NHAI to raise upto Rs 10,000 cr through NCDs

The issue size under tranche-1 aggregates to Rs 5,000 crore with an option to retain over-subscription upto Rs 10,000 crore.

These highway bonds are being issued in two series viz. tranche 1 series 1 and tranche 1 series 2 having a tenure of 10 years and 15 years respectively. The coupon rate for the tranche 1 series 1 and tranche 1 series 2 would be 8.20% per annum and 8.30% per annum respectively. The interest is payable annually on October 1st of each year.

The tranche 1 bonds proposed to be issued have been rated as �CRISIL AAA/Stable� by CRISIL, 'CARE AAA' by CARE and �FITCH AAA (IND) with stable outlook� by FITCH. The rating of the bonds issued by CRISIL and CARE indicate highest degree of safety regarding timely servicing of financial obligations.

Such instruments carry lowest credit risk. The rating of the bonds by FITCH indicates highest rating assigned in its national rating scale. This rating is assigned to the "best" credit risk relative to all other issuers or issues in the country. The bonds offered through this Issue are proposed to be listed on the BSE and the NSE.

The issue shall remain open from December 28, 2011 to January 11, 2012 with an option to close earlier or extend upto a maximum period of 30 days at the discretion of the Board of NHAI subject to necessary approvals, by intimating through an advertisement issued in a leading national daily. However, the issue shall remain open for a minimum of 3 days. The funds raised through this issue will be used for part financing of the various projects being implemented by NHAI.

SBI Capital Markets Limited and A.K. Capital Services Limited are the Lead Managers to the issue. Additionally, ICICI Securities Limited and Kotak Mahindra Capital Company Limited are also involved for marketing of the issue.

Vital decade for eco; Nifty to cross 6600 by Dec: Religare

Equity markets are strategically more important to India than ever before. If Rs 57 lakh crores are required in the current five-year plan for infrastructure development, then at least half of it will come from the private sector. This, in turn, will depend on the public to raise funds against the projects being lined up.

The function of equity markets is fair allocation of capital and becoming one of the chief gateways of accessing capital. It also makes sense that those who will gain the most in the end, the citizens, should invest in their future and reap the benefits.

But finance is tricky. There will always be a struggle for access as companies try to attract investors. They, in turn, look for the safest option with the highest potential return.

The uncertainty of supply will encourage companies to leave more on the table during IPOs (Initial Public Offer) -- a lesson well-learnt in the last several months.

Its impact on our economy could be significant as the availability of finance to underwrite our growth will be a deciding factor in our quest to become one of the prosperous and largest economies of the world.

The ability of local companies to execute these projects while competing with global one, the geopolitics that will determine the flow of international finance; both have the potential to transform our economic landscape. After all, the US does look to us as a strategic bulwark against a rampaging China in the region.

This growth will finance our future for the decades thereafter, making this strategically, the most important decade for India especially, as we are already on a relative roll - notwithstanding the downward slide in GDP.

This will fund our increasing costs including growing oil imports from just over 1 barrel per person per year to 3 within a decade. Plus, there is no telling to the price of oil then. The absolute numbers are staggering and will affect global demand and supply.

Similarly, we have migration or people in millions moving from rural areas into cities. This is one of the reasons driving the current construction boom. If we are to prosper, the perspectives need to be changed when required.

There will be a need to be nimble in redirecting policy and investment strategy as and when required due to transformations within the country.

One has to be politically wise with long-term purpose. This strategy has to be treated as a long term exercise and not as a crisis du jour. It is also complex because as the economies become more integrated and nations more interconnected, the path of globalization, privatization and deregulation which we put ourselves on in 1991 has become more relevant.

This decision was singularly responsible for unshackling the economy and turning India into a high-growth nation and an increasingly important part of the global economy.

Our trade with other countries has grown faster than the global economy itself and we have morphed from a developing nation into an emerging economy while becoming one of the fastest growing countries in the world.

Our strength in technology has helped but more as a service provider to the world than as a domestic implementer - a huge gap yet. This decade will see the real rise of internet in India riding on the dramatic fall in the cost of communications.

In fact, 1991 has been followed through with a period of innovation and expanded capabilities and we have been on the fast track in terms of economic growth. But obviously not fast enough or deep enough or wide enough - yet.

The financial services industry in India has always been innovative, even though stymied by successive governments and restrictive regulation till 1991. So while futures and options were officially allowed only in 2004, there were participants who would wager "tezi - mandi" unofficially right through the previous years.

Entrepreneurial daring has also been a hallmark over the years, witness companies like Reliance , Infosys and Bharti Telecom which broke new ground and became the favourites of Indian investors.

Of course, political battles and controversy, disappointment and despair have inevitably been around to complete the markets, the Satyam case comes to mind immediately.

Then recovery and luck too have played a part, making up for the opportunities gone by. Some of our largest companies, like ONGC , have become global industries and have simultaneously reached a testing point in terms of managing scale and large cross-border enterprises.

Of course, our companies have to operate against extremes of expectations which vary by the year and one has to stay sober and keep one's balance.

So when will the Nifty cross 6600 or more? Everybody is in a slow mood right now but that there are several factors in favour. Remember that India will continue to get allocations as long as we show promise - irrespective of whether the west is in economic trouble or growing.

There are no meltdown fears now in global markets and confidence is returning; our valuations are reasonable. Nifty price to book is at multi-year lows, domestic interest rates and inflation are likely to soften, FII flows have been healthy so far and eventually India remains one of the few stable countries which can offer double-digit returns to investors this year - following up on 27 percent returns in 2012.

The recent currency devaluation as well as the stock market response to this circumstance are done for now. So, disclaimers in place, a Nifty level of 6600, if not more, by the year end seems more imminent than ever before. What sounds challenging today is likely to be tomorrow's reality!

The writer is the President - Retail Distribution, Religare Securities, and the views expressed are personal.

Nasdaq Lifted to Neutral - Analyst Blog

On Jul 5, we upgraded our recommendation on Nasdaq OMX Group Inc. (NDAQ) to Neutral based on its latest acquisitions that create incremental revenue opportunities. However, the sluggish trading volumes environment and intense competition continue to pose risks.

Why the Upgrade?

Estimates for this global stock exchange operator witnessed improvement or remained stable after the company reported its first quarter 2013 results on Apr 24. Nasdaq's first quarter earnings of 64 cents surpassed the Zacks Consensus Estimate as well as the prior-year quarter earnings of 61 cents. Total revenue of $418 million edged up 1% year over year but lagged the Zacks Consensus Estimate of $426 million, displaying lower revenues from market and listing services.

However, operating expenses were kept in check with only 2.2% growth, while total order value witnessed improvement. Yet, order intakes plunged and operating margin dipped to 43% from 44% in the year-ago quarter. Overall, Nasdaq delivered positive earnings surprises in all of the last 4 quarters with an average beat of 4.96%.

Following the release of the first-quarter results and culmination of significant acquisitions, the Zacks Consensus Estimate for 2013 stood intact at $2.62 per share in the last 60 days. However, the Zacks Consensus Estimate for 2014 grew 3.4% to $3.04 per share in the last 60 days. With the Zacks Consensus Estimates showing no clear directional pressure in 2013 but some growth in 2014, Nasdaq now has a Zacks Rank #3 (Hold).

Although the latest acquisitions of the corporate arm of Thomson Reuters and the benchmark US Treasuries' eSpeed has raised the debt level of Nasdaq, these are projected to bring in incremental revenues and cost synergies. Management also expects to reduce its debt raised through the latest acquisitions over the next 12 months.

Overall, the intense competition and changing dynamics in the industry justify Nasdaq's inorganic growth strategy, further shifting its revenue bas! e in the non-transaction space to neutralize the effect of soft volumes environment.

Other Financial Stocks That Warrant a Look

Apart from Nasdaq, other stocks in the stock exchange sector that are outperforming include CME Group Inc. (CME), CBOE Holdings Inc. (CBOE) and MarketAxess Holdings Inc. (MKTX). All these stocks carry a Zacks Rank #2 (Buy).

Bull of the Day: MDC Holdings (MDC) - Bull of the Day

Earnings estimates have been soaring for MDC Holdings (MDC) as the homebuilder continues to benefit from a rebounding housing market. The significant increase in demand for new homes not only means higher revenues for MDC but also significantly higher profit margins as the company is able to raise prices and reduce incentives while leveraging its fixed expenses.

It is a Zacks Rank #1 (Strong Buy) stock.

MDC Holdings Inc. is a homebuilder that has been building under the name "Richmond American Homes" for 40 years. It primarily operates in the Western and Mountain regions of the United States with some exposure in the Eastern U.S.

The recent rise in interest rates has hurt shares of homebuilders like MDC, but the selloff could be a great buying opportunity as the fundamentals of MDC look very attractive.

Big First Quarter Beat

MDC Holdings reported strong first quarter results on May 2. Earnings per share came in at 45 cents, crushing the Zacks Consensus Estimate of 26 cents. It was a huge increase over the 4 cents it reported in the same quarter last year.

Total revenue surged 77% to $344.3 million, well ahead of the consensus of $294.0 million. Home sale revenues rose a whopping 80% to $331.7 million, which was driven by a 64% jump in home delivered. The average selling price for homes closed rose 9% to $325,900.

The gross profit margin expanded 330 basis points to 17.4% of revenue as the company continued increasing prices and decreasing incentives as demand picked up considerably. Meanwhile, selling, general and administrative expenses fell from 18.5% to 14.5% of revenue as the company leveraged its fixed expenses.

Estimates Soaring

Following solid Q1 results, analysts revised their estimates significantly higher for MDC, sending the stock to a Zacks Rank #1 (Strong Buy). You can see the dramatic rise in earnings estimates in the company's 'Price & Consensus' chart:

The Zacks Consensus Estimate for 2013 is currently $2.49, representing 103% EPS growth over 2012. The 2014 consensus is now $2.65, corresponding with 6% annual growth.

In fact, estimates have been rising in general for homebuilders. The 'Building - Residential / Commercial' industry ranks 8th out of the 265 industries that Zacks ranks. That puts it in the top 3% of all industries.

Reasonable Valuation

Despite strong earnings momentum, shares of MDC have sold off recently as interest rates have risen. But shares look attractive at these levels.

The stock currently trades at just 12.5x 2013 earnings, which is below the industry median of 14.5x. Its price to book ratio of 1.6 is also well below the industry median of 2.0.

The Bottom Line

With very strong industry trends, soaring earnings estimates and reasonable valuation, this homebuilder offers a lot to like.

Todd Bunton is the Growth & Income Stock Strategist for Zacks Investment Research and Editor of the Income Plus Investor service.

Hot Casino Companies For 2014

Las Vegas is back, and it's just in time for some of the companies relying on a recovery. In May, the Las Vegas Strip saw gaming revenue climb 6.4%, to $505 million, and for the last year, revenue is up 4.3%, to $6.33 billion.�

This is in stark contrast to regional gaming, where casinos across the country are seeing revenue declines because of fierce competition. But Las Vegas plays a different game, drawing customers in for the party, and getting them to gamble while they're there. It's also more expensive to increase supply on the Las Vegas Strip, which has helped keep supply level since the financial crisis.

The next step
The top end of the market has been doing well over the past two years, and Las Vegas Sands (NYSE: LVS  ) and Wynn Resorts (NASDAQ: WYNN  ) have been the beneficiaries. Las Vegas Sands's Las Vegas�revenue was up 7% in the first quarter, while Wynn's�was up 6.6%. But MGM Resorts (NYSE: MGM  ) and Caesars Entertainment (NASDAQ: CZR  ) haven't seen the same success in the lower end of the market.

Hot Casino Companies For 2014: MGM Resorts International(MGM)

MGM Resorts International, through its subsidiaries, primarily owns and operates casino resorts in the United States. The company?s resorts offer gaming, hotel, dining, entertainment, retail, and other resort amenities. It also owns and operates golf courses and a golf club. As of December 31, 2010, the company owned and operated 15 properties located in Nevada, Mississippi, and Michigan; and has 50% investments in 4 other casino resorts in Nevada, Illinois, and Macau. In addition, MGM Resorts International has an agreement with the Mashantucket Pequot Tribal Nation, which owns and operates a casino resort in Connecticut, to carry the ?MGM Grand? brand name. The company was formerly known as MGM MIRAGE and changed its name to MGM Resorts International in June 2010. MGM Resorts International was founded in 1986 and is based in Las Vegas, Nevada.

Advisors' Opinion:

• [By Hawkinvest]

  MGM Resorts International (MGM) is one of the world's largest hotel and casino companies, based in Las Vegas. Since December, MGM shares have been trading in a range of about $9, to almost $15 per share. The stock is now at the upper limit of the recent trading range which means that the risk of holding or buying this stock right now, could be elevated. MGM shares have rallied with the markets but appear extended and vulnerable to a sell-off. The company has a heavy debt load and it has been reporting losses. The balance sheet has about $13.45 billion in debt and only about $1.97 billion in cash. MGM could be impacted by higher oil prices because many consumers could cut back on spending if they go to Las Vegas, and some might decide not to go at all, and instead opt for a "staycation." With MGM facing challenges and the shares near recent highs, it could make sen se to sell now and buy on dips later this year.

  Here are some key points for MGM:

  Current share price: $14.18

  The 52 week range is $7.40 to $16.05

  Earnings estimates for 2011: a loss of 53 cents per share

  Earnings estimates for 2012: a loss of 39 cents per share

  Annual dividend: none

Hot Casino Companies For 2014: Boyd Gaming Corporation(BYD)

Boyd Gaming Corporation, together with its subsidiaries, operates as a multi-jurisdictional gaming company in the United States. As of December 31, 2011, the company owned and operated 1,042,787 square feet of casino space, containing approximately 25,973 slot machines, 655 table games, and 11,418 hotel rooms. It also owned and operated 16 gaming entertainment properties located in Nevada, Illinois, Louisiana, Mississippi, Indiana, and New Jersey. In addition, the company owns and operates a pari-mutuel jai-alai facility located in Dania Beach, Florida, as well as a travel agency in Hawaii. Further, it holds a 50% controlling interest in the limited liability company that operates Borgata Hotel Casino and Spa in Atlantic City, New Jersey. Boyd Gaming Corporation was founded in 1988 and is headquartered in Las Vegas, Nevada.

Advisors' Opinion:

• [By Hesler]

  Boyd Gaming(BYD) posted a bigger-than-expected drop in its second-quarter earnings, citing weak performance in Las Vegas, the Midwest and the South.

  During the quarter, the casino operator earned $3.4 million, or 4 cents a share, a 73% plunge from $12.8 million, or 15 cents, in the year-ago period. Adjusted earnings came in at 5 cents a share, significantly lower than the 10 cents Wall Street predicted for Boyd.

  Boyd's revenue fell 6% to $578.4 million, also short of the consensus of $588 million.

  "The lingering effects of the recession have left consumers unusually sensitive to shifts in the economy, and they now react more quickly to economic data and other developments, such as fluctuations in the stock market," said CEO Keith Smith, in a statement. "Although conditions remain uncertain, we believe long-term stabilizing trends are still in place, and that year-over-year growth is achievable by the end of 2010."

  In the Las Vegas locals market, the rate of decline in earnings before interest, taxes, depreciation and amortization rose to 16.2% from 10.8%, J.P. Morgan analyst Joseph Greff wrote in a note. Boyd previously reported a 9.9% decline for its Borgata property in Atlantic City. Revenue came in at $186.9 million, a 2.4% decrease from the year-ago period.

  "We think second-quarter results are less important than the coming operating results in the second-half of 2010, when the Atlantic City market faces increased regional competitive pressures from tables in Pennsylvania and West Virginia and the first Philadelphia casino opens this summer," J.P. Morgan analyst Joseph Greff wrote in a note.

  Greff reaffirmed his underweight rating on Boyd, given increasing competition in Atlantic City, a weak recovery in the Las Vegas locals market and stagnant regional gaming trends.

  While there is no doubt the Atlantic City gaming market remains one of the most depressed, Borgata continues to dominate the market and gain share. Atlant! ic City saw gaming revenues plunge 11.1% in June to $286.8 million. Boyd co-owns Borgata with MGM Resorts, which is currently in the process of divesting its 50% stake.

Top 5 Warren Buffett Companies To Own In Right Now: (XTRN)

Las Vegas Railway Express Inc. focuses to re-establish a conventional passenger train service between the Las Vegas and Los Angeles metropolitan areas. It plans to establish a ?Vegas-style? passenger train service. The company is based in Las Vegas, Nevada.

Hot Casino Companies For 2014: Penn National Gaming Inc.(PENN)

Penn National Gaming, Inc. and its subsidiaries own and manage gaming and pari-mutuel properties in the United States. It operates approximately 27,000 gaming machines; 500 table games; and 2,000 hotel rooms in 23 facilities in 16 jurisdictions, including Colorado, Florida, Illinois, Indiana, Iowa, Louisiana, Maine, Maryland, Mississippi, Missouri, New Jersey, New Mexico, Ohio, Pennsylvania, West Virginia, and Ontario. The company was formerly known as PNRC Corp. and changed its name to Penn National Gaming, Inc. in 1994. Penn National Gaming, Inc. was founded in 1982 and is based in Wyomissing, Pennsylvania.

Advisors' Opinion:

• [By Quickel]

  Penn National Gaming(PENN) squeaked past its guidance through improved cost controls, and investors praised its efforts.

  But expectations were low, and its upbeat outlook shouldn't be viewed as a message that regional markets are recovering. "Going forward, we project soft regional gaming revenue results over the next three to six months, as we do not expect to see a significant increase in consumer spending patterns given the uncertain economic environment," J.P. Morgan analyst Joseph Greff wrote in a note.

  Penn National raised its full-year earnings guidance to $1.18 from $1.13 a share, and up its revenue outlook by $26 million to $2.44 billion from $2.41 billion.

  During the second quarter, the company earned $9.2 million, or 9 cents a share, compared with $28.5 million, or 27 cents, in the year-ago period. Excluding items, Penn actually earned 29 cents a share, a penny higher than estimates.

  Revenue rose 3% to $598.3 million, higher than the $597.1 million Wall Street projected. The upside was driven by both better revenues and margins and was generally broad-based across many properties, especially larger venues in Charlestown, Lawrenceburg and Grantville, Pa.

  Penn National rolled out table games in West Virginia and Pennsylvania during the quarter, which should be a growth catalyst moving forward. The company also plans to open a slot facility in Maryland on Sept. 30 and expects its Toldeo, Ohio, location to open in the first-half of 2012. Its Columbus project is slated to open in the second-half of 2012.

  The company repurchased 409,000 shares during the quarter. "[This] sends a message to investors on the value of its equity, but perhaps indicating the lack of near-term acquisition opportunities," J.P. Morgan analyst Joseph Greff wrote in a note.

Is Starbucks A Worthwhile Investment?

With shares of Starbucks (NASDAQ:SBUX) trading around $73, is SBUX an OUTPERFORM, WAIT AND SEE or STAY AWAY? Let's analyze the stock with the relevant sections of our CHEAT SHEET investing framework:

T = Trends for a Stock’s Movement

Starbucks is a roaster, marketer and retailer of coffee operating worldwide. The company purchases and roasts coffees that it sells, along with handcrafted coffee, tea and other beverages and a variety of fresh food items, through its stores. It also sells a variety of coffee and tea products and licenses its trademarks through other channels, such as licensed stores and national food service accounts. In addition to its flagship Starbucks brand, the Company's portfolio also includes Tazo Tea, Seattle's Best Coffee, Starbucks VIA Ready Brew, Starbucks Refreshers beverages and the Verismo System by Starbucks. Starbucks has developed an amazing reputation over the last several years which has generated a lot of buzz for its products. Consumers continue to enjoy Starbucks branded products around the world which will surely lead to rising profits.

Starbucks' earnings beat expectations, with the coffee giant showing growth in both sales and profit for the quarter. The company's push into providing better food options has already started to pay off. Starbucks has introduced salads, La Boulange baked goods, and is working on a partnership with Danone for its own yogurt brand. Starbucks' new Refreshers energy drinks and macchiatos also helped drive sales.

T = Technicals on the Stock Chart are Strong

Starbucks stock has been on a bullish run over the last several years. The stock is now trading near all-time highs and sees no significant signs of slowing. Analyzing the price trend and its strength can be done using key simple moving averages. What are the key moving averages? The 50-day (pink), 100-day (blue), and 200-day (yellow) simple moving averages. As seen in the daily price chart below, Starbucks is trading above its rising key averages which signal neutral to bullish price action in the near-term.

(Source: Thinkorswim)

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

	Implied Volatility (IV)	30-Day IV Percentile	90-Day IV Percentile
Starbucks Options	20.85%	0%	0%

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

	Put IV Skew	Call IV Skew
August Options	Flat	Average
September Options	Flat	Average

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

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

E = Earnings Are Increasing Quarter-Over-Quarter

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

	2013 Q2	2013 Q1	2012 Q4	2012 Q3
Earnings Growth (Y-O-Y)	27.91%	27.50%	14.00%	-0.51%
Revenue Growth (Y-O-Y)	13.24%	11.26%	10.59%	10.96%
Earnings Reaction	7.53%*	-0.82%	4.10%	9.05%

Starbucks has seen increasing earnings and revenue figures over the last four quarters. From these numbers, the markets have been excited about Starbucks’ recent earnings announcements.

* As of this writing

P = Excellent Relative Performance Versus Peers and Sector

How has Starbucks stock done relative to its peers, Dunkin’ Brands (NASDAQ:DNKN), McDonald’s (NYSE:MCD), Green Mountain Coffee Roasters (NASDAQ:GMCR), and sector?

	Starbucks	Dunkin’ Brands	McDonald’s	Green Mountain Coffee Roasters	Sector
Year-to-Date Return	35.80%	30.41%	10.36%	81.45%	24.91%

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

Conclusion

Starbucks provides highly demanded coffee and tea products and services to consumers around the world. A strong earnings report has investors in the company excited. The stock has been on a strong run for several years and seems poised to continue. Over the last four quarters, earnings and revenue figures have been rising which have pleased investors. Relative to its peers and sector, Starbucks has been a strong year-to-date performer. Look for Starbucks to OUTPERFORM.

Financial Planners Waste No Time After DOMA Ruling

Far from some theoretical ruling that “paves the way” for better opportunities for same sex couples and financial planning advice, the Supreme Court’s decision on the Defense of Marriage Act had Hart Patterson Financial Services immediately calling clients. The firm services 230 families, of which about 35% are same-sex households.

“We’ve been waiting years for this,” said Vikki Lenhart (right), a financial planner with the Amherst, Mass.-based practice. “All of the issues we’ve been talking about with our heterosexual couples we can now discuss with our same-sex clients."

Even though the firm is going “case by case” with each client and couple’s situation, they’re zeroing in on military benefits, Social Security and tax returns.

“We called the Social Security administration and they told us to begin sending in applications for spousal benefits,” Lenhart noted.

She pointed to one couple that had to defer taking their individual benefits until age 70.

“One partner is 67 and the other is 69. We told them another strategy is now on the table—spousal benefits, which they can collect for $14,000 per year.”

Although Penny Manners, Hart Patterson’s tax specialist, is still examining the ruling as it applies to the IRS and joint filers, she’s already refiled in one couple’s case, netting them an extra $3,300.

Yet while financial planning for same-sex couples living in a state that recognizes their marriage just got easier with the Supreme Court’s decision, advisors and attorneys say a lot of same-sex planning issues remain unresolved.

The benefit of the Supreme Court striking down DOMA “is still pretty narrow,” said Anna Pfaehler, a CFP and advisor at Palisades Hudson Financial Group in Scarsdale, N.Y.

While the high court’s striking down of DOMA gives same-sex couples who marry the same federal benefits as straight couples, the ruling also preserved individual state laws on the issue, Pfaehler notes.

Nevertheless, Hart Patterson is forging ahead. As to future marketing strategies and business development opportunities, the Cambridge Investment Research-affiliated firm hasn’t been able to think that far ahead.

“We’ve been calling our current clients and haven’t really had a moment to breathe,” Lenhart concluded, noting she’ll be taking some well-deserved vacation time for July 4.  

---

Check out High Court Bolsters Gay Marriage, but Financial Planning Hurdles Remain on AdvisorOne.

Portfolio Management service vs investing in mutual funds

Top Low Price Stocks To Invest In 2014

Thinking of putting money in a PMS product? Here is what you should keep in mind.

It is important to understand the differences between availing of a Portfolio Management Service versus investing in mutual funds.

The first thing which distinguishes a Portfolio Management Service from a mutual fund is that you directly own shares in various companies rather than units in a fund where there are many co-investors with you. The advantage here is that you know exactly what you own and depending on the agreement with your portfolio manager, you may have a say in selecting your investments. Your portfolio does not get affected with the subscriptions and redemptions of other co-investors as in the case of a mutual fund.

The second thing to consider is that there is a wide variety of portfolio managers. The total number of SEBI registered portfolio managers in India is at 268 compared to 51 registered mutual funds. With the variety also comes complexity. There are many agencies tracking the performance of various mutual fund schemes and information is widely available. In the case of portfolio managers however the information availability is an issue. All portfolio managers are required to give prospective investors a document called disclosure document. This document gives details of the past performance, organisation structure, key personnel etc. There is no central place where one can get the details of the performance of all portfolio managers and one would have to go through the disclosure document of each portfolio manager separately in order to make comparisons.

A reassuring factor while selecting a portfolio manager would be availability of references of existing and past clients who can vouch for their experience with the service provider. Some of the questions to ask apart from past returns would be volatility of returns, portfolio churn and investment philosophy. It is very important that the investment philosophy of the client and that of the portfolio manager matches so that there is no heart burn later on.

Investors should guard against unnecessary churn in the portfolio. Portfolio Management transactions are usually done with a single or limited number of brokers and many a times the brokerage is a big source of revenue for the portfolio manager. A high level of churn will incur avoidable expenses of brokerage, STT and short term capital gains tax. Tax authorities also tend to classify portfolios with a high level of churn as trading / business activity rather than investing activity. This classification will result in all income being taxed at the normal income tax rates rather than the concessional rates applicable to capital gains.

Operational aspects to be considered by prospective clients would include the kind of reports that are available to clients and their periodicity, whether reports are accessible on the internet, the auditors auditing the portfolio management transactions and whether the funds and securities are held by professional custodians rather than the staff of the portfolios manager.

For small investors, the entry level to avail of portfolio management services is steep at a minimum of Rs. 5 lacs per investor. This is the SEBI prescribed minimum amount. Portfolio Managers have an option of keeping their entry amounts higher than the SEBI prescribed minimum and many of them do so. In some rare cases the entry amount can be as high as Rs. 5 crores. Entry into mutual funds on the other hand is quite accessible at Rs. 5,000.

Brooks Automation Up to Strong Buy - Analyst Blog

Top 5 Financial Companies For 2014

Zacks Investment Research upgraded Brooks Automation, Inc. (BRKS) to a Zacks Rank #1 (Strong Buy) on Jul 10, 2013.

Why the Upgrade?

Shares of Brooks Automation have risen by 7.96% since the company reported its second quarter of fiscal 2013 (ended Mar 31) results on May 9. Adjusted earnings per share were 1 cent below 20 cents earned in the year-ago quarter but an improvement over a 6 cent loss in the previous quarter. Also, the results surpassed the Zacks Consensus Estimate of a 3 cent loss per share by 133.3%.

Sequentially, revenue grew 19%, reflecting soaring demand for front end semiconductor products. Order bookings stood at $121.3 million, up 31% sequentially. Talking of margins, adjusted gross margin in the quarter improved 20 basis points sequentially and came in at 32.1%.

For fiscal 2013, management of Brooks Automation anticipates revenue to be within the $116-$124 million range and non-GAAP earnings per share to be within the 1 cent-5 cents range. At mid points, revenue guidance reflects a 2.6% sequential growth while earnings guidance reflects 200% sequential growth.

In the last 60 days, the Zacks Consensus Estimate for Brooks Automation has gone up by 10.0% to 11 cents for fiscal 2013 and increased 1.4% to 71 cents for fiscal 2014. Also, the company had positive earnings surprise in three out of four trailing quarters with an average of 113.1%.

Others Stocks to Consider:

Brooks Automation, Inc. is a $657 million company, operating in the semiconductor equipment and materials industry. Other stocks to watch out for in the industry are Cohu, Inc. (COHU), Intevac Inc. (IVAC) and Mattson Technology Inc. (MTSN), each with a Zacks Rank #2 (Buy).

ETFdb Weekly Watchlist: SPY, EWU, XLI Hinge On U.S. GDP, ...

Top 10 Canadian Companies To Buy For 2014

Wall Street was in for several lackluster trading sessions last week, as a mixed bag of earnings and economic reports kept equities trading in a narrow range. Travelers (TRV), Apple (AAPL) and Facebook (FB) beat both earnings and revenue estimates, but fast-food giant McDonald's (MCD), Hasbro (HAS)  and Haliburton (HAL) missed analyst expectations. On the economic front, existing-home sales fell 1.2% in June, while new home sales rose 8.3%. In separate reports, the Federal Reserve Bank of Richmond reported that manufacturing activity in the central Atlantic region contracted in July, falling to -11, while durable-goods orders for June rose 4.2%. This week, investors will once again see a slew of earnings and economic reports. Below, we outline three ETFs that should see a fair amount of activity during the week ahead :



1. SPDR S&P 500 ETF Why SPY Will Be In Focus: This prolific S&P 500 ETF, home to over $151 billion in assets, will come into focus on Wednesday as advanced second quarter U.S. gross domestic product is reported. Analysts have somewhat low expectations, with forecasts coming in at 1.1% as compared to the previous recording of 1.8% .

2. MSCI United Kingdom ETF Why EWU Will Be In Focus: This ETF tracks an index that is comprised of roughly 100 securities, and it is designed to measure the overall performance of the British equity market. Investors should keep a close eye on EWU on Thursday as the Bank of England announces its rate decision and its asset purchase target. Both the rate and target are expected to remain unchanged at 0.50% and 375 billion, respectively.

3. Industrial Select Sector SPDR ETF Why XLI Will Be In Focus: This fund is one of the most popular on the market, with over $5.6 billion in assets and an average daily volume just over 11 million. XLI seeks to replicate the performance ! of the U.S. industrial sector and will be in focus this week as ISM manufacturing data for the month of Julyl hits the street on Thursday. Analysts are expecting ISM manufacturing PMI to rise from 50.9 in June to 52.1 .

Follow me on Twitter @DPylypczak.



Disclosure: No positions at time of writing.

Neutral Stance on Highwoods - Analyst Blog

On Jul 5, 2013, we reaffirmed our long-term recommendation on Highwoods Properties Inc. (HIW), a real estate investment trust (REIT), at Neutral. Our decision rests on the company's successful portfolio repositioning measures. However, continued volatility in the office sector with job cuts, and stiff competition from commercial property developers remain our concerns.

Why Neutral?

Highwoods' first-quarter 2013 core FFO per share missed the Zacks Consensus Estimate by a penny and the prior-year quarter figure by 2 cents. The company has successfully implemented its strategic plans of portfolio repositioning. These position Highwoods favorably for growth. However, a rise in operating expenses acted as the dampener.

As part of the restructuring activity, Highwoods recently bought a Class A office property – One Alliance Center – which is the sister building of its previously acquired Two Alliance Center. The consequent strength in balance sheet and liquidity position will likely help the company to take advantage of distressed asset selling as office and retail asset values continue to fall post recession.

However, continued volatility in the office sector along with job cuts and depressed market fundamentals may limit the company's growth prospects. Moreover, stiff competition from commercial property developers remains a headwind.

Over the last 60 days, the Zacks Consensus Estimate for FFO per share for 2013 rose 0.4% to $2.76. However, for 2014, the Zacks Consensus Estimate for FFO per share dropped 0.3% to $2.84. Almost unchanged estimates made this a Zacks Rank #3 (Hold) stock.

Other REITs to Consider

Some better performing REITs include CommonWealth REIT (CWH), Sunstone Hotel Investors Inc. (SHO) and Winthrop Realty Trust (FUR). All these stocks carry a Zacks Rank #1 (Strong Buy).

Note: Fu! nds from operations, a widely used metric to gauge the performance of REITs, are obtained after adding depreciation and amortization and other non-cash expenses to net income.

The Investment Checklist That Transformed Warren Buffett

Top 5 Undervalued Companies To Watch In Right Now

Who says old dogs can't learn new tricks? Who Says Elephant Can't Dance?

Not Warren Buffett. Not IBM (IBM). But how does an 82-year-old bargain hunter learn new tricks of buying tech stocks at new high prices and predicting future tech trends? Well, he read a corporate turnaround playbook written for IBMers. He read it not just once, but twice!

The book, "Who Says Elephants Can't Dance?: Leading a Great Enterprise through Dramatic Change," was written by Louis V. Gerstner Jr., former IBM CEO, the man who masterminded the historic turnaround of Big Blue. I have to admit that it is one of the best business books I have ever read, with penetrating insights on turnaround, strategy and culture. I highly recommend it to anyone interested in business and management. It is a must-read case study for deep-value investors interested in turnaround situations.

The investment checklist that changed Warren Buffett

Over the years, we have reverse-engineered almost all of Mr. Buffett's investment decisions in the past, and we have never seen him buying into a growth-oriented tech stock at prices near all time highs after a substantial rally. What has turned a bargain-hunting value investor into a growth-minded tech buyer?

An investment checklist from Lou Gerstner's IBM playbook could provide important clues to Buffett's change of heart.

If Gerstner, the man who saved IBM, were the head of research at a securities firm, he would urge his analysts to focus on the following five points in determining shareholder value:

1. LEADING A GROWING MARKET: Is the company a major force in a growing market or market segments? (Remember Warren Buffett's wonderful observation: "When a manager with a great reputation meets a company with a bad reputation, it is the company whose reputation stays intact.")

2. INCRE! ASING MARKET SHARE: Is the company holding or increasing its share in those segments, and is that share gain the result of sustainable advantages (cost, technology, quality)?

3. GENERATING CASH: Is the increased share resulting in growing cash flow — cash flow after all expenses, not the notorious EBITDA (earnings before interest, taxes, depreciation and amortization), and not pro forma nonsense?

4. INVESTING CASH WISELY: Is the company using that cash flow in a wise manner? (a) avoiding macho or bleary-eyed acquisitions; (b) reinvesting in research and development, marketing and other critical areas in the company.

5. ACTING LIKE OWNERS: Does the management team walk the talk of aligning with the shareholders? Do executives own significant amounts of stock (as opposed to just holding options)? Do they return cash to their shareholders in the form of dividends or share repurchases?

IBM's framework for growth

Gerstner's handpicked successor, Samuel J. Palmisano, says his guiding framework for capital decisions boils down to four questions:

1. "Why would someone spend their money with you — so what is unique about you?"

2. "Why would somebody work for you?"

3. "Why would society allow you to operate in their defined geography — their country?"

4. "And why would somebody invest their money with you?"

The four questions were a way to focus thinking, prod the company beyond its comfort zone and make IBM preeminent again. "The hardest thing is answering those four questions," Palmisano says. "You've got to answer all four and work at answering all four to really execute with excellence."

On IBM's decision to move out of the PC business, he said, "If you decide you're going to move to a different space, where there's innovation and therefore you can do unique things and get some premium for that, the PC business wasn't going to be it."

The divestitures meant that IBM was no lon! ger the w! orld's largest information technology company. Hewlett-Packard (HPQ) took that title and took a different strategic path as well, doubling its bet on PCs by acquiring Compaq in 2001. "You see the choice that was made, and how the economics worked out," Palmisano observes.

The idea, Mr. Palmisano explains, is to go to a space where you're uniquely positioned and use your strengths.

In recent years, Warren Buffett's investment style seems to be moving from value to growth. And IBM's playbook played an important role in his venture into tech and growth.

Disclosure: The author owns shares of Berkshire Hathaway.

Hot Performing Companies To Watch For 2014

Shares of Facebook (NASDAQ: FB  ) are outperforming the broader market today with gains of more than 4%. The reason investors are cheering is news that automaker General Motors (NYSE: GM  ) is now advertising on the social network again.

Around the time of Facebook's controversial IPO last year, there was much concern over the effectiveness of Facebook's display ads. GM famously and publicly cut its ad relationship with Facebook, saying it would no longer buy ads on the site. GM is one of the biggest advertisers in the U.S. market, so the automaker was a big fish to lose at the time. Car ads simply weren't performing well on Facebook.

GM has now indicated that it plans to resume running ads on Facebook, which is a big vote of confidence in the social network. GM will feature ads for its Chevrolet brand on Facebook's mobile platforms as part of its larger "Find New Roads" campaign. The campaign is notable because it is specifically a "mobile-only" pilot campaign that looks to target mobile Facebook users.

Hot Performing Companies To Watch For 2014: Intrepid Mines Ltd (IAU.AX)

Intrepid Mines Limited, together with its subsidiaries, engages in the exploration and development of precious metal properties in Indonesia. The company primarily explores for gold, silver, and copper. It principally holds 80% interest in the Tujuh Bukit project that consists of 2 tenements covering a total area of 11,621.45 hectares located in southeast Java, Indonesia. The company was formerly known as NuStar Mining Corporation Limited and changed its name to Intrepid Mines Limited as result of its merger with Intrepid Minerals Corporation in July 2006. Intrepid Minerals Limited was incorporated in 1993 and is based in Spring Hill, Australia.

Hot Performing Companies To Watch For 2014: InfoSonics Corp(IFON)

InfoSonics Corporation engages in the design, development, sourcing, and sale of wireless handsets and accessories in Latin America and the Asia Pacific. The company offers a line of entry-level, mid-tier, and high-end products under the verykool brand name. It contracts with electronic manufacturing services providers to manufacture its branded products. The company?s customers include carriers, agents, distributors, resellers, and original equipment manufacturers. InfoSonics Corporation was founded in 1994 and is headquartered in San Diego, California.

Hot Heal Care Companies To Watch For 2014: Piedmont Natural Gas Company Inc.(PNY)

Piedmont Natural Gas Company, Inc., an energy services company, engages in the distribution of natural gas to residential, commercial, industrial, and power generation customers in portions of North Carolina, South Carolina, and Tennessee. It also operates energy-related businesses, including unregulated retail natural gas marketing, regulated interstate natural gas storage, and intrastate natural gas transportation. The company serves approximately 1 million customers, including 51,800 customers served by municipalities. Piedmont Natural Gas Company, Inc. was founded in 1949 and is headquartered in Charlotte, North Carolina.

Tronox Gets a New CFO

Stamford, Conn.-based Tronox Limited (NYSE: TROX  ) has a new CFO.

Tronox announced this week that it has hired former Rio Tinto business development officer Katherine C. Harper to become its new Chief Financial Officer. In a statement, company CEO Tom Casey expressed confidence that "her deep knowledge  in both sectors [the global mining and chemical industries], as well as her work in international financial markets will help drive Tronox's strategic vision of growth and profitability."

Tronox also announced the hire of a second Rio Tinto alumnus, Jean-Francois Turgeon, to become its executive vice president in charge of the titanium dioxide company's Mineral Sands and Pigment & Electrolytic Divisions.

Harper will join the company on Sept. 16, taking over responsibility for leading the company's global finance group, including treasury, financial planning & accounting, controller, risk management, compliance & audit, and investor relations functions. Turgeon will join later, on Jan. 1.

Tronox is a global leader in the production and marketing of titanium-bearing mineral sands and titanium dioxide pigment.

link

Microsoft's New Toy Is a Preemptive Attack on Apple

A lot has been said about Microsoft's (NASDAQ: MSFT  ) Xbox One since it was introduced on Tuesday. However, here's something that you probably haven't heard: Xbox One is a preemptive strike on Apple (NASDAQ: AAPL  ) .

Think about it. Apple is working on a smart television. Shortly before his death, Steve Jobs told his biographer that he had cracked the problem with smart TVs. CEO Tim Cook told NBC's Brian Williams -- on primetime television -- that it's an area of "intense interest" at Apple.

Let's dream out loud. What would an Apple smart TV do?

Well, thanks to the popularity of Siri, it's a safe bet that there would be some degree of voice recognition. Xbox One has that. "Watch TV" switches to live TV. "Watch AMC" switches the channel. "What's on HBO?" pulls up the channel's listings guide.

Apple's device would also probably incorporate FaceTime video chat. Yes, Microsoft's all over that. The Xbox One allows for Skype video chats -- with multiple users at the same time.

Naturally, there would be some App Store integration with live content, but Xbox One is there already. You can pull up personalized fantasy stats during NBA and NFL games. You can be playing a Blu-ray disc and switch to a split screen to pull up Internet Explorer to figure out where you know that actress from through IMDB or pull up movie ratings on Rotten Tomatoes.

App Store integration naturally means playing games on your TV, and Xbox One naturally will have Apple beat on that front.

The clincher here is that Microsoft already has tens of millions of active Xbox Live users. They all won't hop on the Xbox One platform right away, but they will over time as prices get cheaper.

However, as expensive as the Xbox One will be, a full blown Apple HDTV will probably cost more than a Microsoft console with an existing flat screen. Now that we know that Microsoft will have its new toy out in time for this year's holiday shopping season, it's not as if Apple can get a head start here.

The more you think about it, the more you may start to realize that Apple may already be too late.

The only way Apple could realistically have a game-changer in an Xbox One world would be to revolutionize pay TV. Rolling out a piecemeal service in which consumers pay only for the channels that they watch -- or the content that they watch -- would more than justify Apple's inevitably high price.

The problem, unfortunately, is that cable networks have every reason to be uncooperative here. They stand to lose big money if Apple disrupts cable and satellite television providers. If Apple hasn't been able to get iRadio off the ground as negotiations with the music labels have been reportedly rough, how is Apple going to talk studios and content creators to disrupt a model that will save consumers money at their expense?

The Xbox One is bigger blow to Apple than you might think.

Tech titans are going to war
It's incredible to think just how much of our digital and technological lives are almost entirely shaped and molded by just a handful of companies. Find out "Who Will Win the War Between the 5 Biggest Tech Stocks" in The Motley Fool's latest free report, which details the knock-down, drag-out battle being waged among the five kings of tech. Click here to keep reading.

Amazon Adds NBCUniversal Content to Prime Streaming

Amazon (NASDAQ: AMZN  ) has expanded its content licensing agreement with the NBCUniversal Cable and New Media Distribution division of Comcast  (NASDAQ: CMCSA  )   (NASDAQ: CMCSK  ) to bring even more NBC shows to Amazon's Prime Instant Video.

The new exclusive content Amazon Prime members will have streaming access to includes:

NBC's Grimm, based on Grimm Fairy Tales, available now. USA Network's legal drama Suits and serialized spy thriller Covert Affairs, available now. NBC's psychological thriller Hannibal, based on the novels by Thomas Harris, available later this year. Syfy's  futuristic sci-fi and drama series Defiance, available early next year.

The deal announced this week also adds shows such as NBC's Smash and Syfy's Alphas, Eureka, and Warehouse 13 to Amazon Prime Instant Video. The deal also adds content to Kindle FreeTime Unlimited, a subscription service of books, games, apps, move and TV shows for kids. Prime Instant Video offers more than 40,000 movies and TV episodes for Prime members to stream.

NBCUniversal Cable & New Media Distribution President Frances Manfredi was quoted as saying the Amazon deal would let viewers catch up on what they missed and extend the shows to new viewers. This NBC deal is the latest in a string of partnership Amazon has struck including a partnership to bring Food Network, Cooking Channel, and Travel Channel to Prime Instant Video.

link

Boeing vs. Airbus: Who Will Win the "Mini-Jumbo" Battle?

You've got to hand it to Boeing (NYSE: BA  ) . If there's one thing it does, it builds lots of planes -- even if they don't always work right or come in on budget. One of Boeing's latest ventures involves an attempt to stay ahead of rival EADS Airbus' A350-1000, the largest version of Europe's newest plane.

Right now, Boeing has the market cornered when it comes to "mini-jumbos," thanks to the 777, a twin-engine plane capable of going distances similar to that of a four-engine plane. More importantly, the 777 is Boeing's most lucrative plane, according to analysts. To make sure it stays that way, Boeing is planning on rolling out a few upgrades; the 777-9X and the 777-8X. But will these planes prove profitable? Or will Airbus come out on top? 

Photo: Jean-Philippe Boulet, via Wikimedia Commons. 

777 vs. A350
When it comes to comparing the new 777X's with the A350-1000, there are a few key differences to keep in mind. The 777X's will have a metal fuselage with carbon fiber wings, which, according to Boeing, will increase performance but maintain reliability. The A350-1000, on the other hand, will mainly be carbon fiber. Airbus argues that this makes the plane lighter, and cheaper to operate.  

Further, the 777-9X is expected to hold roughly 400 passengers, while the A350-1000 holds 350 passengers. Boeing claims that the ability to carry 400 passengers will increase airline revenue and that the 777X will have "significantly lower operating costs." But Airbus argues that because of its smaller size, the 350-seater A350-1000 plane is the one that will produce more revenue, as it's cheaper to run.  

Finally, both Boeing and Airbus make mini-jumbo, long distance planes, although there's not as much demand for them. Still, with the ability to fly 9,500 nautical miles, Boeing expects the 777-8X to replace its 777-200 LR and fill this niche market. That's in comparison with Airbus' A340-500 that's capable of 9,000 nautical miles.  

Who will rule the sky?
Boeing and Airbus have been rivals for some time, with both companies attempting to dominate the mini-jumbo market. The A350-1000 has had slow sales to start, but ir recently took a swing at Boeing's 777's thanks to an $6 billion order from longtime Boeing customer British Airways. More importantly, this order marked a upward tick in sales as Air Lease (NYSE: AL  ) also purchased five A350-1000s, and other airlines have starting to show interest in doing the same. Considering Airbus markets the A350-1000 as a 777 replacement, I'm guessing Boeing is feeling a little bruised. 

Battle of the tiny Titans
The latest round in the mini-jumbo battle is just getting started, and who will come out on top is uncertain. Airbus has a head start with orders and should be able to deliver its plane earlier, as Boeing really didn't start marketing its latest designs until it heard about the British Airways order. Following that, Boeing announced its partnership with General Electric (NYSE: GE  ) and seemed to start taking the Airbus threat seriously -- clearly good news for General Electric. So while the battle is still in its infancy, this is something investors should be keeping tabs on. Especially because both planes could prove highly profitable for their respective companies.

Boeing operates as a major player in a multitrillion-dollar market in which the opportunities and responsibilities are absolutely massive. However, emerging competitors and the company's execution problems have investors wondering whether Boeing will live up to its shareholder responsibilities. In our premium research report on the company, two of The Motley Fool's best minds on industrials have collaborated to provide investors with the key, must-know issues surrounding Boeing. They'll be updating the report as key news hits, so don't miss out -- simply click here now to claim your copy today.

Why the Street Should Love Exlservice Holdings's Earnings

Although business headlines still tout earnings numbers, many investors have moved past net earnings as a measure of a company's economic output. That's because earnings are very often less trustworthy than cash flow, since earnings are more open to manipulation based on dubious judgment calls.

Earnings' unreliability is one of the reasons Foolish investors often flip straight past the income statement to check the cash flow statement. In general, by taking a close look at the cash moving in and out of the business, you can better understand whether the last batch of earnings brought money into the company, or merely disguised a cash gusher with a pretty headline.

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

Source: S&P Capital IQ. Data is current as of last fully reported fiscal quarter. Dollar values in millions. FCF = free cash flow. FY = fiscal year. TTM = trailing 12 months.

Over the past 12 months, Exlservice Holdings generated $47.0 million cash while it booked net income of $41.8 million. That means it turned 10.6% of its revenue into FCF. That sounds pretty impressive.

All cash is not equal
Unfortunately, the cash flow statement isn't immune from nonsense, either. That's why it pays to take a close look at the components of cash flow from operations, to make sure that the cash flows are of high quality. What does that mean? To me, it means they need to be real and replicable in the upcoming quarters, rather than being offset by continual cash outflows that don't appear on the income statement (such as major capital expenditures).

For instance, cash flow based on cash net income and adjustments for non-cash income-statement expenses (like depreciation) is generally favorable. An increase in cash flow based on stiffing your suppliers (by increasing accounts payable for the short term) or shortchanging Uncle Sam on taxes will come back to bite investors later. The same goes for decreasing accounts receivable; this is good to see, but it's ordinary in recessionary times, and you can only increase collections so much. Finally, adding stock-based compensation expense back to cash flows is questionable when a company hands out a lot of equity to employees and uses cash in later periods to buy back those shares.

So how does the cash flow at Exlservice Holdings look? Take a peek at the chart below, which flags questionable cash flow sources with a red bar.

Source: S&P Capital IQ. Data is current as of last fully reported fiscal quarter. Dollar values in millions. TTM = trailing 12 months.

When I say "questionable cash flow sources," I mean items such as changes in taxes payable, tax benefits from stock options, and asset sales, among others. That's not to say that companies booking these as sources of cash flow are weak, or are engaging in any sort of wrongdoing, or that everything that comes up questionable in my graph is automatically bad news. But whenever a company is getting more than, say, 10% of its cash from operations from these dubious sources, investors ought to make sure to refer to the filings and dig in.

With 16.7% of operating cash flow coming from questionable sources, Exlservice Holdings investors should take a closer look at the underlying numbers. Within the questionable cash flow figure plotted in the TTM period above, stock-based compensation and related tax benefits provided the biggest boost, at 10.9% of cash flow from operations. Overall, the biggest drag on FCF came from capital expenditures, which consumed 28.6% of cash from operations.

A Foolish final thought
Most investors don't keep tabs on their companies' cash flow. I think that's a mistake. If you take the time to read past the headlines and crack a filing now and then, you're in a much better position to spot potential trouble early. Better yet, you'll improve your odds of finding the underappreciated home-run stocks that provide the market's best returns.

Is Exlservice Holdings playing the right part in the new technology revolution? Computers, mobile devices, and related services are creating huge amounts of valuable data, but only for companies that can crunch the numbers and make sense of it. Meet the leader in this field in "The Only Stock You Need To Profit From the NEW Technology Revolution." Click here for instant access to this free report.

We can help you keep tabs on your companies with My Watchlist, our free, personalized stock tracking service.

Add Exlservice Holdings to My Watchlist.