Can McDonald’s Find Support Post-Earnings?

With shares of McDonald's (NYSE:MCD) trading around $94, is MCD 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

McDonald''s franchises and operates McDonald's restaurants in the United States, Europe, Asia Pacific, the Middle East, Africa, Canada, and Latin America — so just about every part of the world. Its restaurants offer various food items, soft drinks, coffee, and other beverages as well as breakfast menus. The products provided by McDonald's fulfill cravings at competitive prices in convenient locations worldwide. The McDonald's craze shows no signs of slowing, so the company has continued its expansion to just about every nation on the globe. As consumers continue to enjoy McDonald's products, look for it to see rising profits.

McDonald's reported earnings on Monday morning that showed the fast food chain has performed better this quarter than many of its peers, according to Reuters. McDonald's reported a 4 percent rise in profit for the quarter with a net income of $1.52 billion, or $1.52 per share. In the third quarter of last year, McDonald's posted $1.46 billion, or $1.43 per share. Analysts from Consensus Metrix only expected an increase of 1 percent.

T = Technicals on the Stock Chart Are Mixed

McDonald's stock has traded sideways in the last couple of years. The stock is currently trending lower and is getting closer to lows 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, McDonald's is trading below its key averages, which signals neutral to bearish price action in the near term.

Source: Thinkorswim

Taking a look at the implied volatility and implied volatility skew levels of McDonald's options may help determine if investors are bullish, neutral, or bearish.

	Implied Volatility (IV)	30-Day IV Percentile	90-Day IV Percentile
McDonald's Options	15.84%	46%	45%

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
November Options	Flat	Average
December Options	Flat	Average

As of Monday, there is 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.

E = Earnings Are Rising 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 McDonald's’s stock. What do the last four quarterly earnings and revenue growth (Y-O-Y) figures for McDonald's 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)	6.29%	4.55%	2.44%	3.83%
Revenue Growth (Y-O-Y)	2.39%	2.43%	0.9%	1.9%
Earnings Reaction	-0.64%*	-2.68%	-1.95%	0.57%

McDonald's has seen rising earnings and revenue figures over the last four quarters. From these numbers, the markets have not been happy with McDonald's’s recent earnings announcements.

*As of this writing.

P = Weak Relative Performance Versus Peers and Sector

How has McDonald's stock done relative to its peers – Yum Brands (NYSE:YUM), Burger King (NYSE:BKW), and Wendy’s (NASDAQ:WEN) — and sector?

	McDonald's	Yum Brands	Burger King	Wendy’s	Sector
Year-to-Date Return	6.92%	0.36%	16.91%	83.72%	9.43%

McDonald's has been a poor relative performer, year to date.

Conclusion

McDonald's is a well-recognized company that fulfills cravings and demand for quick and delicious food choices that many consumers across the globe enjoy. A recent earnings release has not pleased the markets. The stock has been trading sideways in the last couple of years and looks be headed lower. Over the last four quarters, earnings and revenues have been rising. However, investors have not been happy with recent earnings announcements. Relative to its peers and sector, McDonald’s has been a weak year-to-date performer. WAIT AND SEE what McDonald’s does this quarter.

The Surprising Strength of Australia’s Exports

Australia’s merchandise trade balance for August fell short of economists’ expectations, but the data revealed a couple of promising trends, particularly for investors in the country’s resource sector.

Although Australia’s trade deficit narrowed considerably in August, to AUD815 million from a revised deficit of AUD1.375 billion the prior month, it was still more than twice as wide as the AUD400 million consensus among the 23 economists surveyed by Bloomberg. Australia tends to run persistent trade deficits, with the balance of trade averaging a monthly deficit of AUD323 million over the past five years and an average monthly deficit of AUD1.2 billion over the trailing year.

To be sure, the dollar value of Australia’s exports of goods and services has climbed fairly steadily since its near-term bottom in September 2012, with the latest monthly figure of AUD27.1 billion showing a 13.7 percent improvement from that low. In fact, the precise figure for August is just AUD829 million below the all-time high set back in September 2011.

However, Australia’s demand for imports of goods and services is currently at a monthly all-time high of AUD27.9 billion. That’s effectively masking the strength of Australia’s exports when viewed through the prism of the country’s balance of trade.

In the months ahead, our expectation is that the depreciation of the Australian dollar should give a competitive boost to exports, while reducing domestic demand for imports, since they’ll be more expensive in local currency terms. Though the Aussie fell as low as USD0.89 in late August, it’s rebounded sharply over the past six weeks, in part due to the US Federal Reserve’s decision to continue easing. The currency recently traded near USD0.96, down 9.4 percent from the year-to-date high in January.

The Aussie should weaken further over the medium term, especially once the Fed finally begins to tighten its monetary policy. The consensus forecast among Bloomberg’s survey of economists is for the currency to decline to USD0.89 next year, with a bottom around USD0.86 by 2017.

Although the value of Australia’s overall monthly exports is rising, that may be largely due to demand for services, as the more commodities-dependent merchandise component has declined 5.3 percent on a year-to-date basis, to AUD249.1 billion. That’s likely a reflection of the broad decline in commodities prices, such as coking coal, thermal coal and gold. Indeed, the Reserve Bank of Australia’s (RBA) Index of Commodity Prices has fallen 3.1 percent over the past year.

The good news is that Chinese demand for Aussie commodities has been surprisingly resilient, despite the deceleration of its economy. While the RBA says China’s gross domestic product (GDP) appears on track to achieve full-year growth of 7.5 percent, that’s well below its torrid pace of growth during the preceding decade.

Nevertheless, China is one of Australia’s few trading partners whose demand for goods has actually increased over the past year, up 1.6 percent, to AUD78 billion. China is by far Australia’s largest trading partner and the aforementioned figure accounts for 31.3 percent of the country’s total merchandise exports on a year-to-date basis. In fact, Australia’s merchandise exports to China are currently at an all-time monthly high of AUD8.7 billion, up an astounding 69.4 percent since their near-term low in September 2012 and well above the five-year monthly average of AUD4.8 billion.

A significant factor in this result has been the rise in the price of iron ore, which is Australia’s top export. According to The Steel Index Ltd’s index of iron ore spot prices that prevail in China, while the current spot price near USD134.40 per metric ton is just below the five-year average, it’s up 55 percent since a near-term low in September 2013. There has been some relief for Chinese customers, however, as the spot price is off 15.4 percent from its year-to-date high.

Meanwhile, Chinese steel producers are in the midst of a massive restocking of the raw material. Though the price of iron ore typically crashes around this time each year, Fortescue Metal Group Ltd’s (ASX: FMG, OTC: FSUMF) CEO Nev Power says that Chinese iron ore inventories are at historically low levels, without much room for further destocking. Power believes that should keep prices from slumping for some time.

Indeed, the total monthly value of Australia’s iron ore exports to China hit an all-time high in August of AUD4.8 billion. That’s well above the average monthly value of AUD3 billion over the past five years. China accounted for 73.3 percent of Australia’s iron exports in August, so once its restocking phase ends, prices will likely fall.

Top China Stocks For 2014

Estimates for when that will happen are likely implicit in analysts’ forecasts. Bloomberg’s survey of 14 institutional metals analysts shows an average price forecast of USD118.26 per metric ton of iron ore for the fourth quarter, with prices more or less holding steady at that level until the third quarter of 2014. At that point, the price of iron ore is projected to weaken slightly to USD112.06 per metric ton, and linger near that level for the final half of the year, before rebounding moderately in the first quarter of 2015.

10 Best Dividend Stocks To Own Right Now

Correction: Story corrects that New York Times paid a dividend for 39 years beginning in 1969. The announced plan is not the company's first dividend payment.

NEW YORK - (TheStreet) -- New York Times (NYT), owner of the newspaper that bears its name, said Thursday it will pay a four-cent quarterly dividend, the first shareholder payout since the company suspended payments for the first quarter of 2009. New York Times had paid a quarterly dividend for 39 years beginning in 1969.

New York Times said shareholders will begin to receive the dividend on Oct. 24 to stockholders of record as of the close of trading on Oct. 9.

"We are pleased to announce the initiation of this quarterly dividend, which will allow us to return capital to our shareholders while maintaining the financial flexibility necessary to continue to invest in the company's transformation and various growth initiatives," Chairman Arthur Sulzberger, Jr. said in a statement.

New York Times shares rose 0.9% to $11.54 on Thursday to extend their 2013 rise to 35%. Shares have gained 66% during the past two years. The New York-based media company is projected to post sales of $445 million, a decrease of 1% in 2013, according to average analyst projections compiled by Bloomberg. 

Elsewhere, The Wall Street Journal is losing two of its superstars.

Tech guru Walt Mossberg, who all but created the position of personal-technology journalist, and his cohort Kara Swisher, are leaving the Journal and taking their highly trafficked web site AllThingsD with them. News Corp. (NWS), which made the separation official today in a statement, acquired Dow Jones and its flagship newspaper The Journal in 2006.

News Corp and AllThingsD will not renew their contract when it expires at the end of the year, Dow Jones Editor Gerard Baker said in the statement. Mossberg will leave the newspaper at that time.

Written by Leon Lazaroff.

10 Best Dividend Stocks ! To Own Right Now: CenturyLink Inc.(CTL)

CenturyLink, Inc., together with its subsidiaries, operates as an integrated communications company. The company provides a range of communications services, including voice, Internet, data, and video services in the continental United States. Its services include local exchange and long distance voice telephone services, as well as enhanced voice services, such as call forwarding, caller identification, conference calling, voicemail, selective call ringing, and call waiting; wholesale local network access services; and data services, including high-speed Internet access services, data transmission services over special circuits and private lines, and switched digital television services, as well as special access and private line services. The company also offers fiber transport, competitive local exchange carrier, security monitoring, and other communications, as well as professional and business information services. In addition, it provides other related services, such as leasing, selling, installing, and maintaining customer premise telecommunications equipment and wiring; payphone services; and network database services, as well as participates in the publication of local telephone directories. Further, the company offers printing, direct mail services, and cable television services; and wireless broadband Internet access services and satellite television services. As of December 31, 2010, it operated approximately 6.5 million telephone access lines. CenturyLink, Inc was founded in 1968 and is based in Monroe, Louisiana.

Advisors' Opinion:

• [By Anders Bylund]

  So even after all the hacking and slashing, France Telecom's yield is orders of magnitude richer than American contemporaries AT&T (NYSE: T  ) and Verizon (NYSE: VZ  ) . It's fully comparable to the high-yield payouts of rural American telecoms such as CenturyLink (NYSE: CTL  ) and Windstream (NASDAQ: WIN  ) , but with the added bonus of growth plans in emerging markets. The French stock strikes a unique balance between generous yields, large-scale operations, and vibrant growth plans.

10 Best Dividend Stocks To Own Right Now: Horizon Lines Inc.(HRZ)

Horizon Lines, Inc., through its subsidiaries, provides container shipping and integrated logistics services. It ships a range of consumer and industrial items, such as refrigerated and non-refrigerated foodstuffs, household goods, auto parts, building materials, and other materials used in manufacturing. The company offers container shipping services to ports within the continental United States, Puerto Rico, Alaska, Hawaii, Guam, the U.S. Virgin Islands, and Micronesia. Its integrated logistics services comprise rail, truck brokerage, warehousing, distribution, expedited logistics, and non-vessel operating common carrier operations. Horizon Lines, Inc. also offers terminal services. The company operates terminals in Alaska, Hawaii, and Puerto Rico; contracts for terminal services in seven ports in the continental United States; and the ports in Guam, Yantian, and Xiamen, China, as well as Kaohsiung, Taiwan. In addition, it offers inland transportation services. As of Dec ember 20, 2009, the company owned or leased approximately 20 vessels and 18,500 cargo containers. Horizon Lines, Inc. serves consumer and industrial products companies, as well as various agencies of the U.S. government, including the Department of Defense and the U.S. Postal Service. The company was founded in 1956 and is based in Charlotte, North Carolina.

Top Heal Care Stocks To Own Right Now: Snap-On Incorporated(SNA)

Snap-on Incorporated provides tools, equipment, diagnostics, repair information, and systems solutions for professional users. Its products include hand tools, such as wrenches, screwdrivers, sockets, pliers, ratchets, saws and cutting tools, pruning tools, and torque measuring instruments; power tools, including pneumatic, hydraulic, cordless, and corded tools; and tool storage products comprising tool chests, roll cabinets, and tool control systems. The company?s diagnostics and repair information products include handheld and PC-based diagnostics products, service and repair information products, diagnostic software solutions, electronic parts catalogs, business management systems, business services, point-of-sale systems, integrated systems for vehicle service shops, original equipment manufacturer purchasing facilitation services, and warranty management systems and analytics to manage and track performance. Snap-on Incorporated?s equipment products comprise solutions for the diagnosis and service of automotive and industrial equipment, such as wheel alignment, collision repair, air conditioning service, brake service, fluid exchange, transmission troubleshooting, and safety testing equipment, as well as wheel balancers, tire changers, vehicle lifts, test lane systems, battery chargers, and hoists. The company also provides financial services, including business loans and vehicle leases to franchisees; loans to the franchisees? customers; and loans to its industrial and other customers for the purchase of tools, equipment, and diagnostics products. Snap-on Incorporated sells its products and services through mobile vans, franchisees, company-direct sales, distributors, and the Internet in approximately 130 countries, including the United States, the United Kingdom, Canada, Germany, Australia, France, Japan, Spain, Italy, Sweden, the Netherlands, Argentina, China, and Brazil. Snap-on Incorporated was founded in 1920 and is based in Kenosh a, Wisconsin.

Advisors' Opinion:

• [By Seth Jayson]

  Snap-on (NYSE: SNA  ) reported earnings on April 18. Here are the numbers you need to know.

  The 10-second takeaway
  For the quarter ended March 30 (Q1), Snap-on met expectations on revenues and beat expectations on earnings per share.

• [By Lisa Levin]

  Snap-on (NYSE: SNA) shares gained 0.60% to create a new 52-week high of $106.62. Snap-on's PEG ratio is 1.78.

  Posted-In: 52-Week HighsNews Intraday Update Markets Movers

10 Best Dividend Stocks To Own Right Now: United Community Bancorp(UCBA)

United Community Bancorp operates as the holding company for the United Community Bank that provides banking products and services to individuals and businesses in southeastern Indiana. It offers a range of deposit instruments, including noninterest-bearing demand accounts, such as checking accounts; interest-bearing accounts, consisting of NOW and money market accounts; regular savings accounts; and certificates of deposit, as well as municipal deposits. It also originates one- to four-family residential real estate, multi-family real estate, and nonresidential real estate and land loans, as well as construction and commercial loans. In addition, the company provides a range of consumer loans consisting of home equity loans and lines of credit, as well as loans secured by savings accounts or certificates of deposit (share loans); new farm and garden equipment, automobile, and recreational vehicle loans; and secured and unsecured personal loans. The company is headquartere d in Lawrenceburg, Indiana. United Community Bancorp is a subsidiary of United Community MHC.

10 Best Dividend Stocks To Own Right Now: The Cushing MLP Total Return Fund(SRV)

Cushing MLP Total Return Fund is a closed-end mutual fund launched by Swank Capital, LLC. The fund is managed by Swank Energy Income Advisors L.P. It invests in the public equity and fixed income markets across the globe with a focus in United States. The fund typically invests in MLPs, Other Natural Resource Companies, and global commodities. It primarily invests in the securities of MLPs, other equity securities, debt securities, and securities of non-U.S. issuers employing a fundamental analysis. Cushing MLP Total Return Fund was formed on May 23, 2007 and is domiciled in Dallas.

10 Best Dividend Stocks To Own Right Now: Sysco Corporation(SYY)

Sysco Corporation, through its subsidiaries, distributes food and related products primarily to the foodservice or food-away-from-home industry in North America and Europe. The company offers a line of frozen foods, such as meats, fully prepared entrees, fruits, vegetables, and desserts; a line of canned and dry foods; fresh meats, custom-cut fresh steaks, other meat, seafood, and poultry; dairy products; beverage products; imported specialties; and fresh produce. It also supplies various non-food items, including paper products, such as disposable napkins, plates, and cups; tableware, which include china and silverware; cookware comprising pots, pans, and utensils; restaurant and kitchen equipment and supplies; and cleaning supplies. In addition, the company offers personal care guest amenities, equipment, housekeeping supplies, room accessories, and textiles to the lodging industry. It serves restaurants, hospitals and nursing homes, schools and colleges, hotels and mote ls, lodging establishments, and other foodservice customers. Sysco Corporation was founded in 1969 and is headquartered in Houston, Texas.

Advisors' Opinion:

• [By The Part-time Investor]

  The following stocks met the criteria in January of 2008 and were put into the initial portfolio:

  Abbot Labs (ABT)Advanced data processing (ADP)Associated Banc-Corp (ASBC)Bank of America (BAC)BB&T Corp. (BBT)Bemis Company (BMS)Anheuser Busch (BUD)The Chubb Corporation (CB)Clorox (CLX)Comerica Inc. (CMA)Diebold Inc. (DBD)Emerson Electronics (EMR)First Dollar Corp. (FDO)First Third BanCorp. (FITB)Gannett Co, Inc. (GCI)General Electric (GE)Hershey (HSY)Illinois Tools Works (ITW)Johnson and Johnson (JNJ)Leggett and Platt (LEG)Eli Lilly (LLY)La-Z-Boy (LZB)McDonald's (MCD)Marsh and Ilsley (MI)M&T Bancorp (MTB)PepsiCo (PEP)Pfizer (PFE)Procter & Gamble (PG)Pentair Ltd. (PNR)Regions Financial Corp. (RF)Rohm and Haas (ROH)RPM International (RPM)Sherwin Williams (SHW)Sysco Corp. (SYY)UDR Inc. (UDR)

  Historical quotes were taken from Yahoo Finance. $10,000 was put into each position, to the nearest whole share, so a total of $349,262.89 was invested. From 1/15/08 through 5/16/13 all dividends were reinvested back into the stock that paid them. If a dividend cut was announced, that stock was sold on the ex-div date of the new, lower dividend.

• [By Monica Wolfe]

  Sysco Corporation (SYY)

  Over the past quarter, Hussman has increased his position in Sysco by 33333.3%. The guru purchased a total of 500,000 shares at an average price of $34.43 per share. Since this addition the share price has increased approximately 0.8%.

• [By Alex Planes]

  Investors love stocks that consistently beat the Street without getting ahead of their fundamentals and risking a meltdown. The best stocks offer sustainable market-beating gains, with robust and improving financial metrics that support strong price growth. Does Sysco (NYSE: SYY  ) fit the bill? Let's take a look at what its recent results tell us about its potential for future gains.

• [By GuruFocus]

  Reduced: Sysco Corporation (SYY)

  Tom Gayner reduced to his holdings in Sysco Corporation by 92.56%. His sale prices were between $33.35 and $35.24, with an estimated average price of $34.43. The impact to his portfolio due to this sale was -0.38%. Tom Gayner still held 23,382 shares as of 06/30/2013.

10 Best Dividend Stocks To Own Right Now: NGP Capital Resources Company(NGPC)

NGP Capital Resources Company is a business development company specializing in investments in small and mid size and middle market companies. The firm typically invests in acquisitions, buyouts, growth and development, revitalization, restructuring, recapitalizations, and special situations. It invests in energy companies with a focus on oil and gas exploitation, development, and production business; upstream businesses that acquire, develop, and produce oil, natural gas, and coal; midstream businesses that gather, process, store, and transport oil and natural gas; power generation and distribution; oil field services and other energy services; and alternative energy and other similar energy related businesses. The firm primarily invests between $10 million and $100 million in its portfolio companies. It invests in the form of secured, senior, and subordinate debt; convertible debt; preferred equity; project equity; production payments, net profits interests, and similar investments; and mezzanine loans and may receive equity investments in portfolio companies in connection with such investments. The firm makes asset and project based investments in private companies and can also invest in public companies. NGP Capital Resources Company was founded in 2004 and is based at Houston, Texas. It is a subsidiary of NGP Energy Capital Management.

10 Best Dividend Stocks To Own Right Now: Cummins Inc.(CMI)

Cummins Inc. designs, manufactures, distributes, and services diesel and natural gas engines, electric power generation systems, and engine-related component products worldwide. It operates in four segments: Engine, Power Generation, Components, and Distribution. The Engine segment offers a range of diesel and natural gas powered engines under the Cummins and other customer brand names for the heavy-and medium-duty truck, bus, recreational vehicle, light-duty automotive, agricultural, construction, mining, marine, oil and gas, rail, and governmental equipment markets. This segment also provides new parts and service, as well as remanufactured parts and engines. The Power Generation segment offers power generation systems, components, and services, including diesel, natural gas, gasoline, and alternative-fuel electrical generator sets for use in recreational vehicles, commercial vehicles, recreational marine applications, and home stand-by or residential applications. This segment also provides components that make up power generation systems, such as engines, controls, alternators, transfer switches, and switchgears. The Components segment supplies filtration products, turbochargers, aftertreatment systems, intake and exhaust systems, and fuel systems for commercial diesel applications. This segment offers filtration and exhaust systems for on-and off-highway heavy-duty and mid-range equipment, as well as supplies filtration products for industrial and passenger car applications. This segment also develops after treatment and exhaust systems to help customers meet emissions standards and fuel systems. The Distribution segment provides parts and services, as well as service solutions, including maintenance contracts, engineering services, and integrated products. The company sells its products to original equipment manufacturers, distributors, and other customers. Cummins Inc. was founded in 1919 and is headquartered in Columbus, Indiana.

Advisors' Opinion:

• [By Alex Planes]

  Another potential spark for growth could be Eaton's auto-parts business, which is purportedly on the block. That wouldn't affect Eaton's truck-parts business, which has a major powertrain development deal with Cummins (NYSE: CMI  ) , and which still accounts for more of Eaton's revenue than the auto segment. Reducing its exposure to cyclical industries would improve Eaton's standing in the eyes of many investors, and the cash haul (estimated at $1 billion) from the sale could go toward paying off debt or buying a business more in line with the current electrical focus.

• [By Brian Pacampara]

  Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, diesel engine manufacturer Cummins (NYSE: CMI  ) has earned a coveted five-star ranking.

10 Best Dividend Stocks To Own Right Now: Triumph Group Inc.(TGI)

Triumph Group, Inc., through its subsidiaries, engages in the design, engineering, manufacture, repair, overhaul, and distribution of aircraft components. The company operates in two segments, Aerospace Systems and Aftermarket Services. The Aerospace Systems segment provides mechanical and electromechanical controls, such as hydraulic systems and components, main engine gearbox assemblies, and accumulators and mechanical control cables. It also involves in stretch forming, die forming, milling, bonding, machining, welding, and assembling and fabricating various structural components used in aircraft wings, fuselages, and other assemblies. In addition, this segment provides composite assemblies for floor panels, environmental control system ducts, non-structural cockpit components, and thermal acoustic insulation systems. The Aftermarket Services segment provides maintenance, repair, and overhaul services for commercial and military markets. This segment offers its services on auxiliary power units, and air frame and engine accessories, including constant-speed drives, cabin compressors, starters and generators, and pneumatic drive units; and on thrust reversers, nacelle components, and flight control surfaces, as well as supplies spare parts of cockpit instruments and gauges for a range of commercial airlines. The company serves the aerospace industry, including original equipment manufacturers of commercial, regional, business, and military aircraft and components, as well as commercial airlines, air cargo carriers, and military customers. Triumph Group, Inc. was founded in 1993 and is based in Wayne, Pennsylvania.

Advisors' Opinion:

• [By Seth Jayson]

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

• [By Dan Caplinger]

  Two moves from Precision during the quarter showed the company's commitment toward improving its strategic position within the industry. The biggest was its announced $600 million acquisition of Permaswage late last month, which designs and makes aerospace fluid fittings. With expectations that the buyout will immediately boost earnings once it closes, the move accentuates the huge opportunity that Precision sees in the aerospace industry. But it also sold off its Primus Composites division to Triumph Group (NYSE: TGI  ) , showing Precision's willingness to sell off what it considers to be non-core assets even if it is more typically a buyer than a seller.

• [By Rich Smith]

  On Friday, Triumph Group's (NYSE: TGI  ) Aerostructures-Vought Aircraft Division announced that it has been awarded the contract to design and build the center fuselage section III, rear fuselage section, and also the rudder and elevator components on the tail section on Embraer's second-generation family of E-Jets.

• [By Alex Planes]

  What: Shares of Triumph Group (NYSE: TGI  ) are down nearly 7%, and reached an intraday low of 10% beneath yesterday's close, after releasing an earnings report that pairs solid quarterly results with disappointing forward guidance.

10 Best Dividend Stocks To Own Right Now: ENSCO plc(ESV)

Ensco plc, together with its subsidiaries, provides offshore contract drilling services to the oil and gas industry. The company engages in the drilling of offshore oil and natural gas wells by providing its drilling rigs and crews under contracts with international, government-owned, and independent oil and gas companies. As of February 15, 2010, it owned and operated 42 jackup rigs, 4 ultra-deepwater semisubmersible rigs, and 1 barge rig. The company also has 4 ultra-deepwater semisubmersible rigs under construction. It operates in Asia, the Middle East, Australia, New Zealand, Europe, Africa, and North and South America. The company was formerly known as Ensco International plc and changed its name to Ensco plc in March 2010. Ensco plc was founded in 1975 and is based in London, the United Kingdom.

Advisors' Opinion:

• [By John Buckingham, Chief Investment Officer, Al Frank Asset Management, Inc. (AFAM)]

  Ensco PLC (ESV) is the world's second largest offshore driller. The firm operates across six continents with one of the newest jackup and deepwater fleets in the contract drilling industry.

• [By Marc Bastow]

  Off-shore contact drilling service provider Ensco (ESV) raised its quarterly dividend 50% to 75 cents per share, payable on Dec. 20 to shareholders of record as of Dec. 9.
  ESV Dividend Yield: 4.90%
  

• [By Chris Hill]

  In this segment, Jason and Taylor tell investors why they'll be watching shares of Transocean (NYSE: RIG  ) , Ensco (NYSE: ESV  ) and McDonald's (NYSE: MCD  ) this week.

• [By Traders Reserve]

  For investors who want a piece of this developing trend, Transocean and Seadrill are two of the bigger players in this arena. Other offshore drillers/rig operators are Noble (NE) and Ensco (ESV). Companies that provide services to offshore drillers and benefit from increases in exploration and drilling activity are Gulfmark Offshore (GLF), Hornbeck (HOS), Seacor (CKH) and Tidewater (TDW).

Is Akamai Destined for Greatness?

Investors love stocks that consistently beat the Street without getting ahead of their fundamentals and risking a meltdown. The best stocks offer sustainable market-beating gains, with robust and improving financial metrics that support strong price growth. Does Akamai (NASDAQ: AKAM  ) fit the bill? Let's look at what its recent results tell us about its potential for future gains.

What we're looking for
The graphs you're about to see tell Akamai's story, and we'll be grading the quality of that story in several ways:

Growth: Are profits, margins, and free cash flow all increasing? Valuation: Is share price growing in line with earnings per share? Opportunities: Is return on equity increasing while debt to equity declines? Dividends: Are dividends consistently growing in a sustainable way?

What the numbers tell you
Now, let's look at Akamai's key statistics:

AKAM Revenue (TTM) data by YCharts

Passing Criteria

3-Year* Change

Grade

Revenue growth > 30%	55.5%	Pass
Improving profit margin	14%	Pass
Free cash flow growth > Net income growth	17.3% vs. 77.2%	Fail
Improving EPS	83.5%	Pass
Stock growth (+ 15%) < EPS growth	(11.9%) vs. 83.5%	Pass

Source: YCharts.
*Period begins at end of Q3 2010.

AKAM Return on Equity (TTM) data by YCharts

Passing Criteria

3-Year* Change

Grade

Improving return on equity	36.5%	Pass
Declining debt to equity	(100%)	Hot Growth Stocks To Invest In 2014 Pass

Source: YCharts.
*Period begins at end of Q3 2010.

How we got here and where we're going
Akamai puts together a really impressive performance in its second assessment, scoring six out of seven possible passing grades compared to only three passing grades last year. The only failing grade occurred because Akamai's free cash flow has failed to keep pace with soaring net income -- but these two metrics are neck and neck on a nominal basis for the trailing 12 months, so Akamai has a healthy bottom line in more than one way. In all other areas, Akamai has enjoyed strong growth, which has turned it from a middling stock into what appears to be a great investment. But can Akamai keep up its progress, or is this going to be the company's high-water mark? Let's dig deeper to see what the future might hold.

Recently, Akamai's shares tumbled by as much as 12% despite solid growth in both revenue and earnings for the third quarter, thanks to weak forward guidance. The company has been in negotiations with its largest media customer, which has typically been thought to be Netflix (NASDAQ: NFLX  ) , purveyor of more content than any other one site on the Internet. Fool contributor Dan Caplinger points out that higher levels of high-quality video streaming activity have been a key driver of Akamai's overall traffic. Any deterioration in Akamai's relationship with Netflix would undoubtedly undermine its growth, as there really is no comparable content company out there at the moment.

Customers have thus far shown a great deal of interest in utilizing Akamai's network, and its Kona Site Defender, which adds an extra layer of network security. Networking giant Cisco Systems (NASDAQ: CSCO  ) recently signed a deal to use Akamai's software in its high-end routers, which is an important placement as Akamai seeks to push its high-value software applications into the enterprise environment. Akamai is also set to gain immediate benefits from the acquisition of Israeli start-up Cotendo, which had signed a four-year online content delivery deal with AT&T.

Limelight Networks and Level 3 Communications continue to battle Akamai in the content delivery segment, which has understandably led to pricing wars as the three companies try to grab at the same customer base. Amazon.com is also contemplating a one-stop turnkey solution to its cloud-services clients, which could pose an emerging threat to Akamai and its peers should it be paired with content delivery services. Fool contributor Tim Beyers notes that Google's Project Shield, which offers similar protection as Akamai's Kona Site Defender, could be a game changer in the network security space.

Putting the pieces together
Today, Akamai has many of the qualities that make up a great stock, but no stock is truly perfect. Digging deeper can help you uncover the answers you need to make a great buy -- or to stay away from a stock that's going nowhere.

Will Akamai be 2014's best stock?
The market stormed out to huge gains across 2013, leaving investors on the sidelines burned. However, opportunistic investors can still find huge winners. The Motley Fool's chief investment officer has just hand-picked one such opportunity in our new report: "The Motley Fool's Top Stock for 2014." To find out which stock it is and read our in-depth report, simply click here. It's free!

Cable stocks surge on takeover chatter

Click the chart to track shares of Time Warner Cable.

NEW YORK (CNNMoney) Consumers love to hate their cable companies, but there appears to be a love triangle in the air between three of the industry's giants: Charter Communications, Time Warner Cable and Comcast.

Charter Communications (CHTR, Fortune 500), the fourth largest cable provider with just over 4 million subscribers, has reportedly been in talks with major banks to borrow money to fund a possible bid for Time Warner Cable (TWC, Fortune 500), the second largest cable company with over 11 million subscribers.

But according to a source familiar with the matter, Time Warner Cable has reached out to Comcast (CMCSA, Fortune 500) for a possible deal. There are currently no ongoing conversations though, the source added. With over 21 million subscribers, Comcast is the nation's largest cable provider. (Time Warner Cable was spun off from CNNMoney owner Time Warner (TWX, Fortune 500) in 2009.)

Time Warner Cable and Comcast declined to comment, while Charter could not be reached.

Shares of Time Warner Cable jumped almost 10% on the chatter, while Comcast and Charter shares also gained ground. Another smaller cable company, New York-based Cablevision (CVC, Fortune 500), shot up on the reports as well. Cablevision has long been considered a takeover target.

Citing people familiar with the situation, the Wall Street Journal said Charter has held talks with Bank of America (BAC, Fortune 500), Barclays (BCS) and Deutsche Bank (DB) to help come up with financing for a Time Warner Cable bid.

The company may also be reaching out to sovereign wealth funds and wealthy individuals to help pay for the buyout without taking on too much debt. Time Warner Cable is worth $34 billion -- almost three times as much as Charter.

Media mogul John Malone's Liberty Media (LMCA) is the largest shareholder in Charter and Malone has been a loud supporter of more consolidation in the cable industry, which is facing rising costs in programming.

Plus, cable companies are worried about losing subscribers, as some consumers cut the cord and shift to devices like Apple (AAPL, Fortune 500) TV and Roku as well as streaming video services like Aereo, Netflix (NFLX), Hulu and Amazon's (AMZN, Fortune 500)' Prime Instant Video.

While speculation of a deal has been rising for several months since Malone became a shareholder of Charter, the financing efforts represent "perhaps the most concrete step discussed to date," said Nomura analyst Adam Ilkowitz in a note to clients.

!

He expects Charter will have to raise about $25 billion in total -- $15 billion in debt and $10 billion in cash from other sources.

A merger between the two would likely save $500 million in programming expenses a year, Ilkowitz said.

But IHS cable networks analyst Erik Brannon said those savings may or may not trickle down to consumers, given the rising expenses and intense competition among cable providers.

  Netflix on your cable box? It may happen

Meanwhile, further consolidation between the nation's largest cable providers could raise concern among government regulators -- most notably the Department of Justice and the Federal Communications Commission. Citing unnamed sources, CNBC reported that Comcast is seeking advice on antitrust and FCC concerns.

A merger between Comcast and Time Warner Cable would result in one company with over 32 million subscribers, or nearly a third of all cable subscribers, Brannon said. But he doesn't think a merger between the two is likely.

"I don't think it makes sense for Comcast at this point," he said, noting that Time Warner Cable has been losing an average of about 175,000 subscribers per quarter recently. During the third quarter alone, the company lost a startling 306,000 subscribers due to its month-long fight with CBS (CBS, Fortune 500). "There isn't much upside versus the expenditures Comcast would have."

FCC eyes lifting ban on cell calls on planes

The Federal Communications Commission is reviewing its 22-year ban against in-flight cellphone calls, igniting concerns among frequent fliers about plane cabins becoming much noisier.

At its meeting Dec. 12, the FCC will consider changing its rules to allow passengers access to mobile wireless services. The 1991 ban began because of concerns about jamming ground stations.

"Modern technologies can deliver mobile services in the air safely and reliably, and the time is right to review our outdated and restrictive rules," FCC Chairman Tom Wheeler said. "I look forward to working closely with my colleagues, the FAA and the airline industry on this review of new mobile opportunities for consumers."

The FCC will collect public comment if the proposal moves forward, but opposition erupted immediately.

"My answer is quite simple: Absolutely no way. Never," said Diane Johnson of Fort Worth, a publications executive. "With all the stress of travel, silence on a plane is like music to my ears."

The FCC proposal would give airlines the option to allow voice calls, according to two FCC sources who were not authorized to speak publicly.

Top Heal Care Companies To Watch In Right Now

Phones are used widely on airlines in other countries, for calls and data, by linking essentially to a communication tower aboard the plane. This would satisfy FCC concerns about interference with ground stations, according to the two agency sources.

"On the technical side of things, there have been changes that do allow wireless services on planes that prevent interference with ground service," one source said. "We think there is some benefit to giving airlines the choice of improving consumer choice and access, and let them to decide whether or not they're going to allow voice."

A spokeswoman for the airline industry said it hasn't seen the proposal and declined comment. "We will want to! analyze any proposal to understand the impact," said Victoria Day of the group Airlines for America.

The Association of Flight Attendants-CWA strongly opposed the move. The group warned that calls would be disruptive, loud and divisive and possibly go beyond a mere nuisance to hurt safety by drowning out announcements.

The FCC considered relaxing its ban in 2004 but decided against a change after a flood of opposition and because of lingering technical questions.

"Passengers overwhelmingly reject cellphone use in the aircraft cabin," the attendants union said. "The FCC should not proceed with this proposal."

Capt. Patrick Smith, a 20-year pilot who writes the blog askthepilot.com, said cell calls wouldn't be allowed if safety issues remained, so it's just a social question.

"Just imagine 250 passengers all making calls at once," Smith said. "I shudder to imagine how awful that would be."

Passengers, including frequent business travelers, have long opposed allowing calls because of the noise from other calls.

"I am very much opposed to allowing voice calls aboard flights," said Bill Clegg, a hotel executive in Huntersville, N.C. "The cacophony of babies crying, children screaming and adults carrying on conversations does not need the addition of business travelers closing deals or leisure travelers yakking about travel plans, romances or what they had for dinner last night."

Some travelers shrugged off the problem.

Kim Hunter of Los Angeles, head of a marketing company who travels more than 150,000 miles per year, said calls are fine so long as "there is no disruption on both the flight deck and the cabin."

If that's the case, "I support allowing voice calls aboard all flights, both domestic and international," Hunter said.

James Morrow, an information technology consultant from Overland Park, Kan., said opponents may be overreacting because he thinks the airlines will charge dearly for the calls.

"While it might be annoying to be! sitting ! next to someone who is on the phone, I think people are overestimating how frequently this will actually be used," Morrow said. "The airlines will charge dearly for the privilege, and sound quality of the call will almost certainly suffer if only due to the background noise of an airplane."

The reconsideration of voice calls followed the Federal Aviation Administration recent move to allow passengers to use their gadgets such as games and e-readers while taking off and landing. The FAA has prohibited the use of electronics when the plane was less than 10,000 feet in the air.

The Telecommunications Industry Association, which represents manufacturers and suppliers of communication equipment, praised the FCC for considering the change.

"TIA supports initiatives to make mobile broadband services, including Internet access, available to passengers and flight crews aboard commercial airliners and private aircraft," TIA President Grant Seiffert said. "We look forward to examining the specific proposals of the commission in this matter."

5 Stocks Under $10 Moving Higher

DELAFIELD, Wis. (Stockpickr) -- At Stockpickr, we track daily portfolios of stocks that are the biggest percentage gainers and the biggest percentage losers.

>>5 Big Trades to Take Right Now

Stocks that are making large moves like these are favorites among short-term traders because they can jump into these names and try to capture some of that massive volatility. Stocks that are making big-percentage moves either up or down are usually in play because their sector is becoming attractive or they have a major fundamental catalyst such as a recent earnings release. Sometimes stocks making big moves have been hit with an analyst upgrade or an analyst downgrade.

Regardless of the reason behind it, when a stock makes a large-percentage move, it is often just the start of a new major trend -- a trend that can lead to huge profits. If you time your trade correctly, combining technical indicators with fundamental trends, discipline and sound money management, you will be well on your way to investment success.

>>5 Bargain Bin Stocks to Buy This Fall

With that in mind, let's take a closer look at a several stocks under $10 that are making large moves to the upside recently.

Cleantech Solutions International

Cleantech Solutions International (CLNT) manufactures and sells high-precision forged rolled rings, yaw bearings and shafts. It also manufactures and sells textile dyeing and finishing machines. This stock closed up 9.7% to $5.83 in Thursday's trading session.

Thursday's Range: $5.22-$5.84

52-Week Range: $2.03-$10.85

Thursday's Volume: 457,000

Three-Month Average Volume: 758,917

>>5 Stocks With Big Insider Buying

From a technical perspective, CLNT ripped sharply higher here back above its 50-day moving average of $5.48 with lighter-than-average volume. This move also pushed shares of CLNT into breakout territory, since the stock took out some near-term overhead resistance at $5.72.

Traders should now look for long-biased trades in CLNT as long as it's trending above its 50-day at $5.48 or above more support at $5.05 and then once it sustains a move or close above Thursday's high of $5.84 with volume that hits near or above 758,917 shares. If we get that move soon, then CLNT will set up to re-test or possibly take out its next major overhead levels at $7 to $7.79.

Hudson Technologies

Hudson Technologies (HDSN) is a refrigerant services company providing innovative solutions to recurring problems within the refrigeration industry. This stock closed up 7.3% to $2.05 in Thursday's trading session.

Thursday's Range: $1.89-$2.06

52-Week Range: $1.76-$5.04

Thursday's Volume: 153,000

Three-Month Average Volume: 215,571

>>5 Rocket Stocks to Buy for September Gains

From a technical perspective, HDSN trended higher here right above some near-term support at $1.76 with lighter-than-average volume. This stock recently formed a double bottom chart pattern at $1.77 to $1.76. Following that bottom, shares of HDSN have started to uptrend and break out on Thursday above some near-term overhead resistance at $1.96. Shares of HDSN are now quickly moving within range of triggering another big breakout trade. That trade will hit if HDSN manages to take out some more resistance levels at $2.13 to $2.18 with high volume.

Traders should now look for long-biased trades in HDSN as long as it's trending above Thursday's low of $1.89 and then once it sustains a move or close above those breakout levels with volume that hits near or above 215,571 shares. If that breakout hits soon, then HDSN will set up to re-test or possibly take out its next major overhead resistance levels at $2.75 to $2.92. Any high-volume move above $2.92 will then put its 200-day moving average at $3.30 into range for shares of HDSN.

Magnum Hunter Resources

Magnum Hunter Resources (MHR) is an oil and gas company engaged in the exploration for and the exploitation, acquisition, development and production of crude oil, natural gas and natural gas liquids resources in the U.S. and Canada. This stock closed up 7.5% to $5.87 in Thursday's trading session.

Thursday's Range: $5.47-$5.88

52-Week Range: $2.37-$5.88

Thursday's Volume: 4.84 million

Three-Month Average Volume: 3.38 million

>>5 Stocks Spiking on Big Volume

From a technical perspective, MHR ripped higher here right off some near-term support at $5.40 with heavy upside volume. This move pushed shares of MHR into breakout and new 52-week high territory, since the stock took out some near-term overhead resistance levels at $5.79 to its former 52-week high at $5.86.

Traders should now look for long-biased trades in MHR as long as it's trending above some key near-term support levels at $5.40 or at $5.18 and then once it sustains a move or close above Thursday's high of $5.88 with volume that hits near or above 3.38 million shares. If that breakout triggers soon, then MHR will set up to enter new 52-week-high territory, which is bullish technical price action. Some possible upside targets off that move are its next major overhead resistance levels at $6.45 to $7.50.

Gevo

Gevo (GEVO) is a renewable chemicals and advanced biofuels company. This stock closed up 3.1% to $1.97 in Thursday's trading session.

Thursday's Range: $1.75-$1.92

52-Week Range: $1.36-$2.75

Thursday's Volume: 650,000

Three-Month Average Volume: 753,223

>>5 Stocks Set to Soar on Bullish Earnings

From a technical perspective, GEVO jumped higher here right above its 50-day moving average of $1.88 and back above its 200-day moving average of $1.93 with decent upside volume. This stock has been uptrending modestly over the last month and change, with shares moving higher from its low of $1.67 to its recent high of $2.09. During that move, shares of GEVO have been making mostly higher lows and higher highs, which is bullish technical price action. That move has now pushed shares of GEVO within range of triggering a near-term breakout trade. That trade will hit if GEVO manages to take out some near-term overhead resistance levels at $2.09 to $2.11 with high volume.

Traders should now look for long-biased trades in GEVO as long as it's trending above its 50-day at $1.88 or above more near-term support at $1.82 and then once it sustains a move or close above those breakout levels with volume that hits near or above 753,223 shares. If that breakout hits soon, then GEVO will set up to re-test or possibly take out its next major overhead resistance levels at $2.30 to $2.32. Any high-volume move above those levels will then put its next major overhead resistance levels at $2.45 to $2.75 into range for shares of GEVO.

FalconStor Software

FalconStor Software (FALC) provides disk-based data protection. This stock closed up 2.8% to $1.44 in Thursday's trading session.

Thursday's Range: $1.40-$1.45

52-Week Range: $0.88-$2.89

Thursday's Volume: 260,000

Three-Month Average Volume: 264,841

From a technical perspective, FALC bounced modestly higher here and broke out above some past overhead resistance at $1.43 with decent upside volume. This stock has been uptrending strong for the last two months, with shares moving higher from its low of 88 cents to its intraday high of $1.45. During that move, shares of FALC have been consistently making higher lows and higher highs, which is bullish technical price action.

Traders should now look for long-biased trades in FALC as long as it's trending above $1.30 or $1.20 and then once it sustains a move or close above Thursday's high of $1.45 with volume that hits near or above 264,841 shares. If we get that move soon, then FALC will set up to re-test or possibly take out its next major overhead resistance levels at $1.66 to its 200-day moving average at $1.81. Any high-volume move above those levels will then put $1.90 to $2.20 into range for shares of FALC.

To see more stocks that are making notable moves higher today, check out the Stocks Under $10 Moving Higher portfolio on Stockpickr.

-- Written by Roberto Pedone in Delafield, Wis.

RELATED LINKS:

>>5 Stocks Under $10 Set to Soar

>>4 Stocks Rising on Unusual Volume

>>5 Toxic Stocks You Should Sell

Follow Stockpickr on Twitter and become a fan on Facebook.

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

Roberto Pedone, based out of Delafield, Wis., is an independent trader who focuses on technical analysis for small- and large-cap stocks, options, futures, commodities and currencies. Roberto studied international business at the Milwaukee School of Engineering, and he spent a year overseas studying business in Lubeck, Germany. His work has appeared on financial outlets including

CNBC.com and Forbes.com. You can follow Pedone on Twitter at www.twitter.com/zerosum24 or @zerosum24.

Despite market reaction, Bernanke's head fake is a bad sign

If we learned nothing else from yesterday's announcement that the Federal Reserve is delaying any tapering of the $85 billion-per-month bond-buying program, it is that Chairman Ben S. Bernanke is a big tease.

Anyone being honest about it would have to admit they fully expected Mr. Bernanke to announce that some tapering of the quantitative-easing program would begin this month. The concept of tapering was so forecasted so confidently over the past few months that some market watchers had already seen it through to the end of quantitative easing.

Just prior to the Fed's big no-tapering announcement Wednesday, Jennifer Vail, U.S. Bank Wealth Management's head of fixed income, predicted a $10 billion monthly reduction in bond purchases to kick off a gradual wind-down of quantitative easing.

She even specified June 2014 as the point at which the five-plus-year quantitative-easing program would finally conclude.

Then, boom! Just as everyone expected Mr. Bernanke to start limiting access to the proverbial punchbowl otherwise known as cheap money, he pulls a gotcha and the financial markets go bananas with glee.

All is wonderful, it seems, as stock, bond and gold prices spike while the dollar takes a nose dive in a silent nod to anyone fretting about all that pesky U.S. debt.

So, why all the gloomy comments and frowning symbols at the end of texts and e-mails I received late into the night?

Perhaps Jeff Leventhal, partner and managing director at HighTower Bethesda, summed it up best.

“The issue I see here is that if the data doesn't improve at some point, and we head in another direction, what tools will we have if we go back into another recession?” he said. “There are consequences to leaving rates too low for too long.”

In essence, responsible adults are going to worry about the very real long-term effects of a monetary policy that has pushed the Fed's balance sheet to more than $3.6 trillion and climbing.

Top 10 Penny Stocks To Buy Right Now

When Mr. Bernanke first started talking publicly about specific tapering targets -- even though we know now he was just kidding -- the market had an initial reaction.

Even a slight reduction in purchasing by such a major bond-buyer as the United States government would surely have an impact on yields, and the markets adjusted accordingly.

And so, the bond market, being possibly the most efficient and forward-acting of all financial markets, was considered to be well-positioned for the tapering to begin this month.

That is until Mr. Bernanke reminded us that the economy is not as strong as he had hoped it would be at this point, so he will keep the training wheels on for a bit longer.

How much lon! ger? That's where things start to get foggy again. If one considers the Fed's dual mandate of managing inflation and unemployment, it would be difficult to imagine any major changes this year, especially with the looming debt ceiling debate and more Washington budget battles around the next bend.

Thus, the markets charge forward, riding paradoxically high on the Fed's subtext that even after more than five years of unprecedented support, the economy is not yet strong enough to even attempt standing on its own.

“We've been doing this quantitative easing for so long that people have forgotten that it is not normal operating procedure,” said Rick Platte, co-manager of the Ave Maria Rising Dividend Fund (AVEDX).

“Tapering might have had a short-term negative impact on markets, but I wonder if it wouldn't have also been a psychological positive by showing that the economy is getting stronger,” he added. “By continuing with the meds, it just keeps reminding everyone how sick the patient is.”

My Top 2 Bill Gates Picks

The Internet would not have grown as quickly as it did without Bill Gates. The Microsoft founder standardized software for the personal computers that are now linked together on the Internet.

From our current perspective, it is obvious that software needs to be compatible with other software. But, in the 1980s, before Microsoft made Gates a billionaire, it was actually common to find computers even within a single office with different operating systems and software products like word processing. Gates saw through the disorder and provided standards that made PCs more useful, setting the stage for the Internet.

 

His investment style shows a similar ability to create order. According to recent SEC filings, Gates controls more than $17 billion worth of stock market investments through the Bill and Melinda Gates Foundation. Of all the thousands of potential investments, this fortune is invested in only 21 stocks. Gates obviously likes to focus his attention on just a few opportunities at any one time.

Hot Blue Chip Stocks To Own Right Now

His largest investment is in Berkshire Hathaway (NYSE: BRK-B). The Gates Foundation owns more than $8 billion worth of this stock. Bill Gates also sits on the Board of Directors of Berkshire Hathaway and has access to the investment insights of Warren Buffett.

It is interesting to note that Gates did not make any new buys in the three months that ended June 30, 2013. He did sell five stocks that made up only a small part of his portfolio.

We can see that Gates is a patient and selective investor. As individual investors, it can be difficult to be as patient as a billionaire. Meeting our financial goals generally requires us to earn a profit on our investments in a reasonable amount of time. To do this, I developed a trading system that identifies timely buying opportunities.

I start with a list of stocks owned by great investors like Gates. He has access to brilliant analysts, and they have selected each stock based on its long-term potential. I then look for the stocks on that list that are moving higher faster than the rest of the market and are increasing cash flow.

Relative strength (RS) is a way to identify stocks that are moving higher now. It ranks all investments on a scale of 0 (weakest) to 100 (strongest). A number of research studies show stocks that have moved up the most in the past six months (those with high RS) are likely to outperform the market in the next six months.

Cash flow growth is often seen among stock market winners. This! is a fundamental measure that is usually more reliable than earnings.

My system buys when RS is high and cash flow is growing. From the list of stocks in the Gates Foundation, only two are considered buys using these rules right now.

Known for environmentally friendly products, Ecolab (NYSE: ECL) is a consumer goods company that serves a variety of markets. The company offers cleaners and sanitizers for washing dishes and kitchen equipment for the food service industry, and housekeeping supplies for the hospitality industry. It also provides products for the health care, industrial and energy markets.

Revenue topped $12 billion in the past 12 months. Growth in earnings per share (EPS) averaged 12.65% a year over the past five years and is expected to accelerate to more than 15% a year in the next five years. Free cash flow has turned positive in the past 12 months and increased almost 50% in the last year.

Investors have pushed the stock price up nearly 35% since the beginning of the year, and ECL has an RS rank of 100, meaning it has been a top performer in the stock market over the past six months.

Grupo Televisa (NYSE: TV) provides programming and cable and satellite services to viewers in the U.S., Mexico, the Dominican Republic and other countries. The company reported more than $5.5 billion in revenue over the past 12 months and earnings of more than $680 million, or $1.10 per share. Cash flow per share doubled in the past 12 months.

Grupo Televisa is up only 6% since the beginning of the year, but has an RS rank of 72, just above the buy level of 70 I use for this indicator.

As I mentioned earlier, following market "gurus" like Bill Gates is one of the best ways to make money in the stock market. Investors should consider joining Bill Gates as long-term shareholders of ECL and TV.

But Gates is just one of the 20 investing gurus I follow. And as I just showed you, it's not as simple as looking at their portfolio and buying what they ho! ld. Timin! g also matters.

I've come out with a new free report that helps you understand exactly how you can beat the best gurus in the world at their own game. To get access to the free report,"How to Outperform Soros, Icahn... or Even Buffett," click here.

Disney Buyback Reflects Strength of Media Stocks: Media Roundup

NEW YORK (TheStreet) - Blackouts, hacking scandals and threats to the pay-TV model be damned, the stocks of major U.S. media companies keep on rolling.

Led by Walt Disney (DIS), CBS (CBS) and 21st Century Fox (KMX), the S&P 500 Media Index has gained 30% this year, easily outdistancing the S&P 500 composite, which has advanced a nothing-to-scoff-at 18%, poised for its best year since 1997.

Disney has benefited from the strength of advertising at ABC and fees paid to carry ESPN to beat analysts' earnings forecast in each of the past nine quarters. While the films group has underperformed, Disney said Thursday it will buy back $6 billion to $8 billion of its stock beginning next year, a reflection of the company's health. Shares of the world's largest entertainment company rose 2.4% to close at $65.49, extending its 2013 advance to 32%.

But Disney isn't alone. Media company stocks have been energized by steady and nearly unbroken increases in profits and sales. CBS, for instance, has beaten analyst quarterly forecasts in 15 of the past 16 quarters. Behind those numbers are trends that repudiate, at least for the short term, the notion that content producers would struggle in the age of portable electronic devices and increasing sources of programming. Even after media company have hit record highs, their stocks are being valued just slightly higher than the benchmark S&P 500, which trades at 16.1 times members' earnings. In most cases, analysts view these shares as not yet too expensive. According to data compiled by Bloomberg, CBS and Viacom are trading at 19 times earnings while Time Warner posts a valuation of 17 times and Disney is at 20 times. Meanwhile, 21st Century Fox, by virtue of its split from News Corp. (NWSA), comes in at a more weighty 40 times, according to Bloomberg data. James M. Marsh, media analyst at Piper Jaffray, says media companies are successfully obtaining affiliate fees from local television station owners and retransmission payments from cable- and satellite operators. Netflix (NFLX) and Amazon (AMZN), the two biggest purveyors of video-on-demand programming, are being viewed as friendly rivals, rather than sharks intent on breaking the business model that has sustained content producers for 30 years.

"Investors feel like the model has been de-risked a bit," Marsh said in a phone interview in New York. "Eighteen months ago, two years ago, people were very concerned that new distribution windows would disintermediate the pay-TV ecosystem. But today, they feel much more comfortable that will be further down the road, and that in the interim it's going to be a new distribution channel, a new customer to sell content. The pendulum has shifted from high risk to a sense that the changes in the industry can be managed."

Indeed, the threat of widespread cord-cutting, i.e., pay-TV subscribers abandoning their average $120 monthly payments in exchange for a combination of online and box-top sources, has yet to have a destabilizing impact on media companies or their investors.

Viacom (VIAB), owner of MTV and Nickelodeon, has surged 57% this year, while CBS, the most-watched television network, has jumped 43%, blasting through its four-week blackout with Time Warner Cable as if that unusually public tug-of-war was just another minor operating expense. (The same can't be said of Time Warner Cable (TWC), whose incoming CEO Rob Marcus acknowledged this week at a Bank of America Merrill Lynch conference that the pay-TV operator lost subscribers as a result of the CBS blackout. Marcus didn't say how many customers were lost as a result of fracas.)

News Corp. has more than recovered from concerns that the U.K. hacking scandal that prompted Rupert Murdoch's company to close the London-based News of the World would hamper his legacy print company. News Corp. has gained 8.3% since Murdoch separated his television and film businesses in 21st Century Fox; the shares have gained 7.5% this year. (To be fair to Time Warner Cable, it should be noted that its stock trades at 19 times earnings, an indication that investors still see plenty of value in its underlying business, even as total subscriber numbers decline.) But the domination of major media companies means that their stocks have more to run, says Marsh, who has an overweight rating on CBS. Time Warner (TWX) is rated a buy by 23 analysts and a hold by eight sell-side prognosticators, according to Bloomberg. 21st Century is rated a buy by 24 analysts, a hold by four with one sell recommendation. Marsh has a neutral rating on Viacom, a reflection of the view that the cable-TV network owner may have plateaued. The media business may not be as much of a zero-sum game as industry observers once feared. Rather than viewing Netflix as a reverse indicator for the health of content producer stocks, Marsh argues that recent trends show that video-on-demand services can post good results without hurting media stocks. Netflix has gained an outlandish 226% in 2013 and trades at a gaudy 224 times earnings. "Historically, when Netflix has done well, it's a measure of the increased risk profile of companies that benefit from that pay-TV eco system," Marsh said. "But as you see Netflix hitting 52-week highs again, it's interesting this time around that media companies are also hitting 52-week highs. The market is saying that Netflix can do well, but so can a Disney, Viacom and CBS." -- Written by Leon Lazaroff in New York >Contact by Email. Follow @LeonLazaroff >News stories and columns by Leon Lazaroff.

It's Time for Nuance's Paul Ricci to Go: Opinion

NEW YORK (TheStreet) -- Nuance (NUAN) is not a commonly followed stock compared to the titans of tech. Yet, at a $6 billion market cap, it's hardly a micro-cap.

Most people who know the company know that it's the leader in voice control systems that power such apps as Apple's (AAPL).

It's a textbook industry roll-up.

When I once worked in the voice industry -- which brought us Flipboard founder and former Twitter director Mike McCue as well as new Xiaomi executive Hugo Barra -- the two big titans of voice apps were Nuance and SpeechWorks. Both had splashy dot-com era IPOs and then struggled to keep revenue growing through the desert years of 2001 to 2003. Suddenly -- and seemingly out of nowhere -- both of these companies and scores of smaller private ones were bought up by a company no one in the industry had ever really heard of: ScanSoft. ScanSoft was led by a guy no one had ever heard of: Paul Ricci. Ricci's first big acquisition was buying the Lernout & Hauspie assets out of bankruptcy in 2001. Two years later, he bought SpeechWorks, which was also in the Boston area. Two years after that, he "merged" with Nuance and -- smartly -- took its name. Ricci, now 57, is known for being tough as nails and a guy with no real strategy except just buy revenue and cut out costs. If you're looking for a coherent corporate strategy, keep looking. As a result, Nuance is now a multi-headed corporate beast with a health care transcription business, an enterprise one and a mobile business sold to carriers, Samsung and Apple. It shouldn't be. It should be broken up into three separate businesses so investors can place their own value on each business. But Ricci won't split the baby -- and that's why someone else must. It's time for Ricci to go. He paid himself $37 million last year, even though Nuance shares have declined 23% in value in the last 12 months.

Top 5 Low Price Companies To Watch In Right Now

This year, while the Nasdaq is up 26%, Nuance shares have dropped more than 13%.

There have been repeated missteps in terms of Nuance execution leading to several disappointing earnings calls.

All the while, while Siri and other services have been increasing in popularity, Ricci has yet to really articulate a strategy for Nuance.

Enough is enough. Paul Ricci, you've had your chance to do your strategy of rolling up the industry. There are now no more companies to buy. You've had your chance to overpay yourself. Now it's time for you to go. It's time for Carl Icahn to step up to the plate and press his case for why he should be on the Nuance board and why Ricci should step down. With Icahn allowed to bring in his own choice for the next CEO, Nuance shareholders would have their best chance to see a meaningfully increase in the value of their shares in a year where the rest of the Nasdaq stocks are running away with giddiness. The market has clearly spoken with its verdict on Paul Ricci's capabilities as leader of Nuance. It hads said it's time for him to move on to the next chapter of his life. At the time of publication the author was long NUAN and AAPL. Follow @ericjackson This article was written by an independent contributor, separate from TheStreet's regular news coverage.

Eric Jackson is founder and Managing Member of Ironfire Capital and the general partner and investment manager of Ironfire Capital US Fund LP and Ironfire Capital International Fund, Ltd. In January 2007, Jackson started the world's first Internet-based campaign to increase shareholder value at Yahoo!, leading to a change in CEOs in 2007. He also spoke out in favor of Yahoo!'s accepting Microsoft's buyout offer in 2008. Global Proxy Watch named Jackson as one of its 10 "Stars" who positively influenced international corporate governance and shareowner value in 2007. Prior to founding Ironfire Capital, Jackson was President and CEO of Jackson Leadership Systems, Inc., a leadership, strategy, and governance consulting firm. He completed his Ph.D. in the Management Department at the Columbia University Graduate School of Business in New York, with a specialization in Strategic Management and Corporate Governance, and holds a B.A. from McGill University. He was previously Vice President of Strategy and Business Development at VoiceGenie Technologies, a software firm now owned by Alcatel-Lucent. In 2004, Jackson founded the Young Patrons' Circle at the Royal Ontario Museum in Toronto, which is now the second-largest social and philanthropic group of its kind in North America, raising $500,000 annually for the museum. You can follow Jackson on Twitter at www.twitter.com/ericjackson or @ericjackson. You can contact Eric by emailing him at Dr.eric.jackson@me.com.

PaySimple CEO on Next-Gen Payment Processing

Eric Remer is the founder and CEO of PaySimple, a leading provider of small business merchant accounts, mobile and electronic payments, and ACH processing services. He also founded Conclave Group, a direct marketing services company, and cofounded I-Behavior, a leading behavioral targeting and database marketing organization. He began his career in the investment banking field, with Kidder, Peabody & Company.

In this video segment, Remer describes the platforms and ecosystems in use for money transfer, how they're evolving with each generation, and what he sees ahead for current giants such as MasterCard (NYSE: MA  ) , Intuit (NASDAQ: INTU  ) , and eBay (NASDAQ: EBAY  ) .

A full transcript follows the video.

Be the next Buffett
As every savvy investor knows, Warren Buffett didn't make billions by betting on half-baked stocks. He isolated his best few ideas, bet big, and rode them to riches, hardly ever selling. You deserve the same. That's why our CEO, legendary investor Tom Gardner, has permitted us to reveal "The Motley Fool's 3 Stocks to Own Forever." These picks are free today! Just click here now to uncover the three companies we love. 

Tom Gardner: Last question. What do you see happening in the world of payments? I remember reading an article recently where the assertion was people don't change their payment habits after the age of 35.

Eric Remer: Interesting.

Gardner: I may be making that age up, but it's somewhere in that range. What is the revolution that's happening right now and why is PaySimple playing right into it?

Remer: I think you nailed it. I think it's the next generation. What are they going to be doing? I think PayPal is a great platform and a great company. Someone said to me once, "I agree, in our space, but my 17-year-old never heard of PayPal."

If the next-generational companies will be able to create the platforms to allow money to be transferred, ecosystems -- peer-to-peer as well as peer-to-merchant -- in the most frictionless way, there is an opportunity to change that you and I don't pull our credit cards out. Which, by the way, there's not that much friction in that. It's not that bad. But the next generation who hasn't done that yet ...

Hot Bank Companies To Own For 2014

Gardner: There's a lot of...

Remer: Oh, huge opportunity to change. But it will take time. You asked about MasterCard. It will take time to potentially replace the ecosystems that exist and how are those leading organizations -- the MasterCards, the Visas (NYSE: V  ) , the American Express (NYSE: AXP  ) , the PayPals -- going to come down to the next generation and give them the reason why they should utilize that same payment system.

Gardner: We're going to play a little game to close. I'm going to give you five public companies in your space. You rank them in terms of what you think their prospects are for investors over the long term. I'm putting you on the spot. You don't have to play my silly game if you don't want to, but here we are: American Express, MasterCard, Visa, Intuit, eBay.

Remer: That's a great one. eBay 1, Intuit 2, American Express 3, Visa/MasterCard kind of tie 4, 5.

Gardner: And why?

Remer: I think PayPal, the greatest thing they have is a connection between consumers and merchants, and they've been able to create that large ecosystem that allows people to move money in the most frictionless way within their ecosystem. I think the partnership with Discover and some of the things they're doing to bring that online, offline are brilliant.

I think Intuit -- different scale. They're not going to maybe have the same type of large ecosystems that the PayPal or even the Visa/MasterCards would have. They've nailed the small business, and there's been people coming after them left and right, but I think their value proposition and their commitment to continue to provide that is second to none and I think they'll maintain their space in an ever-growing marketplace.

Gardner: And you think Visa and MasterCard are fighting defensive battles?

Remer: I think they are, and I think American Express could have a more difficult time with them or an easier time. They have a closed ecosystem in terms of their payments, which gives them an advantage and a disadvantage. It's easier to cut American Express out of the ecosystem than Visa/MasterCard, but they have huge brand loyalty which I don't think Visa/MasterCard have. I don't care if I pull out a Visa or a MasterCard, but I always use my American Express card.

Gardner: Awesome. That's a little bit about PaySimple and the world of payments and the new technologies and new innovations. So, Eric, thanks very much. Right on.

Remer: It was really great. Thank you for having me.

Hedge Fund Genius Says Secret to His Success Is Meditation

Hot China Companies To Invest In 2014

Bloomberg via Getty ImagesRay Dalio One of the most successful hedge fund managers in the world attributes his success to a daily meditation regimen. "I've been doing it for 44 years, twice a day for 20 minutes," says Ray Dalio, the guru behind Bridgewater Associates, speaking at Tuesday's NYTimes Dealbook Conference. "It's such a great investment ... more than any other factor in my success. It opens up the two sides of the brain, brings a creativity and open-mindedness." He adds, "It allows you to clear your head and bring an equanimity to everything." His meditation regimen has inspired other Wall Street celebrities, including Daniel Loeb and New York Times columnist Andrew Ross Sorkin, who said he meditated the night before Tuesday's conference to calm his nerves.

Target, Walmart May Not Be Selling the Right Stuff

In its second-quarter earnings report released before markets opened on Wednesday, Target Corp. (NYSE: TGT) announced adjusted earnings per share (EPS) of $1.19 on revenues of $17.12 billion, compared with the consensus estimates from Thomson Reuters for EPS of $0.96 on revenues of $17.26 billion. In the same period a year ago, the big-box retailer posted EPS of $1.06 on revenues of $16.78 billion.

When Wal-Mart Stores Inc. (NYSE: WMT) reported results last week, the mega-retailer posted EPS of $1.24 on revenues of $116.2 billion, compared with the consensus estimates of $1.25 on revenues of $118.47.

Walmart chopped its outlook for the third quarter and the full year, and today Target said its full-year EPS would come in at the low-end of its previous guidance of $4.70 to $4.90. Both stores have cited cautious spending by consumers who face tighter budgets going forward.

That is part of the story, but not all of it. Take a look at the results from Lowe's Companies Inc. (NYSE: LOW) and Home Depot Inc. (NYSE: HD). Both posted nice gains and raised their full-year outlooks. And both stores noted that sales were solid in all departments.

What consumers have spent money on are home improvement items, appliances, smartphones and other electronic gear. The big-ticket stuff — home improvement items and appliances — are not offered at either Target or Walmart. Best Buy Co. Inc. (NYSE: BBY) specifically noted that appliance sales experienced strong growth in the second quarter, helping the company to confound nearly everyone with its big earnings beat on Tuesday.

Both Lowe's and Home Depot raised their outlooks as they expect customers to continue to invest in their homes. Target and Walmart, which sell a lot of discretionary items, have reined in their outlooks, probably recognizing that if consumers are going to spend on discretionary goods it is not going to be on the stuff these stores sell.

More retailers are having a rough quarter than are having a good one. According to Retail Metrics, the projected blended earnings growth from the retail sector has fallen from 10.3% last week to 6.6% as of Tuesday, and that retailers the firm tracks that already have reported earnings have missed expectations by an average of 2.1%. And that decline includes Home Depot.

These numbers do not suggest a banner year for the back-to-school season, and the set-up for this year's holiday season is not looking too good either. For consumers this could mean steeper discounts after the back-to-school season and earlier discounts going into the holiday season. Good for consumers, not so good for retailers.

Target's shares are trading down 2.2% early trading, at $66.41 in a 52-week range of $58.01 to $73.50. The consensus price target from Thomson Reuters was around $73.80 before today's results were announced.

Strategies for Your Health Savings Account

I'm trying to decide how much money to contribute to my health savings account and my 401(k) for 2014. Where should the HSA be on my list of priorities? --W.T., Syracuse, N.Y.

SEE ALSO: FAQs About Health Savings Accounts

Contribute to the HSA as soon as you have contributed enough to your 401(k) to get the employer match, says William Applegate, of Fidelity. Health savings accounts provide a triple tax break that's tough to beat: Your contributions are tax-deductible (or pretax if made through an employer's plan); the money grows tax-deferred; and it can be used tax-free for out-of-pocket medical expenses in any year.

10 Best High Tech Stocks To Watch For 2014

To get those breaks, you must have a health insurance policy with a deductible of at least $1,250 for individual coverage or $2,500 for families in 2014. You can contribute up to $3,300 for individual coverage or up to $6,550 for families (plus $1,000 if you are 55 or older) for the year.

You'll get the biggest benefit if you pay your deductibles and co-payments with other money and leave the cash in the HSA to grow tax-free for the future -- say, to cover health costs in retirement. Match your HSA investments to your time frame. Many plans let you invest in mutual funds or stocks, not just low-interest savings accounts.

You can't make HSA contributions after you sign up for Medicare, but you can use money in the account tax-free at any age for medical expenses, including premiums for Medicare parts B and D and Medicare Advantage (but not medigap), and a portion of long-term-care premiums.

Got a question? Ask Kim at askkim@kiplinger.com.

China’s Iron Ore Demand Boosts Australia’s Exports

Our article last month about the surprising strength of Australia’s exports proved prescient, at least as far as the latest trade data show. Australia’s September trade deficit narrowed considerably, declining to a seasonally adjusted AUD284 million from a revised AUD693 million the prior month.

And that was a far better performance than what economists had predicted. According to a Bloomberg survey of 24 economists, the consensus forecast was for a deficit of AUD500 million. The August figure was itself a noteworthy improvement from the AUD815 million that was first reported.

Australia tends to run persistent trade deficits, which have averaged AUD367 million over the past five years, despite the fact that this period includes the nearly two years of trade surpluses posted during the resource boom. In fact, the September number was one of the best since late 2011. Of course, that’s just one month of trade data, but we’ll take it.

Credit for this performance is partly due to China’s demand for resources, particularly iron ore, which happens to be Australia’s single biggest export. According to government data, the total value of the country’s iron ore exports set a record high of AUD8.1 billion, the third consecutive month in which a new all-time high has been achieved. And China was responsible for the majority of this demand.

On a year-over-year basis, China is one of Australia’s only major trading partners whose demand for the country’s goods has actually increased. It’s up 1.6 percent over that period, which may not seem like much, except for the fact that China is Australia’s largest trading partner and is responsible for over 31 percent of the country’s total export value. In other words, China has been a stabilizing source of export demand amid an otherwise anemic global economy.

According to economists with HSBC, a rise in Chinese infrastructure spending accounts for much of this demand. That’s helped boost iron ore prices during the third quarter, a period during which prices typically weaken. Pricing data aggregated by The Steel Index Ltd show spot prices that prevail in China are currently near USD135.90 per dry ton, up 23.1 percent since the trailing-year low in May.

The good news is that analysts expect this trend to continue at least through year-end. The latest data from Australia’s Port Hedland, the largest bulk terminal in the world, suggest that iron ore exports may have sustained their record-setting pace through October. Iron ore exports that shipped from the port to China jumped 10 percent last month, to 25.2 million metric tons.

Economists expect China’s investment in infrastructure will slow next year, with some predicting that could cause iron ore prices to fall as low as USD115 per tonne. However, that could be partially offset by rising volumes as new mining projects come on line.

Even though investment in Australia’s mining sector has peaked, many of these projects are about to enter their production phase. Fortunately, Morgan Stanley analysts believe the global seaborne market will remain in deficit well into next year, and that should help absorb all the new production.

Currency depreciation should also prove helpful. The Australian dollar currently trades near USD0.94, down about 11.3 percent from its year-to-date high in early January. And the Reserve Bank of Australia (RBA) could help push it even lower with another round of rate cuts.

Although the RBA’s cash rate is at an all-time low of 2.5 percent, economists expect at least one more rate cut early next year. In the central bank’s latest statement on monetary policy, Governor Glenn Stevens characterized the Aussie as “uncomfortably high,” with further depreciation necessary to achieve economic growth.

Additional weakness in the currency will help make Australia’s exports more competitive globally, which should be a boon for our resource investments.

Europe stocks drop on French downgrade, U.S. data

LONDON (MarketWatch) — European stocks fell sharply on Friday after solid U.S. jobs data stoked tapering fears, while stocks in France slumped after Standard & Poor's lowered the country's credit rating to AA from AA+.

The Stoxx Europe 600 index (XX:SXXP)  dropped 0.8% to 321.89, putting it on track for a 0.2% weekly loss.

Click to Play Japanese firms line up to apologize

A Mont Blanc with French chestnut purée but topped with a Korean chestnut widens the food scandal in Japan, the latest in a wave of other firms apologizing for mislabeling food. The WSJ's Ramy Inocencio speaks with reporter Kana Inagaki about why Japanese firms are lining up to apologize.

France's CAC 40 index (FR:PX1)  dropped 1.1% to 4,236.21, after the country lost its AA+ rating. Standard & Poor's raised concerns about the country's growth prospects, saying the government's reforms to taxation, as well as to labor and other markets, won't substantially raise the country's medium-term outlook. Adding to pressure on the French index, data showed the country's industrial production dropped 0.5% in September, missing expectations of a small rise.

Banks slid in Paris, with shares of Société Générale SA (FR:GLE)  down 3.2%, BNP Paribas SA (FR:BNP)  off 1.6%, and Credit Agricole SA (FR:ACA)  1% lower.

Shares of oil giant Total SA (FR:FP)   (TOT)  dropped 1.3%.

Associated Press Shares slide in Paris after S&P cuts France's credit rating.

Stock markets in Europe remained lower after data from the U.S. showed 204,000 new jobs were added to the economy in October, well above expectations. The unemployment rate rose to 7.3% from 7.2%.

Strong U.S. data strengthen the case for the Federal Reserve to scale back its $85-billion-a-month in bond buys. On Thursday, figures showing the U.S. economy grew by a better-than-expected 2.8% in the third quarter spooked investors and left markets in both Europe and the U.S. in the red.

ECONOMY AND POLITICS | @MKTWEconomics

U.S. economy adds 204,000 jobs
The U.S. economy added 204,000 jobs in October –— double Wall Street's forecast — despite a government shutdown that was expected to put a damper on hiring.
• 'Dectaper' back on table: payrolls reactions
• Temporary layoffs spike 448,000
• Job seekers pad resumes with credentials
/conga/story/misc/dc.html 286425

On the data front in Europe, Germany's trade surplus beat forecasts in September as exports rose for a second straight month. Germany's DAX 30 index (DX:DAX)  lost 0.5% to 9,036.52, retreating from an all-time closing high reached on Thursday.

Car stocks fell after Nomura cut the European auto and auto-parts sector to bearish from neutral.

"Unlike many investors, we do not see or forecast a sharp rebound in European car sales anytime soon," the analysts said. "With declining populations, wage deflation, rising unemployment, and continuing government deficits, we see no reason why European car demand should not be compared with Japan's 20-year declining car market as opposed to the V-shaped recovery in the U.S.," they added.

Shares of Daimler AG (DE:DAI)  dropped 1.8%, BMW AG (DE:BMW)  fell 0.5%, and Volkswagen AG (DE:VOW3)  gave up 0.8%.

Rheinmetall AG (DE:RHM)  slid 6.6% after the German weapons and car-parts maker reported a sharp decline in third-quarter profit amid restructuring expenses.

The U.K.'s FTSE 100 index (UK:UKX)  dropped 0.4% to 6,672.08.

Shares of International Consolidated Airlines Group SA (UK:IAG)  jumped 6% in London after the British Airways parent said profit more than doubled in the third quarter.

Rolls-Royce Holdings PLC (UK:RR)  climbed 2.8% after the aerospace and defense firm said its overall estimate for "good growth" in full-year underlying profit is unchanged from its previous forecast in July.