What Are the City's Expectations for Barclays' Profits?

LONDON -- When weighing up a potential investment, it's useful to look forward rather than backward. If you buy a stake in a business, it's the future profits that count -- and the stock market will value your shares based on future expectations.

With that in mind, it can be helpful to review what expert City analysts are expecting a company to earn in the coming years. These expectations can be compared to the share price to give you a better idea of how the stock market is valuing the business.

Today I'm looking at the earnings per share (EPS) forecasts for Barclays  (LSE: BARC  ) (NYSE: BCS  ) , the FTSE 100 banking giant. All my figures are courtesy of S&P Capital IQ.

Analysts expect Barclays to earn 36 pence per share this year. This means that compared to today's share price of 323 pence, the market is valuing Barclays' shares on a forward price-to-earnings multiple of 9.

The experts are far from agreed on this year's profit forecast, however, with estimates ranging widely between 28 pence and 43 pence per share.

Looking ahead, the consensus then calls for an improvement in Barclays' earnings to 44 pence per share for 2015, and then 50 pence in 2016. The data indicates Barclays' revenues meanwhile could jump from 24 billion pounds this year to 31 billion pounds in 2015, although once again, the estimates range significantly.

The wide-ranging estimates, and Barclays' seemingly depressed valuation compared to earnings prospects, demonstrate the market's fear of uncertainty. The fallout from the financial crisis continues to create a hugely speculative element in the analysis of modern banks' earning power and intrinsic value.

But is the market right to shun the complex balance sheets of the financial sector, or can we bank on Barclays' profits in the future?

Whether these projections and the current valuation make the shares of Barclays "fairly priced" is for you to decide.

But if you already own shares in Barclays and are looking for alternative investment opportunities, I've helped pinpoint five particularly attractive possibilities in this exclusive wealth report.

All five opportunities offer a mix of robust prospects, illustrious histories and dependable dividends, and have just been declared by the Fool as "5 Shares You Can Retire On"!

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10 Best Penny Stocks To Buy For 2014

Yesterday's market panic subsided today as earnings from a few big name companies brought buyers back to Wall Street. Goldman Sachs and Coca-Cola (NYSE: KO  ) beat earnings estimates, and that helped push the Dow Jones Industrial Average (DJINDICES: ^DJI  ) up 0.88% higher and the S&P 500 (SNPINDEX: ^GSPC  ) up 1.17% near the end of trading. Today's gains have recovered about half of what was lost on the market yesterday.

Coca-Cola has led the Dow today, gaining 5.7% in late trading. The company said revenue declined 0.9% in the first quarter to $11.04 billion after being negatively affected by foreign exchange rates. Still, the revenue number topped estimates, and when adjusted earnings per share of $0.46 beat by a penny, investors dove back into the stock. Coca-Cola is also restructuring its distribution network, selling distribution rights back to smaller bottlers, which should improve margins. This is no longer a big-time growth stock, but investors love the steady results and are willing to pay a premium for them.

10 Best Penny Stocks To Buy For 2014: 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.

10 Best Penny Stocks To Buy For 2014: China Valves Technology Inc.(CVVT)

China Valves Technology, Inc., through its subsidiaries, engages in developing, manufacturing, and selling low, medium, and high-pressure metal valves for customers in the electricity, petroleum, chemical, water, gas, nuclear power station, and metal industries in China. The company?s product categories include high pressure and high temperature valves for power station units; valves for long distance petroleum and gas pipelines, and sewage; special valves for chemical lines; and large valves for water supply pipe networks. Its products comprise gate, globe, check, throttle, butterfly, ball, safety, water pressure test, vacuum, and extraction check valves. The company markets its products through regional agents and distributors. China Valves Technology, Inc. has a strategic cooperation frame agreement with Dongfang Electric Corporation for the development of high-end valves. The company was founded in 2007 and is headquartered in Kaifeng, the People's Republic of China. Advisors' Opinion:

• [By Robert Hsu]

  China Valves Technology (NASDAQ: CVVT) recently announced that its subsidiary, Able Delight Valve,  has been certified as a qualified supplier of China Nuclear Power Engineering. This is CVVT’s second subsidiary to receive this certification.

  This is a nice milestone for the company as CVVT continues to gain market share in the nuclear power industry. The demand for nuclear power applications is growing but the inspection of prospective suppliers is strict — and the company believes that the addition of Able Delight as a qualified supplier will become another catalyst for rapid growth in the near future. CVVT is a buy under $10.50.

Top Stocks To Buy Right Now: Security National Financial Corporation(SNFCA)

Security National Financial Corporation, together wit its subsidiaries, provides various insurance and annuity products in the United States. It operates in three segments: Life Insurance, Cemetery and Mortuary, and Mortgage Loans. The Life Insurance segment engages in selling and servicing certain lines of life insurance, annuity products, and accident and health insurance products. This segment also involves in funeral plans and interest-sensitive life insurance, as well as other traditional life and accident, and health insurance products. It sells its products through direct agents, brokers, and independent licensed agents. The Cemetery and Mortuary segment offers various products that include grave spaces, interment vaults, mausoleum crypts and niches, markers, caskets, flowers, and other related products. This segment also provides services, such as professional services of funeral directors, opening and closing of graves, use of chapels and viewing rooms, and use of automobiles and clothing. It sells its products and services through sales representatives. As of December 31, 2009, the segment owned 6 cemeteries and 10 mortuaries. The Mortgage Loans segment originates and underwrites residential and commercial loans for new construction, existing homes, and real estate projects primarily in Arizona, California, Florida, Hawaii, Indiana, Kansas, Oklahoma, Oregon, Texas, Utah, and Washington. The company was founded in 1965 and is headquartered in Salt Lake City, Utah.

10 Best Penny Stocks To Buy For 2014: Magic Software Enterprises Ltd.(MGIC)

Magic Software Enterprises Ltd. develops, markets, and supports software development and deployment technology and applications. It offers uniPaaS, an application platform for developing and deploying business applications; and iBOLT, a platform for business and process integration. The company?s uniPaaS and iBOLT platforms enable enterprises to accelerate the process of building and deploying applications to customize and integrate with existing systems. It also provides information technology (IT) professional services in the areas of infrastructure design and delivery, application development, and technology planning and implementation services, as well as supplemental staffing services. In addition, the company offers consulting services in connection with installation assurance, application audits and performance enhancement, application migration, and application prototyping and design; maintenance contracts; technical support; and training on its development tools. Magic Software Enterprises Ltd. provides its products and services through a network of regional offices, independent software vendors, system integrators, distributors, and value added resellers, as well as through original equipment manufacturers and consulting partners in approximately 50 countries worldwide. It serves finance, insurance, government, health care, logistics, manufacturing media, retail, and telecommunications industries. The company was formerly known as Mashov Software Export (1983) Ltd. and changed its name to Magic Software Enterprises Ltd. in 1991. Magic Software Enterprises Ltd. was founded in 1983 and is headquartered in Or Yehuda, Israel. Magic Software Enterprises Ltd. is a subsidiary of Formula Systems (1985) Ltd.

Advisors' Opinion:

• [By Hilary Kramer]

  I like Magic Software (NASDAQ:MGIC), which is what I call in my book, an “Undiscovered Growth” stock.

10 Best Penny Stocks To Buy For 2014: Edac Technologies Corporation(EDAC)

EDAC Technologies Corporation provides design, manufacturing, and other services to the aerospace and industrial markets. The company produces low pressure turbine cases, hubs, rings, disks, and other complex and close tolerance components for various aircraft engine and ground turbine manufacturers. It also offers rotating components, such as disks, rings, and shafts; provides precision assembly services, including the assembly of jet engine sync rings, aircraft welding and riveting, post-assembly machining, and sutton barrel finishing; and engages in precision machining for the maintenance and repair of components in the aircraft engine industry. In addition, the company designs and manufactures fixtures, precision gauges, close tolerance plastic injection molds, and precision component molds for composite parts and specialized machinery. Further, it designs, manufactures, and repairs various types of precision grinders, as well as precision rolling element bearing spind les, including hydrostatic and other precision rotary devices for machine tool manufacturers, special machine tool builders and integrators, industrial end-users, and powertrain machinery manufacturers and end-users in the United States, Canada, Mexico, Europe, and Asia. The company serves a range of industries in areas, such as special tooling, equipment and gauges, and components used in the manufacture, assembly, and inspection of jet engines. EDAC Technologies Corporation was founded in 1946 and is based in Farmington, Connecticut.

10 Best Penny Stocks To Buy For 2014: Imperial resources, Inc.(IPRC)

Imperial resources, Inc., through its subsidiary, Imperial Oil & Gas Inc., engages in the exploration and development of oil and gas assets in the onshore United States. It holds a 14.9% working interest in the oil, gas, and mineral leases in the Greater Garwood hydrocarbon exploration project, which covers an area of approximately 2,244 acres and is located in Colorado County, Texas. The company also has agreements to acquire 50% working interest in Chisholm Trail Prospect in Oklahoma; and a majority participation interest in a salt water disposal well. Imperial resources, Inc. was founded in 2007 and is based in Austin, Texas.

Advisors' Opinion:

• [By Toby]

  Imperial Resources Inc. (OTC: IPRC)is up 4.35% to $0.720 on volume of over 280K shares. IPRC, a company focused on the rapid development of niche oil and gas assets in continental North America, today announced that its Imperial Oil & Gas subsidiary has signed an agreement to purchase 100% of a key salt water disposal facility. (OTC:IPRC), (IPRC)

10 Best Penny Stocks To Buy For 2014: New Energy Systems Group.(NEWN)

New Energy Systems Group, through its subsidiaries, manufactures and distributes lithium battery shells and related products primarily in China. It develops, customizes, and produces steel and aluminum battery shells and caps. The company principally serves large lithium battery manufacturers. It also engages in the research, manufacture, and sale of mobile backup power systems for mobile phones, laptops, solar, MP4, PMPs, PDAs, DC, and digital applications. The company was formerly known as China Digital Communication Group and changed its name to New Energy Systems Group in November 2009. New Energy Systems Group was incorporated in 2001 and is based in Shenzhen, China.

10 Best Penny Stocks To Buy For 2014: Star Gas Partners L.P.(SGU)

Star Gas Partners, L.P., through its subsidiaries, operates as a home heating oil distributor and services provider in the United States. It provides its services to residential and commercial customers to heat their homes and buildings. As of March 31, 2011, the company served approximately 408,000 full-service residential and commercial home heating oil, and propane customers. It also sold home heating oil, gasoline, and diesel fuel to approximately 40,000 customers. In addition, Star Gas Partners installed, maintained, and repaired heating and air conditioning equipment, as well as provided ancillary home services, including home security and plumbing to approximately 11,000 customers. Kestrel Heat, LLC operates as the general partner of the company. Star Gas Partners, L.P. was founded in 1995 and is headquartered in Stamford, Connecticut.

10 Best Penny Stocks To Buy For 2014: Smith Micro Software Inc.(SMSI)

Smith Micro Software, Inc. designs, develops, and markets software products and services primarily for the mobile computing and communications industries worldwide. The company operates in two segments, Wireless, and Productivity and Graphics segments. The Wireless segment develops mobile connectivity, mobile information management, and mobile security solutions, including QuickLink Mobile that provides mobile users to connect a notebook or other wireless device to wireless wide area networks (WWANs) and wireless local area networks (WLANs) or Wi-Fi hotspots; QuickLink Mobility suite, which allows connectivity for the user operating on WWANs, corporate local area networks (LANs), and Wi-Fi networks; and QuickLink Media for managing the media on the mobile devices. It also provides SendStuffNow, which secures cloud-based large file delivery solution; Device Management suite that provides intelligent, automated mobile device provisioning, and configuration; and push-to-talk, visual voicemail, and mobile video solutions. The Productivity and Graphics segment develops various software products for the consumer, prosumer, and professional markets. It provides StuffIt Deluxe, a lossless compression solution for documents and media; CheckIt Diagnostics and CheckIt Netbook suite, a diagnosis and troubleshooting solution for hardware and system problems; Poser, a solution for creating 3D character art and animations; Anime Studio, an animation tool for professional and digital artists; and Manga Studio, a solution for creating manga and comic art. This segment distributes its products through online stores, and third-party wholesalers, retailers, and value-added resellers. The company serves mobile network operators, original equipment manufacturers, device manufacturers, and enterprise businesses, as well as directly to consumers. Smith Micro Software, Inc. was founded in 1982 and is headquartered in Aliso Viejo, California.

10 Best Penny Stocks To Buy For 2014: Kulicke and Soffa Industries Inc.(KLIC)

Kulicke and Soffa Industries, Inc. designs, manufactures, and sells capital equipment and expendable tools used to assemble semiconductor devices, including integrated circuits, high and low powered discrete devices, light-emitting diodes, and power modules. It also services, maintains, repairs, and upgrades its equipment. The company operates in two segments, Equipment and Expendable Tools. The Equipment segment manufactures and sells a line of ball bonders, heavy wire wedge bonders, stud bumpers, and die bonders. Its Ball bonders are used to connect very fine wires, primarily made of gold or copper, between the bond pads of the semiconductor device or die, and the leads on its package; Heavy wire wedge bonders are used in the power semiconductor and automotive power module markets; and Die bonders are used to attach a die to the substrate or lead frame, which will house the semiconductor device. This segment?s Stud bumpers mechanically apply bumps to die, while still in the wafer format, for some variants of the flip chip assembly process. The Expendable Tools segment manufactures and sells various expendable tools for a range of semiconductor packaging applications. Its products include capillaries, bonding wedges, and saw blades. The company?s customers primarily comprise semiconductor device manufacturers, outsourced semiconductor assembly and test providers, other electronics manufacturers, and automotive electronics suppliers in the United States and the Asia/Pacific region. Kulicke and Soffa Industries sells its products through manufacturers? representatives and distributors. The company was founded in 1951 and is headquartered in Singapore.

Dividend Growth Is Important To Enjoy Retirement Years

Retirement investing has different meanings for investors. Some have already retired, some are looking to retire in a few years and others expect to retire in many years, maybe decades. Different time horizons make for varied investment objectives. However one basic fundamental is that a stream of growing income is needed to pay expenses during retirement.

The Queen of England doesn't have to worry about saving for retirement. But at the age of 87, she is in good health and her life expectancy is probably 10-15 years. Active life styles have become common for retirees living longer. Retirement can be enjoyed into the 90s and beyond. Greater spending puts an extra burden on earning high income that needs to grow. Gone are the days when retirees just clipped coupons on bonds. Life style was largely sedentary and life expectancy was not as long.

The low interest rate policy by the Federal Reserve has been hard on retirees. Earning attractive rates on invested funds has become difficult without accepting higher levels of risk. Stocks have risen, partially in pursuit of higher yields. Dividends from quality companies with attractive yields share a bonus, dividends rise over time. Dividend Aristocrats, companies with track records of increasing dividends for 25 to almost 60 years, have the best records of raising dividends.

Ten of the most attractive Dividend Aristocrats for growing income are selected below. Dividends have a tax advantage in personal accounts because they are taxed at lower rates than on marginal income. The tables show yields, current dividends and the percentage increase for dividends over the last 10 years:

10 Dividend Aristocrats for Growing Income in Retirement Investing

Company	Price	Yield	Dividend	Dividend % Increase
Coca-Cola (KO)	$40.28	2.8%	$1.12!	154%
Emerson Electric (EMR)	$59.78	2.7%	$1.64	107%
Exxon Mobil (XOM)	$94.03	2.7%	$2.52	157%
Colgate-Palmolive (CL)	$60.08	2.3%	$1.36	202%
Illinois Tool Works (ITW)	$71.63	2.1%	$1.52	223%
McCormick (MKC)	$71.85	1.9%	$1.36	177%
VF Corporation (VFC)	$197.13	1.8%	$3.48	244%
Hormel (HRL)	$42.24	1.6%	$0.68	224%
WW Grainger (GWW)	$257.31	1.4%	$3.72	409%
Brown-Foreman (BF.B)	$72.08	1.4%	$1.02	241%

Coca-Cola, the largest nonalcoholic beverages worldwide, has the best known brand in the world. Coca Cola beverages are served in virtually every country on earth and it will invest $30 billion for expansion over the next 5 years.

Emerson Electric supplies product technology and engineering services worldwide. The 5 business segments are: Process Management, the Industrial Automation, the Network Power, Climate Technologies, and Tools and Storage. The compound annual growth rate for dividends since 1956 was 11%.

Exxon Mobil is the premier oil producer of oil and gas in the world. With the largest market cap in the world, it descends from Rockefeller's Standard Oil Company with over 31,000 wells and has a resource base of 87 billion oil-equivalent barrels.

Colgate-Palmolive markets consumer products around the w! orld. Com! pany products are in 4 divisions: Oral, Personal, Home Care and Pet Nutrition. Global volume rose 24% (with no annual declines) in the last 6 years.

Illinois Tool Works sells industrial products and equipment worldwide. Products are used in deep-sea oil rigs, aerospace technology, bridges and wind turbines, healthcare and at home. Revenue has doubled to almost $18 billion since 2000.

McCormick & Company markets spices, seasoning mixes, condiments, and other flavorful products to retail outlets, food manufacturers, and foodservice businesses. Consumers buy spices to enjoy the taste of food. The compound annual rate over the last 10 years was 7% for sales and 9% for EPS.

VF Corp has grown to become the largest apparel company because it acquired quality leisure companies in the last 10 years. Popular brands include: The North Face, Timberland, Vans, Wrangler, Lee and Timber Creek. The stock is up five fold in the last decade.

Hormel Foods sells consumer-branded meat and food products. There are 5 segments: Grocery Products, Refrigerated Foods, Jennie-O Turkey Store, Specialty Foods, and International & Other. EPS grew at an 11% rate since 2007.

WW Grainger is America's leading broad line supplier of maintenance, repair and operating products, with expanding global operations. Its stock and dividends grew fivefold in the last 10 years.

Brown-Forman has been selling alcoholic beverages for more than 14 decades. Popular brands include Jack Daniels, Gentleman Jack, Southern Comfort and Finlandia sold in 135 countries. EPS has grown at a 13% rate over the last 35 years and a toast was made last week at the annual meeting to another record year.

All 10 companies have financial strength which allowed them to raise dividends through good years and bad. In the difficult recession 5 years ago, many highly regarded companies ended their dividend streaks (one with a 50 year streak) because of financial difficulties. In October 1987, the stock market had a brutal sello! ff. But a! ll these companies were raising their dividends. XOM, MKC and BF.B have streaks of roughly 30 years; the others have 40-57 year streaks.

Continuous, large dividend increases accompany higher stock prices. The first 5 stocks have at least doubled in the last 10 years. The others at least tripled and the right column in the table shows they have had the largest dividend increases. Capital appreciation accompanies sustained dividend increases which have become more important since 2000.

Since the market crashed in 2000, capital appreciation has been spotty. The Dow started 2000 at 11,497 and just closed at 13,520, up a meager 18%. During that time these companies have excellent records of raising dividends and stock growth, key for successful retirement investing.

Yields on these companies are about 1+ percentage points lower than on higher yielding Dividend Aristocrats. While all Dividends Aristocrats share a commitment to reward stockholders with growing dividends, these companies should continue to have superior dividend increases based on their track records.

Retirees want to be able to enjoy life for more years than in the past. But expenses keep going up. Years ago, growth in retirement income was not considered very important. Today income growth has greater value for retirees who want a better life in later years. Growing income deserves more respect in retirement investing.

Source: Dividend Growth Is Important To Enjoy Retirement Years

Disclosure: I am long KO, VFC. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. (More...)

How Dividends Change the Game for Owners of Merck Stock

The wealth-building power of compound interest will never cease to amaze me. It's a story of patience and attention to detail, where small, short-term differences add up to massive divergence over decades. And in the end, the biggest winners don't always deliver the fattest share-price returns.

Today's case in point is Merck (NYSE: MRK  ) . The pharmaceutical giant's quarterly dividend payout was stuck at $0.38 per share for many years until it started inching up again in 2012. At the same time, Merck shares went on a long upward run that ended up decreasing your dividend yields despite the higher payouts.

MRK Dividend data by YCharts.

So far, this looks like a terrible stock for income investors. Merck's dividend yield is shrinking, and even the renewed payout growth remains anemic. Why bother?

Here's why: Merck's dividend was always generous. It doesn't take much dividend growth or rising yields to make a big difference when you're starting from a high base level.

Even now, at the end of the yield-reduction you saw in that last chart, Merck offers the third-richest yield among the 30 dividend-payers of the Dow Jones Industrial Average (DJINDICES: ^DJI  ) . At 3.7%, it's nearly tied for third place with troubled chip titan Intel (NASDAQ: INTC  ) , whose yield is enriched by the past year's 9% share-price slide. Investors are worried about the death of the PC and Intel's limited involvement in the new mobile-computing era.

Merck matches that yield despite a 23% higher share price, which acts as a headwind in this case.

Intel is a relative newcomer to the high-yield game, but Merck has plenty of shareholder-enriching history behind it. With the highly anticipated Baby Boomer retirement wave on the horizon, I wouldn't be surprised to see Merck juicing its payouts with rising cash flows in coming years.

Now, back to the long-term patience we talked about earlier. It may be a wise move to lock in your base price today so you can enjoy the potential dividend increases to their full potential later on. To take a historical example, you could have bought Merck shares for $16.34 apiece 10 years ago. That was good for a 3.4% yield at the time -- roughly comparable to today's 3.7% dividend return.

Just sitting on your shares and collecting dividend checks would have given you $15.26 in cash since then -- nearly enough to cover the cost of your original shares. The effective yield on your original shares would be a stellar 10.5% right now.

But wait -- there's more!

Reinvesting each payment into more Merck stock would have turned a -23% straight-up share-price return into a 24% total return. Stretch your investment period back another 10 years, and the DRIP payments would have nearly tripled your returns on a Dow-crushing 400% tour de force.

MRK data by YCharts.

Merck is a dividend powerhouse in disguise, even without a generous payout-boosting program. Look ahead to the changing health-care market in the next 10 or 20 years, and Merck stock could be a wealth generator to build your retirement portfolio around.

This titan of the pharmaceutical industry stumbled into 2013 and continues to battle patent expirations and pipeline problems. Is Merck still a solid dividend play, or should investors be looking elsewhere? In a new premium research report on Merck, The Fool tackles all of the company's moving parts, its major market opportunities, and reasons both to buy and to sell. To find out more, click here to claim your copy today.

Top Bank Companies To Invest In Right Now

Last year, Apple (NASDAQ: AAPL  ) ranked as the top smartphone vendor in Japan by Counterpoint Research. That was an impressive feat considering Japanese consumer preferences for local brands. That's changed since though, as Sony (NYSE: SNE  ) has doubled its market share in the past month to gobble up 36% of the market, according to Bloomberg, citing data from researcher BCN.

Sony's big win is directly attributable to a big marketing push by the largest Japanese wireless carrier, NTT DoCoMo (NYSE: DCM  ) , which doesn't offer the iPhone. Smaller rivals SoftBank and KDDI have been chipping away at NTT DoCoMo's subscriber base, thanks in part to carrying Apple's device, so NTT DoCoMo is doing something about it.

The top carrier, which now has 61.6 million subscribers, is putting hefty marketing weight and promotions behind just two specific smartphones, the Samsung Galaxy S4 and Sony Xperia A. This is the first time that NTT DoCoMo has focused so heavily on such a small number of devices, in part to reduce costs.

Top Bank Companies To Invest In Right Now: Banco Bilbao Vizcaya Argentaria S.A. (BBVA.N)

Banco Bilbao Vizcaya Argentaria, S.A. (BBVA) is a diversified international financial group, with strengths in the traditional banking businesses of retail banking, asset management, private banking and wholesale banking. The Company also has investments in some of Spain�� companies. During the year ended December 31, 2009, BBVA focused its operations on six major business areas: Spain and Portugal, Wholesale Banking and Asset Management, Mexico, The United States, South America and Corporate Activities. On August 21, 2009, through its subsidiary BBVA Compass, BBVA acquired certain assets of Guaranty from the United States Federal Deposit Insurance Corporation (the FDIC).

Spain and Portugal

The Spain and Portugal business area focuses on providing banking services and consumer finance to private individuals, enterprises and institutions in Spain and Portugal. The main business units included in the Spain and Portugal area Spanish Retail Netwo rk, which manages individual customers, high net-worth individuals (private banking) and small companies and retailers in the Spanish market; Corporate and Business Banking, which manages business with small and medium enterprises (SMEs), large companies, institutions and developers in the Spanish market, and Other units, which includes consumer finance, that manages renting and leasing business, credit to individual and to enterprises for consumer products and Internet banking; European Insurance that manages the insurance business in Spain and Portugal, and BBVA Portugal, that manages the banking business in Portugal. The Spanish Retail Network unit services the financial and non-financial needs of households, professional practices, retailers and small businesses. The Corporate and Business Banking unit offers a range of services and products to SMEs, large companies, institutions and developers with specialized branch networks for each segment.

The Company

Top Bank Companies To Invest In Right Now: National Australia Bank Ltd (NAB)

National Australia Bank Limited provides products, advice and services. In Australia, it operates through National Australia Bank, MLC and UBank. In the United Kingdom, it operates through Clydesdale Bank. In New Zealand, it operates through Bank of New Zealand. In the United States, it operates through Great Western Bank. Segments include Business Banking, Personal Banking, Wholesale Banking, UK Banking and NZ Banking, MLC and NAB and Great Western Ban. As of April 5, 2012, the Company and its associated entities ceased to be a substantial holder in BlueScope Steel Limited. On May 17, 2012, it ceased to be a substantial holder in Spark Infrastructure Group and Sandfire Resources NL. As of August 24, 2012, the Company and its associated entities ceased to be holder in Tabcorp Holdings Limited. In September 2012, the Company and its associated entities have ceased to be a substantial holder in Incitec Pivot Limited, as of August 30, 2012. Advisors' Opinion:

• [By Dale Gillham]

  NAB is still a long way from its all-time high of $44.84 from 2007, but has so far been able to hold above 50 per cent ($22.42) of its all-time high, which is a positive sign. Given that NAB has spent a lot of time in a zigzag formation above this level; you can see how strong this level has been for its shares. At present NAB is probably my least preferred bank stocks when weighing up the risks from a technical perspective, but while it stays above this 50 per cent level it has a greater probability of rising than falling.

  What is holding it back? You can see how a few months ago NAB attempted to break the $26.00 level overhead, which has proven to be an important threshold for those just not willing to pay more for NAB. If you are a bit of a contrarian and like to pick underdogs, you may decide to keep NAB on your watch list because very soon I am expecting it to show where it is headed. A move back below the 50 per cent level would not bode well for those holding NAB.

Top Stocks To Buy Right Now: U.S. Bancorp(USB)

U.S. Bancorp, a financial services holding company, provides various banking and financial services in the United States. It generates various deposit products, including checking accounts, savings accounts, money market savings, and time certificates of deposit accounts. The company originates a portfolio of loans comprising commercial loans and lease financing; commercial real estate; residential mortgage; and retail loans consisting of credit cards, retail leasing, home equity and second mortgages, and other retail loans. It also offers wholesale lending, equipment finance, small-ticket leasing, depository, treasury management, capital markets, foreign exchange, and international trade services to middle market, large corporate, commercial real estate, and public sector clients. In addition, U.S. Bancorp provides telebanking and automated teller machine (ATM) services, as well as cash management services. The company, through other subsidiaries, provides trust, private banking, financial advisory, investment management, retail brokerage services, insurance, and custody and fund services; and payment services, including consumer and business credit cards, stored-value cards, debit cards, corporate and purchasing card services, consumer lines of credit, and merchant processing. U.S. Bancorp primarily serves individuals, estates, foundations, business corporations, and charitable organizations. It operates a network of approximately 3,031 banking offices and 5,310 ATMs. The company was founded in 1863 and is headquartered in Minneapolis, Minnesota.

Advisors' Opinion:

• [By James K. Glassman]

  52-Week High: $35.46
  
  52-Week Low: $25.43
  
  Annual Revenue: $17.2 billion
  
  Projected 2013 Earnings Growth: 7.3% 
  
  The venerable investment firm Brown Brothers Harriman, which has catered to wealthy families since 1818, has launched some excellent mutual funds in recent years. The managers of BBH Core Select look for stocks that sell for a "meaningful discount" from their judgment of a firm’s intrinsic, or true, value, thus providing what financial scholar Benjamin Graham called a "margin of safety." A prime holding for the past eight years has been Minneapolis-based U.S. Bancorp (symbol: USB), one of the best-run banks in the world. Its stock has risen 35% in the past year, but the P/E is still reasonable at 10, and the 2.5% dividend yield gives you more income than a ten-year Treasury bond.

• [By Vodicka]

  Jerry W Levin, who is a Director at U.S. Bancorp (NYSE:USB), sold 1,133 shares on Sep 27 at $24.67 per share for a total value of $27,955. About the company: U.S. Bancorp is a diversified financial services company that provides lending and depository services, cash management, foreign exchange and trust and investment management services. The Company also provides credit card services, mortgage banking, insurance, brokerage, and leasing. U.S Bancorp operates in the Midwest and Western United States.

• [By James K. Glassman]

   The venerable investment firm Brown Brothers Harriman, which has catered to wealthy families since 1818, has launched some excellent mutual funds in recent years. The managers of BBH Core Select look for stocks that sell for a "meaningful discount" from their judgment of a firm’s intrinsic, or true, value, thus providing what financial scholar Benjamin Graham called a "margin of safety." A prime holding for the past eight years has been Minneapolis-based U.S. Bancorp (symbol: USB), one of the best-run banks in the world. Its stock has risen 35% in the past year, but the P/E is still reasonable at 10, and the 2.5% dividend yield gives you more income than a ten-year Treasury bond.

• [By Louis Navellier]

  U.S. Bancorp (NYSE:USB) provides its customers with lending and depository services, cash management, foreign exchange and trust and investment management services. Since this time last March, USB is up 19%. USB stock gets an “A” grade for operating margin growth, a “B” grade for earnings growth, a “B” grade for its ability to exceed the consensus earnings estimates on Wall Street, a “B” grade for the magnitude in which earnings projections have increased over the past months, an “A” grade for cash flow, and a “B” grade for return on equity. 

Top Bank Companies To Invest In Right Now: First Horizon National Corp (FHN)

First Horizon National Corporation (FHN), incorporated in 1968, is a bank holding company. The Company provides financial services through its subsidiary, First Tennessee Bank National Association (the Bank), and its subsidiaries. The Company�� two brands First Tennessee and FTN Financial provide customers with a range of products and services. First Tennessee provides retail and commercial banking services throughout Tennessee. FTN Financial (FTNF) is engaged in fixed income sales, trading, and strategies for institutional clients in the United States and abroad. FHN has four operating business segments: regional banking, capital markets, corporate, and non-strategic. As of December 31, 2011, the Bank had $16.4 billion in total deposits and $16 billion in total net loans. As of December 31, 2011, the Company�� subsidiaries had over 200 business locations in 17 the United States states, Hong Kong, and Tokyo, excluding off-premises automated teller machines (ATMs). As of December 31, 2011, the Bank had 183 branch locations in four states, which include 172 branches in metropolitan areas of Tennessee; two branches in northwestern Georgia; seven branches in northwestern Mississippi, and two branches in North Carolina. As of December 31, 2011, FTN Financial products and services were offered through 18 offices in total, including 16 offices in 14 states plus an office in each of Hong Kong and Tokyo.

The regional banking segment offers financial products and services, including traditional lending and deposit taking, to retail and commercial customers in Tennessee and surrounding markets. Regional banking provides investments, financial planning, trust services and asset management, credit card, cash management, and first lien mortgage originations within the Tennessee footprint. In addition, the regional banking segment includes correspondent banking, which provides credit, depository, and other banking related services to other financial institutions.

The capital markets se! gment consists of fixed income sales, trading, and strategies for institutional clients in the United States and abroad, as well as loan sales, portfolio advisory, and derivative sales. The corporate segment consists of gains on the extinguishment of debt, unallocated corporate expenses, expense on subordinated debt issuances and preferred stock, bank-owned life insurance, unallocated interest income associated with excess equity, net impact of raising incremental capital, revenue and expense associated with deferred compensation plans, funds management, low income housing investment activities, and charges related to restructuring, repositioning, and efficiency. The non-strategic segment consists of the wind-down national consumer lending activities, legacy mortgage banking elements, including servicing fees, and the associated ancillary revenues and expenses related to these businesses. Non-strategic also includes the wind-down trust preferred loan portfolio and exited businesses along with the associated restructuring, repositioning, and efficiency charges.

As of December 31, 2011, the Company provided services through its subsidiaries, which include general banking services for consumers, businesses, financial institutions, and governments; through FTN Financial fixed income sales and trading, underwriting of bank, loan sales, advisory services and derivative sales; discount brokerage and full-service brokerage; correspondent banking; transaction processing, such as nationwide check clearing services and remittance processing; trust, fiduciary, and agency services; credit card products; equipment finance; investment and financial advisory services; mutual fund sales as agent; retail insurance sales as agent, and mortgage banking services.

As of December 31, 2011, the commercial, financial, and industrial (C&I) portfolio was eight billion dollars, and is consisted of loans used for general business purposes, and consisted of relationship customers in Tennessee and certain n! eighborin! g states, which are managed within the regional bank. Products include working capital lines of credit, term loan financing of owner-occupied real estate and fixed assets, and trade credit enhancement through letters of credit. As of December 31, 2011, the unpaid principal balance (UPB) of trust preferred loans totaled $447.2 million with the UPB of other bank-related loans totaling approximately $161.8 million. The commercial real estate portfolio includes both financings for commercial construction and non-construction loans. This portfolio is segregated between income commercial real estate (CRE) loans which contain loans, lines, and letters of credit to commercial real estate developers for the construction and mini- permanent financing of income-producing real estate, and residential CRE loans. The residential CRE portfolio includes loans to residential builders and developers for the purpose of constructing single-family detached homes, condominiums, and town homes. As of December 31, 2011, the residential CRE portfolio was $.1 billion. As of December 31, 2011, the consumer real estate portfolio was $5.3 billion, and is composed of home equity lines and installment loans. As of December 31, 2011, the credit card and other portfolios were $.3 billion, and primarily include credit card receivables, automobile loans, and over-the-counter (OTC) construction loans and other consumer related credits.

FHN�� investment portfolio consists of debt securities, including government agency issued mortgage-backed securities (MBS) and government agency issued collateralized mortgage obligations (CMO). During the year ended December 31, 2011, Government agency issued MBS and CMO, and other agencies averaged $2.9 billion. During 2011, the United States treasury securities and municipal bonds averaged $79.5 million. During 2011, investments in equity securities averaged $222.3 million.

During 2011, short-term funds (certificates of deposit greater than $100,000, federal funds purchased (! FFP), sec! urities sold under agreements to repurchase, trading liabilities, and other short-term borrowings) averaged $3.6 billion. During 2011, other borrowings increased to $.3 billion. Term borrowings include senior and subordinated borrowings and advances with original maturities greater than one year. During 2011, average term borrowings averaged $2.6 billion.

The Company competes with Regions Bank, SunTrust Bank, Wells Fargo Bank N.A., Bank of America N.A., and Pinnacle National Bank.

Advisors' Opinion:

• [By Dan Freed]

  Trading at a 17% discount to peers in terms of tangible-book value, JPMorgan says First Horizon's valuation "reflects a mediocre franchise and one of the best management teams in the business."

  The report adds that management is moving the bank to become "one of the most profitable banks in the industry over time," and it "[encourages] investors to buy the stock at current levels and ahead of an expected 15-20% ROE and the valuation improvement that should coincide with this level of profitability."

Pentagon Issues Contracts for Radios, Training, Logistics... and NORAD

The U.S. Department of Defense awarded nine new contracts on Monday worth some $1.121 billion in aggregate. While one single IT contract claimed the bulk of the awards, there were other, smaller winners as well. Here are a few of them:

Harris Corporation's (NYSE: HRS  ) RF Communications division was awarded a $22.1 million firm-fixed-price, indefinite-delivery/indefinite-quantity (IDIQ) contract to supply Harris radios and associated components to be used by the Chemical, Biological, Radiological, Nuclear, and High Yield Explosive Response enterprise that "interfaces" with first responders, National Guard teams, military tactical components, law enforcement, and certain Department of Defense entities. This contact will begin with an initial shipment of 30 radios, but will not be completed until July 2015. Lockheed Martin's (NYSE: LMT  ) Information Systems & Global Services unit won a $20.8 million contract modification to support air, missile, and space defense operations for the North American Aerospace Defense Command (NORAD) Cheyenne Mountain Complex/Integrated Tactical Warning/Attack Assessment (NCMC/ITW/AA) through Dec. 31, 2013. URS (NYSE: URS  ) Federal Services was awarded a contract modification worth up to $11.8 million, exercising the first (of four) option year(s) attached to a one-year base contract for unspecified "material distribution services" in Maryland and Utah through July 31, 2017. Science Applications International Corp (NYSE: SAI  ) won a $6.8 million firm-fixed-price contract to provide integrated training support to the U.S. Fleet Forces Command and associated fleet commands during fleet training -- primarily in the U.S., but also in Japan. This contract should run through Sept. 30, 2013.

Microsoft and Nokia Have a Long Way to Go

Microsoft's (NASDAQ: MSFT  ) expensive investment and Nokia's (NYSE: NOK  ) risky gamble appear to be paying off.

Kantar is out with its smartphone domestic market share report for the second quarter, and after conducting more than 240,000 interviews in this country, it appears as if Windows Phone is gaining ground as a mobile operating system.

Hold your applause.

We're only talking about Windows going from 2.9% a year ago to 4% today. This remains a country where Google's (NASDAQ: GOOG  ) Android and Apple's (NASDAQ: AAPL  ) iPhone command a whopping 94% of the market.

In fact, Microsoft's growth hasn't really come at the expense of Google or Apple. They combined for just 91.8% in market share a year ago, so clearly the two market leaders are even more popular today. Microsoft's growing at the expense of BlackBerry (NASDAQ: BBRY  ) , which has seen its stateside market share shrink from 4% to 1.1% over the past year.

Yes, Microsoft's share of smartphone sales during the last three months is the same as BlackBerry's land grab during the same three months of 2012. That's not very encouraging, but then you have to keep in mind that Windows Phone is on the rise. BlackBerry has given us little reason to make it seem as if it's not a platform on the way out.

When Microsoft and Nokia teamed up to champion Windows Phone through Nokia's Lumia line, it was a brazen move. Microsoft would offer up billions in guarantees to Nokia, and the Finnish handset maker would throw its weight behind a fledgling mobile platform instead of joining Samsung in putting out a ton of Android devices.

Nokia's stock has taken a beating as sales haven't been up to snuff, and even Microsoft slumped after posting uninspiring financial results earlier this month. Clearly both companies have a long way to go if they want to be taken seriously in the smartphone market, but at least they're taking baby steps in the right direction.

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Why iRobot 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, robot specialist iRobot (NASDAQ: IRBT  ) has earned a respected four-star ranking.

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

iRobot facts

Headquarters (founded)	Bedford, Mass. (1990)
Market Cap	$976.2 million
Industry	Household appliances
Trailing-12-Month Revenue	$463.55 million
Management	Co-Founder/Chairman/CEO Colin Angle CFO Alison Dean
Return on Equity (average, past 3 years)	13.2%
Cash/Debt	$152.9 million/$0
Competitors	Electrolux AB Lockheed Martin  Samsung Electronics

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

On CAPS, 91% of the 1,318 members who have rated iRobot believe the stock will outperform the S&P 500 going forward.   

Just last week, one of those Fools, DLester78, succinctly summed up the iRobot bull case for our community:

Better company than movie or book. Anytime you can take a menial task that truly is a waste of time and automate it. To cap off why ... Sweeping and cleaning sucks. It does nothing for the economy and there are many daily tasks that if automated would allow someone to focus on being productive. I think more people will adopt smart technologies and [iRobot] has a brand name.  

With the American markets reaching new highs, investors and pundits alike are skeptical about future growth. They shouldn't be. Many global regions are still stuck in neutral, and their resurgence could result in windfall profits for select companies. A recent Motley Fool report, "3 Strong Buys for a Global Economic Recovery," outlines three companies that could take off when the global economy gains steam. Click here to read the full report!

Coming Soon: Lincoln Electric Holdings Earnings

Lincoln Electric Holdings (Nasdaq: LECO  ) is expected to report Q2 earnings on July 29. Here's what Wall Street wants to see:

The 10-second takeaway
Comparing the upcoming quarter to the prior-year quarter, average analyst estimates predict Lincoln Electric Holdings's revenues will expand 1.8% and EPS will expand 9.9%.

The average estimate for revenue is $757.3 million. On the bottom line, the average EPS estimate is $0.89.

Revenue details
Last quarter, Lincoln Electric Holdings tallied revenue of $718.6 million. GAAP reported sales were 1.2% lower than the prior-year quarter's $727.1 million.

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

EPS details
Last quarter, non-GAAP EPS came in at $0.92. GAAP EPS of $0.80 for Q1 were 5.3% higher than the prior-year quarter's $0.76 per share.

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

Recent performance
For the preceding quarter, gross margin was 31.8%, 220 basis points better than the prior-year quarter. Operating margin was 13.8%, 120 basis points better than the prior-year quarter. Net margin was 9.3%, 50 basis points better than the prior-year quarter.

Looking ahead

The full year's average estimate for revenue is $2.93 billion. The average EPS estimate is $3.51.

Investor sentiment
The stock has a five-star rating (out of five) at Motley Fool CAPS, with 385 members out of 392 rating the stock outperform, and seven members rating it underperform. Among 150 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 150 give Lincoln Electric Holdings a green thumbs-up, and give it a red thumbs-down.

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Lincoln Electric Holdings is hold, with an average price target of $59.80.

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Add Lincoln Electric Holdings to My Watchlist.

FAA to Approve Resumption of Boeing Dreamliner Flights

Joshua Trujillo, seattlepi.com/AP

WASHINGTON -- The Federal Aviation Administration has accepted Boeing's revamped battery system for its beleaguered 787 Dreamliners and agreed to lift its grounding order, according to a congressional official.

The order gives Boeing the go ahead to begin retrofitting planes with an enhanced lithium-ion battery system although the root cause of battery failures that caused a fire on one of the planes and smoke on another is still unknown.

Boeing Co. (BA) intends to work on the retrofits over the weekend, and flights could resume within days to a week, the official said. The official requested anonymity because he wasn't authorized to speak publicly before the FAA's announcement.

The FAA gave Boeing permission last month to test the revamped system, which includes additional insulation around each of the battery's eight cells to prevent a short circuit or fire in one of the cells from spreading to the others. The new system also includes enhanced venting of smoke and gas from inside the battery to outside the plane. A strengthened box to hold the battery is an effort to ensure that if a fire were to occur, it wouldn't escape to the rest of the plane. Boeing has completed 20 separate tests of the new system, FAA Administrator Michael Huerta told Congress earlier this week.

The FAA's action directly affects United Airlines (UAL), which is the only U.S. airline with 787s in its fleet. But aviation authorities in other countries are expected to swiftly follow suit. Boeing had delivered 50 planes to eight airlines in seven countries when a fire erupted in a battery aboard a Japan Airlines 787 parked at Boston's Logan International Airport on Jan. 7. The FAA and other authorities grounded the entire fleet after a second incident nine days later led to an emergency landing by an All Nippon Airways 787 in Japan.

Boeing has recently been readying replacement battery systems for installation in anticipation that the grounding order would soon be rescinded.

"We are primarily bound by EASA decisions, and we need to have their permission to end the grounding," said Marek Klucinski, a spokesman for Polish national carrier LOT, referring to the European Aviation Safety Agency. "If the [Boeing] decision is today, we can expect a permission to fly in the middle of next week." LOT has two of the planes: One in Warsaw, and one that was en route to Chicago when the grounding order was issued and has remained there.

Technologically Advanced

The 787 is Boeing's newest and most technologically advanced plane. It is the world's first airliner made mostly from lightweight composite materials. It also relies on electronic systems rather than hydraulic or mechanical systems to a greater degree than any other airliner. And it is the first airliner to make extensive use of lithium-ion batteries, which are lighter, recharge faster and can hold more energy than other types of batteries.

Boeing has billed the plane to its customers as 20 percent more fuel efficient than other midsized airliners. That's a big selling point, since fuel is the biggest expense for most airlines

The plane's grounding on Jan. 16, an enormous black eye for Boeing, marked the first time since 1979 that FAA had ordered every plane of a particular type to stay out of the air for safety reasons.

UBS analyst David Strauss estimated last month that the 787 will cost Boeing $6 billion this year. Besides the battery problems, the plane already costs more to build than it brings in from customers.

United has six Dreamliners, plus another 44 on order. American Airlines and Delta Air Lines (DAL) have also ordered 787s. Boeing has orders for more than 800 of the planes from airlines around the globe.

The 787 has two identical lithium-ion batteries, one of which is located toward the front of the plane and powers cockpit electrical systems, the other toward the rear and used to start an auxiliary power unit while the plane is on the ground, among other functions. It was the battery toward the rear that caught fire and gushed smoke on the plane in Boston, which had recently landed after an overseas flight. It was the other battery toward the front that failed on the plane in Japan.

Every item that is part of an airplane, down to its nuts and bolts, must be certified as safe before FAA approves that type of plane as safe for flight. The two events have raised questions about why the FAA and Boeing didn't uncover problems with the batteries before the FAA certified the plane as safe for flight in 2011. In recent years, the FAA has relied to a greater extent on designated employees of aircraft makers to conduct the safety testing necessary of certification. Some aviation safety experts have questioned whether FAA has the in-house expertise to oversee the safety of cutting-edge technologies that haven't been in planes before.

Lithium batteries are much more likely to experience uncontrolled high temperatures that can lead to fires if they are damaged, exposed to excessive heat, overcharged or have manufacturing flaws. Despite their safety risks, they are increasingly attractive to aircraft makers as a way to cut weight and thus improve fuel efficiency.

The National Transportation Safety Board is investigating the Boston battery fire and the process by which the FAA certified the 787's batteries were certified as safe. The board has scheduled a two-day hearing beginning Tuesday at which FAA and Boeing officials are slated to testify.

NTSB officials have said the Boston battery fire began with a short circuit in one of the battery's eight cells, leading to uncontrolled temperatures and short-circuits in the rest of the battery's cells. Firefighters who responded to the incident reported dense clouds of white smoke and two small flames on the outside of the box that contained the battery cells.

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Where's the Cash Coming From at SeaChange International?

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 SeaChange International (Nasdaq: SEAC  ) , 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, SeaChange International generated $13.6 million cash while it booked net income of $0.3 million. That means it turned 8.7% of its revenue into FCF. That sounds OK.

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

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

So how does the cash flow at SeaChange International 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 41.8% of operating cash flow coming from questionable sources, SeaChange International investors should take a closer look at the underlying numbers. Within the questionable cash flow figure plotted in the TTM period above, stock-based compensation and related tax benefits provided the biggest boost, at 24.0% of cash flow from operations. Overall, the biggest drag on FCF came from changes in accounts receivable, which represented 36.9% 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.

Software and computerized services are being consumed in radically different ways, on new and increasingly mobile devices. Many old leaders will be left behind. Whether or not SeaChange International makes the coming cut, you should check out the company that Motley Fool analysts expect to lead the pack in "The Next Trillion-dollar Revolution." 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 SeaChange International to My Watchlist.

The Next Battle in the Smartphone Wars: Phone Subsidies

While there has always been healthy competition between the major wireless carriers, to date, the heart of the smartphone wars has been between devices. In March, T-Mobile (NYSE: TMUS  ) became the first to take a meaningful step away from phone subsidies, setting in motion what is becoming the next major battle for your smartphone consumption dollars. With AT&T (NYSE: T  ) and Verizon's (NYSE: VZ  ) recent announcements  of their own "early upgrade" plans, the conflict is intensifying.

There are two central questions which this transition raises, namely, the need to understand what is really happening and who will benefit. Without digging into what these changes really mean, it is difficult to trace the impacts. Ultimately, it is the impacts of these changes that will affect us as both consumers and investors.

Spin versus reality
T-Mobile, AT&T, and Verizon are marketing their new plans as a way for consumers to upgrade their hardware more frequently. In the case of T-Mobile's JUMP! plan, customers are able to upgrade as often as twice a year, but they are required to pay for the new device on an installment plan, as well as pay a $10-per-month plan fee -- but the plan fee includes insurance on the device. AT&T Next only allows you to upgrade once each year, requires no upfront down payment, and has no additional charge for the upgrade option. Verizon Edge is a blend of the two, allowing upgrades twice per year, requiring no fee for Edge, but requiring that you pay off half of the device before turning it in for your upgrade. ZDNet's Mathew Miller does a side-by-side comparison that does a nice job of walking you through a concrete example.

The clear conclusion for consumers is that, while these new plans allow you to upgrade more frequently, they are significantly more expensive than traditional options. This is no surprise to anyone paying close attention to the reality of what these plans represent: the end of phone subsidies by carriers. Where the added cost gets really out of control is if you choose not to upgrade as quickly as possible. Each of these plans contains an installment-payment feature, meaning that choosing not to upgrade forces you to keep paying toward your existing device.

In the case of Verizon Edge, this might make sense until you have reached 50% of the device's price -- if not, a lump sum payment is due at the time of upgrade to reach the 50% level. For the others, however, you continue to pay for a device you could replace. In the case of AT&T Next, which only permits an upgrade once per year, by the time you upgrade, you have already paid for more than half of the cost of the device, based on the example of having the device fully paid in 20 months.

For both of these carriers, there is no price break on monthly service fees, and some industry experts believe these rate plans already contain fees to offset the cost of phones. It is this last reality that led T-Mobile's Chief Marketing Officer Mike Sievert to suggest that, under AT&T's plan, customers pay for the same device twice.

Perhaps an obvious push back against the "waiting to upgrade" argument is to ask why anyone would. Maybe the most obvious group is Apple iPhone users. Given the fact that Apple continues to keep its flagship device on an annual product cycle, if you are an iPhone user, there is no reason to upgrade more frequently than once a year. In the short term, Apple could actually benefit from the rollout of these plans, as customers might opt for an iPhone 5 today, knowing they can upgrade to an iPhone 5S in six months on T-Mobile or Verizon; but once you get on the annual cycle, there will be little reason to buy a new iPhone more than once per year.

And the winner is...
While each of the plans have different benefits and drawbacks, the wireless industry as a whole is the winner. The easiest way to achieve growth in an industry is to get customers to pay more for what they are already buying. Particularly in the U.S., we have all become so reliant on our smartphones, that it's unlikely consumers will fail to accept the ultimate end of subsidies. The industry is very astutely focusing attention on upgrading more quickly to counteract the natural inclination to upgrade more slowly if the cost of devices is rising. It will likely take several quarters to truly gage the impact of this shift, but expect to see a benefit to the carriers that should be reflected in their respective stocks.

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

Tackling Cancer: Kidney Cancer's Biggest Current and Upcoming Players

As I noted nine weeks ago, cancer statistics are both staggering and disappointing. Although cancer deaths per 100,000 people have been on the downswing since 1991 thanks to access to more effective medications and better awareness about the negative health effects of smoking, there is still a lot of research and progress yet to achieve. My focus in this 12-week series is to bring to light both the need for continued research in these fields, as well as highlight ways you can profit from the biggest current and upcoming players in each area.

Over the past eight weeks, we've looked at the eight cancer types most expected to be diagnosed this year:

Prostate cancer Breast cancer Lung cancer Colorectal cancer Melanoma Bladder cancer Non-Hodgkin's lymphoma Thyroid cancer

Today, we'll turn our attention to the projected ninth-most diagnosed cancer: kidney cancer -- specifically, renal cell cancer.

The skinny on kidney cancer
This year, nearly 60,000 people will be diagnosed with renal cell cancer. While less than thyroid cancer in number of new diagnoses, the chance of death directly from kidney cancer is considerably higher. In fact, more than 13,000 people are projected to die from some form of renal cell carcinoma this year.

If there is a positive light to be shed from a renal cell cancer diagnosis, it's that 62% of all cases are diagnosed in a localized state, which, according to the American Cancer Society (link opens PDF file), results in a five-year survival rate of 91%. Also, better treatments and better awareness about smoking have helped boost the overall five-year survival rate of kidney cancer from 50% in 1975-1977 to 72% as of 2002-2008.

Conversely, there aren't any current tests that help screen for early-stage kidney cancer, and diagnoses actually rose by an average of 3.1% between 2005 and 2009 despite a 0.5% average annual decrease in death rates.

Sources: Surveillance, Epidemiology, and End Results Program and National Center for Health Statistics. 

Multiple factors, including smoking, hypertension, chronic renal failure, exposure to certain chemicals, and genetic factors have been shown to increase a person's chance of acquiring kidney cancer.

Where investment dollars are headed
Similar to what we saw last week with regard to treating thyroid cancer, surgery is a common option used to treat localized kidney cancer. In some cases ablation (using extreme heat or cold to destroy the tumor) can be used with success. ACS notes that radiation and chemotherapy tend to not have a huge effect on many stages of kidney cancer, but you'll find no shortage of anti-cancer therapies targeted at metastatic renal cell carcinoma. Here are a few of the most popularly prescribed therapies.

Nexavar: Co-developed by Onyx Pharmaceuticals (NASDAQ: ONXX  ) and Bayer, Nexavar has been approved to treat advanced renal cell carcinoma, or RCC, since Dec. 2005. In trials, Nexavar doubled progression-free survival to 167 days compared to the placebo which delivered a PFS of just 84 days. Slightly less than two years later Nexavar gained the added indication to treat unresectable hepatocellular carcinoma, a type of liver cancer. Sales of the drug totaled $861.4 million worldwide in 2012, excluding sales in Japan. Avastin: I believe I've been quite clear in my assessment that Roche's Avastin is a wonder drug. Currently approved for four separate disease indications, Avastin was approved in combination with interferon alfa to treat metastatic RCC in July 2009. Avastin, as a reminder, is a monoclonal antibody that binds to VEGF-receptors and inhibits blood vessel growth, essentially starving solid tumors. In trials, Avastin plus interferon alfa delivered a PFS of 10.2 months compared with just 5.4 months for the interferon alfa with the placebo. Inlyta: Approved in January 2012, Pfizer's (NYSE: PFE  ) Inlyta is designed to treat advanced RCC after the failure of one prior chemotherapy. An twice-daily oral medication similar to Nexavar, Inlyta was pitted against Nexavar in trials and came out on top in terms of PFS. The data showed the Inlyta arm delivered PFS of 6.7 months whereas the Nexavar-arm delivered a PFS of just 4.7 months. Sutent: Also developed by Pfizer, Sutent was approved to treat metastatic RCC in January 2006. The once-daily tablets -- which are also approved to treat pancreatic neuroendocrine tumors and gastrointestinal stromal tumors -- were pitted against interferon-alfa in trials and demonstrated a better-than-doubling of median progression-free survival (47.3 weeks compared with 22 weeks). Sutent was Pfizer's ninth best-selling drug in 2012 with $1.24 billion in sales.  Afinitor: Developed by Novartis, Afinitor was approved in March 2009 as a second-line treatment for advanced RCC after patients experienced progression or failed to respond to Sutent or Nexavar. In trials, Afinitor provided a median PFS of 4.9 months as compared with the placebo, which provided only 1.9 months of median PFS. Further, the objective response rate for Afinitor was 2% and 0% for the placebo. Votrient: Finally, GlaxoSmithKline's (NYSE: GSK  ) oral medication, Votrient, was approved in October 2009 as a first-line treatment for advanced RCC. Like all previous therapies before it, Votrient delivered a significant improvement in median PFS (9.2 months versus 4.2 months) relative to the placebo. Similarly, the objective response rate was an impressive 30% for Votrient and just 3% for the placebo. 

Despite this seemingly endless parade of advanced RCC treatments, there have also been some notable failures -- perhaps none more fresh than AVEO Pharmaceuticals' (NASDAQ: AVEO  ) implosion this past week. AVEO's lead drug, Tivozanib, provided a statistically significant median PFS advantage over Nexavar in late-stage trials, but it failed to produce a median overall survival gain compared to Nexavar. That confusing stat prompted the FDA's panel to vote 13-1 against recommending Tivozanib for approval. While not dead, it's going to take at least another trial it seems to justify Tivozanib's benefits.

What's coming down the pipeline
Now that you have a better idea of the half-dozen important metastatic RCC treatments, let's have a look at two other potentially game-changing treatments coming down the pipeline.

BMS-936558: This is an early stage clinical treatment from Bristol-Myers Squibb (NYSE: BMY  ) that is being targeted at a broad range of cancers, including advanced RCC. Most tumors, including those found in advanced RCC, overexpress the PD-L 1 ligand, which this compound helps to suppress. In early studies, 27% of RCC patients had at least a partial response to BMS-936558, and a good two-thirds of those patients had durable responses lasting longer than a year. Tivozanib: That's right, call me crazy, but I think there's a statistically significant PFS advantage to Tivozanib. However, AVEO will need to be extremely careful when it runs an additional late-stage trial with how it switches patients over from Nexavar to Tivozanib once their disease progresses if it hopes to gain a positive review from the FDA panel. I'd cautiously look for Tivozanib to make it back before the FDA panel sometime in 2015.

Your best investment
The good news for kidney cancer sufferers is that there's a small army of late-stage treatments available that have proven successfully in extended patient quality of life. On the flipside, kidney cancer doesn't have a lot going on in the pipeline beyond AVEO's late-stage drug, meaning your best investment is likely to be found in an existing treatment.

From an investing perspective, while I like the steady growth I've seen from Pfizer's Sutent, I prefer Onyx Pharmaceuticals with Nexavar. Onyx is right in the biotechnology acquisition sweet spot -- being valued at $6.5 billion it's neither too small to be untrusted nor too big for a slow-growth big pharmaceutical company to purchase. Onyx's additional drugs (Stivarga and Kyprolis) provide supplementary sources of revenue that make it an attractive option over the long term.

Stay tuned next week, when we tackle the current and upcoming therapies for the treatment of endometrial cancer in this "Tackling Cancer" series.

While you can certainly make huge gains in biotech and pharmaceuticals, the best investing approach is to choose great companies and stick with them for the long term. The Motley Fool's free report "3 Stocks That Will Help You Retire Rich" names stocks that could help you build long-term wealth and retire well, along with some winning wealth-building strategies that every investor should be aware of. Click here now to keep reading.

What Panera Could Learn From Chipotle

Best Growth Stocks To Own Right Now

Few decisions will have as lasting an impact on your life as your choice of profession. You can pour your life into a career, only to see it taken away as technology and business attitudes render your specialty obsolete. On the other hand, if you discover that you happen to be great at a job that looks to be in high demand for decades to come, you can practically write your own meal ticket.

But what are the best jobs? CareerCast.com, a targeted career site, recently put together its list of the best and worst jobs in America, which it ranks using a proprietary formula based on the general categories inherent to every job: environment, income, outlook, and stress level. A better environment, a higher income potential, robust future growth, and manageable stress levels all combine to create a great job. The five jobs you're about to see offer the best overall combinations of factors, which makes them the five best jobs in America. Let's see what makes them so appealing.

Best Growth Stocks To Own Right Now: Thoratec Corporation(THOR)

Thoratec Corporation engages in the development, manufacture, and marketing of proprietary medical devices used for circulatory support. The company?s primary product lines include ventricular assist devices, such as HeartMate II, an implantable left ventricular assist device consisting of a rotary blood pump to provide intermediate and long-term mechanical circulatory support (MCS); and HeartMate XVE, an implantable and pulsatile left ventricular assist device for intermediate and longer-term MCS. Its ventricular assist devices also comprise Paracorporeal Ventricular Assist Device, an external pulsatile ventricular assist device, which provides left, right, and biventricular MCS approved for bridge-to-transplantation (BTT), including home discharge, and post-cardiotomy myocardial recovery; and Implantable Ventricular Assist Device, an implantable and pulsatile ventricular assist device designed to provide left, right, and biventricular MCS approved for BTT comprising hom e discharge, and post-cardiotomy myocardial recovery. The company also provides CentriMag, an extracorporeal full-flow acute surgical support platform that offers support up to 30 days for cardiac and respiratory failure. In addition, it offers PediMag and PediVAS extracorporeal full-flow acute surgical support platforms designed to provide acute surgical support to pediatric patients. The company sells its products through direct sales force in the United States, as well as through a network of distributors internationally. Thoratec Corporation was founded in 1976 and is headquartered in Pleasanton, California.

Advisors' Opinion:

• [By McWillams]

  Wall Street is expecting Thoratec’s (THOR: 30.70 0.00%) growth rate to accelerate to 15% next year with earnings growth of over 20%. That type of growth has Wall Street analysts bullish on the medical device stock. The stock has a consensus price target of $38 and some analysts think THOR could go to $50.

Best Growth Stocks To Own Right Now: Waste Management Inc.(WM)

Waste Management, Inc., through its subsidiaries, provides waste management services to residential, commercial, industrial, and municipal customers in North America. It offers collection, transfer, recycling, and disposal services. The company also owns, develops, and operates waste-to-energy and landfill gas-to-energy facilities in the United States. Its collection services involves in picking up and transporting waste and recyclable materials from where it was generated to a transfer station, material recovery facility, or disposal site; and recycling operations include collection and materials processing, plastics materials recycling, and commodities recycling. In addition, it provides recycling brokerage, which includes managing the marketing of recyclable materials for third parties; and electronic recycling services, such as collection, sorting, and disassembling of discarded computers, communications equipment, and other electronic equipment. Further, the company e ngages in renting and servicing portable restroom facilities to municipalities and commercial customers under the Port-o-Let name; and involves in landfill gas-to-energy operations comprising recovering and processing the methane gas produced naturally by landfills into a renewable energy source, as well as provides street and parking lot sweeping services. Additionally, it offers portable self-storage, fluorescent lamp recycling, and medical waste services for healthcare facilities, pharmacies, and individuals, as well as provides services on behalf of third parties to construct waste facilities. The company was formerly known as USA Waste Services, Inc. and changed its name to Waste Management, Inc. in 1998. Waste Management, Inc. was incorporated in 1987 and is based in Houston, Texas.

Advisors' Opinion:

• [By Sam Collins]

  Houston-based Waste Management Inc. (NYSE: WM) is the largest trash hauling/disposal company in the United States. This company is a model for steady growth with earnings increasing steadily over many years.?

  S&P has a “four-star buy” on WM with a 12-month target of $42. WM pays an annual dividend of $1.36 for a yield of 3.7%.?

  Technically, the stock is in a powerful bull channel with support at $36 and resistance at $39. Buy WM as a long-term growth opportunity.

Top 10 Biotech Stocks To Watch Right Now: Checkpoint Systms Inc.(CKP)

Checkpoint Systems, Inc. manufactures and markets identification, tracking, security, and merchandising solutions for the retail and apparel industry worldwide. The company operates in three segments: Shrink Management Solutions, Apparel Labeling Solutions, and Retail Merchandising Solutions. The Shrink Management Solutions segment provides shrink management and merchandise visibility solutions. It offers electronic article surveillance systems, such as EVOLVE, a suite of RF and RFID-enabled products that act as a deterrent to prevent merchandise theft in retail stores; and electronic article surveillance consumables, including EAS-RF and EAS-EM labels that work in combination with EAS systems to reduce merchandise theft in retail stores. This segment also provides keepers, spider wraps, bottle security, and hard tags, as well as Showsafe, a line alarm system for protecting display merchandise. In addition, it offers physical and electronic store monitoring solutions, incl uding fire alarms, intrusion alarms, and digital video recording systems for retail environments; and RFID tags and labels. The Apparel Labeling Solutions segment provides apparel labeling solutions to apparel retailers, brand owners, and manufacturers. It has Web-enabled apparel labeling solutions platform and network of 28 service bureaus located in 22 countries that supplies customers with customized apparel tags and labels. The Retail Merchandising Solutions segment offers hand-held label applicators and tags, promotional displays, and queuing systems. The company serves retailers in the supermarket, drug store, hypermarket, and mass merchandiser markets through direct distribution and reseller channels. Checkpoint Systems was founded in 1969 and is based in Thorofare, New Jersey.

Advisors' Opinion:

• [By Michael]

  OK, so Checkpoint (CKP: 13.80 0.00%) probably isn’t going to see its stock price double in 2011. However, the stock gained 35% in 2010 with earnings expected to climb 13%. Next year, Wall Street sees earnings growth accelerating to 25%. Despite the impressive growth rate, the stock trades at only 16x next year’s earnings estimates and analysts have a $25 price target for CKP.

Best Growth Stocks To Own Right Now: Crocs Inc.(CROX)

Crocs, Inc. and its subsidiaries engage in the design, development, manufacture, marketing, and distribution of footwear, apparel, and accessories for men, women, and children. The company primarily offers casual and athletic shoes, and shoe charms. It also designs and sells a range of footwear and accessories that utilize its proprietary closed cell-resin, called Croslite. The company?s footwear products include boots, sandals, sneakers, mules, and flats. In addition, it provides footwear products for the hospital, restaurant, hotel, and hospitality markets, as well as general foot care and diabetic-needs markets. Further, the company offers leather and ethylene vinyl acetate based footwear, sandals, and printed apparels principally for the beach, adventure, and action sports markets; and accessories comprising snap-on charms. The company sells its products through the United States and international retailers and distributors, as well as directly to end-user consumers th rough its company-operated retail stores, outlets, kiosks, and Web stores primarily under the Crocs Work, Crocs Rx, Jibbitz, Ocean Minded, and YOU by Crocs brand names. As of December 31, 2010, it operated 164 retail kiosks located in malls and other high foot traffic areas; 138 retail stores; 76 outlet stores; and 46 Web stores. Crocs, Inc. operates in the Americas, Europe, and Asia. The company was formerly known as Western Brands, LLC and changed its name to Crocs, Inc. in January 2005. Crocs, Inc. was founded in 1999 and is headquartered in Niwot, Colorado.

Advisors' Opinion:

• [By Paul]  

  They’re back! Two years ago everyone was convinced that Crocs (CROX: 23.33 0.00%) was just a fad, but their stock price exploded in 2010 gaining 206%. Revenues are expected to climb 20% this year and analysts are looking for 27% earnings growth in 2011. That type of growth could make Crocs a hot item again in 2011, especially if they can continue to top Wall Street’s estimates each quarter.

Best Growth Stocks To Own Right Now: Intuitive Surgical Inc.(ISRG)

Intuitive Surgical, Inc. designs, manufactures, and markets da Vinci surgical systems for various surgical procedures, including urologic, gynecologic, cardiothoracic, general, and head and neck surgeries. Its da Vinci surgical system consists of a surgeon?s console or consoles, a patient-side cart, a 3-D vision system, and proprietary ?wristed? instruments. The company?s da Vinci surgical system translates the surgeon?s natural hand movements on instrument controls at the console into corresponding micro-movements of instruments positioned inside the patient through small puncture incisions, or ports. It also manufactures a range of EndoWrist instruments, which incorporate wrist joints for natural dexterity for various surgical procedures. Its EndoWrist instruments consist of forceps, scissors, electrocautery, scalpels, and other surgical tools. In addition, it sells various vision and accessory products for use in conjunction with the da Vinci Surgical System as surgical procedures are performed. The company?s accessory products include sterile drapes used to ensure a sterile field during surgery; vision products, such as replacement 3-D stereo endoscopes, camera heads, light guides, and other items. It markets its products through sales representatives in the United States, and through sales representatives and distributors in international markets. The company was founded in 1995 and is headquartered in Sunnyvale, California.

Advisors' Opinion:

• [By Jim Lowell]

  Intuitive Surgical (ISRG: 329.49 0.00%) is an expensive stock and their stock price is currently well below the $400 level that it flirted with in April. However, the stock is a compelling growth story with revenues and earnings expected to climb 19% in 2011. The company faces little competitive pressure and 2011 is likely the year that consumers opt for procedures that they delayed in 2009-10. That could produce some blowout earnings results for ISRG in 2011.

• [By Jim Lowell]

  Intuitive Surgical (ISRG: 329.49 0.00%) is an expensive stock and their stock price is currently well below the $400 level that it flirted with in April. However, the stock is a compelling growth story with revenues and earnings expected to climb 19% in 2011. The company faces little competitive pressure and 2011 is likely the year that consumers opt for procedures that they delayed in 2009-10. That could produce some blowout earnings results for ISRG in 2011.

Cadillac's 2014 CTS Looks to Impress the World

Cadillac's 2014 CTS. Photo: General Motors.

General Motors (NYSE: GM  ) is about to close the ugliest and darkest chapter of its history book, just as soon as the U.S. Treasury dumps its remaining shares in the company. By year's end, GM plans to once again return to investment grade, and in its best financial shape in more than a decade.

GM also has another bright spot this year: Its Cadillac lineup has surged 38% year to date -- its best YTD increase in nearly four decades. Its success is driven by new Cadillac models ATS, CTS, and XTS. Let's look at the 2014 CTS and see what it brings to the table for consumers and investors alike.

Overview and exterior
Typically the CTS has been Cadillac's hero, but last year's introduction of the ATS gives Cadillac a sidekick to its all-new 2014 CTS due out this October.

"CTS has always been Cadillac's centerpiece, and as our brand expands and elevates, the car properly grows to its true place," said David Leone, CTS executive chief engineer, in a press release. "With last year's addition of the award-winning ATS compact luxury sedan, CTS will directly challenge the luxury midsize competition with uncompromised performance, luxury, and technology."

Looking at some of the new tweaks and upgrades in the next-generation CTS, it's clear Cadillac is putting its money where its mouth is -- but it will ask you to pay up roughly $6,000 more for the new model, according to Automotive News.

It's going to offer more interior space, power, and technology, while the new exterior design becomes longer, lower, and leaner. While the vehicle itself gets larger and roomier, it'll be on a strict diet and will shed about 244 pounds from its previous model -- expecting to be the lightest midsize luxury vehicle.

In addition to the weight loss, the 2014 CTS will be offered with a choice of three powertrains and two engines. One of the engines, a 2.0L turbocharged four-cylinder, will put out an impressive 272 horsepower and will go from 0 to 60 in 6.1 seconds -- 1.5 seconds quicker than its predecessor.

Cadillac's CTS also has a 3.6L V6 engine, and in its premium Vsport model package -- which contains the highest-performing components -- it puts out 420 HP. However, all that power and premium options bring a hefty price tag of nearly $60,000 -- roughly $13,000 more than the standard-version CTS.

Interior
All the CTS models will be equipped with Cadillac's prized "CUE" system for connectivity, featuring a large 8-inch touchscreen. Here's a tidbit that was music to my ears: The CTS will also come with a 13-speaker Bose premium audio system with HD radio capability.

Cadillac's 2014 CTS. Photo: General Motors.

Cadillac had me at "Bose system," but here's a list of other CTS interior features, according to a GM press release:

Cadillac's first 20-way adjustable front seats. A motorized cup-holder lid in the center console. Heated and cooled (ventilated) front seats and heated steering wheel. Electronically locking glove box. Electronic park brake. Adaptive remote start feature that also activates the climate control system.

In addition to those minor features, it has a plethora of safety features and options. For example, the 2014 will be the first Cadillac to offer "Automatic Parking Assist," similar to Ford's (NYSE: F  ) feature that parks itself in parallel spaces. It also offers a "Driver Awareness Package" that has vibrating pulses in the driver's seat to bring attention to an imminent collision -- a patented feature. 

Investing takeaway
Luxury lines bring in a high transaction price and fatter margins than standard vehicles, and it's important to be able to step your loyal consumers up as their purchasing power grows over time. One complaint from GM investors is that the company isn't nearly as profitable as it should be for the globe's second leading automaker in sales -- and that looks to change. For investors, GM is an intriguing opportunity because it's years behind Ford in operating efficiencies and has a lot of room to run over the next few years in terms of profitability.

These two crosstown rivals have much to learn from each other. If Ford can take notes from Cadillac's success and apply it to its Lincoln brand, it will be a huge step for growing top-line revenues. If GM can apply Ford's efficient global platform and run its plants and operations at a high percentage of capacity, as Ford does, it will become immensely more profitable. If a hypothetical automaker had GM's top-line success, in combination with Ford's bottom-line success, the result would easily be the best automaker on the globe. Time will tell which company learns its lesson first, but both automakers present us with an incredible investment opportunity as automotive sales rebound in the U.S. and around the world.

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