Why the Street Should Love Grupo Aeroportuario del Pacifico's Earnings

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

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

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

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

Over the past 12 months, Grupo Aeroportuario del Pacifico generated $150.9 million cash while it booked net income of $153.0 million. That means it turned 37.2% of its revenue into FCF. That sounds pretty impressive. However, FCF is less than net income. Ideally, we'd like to see the opposite.

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

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

So how does the cash flow at Grupo Aeroportuario del Pacifico look? Take a peek at the chart below, which flags questionable cash flow sources with a red bar.

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

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

With questionable cash flows amounting to only -4.5% of operating cash flow, Grupo Aeroportuario del Pacifico's cash flows look clean. Within the questionable cash flow figure plotted in the TTM period above, changes in taxes payable provided the biggest boost, at 2.5% of cash flow from operations. Overall, the biggest drag on FCF came from capital expenditures, which consumed 31.2% of cash from operations.

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

Can your retirement portfolio provide you with enough income to last? You'll need more than Grupo Aeroportuario del Pacifico. Learn about crafting a smarter retirement plan in "The Shocking Can't-Miss Truth About Your Retirement." Click here for instant access to this free report.

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

Add Grupo Aeroportuario del Pacifico to My Watchlist.

Is AT&T Stock a Buy Today?

Why ROIC Is Poised to Bounce Back

Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, shopping center REIT Retail Opportunity Investments Corp. (NASDAQ: ROIC  ) has earned a coveted five-star ranking.

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

ROIC facts

Headquarters	San Diego, Calif.
Market Cap	$933.4 million
Industry	Retail REIT
Trailing-12-Month Revenue	$84.2 million
Management	President/CEO Stuart Tanz CFO Michael Haines
Return on Equity (average, past 3 years)	1.6%
Cash / Debt	$6.9 million / $316.4 million
Dividend Yield	4%
Competitors	Kimco Realty  Macerich Vornado Realty Trust

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

On CAPS, 97% of the 501 members who have rated ROIC believe the stock will outperform the S&P 500 going forward.

Earlier this week, one of those Fools, TMFTailwind, tapped ROIC as a particularly timely bargain opportunity: "Good place to start another long-term bet on stellar management (real estate mogul Stuart Tanz). Expecting boring, steady growth complemented by a nice yield. 10+ year time frame on this one."   

If you want market-thumping returns, you need to put together the best portfolio you can. Of course, despite a perfect five-star rating, ROIC may not be your top choice. If that's the case, we've compiled a special free report for investors called "The 3 Dow Stocks Dividend Investors Need," which uncovers a few other juicy income opportunities. The report is 100% free, but it won't be around forever, so click here to access it now.

How Apple May Differentiate the iPhone 5S

Why Westar Energy Is Poised to Outperform

Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, electric utility Westar Energy (NYSE: WR  ) has earned a respected four-star ranking.

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

Westar facts

Headquarters (founded)	Topeka, Kan. (1924)
Market Cap	$4.1 billion
Industry	Electric utilities
Trailing-12-Month Revenue	$2.3 billion
Management	CEO Mark Ruelle CFO Anthony Somma
Return on Capital (average, past 3 years)	9.5%
Cash/Debt	$5.6 million / $3.4 billion
Dividend Yield	4.1%
Competitors	Ameren Great Plains Energy Xcel Energy

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

On CAPS, 96% of the 4,521 members who have rated Westar believe the stock will outperform the S&P 500 going forward.   

Just yesterday, one of those Fools, hend6, succinctly summed up Westar bull case for our community:

As the market might slow, an energy company is poised to stay strong. Consistent earnings with a nice dividend yield, albeit a high payout ratio. That can be expected from this industry though. Balance sheet leans toward a low current ratio, but a high ratio of long-term assets-to-liabilities is comforting. We'll see how the market fares in the next year and keep holding on or let go at that time.

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

If that's the case, we've compiled a special free report for investors called "The 3 Dow Stocks Dividend Investors Need," which uncovers a few other juicy income opportunities. The report is 100% free, but it won't be around forever, so click here to access it now.

Pentagon Spends $961 Million on Poseidon Parts, Saudi Helo Trainers

The Department of Defense awarded more than $961 million worth of contracts to a total of 17 awardees on Thursday. Notable awards to publicly traded companies included:

$74.2 million: Awarded to Science Application International Corp (NYSE: SAI  ) in exercise of the eighth option year period (through May 30, 2014) on a firm-fixed-price, indefinite-delivery contract to provide maintenance, repair, and supply services for the Hawaii and Guam region.
  $53.6 million: Awarded to Boeing (NYSE: BA  ) on a firm-fixed-price contract supply spare parts for the Low Rate Initial Production Lot III of Boeing's P-8A Poseidon Multi-Mission Maritime aircraft. This contract should be completed by June 2016.
  $27.3 million: Split between General Dynamics (NYSE: GD  ) and privately held Capco of Grand Junction, Colo.. This award covers the procurement of parts and tools to service M2A1 machine guns.
  $8.1 million: Awarded to Rockwell Collins (NYSE: COL  ) under a firm-fixed-price, indefinite-delivery/indefinite-quantity, multiyear, foreign military sales to support Longbow Crew Trainer Virtual Geospecific Database Suites for Saudi pilots of the Apache Longbow attack helicopter.
  $8 million: Awarded to L-3 Communications (NYSE: LLL  ) as an indefinite-delivery/indefinite-quantity, cost-plus-fixed-fee with provisions for firm-fixed-price orders, performance-based contract to supply and support proprietary L-3 communications equipment for the Coast Guard. This contract includes additional option years, which, if exercised, would bring the cumulative ceiling value of the contract to an estimated $24.9 million and would extend the period for performance through May 2016.

This Real-World Drama Is My New Favorite Show

Sprint Nextel (NYSE: S  ) and Clearwire (NASDAQ: CLWR  ) have become the stars of my favorite soap opera.

Japanese mobile operator Softbank wants to buy Sprint. So does all-American satellite broadcaster DISH Network (NASDAQ: DISH  ) . This is a bidding war, sure, but also a war of words. DISH says the Japanese option is a threat to national security; Softbank asked its banking partners not to support DISH's bid. So Softbank struck an accord with American regulatory bodies that bypassed the alleged security threats, and DISH tapped a handful of other banks to finance its own bid.

Oh, but that's not all. Sprint is in the midst of buying Clearwire outright -- in a bidding war with DISH, of all potential rivals. This bidding war is a moot point if DISH walks away hand-in-hand with Sprint, but that hasn't stopped some heated auction action. Sprint's original $2.97 bid per share was topped by a $3.30 offer from DISH, and then raised by Sprint again to $3.40 -- and now there's a $4.40 DISH alternative on the table. Clearwire investors clearly love this war, but it sounds as if DISH is waving a white flag over the Sprint combination.

Did I mention that the latest Clearwire bid comes just hours before the company's shareholders are supposed to vote on accepting the Sprint deal? Yeah, that vote will most likely be moved back a few weeks thanks to the fierce bidding.

Will Sprint marry Softbank or DISH? Will DISH get both Sprint and Clearwire -- or neither one? This tangled mess of backstabbing and close-family dating would make an excellent telenovela in my book.

But wait -- there's more! In case you were wondering why DISH is so interested in wireless assets, you'd get another clue by glancing at satellite rival DIRECTV (NASDAQ: DTV  ) . The larger satellite operator is interested in buying all or part of online video specialist Hulu, which is currently owned by a cabal of Hollywood studios that don't always get along. DIRECTV would presumably boost its digital services with the Hulu bid, paving the way toward abandoning the costly satellite strategy in favor of a more direct digital streaming option.

With a serious wireless network under its belt, DISH could do the same thing with a focus on complete and high-quality coverage, while DIRECTV would be the king of exclusive content in this space. Both of these as-yet theoretical services would become serious competitors to HBO and Netflix (NASDAQ: NFLX  ) , as the various players converge on the same ultimate goal from different starting points. Netflix is the leader of this aspirational pack right now, but will that pole position last? DISH, for one, is doing its best to find a passing lane.

We're watching the future of personal entertainment in the making, folks. And the behind-the-scenes story looks like a heck of a script, too.

Can Netflix fend off this burgeoning competition, and will its international growth aspirations really pay off? These are must-know issues for investors, which is why The Motley Fool has released a premium report on Netflix. Inside, you'll learn about the key opportunities and risks facing the company, as well as reasons to buy or sell the stock. The report includes a full year of updates to cover critical new developments, so make sure to click here and claim a copy today.

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More Expert Advice from The Motley Fool

The Motley Fool's chief investment officer has selected his No. 1 stock for the next year. Find out which stock in our brand-new free report: "The Motley Fool's Top Stock for 2013." I invite you to take a copy, free for a limited time. Just click here to access the report and find out the name of this under-the-radar company.

Hot High Dividend Stocks To Invest In 2014

One way to think about the market is in terms of money flows between assets with different risk characteristics. When times are good, money moves out of bonds, which are perceived as safe because bondholders take priority in liquidation proceeds, and into stocks, which are riskier because their owners are last in line. When times are bad, it's the opposite.

The same can be said within asset classes as well. Riskier bonds, known as junk bonds, are more popular when the economy is perceived to be safe, while safer stocks (generally those that pay high dividend yields) demand higher premiums when times are tough. With that in mind, it should be no surprise that the latter are trading for higher multiples than ever.

The conversation about a "dividend bubble" began in earnest at the beginning of last year. As my colleague Morgan Housel said in February 2012, "there's an argument to make that, just as investors ran blindly into subprime bonds five years ago in search of yield, they're running blindly, carelessly into dividend stocks today."

Hot High Dividend Stocks To Invest In 2014: Arena Pharmaceuticals Inc.(ARNA)

Arena Pharmaceuticals, Inc., a clinical-stage biopharmaceutical company, engages in discovering, developing, and commercializing oral drugs in the therapeutic areas of cardiovascular, central nervous system, inflammatory, and metabolic diseases. The company?s clinical development programs include lorcaserin that has completed two pivotal Phase III clinical trials for the treatment of weight management, including weight loss and maintenance of weight loss; and APD811, which is under Phase I clinical trial for the treatment of pulmonary arterial hypertension. Its preclinical development programs include APD334, for the treatment of autoimmune diseases, including multiple sclerosis and rheumatoid arthritis. The company also researches and develops cannabinoid, receptor agonists for the treatment of osteoarthritis and pain; and GPR119 agonists for the treatment of type 2 diabetes. Its other development programs, which had completed Phase I clinical trial include APD597 for th e treatment of type II diabetes; APD916 for the treatment of narcolepsy and cataplexy; and APD791 for the treatment of arterial thrombosis. In addition, the company provides manufacturing services. Arena Pharmaceuticals, Inc. was founded in 1997 and is based in San Diego, California.

Advisors' Opinion:

• [By TheStreet Staff]

   The U.S. commercial launch of Arena Pharmaceuticals (ARNA) and Eisai's weight-loss pill Belviq will be a major disappointment. Belviq will also fail to receive European approval.

Hot High Dividend Stocks To Invest In 2014: AMCIL Ltd(AMH.AX)

Amcil Limited is a publicly owned investment manager. The firm primarily manages separate client focused equity portfolios for its clients. It invests in the public equity markets of Australia. The firm invests in growth and value stocks of large cap and small cap companies to create its portfolios. It invests in companies from media, technology, communications, and entertainment sectors. Amcil Limited was founded in 1996 and is based in Melbourne, Australia.

Top Canadian Stocks To Own For 2014: Real Goods Solar Inc.(RSOL)

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

Advisors' Opinion:

• [By Matthews]

  Real Goods Solar, Inc.(NASDAQ: RSOL) closing price in the stock market Tuesday, Jan. 3, was $1.50. RSOL is trading 8.97% above its 50 day moving average and -25.21% below its 200 day moving average. RSOL is -50.98% below its 52-week high of $3.06 and 51.52% above its 52-week low of $0.99. RSOL‘s PE ratio is N/A and its market cap is $26.93M.

  Real Goods Solar, Inc. operates as a residential and commercial solar energy integrator primarily in California and Colorado.

10 Best Gas Utility Stocks To Own Right Now

Ford Atlas concept. Source: Ford.�

If you told Detroit's Big Three they could dominate only one segment out of the entire U.S. market, they would choose the full-sized truck segment -- 100% guaranteed. That's where the money is. And that's what makes the next two years -- when the segment's market share could be up for grabs -- very interesting for Ford (NYSE: F  ) , General Motors (NYSE: GM  ) , and Chrysler.

Among those automakers, Ford's next generation F-150 is going to strike the right balance of fuel efficiency, design/innovation, and raw towing power. That's why I believe it will be a clear winner against its competition. Sorry to disappoint you loyal GM and Chrysler fans. Here's a quick breakdown of the details.

10 Best Gas Utility Stocks To Own Right Now: Elite Ksb Holdings Limited(550.SI)

Elite KSB Holdings Limited, an investment holding company, engages in importing, processing, and distributing chicken, pork, and other meat products primarily in Singapore. It provides a range of chicken, pork, beef, and lamb products. The company offers a range of fresh chicken products, such as fresh dressed chicken, fresh chicken parts, and marinated chicken; and chilled beef, including striploin, sirloin, and ribeye. It also manufactures and supplies various small goods, including sausages, hams, and other gourmet specialties. The company sells its products under the First Choice, Pasar, Chef, Ayam21, Top Fresh, and PERGAS brand names. In addition, it provides third-party slaughtering services to chicken distributors; invests in investment properties; involves in the feedmill business activities; and operates as a food processing specialist. The company offers its products to the supermarkets, hotels, restaurants, chicken rice stalls, food service providers, and wet ma rket stalls. Elite KSB Holdings Limited was incorporated in 2001 and is based in Singapore.

10 Best Gas Utility Stocks To Own Right Now: SK TELECOM ADR EACH REP 1/9 KRW500(CIT)

SK Telecom Co., Ltd. provides wireless telecommunications services using code division multiple access (CDMA) and wide-band CDMA technologies. It offers cellular voice services, such as wireless voice transmission services; and wireless global roaming services. The company also provides wireless data transmission services, such as wireless Internet access services, which allow subscribers to access online digital contents and services, as well as to send and receive text and multimedia messages. In addition, it offers broadband Internet and fixed-line telephone services, such as video-on-demand and IP TV services; and local, domestic, and international long-distance fixed-line telephone services to residential and commercial subscribers. Further, the company provides wireless entertainment-related contents and services, wireless finance-related contents and m-commerce services, and wireless news and search services; and international calling services, such as direct-dial, pre and post paid card calling services, bundled services for corporate customers, voice services using Internet protocol, Web-to-phone services, and data services. Additionally, it offers satellite digital media broadcasting services; telematics services; and fixed-line and online community portal services. The company also operates 11th Street, an online shopping mall; and T Store, an online open marketplace for mobile applications. As of March 31, 2011, SK Telecom Co. had 26 million wireless subscribers. It has strategic alliances with Bridge Alliance; Orange SA; Telecom Italia Mobile S.p.A.; T-Mobile International AG & Co; and Teliasonera Mobile Networks AB. The company was formerly known as Korea Mobile Telecommunications Co., Ltd. and changed its name to SK Telecom Co., Ltd. in March 1997. SK Telecom Co., Ltd. was founded in 1984 and is based in Seoul, South Korea.

Advisors' Opinion:

• [By Goodwin]

  Morgan Stanley looks cheap at 10X trailing earnings and 8.6X forward earnings at a price to book value of just .85X. MS is actually much more highly leveraged than it was pre-crisis and even though the company could be through the worst of the mortgage mess that brought the shares to around $10 in the summer of 2008, the shares are not for the faint of heart and the risks are still quite pertinent.

Top 10 Diversified Bank Companies To Own In Right Now: Downer EDI Ltd(DOW.AX)

Downer EDI Limited, together with its subsidiaries, provides engineering and infrastructure management services to the public and private minerals and metals, oil and gas, power, transport infrastructure, communications, property, and water sectors in Australia, New Zealand, the Asia Pacific, and the United Kingdom. It offers engineering and consulting services, including design and consulting, project management, procurement, construction, manufacturing, specialist services, asset maintenance, and shutdowns and turnarounds; and mining services, such as exploration management, exploration drilling, open-cut mining, underground mining, blasting services, tire management, crushing services, rehabilitation, specialist services, and transport infrastructure. The company also provides design, build, fit-out, and maintenance of passenger rolling stock and freight rolling stock, including locomotives, rail wagons, freight wagons, and light rails; and importing and commissioning l ocomotives units for use in the resources sector. In addition, it engages in the development, management, and maintenance of roads, highways, and rail infrastructure. Further, the company offers utility services, such as ground works for power, gas, and telecommunications, as well as provides maintenance services for water supply and wastewater treatment. Downer EDI Limited is headquartered in North Ryde, Australia.

10 Best Gas Utility Stocks To Own Right Now: Cape Bancorp Inc.(CBNJ)

Cape Bancorp, Inc. operates as the holding company for the Cape Bank that provides a line of business and personal banking products to retail customers and small and mid-sized businesses primarily in Cape May and Atlantic Counties, New Jersey. Its deposit products include non-interest-bearing demand deposits, such as checking accounts; interest-bearing demand accounts, including NOW and money market accounts; savings accounts; and certificates of deposit. The company?s loan products portfolio comprises commercial mortgage loans, one-to-four family residential mortgage loans, commercial business loans, construction loans, home equity loans and lines of credit, and other consumer loans. It operates through its 16 full service branch offices located in Atlantic and Cape May counties in southern New Jersey; and a loan production office in Burlington County. The company was founded in 1923 and is based in Cape May Court House, New Jersey.

10 Best Gas Utility Stocks To Own Right Now: Blackstone Ventures Inc. (BLV.V)

Blackstone Ventures Inc., an exploration stage company, engages in the exploration and development of mineral properties. It primarily focuses on nickel and copper metals. The company�s principal exploration projects are located in Norway and Sweden. It also has interests in mineral properties located in Ontario and Nunavut, Canada. The company is based in Vancouver, Canada.

10 Best Gas Utility Stocks To Own Right Now: Terumo (TRUMY.PK)

TERUMO CORPORATION operates in four business segment. The Hospital Products segment is engaged in the manufacture, purchase and sale of hospital medical equipment, pharmaceuticals, peritoneal dialysis and diabetes related products, and the rental of hospital medical equipment and home medical products. The Cardiac and Vascular Area segment is involved in the manufacture, purchase and sale of catheter systems, artificial heart and lungs, as well as artificial blood vessels, the manufacture and sale of therapeutic coils for cerebral aneurysm, sampling equipment and kits for platelet-rich plasma and concentrated bone-marrow cell, and large-bore sheaths. The Blood System segment is engaged in the manufacture, purchase and sale of blood transfusion-related products. The Healthcare segment manufactures and sells healthcare related products. As of March 31, 2012, the Company had 79 subsidiaries and 2 associated companies. Advisors' Opinion:

• [By Robert Holmes]

   Analyst Mayo Mita says the Japanese earthquake and tsunami was a setback for the company, Terumo has a more visible growth stage coming.

  "Over the next five years we see clear growth from China, the NOBORI drug eluting stent (DES), the U.S. catheter business, and the blood management business," Mita writes.

  The base-case Mita lays out is for a 26% rise in share price next year, although Mita's most bullish forecast has shares up twice that. On the downside, Mita's most bearish scenario has shares falling 11% in the next 12 months.

  The chart below shows shares of Terumo that trade on the Pink Sheets in the U.S., but Morgan Stanley is recommending buying shares in Tokyo.

10 Best Gas Utility Stocks To Own Right Now: Empire Mining Corporation(EPC.V)

Empire Mining Corporation engages in the exploration and development of mineral properties. The company primarily explores for chromite, copper, molybdenum, gold, silver, lead, and zinc deposits. Its properties are located primarily in Turkey, Albania, and Serbia. The company is headquartered in Vancouver, Canada.

10 Best Gas Utility Stocks To Own Right Now: Castle Resources Inc. (CRI.V)

Castle Resources Inc., a junior resource company, engages in the acquisition, exploration, and development of mineral resource properties in British Columbia and New Brunswick, Canada. It principally focuses on the exploration of its 100% owned Granduc Copper Mine located in British Columbia. The company is headquartered in Toronto, Canada.

10 Best Gas Utility Stocks To Own Right Now: LMI Aerospace Inc.(LMIA)

LMI Aerospace, Inc. provides design engineering services, structural assemblies, kits, and components to the aerospace, defense, and technology markets primarily in the United States. The company operates in two segments, Aerostructures and Engineering Services. The Aerostructures segment fabricates, machines, finishes, integrates, assembles, and kits formed close tolerance aluminum, specialty alloy, and composite components, as well as higher level assemblies. Its aerospace products include wing slats and flapskins; winglet leading edges and related wing modification kits; fuselage and wing skins; helicopter cabin, aft section, and pylon components and assemblies; door surrounds, components, assemblies, and floorbeams; thrust reversers and engine nacelles/cowlings; cockpit window frames and landing light lens assemblies; interior components; structural sheet metal and extruded components; tailcone assemblies; and housings and assemblies. This segment also offers value-add ed services related to the design, production, assembly, and distribution of aerospace components. The Engineering Services segment provides design, engineering, and program management services, such as structural design and analysis, systems design and integration, tool design and fabrication, certification planning support, risk mitigation and producibility trade studies, and the development of program schedules and resource planning. Its services include wing/wingbox, fixed and moveable leading edges/trailing edges, fuselage, empennage, and tailcone design; winglet/wing mod design; nacelle, engine cowl, and thrust reverser design; weight improvement engineering; helicopter fuselage, cockpit, cabin frames, skins, longerons, and beams; aircraft modification engineering; aviation training system; aviation maintenance engineering; manufacturing engineering; and aviation system software engineering. The company was founded in 1948 and is based in St. Charles, Missouri.

10 Best Gas Utility Stocks To Own Right Now: Rada Electronics Industries Limited(RADA)

Rada Electronic Industries Ltd. engages in the development, manufacture, and sale of defense electronics to government agencies and authorities, government-owned companies, and integrators in Israel, Asia, North America, South America, Latin America, and Europe. Its products include data/video recording and management systems, such as mission data and digital video recorders, airborne data servers, post-mission debriefing solutions, and head-up display video cameras for aerial and land platforms; inertial navigation systems for aerial and land platforms; avionics solutions, including avionics for unmanned aerial vehicles; and radar sensors for anti-terrorism/force protection systems. The company also sells and supports legacy commercial aviation test stations, as well as offers test and repair services. It has strategic relationships with Lockheed Martin Aeronautics, GE Aviation, Israel Military Industries, Israel Aerospace Industries, Hindustan Aeronautics Ltd., and Embra er and Rafael Advanced Defense Systems Ltd. Rada Electronic Industries Ltd. was founded in 1970 and is based in Netanya, Israel.

This Is One Incredible CEO

The Motley Fool's readers have spoken, and I have heeded your cries. After months of pointing out CEO gaffes and faux pas, I've decided to make it a weekly tradition to also point out corporate leaders who are putting the interests of shareholders and the public first and are generally deserving of praise from investors. For reference, here's my previous selection.

This week, I'd like to highlight the mother of all private-equity firms, Blackstone Group (NYSE: BX  ) and its CEO, Steve Schwarzman.

Kudos to you, Mr. Schwarzman
As you might imagine, companies like Blackstone Group that invest in and buy out businesses, as well as run hedge funds and invest in commercial real estate markets, require a stable economy and interest rate environment in order to be successful. The recession in 2009 practically turned this sector on its head. Commercial real estate markets are only now beginning to recover with wealthier investors only recently began returning their money back into the hands of asset managers like Blackstone.

This isn't to say, even with the economy on the mend, that the asset management sector hasn't struggled mightily. In order to attract new money, KKR (NYSE: KKR  )  and Blackstone -- both companies known to attract the upper echelon of wage-earners, have lowered their minimum buy-in requirements for their hedge funds down to just $2,500. Even Carlyle Group (NASDAQ: CG  ) , which had previously restricted access to the top 1% of all income earners, is lowering its minimum investing requirements a bit to attract new investors as my Foolish colleague Amanda Alix reported in March. 

However, Blackstone, which has an astounding $218.2 billion in assets under management, has been able to exploit numerous opportunities, as well as throw its weight around, to turn profits for its company and investors and stand out among its peers. Over the past 12 months, the company has boosted its gross inflows by $34 billion, of which $31 billion was organic. Furthermore, its distributable earnings -- which can vary from quarter to quarter with P/E firms -- jumped 134% to $0.33 per unit.

One of the biggest boosts in its most recent quarter came from Blackstone's private-equity portfolio which saw economic income rise 15% from the previous year. More importantly, it saw the IPO of theme park owner SeaWorld Entertainment (NYSE: SEAS  ) , allowing Blackstone to sell 16 million shares and generate another "whale" of a return for investors.

But, just as Blackstone's Steve Schwarzman has been heralded for finding great deals and delivering big returns to shareholders, he should be praised for knowing when to walk away as well. Earlier this year, for instance, Blackstone made a $15 per share bid to acquire a majority stake in Dell (NASDAQ: DELL  ) as a competing bid to Silver Lake Partners and CEO Michael Dell's $13.65 per share cash bid. Blackstone wisely walked away from its bid after an IDC report noted that PC sales fell 14% in the first quarter and the PC business was deteriorating faster than anyone had first imagined because of smartphones and tablets.

Knowing when to hold 'em, and when to fold 'em, has made Schwarzman a fantastic businessman.

A step above his peers
I could probably end right there and it would be more than sufficient as to describe why Steve Schwarzman is an incredible leader, but there's actually so much more!

Obviously, shareholders are going to benefit in a big way from the high profit margins associated with Blackstone's operations. With few staff and overhead needed to run hedge funds and orchestrate buyouts, much of what Blackstone generates is almost pure profit. That means it doesn't take a home run every time to yield a solid dividend. Over just the past four quarters, shareholders in Blackstone have received $0.92 in payouts. That's good enough for a 4% yield based on yesterday's close and would be just about double what you'd be earning on a 10-year Treasury note.

Blackstone's employees also benefit in a big way as well. In terms of compensation -- because Blackstone is so picky in its hiring process to gain employees who'll stay with the company over the long term -- it's the cream of the crop. In 2010, for instance, Blackstone set aside about $811,000 per employee for compensation. Furthermore, Blackstone has increased its headcount by about 25% since the recession, proving high-level jobs do still exist. 

But, my personal favorite aspect of Blackstone Group and its CEO Steve Schwarzman is that he hasn't allowed some $212 billion in assets under management to go to his head. In April, Schwarzman donated $100 million (not a typo!) to the Tsinghua University in Beijing, China. The reasoning behind Schwarzman's donation was to create an elite level Master's program for 200 Chinese students as well as others around the world. Schwarzman's goal, with China playing such a large role in the world's global evolution, is to ensure that China and its top minds don't get left behind.

Two thumbs up
Private equity firms like Blackstone are certainly known for their ruthless cunning when it comes to investing and are often associated with posh lifestyles and spending. Contrary to this belief is Blackstone's Steve Schwarzman, who has done a good job of creating wealth for shareholders, makes sure his employees are fully qualified and compensated well for their hard work, and is a huge philanthropist in the educational field. It's not easy to trust a private-equity firm that offers no guarantee of future income, but as long as Schwarzman is at the helm of Blackstone, it will always have my vote of confidence.

With so much of the financial industry getting bad press these days, it may be a greedy when others are fearful moment. Not surprisingly, some of Warren Buffett's biggest investments are in the space. In the Motley Fool's free report, "The Stocks Only the Smartest Investors Are Buying," you can learn about a small, under-the-radar bank that's too tiny for Buffett's billions. Too bad, because it has better operating metrics than his favorites. Just click here to keep reading.

Goldman's Trip to Tesla Takes Investors to Imagination Land

Motley Fool analyst Blake Bos gives his take on some of the media comments regarding the Goldman Sachs Group's  (NYSE: GS  ) recent trip to California to visit with Tesla Motors  (NASDAQ: TSLA  ) . 

In the video below, Tesla sales projections for North American vehicles for 2017 and beyond are compared with the 2012 sales volume of  BMW's and Audi's entire vehicle lineup. Do these sales goals support the current Tesla market valuation? 

Blake discusses the scientific consensus estimate of a 7% average decrease per year for the cost of battery technology. He also shares the main reason why the decrease from 2011 to 2012 was double that estimate.

Lastly, Blake talks about alternative fuels and also gives an example of how Berkshire Hathaway (NYSE: BRK-A  ) has chosen to invest in battery technology.

Tesla's plan to disrupt the global auto business has yielded spectacular results. But giant competitors are already moving to disrupt Tesla. Will the company be able to fend them off? The Motley Fool answers this question and more in our most in-depth Tesla research available. Get instant access by clicking here now.

Why Smithfield Foods Shares Popped

EnerSys Initiates First Quarterly Dividend

Stored energy solution specialist EnerSys  (NYSE: ENS  )  announced yesterday it would be initiating its first quarterly dividend payment of $0.125 per share, payable on June 28 to the holders of record at the close of business on June 14.  

At the same time, the company said it would start a new $65 million stock buyback program that is in addition to its standing share repurchase plan that was implemented to minimize share dilution caused by its equity incentive plans. The buyback plan will expire on March 31, 2014, but the board cautioned the program could be modified, extended, or terminated at any time.

EnerSys CEO John D. Craig said: "Our level of profitability and cash generation affords the Company the ability to pay a quarterly dividend and repurchase stock while maintaining our acquisition strategy, increasing capital expenditure programs and continuing our growth in the developing markets."

The regular dividend payment equates to a $0.50-per-share annual dividend, yielding 1% based on the closing price of EnerSys's stock on May 28.

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Most U.S. Stocks Fall as Investors Weigh Data, Stimulus

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The Top Ten Stocks for May 24

Most U.S. stocks fell after paring early losses for a second day, as investors weighed prospects of economic growth with concern the Federal Reserve will reduce stimulus efforts.

Gap Inc. and Abercrombie & Fitch Co. slipped more than 1.7 percent after their earnings forecasts trailed analyst projections. Sears Holdings Corp. (SHLD) sank 14 percent as the retailer controlled by billionaire hedge-fund manager Edward Lampert posted a loss. Procter & Gamble Co. surged 4 percent after replacing Chief Executive Officer Bob McDonald with his predecessor, A.G. Lafley.

The Standard & Poor's 500 Index (SPX) fell 0.1 percent to 1,649.60 at 4 p.m. in New York, after sinking as much as 0.8 percent earlier. The Dow Jones Industrial Average added 8.60 points, or 0.1 percent, to 15,303.10, recovering from a 95-point loss. About 10 stocks fell for every 9 that rose and 5.2 billion shares changed hands on U.S. exchanges, 16 percent below the three-month average. U.S. markets will be closed May 27 for the Memorial Day holiday.

"People are still mindful of what the Fed may do as the year progresses," Robert Pavlik, chief market strategist at Banyan Partners LLC, said in a phone interview from New York. His firm manages about $1.4 billion. "They want to look at the dip and see if it turns into something. If it does not turn into anything, they seem to be coming in in the afternoon. That seems to be the pattern every single day."

Stock Buybacks

Investors trying to explain the resilience of American equities during a global selloff may want to consider the pace that companies are repurchasing shares.

About 79 percent of buyback orders at Goldman Sachs Group Inc.'s corporate trading desk were active yesterday, the most this year, according to a note to clients obtained by Bloomberg News. Companies stepped up purchases as the S&P 500 fell as much as 3 percent from an intraday record reached May 22.

The buybacks may have limited losses in ! American equities after shares in Japan fell the most in two years and stock markets from London to Paris and Frankfurt saw declines of more than 2 percent. The S&P 500 closed yesterday down 0.3 percent.

The index fell 1.1 percent this week, the most in more than one month, after a contraction in China manufacturing offset American housing data and investors weighed comments from Fed Chairman Ben S. Bernanke, who said on May 22 that the pace of asset purchases, known as quantitative easing, could be cut "in the next few meetings" if economic conditions improve.

Bernanke Statements

That was a departure from previous statements from Bernanke where he stressed that policy will remain "highly accommodative," Kevin Logan, chief U.S. economist at HSBC Holdings Plc, wrote in a report to investors this week. The S&P 500 has surged 144 percent since March 2009 as the Fed pumped more than $2 trillion into markets to boost economic growth.

"The market is trying to price in that at some point in time the Fed is going to take their foot off the gas pedal," Arvin Soh, a portfolio manager with GAM USA Inc. in New York, said by phone. His firm had $53.3 billion in assets under management as of Dec. 31. "That's because growth is picking up and is sustainable. That should ultimately be a good thing. The problem is everyone is long risk. When one thing gets triggered, that automatically causes selling and it feeds itself."

Concern that the Fed will reduce its monthly bond purchases grew today as a report showed orders for U.S. durable goods increased more than forecast in April, pointing to gains in business investment that will help manufacturing rebound in the second half of the year.

Volatility Gauge

The Chicago Board Options Exchange Volatility Index (VIX), or VIX, fell 0.6 percent to 13.99 for its fifth straight gain, its longest advance of the year. The equity volatility gauge, which moves in the opposite direction to the S&P 500 about 80 percen! t of the ! time, has jumped 12 percent this week.

Eight out of the 10 main industry groups in the S&P 500 declined, led by a 1 percent drop in utility companies. Energy and phone stocks fell at least 0.3 percent.

Gap (GPS), the largest U.S. apparel chain, slid 1.7 percent to $40.64. While first-quarter profit rose to 71 cents a share, exceeding the 69-cent top end of its forecast, the company maintained its projection that earnings this year will be $2.52 to $2.60. Analysts estimated $2.72, on average.

Abercrombie & Fitch tumbled 8 percent to $50.02 after the clothing retailer cut its earnings forecast. The company said its full-year profit may be $3.15 to $3.25 a share, down from a previous estimate for $3.35 to $3.45.

$639 million

Sears sank 14 percent to $50.25. The retailer reported a first-quarter loss of $2.63 a share as revenue fell 8.8 percent to $8.45 billion. The stock tumbled 19 percent earlier in the session, the biggest intraday drop since Nov. 16, cutting the value of Lampert's controlling stake by as much as $639 million.

Salesforce.com Inc., the biggest maker of online customer-management tools, dropped 5.3 percent to $43.25. Profit excluding some items for the fiscal second quarter will be 11 cents to 12 cents a share, the company said. That compared with analysts' average estimate for profit of 12 cents, according to data compiled by Bloomberg.

GameStop Corp., the world's largest video-game retailer, tumbled 11 percent to $32.11. Retailers may keep as little as 10 percent of the revenue from sales of used Microsoft Corp.'s Xbox One games, MCV said on its website, citing ConsoleDeals.co.uk.

P&G Surges

P&G (PG) surged 4 percent, the most in the Dow, to $81.88. The world's largest consumer products maker is changing CEOs as it struggles to rekindle growth at home and abroad. McDonald will retire June 30 after 33 years at the company, P&G said.

Intuitive Surgical Inc. gained 4.8 percent to $501.53. The com! pany conv! inced a Washington state jury that it wasn't negligent in its training of a doctor who performed a robot-assisted surgery on a patient who later died. The case was the first to go to trial of at least 26 lawsuits against Intuitive alleging injuries tied to its da Vinci robotic system, which was used in more than 300,000 U.S. operations last year.

Valeant Pharmaceuticals International Inc. jumped 13 percent to a record $84.47. Canada's largest drugmaker is close to acquiring Bausch & Lomb, the eye-care company owned by Warburg Pincus LLC, for about $9 billion, according to a person familiar with the negotiations.

Kilroy Realty Maintains Dividend at $0.35

Real estate investment trust Kilroy Realty  (NYSE: KRC  )  announced yesterday its second-quarter dividend of $0.35 per share, the same rate it's paid since 2009.

The board of directors said the quarterly dividend is payable on July 17 to the holders of record at the close of business on June 28. The REIT has made a quarterly payout every year since 1997.

The board also declared dividends for its two classes of preferred shares. On the 6.875% Series G cumulative redeemable preferred stock it will pay a dividend of $0.4296875 per share. For the 6.375% Series H cumulative redeemable preferred stock Kilroy will pay a dividend of $0.3984375 per share. Both preferred dividends will be payable on August 15 to shareholders of record on July 31.

The regular dividend payment equates to a $1.40-per-share annual dividend, yielding 2.4% based on the closing price of Kilroy Realty's stock on May 23.

KRC Dividend data by YCharts

Why Abbott Labs Is Poised to Keep Poppin'

Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, health care giant Abbott Laboratories (NYSE: ABT  ) has earned a coveted five-star ranking.

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

Abbott facts

Headquarters (founded)	Abbott Park, Ill. (1888)
Market Cap	$58.9 billion
Industry	Health care equipment
Trailing-12-Month Revenue	$40 billion
Management	Chairman/CEO Miles White (since 1999) CFO Thomas Freyman (since 2001)
Return on Equity (average, past 3 years)	20.6%
Cash / Debt	$8.5 billion / $7.1 billion
Dividend Yield	1.5%
Competitors	Boston Scientific Johnson & Johnson Mead Johnson Nutrition

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

On CAPS, 97% of the 2,617 members who have rated Abbott believe the stock will outperform the S&P 500 going forward.

Just last week, one of those Fools, cschweit, succinctly summed up the Abbott bull case for our community:

Undervalued stock as of right now. Biggest growth will come from emerging markets. Will need to deliver to those emerging markets if it will succeed -- which I think it can. A little worried about a major buyout of its major branches. ... Still a strong company with a good future.

Abbott Labs has changed forever after losing its branded pharmaceutical business to a spinoff. If you're a current investor, or might be buying shares soon, make sure you truly understand the stock by reading The Motley Fool's brand new premium report on Abbott Labs. The report outlines all of the must-know opportunities and risks, along with a full year of analyst updates to keep you up to speed. Best of all, you can claim this report today by clicking here now.

Will Rail Wreak Havoc on Pipelines Forever?

Baker Hughes Names New Treasurer

Baker Hughes  (NYSE: BHI  )  has a new person to wear green eyeshades at the company. The oil and gas industry services provider announced this morning that Mike Sumruld was appointed as its vice president and treasurer, replacing Jan Kees van Gaalen, who left last month to serve as executive VP and CFO at Dresser-Rand.

Sumruld started his career at Baker Hughes in 1998 and worked most recently as VP of financial planning and analysis in Dubai. Prior to that, Sumruld served as Baker Hughes' director of investor relations.

Baker Hughes CFO Peter Ragauss said: "Mike brings more than 20 years of diversified financial expertise, international experience, and a record of solid performance within Baker Hughes to his new role as Treasurer. We believe this depth of experience will enable him to interact very effectively with our external stakeholders."

Sumruld has held a range of financial roles covering the U.S., Latin America, and the Eastern Hemisphere as well as global financial roles covering several product lines including drill bits, drilling services, chemicals, and drilling and completion fluids. He earned his MBA at Texas A&M and his undergraduate business degree at the University of Houston.

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Mortgage Rates Up for Third Straight Week

Freddie Mac released its weekly update on national mortgage rates this morning, showing a continued rise in interest rates -- nearly across the board.

Thirty-year and 15-year fixed rate mortgages (FRMs) rose eight basis points apiece in comparison to last week, hitting 3.59% and 2.77%, respectively.

Among variable rate mortgages, 5/1 adjustable rate mortgages tacked on one basis point, rising to 2.63%. One-year ARMs stayed flat at 2.55%.

In a statement, Freddie Mac vice president and chief economist Frank Nothaft observed that this is the third week in a row that FRMs have risen and mused that this trend "may slow some of the refinance momentum." Even so, "rates are nonetheless low and home-buyer affordability high, which should further aid home sales and construction in coming weeks."

Nothaft noted that even at the higher rates, "the National Association of Realtors reported that the median number of days on the market for these sales fell from 62 to 46 days, the fewest since it began collecting the data in May 2011."

3 FTSE 100 Shares for the Week Ahead

LONDON -- We've been in a busy reporting period for FTSE 100 companies with years and quarters ending in March. Things are starting to settle down a bit, with most having reported now, but there is still some good stuff to come.

Let's take a look at three companies from the top-tier index bringing us news next week.

Tate & Lyle (LSE: TATE  )
Tate & Lyle is set to publish full-year results on Thursday, and at the time of its pre-close update in March things were going pretty much as expected, with the firm saying it should "deliver modest progress for the full financial year."

Current forecasts suggest earnings should be pretty flat this year after four years of steady growth. But there's a rise of about 4.5% expected in the annual dividend, taking it to 26 pence per share for a yield of about 3% on the current share price of 870 pence -- and it should be about twice covered by earnings.

The shares are on a price-to-earnings ratio, based on those expectations, of about 15 -- and that's after the price has gained nearly 30% over the past 12 months. That's a little higher than the long-term FTSE average of about 14, but if forecasts for the next two years are close to accurate, the P/E should drop to about 13 by 2015.

Severn Trent (LSE: SVT  )
Thursday will also bring us the full-time score from Severn Trent as it unveils its results for the year to March 31 -- although the event has been somewhat overshadowed by the recent dramatic takeover attempt faced by the water supplier. On May 14, the firm was the target of a bid from an investment consortium, and the share price soared. And though the bid was rejected the very next day, the share price has stayed high, standing at 2,055 pence now -- up more than 12% on its pre-bid close.

But what of the expected results? City forecasts suggest flat earnings, with an 8% rise in the dividend to provide a yield of 3.7% on the current price. As cash cows with regular and fairly predictable dividends, utilities are in high demand from those seeking safe income -- like pension funds. And to illustrate the value placed on predictability these days, Severn Trent shares are currently on a P/E of 23 -- way higher than the FTSE average.

Kingfisher (LSE: KGF  ) ,
We have a first-quarter update due from Kingfisher, again on Thursday, and shareholders will be keen to see how the new year has shaped up so far after the full year to February was hit by weak consumer confidence. The owner of B&Q and Screwfix in the U.K., as well as a number of European brands, saw adjusted pre-tax profit fall by 11.4%, with adjusted basic earnings per share down 11.2%.

But the final dividend was kept flat, and when added to a 25% rise in the first-half dividend, the overall annual payment was up 7% to 9.46 pence per share. Going forward, the firm introduced a new policy of aiming for a dividend cover of about 2.5 times.

For this year, analysts are currently forecasting a 7% rise in EPS and a 6% dividend hike, putting the shares on a forward P/E of 14, with a dividend yield of 3%. And that comes after the past 12 months saw the share price rise by 17% to 327 pence, so some folks seem to be eyeing up a return to consumer spending.

Dividends can add nicely to your investment returns -- they can be spent or reinvested, according to your needs. Whether you're investing for income or growth, good old cash is always welcome. And that's why I recommend the brand-new Fool report "The Motley Fool's Top Income Share For 2013," in which our top analysts identify a share they believe will provide handsome dividend income for years to come. But it will only be available for a limited period, so click here to get your copy today.

Why Aeropostale Shares Dropped

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

What: Shares of Aeropostale (NYSE: ARO  ) finished down 10% Friday after the teen-focused clothing retailer posted a weak quarterly earnings report.

So what: Aeropostale reported a per-share loss of $0.16 during the seasonally slow quarter, a penny better than analysts had predicted. Perhaps more concerning, overall revenue fell 9%, though that also topped analyst projections, and same-store sales tumbled 14%. The company blamed clearance markdowns from the holiday season for the revenue drop and also said colder-than-normal weather kept shoppers away. Guidance for the current quarter was lower than expected at a loss of $0.20-$0.15, versus a consensus of a loss of $0.06, indicating that the turnaround plan is not going as hoped.

Now what: The teen clothing market is notoriously fickle, and brand loyalty can change in a flash. A 14% drop in comparable sales would normally be alarming, but I'd wait to see the full year's results before assuming that pattern will hold. Rival Abercrombie & Fitch shares were off 8% after a similarly dismal quarter, so this may have just been a result of industrywide pressures. To stay up to date on the latest Aeropostale news, add the company to your Watchlist here.

Seattle’s Best Coffee Opens 10 Drive-Thrus "Overnight" in Dallas-Forth Worth

Starbucks' (NASDAQ: SBUX  ) Seattle's Best Coffee simultaneously opened 10 drive-thrus throughout the Dallas-Forth Worth area at 4:30 a.m. yesterday, using a store model that the company says "significantly cut its market entry time, reduced initial investment costs and developed locations that previously were not suitable for a traditional sized coffee shop."

The 10 stores that opened "overnight" were built in DeSoto, Texas, before being transported on flatbed trucks to their current locations across Dallas/Fort Worth. Tthe 10 new stores employ approximately 150 full- and part-time workers and four more stores are planned in the area in late summer.

In each drive-thru, customers can choose from arabica coffee beverages and food including egg sandwiches, pretzels, and pies. Seattle's Best Coffee also features 12 different combos priced under $5. To kick off the launch, Seattle's Best Coffee launched Free Coffee Week at the 10 drive-thrus from May 20-26.

The Dallas-Forth Worth area is one of the fastest-growing and most populous coffee markets.  

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Today’s 3 Worst Stocks

Losing ground for the first time in five weeks, the S&P 500 Index (SNPINDEX: ^GSPC  ) lost less than 1 point, or less than 0.1%, to close at 1,649 as stocks head into the long weekend. Though posting slight losses, U.S. equities fared far better than most international markets, many of which fell following weak industrial data from China earlier this week. Doing their best impression of weak foreign stocks, these three companies ended as the worst in the S&P Friday.

Five-day periods just don't get much bleaker than the one GameStop (NYSE: GME  ) experienced this week. Today's 10.8% decline brought weekly losses to 19.2%, as Microsoft's Xbox One release was the initial downward catalyst for the stock and the new console will likely make the majority of the used-game industry out of business. Today's slip comes after GameStop announced quarterly results. Sales and income both fell, foreshadowing what could be a depressing future for shareholders. 

The second-largest laggard of the day, Salesforce.com (NYSE: CRM  ) , lost 5.3% after a weak quarter of its own. The quarter wasn't so much weak as expensive: Increasing costs brought margins down. The company lost nearly $70 million in the first quarter, even though core revenue ticked upwards. But with operating expenses rising nearly 30% and interest expense surging 87%, it's tough to post an impressive quarter.

Lastly, shares of materials company Allegheny Technologies (NYSE: ATI  ) slipped 3.1% for a third straight day of losses. The week's earlier data from China initiated the slump, as investors fear sluggish industrial production in the Far East will either spread to the West or limit demand in high-growth markets abroad. Credit Suisse also lowered its price target for the stock today, citing an increase in nickel supply.

With the U.S. relying on the rest of the world for such a large percentage of our goods, many investors are ready for the end of the "made in China" era. Well, it may be here. Read all about the biggest industry disrupters since the personal computer in 3 Stocks to Own for the New Industrial Revolution. Just click here to learn more.

How Home Depot Keeps Building Its Business

Tomorrow, Home Depot (NYSE: HD  ) will release its latest quarterly results. The key to making smart investment decisions on stocks reporting earnings is to anticipate how they'll do before they announce results, leaving you fully prepared to respond quickly to whatever surprises inevitably arise. That way, you'll be less likely to have an uninformed, knee-jerk reaction that turns out to be exactly the wrong move.

Home Depot joined the Dow Jones Industrials (DJINDICES: ^DJI  ) in 1999 following a huge rise during the bull market of the 1990s, yet even through the housing boom its stock largely languished. But the company's efforts to improve efficiency eventually paid off during its recent run to all-time record highs. Let's take an early look at what's been happening with Home Depot over the past quarter and what we're likely to see in its quarterly report.

Stats on Home Depot

Analyst EPS Estimate	$0.77
Change From Year-Ago EPS	18.5%
Revenue Estimate	$18.69 billion
Change From Year-Ago Revenue	5%
Earnings Beats in Past 4 Quarters	3

Source: Yahoo! Finance.

Will investors' optimism pan out for Home Depot this quarter?
Analysts have only grown more optimistic about Home Depot's earnings prospects in recent months, boosting their estimates on the just-ended quarter by a penny per share and adding $0.06 to their full-year fiscal 2013 calls. The stock has moved explosively higher, soaring almost 15% just since mid-February.

Home Depot has definitely set a high bar for this quarter with its past performance. In February, the company announced a 14% gain in revenue and a comparable-store sales gains of 7% in its fourth-quarter results, leading the retailer to boost its dividend by 34% and authorize a $17 billion share buyback. In giving guidance, though, it saw full-year results this year slowing to growth of 3% in same-store sales.

But some investors are concerned that Home Depot's stock has gotten ahead of itself. Essentially, Home Depot's share price anticipated the housing recovery, so it's now up to housing to deliver on the future that shareholders are already taking for granted. Meanwhile, smaller companies in the space have a lot more growth potential, arguably making them more attractive. For instance, last month Lumber Liquidators (NYSE: LL  ) reported strong results, with same-store sales rising more than 15% and earnings crushing guidance. Home Depot can't produce anything close to the sales growth rates that will push Lumber Liquidators and its similarly sized peers upward if housing continues to rebound.

One interesting strategic move that came up during the quarter was the possibility that former Home Depot division HD Supply will go public. Home Depot sold the wholesale construction-materials business to private-equity firms six years ago, but Home Depot still retains a 12.5% stake in the venture. Fellow retailer Sears Holdings (NASDAQ: SHLD  ) has had mixed success with similar derivative spinoffs: Orchard Supply has plunged, but Sears Hometown and Outlet Stores has seen its shares rise sharply since its IPO late last year. But the timing for HD Supply couldn't be better, and an IPO could produce a nice windfall for Home Depot.

In Home Depot's quarterly report, watch for signs from the retailer that it's working on getting its average revenue per transaction up. Rival Lowe's (NYSE: LOW  ) has managed to keep its average customer ticket almost 15% higher than Home Depot's, so if Home Depot can find a way to match Lowe's figures, it could hold the key to accelerating growth for its future.

If you're looking for some long-term investing ideas, you're invited to check out The Motley Fool's brand-new special report "The 3 Dow Stocks Dividend Investors Need." It's absolutely free, so simply click here now and get your copy today.

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

Best Stocks For 2014

Congratulations, young (and some older) people! You're going to college!

Springtime is here, and millions of aspiring scholars across the country have by now received their college acceptance letters, beginning the process that will take them through the rest of their lives. Many may not even know what major they'll pursue once they arrive on campus, and are hoping to out sort this critical part of college at some point in the next few dozen credits. But it's never too early to ponder the many degree options now available at most college campuses.

Getting a degree will undoubtedly help your chances of landing and holding a job in today's economy, but some degrees offer better prospects than others right from the start. Others, however, might hinder your long-term earnings potential for the rest of your life. The five degree paths (ranked from fifth-worst to worst) you'll see below offer the weakest salary prospects out of 130 different options reviewed by PayScale, an analytics company specializing in salary and career data. No one can tell you to abandon your passion -- but if you're not positively committed to one of these majors, then you may want to start researching other options.

Best Stocks For 2014: St.James Place(STJ.L)

St. James's Place plc is a publicly owned investment manager. The firm provides its services to individuals, trustees, and corporations. It launches and manages equity, fixed income, and balanced mutual funds for its clients. The firm invests in public equity and fixed income market across the globe. It employs a combination of in-house and external research to make its portfolio. St. James's Place plc was founded in 1977 and is based in Cirencester, United Kingdom. St. James's Place plc operates as a subsidiary of Lloyds Banking Group plc.

Best Stocks For 2014: Northfield Bancorp Inc.(NFBK)

Northfield Bancorp, Inc. operates as the holding company for Northfield Bank that provides banking services primarily to individuals and corporate customers in Richmond and Kings Counties in New York, and Union and Middlesex Counties in New Jersey. Its deposit products include negotiable order of withdrawal and non-interest bearing checking accounts; savings accounts, including money market, passbook, and statement savings; and certificates of deposit comprising individual retirement accounts. The company?s loan products portfolio comprises construction and land loans, commercial and industrial loans, one-to four-family residential mortgage loans, and home equity loans and lines of credit, as well as loans to finance premiums on insurance policies, including commercial property and casualty insurance, and professional liability insurance. It also offers insurance products, as well as owns a real estate investment trust, which holds primarily mortgage loans and other real estate related investments. Northfield Bancorp operates through its home office in Staten Island, New York; its operations center located in Woodbridge, New Jersey; and additional 19 branch offices located in New York and New Jersey. The company was founded in 1887 and is based in Avenel, New Jersey. Northfield Bancorp, Inc. is a subsidiary of Northfield Bancorp, MHC.

Best High Dividend Companies To Invest In Right Now: Mercer International Inc.(MERC)

Mercer International Inc., together with its subsidiaries, manufactures and sells pulp produced from wood chips and pulp logs. The company offers northern bleached softwood kraft (NBSK) pulp and market pulp. Mercer International sells its products primarily in Europe, Asia, and North America. The company was founded in 1968 and is based in Vancouver, Canada.

How Has America Fared As an Investor?

This week, the U.S. department of Energy announced that Tesla Motors (NASDAQ: TSLA  ) had repaid the remaining balance on its $465 million loan. The loan, part of the DOE's Advanced Vehicle Technology Manufacturing program, was returned to U.S. government coffers -- with interest -- nine years early. That may sound like big money, but $465 million is pennies in comparison with the $34 billion the DOE has committed in loans for various alternative-energy projects and the development of hybrid and electric vehicle manufacturing. 

There are few things that polarize the American public more than having the government provide financial assistance to private industry. The label "crony capitalism" is a popular phrase among critics. Providing federally backed loans to private industry does pose a deep dilemma regarding the interaction of governments and the free market. For a moment, though, let's set aside the philosophical debate and look at the DOE's program pragmatically. Certainly, the U.S. doesn't want to lose money on these investments, but it's not out there looking to make a huge monetary return, either. Let's look at two key reasons the Department of Energy might not be committing the free-market heresy that many claim it is.

Prime the pump for private investment
According to the DOE, the stated objective of the Section 1703 Loan Program is:

... to support innovative clean energy technologies that are typically unable to obtain conventional private financing due to high technology risks. ...Technologies with more than three implementations that have been active for more than five years are excluded. 

By providing federally backed loans to these higher-risk technologies, it is in turn de-risking the investment to a certain degree. As the technology finds commercial application and becomes more attractive to private investors, the government can bow out and let the market take care of the rest.

So far, it appears that the program is doing just that. Goldman Sachs  (NYSE: GS  )  just recently announced that it will invest $500 million in SolarCity to reduce upfront costs for SolarCity's customers (and make a hefty profit on long-term contracts). The investment bank also plans to invest $40 billion over the next decade on alternative-energy projects. Warren Buffett is even getting in on the action. MidAmerican Energy, part of the Berkshire Hathaway (NYSE: BRK-B  ) portfolio, has invested $5.4 billion in three major solar projects, two of which got started on DOE loans.

Let's also not forget one of the largest recipients of DOE loans: Ford (NYSE: F  ) . The company received $6 billion to retool several facilities around the U.S. to manufacture electric and hybrid vehicles. Today, these factories churn out one of the fastest-growing segments of Ford's vehicle lineup. The company will surpass last year's total hybrid sales this month, and it expects 2013 hybrid sales to nearly double the previous record in 2010. Unlike Tesla, Ford has yet to repay its DOE loan in full, but with numbers like this, it should be able to do so rather easily.

You can argue that private investment could have done it on its own, I can't refute that. Instead of thinking of these DOE loans as the only reason these projects succeed, think of them as the choke on an engine. Injecting low-interest, federally backed loans to these "cold engine" industries helps them get up to speed and running on all cylinders in the open market faster than they might without them. 

Reduce energy and the overall trade deficit
For environmentalists out there, I'm about to break your heart. Despite the claims that these programs will reduce fossil-fuel consumption, it misses out on one small point: These are reductions in U.S. consumption, not global consumption. Even if we don't use fossil fuels, somebody else will.

Strangely, this is what should make alternative energy so attractive to the United States.

According to the U.S. Energy Information Administration, the U.S. imports about 17% of its total energy needs. Being a net importer of energy profoundly affects the country's bottom line, as nearly 50% of the U.S. trade deficit comes from energy imports. Some scholars have argued that an increase in the deficit leads to greater U.S. economic growth. Well, if a majority of that deficit is energy shipments to fuel the economic engine, then of course an increase in the deficit will correlate with economic growth. If that massive energy deficit can be replaced by domestic sources, though, then we're talking about moving toward something the U.S. hasn't seen in almost 40 years: a trade surplus.

With America in the midst of an oil and gas boom, some projections from the EIA estimate that the U.S. will be a net natural gas exporter by 2020 and a net oil exporter by 2035. By increasing our alternative-energy consumption -- a purely domestic source -- we can more quickly replace our fossil-fuel consumption and export it to premium markets much sooner than projected. Doing so would dramatically shift our energy deficit and take a massive chunk out of the United States' $38 billion trade deficit.

What a Fool believes
Both sides can debate the philosophical aspect of this topic until they're blue in the face. Critics will point out the $535 million that went down the drain with Solyndra. Defenders can now point to the $465 million Tesla paid back to highlight the project's success. Combined, though, these two loans represent only 3% of the entire loan program. Rather than giving a final verdict on the program based on these two companies, we should should see how the entire loan program does at accomplishing the goals I've mentioned. If these programs can deliver a market primer for alternative energy and help us bring down the energy deficit, then it has done its job.

Warren Buffett knows a thing or two about investing. So when Berkshire Hathaway invests big money into alternative energy, investors should pay attention. One of the biggest winners from the Berkshire solar buy is First Solar. As the United States' largest solar company, it could do well with Wall Street dumping money into the solar industry. If you're looking for continuing updates and guidance on the company whenever news breaks, The Motley Fool has created a brand-new report that details every must know side of this stock. To get started, simply click here now.

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10 Best Life Sciences Stocks To Watch Right Now

Given that you clicked on this article, it seems safe to assume you either own stock in SVB Financial (NASDAQ: SIVB  ) or are considering buying shares in the near future. If so, then you've come to the right place. The table below reveals the nine most critical numbers that investors need to know about SVB Financial stock before deciding whether to buy, sell, or hold it.

SVB Financial is not your typical bank. Located in Northern California, it's the holding company for Silicon Valley Bank, a niche lender that focuses almost exclusively on companies in the technology, life sciences, and winery space. Think venture capital. "For nearly three decades," its website reads, "SVB Financial Group and its subsidiaries, including Silicon Valley Bank, have been dedicated to helping entrepreneurs succeed." And if its share-price performance is any indication, this model has succeeded. Over the past 10 years, the total return to shareholders has been 273%. For context, only a handful of banks exceeded the 100% mark over this same time period -- including JPMorgan Chase, Goldman Sachs, Wells Fargo, and PNC Financial -- and roughly half of the 100-plus banks I examined actually declined in value over the same time period.

10 Best Life Sciences Stocks To Watch Right Now: Optimer Pharmaceuticals Inc.(OPTR)

Optimer Pharmaceuticals, Inc., a biopharmaceutical company, focuses on discovering, developing, and commercializing hospital specialty products worldwide. It develops products that treat gastrointestinal infections and related diseases. The company provides two late-stage anti-infective product candidates, including Fidaxomicin, a narrow spectrum antibiotic for the treatment of Clostridium difficile-infection, which completed two Phase 3 trials; and Pruvel, a prodrug in the fluoroquinolone class of antibiotics, has completed two Phase 3 trials for the treatment of infectious diarrhea, including traveler?s diarrhea. It also develops product candidates using its proprietary technology Optimer One-Pot Synthesis, a computer-aided technology that enables the rapid synthesis of various proprietary molecules. In addition, the company?s other pipeline product candidates consist of CEM-101 (OP-1068), a macrolide and ketolide antibiotic, which is in Phase 2 trials for the treatment of upper and lower respiratory tract infections; and OPT-822/821, a novel carbohydrate-based cancer immunotherapy, is in Phase 2/3 trials for the treatment of metastatic breast cancer. It has collaborative agreements with Astellas Pharma Europe Ltd.; Par Pharmaceuticals, Inc.; Nippon Shinyaku, Co., Ltd.; Cempra Pharmaceuticals, Inc.; Memorial Sloan-Kettering Cancer Center; and The Scripps Research Institute. Optimer Pharmaceuticals, Inc. was founded in 1998 and is based in San Diego, California.

Advisors' Opinion:

• [By Lowell]

  Optimer Pharmaceuticals, Inc. (OPTR) focuses on discovering, developing, and commercializing hospital specialty products worldwide and has a market cap of $729.76 million.

  Net institutional shares purchased over the current quarter come in at seven million, which is 16.56% of the company’s 42.26 million-share float. The stock’s longest winning streak over the last month was seven days, while the longest losing streak was three days, or a win streak/lose streak ratio of 2.33.

  The stock is a short squeeze candidate, with a short float at 15.87% (equivalent to 8.3 days of average volume). The stock has had a couple of great days, gaining 22.44% over the last week.

10 Best Life Sciences Stocks To Watch Right Now: Portland General Electric Company (POR)

Portland General Electric Company operates as an integrated electric utility in Oregon. The company engages in the generation, purchase, transmission, distribution, and retail sale of electricity. Its generating portfolio consists of thermal, hydro, and wind resources. The company also sells electricity and natural gas in the wholesale market to utilities, brokers, and power marketers in the western United States and Canada. As of March 31, 2011, it served approximately 821,193 residential, commercial, and industrial customers. The company was founded in 1930 and is headquartered in Portland, Oregon.

Top Chemical Stocks For 2014: QLT Inc.(QLTI)

QLT Inc., a biotechnology company, engages in the development and commercialization of ocular products that address the unmet medical needs of patients and clinicians. It offers Visudyne that utilizes light-activated photodynamic therapy to treat the eye disease known as wet age related macular degeneration. Visudyne is also used for the treatment of subfoveal choroidal neovascularization secondary to pathologic myopia, severe near-sightedness, and presumed ocular histoplasmosis. The company?s developmental stage products include Latanoprost Punctal Plug Drug Delivery System, which is in Phase II clinical trial for the treatment of glaucoma and allergic conjunctivitis; and QLT091001, which is in Phase Ib clinical trial for the treatment of leber congenital amaurosis and retinitis pigmentosa. QLT Inc. markets its products in approximately 80 countries worldwide. The company was founded in 1981 and is headquartered in Vancouver, Canada.

10 Best Life Sciences Stocks To Watch Right Now: Harris Corporation (HRS)

Harris Corporation, together with its subsidiaries, operates as a communications and information technology company that serves government and commercial markets worldwide. It operates in three segments: RF Communications, Government Communications Systems, and Broadcast Communications. The RF Communications segment designs, develops, and manufactures secure radio communications products and systems for manpack, handheld, soldier-worn, vehicular, strategic fixed-site, and shipboard applications that operate in various radio frequency bands. It also offers products and solutions ranging from wireless network infrastructure solutions to portable and mobile single-band and multiband radios, and public safety-grade broadband video and data solutions for the public safety, federal, utility, commercial, and transportation markets. The Government Communications Systems segment develops, supplies, and integrates communications and information processing products, systems, and netw orks for aerospace, terrestrial, and maritime applications supporting department of defense missions. This segment also provides mission-critical communications and information processing systems for the U.S. civilian Federal market, as well as offers IT transformation, managed, and information assurance solutions. The Broadcast Communications segment provides workflow, infrastructure, and networking solutions that enable media companies to streamline workflow from production through transmission; media solutions to manage digital media workflow through software solutions for advertising, media management, digital signage, broadband, digital asset management, and play-out automation; and transmission systems for delivery of media over wireless broadcast terrestrial networks. The company also offers healthcare IT solutions, IT compliance solutions, and mission-critical managed satellite communications services. Harris Corporation was founded in 1895 and is based in Melbourne, Florida.

10 Best Life Sciences Stocks To Watch Right Now: Align Technology Inc.(ALGN)

Align Technology, Inc., a medical device company, designs, manufactures, and markets clear aligner systems or Invisalign systems, intra-oral scanners, and computer-aided design (CAD) and computer-aided manufacturing (CAM) restorative models used in dentistry, orthodontics, and dental records storage in North America and Internationally. The company?s clear aligner products include Invisalign Full for the treatment of malocclusions; Invisalign Express and Invisalign Lite solutions for less complex orthodontic cases; Invisalign Teen, which is primarily marketed to orthodontists for treating malocclusion in teenage patients; Invisalign Assist for use in anterior alignment and aesthetically-oriented cases; and Vivera retainers for invisalign and non-invisalign patients. It also offers ancillary products comprising cleaning material and adjusting tools used by dental professionals during the course of treatment. In addition, the company provides iTero scanners; iOC scanners; a nd iTero dual scanner, which includes both the iTero restorative software and the iOC orthodontic software, as well as services comprising iTero restorative and OrthoCAD services. Further, it offers CAD/CAM services, such as iTero Models and Dies; OrthoCAD iCast and OrthoCAD iRecord that provides a digital alternative to traditional stone cast models, which allows for simplified storage and digital record retrieval; and OrthoCAD iQ, a computer-guided system for optimal placement of traditional brackets and customized indirect bonding tray system. The company distributes its products primarily directly to orthodontists and general practitioner dentists, as well as restorative dentists, including prosthodontists, periodontists, and oral surgeons. Align Technology, Inc. was founded in 1997 and is headquartered in San Jose, California.

Advisors' Opinion:

• [By Bobby Raines]

  Align Technologies makes and sells the clear dental braces known as Invisalign, along with intra-oral scanners and other dental technology. The company has a five-year annualized EPS growth rate of 20.36%. The stock is trading at about 113$ of its 52-week low. The stock fell sharply in October after the company missed earnings estimates by a penny and ended a distribution relationship. The company announced some restructuring and organizational changes in December, which will result in some severance costs in the fourth quarter of 2012 and the first quarter of 2013. The company has the best-known brand in its market and is steadily increasing the number of dentists who are trained to sell its products, which we believe will help support the stock and fuel future growth.

10 Best Life Sciences Stocks To Watch Right Now: PostRock Energy Corporation(PSTR)

PostRock Energy Corporation, an integrated independent energy company, engages in the acquisition, exploration, development, production, and transportation of oil and natural gas in the United States. It operates in two segments, Oil and Gas Production, and Natural Gas Pipelines. The Oil and Gas Production segment primarily focuses on the development of coal bed methane in the Cherokee basin and the Marcellus Shale in Appalachian Basin, as well as has oil properties in Central Oklahoma. As of December 31, 2009, it had approximately 51.9 billion cubic feet equivalent (Bcfe) of estimated net proved reserves; development rights to approximately 516,184 net acres; and operated approximately 2,849 gross wells in the Cherokee Basin. It also had approximately 44,507 net acres of oil and natural gas producing properties with estimated proved reserves of 18.9 Bcfe and approximately 498 gross wells in Appalachian Basin; and had 65 gross wells, development rights to approximately 1,4 80 net acres, and estimated net proved reserves, 3.9 Bcfe in Central Oklahoma. The Natural Gas Pipelines segment involves in transporting, gathering, treating, and processing natural gas. It owns and operates a natural gas gathering pipeline networks of approximately 2,173 miles in the Cherokee Basin and 183 miles in the Appalachian Basin; and a 1,120 mile interstate natural gas pipeline, which transports natural gas from northern Oklahoma and western Kansas to the metropolitan Wichita and Kansas City markets. The company is headquartered in Oklahoma City, Oklahoma.

10 Best Life Sciences Stocks To Watch Right Now: Cosmos Ltd(COO.AX)

Corum Group Limited provides dispense and point of sale software applications, hardware, and support services to pharmacies in Australia. The company also offers funds transfer, and bill presentment and payment solutions through electronic methodologies for payment of rent, utilities, local government fees, and commercial obligations. In addition, it provides a range of training services to the real estate industry, including industry qualification courses, distance learning, skill-developing, and success orientated programs and coaching. The company was formerly known as Cosmos Limited and changed its name to Corum Group Limited in November 2006. Corum Group Limited is headquartered in Sydney, Australia.

10 Best Life Sciences Stocks To Watch Right Now: Cornerstone Capital Resources I (CGP.V)

Cornerstone Capital Resources Inc., through its subsidiaries, engages in the evaluation, acquisition, and exploration of mineral properties in Canada and South America. It explores for gold, silver, copper, nickel, volcanogenic massive sulphide, base and precious metals, rare earth elements, and uranium properties. As of March 31, 2012, the company�s exploration properties comprised 2,172 claims in Canada, 62 claims in Chile, and 19 concessions in Ecuador. Cornerstone Capital Resources Inc. was founded in 1997 and is headquartered in Mount Pearl, Canada.

10 Best Life Sciences Stocks To Watch Right Now: PCCW Ltd (8)

PCCW Limited is a Hong Kong-based holding company. Its subsidiary HKT provides telecommunications and related services, including local telephony, local data and broadband, international telecommunications, mobile, customer premises equipment sale, outsourcing, consulting and contact centers, primarily in Hong Kong, mainland China and elsewhere in the world. Media Business includes interactive pay- television (TV) services, Internet portal multimedia entertainment platform and the Company�� directories operations in Hong Kong and mainland China. Solutions Business offers Information and Communications Technologies services and solutions in Hong Kong and mainland China. Pacific Century Premium Developments Limited covers the Company�� property portfolio in Hong Kong and mainland China, including the Cyberport development in Hong Kong, and elsewhere in Asia. Other Businesses include the Company�� wireless broadband business in the United Kingdom and all corporate support functions.

10 Best Life Sciences Stocks To Watch Right Now: GeoMet Inc.(GMET)

GeoMet, Inc., an independent energy company, engages in the exploration for, development, and production of natural gas from coal seams and non-conventional shallow gas. Its principal operations and producing properties are located in the Cahaba Basin in Alabama and the central Appalachian Basin in west Virginia and Virginia. The company also owns additional coalbed methane, and oil and gas development rights, principally in Alabama, Virginia, West Virginia, and British Columbia. As of September 30, 2011, it owned approximately 143,000 net acres of coalbed methane, and oil and gas development rights. The company, formerly known as GeoMet Resources, Inc., was founded in 1985 and is headquartered in Houston, Texas.

Mutual Funds: Cheaper to Own Now Than Ever

Mutual funds offer immediate diversification and typically give you the peace of mind that at least someone is paying attention to where your money sits. But for these benefits, you must pay some fees. Due to a variety of factors, these fees are now lower than ever, and represent the changing landscape of how America is investing in a low-interest-rate world.

Falling fees
The Investment Company Institute's annual fact book (link opens PDF file) gives a detailed overview of the mutual fund industry. One of the most telling trends in the report is the decline in expenses over the years:

Source: Investment Company Institute.

The cost to invest in equity funds, bond funds, and hybrid funds, which invest in both equities and bonds, has fallen to some of the lowest levels in years. Over the past decade, the average expense to invest in an equity fund fell from 100 basis points, or $1 per $100 in 2002, to 77 basis points last year.

Why?
The report lists many reasons for this trend. First, even as the amount of assets in a fund increase, the fixed expenses of running the fund remain the same, so usually the expense ratio falls. Second, investors now prefer no-load funds as opposed to front-end or back-end load funds, for which investors pay a fee with the initial purchase or sale of a fund. The average front-end sales load percentage for equity funds have fallen from 3.9% in 1990 to 1% today. Third, economies of scale have also helped reduce costs as the number of households that own mutual funds has increased from 23 million in 1990 to more than 53 million last year.

Finally, the amount of competition has kept a downward pressure on fees. The number of ETFs over the past decade has exploded:

Source: Investment Company Institute.

WisdomTree  (NASDAQ: WETF  ) , the fifth-largest ETF provider, has grown its average assets under management from less than $1 billion in 2006 to more than $23 billion this year, with an average ETF fee of 0.53%. The low-cost leader, Vanguard, keeps putting the pressure on competitors with extremely low expense ratios. For the Vanguard Total Stock Market ETF  (NYSEMKT: VTI  ) , the annual fee amounts to a paltry 0.05%.

With interest rates and treasury bond yields so low, investors are scrimping and saving for each basis point, and flocking toward lower-fee options. They are also less willing to pay load fees, traditionally paid to advisors for the assistance of finding and purchasing a fund. Retail investors, empowered by online brokerages, have less of a need for this professional assistance, and are helping fuel the growth of ETFs as they construct their own portfolios. Market forces are moving in favor of investors, as one of the key differentiators of these funds is expense ratios.

To learn more about a few ETFs that have great promise for delivering profits to shareholders, check out The Motley Fool's special free report "3 ETFs Set to Soar." Just click here to access it now.