Stocks on the Road to Greatness - Motley Fool Stocks on the Road to Greatness - Motley Fool

Wednesday, May 23, 2012

Stocks on the Road to Greatness - Motley Fool

Stocks on the Road to Greatness - Motley Fool

For every stock out there screaming, "buy me," others simply give us a nudge and a nod. While all the attention might be focused on their five-star peers, we can sift through Motley Fool CAPS to find four-star stocks giving us the a sign that they're approaching greatness. 

These opportunities -- including familiar names and beaten-down companies -- rank higher than most of the other 5,400 starred companies, and it pays to investigate their potential. For consideration today, I've got a pair of stocks on their way to fame and glory.

Source: Motley Fool CAPS.

As the 180,000-member CAPS community has chosen these two companies as less obvious sources for tomorrow's great buys, let's see why they might merit your attention.

In the sight of greatness
If wireless carriers can't buy their growth, like AT&T's (NYSE: T  ) failed effort to acquire T-Mobile last year, then they will seek other avenues for expanding their spectrum to meet their needs, and that's where Alcatel-Lucent profits.

I've noted previously that Cisco has said mobile-data traffic will increase 18-fold by 2016. Growth doubled for the fourth year in a row last year as smartphone usage tripled, and it will be responsible for an even larger percentage of data usage as time passes. Smartphones represent 82% of total handset traffic even though basic handsets still account for 88% of the devices on the market. The market opportunity is huge.

What opportunity? To help carriers meet their spectrum needs. Small-cell technology is the means for satisfying the demand for ever-greater amounts of traffic. The FCC won't be auctioning new spectrum for years yet, so the capacity crunch that's coming will make investors in equipment-makers like Alcatel and Ericsson handsome profits.

Both Sprint (NYSE: S  ) and AT&T already have plans to start deploying the small-cell technology these companies produce, and as it's a leader in the field, I believe Alcatel will continue leading the way. Although my CAPScall on Alcatel hasn't paid off yet (nor my real-life investment in the company), I'm fairly confident that because this is still very early innings, and as CAPS member Reyniel says, the boom will materialize sooner rather than later:

Cellular providers will need to move toward 4g soon. The next iteration of the iPhone will force that move. Alcatel-Lucent's lightRadio offers a cost slashing, new age method of squeezing the most of the spectrum. Small cell is the future, and ALU is leading the way.

Add Alcatel-Lucent to your watchlist, and tell me in the comments section below or on the Alcatel-Lucent CAPS page if you think they're about to dial up new growth.

Twinkle, twinkle little star
Following the pole star to mark one's position has been used by travelers for ages. Investors might want to adopt a similar strategy by following the market's pole star, ATV-maker Polaris Industries. Few companies have the record it does of beating analyst forecasts, and last month, it notched its 20th consecutive positive earnings surprise. At a time when Harley-Davidson (NYSE: HOG  ) is getting eclipsed by slowing sales and Arctic Cat (left investors cold with a gloomy outlook, Polaris continues to shine brightly.

ATVs, the main driver of Polaris' growth, was strong again, and even internationally, despite the financial climate in Europe, it saw sales rise 20%. Partially explaining the weak results at Arctic Cat, Polaris admits that the warmer-than-usual winter left inventories higher than normal on snowmobiles, but its growing presence in motorcycles -- it purchased the iconic Indian brand last year -- continues to exceed expectations. It subsequently increased full-year revenue and earnings guidance.

Not only does CAPS member dreamjob like the strong lineup of brands Polaris offers, but he's also enamored of the solid dividend it pays that currently yields 1.9%:

This looks like a well managed company selling at or slightly below intrinsic value. They have manageable debt, and pay a dividend as well. Positive and stable free cash flows and owner earnings as well. Very solid brand name within the family of products they provide.

Add Polaris to the Fool's free portfolio tracker, and let us know on the Polaris CAPS page or in the comments below if you'll follow this company to greater profits.

A great opportunity for you
Investor sentiment suggests these four-star investments are on their way to five-star greatness, but while PCs and related companies might be hurting, the smartphone and tablet revolution is still gaining legs. You can read The Motley Fool's report on "The Next Trillion Dollar Revolution" to find out more. This report will be available only for a limited period. Get it before it's gone!

The Steve Jobs Betrayal
You may already know that in the final year of his life, Jobs revealed a stunning betrayal — and told his biographer, "I will spend my last dying breath... and every penny of Apple's $40 billion in the bank to right this wrong." What was it that made Jobs so irate — and why could it make a few in-the-know investors some major profits over the coming months and years?

Enter your email address below to find out what made Jobs so enraged!



Federal financial watchdog seeks prepaid card protections - NASDAQ

Reloadable prepaid payment cards  may soon have the same safeguards against fraud, hidden fees and losses that currently protect debit card users from abuses.

The federal Consumer Financial Protection Bureau (CFPB) today announced it will begin accepting public comments on potential new consumer protections for reloadable prepaid cards. It's the first step in drafting federal rules to regulate the increasingly popular cards, which allow users to load funds onto them and make online and in-store purchases just as they would with a debit card or credit card. When available funds are depleted, the cards can be reloaded again.

Consumer groups have long warned that prepaid cards are chock-full of fees and carry no mandatory protections if cards are lost, stolen or used by unauthorized parties. To make matters worse, many celebrities -- the Kardashian sisters and money adviser Suze Orman, most recently -- have lent their names to prepaid cards to lure potential buyers only to draw fire from consumer advocates.

Popular among 'the most vulnerable' "Right now prepaid cards have far fewer regulatory protections than bank accounts or debit cards or credit cards," CFPB Director Richard Cordray said in remarks prepared for a hearing on prepaid cards hosted May 23 by the agency in Durham, N.C. "This is especially troubling because the people who use prepaid cards are, in many instances, the most vulnerable among us. Every dollar they pay in hidden fees is a dollar they cannot spend on supporting their families. These consumers are least able to take a hit if their prepaid card is lost or stolen, and yet they often have no guaranteed protection against this kind of a disaster."

Michelle Jun, senior attorney at Consumers Union, the consumer advocacy arm of Consumer Reports magazine, applauds the agency for making the first steps toward regulating the cards.

"It's a very good thing," Jun says, "Consumers will have additional assurances if their card is lost or stolen or their account is involved in a data breach that they will have their funds back."

Currently, many of the prepaid card issuers offer limited consumer protections, but, as Jun notes, "That isn't the same thing as having them federally guaranteed. Currently, you're kind of at the whim of a customer service representative and what their knowledge of the terms of the card are. If it's a federal regulation, every consumer can point to the exact federal regs and say, 'You must do this for me.'"

The CFPB has not yet said what specific prepaid card regulations it will seek. In its request for public comments, the agency posed a series of questions for feedback, including how fees and important terms should be disclosed to potential card buyers, limits on cardholder liability should cards be lost, stolen or used fraudulently, and how best to assess the costs, benefits and potential consumer pitfalls of emerging new prepaid card features.

Prepaid protections Consumers Union has recommended the following best practices for prepaid card protection:

  • Insurance against losses . Currently, many but not all prepaid cards are insured by the Federal Deposit Insurance Corp. (FDIC) if the financial institution fails. Remedy : Extend the coverage to all prepaid cards.
  • Limited liability. Some but not all prepaid card issuers limit cardholder liability from theft or loss. Remedy: Limit liability to $50 if loss is reported within two business days and no more than $500 from three to 60 days.
  • Unauthorized transactions . Identity thieves can drain accounts with unauthorized purchases. Remedy: Zero liability for unauthorized transactions if reported within 60 days. 
  • Recovering money during disputes. If funds are missing or stolen from an account, the card user can be left in the lurch without access to money. Remedy: Require prepaid card issuers to investigate the incident within 10 days and replace the lost funds.  

"They are essentially the same protections that someone with a debit card would have," says Jun.

Cordray and the CFPB want consumers to be able to compare prices, fees and terms of the different prepaid cards offered on the market before they actually buy the cards. However, since many cards are packaged and sold on store racks, there is limited space to disclose many of the relevant details.

"Consumers should know what all the fees are before they decide to pick up a card and load it," says Jun, who recited a list of the potential card fees: activation, fee, monthly maintenance fee, loading fee, fees for use at the point of sale, bill payment fees, fees to check balances or obtain money at an ATM and fees to retrieve the remaining balances on cards when closing accounts.

A 2011 Mercator Advisory Group study estimates the total amount of money loaded onto prepaid cards to hit $167 billion by 2014 -- up from just $12 billion in 2007. The most widely used prepaid cards are general purpose reloadable "open loop" cards, meaning they can be used to purchase merchandise anywhere electronic payment networks (such as Visa, MasterCard or American Express) are accepted.

The CFPB's proposal rules will not cover closed loop cards that can be used only at certain retail outlets, nor will they cover gift cards, electronic benefits transfer (EBT) cards, nonreloadable cards, payroll cards or debit cards linked to checking accounts.  

To help consumers answer questions about prepaid cards, the CFPB also launched a new website: Ask CFPB: Prepaid Cards. 

How to comment To comment, mail responses to Monica Jackson, Office of the Executive Secretary, Consumer Financial Protection Bureau, 1700G Street, N.W., Washington, DC 20552. Or, submit a comment online at Regulations.gov. Search for CFPB and prepaid cards or refer to Docket No. CFPB-20120019 or Regulatory Identification Number (RIN) 3170-AA22.  


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