Stocks top old highs; is breakout on horizon?

NEW YORK — The Standard & Poor's 500 stock index spent time in record territory Monday, raising hopes on Wall Street that the scary early-year pullback has run its course and a new uptrend is taking shape.

The benchmark S&P 500 hit a new intra-day record high of 1858.71 before tailing off and closing less than one point shy of its Jan. 15 closing record of 1848.38. Monday's 0.6% gain erased nearly all the 5.8% loss it suffered from mid-January through its Feb. 3 low.

A record close would mark the official end to the 2014 mini-correction and reaffirm that the five-year stock market uptrend remains intact.

The big question now is whether the U.S. stock market is poised to break out to the upside in a style reminiscent of last-year's mega-bullish run — or whether future gains will come more grudgingly.

TRACK YOUR STOCKS: Get real-time quotes with our free Portfolio Tracker

Investors shouldn't expect a repeat of 2013

, says Nick Sargen, chief investment officer at Fort Washington Investment Advisors, whose outlook mimics the current thinking on Wall Street.

"I am a bull, but I'm not in the raging bull camp," says Sargen. "My call is for a higher but choppy year. Not a runaway market."

Market sentiment has taken a 180-degree turn in a three-week span. What changed?

Many of the worries that drove prices down early in the year have subsided.

The emerging-market currency crisis, which hit countries such as Turkey and South Africa, has "cooled off," says Sargen. That reduced fears of a repeat of past crises, including turbulence in the late 1990s that began in Thailand and Russia and spread to the U.S. and other world markets.

Top Information Technology Companies To Buy For 2014

Wall Street also opted to give the sputtering U.S. economy the benefit of the doubt. Investors, citing the ill effects of nasty winter weather, were ! willing to look past weak readings on U.S. home sales, manufacturing and retail sales. They're betting the economy still has enough positive drivers in place to grow at a faster clip this year than last.

Fears that the Federal Reserve's leadership transition from Ben Bernanke to new Chair Janet Yellen could be potentially rocky were put to bed on Feb. 11. Yellen, in testimony to Congress, was able to reassure markets that under her leadership, the Fed will remain supportive of markets.

"The uncertainty regarding Yellen is behind us," says Andy Brooks, head trader at T. Rowe Price.

But if the stock market, which also got a boost from merger activity and better-than-expected fourth-quarter corporate earnings, is to keep rallying, a few things need to happen.

• The economy has to deliver. The data can't remain weak forever; it has to bounce back this spring, says Hugh Johnson, chief investment officer at Hugh Johnson Advisors.

"If we start to get numbers that are consistent with the consensus view that the economy is not only going to get better, but get progressively better, then the picture will change, and the market can move higher," he says.

• New highs must stick. "A healthy market is one where everything is on the same path" and hitting closing highs, says Bruce Bittles, chief investment strategist at R.W. Baird. To confirm a breakout, the S&P 500, the Dow Jones industrials and the Russell 2000 small-stock index must all top their record highs from earlier this year, he says.

• Skepticism must remain. Less optimism is actually bullish, says Price Headley, CEO of investment site BigTrends.com. "The pullback cooled optimism, which is healthy," he says. "I want people to be worried. I want the pullback dialogue to continue."

Waggoner: No bubble in big tech yet

One of the nation's newest industries is bubble spotting. People in the financial news and in television are raising the specter of bond bubbles, real estate bubbles, stock bubbles — even a bourbon bubble, according to Fortune magazine. And investors, badly burned by bubbles in 2000 and 2006, dearly want to believe that someone can spot the next bubble for them.

The problem with bubbles is that they are, by definition, hard to spot except in hindsight. Only a handful of people saw the real estate bubble before it burst, and half of those say they see leprechauns, too. But you can find interesting stocks in the wreckage of a bubble, even many years after the bubble has burst. So today we're going to take another look in the still-smoking crater of the great technology bubble of the 1990s.

The tech bubble was remarkable for its breathtaking arc. Companies with no earnings — frankly, sometimes just two guys and PC — doubled and tripled on their initial public offerings. And legitimate companies, such as Juniper Networks and EMC, remain more than 50% below their bubble-era highs. From March 31, 2000 through Oct. 31, 2002, the Wilshire 5000 Total Market index vaporized $6.8 trillion, most of it in the technology sector.

But some tech companies have not only survived, but prospered. And, while there are always ebullient tech sectors, many of the biggest survivors are not only thriving, but relatively cheap. These companies were overestimated in the bubble, and have been underestimated — or dismissed as old technology — in the subsequent recovery.

A quick glance at the Nasdaq 100 stock index will show you how decidedly un-bubbly most of the technology world is these days. The index tracks the 100 largest companies listed on the Nasdaq stock exchange (banks are excluded). Brian Mackey, analyst at Adviser Investments, points out that the Nasdaq 100's price-to-earnings ratio has dropped from an average 42 times earnings in 2000 to 21.5 now. The PE ratio measures a company's pr! ice, relative to earnings: Lower is cheaper, and 42 times earnings is nosebleed territory.

Not only that, but 95% of Nasdaq 100 companies are profitable now, vs. just 67% in 2000, and total earnings from in the company have tripled, from $60 billion to $180 billion. Some people really do learn from experience.

And despite the tech sector's excellent performance last year, it still lagged the Standard and Poor's 500 stock index. S&P's information technology index gained 28.4%, including reinvested dividends, while the S&P 500 gained 32.4%. "I don't think there's a bubble overall in technology," says Paul Meeks, portfolio manager at Saturna Capital. Some areas, such as 3D printing, are "priced like it's 1999," he says. But that's typical with the tech sector.

What is unusual is value managers like Meeks taking a hard look at undervalued tech stocks, many of which are old-school tech stocks that are trying to reinvent themselves. These companies' stocks sell for relatively low PEs, have tons of cash, and even pay decent dividends.

Consider Microsoft, currently selling for 13.7 times its previous 12 months' earnings. The company has a dividend yield of 3.1%, currently about a percentage point more than the S&P 500. Earnings per share grew about 18% the 12 months ended September — nothing like its halcyon days, but certainly respectable.

And then there's Intel, which has flatlined on earnings per share, but has a 3.4% dividend yield and sells for 13.4 times earnings. "These are old-school companies that aren't getting much love on valuations," Meeks says. "But if they're able to transition to new schemes, they could be bargains." Both companies, incidentally, have mountains of cash to spend on new ventures.

Both companies, too, are aggressively shrinking the number of shares they have outstanding. Intel had 5.6 billion shares outstanding three years ago; it's down to 4.9 billion now. Microsoft had 8.6 billion shares outstanding three years ago, vs. 8.3 bi! llion now! .

Other tech companies with dividend yields above 2% and rated above average by Standard and Poor's:

• Apple, currently yielding 2.2%. PE: 14.0.

• IBM, yielding 2.0%. PE: 14.4.

• Cisco, yielding 2.6%. PE: 12.6.

The problem with undervalued stocks, of course, is that they can be undervalued for good reason. Given that these companies have enormous cash reserves, they probably aren't going extinct any time soon. But they also must find a way to make money in a rapidly changing field. The days of upgrading the chip or the operating system in your desktop computer are long gone.

But Microsoft is making inroads into mobile computing, as well as in transferring its software products from one-time purchases to ongoing subscriptions — a tactic that provides much steadier revenue streams. The company now has about 25% of the market in cloud computing.

In tech, it's never a sure bet, and there are more tech failures on Wall Street than there are old cables in your desk drawer. Whether Apple can continue to be a leader without Steve Jobs is an open question, for example. But it's probably best to bet on a company with a reasonable price and a good shot at a turnaround than on a company offering a great idea and little revenue. (We're looking at you, Twitter).

As always, it's safer to invest in a portfolio of tech stocks than it is in individual companies. Your tech fund may fall 50% — and that's always possible with tech — but it won't vaporize entirely, as Pets.com and dozens of others of dot-com companies did from 2000 through 2002. The five best tech funds for the past five years are in the chart.

Top 15 Best Foreign Countries for Retirement: 2014

For those with retirement around the corner or who are already retired, picking a place to retire could be a key element into how fulfilling, meaning financially comfortable, retirement will be. With many early boomers' retirement portfolios punished by the financial crisis and low interest rates, the choice of where to live is even more critical.

International Living magazine released the results of its most recent Global Retirement Index last week, with some familiar countries on the list and some new ones. The magazine bases it index on data gathered from editors, correspondents and experts living in the countries that it ranks.

International Living scored 24 countries in eight categories: real estate, special benefits, cost of living, ease of integration for foreigners, entertainment and amenities, health care, retirement infrastructure and climate.

The “special benefits” International Living considered include government provisions that make it easy for Americans to move to and live in each country. Things like discounts on health care, airfares, utilities, duty fees on imported goods, and property rights and taxes were considered. For the “ease of integration” category, International Living considered how widely English is spoken in the country, the friendliness of locals to foreign residents and the size of the current expat community.

Due to its proximity and similar time zones to the United States, Central and South America are obvious choices for retiree destinations, and several of the countries in the top 15 are from those regions.

(Check out Top 10 Best Foreign Countries for Retirement: 2013 on ThinkAdvisor.)

Of the 24 countries in the index, Cambodia was rated the lowest, with a score of 73.2. Although the country earned a score of 100 in cost of living, it rated a 57 and 58 in special benefits and retirement infrastructure, respectively.

15. Portugal: 82.4

14. Italy: 82.5

13. Nicaragua: 82.6

12. (tie) New Zealand: 83

12. (tie) Ireland: 83

10. Thailand: 83.5

International Living notes that retirees have several choices when it comes to where they want to live in Thailand, depending on what kind of lifestyle they want. The capital, Bangkok, is a major city, while the northern part of the country tends to be more peaceful and less expensive, with proximity to the country’s beaches a highlight of the south.

Wherever they decide to settle down, rent can be as low as $500 a month, and a doctor’s exam in a modern hospital will cost less than $40.

9. Uruguay: 83.7

Uruguay is the second smallest country in South America, and boasts extensive infrastructure and ease of access, according to International Living. It also has an established expat community.

8. Malta: 84.1

Malta, a tiny archipelago about 60 miles south of Sicily, is just over 120 square miles. Despite this, it has a modern airport on the main island of Malta that connects the country with Rome, about an hour away by plane. It has been a member of the European Union since 2004 and has been using the euro since 2008.

English is one of the official languages of Malta, and according to International Living, there are many hints to its 150-year history as a British colony, from red phone booths to driving on the left side of the road.

7. Mexico: 84.2

One of Mexico’s biggest attractions to retirees is the wide variety of lifestyles they can adopt there. Whether they’re looking to retire on a beach or in the city, expats will have as much to do as they want. The cost of living is low, and the ease of integration among the highest on the list.

6. Columbia: 84.2

Although technically tied with Mexico on its total score, Columbia earned the higher spot with a much higher rating in special benefits and retirement infrastructure, and slightly smaller gains in other categories.

International Living noted that Columbia is more developed than some other countries in Latin America, and cost of living and real estate are low.

Hot Performing Stocks To Watch Right Now

5. Spain: 85.8

International Living called Spain the “best bargain in Europe.” That’s partly due to the recession, which has driven real estate prices down, but the magazine noted Spain has long been one of the least expensive countries in Europe. In some areas, utilities can be as little as $150, and while meat tends to be more expensive than in the United States, other items like produce, olive oil or wine can be very cheap.

Spain also has excellent private and public health care systems, with access to good hospitals even in rural parts of the country.

4. Costa Rica: 86.8

Costa Rica has long been a favorite destination for expat retirees. One reason is simply that it’s easy for retirees to move there. A couple needs just $1,000 per month in retirement income to qualify for residency.

Another major benefit is the affordability of health care. expats pay a monthly fee based on their income for care that’s free at the time of service.

3. Malaysia: 88.5

The highest-rated Asian country on the list, International Living found a couple can live well in a luxury condo on the coast for about $1,700 per month, including rent. It pointed to Penang Island and the capital, Kuala Lumpur, as centers of excellence in the health care industry.

In addition to having first-world infrastructure, retirees can move their household and car to Malaysia duty-free.

As for visas, retirees can stay in the country on a “social visit pass” that lasts 10 years and automatically renews for an additional 10 years when it expires. Foreign residents just need a fixed deposit of $46,707 and a monthly income from a government pension of at least $3,114.

2. Ecuador: 91.1

Less than one point behind the top spot, Ecuador was knocked out of the No. 1 position, but just barely. The excellent climate and low cost of living that made it the top place holder last year are still there, and International Living noted the country is working to improve its infrastructure. A $680 million airport opened outside Quito in February.

1. Panama: 91.2

International Living noted that Panama won the top spot “by a hair.” In addition to a range of retiree benefits, it has introduced new visas that make it easier to gain residence, and has made great steps to improve its infrastructure. It’s worth mentioning, too, that Panama is largely hurricane free (the last hurricane was Martha in 1969).

Panama uses the dollar, English is widely understood and expats don’t even need to bring electronic converters to use their gadgets.

---

Related stories on ThinkAdvisor:

Lexmark International Inc. (NYSE:LXK): Does Small Insider Buy Hint at Big Gains?

Insider buying was on holiday during the New Year's break as iStock identified records for only 31 companies. However, that doesn't mean we don't have anything to write about this week.

Lexmark International Inc. (NYSE:LXK) is our insider purchase choice today; albeit, it's the winner in a pool of slim-pickings where fives look like tens.  In case you don't have one or know, Lexmark is a developer, manufacturer and supplier of printing, imaging, device management, managed print services, document workflow, and also provides business process and content management solutions.

This author has probably spent thousands of dollars on Lexmark ink! Ugh.

[Related -Futures Up On China Moves; Sourcefire, Inc. (FIRE) Surges On Cisco Systems, Inc. Buyout]

Before we get deeper into our look at LXK, if you believe insiders possess knowledge the average investor never will – they do – and would be interested in a portfolio comprised of stocks with insider buying, then you might want to check out iStock's new Insiders' Circle.

The Daily i On the Market launched the Insiders' Circle launched to start 2014 with five names that meet our strictest criteria; so far so good as the portfolio is above water despite the year's slow start. If you are interested in knowing more, click here to start your 30-day risk-free trial.

Back to Lexmark; Director, Stephen Hardis bought 675 shares at $35.10 for a total investment of $23,692. Although the dollar amount is small relative to some of our other highlighted companies, Hardis previously made a similar purchase, and it was profitable.

[Related -Stocks Rally On Earnings, Housing Data; Coach (COH) Jumps]

The Director added 712 LXK shares in October 2013 at $32.25, which is an 11.47% gain in a little more than 12 weeks. Who wouldn't be happy with that?

Can Hardis go two-for-two based on Wall Street's 2014 outlook for sales and earnings?

The consensus EPS estimate for 2014 is $3.67 per share, which is a slight drop-off from 2013's projected $3.88. At the same time, sales are forecasted to dip by 5%. It's been our experience that slowing earnings and sales normally translates into contracting valuations.

In the last five years, LXK's average price-to-earnings (P/E) ratio was 11.87 and an average price-to-sales (P/S) ratio of 0.56. At the moment, both are trending above the half-decade norms at 14.50 and 0.64, respectively.

Let's take a look at P/E first. Earnings grew at 4.87% while the P/E averaged 11.87 since 2009. That means Lexmark tends to trade at a premium to its bottom-line growth rates. As we already mentioned, profits are expected to fall in the year ahead while the three-to-five year forecast calls for EPS to decline by an average of 2.25% a year.

Hot Dow Dividend Companies For 2015

It's hard to imagine the printer company's P/E growing while EPS are shrinking. Using the average P/E and 2014's consensus estimate, LXK would price out at $43.56, potential upside of 20.6% as we type.

That's livable and would outperform the market in 2014, in our opinion.

However, we get a different result when we plug in sales. The folks and their excel spreadsheet models come to a consensus revenue estimate of 3.42 billion for 2014. At 0.56 times sales (the five-year average), we get a far less attractive target of $30.84.

Splitting the difference between our P/E and P/S price-tags, a compromise of $37.25 – limited upside potential of 3.11%.

Overall: As things stand today, it could be more difficult for Stephen Hardis to make it back-to-back winning Lexmark International Inc. (NYSE:LXK) trades. However, if a catalyst emerges, the stock could fare well as 24.2% of LXK's float(shares available for trading)  is sold short.

3 Predictions for the New Week

I went out on a limb last week, and now it's time to see how that decision played out.

I predicted that Model N (NYSE: MODN  ) would post a smaller loss than analysts were expecting. The provider of revenue management solutions has been a dud since going public nearly a year ago, but one thing it has consistently done is post a smaller deficit than what the pros are forecasting. Wall Street was settling for a loss of $0.12 a share, and Model N sported only $0.03 a share in red ink. The stock soared 19% on Tuesday after the better-than-expected report. I was right. After more than a year of predicting that the tech-heavy Nasdaq would outperform the Dow Jones Industrial Average   (DJINDICES: ^DJI  ) , I mixed things up two weeks ago. I simply predicted that the Dow would bounce back after plunging 3.5% and 1.1% over the prior two weeks. I repeated the call this time around, and the Dow responded with a hearty 2.3% gain. I was right.  My final call was for LeapFrog (NYSE: LF  ) to beat Wall Street's income estimates in its latest quarter. The maker of electronic learning toys has been routinely beating Wall Street projections over the past year. I was banking on a repeat performance, but it wasn't to be. LeapFrog merely broke even on a sharper drop in revenue than expected. Analysts had been braced for a profit of $0.14 a share. I was wrong.

Two out of three? I can do better than that. Let me once again whip out my trusty, dusty, and occasionally accurate crystal ball to make three calls that may play out over the next few trading days.

1. Veeco Industries will post a larger loss than analysts are expecting
Veeco Industries (NASDAQ: VECO  ) is a provider of process equipment solutions that assist the making of LEDs, flexible OLEDs, power electronics, hard drives, MEMS, and wireless chips. Unfortunately for investors it also has been posting a lot of red ink lately.

The one constant over the past year is that Veeco has posted a larger deficit than analysts were forecasting, and that goes for the two periods over the past when the pros were holding out for a profit.

Analysts see Veeco posting a loss of $0.33 a share on Wednesday. That's a lot, but my first call remains that it will wind up with a larger deficit than that.

2.The Dow will close lower this week
The market in general has given us two healthy weeks of gains, so I'm going to switch gears on my call that the Dow Jones Industrial Average inches higher again. It will be a holiday-shortened trading week, given that the exchanges will be closed on Monday, and I can see the blue chips taking a breather after two strong weeks.

My second call is for the Dow Jones Industrial Average to close lower on the week.

3. LifeLock will beat Wall Street's earnings estimates
Some stocks are just flat-out better than others.

LifeLock (NYSE: LOCK  ) is the leading provider of identity theft monitoring for consumers. This may seem like a finicky model for a subscription service, but LifeLock has come through with 34 consecutive quarters of sequential growth in revenue and members.

Another thing it does is make analysts look like perpetual underachievers. If analysts say the company posted a profit of $0.21 a share in its latest quarter, I'll argue that it held up better than that. History's on my side!

One of my best tricks to beating the market is finding stocks that perpetually land ahead of the prognosticators. Let's go over the past year of earnings reports.

Quarter

EPS Estimate

EPS

Surprise

Q4 2012	$0.07	$0.10	43%
Q1 2013	($0.01)	$0.01	200%
Q2 2013	$0.01	$0.03	200%
Q3 2013	$0.10	$0.12	20%

Source: Thomson Reuters.

Things can change, of course. Despite all of the buzz being generated about identity protection breaches at a couple of major retailers this holiday shopping season, LifeLock is not a lock to stretch that streak to 35 quarters of sequential growth. Members can flock to cheaper offerings or leave entirely.

However, it's hard to argue against the trend. Everything seems to be falling into place for another market-thumping quarter on the bottom line.

Three for the road
Well, there are three predictions right there. Let's see how I fare this week as you check out some more stock picks.

It's no secret that investors tend to be impatient with the market, but the best investment strategy is to buy shares in solid businesses and keep them for the long term. In the special free report "3 Stocks That Will Help You Retire Rich," The Motley Fool shares investment ideas and strategies that could help you build wealth for years to come. Click here to grab your free copy today.

The 4 Stocks That Dominated the Market on Friday

February 14, 2014: Markets opened lower on Friday before posting some gains on higher bids for energy and materials. Tech remained in the doldrums until mid-afternoon before moving to the plus side of the ledger, causing the Nasdaq to reach its year-to-date high and a level not seen since 2000. In the final minutes of trading the DJIA was up 0.72%, the S&P 500 was up 0.42%, and the Nasdaq Composite was up 0.07%.

Today's big mover among the Dow 30 stocks was UnitedHealth Group Inc. (NYSE: UNH). Shares were trading up 3.13% at $73.46 in a 52-week range of $52.51 to $77.33 shortly before the closing bell. Healthcare stocks, especially insurers, as a group performed well today UnitedHealth's volume was about 20% above the daily average of around 49 million shares traded.

Cisco Systems Inc. (NASDAQ: CSCO) posted the largest percentage drop of the DJIA stocks yesterday, but is about half that loss back today. Shares are up 1.35% at $22.58 in a 52-week range is $19.98 to $26.49. Traders saw a buying opportunity here and took advantage of it. Trading volume was about 10% higher than the daily average of some 50 million shares.

Top 5 Growth Companies To Invest In 2015

S&P 500 and DJIa component Exxon Mobil Corp. (NYSE: XOM) is up 2.76% trading at $93.95, in a 52-week range of $84.79 to $101.74. Crude oil closed the week higher, the fifth consecutive week of rising crude prices. Exxon's share volume was about 10% higher than the daily average of around 12.5 million shares traded.

Though not an index component, Weight Watchers International Inc. (NYSE: WTW) was the day's, ahem, biggest loser. Among other bad news, the company missed earnings per share (EPS) estimates last night, and forecast full-year 2014 earnings at $1.30 to $1.60 per share, way below a consensus estimate of $2.78. The stock traded down 28.09% at $21.95 a few minutes before the closing bell in a 52-week range of $21.95 to $48.63. The low was set today. Share volume was nearly 10-times the daily average of around 950,000 shares traded.

Of the Dow 30 stocks 27 closed higher today while only 3 closed lower.

Ways to Save on Taxes All Year Round

Getty Images If you managed to claim every possible tax break that you deserved when you filed your return last spring, pat yourself on the back. But don't stop there. Those tax-filing maneuvers were certainly valuable, but you may be able to rack up even bigger savings through thoughtful tax planning all year round. The following ideas could really pay off in the months and years ahead. Give yourself a raise. If you got a big tax refund this year, it meant that you're having too much tax taken out of your paycheck every payday. Filing a new W-4 form with your employer (talk to your payroll office) will insure that you get more of your money when you earn it. If you're just average, you deserve about $225 a month extra. Try our easy withholding calculator now to see if you deserve more allowances. Boost your retirement savings. One of the best ways to lower your tax bill is to reduce your taxable income. You can contribute to up to $17,500 to your 401(k) or similar retirement savings plan in 2010 ($22,000 if you are 50 or older by the end of the year). Money contributed to the plan is not included in your taxable income. Haven't started one yet? Read Why You Need a 401(k) Right Away. Switch to a Roth 401(k). But if you are concerned about skyrocketing taxes in the future, or if you just want to diversify your taxable income in retirement, considering shifting some or all of your retirement plan contributions to a Roth 401(k) if your employer offers one. Unlike the regular 401(k), you don't get a tax break when your money goes into a Roth. On the other hand, money coming out of a Roth 401(k) in retirement will be tax-free, while cash coming out of a regular 401(k) will be taxed in your top bracket. Just remember that you'll have to pay income taxes on the amount you convert. Advertisement Fund an IRA. If you don't have a retirement plan at work, or you want to augment your savings, you can stash money in an IRA. You can contribute up to $5,500 ($6,500 if you are 50 or older by the end of the year). Depending on your income and whether you participate in a retirement savings plan at work, you may be able to deduct some or all of your IRA contribution. Or, you can choose to forgo the upfront tax break and contribute to a Roth IRA that will allow you to take tax-free withdrawals in retirement. Go for a health tax break. Be aggressive if your employer offers a medical reimbursement account -- sometimes called a flex plan. These plans let you divert part of your salary to an account which you can then tap to pay medical bills. The advantage? You avoid both income and Social Security tax on the money, and that can save you 20 percent to 35 percent or more compared with spending after-tax money. The maximum you can contribute to a health care flex plan is $2,500. Pay child-care bills with pre-tax dollars. After taxes, it can easily take $7,500 or more of salary to pay $5,000 worth of child care expenses. But, if you use a child-care reimbursement account at work to pay those bills, you get to use pre-tax dollars. That can save you one-third or more of the cost, since you avoid both income and Social Security taxes. If your boss offers such a plan, take advantage of it. Ask your boss to pay for you to improve yourself. Companies can offer employees up to $5,250 of educational assistance tax-free each year. That means the boss pays the bills but the amount doesn't show up as part of your salary on your W-2. The courses don't even have to be job-related, and even graduate-level courses qualify. Be smart if you're a teacher or aide. Keep receipts for what you spend out of pocket for books, supplies and other classroom materials. You can deduct up to $250 of such out-of-pocket expenses ... even if you don't itemize. Pay back a 401(k) loan before leaving the job. Failing to do so means the loan amount will be considered a distribution that will be taxed in your top bracket and, if you're younger than 55 in the year you leave your job, hit with a 10 percent penalty, too. Tally job-hunting expenses. If you count yourself among the millions of Americans who are unemployed, make sure you keep track of your job-hunting costs. As long as you're looking for a new position in the same line of work (your first job doesn't qualify), you can deduct job-hunting costs including travel expenses such as the cost of food, lodging and transportation, if your search takes you away from home overnight. Such costs are miscellaneous expenses, deductible to the extent all such costs exceed 2 percent of your adjusted gross income. Keep track of the cost of moving to a new job. If the new job is at least 50 miles farther from your old home than your old job was, you can deduct the cost of the move ... even if you don't itemize expenses. If it's your first job, the mileage test is met if the new job is at least 50 miles away from your old home. You can deduct the cost of moving yourself and your belongings. If you drive your own car, you can deduct 24 cents a mile for a 2013 move, plus parking and tolls. If you move in 2014, the rate is 23.5 center a mile. Save energy, save taxes. Congress extended a $500 tax credit for energy-efficient home improvements, such as new windows, doors and skylights, through 2013. Be advised, though, that $500 is the lifetime maximum, so if you claimed $500 in energy-efficient credits before this year, you can't claim this credit. There are also restrictions on specific projects; for example, the maximum you can claim for new energy-efficient windows is $200. Think green. A separate tax credit is available for homeowners who install alternative energy equipment. It equals 30 percent of what a homeowner spends on qualifying property such as solar electric systems, solar hot water heaters, geothermal heat pumps, and wind turbines, including labor costs. There is no cap on this tax credit, which is available through 2016. Put away your checkbook. If you plan to make a significant gift to charity, consider giving appreciated stocks or mutual fund shares that you've owned for more than one year instead of cash. Doing so supercharges the saving power of your generosity. Your charitable contribution deduction is the fair market value of the securities on the date of the gift, not the amount you paid for the asset, and you never have to pay tax on the profit. However, don't donate stocks or fund shares that lost money. You'd be better off selling the asset, claiming the loss on your taxes, and donating cash to the charity. Tote up out-of-pocket costs of doing good. Keep track of what you spend while doing charitable work, from what you spend on stamps for a fundraiser, to the cost of ingredients for casseroles you make for the homeless, to the number of miles you drive your car for charity (at 14 cents a mile). Add such costs with your cash contributions when figuring your charitable contribution deduction. Time your wedding. If you're planning a wedding near year-end, put the romance aside for a moment to consider the tax consequences. The tax law still includes a "marriage penalty" that forces some pairs to pay more combined tax as a married couple than as singles. For others, tying the knot saves on taxes. Consider whether Uncle Sam would prefer a December or January ceremony. And, whether you have one job between you or two or more, revise withholding at work to reflect the tax bill you'll owe as a couple. Beware of Uncle Sam's interest in your divorce. Watch the tax basis -- that is, the value from which gains or losses will be determined when property is sold -- when working toward an equitable property settlement. One $100,000 asset might be worth a lot more -- or a lot less -- than another, after the IRS gets its share. Remember: Alimony is deductible by the payer and taxable income to the recipient; a property settlement is neither deductible nor taxable. The stork brings tax savings, too. A child born, or adopted, is a blessed event for your tax return. An added dependency exemption will knock $3,950 off your taxable income, and you'll probably qualify for the $1,000 child credit, too. You don't have to wait until you file your return to reap the benefit. Add at least one extra withholding allowance to the W-4 form filed with your employer to cut tax withholding from your paycheck. That will immediately increase your take-home pay.

Dumb Starbucks parodies the real coffee shop

A parody of Starbucks called Dumb Starbucks gave away free coffee this weekend in Los Angeles.

The store is very similar to Starbucks except it has the word "dumb" in front of it.

Go buy some @dumbstarbucks before dumb lawyers get to it pic.twitter.com/67E2zq0myf

— Mark McCune (@MarkMcCune) February 8, 2014

A Feb. 7 tweet from @DumbStarbucks announced the store was open at 1802 Hillhurst Ave. in Los Angeles.

We're now open for business! Visit us at 1802 Hillhurst Ave in Los Angeles. pic.twitter.com/WnVefrYM9b

— Dumb Starbucks (@dumbstarbucks) February 7, 2014

A spokesman for Starbucks told the Wall Street Journal that Dumb Starbucks "obviously" has no affiliation with Starbucks. USA TODAY has reached out to Starbucks for comment.

Inside the Dumb Starbucks, the menu also looks very similar to the Starbucks menu, with the word "dumb" in front of the items, such as "Dumb Espresso" and "Dumb Frappuccino."

Hot Penny Stocks For 2015

Enjoy our full menu of coffees and cold drinks pic.twitter.com/wPacrEEH9k

— Dumb Starbucks (@dumbstarbucks) February 8, 2014

The coffee sizes are dumb tall, dumb grande and dumb venti.

The pleasantly condescending barista @dumbstarbucks informed me that they don't serve dumb trenta sized drinks. pic.twitter.com/GhtvgBalOy

— Nick Edwards (@NicksEdwards) February 10, 2014

There were even "dumb" versions of the CDs sold at Starbucks.

Should I open it to hear what's on it? #DumbNoraJones duets. @dumbstarbuckspic.twitter.com/ZtRcTwyu1m

— Mark Sovel (@MisterShovel) February 10, 2014

According to tweets, people waited for an hour for their free Dumb Starbucks coffee.

It's a 1 hour wait outside the #DumbStarbucks in #LosFeliz. Still no word on who is behind the spoof #KPCC. pic.twitter.com/P8maQC8UnS

— Frank Stoltze (@StoltzeFrankly) February 9, 2014

It's unclear who is behind the coffee ! shop. Dumb Starbucks is able to use the Starbucks name and logo because it is technically "making fun" of Starbucks and is considered "a work of parody art," according to a Dumb Starbucks letter.

Dumb Starbucks store. Their legal FAQ is what impressed me. http://t.co/MkrdosOt7xpic.twitter.com/Zhb96WXJ6w

— Ben Pankonin (@benpankonin) February 9, 2014

Under the law, Dumb Starbucks is not a coffee shop but an art gallery, the letter says. "The 'coffee' you're buying is considered the art," the letter says. "But that's for our lawyers to worry about. All you need to do is enjoy our delicious coffee!"

Follow @JolieLeeDC on Twitter.

Benzinga Weekly Preview: US Markets Ending The Year On A High Note

Markets have been on a high recently with the technology sector leading the way.

Twitter's incredible run up since its IPO in November will be closely watched by investors as they wonder how much momentum the company has left. Most analysts expect US markets to remain positive through the end of 2013, but are cautious about a significant retreat early in the New year.

Key Earnings Reports

Next week only one notable earnings release is expected from Lindsay Corporation (NYSE: LNN).

Lindsay Corporation

Lindsay Corporation is expected to report EPS of $0.89 on revenue of $142.20 million, compared to last year's EPS of $1.15 on revenue of $147.37 million.

On December 23, Stifel reiterated its Hold rating on Lindsay Corporation after Kerrisdale Capital Management published a letter regarding its involvement in the company.

Best Tech Companies To Watch In Right Now

"Overall, Kerrisdale reports that it has found Lindsay management to be responsive to its shareholder concerns and the Lindsay Board to be proactive in seeking to maximize shareholder value. According to its most recent letter, Kerrisdale believes that the current Board is seriously considering ways to address Lindsay's underutilized cash balance and continues to consider adding shareholder-nominated representatives to the extent that it would facilitate improved corporate governance, management oversight and shareholder value creation."

Economic Releases

With 2013 coming to a close next week and markets shut on Wednesday, economic data will be thin again. PMI data will steal the show with a host of manufacturing data from around the globe.

Daily Schedule

Monday

Earnings Releases Expected: No notable earnings expected Economic Releases Expected:  Spanish retail sales, Italian business confidence, US pending home sales, South Korean CPI

Tuesday

Earnings Expected: No notable earnings expected Economic Releases Expected: US consumer confidence, South Korean trade balance

Wednesday

Markets Closed For New Year's Day

Thursday

Earnings Expected From: Landec Corporation (NASDAQ: LNDC), Resources Connection, Inc. (NASDAQ: RECN) Economic Releases Expected: Indian manufacturing PMI, Spanish manufacturing PMI, Hong Kong retail sales, Italian manufacturing PMI, French manufacturing PMI, German manufacturing PMI, eurozone manufacturing PMI, US manufacturing PMI, Canadian manufacturing PMI, US manufacturing PMI

Friday

Earnings Expected From:  Lindsay Corporation (NYSE: LNN) Economic Releases Expected:  British mortgage lending, British construction PMI

Posted-In: News Previews Economics Federal Reserve Pre-Market Outlook Markets Trading Ideas Best of Benzinga

(c) 2013 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.

  Most Popular The Five Best Performing Stocks of 2013 Short Sellers Pile On Twitter (FB, TWTR, ZNGA) UPS: Christmas Delivery Delays Caused by 'Perfect Storm' Five Star Stock Watch: Bank of America 3 Reasons That Chocolate - Hershey's That Is - Makes a Great Gift Four Of 2013's Most Disappointing Stocks Related Articles (LNDC + LNN) Benzinga Weekly Preview: US Markets Ending The Year On A High Note Kerrisdale Capital Issues Letter to Lindsay Board, Management Top 4 Small-Cap Stocks In The Farm & Construction Machinery Industry With The Highest EPS Estimates For The Next Quarter Top 4 Small-Cap Stocks In The Chemicals-Major Diversified Industry With The Highest EPS Top 4 Small-Cap Stocks In The Chemicals-Major Diversified Industry With The Lowest PEG Ratio 3 Top Debt Free Stocks with Lots of Cash and Paying Dividends Around the Web, We're Loving... Lightspeed Trading Presents: Thunder and Tubleweeds: Trading Techniques for the New Market Enviroment Pope Francis Rips 'Trickle-Down' Economics Come See How the Pro's Trade in this Exclusive Webinar Wynn, MGM, Other Casino Giants Vying For U.S. Turf What Should You Know About AMZN?

The Microvision Tide Just Turned... Even If It's Not Obvious (MVIS)

If the cash you have available is money you absolutely need to invest safely and wisely because you need it (and its appreciation) to love on in retirement, then let me stop you right now - the rest of what you're about to read probably isn't for you. On the other hand, if you and your qualified financial adviser agree you've got some money you can gamble with [i.e. if you lose it all, it won't matter], then may I direct your attention to Microvision, Inc. (NASDAQ:MVIS)? Long story made short, MVIS has dropped hints of a brewing rebound.

For those even modestly plugged into MVSL, you may be wondering what in the world I'm talking about. There's been little news from, or even about, Microvision of late, and the stock seems content to simply let itself sink deeper into the quicksand. In fact, MVIS managed to hit a new multi-year low yesterday.

Yes, I get all that, and I can't argue that there's a distinct lack of news regarding Microvision, Inc. right now. I'm telling you though, a couple of clues are subtly, quietly pointing in favor of the stock here.

One of them is the fact that MVIS has suddenly become one of the hot - well, one of the fairly warm - names within the message board community. While these tend to be amateur traders (and often pump and dump instigators, or those who fall prey to P&Ds), that doesn't mean the surge in interest isn't telling of something on the horizon - why the sudden interest when there was none before.

The biggest reason Microvision could be a good speculative buy here, however, is the chart.

Yes, MVIS hit new lows on Monday, and the theory is "buy new lows" (since they tend to keep coming). I'm telling you though, in my experience, I've seen it just as often that would-be owners are just waiting for a revisit to prior lows to use as an entry point... the "can't get any worse" theory.

Indeed, on the same day we hit new 52-week lows, Microvision, Inc. also - interestingly - popped back up to close at the high for the day. It was also a butterfly doji day, which suggests Monday was the day we flushed out all of the would-be sellers, and the environment turned to one of net bullishness. The volume spike for Monday (high volume, even of not huge volume) implies underscores how the session may have been a last gasp for the bears and a subsequent "ok, that's low enough" pivot for the bulls. See, high volume doji bars tend to mark turning points for stocks.

Top 5 Safest Companies To Buy For 2015

Yes, it's admittedly all a little fuzzy, which is why MVIS is most definitely a speculation here; today's lack of follow-through isn't exactly reassuring. It could take some time to get in a bullish groove after Monday's clues though. The clincher for the call is fairly simple... the first close above the 20-day moving average line (blue), which has been a nagging resistance level for weeks. It's at least worth adding to your watchlist in the meantime.

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

Google Play Continues to Gain Share in Apps Downloads

Apps downloads for the month of January show that the Google Play store from Google Inc. (NASDAQ: GOOG) gained another point of market share in the two-company battle with the App Store from Apple Inc. (NASDAQ: AAPL). Google Play now claims 38% of the market between the two players, up from 37% in December and 35% in August 2013. The Appstore from Amazon.com Inc. (NASDAQ: AMZN) is not yet included in the data reported by research firm Distimo.

Looking at revenue generating apps, of the five most popular apps at Google Play four are either productivity, personalization, or music player apps. Minecraft – Pocket Edition is the only game in the top five paid apps at Google's store.

The App Store and Amazon's Appstore also boast the only paid games in their respective top five from publicly traded companies: Heads Up! from the Warner Bros. division of Time Warner Inc. (NYSE: TWX) at the App Store and Scribblenauts Remix, also from Warner Bros., at the Appstore. Temple Run: Oz, from The Walt Disney Co. (NYSE: DIS) is the fourth most popular paid app at the Appstore.

Facebook Incl. (NASDAQ: FB) supplies two of the top five free apps at Google Play: Facebook and Facebook Messenger. The only free game in the top five at Google play is Candy Crush Saga, which has fallen out of the top five at the App Store. Pac-Man, normally a paid app, was available free for one week in January and resulted in the game vaulting to fourth in free apps available from the App Store.

Combined revenues at the App Store and Google Play rose by 1% in January compared with December 2013 revenues. Since August App Store revenues have risen by 27% while revenues at Google Play have risen by 44%.

Canceled, delayed flights hurt business travelers

The storms and bitter cold that have pounded the U.S. and led to the delay or cancellation of thousands of flights this year have not only taken a financial toll on those in the business of flying, but those dependent on a plane ride to get them to the next business meeting.

Last month, 49,000 flights were canceled by U.S. carriers, while another 300,000 failed to take off on time, says masFlight, a data and software firm that focuses on air travel. Those scuttled and delayed flights disrupted the travel plans of roughly 30 million fliers, and cost them over $2.5 billion in lost work time, and out of pocket costs for everything from meals to an extra night's hotel stay, according to masFlight's estimates.

"It's one for the record books,'' masFlight's CEO Josh Marks said of January's massive number of canceled and delayed flights. "Virtually every major hub from (the) eastern and central United States, with the exception of Miami, was impacted by the weather and caused a systemic impact we haven't seen before.''

Airlines took a financial hit of $75 million to $150 million in January, as they deiced frosty equipment and moved flight crews into place, among other expenses. And now February is off to a rough start, with thousands of flights already canceled in the face of back-to-back storms.

While corporate trekkers aren't the only ones inconvenienced by a scuttled flight, a delayed business trip can spark a ripple effect of canceled meetings, missed deadlines, and potentially dashed opportunities, some experts say.

"What business travelers are weathering this winter is becoming more burdensome'' says Kevin Mitchell of the Business Travel Coalition. "With more major storms on the horizon, diminished productivity could quickly turn into lost business traction and momentum going into a new year . . . That's what could set 2014 apart from many past winters."

The client waiting for a delayed business traveler to arrive can also lose out, Mitchell adds. For instance, if a co! nsultant has difficulty flying in to help on a project with a tight deadline "the entire schedule and deadlines could be undermined,'' Mitchell says.

Tina Werderman, who provides on-site training, says that she and several of her co-workers found themselves grounded by last month's bad weather. As a result, a couple conference programs they were to participate in had to be called off.

"I couldn't reach mine in New Orleans, but luckily another trainer could so we had to double the group until I arrived,'' says Werderman, a member of USA Today's panel of Road Warriors who lives in Richfield, Wisc.

Road warrior Jon Petz, a professional speaker and entertainer,booked a second, back up flight in January to make sure he made it from his home in Columbus Ohio, to an engagement in Chicago. But even that wasn't enough to help him during the brutal cold snap, caused by the "polar vortex,'' that crippled air travel.

Petz's back-up flight was rescheduled twice before being canceled two hours before take off. Petz finally went to the Southwest counter where he bought a ticket and boarded a flight to Chicago's Midway Airport. It cost him another $224. But it "saved the gig (and) saved the paycheck,'' he says.

Weather-related flight delays can also wreak havoc with large off-site meetings which, if they were to be canceled because attendees couldn't make it in, could lead to losses in the hundreds of thousands of dollars, says Robert Lipman, executive vice president of Summit Management Services which focuses on meetings for the pharmaceutical research industry.

"It's bad enough to reschedule a business trip for one person, but when planning for large groups, rescheduling is not an option,'' says Lipman, who suggests that his clients plan their winter meetings in milder climates like California or Arizona.

Victoria Day, spokeswoman for the U.S. industry trade group Airlines for America said in an email that "airlines are adept at managing their businesses through a challengin! g environ! ment, and these extended weather events are a clear reminder of the industry's operational and financial vulnerability to events outside its control."

10 Best Media Stocks To Own Right Now

Marks, of masFlight, says that it's not just bad weather that's triggered this year's flight disruptions. New federal regulations that fine airlines for lengthy tarmac delays, and require pilots to get more rest, are also boosting the number of canceled flights, he says.

Carriers will need to hire more pilots and tap into technology to make sure there is staff in position to fly, he says. And "while it's unlikely we will see or should see wholesale changes in new duty time rules,'' he says, "we can introduce more flexibility under certain conditions.''

Our Outlook For Stocks in 2014

Related SPY Did The VIX Have It Right On Thursday? Top Trending Tickers On StockTwits For January 31

 

The bull market received a bit of a scare last week as the S&P 500 fell almost 3%, the biggest single week loss since 2012. The market seems to have recovered this week, but a repeat of the 26% gain in 2013 doesn’t appear to be in the cards.

Long-Term Bullish

Last May I wrote that I’m long-term bullish and I don’t believe the stock market is in a bubble. I continue to stand by that thesis. The market has withstood the beginning of the Fed taper without suffering the massive decline that many predicted.

The article I linked to above contains the details of my outlook on the economy as a whole, so I won’t go into too much detail here. Basically, I believe the U.S. economy is undergoing a restructuring where we are becoming radically more productive. Businesses are allocating capital more efficiently; the labor force is retooling its skills for the new economy; and technological innovation continues to push the limits of human productivity. The implications of this advancement can be seen in Figure 1.

Figure 1: A New Paradigm for Capital Allocation and Economic Growth.

Source: New Constructs, LLC.

The average return on invested capital (ROIC) of 20% for the S&P 500 (NYSE: SPY) and the increasing economic earnings of S&P 500 companies supports this thesis. The slow growth in GDP over the past few years is a sign that companies are becoming more deliberate and careful in their capital allocation.

Valuations Raise Short-Term Concerns

Despite my bullish outlook on the economy as a whole, it’s impossible to ignore the fact that valuations are getting a little stretched. In the past few months, the price to economic book value (zero-growth value) ratio of SPY reached 2.6, which is what we consider to be a Dangerous level. Overall we still rate SPY as Neutral.

The high valuation of the S&P 500 shouldn’t send investors running for the hills, but I do expect that the market will be more turbulent this year as we see corrections in individual stocks and groups of stocks that have gotten especially overvalued.

Even though the market is richly valued, there are still plenty of good stock picks out there. Currently, 282 out of the 2,645 stocks we have under coverage (11%) earn an Attractive-or-better rating. 1,697 (64%) earn a Dangerous-or-worse rating. Figure 2 shows the rating landscape for stocks under our coverage.

Figure 2: Ratings for Stocks We Cover

Source: New Constructs, LLC.

As you can see from Figure 2, our ratings currently favor large cap stocks over small caps. Even though Very Dangerous stocks outnumber Very Attractive stocks by almost three to one, Very Attractive stocks have the greater combined market value. Attractive-or-better rated stocks make up only 11% of the stocks we cover but they account for 18% of the market value.

Over the past five years, small caps have handily outperformed large caps. The Russell 2000 (NYSE: IWM) rose by 153% since 2009 compared to 115% for the S&P 500. However, we believe the disparity in their performances signifies that small caps are now overvalued. The Russell 2000 currently has a price to economic book value ratio of 5.1, nearly double that of the S&P 500. There are still quality small-caps out there, but on average small caps are overvalued compared to large and mid cap stocks.

A Stock Pickers Market

I expect to see some corrections in the market this year as valuations fall more in line with fundamentals. I don’t think the market is overvalued enough to cause a large-scale crash, so the corrections should be mostly contained to individual stocks. Even as the market struggles in the short-term, money can be made by those capable of identifying undervalued and avoiding overvalued stocks.

AutoZone (NYSE: AZO) is one of the stocks that earn my Very Attractive rating. AZO has grown after-tax profit (NOPAT) by 8% compounded annually over the past decade. Going with my theme of increasingly intelligent capital allocation, AZO has also increased its ROIC from 20% to 25% over the past five years. At its current valuation of ~$500/share, AZO stands out with a price to economic book value ratio of only 1, which implies that the company will never grow NOPAT from its current level. Given AZO’s strong track record of profitability and growth, I believe the market is significantly undervaluing this company. I expect strong short-term and long-term performance from AZO.

As I said before, I remain long-term bullish on the market as a whole. However, many stocks out there need time to grow into their valuations. We should see many corrections and modest performance from the market as a whole this year, but that does not mean your portfolio can’t achieve significant returns.

The Big Picture and Fed Policy

While valuations are stretched and investors must operate with a higher level of diligence in today’s markets, I believe stabilization of the housing market supports the underlying health of the economy and consumer balance sheets.

Ever since the financial crisis, the Federal Reserve policy has unequivocally supported the capital markets. They needed to support these markets to offset the decline in the nation’s largest asset: housing. Now, that housing has stabilized and consumers are able to catch financial breath, Fed policy can get back to the business of ensuring capital is allocated intelligently. Keeping interest rates too low for too long undermines the long-term economic growth potential of our economy.

So, we can expect the Fed to continue to taper bond purchases and raise rates back to more normal levels in the foreseeable future. These changes will challenge the stock market and lead to a greater rationalization of stock valuations. Momentum strategies will no longer be effective. Cash will again be king as the market will more narrowly focus on awarding value only to the stocks that can generate cash flows in excess of what their current stock valuation implies.

Making money picking stocks is about understanding true cash flowsand identifying disconnects between the market’s expectations for future cash flows and your own expectations. Anything else is gambling, not investing.

Sam McBride contributed to this report

Disclosure: David Trainer owns AZO. David Trainer and Sam McBride receive no compensation to write about any specific stock, sector, or theme.

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

Posted-In: Markets Trading Ideas ETFs

  Most Popular Reports: Microsoft Will Pick Satya Nadella and Bill Gates Will Step Down Analysts React to Las Vegas Sands Earnings #PreMarket Primer: Friday, January 31: Emerging Market Turmoil Spills Over Into Europe As Goes January, So Goes the Year? A Quantitative Look Market Wrap For January 30: Markets Focus on Good News CEO Jeff Bezos: 'It's A Good Time To Be An Amazon Customer' Related Articles (IWM + AZO) Our Outlook For Stocks in 2014 Will the Worries Stick? Top Performing Industries For January 27, 2014 Another Way To Look At Valuations How to Play Seasonal Anomalies for Profit Top 4 Stocks In The Auto Parts Stores Industry With The Highest Revenue Around the Web, We're Loving... Lightspeed Trading Presents: Thunder and Tubleweeds: Trading Techniques for the New Market Enviroment Pope Francis Rips 'Trickle-Down' Economics Come See How the Pro's Trade in this Exclusive Webinar Wynn, MGM, Other Casino Giants Vying For U.S. Turf What Should You Know About AMZN? View the discussion thread.