motley fool-stock advisor jan2014

Dear Fellow Fools,

With

David & Tom GardnerMotley Fool Co-Founders

January 2014 stockadvisor.fool.com

We’re kicking off 2014 a little early with a complete review of the 119 active recommendations on my side and David’s side of the Stock Advisor scorecard. Front and center are our two re-recommendations, Polaris Industries (NYSE: PII) and The Container Store Group (NYSE: TCS). As different as these two wonderful companies are, they share at least one thing in common: Their employees have a deep love for what they do every day.

Both The Container Store and Polaris do a fabulous job connecting with their passionate customers because the employees are their customers. Women account for more than 80% of the dollars spent in a Container Store; not coincidentally, 17 out of the top 21 executive positions at TCS are held by women. As co-founder Kip Tindell told me in a recent interview (available at mot.ly/SA-Tindell), “If you hire your customer, eventually they’ll run your business.”

Over at Polaris, the company creed is: “Understand the riding experience. Live the riding experience. Work to make it better.” Their employees are power-sports enthusiasts, and that gives them a huge innovative edge.

The full list of employee-first companies on our scorecard is long and distinguished, from Costco (NASDAQ: COST) to Chipotle (NYSE: CMG), from Google (NASDAQ: GOOG) to Gartner (NYSE: IT). Our favorite companies take care of their employees and create a vibrant, collaborative, creative, and rewarding culture.

That’s just one reason I’m so proud that Glassdoor.com recently tapped The Motley Fool as the top medium-sized company to work for. We care deeply about creating a workplace where people can thrive, learn, and grow, because that’s the No. 1 way to make certain we deliver you the best experience possible. We want each Fool to be passionate about not just his or her job, but also our mission, what we’re doing here, and how we’re doing it.

It saddens — no, crushes — me to know that in America, 70% of workers feel indifferent or negative about going to their jobs. Seven out of 10! How can anyone hit great new heights feeling, at best, “meh” about going to work? At the Fool, we score the polar opposite and still have room to improve. People and culture are a driving force in business, and we want to invest with that trend, not against it. I feel safe in saying you’ll see even more of that in the new year.

From all of us here at Stock Advisor, happy holidays and best wishes for a Foolish 2014!For disclosure information, see page 12.

Where Business Is a Pleasure

Best Buys NowTwo Core stocks lead our list of great opportunities for new money . . . p.4

Sell RecommendationsSay goodbye to Scotts Miracle-Gro and Simpson Manufacturing . . . . . p.10

Report CardSee our latest thoughts about every stock on our scorecard . . . . . . . . p.4

David’s Re-Recommendation

The Container Store GroupOne month after we first recommended this well-run retailer, we’re already going back to the store. See what insights we picked up from members like you — and why this company might have what it takes to fend off Amazon.com and big-box rivals.

Full story on page 2

Tom’s Re-Recommendation

Polaris IndustriesWhether you love off-road adventures or just companies that focus on great products, people, and potential, you’ll want to read about this leader of the pack. See why the company’s “three P’s” spell potentially prodigious profits.

Full story on page 3

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2 Motley Fool Stock Advisor January 2014 stockadvisor.fool.com

David’s Re-Recommendation: The Container Store Group (NYSE: TCS)

By DaviD GarDner

Yes, we first recommended The Container Store Group (NYSE: TCS) just last month, but already we need to make more space for it on the scorecard. This specialty storage retailer doesn’t issue its first earnings report as a public company until January, so we don’t have a lot of new finan-cial data points on which to judge its progress. But we have learned a lot — as we always do — from our members, and what we’re hearing underscores our confidence in the long-term success of this “conscious capitalism” company.

“Love love love this store,” says MagicQuilter. “I have found the nearest store in the last four places I have lived and have driven up to an hour away to get Elfa storage products, as well as to browse their aisles for other things.” Member 10T has “never seen another store like it,” while argusdc was “blown away by the customer service and overall friendli-ness.” While a handful of personal experiences are far from scientific, they point to a rich secret sauce that has contrib-uted to 13 consecutive quarters of comparable-store growth and should make new locations successful as the company plans to expand its footprint fivefold over the coming years.

At the same time, some members are doubtful that the company’s financials measure up to its stock price. While the stock may look fully valued right now, we’re looking for an inflection in growth. The pace of revenue growth has been accelerating each year since fiscal 2010. The adjusted EBITDA margin in that time has gone from 9.9% to 12.4%, so as dollars flow into stores more quickly, more of each is going to the bottom line. And although the company is only recently profitable, its solid cash flow (as well as money raised from the IPO) is allowing it to pick up the pace of ex-pansion after several slow years. Cash flow from operations for the quarter ended Aug. 31 was up 150% from the prior year, while free cash flow swung from negative to positive.

We also think the company’s competitive moat is wider than it might seem at first. Most of its items are unique, so a shopper can’t simply go to Amazon.com (NASDAQ: AMZN) for the same thing, and the whole — a complete solution to organiza-tional challenges — is greater than the sum of its 10,000-plus SKUs. That’s especially true if you’re there for in-person consulting from a trained salesperson — or simply the sense of discovery that many shoppers find browsing the aisles.

The Foolish Bottom LineEven if all you’re looking for from The Container Store is

a place to put your money, we think you’ll be pleased with what you find. Consider this your Christmastime reminder that sometimes, the toy is less fun than the box it came in.

Karl Thiel contributed to this report. For disclosure infor-mation, see page 12.

What It Does: The Container Store sells over 10,000 items to help customers organize their lives.

Why Buy: » A relatively small retail

footprint leaves lots of room to grow.

» A focus on “conscious capitalism” has created a strong brand and corporate culture that translates to a unique shopping experience.

» The company boasts accelerating revenue growth and a strong track record of comparable-store sales growth.

Recent Price: $42.40

Risk Rating: 10 of 25 — jawbreaker

Industry Position: Leader

Market Cap: $1,950

Cash/Debt: $13 / $392

Revenue (’11/’12/TTM): $634 / $707 / $736

Earnings (’11/’12/TTM): ($31) / $0 / $8

Insider Ownership: 60%

Biggest Threat: Competition crimps profits

The Team Says: We’ll find the space

Data as of 12/17/13Dollar amounts in millions

except recent price.

5 and 3: What We’re Watching

By Karl Thiel

5 Potential Green Flags for The Container Store Group

1. Comparable-store sales reaccelerate after slowing growth in recent quarters.

2. Average ticket price continues to increase.

3. EBITDA margin improves with growing scale.

4. Higher-margin Elfa sales increase as a percentage of total sales.

5. Shoppers embrace newly opened stores, which continue to deliver a roughly 2.5-year payback period or better.

3 Potential Red Flags for The Container Store Group

1. The company’s single distribution center is no longer sufficient for the growing chain and must take on substantial expansion expense.

2. Increasing competition, particularly online, causes sales growth to slow or margins to fall.

3. The company takes on additional debt to fuel expansion.

For disclosure information, see page 12.

stockadvisor.fool.com January 2014 Motley Fool Stock Advisor 3

Tom’s Re-Recommendation: Polaris Industries (NYSE: PII)

By Tom GarDner

This August, at the annual Sturgis Motorcycle Rally in South Dakota, close to half a million bikers were reintroduced to the iconic and newly resurrected Indian motorcycle brand. One week later, a smaller and less leather-clad crowd was in-troduced to the company behind Indian’s revival when Polaris Industries (NYSE: PII) CEO Scott Wine spoke at a Motley Fool member event in Polaris’ hometown of Minneapolis. The recreational-vehicle maker was already a big winner for us, but that conversation with Wine crystallized our thinking and excitement for it. Today, we’re officially catching another ride.

All Stock Advisor companies should have what Wine refers to as the “three P’s.”

Great Products: Innovation permeates Polaris’ product lines. No wonder, as 4% of revenue is committed to R&D each year. But Polaris also invests in the design process itself. This allows rapid and accelerating development time-lines that can quickly be adapted to customer preference. That’s helped Polaris extend its market share lead in off-road vehicles (No. 1 in both ATVs and side-by-sides) and produce exceptional sales growth and margin improvement across both the off-road and on-road vehicle portfolios.

Great People: “You can’t be a good innovation company without also being a good execution company,” says Wine. And so Polaris’ culture reflects both Wine’s military background and his experience working with the renowned Danaher Business System. Polaris is fast-paced and competitive and, critically, sets high expectations with measured accountability. The result: an employee base that does well and loves doing it, rating the company and Wine highly on Glassdoor.com.

Great Potential: Polaris is ramping up each product cate-gory, and new markets are opening with each acquisition. We see plenty of product expansion to come — motorcycles and small electric vehicles, both sub-$200 million businesses last year, can grow to $1 billion each, for example — but inter-national growth looks like the biggest long-term opportunity. Only 14% of sales come from outside North America now, but acquisitions in France, factory openings in Poland and India, and brand expansion globally are the most recent steps driving what could be 25% annual international sales growth through the end of the decade. It’s an important component of the 12% to 15% sales and earnings growth we expect to power the stock’s gains from its current all-time highs.

The Foolish Bottom LineThe three P’s are what’s made Polaris the success it is

today, and what keeps Wine excited to lead this company — and, for that matter, what gets us excited enough to give Polaris a second seat on our scorecard.


What It Does: Polaris is a vehicle manu-facturer making “anything but cars.” It’s the leading seller of off-road all-terrain vehicles in North America.

Why Buy: » Polaris is the top

dog in the off-road vehicle market.

» A history of innova-tion and excellence drives continued market expansion.

» International and on-road opportunities supple-ment its healthy off-road offerings.

Recent Price: $135.90

Risk Rating: 6 of 25 — carbon steel

Industry Position: Leader

Market Cap: $9,413

Cash/Debt: $388 / $107

Revenue (’11/’12/TTM): $2,681 / $3,244 / $3,637

Earnings (’11/’12/TTM): $228 / $312 / $357

Insider Ownership: 1.2%

Biggest Threat: Credit market disruption

The Team Says: Saddle up!

Data as of 12/17/13Dollar amounts in millions

except recent price.

5 Potential Green Flags for Polaris Industries

1. Interest in power sports continues to gain momentum.

2. Electric vehicles and motorcycle segments each trend toward $1 billion in sales.

3. The international business moves closer to 25% of sales.

4. The company reaps the benefits of continued investments in innovation and product development fueled by a commitment to R&D.

5. The company remains on pace for $8 billion in sales and a net income margin of 10% by 2020.

3 Potential Red Flags for Polaris Industries

1. The company undergoes a major management shake-up, including the departure of CEO Scott Wine.

2. A spike in interest rates increases the cost of financing recreational-vehicle purchases.

3. A downturn in the economy or business cycle results in sales shortfalls.


5 and 3: What We’re Watching

By BrenDan maThews

Report CardIn this review, we offer our outlook for each of Stock Advisor’s 119 recommendations (you can find in-depth analysis of our re-recommendations, The Container Store Group and Polaris Industries, on page 2 and page 3, respectively). See the opportunities ahead, and then join us online for details and Q&A at stockadvisor.fool.com.

Teradata Moves to Hold

We are moving Teradata (NYSE: TDC) to Hold. See the team’s explanation on page 12.


Amazon.com (AMZN) CORE

With less than 10% of global retail sales taking place online, this multibagger of multibaggers still has a tremendous runway for growth. In addition, another Bezos and Co. creation, Amazon Web Services, is disrupting a huge segment of the IT industry and could one day rival Amazon’s core e-commerce business in size. Add in some R&D sci-fi that may even include aerial drone-based deliveries, and you have an incredible growth story that’s far from over.

Apple (AAPL)Apple’s future looks bright, with signs pointing to booming iPad sales and an impending deal to bring the iPhone to China Mobile and its more than 750 million subscribers. Add in the world’s most valuable brand, a fortress-like balance sheet, a growing dividend, and the largest share buyback in history, and Apple has the makings of a winner in the years ahead.

BorgWarner (BWA)BorgWarner has crushed the market since our last review issue. The company recently announced a multiyear outlook that includes $2.9 billion in net new business for the next three years. It has executed well in its market, and governments around the world are proposing legislation requiring more fuel efficiency, which will drive more demand for Borg’s products. Innovation is still a major driver for this business, and based on recent product releases, Borg hasn’t lost its touch.

Interactive Brokers (IBKR)The outsized growth prospects of the brokerage business have long been masked by a volatile market-making operation, but years of industry-leading new-account growth has finally allowed the brokerage unit to firmly take the reins. A talented owner/operator at the helm continues to give us confidence in the long-term prospects of this outstanding business.

Kinder Morgan (KMI)This oil and natural gas pipeline operator is trading near a 52-week low. One reason is that the dividend and distributions announced at the beginning of the month fell short of what Wall Street had been hoping for. We, however, are focused on long-term performance, not short-term guesses. The U.S. energy revolution is far from over; pipelines are key to moving oil and gas from where it’s produced to where it’s used, and Kinder Morgan’s role in that process is large and growing.

Oceaneering International (OII)Oceaneering International is benefiting from continued growth in deep-sea oil drilling. Its backlog is growing, its margins are holding steady or expanding, and its net cash position has expanded. We like the growth opportunity and expect this well-managed company to continue its winning ways. Its recent pullback marks an opportunity to start (or add to) a position.

Precision Castparts (PCP) Precision Castparts, which makes airplane parts and supplies titanium to the industry, is having a good year. Current expectations call for more than 35,000 jetliners (worth $4.8 trillion) to be built by 2032, so Precision should do well over the next several years. Even though it’s near an all-time high, we think the long-term story will carry it much higher.

Sierra Wireless (SWIR)This is the global leader in embedded module machine-to-machine communications technology. As the “Internet of Things” is expected to grow exponentially in the years ahead, so too should Sierra’s revenue and earnings. And we’re pleased to see Sierra widen its moat by using some of the capital it received from the sale of its AirCard business to acquire new M2M assets and technologies. A leader in an important, emerging trend that’s expanding its competitive advantages — that’s a powerful formula for market outperformance.

Valeant Pharmaceuticals (VRX)Valeant Pharmaceuticals, the diversified, acquisitive drugmaker, increased cash earnings per share 24% last quarter, including 14% organic sales growth in emerging markets. The acquisition of Bausch & Lomb instantly gives the company a strong position in ophthalmology. For the second time since we recommended this stock in October, we’re happily prescribing it to you as a Best Buy Now.

Whole Foods Market (WFM) CORE

Whole Foods’ stock price has fallen more than 10% since the company lowered its fiscal 2014 sales and profit outlook back in November. As competition in the natural and organic foods arena heats up, Whole Foods is focused on improving its prices relative to its rivals. While some investors fear that pricing pressure will dent margins, we think this value-focused strategy will help Whole Foods not only defend its market share, but also expand its customer base by appealing to more price-sensitive consumers. That, in turn, should lead to greater sales and profits in the years ahead.

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Motley Fool Stock Advisor™ (ISSN: 1539-218X print version) is published monthly by The Motley Fool, LLC, 2000 Duke Street, Alexandria, VA 22314. Periodicals prices paid at Alexandria, VA and additional mailing offices. POSTMASTER: Send change of address to: Motley Fool Stock Advisor™, 2000 Duke St., Alexandria, VA 22314. Phone (toll-free): 1-888-665-3665. Website: www.fool.com. Email: [email protected]. Please email or call if you have any subscription questions. Editor: Tom Madigan, Publisher: Barry Chambers, Designers: Paul Chun, Ramunė Rastonis, Rik Silverman, CEO: Tom Gardner. Subscription $199 per year. © Copyright 2013 by The Motley Fool, LLC. All rights reserved. Photocopying, reproduction, quotation, or redistribution of any kind is strictly prohibited without written permission from the publisher. Motley Fool Stock Advisor™ bases recommendations and forecasts on techniques and sources believed to be reliable in the past but cannot guarantee future accuracy and results. The Motley Fool is a company of investors writing for investors, and as such, its analysts may own stocks mentioned in the Stock Advisor newsletter. For a complete list of stocks owned by any Motley Fool writer or analyst, please visit www.fool.com/help/disclosure.htm. The Motley Fool, Fool, and Foolish are registered trademarks of The Motley Fool Holdings, Inc. Unless otherwise indicated, the authors do not own shares of the companies discussed in this issue. An affiliate of The Motley Fool provides investment products that may hold securities mentioned in our publications. Editorial personnel have no nonpublic knowledge of the affiliate’s holdings, and the affiliate’s personnel have no knowledge of any editorial content before it is published. These articles may be edited for length and thus vary slightly from our online versions.

Berkshire Hathaway (BRK-B)The insurance segment of Warren Buffett’s empire has faced some headwinds over the past six months as Geico has paid out a higher percentage of premiums and General Re lost money from a European hailstorm. However, the insurance business has also delivered 18 straight quarters of profitability, which is good for anybody. Meanwhile, Berkshire’s operating businesses are growing at a moderate pace, which should continue for the long term.

Canadian National Railway (CNI)North America’s only transcontinental rail network is moving more freight more efficiently and earning more money. And if this winter brings another deep freeze, the company has made preparations. As the U.S. and Canadian economies slowly improve, CN will be on track to steam ahead for more growth.

CarMax (KMX)CarMax continued to top itself in the quarter ending in November as sales of used cars increased 15%. It’s steadily opening new superstores, and it has plenty of room for more. We’ll be watching to make sure CarMax Auto Finance steers clear of lower net interest margins, but the company’s consumer-friendly model clearly resonates. Buckle up and enjoy the ride.

Costco Wholesale (COST)In 2013, Costco delivered on our expectations for steady sales growth, new store expansion, and extremely high member retention. 2014 looks like it’ll be much the same, with new store openings accelerating a bit but the level of excellence maintaining its status quo. We’ll be watching a new effort by Amazon to enter the warehouse space — but we don’t think it’s any reason to take Costco out of your cart.

Google (GOOG)Google continues to widen its moat, building an impressive ecosystem filled with top-tier services such as Android, Chrome, YouTube, Gmail, and, of course, Google’s core search business. As a leader in multiple megatrends, this Core stock can help form the foundation of a Fool’s portfolio.

National Oilwell Varco (NOV)Despite historic highs in new drill rig orders and a multi-decade record of success, our Core oil equipment maker looks underappreciated and ripe for investment. We expect worries about margins to lessen as the company gets a handle on cost overruns from the bonanza of new business and the spin-off of the distribution segment moves forward.

Netflix (NFLX)Netflix continues toward dominance over the world’s streaming content. Domestic and international subscriber growth continues apace, and by this time next year, we expect more original content and one or two new international markets. It’s still relatively early days for this juggernaut.

Nike (NKE)The global leader in athletic footwear and apparel is still running at full speed — earnings per share increased 37% last quarter. And as products like Nike+ FuelBand show, the company hasn’t lost a step as an innovator. We’re looking forward to the 2014 World Cup and all the big wins to come.

3D Systems (DDD)After a year of blockbuster sales and several acquisitions, 3D Systems is putting its growing capital right back into its growing business by meeting the exploding manufacturing and consumer demand for 3-D printers and developing new products to ignite future demand. We expect more great things to come.

Activision Blizzard (ATVI)Activision Blizzard is poised for a very strong holiday season as the blockbuster launches of both the PlayStation 4 and Xbox One drive excitement for next-generation games such as Activision’s new megahit Call of Duty: Ghosts. And with Activision completing its repurchase of the majority of Vivendi’s stake, shareholders should enjoy a larger share of the profits going forward.

Adobe Systems (ADBE)Adobe is transitioning users from license to subscription at a breakneck pace, despite some early unhappiness, and we expect the company to return to growth after dipping in 2013. Millions of users with a free trial to Creative Cloud offer plenty of conversion opportunities. Look for margins to improve in 2014 after a steep decline.

Aflac (AFL)Aflac has improved its financial health since the financial crisis hit its investment portfolio hard. Important solvency metrics are strong, and the company should continue to increase its dividend and share buyback programs. Meanwhile, a long-term but still nascent trend in the U.S. private health exchange market could presage renewed growth. We’re cautiously optimistic.

Air Methods (AIRM)Our emergency medical transporter had some bouts of ugly weather in 2013, but recent earnings demonstrate underlying pricing power is secure and flight volumes are picking back up. Furthermore, hospital partners are accelerating the transition to outsourced air ambulance services, giving Air Methods a viable growth path in an otherwise mature industry.

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Ameresco (AMRC)Ameresco’s failure to execute on its large backlog of energy-efficiency contract awards has disappointed Fools pretty consistently for nearly three years now. Only last quarter did we see a tiny bit of positive movement, but that’s enough to keep us interested a little bit longer. Nobody’s favorite, but a turnaround candidate worth a nibble.

Atwood Oceanics (ATW)Offshore oil driller Atwood Oceanics topped $1 billion in trailing-12-month revenue for the first time, reflecting the continued growth in demand. With oil prices above $100 per barrel, we expect demand to remain high, but watch rig utilization closely for signs of slowdowns. We like Atwood’s reasonable debt level, as well as its profit margins.

Balchem (BCPC)Feed-additive maker Balchem has not beaten the S&P 500 since our July 2011 recommendation. Our thesis is still intact, but it’s been slow going. Next year’s broiler chicken crop is expected to grow, which, on top of strong growth of choline sales in Europe, bodes well for the company.

Beam (BEAM)Beam’s strong portfolio of “brown” liquors has benefited from a worldwide surge in demand for bourbon. That’s offsetting slumping sales of “ready-to-serve” drinks like the once-hot Skinnygirl brand. In the long term, we expect a new generation of bourbon drinkers to make for lasting growth, bolstered by further product innovation.

Bed Bath & Beyond (BBBY)Bed Bath & Beyond is at once one of the best-run retailers out there, and one of the cheapest retail stocks. You’d think that’d get us more excited, if not for one word: Amazon. We’re happy to recommend a Buy here, but we’ll need to see substantial improvement to the nascent online business before getting more excited.

BJ’s Restaurants (BJRI)The casual-dining chain had a tough year as it struggled with declining same-store sales and revenue and profits that fell short of Wall Street’s expectations. But BJ’s opportunity for store-count expansion remains large, and we’re giving management time to right the ship.

BMW (BAMXF)BMW is moving at full speed with two straight quarters of record sales volumes, though revenue is offset by price discounts in core European markets. BMW also invested in itself this year, hiring more engineers and skilled workers to help achieve its goals. Short-term market weakness in Europe isn’t much of a worry for this iconic luxury brand.

Boston Beer (SAM)Strong sales of this popular craft brewer’s Twisted Tea and Angry Orchard brands, along with a return to growth for Samuel Adams Boston Lager, helped drive impressive depletion growth. And while Boston Beer is a titan in craft brewing, it accounts for only a small part of the overall beer market, giving it tremendous room for further growth.

Buffalo Wild Wings (BWLD)B-Wild’s long-running growth story is still going strong. Our mouths are watering from an improved wing-pricing system that should temper variable wing costs, a pizza concept still in the early stages, and a new at-table experience and proprietary TV content. We expect these and more to help the stock keep running wild.

Caesarstone (CSTE)Caesarstone is 2-for-2 in outstanding earnings reports since coming to our scorecard. The new Super-Natural line is an unmitigated success, powering global sales growth and especially market share gains in the U.S., which is now its largest market. Investors are waking up to the opportunity, but the quartz countertop revolution is still young.

Chipotle Mexican Grill (CMG)Our burrito slinger is on pace to approach 1,600 restaurants this year. And once those stores have been open a year or more, they’re bringing in over $2 million each in annual revenue. Impressive! Don’t be put off by the spicy stock price — we expect strong growth to continue.

Cintas (CTAS)Uniform company Cintas is trucking along, with higher revenue in all four operating areas last quarter. The company’s operating margin is feeling some pressure from additional route capacity and lower recycled paper prices (for its document services business), but management continues to repurchase shares and maintains its estimates for the year. This one’s steady as she goes.

Clean Energy Fuels (CLNE)Clean Energy Fuels’ stock price recovered from the dive it took after the release of a damaging — and erroneous — analyst report in October. The core refueling business is steadily increasing revenue, and although expenses related to building out America’s Natural Gas Highway are still dragging on earnings, the company is motoring ahead with a bunch of new deals. We’re optimistic about Clean Energy’s year ahead.

Coach (COH)Coach is in the midst of major changes in leadership and strategy, and tough competition in 2013 has further pressured the stock. We’re hopeful that the incoming CEO and new creative director have the right formula to re-energize Coach as it shifts into a lifestyle brand; the payoff will be compelling if they do.

Cognex (CGNX)Cognex helps machines “see,” leading to improved efficiency in many industries. It’s recently entered the logistics market with a more accurate barcode reader. Early sales results there are exciting, and we’re eager to see where it will go next, capitalizing on its healthy R&D to expand the business.

Corning (GLW)A new deal with Samsung and the authorization of $2 billion in share repurchases brightened glassmaker Corning’s returns for the end of the year. A company of Corning’s size and stature is unlikely to blaze to huge gains, but with the Samsung deal, continued strength in Gorilla Glass, and promising projects in the pipeline, this market leader seems to be in good shape.

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Cubic (CUB)Cubic faced a transitional year in 2013 with a new CEO and concerns over Defense Department spending. But it’s recently won new contracts in both its transit fare collection and military training businesses, and its leadership in transportation systems gives us confidence in the company’s long-term potential.

Cummins (CMI)Weakness in the global economy has been the story for our heavy-duty engine maker, though the stock has roughly matched the broader market in 2013. Cummins has two new engines being released in 2014, with more coming in ’15 and ’16, which should help drive better returns in the future.

Darling International (DAR)Darling has been hit by an EPA proposal to blend less biofuel into gasoline. But it has plenty of uses for its fats and food wastes. Its acquisition of Rothsay extends its reach into Canada, while Vion gives the company more high-margin, value-added products. Even with less growth, we think the stock looks attractively priced.

Dassault Systèmes (DASTY)3-D software maker Dassault Systèmes is only a few dollars above its December 2012 price after lower-than-expected earnings spooked investors in October. That miss came from customers choosing to rent software rather than purchase licenses outright, which delays revenue recognition but makes it recurring. With innovative new initiatives such as its cloud-based software, however, Dassault has a strong long-term outlook and remains a Buy.

Discovery Communications (DISCK)Rumors are swirling that Discovery is mulling a bid for fellow Stock Advisor company Scripps Networks Interactive, parent company of Food Network, HGTV, and the Travel Channel. We think that could be an interesting combination — and we also wouldn’t be surprised if Discovery was itself scooped up by a larger company such as Disney. But above all, we like Discovery based on the value of its content library and content-creation abilities.

DreamWorks Animation (DWA)DreamWorks Animation’s stock has rocketed up about 100% year-to-date, driven by better-than-expected feature-film results. The company is pushing further into television and streaming content as a means to diversify its revenue stream and leverage its catalog of characters and stories. Plus, How to Train Your Dragon 2 should be a blockbuster next summer. The stock remains an animated Buy.

eBay (EBAY)This auctioneer and more is well positioned to profit from the surging growth of e-commerce, particularity via mobile devices, thanks to its popular shopping websites and apps. In addition, PayPal continues to expand its presence as a leader in digital payments. Together, these powerful trends give eBay shareholders multiple ways to win.

Embraer-Empresa Brasileira (ERJ)Our Brazilian aircraft manufacturer is still working through the effects of its slowdown in 2011-2012, when the backlog was at its lowest level since 2005. But the skies are much clearer now, with its backlog near record highs. Fuel-efficient second-generation E-jets should keep Embraer on top of the regional jet market.

Express Scripts (ESRX)Even though its stock has trailed the market this year, our pharmacy benefit manager has been solid. It’s a sign of good health that the company has been filling more prescriptions with generic drugs — they’re more profitable. This trend is beginning to show in higher margins, a big benefit for this health care behemoth.

Federated Investors (FII)Federated Investors remained out of favor and underachieving in 2013. Low interest rates have kept the lid on money-market funds’ earnings, so we wait yet one more year for rising rates to allow Federated’s normalized earnings power to shine through. The drawn-out money fund reform process is slowly resolving but doesn’t diminish our interest in this high-quality asset manager.

FedEx (FDX)FedEx continues its slow growth, thanks to the Ground division. The company continues to work on modernizing, trimming costs, and improving margins, which should grow profits significantly faster than revenue. Barring spiking fuel prices or the sudden hegemony of delivery drones, FedEx should deliver double-digit profit growth over the next several years.

Ford (F)Ford has handily beaten the market over the past year, and the company raised full-year guidance in its most recent earnings report. The company has been operating well, despite rumors that CEO Alan Mulally might not stay through 2014 as planned. Fuel-efficient vehicles are highly important, and the 2014 Fiesta has the highest efficiency rating of any non-hybrid vehicle.

Gartner (IT)This research and advisory firm delivered consistent, higher-than-10% growth this year, and with 97% retention last quarter, customers clearly love its services. We like that while Gartner increases prices annually and offers no discounting, 80% of its growth is from volume. And management is repurchasing shares, creating value for investors.

Generac Holdings (GNRC)This backup-generator maker is off to a good start as one of our newest stocks. We’re expecting sustained revenue growth of 8% to 10% annually, which should come from continued residential sales, higher penetration with small business, and international growth. Add the temporary-lighting business, and this should be a long-term winner.

Genesee & Wyoming (GWR)Railroad company Genesee & Wyoming chugged ahead this year. After its Rail America acquisition, combined operating revenue increased more than 10%, driven overwhelmingly by freight revenue through a mix of rates and higher traffic. Watch for more developments — and possible acquisitions — in North America and Australia in 2014.

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Gilead Sciences (GILD)This biotech was recently approved for sofosbuvir, a likely mega-blockbuster to treat hepatitis C. But the clinical success of idelalisib shows that the company’s next area of growth could be cancer, not just infectious disease. Management is deftly maneuvering around patent expirations for older HIV drugs.

Hain Celestial (HAIN)CEO Irwin Simon and his team have demonstrated a strong ability to boost the value of acquired brands through increased distribution, new product launches, and effective marketing. Combined with solid organic growth among Hain’s existing natural-foods product portfolio, it’s a powerful formula for long-term profit growth and stock gains.

Hasbro (HAS)Hasbro, after long treading water, made a strong move in 2013 and has a promising lineup of movie tie-ins for 2014 and 2015. While U.S. toy sales for boys remain soft, successful new launches (Telepods!), old standbys (My Little Pony), and lower inventories promise growth ahead.

Heico (HEI)This airline parts maker has reaped some growth rewards from pent-up demand in the commercial airline industry in recent quarters. Even as that opportunity fades, steady organic growth on top of lumpy but regular acquisition activity is just the recipe we’ve sought from Heico and its talented owner/operator leadership. We see it maintaining its quiet winning ways.

Hyatt Hotels (H)Hyatt Hotels, one of David’s newer recommendations, is fluffing the pillows for investors and guests alike as it pursues a multipronged strategy of new resort concepts and revamped properties like the former Peabody Hotel in Orlando. We’re confident that CEO Mark Hoplamazian and team can increase revenue per available room across the board in the year to come, even as Hyatt continues to expand its system size.

II-VI (IIVI)Laser-part manufacturer II-VI has finally shuttered most of its Pacific Rare Specialty Metals business, which had long hurt profits. New orders (bookings) remain strong, but earnings are down because of lower margins. We’re keeping an eye on it, hoping the trend reverses itself in relatively short order.

Illumina (ILMN)DNA sequencer maker Illumina continues zipping along the two strands of its business, academic-and-industry (now nearly half of revenue) or razor-and-blade (e.g., sequencers and new reagent kits and tests). As the price to sequence entire genomes continues to drop, Illumina will lead the way into the genomic revolution.

Intuit (INTU)Intuit continues to make strides converting QuickBooks customers to cloud-based offerings, which has benefited its gross margin. And the company is investing in an improved experience for TurboTax users this tax season. It remains a Buy on our ledgers.

ITC Holdings (ITC)ITC Holdings hit a dead end in a two-year journey to consummate a mega-merger with Entergy’s transmission business. A failed merger isn’t ideal, and neither is the bevy of legal challenges facing ITC and its peers over their lucrative allowed returns on equity. But we think high growth is still in the cards, so we’ll leave ITC as a Buy.

Kennametal (KMT)Last summer, we said Kennametal’s slowdown in organic growth was creating a headwind. Since then, the stock hadn’t done much until the announcement that the company would acquire ATI’s tungsten materials business. The acquisition aligns well with Kennametal’s long-term strategy and should help offset sluggish organic growth.

LabCorp (LH)Amid the health care industry’s uncertainty related to the Affordable Care Act, medical testing company LabCorp is limping into the new year after reducing guidance for 2014. We’ll be patient, rather than worried, because of management’s focus on efficiency and LabCorp’s central role in improving patient outcomes.

Linear Technology (LLTC)Linear Technology has a lot working for it today. Here are just two examples: Its battery management and other automotive solutions give it exposure to fuel efficiency and hybrid/electric vehicle industry growth, while its Dust Network acquisition is driving fast growth in wireless sensors that are helping to enable the “Internet of Things.”

LinkedIn (LNKD)Our employment matchmaker continues to disrupt the professional networking and recruiting industries. And, as a way to make its services even stickier to users, LinkedIn is building out its media content with its Pulse acquisition and Influencers program. We think those moves will further increase user engagement and the value of LinkedIn’s network.

Liquidity Services (LQDT)The surplus auctioneer has disappointed Wall Street on guidance five quarters in a row, and the stock is near a two-year low. But it remains in a strong competitive position and is investing in new services that should attract new clients and make existing ones more valuable. We’re looking for the weak retail segment to pick up in 2014.

LKQ (LKQ)This auto-parts maker continues its acquisitive ways, particularly in Europe, but it still has plenty of levers for organic growth: direct repair programs at insurers that favor alternative parts, a growing catalog and wider network, and the simple fact that many people try to keep their cars on the road longer than they used to.

MasterCard (MA)With more than 80% of global payment transactions still taking place via cash or check, and recent reports of increased consumer spending and credit-card borrowing here in the U.S., MasterCard’s prospects in both the long term and short term look strong.

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McKesson (MCK)This top drug distributor has been on fire since the summer. Its announcement that it’s acquiring Celesio, a German competitor, has been well received — if the deal is approved, as we think it will be, McKesson will ultimately own 75% of the business as it increases globalization efforts.

Meritage Homes (MTH)Homebuilder Meritage Homes is taking a breather after running up sharply over the past year. The housing recovery is adjusting to higher home prices and interest rates, but we believe there are enough demographic pressures to keep it moving forward for several years. Meritage will benefit.

Mobile Mini (MINI)Our favorite portable-storage provider has generated positive free cash flow over 23 consecutive quarters. Average fleet utilization is increasing, and management is deploying cash to repurchase shares. It remains a solid option for investors to store their money.

Montpelier Re (MRH)This reinsurer has slowly been beating the market ever since it was recommended, and 2013 has brought more of the same. Tangible book value is up to about $29 per share, and an IPO of a subsidiary is likely to create more shareholder value in the future.

Morningstar (MORN)Morningstar, a premier provider of investment information and services, is back on the growth track as sales picked up 8% last quarter. CEO Joe Mansueto has admirably steered the ship through tough times, and the stock remains a Buy.

MSC Industrial Direct (MSM)This industrial parts supplier’s stock took a step back after fourth-quarter guidance came in below analyst estimates. We think it’s more important that its returns on capital are still very solid, and continued growth in the manufacturing sector should help both the business and its shareholders.

National Instruments (NATI)This maker of scientific tools has had a bumpy year, but it managed to beat its earnings guidance in the latest quarter despite fighting margin pressure and lower sales. Management has promised continued improvement, and we’ll be keeping a close eye on its ability to hang on to its customers while growing revenue and expanding margins.

Netgear (NTGR)Netgear has more opportunities than ever to connect smart homes and a growing “Internet of Things.” Yet the company has underperformed as it grapples with slow consumer and business spending. Highly rated new routers should maintain the company’s lead in networking, but it needs to regain lost share in storage.

Nuance Communications (NUAN)We’ve been very disappointed with Nuance Communications’ performance. But with the stock so beaten down, much of the negativity may already be priced in. We continue to believe in Nuance’s voice technology, and with activist investor Carl Icahn recently increasing his stake to nearly 19%, we think a management shakeup — and possibly even a sale of the company — may be ahead.

Nucor (NUE)Our steel producer, Nucor, isn’t immune to the troubles of its industry, which has been moribund over the past five years. But the company’s efficient operations, strong balance sheet, and widely admired management culture have kept it afloat. Nucor stock is up over 20% this year — not quite as much as the S&P 500, but significantly better than its peers.

Nvidia (NVDA)Nvidia requires patience as it grows from PC-based graphics processors into mobile. With Tegra 4 and 4i fairly new to the market, it’s still wait and see. Mobile console Shield and cloud-based GRID servers point to the future: Computing is becoming ever more visual, while gaming and mobile are quickly converging.

Paccar (PCAR)Record parts sales and increased truck deliveries were just a few of the bright spots in Paccar’s latest earnings report. Despite economic difficulties in Europe, the company has been able to achieve market leadership through increased truck orders. Investment in new products and manufacturing capacity will help keep it rolling for some time.

Panera Bread (PNRA)This fast-casual chain is having trouble efficiently handling customer traffic during busy periods. As a result, the company was forced to hold off on traffic-boosting promotions, which led to disappointing same-store sales figures. But Panera has a host of initiatives already underway to correct the problem, and we expect same-store sales growth to kick back into high gear once Panera ramps up its marketing campaign.

Pegasystems (PEGA)Enterprise software company Pegasystems had a scrumdiddlyumptious year: Revenue soared, its gross margin rose to 69% in the third quarter, and its stock price more than doubled. And Pegasystems’ European business showed promising signs of recovery, which bodes well for its overall success. We’re excited about more good things to come.

PetSmart (PETM)PetSmart has trailed the market as consumers have tightened their pets’ collars along with their own belts. The industry is expected to grow 3% to 5% over the next five years, but PetSmart’s strong brand and differentiated inventory and service offerings should allow it to grow faster. With about 15% market share, there’s room to stretch out.

Priceline.com (PCLN)Priceline.com is revitalized and taking share in the U.S. as it continues to capitalize on its powerful moat worldwide. Our only hesitation here: Jeff Boyd, the industry’s best CEO, is stepping down as chief executive (though staying as chairman). Buy today, but watch that transition carefully.

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Sell Recommendations: Scotts Miracle-Gro and Simpson Manufacturing

By The Stock AdviSor Team

Sell Simpson ManufacturingIt’s been 18 months since we moved Simpson

Manufacturing (NYSE: SSD) to Hold following founder Barclay Simpson’s retirement as CEO. We held out some hope that a recovering housing market wasn’t the only reason to stick around, and that Simpson’s historically powerful moat in U.S. residential building support products would resurface in the form of pricing power and increased sales volumes.

But while sales are up 7% and earnings have risen 20% in the past year, Simpson’s still only at about $1 a share in earnings power, compared to the $2 we had expected in a normalized housing market when we initially recom-mended the company in April 2010.

Chalk up that significant gap to Simpson’s failure to main-tain pricing power in the face of intense competition — most notably from Berkshire Hathaway (NYSE: BRK-B) com-pany MiTek, which purchased Simpson rival USP Structural Connectors in 2011 and has since conducted a successful incursion into Simpson’s market share. Those pressures look more than temporary, which makes the core business less valuable. And lackluster results from Simpson’s global expansion attempts do little to mitigate the problems at home.

At its P/E of 35 and with lost confidence in Simpson’s prospects, we’re cutting our losses. Simpson leaves us with a 22% return, well behind the 60%-plus return of the S&P over that period. Fools looking for a housing-oriented replace-ment should check out Watsco (NYSE: WSO) or Meritage Homes (NYSE: MTH) for better prospects.


Sell Scotts Miracle-GroThe grass is always greener with Scotts Miracle-Gro

(NYSE: SMG) — or at least, that’s what we thought when we recommended the stock in 2011. We saw a brand and market-share leader, with invested and shareholder-friendly management, that had a plan to re-energize slug-gish sales growth by shifting to a new regional focus and flexing its pricing power muscle. We walked into a bit of a dead patch instead.

We have a dimmer view of the company’s pricing power after watching volumes flounder for two years. All was not lost; CEO Jim Hagedorn recognized the chal-lenges and refocused objectives on margin improvement and returning cash to shareholders. That’s grown Scotts’ performance on our scorecard almost 35% — respectable, given the poor fundamentals, but deservedly behind the S&P’s 50%-plus return.

Today, the company believes it can achieve 3% to 5% sales growth in the long term through price increases and ex-pansion into niche categories like organics and indoor/urban gardening. It also sees room for more margin improvement, but both the sales and margin targets are materially lower than they were just two years ago.

We’re left with a busted investment thesis, fairly mundane expectations for the next three to five years, and a stock price that doesn’t leave room for much excitement besides. We recommend you sell Scotts and look to our Best Buys Now for reinvestment.


Qiagen (QGEN)Qiagen and Eli Lilly agreed on their third co-development project in November: biological testing of patient response to particular medical treatments. It’s expected that Qiagen will focus on oncology treatments, with the aim of developing customized ways to treat cancer. That approach could lead to big growth in diagnostics revenue.

Robert Half International (RHI)This leading provider of temporary staffing continues to increase profits (up 16% last quarter) despite the weak employment environment, particularly in Europe. Its margins continue to improve, and the company is returning cash to shareholders through both dividends and share buybacks. We’re happy to keep it employed.

Rosetta Stone (RST)Rosetta Stone seemed like it was making slow progress in its transition to a cloud and direct-to-consumer business model, but a weak third quarter throws that observation into question. While education and enterprise sales are healthy, we need to see a pick-up in retail, particularly international sales.

Safety Insurance Group (SAFT)Our Massachusetts insurer continues to maintain market share and underwriting discipline. That one-two punch is all we can ask for now, since continued low interest rates keep earnings from really ramping up. Until rates rise, we’re satisfied with business stability, a reasonable valuation, and an attractive dividend yield.

Scripps Networks Interactive (SNI)Scripps Interactive Networks continues to rule the airwaves — its customers represent the highest discretionary spending in all of cable, which brings advertisers flocking. International expansion is a big part of Scripps’ strategy, and so far, it’s looking good. Meanwhile, buyout rumors abound, which could also work out very well for shareholders.

Sherwin-Williams (SHW)The Mexican government’s denial of Sherwin-Williams’ attempt to buy Consorcio Comex has management re-evaluating. On the bright side, our paint maker was able to secure Comex’s operations in the U.S. and Canada. Overall, we’re encouraged that Sherwin-Williams is determined to expand its presence internationally, especially in Mexico, and we’ll be keeping an eye out for more acquisition activity in 2014.

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Sina (SINA)Sina’s strategy of investing in mobile platforms and monetizing its microblogging site, Weibo, through its partnership with Alibaba seems to be paying off. We look forward to monetization increasing next year, as well as steady growth in daily active users and advertising revenue across all Sina’s platforms. If Sina can do that and maintain its 64% gross margin, 2014 will be a good year indeed.

Starbucks (SBUX)The sweet call of the green-and-white siren is growing even more tempting, as Starbucks improves its product offerings with La Boulange bakery products, Evolution Fresh juices, and Teavana teas. With room for expansion (still!) in the U.S. and massive opportunities in emerging markets such as China and India, Starbucks can provide a jolt to your portfolio.

Tennant (TNC)Tennant, maker of cleaning solutions, has been a quiet winner. Its balance sheet is the strongest it’s been in years, and profit margins are climbing. With economic growth returning to the U.S., sales should pick up and operations should improve going forward. Add in a European recovery, and this company should continue its winning ways.

Tesla Motors (TSLA)An epic ride in 2013 left us with a bit of whiplash but firmly bullish about this disruptive automaker’s future. We’re looking for another near-double for Model S sedan sales, and progress (hopefully all the way to production) for the crossover SUV Model X in 2014. Tesla may seem insanely expensive, but we think its future is insanely great.

Texas Roadhouse (TXRH)This steakhouse chain has a simple concept: good food served in a fun atmosphere for an affordable price. The company is executing this strategy well, aided by a strong ownership culture that aligns the interests of customers, employees, and shareholders.

Tibco Software (TIBX)Tibco has significantly underperformed the market since we recommended it in July 2011. But we still have confidence in founder/CEO Vivek Ranadivé and Tibco’s leading technology in middleware and infrastructure software, and we believe the company is a strong play on the Big Data megatrend.

TransDigm Group (TDG)TransDigm, the maker of aerospace components, continues to impress. Net sales increased 13% in fiscal 2013, and the company continues to execute its acquisition-driven strategy to increase shareholder value. Go ahead and fly the friendly skies.

Ulta Salon (ULTA)Ulta Salon’s new CEO, Mary Dillon, shook up investors with her measured resetting of earnings expectations for the year ahead, but we think she’s right on track. The company will focus on propelling growth through e-commerce, new stores, and adding new brands and products to its offerings.

Under Armour (UA)Under Armour is quickly growing from an edgy underdog to an industry titan in the U.S. But make no mistake: UA is still only one-eighth the size of industry leader Nike, and international markets remain largely untapped. Recent acquisition MapMyFitness expands UA’s digital product offerings and further highlights the company’s innovative culture.

UnitedHealth Group (UNH)UnitedHealth Group has returned over 400% since we recommended it in 2002. As the largest provider of health insurance in the country, it may find such impressive growth more difficult to achieve in the future. However, United’s Optum platform is growing rapidly and improving the efficiency of United’s coverage.

Urban Outfitters (URBN)Despite a challenging promotional sales environment, Urban Outfitters produced record revenue and higher margins last quarter. Management recognizes the need to execute better and has made that its primary focus for 2014. We expect the effort to succeed, but if management fails, we’ll consider putting Urban back on the rack.

Vail Resorts (MTN)Vail Resorts is schussing along. There might be a delay in building out the Epic Discovery summer resort plans, but that doesn’t derail our thesis. It’s shaping up to be a good ski season this year, and with a continued strengthening economy, we expect the good run to continue.

Walt Disney (DIS)Disney’s stock price is near its all-time high as ESPN continues to dominate the sports entertainment industry and the company’s namesake parks and resorts enjoy solid increases in attendance, revenue, and operating income. With a host of other promising films set to debut over the next several years, Disney should continue to thrill moviegoers and shareholders alike.

Watsco (WSO)Watsco’s brass recently articulated their long-term ambitions for dramatic operating income and margin improvements. A combination of focusing on what’s worked (industry consolidation and market-share gains taken from smaller HVAC distributors) — as well as new initiatives in products, manufacturing partners, and international expansion — give us comfort this outstanding management team isn’t standing still.

Western Union (WU)Western Union has hit a rough patch. Its profits have taken a hit as the company deals with Mexican regulatory issues and reduces prices to increase the volume. Fortunately, recent consumer-to-consumer transaction volume increased 9% last quarter.

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Westinghouse Air Brake Technologies (WAB)This maker of train components is chugging along. Earnings per share increased 17% last quarter, and the train brakes that are the company’s signature product are not a discretionary purchase. We like Wabtec’s slow-and-steady returns — no need to hit the brakes now.

Westport Innovations (WPRT)Westport Innovations is at a multiyear low following uneven sales, a secondary offering management previously said wouldn’t be necessary, and more. Questions remain, but we believe the market for natural-gas vehicles is finally accelerating. Westport’s new products and OEM agreements keep it in the driver’s seat. Look for positive cash flow in 2014.

Williams-Sonoma (WSM)This home-goods purveyor is cooking with CEO Laura Alber at the controls. Driving the good results are strong sales at West Elm and Pottery Barn, as well as better-than-expected performance in Australia and the Middle East. We’ll be especially excited if Alber can pump up sales at Williams-Sonoma stores in time for the holidays.

WisdomTree Investments (WETF)WisdomTree posted a 2013 for the record books, with 80%-plus growth in assets under management and a veritable monster smash hit with its currency-hedged Japan ETF. That leaves the company heavily exposed to a turn in sentiment in Japan, but we’re comfortable tolerating that risk to participate in the decade-plus growth path we see from this pure play on the ETF megatrend.

Dolby Laboratories (DLB)Dolby’s sales and margins have been on the downswing. Licensing royalties on optical disc players is declining, and the company is searching for new profit streams. Until we see progress in new growth areas, we’re leaving Dolby on pause.

Quality Systems (QSII)Since our June review issue, Quality Systems’ stock has rebounded amid Wall Street’s excitement about a reorganization plan. Changing the business to focus on recurring revenue has created some disappointing numbers in the short term. However, management remains resolute in its commitment to the business model and the customers, so we are willing to hold on and wait out the continued reorg.

SeaDrill (SDRL)We’re still concerned about this offshore oil driller’s debt level. It has about 3 times the debt-to-equity level of its competitors and is still aggressively building rigs. We want to see one more quarter’s results before making up our minds on keeping this or letting it go.

Silicon Labs (SLAB)This fabless semiconductor company has shown a knack for innovation. But its co-founders are less actively involved these days, it faces intense competitive pressure, and margins have declined. Until we see improvements, this longtime recommendation remains on Hold.

Teradata (TDC)Teradata has struggled this year, with earnings consistently coming in below expectations. This, along with the threat of public cloud adoption, has caused us to question whether Teradata remains a long-term growth story. We’re putting the company on Hold to monitor results for the next six months. We’d like to see the company win more Big Data deals and return to 10% or more annual revenue growth.

TTM Technologies (TTMI)TTM continues to struggle with hard-negotiating customers and employees — the company hasn’t been able to raise prices to cover wage inflation in China, and margins have gotten hit. Until we see signs of pricing power, this company remains on Hold.

John Mackey, co-CEO of Whole Foods Market, is a member of The Motley Fool’s board of directors. Alex Scherer, CFA, owns shares of BRK-B and has options on TSLA. Andy Cross owns shares of BRK-B, SAM, BWLD, CMG, DISCK, ESRX, IIVI, LNKD, MA, MRH, NOV, PCLN, SBUX, UA, and WAB. Brendan Mathews owns shares of AMZN, AAPL, BRK-B, KMX, GOOG, KMI, MA, NOV, NKE, VRX, and WETF. David Gardner owns shares of DDD, ATVI, AMZN, AAPL, ATW, CNI, CMG, DWA, FDX, F, GOOG, NFLX, PNRA, PCLN, RST, SWIR, SINA, SBUX, TSLA, UA, DIS, and WFM. Jim Mueller owns shares of DDD, ATVI, AMZN, ATW, BJRI, SAM, BWLD, CNI, KMX, CMG, CLNE, CGNX, GLW, DAR, F, GWR, GILD, GOOG, HAIN, H, IIVI, ILMN, INTU, KMI, LQDT, LKQ, MTH, NOV, NFLX, NUAN, PEGA, PCLN, QGEN, RST, SDRL, SWIR, SINA, SBUX, TSLA, TCS, TIBX, TDG, URBN, MTN, WPRT, and WFM and has options on AAPL, BRK-B, F, NFLX, SBUX, DIS, and WPRT. Joe Tenebruso owns shares of LNKD and DIS. Karl Thiel owns shares of AAPL, GLW, GOOG, HAS, NUAN, and NVDA. Nathan Alderman owns shares of AMZN, AAPL, BRK-B, CMG, and COST. Sara Hov owns shares of DDD, AMZN, AAPL, BRK-B, CMG, COH, GOOG, SBUX, DIS, and WFM. Tom Gardner owns shares of BWLD, CMG, COH, GOOG, INTU, LNKD, MA, MSM, NOV, PCAR, SBUX, and WFM. The Motley Fool owns shares of AAPL, AMZN, ATVI, ATW, BJRI, BRK-B, BWLD, China Mobile, CMG, CMI, COH, Corning, COST, DDD, DIS, EBAY, ESRX, F, GNRC, GOOG, HAIN, HAS, INTU, KMI, KMX, LNKD, MA, MSM, NFLX, NKE, NOV, NUAN, PCAR, PCLN, PNRA, RST, SAM, SBUX, SDRL, SINA, SWIR, TNC, TSLA, ULTA, UA, WFM, and WPRT and has options on DDD.

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RECOMMENDATION REPORT CARD

64%

107 beating the market

60 lagging the market

36%

As of 12/17/2013 Excludes sold positions.

AVERAGE RETURNS

As of 12/17/2013. Includes sold positions.As of 12/18/2012. Includes sold positions.

221.3%

46.5%

0% 25% 50% 75% 100% 125% 150% 175% 200% 225%

David’s Returns

Tom’s Returns 79.3%

S&P 500

motley fool-stock advisor jan2014

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