Ibd20131111

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Ibd20131111

  1. 1. THE BIG PICTURE Current outlook: Under pressure S&P 500 INDEX 1770.61 +23.46 (+1.3%) DOW JONES IND. 15,761.78 +167.80 (+1.1%) Market rebounds in lighter volume. B8 Retraces Thursday’s sell-off; still near high JPMorgan, Goldman Sachs lead the charge NYSE VOL. (MIL) 3,748 -32 (-0.8%) NASDAQ 3919.23 +61.90 (+1.6%) NASDAQ VOL. (MIL) 1,927 -312 (-13.9%) Volume fails to equal Thursday’s big pace Tesla down 3rd day; other leaders recover Some leaders find support at trend line 10-YEAR T-NOTE 2.75% +0.15 (+5.8%) EURO 1.3367 -0.0052 (-0.4%) REUTERS CRB FUT. 274.39 +1.23 (+0.5%) Starbucks: A Culture Of Innovation Sharp rise in yields as fears over Fed revive Dollar hits 2-month high on jobs report Energy commodities rise, while gold folds Property Swaps Can Cut Your Taxes FINANCIAL ADVISERS How can advisers best serve today’s investors and succeed in business? New strategies and tools help. A17-22 ISSUES & INSIGHTS / A10-11 Israel’s Iran Options Are Dwindling LEADERS & SUCCESS / A4 Gary O’Neal, A Star Army Ranger MANAGING FOR SUCCESS / A9 FUNDS & PERSONAL FINANCE / A13-15 W W W . I N V E S T O R S . C O M VOL. 30, NO. 152 IBD’S TOP 10 U.S. Gains Traction As 204,000 Jobs Added Last Month Stocks Rebound, Trade Fades 1 The Nasdaq surged 1.6%, the S&P 500 1.3% and the Dow 1.1%. But volume fell on both major exchanges, which was disappointing after Thu.’s higher-volume declines. Stocks moved up despite the robust Oct. jobs data, which sparked fears that the Fed may soon taper its bond buys. But those fears firmed up the dollar and interest rates. The 10-year Treasury yield surged 15 basis points to 2.75%, the highest since the Fed decided not to taper on Sept. 18. More on B8 Shutdown Impact Subdued Stocks, bond yields fly on upbeat report, though many hires are low-wage Jobs Beat Belies Shutdown 2 The pace of job growth quickened in Oct. to 204,000, nearly twice as high as expected, a sign that employers looked past the gov’t shutdown. Job gains were broad-based across industries, though low-wage hiring remained heavy. Payroll gains for Aug. and Sept. were revised up. More on this page, A2 ANDREA RIQUIER INVESTOR'S BUSINESS DAILY Iran Nuclear Deal Looming? 3 Sec’y of State John Kerry cut his Middle East trip short to meet with Iranian officials in Geneva to discuss an interim deal while larger issues are worked out. Western powers offered Iran access to $50 bil in frozen foreign assets if Tehran agrees to stop expanding its uranium enrichment program. Israel warned the West not to give Iran sanction relief. Obama Mulls ObamaCare Fix? 4 The White House may expand how many Americans are eligible for exchange subsidies, a source told the Huffington Post, though the law phases them out at 400% of the poverty level. Pres. Obama’s approval rating has hit record lows as millions of people lose their current plans despite his oft-repeated “you can keep your plan” vow. The House may vote on a “keep your plan” bill this week. Meanwhile, the administration said all insurers will have to cover mental illness and addiction like physical ills. Shutdown Sours Consumers 5 Consumer spending growth slowed to 0.2% in Sept., from 0.3% in Aug. Personal income picked up to a 0.5% gain, beating expectations. Sentiment turned lower for the 7th straight month, according to the Reuters/Univ. of Michigan survey. That contradicted the IBD/ TIPP Economic Optimism Index, which showed a partial rebound from a shutdown-related dive a month earlier. Mortgage Asset Sales Ending 6 Ocwen Fin’lOCN and NationstarNSM have been buying up rights to service mortgages from large banks, which have shed many subprime loans. But the megawave of auctions is ending, according to analysts. Rising rates slowed refinancing, and Ocwen and Nationstar struggled to meet expectations. More on A12 Lockhart: Dec. Taper In Play 7 Atlanta Fed Pres. Dennis Lockhart said he “would not take off the table” a decision to reduce the $85 bil-a-month bond-buying program. He hailed the Oct. jobs report but said he’s “reticent to draw very profound conclusions” from 1 month. Despite several encouraging economic reports in Oct., most Fed watchers don’t expect a taper until 2014. McDonald’s Oct. Sales Cook 8 The world’s No. 1 fast-food chain’s global same-store sales rose 0.5% vs. a year earlier, beating estimates for a 0.2% rise. McDonald’sMCD cited strong sales of new items such as seasonal pumpkin spice latte. Comps grew 0.2% in the U.S., 0.8% in Europe. They fell 0.2% in Asia/Middle East/Africa, mainly on weak sales in Japan. Shares edged down. MONDAY, NOVEMBER 11, 2013 $3.00 Rapidly Aging China Needs Reforms Soon Pres. Xi raised hopes for key policy meeting — 35 years after Deng BY CIARAN McEVOY China GDP 15% Yearly change 12 INVESTOR'S BUSINESS DAILY Thirty-five years after the Communist Party set China on the path toward capitalism, the Chinese government has signaled that the latest party meeting could herald more sweeping economic changes. The Third Plenum of the 18th Communist Party of China runs Saturday to Tuesday. President Xi Jinping, who took office in March, called the Beijing gatheringof roughly 370 party members and has dropped hints that have economists’ tongues wagging. “China is drawing up a master plan for the deepening of reform in all respects,” Xi said last month at the Asia-Pacific Economic Cooperation CEO Summit in Indonesia. But questions remain whether China will reform massive stateowned enterprises (SOEs), including its financial system, as well as the rural areas, where farmers are burdened by restrictions on their ability to sell their land or homes. It also remains to be seen if China can shift from an economy where SOEs rule the commanding heights to one where privatization and foreign investment are encouraged. “Are they going to make a serious commitment to corporate competition or are they going to continue to shield state-owned enterprises?” said Scott Rozelle, the Helen F. Farnsworth Senior Fellow in the Freeman Spogli Institute for International Studies at Stanford University. Q3: 7.8% 9 6 ’06 ’07 ’08 ’09 ’10 ’11 ’12 ’13 Source: Datastream “You have to allow the private sector to boom,” Rozelle said. “If they can’t generate growth based on innovation 15 years from now, they’re going to be in big, big trouble.” Closed Door To Open China? Although political party meetings generally don’t set the public’s imagination on fire, Third Plenums have sparked major economic policy changes. The meetings, which typically occur after new Chinese leadership consolidates power and feels able to announce its economic programs, are held in secret. Their full importance might not be known for months or even years afterward. The most famous Third Plenum occurred in 1978, two years after the death of Mao Zedong, when Deng Xiaoping outmaneuvered his adversaries and began the process of opening China to foreign trade and investment. The 1993 Third Plenum formally adopted the more aggressive reforms under Premier Zhu Rongji, which ultimately resulted in China joining the World Trade Organization eight years later. This year’s Third Plenum comes amid a backdrop of slower economic growth. GDP growth in the world’s secondSEE CHINA ON A6 Employers added 204,000 jobs in October, the Labor Department said Friday, far more than expected and the latest sign that the economy was building momentum even as the government shutdown took hold. The jobs gain dwarfed the 120,000 that economists had forecast. August and September hiring was revised up by a combined 60,000. Meanwhile, 61.5% of industries boosted payrolls, the most since February. Stocks rose sharply, rebounding from Thursday’s sell-off, despite concerns that the Federal Reserve may pull the punchbowl sooner rather than later. The 10-year Treasury yield jumped to the highest since policymakers unexpectedly refrained from announcing a taper on Sept. 18. “The economy’s certainly not knocking the lights out but it’s absolutely showing that there was strength going into the shutdown and it did not have as detrimental an impact as feared,” said Jennifer Vail, head of fixedincome research at U.S. Bank Wealth Management. The private sector has been surprisingly resilient in the face of persistent head winds from Washington, Vail said. Even before the shutdown and debt ceiling drama, employers had to contend with the expiration of payroll tax cuts as well as sequester spending cuts. “There’s no way to get around the fact that taking purchasing power out of consumers hands is not good for the economy,” said Robert Hughes, a senior research fellow at the American Institute for Economic Research. The jobless rate edged up to 7.3% as the household survey found sharp drops in the number of people employed or in the labor force, for reasons that were not entirely clear. Data Not ‘Clean’? While analysts believe the effects of the government shutdown were less than expected, completely “clean” data probably won’t be available until the December jobs report, which won’t be out until early January. Still, other recent data also suggest that the economy is gaining traction. ISM manufacturing and service-sector reports both signaled faster growth in October. Manufacturers added 19,000 jobs in October, the third monthlygainina rowand the most since February.Buthiringremainsconcentrated in low-wage sectors such as retail (up 44,400) and leisure/hospitality (up 53,000). Government payrolls fell by 8,000. Furloughed federal work- ers were counted as employed. Vail thinks that the Fed would start to taper as early as December, if not for the understanding that data could still be skewed. That makes January more likely, she said. But the Fed will need to provide much stronger forward guidance as the unemployment rate reaches its target of 6.5%, which could come as soon as next summer, she said. But Sophia Koropeckyj, an economist with Moody’s Analytics, said the Fed’s hands were tied as long as federal fiscal wrangling continued. “A 7+ unemployment rate is still quite high and the economy is still in need of some stimulus,” she said. October Surprise Nonfarm payrolls 350 Monthly change, in thousands Oct.: 300 204,000 250 200 150 100 50 0 OND J FMAMJ J A S O ’12 ’13 Jobs by sector Construction Manufacturing Retail Leisure/hospitality Temp Government Monthly change 11,000 19,000 44,400 53,000 3,300 -8,000 Sources: Labor Dept., Datastream Yet Koropeckyj called Friday’s report unequivocally strong, and said the underlying trend for job growth is probably about 175,000 a month. That’s in line with the 180,000 or so Vail expects in November. “I’m not as concerned about when they start as how fast they go,” Hughes said. Even if the Fed sees evidence of sustained labor market improvement, it will have to navigate choppy waters after tapering begins, particularly if the unemployment rate remains dynamic. By setting out specific targets, “they’ve put themselves in a box,” he said, though policymakers can always point to “transient factors” for shifting direction later. There are still plenty of pitfalls, despite recentprogress. Consumer spending growth decelerated to a two-year low in Q3. The Reuters/University of Michigan sentiment index slid to a nearly twoyear low Friday — though the IBD/TIPP Economic Optimism Index bounced back somewhat. What’s more, the deal that reopened the government and raised the debt ceiling was shortterm. Congress must reach a new deal soon or face another fiscal standoff. Still, there’s reason for optimism. “There’s a lot of the economy that will keep chugging along in spite of everything going on in Washington,” said Koropeckyj. IPO Proceeds Most Since ’00 9 U.S. initial public offerings have raised $50.8 bil so far this year, including Twitter’sTWTR $1.8 bil new issue, Thomson Reuters said. That’s the most since 2000. After a busy week, there have been 189 U.S. IPOs, the most since 2004. Global IPO proceeds so far this year are up 26% to $126 bil. Starbucks More Than Just Java 10 The coffeehouse giant may be known for its java and espresso drinks, but its revenue is being driven by the employees and its ability to innovate, analysts say. For instance, StarbucksSBUX workers form connections with their customers. The Seattle-based chain offers free Wi-Fi in most locations and embraces social media. Shares have rallied more than 51% this year. More on A9 Protection is positioned as an investment goal. Investing in certain securities may help to hedge against certain risks, but does not imply any guarantee from loss. Mutual funds are subject to market risk and volatility. Shares may gain or lose value. ©2013 OppenheimerFunds Distributor, Inc.
  2. 2. A2 MONDAY, NOVEMBER 11, 2013 INVESTORS.COM VITAL SIGNS Jobless Rate Rises On Shutdown Impact Nonfarm payrolls were strong last month, but the household survey found a plunge in jobs and the labor force due to government shutdown furloughs. The jobless rate edged up to 7.3% as a result — 11.1% with a steady participation rate. 61.5% of industries added staff last month. Household jobs, labor force Industry diffusion index 600 Monthly change, in thousands 400 Household jobs Labor force 200 0 -200 -400 -600 -800 M ’13 J J A S O Jobless rate 65% If participation rate held constant 12% 10 8 Official rate 6 4 ’08 Sources: Labor Dept., Datastream ’09 ’10 ’11 ’12 ’13 Oct.: 61.5% 60 55 50 45 O ’12 N D J ’13 F M A M J J A S O TO THE POINT NATION BUSINESS BRIEFS Obama backs $10 min. wage MEDICAL AVIATION Covidien gross margins miss Boeing warns Seattle on deal The medical products maker said Q4 EPS rose 6% to 91 cents, a penny above views, mostly helped out by lower interest expenses, taxes and share count. Gross margins were light. Covidien’sCOV sales were up 2% to $2.56 bil, in line with views. It affirmed its previous guidance for fiscal ’14 with implied EPS of $3.65-$4.10. Analysts are expecting $3.99. Shares fell 1.7% to 63.85. LEISURE The aircraft maker said it will seek another location to build its new 777X jet if local officials and assembly workers don’t ratify plans, after senior union members voiced opposition to the proposed labor contract, which is slated for a membership vote Wed. BoeingBA last week had reached tentative agreements to build in Seattle, giving it sizable tax breaks and locked-in labor costs. Shares rose 1.5% to 133.49. Lions Gate’s revenue misses Airline fees to hit $42.6 bil The TV and film company reported break-even Q2 earnings vs. EPS of 56 cents last year. Analysts were expecting a loss of 8 cents. Revenue fell 29.5% to $498.7 mil, missing views for $528.85 mil. Lions GateLGF said revenue from the motion picture segment fell 29% to $434.4 mil as the company had only 2 wide-release movies vs. 3 last year. Television production revenue fell 35% to $64.3 mil. The 2nd installment of the highly anticipated “Hunger Games” trilogy, “Catching Fire,” opens in domestic theaters Nov. 22. Shares rose 0.5% to 32.30. Baggage, food and service fees collected by airlines worldwide will hit $42.6 bil, double what was collected in ’10, according to a report by the Idea Works Co. as reported by MarketWatch. In a report by Idea Works, Allegiant AirALGT and Spirit AirlinesSAVE profited the most from the extra fees. Extra fees on int’l carriers China Southern and Emirates accounted for only 1% of total earnings. Virgin America gets only 4.7% of its revenue from fees; Delta Air LinesDAL gets only 7%. MEDIA The White House backed a bill to hike the fed’l minimum wage from $7.25 an hour to $10.10 in increments by ’15. That’s a big jump from the $9 minimum wage Pres. Obama called for in his State of the Union address. Earlier this year, California became the first state to adopt a $10 minimum wage, effective 2016. In 30 states, the state minimum wage is $7.25. Pew: 31% like Obamanomics SUSANFORDBALESstands in frontof the Navy’snewestnuclear-powered aircraft carrier, USS Gerald R. Ford, at the Newport News Shipbuilding in Newport News, Va., on Friday. Bales, the daughter offormer President Ford, will christen the new carrier on Saturday. TELECOM ECONOMY Cablevision falls despite beat ECRI leading U.S. index dips The cable operator reported a Q3 profit of 22 cents a share ex items, reversing last year’s 1-cent loss and double views for an 11-cent gain. Revenue climbed 2% to $1.57 bil, topping. Cablevision SystemsCVC said it lost 37,000 video subscribers, 18,000 voice subscribers and 13,000 high-speed data customers and total customers fell 29,000 to 3.2 mil. Shares sank 4% to 15.08. BANKS Scripps hurt by ad sales drop The operator of 14 newspapers and 19 TV stations swung to a Q3 loss amid an off-year election. E.W. ScrippsSSP reported a 14% drop in sales to $189.5 mil, below analyst views for $197.1 mil. Scripps lost 14 cents per share vs. a 25-cent profit a year ago, worse than the expected 6-cent loss. TV sales slid 21% as political ad revenue plunged 97%. Newspaper revenue fell 44%; Scripps noted subscription revenue grew for the 1st time in many years on new digital-print subscriptions. Shares fell 1.6% to 18.66. IN BRIEF UBS to buy back rescue fund Home DepotHD, the home improvement store, apologized for a tweet that featured 2 black drummers and a person wearing an ape mask. The message asked, “What drummer is not like the others?” The company quickly deleted the tweet and said it fired the people and firm responsible for the tweet. Shares fell 0.3% to 75.48. The Swiss bank said it will buy back the Stability Fund, which it set up in Oct. ’08 for toxic assets, for $3.7 bil. UBSUBS, which set up the fund to bail itself out during the financial crisis, will pay the Swiss National Bank $1 bil plus 50% of the amount remaining from the purchase price. UBS had spun off into the fund $38.7 bil of risky assets, while the gov’t and SNB provided equityand loansto support those assets. UBS shares rose 1.2% to 18.28. For The Record: Novartis is closing a biotherapeutics unit in La Jolla, Calif. Friday’s Income Investor column incorrectly said the entire La Jolla facility would close. Limited Mintage Striking... WORLD’S FIRST The Economic Cycle Research Institute’s gauge shed 0.5 point to 131 in the week ended Nov. 1. But the 4-week annualized growth rate edged up to 1.8% from 1.7%. German trade surplus hits high At 18.9 bil euros, the merchandise trade surplus hit a record in Sept. Aug.’s reading was revised upward, to 15.8 bil euros. Exports rose 1.7% to a 1-year high while imports fell 1.9%. Critics argue Germany should do more to boost imports, which could bolster weaker EU countries. S&P downgrades France The agency became the 1st to cut the French sovereign credit rating a 2nd time, taking it to AA from AA+. S&P said the govt’s reform efforts weren’t sufficient for growth, and that stubbornly high unemployment was weighing on policy. Canadian employment rises Employers added 13,200 jobs in Oct., ahead of expectations and the 11,900 added in Sept. The jobless rate stayed steady at 6.9%. The gains reflected an increase in fulltime positions, but it was mostly centered in the public sector. COMING UP TUESDAY 00 NFIB small business optimism index for Oct., 7:30 a.m. ET. 00 Chicago Fed Nat’l Activity Index for Sept., 8:30 a.m. ET. The 2014 $100 SILVER PROOF TRENDS Tiny Hornets fly over battlefield Actual size is 6” x 2 ½” Collectible 2014 date Mirrored proof background Larger Franklin portrait Liberty Bell, quill pen & July 4th date Minted in one Troy ounce of .999% fine silver GovMint.com Announces the Limited Mintage Striking of an Extraordinary Silver Proof —the Newest United States $100 Bill Struck in Pure Silver Bullion. Discount Price $99 This extraordinary piece of pure silver bullion has a surface area that exceeds 15 square inches...and it contains one Troy ounce of pure silver bullion! And now, during a limited strike period, the very first Year 2014 $100 Silver Proof is available at a special discount price—only $99! EXQUISITE DETAIL The historic 2014 $100 Silver Proof is an exquisite adaptation of the United States Treasury’s newly-designed $100 Federal Reserve Note—only the third new $100 bill design in 100 years. It is a true artistic masterpiece that will always be treasured. .999 SILVER Best of all, this stunning Silver Proof is even more beautiful than the original, because it’s struck in precious silver bullion! It is a landmark in proof minting, combining unprecedented weight with extraordinary dimension. The specifications for this colossal medallic proof are unparalleled. Each one: • Is Individually Struck from Pure .999 Silver. • Weighs one Troy ounce. • Has a Surface Area That Exceeds 15 Square Inches. • Contains 31.10 Grams (480 Grains) of Pure Silver. • Is Individually Registered and Comes With a Numbered Certificate of Authenticity. • Is Fully Encapsulated to Protect Its Mirror-Finish. • Includes a Deluxe Presentation Case. ADVANCE STRIKE DISCOUNT The price for the 2014 $100 Silver Proof will be set at $129 per proof. However, if you place your order now, you can acquire this giant silver proof at the special advance strike discount price—only $99. NOTE TO COLLECTORS: When you place your order for the $100 silver proof, it will be processed immediately, and the earliest orders will receive the coveted lowest registration numbers. ADDITIONAL DISCOUNTS Substantial additional discounts are available for serious collectors who wish to acquire more than one of these exquisite silver proofs. You can order: ONE Year 2014 $100 Silver Proofs for just $99 each + s/h FIVE Year 2014 $100 Silver Proofs for just $95 each + s/h TEN Year 2014 $100 Silver Proofs for just $89 each + s/h There is a limit of twenty $100 Silver Proofs per order, and all orders are subject to acceptance by GovMint.com. The miniature drones look like toy helicopters but are unmanned aerial vehicles that are part of the military’s arsenal. The PD-100 Black Hornet Personal Reconnaissance System, made by Norway’s Prox Dynamics and recently unveiled to the American public, has been used by British soldiers in Afghanistan since last year. The drones are reportedly silent, weigh 16 grams, and are invisible at more than 30 feet. They can be used to scout routes to ambush enemies or to look over walls. 00 Following a Mediterranean diet has been linked to longer life, but U.S. scientists found in a new study of over 10,000 women in their 50s and 60s that 15 years later, the healthiest ones had stuck with a Mediterranean-based diet and were able to avoid chronic illnesses such as heart disease, diabetes and Parkinson’s. The healthy women were about 40% more likely to live beyond 70 without physical and cognitive impairment or chronic disease, the scientists said in Annals of Internal Medicine. ONLY 9999 AVAILABLE GovMint.com will limit striking to only 9999 One Troy Ounce Silver Proofs for the year 2014. Once the edition is sold out, no more 2014 silver proofs can ever be struck. Orders only will be accepted on a strict first-come, first-served basis according to the tiame and date of the order. Call today for fastest order processing. Call Today to Order Your $100 Silver Proof! 1-888-835-8806 Offer Code: SFP134-01 Please mention this code when you call. A major credit card is necessary to secure your reservation, and GovMint.com guarantees satisfaction with a money-back policy for a full 30 days. Prices and availability subject to change without notice. Past performance is not a predictor of future performance. NOTE: GovMint.com® is a private distributor of worldwide government coin and currency issues and privately issued licensed collectibles and is not affiliated with the United States government. Facts and figures deemed accurate as of October 2013. ©2013 GovMint.com. Visit our web site at www.GovMint.com CH WORLD Iran nuke deal: Gaps remain “I want to emphasize there is not an agreement at this point,” said Sec. of State John Kerry, explaining that “important gaps” remain to be addressed over the Islamic republic’s nuclear program. Joining Kerry at the Geneva talks are the British foreign secretary and the foreign ministers of Germany and France. SPAIN: A Spanish court ordered the release of 9 members of Basque separatist group ETA. The court was forced by a European Court of Human Rights ruling last month, which found that Spain had acted illegally when it retroactively cut short the years of “time off ” earned by 1 of the prisoners for good behavior. The 9 to be released were jailed for deadly acts, including bombings and shootings. SOMALIA: A car bombing at a Mogadishu hotel killed 6. No one claimed responsibility but alQaida-linked al Shabaab has been waging a violent campaign since it was driven out of town 2 years ago. CONTENTS Amex Tables ....................B12 Big Picture .........................B8 Block Trades......................B17 Commodity Futures .........B18 Company Index .................A2 Dividends News ................B19 Earnings News .................B19 Economic News ..................A2 Editorials ..........................A10 Exchange Traded Fund ....B19 Fund & Finance ...............A13 General Market ...................B8 IBD50 ...................................B1 Industry Groups ................B15 Industry Snapshot............A12 Internet & Technology .......A8 Investor's Corner.................B7 Issues & Insights ............A10 Leaders & Success .............A4 Leading Market Index .....B14 Low Price Stocks .............A16 Managing For Success ......A9 New America ......................A6 New Highs & Lows ...........B11 New Highs List Analysis....B11 New Issues .........................A6 Option Tables ...................B21 REITs ................................B19 Research Tables .................B9 Stocks Spotlight ...............B11 To The Point ......................A2 Top Sector Stocks ..............B9 Volume Changes ...............B17 Weekly Top 10 ....................B2 World News Briefs .............A2 World Stocks ....................B16 COMPANY INDEX Aceto ............................B11 Align Tech ....B2, B11, B3 Ambarella ......................B2 Bank Of America.........A22 Boeing ..................A2, B2 Bonanza Creek Energy...B8 Carefusion Corp ............A6 Chipotle Mexican Grill ...B2 Citigroup .....................A12 Covisint Corp.........A8, B2 Facebook ........A18, A22 Ford Motor....................B12 Google Inc .............A8, B2 Grifols .............................A6 Home Depot ...................A9 HomeAway Inc ...............B2 Intuitive Surgical ...........A6 Johnson & JohnsnB15,B4 Las Vegas Sands...B11, B3 LinkedIn .....................A22 Lumber Liquidators ......A9 MasterCard ....................B8 McDonald’s.....................B2 Michael Kors .................B8 Morgan Stanley .........A22 Nationstar Mortgage ...A12 Noah Holdings ....B2, B12 Salix Pharma .................B11 Santarus Inc ..................B11 SouFun ........................B12 Spirit Airlines ..............B12 Sprouts Farmers Markt .A6 Starbucks ...............A1, A9 State Street ..................B11 Tesla Motors Inc ..........B12 UMB Financial ..............B11 Varian Medical Sys ........A6 Volkswagen .................B12 Wal-Mart .......................A9 Whole Foods Market .....A9 Winnebago Inds ..B11, B3 Zillow ..............................B7 FEATURE CALENDAR Big Cap 20 .............................................Tuesday Earnings Calendar ..................................Monday IBD 50 ................................Monday, Wednesday Industry Snapshot .................................Monday Inside Real Estate ......................................Friday Funds & Personal Finance .....................Monday Managing For Success ..........................Monday New America Archive ...............................Friday Top/Bottom 200 Composite Stocks ......Thursday Weekly Top 10 .......................................Monday Weekly Stocks On the Move ..................Monday Your Weekly Review ................................Friday Investor’s Business Daily (ISSN 1061-2890) is published Monday-Friday, except legal holidays and Good Friday. Periodicals postage paid at Los Angeles, CA and other mailing offices. U.S. subscription rate (postage paid): 2 year $549, 1 year $329, 6 month $205, plus any sales tax. Foreign rates on request. READERS: To subscribe or obtain delivery or other information, contact 800-831-2525 (310-448-6600 outside U.S.) or www.investors.com. ADVERTISERS: All advertising published in Investor’s Business Daily is subject to the applicable rate card, available at 310-448-6700. REPRINTS: Please e-mail us at ibdreprints@investors.com. POSTMASTER: Send address changes to Investor’s Business Daily, P.O. Box 92089, Los Angeles, CA 90009-2089. All reproduction rights reserved. Investor’s Business Daily, IBD, CAN SLIM and corresponding logos are owned by Data Analysis Inc., an affiliate of Investor’s Business Daily. Portions of the data herein are licensed from William O’Neil + Co. Inc. SCREEN OF THE DAY: We spotlight firms with pretax profit margins of at least 18% at investors.com/stockresearch TIP OF THE DAY: Read the Financial Advisers’ Guide online at investors.com/newsandanalysis/ specialreports.aspx CA Sixty-five percent of those responding to a new Pew Research Center poll objected to Pres. Obama’s handling of the economy, the worst level of his presidency. In Sept., the president had a 43% approval rating on the economy. Disapproval on health care policy rose to 59% from 53%. Among independents, 21% approve of his economic policy while 75% disapprove. 00 Detroit’s abandoned buildings total 78,000; 40% of street lights don’t work; and police response times average 58 minutes, officials said at a trial to determine whether the city is eligible for bankruptcy. OH FL GA TX NJ VA IBD STOCK ANALYSIS: What does upscale retailer Restoration Hardware have in store for investors? ibdtv.investors.com SF WA IA CO
  3. 3. INVESTOR'S BUSINESS DAILY MONDAY, NOVEMBER 11, 2013 A3 Imagine the possibilities and weigh them by the probabilities. Thomas Peterffy Founder Interactive Brokers Good advice for navigating through life, directly applicable to investing and the very essence of options trading. At interactivebrokers.com/probabilities I tell you a practical way of thinking about options without complicated mathematics. The most valuable half hour you could spend on this topic. Interactive Brokers Interactive Brokers LLC is a member of NYSE/FINRA/SIPC. Probability LabSM (Patent Pending). Any trading symbols displayed are for illustrative purposes only and are not intended to portray recommendations. Supporting documentation for any claims and statistical information will be provided upon request. Options involve risk and are not suitable for all investors. For more information read the “Characteristics and Risks of Standardized Options”. 11-IB13-695CH691 For a copy visit Interactivebrokers.com/disclosures or call 203-618-5800.
  4. 4. A4 MONDAY, NOVEMBER 11, 2013 INVESTORS.COM WISDOM TO LIVE BY Cutts On Time Management When you’ve got five minutes to fill, Twitter is a great way to fill 35 minutes. Manning On Practice Pressure is something you feel when you don’t know what you’re doing. Zeldman On Marketing The best way to engage honestly with the marketplace via Twitter is to never use the words engage, honestly or marketplace. Matt Cutts, executive Jeffrey Zeldman, Web designer Sanders On Balance Baer On Inspiration There’s no reason to be the richest man in the cemetery. You can’t do any business from there. Activate your fans; don’t just collect them like baseball cards. Harland Sanders, founder of Kentucky Fried Chicken Peyton Manning, football player Jay Baer, author LEADERS & SUCCESS IBD’S 10 SECRETS TO SUCCESS Investor’s Business Daily has spent years analyzing leaders and successful people in all walks of life. Most have 10 traits that, when combined, can turn dreams into reality. Each day, we highlight one. 1 HOW YOU THINK IS EVERYTHING: Always be positive. Think success, not failure. Beware of a negative environment. 2 3 4 5 6 7 8 9 DECIDE UPON YOUR TRUE DREAMS AND GOALS: Write down your specific goals and develop a plan to reach them. 10 TAKE ACTION: Goals are nothing without action. Don’t be afraid to get started. Just do it. NEVER STOP LEARNING: Go back to school or read books. Get training and acquire skills. BE PERSISTENT AND WORK HARD: Success is a marathon, not a sprint. Never give up. LEARN TO ANALYZE DETAILS: Get all the facts, all the input. Learn from your mistakes. FOCUS YOUR TIME AND MONEY: Don’t let other people or things distract you. DON’T BE AFRAID TO INNOVATE; BE DIFFERENT: Following the herd is a sure way to mediocrity. DEAL AND COMMUNICATE WITH PEOPLE EFFECTIVELY: No person is an island. Learn to understand and motivate others. BE HONEST AND DEPENDABLE; TAKE RESPONSIBILITY: Otherwise, Nos. 1-9 won’t matter. HOW YOU THINK IS EVERYTHING Tapping The Right Stuff For indomitable spirit, look no further than veterans. How they shine in corporate and entrepreneurial fields: 00 Give your all. Military service instills a particular brand of tenacity. “It’s illegal to give up — to surrender. That, of course, applies to business.” So says James Cummiskey, a former Marine and now CEO of Cima Coffee Farms. He applies boots-on-the-ground lessons to his South American coffee bean operation. “Outstanding execution and excellent behavior — this is our company motto,” he said. 00 Take it on. The Marines taught Cummiskey that authority can be delegated, but not responsibility. That’s why he takes ownership of his firm’s output. “From seed to cup, we’re responsible for it,” he told IBD. “So if the coffee sucks, it’s my fault. And I like that.” 00 Reverse the order. When a hot meal is served to Marines in the field, “the officers take a deliberate place in the back of the line,” said Cummiskey. “The troops see that every day and it really means a lot.” The leadership lesson? “People are your most important asset,” he said. 00 Try their boots. “I don’t need a sniper. I need a trader.” The slap, from a Wall Street executive who’d interviewed a veteran, is not uncommon. “That’s someone who doesn’t understand what it takes to be a sniper,” said Cauldon Quinn, chief financial officer at financial service firm Drexel Hamilton. A retired Navy lieutenant who served in the Afghan war, Quinn made the jump to Wall Street after leaving the service in 2002. He urges business executives to take a closer look at people who sharpened their talent in the military. Take that sniper. “It’s a highly competitive job,” Quinn said, requiring mental acuity, math expertise and the ability 1 to deal with intense pressure — all assets in the finance world. 00 Clear a path. Quinn wants more attention on this stat: Nationally, 41% of disabled vets fight unemployment. “I believe that disabled vets don’t want to be anybody’s damn charity,” he said. Neither does Drexel Hamilton founder and Chairman Lawrence Doll. A service-disabled veteran who was awarded two Purple Hearts during the Vietnam War, Doll is committed to hiring those who’ve served. Approximately 50% of Drexel Hamilton’s 60 executives are veterans, and 13 are service-disabled. Doll also co-founded, with retired Marine Gen. Peter Pace, the Wall Street Warfighters Foundation, which helps vets transition to finance professions. 00 Fight back. “There were days when I didn’t want to get out of bed,” said Shilo Harris. Gravely wounded in Iraq by an improvised explosive device, the retired Army staff sergeant has endured 50 surgeries since 2007. Burns over 35% of his body took Harris’ ears, the tip of his nose and three fingers. He also lost his place. “I had been the provider for the family,” Harris said. Pushing forward took grit. After working as a motivational speaker, he became a franchisee with Win Home Inspection, which has committed to making veterans one-quarter of its franchise owners. Harris’ message: “What looks like a mountain ahead of you — it isn’t impossible.” 00 Value their skills. “Each and every one of these veterans has had a great deal of responsibility, regardless of age,” Harris said. Entrusted with millions of dollars of equipment and crucial battle secrets, they’re a dependable and loyal workforce — given the chance. “Make them feel like they’re part of something again,” Harris said. Sonja Carberry LEARN THE HOW TO MAKE MONEY IN STOCKS WORKSHOP SERIES Level 1 Beginning Strategies for Successful Investing UPCOMING WORKSHOPS: Miami, FL January 4, 2014 Orlando, FL January 11, 2014 Tampa, FL January 25, 2014 Austin, TX February 1, 2014 Houston, TX February 8, 2014 Space Is Limited! Register Now! Course Fee: $99 Investors.com/level1 or Call 1-800-827-8278 Army Ranger Gary O’Neal Fought With Strong Spirit Go All Out: He tracked America’s long-range enemies BY SCOTT S. SMITH FOR INVESTOR'S BUSINESS DAILY Army Ranger Gary O’Neal is one tough dude, according to retired two-star Gen. John Singlaub. Singlaub would know, since he was the first commander of the special operations group in Vietnam that became the model for Delta Force and SEAL Team Six. “Of the citizens of the U.S., only 1% voluntarily joins the armed forces,” he wrote in the foreword to O’Neal’s recently released memoir (co-authored with David Fisher), “American Warrior.” “Of that number, only 1% joins the ranks of special operations. The top 1% of that group makes it in the ranks of the super soldiers in the Joint Special Operations Command. Then there are the individuals like Gary O’Neal, who is in the Ranger Hall of Fame.” O’Neal tracked down America’s enemies for four decades, getting wounded nine times and tortured while earning decorations such as the Silver Star, Bronze Star with Valor and Legion of Merit. “I want to share what I learned so that others can benefit, no matter what their path in life is,” O’Neal, 62, told IBD. O’Neal was born in 1951 in Deadwood, S.D., to a Lakota Sioux mother and a white World War II veteran whose ancestors fought in the American Revolution. Infantry And Vietnam Being a warrior was in Gary’s blood, but he didn’t know about his Indian heritage until he was 10, when he found out his father’s wife was his stepmom. Properly enlightened, he began attending Sioux ceremonies, and, as his spiritual practices evolved, he was surprised to find that he could communicate with what he calls otherworldly spirit guides. He had been honing his hunting skills since age 6. By 13 he was skydiving, so it was natural to think about a career in Army Airborne. Turning 15 in 1966 — with America in the thick of the Vietnam War — he dropped out of high school, stole a cousin’s identity papers and joined the Army as Butch O’Neal. After training at Fort Benning, Ga., he hooked up with the 173rd Airborne Brigade, landed with the infantry outfit in Vietnam in 1967 and went right into combat. “My squad was walking point for the company when we were ambushed, and for the first seconds I hit the ground and was frozen in fear,” he said. “I saw what people around me were doing and let the training take over. The enemy was killed or fled, and I learned that fear can be channeled into action or it can cripple you.” O’Neal, who wore the rank of specialist, developed a ritual in Vietnam. He would perform a prayer ceremony before going on missions and draw on his spiritual training to hone his ability to sense impending attacks. Meanwhile, he became skillful at guerrilla warfare. Then came a serious ‘Woops’ moment. His cousin was drafted, and the Army discovered that Gary had impersonated him. He was given an honorable discharge, but was banned from re-enlisting. Still, O’Neal had a slim chance of jumping back into action. He was still subject to the draft. After returning to South Dakota, he meandered on reservations and dug into Indian spirituality and old warrior ways. He also fell in love and married, but couldn’t shake the draw of combat. There was always that draft card, and O’Neal played it. He asked his aunt to pull some strings, put Army green back on, left his pregnant wife and hit repeat basic training at Fort Leonard Wood, Mo. Back in Vietnam in 1969, O’Neal found a mentor in Sgt. Maj. Pappy Wells, who had also joined the Army at 15, fighting against the Nazis. Wells helped him get extra training for reconnaissance patrol. O’Neal felt the heat immediately. His company walked into a North Vietnamese army base camp, and O’Neal wasted little time joining an infantry outfit headed for Vietnam, wherehisIndianspiritualtrainingcameinhandyamidtheguerrillawar. O’Neal’s Keys 00 Highly decorated mem- ber of the Army Ranger Hall of Fame. 00 Overcame: Torture in Nicaragua. 00 Lesson: Train the mind to endure any adversity. 00 “If it sounds stupid, but it works, it isn’t stupid.” the firefight battered O’Neal. His wounds were so convincing, he was put into a body bag before soldiers realized he was alive. He returned to his unit after several months in a hospital. Rather than seek safety behind a desk, O’Neal wanted the edge of being in special operations — and soon gained entry to the 20th LongRange Reconnaissance Patrol, called Charlie’s Rangers. “We’d go out for weeks at a time, and no one at headquarters really knew what we were doing,” he said. “We’d go into Laos and Cambodia and hit the NVA rest camps to let them know they weren’t safe.” His platoon leader in 1970 and 1971 was Gary Dolan, now a retired lieutenant colonel and author of “Of Their Own Accord,” who said: “Gary O’Neal adapted to the jungle better than anyone else I ever met. He shared his unique field methods to use the unforgiving terrain to our advantage, blending in and becoming comfortable with the teeming insects and wild animals. He was the only one who wasn’t an officer or team leader who studied the maps of each area of operation before missions.” One day, O’Neal and his Vietnamese guide got separated from the rest of the team during an exchange of fire with communist camp guards. The duo seized the moment and charged in, screaming like banshees and throwing grenades to create confusion until the others could arrive. The two were wounded by shrapnel, but O’Neal believes they left behind hundreds of enemy casualties. The Star “I put him in for a Silver Star for that extraordinary cunning and heroism, but he repeatedly refused the Purple Heart, considering it a tribute to the skill of his enemy!” said Dolan. “Even though he didn’t possess the rank of a leader, he led by the example of his composure under fire and decisive actions. He made everybody better without ever seeking glory for himself.” In December 1971, O’Neal returned to South Dakota with symptoms of what would be recognized as post-traumatic stress disorder. He was moody and overreacted to noise, imagining he was back in Vietnam, and it scared his wife and son. He finally went through Ranger School at Fort Bragg, but by the time he returned to Vietnam in 1972, the American combat mission was in its last throes, so he did paperwork for two months. Back at Bragg, he joined the Golden Knights, the Army’s demonstration and competition parachute team. But his wife had had enough of his risk-taking and unpredictable behavior, and left with their son. Thereafter, O’Neal developed a friendship with his ex and closeness to his son. O’Neal’s lesson is that when your work is causing your closest relationships to suffer, it’s time to re-examine your priorities. The Teacher By 1974, he was sharing his combat expertise with fellow soldiers, instructing them on everything from sniping to living off the land. But clashes with superiors made him decide to leave the Army. Two years later, one of his former commanders offered him a job training the Nicaraguan national guard in its effort to beat back the socialist Sandinista rebels. While in the Central American country, he fell in love with the widow of an officer from whom he was renting an apartment and bonded with her three children, and they married. In September 1978, three U.S. trainers were killed, and he accompanied their bodies to America. When he returned to Nicaragua, he saw his home had been ransacked and his wife and children missing. He tracked them to a farmhouse and got into a firefight, but ran out of ammo and was captured. He was tortured by the Sandinistas for days, but blocked out much of the pain with mental techniques. What he would always remember were the bodies of his family displayed in front of him in a pool of blood. He was also left for dead, but farmers took him to a hospital. After months of rehab, he got intel on the five Sandinistas responsible for his family’s massacre. He ended up killing four of them. O’Neal returned to America in 1980 and felt a need to deal with his demons, so he trekked into the Teton Mountains of Wyoming to “cleanse my body and soul,” he wrote. After he came down from the mountain, a friend enticed him back to Fort Bragg to teach government employees how to escape if kidnapped. After that stint, he trained special forces in Latin America to fight drug cartels. His stress disorder improved with the help of Veterans Affairs doctors, as well as by sweating through the grueling Sioux sun dance. “No matter how tough you are, some problems can’t be solved without the help of others,” he said. Married again, he teaches what he calls the American Warrior Free Fighting System, a synthesis of the martial arts he has mastered.
  5. 5. INVESTOR'S BUSINESS DAILY MONDAY, NOVEMBER 11, 2013 A NEW DAWN FOR PANAMA LEADING THE WAY IN LATIN AMERICA, PANAMA’S FUTURE IS BRIGHT. Panama has seen unprecedented growth and prosperity thanks to the progrowth, pro-business policies of President Ricardo Martinelli. Recently ranked one of the most economically competitive nations in the region, Panama has become a global hot spot for venture capital investment. President Martinelli´s aggressive 5-year, $20 billion investment plan is driving a growing economy and launching new infrastructure projects across the country and his crucial tax reforms are encouraging business to expand. As a result, more and more Fortune 100 companies, including Procter & Gamble, General Electric, Johnson & Johnson and Dell have moved key operations to Panama. Foreign investment has grown on average 38% annually, since 2009, and free trade agreements have opened and modernized Panama’s economic markets. Robust domestic investments in health care, public transportation and education have resulted in millions of dollars for new hospitals, a new transportation system and schools. Panama has not just weathered the economic crisis, but President Martinelli’s forward-looking policies have helped Panama enjoy a new dawn of prosperity and promise, becoming a global epicenter for commerce and trade. Today the future is bright for Panama. Learn more at: www.meetpanama.com.pa Distributed by HDMK, LLC on behalf of the Republic of Panama. Additional information is on file with the Department of Justice, Washington DC. A5
  6. 6. A6 MONDAY, NOVEMBER 11, 2013 INVESTORS.COM AFTER MARKET IBD New Issues Index Leading New Issues Sprouts Careens After Earnings Report Offering Company Symbol Date Insys Therapeutics INSY 5/ 2/13 Aratana Therapeutics PETX 6/27/13 Voxeljet Ag Adr VJET 10/18/13 G W Pharma Adr GWPH 5/ 2/13 Marketo Inc. MKTO 5/17/13 ChannelAdvisor ECOM 5/23/13 Sprouts Fmrs Mkts SFM 8/ 1/13 QIWI Plc Cl B Ads QIWI 5/ 3/13 After a wild ride, Sprouts Farmers Markets SFM finished the day down 0.61 to close at 45.97, a 1.3% drop. The company announced earnings after the close Thursday along with a secondary offering. It traded as low as 44.20 in the morning and as high as 48.95 near midday before falling back. The company reported EPS of 13 cents with sales up 24% from a year ago. Offering price 8.00 6.00 13.00 8.90 13.00 14.00 18.00 17.00 Current price 41.95 21.14 44.91 29.03 34.00 36.23 45.69 40.48 EPS Industry %Chg Rtg group 424.4 78 Medical-Biomed/Biotech 252.3 4 Medical-Ethical Drugs 245.5 20 Machinery-Mtl Hdlg/Autmn 226.2 14 Medical-Biomed/Biotech 161.5 19 Computer Sftwr-Enterprse 158.8 1 Computer Sftwr-Enterprse 153.8 84 Retail-Super/Mini Mkts 138.1 80 Finance-Crdtcard/Pmtpr Lead underwriter Wells Fargo Sec Stifel Nicolaus Weisel Piper Jaffray & Co Lazard Cap Markets Goldman Sachs & Co Goldman Sachs & Co Goldman Sachs & Co J P Morgan THE NEW AMERICA ALIGN TECHNOLOGY San Jose, California Technology For Teeth Raises Bar At Maker Of Invisible Braces BY MARIE BEERENS Align Technology FOR INVESTOR'S BUSINESS DAILY aligntech.com Just when it looks like Align Technology has about perfected the tech behind its invisible braces, the company finds yet another way to improve it. Early this year the San Jose, Calif., maker of alternatives to metal braces introduced a new material for its Invisalign clear aligner system. It’s SmartTrack, a highly elastic material that better maintains its shape and a more constant force over the twoweeks a patientwears thealigners. It conforms better to tooth morphologyandattachments,andis easier to insert and remove. According to orthodontists or general practitioners, the old material would hold its form very well the first four to five days but then quickly lose its shape, says Jonathan Block, managing director at Stifel Financial. “So it’s acting as a retainer for the last week or week and a half. What SmartTrack holds its shape much better and therefore has been shown to move teeth more effectively,” he said. “Our due diligence suggests it’s allowing — notably — orthodontists to do more complex cases and that’s helping increase case volume.” In a recent study by Stifel Financial, 80% of respondents said they believe the new material will help them treat more complex cases and 55% said it has already allowed them to do that. In addition, 40% of Stifel’s respondents believe SmartTrack already shortened treatment times for their Invisalign patients. Product Innovations In June, Align Technology also introduced Realine, an entry-level, five-stage clear aligner product that helps with very minor crowding and spacing issues that a general practitioner can help fix. Treatments Invisalign Express and Lite also help with minor corrections, while taking less time to implement. And finally, Align Technology sells 3D scanners and software to help dentists create digital molds of patients’ mouths. These new introductions certain- Ticker Share price 12-month sales 5-year profit growth rate IBD SmartSelect Corporate Ratings Composite Rating Earnings Per Share Relative Price Strength Industry Group Rank Sales+Profit Margins+ROE Accumulation-Distribution See Investors.com for more details Align Technology’s straighteners for teeth include several Invisalign products used by orthodontists and the Realine aligner for minor fixes. Aligned For Progress Product innovation in “invisible orthodontics” continues to help Align Technology grow. It’s a pioneer in that market with its Invisalign system for misalignment of teeth. Net revenue, in millions Invisalign shipments Operating margin Scanner and CAD/CAM $180 120 Thousands of cases 27% Clear aligner 160 18 100 140 80 9 120 Total 60 100 Q3 Q4 Q1 Q2 Q3 Q4e* ’12 ’13 0 Q3 Q4 Q1 Q2 Q3 Q4e* ’12 ’13 ly have helped the company’s results. After flat and then singledigit year-over-year earnings growth the prior two quarters, earnings per share shot up 62% in the third quarter on a 21% increase in sales, both above analyst forecasts. The stock surged 26% on the news to near 58 on Oct. 18 and has been trading near it since. Align Technology holds the highest Composite Rating — 98 of a possible 99 — of all companies in IBD’s Medical-Systems & Equipment industry group. It is also the best in the group in EPS Rating, with a 95. The industry group itself ranks 28th among 197 that IBD tracks. Align Technology is seventh largest CHINA FROM A1 and Japan, the study said. But China isn’t as wealthy as those developed nations, so it will need to boost its growth if it wants its citizens to live in relative comfort, the economists concluded. “The window is closing,” Rozelle said. “If they don’t do these reforms within the next five to 10 years, it’s going to creep to a slow stop and you’re going to have 600 million to 700 million of the rural population be unemployable.” More Vested Interests But China’s rocket-speed growth and the wealth that the government elite has amassed mean more obstacles to reform than they did even a decade ago. “You’re asking them to get together and take away some of their own goodies,” Dollar said. “But on the other hand, this is a leadership that has been committed to the continued development of the Chinese economy. It’s very hard to predict what’s going to come out of the meeting.” Ultimately, China’s deeds rather than its leaders’ words will be the lasting impression. “Roughly a year from now, we’ll have a very good sense whether reform has accelerated,” Dollar said. Q3 Q4 Q1 Q2 Q3 Q4e* ’12 ’13 *Midpoint of outlook range Source: Company reports State-Owned Enterprises Among Vested Interests Blocking Change largest economy has dropped from 14.2% in 2007 to 7.8% in Q3 2013. That’s still the envy of almost the entire world. But analysts say China faces stagnation in its future unless it finds a way to reduce the influence of state-run enterprises. Strengthening peasants’ rights by allowing them to sell their land would make the economy more efficient and encourage peasants to move to the cities and open their own businesses, said David Dollar, a senior fellow at the Brookings Institution. China’s aging populace means the clock is ticking. The 15-59 working age population fell by 3.45 million last year to 937.27 million, according to official statistics. China’s “deteriorating demographics” are likely to trim 3.25 percentage points off the nation’s yearly growth rate between 2012 and 2030, Citigroup economists Nathan Sheets and Robert Sockin estimated in a report last month. The Chinese working population (age 15-64 in Citi’s reckoning) is expected to decline over that span at nearly the same rate as in wealthy nations such as the U.S. ALGN Near 58 $625 mil 38% in the 66-member group by market cap, after Intuitive SurgicalISRG, GrifolsGRFS, CareFusionCFN, Varian Medical SystemsVAR, HologicHOLX and Idexx LaboratoriesIDXX. Align Technology’s new product launches are part of the company’s goal to introduce one big product per year, Block says. Another goal the company has been pursuing is breaking down the barriers in the teen market. Youth Tooth Market Teenager Invisalign cases have been steadily growing since the end of 2012. Last quarter, the company had a total of 29,000 teenage cases, a 23% increase from the 98 95 95 28 A A- prior-year period. But the market penetration is still relatively small. “We have a very positive outlook on the company, even within teenagers,” said analyst J.T. Haresco of JMP Securities, noting that the marker remains only about 10% to 15% penetrated in the U.S., if that. “And given that they have a monopoly on invisible braces,” he said of Align Technology, “it’s easy to paint a very good long-term picture for how they’re going to do.” Growing Business Abroad A third area of growth for Align Technology is international. During the third quarter, the company had 22% of its worldwide cases originate internationally. International revenue soared 31% vs. a year earlier and represented 24% of total revenue. “There’s a lot of opportunity to pursue (internationally),” Haresco said. “It’s purely a cash-pay business — as opposed to the U.S., where there is some reimbursement — and they have a little economic sensitivity, but it hasn’t softened yet. There are not really any alternatives out there.” Japan and China provided strong volume growth. The company repurchased its Asia-Pacific distributor in May, allowing it to directly sell its products in that market and command end-user pricing. This deal has quickly become accretive to earnings, noted Block. Europe also performed well, with case shipments growing 20% in the third quarter vs. a year earlier. The growth was led by Spain, France, Italy and Germany. The U.K. mar- ket was the only one to post a slight decrease due to the soft economic environment. An advantage in pursuing international growth is that Align Technology is able to command higher prices abroad vs. in the U.S. “It is one of the very few medical device companies that has arguably as high a gross margin structure internationally as it has in the U.S.,” Block said. “The unwritten law in med tech is ‘you’re selling products a little bit cheaper internationally than you do in the U.S.’ — but not for them.” Normally, he says, what you have is faster growth internationally but it comes at a lower margin. However, for Align Technology, “arguably you can have faster growth internationally while maintaining that very attractive margin profile,” Block said. Align Technology’s operating margins have been creeping up slightly from one year to the next, with the most recent number at 23.1% in the third quarter. Nevertheless, quarterly margin and earnings numbers can be pretty volatile. Block expects margin growth to speed up going forward. He estimates it will reach 25.7% in 2014 and 28% in 2015. He believes drivers for this stronger growth will be lower general, administrative, legal, sales and marketing expenses. “Even if you flat-linethem and revenue grows, you’ll get leverage out of that line item.” Align Technology also added about 40 to 50 Invisalign reps in 2013 in North America, which will start being accretive to revenue next year. Risks for the company include a lethargic economy and quarter-toquarter variability in their results. Align holds 538 patents and another 201 pending worldwide. The first of the patents are due to expire in 2017-18. The company had $400 million in cash at the end of last quarter and no debt. It’s been using some of its cash to do share buybacks. “They’re a disruptive technology in a very large market that, arguably, might be in the very early innings of executing,” Block said. IPO Filings Soon To Be Priced Symbol/ Shares Estimated Mkt Value P/E Ratios: Company Exchange (000) Price ($Mil) Industry Group Co / Grp Lead Underwriter CardioDx Inc CDX/NDQ 5,750 14.0– 16.0 285.6 Medical–Products n.a./ 32 Bofa Merrill Lynch. Palo Alto, CA. Develops diagnostic tests for cardiovascular diseases such as coronary artery disease, arrhythmia and heart failure. CLDN/NDQ 5,000 14.0– 16.0 273.7 Medical–Biomed/Biotech n.a./ 62 J P Morgan. Celladon Corp San Diego, CA. Develops therapies for diseases with unmet medical needs in the field of calcium dysregulation. XNCR/NDQ 5,750 14.0– 16.0 359.1 Medical–Biomed/Biotech n.a./ 62 Credit Suisse. Xencor Inc Monrovia, CA. Develops engineered monoclonal antibodies to treat autoimmune and allergic diseases, cancer and other conditions. ZU/NDQ 13,225 16.0– 18.0 2228.2 Retail–Internet n.a./ 60 Goldman Sachs & Co. Zulily Inc Cl A Seattle, WA. Offers a selection of over 4,500 product styles through various flash sales events targeting mothers via zulily.com. n.a./ 32 Bofa Merrill Lynch. Tandem Diabetes Care Inc TNDM/NDQ 8,214 13.0– 15.0 323.9 Medical–Products San Diego, CA. Manufactures medical devices for people with insulin–dependent diabetes using its Micro–Delivery Technology. RLYP/NDQ 7,878 16.0– 19.0 413.0 Medical–Biomed/Biotech n.a./ 62 Morgan Stanley. Relypsa Inc Redwood City, CA. Develops non–absorbed polymeric drugs to treat disorders in the areas of renal, cardiovascular and metabolic diseases. CHGG/NSE 17,250 9.5– 11.5 1018.6 Consumer Svcs–Education n.a./ 33 J P Morgan. Chegg Inc Santa Clara, CA. Offers print textbooks, eTextbooks and supplemental materials to college students via its Student Hub platform. HMHC/NDQ 18,250 14.0– 16.0 2239.3 Consumer Svcs–Education n.a./ 33 Goldman Sachs & Co. Houghton Mifflin Harct Boston, MA. Provides K–12 educational content to educational institutions and consumers in over 150 countries worldwide. STAY/NSE 32,488 18.0– 21.0 4298.5 Leisure–Lodging 68/ 34 Deutsche Bank Sec. ESH Hospitality Inc Charlotte, NC. Owns and operates 682 extended stay hotels with 75,928 rooms located across the U.S. and in Canada. Prices Of Recent IPOs Company Symbol/ Offer Exchange Date High Filing Offer Price Price % Chg % Chg From Current From Filing Price Offer Industry Group Lead Underwriter Mavenir Systems Inc L G I Homes Inc Norcraft Companies Inc Twitter Inc MVNR/NSE LGIH/NDQ NCFT/NSE TWTR/NSE 11/ 7 11/ 7 11/ 7 11/ 7 17.0 15.0 18.0 25.0 10.0 –41.2 9.3 –7.5 Telecom–Infrastructure 11.0 –26.7 13.0 18.5 Bldg–Resident/Comml 16.0 –11.1 15.6 –2.6 Bldg–Constr Prds/Misc 26.0 4.0 41.6 60.2 Internet–Content Midcoast Ener Ptnrs Cl A Arc Logistics Prtns LP Avianca Holdings Ads Barracuda Networks Inc MEP/NSE ARCX/NSE AVH/NSE CUDA/NSE 11/ 7 11/ 6 11/ 6 11/ 6 21.0 21.0 20.0 21.0 18.0 –14.3 17.8 –0.9 Oil&Gas–Transprt/PipelneBofa Merrill Lynch 19.0 –9.5 19.0 0.2 Oil&Gas–Transprt/PipelneCitigroup 15.0 –25.0 14.5 –3.3 Transportation–Airline J P Morgan 18.0 –14.3 21.2 17.9 Computer Sftwr–Security Morgan Stanley Wix.com Ltd WIX/NDQ 11/ 6 Karyopharm Therapeutics KPTI/NDQ 11/ 6 Blue Capital Reins Hldg BCRH/NSE 11/ 6 The Container Store Grp TCS/NSE 11/ 1 16.5 16.0 20.0 18.0 16.5 16.0 20.0 18.0 Qunar Cayman Cl B Ads 58.com Inc Cl A Ads Essent Group Ltd Marcus & Millichap Inc QUNR/NDQ 11/ 1 WUBA/NSE 10/31 ESNT/NSE 10/31 MMI/NSE 10/31 14.0 16.0 15.5 16.0 15.0 7.1 17.0 6.3 17.0 9.7 12.0 –25.0 Brixmor Property Group Surgical Care Affiliates Veracyte Inc Criteo SA Ads BRX/NSE 10/30 SCAI/NDQ 10/30 VCYT/NDQ 10/30 CRTO/NDQ 10/30 Commscope Holding Co Inc COMM/NDQ 10/25 Endurance Intl Grp Hldgs EIGI/NDQ 10/25 Sprague Resources LP SRLP/NSE 10/25 Aerie Pharmaceuticals AERI/NDQ 10/25 0.0 0.0 0.0 0.0 Morgan Stanley Deutsche Bank Sec Citigroup Goldman Sachs & Co 17.3 4.8 Compter Sftwr–Enterprse 16.2 1.5 Medical–Biomed/Biotech 19.1 –4.4 Insurance–Prop/Cas/Titl 35.0 94.2 Retail–Home Furnishings J P Morgan Bofa Merrill Lynch Deutsche Bank Sec J P Morgan 25.6 28.5 21.3 13.7 70.9 67.9 25.0 13.8 Leisure–Travel Booking Retail–Internet Finance–Mrtg&Rel Svc Real Estate Dvlpmt/Ops Goldman Sachs & Co Morgan Stanley Goldman Sachs & Co Citigroup 21.0 24.0 15.0 29.0 20.0 –4.8 19.8 24.0 0.0 26.5 13.0 –13.3 11.4 31.0 6.9 29.8 –1.3 10.5 –12.2 –4.0 Finance–Property Reit Medical–Hospitals Medical–Resrch Eqp/Svc Comml Svcs–Advertising Bofa Merrill Lynch J P Morgan Morgan Stanley J P Morgan 21.0 16.0 21.0 14.0 15.0 12.0 18.0 10.0 –28.6 –25.0 –14.3 –28.6 15.3 1.8 Telecom–Infrastructure 11.0 –8.2 Computer–Tech Services 17.6 –2.2 Oil&Gas–Refining/Mktg 10.9 8.9 Medical–Biomed/Biotech J P Morgan Goldman Sachs & Co Barclays Capital Rbc Capital Markets
  7. 7. INVESTOR'S BUSINESS DAILY MONDAY, NOVEMBER 11, 2013 A7 ETF INVESTMENT MINUS THE WHOPPING TIME INVESTMENT. JUMP-START YOUR ETF SELECTION WITH OUR CURATED CHOICES. Choose from 100+ commission-free ETFs independently selected by a respected and objective third party based on performance, cost, trade volume and correlation to their chosen index. Get up to $600 when you open a new account. | tdameritrade.com/etf Carefully consider the investment objectives, risks, charges and expenses before investing. A prospectus, obtained by calling 800-669-3900, contains this and other information about an investment company. Read carefully before investing. ETFs can entail risks similar to direct stock ownership, including market, sector or industry risks. ETF trading prices may not reflect the net asset value of the underlying securities. Commission fees typically apply. To trade commission-free ETFs, you must be enrolled in the program. If you sell an eligible ETF within 30 days of its being purchased commission-free, a short-term trading fee will apply. Market volatility, volume and system availability may delay account access and trade executions. Offer valid through 4/30/14. Funding/rollover of $25,000– $99,999 receives $100; funding/rollover of $100,000– $249,999 receives $300; and funding/rollover of $250,000 or more receives $600. Cash bonus subject to nine-month funding-duration condition. See Web site for details and other restrictions/conditions. This is not an offer or solicitation in any jurisdiction where we are not authorized to do business. TD Ameritrade, Inc., member FINRA/SIPC/NFA. TD Ameritrade is a trademark jointly owned by TD Ameritrade IP Company, Inc. and The Toronto-Dominion Bank. © 2013 TD Ameritrade IP Company, Inc. All rights reserved. Used with permission. 36 USC 220506
  8. 8. A8 MONDAY, NOVEMBER 11, 2013 DATA BUS Stratasys revenue Stratasys By The Numbers 3D printer maker Stratasys reported revenue of $126 million in the third quarter, up 39% from the year-ago quarter. The midrange estimate for Q4 revenue is $149 million, up 54%. North America accounts for more than half of sales. Source: Stratasys (stratasys.com) INVESTORS.COM Revenue growth Sales by region $150 In millions 120 90 60 30 0 Q1’12 Q2 Q3 Q4 Q1’13 Q2 Q3 Q4e 60% % change from year-ago quarter 50 40 30 20 10 0 Q1 ’13 Q2 Q3 Q4e Q3 2013 North America 54% Other 1% Asia-Pacific 19% Europe/ Middle East 26% INTERNET & TECHNOLOGY Autonomous, Driverless Cars Face Long Legal Road Technology Mostly Here Now Google, Covisint and big carmakers get ready to roll, but not consumers, laws BY SHEILA RILEY FOR INVESTOR'S BUSINESS DAILY Driverless cars face daunting legal roadblocks before they become a common sight on U.S. roads. For one, they will need to talk to other driverless cars. Vehicle-tovehicle communication — and who is responsible when that doesn’t go well — is a major challenge. “The GM car is driving down the road has to be able to communicate with the Toyota so that they don’t run into each other,” said antitrust lawyer Steve Cernak. And if driverless cars do collide, then that raises questions of who is at fault. Right now the answers are far from clear, says Cernak, an Ann Arbor, Mich.-based antitrust attorney with Schiff Hardin. Vehicle-to-vehicle communication standards have to be worked out, and that’s just not being done, Cernak says. There’s a reason engineers should have a lawyer in the room when those discussions take place, he says. “When carmakers have to come up with common standards, it raises antitrust issues,” Cernak said. Driver skepticism is another reason carmakers are moving slower than some might like. “The technology, for the most part, is here. Consumer acceptance is not,” said Dan Gage, spokesman for the Washington, D.C.-based Al- liance of Automobile Manufacturers. The AAM represents 12 automakers that together sell nearly four in five U.S. cars and light trucks. And nearly all have been working on driverless vehicle technology for more than 10 years, Gage says. Most U.S. motorists, though, aren’t ready for cars that drive themselves, the AAM found in a survey released last summer. Of 2,000 consumers polled, 42% said autonomous vehicles were a bad idea and another 24% were unsure, Gage says. Just 33% liked the idea. In general, he said, “consumers think the technology is cool — in limited fashion. But when we talk about everyone riding in a Jetsonstype vehicle, true acceptance of autonomous vehicles is decades away.” Gage says automakers want to be clear on one crucial question before proceeding: whether the feds or individual states are “in charge” of this issue. AAM says the feds must take the lead. “There’s no way we can build 50 different cars for 50 states,” Gage said. Besides carmakers, GoogleGOOG is a large presence in the relatively small world of “Look, Ma — no hands” driving. It is testing some two-dozen Lexus RX 450h vehicles on U.S. roads. The company declined to be interviewed but said in a statement that its driverless cars have accumulated 500,000 miles without an accident. Without hinting at any timeline, Google said it’s refining its automotive self-driving technology, which includes laser sensors, radar and A Google self-driving car attracts a big crowd at a demo this spring. Google says it’s accumulated 500,000 test miles without any accidents. cameras, in the hopes of seeing driverless cars available to the public. Google has posted a video of one of its driverless cars on the road, at youtube.com/ watch?v=cdgQpa1pUUE. At least one company aims to see automakers looking to the cloud as they create driverless vehicles. One Communications Source Detroit-based CovisintCOVS, which went public in September, provides cloud services for the auto industry. It wants to be the source for driverless cars to communicate with everything that matters for their smooth operation, says Dave Miller, Covisint’s chief security officer. That means driverless cars that can communicate with external factors such as traffic lights and emergency vehicles, Miller says. “Instead of cars having to know the 100 different external commu- nication points, Covisint provides one smooth source of information, a super-connection,” he said. Just as computer users have one ID that takes them to destinations on the Internet, cars will have one connection to the outside world, he says. “This is our vision of how autonomous vehicles will work.” But Miller agrees that roads full of driverless cars aren’t in the nearterm future. “There are some visionary folks out there, but I don’t know where this ends up going,” Miller said. “There are a significant number of barriers to autonomous vehicles.” The company, though, aims to be part of whatever direction autonomous vehicles take. “Covisint sees itself fitting into a future where vehicles drive themselves, but there remains a lot of unknowns,” said Miller. California is among states grappling with how to test driverless cars and just what types of operating regulations to mandate. And it’s not just a matter of driveroperated and driverless cars. There are “graduated levels of autonomy” to deal with, said Bernard Soriano, deputy director of California’s Department of Motor Vehicles. The National Highway Traffic Safety Administration already defines these levels. They range from Level 1, which includes standard cruise control, to Level 4, which means “full self-driving automation” in NHTSA lingo. “This is a continuum,” Soriano said. The DMV, by California law, has to come up with regulations by January 2015. Features that the NHTSA classifies as Level 2 are installed on some 2014 car models already in showrooms, including some BMWs and Cadillacs, Soriano says. The features include adaptive cruise control, which can be set so that a car speeds up if the one ahead of it does, working in concert with lane-centering technology. Level 3 means the car drives itself under most conditions, but when it can’t the human driver can easily take over. Level 4 is completely driverless. Carmakers have different timelines for bringing Levels 3 and 4 to market, Soriano says. “It’s not (going to happen in one) great big jump, which some people are envisioning,” Soriano said. “We will probably get there (to driverless cars), but the question is when.” WE ELEVATED OUR GAME SO YOU CAN ELEVATE YOURS. At optionsXpress, trade on our powerful, easy-to-use platform with innovative tools you won’t find anywhere else. TM WALK LIMIT. It’ll automatically try to find you the best fill price. Set your start and end price, and let Walk Limit chase the market for you. No more manually canceling orders. O SM TRADING PATTERNS. Get trade ideas by seeing what others are trading. Now, Trading Patterns shows you the day’s top 10 options trades by volume for a specific symbol. So you can develop options trade ideas based on the activity of others. IDEA HUB. Find actionable bullish, bearish and neutral options trade ideas in seconds. 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  9. 9. INVESTOR'S BUSINESS DAILY A9 MONDAY, NOVEMBER 11, 2013 TOP DOWN Older Americans Spearhead New Firms An aging population and post-1996 economic strains are increasing the share of new entrepreneurs 55-64, while the creation of new businesses by some younger groups is falling. The entrepreneurial activity rate of those 55 and older is also edging up after a recessionary slump. New entrepreneurs by age 1996 20-34 26.2% 55-64 23.4% 55-64 14.3% 45-54 23.9% Index of entrepreneurial activity by age* 2012 20-34 34.8% 35-44 27.0% 45-54 26.3% Source: Ewing Marion Kauffman Foundation 35-44 24.2% 0.4% 0.3 0.2 0.1 0 Ages 20-34 Ages 35-44 Ages 45-54 Ages 55-64 ’08 ’09 ’10 ’11 ’12 *Gauging individuals who don’t own a business in first survey month that launch one in the following month MANAGING FOR SUCCESS FOLLOW THE LEADERS Lumber Liquidators CEO Holds Annual ‘University’ BY MOREY STETTNER Barista Liz West passes out a tray of coffee samples to customers at a Starbucks outlet in Seattle. Serving Up Innovation Inside The Coffeehouse Creativity, acquisitions and staffers boost Starbucks BY GARY M. STERN FOR INVESTOR'S BUSINESS DAILY It’s more than the tasty coffee and nimble baristas that pump up business at Starbucks. More than the Frappuccino and espresso, analysts say it’s the employees who connect with customers and the global coffeehouse’s ability to innovate that’s spurring growth. In fact, StarbucksSBUX has been on a roll. It’s had 14 consecutive quarters of global sales growth greater than 5% and its stock price has jumped by over 45% since January. Observers say the company has mastered staying one step ahead of customers, anticipating their needs and creating a clientfriendly atmosphere that encourages them to return. Starbucks has more than 200,000 global employees serving 60 million customers weekly in 19,302 global retail stores, notes consultant Joseph Michelli, the author of “Leading the Starbucks Way: 5 Principles for Connecting With Your Customers, Your Products and Your People.” Surging From Within Michelli, an expert on organizational excellence, credits Starbucks’ recent surge to its culture, openness to innovation, and its embrace of social media. Fueling its revival has been “its emotional engagement with the customer.” The company has also recast its global strategy and expanded its product lines to take into account increasingly mobile customers, he says. Michelli adds that Starbucks understands that its sales are based on “forming relationships” with its clientele. Staff is trained to provide uplifting moments, give eye contact, become familiar with regular clientele and remember their preferences on drinks and food. It connects with customers by building environments that become “the living room of the community,” Michelli said. Community tables enhance the chances of Starbucks customers interacting or friends conversing over a cup of coffee. Free Wi-Fi in most locations brings customers in and often keeps them for extended periods. Michelli says Starbucks has also turned into a technology company. Knowing that many customers rely on smartphones as their chief form of communication, its Starbucks app enables clientele to “convert their gift cards with one keystroke into a loyalty card,” he said. With the app, customers turn their smartphones into payment sources and flick them to pay, without needing cash. Forging strong relationships with customers is fueling its bottom line. Loyal customers reduce its marketing costs since these enthusiasts recommend Starbucks to friends. Retaining customers allows the chain to “sell more deeply, cross-sell its products to existing customers and to create pipelines of new customers,” Michelli says. Starbucks’ culture is a major factor in its success story, says Marc Riddick, New York-based consum- er analyst at the Williams Capital Group. Since Starbucks operates in a manner that its customers appreciate, they’re more likely to support it in good times or bad. In fact, Starbucks loyalty cards generate a quarter of its sales, Riddick says. For example, Marisa Amador, a New York-based independent publicist, relies on her Starbucks card because of its all-around benefits. She likes it because of the perks and the free drink she gets after 12 drinks. “I can use the app on my phone and not have to fumble for a card or carry it around,” she added. Since her debit card is connected to the app, she can buy anything at Starbucks instantaneously. Communicating with customers also breeds loyalty. Starbucks established MyStarbucksIdeas.com to generate suggestions from customers. So far, 150,000 recommendations have been submitted, with 265 ideas acted on by the company. Examples are the creation of the Starbucks eGift program, environmentally sound cup sleeves and stepped-up recycling efforts. Acquisitions are also spiking revenue and creating new markets. In the last few years, Starbucks has acquired a bakery, juice company and tea company by buying the businesses of La Boulange Bakery, Evolution Fresh and Teavana. La Boulange pastries sell in existing Starbucks outlets. Michelli says it provides an array of croissants, muffins and scones. Evolution Fresh offers standalone stores that specialize in juices, salads and smoothies. Its products are also sold at Whole Foods WFM . By the end of 2013, its juices are expected to be available in 8,000 Starbucks stores. In 2012 Starbucks acquired Teavana, which operates 300 company-owned tea stores, opening up a new sales channel. It also announced in October that it’s opened its first Teavana store in New York City. An Afternoon Coffee Starbucks also introduced a milder coffee, Blonde Roast. Because it’s a lighter blend, consumers are prone to order it later in the day, not just at breakfast. The new coffee selection helps because Starbucks, which generates 70% of its revenue by 2 p.m., is trying to boost post-lunch sales . Seasonal drinks and limited offers are also buoying sales, and overall revenue is expected to rise when its latest acquisitions are fully rolled out. Reduced coffee prices on the commodity markets are also boosting margins. Starbucks says it’s planning to open 1,400 new stores worldwide next year, setting the stage for what Riddick calls a “moderate” expansion. About 600 new stores will launch in the Americas, 700 in Asia, and 100 in Europe and the Middle East. In the past, Riddick had doubts whether Starbucks could sustain its growth and its valuation, but now he’s become a convert. “We underestimated the ability of Star- bucks to drive sales growth and underestimated the price that investors are willing to pay for companies that can deliver top-line growth,” he said. Moreover, the company’s benefiting from consumers moving away from carbonated soda beverages into coffee and tea. “At the end of the day, Starbucks’ culture drives its growth,” Michelli said. Lumber Liquidators FOR INVESTOR'S BUSINESS DAILY lumberliquidators.com Lumber Liquidators has about 300 retail stores across the U.S. Around the time of each store manager’s birthday, a special card arrives in the mail. “I send a handwritten birthday card to every store manager,” said Rob Lynch, president and chief executive of Lumber Liquidators HoldingsLL, a hardwood flooring retailer based in Toano, Va. “I also enclose a $10 Starbucks gift card.” Lynch likes to stay accessible to his far-flung workforce. After working at retail giants Wal-MartWMT and Home DepotHD, Lynch has learned the importance of staying close to his team even if they operate thousands of miles apart. While Lynch’s cards solidify personal bonds with his managers, they sometimes serve a secondary purpose. If a manager’s store is performing particularly well, Lynch may praise the superior results. Lynch became the company’s CEO in January 2012. Soon after, he launched a one-week training program for store managers. “I learned this at Wal-Mart,” said Lynch, 47. “Sam Walton did this really well. Sam believed in pushing down information and sharing it with the troops at every store.” At these annual “Lumber Liquidators University” retreats, Lynch and other senior executives update store managers on the firm’s oneand five-year strategic plan. He also allows time for managers to mingle with peers so that they can Ticker Share price 12-month sales 5-year profit growth rate Rank in 11/4 IBD 50 LL Near 113 $952 mil 22% 14 IBD SmartSelect Corporate Ratings Composite Rating Earnings Per Share Relative Price Strength Industry Group Rank Sales+Profit Margins+ROE Accumulation-Distribution See Investors.com for more details 95 97 93 158 A B+ share ideas and best practices that benefit the entire store network. To motivate the group, Lynch instructs everyone to join hands and participate in what he calls “quirky cheers” that build camaraderie. He sets five goals for the coming year (relating to sales, gross margins, etc.) and, as each goal flashes on a big screen, the managers shout their intention to fulfill it. “I learned at Wal-Mart that when you directly ask someone to commit to something in public as part of a team, they’re not going to let the team down,” he said. “And if the CEO talks with confidence that you believe the team will hit all its goals, the team believes too.” Lynch lists the goals on a sheet of paper and asks every manager to sign it. Then he frames it on his office wall for the year, periodically sending copies to his managers to remind them to stay focused on reaching the goals.This way, everyone keeps their eye on the ball. Own the only mutual fund to use the CAN SLIM® Investment System. The system that adjusts to market conditions, while selecting top-ranked growth stocks. Ticker: CANGX. (800) 274-5448 www.northcoastam.com The fund’s investment objectives, risks, charges, and expenses must be considered carefully before investing. The summary prospectus and statutory prospectus contain this and other important information about the investment company, and it may be obtained by calling (800) 274-5448, or visiting www.northcoastam.com. Read carefully before investing. The Fund may invest in foreign securities which will involve greater volatility and political, economic and currency risks and differences in accounting methods. The Fund invests in small and medium capitalization companies which tend to have greater price volatility than larger compain adverse tax consequences to the Fund’s shareholders. While the fund is no-load, management and other expenses still apply. Please see the prospectus for more details. 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  10. 10. A10 WE SAY IT LIKE IT IS MONDAY, NOVEMBER 11, 2013 INVESTORS.COM ISSUES & INSIGHTS WINNER OF THE 2008 Pulitzer Prize A Deal Forcing Israel’s Hand Mideast: An impending deal to ease sanctions without real concessions from Tehran over its nuclear program virtually assures that Israel will bomb Iran. This is a crisis that should have been prevented years ago. T he grave tone of Israeli Prime Minister Benjamin Netanyahu’s voice in the video of his statement after meeting Secretary of State John Kerry before Kerry’s trip to Geneva to negotiate with Iran makes it clear that the leader of the Jewish state feels the die has been cast. He called what the U.S. was about to undertake “the deal of a century for Iran” but “a very dangerous and bad deal for peace and the international community.” Without being required to dismantle even a single uranium centrifuge, economic sanctions will be lessened on Iran in the hope that these Islamofascist fanatics see it as a gesture of good will from the Great Satan. Netanyahu knows what is really happening: Tehran has succeeded in buying a great deal of time for itself as it completes its nuclear weapons capability. Once negotiating with Tehran about negotiations begin, it stops mattering how many centrifuges spin, how many multi-stage rockets are tested under the cover of the Iranian first-jihadist-on-the-moon program, how many secret underground nuclear facilities continue to operate within the country. The appease-first, ask-questions-later forces who dominate the United Nations will insist, month after month, that the world “give peace a chance.” What we hear of the deal is that Iran will agree to limits on uranium enrichment, delay use of (not remove or dismantle) its advanced uranium centrifuges and plutonium reactor and allow a modest increase in inspections by the U.N.’s International Atomic Energy Agency — less than what the IAEA needs to assure compliance. Every bit of this can be cheated or worked around. As Robert Zarate of the Foreign Policy Initiative points out, such a deal would continue to exclude IAEA inspectors’ “extensive near-real-time monitoring, widearea surveillance and zero-notice inspections at any remaining or suspected nuclear-related facilities.” No wonder the Iranian negotiators are gleeful. Netanyahu, on the other hand, now looks like a man being forced to act. His military is set to go, having less than a month ago conducted a “special long-range flight exercise” over Greece, practicing mid-air refueling for the long-range mission to Iran. In an unusual move, Israel even publicly posted video of the exercises online. The U.S. years ago had a number of opportunities to prevent what will soon be a full-blown crisis of global proportions. Most recently, President Obama could have publicly taken the side of the Iranian people demonstrating against their regime’s voter fraud in 2009; he chose to stay silent. But even the previous administration could have provided student, union and religious anti-regime forces with material and public moral support, with the objective of overturning one of the most repressive governments in the world. We did not. And so Israel will almost certainly soon go to war for its own preservation. Owned By The State Serfdom: Don’t think that ObamaCare is the Democrats’ last word on health care. They won’t be content until both patients and doctors are under their command. D emocrats won’t say out loud in public that it’s their goal to drive physicians under the government boot. But sometimes ambitions are revealed in unguarded moments. Consider the confession of a Democratic candidate running for the Virginia House of Delegates during the Great Falls Grange Debate on Nov. 1. According to reports, Kathleen Murphy, who lost the 34th District race to Republican incumbent Barbara Comstock, said she supported the idea of forcing doctors to accept Medicaid and Medicare patients against their will. Yes, this is one Democrat running for a state office. But it’s foolish to think her comment isn’t in line with her party. A few years ago Massachusetts Democrats were behind a bill in the state legislature that would strip doctors who didn’t accept Medicare, Medicaid and the state plan of their licenses to practice. This isn’t a political molehill. If doctors can be forced to participate in a government payment system they don’t want to be in, then doctors are owned by government. Their education, labor and intellects will have been seized by the state. They are no longer free agents — they are serfs, the bondsmen of legislators who will sweat them like galley slaves. Roughly a fourth of physicians across the country already don’t take Medicaid. About 10% to 12% don’t participate in Medicare. Here’s why: Government plans don’t pay well. According to the Office of the Actuary for the Centers for Medicare and Medicaid Services, doctors are reimbursed by Medicare at a rate of about 80% of what private insurance pays, while Medicaid pays them only about 58% of what private coverage will take care of. “Physicians say they just can’t afford to be part of a system that generates so many patients for so little compensation,” says, Richard Jackson, chairman and CEO of Jackson Healthcare, a medical staffing and technology solutions company that has surveyed doctors. Four years ago, our IBD/TIPP Poll found that 45% doctors said they “would consider leaving their practice or taking an early retirement” if the Democrats’ health care overhaul became law. How many more would leave if Washington required them to accept Medicare and Medicaid? How many brilliant students would choose other professions? No one wants, or deserves to be, chattel of the state. Adding Another Lie To The Pile Prevarication: At the very moment President Obama was supposedly saying sorry for his “keep your plan” lie, he told a brand-new one when he claimed that just 5% are at risk of losing the health plans they like. A s many have already pointed out, Obama didn’t actually apologize for misleading the public about ObamaCare. “I meant what I said,” he told NBC News’ Chuck Todd. He was just sorry people were upset to learn that what he said wasn’t true. Oh, and Obama also managed to imply that anyone who likes what they have is a fool, since they’re sticking with the “bad insurance that they’ve got right now.” But then Obama added a fresh lie to the pile by trying to minimize the impact of ObamaCare on people who already have insurance plans they like. “We’re talking about 5% of the population,” Obama said early in the interview. “It only affects a small amount of the population.” Later he said, “it’s a small percentage of folks who may be disadvantaged, you know.” And just in case anyone missed the point, he said it once more. “It’s a small percentage of people. . . . I mean, we’re talking about 5% of the population.” But Obama knows full well this 5% figure isn’t true. His own administration predicted in a 2010 regulatory filing that as many as 64% of large companies and 80% of small businesses would be forced to give up the “plans they like” because of ObamaCare. And for the same reason that millions of individuals are losing their plans. The law only allows companies to keep their existing insurance plans if they bought them before March 2010, and then only if the plans didn’t change much over the past three years. Since his administration defined “change” so narrowly, Obama knew that most plans — individual and employer-provided alike — would fail to qualify for “grandfather” status. And just like all those individuals Obama claims to be so concerned about, many of these employers and their workers will find that the ObamaCare-approved plans are far more expensive. When McClatchy News crunched the numbers, they concluded that 41 million workers would end up losing the employer-provided plans they currently have. That’s in addition to the 11 million individuals losing their plans. Memo to Mr. Obama: That’s equal to 17% of the population. Avik Roy, a health policy expert at the Manhattan Institute, figures the total number is more like 93 million. Duke University professor Chris Conover thinks it will be as high as 129 million. Now we’re up to 41% of the population. This doesn’t count the millions of seniors slated to lose the Medicare Advantage plans they like, thanks to deep ObamaCare cuts to that program. The chief actuary at the Centers for Medicare and Medicaid Services projected that about 3 million seniors would get booted off their Medicare Advantage plans by 2017. Nor does it include workers who’ve lost their employer-provided benefits because of ObamaCare. Several companies, for example, have canceled coverage for their part-time workers. That’s what Home Depot did for 20,000 of its part-timers. Others are dropping spousal coverage and retiree benefits. Yet, mysteriously, Obama’s interviewer, Chuck Todd, failed to press him on this. That’s despite the fact that NBC News was one of the first to report — using the very regulatory filing mentioned above — that Obama knew millions would be forced off their plans even as he was repeating his phony “keep your plan” promise. Most of the rest of the media also simply repeated the 5% figure, as though Obama can be trusted with anything he says about ObamaCare. It’s unlikely the president will ever get around to apologizing to the tens of millions of workers harmed by ObamaCare. Not that they should accept one. Instead, they need to organize and demand that Congress repeal this law and start over. A Deceptively Good Month For Jobs Employment: Like everyone else, we were happy to see 204,000 new jobs created in October. But is it time to pop the champagne corks and celebrate an end to the worst recovery in history? Hardly. W e hate to be downers, but the 204,000 jobs created during October — the month of the government shutdown, by the way — were about the only good news contained in the report. Fact is, unless a sustained burst of new jobs well in excess of 200,000 a month takes place over the next few years, President Obama will go down in history as the first leader ever to actually destroy jobs during a time when the economy was expanding. Quite a feat. How can that be? Explaining this job destruction thing is a bit tricky, but here goes: The economy began its recovery in June of 2009, five months after Obama took office. Since then, it’s added 5.97 million jobs. Sounds good, except the previous peak in employment, in January 2008, was 138.056 million. So we’re still about 1.5 million jobs below that. Since the Depression, it has taken on average 26 months to return to the previous peak in payroll employment after a recession. Under Obama, we’re at 53 months and counting. Last month, a shocking 932,000 more Americans were added to the count of those “not in the labor force.” That’s an all-time high of 91.5 million people not working, about a third of our total population. Meanwhile, a separate government measure showed the civilian labor force plunging by 720,000 in October, pushing the labor force participation rate down to 62.8% — its lowest level since 1978 (see chart). If our labor force participation rate had merely remained stable since Obama entered office, the total number of jobs would be about 7 million more than today. That’s the Obama jobs gap, and it’s not closing. And that’s the real crisis. Jobs that disappear and don’t come back. Under this administration, we’ve hollowed out America’s once-thriving job market, creating a growing army of dependents who desperately need government handouts to make ends meet. It’s no accident that, even as Obama touts his economic policy successes after four years and five months of recovery, both the number of food stamp recipients and people in poverty have shot to record highs. Economists call this “immiserating growth.” By the way, government’s own broad measure of unemployment— thesocalled U6 index, Participation Problem which includes people who want to % of civilian labor force with jobs work but have stopped looking and 66% people in part-time jobs who want to 65 work full-time — edged up for the 64 month to 13.8% from 63 13.6%. If the governOct.: ment has a real “un62.8% 62 employment rate,” ’09 ’10 ’11 ’12 ’13 that’s it. Source: Labor Department This is where we are right now, and no single month of “unexpectedly good” job growth can disguise it. With the economy growing at a rate below 3%, it will be very tough to restore the abundance of jobs we enjoyed during much of our history. Even so, we can and do take at least one bit of comfort from the October report: Despite widespread predictions that the government shutdown would decimate payroll employment, it didn’t. Hmm, maybe we should shut down the government every month. With unemployment still high and hundreds of thousands of people fleeing the labor force, the job market is imploding. The only way to change that is to change to pro-growth economic policies — which means we have a long way to go before real improvement begins.

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