What Is China's Real Growth Rate?

The news from China continues to push stocks both higher and lower so Moneyshow's Jim Jubak assesses what he thinks is their real growth rate.

The official target for growth for 2013 in China remains at 7.5%.  That’s where the government set it.  That’s where all the votes of various bodies were in and it’s still the official target, but you can see its sliding.  We’ve had a couple of instances in the last few weeks, where people say, you know, officials have come out—officials who are in the know, so it’s not really a mistake---they’ve come out and started talking about 7%, and then finally, you had Premier Lee come out and say, oh, okay, we’re really not talking about a range.  Acceptable range is 7 to 7.5%, but we absolutely will not go below 7.  This is a big shift.  I don’t know how much of this is embedded in the price of commodity stocks, but my guess is that they were really thinking that 7.5% would be a bottom.  If 7% is now the bottom, you’re going to see some kind of rejiggering of the prices of those stocks.  The real danger, though, in that sector, would be if we start to move below 7. 

Top 5 Bank Companies To Watch For 2014

Now it looks like the Chinese government really wants to defend seven on the same day as Premier Lee came out and said 7% is our bottom, he also said, well, you know, we’re going to speed up our spending on construction on railroads in Southern and Western China.  It’s significant that he wasn’t talking about new money; just talking about speeding up the spending of already allocated money, budget is set.  So, really, it’s a very limited kind of stimulus.  To the degree that there are any analysts out there all trying to put numbers on this, the consensus is well, that we really might see net stimulus from the central government of about $25 billion of 2013.  That’s a big contrast to the stimulus after the global financial crisis, when China was really trying to stop an economy in free fall and stimulus then was $586 billion-$586,25; you can see the difference.  The ideological difference is that you’ve moved from a period where the government seemed to be really fearful of breaking through 7-1/2, because they were afraid that it was going to produce social unrest or the consequences to the connected people in the party, and their pocketbooks were going to be too high.  7% now seems to be acceptable, because the government has really ratcheted up its concern about the need to reform the Chinese economy. 

If the Chinese economy is going to grow at a decent rate going forward, certain things have to happen.  The financial system has to have certain reforms.  There have to be changes in the way that banks do loans.  Strangely enough, you’ve got a runaway loan credit demand situation in China, but medium-sized and small-sized companies in China can’t raise any money.  All the money’s going to the big state-connected institutions and you’ve got a real credit crunch in the small and medium size part of the economy, so there’s a sense that it’s crucial for these reforms to happen and if China needs to sacrifice a half percentage point of growth to do that, that’s fine.  The question really is—the big question is not so much whether we’ll get 7%, because I don’t know that—no one really does.  I mean, how do you judge where you’re going to be able to stop a locomotive as big as China.  The question is well, if we go below seven, if you move toward 6-1/2 or 6.7, what does the government do?  Does the government decide that that’s okay, if we’re going to get the reforms that we need out of that, or is the government going to say, okay, that’s unacceptably low.  It’s too risky.

We’re going to stimulate again, and really throw the reforms out the window.  So that’s the crucial thing.  7% has implications for all Chinese stocks and all commodity stocks around the world, but it’s really what happens below that, that’s important going forward, and we won’t know what that is until we get there. 

Best Tech Companies To Watch For 2014

Of the thousands of stocks that trade on U.S. exchanges, the list of Dividend Aristocrats includes only a handful of companies that have been able to raise their dividend payouts every year for a quarter century or longer. Yet the Aristocrats define dividend growth as any increase in the payout, no matter how small, and so some stocks demonstrate better growth prospects than others.

Until recently, Consolidated Edison (NYSE: ED  ) was arguably one of those stocks that made the Aristocrats list on a technicality, as it had made minimal half-penny increases in its quarterly payout for more than 15 years. But this past year, the utility boosted its dividend by a full penny, and while that's small, it could be significant in signaling an acceleration of its dividend increases. Let's take a closer look at Consolidated Edison to see whether this faster dividend growth is likely to continue.

Best Tech Companies To Watch For 2014: Tessera Technologies Inc.(TSRA)

Tessera Technologies, Inc., through its subsidiaries, develops, licenses, and delivers miniaturization technologies and products for electronic devices worldwide. The company operates in two segments, Intellectual Property and DigitalOptics. The Intellectual Property segment offers semiconductor packaging technologies, which create mechanical and electrical connection between semiconductor chips and systems, such as computers and communication equipments through connection to printed circuit boards. The DigitalOptics segment provides mobile camera module solutions in categories, including actuator technologies, image enhancement solutions, and wafer level optics that can be applied to mobile phones and other consumer electronic products. It also offers customized micro-optic lenses from diffractive and refractive optical elements to integrated micro-optical subassemblies. This segment serves customers in digital still cameras and mobile handsets markets, as well as semicon ductor lithography, high-end communication routers, military and defense, and barcode scanners markets. Tessera Technologies, Inc. was founded in 1990 and is headquartered in San Jose, California.

Best Tech Companies To Watch For 2014: Spirent Plc(SPT.L)

Spirent Communications plc operates as a communications technology company in Europe, the Asia Pacific, the Americas, and Africa. It operates in three segments: Performance Analysis, Service Assurance, and Systems. The Performance Analysis segment provides solutions that test current and next-generation communications technologies in the lab. It develops test solutions for the engineers in the communications industry that allow them to evaluate the performance of the latest technologies, infrastructure, and applications to be deployed worldwide. This segment also offers tools for service technicians and field test engineers to enhance network quality and make troubleshooting of live networks. In addition, it allows network equipment and mobile device manufacturers, service providers, enterprises, and government entities to test and benchmark the performance of their networks, network elements, mobile devices, and services; and delivers solutions, which address high speed E thernet, data center, cloud computing, virtualization, IMS, IPTV, location based services, multi-GNSS satellite technologies, 3G and 4G/LTE wireless, and other technologies. The Service Assurance segment provides network monitoring and field test solutions for live networks. This segment allows service providers to diagnose, troubleshoot, and determine how to resolve issues with networks and systems within the live network. The Systems segment supplies electronic control systems for electrically powered vehicles in the medical mobility and industrial markets. These include vehicles, such as powered wheelchairs and mobility scooters, as well as industrial vehicles, including floor cleaning equipment, fork-lift trucks, aerial access platforms, and golf carts. Spirent Communications plc was founded in 1936 and is headquartered in Crawley, the United Kingdom.

Top 5 Undervalued Companies To Invest In Right Now: Wave Systems Corp.(WAVX)

Wave Systems Corp. develops, produces, and markets products for hardware-based digital security. Its products are based on the Trusted Platform Module (TPM), a hardware security chip that enables secure protection of files and other digital secrets, and performs critical security functions. The company offers EMBedded Application Security SYstem (EMBASSY) Trust Suite, a set of applications and services that are designed to bring functionality and user value to TPM enabled products. The EMBASSY Trust Suite includes the EMBASSY Security Center, Trusted Drive Manager, Document Manager, Private Information Manager, and Key Transfer Manager. It also offers middleware and tools, which include Trusted Computing Group (TCG) enabled toolkit that assists application developers in writing new applications or modifying existing ones to function on TCG-compliant platforms; and Wave TCG-Enabled Cryptographic Service Provider, which allows software developers to utilize the security of a TCG standards-based platform. In addition, the company offers EMBASSY Trust Server Applications comprising EMBASSY Key Management Server, a server application designed to provide corporate-level backup and transition of the TPM keys; EMBASSY Authentication Server that offers centralized management, provisioning, and enforcement of multifactor domain access policies; and EMBASSY Remote Administration Server, which provides centralized management and auditing of TPMs and self-encrypting drives. Further, it offers eSign Transaction Management Suite and broadband media distribution services. Wave Systems Corp. sells its products to chip original equipment manufacturers (OEMs), PC OEMs, enterprise customers, and systems integrators. The company was formerly known as Cryptologics International, Inc. and changed its name to Wave Systems Corp. in January 1993. Wave Systems Corp. was founded in 1988 and is based in Lee, Massachusetts.

Best Tech Companies To Watch For 2014: LSI Logic Corporation (LSI)

LSI Corporation designs, develops, and markets storage and networking semiconductors worldwide. It offers integrated circuits for hard disk and tape drive solutions, which are used to store and retrieve data in personal computers, corporate network servers, archive/back-up devices, and consumer electronics products. The company�s storage electronics products include systems-on-a-chip, read channels, pre-amplifiers, serial physical interfaces, and hard disk controllers, as well as custom firmware required to read, write, and protect data. It also offers pre-amplifiers, which are used to amplify the initial signal to and from the drive disk heads; and solutions that transmit data between a host computer and storage peripheral devices. In addition, the company provides custom and standard networking solutions that include chips, such as network processors, digital signal processors, content-inspection processors, traffic shaping devices, and physical layer devices, as well a s software, evaluation systems, and reference designs for office, home office, and small-to-medium business applications; flash storage processors; server storage semiconductor products, and server RAID adapters and software; and high-speed interface intellectual property that combine with customers� intellectual property to provide a connection to the SAN, memory systems, and host buses. Further, it offers networking solutions include communication processors, network processors, media processors, content-inspection processors, and physical layer devices, as well as software tools and segment specific applications, evaluation systems, and reference designs. The company was formerly known as LSI Logic Corporation and changed its name to LSI Corporation in April 2007. The company was founded in 1980 and is headquartered in Milpitas, California.

Wynn Resorts' Key Advantage

Shares of the casino and resort company have had a very good run lately, rising 12% in the last three months alone. While most people automatically picture the iconic Las Vegas strip when they think of casinos, Wynn Resorts (NASDAQ: WYNN  ) actually makes the majority of its profits from its operations in Macau. With China's economy slowing down, how much will Wynn's bottom line be hurt? Motley Fool Asset Management analyst Bill Barker shares why investors focused on the long term have nothing to fear.

CEO Steve Wynn and his leadership team have built a strong culture at Wynn Resorts. So while betting in Macau is expected to cool off in the rest of 2013, Barker says China's economy will not be the determining factor in Wynn Resorts' long-term success. With Wynn and his team at the helm, the company is in great shape over the next five to 10 years. While shares of Wynn Resorts have nearly doubled the market's return over the past 12 months, Barker expects the stock to be a market-beater for years to come.

Profiting from our increasingly global economy can be as easy as investing in your own backyard. The Motley Fool's free report "3 American Companies Set to Dominate the World" shows you how. Click here to get your free copy before it's gone.

Dow Set for Early Gains

LONDON -- Stock index futures as of 6:20 a.m. EDT indicate that the Dow Jones Industrial Average (DJINDICES: ^DJI  ) may open up 0.48% this morning, while the S&P 500 (SNPINDEX: ^GSPC  ) may open 0.51% higher. CNN's Fear & Greed Index has continued to fall, dropping to 28, or "fear," after closing at 39 yesterday.

European markets have made modest gains this morning, helped by some positive data from the region's largest economies. In the U.K., the number of new jobless claims fell by 8,600 in May, beating expectations of a 5,000 drop. In the eurozone, industrial production rose by 0.4% in April from March, beating consensus forecasts for a 0.2% rise. In the U.K., Vodafone, the 45% owner of Verizon Wireless, dropped 4.4% after announcing that it was in preliminary discussions to acquire Kabel Deutschland, a German cable television company valued at 7 billion euros. At 7:15 a.m. EDT, the FTSE 100 was up 0.2%, while Germany's DAX was flat and Spain's IBEX 35 was up by 1.6%.

Today's U.S. economic calendar includes the Federal budget for May, which is due at 2 p.m. EDT and is expected to come in at -$130 billion, down from -$124.6 billion for the same period last year. Companies due to report quarterly earnings today include H&R Block, which is expected to report fourth-quarter earnings of $2.61 per share, according to consensus forecasts. Also due to report are Men's Wearhouse and PVH, which is expected to report first-quarter earnings of $1.35 per share.

5 Best Blue Chip Stocks To Buy Right Now

Rambus surged 10.5% in premarket trading after announcing that it had settled a patent dispute with SK Hynix Inc, while Yum! Brands may edge lower when markets open after reporting a 19% fall in same-store sales in China. First Solar was down by 6.3% in premarket trading this morning and is likely to drop heavily when markets open after the firm announced a public offering of 8.5 million new shares of its common stock last night. Heading the other way may be Carnival, which was up 1.6% in premarket trading after announcing that its former president, Bob Dickinson, is returning to the company as a consultant to advise the firm on marketing. Carnival's share price has fallen by 17% since February, when it reported disappointing quarterly earnings.

Finally, let's not forget that the Dow's daily movements can add up to serious long-term gains. Indeed, Warren Buffett recently wrote, "The Dow advanced from 66 to 11,497 in the 20th Century, a staggering 17,320% increase that materialized despite four costly wars, a Great Depression and many recessions." If you, like Buffett, are convinced of the long-term power of the Dow, you should read "5 Stocks To Retire On." Your long-term wealth could be transformed, even in this uncertain economy. Simply click here now to download this free, no-obligation report.

Cell Phone 'Bill Shock' Is History Thanks to New FCC Rules

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The days of opening your cell phone bill and getting slapped with unexpected charges should be over.

As of Wednesday, cell phone companies must send customers four types of alerts when they are in danger of being charged beyond their normal plan price. The practice, which tacks on unauthorized or misleading charges on a bill, is known as "cramming" and has been around for decades with landline phone bills.

A 2011 agreement between the Federal Communications Commission and major cell phone companies included today's deadline that requires them to alert subscribers when they approach, reach and exceed limits on voice, data, text and international roaming charges. Carriers were required to provide two alerts by Oct. 17.

"This is very important consumer protection," says Jack Gillis, Director of Public Affairs for the Consumer Federation of America. "The bottom line is that cell phone charging plans are so complicated it's very easy to go over plans, especially with limited plans. This new requirement at the very least will save consumers thousands of dollars."

According to a 2010 FCC survey, 30 million Americans, about one in six mobile users, have experienced "bill shock," a sudden and unexpected increase in monthly bills not caused by a change in service plans. In 2010, the agency showcased a 66-year-old customer's plight of facing an $18,000 bill after a promotional, limitless data plan expired without warning as why more stringent notifications were needed.

The average wireless contract includes a flat fee for a set number of minutes and data each month and any usage that goes beyond the allotment is charged at a much higher rate. The surge in use of tablets has made consuming data and in turn, exceeding limits, much easier.

The FCC and Governmental Affairs Bureau held a workshop Wednesday on bill shock and cramming and according to attendee John Breyault, vice president of Public Policy for the National Consumers League, the FCC reported the number of complaints over mammoth fees has dropped significantly since October.

The NCL advocated for the new regulations to be implemented two years ago, and Breyault says the wireless companies reported being in full compliance of the alerts on Wednesday, which covers 97 percent of the carrier market.

In some cases when companies incur higher taxes or lose a revenue stream they are forced to increase prices to make up the difference, but Breyault says wireless caries did not view overcharges "as profit centers."

"The dissatisfaction of consumers felts over charges had the companies introduce tiered data plans ... there are still problems with these plans and whether or not they are adequate and will offer enough data at a reasonable price."

Amy Storey, spokeswoman for the wireless association CTIA, told FOX Business that the cost for the alerts is not known, but carriers would not pass them along to consumers. More From Fox Business: 3 Job-Hunting Tips for MBA Grads to Land a Job Rent vs Sell? 4 Questions to Ask to Make the Right Decision Planning for Retirement: Where to Start

Is YouTube Google's Secret Weapon?

Lately, the media hubbub with Google  (NASDAQ: GOOG  ) has centered around the dynamic company's shiny Google Glass innovation, which has become nothing less than a popular-culture touchstone.

The commotion has shoved YouTube, which Google acquired in 2006, into the background, but it shouldn't be that way at all.

The YouTube 2013 story is filled with drama. Yes, Netflix has changed the stakes in this consumer content sector by coming up with House of Cards, the Kevin Spacey drama that has captured the fancy of much of the nation while giving parent Netflix a new kind of aura. YouTube has remained somewhat static, in terms of offering the same service yesterday as today, while Netflix is growing and evolving.

The question of whether YouTube can keep up with Netflix, which has notched a decided public-relations win with its original content, could help determine whether Google itself will return to prominence as a hot stock.

As The Guardian newspaper noted, Wall Street estimates that YouTube brings in anywhere from $4 billion to $5.6 billion in revenue, accounting for as much as 10% of Google's total revenue.

YouTube has had a rocky road. Last March, AllThingsD noted that YouTube's ad revenue wasn't "keeping pace" with the increasing view-counts, and expenses, of a number of YouTube's partners. 

MarketWatch.com published a piece on July 19 proclaiming: "Google's bet on YouTube is finally paying off." The site noted: "That's good news for Google bulls looking for another source of revenue to sustain the company's annual growth rate, which has slowed since the purchase of Motorola Mobility last year."

Google's shares tumbled in after-hours trading on July 18 when the company announced disappointing quarterly earnings.

As Fool.com's's Steve Heller noted:

In the second quarter, Big G reported year over year revenue growth of 19% to $14.11 billion, which translated into a non-GAAP income of $3.23 billion, or $9.56 a share. Analysts were expecting Google to earn $10.78 a share on revenue of $14.42 billion. The culprit appears to be that Google's cost-per-click -- or CPC -- declined by 2% sequentially and 6% year over year, despite paid click volume rising by 23% year over year and 4% sequentially. This could indicate there's potentially a structural headwind that's driving down the CPC metric.

Google has appeared to be a tech juggernaut, even labeled unstoppable, at times. Hmmm. Remember what happened to previous dynamos such as Microsoft and Apple, both of which crushed shareholders' dreams.

If nothing else, the Google executive team has proven itself to be resourceful. Acquiring YouTube in 2006 was an example. But that was then. Can YouTube now help Google avoid the pitfalls of other once-hot stocks that cooled off?

San Bruno, Calif.-based YouTube has burst into prominence as a video-sharing Internet site, originated by a trio of PayPal staffers in 2005. Viewers can upload, share and watch videos. It allows people to exhibit an array of user-created videos, encompassing everything from movie reels and TV footage to homemade videos and video blogs.

YouTube has become synonymous with the do-it-yourself creative spirit of the Internet in recent years. Trying to capitalize on the video-viewing experience, Google gobbled up for $1.65 billion nearly seven years ago. You Tube is also responsible for pushing the term "viral video" into our societal lexicon.

But what does all that mean to shareholders of Google? Well, considering it may pull in as much as 10% of Google's revenue, YouTube might be Google's secret weapon.

3-D Printing News You Need to Know: Expiring Patents and New Tech

The 3-D printing space has certainly garnered its fair share of media attention over the past year due to a multitude of factors, but one surely has been the rising use of personal 3-D printers by hobbyists. This increasing use can largely be attributed to the expiration of patents on the technology used in those printers, which is leading to a rapid onslaught of entrepreneurs creating their own hobbyist 3-D printers for resale. As history shows, patent expiration can frequently lead to periods of rapid innovation. In this video, Motley Fool analyst Blake Bos covers some very important patents expiring in 2014. Watch the video below, and also check out this very innovative new 3-D printing technology featured at Rapid Ready Technology.   

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With the U.S. relying on the rest of the world for such a large percentage of our goods, many investors are ready for the end of the "made in China" era. Well, it may be here. Read all about the biggest industry disrupters since the personal computer in "3 Stocks for the New Industrial Revolution". Just click here to learn more.

Is Taiwan Semiconductor Destined for Greatness?

Investors love stocks that consistently beat the Street without getting ahead of their fundamentals and risking a meltdown. The best stocks offer sustainable market-beating gains, with robust and improving financial metrics that support strong price growth. Does Taiwan Semiconductor (NYSE: TSM  ) fit the bill? Let's look at what its recent results tell us about its potential for future gains.

What we're looking for
The graphs you're about to see tell Taiwan Semi's story, and we'll be grading the quality of that story in several ways:

Growth: Are profits, margins, and free cash flow all increasing? Valuation: Is share price growing in line with earnings per share? Opportunities: Is return on equity increasing while debt to equity declines? Dividends: Are dividends consistently growing in a sustainable way?

What the numbers tell you
Now, let's take a look at Taiwan Semi's key statistics:

TSM Total Return Price data by YCharts.

Criteria

3-Year* Change

Grade

Revenue growth > 30%	68.4%	Pass
Improving profit margin	(7.3%)	Fail
Free cash flow growth > Net income growth	(37.9%) vs. 56%	Fail
Improving EPS	56.1%	Pass
Stock growth (+ 15%) < EPS growth	82.4% vs. 56.1%	Fail

Source: YCharts.
*Period begins at end of Q1 2010.

TSM Return on Equity data by YCharts.

Criteria

3-Year* Change

Grade

Improving return on equity	(12.6%)	Fail
Declining debt to equity	236.2%	Fail
Dividend growth > 25%	7.7%	Fail
Free cash flow payout ratio < 50%	276.3%	Fail

Source: YCharts.
*Period begins at end of Q1 2010.

How we got here and where we're going
Taiwan Semi doesn't back up its strong price appreciation by earning a measly two out of nine passing grades today. The company's big weakness of late is falling free cash flow, which now rests far below its net income (although it remains in solidly positive territory for the time being). Can Taiwan Semi's shareholders continue to earn market-beating returns, or is chip-making not the moneymaker it was once thought to be? Let's dig a little deeper.

Apple (NASDAQ: AAPL  ) signed a three-year deal with Taiwan Semi in the past month to build the upcoming A8, A9, and A9X chips -- a deal that seemed to show Apple moving away from Samsung as its supplier-slash-frenemy of choice. But Apple is apparently still utilizing Samsung fabs to build A9 chips for future iterations of the iPhone, starting in 2015. Apple also made a deal with Samsung for future 14-nanometer chips, which means that Samsung has beaten out Taiwan Semi to the 14-nanometer transistor size. The Taiwanese company, despite being one of the very major few chip fabs left, couldn't get get a 14-nanometer production line up and running in time for Apple's anticipated launch.

However, Apple's new partnership with Taiwan Semi has resulted in a dedicated chip fabrication facility that should allow the iPhone maker a chance to reduce its reliance on Samsung for one of the most important components in its devices. Apple had previously offered Taiwan Semi sizable investments to guarantee dedicated capacity, only to be rebuffed as Taiwan Semi sought to maintain its flexibility. To ensure such flexibility in light of the new deal, Taiwan Semi has also been branching out into LED lighting and solar energy. Moving beyond its core business isn't without risks, but these two industries continue to grow by leaps and bounds. If management pulls it off, Taiwan Semi's flagging free cash flow -- no doubt a consequence of equipment investments -- could turn up in a big way. At the very least, the revenue from these two areas could even out the cyclicality of its chip business.

As the largest chip foundry, Taiwan Semi has the size to maintain reliable profitability, where fabless chip makers tend to vacillate between red and black ink. If Apple continues to shift production to Taiwan Semi and away from Samsung, Taiwan Semi will have a massive new customer that can singlehandedly boost its bottom line -- provided that the world doesn't fall out of love with iStuff, that is.

Putting the pieces together
Today, Taiwan Semiconductor has some of the qualities that make up a great stock, but no stock is truly perfect. Digging deeper can help you uncover the answers you need to make a great buy -- or to stay away from a stock that's going nowhere.

Apple has a history of cranking out revolutionary products -- and then creatively destroying them with something better. Read about the future of Apple in the free report "Apple Will Destroy Its Greatest Product." Can Apple really disrupt its own iPhones and iPads? Find out by clicking here.

Hot Value Stocks To Buy For 2014

On Monday, the Department of Defense awarded 19 contracts, which added�up to just under $1.5 billion in total value. The largest award went to a private company to pay for "full line food distribution" in Okinawa. But even so, there were a few contracts worth noting, going to publicly traded companies:

Kratos Defense & Security Solutions (NASDAQ: KTOS  ) subsidiary Gichner Shelter Systems won a $25.5 million fixed-price, indefinite-delivery/indefinite-quantity contract to provide "up to" 400 mobile facility production units for use in testing, repair, and operation of avionics and other equipment by the Marine Corps and Navy in training and expeditionary scenarios. Delivery is due July 2018. URS (NYSE: URS  ) Technical Services was awarded a $14.2 million option exercise on its contract to support the Air Combat Command's Unmanned Aircraft System Operations Center -- and in particular, its MQ-1 Predator and MQ-9 Reaper aircraft. DOD says the cumulative face value of this contract now exceeds $124.6 million and will conclude on June 30, 2014. Sanofi (NYSE: SNY  ) Pasteur won a maximum $14.2 million firm-fixed-price contract to supply flu vaccines to the U.S. Army, Navy, Air Force, Marine Corps, and federal civilian agencies through Sept. 30, 2013. Similarly, Novartis (NYSE: NVS  ) Vaccines and Diagnostics was awarded a contract worth up to $14.1 million to supply flu vaccines to the Army, Navy, Air Force, and Marine Corps by the same delivery date. Finally, EADS (NASDAQOTH: EADSY  ) North America was awarded a $12.9 million increase to a previously awarded firm-fixed-price, option-filled contract to provide logistics services for the Army's aviation assets.

Hot Value Stocks To Buy For 2014: Newstrike Resources Ltd. (NR.V)

Newstrike Resources Ltd., an early stage exploration company, engages in the acquisition and exploration of precious and base metal properties in Canada. It principally explores for gold ores. The company holds interests in the Amalgamated Commodore property located in the Kirkland Lake region of Ontario; and the Swansea property situated in the Larder Lake area of Ontario. It also has interest in an oil and gas exploration project consisting of approximately 1,600 acres of crown and freehold mineral leases near the town of Camrose, Alberta. The company was formerly known as Newbliss Resources Ltd. and changed its name to Newstrike Resources Ltd. in January 2005. Newstrike Resources Ltd. was founded in 2004 and is based in Toronto, Canada.

Hot Value Stocks To Buy For 2014: Rio Novo Gold Inc Ord(RN.TO)

Rio Novo Gold Inc. engages in the acquisition, exploration, and development of mineral resource properties. The company primarily explores for gold deposits. Its properties comprise the Almas Gold project located in the Tocantins State, Brazil; the Guarant�Gold project located in the Mato Grosso State, Brazil; and Toldafria Gold project located in the Caldas State, Colombia. The company was formerly known as Rio Novo Holdings S.A. and changed its name to Rio Novo Gold Inc. in January 2010. Rio Novo Gold Inc. was incorporated in 2008 and is based in Toronto, Canada.

Best Stocks To Own For 2014: Oncard International Ltd (ONC.AX)

Oncard International Limited engages in the provision of loyalty, rewards, and payment solutions in Australia, Asia, and China. The company provides private label and co-branded loyalty, reward, or payment solutions, including reward cards, debit cards, gift cards, dining cards, staff cards, credit cards, and phone cards, as well as insurance services. The company also offers SmartPASS prepaid cards; OnCard Rewards that provides multi-merchant points schemes and co-branded rewards programs; MarketSMART technology that provides the intellectual property for use in the OnCard Rewards operations; and Buffet Club, a loyalty programme, which offers Dining Club memberships. It serves a range of industries, including hospitality, retail, finance, and lifestyle. The company is headquartered in Quarry Bay, Hong Kong.

Top Financial Stocks To Buy Right Now

In a recent poll by American Banker, financial institutions scored second to last in industry reputation. Who could possibly be worse? Congress. For banks, this is not good.

In many ways the financial industry let down the American public leading up to and through the financial crisis. Greed overwhelmed prudence and gave way to the systemic near-collapse we are all now familiar with. Things only got worse as the crisis progressed and then abated, with bad behavior becoming the expectation for banks, which now seem to be constantly on the defensive.�

In the video below, Motley Fool contributor Jay Jenkins discusses the survey's results and its implications for the largest U.S. banks like Wells Fargo (NYSE: WFC  ) , Bank of America (NYSE: BAC  ) , and JPMorgan Chase (NYSE: JPM  ) .

Top Financial Stocks To Buy Right Now: ROB(ROB.AX)

Robe Australia Limited does not have significant operations. Previously, it was engaged in the provision of client investment advisory, stock broking and associated financial, corporate advisory, and fund and wealth management services. The company was formerly known as Tolhurst Group Limited and changed its name to Robe Australia Limited in April 2009. The company was incorporated in 1920 and is based in Melbourne, Australia.

Top Financial Stocks To Buy Right Now: Worthington Industries Inc.(WOR)

Worthington Industries, Inc. operates as a diversified metals processing company focusing on steel processing and manufactured metal products in the United States, Canada, and Europe. It processes flat-rolled steel and stainless steel for the automotive, construction, lawn and garden, hardware, furniture, office equipment, electrical control, tubing, leisure and recreation, appliance, agricultural, HVAC, container, and aerospace markets. The company also produces low-pressure liquefied petroleum gas and refrigerant gas cylinders; high-pressure and industrial/specialty gas cylinders; seamless steel high pressure cylinders for compressed natural gas storage in motor vehicles; aluminum-lined, composite-wrapped high-pressure cylinders; airbrake tanks; and consumer products. In addition, it produces recovery tanks for refrigerant gases; air reservoirs for truck and trailer original equipment manufacturers; and Balloon Time helium kits. Further, the company designs and manufactu res reusable custom platforms, racks, and pallets made of steel for supporting, protecting, and handling products throughout the shipping process; provides framing systems and stairs for mid-rise buildings, and current and past model automotive service stampings; designs, builds, and supplies light gauge steel framed commercial structures and multi-family housing units; supplies and constructs metal framing products for single family housing with a focus on military housing; and manufactures pre-engineered steel egress stair solutions. Worthington Industries was founded in 1955 and is headquartered in Columbus, Ohio.

Best Stocks To Invest In 2014: Destination Maternity Corporation(DEST)

Destination Maternity Corporation engages in the design and retail of maternity apparel. It offers casual and career wear, formal attire, lingerie, sportswear, and outerwear. As of September 30, 2011, the company operated 2,352 retail locations, including 658 stores in 50 states of the United States (U.S.), Puerto Rico, Guam, and Canada; and 1,694 leased departments located within department stores and baby specialty stores in the U.S. and Puerto Rico. It operates stores under the Motherhood Maternity, A Pea in the Pod, and Destination Maternity names. Motherhood Maternity brand serves the value-priced portion of the maternity apparel business with stores located in regional malls, strip and power centers, and central business districts. A Pea in the Pod brand serves the medium-priced and luxury portion of the maternity apparel business with stores located in regional malls, lifestyle centers, central business districts, and stand-alone stores. Destination Maternity brand provides Motherhood and Pea merchandise with stores located in regional malls and lifestyle centers. The company also sells its merchandise on the Internet through DestinationMaternity.com and brand-specific Web sites. In addition, Destination Maternity Corporation offers Two Hearts Maternity by Destination Maternity collection at Sears stores in the U.S. through a leased department relationship. Further, the company distributes its Oh Baby by Motherhood collection through a license arrangement at Kohl?s stores in the U.S. and through Kohls.com. Additionally, it had 66 international franchised locations comprised of 15 stand-alone stores in the Middle East and South Korea under the Destination Maternity name; and 51 shop-in-shop locations in India and South Korea. The company was formerly known as Mothers Work, Inc. and changed its name to Destination Maternity Corporation in December 2008. Destination Maternity Corporation was founded in 1980 and is headquartered in Philad elphia, Pennsylvania.

Top Insurance Companies For 2014

While many investors avoid investing in banks, much of Warren Buffett's success has come from his investments in the financial sector. What gives Buffett the confidence to commit billions of dollars to an industry that many have classified as a "black box?"

In this video, Motley Fool banking analysts Matt Koppenheffer and David Hanson discuss Buffett's bank investments and tell investors how Buffett's process highlights an important trend for all investors.�

Thanks to the savvy of this investing legend, Berkshire Hathaway's book value per share has grown a mind-blowing 586,817% over the past 48 years. But with Buffett aging and Berkshire rapidly evolving, is this insurance conglomerate still a buy today? In The Motley Fool's premium report on the company, Berkshire expert Joe Magyer provides investors with key reasons to buy as well as important risks to watch out for. Click here now for instant access to Joe's take on Berkshire!

Top Insurance Companies For 2014: Sun Life Financial Inc.(SLF)

Sun Life Financial Inc., together with its subsidiaries, provides various life and health insurance, savings, investment management, retirement, and pension products and services to individuals and corporate customers. It offers individual life insurance policies, including individual term life, universal life, critical illness, disability, accident, and accidental death and dismemberment insurance policies; and group life insurance policies. The company also provides individual health insurance, long-term care insurance, group health benefits, dental benefits, and group insurance; and various individual and group annuity, retirement, and investment income products and services, such as mutual and pooled funds, variable and fixed annuities, savings, retirement and pension plans, and education savings. In addition, it offers asset management services for corporate retirement plans, separate accounts, public or government funds, and insurance company assets to institutional clients; and advisory services to individual investors. Further, the company provides run-off reinsurance services. Sun Life Financial Inc. distributes its products through direct sales agents, independent and managing general agents, financial intermediaries, broker-dealers, banks, pension and benefit consultants, and other third-party marketing organizations. The company operates primarily in Bermuda, Canada, China, Hong Kong, India, Indonesia, Ireland, the Philippines, the United States, and the United Kingdom. Sun Life Financial Inc. was founded in 1999 and is based in Toronto, Canada.

Top Insurance Companies For 2014: Marsh & McLennan Companies Inc. (MMC)

Marsh & McLennan Companies, Inc., a professional services company, provides advice and solutions in the areas of risk, strategy, and human capital. It operates in two segments, Risk and Insurance Services, and Consulting. The Risk and Insurance Services segment provides risk management and insurance broking, reinsurance broking, and insurance program management services for businesses, public entities, insurance companies, associations, professional services organizations, and private clients. The Consulting segment offers advice and services to the managements of organizations in the area of human resource consulting, comprising retirement and investments, health and benefits, outsourcing and talent; and strategy and risk management consulting, such as management, economic, and brand consulting. The company also provides investment consulting services for endowments and foundations in the United States; health and benefit recordkeeping, and employee enrollment technology; human resource knowledge, data, and solutions for professionals in various industries; and Medicaid policy consulting services. It principally serves customers in the United States, the United Kingdom, the Asia Pacific, and Continental Europe. Marsh & McLennan Companies, Inc. was founded in 1871 and is headquartered in New York, New York.

Best Stocks To Buy Right Now: Aon Corporation(AON)

Aon Corporation provides risk management services, insurance and reinsurance brokerage, and human resource consulting and outsourcing services primarily in the United States, the Americas, the United Kingdom, Europe, the Middle East, Africa, and the Asia Pacific. The company?s Risk Solutions segment offers retail brokerage products and services, including affinity products, general underwriting management services, placement services, and captive management services; and advisory services to technology, financial services, agribusiness, aviation, construction, health care, and energy industries, as well as facilitates various risk management solutions for property liability, general liability, professional liability, directors' and officers' liability, workers' compensation, and various healthcare products. This segment also provides risk consulting services comprising captive management; eSolutions products that enable clients to manage risks, policies, claims, and safet y concerns through an integrated technology platform; reinsurance brokerage services, such as actuarial, enterprise risk management, catastrophe management, and rating agency advisory services; property and casualty reinsurance; and specialty lines, which include professional liability, medical malpractice, accident, life, and health, as well as capital management transaction and advisory services. Its HR Solutions segment offers human capital services in the areas of health and benefits, retirement, compensation, and strategic human capital; and benefits administration and human resource business process outsourcing services. The company was founded in 1919 and is headquartered in Chicago, Illinois.

Advisors' Opinion:

• [By Michael]

  Aon Corp. (NYSE: AON : 46.02, 0.87) registered net profit of $258 million or 75 cents per share in its Q2, up from $153 million, or 54 cents per share a year earlier. Analysts had forecasted earnings of 82 cents per share for the company. Total revenue during the quarter rose 48 percent to $2.8 billion. Shares had closed yesterday's trading at $49.39.

• [By Robert Holmes]

  Company Profile: Aon is a provider of risk-management services, insurance and reinsurance brokerage and human capital and management consulting. In July 2010, the company announced a merger with Hewitt Associates, an HR consulting and outsourcing company.

  Share Price: $46.30 (Dec. 6)

  2011 Return: 0.7%

  Investment Thesis: William Blair analysts see several catalysts for Aon Corp. in 2012, the most notable of which is the merger with Hewitt, which should reap rewards next year. The analysts forecast a 100-basis-point improvement in pretax margin for 2012 and a 250-basis-point improvement for 2013.

  "The margin in the brokerage segment has finally begun showing progress," the analysts write. "With forecast organic growth remaining solid (our estimate is 3% for 2012), the segment should be able to secure additional margin expansion for the next few years. We forecast 40 basis points of pretax margin improvement during 2012 and 2013."

  Additionally, William Blair expects Aon's free cash flow growth to remain robust and their forecast assumes 30 million of share repurchases over the next two years, which they argue could be a conservative number if the cash flow from the merger with Hewitt. accelerates into 2012.

Top Insurance Companies For 2014: Iamgold Corporation(IAG)

IAMGOLD Corporation, together with its subsidiaries, engages in the exploration, development, and production of mineral resource properties worldwide. It primarily explores for gold, silver, zinc, copper, niobium, diamonds, and other metals. The company holds interests in eight operating gold mines, a niobium producer, a diamond royalty, and exploration and development projects located in Africa and the Americas. Its advanced exploration and development projects include the Westwood project in Canada; and the Quimsacocha project, which consists of 3 mining concessions covering an aggregate area of approximately 8,030 hectares in Ecuador. The company was formerly known as IAMGOLD International African Mining Gold Corporation and changed its name to IAMGOLD Corporation in June 1997. IAMGOLD Corporation was founded in 1990 and is based in Toronto, Canada.

Advisors' Opinion:

• [By Christopher Barker]

  Although I have not shed my long-standing contention that Yamana Gold offers one of the more deeply discounted vehicles for long-term gold exposure, lately my outlook for IAMGOLD has turned particularly bullish. With a looming spin-off of a 10% to 20% stake in the company's reliably profitable Niobec niobium mine, and the recent sale of its interest in a pair of high-cost gold operations in Ghana for $667 million, IAMGOLD finds itself in terrific financial shape to execute an aggressive $1.2 billion expansion imitative at existing operations.

  Considering the $1.6 billion net asset value (after tax) that IAMGOLD recently assessed for the Niobec mine alone, and a presumed hoard of more than $1.2 billion (in cash, cash equivalents, and gold bullion held for investment), at a market capitalization of $6.9 billion I find extreme comfort in the market's resulting valuation for IAMGOLD's 15.2 million ounces of attributable gold reserves.

JPMorgan's Imperial Chairman Remains

Despite serious missteps leading to the London Whale trading scandal, which blew a $6.2 billion hole into JPMorgan Chase's (NYSE: JPM  ) balance sheet and earned the scorn of regulators, CEO and Chairman Jamie Dimon's board has continued to insist that he's doing a great job.

Many investors disagree, and rightly so. However, these dissenters were unable to get majority support for a shareholder proposal pushing the company to take on an independent chair.

According to the preliminary voting results announced on Tuesday, about 32% of shares voted in favor of a shareholder proposal calling for an independent chair at JPMorgan. While 32% is a minority, it is a significant percentage -- especially given the obstacles dissenting investors faced in fighting the board's recommendation.

The value of independent oversight
I believe it is generally a better idea for public companies to employ an independent chair, and the data supports my view. For example, according to a 2012 study conducted by corporate governance expert Nell Minow's organization, companies with a combined CEO and chair offer higher risks and lower long-term returns to shareholders. The study also finds that the costs of paying the combined salaries of a separate CEO and chair tend to be lower than the cost of paying the salary of one person occupying both roles.

Further, I think investors have a particularly strong reason to want an independent chair at JPMorgan, where I believe company leadership has compromised the trust of shareholders and regulators by making inexcusably poor decisions leading to the London Whale scandal. Here are a few highlights:

The company obscured risky investments by ignoring risk limit breaches and altering risk models. Even though Dimon allegedly knew about the size and complexity of the London Whale trades and the losses already incurred because of them, he dismissed investor concerns about the trades and called the threat a "tempest in a teapot." Dimon certified a deeply flawed internal controls process. The board exercised such lax oversight over the internal-audit and finance functions, and over Dimon himself, that regulators intervened and required it to submit a plan for enhancing oversight in the future.

Given these missteps, I believe investors were right to call for an independent board chair.

Obstacles
Because of the obstacles Dimon dissenters faced in stripping him of the chairmanship, I find it notable that so many shareholders voted for the proposal calling for an independent chair. 

1. Access to shareholder capital
Like all other public companies, JPMorgan is able to use shareholder capital to lobby for its recommendations and against the recommendations of shareholders. Activist shareholders, on the other hand, have to spend their own money to lobby for their proposals.

2. Exclusive access to early voting tallies
JPMorgan recently gained another advantage over activist shareholders when proxy communications and voting company Broadridge Financial Solutions (NYSE: BR  ) cut off activist investors backing shareholder proposals from information about early voting tallies. This change occurred after trade group Securities Industry and Financial Markets Association, which includes JPMorgan as a member, challenged Broadridge's decision to provide shareholders with this information.

This is significant, as it provides companies with valuable information they can use to guide their campaign strategies while depriving activist shareholders of the same information.

3. An "indispensable" leader
Finally, some shareholders may have been concerned that Jamie Dimon would resign if he were stripped of the chairmanship -- especially given the fact that some fear nobody at JPMorgan is currently prepared to step into the role of CEO.

As Yves Smith points out on her award-winning economics blog Naked Capitalism, "the fact that there is no one even remotely plausible in the [can] as successor means Dimon has made himself indispensable (well, until you remember the Clemenceau saying, 'The graveyards are full of indispensable men.')"

In other words, if Dimon is indispensable, it's because he's made himself indispensable by failing to cultivate a strong successor -- thus creating yet another obstacle to shareholders voting him out.

However, this kind of "indispensability" is not the kind shareholders should like, as it's arguably established by poor leadership and succession planning rather than stellar performance. 

The Foolish takeaway
While Dimon won this particular battle, I believe the succession concerns at JPMorgan, along with the risk, governance, and regulatory concerns, should make investors wary of the stock.

More from The Motley Fool
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Hot Clean Energy Stocks To Buy For 2014

RENO, Nev. (AP) -- Apple (NASDAQ: AAPL  ) said it will pay for construction of an 18-megawatt photovoltaic solar plant in northern�Nevada�to provide power for a data center the technology giant plans east of Reno.

The Fort Churchill Solar Array, to be built in Yerington, was included in a filing Monday by NV Energy (NYSE: NVE  ) with the Public Utilities Commission.

Apple announced plans last year to build the data center. The solar generating plant would be located in Lyon County, south of that facility. The solar plant proposal must be approved by state regulators, a process that could take several months.

In a statement, Apple said the solar project would provide renewable energy for the data center and add clean energy to the power grid.

Hot Clean Energy Stocks To Buy For 2014: Dorex Minerals Inc(DOX.V)

Dorex Minerals Inc., an exploration stage company, engages in the acquisition, exploration, and development of mineral properties located in British Columbia and Ontario, Canada; and the Slovak Republic. It primarily explores for precious and base metals properties. The company was formerly known as Alinghi Minerals Inc. and changed its name to Dorex Minerals Inc. in April 2006. Dorex Minerals was incorporated in 1989 and is based in Vancouver, Canada.

Hot Clean Energy Stocks To Buy For 2014: PURE Bioscience Inc.(PURE)

Pure Bioscience, Inc. engages in the discovery, development, and commercialization of bioscience products principally in the United States. The company offers silver dihydrogen citrate (SDC) based antimicrobials. The silver dihydrogen citrate technology is an electrochemical process that allows the generation of ionized silver in the presence of organic acid. It provides PURE Hard Surface, a hard surface disinfectant and food contact surface sanitizer for use in food processing equipment, machinery, and utensils; Axen30, a hard surface disinfectant; Silv�ion, an antimicrobial formulation used as a raw material in the manufacturing of personal care products; and Axenohl, an antimicrobial formulation for use as a raw material in the manufacturing of environmental protection agency-registered products. The company also offers research and development services in food processing, agriculture, water treatment, pharmaceuticals, and oil and gas projects. It sells its products t hrough partners and distributors primarily to industrial and consumer markets. The company, formerly known as Innovative Medical Services, was founded in 1992 and is headquartered in El Cajon, California.

5 Best Stocks For 2014: Terrex Energy Inc (TER.V)

Terrex Energy Inc., a junior oil company, engages in development, exploitation, and production of petroleum and natural gas in the Western Canadian Sedimentary Basin. It holds 100% working interests in the Strathmore property, which covers an area of approximately 3,840 acres and is located to the south of Calgary, Alberta; and properties covering an area of 4,320 acres, located in the Two Creek area of west central Alberta. The company was founded in 2010 and is headquartered in Calgary, Canada.

Top 5 Penny Stocks To Buy Right Now

It's been more than three years since the spill at the Macondo well in the Gulf of Mexico, and day by day the prospects for oil exploration there seem to get better. A recent report by Wood MacKenzie shows that production in the Gulf went up 6% last year, and another 4% is expected this year. By 2018, the research group�believes�that the Gulf will be back to its pre-Macondo-spill high in�production�of 2 million barrels per day. �

For this to happen, though, exploration and production companies will need to spend a pretty penny. Between now and 2015, E&P companies are expected to spend somewhere around $20 billion. In this video, fool.com contributor Tyler Crowe looks at what this could mean for oil services companies that specialize in offshore regions such as the Gulf.

Top 5 Penny Stocks To Buy Right Now: Pinnacle Data Systems Inc.(PNS)

Pinnacle Data Systems, Inc. provides electronics repair and reverse logistics, ODM and OEM integrated computing services, and embedded computing products and design services for the computing, telecommunications, imaging, defense/aerospace, medical, semiconductor, and industrial automation markets in the United States and internationally. The company provides various engineering and manufacturing services to OEMs requiring custom product design, system integration, repair programs, warranty management, and/or specialized production capabilities. Its product capabilities range from board-level designs to fully integrated systems specializing in long-life computer products and customer-centric solutions. The company also operates as a software dealer and distributor. Pinnacle Data Systems, Inc. was founded in 1989 and is headquartered in Groveport, Ohio.

Top 5 Penny Stocks To Buy Right Now: Harvard Bioscience Inc.(HBIO)

Harvard Bioscience, Inc. develops, manufactures, and markets apparatus and scientific instruments used in life science research in pharmaceutical and biotechnology companies, universities, and government laboratories in the United States and internationally. The company?s products target ADMET testing, and molecular biology and liquid handling application areas. Its ADMET testing products comprise absorption diffusion chambers that measure the absorption of a drug into the bloodstream; well equilibrium dialysis plates for serum protein binding assays; organ testing systems; infusion pumps for infusing liquids; behavioral products used in neuroscience, cardiology, psychological, and respiratory studies to evaluate the effects of situational stimuli, drugs, and nutritional infusions on motor and sensory, activity, and learning and test behavior; cell injection systems; ventilators; and electroporation products. The company also distributes various devices, instruments, and c onsumable items used in experiments involving cells, tissues, organs, and animals in the fields of proteomics, physiology, pharmacology, neuroscience, cell biology, molecular biology, and toxicology. It sells its ADMET testing products under the Harvard Apparatus, BTX, KD Scientific, Hugo Sachs Elektronik, Panlab, and Warner Instruments brands names. Its molecular biology and liquid handling products include molecular biology spectrophotometers, DNA/RNA/protein calculators, multi-well plate readers, amino acid analysis systems, liquid dispensers, gel electrophoresis systems, and consumables primarily consisting of pipettes, pipette tips, autoradiography films, gloves, thermal cycler accessories, and reagents. The company sells its products to researchers through catalogs, its Website, and distributors, as well as directly in the United States, the United Kingdom, Germany, France, Spain, and Canada. Harvard Bioscience, Inc. was founded in 1901 and is headquartered in Hollisto n, Massachusetts.

Best Stocks To Invest In Right Now: Independent Bank Corporation(IBCP)

Independent Bank Corporation operates as a holding company for the Independent Bank that provides various retail and commercial banking services in Michigan. The company offers various deposit products, including non-interest bearing demand deposits, time deposits, checking and savings accounts, and NOW accounts. It also provides commercial lending, direct and indirect consumer financing, mortgage lending, and safe deposit box services. The company, through its other subsidiaries, offers payment plans used by consumers to purchase vehicle service contracts and title insurance services, as well as provides investment and insurance services. As of May 2, 2011, it operated approximately 100 offices across Michigan?s Lower Peninsula. The company was founded in 1864 and is based in Ionia, Michigan.

Advisors' Opinion:

• [By Harding]

  Independent Bank is a commercial bank in Michigan. It provides checking and savings accounts, commercial lending, direct and indirect consumer financing and mortgage lending.

  Shares of the Michigan company climbed after Independent Bank said its net loss applicable to shareholders shrank to $4.9 million, or 65 cents a share, in the fourth quarter, compared to a year-earlier loss of $48.2 million, or $20.49 a share. On Feb. 16, Independent Bank announced its senior management succession plan, although shares pulled back shortly after when the company announced the unregistered sale of 253,000 shares of common stock to Dutchess Opportunity Fund II as part of an investment agreement established in July 2010.

  Current Share Price: $3.23 (March 29)

  First Quarter Total Return: 148%

  Analyst Ratings: Stifel Nicolaus is the only research firm currently following Independent Bank, recommending that investors hold on to shares.

  TheStreet Ratings has a "sell" rating on Independent Bank, noting that despite the recent stock rally, shares are down sharply in the past two years and underperform the S&P 500. "Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter," the March 20 research note reads.

Top 5 Penny Stocks To Buy Right Now: Atlas Air Worldwide Holdings(AAWW)

Atlas Air Worldwide Holdings, Inc. provides air cargo and outsourced aircraft operating solutions worldwide. The company operates through four segments: Aircraft, Crew, Maintenance, and Insurance (ACMI); Air Mobility Command (AMC) Charter; Commercial Charter; and Dry Leasing. The ACMI segment offers aircraft that is crewed, maintained, and insured by the company for lease. The AMC Charter segment provides full planeload charter flights to the U.S. military. The Commercial Charter segment provides planeload of capacity charter services to charter brokers, freight forwarders, direct shippers, and airlines. The Dry Leasing segment provides for the leasing of aircraft and/or engines to customers. The company operates a fleet of Boeing 747 freighters. Its customers include airlines, express delivery providers, freight forwarders, the U.S. military, and charter brokers. It operates in Asia, the Middle-East, Australia, Europe, South America, Africa, and North America. As of Decem ber 31, 2009, the company operated a fleet of 747-400 freighter aircraft. Atlas Air Worldwide Holdings was founded in 1992 and is based in Purchase, New York.

Top 5 Penny Stocks To Buy Right Now: Medallion Financial Corp.(TAXI)

Medallion Financial Corp., through its subsidiaries, operates as a specialty finance company in the United States. The company engages in originating, acquiring, and servicing loans that finance taxicab medallions and various types of commercial businesses. It offers commercial loans to finance the purchase of the equipment and related assets necessary to open a new business, or the purchase or improvement of an existing business; asset-based loans to small businesses; and secured mezzanine loans to businesses in various industries, including manufacturing and various service providers. The company also raises deposits; originates consumer loans for the purchase of recreational vehicles, boats, motorcycles, trailers, and hearing aids; and conducts other banking activities. In addition, it provides other debt, mezzanine, and equity investment capital to companies in various industries. The company was founded in 1995 and is headquartered in New York, New York.

Yum! Brands Is Going Upscale

The success and popularity of the fast-casual dining concept has not been lost on other restaurant operators, particularly Yum! Brands (NYSE: YUM  ) , which has decided to pull up a seat to the table.

Both Chipotle Mexican Grill (NYSE: CMG  ) and Panera Bread (NASDAQ: PNRA  ) have been some of the best restaurant concepts over the past few years, but particularly during the recession, as diners went down market to save money while still getting a good value for their dollar.

Sales at Chipotle have expanded at nearly 20% annually over the last five years, while operating profits soared more than 30%. For Panera, the growth rates have been similarly lip-smacking good, with revenues rising at a 14% compounded annual growth rate, and profits up 27% annually.

In contrast, Yum, which operates fast food chains Taco Bell, KFC, and Pizza Hut, has seen an anemic sub-4% rise in sales, and just an 8% rise in profits over the same time frame. While lately the chain has suffered as a result due to its exposure to China, where a slowing economy and a avian flu outbreak caused sales to dip, even fast food leader McDonald's, which obviously has a more focused format than Yum, could only post comparable results to its rival.

It could be for that reason Yum has decided to take a bite out of the fast casual market, the area where industry analysts see the best potential for growth still. 

The move began last year when Yum brought in celebrity chef Lorena Garcia to spice up its Taco Bell menu, while creating a more lounge-like ambience in its restaurants. That followed a trend launched by Wendy's and Burger King, who also installed lounges, while giving their menus a makeover. But Yum is extending the concept to its KFC chicken business now, as well, finally burying the iconic goateed image of Colonel Sanders, and unveiling what it calls a new "KFC eleven," a nod to the 11 herbs and spices of the original KFC recipe. The new concept will feature flatbread sandwiches, fresh salads, and a more relaxed atmosphere.

Analysts say restaurant sales overall should be similar to last years results, but the fast casual market will be best to capture the opportunity with concepts like Panera and Cheesecake Factory their favorites. With the U.S. Census Bureau saying that sales at restaurants and bars were up 3.9% in June, Yum's upscale attempt to latch onto some fancy feasts means it could be time for investors to pull up a chair here, as well.

While China's immediate effect on Yum! Brands has been negative, there's a long-term story in international opportunities. Profiting from our increasingly global economy can be as easy as investing in your own backyard. The Motley Fool's free report, "3 American Companies Set to Dominate the World," shows you how. Click here to get your free copy before it's gone.

Agenus: Key Clinical Events Are Imminent

Key Value Drivers for Agenus Through 2015

I am initiating coverage of Agenus (AGEN) with a Buy. I have just published a basic report on my website, which goes into detail on the company's two core technology platforms: (1) the heat shock protein technology that is the basis of therapeutic and preventive vaccines for cancer and infectious disease, and (2) the QS-21 Stimulon adjuvant that is being used by Agenus and other vaccine developers to enhance the effectiveness of their vaccines. This report is a summary of that more detailed report.

Glaxo (GSK) is Agenus' primary partner for QS-21 and currently has 19 vaccines in development that use QS-21, four of which are in late stage Phase III development and are critical to my investment thesis. They are:

1. The MAGE A-3 cancer vaccine that is being used as adjunctive therapy in surgically resected stage IIIb and IIIc melanoma. Topline data on this Phase III trial will be reported in 2H, 2013. If the trial is successful, I think the product could be launched in the US and Europe in early 2015.

2. The same MAGE A-3 vaccine is also being developed for surgically resected stages Ib, II or IIIa non-small cell lung cancer. Topline data on this trial will be available in 4Q 2013 or early 2014. If the trial is successful, I think the product could be launched in the US and Europe in early 2015 at the same time as the melanoma indication.

3. RTS,S is a vaccine for malaria. Interim results on the Phase III trial of this vaccine have been unclear, with some positive and some not so positive data. More definitive data will be reported in 4Q 2013 and in 2014. If this upcoming data is positive, this vaccine could become part of the normal vaccination program in sub-Saharan Africa, with this process beginning in 2015.

4. A vaccine is in development for herpes zoster, commonly known as shingles. The vaccine is being developed under the premise that it will be superior to the current market leader, Merck's Zostavax, and repla! ce much of that product's sales. Topline data for this trial will be available in late 2014 and if the results are positive, marketing could begin in early 2016.

The following table shows my estimates for the sales potential of these four Glaxo vaccines and the royalties that Agenus will recieve.

24

Table 1: SmithOnStocks Estimates of Glaxo Vaccine Sales and Resultant Agenus Royalties
$ millions	2015	2016	2017	2018	2019	2024
Glaxo Vaccine Revenues
MAGE A-3 in Non Small Cell Lung Cancer	137	363	867	1,226	1,626	2,181
MAGE A-3 in Melanoma	42	113	268	380	503	675
RTS,S in Malaria	11	31	43	81	199	699
Herpes Zoster Vaccine	0	50	200	500	750	1,126
Total Glaxo Revenues	191	557	1,378	2,187	3,078	4,681
Agenus Royalties
MAGE A-3 in Non Small Cell Lung Cancer	5	13	31	44	59	79
MAGE A-3 in Melanoma	10	14	18	24
RTS,S in Malaria	0	1	1	1	3	11
Herpes Zoster Vaccine	0	1	3	8	12	18
Total Agenus Royalties	7	19	45	67	92	132
Source: SmithOnStocks Estimates

Moving on to the heat shock protein vaccine programs, initial clinical results have been quite encouraging for the use of Prophage vaccine technology in recurrent and newly diagnosed glioblastoma. This has resulted in the May 2013 start of a Phase II trial in 222 recurrent glioblastoma patients. With strong results, this trial might be sufficient for regulatory approval. Topline results will probably be available in 2015 and in the best case; Prophage could be approved for recurrent glioblastoma in 2016. A Phase II trial in newly diagnosed glioblastoma patients could begin in early 2014. Agenus has full rights to Prophage in these indications. Results of a 65 patient Phase II trial of HerpV, the company's vaccine for genital herpes, will read out in 4Q 2013. If the trial is successful, this program would likely be partnered in 2014.

Price Target Thinking

The potential for the stock in 2013 rests primarily on the outcome of the MAGE A-3 cancer vaccine trials. We will see the melanoma results in 3Q 2013 and the results in non-small cell lung cancer in 4Q 2013 or 1Q 2014. I estimate in my basic report that the net present value of the MAGE A-3 vaccine in melanoma is $55 million or roughly $1.09 per share after tax, if the results support regulatory approval. I estimate that the net present value in non-small cel! l lung ca! ncer is $177 million or $3.50 per share after tax. Application of a tax loss carry forward could add another $1.50 or so to net present value.

The net present value estimates are based on discounting the projected royalty stream of Agenus at a 15% discount rate, applying a 30% tax rate and dividing by fully diluted shares of 35 million. The assumption of a discount rate is somewhat arbitrary. I have chosen to use 15% in this report, but some investors might apply a lower or higher rate. I show the effect of using a 10%, 15% and 20% discount rate in the following table.

Table 2: Estimated Net Present Value of Royalties Using Different Discount Rates
	Discount rates
Pretax net present value ($ millions)	10%	15%	20%
MAGE A-3 Vaccine
Non-small cell lung cancer	$244	$177	$132
Melanoma	75	55	41
RTS,S malaria vaccine	23	16	11
Herpes zoster vaccine	51	36	26
Total	$393	$284	$210
After tax, per share net present value
MAGE A-3 Vaccine
Non-small cell lung cancer	$4.82	$3.50	$2.61
Me! lanoma	$1.48	$1.09	$0.81
RTS,S malaria vaccine	$0.45	$0.32	$0.22
Herpes zoster vaccine	$1.01	$0.71	$0.51
Total	$7.77	$5.62	$4.15
Assumes 30% tax rate and 35.4 million shares outstanding
Source: SmithOnStocks.com

Using my assumptions, the common of Agenus might be worth about $7.00 per share in early 2014 based on the royalties from the Glaxo vaccines and the net operating loss carry forward even if every other asset in the company were valued at zero. However, there may be substantial value in Agenus' internal vaccine programs in recurrent and newly diagnosed glioblastoma and the genital herpes vaccine. Based on a comparison to peer companies like Northwest Biotherapeutics (NWBO) and ImmunoCellular Therapeutics (IMUC), I believe that the internal programs at Agenus currently may be worth $150 million or $4.45 per share. Adding this to the value of the MAGE A-3 vaccine could produce a stock price of $11.00 in early 2014.

I think that success with the MAGE A-3 vaccine could have a profound, additional effect on the stock price of Agenus from a psychological standpoint. First of all, there are 19 other clinical development programs and 13 pre-clinical development programs underway in which QS-21 is being used as an adjuvant. Investors might attribute considerable value to these programs. Perhaps more importantly, success in the MAGE A-3 trial would bring credibility to the field of cancer vaccines and might lead investors to value the potential for Agenus' heat shock protein cancer and infectious disease vaccines. Currently, these are being largely ignored by biotech! nology in! vestors. Agenus could be the subject of speculative fervor if investors rush to determine what other companies are in late stage development of cancer vaccines.

I think that Agenus might decide to issue more equity if one or both of the MAGE A-3 trials are successful. By my calculations, the year-end cash position will be about $9 million, which is less than a year of cash burn. I think that an offering following positive MAGE A-3 results would be well received and would not have much of an impact on the stock price.

Biotechnology investors know that nothing is for sure in clinical trials, so what happens if the MAGE A-3 trials fail in melanoma and non-small cell lung cancer? I think the immediate effect of a failure in melanoma might be to knock the stock down to around $2.50 per share. If then MAGE A-3 failed in non-small cell lung cancer, I think the stock might trail off some more, bringing the stock to around $2.00 in early 2014. Investors would then be looking at the need for a significant financing in mid-2014, and the anticipation and execution of an offering might drive the stock to the $1.25 to $1.50 range, which is my estimate of downside risk if both MAGE A-3 trials fail.

In thinking about price targets so far, I have ignored the potential for positive results in HerpV Phase II trial in genital herpes. Success could lead to a partnering deal later in 2014 that could significantly enhance the value of the company. For the time being, I am not going to try to factor in what success or failure of this trial might mean to the stock. Similarly, I am not attributing value to potential Agenus royalties from use with other vaccines. This adds some conservatism to my outlook.

I think that there will be some very important clinical data on the Prophage cancer vaccine trials in recurrent glioblastoma in 2015 and newly diagnosed glioblastoma in 2016. Based on looking at valuations awarded oncology companies with successful Phase II randomized trials, I could see the valuation put! on Agenu! s' heat shock cancer and infectious disease technology as being $500 million to $1 billion per year. The company currently has about 35 million shares outstanding, but there is the strong probability that share issuance will increase this significantly. I am "guesstimating" that there will be 55 million shares outstanding in 2015 ,so that success in the Prophage program could potentially create $9.00 to $18.00 in stockholder value.

My estimated upside potential for the stock in early 2014 is $11.00+ if the MAGE A-3 trial is successful and the downside could be as low as $1.25 if all of the Glaxo vaccines fail, the Phase II HerpV trial also fails and Agenus is forced to finance at depressed prices. Even in this event, there would remain some hope that the Prophage trials in glioblastoma would succeed and result in some strong price appreciation in the 2015-2016 period. Based on this line of reasoning, I think that the risk reward is favorable for buying Agenus at this level. In order to gage the potential for success in the MAGE A-3 trials, I suggest that readers review the discussion on MAGE A-3 later in this report.

Other Value Drivers for Agenus

There are a number of other value drivers that are harder to analyze. AGEN has a net operating loss carry-forward of $624 million. Some part of this could be applied to operating profits that might arise from the Glaxo vaccines and Prophage. Not all of the net operating loss can be applied and there are complex calculations beyond my current ability to calculate to determine how much can be applied. However, every 10% of the operating loss carry-forward that can be used amounts to $1.90 per share. If only 25% can be used, the potential value is $4.75 per share

There are a large number of other potentials for creating value for which I have made no estimates. The MAGE A-3 vaccine is applicable to a number of cancers other than melanoma and non-small cell lung cancer. It is currently in Phase II trials for bladder cancer, head a! nd neck, ! gastric, hepatocarcinoma, and multiple myeloma. Moreover, Glaxo is only enrolling patients in its Phase III trials that are high expressors of MAGE A-3 in order to maximize the chances for success. In clinical practice, MAGE A-3 use might expand to a much broader population of patients with lesser MAGE A-3 expression.

Glaxo has 15 other vaccines in clinical development in addition to the MAGE A-3, malaria and herpes zoster vaccines. I have not tried to calculate the net present value of those vaccines.

Also, Agenus is developing a vaccine for herpes simplex, or genital herpes, that uses Prophage heat shock technology and the QS-21 adjuvant. This disease affects 60 million Americans and is the fastest growing sexually transmitted disease. Agenus' HerpV vaccine will report topline data from a Phase II trial in 4Q 2013. There are no vaccines approved for treatment of this disease and success in the trial could trigger a lucrative partnering deal for Agenus, and also validate the potential of Prophage technology to treat many other types of infectious diseases such as malaria, tuberculosis and HIV.

Historical Perspective

Agenus was founded in 1994; it was a pioneer in immunotherapy and bears the battle scars that are inevitable with the development of paradigm changing technologies. Its core technology was based on an understanding of the biological role of heat shock proteins in the adaptive and innate immune response to cancer and infectious disease. The company initially applied this technology to the development of autologous therapeutic cancer vaccines, which are complexes of heat shock proteins with cancer antigens derived from a patient's own tumor tissue.

In 2000, Agenus acquired Aquillo, which had developed an adjuvant for vaccines called QS-21. Adjuvants are used in almost all vaccines to rev up the immune response and in doing so, they enhance the efficacy of vaccines. Agenus has an extensive collaboration with Glaxo, which has incorporated QS-21 as an integral part ! of adjuva! nt systems used in 19 separate vaccines in clinical development. QS-21 is also a key component of a heat shock protein therapeutics vaccine for genital herpes in Phase II that Agenus is developing. In total, QS-21 is currently being used in 21 clinical development programs and 13 preclinical studies.

The heat shock protein cancer program resulted in the development of Oncophage (since renamed Prophage), one of the first therapeutic cancer vaccines. It was progressed into phase III trials in renal cell carcinoma and melanoma. Both trials failed to meet their primary endpoints, causing many investors to give up on the product and the company. The stock suffered and Agenus was left in a financial conundrum, forcing a series of financings at depressed stock prices.

A retrospective analysis of the Oncophage Phase III trials showed very encouraging data for certain patient subsets. I mentioned earlier that pioneers get battle scars, and this has certainly been the case with cancer vaccine developers. Many of the pioneers in this space -- CancerVax, Favrille, Genitope, Cell Genesis -- failed in their trials and went out of business. With the experience of Oncophage and these other pioneer companies, there was a common thread underlying their failures. The conventional way of developing cancer drugs when cancer vaccines first entered clinical development was to add new drugs to standard of care in advanced cases of cancer. If the drugs were shown to be effective in this setting, they could then be tested in earlier and less severe cases of cancer. With perfect hindsight, this has proven to be exactly the wrong way to develop cancer vaccines and other drugs based on immune therapy. The clinical experience with two approved immunotherapies, Dendreon's (DNDN) Provenge and Bristol-Myers Squibb's (BMY) Yervoy, and other work has produced a new consensus view that immunotherapies work best for early stage cancers with small tumor masses.

As a pioneer in cancer vaccines, Agenus was unfortunately loc! ked into ! this exactly wrong development scheme. Upon analyzing patient subsets, Agenus was able to suggest that the drug seemed to be quite effective in earlier stage cancers. From a scientific point of view, this was an important observation and suggested that Oncophage was effective when used in earlier stages of cancer. However, regulatory agencies, for very legitimate reasons, will not accept retrospective analysis of patient sub-groups. From a regulatory standpoint, the trials were and remain a failure. A large company would have taken the experience gained in these trials to launch new Phase III trials of Oncophage in earlier stage renal cell carcinoma and melanoma patients. However, as a small developmental stage biotechnology company, this was not an option for Agenus. New trials would have taken several years to perform and Agenus was severely cash constrained; indeed, the Oncophage failure threatened its existence.

The last few years have been ones of struggles for the company financially as it moved from one financing to another and yet never had the financial resources to run the clinical trials needed to test the promise of its cancer vaccines. For a company that was not long on its luck, it found some when a neurosurgeon at the University of California in San Francisco, Dr. Andrew Parsa, became interested in the use of Prophage (previously called Oncophage), to treat both newly diagnosed and recurrent glioblastoma. Dr. Parsa ran investigator led trials in glioblastoma that created data that has led to the start of a 222 patient randomized Phase II study in recurrent glioblastoma that has the potential to be a registrational trial. Both Avastin and Gliadel, which are only modestly effective, were approved for recurrent glioblastoma with studies of similar size so that this trial might be sufficient for registration if successful.

The National Cancer Institute has decided to fund most of the estimated $21+ million needed to run the recurrent glioblastoma study. From a shareholder standpoi! nt, the f! unding for this trial requires minimal cash commitment from Agenus as it is only required to manufacture the product needed for the trial. Without Dr. Parsa, Prophage/Oncophage would be an historical footnote in cancer drug development. Importantly and interestingly, Dr. Parsa receives no compensation from Agenus, nor does he own stock. Now, Agenus has the hope that Phase II trials in glioblastoma will lead to success and a potential filing of an NDA for recurrent glioblastoma in the 2015-2016 time frame. Agenus will be meeting with the FDA later this year in order to plan for a Phase III trial in newly diagnosed glioblastoma. This could start in early 2014 and would take about two years to create topline data in 2016. Funding for this trial has not yet been put in place.

Financial Considerations

Agenus executed a restructuring of its debt in the first quarter of 2013 that significantly improved balance sheet strength. At that time, it had $39 million of senior subordinated debt that was due in August of 2014. The company had $17 million of cash on its balance sheet and relative to the recent quarterly cash burn rate of about $3.5 million per quarter, it was on track to end 2013 with $7 million of cash. Investors were looking at the bleak prospect that Agenus needed to raise nearly $50-60 million of cash in the next year or so, which is roughly equivalent to half of its market capitalization. However, raising this amount of money would no doubt have been done at a sharp discount and with substantial (probably 50%) warrant coverage. Shareholders could have seen the share count potentially double, causing very substantial dilution.

The company might have been able to retire the $39 million of debt with a new, extended debt package, but this would have left the substantial debt overhang in place. Agenus took a different tack by offering the debt holders $10 million, 20% of the royalties received from QS-21 partnered programs and 2.5 million shares of stock as a swap for the $39 million of! debt. It! then separately entered into a senior secured debt transaction with Silicon Bank for $5 million and a separate senior subordinated debt offering with investors for $5 million. This new debt matures in 24 months and can be prepaid at any time without fees or penalties. Also in the second quarter, the company received $2.3 million of sales from an ATM agreement.

Adjusting for all of the above transactions, the company now has $10 million of debt and on a pro forma basis, about $19 million of cash at the end of 1Q 2013. The fully diluted share count was increased by about 3.6 million shares to approximately 35.4 million shares. At the current price of $4.00, the fully diluted market capitalization is about $140 million.

The current operating cash burn is about $3.5 million, so at this rate, by the end of 2013, the cash position might decline to $9 million. Using a comparable rate of quarterly burn ($3.5 million per quarter) in 2014 would result in the company running out of cash in 3Q 2014 without additional cash inflows. Remember also that the company also has to retire or refinance the $10 million of newly acquired senior subordinated debt that it has just incurred before April of 2015.

From a cash standpoint, Agenus probably will elect to raise cash in 2013 if market conditions are favorable. I think that if one or both of the MAGE A-3 vaccine trials are successful and the price increases substantially, it would be prudent to bring in more cash. This could be done with a conventional equity offering in combination with its ATM facility. To provide for the repayment of debt and keep the company in a reasonably strong cash position. I think that the company might elect to raise cash of $25 million or more through stock sales. Another possibility for bringing in more cash is a partnering deal on the HerpV vaccine for genital herpes if the phase II data expected in 4Q 2013 is positive. With good data, I think that Agenus might be able to negotiate a $25 million upfront milestone payment f! or HerpV ! in 2014.

Using the assumptions I have outlined for royalties that may arise from the four late stage Glaxo vaccines, I estimate royalty revenues of $7 million in 2015, $18 million in 2016, $45 million in 2017 and $67 million in 2018. If so, the company could reach profitability in 2017. The royalties would also fund a significant part of the burn rate in 2015 and 2016.

More on the Glaxo Vaccines

The key to the Agenus investment story in 2013 and 2014 is driven primarily by the outcome of the four phase III vaccine trials being conducted by Glaxo. Agenus will receive a royalty of 4.5% on sales of the MAGE A-3 vaccine for melanoma and non-small cell lung cancer, and 2% on the malaria and herpes zoster vaccines. As a condition of a debt re-financing, Agenus will pay 20% of these royalties to the financial firm Ingalls and Snyder. Agenus will receive royalties for ten years following commercial introduction. The commercial prospects for each of these vaccines is quite different. In my basic report, I go into considerable detail on these four products, but in this abbreviated form of that report, I only go over my conclusions. Let's start with the MAGE A-3 vaccine in development for melanoma and non-small cell lung cancer.

MAGE A-3 is a very interesting and cancer specific antigen that is meaningfully expressed in up to 66% of melanomas and 35% of non-small cell lung cancers. The Glaxo trials are being conducted only in patients who express high levels of MAGE A-3. These were very large trials as there were 1,350 patients in the melanoma trial and 2,300 patients in the non-small cell lung cancer trial; the latter is the largest trial ever done in this stage of NSCLC. These trials are very different from previously conducted cancer vaccine trials in that they are being done in early stage patients (recall my earlier discussion on why immunotherapies should be tested in early stage and not late stage patients). They are also very large trials that are well powered to achieve statistical! signific! ance in their primary endpoint of median progression free survival and secondary endpoint of median overall survival. The trials are targeted at a specific population of high MAGE A-3 expressors who can benefit as opposed to a broader, non-specific patient population; this has been a mistake often made in prior cancer trials.

There is reason to hope that this approach will lead to success in the trials because of the designs of the trials, but what are the chances for success? It has been my experience that a significant percentage of clinical trials fail not because the drug doesn't work, but because the trials are too small or there are flaws in the trial design. Small biotechnology companies often don't have enough money to conduct large trials and may not have the skills to design and execute the trials. This is not the case with the MAGE A-3 vaccine as the Glaxo trials are very large and hopefully the considerable experience of Glaxo in conducting clinical trials will mitigate the design and execution risk.

I do want to take a moment to consider why these trials might fail. When I listen to pessimistic investors, the most often cited reason is the large number of cancer vaccine failures that have gone before. I believe that this was due in part to an inappropriate focus on late stage patients instead of earlier stage patients. However, this is just a hypothesis and there may be other reasons that we have yet to discover that account for these failures. Another potentially negative issue is that the MAGE A-3 vaccine targets a single antigen. It is known that when cancer treatments, which target particular cancer antigens in a cancer cell, over time, cancer cells displaying these antigens are depleted. This leads to the selection or emergence of cells that are resistant to treatment; a process that is known as antigen drift. For this reason, most cancer vaccine products -- Provenge is an exception -- are targeted at multiple antigens.

The risk of failure in these trials is significa! nt and if! they do fail, it is likely to be due to some unanticipated biological or clinical trial event. This seems to happen over and over again in the pursuit of new cutting edge products. Biology is very complex and it often takes decades to refine new therapeutic approaches as has been the case with cancer in the use of chemotherapy, monoclonal antibodies and targeted therapies. Unexpected things inevitably arise. However, I think that the Glaxo trials in melanoma and non-small cell lung cancer are well planned and conducted and have a reasonable chance for success.

Glaxo has reported two interim results from a Phase III trial of its malaria vaccine. This disease is estimated to kill 650,000 humans each year, primarily infants, young children and pregnant women. It is primarily a disease that affects less developed countries and is especially prevalent in sub-Saharan Africa. Perhaps no drug under development has the potential to save as many lives as an effective vaccine for malaria. Initial results reported in 2011 for children aged 6 to 18 months were very encouraging as they showed that Glaxo's malaria vaccine RTS,S was able to reduce the incidence of severe cases of malaria by 51%. However, a subsequent interim look at younger infants aged six weeks to five months showed only a 31% reduction in severe cases of malaria. The results in this younger age bracket are particularly important as they are the group that is at high risk and who routinely receive a program of childhood vaccines that RTS,S could become a part of.

The reaction to the interim report on the six weeks to five month age group was generally disappointment. The World Health Organization has suggested a somewhat arbitrary but accepted goal of 50% or more reduction in severe cases of malaria in order to include a malaria vaccine in routine childhood vaccination programs. Bill Gates, whose foundation has poured more than $200 million into treating malaria research, called these results disappointing. Andrew Witty, the CEO of Glaxo! , said th! e results were less than the Company had hoped for, but that Glaxo remained committed to continuing development of the vaccine.

There will be another look at the Phase III data in late 2013 and another in 2014 that will better define the role of the malaria vaccine. The key information being sought is the duration and magnitude of the immune response. There is the hope that the result of a booster shot coupled with a more mature immune system will result in improved efficacy in the six weeks to five month age group. If this does not happen, I am inclined to think that this vaccine will not become a part of the standard vaccination strategy for young African children.

The fourth Glaxo vaccine is for herpes zoster, which is more commonly referred to as shingles. Merck has the dominant vaccine in the market with Zostavax, an attenuated virus vaccine; it achieved $650 million of sales in 2012 and appears to be on a path to $1 billion of sales. The Glaxo vaccine is based on a newer technology that uses recombinantly produced antigens from the coat of the herpes zoster virus. Herpes zoster mostly affects people with compromised immune systems arising from diseases or drug treatments and the elderly. Glaxo believes that its sub-unit vaccine will be more effective than Merck's attenuated vaccine in immunocompromised patients. Glaxo's reason for developing this vaccine is that it believes it will be superior to Zostavax in both elderly and immuno-compromised patients and will largely replace Zostavax sales. If so, the Glaxo herpes zoster vaccine could have sales potential of $1 billion.

The MAGE A-3 trials if successful will define a new standard of care for the adjuvant treatment of early stage, surgically resected melanoma and non-small cell lung cancer patients with high MAGE A-3 expression. These are landmark trials and their success would mean rapid uptake of these vaccines as part of standard of care. The patient population that the MAGE A-3 vaccine addresses in non-small cell lung cancer! is about! 90,000 patients. However, only 60,000 of these patients are surgically resected, and of these patients, only 21,000 have sufficient MAGE A-3 expression. Hence 21,000 patients is the addressable market in the US and Europe for non-small cell lung cancer. The comparable numbers for melanoma are 9,000 patients in the US and Europe who are surgically resected, and of these, 6,500 have adequate MAGE A-3 expression. Hence the target market for melanoma is 6,500 patients.

In thinking about a price potential for these vaccines, a starting point is to look at prices for other immunotherapies. Yervoy costs about $120,000 per year and Provenge is priced at $90,000. Most new drugs for cancer fall into the $60,000 to $100,000 annual price range. Just for the sake of discussion, let's assume that the MAGE A-3 vaccine is priced at $80,000 per year. This means that the addressable market for non-small cell lung cancer for Glaxo is $1.7 billion, and for melanoma it is $500 million. However, Glaxo also has Phase II trials underway in bladder cancer, head and neck cancer, gastric cancer, liver cancer and multiple myeloma. Success in the melanoma and non-small cell lung cancer trials could lead to rapid clinical development and regulatory approval in these cancers that would further expand the potential. Finally, Glaxo has been very careful to conduct trials only in high MAGE A-3 expressors who are most likely to benefit in order to maximize chances for success in Phase III. In actual clinical practice, it is possible that lower MAGE A-3 expressors could be treated, which would also expand the market.

Agenus struck a deal with Glaxo that gives it a royalty of 4.5% of sales. However, in a debt restructuring agreement, Agenus agrees to give up 20% of this royalty to a creditor in return for debt forgiveness. This makes the effective royalty to Agenus 3.6%. The addressable market for Agenus in terms of royalties payable to Agenus is $100 million for non-small cell lung cancer, and for melanoma it is $31 million. ! I would e! xpect rapid uptake of the vaccine in both indications if the trials are successful. I think that within five years of introduction, the MAGE A-3 vaccine might be used in 75% of its target population. I think that the vaccines will probably be launched in early to mid-2015 and Agenus is entitled to royalties for 10 years post commercialization.

The potential for the malaria vaccine will initially be in ten countries in Africa, if it is successfully developed. It would be included in the package of standard childhood vaccinations, which are generally priced at $2.00 per vaccine. There are 180 million babies born each year in these ten African countries, so the sales potential for Glaxo for this birth cohort is $360 million per year. Initially, there could be a bulge in sales as children in the age group from six to eighteen months would also be vaccinated. Agenus receives a royalty of 2.0% from Glaxo and again this royalty is reduced to 1.6% due to the debt restructuring. On $360 million of sales, the royalties received and retained by Agenus would be $6 million.

The herpes zoster or shingles vaccine is a little harder to model. Merck has first mover advantage in the market and has achieved $650 million of sales in 2012 following four years in which production issues caused sales to fall in the $250 to $275 million range. This should be a $1 billion product for Merck by 2016 when the Glaxo vaccine could come to market. The Glaxo vaccine clinical trials are intended to show superiority to Zostavax in treating elderly and immunocompromised patients who are the patients at highest risk. Phase I and II trials have indicated that it produces a stronger immune response is such patients. With superior efficacy, the Glaxo product could replace Zostavax as the dominant vaccine in the market and aspire to a billion dollars of sales.

Agenus' Prophage Vaccines for Glioblastoma

Topline results on the Phase II trial in recurrent glioblastoma could be available in 2015 and the results in newly di! agnosed g! lioblastoma could be a little bit later in 2016. If successful, the trial in recurrent glioblastoma is potentially sufficient for registration because of the severity of the disease and lack of any effective therapy. Avastin and the Gliadel Wafer are approved for this indication but have only modest efficacy. The topline data on the Phase II trial in recurrent glioblastoma could be available in 2015 or 2016. However, if the results are not striking, there is some chance that the FDA may require a confirmatory trial for approval that could take another two years to conduct.

Data on an earlier Phase II trial in recurrent glioblastoma will be published later this year; I have not seen the results. With the decision of NCI to fund the just started Phase II trial in recurrent glioblastoma, I think that we can assume that the data was positive. Interim results in a trial of newly diagnosed glioblastoma patients was just released and indicated that median overall survival was 23.3 months versus 14.4 expected for standard of care. The data is relatively immature and I would expect the median overall survival for Prophage to improve as the patient population is followed.

Investors who have followed my work will quickly ask how I think Prophage will compare to NWBO's DC Vax-L and IMUC's ICT-107 in newly diagnosed glioblastoma; neither of these products is in a Phase II trial in recurrent glioblastoma, so potentially Prophage could be the first to gain approval in this indication. The data for DC Vax-L in Phase I trials showed median overall survival of 36.0 months in newly diagnosed glioblastoma and ICT-107 showed 38.4 months. This compares to 18.8 months for standard of care. Interim data on Prophage showed median survival of 23.3 months is less than this, but as I commented, the data is still maturing and I would expect Prophage's median overall survival to improve. By the way, this might also apply to DC Vax-L and ICT-107 as well.

Median overall survival is more than encouraging for all three! products! and is suggestive that each could be a major advance in glioblastoma. The question is how they might compete in the market if each is successful and approved for commercial use. It is too early to say definitively, but I think that because of HLA restrictions, ICT-107 would only be applicable in about 40% to 50% of the population, whereas DC Vax-L and Prophage can be used in most patients. There are likely to be other factors that might determine that the vaccines might be better in certain populations. However, I think that the potential in glioblastoma is less important than validation of the technology that success would bring. This would represent a significant advance in cancer and infectious disease treatment. Success in the glioblastoma indication would validate potential for immunotherapy in most types of cancer that would, in my opinion, be a significant advance over chemotherapy, monoclonal antibodies and targeted therapies that are the focus of almost all current cancer treatments and development efforts.

Agenus' HerpV vaccine for Genital Herpes

The final aspect of the near-term outlook for Agenus is a vaccine, HerpV, that it has developed for genital herpes. This uses heat shock proteins complexed with antigens from the viral coat or infected cells. Unlike Prophage, this product uses synthetic antigens and would be an "off the shelf" product.

Agenus is conducting a Phase II trial that is investigating the potential for HerpV to reduce viral shedding, which experts generally believe would reduce the spread of this sexually transmitted disease that affects 60 million Americans. This is Agenus' first clinical program using heat shock protein antigen complexes in the treatment of infectious disease. If successful, it could lead to other product development efforts in numerous other infectious diseases. Results are expected in late 2013 and if this trial is successful, could lead to a meaningful partnering program. The upfront milestone payment could meaningfully incr! ease the ! financial strength of the company.

Source: Agenus: Key Clinical Events Are Imminent

Disclosure: I am long NWBO, IMUC. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article. (More...)