NY Times in Neutral Lane - Analyst Blog

We reaffirm our long-term Neutral recommendation on The New York Times Company (NYT). Tough economic conditions along with softness in advertising demand have been weighing upon the company's performance. Consequently, the company is trying every means to shield itself from the impact of an unstable market and has been contemplating new revenue generating avenues. Currently, The New York Times Company carries a Zacks Rank #3 (Hold) status.

Why the Reiteration?

Advertising, which remains a significant source of revenue, is largely dependent upon the global financial health. We observe that The New York Times Company's total advertising revenue slid 11.2% in the first quarter of 2013. Print advertising dipped 13.3% during the quarter. Other publishing companies such as Journal Communications, Inc. (JRN), The E.W. Scripps Company (SSP) and Gannett Co. Inc. (GCI) are also encountering similar headwinds.

Advertisers are shying away from making any upfront commitments in an economy that is showing an uneven recovery.

The New York Times Company has been adding diverse revenue streams, which include a circulation pricing model and a pay-and-read model to make it less susceptible to the economic conditions. The company is also adapting to the changing face of the multiplatform media universe, which currently includes mobile, social media networks and reader application products in its portfolio.

Despite hiccups in the economy, what still guarantees revenue generation is The New York Times Company's pricing system for NYTimes.com, which was launched on Mar 28, 2011. The company also recently announced that mobile app users will now be able to access a maximum of three articles per day from over 25 sections, blogs and slideshows, before being asked to subscribe.

The publishing industry has long been grappling with sinking advertising revenue. This comes in the wake of a longer-term secular decline as more readers cho! ose free online news, thereby making the print-advertising model increasingly irrelevant. To curb shrinking advertising revenue and seek new revenue avenues, the publishing companies contemplated charging readers for online content.

In an effort to offset the declining revenue and shrinking market share, publishers are scrambling to slash costs. The New York Times Company has been realigning its cost structure and streamlining its operations to increase efficiencies, and in turn the operating performance. The company is also offloading assets that bear no direct relation to its core operations.

The New York Times Company completed the sale of Regional Media Group in Jan 2012 to re-focus on its core newspapers and pay more attention to its online activities. The company divested its remaining stake (210 Class B units) in the Fenway Sports Group in May 2012. The company, in Sep 2012, completed the sale of About Group and sold its stake in Indeed.com in Oct 2012. The company also intends to sell its New England Media Group, including The Boston Globe and its allied properties.

Cigna Forms Another ACO - Analyst Blog

U.S. health insurer CIGNA Corp. (CI) has formed a Collaborative Accountable Care initiative with Arizona Community Physicians and Arizona Connected Care.

This step is in sync with Cigna's goal to improve the quality of care and service provided to the customers along with lowering healthcare costs and improving overall value.

Cigna's Collaborative Accountable Care initiative is similar to an Accountable Care Organization (ACO). An ACO is a group effort by health care providers, who voluntarily form alliances to provide coordinated high quality care to patients.

An ACO is accountable for the quality, cost and overall care offered to members. By focusing on the needs of patients and connecting payments to the service offered, this model intends to improve the health of individuals and communities as well as curtail the rising healthcare costs.

Cigna's new ACO initiative will be the first one in the Tuscon city area and has become operational from Jul 1. This program will serve more than 12,000 individuals covered by the Cigna health plan. These customers already receive services from 119 doctors affiliated to Arizona Community Physicians or 217 health care professionals who are a part of Arizona Connected Care.

Through this program doctors will monitor and coordinate all the aspects of a patient's care. The enrollees in the program will also have the benefit of receiving services of registered nurses. They will coordinate patient care, educate patients about various health conditions, and counsel them on proper health care.

The ACO will also designate care coordinators who will stay close to the patients and monitor the services being offered. They will follow up with the patient throughout, by reminding them of screenings required or medical help so that their chronic condition does not worsen further.

The physicians will ! receive remuneration based on their performance in reducing patients' health care cost while providing them best service.

Initiatives like ACO or CAC are being deployed to improve the health of the Americans as well as to offer high quality health care to patients.

At present, Cigna is engaged in 66 Collaborative Accountable Care initiatives in 26 states. These programs provide services to more than 700,000 Cigna customers. The company initiated its first CAC program back in 2008. It aims to serve about 1 million customers via 100 CAC initiatives by 2014.

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Companies like UnitedHealth Group Inc. (UNH) and Aetna Inc. (AET) are also assertive about ACO initiatives. Going forward, we expect acceleration in the formation of such patient-centered collaborations.

Cigna currently retains a Zacks Rank # 1 (Strong Buy). Another stock, Assured Guaranty Ltd. (AGO) carrying a Zacks Rank #1 (Strong Buy) is worth considering.

Can Delta Avoid Turbulence in 2013?

Less than ten years ago, four of the seven major airlines in the U.S. filed for Chapter 11 bankruptcy protection. The airline industry has proved an erratic environment for investors ever since; however, with Delta Air Lines Inc. (NYSE:DAL) up almost 130 percent since September, is it time to take a serious look at airline stocks again? Let's use our Cheat Sheet investing framework to decide whether Delta is an OUTPERFORM, WAIT AND SEE, or STAY AWAY.

C = Catalysts for the Stock's Movement

A major reason for the success of Delta and its peers over the past several years is the re-consolidation of the airline business. Four significant mergers since 2008 are helping return stability to the industry. Capacity has decreased and airlines have gotten some pricing power back. One such merger was Delta and Virgin Atlantic.

Delta acquired a 49 percent stake in Richard Branson's airline from Singapore Airlines last December. This merger will give Delta increased market share at London’s Heathrow Airport, one of the world’s busiest airports.

E = Earnings Growth is Mixed

Delta's year-over-year earnings growth pattern is extremely erratic. While Delta generated a 1.03 percent revenue increase and free cash flow of $457 million during the first quarter this year, earnings per share fell nearly 100 percent from the first quarter in 2012. The decline was mostly due to increased salary expenses and investment in operations; as a result, operating margins fell by 60 basis points. Revenue growth at the airline paints a much prettier picture and is steadily increasing each quarter. This attractive pattern in revenue growth can be attributed to increased yields from domestic flights, but the sporadic earnings growth is a huge red flag, especially for risk-averse investors.

	2013 Q1	2012 Q4	2012 Q3	2012 Q2	2012 Q1
EPS YoY Growth	-93.33%	-98.60%	89.23%	N/A	N/A
Revenue YoY Growth	1.03%	2.42%	1.09%	6.33%	8.60%

S = Support Is Provided by Institutional Investors but Not Company Insiders 

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Delta has been getting a lot of love from “smart money” as of late. Sixty-eight hedge funds currently hold Delta in their portfolio — up 10 percent from the previous quarter. Lansdowne Partners, managed by Paul Ruddock and Steve Heinz, has $576.9 million invested in Delta. Wayzata Investment Partners owns the second highest amount of Delta, with a long position of $565.4 million. Unfortunately, insiders have not been as enthusiastic about the stock — execs have sold around a quarter of a million shares in the past two months.

T = Technicals Are Strong

Delta closed at a price of $19.36 on Monday, above both its 200-day moving average of $15.70 and its 50-day moving average of $18.38. The airline is experiencing a strong uptrend since December. The stock has been on a tear since September – up almost 130 percent since it posted its 52-week low of $8.42 on September 4. The stock posted a fresh 52-week high on Monday of $19.73.

Conclusion

Delta impressed analysts with its first-quarter earnings figures, and the airline industry appears to be operating with some semblance of stability recently. Delta, however, has been unable to show that it can generate steady earnings per share growth due to the high variability of its operating expenses. The erratic increases in operating expenses are partially a result of the volatile industry and partially a result of Delta's management team. For example, Delta recently acquired a refinery in Trainer, Pennsylvania, last May. The refinery is supposed to save $300 million in fuel costs but has posted losses in two straight quarters. Despite some poor managerial decisions, the outlook of the airline industry looks better compared to the last few years. Investors should WAIT AND SEE if Delta can post steady earnings numbers and profit margins in the next quarter before deciding to initiate a long position.

Thinking About Education Costs in Your 50s or Older

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Getty Images Dealing with the costs of education isn't just a task for the young anymore. Even for those 50 or older, student-loan debt has become a key concern, with the latest figures from the Federal Reserve Bank of New York showing that those ages 50 to 59 had $112 billion in outstanding student loans -- almost 12 percent of all student debt -- while those 60 and older had $43 billion in student loans. Moreover, default rates among those 50 or older have jumped sharply in the past eight years, with 60-plus borrowers seeing default rates double from 6 percent in early 2005 to 12.5 percent at the end of 2012. Older Americans face unique financial challenges that can make repaying educational debt more difficult. Yet as college costs rise, many people older than age 50 want to try to help their children and grandchildren with educational expenses to avoid seeing future generations burdened with heavy debt. Let's examine to some ways older Americans can achieve both of those goals. 1. Recognize the Danger of Debt. The student-loan burdens that those 50 or older face are often much more difficult than those for their younger counterparts. With much of the debt they take on representing parental loans or cosigned loans for children and grandchildren, they often lack the flexibility in repayment terms that younger borrowers enjoy. Most private loans and parental loans don't offer income-based repayment options or other ways of reducing monthly payments, yet bankruptcy and other options of last resort won't get rid of them. Last year, reported that 119,000 retired Americans were having part of their Social Security benefits garnished to repay student loans. Make sure you understand the terms that govern tyour deb. Know your repayment options and prioritize the most burdensome loans first before turning to loans with more favorable rates and terms. That will give you the best chance to get your debt under control while you're still in a position to deal with it. 2. Don't Sacrifice Your Own Financial Future. When you hit your 50s, you're really reaching crunch time in terms of providing for your retirement. As your earnings peak, you'll never have a better time to put large amounts of savings toward that nest egg.

Plan Sponsors Look to Change Up Investment Menu

Plan sponsors are re-evaluating their investment lineups over the next 12 months, according to the DC Investment Manager Brandscape report by Cogent Research.

Cogent presented findings from the report Tuesday in a webinar. The survey was conducted online in March and April among 600 401(k) plan sponsors.

Among the “intriguing” findings, according to Linda York, vice president of the syndicated division at Cogent and lead author of the report, is the change expected for next year. “We found that plan sponsors anticipate considerable activity in terms of DC investment changes in the coming year,” she said. More than half said they were making changes in the next 12 months, “a substantial increase compared to just one year ago.”

Furthermore, 10% of plan sponsors said re-evaluating their investment menu was their top priority for the next 12 months, and more than a third said it was in their top three priorities. “Notably, 45% also cited concerns over reducing plan costs as a key priority,” York said.

“With all this attention being paid to plan investments and increased activity anticipated in terms of changes, it’s really critical for asset managers to match the right product and investment objective to each segment’s needs,” York said.

From a product perspective, “mutual funds are clearly the product of choice among DC plan sponsors, and most of the anticipated activity will occur in this product category.” Thirteen percent of sponsors said they would add traditional mutual funds to their lineup over the next 12 months, and 9% said they would add indexed mutual funds. “Passive funds actually rival active funds in terms of their future growth potential,” York noted.

Nearly 40% of plan sponsors said helping their plan participants reach their retirement goals was a priority, the report found. “It follows that products design to provide retirement income are on the radar screen for many,” York said. Over a quarter of respondents already offer such products, and 35% are interested in exploring options.

According to the 2012 study, 36% of plan sponsors automatically enroll participants into a default investment, most commonly a target-date fund, York said. “Given the popularity of these options, a competitive target-date fund offering is essential for asset managers who want to garner more DC assets.”

Most sponsors use the proprietary TDF from their provider, but the report found about a quarter are using a custom option. Twenty-nine percent of small firms use a custom TDF and 24% of mega-firms use one.

Regarding asset classes, respondents showed the most interest in emerging markets, with 13% saying they would add or increase those offerings in the next 12 months. Ten percent were looking at increasing cash and cash-equivalent options, and 9% said they were increasing their offerings in active and passive U.S. public equities. “We see the most interest in these passive options among the mega plan sponsors,” York said.

“As competitive pricing information becomes more readily available, plan sponsors appear to be feeling pressure to focus more on plan fees,” York said. Nearly a third said they’re using fee disclosures for benchmarking purposes and a quarter will use them to negotiate lower fees. “The larger the plan, the higher the likelihood of future negotiation either lower fees or lower cost share classes,” York said.

When asked why they would drop a DC manager, the most commonly cited reason was underperformance compared to benchmarks. Sixteen percent cited lack of communication or responsiveness as a reason to drop their DC manager. More than a quarter said they would reduce the number of managers in order to reduce fees and expenses. “Clearly, fee sensitivity has been heightened and will likely play an important part in shaping plan investment design for some time to come,” York noted.

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Check out 401(k) Expenses Dropped in 2012: ICI on AdvisorOne.

Going Feral: A Boomer’s Advice for the ‘New’ Retirement

Resignation letters, especially from teachers, are becoming a genre unto themselves and not infrequently go viral. Perhaps it is because they give voice to some deep sentiments that are true but impolitic to state until after one has tendered one’s resignation.

A new entertainingly written contribution to this burgeoning field of literature, a blog post by Penn State political science professor Philip Schrodt, has particular relevance to financial advisors as a case study in what the new retirement looks like, or could look like, for affluent boomer clients.

Schrodt’s post is not only going viral but is specifically counseling “going feral” — the post’s title — as a life and career move for late middle-age professionals.

Going feral is shorthand for neither retiring nor staying on as a tired, timeserving, tenured salary collector of declining relevance — or as Schrodt puts it in announcing his move to full-time consulting: “I’ve left to pursue other opportunities and get my fat Boomer butt out of the way.”

The lengthy but fun-to-read post essentially argues that boomers, by delaying retirement for longer stretches, are blocking the progress of young people struggling to ignite their careers while failing to use this stage of life to explore other opportunities.

“Why give up a sinecure that pays three or four times the median income and if you just want to do absolute minimum — and plenty of Boomers do — involves maybe 10 hours a week, if that?” Schrodt asks, noting that he is not leaving because of poor health or an inability to perform his job at a high level.

Rather, the reasons to go feral include quitting while you’re ahead. Schrodt points to one colleague who died three weeks after retiring but thinks boomers who stay on thinking retirement will hasten their demise are making a mistake. “Even Pope Benedict decided to retire when he didn’t have the strength to do the job well.”

And he says of his own aging: “The exhaustion following a three-hour class is physically painful; and waking up at 5 a.m. thinking about what needs to done for a class the next day is no longer my idea of fun.”

Integrity is another reason for voluntarily discontinuing a long career: “In order to get tenure at any place worth getting tenure, you’ve got to publish garbage can models, and lots of garbage can models, and that is not going to change any time soon.”

And bureaucracy is another—Schrodt describes Penn State as having “a North Korean governance model without the transparency.” He adds that “in any large institution, most of the rules exist to make someone else’s job easier—or CYA.”

The newly free former professor also cites modern advantages that obviate the need to rely on the established institutions that employ boomers: the computing power in his phone alone makes his university unnecessary and he no longer needs to visit the library adjacent his campus office because he can all the reference material he needs free on the Web.

A key argument Schrodt makes concerns the equity of remaining in a professional position that both keeps him from doing things he might otherwise never do while keeping younger people who need the opportunities he is essentially hogging. For example, an academic journal accepting his paper means that it is not publishing the paper of a younger faculty member who needs the credit. What’s more, he finds that most older tenured professors do not contribute significantly to research—only a few outstanding scholars who are “fabulously productive” and with whom it is hard to compete.

Finally, Schrodt points to the cynicism that occurs “when you find yourself beginning to feel sympathetic with many of the stereotypical negative things people say about academia,” describing the transience and irrelevance of various trendy ideas.

His advice to his fellow place-holding boomers: “It’s a magical world: let’s go exploring.”

SM to Divest Anadarko Assets - Analyst Blog

U.S. independent oil and gas company SM Energy Company (SM) intends to sell all of its assets in the Anadarko basin, including its interests in the Granite Wash play. These assets are believed to hold large oil and natural gas reserves.

The company has hired an advisor to look over the marketing process, which is expected to take about six months.

The Denver-based company's assets in Anadarko Basin – centered in western Oklahoma and the upper Texas panhandle – also extend into Kansas and Colorado and span a total area of 56,000 acres. Currently, these assets yield about 9,000 barrels of oil equivalent per day comprising 75% natural gas. The production accounted for around 8% of the company's total output in the first quarter.

The funds raised from the sale would be utilized to finance strategic projects in its portfolio. The proposed sale is part of SM's regular review of its portfolio to identify opportunities to upgrade and concentrate its inventory through divestitures.

Other companies such as Chesapeake Energy Corporation (CHK) and Laredo Petroleum Holdings Inc. (LPI) have also inked deals to divest their assets in the prospective Granite Wash play earlier this year.

SM Energy's attractive oil and gas investments, balanced and diverse portfolio of proved reserves and development drilling opportunities are likely to create long-term value for shareholders.

In fact, SM Energy is one of the most attractive players in the exploration and production space. The company surpassed first quarter expectation and showed improved net resource potential in the Eagle Ford and Bakken.

SM carries a Zacks Rank #3 (Hold). However, the Zacks Ranked #1 (Strong Buy) W&T Offshore, Inc. (WTI) is expected to outperform in the near term.

Weatherford Burning Through Its Benefits Of The Doubt

Broadly speaking, there are two valid reasons to own Weatherford (NYSE:WFT). First, you believe that the company's position in markets like artificial lift, casing, and tool rental coupled with more disciplined management will lead to solid revenue and profit growth. Second, you believe that the company's process of getting its act together, including resolving tax/reporting issues, a FCPA investigation, and working capital management, will lift the penalty discount on the shares and/or prompt a buyout.

Judging by Weatherford's second quarter earnings, and the market's reaction, it seems like the second notion is in the lead. This wasn't a great quarter for the service sector, but Weatherford's quarter was pretty poor on an operating basis, and there's only just so much grace period that investors will give this management team. While I'm still content to own these shares on the basis of what I think is the underlying value to the business, the company needs to get its act together quickly.

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Weak Operating Results Dominate Q2 Results
This was a decidedly feeble quarter for Weatherford, and there was some competition for that title with the quarters reported by Halliburton (NYSE:HAL) and Baker Hughes (NYSE:BHI). While a lower tax rate helped to Nerf some of the damage, Weatherford was pretty weak on an operating basis relative to both its own prior guidance and Street expectations, and it sounds as though managed walked back from its targets for the second half of the year.

Revenue rose 3% from last year and 1% from the first quarter, good for a slight beat relative to expectations. North American revenue was particularly weak, down 8% and 10%, relative to Halliburton, Schlumberger, and Baker Hughes, as the company has above-average exposure to the weak Canadian market and below-average exposure to the healthier Gulf of Mexico market. International performance (up 12% and 9%) was more encouraging, both relative to analyst expectations and the performance of rivals.

Margins were pretty ugly. Gross margin declined both annually and sequentially (down four points and one point). Operating income rose 7% and fell 10% relative to last year and last quarter and missed the average estimate by about 13%. North American margin was down more than two points, much worse than the performance of the Big Three, while the half-point improvement in international margin was actually better than Baker Hughes.

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Even if you exclude items like severance and legacy contract costs, it was only a weaker tax rate that saved the quarter, and Weatherford missed by about 20% per-share on an adjusted basis.

What Now?
With Weatherford seemingly making something of a habit of operating misses, the notion of the company rebuilding its credibility with the Street could be getting a little strained. Still, it didn't seem like sell-side analysts on the conference call were that aggrieved by it. What's more, with management announcing an additional FCPA reserve of $153 million ($253 million in total) for a long-ago violation of Iraq sanctions, and that reserve being about $100 million to $150 million below some estimates, it seems like analysts are still willing to look past current difficulties and toward a better future.

Operationally, there is an expiration date on the bullish case for Weatherford, but I don't think we're there yet. Those companies that outperformed Weatherford seemed to do so on the basis of stronger performance in service areas like reservoir characterization and stimulation/pressure pumping – areas where Weatherford is well-known to be weak. That's not a perfect excuse, as Dover (NYSE:DOV) saw 6% year-on-year growth in its production business (which includes artificial lift), but I think there is a valid argument to be made that the "sweet spot" for Weatherford is still coming.

The Bottom Line
Weatherford has already been outperforming on the basis of the "clean-up trade", and I'm not sure that there's much juice left there. Consequently, operational performance will become increasingly important if Weatherford is going to head higher and earn a better multiple from the market.

I continue to value Weatherford at a discount to Halliburton and Schlumberger, and closer to on-par with Baker Hughes (an EV/EBITDA multiple of 7x for WFT as opposed to 6.5x for Baker Hughes). On that basis, fair value still looks to be around $18, making this stock one of the cheapest in the energy services space. That apparent cheapness comes at a cost, though, as this quarter demonstrates once again why there's serious doubt in some corners as to Weatherford's ability to execute and drive good financial results on a prolonged basis.

Disclosure: At the time of writing, the author owned shares of Weatherford.

Positive Data for Novartis' Candidate - Analyst Blog

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Novartis (NVS) recently announced encouraging top-line data from a phase III study, FIXTURE (the Full year Investigative eXamination of secukinumab vs. eTanercept Using 2 dosing Regimens to determine Efficacy in psoriasis), on psoriasis candidate, secukinumab (AIN457).

In the randomized, double-blind, placebo-controlled study (n =1,307), secukinumab was evaluated for efficacy in patients suffering from moderate-to-severe plaque psoriasis. It was observed in the study that secukinumab was more effective in clearing skin than Amgen's (AMGN) Enbrel.

The study met primary as well as secondary endpoints. The safety profile of secukinumab was consistent with previously reported results from phase II studies in moderate-to-severe plaque psoriasis.

Secukinumab is one of the most promising pipeline candidates at Novartis - we are encouraged by the results and look forward to detailed results that will be presented later this year. Novartis also remains on track to file for approval this year.

We note that secukinumab is also being evaluated for other indications like psoriatic arthritis, ankylosing spondylitis and rheumatoid arthritis among others. The phase III studies for these indications are ongoing with results expected in 2014.

Additionally, secukinumab is in phase II studies for the treatment of multiple sclerosis.

Secukinumab is the first anti IL-17A on which phase III results have been presented. We note that Amgen has an anti IL-17 candidate, brodalumab, in its pipeline. Brodalumab is currently in phase III studies for the psoriasis indication.

Meanwhile, currently approved products include AbbVie's (ABBV) Humira among others.

Novartis currently carries a Zacks Rank #3 (Hold). Right now, Valeant Pharmaceuticals (VRX) looks well placed with a Zacks Rank #1 (Strong Buy).

Will Facebook Soar Like Google After Its IPO?

Facebook's IPO is creating quite a stir recently. Valued at $100 billion, it would be the largest Internet IPO ever. On the surface, Facebook has much in common with another major Internet IPO of the decade, Google. They are both hugely popular and profitable internet companies who rely heavily on advertising for revenue, with grandiose, global-reaching goals: Google has said it aims to "provide a great service to the world— instantly delivering relevant information on any topic." Facebook's stated mission is to "make the world more open and connected." But there is a great disparity in their ability to create sustainable growth for shareholders. Google's (GOOG) net revenue growth leading up to its IPO in August 2004 was astronomical. It jumped from $19 million in 2000 to $962 million in 2003. Earnings grew from a net loss of $15 million to a net gain of $106 million, in the same span of time. Facebook has grown at a similarly rapid rate, increasing revenue from $777 million in 2009 to $3.7 billion in 2011. Earnings grew from $229 million to $1 billion in the same span of time.

While Facebook has explosive growth, it has several distinct challenges. First of all, Facebook is already reaching penetration and the pace of growth could decelerate in coming years. In Chile, Turkey and Venezuela, for instance, more than 80% of Internet users use Facebook. In the U.S. and UK, Facebook has a penetration rate of approximately 60%. There is still room to expand abroad, with a penetration rate of just 20-30% in countries such as Brazil, German and India; Japan, Russia and South Korea is less than 15%. Facebook access is still restricted in China.

Facebook says it aims to make all two billion global Internet users members of its site, but the nature of its business makes this unrealistic. There will always be a significant portion of the population with no interest in getting on a website to "Like" their friends' statuses or see what their high school classmate from 40 year! s ago had for breakfast.

Still others defect from the site every day, overwhelmed by the constant changes, finding it interfering with other priorities, or losing its utility once they feel restricted in what they can say knowing their parents or coworkers can read and see everything they post. A recent Pew Internet & American Life Project study found that the twice as many teens aged 12 to 17 are now using Twitter from two years ago, seeking a haven of privacy. This has also strengthened the appeal of Google+, which has circles of privacy people can add various friends to.

Along with financial valuation, one of the most important aspects of an investment is how much society will value the company. Google and Facebook are different in this respect as well. There will always be alternatives to Facebook to connect with people. Members can stop using Facebook and still call, text, email, or see their friends in person, with little disruption to their social lives. Few people, however, will stop using Google to look up information and instead revert to picking up the right letter of an encyclopedia set. Businesses, individuals and schools will continue to use Google to navigate the vast resources of the Internet, as well as the company's many other innovations.

Valuation of the Facebook and Google IPOs would not give useful information about their futures. At the time of Google's IPO, it had a P/E of 195 and P/S ratio of 21.3. The business has grown significantly since then and the P/E has come down to 19.65. Facebook's IPO P/E, if they value the company at $100 billion, will be 100, and the P/S will be 27.



Google, on the other hand, is valued at nearly $200 billion, but generated nearly ten times Facebook's revenues and about six times its profit. As GuruFocus author David Dietz writes, "If Facebook is really going to be the next Google (GOOG), its value is closer to $33 billion, one third of projections."

He also notes that Google, with a 20% per a! nnum grow! th rate and P/E of 20, has a PEG ratio of about one. A PEG of one applied to Facebook would require that the company grow earnings 100% annually to justify a 100 P/E ratio.

Facebook does not seem like an appealing investment for value investors. But most value investors steered clear of Google when it went public as well. One exception was Bill Miller. He was in on Google's IPO near the end of his winning streak which ran from 1991 to 2005. Undeterred by the high valuation, Miller got the stock at $85 and watched it soar to $436 a year and a half later. Then for the next six years he underperformed the S&P and ultimately resigned from his fund, reinforcing just how cloudy the future of an Internet company can be.

Facebook seems as though it has less going for it than Google did at this point, and whether it will follow the same trajectory depends greatly on several unknown factors about the future.

10 Best Canadian Stocks To Watch For 2014

Canadian stocks rose, following the third weekly drop for the benchmark index, as a nine-month high in the price of crude boosted oil and gas producers and existing home sales rose in May.

Calfrac Well Services Ltd. and Bankers Petroleum Ltd. (BNK) added at least 4.4 percent to pace gains among energy shares. Talisman Energy (TLM) Inc. increased 1.7 percent after Lundin Petroleum AB began drilling in a field co-owned by the two companies in the North Sea. B2Gold Corp. jumped the most in six weeks, ahead of its inclusion in an index of gold mining stocks. Rogers Communications Inc. rallied 1.3 percent after an analyst with Canaccord Genuity Inc. raised his rating for the stock.

The Standard & Poor��/TSX Composite Index (SPTSX) rose 101.54 points, or 0.8 percent, to 12,288.90 at 4 p.m. in Toronto. The gauge slipped 1.5 percent last week and has lost 1.2 percent this year, making it the third-worst performing index among developed markets in the world, ahead of Austria and Hong Kong.

10 Best Canadian Stocks To Watch For 2014: (CG)

The Carlyle Group is an investment firm specializing in direct and fund of fund investments. Within direct investments, it specializes in management-led buyouts, divestitures, strategic minority equity investments, equity private placements, consolidations and buildups, leveraged finance, and venture and growth capital financings. The firm typically invests in agriculture, aerospace, defense, automotive, consumer, retail, industrial, infrastructure, energy, power, healthcare, software, technology, real estate, financial services, transportation, business services, telecommunications, and media sectors. Within the industrial sector, the firm invests in manufacturing, building products, packaging, chemicals, metals and mining, forestry and paper products, and industrial consumables and services. In consumer and retail sectors, it invests in food and beverage, retail, restaurants, consumer products, consumer services, personal care products, direct marketing, and education. W ithin aerospace, defense, business services, and government services sectors, it seeks to invest in defense electronics, manufacturing and services, government contracting and services, information technology, distribution companies. In telecommunication and media sectors, it invests in cable TV, directories, publishing, entertainment and content delivery services, wireless infrastructure/services, fixed line networks, satellite services, broadband and Internet, and infrastructure. The firm seeks to hold its investments for four to six years. In the healthcare sector, it invests in healthcare services, outsourcing services, companies running clinical trials for pharmaceutical companies , managed care, pharmaceuticals, pharmaceutical related services, healthcare IT, medical, products, and devices. It seeks to invest in companies based in Sub-Saharan Africa, Asia, Australia, Europe, Middle East, North America, and South America. The firm seeks to invest in food, financial, and healthcare industries in Western China. In the real estate! sector, the firm seeks to invest in Italy, the United Kingdom, and the United States with a target on Florida and Atlanta. It typically invests between $5 million and $50 million for venture investments and between $50 million and $1 billion for buyouts. It typically holds its investments for three to five years. Within automotive and transportation sectors, the firm seeks to hold its investments in for four to six years. The firm originates, structures, and acts as lead equity investor in the transactions. The Carlyle Group was founded in 1987 and is based in Washington, District of Columbia with additional offices across North America, Latin America, Asia, Africa, and Europe.

10 Best Canadian Stocks To Watch For 2014: Canadian Imperial Bank of Commerce(CM)

Canadian Imperial Bank of Commerce provides various financial products, services, and advice to individual, small business, commercial, corporate, and institutional clients in Canada and internationally. The company offers retail markets services comprising personal banking, business banking, and wealth management services, as well as investment management services to retail and institutional clients. It also provides wholesale banking services, including credit, capital markets, investment banking, merchant banking, and research products and services to government, institutional, corporate, and retail clients. The company provides its services through its branch network, automated bank machines, mobile banking, and online banking site. As of June 3, 2011, it operated approximately 1,100 branches and 4,000 automated bank machines in Canada. The company was founded in 1867 and is headquartered in Toronto, Canada.

Advisors' Opinion:

• [By ETF Authority]

  Canadian Imperial Bank of Commerce (NYSE:CM): Up 0.89% to $69.33. Canadian Imperial Bank of Commerce provides banking and financial services to consumers, individuals, and corporate clients in Canada and around the world.

Top 10 Value Stocks To Buy For 2014: Agnico-Eagle Mines Limited(AEM)

Agnico-Eagle Mines Limited, through its subsidiaries, engages in the exploration, development, and production of mineral properties in Canada, Finland, and Mexico. The company primarily explores for gold, as well as silver, copper, zinc, and lead. Its flagship property includes the LaRonde mine located in the southern portion of the Abitibi volcanic belt, Canada. The company was founded in 1953 and is based in Toronto, Canada.

Advisors' Opinion:

• [By Vatalyst]

  With headquarters in Canada, Agnico-Eagle is a gold producer that has been around for a while with operations in Canada, Finland and Mexico and the United States that has paid a cash dividend for 29 consecutive years. AEM gained 25% over the year and reported 83.5% growth in quarterly earnings. It has a market capitalization of $11.4 billion and a trailing P/E ratio of 34x with expectations of earning $0.55 per share. AEM, like other operators like it, are likely a better bet than ETF trust options like SPDR Gold Shares (GLD).

10 Best Canadian Stocks To Watch For 2014: Celadon Group Inc.(CGI)

Celadon Group, Inc., through its subsidiaries, provides transportation services between the United States, Canada, and Mexico. It offers a range of truckload transportation services, including long-haul, regional, less-than-truckload, intermodal, and logistics services. The company transports various types of freight comprising tobacco, consumer goods, automotive parts, home products and fixtures, lawn tractors and assorted equipment, light bulbs, and various parts for engines. It also operates an e-commerce business that provides discounted fuel, tires, insurance, and other products and services to small and medium-sized trucking companies through its website, www.truckersb2b.com. In addition, the company provides warehousing and trucking services, as well as freight brokerage services. Celadon Group, Inc. was founded in 1985 and is based in Indianapolis, Indiana.

Advisors' Opinion:

• [By Cutler]

  Celadon Group, Inc. is engaged in the business of truckload carriers. As a dry van truckload carrier, the Company transports full trailer loads of freight from origin to destination without intermediate stops or handling. Its EPS forecast for the current year is 0.61 and next year is 0.93. According to consensus estimates, its topline is expected to grow 6.56% current year and 11.07% next year. It is trading at a forward P/E of 17.96. Out of 10 analysts covering the company, eight are positive and have buy recommendations, one has a sell recommendation and one has a hold rating.

10 Best Canadian Stocks To Watch For 2014: Higher One Holdings Inc.(ONE)

Higher One Holdings, Inc. provides technology and payment services in the United States. It offers a suite of disbursement and payment solutions for higher education institutions and their students. The company provides OneDisburse Refund Management product that offers higher education institutional clients with a technology service for streamlining the student refund disbursement process. It also offers CASHNet Payment suite that includes software-as-a-service products and services, such as ePayment to securely accept online payments for tuition, charges, and fees from students through credit card, pinless debit, and ACH; eBill to automate payer billing and processing functions; MyPaymentPlan to personalize students? payment plans; eMarket that allows academic, athletic, and other departments to take alumni donations, sell event tickets and other merchandise, and accept payments of event and conference registration fees; and Cashiering to operate and manage cashiering fu nctions, back office payments, and campus-wide departmental deposits. In addition, the company provides OneDisburse ID, which offers an option to combine the company?s debit card with the institution?s ID cards; OneDisburse Payroll to distribute payroll and other employee-related payments; OneDisburse PLUS product to distribute Parent PLUS loan refunds to parents on behalf of the school; and Financial Intelligence to students with an online class. Further, it provides student-oriented banking services to campus communities. Additionally, the company offers OneAccount product for students, as well as faculty, staff, and alumni, with an FDIC-insured online checking account and a debit MasterCard ATM card. Higher One Holdings, Inc. was founded in 2000 and is headquartered in New Haven, Connecticut.

Advisors' Opinion:

• [By Robert Holmes]

  Company Profile: Higher One offers integrated financial aid disbursement services for universities. The company provides services to about 5.8 million students, ensuring they receive financial aid refunds quickly, can pay tuition and bills online, make on-campus and community purchases.

  Share Price: $19.99 (Dec. 6)

  2011 Return: -1.2%

  Investment Thesis: William Blair analysts say they like Higher One because the company has an attractive, predictable business model with high incremental margins and solid cash flow conversion. It also helps that management recently said that the company's pipeline "remains extremely robust."

  "We believe there could be upside down the road from the company increasingly being viewed as a true bank alternative (e.g., more direct deposit), through acquisitions, by monetizing the graduate opportunity, and as a takeover candidate," the analysts write.

  However, there is high short interest in Higher One's stock -- William Blair analysts say it would take about 30 days to cover. That's due to a number of unresolved headwinds, including competition, fees, potential cuts in Pell grants, slowing enrollment growth in the U.S. and a bank partner.

  While finding a bank partner is the biggest question market, William Blair analysts say that a positive announcement, which could come in the next three months, would be a huge catalyst, especially considering the massive short interest.

10 Best Canadian Stocks To Watch For 2014: AmerisourceBergen Corporation (HOLDING CO)

AmerisourceBergen Corporation, a pharmaceutical services company, provides drug distribution and related services to healthcare providers and pharmaceutical manufacturers in the United States, the United Kingdom, and Canada. The company distributes brand-name and generic pharmaceuticals, over-the-counter healthcare products, home healthcare supplies and equipment, and related services to various healthcare providers, including acute care hospitals and health systems, independent and chain retail pharmacies, mail order pharmacies, medical and dialysis clinics, physicians, and long-term care and other alternate site pharmacies. It also offers various services, such as pharmaceutical packaging, pharmacy automation, inventory management, reimbursement and pharmaceutical consulting and staffing services, logistics services, and pharmacy management. In addition, AmerisourceBergen provides scalable automated pharmacy dispensing equipment, medication and supply dispensing cabinets , and supply management software to various retail and institutional healthcare providers. Further, the company offers distribution and other services to physicians, who specialize in various disease states; distributes plasma and other blood products, injectible pharmaceuticals, and vaccines; and provides drug commercialization, third party logistics, reimbursement consulting, data analytics, and outcomes research services for biotech and other pharmaceutical manufacturers, as well as practice management and group purchasing services for physician practices. Additionally, it delivers unit dose, punch card, unit-of-use, and other packaging solutions to institutional and retail healthcare providers; and offers contract packaging and clinical trial material services for pharmaceutical manufacturers. The company serves customers through a network of distribution and service centers, and packaging facilities. AmerisourceBergen was founded in 1985 and is headquartered in Chesterb rook, Pennsylvania.

10 Best Canadian Stocks To Watch For 2014: Patni Computer Systems Limited(PTI)

Patni Computer Systems Limited, an information technology (IT) services company, provides a range of IT services through integrated onsite and offshore delivery locations. Its services include IT strategies development, system consulting and design, application development, application maintenance and support, packaged software implementation, quality assurance, infrastructure management, business process outsourcing, IT outsourcing, and OSS and BSS systems deployment services. The company offers IT services primarily to customers in insurance, manufacturing, retail, distribution, financial services, communications, media, and utilities industries. It also offers product engineering services, including engineering design and modeling, electronic design, embedded software development, and product lifecycle management for legacy products, as well as testing and migration services for new technologies to clients in electronics, automotive, medical electronics, industrial auto mation, office automation, handheld/mobile device manufacturing, and semiconductor manufacturing industries. The company operates in North America, Europe, India, and Japan, as well as in the rest of the Asia-Pacific region. Patni Computer Systems Limited was incorporated in 1978 and is headquartered in Mumbai, India.

Advisors' Opinion:

• [By Kennedy]

  Patni Computer Systems Ltd, based in Mumbai, is one of the leading global providers of Information Technology services and business solutions. More than15000 professionals from Patni Computers service clients across diverse industries, from 28 international offices across the Americas, Europe and Asia-Pacific, and 20 Global Delivery Centers in strategic locations across the world.

  Revenues for the quarter ended 31st March 10 stood at US$ 172.3 million (Rs.7,745.4 million). The operating Income for the quarter at US$ 36.2 million (Rs.1,627.0 million) and this is up by 8.7% when compared quarter to quarter.

10 Best Canadian Stocks To Watch For 2014: Plains All American Pipeline L.P.(PAA)

Plains All American Pipeline, L.P., through its subsidiaries, engages in the transportation, storage, terminalling, and marketing of crude oil, refined products, and liquid petroleum gas (LPG) products in the United States and Canada. The company operates in three segments: Transportation, Facilities, and Supply and Logistics. The Transportation segment transports crude oil and refined products on pipelines, gathering systems, trucks, and barges. As of December 31, 2011, this segment owned and leased 16,000 miles of active crude oil and refined products pipelines and gathering systems; 23 million barrels of above-ground tank capacity used primarily to facilitate pipeline throughput; 67 trucks and 382 trailers; and 82 transport and storage barges, and 44 transport tugs. The Facilities segment provides storage, terminalling, and throughput services for crude oil, refined products, and LPG and natural gas, as well as offers LPG fractionation and isomerization, and natural gas processing services. The Supply and Logistics segment purchases crude oil at the wellhead, and pipeline and terminal facilities; waterborne cargoes at their load port and various other locations in transit; and LPG from producers, refiners, and other marketers. This segment also resells or exchanges crude oil and LPG; and transports oil and LPG on trucks, barges, railcars, pipelines, and ocean-going vessels to various delivery points. It has 622 trucks and 731 trailers, and 2,453 railcars. The company also owns and operates natural gas storage facilities. Plains All American Pipeline, L.P. was founded in 1998 and is headquartered in Houston, Texas.

10 Best Canadian Stocks To Watch For 2014: Gildan Activewear Inc.(GIL)

Gildan Activewear Inc. engages in the manufacture and sale of apparel products primarily in the United States, Canada, and Europe. It sells T-shirts, fleece, and sport shirts to wholesale distributors under the Gildan brand name. The company also provides its activewear products for work and school uniforms and athletic team wear, and other purposes to convey individual, group, and team identity. In addition, it offers undecorated products to branded apparel companies and retailers; and underwear products. Further, the company markets its sock products under the various brands, including Gold Toe, PowerSox, SilverToe, Auro, All Pro, GT, and the Gildan brand. The company was formerly known as Textiles Gildan Inc. and changed its name to Gildan Activewear Inc. in March 1995. Gildan Activewear Inc. was founded in 1984 and is headquartered in Montreal, Canada.

Advisors' Opinion:

• [By Matthews]

  Gildan Activewear is a definite leader in apparel manufacturing. The company has great growth and solid profitability in a market where it is tough to create economic moats. It offers a compelling 1.5% dividend, and we believe that the company has upside to our price target of $36. The company should be able to make a nice move higher from here as it outperforms the industry in growth with sales and earnings outpacing the industry exceptionally. Further, it is considerably undervalued with a PE at 10 vs. an industry average around 20. Value and growth in one...can't beat it.

  Allocation: $2000

  Entry: $19.85

  Target: $21.85, $24.00, and $36

10 Best Canadian Stocks To Watch For 2014: Enerplus Corporation (ERF)

Enerplus Corporation, together with subsidiaries, engages in the exploration and development of crude oil and natural gas in United States and Canada. As of December 31, 2011, it had 322 MMBOE of proved plus probable reserves. The company also held a portfolio of approximately 380,000 net acres of land comprised of 75,000 net acres at Fort Berthold targeting the Bakken and Three Forks; 65,000 net acres in the Duvernay; 33,000 net acres in the Montney; 67,000 net acres in the Stacked Mannville; 30,000 net acres in the Cardium and other emerging oil plays in Canada; and 110,000 net acres in the Marcellus. In addition, it had 120 gross producing wells. The company was founded in 1986 and is headquartered in Calgary, Canada.

Advisors' Opinion:

• [By Lisa Springer]

  Enerplus Corp. (NYSE: ERF) is one of Canada's largest oil and gas drillers. The company owns properties in many major resource plays, including the Marcellus Shale. Enerplus has produced solid income growth in the past three years, but results have suffered recently due to weak natural gas prices. As a result, the company was forced to cut its dividend in half last year. Even at the reduced dividend rate, Enerplus offers an attractive 8% dividend yield. 

Why Tile Shop Is Poised to Keep Rallying

Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, natural stone tile retailer Tile Shop Holdings (NASDAQ: TTS  ) has earned a coveted five-star ranking.

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

Tile Shop facts

Headquarters (founded)	Plymouth, Minn. (1985)
Market Cap	$1.4 billion
Industry	Home improvement retail
Trailing-12-Month Revenue	$193.6 million
Management	Founder/CEO Robert Rucker CFO Timothy Clayton
Trailing-12-Month Return on Capital	26.3%
Cash/Debt	$15.8 million / $68.8 million
Competitors	Home Depot  Lowe's Companies

Top 5 Undervalued Companies To Watch In Right Now

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

On CAPS, 98% of the 160 members who have rated Tile Shop believe the stock will outperform the S&P 500 going forward.

Just yesterday, one of those Fools, pmadiraju, explained why the stock still has plenty of room to run:

The real estate market is turning around. Assuming home prices increase over time, equity in the homes increases, and home owners will spend money upgrading homes. TTS has a veteran management team, and is poised to increase stores across the country. I should have been in TTS 4 or 5 months back. Better late than never! Strongly outperform for the next 5 years!

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

To learn about two other retailers with especially good prospects, take a look at The Motley Fool's special free report: "The Death of Wal-Mart: The Real Cash Kings Changing the Face of Retail." In it, you'll see how these two cash kings are able to consistently outperform and how they're planning to ride the waves of retail's changing tide. You can access it by clicking here.

Will This Finally Get Americans in Electric Cars?

Electric cars have mostly proven to be a hard sell here in the U.S. Most buyers will tell you that they're too expensive, too heavy, they have terrible range, and they're not fun to drive. While Tesla Motors (NASDAQ: TSLA  ) has shown that some of those problems can be overcome, electric cars are still a long way from being a mass-market solution here in the U.S.

That has been just as true in Europe -- but now, there's a big effort under way to change that. In this video, Fool.com contributor John Rosevear looks at what's happening in Europe -- and at how it could lead to a big jump in electric car sales here in the United States.

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

Why PepsiCo Is Poised to Keep Poppin'

Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, soft-drink and snack giant PepsiCo (NYSE: PEP  ) has earned a respected four-star ranking.  

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

PepsiCo facts

Headquarters (founded)	Purchase, N.Y. (1898)
Market Cap	$127.7 billion
Industry	Soft drinks
Trailing-12-Month Revenue	$65.6 billion
Management	Chairman/CEO Indra Nooyi CFO Hugh Johnston
Return on Equity (average, past 3 years)	27.2%
Cash/Debt	$7.0 billion/$29.4 billion
Dividend Yield	2.7%
Competitors	Coca-Cola  Dr Pepper Snapple Group  Mondelez International

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

On CAPS, 97% of the 4,549 members who have rated PepsiCo believe the stock will outperform the S&P 500 going forward.

Top 10 High Tech Companies To Invest In 2014

Just last week, one of those Fools, cschweit, tapped PepsiCo as a particularly tasty opportunity:

It's got options. Not as in stock options, but rather business options. This company has many choices to make in the coming years. These decisions: buy/don't buy Mondelez International, spin off the beverage group, sell the beverage group, any combination of these and others. It will be interesting what will happen, but I think this company is a strong one that will continue to grow.

PepsiCo has quenched consumers' thirst for more than a century. But recently the company has left shareholders craving more. With increased competition and loss of market share, many investors wonder if this global snack food and beverage giant is simply fizzling out. Are more bland results ahead for PepsiCo? The Motley Fool's premium report on the company guides you through everything you need to know about PepsiCo, including the key opportunities and threats facing the company's future. Simply click here now to claim your copy today.

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More Expert Advice from The Motley Fool

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

Got $100? Here's How to Start Investing

To be successful with your investing, it's important to start as early as you can. Yet many beginning investors mistakenly assume that they need a lot of money to get started. In reality, you can invest as little as $100 in ways that will provide much better returns than you'll get in your savings account.

In the following video, Motley Fool investment-planning editor Lauren Kuczala talks with longtime Fool contributor and financial planner Dan Caplinger about how to go about investing $100. Dan points out that many mutual fund companies allow people to invest small amounts as long as they commit to making regular additions to their account. In addition, other specialty investments such as savings bonds offer a chance to invest small amounts to get returns that will be better than some other fixed-income options.

Once you've saved enough to start looking at individual stocks, 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.

How High Can Ares Capital Climb?

Next Tuesday, Ares Capital (NASDAQ: ARCC  ) will release its latest quarterly results. The key to making smart investment decisions on stocks reporting earnings is to anticipate how they'll do before they announce results, leaving you fully prepared to respond quickly to whatever inevitable surprises arise. That way, you'll be less likely to make an uninformed, knee-jerk reaction to news that turns out to be exactly the wrong move.

As a business development company, Ares Capital has attracted a lot of attention due to its huge dividend yield. But lately, capital appreciation has played an even more vital role in the company's long-term returns. Let's take an early look at what's been happening with Ares Capital over the past quarter and what we're likely to see in its quarterly report.

Stats on Ares Capital

 

 

Analyst EPS Estimate	$0.40
Change From Year-Ago EPS	5.3%
Revenue Estimate	$194.78 million
Change From Year-Ago Revenue	16.1%
Earnings Beats in Past 4 Quarters	3

Source: Yahoo! Finance.

How will Ares Capital's earnings fare this quarter?
In recent months, analysts have gotten just the slightest bit more pessimistic about Ares Capital's earnings prospects, cutting a penny per share from their estimates for both the first quarter and the full 2013 year. But the stock has fared better, climbing 4% since late January.

Ares invests mostly in secured loans and senior debt, taking advantage of the BDC structure to avoid corporate-level tax. In exchange, it has to pay the bulk of its income to shareholders as dividends, producing the company's attractive yield of roughly 9%. That's been a huge draw for investors, who've been willing to pay up for BDC shares lately.

But one concern is that investors are paying too much for BDCs. Like Ares, peers Prospect Capital (NASDAQ: PSEC  ) and Fifth Street Finance (NASDAQ: FSC  ) also carry share prices that are higher than the net value of the assets on their books. Yet Ares trades at a substantially higher premiums to NAV than Prospect or Fifth Street, suggesting that they're more comfortable with the quality of Ares' assets compared to its rivals.

Even a secondary stock offering back in April wasn't enough to send the stock downward for long, as the company offered more than 19 million shares to investors and underwriters at $17.43 per share. Yet despite the temporary decline of about 4%, the stock recovered all of its losses before the month was out.

In Ares Capital's quarterly report, pay close attention to how the company's net asset value has fared during the quarter. As a fundamental reflection of the health of the business, investors shouldn't be willing to pay too much of a premium for Ares shares no matter how attractive the dividend yield may be.

If you're on the lookout for high-yielding stocks, The Motley Fool has compiled a special free report outlining our nine top dependable dividend-paying stocks. It's called "Secure Your Future With 9 Rock-Solid Dividend Stocks." You can access your copy today at no cost! Just click here.

Top 10 Low Price Stocks To Watch Right Now

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

Can Samsung Create the Web Browser of the Future?

In the world of smartphones, Samsung's Android phones dominate the market. But instead of a close-knit team that's sweeping the mobile world, Google (NASDAQ: GOOG  ) and Samsung look more like two competitors handcuffed together by mutual interests.

Samsung has expressed interest in leaving the Android party in the past, and a new partnership with Mozilla may be the key to making that transition a reality.

Browsing the future
Earlier this month, Firefox creator Mozilla announced on its blog that it's teaming up with Samsung to create a new mobile browser engine built specifically for hardware found in most mobile devices today.

The browser engine is built on a coding language called Rust that Mozilla says is safer and is less prone to crashes than current browser engines. Samsung's partnership with Mozilla gives the company influence and access over a new way of mobile surfing.

So why's this an important move for Samsung?

Sammy is extremely dependent on Android for its mobile browser and OS platform, and it's looking to make a move away from Google's mobile darling. In its launch of the Galaxy S4, Samsung hardly mentioned that the phone runs on Android, probably a purposeful omission. Samsung has been developing its own operating system, called Tizen, and will launch a few phones with the OS in regional markets later this year. Tizen isn't close to replacing Android any time soon, but it's a way for Samsung to test new ways to break free from Google.

The partnership with Mozilla is yet another way to do that. If Samsung can move away from Google's Android OS and Chrome browser, then it will grab more control over its users' smartphone experience. Aside from browsers, Mozilla is also developing its own mobile operating system to compete with Android. If Samsung and Mozilla can work well together on a browser, then teaming up for a future mobile OS may be the next step.

Anything but easy
It's still unclear what exactly will come about from the Mozilla/Samsung partnership, if anything. For now, it's yet anther indication that Samsung would like more control over its phones and the OS they run on. Google, on the other hand, should be at least a little concerned with Samsung's desire to ditch the green droid, considering Sammy is estimated to hold about 30% of the global smartphone market. Although companies don't pay to use Android, Google makes money from the OS through search advertising and the Google Play store.

Completely ditching Android would be a very big and difficult step for Samsung. For one thing, the company's smartphone users are already used to the platform. Although Samsung has built out some of its own features within the OS, starting its own system may be easier said than done.

Take, for example, Nokia's (NYSE: NOK  ) move to the Windows Phone OS. Nokia wasn't using Android for its platform before it moved to Windows Phone, but it is trying to sell phones that aren't running on Apple's (NASDAQ: AAPL  ) iOS or Android -- which have a combined smartphone global market share of 91% right now.

In China, where Nokia once held 50% of the mobile market share, it now holds just 1% because of Android and iOS. Samsung doesn't want to walk down the same road as Nokia, so it needs to make its transition from Android slowly if it wants to do it successfully.

With Samsung's browser partnership with Mozilla, the company can slowly test the waters of moving away from Android without jeopardizing its current place in the mobile world. Consumers should keep an eye out for how this new relationship grows and how much Samsung gets involved in building the browser engine. If the company launches a Mozilla-based mobile browser on its devices in the near future, then it may mean the company is breaking free from Google's grip -- which would be quite a feat.

It's incredible to think just how much of our digital and technological lives are almost entirely shaped and molded by just a handful of companies. Find out "Who Will Win the War Between the 5 Biggest Tech Stocks" in The Motley Fool's latest free report, which details the knock-down, drag-out battle being waged among the five kings of tech. Click here to keep reading.

Top Dividend Stocks To Buy For 2017

Top Dividend Stocks To Buy For 2017