Stryker Strikes Gold

Physicians today, and particularly surgeons, are using equipment and techniques that were undreamed of even a generation ago. A company that has been on the cutting edge of the medical technology revolution, with the prospect of more innovation ahead, is Stryker Corporation (NYSE: SYK).

The Kalamazoo, Michigan-based firm has a diverse array of products that includes implants used in joint replacement and trauma surgeries; surgical equipment and surgical navigation systems; endoscopic and communications systems; patient handling and emergency medical equipment; neurosurgical, neurovascular and spinal devices; as well as other medical device products.

The company should be attractive to both growth- and income-oriented investors. Last month Stryker's board of directors increased its dividend by 15 percent, compared to the prior year, by declaring a quarterly dividend of 30 cents per share.

In the fourth quarter, Stryker posted net sales growth of 5.6 percent to $2.5 billion. Earnings per share increased 42 percent to $1.01 per share. For the full year, net sales growth was up 4.2 percent to $9 billion, and cash flow from operations increased 13.8 percent to $1.9 billion.

The company has a market cap of $29.1 billion. Its debt levels seem quite reasonable considering its steady revenue growth, and its price-earnings ratio of 31 is justified by its history of innovation and expansion.

In the United States, most of Stryker’s products are marketed directly to doctors, hospitals and other healthcare facilities. Internationally, Stryker products are sold in over 100 countries through company-owned sales subsidiaries and branches as well as third-party dealers and distributors.

“We're pleased with the organic sales growth and operational earnings we achieved in 2013. With our broad-based product portfolio and commitment to innovation and globalization, we're well positi! oned to build on this momentum in 2014,” said company president Kevin Lobo.

Stryker's product lines are in three major business segments: Reconstructive, Medical & Surgical, and Neurotechnology & Spine. Reconstructive products consist primarily of implants used in hip and knee joint replacements and trauma and extremities surgeries.

MedSurg products include surgical equipment and surgical navigation systems (instruments); endoscopic and communications systems (endoscopy); patient handling and emergency medical equipment; and reprocessed and remanufactured medical devices as well as other medical device products used in a variety of medical specialties.

Stryker Neurotechnology and Spine products include a portfolio of products including both neurosurgical and neurovascular devices. Their neurotechnology offering includes products used for minimally invasive endovascular techniques, as well as a line of products for traditional brain and open skull base surgical procedures, orthobiologic and biosurgery products including synthetic bone grafts and vertebral augmentation products, as well as minimally invasive products for the treatment of strokes.

The firm also develops, manufactures and markets spinal implant products including cervical, thoracolumbar and interbody systems used in spinal injury and deformity therapies.

Stryker recently revealed that it is in the process of acquiring Patient Safety Technologies for an aggregate purchase price of $120 million. The company’s proprietary Safety-Sponge System and SurgiCount 360 compliance software help prevent what the medical community delicately calls Retained Foreign Objects (RFOs) – in other words, the surgeon accidentally left something inside the patient.

The safety system includes bar-coded surgical sponges and towels, an integrated barcode scanner, and compliance tracking software. In 2013 it produced revenue of more than $16 million, which will be a healthy addition to Stryker's sales! growth.
Scary as it may sound, RFOs are the most common operating room mishap in the United States. Sponges are the most common retained object, with approximately 2,300 incidents reported annually at an average cost per incident of over $400,000. The SurgiCount Safety Sponge System offers a way to eliminate unnecessary costs from the healthcare system while improving quality of care. 

Since its launch in 2006, SurgiCount has established a strong customer base of over 300 hospitals including several of the leading medical institutions in the U.S. The Safety Sponge System will become part of Stryker’s Instruments division’s offerings and will augment Stryker Instruments’ broad portfolio of products that are designed to improve perioperative care.

“We are committed to providing solutions that result in a higher quality of care and level of safety for both patients and healthcare professionals,” said Timothy Scannell, head of Stryker's MedSurg and Neurotechnology division. “This acquisition aligns with Stryker’s focus on offering products and services that have demonstrated cost effectiveness and clinical outcomes.”

Stryker has also acquired the privately held Concentric Medical, Inc. (Concentric) in an all cash transaction for $135 million. Concentric’s products include devices for the removal of thrombus in patients experiencing acute ischemic stroke along with a broad range of AIS access products.

And in November 2012, Stryker acquired the Tel Aviv, Israel-based Surpass Medical Ltd., a company developing a flow diversion stent technology to treat brain aneurysms using a mesh design and delivery system, for $135 million.

Finally, in December 2013, Stryker acquired MAKO Surgical Corporation (MAKO). MAKO is a company in South Florida that manufactures and markets surgical robotic arm assistance platforms, most notably the RIO (Robotic Arm Interactive Orthopedic System) as well as orthopedic implants used by orthoped! ic surgeo! ns for use in partial knee and total hip arthroplasty.

With all these acquisitions plus the strong revenue growth generated by its existing product line, Stryker should remain at the top of its game for some time to come.

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Tom Scarlett is an investment analyst at Personal Finance and its parent web site Investing Daily.

Can This Man Help Hulu Gain Technical Parity With Netflix?

Hulu's hiring of Tian Lim as chief technology officer is long overdue, Fool contributor Tim Beyers says in the following video.

Not so much that Lim, specifically, should have been on the payroll, but that someone of his caliber has been needed in-house for a while, Tim argues. Former CTO Richard Tom left the company, along with founding CEO Jason Kilar, about a year ago. Netflix (NASDAQ: NFLX  ) been on a tear since, funding new originals and opening new territories.

Part of what makes the Netflix story appealing -- or at least more appealing than Hulu's -- is that the service works seamlessly on a huge range of devices. Remember the Wii U? Netflix was so fast to support the device that Nintendo was still working on its own "TVii" service when the streamer went live on the console.

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Moreover, Tim says, the company's technology includes a built-in content delivery network, or CDN, for accelerating streams to customers in certain high-traffic regions. The service should also help to protect against Internet Service Providers who choose to take advantage of the more lax net neutrality regulations and throttle Netflix's streams. Hulu doesn't appear to enjoy similar safeguards.

Lim, whose experience at Sony includes bringing Hulu Plus to PlayStation consoles, is now responsible for remedying that. It's about time someone was.

Now it's your turn to weigh in. What new services do you want to see Hulu offer? How would you differentiate from Netflix? Please watch the video to get Tim's full take, then leave a comment to let us know what you think, and whether you would buy, sell, or short Netflix stock at current prices.

One key to getting rich like Buffett
In 1988, Warren Buffett first began buying shares of Coca-Cola, a stock his company holds to this day and that has returned more than 700%. The lesson? Buying stock in great businesses can lead you to life-changing wealth. And yet with 5,000 publicly traded companies to choose from, it can be daunting to find the one that'll make you truly rich. So, we've done the work for you. Our chief investment officer names his top pick for new money now in the special free report "The Motley Fool's Top Stock for 2014," and it's yours for the asking. Click here to get your free copy now.

Capital One's home visits policy causes backlash

Capital One is revisiting a policy that allows bank workers to make personal visits to customers and identify themselves in any manner they choose, after consumer advocates and others recently lambasted the tactics.

A spokesperson for Capital One said the terms have been in contracts for years and that the bank does not visit cardholders' homes unless it is repossessing a vehicle.

But, under the current agreement, bank representatives have the right to come to customers' homes and places of employment. Backlash from news of the contracts' language will likely make other card companies stay away from such agreements, according to several credit card experts.

"It is a bit over the top," said Bill Hardekopf, CEO of LowCards.com, which provides information on various credit cards. "They can try to get the money back but they can't come to my door and take my stereo away."

Hardekopf, calling the contract's wording "creepy," said he hasn't heard of such agreements and doubts that other companies will follow Capital One's lead.

Pam Girardo, a spokeswoman for Capital One, said the language has been in contracts for years.

"The agreement was recently sent to a group of customers as part of the ongoing HSBC integration," she said in an e-mail. "We are reviewing the language because we do not want to create any unnecessary insecurity among our customers and we apologize for the confusion."

The company only sends debt collectors to homes and workplaces in connection with partnerships it has with several sports vehicle manufacturers, Girardo said. As a last resort, jet skis, snowmobiles and other vehicles might be repossessed, she said.

Girardo added the company wants its name displayed on caller ID but that "some local phone exchanges may display our number differently."

Eric Adamowsky, co-founder of CreditCardInsider.com, a consumer resource site, can understand where the company might be coming from. He doesn't agree with Capital One's methods but said that con! sumers have been getting aggressive about not paying their bills.

"Banks are basically answering the consumer's ability to dodge them," Adamowsky said. "It's a dangerous cat and mouse situation."

Some experts criticized the contracts and said Capital One should change its practices.

Norma Garcia is a senior attorney and manager of the financial-services program of Consumers Union, the policy and advocacy arm of ConsumerReports. She said the Consumer Financial Protection Bureau, an independent federal agency, should look into Capital One's "trickery."

"It's important that consumers understand the terms and conditions of their credit cards," Garcia said. "This is one that would raise the red flag for me."

Reading the fine print of credit card agreements can lead many to finding problematic language, said Joe Ridout, a spokesman for Consumer Action, a nonprofit that works on consumer literacy and rights issues.

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"Often you will find you forfeited some legal and constitutional rights," he said, explaining that you might have given up the right to a jury trial or that the bank might be able to raise fees even if you pay on time.

However, Ridout and several others were surprised to learn of Capital One's details.

"It is very troubling to think that your bank is thinking of ways to circumvent your call screening methods in order to talk to you when you don't want to talk to them," he said.

The bank's policies don't make sense to Paul Gentile, president and CEO of New England Credit Union Services Corporation, a trade association that represents 200 credit unions.

"Based on my experience, I would assume they are doing this to save on administration costs," he said. "We have a very different policy. We are looking for ways to see how people want to interact with credit unions."

Japan stocks move lower after weak economic data

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LOS ANGELES (MarketWatch) -- Japanese stocks slipped early Monday, with the Nikkei Stock Average (JP:NIK) down 0.1% at 14,298.17, and the Topix dropping 0.4%. Singapore-traded lead futures for the Nikkei Average had suggested a 0.8% gain for the index, but the indicator fell after the Cabinet Office reported fourth-quarter economic growth of 0.3%, flat from the previous quarter and below expectations in separate Reuters and Wall Street Journal/Nikkei surveys. The disappointing economic data also pushed the yen higher, weighing on some exporters, with Panasonic Corp. (JP:6752) (PCRFF) down 1.8%, NEC Corp. (JP:6701) (NIPNF) off 1.3%, and Sony Corp. (JP:6758) (SNE) down 0.7% after S&P downgraded the firm's credit rating to BBB- from BBB with a negative outlook. Shares of Internet retailer Rakuten Inc. (JP:4755) (RKUNF) dropped 12% after announcing plans to buy online messaging and telecom firm Viber Media Inc. for $900 million as well as posting below-consensus full-year profit. Banks were broadly lower, with Mizuho Financial Group Inc. (JP:8411) (MFG) off 1% and Sumitomo Mitsui Financial Group Inc. (JP:8316) (SMFG) off 1.1%, though Daiwa Securities Group Inc. (JP:8601) (DSECF) added 0.6% after Friday gains on Wall Street. Also on the rise, Suntory Beverage & Food Ltd. (JP:2587) added 2.5% after posting forecast-beating earnings.

Generic Gains for Lannett

Over the years I have recommended a number of generic companies; companies that can make products cheaper and save people money are catnip for me, jests Tom Bishop, small-cap expert and editor of BI Research.

Did you know that 83% of prescriptions filled in the US are filled with generics, which are often priced at 80% to 85% of the branded product.

As of June 2013, $86 billion of brand drugs were scheduled to come off patent through 2017. This is where Lannett (LCI) rolls. The firm has 43 marketed products, 15 ANDA's awaiting FDA approval and 58 more in development.

Its biggest category is Thyroid Deficiency, accounting for 38% of fiscal year ending June, 2013 sales. Here its big product is Levothyroxine, based on the second most prescribed molecule in the US.

Cardio-vascular drugs grew 43% last year and accounted for 17% of sales. In this market, Digoxin, for congestive heart failure, was the biggest product.

Pain management is a key growth focus for the future; the company is one of only seven US companies with a DEA license to import controlled substances for use in pharmaceuticals (such as Oxycontin and Vicodin). This is a $15 billion market with a generic portion of $3.5 billion.

Yet another source of future growth could come from acquisitions of generic products or companies. Having completed a secondary of 4.3 million new shares in October, the company currently has about $120 million to fund its growth strategies and go shopping.

For the second quarter, Lannett kicked analysts' estimates to the curb, reporting $0.46, versus expectations of $0.38, for a pleasant upside surprise of 21%. This is multiples above last year's $0.10. Revenues soared 84% to $67.3 million, also way ahead of estimates.

IBD gives Lannett its highest composite rating of 99. Our proprietary BI Rank is a strong buy.

Subscribe to BI Research here…

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Edmunds: Lessons from Booker T. Washington

February is Black History Month and there are many from the past that had the entrepreneurial spirit and have left a light on the path for us. However when it comes to entrepreneurship my all-time favorite person from the past is Booker T. Washington, founder of both The Tuskegee Institute, now know as Tuskegee University and The National Negro Business League, known today as The National Business League.

He had an interesting perspective on personal success. "I have learned that success is to be measured not so much by the position that one has reached in life," he said, "as by the obstacles which he has had to overcome while trying to succeed."

I have quoted Washington's statement many times to people who read and hear entrepreneurial success stories and think that there is something wrong because their businesses didn't make millions of dollars immediately. These folks don't realize that the road to success is paved with many obstacles and stumbling blocks along the path.

Perhaps they haven't read that Washington was born into slavery and as a child was beaten often by slave masters because he wasn't working fast enough or hard enough carrying large sacks of grain to the plantation's mill. Or, after leaving home to go to school in order to get the education that he longed for he had to walk 500 miles to reach Hampton Normal Agricultural Institute in Virginia. Along the way he had to do odd jobs to support himself. I can only imagine what that must have been like.

When talking about Booker T. Washington, we often place the emphasis on the final result; his success. And yet the obstacles he went through were many. Just like those of us in business must face obstacles almost daily as we head toward the goal line marked success.

First, we have to start where we are with what we have. Washington had an interesting take on entrepreneurship. He realized that slavery had taught American blacks many profitable skills and trades. Things like carpentry, cooking, farming, tai! loring and shoemaking were seeds for businesses that could be started at home and with little or no capital. And to utilize those skills to start even the smallest business was both honorable and the right thing to do for the advancement of the race. This message is not only for African Americans but also for all who want self-sufficiency and independence as entrepreneurs.

I am often amazed at the number of people who seek my advice about starting a business in a field in which they have no experience and no knowledge. Rather than honor the trade and skills that they have, they want to reach into areas that they know nothing about.

I am reminded of "Lee," a young woman who frequently asked me about starting an event planning company. We talked long enough for me to learn that she had no experience in planning events. She got the idea from attending a wedding and merely watching the event planner working the party. I have no idea exactly what she saw considering that a good event planner is usually invisible on the day of the event even if the planner is there working it should not be obvious.

Lee would visit often and she dressed to the nines. As time went on I learned that she designed and made all of the clothing she wore including coats and jackets. And yet she didn't recognize the value of her incredible skill. And didn't consider making clothes a true business.

Lee's idea of a "real" business required an elaborate business plan, large capital investment, a commercial space and employees galore.

What she didn't realize was that some of the greatest businesses are started with scarce resources, at home and with existing skills. Some of these beginning entrepreneurs have even endured ridicule from onlookers along with many other obstacles. And yet, in spite of it they built dynamic businesses.

For example, consider the humble entrepreneurial beginning of John H. Johnson. In 1942 he borrowed $500 against his mother's furniture to start the Johnson Publishing! Company.! Along with the borrowed money he had an idea, skills and an inner drive to build a business. I'm sure he had people round him questioning if a "real" business would result from his efforts.

He built a publishing empire that publishes Ebony and Jet magazines and is one of the most prosperous black publishing company in America. In 1982 Johnson was the first black American to make it to the Forbes' 400 wealthiest Americans list.

Was the entrepreneurial flame in Johnson and others like him a result of the words and philosophy of Booker T. Washington? I can't say what fueled the entrepreneurial flame in Mr. Johnson, but I'm glad the fire was lit, and continues to burn.

As we move through this Black History Month, it is fitting to recognize people like Booker T. Washington who made folks realize that you don't need a fat bank account or a huge commercial space to start a business. His message is a timeless one: That the road to success is not an easy one. However, the smallest, most humble entrepreneurial endeavor is honorable and a great contribution to the progress of the human race.

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Gladys Edmunds, founder of Edmunds Travel Consultants in Pittsburgh, is an author and coach/consultant in business development. Her column appears Wednesdays. E-mail her at gladys@gladysedmunds.com. An archive of her columns is here. Her website is gladysedmunds.com.

Best Valued Stocks For 2015

Shares of Vertex Pharmaceuticals (VRTX) are in free-fall today following yesterday’s earnings-related plunge.

This time its a downgrade that’s driving Vertex’s stock lower as Bernstein analyst Geoffrey Porges and team cut its shares to Marketperform from Outperform. They explain why:

Our downgrade is based on the stock’s strong performance over the last nine months (+65%), the high value now accorded to the future expansion in their cystic fibrosis treatment revenue, our caution about the risks associated with the company’s ongoing phase III trials of Vx809 and Kalydeco, and the decreasing probability of any meaningful revenue from their remaining HCV asset, Vx135. While critics will suggest that our downgrade is a timing and valuation one, it seems unreasonable for us to encourage investors to ride out the stock’s volatility, and uncertainty, for programs and results that we expect to only show their full potential in 2015 or 2016, rather than 2014. We believe the stock is fairly valued in the mid $70′s, given the current stage and uncertainty about Vx809. We expect the stock to offer more upside after the company formally transitions their attention from Vx809 to its successor Vx661, and to the three drug combinations containing an additional corrector compound for the large number of patients with the commonest form of the disease. The recently announced restructuring was largely inevitable and probably falls short of many investors’ hoped-for cuts in expenses.

Best Valued Stocks For 2015: Schlumberger N.V.(SLB)

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

Advisors' Opinion:

• [By Matt DiLallo]

  Along with announcing earnings, both Halliburton (NYSE: HAL  ) and Schlumberger (NYSE: SLB  ) announced multi-billion-dollar stock buybacks. With so much money on the line, investors have to ask if this is the right move for these two oil-field service giants. Are these stocks cheap enough to warrant the buybacks or should these companies consider other options for those funds?

• [By Dan Caplinger]

  Halliburton's share-price gains began early in the quarter after the company reported its first-quarter results. Although the company took a massive $637 million charge related to the 2010 Gulf disaster, Halliburton managed to hold its own on the domestic front in a weak environment. Internationally, the company cleaned up, with sales rising 21% and at more than twice that rate in the Eastern Hemisphere. But, perhaps most importantly, Halliburton looked favorably on the near-future for domestic drilling, noting gains in margins, and some pricing power expected to enhance profitability from rising well production. That's consistent with the results we saw from Schlumberger (NYSE: SLB  ) this morning, as the industry leader beat earnings expectations with a nearly 50% jump in its net profits, coming largely from overseas activity, but also posting a 2% revenue increase in North America.

• [By David Smith]

  A promising partnership
  Total outlays for subsea facilities were slightly more than $25 billion in 2011. That number is expected to rocket to about $130 billion by 2020. Among several companies that will benefit from this nearly five-fold growth are Schlumberger (NYSE: SLB  ) and Cameron International (NYSE: CAM  ) .

Best Valued Stocks For 2015: Tupperware Corporation(TUP)

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

Advisors' Opinion:

• [By Arie Goren]

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

Hot Undervalued Companies To Invest In Right Now: Caterpillar Inc.(CAT)

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

Advisors' Opinion:

• [By Stephen Rosenman]

  Can you really take a company's yearly guidance seriously? Who can predict future events a year from now? It's so hard most companies skip the ordeal. Who can blame them? So many unforeseen events can derail a company's guidance. Yet, a few daredevil companies continue giving their yearly outlook. As far as I'm concerned, that's akin to writing the front page of next year's Wall Street Journal. I've already highlighted how Caterpillar (CAT) and Parker Hannifin (PH) - two excellent companies - almost never get their yearly guidance right.

Best Valued Stocks For 2015: Dollar Tree Inc.(DLTR)

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

Advisors' Opinion:

• [By Mani]

  Dollar Tree, Inc. (NASDAQ:DLTR) is one of the companies that are set to exploit the ongoing trend of consumers' increasing focus on value with significant opportunity to grow its store base, and expand margins.

What Not to Buy for Valentine's Day

If you haven't already bought Valentine's Day gifts for your loved ones, take note: There are several items you should avoid buying if you value getting a good deal. Granted, it's difficult letting price dictate Valentine's Day purchases if your sweetie is expecting something particular. But you can get these four things for much less when retailers dramatically slash prices on them after February 14.

SEE ALSO: Best Buys of Winter

Chocolate. You can find affordable boxes of chocolate. But if your significant other won't settle for anything less than the best, you'll be better off surprising him or her with a special treat in March. Those boxes of chocolates that didn't get snapped up for Valentine's Day will be marked down by as much as 50% in March, according to dealnews.com, and you'll find the best deals at high-end chocolate shops. Dealnews.com recommends looking at stores such as Godiva and the gift section of department stores for decadent ways to treat your loved one on a budget.

Jewelry. You might see a few retailers offering modest discounts on jewelry before Valentine's Day. But if you wait a week or two after February 14, you'll see jewelry at many stores marked down as much as 80%, says Offers.com savings expert Amber Sager.

Perfume. Perfume sales tend to peak around Valentine's Day (and Christmas). So retailers tend to discount perfume heavily after these holidays have passed. Luke Knowles, creator of FreeShipping.org, says consumers can expect prices to be slashed by as much as 50% in March, with the best sales at Web sites dedicated to perfume.

Roses. Prices for red roses are notoriously high on Valentine's Day. The markup can be attributed to demand. More labor is needed to harvest such a massive number or roses and more cargo space is needed to ship them, according to Bankrate.com. And those extra costs are passed on to the consumer. 1800Flowers.com, for example, is charging $50 for a dozen roses. It'll cost you another $10 for a basic vase, $15 for delivery plus a $5 surcharge to guarantee delivery on Valentine's Day. Throw in tax and you're looking at paying about $7 per rose.

How to Get Deals on Valentine's Gifts

Okay, so we've just told you not to buy the most popular Valentine's gifts because you'll pay a premium for them. What now? There are ways to avoid paying the full retail price for some of these items, or you could consider alternatives that actually are on sale now.

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Look for coupons. You may be able to find department store coupons that can be used storewide, so they may help you get a discount on chocolate, jewelry and perfume. For jewelry, in particular, dealnews.com recommends looking for coupons for lower-cost jewelry sites such as Ice.com, Limoges Jewelry, Netaya and Ross-Simons. And several of the major online florists, such as 1800Flowers.com and ProFlowers.com, have promotional codes for 20% off or more. You can find coupon codes at sites such as Offers.com and RetailMeNot.com.

Shop around. Rather than just heading to the mall in hopes of finding a decent price on jewelry or perfume, compare prices online at PriceGrabber.com or several stores' sites to find the lowest price on the specific item you want to buy. For flowers, you might find that local florists offer lower prices than online florists -- even those with coupons -- so compare prices before placing an order. This is especially true if you pick up the flowers from a local florist rather than paying extra for delivery. (See How to Get the Best Price on Valentine's Roses.)

Give a gift card. Unless you know what type of perfume your sweetie wears or the specific piece of jewelry she wants, you'll probably be better off giving her a gift card so she can get exactly what she wants ... when the price is much lower after Valentine's Day. And to get even more bang for your buck you can find discounted gift cards at sites such as Gift Card Granny.

Consider alternatives. Rather than spring for pricey red roses, opt for an orchid or other potted flower that will cost less and last longer. Although not as romantic as jewelry or perfume, a nice winter coat for evenings on the town could make a great gift -- especially considering that you'll get a great deal on one now. Retailers are marking down outerwear and cold-weather clothing an extra 30% to 60% on top of clearance prices that already are 70% off original prices, according to dealnews.com. You'll also find great deals on televisions for cozy nights at home watching your favorite movies. See 6 Great TVs at Great Prices and Best and Worst Buys of February for more things you can get for a good price this month.

Is Hewlett-Packard a Solid Investment?

With shares of Hewlett-Packard (NYSE:HPQ) trading around $28, is HPQ an OUTPERFORM, WAIT AND SEE, or STAY AWAY? Let's analyze the stock with the relevant sections of our CHEAT SHEET investing framework:

T = Trends for a Stock’s Movement

Hewlett-Packard provides products, technologies, software, solutions, and services to individual consumers, small and medium businesses, and large enterprises worldwide. The company offers commercial notebooks and desktops, consumer notebooks, desktops, software, and services for the commercial and consumer markets. The services segment provides consulting, outsourcing, and technology services to infrastructure, applications, and business process domains. The diverse technological products and services offered by Hewlett-Packard make it a leading provider that sees increased demand through global expansion.

Hewlett-Packard has released documentation proving that the British software company Autonomy, which HP acquired for $11 billion back in 2011, committed fraud in advance of the acquisition, according to a report from the Wall Street Journal. HP has accused Autonomy of overstating its revenue and other financial information, but this documentation is the first proof HP has shown to back up its claims. According to a filing with a UK regulator seen by the Journal, an internal audit of Autonomy's financials performed by HP found that the company's revenue for 2010 was overstated by 54 percent. Operating profit was overstated by 81 percent. Autonomy was found to have recorded revenue for deals that were never paid for and claimed false transactions for customers that do not exist. The audit found similar overstatements in Autonomy's financials for 2011.

T = Technicals on the Stock Chart Are Strong

Hewlett-Packard stock has performed well over the past couple of months. However, the stock is currently trading sideways and may need time to consolidate before heading higher. Analyzing the price trend and its strength can be done using key simple moving averages. What are the key moving averages? The 50-day (pink), 100-day (blue), and 200-day (yellow) simple moving averages. As seen in the daily price chart below, Hewlett-Packard is trading above its rising key averages which signal neutral to bullish price action in the near-term.

(Source: Thinkorswim)

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

	Implied Volatility (IV)	30-Day IV Percentile	90-Day IV Percentile
Hewlett-Packard options	44.04%	90%	88%

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

	Put IV Skew	Call IV Skew
March Options	Flat	Average
April Options	10 Best Media Stocks To Own Right Now Flat	Average

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

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

E = Earnings Are Decreasing Quarter-Over-Quarter

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

	2013 Q3	2013 Q2	2013 Q1	2012 Q4
Earnings Growth (Y-O-Y)	-120.93%	-14.00%	-31.45%	-13.70%
Revenue Growth (Y-O-Y)	-2.77%	-8.23%	-10.14%	-5.58%
Earnings Reaction	9.04%	-12.45%	17.09%	12.28%

Hewlett-Packard has seen decreasing earnings and revenue figures over the last four quarters. From these numbers, the markets have had conflicting feelings about Hewlett-Packard’s recent earnings announcements.

P = Excellent Relative Performance Versus Peers and Sector

How has Hewlett-Packard stock done relative to its peers, Microsoft (NASDAQ:MSFT), IBM (NASDAQ:IBM), Apple (NASDAQ:AAPL), and sector?

	Hewlett-Packard	Microsoft	IBM	Apple	Sector
Year-to-Date Return	0.21%	-3.98%	-6.94%	-8.35%	-3.76%

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

Conclusion

Hewlett-Packard is a software and technology bellwether that provides essential products and services to consumers and companies worldwide. The company has released documentation proving that the British software company Autonomy, committed fraud in advance of the acquisition, according to a report from the Wall Street Journal. The stock has been moving higher in recent months, but is currently trading sideways. Over the last four quarters, earnings and revenues have been declining, which has produced conflicting feelings among investors. Relative to its peers and sector, Hewlett-Packard has been a year-to-date performance leader. Look for Hewlett-Packard to continue OUTPERFORM.

Brace yourself for a big heating bill

Snow blows! High heating costs are another headache this winter.

NEW YORK (CNNMoney) Millions of Americans could be in for a surprise when they get their next heating bill.

Some of the nation's largest utilities say energy bills will be significantly higher in February following a string of big snow storms that blanketed the Northeast and Midwest last month.

Con Edison (ED, Fortune 500), which supplies gas and electricity to 3 million people living in New York City and surrounding areas, expects February heating bills for the typical household to increase more than 16% from last year.

And it's not just heating bills that are going up.

Con Ed said the recent price surge in natural gas, which is used to generate power, will lead to a 22% spike in electricity bills this month.

In Michigan, DTE Energy (DTE, Fortune 500) said gas bills will be up 13% for the November through January period for its roughly 1.2 million natural gas customers. Nicor Gas in Illinois said its customers should expect to see a 30% rise in their heating bills.

The jump in heating bills is entirely due to increased demand, according to the utilities. The companies say their rates haven't changed, but customers have been running their heaters more than usual because of the brutal weather.

Last month, extreme cold, strong winds and snow pummeled communities from New York to Massachusetts to Maine. Chicago was hit with 33.7 inches of snow in January, making it the "third-snowiest" on record for the Windy City, said CNN meteorologist Dave Hennen.

Demand for natural gas hit an all-time high during the first week of January, when a Polar Vortex brought record low temperatures to a large swath of the United States, according to according to research from Bentek Energy.

While prices for natural gas have surged to record highs in the wholesale market, most utilities buy their winter supply when prices are lower during the summer, said Katie Teller, an analyst at the Department of Energy.

What's more, natural gas prices are subject to a variety of state and federal regulations.

"Con Edison does not control the price of natural gas or electricity and makes no profit on either commodity," the company said.

Still, it's shaping up to be one of the coldest winters in recent memory and demand for heat! is unlikely to fall any time soon.

With a pair of storms already this week, forecasters are looking ahead to a third round of nasty winter weather for the weekend.

4 Stocks to Buy on a Crash Sale

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From the breathless reporting in the financial media, you'd think the world was coming to an end just because the market has actually been correcting this month.

In truth, I can't find any consensus among the economists, hedge fund managers, wealth managers and CEOs that I regularly speak with regarding the market. You'd think that if the Fed starts to taper, that would mean rates would rise and folks would rush out of stocks and back into bonds to find yields.

Maybe. Or maybe not.

That's why I advise having a long-term diversified portfolio, with portions set aside for options, swing trades and stocks to buy in case of a crash. I have my own shopping list for such stocks to buy, and I've written about them over the past two years, demurring on purchases because they are overvalued.

In a market crash, however, you might get a chance to buy in. Here's what I'd want to grab if it went on sale.

Stocks to Buy After a Crash: Whole Foods Market (WFM)

Whole Foods Market (WFM) would be one of these stocks to buy.

The verdict is in, and organic wins. Organic foods have infiltrated even the smallest markets at this point. "Organic" is, to my mind, the greatest marketing scheme since De Beers' "Diamonds Are Forever.” In my experience, organic foods do generally taste better, but no company has leveraged this single word better than Whole Foods.

Whole Foods also runs an outstanding business, has a fantastic company culture and knows how to ream consumers via outrageously expensive organic products better than any other business.

WFM stock trades around $52, with just under $3 per share in cash. At estimates of $1.68 in earnings per share for FY14 and projections for 17% in long-term growth, and perhaps a 20% premium for its cash flow, I would assign it a fair value around $34. If WFM stock is unfortunate enough to fall that low, I’d absolutely buy around there.

Stocks to Buy After a Crash: MSC Industrial Direct (MSM)

MSC Industrial Direct (MSM) is a very boring company, which in an of itself is a good reason it belongs in a list of stocks to buy.

MSM is a marketer and distributor of a broad range of metalworking and maintenance, repair, and operations products. You should always pay attention to distribution operations. It's something I learned while in the movie business. The manufacturers might make money, but they are nothing without distribution. If you have a wide distribution platform, you can make tons of money, and that's why the movie studios distribute their own films.

Plus, MSC distributes really important little objects that make a lot of machines run. Again, not a sexy business, but a good one to be in.

As far as MSM stock is concerned, 13% long-term growth for me translates into a 13 P/E on FY14 earnings of $4.  Fair value is $52, and MSM trades at $84.

Stocks to Buy After a Crash: Exxon Mobil (XOM)

Exxon Mobil (XOM) is what I call a "forever hold" stock. As I've written before, the world will always need oil, and XOM is the world-class operation in this sector. (Of course, it doesn’t hurt that it’s also deeply entrenched in natural gas, now, too.)

Exxon’s earnings can vary for many reasons, so I’ve always valued XOM stock on an EV/EBITDA ratio. It presently sits at 6.89. My historical buy-in for XOM stock has always been an EV-EBITDA ratio of 5.5, give or take a bit. Enterprise value is roughly equivalent to market cap with XOM, so that means we want to see about a 20% decline in market cap, which means a 20% decline in price.

Grab XOM stock in the mid-$80s.

Stocks to Buy After a Crash: Amazon (AMZN)

Amazon (AMZN) has emerged — despite my skepticism 10 years ago — as the single online shopping source for everything. Yes, everything. Yes, like bacon shaped band-aids. Canned unicorn meat, anyone?

Jokes aside, the zombie apocalypse can occur and I believe you'll still be able to get anything you want from Amazon — and get it 15%-35% cheaper than anywhere else. Seriously, I never go to stores anymore.  Ever. There's no reason to.

Amazon's earnings will always be erratic and expectations will always be all over the place (as we saw last night), but the company is a star, as is AMZN stock. Amazon stock actually suffered a pretty substantial blow today, so it’s certainly priced better now than it was yesterday. However, it’s still difficult to say what fair value is, so that's when I look at the technicals.

The 200-day moving average is at about $320, and that’s where I would buy.

As of this writing, Lawrence Meyers was long AMZN. He is president of PDL Broker, Inc., which brokers financing, strategic investments and distressed asset purchases between private equity firms and businesses. He also has written two books and blogs about public policy, journalistic integrity, popular culture, and world affairs. Contact him at pdlcapital66@gmail.com and follow his tweets @ichabodscranium.