Microsoft CEO Search Is Narrowing

Microsoft Corp. (NASDAQ: MSFT) is about to potentially be a far different company. Steve Ballmer’s resignation, retirement, or force-out, was sooner than some investors were expecting. Now we have a Bloomberg report that the board of directors is likely to narrow down the new CEO candidate in a board meeting on Monday, November 18. What is interesting is that we have heard and read this same notion of the candidate pool shrinking elsewhere, and not even this week.

Everyone is going to just have to deal with a new Microsoft, regardless of who becomes CEO. This is no longer simply a Microsoft under Bill Gates, and now longer a Microsoft under the Gates and Ballmer duo. Microsoft has enough businesses now that a new CEO may even decide to break the businesses up.

Hot Tech Companies To Watch For 2014

Alan Mulally of Ford Motor Co. (NYSE: F) keeps coming up as a potential replacement. This would be bad for Ford, although our take is that Ford already has its full team in place now. Another question is whether or not his age would be a factor. We already pointed out how there is literally no young blood on the Microsoft board of directors. A guy in his late-60s who has been an industrial CEO might not be the right fit at a struggling software and technology company even if he done incredibly well elsewhere.

Stephen Elop is still in the hunt apparently, and he will be rejoining Microsoft from Nokia Corp. (NYSE: NOK) when the acquisition of the handset division closes. We have a hard time knowing if it is worth the risk of taking on a handset chief as the company’s full CEO. Nokia’s reputation has diminished handily, and the risk is that if a CEO replacement does not work out then it would look like a bonehead move that could have been avoided.

Internal candidates running Microsoft businesses already are also up for consideration. We have seen several names, but it almost seemed as if the names were grabbed from the list of division heads.

A new CEO candidate seems to be on the way sooner rather than later. We recently saw a key analyst report to get Microsoft back to $45 or even $50 and that was in a post-Ballmer world. With the stock at 437.81 and a recent peak above $38.00, it is not as impossible to imagine as you might think.

For LPL, recruiting numbers add up

LPL CEO Mark Casady Bloomberg News

Recruiting came roaring back in the third quarter for LPL Financial, which added 154 net new registered representatives and advisers for the three-month period ended Sept. 30.

The firm added 40 registered reps from a bank, which LPL declined to identify. The recruiting figures were made public as part of the firm's third-quarter earnings report Wednesday.

The robust quarter brings LPL's 12-month recruiting tally to 393 net new reps and advisers, putting the industry's largest independent broker-dealer in line with its long-stated objective of adding at least 400 net new reps and advisers per year.

Like many of its competitors, LPL's recruiting was in the doldrums over the first half of the year, a period in which it added just 56 net new advisers.

LPL's recruiting efforts have long led the industry and are widely regarded as a bellwether among its competitors, which likewise saw a slowdown in recruiting in the first half.

(See also: LPL puts layoff, outsourcing plan into action)

Overall, LPL reported a solid quarter: Net revenue increased 16.1% compared with the same period a year earlier, reaching $1.05 billion. Net income was $37.6 million, an increase of 9.7% versus the same quarter in 2012. Total assets were $414.7 billion as of Sept. 30, up 11.7% from a year ago. The firm now has 13,563 registered reps and advisers.

With the strong performance of the stock market in the first half, reps and advisers were reluctant to move, chief executive Mark Casady said Wednesday in a conference call with analysts. During that time, advisory firms either were focused on existing clients or getting used to the increased volume and adding staff members to deal with their practices' higher revenue, he said. That slowed down recruiting.

Recruiting got back to normal over the summer, Mr. Casady said.

“In the third quarter, recruiting was from all over,” he said, with reps and advisers leaving banks, credit unions, insurance company-owned broker-dealers, independent broker-dealers and wirehouses to join LPL.

Mr. Casady said that LPL is continuing to study the idea of starting a bank and will have more information regarding that potential line of business in a few months.

Commission revenue jumped 19.3% in the third quarter compared with the 2012 period; that reflected an increase in sales of alternative investments, including nontraded real estate investment trusts, the company said.

Along with several other independent broker-dealers, LPL has drawn scrutiny over the past year for sales of nontraded REITs. In total, six IBDs, including LPL and Securities America Inc., have agr! eed to offer $21.6 million in restitution to clients with regard to violations involving sales of nontraded REITs, and they have paid fines of close to $1.5 million.

(Don't miss: Massachusetts hits five IBDs with $10.75M charge on nontraded REIT sales)

LPL's chief financial officer, Dan Arnold, said in an interview that commissions from nontraded REITs increased as trusts such as Cole Credit Property Trust III became listed companies. As a result, some clients selling those holdings and allocating the money into other nontraded REITs that promise yields of 6% to 7%.

Mr. Arnold added that LPL was seeing potential to add advisers from banks with $30 billion to $60 billion in assets that are looking to outsource broker-dealers business to a third party such as LPL.

“There is a trend towards larger banks exploring outsourcing for economic reasons, and one bank [this past quarter] did deliver 35 to 40 reps,” he said.

Stocks to Watch: UPS, Newell Rubbermaid, National Oilwell

Among the companies with shares expected to actively trade in Friday’s session are United Parcel Service Inc.(UPS), Newell Rubbermaid Inc.(NWL) and National Oilwell Varco Inc.(NOV)

UPS’ third-quarter revenue rose on increased domestic and international shipments. Core earnings also climbed and just topped Street estimates, helping send shares up.

Newell Rubbermaid’s third-quarter earnings rose 78% after the consumer-products maker booked a gain on the sale of its hardware business. Shares climbed as the bottom line beat expectations.

National Oilwell’s third-quarter earnings rose 3.9%, buoyed by top-line growth throughout the oilfield-services equipment manufacturer’s operations. Results beat views and all three of its segments posted revenue gains. Shares rose.

Microsoft Corp.(MSFT) bucked a recent trend among major sellers of technology to corporations, posting double-digit percentage increases in both revenue and profit for the fiscal first quarter. The results easily topped Wall Street’s expectations, sending shares up.

Amazon.com Inc.(AMZN) reported its third quarterly loss in the past year after a more than nine-year run of profitable quarters. The online retailer, as expected, reported a big jump in revenue heading into the holiday season, its biggest quarter of the year. Shares rose.

Zynga Inc.'s(ZNGA) third-quarter loss narrowed as the social-game maker continued to slash expenses, though daily average users continued to decline. The stock, which has fallen sharply from its initial public offering price of $10 a share in late 2011, rose as the adjusted loss and bookings topped the company’s own forecast.

Career Education Corp.(CECO) agreed to sell its European education properties to private equity firm Apax Partners for a total of $305 million. Shares of Career Education rose.

Qlik Technologies Inc.'s(QLIK) third-quarter earnings soared due to a tax benefit, but higher costs more than offset revenue growth. Shares dropped as revenue missed expectations and the company’s outlook for the current quarter was short of analysts’ estimates.

Outerwall Inc.'s(OUTR) third-quarter profit more than doubled on a gain tied to the company’s equity interest in ecoATM, which the kiosk operator fully acquired this summer. Shares jumped, as Outerwall’s results were mostly strong compared to the weak guidance it issued last month.

Healthways Inc.'s(HWAY) profit fell 64%, hurt by shrinking margins and flat revenue. Shares of Healthways fell as the company lowered its guidance for the year, while issuing downbeat estimates for the fourth quarter and 2014.

Deckers Outdoor Corp.'s(DECK) third-quarter profit slid 23% as the footwear maker reported sharply higher overhead expenses, masking higher sales of brands like Ugg and Teva. But the company’s shares jumped, as results exceeded Deckers’ July targets and the company issued rosy outlook commentary for the year.

DuPont Co.(DD) intends to spin off its performance chemicals segment to existing shareholders, a move that comes as some investors called on management to improve the company’s financial results. Shares rose.

Callaway Golf Co.'s(ELY) third-quarter loss narrowed significantly as the golf equipment maker reported a jump in sales and sharp increase in gross margins. Results for the period easily topped Wall Street’s expectations, sending shares up.

ResMed Inc.’s profit rose 9% in its fiscal first quarter, buoyed by revenue growth and widening margins. However, shares dropped as results came in below expectations.

Lear Corp.'s(LEA) third-quarter profit fell 7.1% due to higher expenses that masked revenue and margin growth at the automotive-seating and electric-systems company. But results easily beat estimates, and the company raised its full-year revenue guidance, sending shares up.

AbbVie Inc.'s(ABBV) third-quarter earnings fell 39% due to higher costs and expenses, offsetting strong revenue growth from key drug Humira. Results topped expectations, and the company raised the low end of its full-year adjusted earnings estimate. Shares rose.

Eastman Chemical Co.'s(EMN) third-quarter earnings surged as the diversified chemical and materials producer reported sales growth as well as fewer charges related to its acquisition of Solutia Inc. last year. But it lowered its earnings estimate for the year on expectations it will continue to face challenges in its adhesives and plasticizers business, as well as higher raw-materials and energy costs. Shares dropped.

Orders for long-lasting goods drop 2% in October

WASHINGTON — Businesses spent less last month on machinery, computers and most other items, lowering orders for U.S. long-lasting factory goods. The decline suggests companies may have been reluctant to invest during the 16-day partial government shutdown

The Commerce Department said Wednesday that orders for durable goods dropped 2% in October from September. That follows a 4.1% increase in September from August.

Durable goods are meant to last at least three years.

Demand for commercial aircraft plunged nearly 16% last month, accounting for much of the decline. But orders also fell 1.2% in a closely watched category that excludes volatile transportation and defense orders. That was the second straight drop.

Economists pay closer attention to core capital goods because those orders can reflect businesses' confidence in the economy.

Many companies may have held off placing orders in October, awaiting the outcome of a budget impasse that shut down parts of the federal government.

However, the report conflicts with a private sector survey released earlier this month that showed companies shrugged off the shutdown and boosted orders.

The Institute for Supply Management, a trade group, said factory activity accelerated for the fifth straight month in October to the fastest pace in 2 ½ years. The survey's measure of new orders ticked up and production remained strong, though it slowed from the previous month.

Other reports have suggested that manufacturing has picked up since the spring. Strong auto sales and a healthier housing market have pushed up demand for steel and other metals, auto parts, furniture and appliances.

And factory output rose for the third straight month in October, according to the Federal Reserve, driven higher by greater production of primary metals and furniture.

Overseas demand for many goods has also risen as Europe has climbed out of recession, Japan is growing faster and China's economy has slowed but is still growing a! t a healthy pace.

Changes in aircraft demand can frequently push the overall figure up or down. Aircraft orders soared 59% in September, accounting for most of the total increase in orders that month.

Boeing says it received orders for 79 planes last month, down from 127 in September.

4 Hot Stocks to Trade (or Not)

BALTIMORE (Stockpickr) -- Put down the 10-K filings and the stock screeners. It's time to take a break from the traditional methods of generating investment ideas. Instead, let the crowd do it for you.

>>5 Stocks Under $10 Set to Soar

From hedge funds to individual investors, scores of market participants are turning to social media to figure out which stocks are worth watching. It's a concept that's known as "crowdsourcing," and it uses the masses to identify emerging trends in the market.

Crowdsourcing has long been a popular tool for the advertising industry, but it also makes a lot of sense as an investment tool. After all, the market is completely driven by the supply and demand, so it can be valuable to see what names are trending among the crowd.

While some fund managers are already trying to leverage social media resources like Twitter to find algorithmic trading opportunities, for most investors, crowdsourcing works best as a starting point for investors who want a starting point in their analysis. Today, we'll leverage the power of the crowd to take a look at some of the most active stocks on the market today.

>>5 Big Stocks to Trade for Big Gains

These "most active" names are the most heavily-traded names on the market -- and often, uber-active names have some sort of a technical or fundamental catalyst driving investors' attention on shares. That's especially true now that earnings season is officially underway. And when there's a big catalyst, there's often a trading opportunity.

Without further ado, here's a look at today's stocks.

Alcatel-Lucent

Nearest Resistance: $4

Nearest Support: $3.50

Catalyst: Earnings Surprise

>>5 Stocks Rising on Unusual Volume

French communications stock Alcatel-Lucent (ALU) is up close to 15% this afternoon following the release of the firm's third-quarter earnings numbers. ALU has been struggling in recent quarters, but management was able to trim its losses by cutting costs. The firm ended up losing 200 million euros for the quarter, down from 316 million euros a year ago.

From a technical standpoint, Alcatel-Lucent has been on fire since the start of the summer, pushing higher in a well-defined uptrend. While today's jump is huge, it's still short of resistance at $4; traders will need to see that price ceiling get taken out before it makes sense to be a buyer here.

Avon Products

Nearest Resistance: $19.50

Nearest Support: $17

Catalyst: Earnings/Bribery Settlement

>>5 Stocks Insiders Love Right Now

Cosmetics maker Avon Products (AVP), on the other hand, is getting shellacked this afternoon on the heels of its earnings release. AVP reported third-quarter earnings of 14 cents per share, falling short of Wall Street's 19-cent consensus estimate. Worse, the firm announced that a bribery probe settlement proposed by the SEC was likely to come with penalties that would be much larger than expected -- enough to materially impact the business. AVP is off by more than 22% as I write this afternoon.

The technical outlook doesn't look much better. AVP broke support at $20 on this morning's gap-down, falling to a $17 support level that hasn't been tested since back in February. AVP was trending lower to begin with, and today's breakdown is icing on the cake. I'd recommend keeping clear of this name for the foreseeable future; don't try to catch the falling knife.

MGM Resorts International

Nearest Resistance: $20

Nearest Support: $17

Catalyst: Earnings Miss

>>Hack Earnings Season With These Serial Surprisers

Top Gold Stocks For 2014

MGM Resorts International (MGM) reported its own earnings miss to Wall Street this morning, losing 7 cents per share for the quarter. That's three cents shy of the 3-cent loss that analysts were expecting. MGM is capping off a stellar 65% year-to-date rally with a 6% earnings-induced drop today, and the decline could deepen before we reach year end.

That's because MGM's drop this morning marks the official beginning of a downtrend in the casino stock. Shares had been holding firm at $20 support, but that broke definitively this morning. From here, $17 looks like the next spot where MGM could see another glut of demand, but I'd recommend staying away until the downtrend can actually get snuffed out.

Expedia

Nearest Resistance: $66

Nearest Support: $54

Catalyst: Earnings

>>4 Stocks Triggering Big Breakout Trades

Last up is Expedia (EXPE). The $8 billion travel site is up more than 16% in this afternoon's session following better-than-expected earnings released after the bell yesterday. EXPE reported third-quarter earnings of $1.43 per share, an improvement on the $1.35 average guess that analysts were hoping for. That's yet another year of double-digit growth for Expedia, and it's giving investors another excuse to look at this stock after a volatile year of trading.

Today's big gap up breaks the sharp downtrend that's been in force since July's highs, but shares are still down from the high-water-marks set back in the first quarter. Investors should keep a close eye on how EXPE reacts to resistance at $66; if shares can catch a bid above that past price ceiling, it's a strong buy signal for shares.

To see these stocks in action, check out the at Most-Active Stocks portfolio on Stockpickr.



-- Written by Jonas Elmerraji in Baltimore.

RELATED LINKS:

>>4 Stocks Spiking on Big Volume

>>Own Gold? Here's Why It's Time to Sell

>>4 Stocks Under $10 Moving Higher

Follow Stockpickr on Twitter and become a fan on Facebook.

At the time of publication, author had no positions in stocks mentioned.

Jonas Elmerraji, CMT, is a senior market analyst at Agora Financial in Baltimore and a contributor to

TheStreet. Before that, he managed a portfolio of stocks for an investment advisory returned 15% in 2008. He has been featured in Forbes , Investor's Business Daily, and on CNBC.com. Jonas holds a degree in financial economics from UMBC and the Chartered Market Technician designation.

Follow Jonas on Twitter @JonasElmerraji

7-Eleven to sell upscale wines in some stores

Chez 7-Eleven?

Well, not exactly. But the nation's biggest convenience store chain, perhaps best-known as a place to grab a cold beer or a Slurpee, has quietly begun to sell ultra-premium wines at about $19.99 at 700 locations in 16 states.

The move is a serious bid to appeal to upper-scale Millennials whose business is crucial to the store's growth. It's also part of a broader, long-term strategy to attract more upscale customers to 7-Eleven stores. Just last month, the chain began selling better-for-you snacks including organic trail mix.

Sure, 7-Eleven may be better-known for carrying $3.99 bottles of Yosemite Road wine, "but we have to take care of our more affluent guests, too," says Alan Beach, vice president of merchandising.

For the holidays, 7-Eleven will even be selling a $54.99 bottle of Stag's Leap wine at about 300 stores. Consider, an average bottle of wine currently sold at 7-Eleven costs about $6.

Behind the wine surge at 7-Eleven: changing generational tastes away from beer towards wine. Wine sales domestically have grown for 19 years straight, says the Wine Institute. Wine consumption grew 21% between 2001 and 2011, reports the Beverage Information Group.

As wine becomes more mainstream, says Joe Czerwinski, managing editor of digital and print at The Wine Enthusiast, "it's subject to the same sort of impulse buying as other grocery items."

At the same time, Czerwinski notes, wine buyers tend to spend more per shopping basket than non-wine buyers, "so there may be expectations of some spillover effect."

For 7-Eleven, it's a no brainer. Unlike the guy who just pops in for a Slurpee and bag of chips, the gal who comes in for a bottle of upscale wine also might want to purchase a six-pack of its $8.99 Blue Moon craft beer, or even some of 7-Eleven's $20 iPhone chargers.

The A-list wines now at select 7-Eleven's: La Crema Chardonnay, Louis Martini Cabernet Sauvignon, Kim Crawford Sauvignon Blanc and Wild Horse Pinot Noir.

"We! will see more of our stores adding premium and super-premium wines as demand increases," says Beach. Some 7-Eleven's that formerly carried just a dozen, or so, wines will now carry up to 40 varieties, he says.

Among the markets selling the upscale wines: San Francisco, Newport Beach, Ca., some Chicago suburbs and parts of Northern Virginia.

The target is younger consumers, age 21 to 34, whose incomes exceed $65,000.

The fancy wine is getting fancy in-store displays, too, under the banner, "Fine Wines Under $19.99."

In November and December, 300 7-Eleven stores will be selling the even more-upscale luxury wines that fetch $20 to $54.99.

Beach projects this will drive-up 7-Eleven's wine business for the holidays.

And that, he knows, is a lot of Big Gulps.

5 Retailers Keeping Video Rental Alive

Hot Low Price Companies To Invest In Right Now

PORTLAND, Ore. (TheStreet) -- The demise of one-time video rental titan Blockbuster finally puts that chain's long struggle with an evolving marketplace to rest, but it doesn't answer one question: Who's going to rent everyone their DVDs?

Admittedly, it's not great out there for the last DVD renters. Since 1999, the number of video stores in the U.S. has dropped from 28,000 to just 6,122 in last year before the Blockbuster closings, according to the Entertainment Merchants Association. Contrary to what the self-inflicted tragedy of Blockbuster may lead consumers to believe, however, its death isn't the end of DVD rental. While Blockbuster made up a large portion of that particular industry, market research firm IBISWorld notes it's still a $4 billion market that still has a core of demand. That core has shrunk nearly 14% since 2008 -- thanks largely to Blockbuster's troubles -- but video-on-demand services from Comcast (CMCSA), Time Warner Cable (TWC), DirecTV (DTV), Dish Network (DISH) and on-demand streaming services from Amazon (AMZN), Apple (AAPL) iTunes and Wal-Mart's (WMT) Vudu haven't killed it yet.

Supply just might. According to Home Media Magazine, the 7.12 million DVDs sold this year made up 83% of all disc sales through October. Unfortunately, sales of those discs have plummeted more than 23% since last year despite fetching an $11 average price that's 7% lower than it was in 2012. Don't expect Blu-ray discs to come charging to the rescue, either. Instead of becoming the new standard, their share of the market hovers around 17% as sales drop 26.5% year over year. The movie industry seems content to make Blu-ray discs and upmarket niche item, as their average price has risen 2.6% within the past year to $20.54 -- or nearly double that of a DVD.

The fact is that studios really don't want to have to sell or even rent physical copies of movies anymore. They cost money to make, to package, to ship and to take back when viewers don't want millions of copies of a film they didn't exactly flock to when it was in theaters. Still, they'll package digital copies and Ultraviolet versions in with purchases just to get everybody nice and acclimated while arranging early releases for "Digital HD" versions of films and television shows to get fans to pay a premium for content without the packaging or ownership. But there's still a corner of the population that not only likes the physical copies, but likes renting them. There are still certain titles that haven't made the switch to digital downloads or streaming and there are customers who prefer getting a DVD on their own schedule rather than waiting for a streaming service to get a particular title. Those folks still have a bunch of options, but even they may not be around for long. We present the following five alternatives for DVD rental and wish disc loyalists the best of luck with keeping them. Also see: Blockbuster's Self-Inflicted Tragedy Is Our Loss>>

Redbox

The little red kiosk isn't the video store, but it's quickly becoming the face of DVD rental for U.S. customers still attached to the practice.

Parent company Outerwall (OUTR) has spread them throughout grocery stores, convenience stores, discount stores and even McDonald's (MCD) locations in an attempt to convince folks that DVD rental is still a worthwhile endeavor -- especially when it costs less than $2. As of last year, there were 46,000 in the U.S. alone. Redbox still has a bit of a new-release advantage over its DVD-by-mail competitors, but it's had to resort to making the same delayed-release deals with Warner Brothers and other studios in an attempt to secure content. It's also given customers reason to worry by partnering with Verizon on its new streaming service, Redbox Instant. While that service is still in its infancy and lacking in content and distribution, it's only a matter of time until it gets the itch to compete directly with Hulu, Amazon, Netflix (NFLX), HBO Go and others. In the meantime, Redbox is learning the value of disc-rental convenience on unseasonably cold nights. Redbox generated a record 199.5 million rentals last quarter, up 13.1% from the same period last year. That's boosted Redbox revenue by more than 9% and gave consumers a valuable and convenient fallback for DVD rentals.

Netflix

Well, Netflix is still in the DVD-by-mail service. Unfortunately, it may not be in it for much longer.

Netflix boasted 7.15 million DVD subscribers in its last quarter. That would be great if it didn't have 8.6 million at the same time last year and more than 14 million when it split its DVD and streaming services in 2011. That DVD audience is still expected to contribute $96 million to $110 million in profits for Netflix this year, but that's clearly secondary to the $165 million to $177 million being generated by streaming. It's also a fraction of the more than $410 million in profits DVDs generated for the company just a year ago. Remember when Netflix used to really care about DVD turnaround, delivery logistics and things related to the U.S. postal service? Yeah, that's kind of out the window, too, as the company continues downsizing from 58 distribution centers 2011 to 39 today. A handful more are expected to go within the next year. It's a shame, as Netflix's DVD holdings are still extensive and include content such as HBO programming, which will never see the light of HD television on Netflix's streaming service. It's still where a whole lot of Netflix's best offerings reside, but the price hike and downgrade in priority suffered by Netflix's DVD branch in recent years -- including the marginalization of customers' DVD queue in a recent site "upgrade" -- makes it feel a whole lot less accessible. Netflix has also done a great job of making the whole DVD enterprise seem less convenient. Streaming may not give you all the content you want, but it reduces the wait and hassle for content that's there. Movies don't become huge roadblocks when it turns out you're not in the mood for a particular genre and, when they turn out to be duds, there's no four-day penance period before you can watch a new one. Get your DVDs from Netflix if you must, but Netflix's mission seems to be similar to that of Blockbuster in its final days: To make the DVD rental experience as unattractive as possible.

CafeDVD

Imagine if the Netflix DVD-by-mail algorithm actually cared about the quality of the film you watched and took all the intangibles of the moviegoing experience into account when curating your selection. That's CafeDVD in summary.

The online equivalent of the quirky independent video store in a city you live way too far from or the personal collection of the film student and cinephile who live a block down, CafeDVD makes a point of weeding out the dregs of the "new release" shelves and taking a more scholarly approach to its offerings. Lists of subcategories including the American Film Institute's Top 100, Criterion Collection films, Roger Ebert's Overlooked Film Festival, Films That Were Banned/Censored and On Totalitarianism call back to a time when a video store's staff would take the time to cull their own shelves full of picks and discerning customers could be drawn by collections that encouraged exploration rather than added expense. The front page is spare, but it'll make the naturally curious wonder if they'd ever pick Mickey Rourke for the lead in the film version of a Bukowski story again or if John Woo's The Killer held up as well as you remembered it in your 20s. The DVD rental market has little choice but to devolve into niches, but CafeDVD has served its particular nice well for nearly 15 years. Also see: Last Picture Show for Second-Run Theaters?>>

Family Video

Welcome to the largest video-store chain in America.

With 770 stores throughout the U.S. (mostly in the Midwest) and Canada, Family Video was bigger than Blockbuster even before the latter shut down. In fact, Family Video just added 18 stores this year and makes clear on its website that it's actually hiring. What's the secret? Basically, don't sell out the original idea. Family Video just kept plugging away with the standard video store when Blockbuster, Hollywood Video, Movie Gallery, West Coast Video and all of the other retail video tombstones started freaking out about the coming digital apocalypse. With rental prices capped around $3 per rental, free rentals for kids, a forgiving and negotiable late fee policy, the chain has watched same-store sales increase for three decades. They're already up 4.5% in 2013 from last year. This is what you can do when you don't have Viacom or Carl Icahn breathing down your neck to cut costs and maximize profits, but it's also a bit easier when you're not leasing hundreds of properties across the country. Family Video owns most of its stores, which reduces overhead, but its pricing and well-targeted demographics have given its stability that an unstable Blockbuster could only have dreamed of.

Vice and virtue

Remember what we said about DVD rentals and niches? Well here are both ends of the spectrum.

Netflix may not think much of its DVD-by-mail service anymore, but the Christian film industry and the adult film industry certainly do. Dissatisfied with the lack of all but the softest porn on Netflix and apparently unimpressed with the Internet's trove of video offerings, the reliably loyal contingent of adult film watchers fuels a DVD-by-mail industry spanning a variety of sites including SugarDVD, Excalibur Films and others. It's an industry that thrives on its subcategories, so a DVD-by-mail market that prides itself on discretion is only a natural addition to an already thriving enterprise. On the other side of the coin is ChristianCinema, which eschews the overwhelming majority of mainstream offerings in favor of what it considers more wholesome fare. Somehow, the story of General Stonewall Jackson and a copy of Disney's Up -- a film in which an older gentleman kidnaps a boy scout and kills a man by dropping him off of an airship to his death -- slipped into the mix, but the site largely accomplishes its goal of avoiding Hollywood at all costs. These are two groups that exist in diametric opposition to each other, but their commitment to watching content that the mainstream abhors using a method that doesn't require them to leave the safety of home may just save the DVD-by-mail industry. -- Written by Jason Notte in Portland, Ore. >To contact the writer of this article, click here: Jason Notte. >To follow the writer on Twitter, go to http://twitter.com/notteham. >To submit a news tip, send an email to: tips@thestreet.com. RELATED STORIES: >>Blockbuster's Self-Inflicted Tragedy Is Our Loss >>Last Picture Show For Second-Run Theaters? >>Generation X Sold Out Cobain and Biggie

Jason Notte is a reporter for TheStreet. His writing has appeared in The New York Times, The Huffington Post, Esquire.com, Time Out New York, the Boston Herald, the Boston Phoenix, the Metro newspaper and the Colorado Springs Independent. He previously served as the political and global affairs editor for Metro U.S., layout editor for Boston Now, assistant news editor for the Herald News of West Paterson, N.J., editor of Go Out! Magazine in Hoboken, N.J., and copy editor and lifestyle editor at the Jersey Journal in Jersey City, N.J.

Fewer Buyers for Cheaper Gas

Ever since the OPEC oil embargo 40 years ago, U.S. consumers have responded predictably, like rational economic beings, to every big swing in the price of gasoline. When it spiked, we drove fewer miles, switched to fuel-efficient vehicles, used mass transit more. But when the price declined for a long stretch, we went back to our old gas-guzzling ways. Every prediction of the permanent demise of, say, big SUVs, powerful sports cars, and commuting in pickup trucks proved premature.

Will the next time be different? Is it possible that even if gasoline prices decline consumption won't go up? I think it's a good bet, and we probably won't have to wait long to find out.

My colleagues in the Kiplinger Business Forecasting Group have made a bold prediction that by 2016 the price of petroleum will fall by 20% to 30% from recent averages of about $95 a barrel. That would take a gallon of gasoline down by a similar amount, to an average of $3 a gallon.

That slide will be a boon to consumer budgets, and I have a hunch that this time around drivers won't respond by boosting their use of gasoline. Instead, they'll shift the money into other purchases or savings—unless governments take advantage of the price decline to raise gasoline taxes.

An oil boom. High gasoline prices in recent years were the result of tight supplies and surging global demand, especially in fast-growing emerging economies. Conversely, the long price slide we are predicting will be the product of soaring oil production and slowing global demand. Oil production will keep booming—everywhere from Iraq to Canada, and from offshore areas of Africa and South America to our own United States (up 30% just since 2008).

At the same time, oil consumption will continue to decline in the Western nations. In the U.S., we're using 11% less petroleum today than in 2005, because of urbanization, reduced driving, stricter federal fuel-efficiency standards, a new vogue for small cars and hybrids, and the use of biofuels (ethanol and biodiesel).

Outside of the advanced nations, gasoline use will continue to rise, spurred by a growing middle class wanting to own cars. But governments in countries with fast-growing economies, such as China and India, will reduce their fuel subsidies, impose clean-air rules and perhaps push electric cars, restraining the public thirst for gas.

Overall, the rate of growth in global gasoline demand will slow, and demand will probably be more than matched by higher petroleum production, which will ultimately lead to lower prices.

Conservation habit. But today, unlike a decade ago, energy conservation is firmly entrenched in business practices and the public psyche. Not only do we use less for transportation, we also have more-efficient industrial processes, lighting, home appliances and electronics design. The conservation habit is driven not just by a desire to save money, but also by mounting concern about the effects of coal and oil usage on the environment, whether it be local air quality or global climate change.

Natural gas will be abundant and cheap, too. While booming production has its own issues—such as possible air and water pollution from the extraction process—natural gas burns more cleanly than coal and oil in power plants and more cleanly than gasoline and diesel in vehicles (as compressed or liquefied natural gas).

Some possible downsides: Lower prices for gasoline and diesel will lessen the demand for clean biofuels and slow the adoption of all-electric cars, whose high prices continue to turn off car buyers. Yes, there are always trade-offs in free markets.

Columnist Knight Kiplinger is editor in chief of this magazine and of The Kiplinger Letter and Kiplinger.com.

Can Tesla Motors Continue to Move Higher?

With shares of Tesla Motors (NASDAQ:TSLA) trading around $139, is TSLA 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

Tesla Motors designs, develops, manufactures, and sells electric vehicles and electric vehicle powertrain components. The company also provides services for the development of electric powertrain systems and components, and sells electric powertrain components to other automotive manufacturers. It markets and sells its vehicles through Tesla stores as well as over the Internet. Consumers and companies are looking to save at the pump, and what better way to do so than with electric vehicles?

Tesla Motors CEO Elon Musk responded to concerns over the three Tesla Model S fires that have occurred in recent months at The New York Times Dealbook conference, according to CNN. Despite the three battery fires, Musk says there will be no Model S recall. "We have never had a serious injury or death in any of our cars. Maybe there is a car as safe as the Model S, but there is certainly not a car that is safer," Musk said. He also noted that the Model S drivers who experienced the fires asked for new Tesla vehicles, instead of switching to a different car.

T = Technicals on the Stock Chart Are Strong

Tesla Motors stock has has been exploding higher in the past several months. The stock is currently trading at highs for the year. 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, Tesla Motors is trading between its rising key averages, which signals neutral price action in the near-term.

Source: Thinkorswim

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

	Implied Volatility (IV)	30-Day IV Percentile	90-Day IV Percentile
Tesla Motors Options	60.03%	3%	0%

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

	Put IV Skew	Call IV Skew
December Options	Average	Average
January Options	Average	Average

As of Wednesday, there is average demand from call and put buyers or sellers, all neutral over the next two months. To summarize, investors are buying a very small amount of call and put option contracts and are leaning neutral 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 Increasing 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 Tesla Motors’ stock. What do the last four quarterly earnings and revenue growth (Y-O-Y) figures for Tesla Motors 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)	-86.96%	105.62%	113.95%	-1.27%
Revenue Growth (Y-O-Y)	1102.65%	1420.08%	1762.78%	677.88%
Earnings Reaction	-14.5%	14.34%	24.39%	-8.77%

Tesla Motors has seen mixed earnings and rising  revenue figures over the last four quarters. From these numbers, the markets have had conflicting feelings about Tesla Motors’s recent earnings announcements.

P = Excellent Relative Performance Versus Peers and Sector

How has Tesla Motors stock done relative to its peers – General Motors (NYSE:GM), Toyota (NYSE:TM), and Ford (NYSE:F) — and sector?

	Tesla Motors	General Motors	Toyota	Ford	Sector
Year-to-Date Return	309.70%	33.33%	36.91%	32.05%	35.09%

Tesla Motors has been a relative performance leader, year-to-date.

Conclusion

Tesla Motors offers electric vehicles that consumers and companies are opting for over other luxury vehicles. The company’s CEO responded to concerns over the three Tesla Model S fires that have occurred in recent months at The New York Times Dealbook conference. The stock has been exploding higher recently and is now trading near highs for the year. Over the last four quarters, earnings have been mixed while revenues have been rising, which has left investors with conflicting feelings about the company. Relative to its peers and sector, Tesla Motors has been a year-to-date performance leader. Look for Tesla Motors to continue to OUTPERFORM.

American Style? Or European?

Today, I will continue my review is about another of the six elements of option pricing, American vs European  style.

American style options may be exercised at any moment in their lifetime. You can buy an option and exercise it one second later if you like. American style options also settle in the physical delivery of the underlying asset. As a rule, individual stock options are American style.

European style options, on the other hand, are exercised only at the moment of expiration and settle in cash. So, on expiration if the underlying value is 100, holders of he 90 call receive $10 (notwithstanding what they paid for it) and holders of the 100 and above put get nothing. Holders of the 110 put get $10 and holders of the 100 and below call get nothing, etc.

As a rule, index options are European style. It's just too much of a hassle to physically deliver the various components of, say, the S&P 500. This makes trading index options certainly less complicated.

If one trades American style options one must be constantly aware of the possibility of early assignment. With calls early exercise is likely to happen the day before a dividend is paid out. Dividends are only paid to shareholders, not option holders. With puts early exercise is likely to happen the day after the dividend is paid out. If I am holding stock with a very deep in the money (ITM) put, once I've received the dividend there is no longer any reason to carry the position so I exercise my option and "put the stock" away.

Very important! With American style stock options dividends create extra, hidden, expirations. Deep ITM calls for all intents and purposes expire the day before a dividend is paid out and deep ITM puts expire for all intents and purposes the day after the dividend is paid out.

If, as a small investor, you cannot take delivery of the stock then be sure to sell your ITM call before the dividend as the call, like the stock, is likely to lose the amount of the dividend the next day. Similiarly, if you have no stock to deliver and no facility to sell the stock short, be sure and sell your ITM put the day before the dividend as whatever dividend premium was in the put will vanish the next day.

The following article is from one of our external contributors. It does not represent the opinion of Benzinga and has not been edited.

Posted-In: Options Markets

Originally posted here...

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Helping Female Advisors Navigate a Male-Dominated Profession

“We are losing women in this profession and we do have a gender issue in this profession,” Rebecca Pomering of Moss Adams Wealth Advisors told a room full of women—and some men—during Schwab’s IMPACT conference Monday.

Speaking on a women’s panel along with Pomering, Peggy Ruhlin of Budros, Ruhlin & Roe, Inc., added that “25% of the attendees at conferences were women when I started, and that hasn’t changed”—a fact that she said both “surprises and upsets” her.

Ruhlin and Pomering were joined by Schwab’s Naureen Hassan as well as Suanne Ramar of Nelson Capital Management. They each shared their experiences in the profession and offered some sage—and frank—advice to the other female advisors in attendance.

Ramar, who said she entered the advisory field “by accident” right out of college, noted the importance of mentoring. The woman who ended up mentoring her had an MBA and CFA, she said, two credentials she eventually secured for herself. Mentoring, she said, has to be a “path that’s best for both parties.”

Pomering agreed. “Mentoring has to be a two-way street,” she said. “You mentor people because they help you advance in your career and skills as well.” As her mentor said to her: “The more successful you are the more we can grow this.”

Ruhlin urged the women in attendance to join their local chapters of financial planning-related associations, which she said “can pay off big time.” While not having a mentor herself, Ruhlin said that early in her career she became president of her local chapter of the “old IAFP” [now the FPA].

“When I was president of the local IAFP, there was a big one-day stock market crash and ABC News decided to cover this event,” Ruhlin recalled. ABC News went to the IAFP looking for someone to interview, she said, “and they suggested me; it was casual day and I had to send my husband home to get an outfit.” Peter Jennings ended up being the newscaster who interviewed her on Monday night, “right before Monday night football,” so “everybody saw this show—I got all sorts of calls. What do you think that kind of publicity would cost?”

The women also agreed that challenges can be masked as opportunities. While opportunities came her way because she is a woman, Pomering said, “the bigger opportunities come from proving yourself in those initial opportunities.”

Ramar told attendees not to fall into the trap of being “self-deprecating” when opportunities come their way.

“Don’t say I was really lucky rather than being smart. Let’s be both lucky and smart and take advantage of that opportunity.”

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Check out Beware a Fiduciary ‘Wild West’: Graff on ThinkAdvisor.

‘Great Rotation’ Overblown, Sanford Analyst Says

It’s not that the “great rotation” isn’t happening; it’s just that it’s not happening as most investors expected. That’s the idea put forth by Sanford Bernstein analyst Luke Montgomery, one he says will result in a lot disappointment for those expecting a boost in equity prices as a result.

The great rotation, a term almost as ubiquitous as the “New Normal” in the years since the economic crisis and rebound, describes the exit from bonds as yields scrape bottom and interest rate risk rises.

“A rotation mental model may stem from incomplete notions of supply, demand, pricing and flows in capital markets,” Luke Montgomery, an analyst at the New York-based firm covering asset managers, wrote Friday in a note to clients.

Montgomery cited “misconceptions over what happens when one investment type appears to win favor at the expense of another, saying there’s no automatic correlation between the migration of money and asset prices,” according to Bloomberg, who received a copy of the report. He also disputed the notion that individual investors are holding less in stocks than they have historically, supposedly setting up a major shift.

In the report, Montgomery questioned how much of a rotation can occur and what its impact would be. According to the news service, “he took aim at the argument that high levels of bank deposits and bond mutual fund assets created by the U.S. Federal Reserve’s stimulus efforts might suddenly pour into stocks.

“While quantitative easing floods investors with liquid financial assets and can inflate other asset values, this does not mean deposits in aggregate then become a latent source of funds for risk assets,” Montgomery wrote.

What’s more, he said, bonds can drop in value without money flowing into other assets.

“Wealth destruction in bonds can be an independent event — bond wealth can simply evaporate and need not be offset by wealth created in equities, or any other asset class,” he added, according to Bloomberg. “Once the rate hike cycle begins, there is a far wider range of possibilities for the future market values of (and allocations to) cash, bonds and equities than may be envisioned by the great rotation mental model.”

Money managers and related industry experts have debated the timing and severity of the great rotation since the term was first introduced by Bank of America Merrill Lynch analysts in 2011.

“The great rotation is a ridiculous notion. It’s utterly illogical,” DoubleLine’s Jeffrey Gundlach said in April. “You could also call it a great rotation into bonds from stocks.”

More recently, however, TrimTabs Investment Research said indicators were “very strong” the great rotation has begun, citing U.S. equity mutual funds and exchange-traded funds received a record $40.3 billion in July, easily surpassing the previous record of $34.6 billion in February 2000.

“We're really only a few months of these heavy flows, but yes, the ‘great rotation’ so many pundits have been expecting may finally be starting,” David Santschi, TrimTabs CEO, told ThinkAdvisor over the summer.  “In June and July, U.S. equity funds posted an inflow of $39.9 billion, while bond funds redeemed $90.1 billion.”

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Check out DoubleLine’s Gundlach Crushes Notion of Great Rotation, Bond Bubble on ThinkAdvisor.

Is Groupon a Discount at Current Prices?

With shares of Groupon (NASDAQ:GRPN) trading around $10, is GRPN 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

Groupon offers online retail services. The company provides daily deals on the stuff to do, eat, see, and buy in more than 500 markets in 44 countries. It provides an online service that lets groups of people create campaigns to pool resources, including money and personal commitments to take action, and it allows users to sell products and transact business online. Groupon is poised to see rising traffic as it provides consumers with ways to save on common shopping experiences and activities. Look for Groupon to continue to grow and provide consumers and businesses with new opportunities.

Groupon shares are trading up slightly as CEO Eric Lefkofsky says that the company is looking to buy at least three warehouses to support its direct e-commerce sales and fulfillment efforts. A Kentucky facility has already been singled out for acquisition while e-commerce sales have been ramping up. Though sales are increasing, Groupon's margins have been sagging — Lefkofsky says that the warehouse purchases will help to expand them.

T = Technicals on the Stock Chart Are Strong

Groupon stock has struggled to gain traction since its initial public offering. However, the stock has been surging higher this year. 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, Groupon 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 Groupon options may help determine if investors are bullish, neutral, or bearish.

	Implied Volatility (IV)	30-Day IV Percentile	90-Day IV Percentile
Groupon Options	59.72%	43%	41%

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

	Put IV Skew	Call IV Skew
September Options	Flat	Average
October Options	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 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 Increasing 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 Groupon’s stock. What do the last four quarterly earnings and revenue growth (Y-O-Y) figures for Groupon look like and more importantly, how did the markets like these numbers?

	2013 Q2	2013 Q1	2012 Q4	2012 Q3
Earnings Growth (Y-O-Y)	-125.00%	50.00%	0.73%	100.00%
Revenue Growth (Y-O-Y)	7.11%	7.53%	29.69%	32.17%
Earnings Reaction	21.55%	11.44%	-24.24%	-29.59%

Groupon has seen increasing earnings and revenue figures over the last four quarters. From these numbers, the markets have had mixed feelings about Groupon’s recent earnings announcements.

P = Excellent Relative Performance Versus Peers and Sector

How has Groupon stock done relative to its peers Facebook (NASDAQ:FB), Google (NASDAQ:GOOG), United Online (NASDAQ:UNTD), and sector?

	Groupon	Facebook	Google	United Online	Sector
Year-to-Date Return	115.40%	56.05%	Top Energy Stocks To Buy Right Now 21.52%	46.15%	39.73%

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

Conclusion

Groupon allows consumers and companies to find a happy medium when transacting for goods or services. The company is reportedly looking into purchasing warehouses in order to expand its e-commerce business. The stock is currently surging higher after struggling a bit since its initial public offering. Over the last four quarters, earnings and revenues have been rising, however, investors in the company have had mixed feelings about recent earnings reports. Relative to its peers and sector, Groupon has been a year-to-date performance leader. Look for Groupon to OUTPERFORM.

Mind the Gap: Gap Shares Gap Up as Sales Surprise

The Gap’s (GPS) surprised investors with top-notch results today, resulting in another gap–the one between yesterday’s closing price and where it’s trading now.

Getty Images

The Gap reported said it would earn 71 cents a share, well ahead of analyst forecasts for 66 cents. Even better, so-call same -store sales rose 4%, topping forecasts for a 0.6% increase.

This gap up, however, comes a little less than a month after shares of the Gap gapped down 7% on Oct. 11, following disappointing same-store sales. What will November hold?

Janney’s Adrienne Tennant and Gabriella Carbone urge caution. They write:

We believe merchandise margins will be under pressure for the remainder of the year, as a result of the sector-wide increased promotional activity. For November, we are modeling a +1% comp. We point out several negative factors impacting November: 1) one week later start to retail November, 3) shorter overall holiday season, 3) one week later Thanksgiving, which will shift CyberMonday and some Black Friday DTC sales out of retail November (GPS recognizes e-commerce sales upon estimated receipt by customer)…

…offsetting this, and specific to Old Navy, will be more Thanksgiving Day store openings (900 stores versus 750 last year from 9 am to 4 pm) and most of the stores open from 7 pm Thanksgiving Day through Black Friday (recall last year, Old Navy reopened at midnight missing much of the earlier off-mall traffic).

We continue to believe the global brand management structure of the business will help attain greater speed and efficiencies, as well as fuel future long term global growth; however, in the near-term we remain cautious given challenging mall traffic and aggressive promotions.

Shares of the Gap have jumped 8.9% to $41.12, while L Brands (LTD) has gained 1.6% to $62.77, Urban Outfitters (URBN) has risen 2.1% to $39.27 and Ann (ANN) has advanced 1.5% to $35.47.

Oriens Travel and Hotel Management is On the Verge (OTHM)

Call it a hunch, because that's all it is, but I've got a feeling Oriens Travel and Hotel Management Corp. (OTCMKTS:OTHM) is on the verge of a trade-worthy move. The hotel and property management company was completely unknown just a few weeks ago, but of the growing buzz surrounding OTHM is any indication (and it usually is), then a big move is just around the corner.

For most intents and purposes, Oriens Travel and Hotel Management didn't exist as a company before February of this year. For whatever reason, that's when the company started to get serious (again) about being in business. It unveiled an online-booking system in March that catered to PayPal and Google Pay users, and a few months later that system was chosen to be the central booking system for a new $20 million hotel build. Last month the company announced it had put an investor-relations plan into place - proof that it realized publicity is just as important for a stock's success as corporate performance is - and just today the company announced it was being named as the ticket manager of a major overseas sports stadium. It's a quantity and quality of activity that simply didn't exist a year ago, and over the course of the activity buildup, OTHM has begun to trade on substantial volume.

Now, those who've been following the Oriens Travel and Hotel Management Corp. story will know that for as much good news as the company has been behind of late, the stock has suspiciously not moved higher. Be patient - that may be about to change.

Take a closer look at the chart of OTHM below. Yes, with just a quick glance it looks like little more than a volatile mess. The longer you study the chart of Oriens Travel and Hotel Management, however, the more you'll start to notice things like the fact that we've seen a series of higher lows since July, and that several 'up' days have unfurled on higher volume while we've seen no high-volume 'down' days. The attack the stock has mounted against all of its key moving averages (to the extent it matters for a young small stock like this one anyway) also suggests a brewing bullishness that we haven't seen in a while.

Top 5 Energy Companies For 2014

The key and clincher to an explosive rally from Oriens Travel and Hotel Management Corp. is one more close above the 200-day moving average line, which could materialize this week... maybe even today. That may catapult the stock for several days, and dole out a quick but sizable bullish reward.

For more trading ideas and insights like these, be sure to sign up for the free SmallCap Network newsletter.

The Container Store Group (TCS) Cares About Its Employees But What About Investors? XRT, LOW & HD

Small cap storage and organization system retailer Container Store Group Inc (NYSE: TCS) is the latest hot consumer IPO to temp investors and while there are no direct peers for the quirky but money loosing retailer, could investors just be better off sticking with retail ETFs like the SPDR S&P Retail ETF (NYSEARCA: XRT) or more traditional large cap home improvement stocks like Lowe's Companies, Inc (NYSE: LOW) and The Home Depot, Inc (NYSE: HD)?

What is the Container Store Group?

Starting out in 1978 with just one store, small cap Container Store Group is truly a specialty retail stock as its the original storage and organization specialty retailer and the only national retailer solely devoted to the category with 62 stores across 22 states (a typical location will have around 19,000 square feet and 10,000 SKUs). The Container Store is perhaps most famous for its "employee-first culture" that has landed the retailer on FORTUNE Magazine's annual list of "100 Best Companies To Work For" for the past 14 years.

For reference, the SPDR S&P Retail ETF tracks the S&P Retail Select Industry Index by investing in approximately 101 retail stocks while Lowe's Companies and The Home Depot are, of course, the big behemoths of home improvement retail and offer consumers the materials to more dramatically alter their storage and organizational space.

What You Need to Know About the Container Store Group

Last Friday, the Container Store Group offered 12.5 million shares at $18, the top end of an already elevated range, and saw shares shoot up to the $36 level by the end of the trading day for what has become the latest hot consumer orientated IPO.

It might be somewhat ironic that Wall Street has fallen in love with the Container Store Group as its long been touted as a model for an employee centric company or at least for a warm and fuzzy version of capitalism. In fact, its "Foundation Principles" were even outlined in the S-1 filing with that section beginning with the following paragraph:

One of our greatest hopes is that the practice of simultaneously taking care of everyone connected to a business, operating from a purpose beyond profits and leading with consciousness—what we along with other companies, thought leaders and academics call Conscious Capitalism®—becomes the preferred and most accepted way of doing business. It will prove that the economic imperatives of corporate success aren't incompatible with doing the right things. It's not a zero-sum game. No one has to lose for the other person to win. You can make decisions based on love and succeed.

The Principles themselves are focused around "treating employees, customers and vendors with respect and dignity" and the Container Store Group has long claimed that they along with its employee training program that puts full-time employees through more than 260 hours of formal training in their first year are competitive advantages. Moreover, the company culture has helped to produce an industry-low employee turnover rate of 10% verses the retail sector's usual double turnover rate while the IPO has turned 40% of its employees into shareholders.

However, there is a catch. While the Container Store Group has apparently posted 13 straight positive comparable store sales and says it has the potential to grow its US footprint to at least 300 locations, the company is not yet profitable. Specifically, the Container Store Group has produced revenues of $706.76M (53 weeks ending 2013-03-02), $633.62M (52 weeks ending 2012-02-25), $568.82M (52 weeks ending 2011-02-26) and $523.00M (52 weeks ending 2010-02-27) for the past four fiscal years and net losses of $0.13M (53 weeks ending 2013-03-02), $30.67M (52 weeks ending 2012-02-25), $45.05M (52 weeks ending 2011-02-26) and $4.20M (52 weeks ending 2010-02-27). Nevertheless, it should be mentioned that the Container Store Group has also expanded beyond bricks and mortar into online sales and call centers, which together have risen 84% over the past three fiscal years and account for 5.4% of the total business.      

Share Performance: Container Store Group Plus XRT, LOW & HD

On Tuesday, the Container Store Group closed at $35.35, where it started the day at, for a market cap of $1.63 billion. With that and the above in mind, here is a look at the long term performance of the SPDR S&P Retail ETF, Lowe's Companies and The Home Depot:

As you can see from the chart, the SPDR S&P Retail ETF has been the best performer followed by The Home Depot with Lowe's Companies also rewarding investors.

Finally, here is a the latest rather bullish technical charts for the SPDR S&P Retail ETF and Lowe's Companies plus The Home Depot.

The Bottom Line. Given just how competitive and cut throat the retail, home improvement or home furnishing market can be, Container Store Group's is a rather noble company for how it treats its employees. But investors who aren't employees might want to look elsewhere for a more investor centric retailer or investment like the SPDR S&P Retail ETF, Lowe's Companies or The Home Depot.

The Week Ahead: Don't Let Your Portfolio Go on Vacation

If you are tempted by recent positive economic data to jump into the market with both feet or head to the beach for the summer and forget your portfolio, you might want to rethink your strategy, counsels MoneyShow's Tom Aspray.

The bullish stock market in 2013 has fueled a surge in IPOs over the past six weeks as $5.2 billion has been raised by 26 new companies. The fact that Facebook, Inc. (FB) has finally moved above its initial offering price has also reassured investors.

The major averages are flat to up slightly for the month after last week's decline. As I concluded last week, one should not expect August to match the outstanding gains that we saw in July. The slight weakness early last week made many commentators turn cautious rather quickly.

5 Best Penny Stocks For 2014

Stock investors should have been happy with their July account statements and with the further new market highs in early August. Of course, the concern over the global economy has still kept many out of the stock market despite the year's impressive gains.

The outlook for the US economy has continued to improve, and late last week, there was trade data out of China suggesting its economy may be stabilizing. It would be good to see consecutive positive data points out of China as the trend has not been consistent.

There were more signs of improvement for the global economy as the Organization for Economic Cooperation and Development's (OECD) composite leading indicators pointed to firming economic growth. The chart shows that the indicator dropped below the 100 level in 2011 but then moved back above it in 2013.

Japan, the United Kingdom, and the United States show evidence of firming economic growth. In the euro area, the growth trend looks the best for Germany, with improvement in Italy, but rather flat action in France. Their growth momentum analysis still suggests slowing in China, Russia, and Brazil.

A few weeks ago, I focused on some of the euro countries' debt levels, as well as the improvement in some of their manufacturing data. Their stock markets have continued to rally sharply as the iShares MSCI France (EWQ) is up over 13% since early July and is doing just slightly better than Germany (EWG).

Even more surprising is Spain whose unemployment rate is over 26%. The iShares MSCI Spain (EWP) was down 6% for the year in late June, but is now up over 11%. All three look positive technically but are closing the week above their starc+ bands indicating that we should get a better entry point in the next few weeks.

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F5 Networks, Inc. (FFIV): Strength In Application Delivery Platform Should Boost Fundamentals

F5 Networks, Inc. (NASDAQ:FFIV) is seeing significant traction for its application delivery platforms, which are playing an increasingly relevant role in handling core datacenter infrastructure functions.

More specifically, F5's "full-proxy" architecture are implementing several core IT infrastructure functions in Fortune 500 enterprises and in Web 2.0 and Cloud datacenters that go beyond server load balancing.

F5 Networks is a provider of technology that optimizes the delivery of network-based applications, security, the availability of servers, storage devices, etc. F5 is a strategic point of control within a network. F5 solutions are used by enterprises, service providers, and Web portals.

F5's BIG-IP platform insertion into mainstream IT functions such as "seamless user access to multiple applications"; "handling a new range of threat scenarios"; "scaling the datacenter sub-linearly to traffic growth", etc makes the App Delivery purchase less discretionary.

"The upside of F5's solutions being viewed as a series of core IT functions is that F5's HW and SW modules, and related services, become line items in the core IT budget versus being relegated to the load balancer item within an application upgrade budget," Deutsche Bank analyst Brian Modoff wrote in a note to clients.

F5 said more than 30 percent of their application data centers (ADCs) are seeing software modules attach rates. F5's hardware and software modules incorporate features that were historically purchased as point products. This suggests F5's solutions being increasingly viewed as part of the core IT infrastructure purchase versus as a load balancer purchase.

F5's solution rollouts as a single sign-on proxy, across enterprise and Web/Cloud/SaaS applications, is a tailwind for sales of Next-Gen Firewalls as IT views authentication proxies as a security function. The company sees total available market for application delivery worth $7 billion -$8 billion.

"Our IT conversations give us convicti! on that F5's Application Delivery solutions are transitioning into "architectural plays" and are likely to widen the moat between F5 and its sub-scale peers - smoothing out the volatility in inter-quarter purchases of F5's solutions – and grow the company's share of IT wallet in FY14+," Modoff said.

The Traffic Management feature can leverage single sign-on modules across F5's platforms in the event of congestion or failure in any individual module.

Meanwhile, the company's strategy to build up a consulting practice is a longer term positive as Cisco, IBM and VMware had success in creating architectural lock-ins for their portfolio, which are stickier and create a longer-term product sales and refresh pipeline versus a modest book and ship business.

"We note that management's strategy to build a consulting services practice in FY14 (albeit with a 50-100bps services margin hit) is pertinent for the core IT functions role that F5's solutions are starting to play into," Modoff said.

Further, the bear case around potential near-term downside to F5's product gross margins is overstated, given that the total spend on F5's HW + SW solutions are likely to grow as a percentage of the IT budget – given F5's platforms integrating several core IT functions. 

These functions previously were stand-alone systems such as authentication servers, application + network firewalls, policy servers, etc.

"In sum, we see potential for upside to the high-single digit product rev consensus view for FY14 (we are modeling 7.4% Y/Y product rev growth in FY14; maintaining an upward bias)," Modoff said.

The FFIV stock, which trades 14.4 times its 2014 consensus earnings estimate, is down 17 percent year-to-date.