation will also be affected, says Michael Orr, real estate expert at the W.P. Carey School of Business at Arizona State University.

"A good slice of our owner occupants have become tenants against their will. That's not a good thing," Orr says.

Phoenix was one of the first cities targeted by institutional investors, who are spending billions turning single-family homes into rentals alongside mom-and-pop investors.

Since Phoenix home prices bottomed in 2011, they're up about 40%, according to Standard & Poor's Case-Shiller data. That makes it harder for owner-occupants to now buy in, Orr says.

Mid-Day Market Update: U.S. Stocks Tumble; Regis Shares Decline On Downbeat Results

Midway through trading Monday, the Dow traded down 0.35 percent to 15,824.04 while the NASDAQ dropped 1.32 percent to 4,073.61. The S&P also fell, declining 0.68 percent to 1,778.09.

Top Headline
Caterpillar (NYSE: CAT) reported a 44% rise in its fourth-quarter profit.

Caterpillar's quarterly profit surged to $1 billion, or $1.54 per share, versus a year-ago profit of $697 million, or $1.04 per share. Its revenue declined to $14.40 billion from $16.08 billion. However, analysts were expecting a profit of $1.27 per share on sales of $13.41 billion. Caterpillar announced its plans to buy back $10 billion in common stock by the end of 2018.

Equities Trading UP
Millennial Media (NYSE: MM) shot up 10.88 percent to $7.44 as the company lifted its Q4 forecast and announced the resignation of its founder and CEO Paul Palmieri.

Shares of Caterpillar (NYSE: CAT) got a boost, shooting up 4.41 percent to $89.97 after the company reported upbeat Q4 results.

Rayonier (NYSE: RYN) was also up, gaining 6.78 percent to $43.97 after the company reported Q4 results and announced its plans to separate into two public companies.

Equities Trading DOWN
Shares of Geron (NASDAQ: GERN) were down 18.46 percent to $4.5828 after the company reported that 20 patients have discontinued from Imetelstat study since its inception.

Regis (NYSE: RGS) shares tumbled 9.13 percent to $12.20 after the company reported downbeat Q2 results.

Idenix Pharmaceuticals (NASDAQ: IDIX) was down, falling 9.45 percent to $6.61 after JMP Securities downgraded the stock from Market Perform to Market Underperform.

Commodities
In commodity news, oil traded down 0.71 percent to $95.95, while gold traded down 0.21 percent to $1,261.80. Silver traded up 0.40 percent Monday to $19.85, while copper fell 0.35 percent to $3.26.

Eurozone
European shares were lower today.

The Spanish Ibex Index dropped 0.95 percent, while Italy's FTSE MIB Index dropped 0.44 percent. Meanwhile, the German DAX declined 0.33 percent and the French CAC 40 fell 0.41 percent while U.K. shares tumbled 3.19 percent.

Economics
Sales of new homes declined 7% to an annual rate of 414,000 in December, but climbed 4.5% y/y in the month. However, economists were projecting an annual rate of 455,000 in the month.

The Dallas Fed general business activity index rose to 3.80 in January, versus a prior reading of 3.10. However, economists were expecting a reading of 3.50.

Posted-In: Earnings News Guidance Eurozone Futures Forex Global Econ #s Economics Intraday Update Markets Movers Tech

(c) 2014 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.

  Most Popular Earnings Expectations For The Week Of January 27: Facebook, Google, Apple And More Apple Earnings Preview: A Return To Earnings Growth? Weekly Highlights: Gmail Crashed, iPhone XL Hype, Galaxy S5 Tease And More #PreMarket Primer: Monday, January 27: Markets Open The Week On Edge Earnings Scheduled For January 27, 2014 Why Icahn Is Wrong On Apple Related Articles (CAT + BZSUM) Mid-Day Market Update: U.S. Stocks Tumble; Regis Shares Decline On Downbeat Results Winter's Stock Knockdown May Give Way To A Spring Thaw Monday's Premarket Earnings Reports Benzinga's Volume Movers Mid-Morning Market Update: Markets Mostly Higher; Caterpillar Results Beat Street View Top Trending Tickers On StockTwits For January 27 Around the Web, We're Loving... Lightspeed Trading Presents: Thunder and Tubleweeds: Trading Techniques for the New Market Enviroment Pope Francis Rips 'Trickle-Down' Economics Come See How the Pro's Trade in this Exclusive Webinar Wynn, MGM, Other Casino Giants Vying For U.S. Turf

The Gun Stocks Trade Is Still Firing

Popular Posts: 5 Fire-Breathing China Mutual Funds to BuyThe Gun Stocks Trade Is Still FiringForget Amazon and eBay — China Has the Hottest Online Retailers Recent Posts: The Gun Stocks Trade Is Still Firing SSO — Double Down When D.C.’s Squabbles Die Down 5 Fire-Breathing China Mutual Funds to Buy View All Posts

When you own a firearm, you want to have confidence in both your ability to use it properly in an emergency situation, and in that firearm's ability to perform without malfunctioning. Similarly, when you're at the helm of a company, you want to have confidence that your stock is going to continue to perform.

An expression of such confidence was seen today when gun-maker Smith & Wesson Holding (SWHC) announced plans to buy back up to $15 million of its stock.

In a statement accompanying the announcement, CEO and President James Debney said, "Given the strength of our balance sheet and our expected cash flow from operations, our Board has approved the repurchase of an additional $15 million of our common stock. We continue to believe that investing in our own company is presently one of our greatest opportunities."

That is the kind of confidence Wall Street likes to see from a CEO and management, so it's no surprise that SWHC stock was up nearly 2% in early Tuesday trade.

For Smith & Wesson, seeing a jump in shares is nothing new. During the past two years, SWHC stock has had an incredible run, shooting up nearly 340%. Year-to-date, the stock has seen a much more modest (yet still impressive) move higher of nearly 30%.

The gains in Smith & Wesson shares have been the result of strong revenue and earnings — metrics that have been fueled by a gun buying public fearful that the current leadership in Washington is intent on restricting gun rights. Of course, efforts to pass gun legislation in Congress were unsuccessful, but still, the threat of an impingement on Second Amendment rights caused gun lovers throughout the country to stock up on arms — and investors to pile into gun stocks.

This certainly is the case with Smith rival Sturm, Ruger & Co (RGR), as that company also has seen big jumps in revenue and EPS over the past two years. The gun-maker also has seen a big spike higher in its share price, with a two-year gain of 141%. Year to date, RGR stock actually has outpaced SWHC, rising nearly 38%.

One reason why RGR shares have outperformed SWHC is due to a correction of sorts in Smith's share price in August and early September leading up to, and immediately following, the company's second-quarter and full-year outlook revision. Despite having reported Q1 sales of $171 million, or more than a 25% year-over-year increase, and better-than-expected earnings of 40 cents per share, the stock fell on the company's tailored estimates going forward.

The reduced forecast calls for Q2 sales to in the $135 million to $140 million range, which is below expectations for sales of $143 million. EPS is estimated by Smith to come in at 20 cents to 22 cents, also below expectations for EPS of 29 cents. The company cited the implementation of a new software program and the resulting delays in production for the shortfall.

For SWHC, I suspect the August-September slide was more of a misfire than any kind of real problem for the company and the stock going forward. Apparently, the company feels that way too, hence its plan to buy back those additional shares.

I have said this in the past, but it bears repeating once again: When it comes to firearms, there is an attitudinal bid higher in the shares of both SWHC and RGR that stems from what I think is a permanent change in the mind-set of a significant segment of America. This new mind-set is, in my opinion, a justifiable fear of more federal control over our lives in general, and in particular more control over guns.

Until this attitude is altered, and until gun-makers actually see their fundamentals flounder, I will remain bullish on firearms stocks.

As of this writing, Jim Woods did not hold a position in any of the aforementioned securities.

Our 401(k)s Show We're Not Taking Investor Confidence Seriously

NEW YORK (BankingMyWay) -- U.S. investors are bullish on the stock market, but not enough are putting the cash into their 401(k) accounts to show it -- and to gain full advantage.

That's a shame, as even a 1% hike in your monthly 401(k) savings plan can add up to $330 per month in your retiree "paycheck" down the road.

This figures come from Fidelity Investments, which is chiding Americans these days about not saving enough for retirement even though eight out of 10 investors believe the Standard & Poor's 500 Index will rise by more than 100 points by the end of the year. [Read: Wall Streets' Great Recession Cost Us All $30 Trillion ]

There is some progress for Americans with their retirement savings. According to Fidelity, 401(k) plan balances rose 11% from the third quarter or 2012 to the third quarter of this year to a nationwide average of $80,600. And if you have been working for a company that offered 401(k) plans for the past 10 years, that average balance number leaps to $211,800 -- up 19% from a year ago. But in the latest in a series of quarterly reports from Fidelity on U.S. workers and their 401(k) plans, company analysts say Americans are costing themselves income in retirement by being stingy on their retirement plan contributions now. "While it's a good sign that some workers are increasing their savings for retirement, many younger workers -- especially Millennials -- aren't saving at the recommended 10% to 15% of their income," says James MacDonald, president of workplace investing at Fidelity. "It is critical young workers realize that even the smallest increase to their monthly savings today or just 1% -- whether in a 401(k) or an IRA -- could have a meaningful impact on their retirement paycheck down the road." Here is how that translates into real dollars: [Read: 3 Money Basics That Will Help You Sleep Better ] Say you're 25 and have a salary of $40,000, and you added just $33 per month to your 401(k), with an assumed average annual rate of return of 7%. Fidelity says you could add $330 (in pretax income) to your monthly paycheck in retirement by doing so. Even if you scaled back to an average annual rate of return of 5.5%, a 1% uptick in savings translates into an extra $200 every month in retirement. If you're 35 and make $60,000 annually, and you add $50 to your monthly 401(k) contribution, an average 7% annual rate of return will yield an additional $270 every month after you turn 65, or an extra $180 at a 5.5% annual rate of return. Those are real dollars, and they really add up during your golden years. But that only holds true if you play the game right and start contributing that extra 1% every month, Fidelity says.

Morgan Stanley Starts Coverage on Deere & Company with “Underweight” Rating (DE)

On Thursday, Morgan Stanley reported that it has begun coverage on agriculture company Deere & Company (DE).

The firm has initiated coverage on DE with an “Underweight” rating and $72 price target. This price target suggests a 14% decline from the stock’s current price of $83.63.

Analyst Nicole DeBlase noted, "we forecast 8% downside to 2014e consensus, as we are concerned about recent deterioration in the used equipment market, augmented by a negative margin mix shift, as evidenced by our proprietary survey work. Our $72 PT implies 14% downside, and we project a 2-to-1 negative risk/reward ratio."

Deere & Company shares were down 98 cents, or 1.16%, during Thursday morning trading. The stock has been mostly flat YTD.

This Awesome New Web Site Might Help Save Radio

NEW YORK (TheStreet) -- As I explained this past week at TheStreet, the broadcast radio guys remain in denial. By some crazy stretch of their deluded imaginations, they don't consider Pandora (P) (and, presumably, its Internet radio brethren) a threat.

That's nothing but pure poppycock.

However, contrary to what my writing on the space might lead you to believe, I, more than most, want broadcast radio to succeed. If it gets -- or even just puts a clue on loan -- it might have a fighting chance to coexist, even successfully, alongside Internet radio for a long time.

I want radio, as we knew it, to succeed because I grew up on it and in it. I love the medium. I worked in radio as a teenager. It was my first career before ditching it in the year 2000 for other, mostly greener pastures. That's part of the reason why, for me, it's sad to see the industry sit on its butt, responding to Internet radio with little more than a cheap knockoff like Clear Channel's iHeart Radio. iHeart Radio admits defeat at the hands of Pandora, Spotify and others as much as it promotes terrestrial radio itself. It effectively tells the user -- Here, you can access our stations, but you'll probably think they suck so you can create your own personalized station. One that, by the way, won't be as good as pure play Internet radio because we're reacting to what they have crafted, not forging our own righteous path. Anyhow, thanks to GIGAOM for writing about serial entrepreneur Michael Robertson's just-launched venture. It's, as described by GIGAOM, a "radio search engine" that "turns tens of thousands of radio stations into an easily searchable music jukebox." It helps you find what you're looking for, as one of its main functions, on actual broadcast radio. It doesn't succumb to the notion that Internet radio is just better. Even if that's not the message iHeart and others are trying to send, it is, for all intents and purposes, what they're saying. Here's how the interface looks, by default, from my perch in the Los Angeles area:

And here's how it looks when you search for something specific. In this case, I asked the Radio Search Engine to find "Fifteen" by Taylor Swift:

It's that simple. Search for a song or a program and the Radio Search Engine spits out all the places -- Internet and broadcast radio streaming online -- where you can find what you're looking for, along with recommendations for other things you might like. Simple, but brilliant. And clearly beyond the limited capacities of so many of the cats in broadcast radio who refuse to admit they're losing. It's even cooler for a radio geek like me, who spent the days and nights of his childhood struggling to sample stations from across the country. Streaming changed that. And this search engine takes things to an entirely new, dynamic and way more convenient level. You can play with the Radio Search Engine yourself HERE. Follow @rocco_thestreet --Written by Rocco Pendola in Santa Monica, Calif.

Stock quotes in this article: P 

Surprise! Big Banks Pass Self-Administered Stress Tests

A slew of big banks just passed another stress test, mandated under the Dodd-Frank reform law. This time, however, the tests weren't overseen by the Federal Reserve, as they were during last March's Comprehensive Capital Analysis and Review. These "mid-cycle" tests were both created and administered by the very same bank holding companies that took part in the Fed's test -- those with assets of $50 billion or more.

How did megabanks like Bank of America (NYSE: BAC  ) , Citigroup (NYSE: C  ) , JPMorgan Chase (NYSE: JPM  ) , and Wells Fargo (NYSE: WFC  ) fare with these self-generated, self-administered tests? Not surprisingly, they all passed with flying colors.

Surpassing achievements from the Fed's CCAR review
The tests are supposed to gauge the health of each institution under stressful scenarios generated by the banks themselves. The Fed will use the information gleaned from the tests to assist in its supervision of the banks, but is otherwise staying out of the picture.

Clearly, it is much easier to ace a test when you generate the template, and the banks named above all sailed through without a hitch. All used a severely stressful nine-quarter scenario in order to test their individual mettle, and all came out with robust Tier 1 common capital ratios. Wells Fargo emerged with a 10.3% cushion after suffering loan losses of nearly $30 billion, while JPMorgan still retained a ratio of 9.4% after a $32 billion hit.

B of A and Citi also triumphed -- the former with a capital ratio of 9.2% on $36.8 billion in losses, and the latter sporting a 9.4% capital cushion while enduring a loss of $43.1 billion.

As for the Tier 1 common stressed minimum values, things are looking better yet:

Tier 1 Common Minimum Capital Ratios

Bank

March 2013 CCAR

Mid-Cycle Results

Bank of America

6.04

8.4

Citigroup

8.22

9.1

JPMorgan

5.56

8.5

Wells Fargo

5.94

9.9

Sources: Bank presentations, Federal Reserve. 

Scenario differs slightly
Have banks really come that far, that fast? Except for Citi, the minimum capital ratios banks could expect to support under the severely adverse scenario are much higher now than they were at the end of last year.

It's true that banks have been working to bulk up their cushions. JPMorgan CEO Jamie Dimon noted that his bank expects to achieve a common ratio under Basel III of 9.5% by year's end, based on the latest rules put forth by the Fed this past July. In its second-quarter earnings summary, Bank of America also claims to have raised its Basel III common ratio to 9.6%, an increase from the prior quarter's 9.52%.

While the banks are definitely making headway, it's interesting that all four used a similar model for the projection of long-term interest rates -- namely, that they would be heading downward during the scenario timeline.

This is, of course, the opposite of what is now happening, as well as a deviation from the previous Fed-supervised stress test, which specifically mentioned that both corporate borrowing rates and mortgage rates were to rise during the scenario's timeline. Considering the effect rising rates are having on the mortgage refinance and origination business of the biggest banks -- especially Wells and JPMorgan -- using higher long-term rates may have been more realistic.

Still, this was a worthy exercise. Not only does it keep the issue of bank regulation and safety front and center, but it serves as a reminder of just how far the financial system has come since the crisis. Involving the banks in the creation of a stressful economic scenario, even if they give themselves a little break on the interest rate issue, keeps the remembrance of past mistakes fresh for the very institutions that need that timely reminder.

Banks Have Come a Long Way, Baby
Have you missed out on the massive gains in bank stocks over the past few years? There's good news: It's not too late. Bargains of a lifetime are still available, but you need to know where to look. The Motley Fool's new report "Finding the Next Bank Stock Home Run" will show you how and where to find these deals. It's completely free -- click here to get started.

Can LinkedIn Continue to Move Higher After Its Offering?

With shares of LinkedIn (NASDAQ:LNKD) trading around $240, is LNKD an OUTPERFORM, WAIT AND SEE, or STAY AWAY? Let's analyze the stock with the relevant sections of our CHEAT SHEET investing framework:

T = Trends for a Stock’s Movement

LinkedIn is a professional network on the Internet with more than 90 million members in over 200 countries and territories. Through the company's platform, members are able to create, manage, and share their professional identity online as well as build and engage with their professional network, access shared knowledge and insights, and find business opportunities. Its platform also provides members with applications and tools to search, connect and communicate with business contacts, learn about career opportunities, join industry groups, research organizations, and share information. Networking and social contact is rising in importance for consumers and companies all around the world.

LinkedIn is planning to offer $1 billion worth of its stock — which has been trading near all-time highs and gained 110 percent in the past year — in a move to strengthen its balance sheet. Some have speculated that the business social networking site could be planning a big acquisition. Co-founder and Chairman Reed Hoffman will still retain the majority of control of the company, Forbes reports.

Also, LinkedIn shares have been on the rise after the company reported second quarter earnings that topped expectations. The professional networking service's earnings came in above the company's own typically conservative forecasts. There are now a total of 238 million members on the site with 20 million being added in the second quarter, a 36 percent increase in membership versus a year ago.

T = Technicals on the Stock Chart Are Strong

LinkedIn stock has been surging higher over the last several years. The stock is now consolidating slightly below all-time high price so it may need a bit of time before its next move. Analyzing the price trend and its strength can be done using key simple moving averages. What are the key moving averages? The 50-day (pink), 100-day (blue), and 200-day (yellow) simple moving averages. As seen in the daily price chart below, LinkedIn is trading above its rising key averages which signal neutral to bullish price action in the near-term.

(Source: Thinkorswim)

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

	Implied Volatility (IV)	30-Day IV Percentile	90-Day IV Percentile
LinkedIn Options	37.29%	60%	57%

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

	Put IV Skew	Call IV Skew
September Options	Flat	Average
October Options	Flat	Average

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

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

E = Earnings Are Increasing Quarter-Over-Quarter

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

	2013 Q2	2013 Q1	2012 Q4	2012 Q3
Earnings Growth (Y-O-Y)	137.50%	400.00%	604.00%	-50.00%
Revenue Growth (Y-O-Y)	59.37%	72.29%	117.68%	108.22%
Earnings Reaction	10.60%	-12.93%	21.26%	-0.06%

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

P = Excellent Relative Performance Versus Peers and Sector

How has LinkedIn stock done relative to its peers Facebook (NASDAQ:FB), Google (NASDAQ:GOOG), Monster Worldwide (NYSE:MWW), and sector?

	LinkedIn	Facebook	Google	Monster Worldwide	Sector
Year-to-Date Return	109.80%	56.65%	22.28%	-21.00%	27.84%

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

Conclusion

LinkedIn allows consumers, companies, and groups to network worldwide from the comfort of their computers. The company is set to offer more stock in order to clean up its balance sheet. The stock has been surging higher over the last few years and is now trading near highs for the year. Over the last four quarters, earnings and revenues have been rising, which has kept investors in the company pleased. Relative to its peers and sector, LinkedIn has been a year-to-date performance leader. Look for LinkedIn to continue to OUTPERFORM.

Oxfam: Richest 1% own nearly half of world's…

Editor's note: This story has been updated to clarify confusion between two sets of numbers in the report.

Almost half of the world's wealth is owned by just 1% of the world's population, according to a report published just days before the start of the World Economic Forum's annual meeting, where the topic of rapidly increasing income disparities will be a major focus.

In its study titled Working for the Few, the British-founded development charity Oxfam concludes that the $110 trillion wealth of the 1% richest people on the planet is some 65 times the total wealth of those floundering at the "bottom half" of the world's population.

Further, this poorer "bottom half" now has about the same amount of money as the richest 85 people in the world, and the wealthiest grew their share of bounty in 24 out of 26 countries surveyed between 1980 and 2012, the study says. The research was compiled using data from Credit Suisse's World Wealth report and the Forbes' billionaires list.

"In the last 30 thirty years seven out of 10 people have been living in countries where economic inequality has increased," Nick Galasso, one of the co-authors of the study, told USA TODAY. "This is a trend that has been unfolding globally for the last two or three decades. What we've not seen is any political will toward curbing it."

President Obama has identified economic equality as one of the defining issues of our time and in a speech in December he said that increasing inequality "challenges the very essence of who we are as a people." In the U.S., the financially privileged — the wealthiest 1% — have "captured 95% of post-financial crisis growth since 2009, while the bottom 90% became poorer," the Oxfam report notes.

"This massive concentration of economic resources in the hands of fewer people presents a significant threat to inclusive political and economic systems. Instead of moving forward together, people are increasingly separated by economic and political power, inevitably heighten! ing social tensions and increasing the risk of societal breakdown," the report says.

The World Economic Forum has identified income inequality as one of the greatest risks facing the world in 2014, and it will be a big topic of discussion during the organization's annual meeting Wednesday through Saturday in Davos, Switzerland.

"(Oxfam's report) is a further confirmation that the global economy is twisted out of shape," says Philip Jennings, the general secretary of the UNI Global Union, an international federation of unions based in Geneva. "These are levels of inequality that we have not seen since the 1920s."

FULL COVERAGE: World Economic Forum's annual meeting 2014

Follow USA TODAY's Kim Hjelmgaard on Twitter: @khjelmgaard

Study: Gen Y may like cars after all

New findings from consulting giant Deloitte debunk a notion held in recent years that young people don't want to drive anymore.

Generation Y — born roughly from 1977 to 1994 — are more than 80 million strong and nearly 50 million of them plan to buy a new or used car in the next three years, according to Craig Griffi, Deloitte vice chairman and automotive practice leader

"There's been a lot of conjecture about whether Gen-Yers even like driving," Griffi said. But Deloitte found nearly two-thirds of Gen Y Americans "would indicate that they love their cars."

Nearly 700 Gen-Y-age Americans participated in Deloitte's survey, which encompassed more than 23,000 respondents across 19 countries. The company will release full results later this year, but it disclosed some findings earlier this week on a group that automakers have spent years trying to understand.

To be sure, Deloitte notes some of America's car culture has been lost. Gen Y faces three barriers to vehicle shopping: needs being met by other transportation like walking, mass transit and car-sharing programs; operational costs such as fuel and maintenance; and vehicle affordability.

Start with the first one. More than two-thirds of Gen Y consumers "would prefer to live in neighborhoods with everything in walking distance," Griffi said. Given rising traffic congestion, that isn't necessarily a problem, but "obviously the vehicle starts to become less important," he added.

Unless it drives itself. A high percentage Gen Y consumers view self- driving cars — anathema to performance enthusiasts, but an inexorable goal for the auto industry — as a big benefit, said Joe Vitale, who leads Deloitte's global automotive sector.

That doesn't mean Gen Y wants to abandon wheels altogether. Just 29 percent said they'd be willing to give up their personal cars for other forms of mobility, Deloitte notes. Semi-autonomous technologies that help drivers avoid accidents score big with the group. Some four-fifths of resp! ondents rated technology that helps the vehicle avoid crashes as very important, Vitale said.

Top 10 Undervalued Companies For 2014

In early August SemGroup (SEMG), an owner and operator of oil and gas midstream assets, including pipelines and storage and blending facilities, closed on an opportunistic purchase of assets from Chesapeake Energy. The assets nicely complement SemGroup's existing core assets that stretch from Colorado to Oklahoma. While SemGroup will have to spend money to complete the assets��oney that financially distressed Chesapeake likely could not justify��e view the expenditures favorably given their high return characteristics.From Third Avenue Management's fourth quarter 2013 commentary.

Also check out: Third Avenue Management Undervalued Stocks Third Avenue Management Top Growth Companies Third Avenue Management High Yield stocks, and Stocks that Third Avenue Management keeps buying

Currently 4.00/512345

Rating: 4.0/5 (1 vote)

Top 10 Undervalued Companies For 2014: Caterpillar Inc.(CAT)

Caterpillar Inc. manufactures and sells construction and mining equipment, diesel and natural gas engines, industrial gas turbines, and diesel-electric locomotives worldwide. It operates through three lines of businesses: Machinery, Engines, and Financial Products. The Machinery business offers construction, mining, and forestry machinery, including track and wheel tractors, track and wheel loaders, pipelayers, motor graders, wheel tractor-scrapers, track and wheel excavators, backhoe loaders, log skidders, log loaders, off-highway trucks, articulated trucks, paving products, skid steer loaders, underground mining equipment, tunnel boring equipment, and related parts. It also manufactures diesel-electric locomotives; and manufactures and services rail-related products and logistics services for other companies. The Engines business provides diesel, heavy fuel, and natural gas reciprocating engines for Caterpillar machinery, electric power generation systems, marine, petrol eum, construction, industrial, agricultural, and other applications. It offers industrial turbines and turbine-related services for oil and gas, and power generation applications. This business also remanufactures Caterpillar engines, machines, and engine components; and offers remanufacturing services for other companies. The Financial Products business provides retail and wholesale financing alternatives for Caterpillar machinery and engines, solar gas turbines, and other equipment and marine vessels, as well as offers loans and various forms of insurance to customers and dealers. It also offers financing for vehicles, power generation facilities, and marine vessels. The company markets its products directly, as well as through its distribution centers, dealers, and distributors. It was formerly known as Caterpillar Tractor Co. and changed its name to Caterpillar Inc. in 1986. Caterpillar Inc. was founded in 1925 and is headquartered in Peoria, Illinois.

Advisors' Opinion:

• [By Jessica Alling]

  Durability
  Despite the news this morning that orders for durable-goods increased 4.2% in June, Caterpillar (NYSE: CAT  ) is down 2% following a truly disappointing earnings report. The company has seen continued declines in revenue compared to the prior year, so a new trend of higher demand for durable goods should have been a sign to investors that Caterpillar could see some new buyer activity here in the States. But low commodities prices and signals from China hinting at slowed manufacturing aren't helping the company gain confidence in the market.

• [By Russ Koesterich]

  As I write in my new weekly commentary, the long-delayed and mixed September jobs report was consistent with my view that the labor market is stuck in slow growth mode. And outside of the jobs market, other measures of economic activity - such as orders for durable goods and a sales forecast cut from construction equipment company Caterpillar (CAT) - pointed toward slow growth as well.

• [By Dan Caplinger]

  Clearly, investors see the jobs report as evidence that the economy has turned the corner. The fact that cyclical giants Caterpillar (NYSE: CAT  ) and General Electric (NYSE: GE  ) are among the Dow's biggest winners today -- they have gained 3.1% and 1.8%, respectively -- shows the extent to which people are banking on an economic recovery, not only in the U.S. but also in harder-hit areas of the world such as Europe. Both Caterpillar and GE need a marked improvement in global conditions to support their stock prices. Given the importance of the U.S. in the overall global economy -- especially on the consumer front, which is arguably most directly tied to employment conditions -- it's reasonable to conclude that better domestic jobs numbers will support economies worldwide.

Top 10 Undervalued Companies For 2014: Tupperware Corporation(TUP)

Tupperware Brands Corporation operates as a direct seller of various products across a range of brands and categories through an independent sales force. The company engages in the manufacture and sale of kitchen and home products, and beauty and personal care products. It offers preparation, storage, and serving solutions for the kitchen and home, as well as kitchen cookware and tools, children?s educational toys, microwave products, and gifts under the Tupperware brand name primarily in Europe, Africa, the Middle East, the Asia Pacific, and North America. The company provides beauty and personal care products, which include skin care products, cosmetics, bath and body care, toiletries, fragrances, nutritional products, apparel, and related products principally in Mexico, South Africa, the Philippines, Australia, and Uruguay. It offers beauty and personal care products under the Armand Dupree, Avroy Shlain, BeautiControl, Fuller, NaturCare, Nutrimetics, Nuvo, and Swissgar de brand names. The company sells its Tupperware products directly to distributors, directors, managers, and dealers; and beauty products primarily through consultants and directors. As of December 26, 2009, the Tupperware distribution system had approximately 1,800 distributors, 61,300 managers, and 1.3 million dealers; and the sales force representing the Beauty businesses approximately 1.1 million. The company was formerly known as Tupperware Corporation and changed its name to Tupperware Brands Corporation in December 2005. The company was founded in 1996 and is headquartered in Orlando, Florida.

Advisors' Opinion:

• [By Arie Goren]

  After running this screen on May 21, 2013, before the markets' open, I discovered the following eight stocks: Sunoco Logistics Partners LP (SXL), Leggett & Platt Inc (LEG), Copa Holdings SA (CPA), RPC Inc. (RES), Tupperware Brands Corp. (TUP), Herbalife Ltd. (HLF), John Wiley & Sons Inc. (JW.A) and C.H. Robinson Worldwide Inc. (CHRW).

• [By Monica Gerson]

  Tupperware Brands (NYSE: TUP) is expected to report its Q3 earnings at $1.03 per share on revenue of $623.34 million.

  Varian Medical Systems (NYSE: VAR) is projected to post its Q4 earnings at $1.12 per share on revenue of $779.02 million.

Hot Performing Companies To Own For 2014: Dollar Tree Inc.(DLTR)

Dollar Tree, Inc. operates discount variety stores in the United States and Canada. Its stores offer merchandise primarily at the fixed price of $1.00. The company operates its stores under the names of Dollar Tree, Deal$, Dollar Tree Deal$, Dollar Giant, and Dollar Bills. Its stores offer consumable merchandise, including candy and food, and health and beauty care, as well as household consumables, such as paper, plastics, household chemicals, in select stores, and frozen and refrigerated food; variety merchandise, which includes toys, durable housewares, gifts, party goods, greeting cards, softlines, and other items; and seasonal goods, such as Easter, Halloween, and Christmas merchandise. As of April 30, 2011, it operated 4,089 stores in 48 states and the District of Columbia, as well as 88 stores in Canada. The company was founded in 1986 and is based in Chesapeake, Virginia.

Advisors' Opinion:

• [By Lawrence Meyers]

  The finance sector, as mentioned, can make money in many ways. The second-highest growth sector is expected to be consumer discretionary, with a 6.2% increase. When you look at earnings from luxury brands like Tiffany & Co. (TIF), and that the hotel sector continues to do very well, it suggests that those people who are in good financial shape are spending their money. Meanwhile, dollar players like Dollar Tree (DLTR) continue to perform very well, suggesting that folks with less money are spending it on cheaper items.

• [By Dan Moskowitz]

  The shiniest dollar
  Many investors and analysts like to debate which dollar store offers the best investment opportunity. The truth is that Dollar General, Dollar Tree Stores (NASDAQ: DLTR  ) , and Family Dollar Stores (NYSE: FDO  ) are all likely to be quality long-term investments.

Top 10 Undervalued Companies For 2014: Schlumberger N.V.(SLB)

Schlumberger Limited, together with its subsidiaries, supplies technology, integrated project management, and information solutions to the oil and gas exploration and production industries worldwide. The company?s Oilfield Services segment provides exploration and production services; wireline technology that offers open-hole and cased-hole services; supplies engineering support, directional-drilling, measurement-while-drilling, and logging-while-drilling services; and testing services. This segment also offers well services; supplies well completion services and equipment; artificial lift; data and consulting services; geo services; and information solutions, such as consulting, software, information management system, and IT infrastructure services that support oil and gas industry. Its WesternGeco segment provides reservoir imaging, monitoring, and development services; and operates data processing centers and multiclient seismic library. This segment also offers variou s services include 3D and time-lapse (4D) seismic surveys to multi-component surveys for delineating prospects and reservoir management. The company?s M-I SWACO segment supplies drilling fluid systems to improve drilling performance; fluid systems and specialty tools to optimize wellbore productivity; production technology solutions to maximize production rates; and environmental solutions that manages waste volumes generated in drilling and production operations. Its Smith Oilfield segment designs, manufactures, and markets drill bits and borehole enlargement tools; and supplies drilling tools and services, tubular, completion services, and other related downhole solutions. The company?s Distribution segment markets pipes, valves, and fittings, as well as mill, safety, and other maintenance products. This segment also provides warehouse management, vendor integration, and inventory management services. Schlumberger Limited was founded in 1927 and is based in Houston, Texas.

Advisors' Opinion:

• [By Sean Williams]

  Finally -- and to keep with today's theme of earnings-driven moves -- oil services contractor Schlumberger (NYSE: SLB  ) added 5.4% after topping the Street in the second quarter. Overall, revenue rose 8%, to $11.18 billion, with net income soaring 50%, to $2.1 billion, or $1.57 per share. Excluding one-time gains, Schlumberger topped EPS estimates by $0.05 and slid by revenue projections by $60 million. Schlumberger can thank robust drilling activity overseas in China and Australia, as well as domestically in the Gulf of Mexico, for its market-beating results. To add the icing on the cake for shareholders, Schlumberger also announced a new $10-billion share repurchase program. Investors would be smart to keep their eyes on Schlumberger moving forward.

• [By David Smith]

  As June came to an end, the company finalized a joint venture, OneSubsea, with Schlumberger (NYSE: SLB  ) . The intriguing partnership -- in which Cameron has a 60% interest, with the remainder Schlumberger's -- will develop products, systems, and services for the subsea oil and gas market.

• [By Alex Planes]

  Last year, CARBO made almost half of its total revenue from just two customers: Halliburton (NYSE: HAL  ) and Schlumberger (NYSE: SLB  ) . A dependence on major players can be part of the game in this energy niche, as much of the onshore drilling services industry is in fact dominated by Halliburton and Schlumberger. However, CARBO's deepwater proppant could help it diversify in a big way, provided the company can handle what are sure to be more bothersome logistics problems than already exist with its land-based delivery network. Creating more distribution hubs closer to oil fields can help CARBO reduce its transportation costs and further reduce its dependence on the big two's infrastructure.

Hot Warren Buffett Stocks To Buy For 2014

LONDON -- One of�Warren Buffett's famous investing sayings is "be fearful when others are greedy and greedy only when others are fearful" -- or, in other words, sell when others are buying and buy when they're selling.

But we might expect Foolish investors to know that, and looking at what Fools have been buying recently might well provide us with some ideas for good investments.�

So, in this series of articles, we're going to look at what customers of The Motley Fool ShareDealing Service have been buying in the past week or so, and what might have made them decide to do so.

Triple-whammy
The share price of�FirstGroup� (LSE: FGP  ) -- the bus and rail operator -- has plunged over 40% in the past couple of weeks, following a triple-whammy announcement of a rights issue, a dividend cut and a profit warning in its preliminary final results, and the loss of chairman Martin Gilbert, who agreed to stand down once a successor has been found.

The cash-call was necessary to avert a potential downgrading of debt-laden FirstGroup's credit rating to "junk status", which could have forced up interest rates on its existing debt, and also caused serious problems, or even disqualification, when bidding for things like rail franchises.

Hot Warren Buffett Stocks To Buy For 2014: Encounter Resources Ltd (ENR.AX)

Encounter Resources Ltd. engages in the exploration and development of mineral properties in western Australia. The company explores for uranium; manganese; and base metals, such as copper, silver, lead, and zinc. It primary focuses on the Yeneena project covering 1,300 square kilometers located in the Paterson Province of western Australia. Encounter Resources Ltd. was founded in 2004 and is based in West Perth, Australia.

Hot Warren Buffett Stocks To Buy For 2014: Nuveen Insured California Premium Income Municipal Fund II In (NCL)

Norwegian Cruise Line Holdings Ltd., through its subsidiaries, operates as a cruise line operator, offering cruise experiences for travelers with various itineraries in North America, the Mediterranean, the Baltic, Central America, Bermuda, and the Caribbean. The company offers cruises ranging in length from 1 day to 3 weeks. As of December 31, 2012, it operated 11 ships offering cruises in Alaska, the Bahamas, Bermuda, the Caribbean, Europe, Hawaii, Mexico, New England, Central and South America, North Africa, and Scandinavia. The company was formerly known as NCL Corporation Ltd. and changed its name on January 24, 2013. Norwegian Cruise Line Holdings Ltd. was founded in 1966 and is headquartered in Miami, Florida.

Advisors' Opinion:

• [By Rick Munarriz]

  Carnival stock is trading closer to its 52-week low than its high, and the same can't be said of rivals Royal Caribbean (NYSE: RCL  ) and NCL (NYSE: NCL  ) .�

• [By Rick Munarriz]

  Royal Caribbean,�NCL (NYSE: NCL  ) , and ship spa services provider Steiner Leisure (NASDAQ: STNR  ) all hit new 52-week highs earlier this month. Unlike Carnival (NYSE: CCL  ) -- which has been sluggish in light of several mishaps at sea since last year -- everyone seemed to view the negative instances as Carnival-specific events. Now Royal Caribbean's fire may lead folks to question booking on any cruise line in the near future.

Top Financial Companies To Watch For 2014: Pirelli&c Real E(PCRE.MI)

Pirelli & C. Real Estate S.p.A. is a real estate arm of Pirelli & C. S.p.a. The firm engages in investment, development, and management of properties. It invests in the real estate markets of Italy, Germany, and Poland. The firm?s portfolio includes both commercial and residential properties. Pirelli & C. Real Estate S.p.A. is based in Milan, Italy. Prelios SpA (CM:PRS) operates independently of Pirelli & C. SpA as of October 21, 2010.

Hot Warren Buffett Stocks To Buy For 2014: Cost Plus Inc.(CPWM)

Cost Plus, Inc. operates as a specialty retailer of casual home furnishings and entertaining products in the United States. It offers home decorating items that include furniture, rugs, pillows, bath linens, lamps, window coverings, frames, and baskets; and furniture products, which comprise ready-to-assemble living and dining room pieces, handcrafted case goods, occasional pieces, and outdoor furniture made from various materials, such as rattan, hardwood, and metal. The company also provides tabletop and kitchen items, including glassware, ceramics, textiles, and cooking utensils; gift and decorative accessories comprising collectibles, candles, framed art, and holiday and other seasonal items; and jewelry, fashion accessories, and personal care items. In addition, it offers gourmet foods and beverages, including wine, microbrewed and imported beer, coffee, tea, and bottled water. The company operates stores under the names of World Market, Cost Plus World Market, Cost P lus Imports, and World Market Stores. Cost Plus, Inc. also sells its products through its Web site, worldmarket.com. As of May 19, 2011, it operated 259 stores in 30 states. The company was founded in 1946 and is headquartered in Oakland, California.

Hot Warren Buffett Stocks To Buy For 2014: Fortress Investment Group LLC (FIG)

Fortress Investment Group LLC (Fortress) is a global investment management firm. Its offering of alternative investment products includes private equity funds, liquid hedge funds and credit funds. In addition, it offers traditional investment products. As of December 31, 2011, it managed alternative assets in three businesses: Private Equity, Liquid Hedge Funds and Credit Funds. Private Equity is a business, which manages assets under management (AUM) consisted of two business segments: private equity funds, which make investments in debt and equity securities of public or privately held entities in North America and Western Europe, and publicly traded alternative investment vehicles, which it refer to as Castles, which invest in real estate and real estate related debt investments. Liquid Hedge Funds invest globally in fixed income, currency, equity and commodity markets and related derivatives. Credit Funds is a business, which manages AUM consisted of two business segments: credit hedge funds which make investments in assets, opportunistic lending situations and securities, on a global basis and throughout the capital structure, as well as non-Fortress originated funds, for which Fortress has been retained as manager as part of an advisory business, and credit private equity (PE) funds, which are consisted of a family of credit opportunities funds focused on investing in distressed and undervalued assets, a range of long dated value funds focused on investing in undervalued assets with cash flows and long investment horizons, a range of real assets funds focused on investing in tangible and intangible assets in four principal categories (real estate, capital assets and natural resources), a family of Asia funds, including Japan real estate funds and an Asian investor based global opportunities fund, and a range of real estate opportunities funds.

Private Equity Funds

The Company�� private equity business is made up of a series of funds named the Fortress Investment Funds! and organized to make control-oriented investments in cash flow generating, asset-based businesses in North America and Western Europe. Investors in its private equity funds contractually commit capital at the outset of a fund, which is then drawn down as investment opportunities become available, generally over a one to three year investment period. Management fees of 1% to 1.5% are generally charged on committed capital during the investment period of a new fund, and then on invested capital (or net asset value (NAV), if lower). It also earns a 10% to 25% share of the profits on each realized investment in a fund.

The Company manages two companies: Newcastle Investment Corp. and Eurocastle Investment Limited, which it calls its Castles. It earns management fees from each Castle equal to 1.5% of the company�� equity. In addition, it earns incentive income equal to 25% of the company�� funds from operations (FFO) in excess of specified returns to the Company�� shareholders. In addition to these fees, it also receives from the Castles, for services provided, options to purchase shares of their common stock in connection with each of their common stock offerings.

Liquid Hedge Funds

The Fortress Macro Funds, and Fortress�� legacy macro-strategy funds, the Drawbridge Global Macro Funds, apply an investment process based on macroeconomic fundamental, market momentum and technical analyses. The funds have the flexibility to allocate capital dynamically across a range of global strategies, markets and instruments as opportunities change, and are designed to take advantage of a range of sources of market, economic and pricing data to generate trading ideas. The fund invests in developed markets; they also invest in emerging markets if market conditions present opportunities for attractive returns. The funds pursue global macro directional and relative value strategies. Management fees are charged based on the AUM of the Fortress Macro Funds at a rate between 1.5%! and 2% a! nnually, depending on the investment and liquidity terms elected by investors. It earns incentive income of between 15% and 25% of the fund�� profits, generally payable annually, depending on the investment and liquidity terms elected by investors. In other words, an incentive income payment establishes a high water mark, such that the fund must earn a cumulative positive return from that point forward in order for Fortress to earn incentive income. Investors in the Fortress Macro Funds may invest with the right to redeem without paying any redemption fee either monthly, quarterly, or annually after three years. Investors with three-year liquidity may redeem annually before three years, subject to an early redemption fee payable to the funds.

The Fortress Asia Macro Funds invest in global fixed income, commodities, currency and equity markets, and their related derivatives, thematically related to the Asia-Pacific region through a fundamental macroeconomic strategy, which focuses on liquid investments. The funds��investment program focuses on global trading and capital flows. Management fee rates for these funds range from 1.5% to 2% and it earns incentive income equal to 20% of their profits. Commodities Funds invests across multiple sectors within the commodity asset class ranging from energy to metals to agriculture and within the cyclical, industrial, and commodity equity universe. Management fee rates for these funds range from 1.5% to 2% and it earns incentive income equal to 20% of their profits. The Fortress Partners Fund�� investments are made both in Fortress Funds and in funds managed by other managers, and in direct investments that are sourced either by Fortress personnel or by third parties with whom it has relationships. Management fee rates for these funds range from 1% to 1.5% and it earns incentive income generally equal to 20% of the profits from direct investments only.

Credit Funds

The Company�� credit hedge funds are designed to exploi! t pricing! anomalies, which exist between the public and private finance markets. It has developed a network consisted of internal and external resources to source transactions for the funds. The funds are able to invest in a range of financial instruments, ranging from assets, opportunistic lending situations and securities throughout the capital structure with a value orientation.

The Drawbridge Special Opportunities Funds form the core of the Company�� credit hedge fund investing strategy. The funds acquire a portfolio of investments throughout the United States, Western Europe and the Pacific region. Management fees are charged based on the AUM of the Drawbridge Special Opportunities Funds at a rate generally equal to 2% annually. It earns incentive income of 20% of the fund�� profits, payable annually, and subject to achieving cumulative positive returns since the prior incentive income payment. Investors in the Drawbridge Special Opportunities Funds may redeem annually on December 31. The Worden Funds invest in a portfolio of undervalued and distressed investments in North America and Western Europe, but also in Australia, Asia and elsewhere on an opportunistic basis. Management fees are charged based on the AUM of the Worden Funds at a rate generally equal to 2% annually. It earns incentive income of 20% of the funds��profits.

The Company�� credit PE funds are of families of funds. They have management fee rates between 1% and 1.5% and generate incentive income of between 10% and 20% of a fund�� profits subject to the fund achieving a minimum return as a whole. Fortress through Fortress Credit Opportunities Funds make opportunistic credit-related investments. In addition to its Fortress Investment Fund family of funds, it has a private equity fund product, the Long Dated Value family of funds, which focuses on making investments with long dated cash flows. Its Real Assets Funds invest in tangible and intangible assets. The investment program of these funds focuses on di! rect inve! stments in four principal investment categories: real estate, capital assets and natural resources, but also may include indirect investments in the form of interests in real estate investment trusts (REITs), master limited partnerships, corporate securities, debt securities and debt obligations, including those that provide equity upside, as well as options, royalties, residuals and other call rights. The investments are located in North America and Western Europe. Fortress Japan Opportunity Funds focus to invest in Japanese real estate-related performing, sub-performing and non-performing loans, securities and similar instruments. Real Estate Opportunities Funds make opportunistic commercial real estate investments.

Advisors' Opinion:

• [By Inyoung Hwang]

  He currently has buy recommendations on private-equity firm Fortress Investment Group LLC (FIG) and Zions Bancorporation. (ZION)

  Analysts Surveyed

  To compile the ranking, Stamford, Connecticut-based Greenwich Associates surveyed 945 buy-side analysts at 190 investment management firms, mutual funds, hedge funds, pension funds and insurers from December to March. The analysts were asked to name the Wall Street research teams they considered their most important sources of advice on investments.

• [By Dakin Campbell]

  Servicing rights on at least $1 trillion of mortgages will trade in the next two years, Jay Bray, chief executive officer of Nationstar Mortgage Holdings Inc. (NSM), a servicer majority owned by Fortress Investment Group LLC (FIG), said last month. The private-equity firm said in July it raised a $1.1 billion fund to buy the contracts.

• [By Amanda Alix]

  This turn of events worked in favor of Fortress Investment Group's (NYSE: FIG  ) portfolio, which held the former Centex Corp, the subprime mortgage lending unit of a Texas homebuilder. That company is now Nationstar, which is definitely doing its fair share to add to its parent's bottom line. Also owned by Fortress is Newcastle Investment (NYSE: NCT  ) , the diversified REIT with an involvement in almost anything to do with real estate, whether residential or commercial.

Hot Warren Buffett Stocks To Buy For 2014: Intl Parkside Products Inc.(IPD.V)

International Parkside Products Inc., through its subsidiaries, engages in the production and marketing of optical and screen cleaning products. Its products include various photo and optic lens cleaning devices, such as Lenspen, Lenspen MiniPRO II, Lenspen CellKlear, Lenspen DigiKlear, ProPak I, ProPak II, Camouflage LensPen, Anti-Fog Solution, MicroPro, MobileKlear Kit, FogKlear, Hurricane Blower, OutDoorPro Kit, PhotoPro Kit, SensorKlear Loupe, SensorKlear II, SensorKlear Loupe kit, FilterKlear, TriKlear, DSLR Pro Kit, SensorKlear II Plus, Mini-Pro, and Mini-Pro II, as well as HunterPro Kits, Photo Kits, RangeKlear, Screencleaning Kits, and Microfiber cloth. The company also provides universal screen cleaners comprising Lenspen MicroKlear, LapTop Pro, Lenspen VidiMax, Screen Cleaning Kit, VidiMax Ultra Kit, LapTop-Pro Ultra Kit, NavKlear, ScreenKlean, and replacement cleaning pads for SideKick and LapTop-Pro. In addition, it offers accessories, such as Panamatic, SideKi ck, and SensorKlear Loupe Kit. The company sells its products primarily in North America, Europe, Asia, Russia, and Latin America. International Parkside Products Inc. was incorporated in 1983 and is headquartered in Vancouver, Canada.

Masco Unit Expands in Louisiana - Analyst Blog

Williams Insulation, a wholly-owned subsidiary of Masco Corporation (MAS) recently announced its plans to expand into Lake Charles, La.

Williams Insulation is a part of Masco Contractor Services, which is a group of subsidiaries owned by Masco Corporation. Masco Corporation manufactures, sells and installs home improvement and building products.

Williams Insulation offers various forms of insulation installations such as fiberglass batt, blown fiberglass, spray foam and cellulose. It also offers fireplaces and gutters. The company already serves both homebuilders and homeowners in Southeast Texas and Southwest Louisiana. Expansion in the Lake Charles area will further broaden the company's client base.

Recently, another Masco Contractor Services unit , Red Lion Insulation, announced its plans to expand into Farmingdale, N.J. Red Lion offers various forms of insulation installations such as fiberglass batt, blown fiberglass, spray foam and cellulose.

Masco Corporation will report its second quarter 2013 earnings results on Jul 30, 2013. The Zacks Consensus Estimate for the quarter stands at 19 cents per share. The Zacks Consensus Estimate for 2013 is 69 cents while that for fiscal 2014 is $1.02 per share.

Masco carries a Zacks Rank #3 (Hold).

We are encouraged by Masco's continued focus on product innovation and cost improvements. The company is benefiting from new home construction and repair and remodel activities. However, weak consumer spending on big ticket remodeling and a sluggish European economy remain headwinds.

Other stocks in the construction sector that are performing well and deserve a mention include PulteGroup, Inc. (PHM), DR Horton, Inc. (DHI), and USG Corporation (USG). PulteGroup and DR Horton carry a Zacks Rank #1 (Strong Buy) whereas USG Corporation carries a Zacks Rank #2 (Buy).

Hungary's Crocodile Dundee Recovery

Regular readers of this column will know I am a big fan of the research of Renaissance Capital's Charles Robertson, whose opinions I have previously quoted on Russia and Nigeria (both of those articles can be found in the panel on the left hand side of the page). Today he is on typically good form on Hungary, with an analogy which just has to be brought to a wider audience.

Remember that great scene from Crocodile Dundee when some inept mugger tries to pull a knife on the outback hero in New York? "That's not a knife. That's a knife." It might just be the most quoted movie line from the 1980s.

Today Robertson recalls the scene and applies it to Hungary's recovery relative to Spain's. Spain is getting a fair amount of positive press for its revival despite somewhat moribund numbers; Hungary's, Robertson says, is on a whole other scale. That's not a recovery. That's a recovery.

"It is an apt metaphor for how Hungary's strong recovery looks when compared to the better (but still anaemic) figures coming out of Spain and elsewhere in periphery Europe," he says. "We see encouraging news in Spain and across most of the eurozone, but Hungary shows what a really good recovery looks like."

Here's why. Business confidence in Hungary is at the highest level since 1998, and consumer confidence is increasing too. Unemployment, while still high at 11%, confounded expectations when last announced – optimistic commentators had been hoping for 11% – while wages are growing, retail sales growth doubled from the first quarter of 2013 to October, and consequently estimates of GDP growth are beginning to improve too.

Robertson argues that the expectations of that GDP growth are inaccurately low, and that therefore there is an opportunity. Bloomberg consensus shows 0.7% growth for Hungary for 2013 (the actual figure is not yet public), 1.8% in 2014 and 2% in 2015. Renaissance reckons it grew 1% in 2013, will grow 2.5% this year and 4% next. "We think better jobless numbers should translate into higher wages, more consumption and more jobs, and spur a self-fuelling recovery. Exports and industrial output are on the rise, and given Hungary's strong link to Germany (which still benefits from excessively low interest rates), we see no reason for that to end."

So what's the argument against Robertson's view, which clearly not everybody shares? One is the catch-all emerging market concern that tapering, when it kicks off in earnest, will be bad for riskier assets, as we saw when the first suggestion of US tapering raised its head last May. Others are more specific to Hungary: interest rates are already at record lows after 17 consecutive cuts (though, at 3% and without much inflationary pressure, there is room to go lower if necessary), the currency was battered late last year and is still arguably vulnerable, there is an election this year – rarely conducive to long-term policy – and there is an odd approach of nationalising foreign-owned utility assets, which is hardly the textbook way to build an economic recovery.

Deutsche Bank, for example, notes Hungary's high external debt, hostile tax environment and what it calls a "challenging regulatory backdrop," in particular for the banking sector.

Still, set against that, whatever happens at home, Hungary will benefit from any improvement in the eurozone, so if you believe in that outcome then you probably also believe there is a recovery coming in Hungary. In terms of how to play it, that's not easy, with Renaissance only coming up with OTP, which is the largest commercial bank in Hungary, and Austrian banks that are exposed to Hungary's domestic demand. "It may be as difficult to profit from Hungary's recovery," says Robertson, "as it was to profit from mugging an Australian tourist in New York in 1986."