Introduction to Margin Accounts

Do you have a margin account with your broker? If so, did you know that the shares you have purchased may be lent out to other parties without your knowledge or granted permission? When opening a margin account, you are essentially giving permission to the brokerage firm to lend out the securities in your account even if you don't realize it.

When your shares are lent out you can lose your voting rights; but on the positive side, lending out your shares can have great benefits. In this article, we will look at what your broker could be doing with your shares as well as potential ways that you could benefit.

How Margin Accounts Work
A margin account is a way to leverage the capital and securities you own to purchase additional investments without having to invest any additional capital. You simply borrow from your broker to buy more securities. The broker will charge you interest on the borrowed money and use all the securities (those already in your margin account and the ones you just bought) as collateral.

Note that the risk of trading on margin is greater than trading in a cash account because you can, in theory, lose more money than you started with in your account.

What Happens to the Securities in Your Margin Account?
The securities in your margin account may be lent out to another party, or used as collateral by the brokerage firm at any time without notice or compensation to you, when there is a debt balance (or negative balance) on the account where you have accessed the margin funds. If the account is in a credit state, where you haven't used the margin funds, the shares can't be lent out.

The borrowers of stocks held in margin accounts are generally active traders, such as hedge funds, who either are trying to short a stock or need to cover a stock loan that has been called in. Investment firms that need an underlying instrument for a derivatives contract might borrow your margined stocks from your broker. The brokerage firm may also pledge the securities as loan collateral.

Additionally, if your margined shares pay a dividend but are lent out, you don't actually receive real dividends because you aren't the official holder. Instead, you receive "payments in lieu of dividends," which don't qualify for the 15% dividend tax rate. However, you will only have to pay the high income-tax rate if the firm clearly states that the dividend income was payment in lieu on the Form 1099-Div - if it isn't stated, you will receive the lower 15% rate.

Back to Cash?
If the above doesn't sound too appetizing to you and you're adamant about retaining your vote and want to avoid a potential dividend tax hassle, the easiest solution is to transfer your shares from a margin account to a cash account. Shares held in a cash account can't be lent out, which removes the voting and dividend issues.

However, if you are willing to give up some of the above and take on the additional fees to access the greater capital in a margin account, you will need to ensure that you keep your account in a credit state around important voting times (as the brokerage firm will need to return the borrowed shares).

Share Lending
If you give the brokerage firm permission, shares held in a cash account can also be lent out, which presents a potential source of additional gain. This process is called share lending.

There can be a lot of demand by short sellers and hedge funds to borrow securities, especially on securities that are typically hard to borrow. Similar to a margin account, when you borrow capital or securities, you are required to pay interest on the amount borrowed.

Depending on market rates and the demand for the securities, the exact amount of interest charged for borrowing securities will vary (the harder to borrow, the higher the interest). The most attractive securities to lend are those that are hardest to borrow for short selling, which usually means small caps or thinly traded stocks as well as shares that are already heavily shorted or have fallen in price.

This demand presents an attractive opportunity for investors with the securities in demand. If you have a cash account with securities in demand, you can let your broker know that you are willing to lend out your shares. If there is demand for these shares, your broker will provide you with a quote on what he/she would be willing to pay you for the ability to lend these shares.

If you accept, your broker will lend your shares out to a short seller or hedge fund for a higher rate and pocket the difference, as well as satisfy another customer's demand and generate commissions. For example, your broker may give you 8% interest on the loaned shares while lending out at 13%. Depending on the size of your position, it can be a nice additional source of return. This method also allows you to keep your existing long position in the security and benefit from its upward movement.

Depending on the broker, he/she may or may not provide this service, and may also require a minimum number of shares or dollar amount.

Conclusion
Investors should always be evaluating everything on a risk/reward basis from the stocks they invest in to the accounts they open. Margin accounts can be attractive as you can generate a large return by using a brokerage's capital. However, there is a greater risk of loss, and investors can also lose voting power.

Alternatively, while a cash account may seem boring as there is no leverage, through the practice of lending securities, investors can increase their returns with another source of income.

Watching Trends in Biotech and Solar

Harry Boxer, author of The Technical Trader, provides some of his favorite picks in the biotech and solar sector and fills you in on why he's so excited about them.

SPEAKER 1:  I’m talking trends with Harry Boxer.  Hi, Harry, and thanks for being here.

HARRY:  My pleasure.

SPEAKER 1:  So what do you see these days?  We talked a little bit about 3-D printing.  I mean that’s amazing today.

HARRY:  It is.  More than 10 years, I visited 3-D systems and saw a demo, and it was like whoa.  They weren’t even public then.  Of late, SSYS (Stratasys), Proto Labs (PRLB), EX1; those are the four big ones in the industry.  There is a little buy-out tech company called Orvganovo (ONVO) that is now bio-printing organs for testing.

SPEAKER 1:  That’s amazing.

HARRY:  That could be something, I think that down the road could be quite interesting.  That stock when I first bought it, it recommended to my scrubbers it went from 4.25 to 8.5.  It doubled in two weeks.

SPEAKER 1:  Oh my gosh.

HARRY:  Two weeks.

SPEAKER 1:  Yeah, two weeks.

HARRY:  Two weeks.

SPEAKER 1:  What was the catalyst behind that?  Just more press releases?

HARRY:  Yes.

SPEAKER 1:  Yeah.

HARRY:  More public awareness.

SPEAKER 1:  What do they do when these organs are not transplantable?

HARRY:  No, they’re not transplantable.  They say it may be 10 or 15 years, but at least, the key is that bio-tech companies and pharmaceutical companies want these organs intoed of having to do it on human testing they can now test it on human organs.

SPEAKER 1:  Sure.

HARRY:  That are bio-printed so it’s fabulous.

SPEAKER 1:  And cost wise, I mean how expensive are these organs?

HARRY:  Well, it’s not the organs, it’s the machine that makes them.  It’s only a couple hundred thousand dollars I think,

SPEAKER 1:  Yeah, that’s reasonable.

HARRY:  A bio-tech company is going to want to buy it.

SPEAKER 1:  Cheaper than a transplant.

HARRY:  There you go.

SPEAKER 1:  Right?

HARRY:  Ah, huh.

SPEAKER 1:  Okay, what else?  Do you have anything else in the bio-tech area that you like or that you’re seeing?

HARRY:  There are an awful lot of stocks that I’ve recommended this year that have done great, but a lot of them had big runs.  The stock I like now is Celldex (CLDX); another one is ACAD.

SPEAKER 1:  What’s that one?

HARRY:  Arcadia pharmaceuticals.

SPEAKER 1:  Okay.

HARRY:  They’re emerging and they’re in their 20s.  I think if they can be $40, $50, $60 a stock they’d be taken over.  Some of the ones we had prior to this year were PCYC (Pharmacyclics) and Agerianao (SP?) EGR both that went from the 20s to the 90s.

SPEAKER 1:  Oh my gosh, that’s a huge gain.

HARRY:  Yeah, ONXX in the 30s to 125.

SPEAKER 1:  Right, I was just looking at that one.

HARRY:  130, yeah.

SPEAKER 1:  Then also you’re looking at some solar companies too right?

HARRY:  Yeah, I really think, my favorite solar is I believe in a group is First Solar which is one time a $3300 stock; it’s trading in the 30s.

SPEAKER 1:  Yes.

HARRY:  I think it could be double or triple in the next you know year or two.  The lower priced ones that I like are Canadian Solar (CSIQ), SUNE that’s SunEdison, and I also SolarPower (SPWY), SunPower excuse me.

SPEAKER 1:  SunPower.

HARRY:  Those four are the stocks that I’d be interested in.  I think they may double and triple in the next year.

SPEAKER 1:  What’s propelling this?

HARRY:  The fact that their cost basis, the price cost, you know like anything else.  Initially everything costs a lot more money like a cell phone.

SPEAKER 1:  Sure.

HARRY:  Costs a couple thousand dollars, now it’s a hundred bucks.  The same thing with solar.  The cost of the modules are dropping, becoming more economically cost efficient and as a result they are now able to put them in homes and businesses and make it more acceptable for companies and people to consider the solar power which is way cheaper now; one-third the cost of electricity and stuff like that.

SPEAKER 1:  Right, yeah, well super.

HARRY:  That’s an emerging group.

SPEAKER 1:  Thank you, Harry.

HARRY:  My pleasure.

SPEAKER 1:  Thanks for being with us at the MoneyShow.com video network.

Best Heal Care Stocks To Buy Right Now

Compa帽铆a de Minas Buenaventura S.A.A. (NYSE: BVN  ) is expected to report Q1 earnings around April 26. Here's what Wall Street wants to see:

The 10-second takeaway
Comparing the upcoming quarter to the prior-year quarter, average analyst estimates predict Compa帽铆a de Minas Buenaventura S.A.A's revenues will grow 5.3% and EPS will compress -20.7%.

The average estimate for revenue is $397.1 million. On the bottom line, the average EPS estimate is $0.65.

Revenue details
Last quarter, Compa帽铆a de Minas Buenaventura S.A.A. tallied revenue of $424.2 million. GAAP reported sales were 5.4% higher than the prior-year quarter's $402.3 million.

Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures may vary to maintain comparability with estimates.

Best Heal Care Stocks To Buy Right Now: Petra Foods Limited (P34.SI)

Petra Foods Limited, through its subsidiaries, manufactures and markets cocoa ingredients and consumer chocolate confectionery products. The company�s Cocoa Ingredients segment engages in the manufacture and marketing of specialty cocoa butter, liquor, and powder products for food and beverage companies under the Delfi brand. Its Branded Consumer segment manufactures and markets chocolate confectionery products under various brands, which include SilverQueen, Ceres, and Delfi. This segment also distributes food and other consumer products. The company also engages in marketing and distributing healthcare, convenience beverages, and other consumer products; and provides manpower services. It serves its customers in Indonesia, Japan, Singapore, the Philippines, Thailand, Malaysia, and China; other countries of Asia; Europe; Australia; North America; Latin America; the Middle East; and Africa. The company was founded in 1984 and is headquartered in Singapore. Petra Foods Lim ited is a subsidiary of Aerodrome International Limited.

Best Heal Care Stocks To Buy Right Now: Sina Corporation(SINA)

SINA Corporation provides online media and mobile value-added services (MVAS) in the People?s Republic of China. It provides advertising, non-advertising, and free services through SINA.com, Weibo.com, and SINA Mobile. SINA.com offers free interest-based channels that provide region-focused format and content, including news, sports, automobile-related news, finance, entertainment, luxury, technology, digital, tools, collectibles, video, music, and wireless application protocol, as well as interactive platform for fashion-conscious users to share comments and ideas on a range of topics, such as health, cosmetics, and beauty. The company's microblogging platform, Weibo.com, enables its users to follow the hottest topics being discussed online, as well as discussions related to people they know. Weibo accounts consist of celebrities, commercial enterprises, government entities, and grass root Internet users. Its SINA Mobile service allows users to receive news and informatio n, download ring tones, mobile games and pictures, and participate in dating and friendship communities. The company also offers SINA Game, which serves as an interactive platform that provides users with downloads and gateway access to popular online games; SINA eReading, a shop for book reviews; SINA.net, an enterprise solutions platform to assist businesses and government bodies; and SINA Mall, an online shopping Website. In addition, it provides a platform for Chinese bloggers; photo-sharing platform; free email, VIP mail, and corporate email for enterprise users; audio and video-based instant messaging tools; proprietary search technology; and classified advertising services, as well as hosts topic-specific discussion forums in Chinese language; and creates user-maintained and supported online communities. The company has strategic cooperation agreement with China Unicom (Hong Kong) Limited. SINA Corporation was founded in 1997 and is headquartered in Shanghai, the Peop le?s Republic of China.

Advisors' Opinion:

• [By Paul Ausick]

  Over the past 12 months, shares of Qihoo 360 are up more than 200%, compared with gains of about 46% at Sina Corp. (NASDAQ: SINA) and about 20% at Baidu Inc. (NASDAQ: BIDU), two other booming Chinese Internet players.

10 Best Small Cap Stocks To Own For 2014: Booker Group PLC(BOK.L)

Booker Group Plc, a cash and carry operator, provides branded and private label goods primarily to independent convenience stores, grocers, leisure outlets, pubs, and restaurants. It offers approximately 18,000 lines of products, including branded and own label grocery, fresh and frozen food, beer, wine, spirits, tobacco, and non-food items. The company operates 172 cash and carry branches to serve approximately 326,000 catering businesses and 78,000 independent retailers in the United Kingdom. Booker Group Plc is based in Wellingborough, the United Kingdom.

Best Heal Care Stocks To Buy Right Now: Dollar/Yen (YY)

YY Inc., through its subsidiaries, operates an online social platform in the People�s Republic of China. It provides YY Client, a personal computer based user software that offers real-time access to user-created online social activities groups. The company also offers Web-based YY that enables users to conduct real-time interactions on the Web without any downloads or installations; and Mobile YY, a smartphone application. In addition, it operates Duowan.com, a game media Website that provides information on online games and other resources for users and online game players. The company was founded in 2005 and is based in Guangzhou, the People�s Republic of China.

Advisors' Opinion:

• [By Alyssa Oursler]

  One glance at YY Inc’s (YY) chart might lead you to believe that the stock’s 240% year-to-date climb has been too much, too fast. Heck, the Chinese Internet midcap went public late last year for $10.50 a share, and has already hit $45.

Best Heal Care Stocks To Buy Right Now: Peoples Financial Corporation(PFBX)

Peoples Financial Corporation operates as the bank holding company for The Peoples Bank, which provides banking products and services to individuals and small to middle market businesses in Mississippi. The company offers deposit services, such as interest bearing and non-interest bearing checking accounts, savings accounts, certificates of deposit, and IRA accounts, as well as non-deposit funds management accounts. It also provides loan products, such as business, commercial, real estate, construction, personal, and installment loans. In addition, the company offers personal trust, agencies, and estate services, including living and testamentary trusts, executorships, guardianships, and conservatorships. Further, it provides benefit accounts, which include self-directed individual retirement accounts, as well as provides escrow management, stock transfer, and bond paying agency accounts to corporate customers. Additionally, the company offers other services, including saf e deposit box rental, wire transfer services, night drop facilities, collection services, cash management, and Internet banking services. As of December 31, 2010, it operated 15 branches in Harrison, Hancock, Jackson, and Stone Counties; and 51 automated teller machines. The company was founded in 1896 and is headquartered in Biloxi, Mississippi.

Best Heal Care Stocks To Buy Right Now: Dyadic International Inc (DYAI)

Dyadic International, Inc. (Dyadic), incorporated in September 2002, is a holding company. The Company is a global biotechnology company. The Company has operations at the United States and the Netherlands. Dyadic uses its technologies to conduct research and development (R&D) and commercial activities for the discovery, development, manufacture and sale of enzymes and proteins for the bioenergy, industrial enzyme, and biopharmaceutical industries. The Company derives all of its revenues from the licensing of its technologies, the sale of its enzymes and conducting research and development (R&D) activities for third parties. The Company operates in two segments: the United States operations and The Netherlands operations. The United States segment includes a subsidiary in Poland.

The United States operating segment is a developer, manufacturer and distributor of enzyme products, proteins, peptides and other bio-molecules derived from genes and a collaborative licensor of enabling technologies for the development and manufacturing of biological products and use in R&D. The Netherlands operating segment is also a researcher and developer of enzyme products, proteins, peptides and other bio-molecules derived from genes and, to date, has mainly invested in R&D activities.

Dyadic�� R&D activities focus on its fungal strains and associated technologies. Dyadic uses its Trichoderma and C1 fungal strains in the production of its industrial enzymes. Dyadic manufactures and sells liquid and dry enzyme products to global customers for use within the animal feed, pulp and paper, starch and alcohol, food and brewing, textiles, and biofuels industries.

Dyadic also utilizes a technology platform based on its patented and C1 fungus (the C1 Platform Technology), which enables the development and manufacture of proteins and enzymes for diverse market opportunities. The C1 Platform Technology can also be used to screen for the discovery of novel genes and proteins. The C1 Platf! orm Technology also has the potential of developing and producing other biological products such as antibodies, vaccines, proteins and polypeptides for the biopharmaceutical industry.

Best Heal Care Stocks To Buy Right Now: HENDERSON GROUP PLC ORD GBP0.125(HGG.L)

Henderson Group plc is an asset management holding entity. Through its subsidiaries, the firm provides services to institutional, retail clients, and high net worth clients. It manages separate client-focused equity and fixed income portfolios. The firm also manages equity, fixed income, and balanced mutual funds for its clients. It invests in public equity and fixed income markets, as well as invests in real estate and private equity. Henderson Group plc was founded in 1934 and is based in London, United Kingdom with additional offices in Jersey, United Kingdom and Sydney, Australia.

Best Heal Care Stocks To Buy Right Now: Vittoria(VITI.MI)

Vittoria Assicurazioni S.p.A., together with its subsidiaries, provides various life and non-life insurance products to individuals, families, and businesses in Italy. Its life insurance products comprise savings insurance products; protection policies covering risks of death, disability, and non-self-sufficiency; supplementary pension plans, including individual pension schemes and open-ended pension fund; and unit-linked financial policies. The company?s non-life insurance products include accident, health, and fire and natural events insurance; other asset damage insurance, which covers the risks of theft and burglary, hail, damage to electronic equipment, and technological damage; general third party liability, pecuniary loss, and legal protection insurance; credit and bond insurance; aircraft and watercraft hulls insurance; railway rolling stock insurance; and goods in transit insurance. It also offers motor insurance products, such as third-party liability for motor vehicles and watercraft, land motor vehicle hulls, and assistance; and outward and inward reinsurance products. In addition, the company engages in the real estate trading; and real estate management, brokerage, and promotional activities. As of December 31, 2010, it offered its products through 318 general agencies and 551 professional sub-agencies. The company was formerly known as The Victory Insurance and changed its name to Vittoria Assicurazioni S.p.A. in 1968. Vittoria Assicurazioni S.p.A. was founded in 1921 and is based in Milan, Italy.

Yep, ZIOPHARM Oncology is For Real (CLVS, NVLX, ZIOP)

Cancer drug investors who have been disappointed in recent results from shares of Clovis Oncology Inc. (NASDAQ:CLVS) or Nuvilex Inc. (OTCMKTS:NVLX) lately may want to take a look at ZIOPHARM Oncology Inc. (NASDAQ:ZIOP) as a replacement for either of those first two stocks. CLVS is down about 16% for the week on a less-than-flattering write-up in a Bloomberg publication, and NVLX has moved under a pair of key moving averages this week because, well, for no specific reason, but broadly because the recent wave of compelling news is already losing its potency, with most of that upside already being priced into shares (and then some) before it became official.

Neither chart looks especially encouraging for the foreseeable future either. With the recent move back under the 20-day, 50-day, and 100-day moving averages, Nuvilex confirmed its second lower high, and has more room to fall before finding a floor. of Clovis Oncology shares still have a huge unfilled gap from June's jump that's begging to be closed. Meanwhile, ZIOPHARM Oncology shares have just started to break out of a long-term funk, and there's a ton of upside left to tap.

If the ticker ZIOP rings a bell, it may because yours truly made a point of penning the fact that a rebound started to bloom a long time ago. Back on July 16th it was noted how the stock was recovering well after plunging in March on news that its sarcoma drug, Palifostamide, had failed to meet its Phase 3 goal. The concern then wasn't that ZIOPHARM Oncology shares weren't strong enough. Rather, the concern was that they were too strong to hold up at their price at the time. The fact that they were pausing at $2.98 - a key ceiling at the time - only underscored the need to wait for a dip within the bigger picture uptrend.

That dip did develop, by the way, though only after ZIOP hit a top at $3.30 on the 17th of July. Regardless, patient onlookers got a chance to get into a trade as low as $2.70 a couple of days later, and sure enough, the bigger uptrend kicked in again.

The best, however, had yet to come.

Though it took more than another month - and a lot more volatility - to get going, ZIOPHARM finally worked its way into a situation that's highly bullish now. One of those bullish clues is the fact that shares have been trapped in a narrow trading range between $2.98 and $3.33 since early August; the narrower the range and the longer the stock stays range-bound, the more explosive the breakout is once it begins. The second bullish clue telling us that ZIOP is now off and running is the fact that it's also moved above all of its key moving average lines. Today's pop is just the clincher. That said...

While today's big surge from ZIOPHARM Oncology Inc. may be the clincher, the sheer size of the 17% advance will likely set up something of a bearish pushback in the coming week. That shouldn't up-end the bigger rally effort, however. The hard work has been done. Now ZIOP just needs to find a bullish groove above $2.33, and that could take a couple of days. For traders, however, it's worth the wait.
 
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Stock-picking environment favors mid- and small-cap stocks

The second quarter earnings season has ushered in change for the stock market. The timing of this change may be somewhat coincidental, but I also believe that the relative strength trend shifts in many stocks is attributable to a more critical appraisal of earnings growth prospects.

For weeks, investors have grappled with the impending tapering of the Fed's Quantitative Easing mission. Some observers were quick to react to this, deeming it a major turning point in the central bank's long standing monetary accommodation. True to its admirable policy of transparency, the Fed did sound an early warning for Wall Street that some monetary policy adjustment would be forthcoming. But, it remains unlikely that interest rates will embark on a secular uptrend based on jobs data, inflation readings and other economic barometers. While the Fed's alert may have been a triggering mechanism for the current consolidation, correction has been orderly and characteristically similar to most other pullbacks in this cycle with sharp, but brief, retreats and rotational backing and filling price movements among the market's leading categories.

Unlike other downturns since March 2009, the prevailing retreat has introduced a more stock picking-focused environment that favors medium and small capitalization stocks. The Russell 2000 (RTY) Index, which is comprised of the 2,000 smallest companies in the Russell 3000 Index, has outpaced the DJIA on a total return basis by more than 500 basis points year to date with most of the relative strength strides occurring since June 30.

While this movement toward medium and small cap stocks has accelerated in recent months it has not meaningfully altered sector leadership which remains impressively broad and diverse. Some of the heightened focus on sub-blue chips is not atypical of the characteristics evident in the advanced stages of other market cycles.

I view this migration toward smaller-cap stocks as a bullish potential for the stock market since it seems to underscore a greater willingness among investors to move from the perceived safety of blue chips to the earnings leveraged opportunities more readily found in lower-cap stock tiers. It reinforces technical factors and lends greater credence to the notion that investor confidence is steadily improving.

A somewhat narrowing and selective stock market might be construed as a speculative, risk oriented one. I do not believe that stock leadership is contracting aggressively at this juncture nor to such an extent that the market is in danger of being driven by micro-thematic factors that might render it vulnerable to headline risk. The leading sectors continue to benefit from reasonably good depth of individual stock performers and this does not appear to be in jeopardy of being substantially altered anytime soon.

The broad leadership theme of T.H.E.M. (Technology, Health care, Energy and Manufacturing) remains intact and continues to be complemented by other categories including consumer discretionary, consumer staples and financials. The shift in focus that I refer to pertains mainly to investors seeking earnings-leveraged stock opportunities rather than established earnings mainstays. This could spur significant rallies in stocks that have somewhat higher price-to-earnings ratios (P/E's) than the S&P 500 multiple which stands currently at 15.8.

Best Stocks To Watch Right Now

To be sure, this is not likely a looming sequel to the technology cycle of the late 1990s when stocks with a! stronomical P/E's vaulted higher leaving 'traditional' stocks and sectors far behind. It is similar only in as much as seemingly untethered earnings growth candidates will likely perform better than the established earnings growers. This is not a call to abandon blue chips, but rather an alert that from both bottom-up and top-down perspectives medium-cap growth has taken a performance lead over mega-caps that could be maintained through the remainder of this cycle. Therefore, equity allocation adjustments may be warranted for those investors over weighted in large-cap value strategies.Sturdy energy stocks Eugene Peroni

Energy stocks continue to exhibit sturdy longer term technical characteristics. My positive outlook for the group is based, in part, on the strength of its sub-categories including integrated oil, domestic oil and gas exploration, off-shore drillers and oil service. Like other leadership sectors, energy is populated with large and mid/small cap stocks, with the latter exhibiting improving relative strength characteristics. This is particularly evident among the medium-cap service and offshore drillers.

Oil recently broke out into two year high territory amid escalating geopolitical tensions, dateline Syria. While this headline event spurred the latest oil rally just as currency fluctuations and other global events have caused re

Why Bill Ackman Could Boost This Stock By 35%

Following the institutional investors can be a useful strategy for retail investors.

Institutional investors are so big, they move the market. This is a form of "bottom feeding" investing, where retail investors can lurk in the shadows of "whales" (institutional investors) and get fat on the leftovers. The same principle can be used by following "sharks" (activists).

The likes of activist investors, including big names such as Carl Icahn and Bill Ackman, have been reforming companies for decades now. And for those investors who followed Icahn into Chesapeake Energy (NYSE: CHK) or Netflix (Nasdaq: NFLX), they were handsomely rewarded. These sharks take meaningful stakes in companies and then push for management shakeups, restructurings, spinoffs, operational improvements, etc.

Icahn has been the talk of the activist circle of late, overshadowing some other notable activist campaigns. It appears that a combination of Ackman's own recent shortcomings and Icahn's high-profile Apple (Nasdaq: AAPL) investment has overshadowed Ackman's activist bet on the less-than-sexy industrial space. Since Ackman announced his 9.8% ownership of Air Products (NYSE: APD) at the end of July, the stock is relatively flat.

Has the market lost faith in Ackman that quickly? Granted, the media has had a field day over the J.C. Penney (NYSE: JCP) debacle, not to mention the virtual implosion of his Herbalife (NYSE: HLF) short. However, Ackman is coming off one of his biggest wins with Canadian Pacific Railway (NYSE: CP), which also happens to be in the industrials sector. His Pershing Square hedge fund managed to make 2.5 times its money in just around two years at Canadian Pacific.  

Hot High Tech Companies To Own In Right Now

While Ackman emphasized the need for operational reform and efficiency improvement at Canadian Pacific, the campaign at Air Products could prove to be a bit different. Ackman hasn't laid out his exact plans, but he has called Air Products' business "simple, predictable, and free-cash-flow-generative, and enjoys high barriers to entry, high customer switching costs and substantial pricing power." 

All characteristics of a great investment, but the valuation alone does not appear to be a viable investment thesis. Air Products trades at a price-to-earnings (P/E) ratio of 23.2, in line with its peer Airgas' 24.3 and Praxair's 21.7.

As well, Air Products has grossly underperformed its peers over the past decade, with its stock up only 118%, compared with Airgas' 477% return and Praxair's 275%. This is, in part, because the company continues to underperform in terms of its return on invested capital (ROIC) and return on equity (ROE). Air Products has an ROIC of 7.6% and ROE of 15.3%. Compare this to Praxair's ROIC of 11.3% and ROE of 29%, and Airgas' ROIC of 8.3% and ROE of 19.4%.

Air Product's dividend is already the highest among the three major gas companies, paying a 2.7% yield, compared with Praxair's 2% and Airgas' 1.8%. The payout ratio is 60%, leaving little room for a dividend increase.

	Copyright © Air Products and Chemicals, Inc.
	Ackman has called Air Products' business "simple, predictable, and free-cash-flow-generative, and enjoys high barriers to entry, high customer switching costs and substantial pricing power."

So what does Ackman see as the real catalyst?

One of the big opportunities lies in Air Products' balance sheet. The company has a debt-to-equity ratio that's nearly half of Airgas' and Praxair's, and its leverage ratio is at least 80% of either peer.

With this less levered balance sheet, Ackman could push the company to recapitalize and make share repurchases or pay a special dividend. Ackman could also push the company to make acquisitions.

Air Products made a play for Airgas in 2010, but eventually abandoned its efforts. Ackman could push for a marriage of the two, which would allow Air Products to better compete with Praxair. Praxair has a market cap that's 50% greater than Air Products and nearly five times that of Airgas. But together, Air Products and Airgas' revenues would surpass Praxair's by 30%.

Assuming that Ackman "does his thing," whether it be optimizing operational efficiencies or leveraging the balance sheet, the plan is to bring Air Products' returns more in line with peers. Assuming Ackman gets Air Products' ROE up to 20% with share repurchases and modest operational improvements, the stock could easily see $145 over the next 12 months.

Risks to consider: As with any activist investment, there is the risk that the activist announces plans for increasing shareholder value, the stock moves up quickly in a short time period, but plans fail to materialize and the stock tumbles. Air Products also has a poison pill in place that prevents Ackman from buying more than 10% of the company without having board approval.

Action to take --> When activists get involved in a company, the stock tends to see an initial run, but they also tend to outperform the broader market over the following years. Investors haven't seen the initial pop in Air Products stock, but once Ackman lays out his plans, the stock could move higher.

P.S. Air Products is one of those companies that are fundamental to broad economic success. It reminds us a lot of what we call "forever" stocks. "Forever" stocks can be bought, forgotten about and held -- forever. To learn more about these stocks -- including some of their names and ticker symbols -- click here.

Goldman Sachs Downgrades BRE Properties to “Sell” (BRE)

Real estate investment trust BRE Properties Inc (BRE) was downgraded by analysts at Goldman Sachs on Tuesday due to a number of risks.

The analysts downgraded BRE from “Neutral” to “Sell” and now see shares reaching $44, down from $50. This new price target suggests a 13% downside to the stock’s Monday closing price of $50.72.

Goldman Sachs cited two factors for the downgrade. For one, there is development funding risk due to the development size. Also, the analysts downgraded the stock due to its current valuation.

“BRE has one of the largest development pipelines under our apartment coverage at 23% of market cap, where 7.5% of market cap remains to be funded,” the analyst notes. “These funding needs would increase if the company commences construction on Pleasanton in 2014, as management noted on the company's 2Q13 earnings call.”

BRE Properties shares were inactive during pre-market trading on Tuesday. The stock is down a fraction year-to-date.

Post-Lehman Crash, Altegris’ Jon Sundt Defends Alternatives as Hedge Against Volatility

“Celebration” is not the word that comes to mind as market players observe the fifth-year anniversary of the Lehman Brothers crash.

Rather, what now inspires investors to remember the crash is the cautionary tale it offers of the terrible things that can happen when the financial world spins out of control. Indeed, “caution” is a better word to describe why anybody should mark the date of Sept. 15, 2008, when Lehman filed for bankruptcy, according to Jon Sundt, president and chief executive of alternative investment firm Altegris.

“I think 2008 crystallized this idea that you need to be diversified,” Sundt (left) said in a recent interview with ThinkAdvisor. “The people who didn’t have diversified portfolios to this day are still suffering. It’s a stark reminder that you had better build a portfolio that can survive bad unforeseen outcomes.”

Sundt remembered that he was sitting at his desk in Altegris’ headquarters in La Jolla, Calif., the day that Lehman crashed.

“It was a bit of ‘shock and awe,” he recalled. “We had dozens of managers that we allocate to and thousands and thousands of investors. My biggest concern at the time was: Do we have any counterparty risk? We quickly determined that we had no direct exposure to Lehman. Some of our managers didn’t do so well, but those in the managed futures space did well, and so did people with hedges.”

Sundt’s own firm has gone through transmutations since the Lehman crash. After he founded Altegris in 2002, Genworth Financial bought his firm in 2010 for approximately $35 million, and earlier this year Genworth sold its wealth management unit, including Altegris, for $412.5 million to a partnership of two private equity firms, Genstar Capital and Aquiline Capital. Altegris currently has more than $4 billion in assets under management and employs 120 individuals.

Today, Sundt focuses much of his energy on promoting the idea of using equity and fixed income long/short strategies as core allocations. To be sure, that focus stems from Altegris’ relatively recent launches of the Altegris Fixed Income Long Short (FXDAX, FXDIX, FXDNX), on Feb. 28 this year, and the Altegris Equity Long Short Fund (ELSAX, ELSIX, ELSNX), on April 30, 2012.

Year to date, according to Morningstar, FXDIX has outperformed its benchmark, the Barclays U.S. Aggregate Bond Index (which tracks the broader debt market in the same way that the S&P 500 follows stocks), with a $10,000 investment in FXDIX currently yielding $10,090 versus the Barclays index’s $9,686. The growth of $10,000 for ELSIX currently comes to $10,915, underperforming the benchmark S&P 500 index’s $12,018 by a wide margin.

“This is a prudent approach,” Sundt said in defense of ELSIX’S underperformance. “You want to participate in this party, but you don’t want to drink too much. You want to participate in a way to preserve capital. A great way to do that is equity long/short. Our managers have exposure to the market for the upside but short positions in case the market corrects. If you’re 100% net long, you can get hurt.”

Similarly, Sundt noted, FXDIX offers a smoother ride for fixed income investors during an extremely volatile period for bonds. “If you have a portfolio with a lot of holdings, it may be a good idea to get into a long/short fixed-income fund, which is a corollary to long/short equities,” he said.

More thoughts from Jon Sundt on why fixed income long/short is a good idea:

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Read 5 Years After Lehman Crash: ‘Dark Times’ Ahead at ThinkAdvisor.

Top 10 Bank Stocks For 2014

In this series, we'll explore the data announcements and events that may impact the performance of bank stocks during the upcoming week.

It's the beginning of earnings season for the banks, and with two already under our belts, it's important that bank investors keep an eye on the news for the next week. As we saw, record earnings weren't enough to propel the reporting banks higher -- so watch out for more declines in the days to come.

Monday

Earnings -- Citigroup (NYSE: C  ) announces its first-quarter earnings Monday morning. Following on the heels of two record-high earnings reports from JPMorgan Chase� (NYSE: JPM  ) and Wells Fargo (NYSE: WFC  ) , Citi will be under a lot of scrutiny from shareholders. Though the record earnings didn't save the other two banks from falling Friday, largely because of investors looking for more quality along with the quantity of profits. Housing Market Index -- as the housing market continues its slow but steady recovery, bank investors should look for signs of increased activity. One of the biggest takeaways from this week's batch of earnings reports was a decrease in mortgage activity -- a lead generator of revenue for the banks. This index provides a glimpse of the prospective buyer trend, giving bank investors a feel for how much new business could be coming to the banks.

Tuesday

Top 10 Bank Stocks For 2014: Commonwealth Bank of Australia (CBA)

Commonwealth Bank of Australia (the Bank) is engaged in the provision of a range of banking and financial products and services to retail, small business, corporate and institutional clients. The Bank is a provider of integrated financial services, including retail, business and institutional banking, superannuation, life insurance, general insurance, funds management, broking services and finance company activities. Its operating segments include Retail Banking Services, Business and Private Banking, Institutional Banking and Markets, Wealth Management, New Zealand, Bankwest and Other. Its retail banking services include home loans, consumer finance, retail deposits and distribution. Its business and private banking include corporate financial services, regional and agribusiness banking, local business banking, private bank and equities and margin lending. The Bank and its subsidiaries ceased to be a substantial holder in Ten Network Holdings Limited, as of September 12, 2012. Advisors' Opinion:

• [By Dale Gillham]

  CBA has held up better relative to the 2009 low and has been less volatile than ANZ. Also, the retracement in 2011 was just under 50 per cent ($42.02) of the range from the 2009 low to the high at $60.00, whereas the other banks broke this level.

  Over recent months CBA has rebounded and is currently close to strong resistance around $49.50. Like ANZ, the overhead resistance may hold the stock back in the short term. However, if CBA jumps the immediate hurdle it also has the potential to move up over the coming months by around 10 per cent to between $53.00 and $56.50.

Top 10 Bank Stocks For 2014: Mitsubishi UFJ Financial Group Inc (MTU)

Mitsubishi UFJ Financial Group, Inc. (MUFJ), incorporated on April 2, 2001, is a holding company for The Bank of Tokyo-Mitsubishi UFJ, Ltd. (BTMU), Mitsubishi UFJ Trust and Banking Corporation (MUTB), Mitsubishi UFJ Securities Holdings Co., Ltd. (MUSHD), Mitsubishi UFJ Morgan Stanley Securities Co., Ltd.( MUMSS), Mitsubishi UFJ NICOS Co., Ltd. (Mitsubishi UFJ NICOS) and other companies engaged in a range of financial businesses. Its services include commercial banking, trust banking, securities, credit cards, consumer finance, asset management, leasing and fields of financial services. In May 2010, the Company and Morgan Stanley formed two joint ventures in Japan by integrating our respective Japanese securities companies engaged in investment banking and securities businesses. The Company converted the wholesale and retail securities businesses conducted in Japan by the former MUS into one of the joint venture entities, which is named MUMSS. Morgan Stanley contributed the investment banking operations conducted in Japan by its formerly wholly owned subsidiary, Morgan Stanley Japan Securities Co., Ltd. (MSJS) into MUMSS and converted the sales and trading and capital markets businesses conducted in Japan by MSJS into a second joint venture entity called Morgan Stanley MUFG Securities, Co., Ltd.

Integrated Retail Banking Business Group

The Integrated Retail Banking Business Group covers all domestic retail businesses, including commercial banking, trust banking and securities businesses, and enables the Company to offer a range of banking products and services, including financial consulting services, to retail customers in Japan. This business group integrates the retail business of BTMU, MUTB and MUMSS, as well as retail product development, promotion and marketing in a single management structure. Many of its retail services are offered through its network of MUFG Plazas providing individual customers with access to its financial product offerings of integrated commercial b! anking, trust banking and securities services.

The Company offers a range of bank deposit products, including a non-interest-bearing deposit account that is redeemable on demand and intended for payment and settlement functions, and is insured without a maximum amount limitation. It also offers a variety of asset management and asset administration services to individuals, including savings instruments, such as current accounts, ordinary deposits, time deposits, deposits at notice and other deposit facilities. MUFJ also offers trust products, such as loan trusts and money trusts, and other investment products, such as investment trusts, performance-based money trusts and foreign currency deposits.

The Company creates portfolios by combining savings instruments and investment products. It also provide a range of asset management and asset administration products, as well as customized trust products for high-net-worth individuals, as well as advisory services relating to the purchase and disposal of real estate and effective land utilization, and testamentary trusts. The Company provides a varied line up of investment trust products allowing its customers to choose products according to their investment needs through BTMU, MUTB and MUMSS, as well as kabu.com Securities, which specializes in online financial services. In the fiscal year ended March 31, 2010, BTMU offered a total of five investment trusts. As of the end of March 2010, BTMU offered its clients a total of 73 investment trusts.

The Company offers securities, including publicly offered stocks, foreign and domestic investment trusts, Japanese government bonds, foreign bonds and various other products. The Company offers housing loans, card loans and other loans to individuals. With respect to housing loans, in addition to housing loans incorporating health insurance for seven major illnesses, BTMU began offering in June 2009 preferential interest rates under its Environmentally Friendly Support program ! to custom! ers who purchase environment-conscious houses (like houses with solar electric systems), which meet specific criteria in response to increasing public interest in environmental issues. In September 2009, BTMU launched housing loans with home mortgage insurance, which BTMU jointly developed with the Japan Housing Finance Agency, a governmental agency under the Japanese government�� economic stimulus measures, under which the agency indemnifies BTMU for losses from housing loans.

The Company offers products and services through a range of channels, including branches, automated teller machines (ATMs) (including convenience store ATMs shared by multiple banks), Mitsubishi-Tokyo UFJ Direct (telephone, Internet and mobile phone banking), the Video Counter and postal mail. It offers integrated financial services combining its banking, trust banking and securities services at MUFG Plazas. These Plazas provide retail customers with integrated and flexible suite of services at one-stop outlets. As of March 31 2010, the Company provided those services through 47 MUFG Plazas. The Company offers MUTB�� trust related products and advisory services through its trust agency system not only for MUTB customers but also for BTMU and MUMSS customers. As of March 31, 2010, BTMU engaged in eight businesses as the trust banking agent for MUTB: testamentary trusts, inheritance management, asset succession planning, inheritance management agency operations, business management financial consulting, lifetime gift trusts, share disposal trusts, and marketable securities administration trusts.

Integrated Corporate Banking Business Group

The Integrated Corporate Banking Business Group covers all domestic and overseas corporate businesses, including commercial banking, investment banking, trust banking and securities businesses, as well as UnionBanCal Corporation (UNBC). UNBC is a wholly owned subsidiary of BTMU and a US bank holding company with Union Bank being its primary subsidiary. T! he Compan! y provides various financial solutions, such as loans and fund management, remittance and foreign exchange services. It also helps its customers develop business strategies, such as inheritance-related business transfers and stock listings.

It offers advanced financial solutions to companies through corporate and investment banking services. Product specialists globally provide derivatives, securitization, syndicated loans, structured finance and other services. It also provides investment banking services, such as merger and acquisition (M&A) advisory, bond and equity underwriting. It provides online banking services that allow customers to make domestic and overseas remittances electronically. It also provides a global cash pooling/netting service, and the Treasury Station, a fund management system for a multi-company group. The Company�� global Corporate and Investment Banking business (Global CIB), primarily serves companies, financial institutions, and sovereign and multinational organizations with a set of solutions for their financing needs.

Integrated Trust Assets Business Group

The Integrated Trust Assets Business Group covers asset management and administration services for products, such as pension trusts and security trusts by integrating the trust banking expertise of MUTB and the international strengths of BTMU. The business group provides a range of services to corporate and pension funds, including stable and secure pension fund management and administration, advice on pension schemes, and payment of benefits to scheme members. Its Integrated Trust Assets Business Group combines MUTB�� trust assets business, comprising trust assets management services, asset administration and custodial services, and the businesses of Mitsubishi UFJ Global Custody S.A., Mitsubishi UFJ Asset Management Co., Ltd. and KOKUSAI Asset Management Co., Ltd.

Advisors' Opinion:

• [By Louis Navellier]

  Mitsubishi UFJ Financial (NYSE:MTU) is a Japanese holding company mainly engaged in the banking business. Mitsubishi Financial has posted a gain of 11% since this time last year. MTU stock gets a “B” grade for operating margin growth, a “B” grade for the magnitude in which earnings projections have increased over the past months, and an “A” grade for cash flow.

Top Insurance Companies To Invest In 2014: Northern Trust Corporation(NTRS)

Northern Trust Corporation, through its subsidiaries, provides asset servicing, fund administration, asset management, and fiduciary and banking solutions for corporations, institutions, families, and individuals worldwide. The company offers corporate and institutional services, including global master trust and custody, trade settlement, and reporting; fund administration; cash management; investment risk and performance analytical services; investment operations outsourcing; and transition management and commission recapture services. It also provides personal financial services, such as personal trust, investment management, custody, and philanthropic services; financial consulting; guardianship and estate administration; brokerage services; and private and business banking services, as well as customized products and services. In addition, the company offers active and passive equity and fixed income portfolio management, as well as alternative asset classes comprisin g private equity and hedge funds of funds, and multi-manager products and advisory services. Further, it engages in fund administration, investment operations outsourcing, and custody business that provides specialized services to a range of funds, which include money-market, multi-manager, exchange-traded funds, and property funds for on-shore and off-shore markets. Additionally, the company provides administrative and middle-office services consisting of trade processing, valuation, real-time reporting, accounting, collateral management, and investor servicing. Northern Trust Corporation was founded in 1889 and is based in Chicago, Illinois.

Top 10 Bank Stocks For 2014: Capital One Financial Corporation(COF)

Capital One Financial Corporation operates as the bank holding company for the Capital One Bank (USA), National Association (COBNA), and Capital One, National Association (CONA), which provide various financial products and services in the United States, the United Kingdom, and Canada. It offers consumer and small business credit card lending, national closed end installment lending, and the international credit card lending services. The company also provides various non-interest bearing and interest-bearing deposits, including demand deposits, money market deposits, negotiable order of withdrawal accounts, savings accounts, certificates of deposit, and other consumer time deposits. Its loan portfolio comprises credit card loans; consumer loans, such as auto, home, and retail banking loans; and commercial loans, including commercial and multifamily real estate, middle market, specialty lending, and small-ticket commercial real estate loans. In addition, the company provid es mortgage banking, treasury management, and depository services. It primarily serves consumers, small businesses, and commercial clients through branches, the Internet, and other distribution channels. The company was founded in 1993 and is headquartered in McLean, Virginia.

Advisors' Opinion:

• [By Matthew Scott]

  While I disapprove of its cheesy advertisements for Capital One (NYSE: COF) and its generally high percentage rate credit cards, Capital One is one financial services company that has a real opportunity for growth coming out of the recession. Capital One stock price increased six times in two years, jumping from $8.63 on March 9, 2009 to $51.96 at the end of the first quarter. Since the bank wasn’t in the “too big to fail” category before the recession, it has been able to expand its number of branches over the last two years when times were tough, growing profits at the same time. As consumers begin using credit cards again as the economy improves, Capital One stands to benefit.

• [By Kathy Kristof]

  There's also opportunity in a big bank that follows a different path than others on this list. Capital One Financial (COF) is one of the nation's biggest credit card issuers and may be best known for its tongue-in-cheek commercials featuring Alec Baldwin and former basketball star Charles Barkley. The bank's earnings were up nearly 12% last year, but earnings per share declined because the number of shares outstanding rose after the completion of two mergers in 2012. The mergers turned Capital One into one of the nation's largest banks by deposits, but its market capitalization of $31.8 billion is only one-fourth that of Citi and BofA.

  Capital One focuses more on consumers and less on businesses than the other banking behemoths. It generates about three-fourths of its income from credit cards and consumer loans. The improving financial health of the consumer sector is driving down Capital One's default rates and is helping to put the company in a position to meet increasingly stringent regulatory capital requirements well ahead of schedule.

  In fact, the bank is so well capitalized that regulators recently gave it permission to hike its quarterly dividend sixfold, to 30 cents per share. At $55.07, the stock yields 2.2% on the new dividend rate and sells for 8.6 times projected 2013 earnings. That's below Capital One's estimated long-term earnings growth rate of 9.3% a year, suggesting that the stock is undervalued. RBC analysts believe the shares will reach $67 over the coming year.

• [By Elissa]

  As one of the most recognizable and reputable financial companies in the United States, Capital One offers a wide range of services to individuals and small businesses. It focuses on the areas of checking, savings, loans and investments. It earns about $2.7 billion every year.

Top 10 Bank Stocks For 2014: Federal National Mortgage Association Fannie Mae (FNMAT)

Federal National Mortgage Association Fannie Mae is a government-sponsored enterprise (GSE) chartered by the United States Congress to support liquidity and stability in the secondary mortgage market, where mortgage-related assets are purchased and sold. The Company�� activities include providing market liquidity by securitizing mortgage loans originated by lenders in the primary mortgage market into Fannie Mae mortgage-backed securities (Fannie Mae MBS), and purchasing mortgage loans and mortgage-related securities in the secondary market for its mortgage portfolio. Fannie Mae operates in three business segments: Single-Family business, Multifamily Business (formerly Housing and Community Development (HCD)) and Capital Markets group. Its Single-Family Credit Guaranty and Multifamily businesses work with its lender customers to purchase and securitize mortgage loans customers deliver to the Company into Fannie Mae MBS.

The Company obtains funds to support its business activities by issuing a variety of debt securities in the domestic and international capital markets. Fannie Mae acquires funds to purchase mortgage-related assets for its mortgage portfolio by issuing a variety of debt securities in the domestic and international capital markets. It also makes other investments. Fannie Mae conducts its business in the United States residential mortgage market and the global securities market. It conducts business in the United States residential mortgage market and the global securities market. During the year ended December 31, 2011, the Company��

Single-Family Business

Single-Family business includes mortgage securitizations, mortgage acquisitions, credit risk management and credit loss management. Single-Family business works with the Company�� lender customers to provide funds to the mortgage market by securitizing single-family mortgage loans into Fannie Mae MBS. Its Single-Family business also works with its Capital Markets group to facilitate the purc! hase of single-family mortgage loans for the Company�� mortgage portfolio. Fannie Mae�� Single-Family business prices and manages the credit risk on its single-family guaranty book of business, which consists of single-family mortgage loans underlying Fannie Mae MBS and single-family loans held in its mortgage portfolio. Single-Family business and Capital Markets group securitize and purchase primarily single-family fixed-rate or adjustable-rate, first lien mortgage loans, or mortgage-related securities backed by these types of loans.

The Company securitizes or purchases loans insured by Federal Housing Administration (FHA), loans guaranteed by the Department of Veterans Affairs (VA), and loans guaranteed by the Rural Development Housing and Community Facilities Program of the Department of Agriculture, manufactured housing loans, reverse mortgage loans, multifamily mortgage loans, subordinate lien mortgage loans and other mortgage-related securities. Its Single-Family business securitizes single-family mortgage loans and issues single-class Fannie Mae MBS. Fannie Mae�� Single-Family business securitizes loans solely in lender swap transactions, in which lenders deliver pools of mortgage loans to the Company, which are placed immediately in a trust, in exchange for Fannie Mae MBS backed by these loans. Generally, the servicing of the mortgage loans held in its mortgage portfolio or that backs its Fannie Mae MBS is performed by mortgage servicers on the Company�� behalf. Lenders who sell single-family mortgage loans to Fannie Mae service these loans for the Company. For loans it owns or guarantees, the lender or servicer must obtain its approval before selling servicing rights to another servicer.

Fannie Mae�� mortgage servicers collect and deliver principal and interest payments, administer escrow accounts, monitor and report delinquencies, perform default prevention activities, evaluate transfers of ownership interests, respond to requests for partial releases of sec! urity, an! d handle proceeds from casualty and condemnation losses. Its mortgage servicers are the primary point of contact for borrowers and perform implementation of its homeownership assistance initiatives, negotiation of workouts of troubled loans, and loss mitigation activities. Mortgage servicers also inspect and preserve properties and process foreclosures and bankruptcies.

Multifamily Mortgage Business

Multifamily business works with the Company�� lender customers to provide funds to the mortgage market by securitizing multifamily mortgage loans into Fannie Mae MBS. Through its Multifamily business, Fannie Mae provides liquidity and support to the United States multifamily housing market principally by purchasing or securitizing loans that finance multifamily rental housing properties. It also provides some limited debt financing for other acquisition, development, construction and rehabilitation activity related to projects that complement this business. Fannie Mae�� Multifamily business also works with its Capital Markets group to facilitate the purchase and securitization of multifamily mortgage loans and securities for Fannie Mae�� portfolio, as well as to facilitate portfolio securitization and resecuritization activities.

The Company�� multifamily guaranty book of business consists of multifamily mortgage loans underlying Fannie Mae MBS and multifamily loans and securities held in Fannie Mae�� mortgage portfolio. Revenues for Fannie Mae�� Multifamily business are derived from a variety of sources, including guaranty fees received as compensation for assuming the credit risk on the mortgage loans underlying multifamily Fannie Mae MBS and on the multifamily mortgage loans held in its portfolio and on other mortgage-related securities; transaction fees associated with the multifamily business, and other bond credit enhancement related fees. As with the servicing of single-family mortgages, multifamily mortgage servicing is performed by the lenders who s! ell the m! ortgages to the Company. Fannie Mae�� Multifamily business is organized and operated as an integrated commercial real estate finance business.

Capital Markets

Capital Markets group's primary business activities include mortgage and other investments, mortgage securitizations, structured mortgage securitizations and other customer services, and interest rate risk management. Capital Markets group manages the Company�� investment activity in mortgage-related assets and other interest-earning, non-mortgage investments. It funds its investments primarily through proceeds the Company receives from the issuance of debt securities in the domestic and international capital markets. Its business activity is focused on making short-term use of its balance sheet rather than long-term investments. Activities Fannie Mae is undertaking to provide liquidity to the mortgage market include whole loan conduit, early funding, real estate mortgage investment conduit (REMICs) and other structured securitizations and dollar roll transactions. Whole loan conduit activities include its purchase of both single-family and multifamily loans principally for the purpose of securitizing them. During the year ended December 31, 2010, it was engaged in dollar roll activity. A dollar roll transaction is a commitment to purchase a mortgage-related security with a concurrent agreement to re-sell a similar security at a later date or vice versa.

Fannie Mae�� Capital Markets group is engaged in issuing both single-class and multi-class Fannie Mae MBS through both portfolio securitizations and structured securitizations involving third party assets. Its Capital Markets group creates single-class and multi-class Fannie Mae MBS from mortgage-related assets held in its mortgage portfolio. Fannie Mae�� Capital Markets group may sell these Fannie Mae MBS into the secondary market or may retain the Fannie Mae MBS in its investment portfolio. The Company�� Capital Markets group creates single-class ! and multi! -class structured Fannie Mae MBS, for its lender customers or securities dealer customers, in exchange for a transaction fee. The Company�� Capital Markets group provides its lender customers and their affiliates with services that include offering to purchase a range of mortgage assets, including non-standard mortgage loan products; segregating customer portfolios to obtain optimal pricing for their mortgage loans, and assisting customers with hedging their mortgage business.

Although the Company�� Capital Markets group�� business activities are focused on short-term financing and investing, revenue from its Capital Markets group is derived primarily from the difference, or spread, between the interests it earns on its mortgage and non-mortgage investments and the interest it incurs on the debt the Company issues to fund these assets. Its Capital Markets revenues are primarily derived from the Company�� mortgage asset portfolio. Capital Markets group funds its investments primarily through the issuance of a variety of debt securities in a range of maturities in the domestic and international capital markets. Investors in the Company�� debt securities include commercial bank portfolios and trust departments, investment fund managers, insurance companies, pension funds, state and local governments, and central banks.

The Company competes with Freddie Mac, FHA and Ginnie Mae.

Top 10 Bank Stocks For 2014: Royal Bank Of Canada(RY)

Royal Bank of Canada provides personal and commercial banking, wealth management services, insurance, corporate and investment banking, and transaction processing services under the RBC name worldwide. Its Canadian Banking segment offers personal financial services, business financial services, and cards and payment solutions. The company?s Wealth Management segment provides wealth and asset management, and estate and trust services to affluent and high net worth clients through distributors, as well as directly to institutional and individual clients in Canada, the United States, Europe, Asia, and Latin America. Its Insurance segment provides various life and health insurance, including universal life, accidental death and critical illness protection, disability, long-term care insurance, and group benefits; and property and casualty insurance comprising home, auto, and travel insurance, as well as wealth accumulation solutions; and reinsurance products through retail ins urance branches, call centers, independent insurance advisors and travel agencies, financial institutions, and career sales force. The company?s International Banking segment offers various financial products and services to individuals, business clients, and public institutions in the U.S. and Caribbean. This segment also provides global custody, fund and pension administration, securities lending, shareholder services, analytics, and other related services to institutional investors. Royal Bank of Canada?s Capital Markets segment engages in the trading and distribution of fixed income, foreign exchange, equities, commodities, and derivative products for institutional, public sector, and corporate clients; and involves in investment banking, debt and equity origination, advisory services, corporate lending, private equity, and client securitization businesses. The company was founded in 1864 and is headquartered in Toronto, Canada.

Top 10 Bank Stocks For 2014: M&T Bank Corporation (MTB)

M&T Bank Corporation operates as the holding company for M&T Bank and M&T Bank, National Association that provide commercial and retail banking services to individuals, corporations and other businesses, and institutions. It offers business loans and leases; business credit cards; deposit products, such as demand, savings, and time accounts; and financial services, including cash management, payroll and direct deposit, merchant credit card, and letters of credit. The company also provides residential real estate loans; multifamily commercial real estate loans; commercial real estate loans; one-to-four family residential mortgage loans; investment and trading securities; short-term and long-term borrowed funds; brokered certificates of deposit and interest rate swap agreements related thereto; and branch deposits. In addition, it offers foreign exchange, as well as asset management services. Further, the company provides consumer loans, and commercial loans and leases; cred it life, and accident and health reinsurance; and securities brokerage, investment advisory, and insurance agency services. As of December 31, 2009, it had 738 banking offices in New York State, Pennsylvania, Maryland, Delaware, New Jersey, Virginia, West Virginia, and the District of Columbia; a commercial banking office in Ontario, Canada; and an office in George Town, Cayman Islands. The company was founded in 1969 and is headquartered in Buffalo, New York.

Top 10 Bank Stocks For 2014: Ampco-Pittsburgh Corporation(AP)

Ampco-Pittsburgh Corporation and its subsidiaries manufacture and sell custom-engineered equipment in the United States and internationally. It operates in two segments, Forged and Cast Rolls, and Air and Liquid Processing. The Forged and Cast Rolls segment produces forged hardened steel rolls used in cold rolling for the producers of steel, aluminum, and other metals; and cast iron and steel rolls for hot and cold strip mills, medium/heavy section mills, and plate mills. The Air and Liquid Processing segment manufactures finned tube and plate finned heat exchange coils for the commercial and industrial construction, as well as for process and utility industries; custom air handling systems used in commercial, institutional, and industrial buildings; and a line of centrifugal pumps for the refrigeration, power generation, and marine defense industries. The company was founded in 1929 and is based in Pittsburgh, Pennsylvania.

Advisors' Opinion:

• [By EntreBankph.com]

  Aboitiz Power Corporation (AP) is a publicly-owned holding company listed with the Philippine Stock Exchange that, through its subsidiaries and affiliates, is a leader in the Philippine hydroelectric power generation industry and has interests in some of the largest privately-owned distribution utilities in the Philippines. Since its incorporation in 1998, AP has accumulated interests in both hydroelectric power generation facilities and in thermal plants.

Top 10 Bank Stocks For 2014: Access National Corp (ANCX)

Access National Corporation (ANC) operates as a bank holding company. The Company has two wholly owned subsidiaries: Access National Bank (the Bank) and Access National Capital Trust II. The Bank is the operating business of the Company. The Bank provides credit, deposit, and mortgage services to middle market commercial businesses and associated professionals, primarily in the greater Washington, D.C. Metropolitan Area. The Bank offers a range of financial services and products and specializes in providing customized financial services to small and medium sized businesses, professionals, and associated individuals. The Bank provides its customers with personal customized service utilizing the latest technology and delivery channels. The Bank�� business is serving the credit, depository and cash management needs of businesses and associated professionals. The products and services offered by the Bank include accounts receivable lines of credit, accounts receivable collection accounts, growth capital term loans, business acquisition financing, online banking, checking accounts, money market accounts, sweep accounts, personal checking accounts, savings /money market accounts and certificates of deposit.

The Bank�� revenues are derived from interest and fees received in connection with loans, deposits, and investments. The Bank operates from five banking centers located in Chantilly, Tysons Corner, Reston, Leesburg and Manassas, Virginia and online at www.accessnationalbank.com. The Mortgage Corporation specializes in the origination of conforming and government insured residential mortgages to individuals in the greater Washington, D.C. Metropolitan Area, the surrounding areas of its branch locations, outside of its local markets through direct mail solicitation, and otherwise. The Mortgage Corporation has offices throughout Virginia, in Fairfax, Reston, Roanoke, and McLean.

Lending Activities

The Bank�� lending activities involve commercial real estate loa! ns, residential mortgage loans, commercial loans, commercial and residential real estate construction loans, home equity loans, and consumer loans. These lending activities provide access to credit to small to medium sized businesses, professionals, and consumers in the greater Washington, D.C. Metropolitan Area. Loans originated by the Bank are classified as loans held for investment. At December 31, 2011 loans held for investment totaled $569.4 million. At December 31, 2011 unsecured loans were comprised of $2.9 million in commercial loans and approximately $124 thousand in consumer loans and collectively equal approximately 0.5% of the loans held for investment portfolio.

The Bank�� commercial real estate loans-wner Occupied represented 30.14% of our loan portfolio held for investment, as of December 31, 2011. Its commercial real estate loans-non-owner occupied loans represent ed18.44% of its loan portfolio held for investment, as of December 31, 2011. The Bank�� residential real estate loans represented 22.56% of the loan portfolio, as of December 31, 2011.

These loans fall into one of three situations: loans supporting an owner occupied commercial property; properties used by non-profit organizations, such as churches or schools where repayment is dependent upon the cash flow of the non-profit organizations, and loans supporting a commercial property leased to third parties for investment. Its residential real estate loans category includes loans secured by first or second mortgages on one to four family residential properties, extended to the Bank clients.

As of December 31, 2011, commercial loans represented 23.15% of the Bank�� loan portfolio held for investment. These loans are to businesses or individuals within its market for business purposes. As of December 31, 2011, real estate construction loans consisted of 5.22% of loans held for investment loan portfolio. These loans include loans to construct owner occupied commercial buildings; l! oans to i! ndividuals; loans to builders for the purpose of acquiring property and constructing homes for sale to consumers, and loans to developers for the purpose of acquiring land, which is developed into finished lots for the ultimate construction of residential or commercial buildings. As of December 31, 2011, consumer loans made up approximately 0.49% of its loan portfolio.

Investment Activities

The Company�� investment securities portfolio is consisted of the United States Treasury securities, the United States Government Agency securities, municipal securities, Community Reinvestment Act (CRA) mutual fund, and mortgage backed securities issued by the United States Government sponsored agencies and corporate bonds. At December 31, 2011, securities totaled $85.8 million. . The securities portfolio is comprised of $45.8 million in securities classified as available-for-sale and $40.0 million in securities classified as held-to-maturity.

Sources of Funds

As of December 31, 2011, deposits totaled $645.0 million. As of December 31, 2011, deposits consisted of noninterest-bearing demand deposits in the amount of $113.9 million, savings and interest-bearing deposits in the amount of $182.0 million, and time deposits in the amount of $349.1 million. The Bank also uses wholesale funding or brokered deposits to supplement traditional customer deposits for liquidity. It participates in the Certificate of Deposit Account Registry Service (CDARS). Through CDARS its depositors are able to obtain FDIC insurance of up to $50 million. As of December 31, 2011, brokered deposits totaled $223,554,000, which includes $192,326,000 in reciprocal CDARS deposits. It also maintains lines of credit with the Federal Home Loan Bank (FHLB) and Federal Reserve Bank (FRB). At December 31, 2011 there was $284.9 million available under these lines of credit. Borrowed funds consist of advances from the FHLB, senior unsecured term note, FHLB long-term borrowings, subordinated debentures (! trust pre! ferred), securities sold under agreement to repurchase, United States Treasury demand notes, federal funds purchased, and commercial paper. As of December 31, 2011 borrowed funds totaled $123.6 million. At December 31, 2011 borrowed funds totaled $70.9 million.

Top 10 Bank Stocks For 2014: New York Community Bancorp Inc (NYCB.N)

New York Community Bancorp, Inc. is a bank holding company and a producer of multi-family mortgage loans in New York City, with an emphasis on apartment buildings that feature below-market rents. It has two bank subsidiaries: New York Community Bank (the Community Bank),New York Commercial Bank (the Commercial Bank. The Community Bank has 241 branches and operates through seven divisional banks. The Commercial Bank has 34 branches in Manhattan and operates 17 of its branches under the divisional name Atlantic Bank.

During the year ended December 31, 2011, all of the one-to-four family loans the Company originated was sold to government-sponsored enterprises (GSEs). In New York, the Company serves its Community Bank customers through Roslyn Savings Bank, with 55 branches on Long Island; Queens County Savings Bank, with 34 branches in the New York City borough of Queens; Richmond County Savings Bank, with 22 branches in the borough of Staten Island, and Roose velt Savings Bank, with eight branches in the borough of Brooklyn. As of December 31, 2011, in the Bronx and neighboring Westchester County, the Company had four branches that operated directly under the name New York Community Bank.

In New Jersey, the Company serves its Community Bank customers through 51 branches that operate under the name Garden State Community Bank. In Florida and Arizona, where it has 25 and 14 branches, respectively, the Company serves its customers through the AmTrust Bank (AmTrust) division of the Community Bank. In Ohio, the Company serves its Community Bank customers through 28 branches of Ohio Savings Bank. Customers of the Community Bank and the Commercial Bank have access to their accounts through 261 of its 285 automatic teller machines (ATMs) locations in five states. The Company also serves its customers through three Websites, which include www.myNYCB.com, www.NewYorkCommercialBank.com and www.NYCBfamily.com.

Lendi ng Activities

The Company�� principal asset i! s loans. Its loan portfolio consists of three components: covered loans, non-covered loans held for sale and non-covered loans held for investment. As of December 31, 2011, the balance of covered loans was $3.8 billion, of which $3.4 billion were one-to-four family loans. Non-covered loans held for sale consists of the one-to-four family loans that are originated for sale, primarily to GSEs. At December 31, 2011, the held-for-sale loan portfolio totaled $1.0 billion

As of December 31, 2011, loans held for investment consisted of loans that it originates for its own portfolio, and totaled $ 25.5 billion.

In addition to multi-family loans, loans held for investment include commercial real estate loans (CRE); acquisition, development and construction (ADC) loans; commercial and industrial loans (C&I), and one-to-four family loans. As of December 31, 2011, its multi-family loans represented $17.4 billion, or 68.3%, of total loans held for investment, and repr esented $5.8 billion, or 64.1%, of the total loans that it originated for investment. The multi-family loans it originates are typically secured by non-luxury apartment buildings in New York City. It also makes multi-family loans to property owners who are seeking to expand their real estate holdings by purchasing additional properties.

As of December 31, 2011, CRE loans represented $6.9 billion, or 26.9%, of total held for investment; ADC loans represented $445.7 million, or 1.7%, of total loans held for investment. Its ADC loan portfolio consists of loans that were originated for land acquisition, development, and construction of multi-family and residential tract projects in New York City and Long Island.

C&I loans represented $600.0 million, or 2.4%, of total held for investment. It also offers a range of loans to small and mid-size businesses for working capital (including in! ventory a! nd receivables), business expansion, and the purchase of equipment a nd machinery. Non-covered one-to-four family loans totaled $! 127.4 mil! lion at December 31, 2011.

Investment Activities

The Company�� securities portfolio primarily consists of mortgage-related securities, and debt and equity (other) securities. Its investments include GSE certificates, GSE collateralized mortgage obligations (CMOs) and GSE debentures. The Community Bank and the Commercial Bank are members of the Federal Home Loan Bank of New York (FHLB-NY), one of 12 regional Federal Home Loan Banks (FHLBs) consisting of the FHLB system. As of December 31, 2011, the Company�� securities represented $4.5 billion, or 10.8%, of total assets. As of December 31, 2011, 93.7% of its securities portfolio consisted of GSE obligations; held-to-maturity securities represented $3.8 billion, or 84.0%, of total securities, and its investment in bank-owned life insurance (BOLI) was $769.0 million.

Source of Funds

The Company has four primary funding sources. These include the deposits that it added thr ough its acquisitions or gathered through its branch network, and brokered deposits; wholesale borrowings, primarily in the form of FHLB advances and repurchase agreements with the FHLB and various brokerage firms; cash flows produced by the repayment and sale of loans, and cash flows produced by securities repayments and sales. As of December 31, 2011, deposits totaled $ 22.3 billion, which included certificates of deposit (CDs) of $7.4 billion; negotiable order withdrawal (NOW) and money market accounts of $8.8 billion; savings accounts of $ 4.0 billion, and non-interest-bearing accounts of $2.2 billion. As of December 31, 2011, the Company�� borrowed funds totaled $14.0 billion, loan repayments and sales generated cash flows of $15.0 billion, and securities sales and repayments generated cash flows of $4.2 billion.

Subsidiary Activities

As of December 31, 2011, C! ommunity ! Bank had 34 subsidiary corporations. Of these, 22 are direct subsidiaries of the Community Bank and 12 are subsidiaries of Community B! ank-owned! entities. The 22 direct subsidiaries of the Community Bank include DHB Real Estate, LLC, Mt. Sinai Ventures, LLC, NYCB Community Development Corp., NYCB Mortgage Company, LLC, Eagle Rock Investment Corp., Pacific Urban Renewal, Inc., Somerset Manor Holding Corp., Synergy Capital Investments, Inc., 1400 Corp., BSR 1400 Corp., Bellingham Corp., Blizzard Realty Corp., CFS Investments, Inc., Main Omni Realty Corp., NYB Realty Holding Company, LLC, O.B. Ventures, LLC, RCBK Mortgage Corp., RCSB Corporation, RSB Agency, Inc., Richmond Enterprises, Inc. and Roslyn National Mortgage Corporation.

The 12 subsidiaries of Community Bank-owned entities include Bronx Realty Funding Company, LLC, Columbia Preferred Capital Corporation, Ferry Development Holding Company, Peter B. Cannell & Co., Inc., Roslyn Real Estate Asset Corp., Walnut Realty Funding Company, LLC, Woodhaven Investments Inc, Your New REO, LLC, Ironbound Investment Company, Inc.,The Hamlet at Olde Oyster Bay, LLC, The Hamlet at Willow Creek, LLC and Richmond County Capital Corporation.

The two direct subsidiaries of the Commercial Bank include Beta Investments, Inc., and Gramercy Leasing Services, Inc. The two subsidiaries of Commercial Bank-owned entities include Omega Commercial Mortgage Corp. and Long Island Commercial Capital Corp.

Will American Express Continue This Bull Run?

With shares of American Express (NYSE:AXP) trading around $72, is AXP an OUTPERFORM, WAIT AND SEE or STAY AWAY? Let's analyze the stock with the relevant sections of our CHEAT SHEET investing framework:

T = Trends for a Stock’s Movement

American Express is a global service company. Its principal products and services are charge and credit payment card products and travel-related services offered to consumers and businesses worldwide. The Company operates in four segments: U.S. Card Services, International Card Services, Global Commercial Services, and Global Network & Merchant Services. The way consumers and companies transact is constantly seeing incredible improvements which has led to amazing growth in this area. Consumers and businesses are seeing increasing worldwide growth and therefore, will continue to become dependent on the financial services provided by American Express.

T = Technicals on the Stock Chart are Strong

American Express stock has been exploding higher over the last several years. In fact, the stock is now trading at all-time high prices and seems to just keep surging higher. Analyzing the price trend and its strength can be done using key simple moving averages. What are the key moving averages? The 50-day (pink), 100-day (blue), and 200-day (yellow) simple moving averages. As seen in the daily price chart below, American Express is trading above its rising key averages which signal neutral to bullish price action in the near-term.

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(Source: Thinkorswim)

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

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	Implied Volatility (IV)	30-Day IV Percentile	90-Day IV Percentile
American Express Options	18.14%	10%	8%

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

	Put IV Skew	Call IV Skew
June Options	Flat	Average
July Options	Flat	Average

As of today, there is an average demand from call buyers or sellers and low demand by put buyers or high demand by put sellers, all neutral to bullish over the next two months. To summarize, investors are buying a very low amount of call and put option contracts and are leaning neutral to bullish over the next two months.

On the next page, let’s take a look at the earnings and revenue growth rates and the conclusion.

E = Earnings Are Increasing Quarter-Over-Quarter

Rising stock prices are often strongly correlated with rising earnings and revenue growth rates. Also, the last four quarterly earnings announcement reactions help gauge investor sentiment on American Express’s stock. What do the last four quarterly earnings and revenue growth (Y-O-Y) figures for American Express look like and more importantly, how did the markets like these numbers?

	2013 Q1	2012 Q4	2012 Q3	2012 Q2
Earnings Growth (Y-O-Y)	7.48%	-44.36%	5.83%	4.55%
Revenue Growth (Y-O-Y)	3.88%	5.15%	3.84%	4.56%
Earnings Reaction	1.41%	-1.58%	-2.96%	-3.53%

American Express has seen increasing earnings and revenue figures over most of the last four quarters. From these figures, the markets have grown to expect a little more from American Express’s recent earnings announcements.

P = Excellent Relative Performance Versus Peers and Sector

How has American Express stock done relative to its peers, Visa (NYSE:V), MasterCard (NYSE:MA), Discover Financial Services (NYSE:DFS), and sector?

	American Express	Visa	MasterCard	Discover	Sector
Year-to-Date Return	25.78%	19.12%	16.47%	21.82%	19.09%

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

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Conclusion

American Express offers efficient and necessary financial services to a growing consumer and company user base around the world. The stock had been quickly moving higher and is now trading at all-time high prices. Earnings and revenue figures have been growing steadily but investors have grown to expect a little more from the company. Relative to its peers and sector, American Express has been a year-to-date performance leader. Look for American Express to OUTPERFORM.

Apple's Next Move Has Wall Street's Attention

Apple stock has needed a fresh catalyst for quite some time, and it's about to get one.

In the first of two related developments, Apple Inc. (Nasdaq: AAPL) has scheduled an event on Tuesday to unveil its new flagship iPhone 5S as well as a lower-cost version, expected to be called the iPhone 5C.

Just 10 hours later, Apple will host an event in China - an extraordinary measure for the Cupertino, CA-based tech giant.

At that event, Apple is widely expected to announce, after years of negotiations, a partnership with China's dominant carrier, China Mobile.

The combination of that deal with the iPhone 5C - a phone many believe is targeted at customers of more modest means in emerging markets like China and India - would indeed put some new sizzle into AAPL stock.

After slumping as much as 45% from its high of $705.07 last year, AAPL stock has recovered to about $497, but is still down 29.5% from that high.

Apple stock has suffered as the iPhone has lost market share to phones powered by Google Inc.'s (Nasdaq: GOOG) Android operating system and built by aggressive companies such as Samsung Electronics (OTC: SSNLF).

With the smartphone market in places like the United States and Europe reaching maturation, the iPhone 5C is the only way the company can arrest the slide in the iPhone's global market share, capture any meaningful growth, and rejuvenate the Apple stock price.

Apple already sells its older models, the iPhone 4 and iPhone 4S, at steep discounts in many countries, but the thinking is that a brand new model tailored to this critical portion of the market will prove far more popular.

"There are different needs in different markets," Wayne Lam, smartphone analyst at IHS Inc. told the Financial Times. "Apple has to have the right product lines to address that."

A Big Opportunity for Apple Stock

To understand how the iPhone 5C and a relationship with China Mobile could drive Apple stock, you need to look at the numbers.

Apple already sells through two Chinese carriers, China Unicom and China Telecom, with a combined subscriber base of about 405 million.

But China Mobile is the largest carrier in the world. Its 740 million subscribers dwarf its competitors, as well as the 100 million of the largest carrier in the United States, Verizon Communications Inc. (NYSE: VZ). China Mobile's customer base is actually more than twice the entire U.S population - every single man, woman, and child.

And the market is still growing rapidly; research firm IDC says unit shipments in China will rise 52% in 2014 to 458 million to account for one out of every three smartphones sold in the world.

But without a device for the middle and low end of the market, and without access to China Mobile's vast number of subscribers, iPhone sales in China declined 14% year over year.

Here's why the iPhone 5C will change all that...

Analysts at UBS estimate that the iPhone 5C will make a huge difference, accounting for 70% of the 17 million iPhones it expects Apple to sell in China in 2014 and 10% of the 170 million Apple will sell worldwide.

That would be enough to reverse the iPhone's slipping global market share as well, from 14% now to 15.5% in 2014. Apple needs to maintain a healthy market share to ensure that developers will keep writing apps for iOS, as the vibrant ecosystem is a key selling feature for the company's mobile line-up of iPhones, iPads, and iPod Touches.

And while some had worried that a less expensive iPhone model would ding margins, those concerns have ebbed lately. Most analysts are raising their assumptions of the iPhone 5C profit margin from the low 30s to the upper 30s, with most above the company average of just under 37%.

In a note to clients, UBS analyst Steven Milunovich pegged the profit margin of a low-cost iPhone at 38%, "making the 5C accretive to earnings."

With the boost from the iPhone 5C, Milunovich raised his earnings target for Apple to $44.65 a share in 2014 and $48.45 a share in 2015.

Applying those earnings per share (EPS) figures to the company's current price/earnings (P/E) ratio of about 12.40 gives a price target for AAPL stock of about $550 for 2014 and $600 for 2015.

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That's a 20% return, which is not too bad for a maturing tech company - and that doesn't include the 2.5% dividend yield.

But it's also very possible that Apple stock will soar far beyond $600 and get there much sooner than UBS estimates.

How AAPL Stock Could Rise Even Faster

While the iPhone 5C in China alone will help stabilize Apple stock and gradually push it higher over the next two years, other factors could speed up the timetable and possibly get AAPL back to its all-time highs.

For one thing, the iPhone 5C won't just help grow sales in China, but in other emerging markets as well. India in particular will be adding nearly as many new mobile subscriptions as China over the next several years (see chart).

Then there's the possibility that the iPhone 5C is just the beginning of a diversification of the iPhone line.

The Wall Street Journal reported this week that Apple has been testing new iPhone form factors with screen sizes ranging from 4.8 inches to 6 inches. (The iPhone 5 has a 4-inch screen.)

Such a move would make sense, echoing a similar evolution in the iPod product line over the years to appeal to different customer needs at different price levels, a strategy that could really jolt iPhone sales and AAPL stock.

Finally, there's the potential of Apple unleashing some completely new product in the next few months.

Whether it's the long-rumored Apple television, or an iWatch, or something else entirely, the company is overdue for a major new product initiative. Such a new product could add several dollars more to Apple's EPS over the next couple of years, which would give Apple stock yet another positive jolt.

Cantor Fitzgerald Analyst Brian White told CNBC last week that he had initiated coverage of AAPL stock with a "Buy" rating and based his lofty target price of $777 - 56% above current levels - partly on the expectation that Apple has something insanely great up its sleeve.

"After a year to forget, we believe Apple is poised for liftoff in [fiscal year] 2014," White wrote in a note to clients. "The past year was extremely challenging for Apple stock, as the higher-end smartphone market hit a wall and the ramp of new product categories did not come to fruition... however, we believe innovation at Apple has not stood still and that the fruits of the company's labor will begin to show up in a major new product cycle over the next 12 months to 18 months. We believe the challenges over the past year will prove to be a blip in a longer-term positive trend at Apple."

Money Morning Capital Wave Strategist Shah Gilani has his own reasons to think that Apple stock is a buy right now. Don't miss his take on why he likes AAPL - with or without the iPhone 5C.

Related Articles:

Money Morning:
Apple (Nasdaq: AAPL) Stock Hits $500 Thanks to Carl Icahn Money Morning:
Five Reasons Apple Stock Is a Buy Financial Times:
Apple Event Raises Hopes of China Mobile Deal Dividend.Com:
UBS Reiterates "Buy" Rating on Apple; Raises Price Target and Estimates (AAPL) Financial Times:
Apple Looks to Build Market Share with the Cheaper iPhone 5C The Wall Street Journal:
Apple Tests iPhone Screens as Large as Six Inches

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