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 Corrections Corporation of America (NYSE: CXW ) , whose recent revenue and earnings are plotted below.
Best Blue Chip Stocks To Watch Right Now: Avago Technologies Limited(AVGO)
Avago Technologies Limited engages in the design, development, and supply of analog semiconductor devices with a focus on III-V based products. Its product portfolio comprises RF amplifiers, RF filters, RF front-end modules, ambient light sensors, light emitting diodes, low noise amplifiers, mm-wave mixers, optical finger navigation products, diodes, fiber optic transceivers, serializer/deserializer ASICs, motion control encoders and subsystems, optocouplers, and optical mouse sensors. The company?s products are used in cellular phones, consumer appliances, data networking and telecommunications equipment, enterprise storage and servers, renewable energy and smart power grid, factory automation, displays, optical mice, printers, voice and data communications, keypad and display backlighting, backlighting control, base stations, storage area networking, in-car infotainment, lighting, motor controls, power supplies, and optical disk drives applications. It markets its produ cts through a network of distributors and its direct sales force worldwide. The company sells approximately 6,500 products to original equipment manufacturers of wireless communications, wired infrastructure, industrial and automotive electronics, and consumer and computing peripherals markets. Avago Technologies Limited was founded in 2005 and is based in Singapore.
Advisors' Opinion:- [By Eric Volkman]
In what seems to be turning into a tradition, Avago Technologies (NASDAQ: AVGO ) has again raised its shareholder distribution.
The company on Thursday declared a quarterly dividend of $0.21 per share, to be handed out on June 28 to shareholders of record as of June 17. That amount is $0.02, or 10.5%, higher than Avago Tech's previous distribution of $0.19 per share, which was paid in early April.
- [By Dan Caplinger]
On Wednesday, Avago Technologies (NASDAQ: AVGO ) will release its latest quarterly results. Although the stock has largely treaded water over the past year, investors are concerned about troubling sales trends and their potential impact on the company's future.
10 Best Prefered Stocks To Invest In 2014: Komatsu Ltd (KMTUY)
Komatsu Ltd. (Komatsu), incorporated in May 13, 1921, is a global company engaged in the manufacturing, development, marketing and sale of a range of industrial-use products and services. The manufacturing operations of Komatsu are conducted primarily at plants located in Japan, the United States, Brazil, the United Kingdom, Germany, Sweden, Italy, Indonesia, China, Thailand and India. Komatsu�� products are primarily sold under the Komatsu brand name and almost all of its sales and service activities are conducted through its sales subsidiaries and independent distributors who primarily sell products to retail dealers in their respective geographic area. Komatsu operates and competes in the six principal markets, such as Japan, the United States, Europe and Commonwealth of Independent States (CIS), China, Asia (excluding Japan and China) and Oceania and the Middle East and Africa. In May, 2009, Komatsu acquired the additional interest in Komatsu Australia Corporate Finance Pty. Ltd.
Construction, Mining and Utility Equipment
The Company offers various types of construction, mining and utility equipment, ranging from super-large machines capable of mining applications to general construction equipment and mini construction equipment for urban use. Komatsu�� range of products in this operating segment also includes a variety of attachments to be used with its products. Komatsu�� principal products include excavating equipment, loading equipment, grading and roadbed preparation equipment, hauling equipment, forestry equipment, tunneling machines, recycling equipment, industrial vehicles, other equipment, engines and components, casting products and logistics.
Industrial Machinery and Others
The Company�� Industrial Machinery and Others segment products are used by a range of businesses and include industrial machinery, such as forging and sheet metal machinery and other services. Komatsu�� principal products include metal forging and stampi! ng presses, sheet metal machines, machine tools, defense systems, temperature-control equipment and others.
The Company competes with Caterpillar Inc., Hitachi Construction Machinery Co., Ltd., Volvo Construction Equipment NV, CNH Global N.V., Hyundai Heavy Industries Co., Ltd., Doosan Infracore Co., Ltd. and Toyota Motor Corporation.
Advisors' Opinion:- [By Dan Carroll]
Chinese manufacturing and materials stocks may not be the only picks in trouble, however. Leading international manufacturers could see demand in the world's second-largest economy, cutting into lofty growth expectations that relied upon China's surge to make up for weakness elsewhere around the globe. Japanese industrial power Komatsu (NASDAQOTH: KMTUY ) , the second-largest industrial machinery manufacturer in the world, is betting on�growing Chinese demand this fiscal year, in combination with the weak yen, to fuel growth.
10 Best Prefered Stocks To Invest In 2014: Liberte Investors Inc. (FAC)
First Acceptance Corporation, through its subsidiaries, engages in retailing, servicing, and underwriting non-standard personal automobile insurance and related products. Its primary business involves issuing automobile insurance policies to individuals who are categorized as non-standard based primarily on their inability or unwillingness to obtain insurance coverage from standard carriers due to various factors, including their payment history or need for monthly payment plans, and failure to maintain continuous insurance coverage or driving record. The company also offers optional products that provide ancillary reimbursements and benefits in the event of an automobile accident; and underwrites a tenant homeowner policy that provides contents and liability coverage to renters. In addition, it engages in activities related to the disposition of real estate held for sale. The company distributes its products through retail locations. As of March 31, 2012, it leased and op erated 378 retail locations. First Acceptance Corporation was founded in 1969 and is based in Nashville, Tennessee.
Advisors' Opinion:- [By John Udovich]
Auto sales continue to rise and that is good news for small cap auto insurers Infinity Property and Casualty Corp (NASDAQ: IPCC), First Acceptance Corporation (NYSE: FAC) and Atlas Financial Holdings Inc (NASDAQ: AFH) which are focused on niche auto insurance markets.�A Yahoo! Autos blog post�recently noted that in August, automakers sold 1.5 million new vehicles for the highest rate in years. Moreover,�most industry forecasters expect sales to�return to the level they hit before the 2008 recession of 16 million vehicles a year. The blog post then went on to note the three forces driving auto sales:
10 Best Prefered Stocks To Invest In 2014: Green Dot Corporation (GDOT)
Green Dot Corporation operates as a bank holding company. It offers general purpose reloadable prepaid debit cards, and cash loading and transfer services in the United States. The company�s products include Green Dot MasterCard, Visa-branded prepaid debit cards, and various co-branded reloadable prepaid card programs; Visa-branded gift cards; and MoneyPak and swipe reload proprietary products that enable cash loading and transfer services through its Green Dot Network. Its Green Dot Network enables consumers to use cash to reload its prepaid debit cards or to transfer cash to any of the company�s Green Dot Network acceptance members, including competing prepaid card programs, and other online accounts. The company markets its cards and financial services to banked, underbanked, and unbanked consumers. Green Dot Corporation offers its products and services through retail distributors, including mass merchandisers, drug store and convenience store chains, and supermarket chains; the Internet; and relationships with other businesses. Its prepaid debit cards and prepaid reload services are available to consumers at approximately 60,000 retail locations nationwide and online at greendot.com. The company was formerly known as Next Estate Communications, Inc. and changed its name to Green Dot Corporation in October 2005. Green Dot Corporation was incorporated in 1999 and is headquartered in Pasadena, California.
Advisors' Opinion:- [By Jane Edmondson]
Green Dot (GDOT), a Pasadena, CA-based company, is a leading provider of prepaid MasterCard (MA) and Visa (V) debit cards. Green Dot products are sold in more than 60,000 retail locations including drug stores, grocery stores, convenience stores, and discount department stores. The company also has a discounted offering available exclusively through Wal-Mart (WMT).
- [By Dan Newman]
Even with Radiohead's questionable outcome with the scheme,�Green Dot's� (NYSE: GDOT ) GoBank, launched in January, is offering checking accounts where its members decide what to pay as a monthly fee, between $0 and $9. Does this make any sense for the company to think customers will voluntarily pay?
- [By Lauren Pollock]
Green Dot Corp.(GDOT) posted better-than-expected third-quarter results and lifted the lower end of its full-year guidance, touting more customers receiving recurring direct deposits. The company’s chief executive also said it was well positioned to return to double-digit revenue growth as Green Dot looks towards�2014.
10 Best Prefered Stocks To Invest In 2014: Hillenbrand Industries Inc. (HRC)
Hill-Rom Holdings, Inc. manufactures and provides medical technologies and related services for the health care industry worldwide. It offers patient support system, safe mobility and handling solutions, medical equipment rental services, surgical products, and information technology solutions, as well as non-invasive therapeutic products for acute and chronic medical conditions. The company rents and sells patient support systems, which include various bed systems, and integrated and non-integrated therapeutic bed surfaces for use in high, mid, and low acuity settings; and non-invasive therapeutic products and surfaces for the prevention and treatment of various acute and chronic medical conditions, including pulmonary, wound, and bariatric conditions. It also provides rentals and health care provider asset management services for moveable medical equipment, such as ventilators, defibrillators, intravenous pumps, and patient monitoring equipment; mobility solutions, inclu ding lifts and other devices used to move patients; architectural products comprising headwalls and power columns; and health care furniture solutions. In addition, the company develops and markets various communications technologies and software solutions primarily to improve patient safety at the point of care; and surgical products, including a range of positioning devices for use in shoulder, hip, spinal, and lithotomic surgeries, as well as platform-neutral positioning accessories for operating room tables. It sells its products primarily to acute and extended care health care facilities through direct sales force and distributors. The company was formerly known as Hillenbrand Industries, Inc. and changed its name to Hill-Rom Holdings, Inc. in March 2008. Hill-Rom Holdings, Inc. was founded in 1969 and is headquartered in Batesville, Indiana.
Advisors' Opinion:- [By Stephen Simpson, CFA]
On the antennas side, PCTEL antennas can be used in a wide variety of applications from mobile radio to WiFi to GPS and machine-to-machine communication. PCTEL management defines the company's core addressable market as a 5% to 10% slice of a $30 billion market for process automation, smart grid, public safety, fleet management, and enterprise WLAN. Companies ranging from Harris (HRC) to Deere (DE) to Cisco (CSCO) have used PCTEL antennas, and Cisco incorporates the company's antennas into their higher-end wireless products.
- [By Lisa Levin]
Hill-Rom Holdings (NYSE: HRC) dropped 14.43% to $37.74 after the company reported weaker-than-expected Q1 results and lowered its outlook. The company also announced its restructuring program.
- [By Seth Jayson]
Calling all cash flows
When you are trying to buy the market's best stocks, it's worth checking up on your companies' free cash flow once a quarter or so, to see whether it bears any relationship to the net income in the headlines. That's what we do with this series. Today, we're checking in on Hill-Rom Holdings (NYSE: HRC ) , whose recent revenue and earnings are plotted below.
10 Best Prefered Stocks To Invest In 2014: Elephant Talk Communications Corp (ETAK)
Elephant Talk Communications Corp., incorporated on September 26, 2011, is a provider of mobile networking software and services. The Company provides operating software, managed services, cloud and Software as a Service (SaaS) solutions, an integrated transaction and delivery platform to the mobile telecommunications industry globally. The Company�� products include remote health care, credit card fraud prevention, mobile Internet ID security, secure remote file access management, loyalty and transaction management services and a whole range of other emerging mobile services.
The Company empowers Mobile Network Operators (MNOs) and Mobile Virtual Network Operators (MVNOs) by providing a cloud based mobile communications infrastructure, operating software and managed services, based mostly on company developed and owned software. In addition to the mobile based services, the Company also provides landline services like Carrier Select and Carrier Pre-Select Services, Toll Free and Premium Rate Services to the business market through its fixed line telecom infrastructure and its centrally operated and managed ET Boss and Infitel platform.
Advisors' Opinion:- [By Bryan Murphy]
If you're reading this, then odds are you already know that small caps WidePoint Corporation (NYSEMKT:WYY), CytRx Corporation (NASDAQ:CYTR), and Elephant Talk Communications Corp. (NYSEMKT:ETAK) are among the recent big winners from the small cap stock realm. ETAK is up 100% since the end of October, largely spurred by encouraging numbers in its third-quarter results. CYTR shares have rallied more than 150% in just the past three days on the heels of an announcement that a cancer drug the biotech company is developing has shown wonderful Phase 2 results. And, WYY has advanced 93% over the past month or so, thanks to Q3's earnings announcement, though the trading public - and then the media - certainly took the ball and ran with it.
10 Best Prefered Stocks To Invest In 2014: MS Structured Asset Corp Saturns GE Cap Corp Series 2002-14 (MKS)
MKS Instruments, Inc., together with its subsidiaries, provides instruments, subsystems, and process control solutions that measure, control, power, monitor, and analyze parameters of manufacturing processes worldwide. It offers instruments and control systems, such as pressure measurement and control, materials delivery, gas composition analysis, and control and information technology products. The company also provides power and reactive gas products comprising power delivery, reactive gas generation, processing thin films, and equipment cleaning products; and vacuum products, including vacuum containment components, vacuum gauges, vacuum valves, effluent management subsystems and custom stainless steel chambers, vessels, and pharmaceutical process equipment hardware and housings. Its products are used in the semiconductor processing steps, such as depositing thin films of material onto silicon wafer substrates, and etching and cleaning circuit patterns; manufacture of f lat panel displays, light emitting diodes, solar cells, data storage media, and other coatings, including architectural glass; energy generation and environmental monitoring processes, such as nuclear fuel processing, fuel cell research, greenhouse gas monitoring, and chemical agent detection; medical instrument sterilization; consumable medical supply manufacturing; and pharmaceutical applications. In addition, the company offers maintenance and repair, software maintenance, installation, and training services. It serves semiconductor capital equipment and device manufacturers, thin film capital equipment manufacturers, energy generation, environmental monitoring, and manufacturing companies, as well as government, universities, and industrial research laboratories. The company sells its products primarily through its direct sales force, as well as through sales representatives and agents. MKS Instruments, Inc. was founded in 1961 and is headquartered in Andover, Massachuse tts.
Advisors' Opinion:- [By Jonathan Morgan]
Marks & Spencer Group Plc (MKS), the U.K.�� largest clothing retailer, advanced 4.5 percent to 509 pence after reporting the smallest decline in general-merchandise sales in more than two years. Sales at stores open at least a year fell 1.3 percent in the quarter ended Sept. 28, M&S said. That beat the median estimate of 17 analysts for a 1.5 percent drop.
- [By Sofia Horta e Costa]
Marks & Spencer (MKS) Group Plc climbed the most in three weeks after posting sales growth that exceeded projections. Ashmore Group Plc jumped the most in almost 4 1/2 years as the assets under its management increased. Eurasian Natural Resources Corp. dropped 4.7 percent after a report that its chairman has threatened to quit. Evraz Plc declined the most since November 2011 as it refrained from announcing a final dividend for 2012.
- [By Namitha Jagadeesh]
Royal Bank of Scotland Group Plc (RBS) slipped 7.2 percent for the worst performance on the FTSE 100. Marks & Spencer Group Plc (MKS) paced a decline among retailers. BT Group Plc (BT/A) climbed 1 percent after Citigroup Inc. raised its recommendation on the shares.
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