INVESTING COMMENTARY

• The 10 Biggest Russell 2000 Losers in November
• Wednesday's Biggest Stock Stars
• Making Cents in Penny Stocks
• Gold Selling for $10 an Ounce!
• 5-Star Stocks Poised to Pop: Seagate Technology
• 5-Star Stocks Poised to Pop: Western Union
• 5 Deathbed Stocks?
• 4-Star Stocks Poised to Pop: Genco Shipping
• Apple Isn't a One-Hit Wonder
• 1-Star Stocks Doomed to Drop: Daimler
• 7 Must-Read Stock Blogs
• Today's 5-Star Movers
• 5 Free Internet Winners
• Every Day Is Cyber Monday
• 5-Star Stocks Begging to Be Bought
• The World's Greatest Get-Rich Formula
• Cloud Computing Descends
• The Biggest Threat to Your Portfolio Today
• An Unlikely Powerhouse
• Black Friday Missing the Black
• Don't Miss These Stocks
• 9 Health-Care Stocks to Defend Your Portfolio
• How I Learned to Love the Bailout
• As If Things Weren't Bad Enough...
• The Truth Behind Buffett's Big Bet
• One Outrageously Cheap Stock
• Buffett Says It's Time to "Be Greedy"
• Is Sigma Designs Wearing Thin?
• Warren Buffett's Priceless Investment Advice
• Drug Deals Require Cash
• Do These Stocks Deserve Your Support?
• A Great Pick for Your IRA
• Pay Attention, GameStop
• 3 Stocks Hitting Low Notes
• 4-Star Stocks on the Upswing
• Throw This Stock Away
• What's a Whopper Virgin?
• Pros and Cons of the Top 20 Rejected Treasury Candidates
• Poor Pozen
• Drink In These 5 Top Stocks
• Buyout or Sellout?
• Amazon Seeds Its Clouds
• This Just In: Upgrades and Downgrades
• 3 Reasons to Buy Best Buy Now
• Marvell at This Huge New Market
• Stocks the Rich Executives Are Buying
• 3 Reasons to Sell Best Buy Now
• Should You Free Yourself From Freeport?
• 10 of the Most Efficient Companies on the Planet
• Signs of a Top-Notch Fund
• Pfizer Blows Statin Smoke
• Is Nokia Out of Touch?
• The Mr. Scrooge of Silver Miners
• 6 Words You Don't Want to Say
• 4 Reasons to Choose Funds Over Stocks
• Can Obama Save the Zune?
• Now Is the Time to Invest and Get Rich
• Bill Miller Calls a Market Bottom
• Paulson’s New Plan: A Cheap Mortgage for Every Home
• Android Stalks Steve Jobs
• A Cleantech Outlook for 2009

The 10 Biggest Russell 2000 Losers in November

The Russell 2000 index is a collection of roughly 2,000 stocks that represents the performance of small-cap stocks. While the index has lost 12% in the month of November, its bottom 10 companies have seen their stock prices fall even further. Since companies may be delisted from the major exchanges from time to time, our 10 biggest Russell 2000 losers are currently trading on either the NYSE or Nasdaq exchanges and also have market caps of at least $200 million as of Nov. 28, 2008.

Of course, a stock's price can drop for reasons both significant (e.g., the emergence of a more powerful competitor) and insignificant (e.g., tax selling). Hence, a large drop in stock price could offer a unique buying opportunity, but it could also present a value trap.

That's why we've paired the 10 biggest Russell 2000 losers for the month of November with the intelligence of our 120,000-member-strong Motley Fool CAPS community. Each company's CAPS rating should offer some insight into how our community views the company. As always, though, you should conduct your own fundamental research.

For the month of November, here are the Russell 2000's 10 biggest market losers.

Company

Return in November

Year-to-Date Return

CAPS Rating (out of 5)

Additional CAPS Research

1. KV Pharmaceuticals

(73.1%)

(84.0%)

*****

KV-A

2. VeriFone Holdings (NYSE: PAY)

(63.8%)

(82.3%)

***

PAY

3. Ferro Corp

(58.5%)

(69.0%)

*

FOE

4. Gaylord Entertainment (NYSE: GET)

(57.1%)

(77.3%)

*

GET

5. Arbitron (NYSE: ARB)

(56.9%)

(66.3%)

**

ARB

6. Eagle Bulk Shipping (Nasdaq: EGLE)

(56.6%)

(83.7%)

****

EGLE

7. Live Nation (NYSE: LYV)

(56.5%)

(66.3%)

**

LYV

8. Genco Shipping & Trading (NYSE: GNK)

(56.3%)

(83.4%)

****

GNK

9. Phoenix Companies

(56.0%)

(76.0%)

**

PNX

10. ION Geophysical (NYSE: IO)

(54.3%)

(81.0%)

*****

IO

Source: Capital IQ and Motley Fool CAPS.

Curious to see which other companies saw their share prices get a haircut? Check out the biggest Dow losers, Nasdaq losers, and S&P 500 losers or join us on CAPS to further your research into the companies mentioned above.

Wednesday's Biggest Stock Stars

Hey there, Fools. I've summoned our Motley Fool CAPS community once again to highlight a few of Wednesday's biggest winners among the stocks with a top rating of five stars.

Without further ado:

Company

Yesterday's % Gain

Grey Wolf (AMEX: GW)

24.94%

Quality Systems (Nasdaq: QSII)

13.27%

Silver Wheaton

12.78%

Yingli Green Energy (NYSE: YGE)

11.82%

Markel (NYSE: MKL)

7.84%

There's a reason why I selected notable five-star gainers, as opposed to other big-name winners making noise on Wednesday, like low-rated Morgan Stanley (NYSE: MS). Stocks go up all the time, but unless you were able to predict the pop, what does it matter?  

Our community of more than 120,000 CAPS Fools considers its five-star stocks the most likely to outperform the market. So far, CAPS has indeed proved its market-beating prowess: In the first 20 months since its inception in late 2006, five-star stocks beat the market by 12 points, annualized.

Written in the (five) stars?
For example, 97% of the 472 All-Star members who've rated Motley Fool Stock Advisor pick Quality Systems have a bullish opinion of the stock. Yesterday afternoon, one of those Fools, Har1en, described the medical-records-software maker in glowing terms:

Another great company with a niche -- medium to large medical practice sales and upkeep of medical records tech. And another No Debt team member! ... Come inflation or deflation, these companies will be able to reprice their products to fit the new landscape and won't be slowed down by debt servicing.

With the help of yesterday's pop, Har1en is off to a nice start with that call.

The bullish lesson?
Learn to capitalize on conservatively capitalized companies. In turbulent times such as these, businesses with rock-solid balance sheets have the flexibility to grow intrinsic value, while debt-laden competitors struggle to just stay alive. As Warren Buffett simply put it in Berkshire Hathaway 's Owners Manual, "We will reject interesting opportunities rather than over-leverage our balance sheet."

And now for the losers ...
Of course, winning isn't everything in the stock market. Here are five of Wednesday's biggest one-star decliners:   

Company

Yesterday's % Loss

Fortress Investment Group

25.20%

Palm (Nasdaq: PALM)

16.83%

Tecumseh Products

10.37%

Venoco

8.93%

Zale

8.71%

While yesterday's drop in five-star stock Freeport-McMoRan (NYSE: FCX) may have caught our community off-guard, one-star stocks are fully expected to fall hard: Over the 20 months since CAPS started, one-star stocks dropped an average of 11.4%, annualized.

Did CAPS call the fall?
Two days ago, for instance, CAPS All-Star skymutt2 commented on a recent statement from Palm:

Stunning revenue warning. Management blames it on the economy, but it's the product that's the problem, and has been for some time. Trying to execute a turnaround in this environment is not an enviable task.

Not surprisingly, shares of the Treo and Centro maker have continued to slide since that warning on Tuesday.

The bearish takeaway?
If you plan to play the turnaround game, be sure to pick up broken stocks -- not broken companies. A downturn can certainly provide opportunities to buy quality on the cheap, but weaker companies, businesses that were already losing ground, might look just as appealing to bargain-hunters. True, it's darkest before dawn, but as Peter Lynch reminds us, "It's also always darkest before it goes absolutely pitch black."

The final Foolish move
Investors often focus strictly on stock price movements, without realizing that developing a proper stock-picking process counts most.

Over at Motley Fool CAPS, thousands of investors are Foolishly sharing insightful investment tips to help, above all else, identify tomorrow's big movers. Over time, consistently reverse-engineering winning -- and losing -- stocks will help you become a more Foolish investor.

Log in to CAPS today and start participating. It's absolutely free -- and a lot of fun! 

Making Cents in Penny Stocks

The occasional shower of pennies from heaven might do our bank accounts some good, but we Fools can't say the same for penny stocks. The world of penny stocks is often full of manipulation and deceit, making it harder for investors to separate its few good offerings from the multitude best ignored.

Still, many investors dabble at the low end of the stock-price spectrum. At Motley Fool CAPS, we award the "Pennies" title to investors who rate stocks trading in the single digits more than half the time. Believe it or not, you'll find some of the best CAPS All-Stars among those members.

Pinching pennies
This week, we'll look at some of the low-priced investments these All-Stars have praised. If the best investors regularly scanning this end of the market have singled out these companies, we might want to turn our umbrellas upside-down -- or run for cover!

Here's the latest list of low-priced stocks with All-Star support:

Company

Price*

CAPS Rating (out of 5)

CAPS Member

Member Rating

ABB (NYSE: ABB)

$9.75

*****

aracer

98.75

Wachovia (NYSE: WB)

$5.40

**

steve3333

98.58

Sandisk (Nasdaq: SNDK)

$5.41

****

jmf1957

96.60

Exide Technologies (Nasdaq: XIDE)

$3.67

****

chicachick

87.41

Time Warner (NYSE: TWX)

$8.12

***

JPRutledge

88.74

*Price when the outperform call was made.

Your two cents worth
The number of previously formidable companies that now rank among the detritus of penny stocks is staggering. Yet Wachovia's absorption by Wells Fargo (NYSE: WFC) created a sound base for recovery for the sprawling banking concern. CAPS member investmentguru30 recently blogged that the $800 billion in deposits Wells received, along with its own size and scope, add up to some hefty competitive advantages:

Wells Fargo is probably the best capitalized of the major banks. The recent addition of Wachovia has given Wells Fargo about 800 billion in deposits. Wells Fargo size is a major competitive advantage ... Wells also has excellent management. Wells Fargo management have already accounted for a 74 billion dollar writedown of Wachovia's total loan portfolio. This should reduce Wells exposure going forward... Wells has historically had a 22% profit margin and solid ROE of 18% over the last five years. It doesn't hurt that Warren Buffett loves Wells Fargo and has owned it for years.

JPRutledge thinks that when Time Warner finally spins off AOL, not to mention Time Warner Cable (NYSE: TWC), it will re-emerge as an entertainment and media juggernaut.

Time Warner will narrow its focus and expand its reach by casting off its most-horrendous acquisition (AOL) in the next year. This jettisoning will allow the organization to focus on the traditional media and entertainment markets it knows so well. As a result, its bottom line will improve dramatically over the next five years ---- and its multiple will expand significantly.

Making change
As solid state drives become more prevalent and important, SanDisk is striving to produce better-performing, more reliable drives. Its recently unveiled advanced flash file management system may help thwart the decline the recession will impose on all aspects of the semiconductor sector. CAPS member mad02 figures SanDisk has the intellectual portfolio to turn things around: "This is a bet on [SanDisk's] IP portofolio and that the economic downturn we are facing doesn't turn into a 1930's style depression lasting more than 4-6 quarters."

Penny for your thoughts
What do you think? Should we fill up the change jar with these penny stocks, or ignore 'em like a discarded coin on the street? It pays to start your own research on these stocks on Motley Fool CAPS. Read a company's financial reports, scrutinize key data and charts, and examine the comments your fellow investors have made -- all from a stock's CAPS page. Consult our free CAPS investor-intelligence community, where your two cents count as much as anyone else's.

Gold Selling for $10 an Ounce!

Beware of the peddler trying to sell you the Brooklyn Bridge. But if you come across a guy looking to sell another type of bridge -- namely Seabridge Gold (AMEX: SA) -- you might want to pay attention.

The fellow's name is Rudi, but he's not the former Big Apple mayor who was caught on film in drag. This Rudi, Rudi Fronk, is the founder and CEO of Seabridge, and this week he announced to the mining industry that he is looking to sell his company to one of the majors.

With a whopping 27.8 million ounces of measured and indicated gold resources, and a share price that has dropped by more than 70% in 2008, my bet is that those major miners will be eager to get their hands on this company. Silver Wheaton (NYSE: SLW) shares valued at $1 per ounce of silver was surprising enough, but what about gold at $10 per ounce?

That's right: A deal for the company could bring Seabridge shareholders across a gilded bridge from the present market value -- as Fronk himself points out -- of just $10 per ounce of gold.

Seabridge just released the preliminary economic assessment for the flagship Kerr-Sulphurets-Mitchell (KSM) project in British Columbia. According to the report, KSM is capable of delivering 648,000 ounces of gold per year for 30 years, and those gold ounces would come at a negative operating cost after by-product credits. With encouraging economic assessments now in hand for both the KSM and Courageous Lake projects, the moment is ripe for Fronk to execute his exit strategy and sell the company to usher these projects into the development phase.

Company insiders hold 35% of Seabridge shares, so shareholders know their interests are under consideration. In an apparent move to launch a bidding contest, Fronk publicly proclaimed his short list of preferred suitors: Barrick Gold (NYSE: ABX), Newmont Mining (NYSE: NEM), and Goldcorp (NYSE: GG). Pointing to the relative political risk of their mine locations, Fronk also named his list of unwelcome suitors, including Kinross Gold (NYSE: KGC) South Africa's Gold Fields (NYSE: GFI).

The big three miners are a logical source for the $3.4 billion needed to develop the KSM mine, and as long as an eventual deal is conducted through shares only, as Fronk prefers, then Seabridge shareholders can follow these assets through to production. Fronk expects the company to sell at a healthy premium above market value.

Further Foolishness:

5-Star Stocks Poised to Pop: Seagate Technology

Based on the aggregated intelligence of 120,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, hard-drive maker Seagate Technology (Nasdaq: STX) has earned a coveted five-star ranking. Our data has shown that five-star stocks outperform the market by a significant margin; conversely, one-star stocks have woefully lagged the market average.

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

Seagate facts

Headquarters (founded)

George Town, Cayman Islands (1979)

Market Cap

$2.15 billion

Industry

Data Storage Devices

TTM Revenue

$12.46 billion

Management

CEO William Watkins (since 2004)
COO David Wickersham (since 2004)

Return on Equity (average last three years)

20%

Dividend Yield

10.9%

Competitors

Western Digital (NYSE: WDC),
SanDisk (Nasdaq: SNDK)

CAPS members bullish on STX also bullish on

Apple (Nasdaq: AAPL),
Intel (Nasdaq: INTC)

CAPS members bearish on STX also bearish on

Research In Motion (Nasdaq: RIMM),
Whole Foods Market (Nasdaq: WFMI)

Sources: Capital IQ, a division of Standard & Poor's, and Motley Fool CAPS. TTM = trailing 12 months.

Over on CAPS, fully 122 of the 139 All-Star members who have rated Seagate -- some 88% -- believe the stock will outperform the S&P 500 going forward. These bulls include jdawg1847 and JTShideler, both of whom are ranked in the top 5% of our community.

Late last month, jdawg1847 ran down a few of the stock's bullish stats: "Largest maker of computer hard drives yields 10%, has a $9 book value and $2.5 per share in cash."

In a more recent pitch from just yesterday, JTShideler echoes that sentiment, tapping Seagate as a solid, cash-rich pick:

Picking Seagate as a longterm value play trying to juice my returns by picking stocks with low valuations, good financials and great dividends. I figure with a P/E of 2.6 and trading below book value, plenty of cash on hand, free cash flow and a nice 10% dividend yield I can afford to wait it out until Mr. Market comes back to his senses.

What do you think about Seagate, or any other stock for that matter? Make your voice heard on Motley Fool CAPS today. More than 120,000 investors are waiting to hear what you have to say. CAPS is 100% free, so simply click here to get started.

5-Star Stocks Poised to Pop: Western Union

Based on the aggregated intelligence of 120,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, money transfer agent Western Union (NYSE: WU) has earned a coveted five-star ranking. Our data has shown that five-star stocks outperform the market by a significant margin; conversely, one-star stocks have woefully lagged the market average.

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

Western Union facts

Headquarters (founded)

Englewood, Colorado (1851)

Market Cap

$9.08 billion

Industry

Personal Services

TTM Revenue

$5.3 billion

Management

CEO Christina Gold

CFO Scott Scheirman

Return on Capital (average last two years)

28.25%

Competitors

MoneyGram International (NYSE: MGI),

Global Payments (NYSE: GPN)

CAPS members bullish on WU also bullish on

Microsoft (Nasdaq: MSFT),

General Electric (NYSE: GE)

CAPS members bearish on WU also bearish on

Citigroup (NYSE: C),

General Motors (NYSE: GM)

Sources: Capital IQ, a division of Standard & Poor's, and Motley Fool CAPS. TTM = trailing 12 months.

Over on CAPS, fully 1,015 of the 1,044 members who have rated Western Union -- some 97% -- believe the stock will outperform the S&P 500 going forward. These Foolish bulls include BeachExec and zubikov.

In late October, BeachExec touched on Western Union's attractive price: “Strong cash generator. Hammered for not providing guidance next quarter but this company is well managed and will beat the market over time.”

In an earlier pitch from August, zubikov shared that sentiment, stressing the stock's long-term tailwinds:

This company will thrive because of increased international electronic cash flow. If they keep fraud in check, they will do very well as they are the only truly established trusted wire transfer company with branches in many developing countries. Just ask any of your friends that have family abroad, and how remittances are sent; it's very likely that someone they know uses Western Union.

Markets may go up and down. Currencies appreciate and fall. Inflation and rates are going wild...In the meantime, Western Union can't count its cash fast enough!

What do you think about Western Union, or any other stock for that matter? Make your voice heard on Motley Fool CAPS today. More than 120,000 investors are waiting to hear what you have to say. CAPS is 100% free, so simply click here to get started.

5 Deathbed Stocks?

We've all heard of the "death rattle," the last gasp from a lost soul's lungs. Sometimes, we seem to hear it from the companies in which we invest. Revenue dries up. Margins contract. Profits evaporate. All these signs suggest that their condition is worsening -- a financial death rattle, if you will.

Stocks in sickbay
Don't assume that all such companies are goners. Some will barely cling to life, while others will make a full recovery. But here, we're seeking companies that have all but given up the ghost.

For help, we'll turn to the clever coroners at our 120,000-strong Motley Fool CAPS community, where members give the thumbs-up or thumbs-down to some 5,400 stocks. Data shows that newly minted five-star stocks offer the best opportunities for investors, while the lowest-rated companies fared the worst. We've unearthed a handful of stocks that look like they might be headed six feet under, based on the rock-bottom one-star rating they've garnered from CAPS.

Then we'll palpate their pulse with some quick tests for liquidity -- who knows, maybe we'll still find some signs of life? The current ratio and quick ratio (also called the "acid test" ratio) give us an idea of a company's ability to pay its bills, and the Altman Z-Score suggests companies in danger of bankruptcy. Companies scoring 3.00 and above are considered safe; between 2.70 and 2.99 should prompt caution; between 1.80 and 2.70 have a good chance of going bankrupt within two years; and those with scores below 1.80 mean the cryptkeeper is waiting.

Here's today's list. Are these companies only mostly dead, or have they already given up the ghost?

Stock

Current Ratio

Acid-Test Ratio

Altman Z-Score

Recent Price

AutoNation (NYSE: AN)

1.0

0.2

3.48

$9.25

InfoSpace (Nasdaq: INSP)

6.8

6.7

1.22

$7.63

Internet Capital Group (Nasdaq: ICGE)

3.7

3.4

(10.11)

$4.27

Life Time Fitness (NYSE: LTM)

0.3

0.1

1.36

$13.65

Merrill Lynch (NYSE: MER)

1.4

1.4

NA

$12.43

Sources: Motley Fool CAPS; Capital IQ, a division of Standard & Poor's.

We obviously don't know whether these companies are headed six feet under, so don't short them based on their appearance here. Moreover, some companies, like software makers and financial firms, don't neatly fit into the Altman Z-Score scale. Yet our primary screen searches for stocks that CAPS investors have marked down to one- or two-star status, suggesting they may be destined to seriously underperform the market. Just the other day, Pilgrim's Pride -- which appeared here back in April -- filed for bankruptcy protection.

Nothing ventured, nothing gained
Revenue at Internet Capital Group's eight core companies grew 20% last quarter, but they still collectively reported a wider aggregate loss of $6.9 million. Although revenue growth trailed expectations, the venture capital firm's management said it was still happy with the results, considering the economic headwinds. Still, this market isn't kind to startups, like those in which ICG invests, and IPOs have been extremely rare. ICG may operate a profitable model during good times, but CAPS member srk85 nonetheless suspects there's too little hope for it ahead: "Big losses on the horizon, little prospect for a recovery"

In outer space
Back in March, CAPS All-Star member equalfuture called InfoSpace a holdover from the tech boom. It may have outlasted Pets.com and DrKoop.com, but it still finds itself mired among other tech wrecks like Internap Network Services (Nasdaq: INAP). equalfuture thinks it may have outlived its usefulness: "A relic from the dot.com days. It has outlived its expected lifespan and the day has come to put it out of its misery."

Still financially fit?
At least one high-profile stock site has questioned whether Life Time Fitness can reverse membership trends amid tightening discretionary spending. CAPS member Relic666 thinks the comapny could succeed -- if it makes it through this recession.

With the current economic status this is a luxury that will sit in the wings for the next year or so. Once everything has settled down, they [should] begin to prosper. Have to [keep] a sharp eye out and make sure they don't over extend themselves between now and then.

Whether for gyms or gym-equipment makers like Nautilus (NYSE: NLS), itself a former denizen of the deathbed list, these are hardly friendly times for big-ticket items.

Rattling the cage
Are these companies doomed to drag their investors into an underworld of underperformance? Or will they be resurrected to stalk the markets once again? It pays to start your own research on these stocks on Motley Fool CAPS. Read a company's financial reports, scrutinize key data and charts, and examine the comments your fellow investors have made, all from a stock's CAPS page. Sign up today, absolutely free, and let us know whether you think the Grim Reaper's at the door.

4-Star Stocks Poised to Pop: Genco Shipping

Based on the aggregated intelligence of 120,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, drybulk hauler Genco Shipping (NYSE: GNK) has earned a respected four-star ranking. While five-star stocks have been the best performers, our data has shown that four-star stocks still outshine the market by a significant margin and shouldn't be taken lightly; conversely, low-rated stocks have woefully lagged the market average.

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

Genco facts

Headquarters (Founded)

New York, N.Y. (2004)

Market Cap

$215.89 Million

Industry

Shipping

Trailing-12-Month Revenue

$369.5 Million

Management

President Robert Buchanan

CFO John Wobensmith

Return on Capital (Average, Past Two Years)

7.6%

Dividend Yield

55.7%

Competitors

Eagle Bulk Shipping (Nasdaq: EGLE)

Navios Maritime (NYSE: NM)

CAPS Members Bullish on GNK Also Bullish on:

Diana Shipping (NYSE: DSX)

DryShips (Nasdaq: DRYS)

CAPS Members Bearish on GNK Also Bearish on:

Euroseas (Nasdaq: ESEA)

Excel Maritime (NYSE: EXM)

Sources: Capital IQ (a division of Standard & Poor's) and Motley Fool CAPS.

On CAPS, 752 of the 786 members who have rated Genco -- some 96% -- believe the stock will outperform the S&P 500 going forward. These Fools include CAPS All-Star Hetepheres and rfoben.

Last month, Hetepheres tapped Genco as a way to get paid while you wait: "I see this one as being able to weather the current storm (so to speak) and do okay in the long run. In the meantime, DIVIDENDS."

In a pitch posted just yesterday, rfoben shares that contrarian spirit and elaborates on Genco's ability to bounce back:

Conservative, low cost producer, low P/E, price to tangible book is about 35%, high dividend (will likely be cut at least in half--still will be 20%).

Relatively new fleet, serving China especially. Current 80% gross margin under contracts into 2010; will see significant pressure here but Genco will ultimately prosper.

What do you think about Genco, or any other stock for that matter? Make your voice heard on Motley Fool CAPS today. More than 120,000 investors are waiting to hear what you have to say. CAPS is 100% free, so get started!

Apple Isn't a One-Hit Wonder

Of course Apple (Nasdaq: AAPL) isn't forever. But is it really the next Iomega? That's what my Foolish friend Rick Munarriz thinks. I think he's already had too much eggnog.

That's what we in the biz call a "one-hit wonder"
Comparing Apple to the no-longer-independent Iomega is like comparing The Beatles to A Flock of Seagulls, or Men Without Hats. Sure, both bands had chart-toppers like "I Ran (So Far Away)" and "Safety Dance," but do you really care about anything else either of them did? Not likely.

The Beatles by contrast, have sold more than 500 million records and are the best-selling band of all time. Yeah, I know, John Lennon actually did do that "Two Virgins" audio experiment with Yoko Ono; it wasn't a nightmare. And, yes, the Magical Mystery Tour movie wasn't exactly a smash. But doesn't that pale against the rest of the band's pure platinum body of work? Of course it does.

Behind the music: Iomega
Which brings us back to Iomega, the classic one-hit wonder of the business world. Rick says it perfectly:

Iomega's stylish cobalt blue Zips were elegant and functional. With superior storage capacity to floppy diskettes, it became an essential PC accessory. Tape storage rival SyQuest tried to make its mark in the niche, but it was too late. Iomega was gobbling up market share and all of the style points. We all know how it ended. Zip ultimately handed the baton to CD-Rs, flash memory cards, and USB drives.

Exactly. Iomega had other products -- still does -- but none of them ever took off the way the Zip Drive did.

Now, shall we run through Apple's string of chart-toppers? Allow me:

Of course, Apple has had its blunders too. Take the Mac Cube. A cult hit in later years, it proved to be a weak seller at launch and was canceled after just a year on the market. The Pippin gaming system had already lost out to platforms from Nintendo and Sony (NYSE: SNE) by the time of its U.S. launch in 1996. And while it's future is debatable, there's no doubting that Apple TV has done little, if anything, to diminish enthusiasm for TiVo and Netflix (Nasdaq: NFLX).

The barbarians named Gates and Ballmer
What about Microsoft (Nasdaq: MSFT), you say? Yes, the original Mac OS never took off the way it was supposed to during the '90s. However, Microsoft's OS victory likely had more to do with partnerships than technical superiority.

Certainly Bill Gates, Steve Ballmer and team did a brilliant job of wooing developers to Windows. And partnering with Intel (Nasdaq: INTC) made it easy to propagate its "Wintel" platform via IBM (NYSE: IBM), Dell (Nasdaq: DELL), Compaq, and other PC makers. Apple might have done better had it chosen to open the Mac OS to outsiders sooner.

Or not. Today, Windows is decades old and, as a consequence of its popularity, maintains aged code so that old software -- some old software, anyway -- can run on the newest versions of the OS. Apple doesn't have that problem and thus has been able to rebuild the Mac OS time and again, emphasizing innovation over aging bits. Market share gains have followed. (Though, to be fair, Apple's Rosetta Stone utility has played a part by assisting older Mac software in operating on today's binary code systems.)

Mr. Epstein, meet Mr. Jobs
Aside from the dark years when Jobs was away, Apple has been a consistent chart-topper. The next Iomega? Only if you think of Jobs as David Bailey or David Norton, Iomega's successful but mostly anonymous co-founders. His record, however, is much more like legendary Beatles manager Brian Epstein.

You're welcome to bet that he doesn't have another hit in him. Just don't ask me to.

1-Star Stocks Doomed to Drop: Daimler

Based on the aggregated intelligence of 120,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, German carmaker Daimler (NYSE: DAI) has received the dreaded one-star ranking. Our data has shown that one-star stocks woefully lag the market average; conversely, five-star stocks outperform the S&P by a significant margin.

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

Daimler facts

Headquarters (founded)

Stuttgart, Germany (1883)

Market Cap

$28.91 billion

Industry

Auto manufacturers

TTM Revenue

$139.52 billion

Management

CEO Robert Nardelli (since 2007)

CFO Ronald Kolka (since 2007)

Compound Annual Revenue Growth (over last three years)

(12.1%)

Competitors

Toyota Motor (NYSE: TM),

Honda Motor (NYSE: HMC)

CAPS members bearish on DAI also bearish on

General Electric (NYSE: GE),

Vale (NYSE: RIO)

CAPS members bullish on DAI also bullish on

General Motors (NYSE: GM),

Ford Motor (NYSE: F)

Sources: Capital IQ (a division of Standard & Poor's), and Motley Fool CAPS. TTM = trailing 12 months.

Over on CAPS, fully 64 of the 92 All-Star members who have rated Daimler -- some 70% -- believe the stock will underperform the S&P 500 going forward. These Fools include dew250 and uclayoda87, both of whom are ranked in the top 5% of our community.

Just last week, dew250 summed up the bear case using simple addition: “luxury plus motor vehicles... watch as interest rates and tightening belts kill their earnings and profits.”

In an earlier pitch from late October, uclayoda87 shared that bearish sentiment, writing:

Car sales are down in general due to the uncertain economy and tight credit. I also doubt that people want to buy a new expensive car that runs on only gas. Its like buying an old computer at an inflated price. When the auto industry comes out with a good quality gas/electric car or minivan that is a good value, then buyers will return.

What do you think about Daimler, or any other stock for that matter? Make your voice heard on Motley Fool CAPS today. More than 120,000 investors are waiting to hear what you have to say. CAPS is 100% free, so simply click here to get started.

7 Must-Read Stock Blogs

The Motley Fool's CAPS investing service is great way for investors to work together to beat the market -- and maybe get famous while they're at it. Among its features, CAPS lets users blog about their picks, investing strategies, market views, their favorite college football team, or whatever floats their boat.

As the CAPS blogosphere continues to grow, players are adding more great content on a daily basis. To make it easier to find some of the gems out there, I've dug through the past week's posts to find some of CAPS' best insights. Of course, with room for only seven posts here, I can't possibly cover all of the great stuff in the CAPS blogosphere. So when you're done here, I highly recommend heading over to CAPS and checking out what some of the other investors have to say.

The SEC is a bunch of toothless buffoons
Quite the bold statement, eh? Well, CAPS blogger TMFDeej is pulling no punches as he looks at the SEC's recent regulation changes when it comes to the big three bond raters -- Moody's (NYSE: MCO), Standard & Poor's, and Fitch. As the title implies, Deej doesn't think that the SEC went far enough with the new rules. But of course, my summary couldn't do Deej's post justice, so go ahead and click through to his blog!

Ford throws GM under the bus (the SUV?)
There's no shortage of jibes at U.S. automakers Ford (NYSE: F), GM (NYSE: GM), and Chrysler as they try desperately to get money from the government to help them survive the current recession. TMFBomb has one more to share. Head over to his blog to find out what the three stooges of the auto industry are up to now.

Foolanthropy's "My Two Cents" campaign
Want your voice to be heard on the stocks you follow and contribute to society at the same time? Well for the month of December, that's easy, just participate in The Motley Fool's CAPS service and discussion boards, and The Fool will cough up cash for charities. Check out TMFMarfa's blog to get the details on this great program.

A coiled spring: near-term catalysts and oversold stocks
There hasn't been much in this market that we could call springy, but CAPS blogger ETFinnovators thinks he's found a few stocks that have catalysts around the corner. Among the stocks with potential near-term triggers are AMAG Pharmaceuticals (Nasdaq: AMAG) and Johnson & Johnson (NYSE: JNJ). For the rest of the list, along with the details, head over to ETFinnovators' blog.

28/56
Sick of the market's volatility? Join the club. Motley Fool co-founder TMFBreakerDave (aka David Gardner) has an interesting stat to share with us that does a great job underscoring just how intense the volatility has been. Click through to David's blog for the low-down.

Does anyone look at a balance sheet?!?!
A worthy question posed recently by CAPS blogger kevinwinter. Specifically, Kevin has been looking at AgFeed (Nasdaq: FEED) and North American Galvanizing (Nasdaq: NGA) and wondering why these companies with little or no debt get no respect from Mr. Market. To read kevinwinter's consternation, head over to his blog.

Tweets of the week
And of course, would your week possibly be complete without the best of the bite-sized Motley Fool? If you answered "no," then you're in luck, because TMFNato has rounded up all the best of The Motley Fool's posts on Twitter for the week. Click through to take a gander at the tweets.

And that's our round-up for this week. Be sure to check back next week for more great blogging action. In the meantime, why not head over to CAPS and add your two cents to the community pool?

More CAPS Foolishness:

Today's 5-Star Movers

As fundamentals-focused long-term investors, Fools never base an investment decision on the daily gyrations of the market. But the market's daily price movements can be useful when looking for new stock ideas for further research, or to keep tabs on watch-list stocks.

Below you'll find today's biggest movers among our five-star stocks -- the highest rating awarded by our CAPS community of more than 86,000 investors. Have a look, and then visit us on CAPS to dig in further on each of them.

Up Today

Sector

Sector Past 30 Days

Fools Saying Outperform

Research

DiamondRock Hospitality Company

(NYSE: DRH)

18.32%

Real Estate Investment Trusts (REITs)

(17.61%)

84 of 87

Research

Navios Maritime Holdings, Inc.

(NYSE: NM)

16.66%

Marine

(36.05%)

1051 of 1071

Research

Copart, Inc.

(Nasdaq: CPRT)

11.20%

Commercial Services and Supplies

(9.78%)

1405 of 1433

Research

5 Free Internet Winners

Access, as we know it, is about to change.

In two weeks, the FCC will vote on rules behind the sale of a sought-after chunk of airwaves. Chairman Kevin Martin wants to include the stipulation that the winning bidder must set aside 25% of the spectrum to roll out free Internet access to 95% of the country.

Is this huge? You bet. How exactly the bulk of the country's population will be canvassed with connectivity remains to be seen. Even if it does pass and a top bidder emerges, the actual roll-out should still be several years away.

However, it's not too early to size up the winners and the losers so that investors can get in -- or out -- early.

Let me go over five of the biggest winners if free Wi-Fi comes to pass.

Google (Nasdaq: GOOG)
It's hard to start this list with any other name than Big G. The dot-com giant already commands nearly two-thirds of the country's search queries. As any other company trying to make a mint in cyberspace will tell you, search is where it's at. You're not hitting up a search portal unless you want to go somewhere else, and advertisers pay top dollar for perfectly targeted keyword-based leads.

Google knows the power of access. Why else do you think it was offering to provide coverage throughout San Francisco for free three years ago? Google.com traffic will explode under a nationwide access platform. Sure, folks who can't afford access presently may be less desirable as sponsor leads, but trust Google to make it up in volume in the end.

Logitech (Nasdaq: LOGI)
Most of the winners will naturally be high-traffic websites, but let's make sure we get a hardware winner into the mix. Logitech announced that it shipped its billionth mouse yesterday, but the company makes other accessories that will greatly benefit from free Wi-Fi.

I'm talking about Logitech's strengths in webcams and Internet headphones. One of the biggest benefits of widespread connectivity is that folks will use free software to communicate with friends and families. That is naturally going to crack open the market for broadband communication devices, and Logitech is there with its Web-minded headphones and its huge line of affordable webcams.

Amazon.com (Nasdaq: AMZN)
If you think the shopping malls are decked in cobwebs and tumbleweed these days, you will probably be able to hear a pin drop in the food court once everyone has access to e-commerce.

Granted, those who lack high-speed access these days aren't going to be voracious shoppers. They watch their pennies. However, that will be great for Amazon's Prime membership program. Once folks are smitten by the two-day free deliveries on a growing range of products, more of their lives will revolve around a trip out to Amazon.com instead of a trek to a vacant shopping center.

eBay (Nasdaq: EBAY)
Forget eBay.com itself. By the time free access hits the masses, PayPal and perhaps even Skype will be bigger parts of this portfolio of verbs. Heck, even the name eBay may be toast as you crack open the 2012 annual report of SkypePal Incorporated.

Skype and PayPal will be the biggest winners of blanketed coverage. Skype remains the global voice chat leader with 370 million users worldwide. If you don't think that Skype will replace a few landline telephone accounts once connectivity is pervasive, you may as well Skype me to tell me otherwise.

PayPal is already the leader in micro-payments. It will become an even bigger force in real world transactions under Martin's scenario of access for all.

Nintendo (OTC BB: NTDOY.PK)
I need a video game console maker, because gaming is a growing market, and connectivity will allow the platforms to deliver more games digitally (high margins, baby) and to cash in on in-game advertising that is updated online. Nintendo is an easy choice, given its strong role on both the hardware side and its huge library of proprietary titles on the software side.

Yes, I could have gone with Microsoft (Nasdaq: MSFT) here. Xbox Live is way ahead of where the Wii and the PS3 are at these days. Microsoft also has the Wi-Fi friendly Zune, which would really benefit if it's still around in the future. Microsoft's MSN and Live.com will also cash in. However, my fear with Mr. Softy is that rampant connectivity will prop up cloud computing. Once the Web is serving up free productivity apps, Office sales will suffer, and to a lesser extent Windows once more server-stored apps are operating system agnostic -- since it's all about the browser.

Waiting is the hardest part
The winners make sense on paper, but we're still far away from fulfilling Martin's dream of open access. There will also be several losers, and that's where I'll be headed in tomorrow's column.

For now, just know that nearly any company creating content or improving the cyberspace experience is probably in a good position to thrive in the future. The biggest winners will be the sites that are already dominant in their fields like MySpace and Facebook in social networking, Google in search, or The Knot (Nasdaq: KNOT) in wedding planning. The Internet migration will find new users heading to the category killers first.

Ready. Aim. Wait.

Why free connectivity?

Every Day Is Cyber Monday

Tightfisted shoppers love deals? Tell me something I don't know.

Market watcher comScore released some seemingly encouraging e-tail data yesterday. The company projects that online stores rang up $846 million in sales on Cyber Monday, a 15% improvement over last year.

Cyber Monday has become the dot-com equivalent of Black Friday, as potential buyers return to the Web after the Thanksgiving holiday weekend. Since online storefronts know they have a tighter window, given shipping deadlines, putting out choice deals as early as possible is huge.

It's still too early to tell who the winners and losers of Cyber Monday were. Most public companies wait until after the holidays are over to send out their report cards. Bellwether Amazon.com (Nasdaq: AMZN) waits a day or two after Christmas before unwrapping its holiday sales metrics to the public. Those that do talk aren't saying much.

IAC 's (Nasdaq: IACI) Shoebuy.com issued a press release to point out that 350,000 visitors hit its footwear-selling site. That is a 30% gain over last year, but where's the shopping data? Did the bump in traffic lead to an increase in sales? Shoebuy isn't telling. The release was more of a self-serving piece to point out how it has $3.5 billion in inventory across 700,000 different products.

The comScore projection is a reflection of actual spending, but that also doesn't tell us much. If e-tailers have to resort to steep markdowns and subsidized shipping to win over buyers -- and that is exactly what appears to be happening this turbulent season -- top-line gains may still result in sharp declines on the bottom line.

Unfortunately for retailers, it seems as if discounting is the key to driving traffic, because nearly every merchant is offering up daily deals to keep bargain hunters coming back.

In short, every single day is Cyber Monday this month. Investors had better cross their fingers and hope that the price-tag slicing doesn't mean a lump of coal on the bottom line in a few weeks.

Some other shopping tips:

5-Star Stocks Begging to Be Bought

"I will tell you how to become rich. Close the doors.
Be fearful when others are greedy. Be greedy when others are fearful."

-- Warren Buffett

Can't argue with that, can you? I don't need to remind you of how much fear is in the market these days. The beauty of it all is how much opportunity it's creating for those patient and diligent enough to search for the babies thrown out with the bathwater.

Using our Motley Fool CAPS ranking system's nifty screening tool, I looked for companies with the following characteristics:

Among others, that screen dug up these stocks shredded to such paltry levels in the past month that it's hard to keep ignoring 'em.

Take a look:

Company

4-Week Price Change

Dividend Yield

Price/Book Ratio

Price/Earnings

Ratio (TTM)

Allied Irish Banks (NYSE: AIB)

(34.1%)

NA*

0.18

1.0

Dow Chemical (NYSE: DOW)

(23.2%)

9.0%

0.90

6.8

El Paso (NYSE: EP)

(18.6%)

3.0%

0.88

5.2

Freeport-McMoRan Copper & Gold (NYSE: FCX)

(19.4%)

NA*

0.51

2.5

Jones Lang LaSalle (NYSE: JLL)

(25.5%)

4.7%

0.67

4.9

NYSE Euronext (NYSE: NYX)

(20.4%)

5.6%

0.63

7.2

Seagate Technology (Nasdaq: STX)

(34.7%)

11.1%

0.45

2.4

Data from Motley Fool CAPS, Yahoo! Finance, and Capital IQ, a division of Standard & Poor's, as of Dec. 3.
*Allied Irish and Freeport McMoRan have recently suspended their dividends.
TTM = trailing 12 months.

Looking at earnings in the rearview mirror typically means very little, but the disparity between what these companies trade for today and what they earned in the past year is pretty overwhelming. None of these are formal recommendations -- just a good starting point for you to dig a little deeper.

The biggest shocker here is Motley Fool Global Gains recommendation Allied Irish Banks, an incredibly well-run company caught in the middle of a global fire sale of anything bank-related. Like so many other financials, Allied Irish gave its dividend the boot last month, canceling the payouts investors had enjoyed even as shares crumbled over the past year.

Nonetheless, our CAPS community isn't giving up hope on this five-star beauty. TMFGebinr summed up the thesis a couple of weeks ago:

Of the Irish banks, this is the best capitalized, even though it will probably have to   take on additional capital to raise its Tier 1 level to compete with other UK banks. It can do this through selling some of its assets … It is exposed somewhat to the Irish housing downturn, mostly through developers. It continues to increase depositors, which also increases capital. ...

Over the next few months, I don't know where the price will go, but over the longer period of a few years, it should go up quite handily, especially after having been beaten down so far. Just wish my own basis was this low.

Well said. Take a company that kept its lending manners to itself over the years and team it up with a "sell-now-ask-questions-later" market, and out pops a gem like Allied Irish. What value investors have to love is that Allied Irish has been susceptible to panic in the bank industry. That adds up to irrational selling, and our CAPS community's drooling over this one.

Moving onto yet another sector mired in the frenzy, Freeport McMoRan has shed more than 80% year to date as the mining industry continues to suffer from the spectacular commodities bust.

While the collapse has been a real gut check, a very rational thesis for commodity plays like Freeport is the assumption that the unprecedented amounts of money being thrown at the financial system will eventually lead to inflation, if not hyperinflation, thus causing investors to flock to hard assets such as gold, silver, and copper ... Freeport's bread and butter.

CAPS member jtm1022 seems to take a similar stance, noting last week:

I expect the inflationary scenario with a weak USD to be the near term result of the massive increases to money supply to stabalize global financial crisis as the more palatable option. [Freeport McMoRan] will become as before a commodity hedge and go back to former price levels.

The one caveat to this scenario is a deep global recession causing a drawn out commodity slump that will forestall Freeport's recovery. While such a case could test investors' patience, those willing to wait for the inevitable rebound of the global economy are likely to be rewarded handsomely.

What do you think about this spectacular sell-off in the financial and commodities universe? To see what more than 120,000 other investors are saying about it, I invite you to check out our CAPS investor community. Click here to give it a whirl. It won't cost you a dime.

Related Foolishness:

The World's Greatest Get-Rich Formula

You should be highly skeptical of any and all get-rich schemes ... except for the super-simple formula I'm going to show you below. Because this one really works.

It works so well that it's been used by the world's billionaires -- from moguls of yesteryear such as Rockefeller and Ford to today's tycoons Carlos Slim Helu and Warren Buffett.

But enough already. Let's get to the formula.

The formula
It is, simply:

FV = PV * (1 r) ^ n

Where:

FV = future value
PV = present value
r = rate of return
n = time (or number of years)

Compounding 101
Now, some astute finance brains will know that equation not as some mystical secret but as the "future value of money" (FVM) equation taught in college.

The FVM formula simply states that your future wealth (FV) is a function of three variables: the amount of money invested today (PV), the rate of return generated (r), and the length of time in which that money is put to work (n). So maximizing future riches requires three steps.

Step 1: Increase PV
It takes money to make money. But by actively and consistently slivering off a portion of your earnings every month to save and invest, you'll have more and more of that money working for you.

All things equal, the greater amount you invest today (PV), the greater wealth you'll build for tomorrow (FV).

Step 2: Increase r
Next, you'll need a way to grow that capital. Historically, the stock market has been the most effective wealth-building vehicle of all. Plowing your money into a low-cost index fund wouldn't be a bad idea.

But if you really want to maximize r, you'll need to allocate a portion of your portfolio to the best segment of the market over the past 50 years: small-cap value stocks. The reason is simple. Unlike behemoths such as $170 billion AT&T (NYSE: T) and $185 billion Procter & Gamble (NYSE: PG) -- whose spectacular growth days are behind them -- reasonably priced small caps have tons of room to rocket. Take a look at data from Eugene Fama and Kenneth French, who tracked stocks from 1956 to 2005:

Value

Growth

Large caps

13.3%

9.7%

Small caps

17.3%

8.7%

Total stock market

10.5%

Not adjusted for inflation.

All things equal, the greater your rate of return (r), the greater wealth you'll build for tomorrow (FV).

Step 3: Increase n
The last ingredient in our super-simple wealth-building recipe: maximum time in the market.

Look back at the equation. You'll see that n is an exponential function -- meaning that for every year you're not invested, you give up the awesome (almost magical) benefits of compounding.

All things equal, the longer you're invested (n), the greater wealth you'll build for tomorrow (FV).

Plug and chug
To get a feel for the three-step process in action, let's go back in time to see what kind of wealth would have been generated had someone:

Here's what it would look like:

Company

Amount invested 10 years ago

Average compounded return over last 10 years

Total value of investment today

Atwood Oceanics (NYSE: ATW)

$8,000

13.8%

$29,142

Shaw Group (NYSE: SGR)

$8,000

14.6%

$31,256

National Oilwell Varco (NYSE: NOV)

$8,000

17.6%

$40,473

ArcelorMittal (NYSE: MT)

$8,000

11.8%

$24,407

Pool (Nasdaq: POOL)

$8,000

20.5%

$51,637

Total amount invested (PV)

Avg. annual return of portfolio (r)

Total value of portfolio today (FV)

$40,000

16.0%

$176,915

By having bought into five high-quality, reasonably priced companies while they were still babies, that $40,000 stake would be worth more than $175,000 today.

Of course, you can always fiddle with the numbers to generate different levels of FV, but our objective should remain the same:

1. Maximize PV by sticking to an investment plan.

2. Maximize r by devoting a chunk of your portfolio to superior small caps at attractive prices.

3. Maximize n by investing as soon as possible and for as long as possible.

The final Foolish variable
So don't waste another "n." Start plugging whopping returns into your own real-life wealth equation today.

If you need a few small-cap ideas to start you off, our specialists at Motley Fool Hidden Gems can help. Advisors Bill Mann and Seth Jayson make sure subscribers get the absolute most from the FVM formula. Since the newsletter's inception in 2003, the picks are beating the S&P 500 by an average of six percentage points. You can see their five favorite small caps for new money with a free, 30-day trial. To learn more, click here.

This article was first published Oct. 12, 2007. It has been updated.

Fool contributor Brian Pacampara tried to get rich quick once, but his idea for a cold-air balloon never got off the ground. He owns no position in any of the companies mentioned. Atwood Oceanics and National Oilwell are Motley Fool Stock Advisor picks. The Fool has a mathematical disclosure policy.

Cloud Computing Descends

Cloud computing could soon be coming to a netbook near you.

Good OS, best-known for making Linux operating systems for netbooks sold through Wal-Mart (NYSE: WMT), this week unveiled "Cloud," a new OS that boots directly into a browser with links to classic Web applications such as YouTube and Skype.

Available images suggest a look and feel that melds Google 's (Nasdaq: GOOG) simplicity with Apple 's (Nasdaq: AAPL) OS X style, including a "Dock" at the bottom of the browser where you'll find icons for available Web software. Good OS plans to ship Cloud with GIGABYTE's touchscreen netbooks early next year, according to a company press release.

So, once again, the iEmpire misses out on the netbook opportunity. For now, at least. But isn't it Google that blew it here?

The Big G is heavily committed to cloud computing as a desktop replacement. Google Apps, while nowhere near as popular or as functional as Office, is nevertheless catching on. Chrome, meanwhile, was built both as a browser and as a hosting platform for Web applications.

Contrast that with how Amazon.com (Nasdaq: AMZN), EMC (NYSE: EMC), and salesforce.com (NYSE: CRM) view the cloud -- as an economically viable home for business software. Or, better still, as a way to disrupt buy-install-and-maintain incumbents like Oracle (Nasdaq: ORCL).

That's good news. Google is thinking differently -- just not differently enough. Otherwise, Good would already be Googly. So, great job, Good OS. Now show us your rebel yell.

Up, up, and away with Foolishness in the cloud:

The Biggest Threat to Your Portfolio Today

CBS flew me to New York and put me up in a tony midtown hotel recently so I could appear on The Early Show. The topic? What investors can do to cope with this economic "fiasco" -- Harry Smith's word, not mine.

During the pre-interview, Smith asked me point-blank, "Tim, where is the safest place for our money?" I told him that while it depends on your timeline, if this truly is money that you don't need for the next 10 years or more, then the safest place is foreign stocks.

He shot me a look and said, "I'm going to challenge you on that."

Never happened
Television being what it is, he never did get around to challenging that assertion. (I've never yet been part of a segment that didn't get cut short.) I wish he had.

Take China, for example. Though its growth is slowing, it's still expected to grow from 7% to 9% per year for the next decade. This is why Princeton economist Burton Malkiel wrote in his most recent book on investing that "the biggest risk to any investor's portfolio today is not to have at least some exposure to China."

But an even bigger risk -- nay, threat -- is that you don't have any exposure to any other countries at all!

Here's why
Most Americans are dramatically underexposed to foreign markets. While there's no consensus as to how much foreign exposure the average American has, estimates range from 2% (dangerously low) to 20% (slightly low). This has two significant consequences.

First, it leaves you especially vulnerable to a slowing U.S. economy. Today, for example, as you're watching the value of your home drop, you're seeing your stock portfolio decline and your hard-earned dollar buy less and less. Even worse, given our weakening economy, your job prospects may be dimmer than they were this time last year.

Second, when you ignore foreign markets, you're all but assuring that you are going to miss out on the greatest economic growth of the next 10 to 15 years. Given development trends, I believe China, India, and Brazil all stand to outgrow the U.S going forward by significant margins. Other emerging countries such as Vietnam, Indonesia, Colombia, Mexico, Thailand, the Philippines, and Poland also have that potential, though their futures are a bit harder to predict, given additional political and economic uncertainty.

The good news is you can buy exposure to all of these countries in your portfolio, thus increasing returns and reducing volatility in the process.

How much is enough?
I'm not the only crazed investment analyst who's advocating that American investors take advantage of current volatility to beef up their exposure to promising international stocks.

In October, Ibbotson Associates recommended that American investors should invest 35% of their portfolios abroad, with at least a third of that allocation devoted to the emerging markets. Citigroup one-upped that plan when the advisor told its clients recently to up their international exposure to 55%. And one of the smartest investors around, PIMCO co-CEO Mohamed El-Erian, told Money magazine, "The world of tomorrow suggests a much greater exposure overseas. ... [Y]ou should consider holding a third of your equities in the U.S., a third in industrial countries outside the U.S., and a third in emerging markets."

Add that up and El-Erian believes American investors should devote a hearty 66% of their portfolios to foreign stocks!

Which brings us to ...
The good news is that if you've been reading along and now find yourself convinced that you're underexposed to foreign stocks, this is a good time to make it right. Foreign stock markets -- and particularly the emerging markets -- have suffered this year as slowing growth has led investors to abandon shares that were previously trading at very premium valuations.

And today, for example, some of the world's fastest-growing names have not only seen their valuations come down, but also their spreads narrow relative to their slower-growing American peers:

Foreign Company

January 2008 P/E

Recent P/E

U.S. Peer

January 2008 P/E

Recent P/E

MercadoLibre (Nasdaq: MELI)

151.6

27.1

eBay (Nasdaq: EBAY)

17.8

8.3

China Nepstar Chain Drugstore (NYSE: NPD)

128.6

9.1

CVS (NYSE: CVS)

20.1

12.1

CNOOC (NYSE: CEO)

17.0

4.6

ExxonMobil

12.7

8.2

America Movil (NYSE: AMX)

21.2

10.5

AT&T

19.9

11.1

Data from Capital IQ, a division of Standard & Poor's. Multiples are normalized where necessary.

While growth abroad is slowing, it is certainly not stopping, and the valuations on emerging stocks today give you a much better chance of making money than they did just 12 months ago.

To recap
By now you should know:

You can, of course, gain exposure to foreign markets through a host of low-cost ETFs and mutual funds. But if you're looking for the best of the best, try our Motley Fool Global Gains investment service -- free for 30 days. We recommend two new stocks every month, as well as our best bets for new money now. Just click here to get started -- there's no obligation to subscribe.

This article was first published on Oct. 2, 2008. It has been updated.

Tim Hanson owns shares of MercadoLibre and America Movil. CNOOC and America Movil are Motley Fool Global Gains recommendations. eBay is a Stock Advisor pick. The Fool's disclosure policy recommends you garnish your gin and tonic with a sprig of basil rather than a slice of lime. It really is quite a refreshing combination.

An Unlikely Powerhouse

Right now, there in your chair, sipping coffee and reading this story, you're polluting the atmosphere. It's not your breathing -- it's your browsing.

A new McKinsey & Co. study found that the energy required to power all of the world's computers, data storage, and communications networks is expected to double by 2020. Already, today, it accounts for roughly 2% of the world's greenhouse gas emissions.

Can you imagine? No matter how much they work to contain power consumption, AMD (NYSE: AMD), Dell (Nasdaq: DELL), and EMC (NYSE: EMC) are, by their very existence, helping to pollute the planet.

It's a problem VMware (NYSE: VMW) was built to solve.

That's right; the simplest and most cost-effective soldier in the war against global warming isn't First Solar (Nasdaq: FSLR) or Archer Daniels Midland (NYSE: ADM), but a software company dedicated to virtualization. Score one for Silicon Valley.

Virtual reality for the real world
Obviously, we need to reduce the amount of power consumed by our personal computers and networks. But the answer isn't better chips, thinner servers, or smarter storage arrays -- although that helps. We need fewer servers, less infrastructure. We need to consolidate horsepower.

And that's where VMware and virtualization come in.

Virtualization software allows any piece of computing machinery to act as more than one machine by dividing available processing power, storage, and memory into distinct chunks. That enables those machines to be used to their fullest capacity. And when machines are running at capacity, networks need fewer of them and, thereby, less power.

This cost-cutting quest has what cartoonist Scott Adams calls a 'second-order benefit' -- it reduces carbon emissions. Pundits, realizing this, have given the process a name: server consolidation. (Genius, eh?)

And it's become a big business. A recent Goldman Sachs survey of 100 technology buyers found that server consolidation is their top 2009 priority. Meanwhile, researcher IDC says that the broader virtualization services market is on track to more than double from $5.5 billion in 2006 to $11.7 billion by 2011, or 16.3% annually.

Let me hear your rebel yell
At Motley Fool Rule Breakers, we're looking for the ultimate growth stocks -- and that means finding the stocks that will change the world. VMware fits that bill -- literally. It meets five of the six signs of a Rule Breaker. They are:

Think of these as a subjective stock screen, criteria that helped Fool co-founder David Gardner to achieve a decade of 20% returns in the real-money Rule Breaker portfolio. And these criteria are why David recommended VMware to Rule Breakers subscribers in the June issue and why, at current prices, this stock is a screaming buy.

Our rebel portfolio has taken a beating with the global recession. Most of our recent picks are losing big -- including VMware. But David's not giving up on it. Neither am I. Neither should you.

Your browsing is polluting the atmosphere. VMware is working on that. And we're working on building excellent portfolios for the long haul. VMware is part of that as well.

Click here to try Rule Breakers free for 30 days. You'll get our dispatches from Silicon Valley, our special reports, and every one of our recommendations, all on our dime. And, of course, there's no obligation to subscribe.

Fool contributor Tim Beyers didn't own shares in any of the stocks mentioned in this article at the time of publication. He's also a member of the Rule Breakers team, which counts VMware among its recommendations. Dell and Microsoft are Inside Value picks. The Motley Fool's disclosure policy has a big bark and an even bigger bite. Beware, stock polluters.

Black Friday Missing the Black

Strings of holly are being hung and trees are lighting up, but it's still not beginning to look like Christmas for retailers. As we unwrap November's same-store sales reports, the Black Friday miracle that typically turns retailers' books from red to black looks like it came in the form of holiday hell this year instead.

But 'tis the season to be jolly, so I'll start with what little there was to celebrate. Wal-Mart and BJ's Wholesale (NYSE: BJ) were the winners out of the big-box players. With our economy officially in a recession and third-quarter consumer spending falling its largest amount in 28 years, consumers seem to be on a nationwide bargain hunt -- so much so that even the "posh" discounters like Costco (Nasdaq; COST) and Target (NYSE: TGT) aren't escaping the weakness.

Company

November Same-Store Sales

Wal-Mart

3.4%

BJ's Wholesale

4.1%

Costco

(5%)

Target

(10.4%)

On the mall front, the downward sales trend persisted despite desperate actions many retailers have taken to attract shoppers. With the exception of Buckle (NYSE: BKE), which has fascinatingly gotten through this consumer slowdown unscathed, sales were anything but festive.

After trekking out to the stores for some firsthand analysis recently, my Foolish colleagues Alyce Lomax and Dayana Yochim and I noted that mounds of inventory, the return of the almost-forgotten layaway option, and hefty markdowns didn't present a pretty landscape for retailers this holiday season. The figures below confirm our observations.

Company

November Same-Store Sales

Gap (NYSE: GPS)

(10%)

Chico's

(15.40%)

American Eagle (NYSE: AEO)

(11%)

Macy's

(13.3%)

Abercrombie & Fitch

(28%)

JC Penney (NYSE: JCP)

(11.9%)

Buckle

15%

The holidays are always a joyous time of the year, but there's little cheer about these results. With tightening budgets and dissipating credit, Santa's sack is going to be a whole lot lighter this year. Merchandise is sitting idle on shelves, and stores are implementing dramatic sales tactics in an attempt to drive traffic into stores.

So if you thought the Grinch stole sales this holiday season, just wait till you see what he does to the bottom line when fourth-quarter results are announced.

Don't Miss These Stocks

Imagine for a moment that you have the opportunity to invest in a company that:

Would you do it?

These are great reasons to buy
I admit it. I was bullish about Intuitive Surgical back in February 2006 -- because it had everything going for it.

Its da Vinci robots had revolutionized surgery. They offered smaller scars, faster healing, and fewer surgical infections. Because it takes years of research and a long, expensive FDA approval process to bring a device to market, its competitive advantage was, in effect, protected by the government. And the company was tiny. At that time, Intuitive Surgical had just closed a year with $227 million in sales -- compared to the $2.8 billion quarter fellow device maker Medtronic had just completed.

I liked Intuitive Surgical so much that I proclaimed that it had the potential to revolutionize its industry. I had visions of it becoming practically as ubiquitous in surgical settings as Bell Labs' (now a part of Alcatel-Lucent (NYSE: ALU)) transistor is in the rest of our lives.

In other words, the company and its stock were poised for success, and both saw that success play out. Since I wrote that article, even in the midst of this current chaos, Intuitive Surgical shares have blown past both the overall market and others in its industry:

Company

Price on
02/09/2006

Price on
12/02/2008

Change

Intuitive Surgical

$101.50

$117.95

16%

Integra LifeSciences (Nasdaq: IART)

$37.70

$31.94

(15%)

ResMed (NYSE: RMD)

$41.41

$34.80

(16%)

China Medical Technologies (Nasdaq: CMED)

$35.90

$18.45

(49%)

S&P 500

1,263.78

848.81

(33%)

Stock prices adjusted for splits.

While Intuitive Surgical has fallen far from its $359 high, had I invested, I would have trounced the S&P 500 and still made money -- even in this market!

But I never pulled the trigger ... even though I loved the company.

I messed up
I chickened out because I was scared of the stock price. It didn't seem cheap.

Traditional bargains are industrial titans like 3M (NYSE: MMM) and United Technologies (NYSE: UTX) amid an economic slump or tech giant Intel (Nasdaq: INTC) after a product flop. They have track records, a proven ability to deliver returns, and an established customer base -- and, thus, a strong chance of emerging from their slumps as normality returned.

Intuitive Surgical, on the other hand, had a great product, terrific potential, and some early successes -- but no proven ability to scale. And even great ideas with enormous potential can fail if they're executed poorly.

In the end, I focused on my fear that this investment would fail -- instead of on the reasonable expectation of rewards.

Fight the fear
Given everything else going for it, I should have invested in Intuitive Surgical despite the risks -- because it wouldn't have been my only investment.

Each stock matters, and each stock needs to be chosen for the right reasons (like being the first mover in an emerging industry and having a deep, wide moat), but in the end, it's the overall portfolio that counts. A single stock that quickly skyrockets can make up for a whole lot of them that wind up going nowhere fast.

That's a powerful antidote to the fear that you may be wrong on any individual pick.

So, to come full circle, imagine for a moment that you have the opportunity to invest in a company that:

Would you do it, even if it weren't "cheap" by traditional measures? If you have an otherwise well-rounded portfolio, you should be nodding your head yes. Because those types of stocks -- innovators, disruptors, companies shaking up the "normal" ways of doing business -- are the stocks you don't want to miss.

Finding those companies is our mission and purpose at Motley Fool Rule Breakers. Does that mean every pick has been a winner thus far? Nope -- but the ones that have doubled or more go a long way toward making up for the ones that have been slower to prove themselves.

So take a deep breath, think about your portfolio holistically, and try to overcome the fear of failure that has kept you from buying some of the greatest investment opportunities the market has to offer. If you need stock ideas or reassurance from a like-minded community, join us at Rule Breakers today. A 30-day free trial gives you access to our best picks for new money now. Just click here to get started.

This article was originally published July 25, 2008. It has been updated.

At the time of publication, Fool contributor Chuck Saletta owned shares of Alcatel-Lucent and Intel. And no, he never did buy Intuitive Surgical, but it certainly is starting to look attractive again. Intuitive Surgical is a Rule Breakers pick. 3M and Intel are Motley Fool Inside Value recommendations. Integra LifeSciences is a Motley Fool Stock Advisor pick. The Fool owns shares and covered calls of Intel. The Fool has a disclosure policy.

9 Health-Care Stocks to Defend Your Portfolio

Put on your helmets! It's time to bring in the defense.

The National Bureau of Economic Research disseminated the glum news on Monday that investors knew in the back of their minds: The U.S. is in a recession and has been since payrolls peaked in December of 2007.

It's late in the game. We're in the fourth quarter, your portfolio is down, the clock is ticking and Mr. Market is playing hardball. No doubt you've tried to remain on the offense, but now the game rules have shifted to defense. The health-care sector is full of defensive plays, as many of these companies operate in recession-resistant industries. Just because the economy has fallen off a cliff, doesn't mean people are going to ignore their health problems.

Companies like Amgen (Nasdaq: AMGN) and Gilead Sciences (Nasdaq: GILD) in the biotech industry are examples of financially strong companies with promising pipelines that target large markets. What's more, the recession should have little impact on their businesses. Take Gilead, for example: According to one analyst, the company has one of the best HIV drug lines on the market. Those who have AIDS will continue to require Gilead's treatments, recession or no.

Another example is biopharmaceutical company Emergent BioSolutions (NYSE: EBS), which is best known for its BioThrax vaccine that treats anthrax. One of the company's biggest customers is the Federal Government. Emergent has secured over $850 million in contracts with the U.S. government for the delivery of over 33 million doses of BioThrax, securing strong revenue for the next three years.

To find winning companies, I used the Fool's CAPS screening tool, looking for companies that:

In the first 20 months since we began our CAPS investment community, four- and five-star companies outperformed the market, with average annualized gains of 7% and 12%, respectively.

Company Name

Market Capitalization

Rev. Growth Rate (last 3 Years)

Return on Equity (TTM)

Current Ratio (mrq)

Amgen

$60.9 billion

6.4%

20.5%

3.2

China Medical Technologies (Nasdaq: CMED)

$513 million

61%

23.5%

2.6

Emergent BioSolutions

$707 million

20.6%

24.4%

2.9

Gilead Sciences

$42.0 billion

34.1%

44.3%

3.4

Intuitive Surgical (Nasdaq: ISRG)

$5.2 billion

51.3%

17.1%

4.4

Johnson & Johnson (NYSE: JNJ)

$159.0 billion

8.1%

27.6%

1.6

Meridian Biosciences

$940.6 million

14.4%

23.5%

6.2

Mindray Medical International (NYSE: MR)

$2.0 billion

44.4%

21.7%

2.2

Novartis

$107.8 billion

8%

23.9%

1.6

Source: Motley Fool CAPS. TTM = trailing 12 months; mrq = most recent quarter.

This is only a starting place. Prospective investors should pay careful attention to companies' respective businesses, position in the competitive landscape, and financial health. Also, be mindful of valuation, as many investors on Wall Street are aware of the promise that companies in the health-care sector hold in this environment.

Start padding your portfolio at Motley Fool CAPS today! Let the collective wisdom of our 120,000 member-strong investment community help you make better investing decisions.

For related Foolishness:

How I Learned to Love the Bailout

What's happened to the creative spirit that put together the financial instruments that caused today's market bedlam? You'd think someone would've figured out some inventive ways to profit from the government bailout.

But it seems that subtlety is out of style. For instance, where's the panache in becoming a "bank holding company" in order to get at the government's bailout money? It's just so obvious.

And even worse, it's already been done … by Goldman Sachs (NYSE: GS), Morgan Stanley (NYSE: MS), and American Express (NYSE: AXP). Even General Motors ' GMAC has filed the paperwork, for goodness' sake.

So instead of jumping on the bank bandwagon, why not look for more creative ways to make money? Here are a few of my thoughts:

Interpreting dreams and writing personal ads require creativity. Let The Motley Fool help you sort through the many kinds of creativity flowing through the market. Take a free 30-day trial to any of our newsletters.

Further Foolishness:

As If Things Weren't Bad Enough...

The biggest news out of emerging markets this past week were the horrific attacks in Mumbai, India. A group of terrorists fired on and bombed India's financial center, killing 172 people and injuring around 300. Many news sources focused their reporting on foreigners caught in the attack. But while the profile of the Taj Mahal Palace and Oberoi Hotels guaranteed that foreigners would be hit, the fact that the first target was the main Mumbai train station suggests strongly that this attack was designed to destabilize India itself.

It's important to remember that while the Mumbai attack got the most attention from the media, it was only the latest of a significant string of terrorist incidents in India, with several of its commercial and political centers -- including Hyderabad, Delhi, Ahmedabad, Bangalore and Mumbai -- bearing the brunt. While these attacks were more sophisticated and brazen than previous ones, India has experienced numerous terrorist attacks in recent years, yet continued on the path of economic expansion. In fact, a little more than two years ago, Mumbai was the site of terrorist bombing that claimed the lives of 180 people.

In this context, it becomes clearer that the main terrorist goals are to destabilize both India's secular democracy and its increasingly capitalist economy. Much as the Sept. 11 terrorists targeted the World Trade Center because of its importance to global commerce, these terrorists attacked the vehicle through which Indians -- and poor people throughout the world -- have been able to pull themselves up to better stations in life.

India's economy has already had a rough year, as it suffers through the effects of a global slowdown. In October, the country saw its first drop in exports in seven years. Some have expressed worries that the terrorist attacks will scare off businesses, completely derailing India's economy. Despite the deep human tragedy surrounding this story, this scenario seems far-fetched.

Companies operating in India and South Asia are under no illusions about the region's various religious, ethnic and political conflicts, which occasionally erupt into dangerous situations. The recent attacks may cause tourism to slump, and delay investment activity as new security measures are put in place, but the effects are likely to be short-term.

Specifically, manufacturers like General Motors (NYSE: GM) and South Korean electronics giant Samsung expressed no concerns about their Indian investments, pointing to the country's longer-term growth potential. In spite of the growing economic headwinds, the International Monetary Fund expects India's economy to grow nearly 8% this year and more than 6% next year. While that figure's down from more than 9% the past two years, it's still heady growth -- especially compared to estimates of low single-digit growth this year, and negative growth in 2009, for the U.S. and Western Europe.

If the terrorists' goal was to derail India's transformation from a command-control economy to a market-based one, they're certainly on the side of history, not the future.

Don't forget about China
While India has its domestic issues to deal with, China is frantically trying to prevent a worsening of its own. Analysts estimate that China needs to grow by roughly 10% per year in order to create enough jobs to support the mass migration of its people to its cities. While this number may be a little high, the principle is sound: In order to maintain calm among -- or more importantly, control over -- a population topping 1.3 billion, the Communist Party needs to provide opportunities for the people it's indoctrinated to believe in the power of the state to support their lives and livelihoods.

With a stock market that has plummeted more than 60% in the past year, and demand for its loads of export goods falling to record lows, the Chinese government is facing increasing ire from its citizens. Former employers of bankrupt toy factories are protesting to get back pay and benefits. Taxi drivers are using rush-hour protests to air their grievances. Even the police are getting fed up with wages that aren't keeping up with inflation -- a crisis that prompts the question, "Who puts a stop to a police protest in China?"

But what can be done?
The Chinese government hasn't been sitting idly by. The recently announced $586 billion stimulus package is focused on infrastructure, schools, and health care. This should provide opportunities for foreign companies like General Electric (NYSE: GE), Intel (Nasdaq: INTC) and Caterpillar (NYSE: CAT), as well as domestic job growth in certain areas of the country. However, it provides little relief for toy factories in Guangdong, which are facing drastic drops in orders from Hasbro (NYSE: HAS) and Mattel (NYSE: MAT).

Recognizing this, the Chinese central bank took additional steps to provide some juice to the economy. Last week, it lowered its benchmark interest rate by more than 1%, the most in 11 years. It's already taken steps to increase lending to businesses and home buyers, to help stimulate small business activity and put a floor on collapsing residential markets.

In a new step that has raised the ire of Treasury Secretary Hank Paulson,