Why Caesarstone, Kforce, and Trimble Navigation Are Today's 3 Best Stocks

The broad-based S&P falls fractionally as Caesarstone, Kforce, and Trimble Navigation rocket higher by double-digits after strong earnings reports.

Feb 12, 2014 at 5:15PM

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

Following four straight days of strong gains, the broad-based S&P 500 (SNPINDEX:^GSPC) appeared to take a breather today after unimpressive economic data failed to outweigh a slew of earnings reports, and pushed the markets lower.

Specifically, investors seemed to focus on a weak loan originations report from the Mortgage Brokers Association. The weekly report showed a 2% week-over-week decline in originations, which is concerning given that lending rates are still historically low, and that originations rose 0.4% last week. On the other hand, fluctuations in this figure aren't uncommon. But, considering that loan originations hit a nearly two-decade low in December despite a 4%, 30-year mortgage rate, this decline should give homebuilders and banks cause for concern.

The release of the Treasury Budget for January also failed to excite investors. Although the deficit of $10.4 billion was right in line with estimates, and down nearly 37% from the prior year, it reversed a surplus of $2.9 billion in the prior month, and points to plenty of work left to be done by Congress to reduce federal spending and the deficit. Given Congress' inability to work together during the past couple of years, this deficit serves as a worrisome reminder for investors.

By day's end, the S&P 500 had broken its four-day winning streak, and fallen modestly by 0.49 points (-0.03%), to close at 1,819.26.

Topping the charts and leading all companies to the upside, was quartz-countertop maker Caesarstone Sdot-Yam (NASDAQ:CSTE), which gained 19.6% after the company reported better-than-expected fourth-quarter results. For the fourth quarter, Caesarstone reported a 27% increase in revenue to a record $96.8 million (and that includes a nearly 3% negative effect from foreign currency translation), as net income jumped 58%, to $0.48 per share. By comparison, Wall Street had expected Caesarstone to report revenue of just $87.6 million on $0.40 in EPS. Overall, Caesarstone announced partnerships with all U.S.-based IKEA stores to supply them with quartz countertops, and saw its margin expand 120 basis points, to 43%. Furthermore, Caesarstone now anticipates fiscal 2014 full-year revenue of $410 million-$420 million, which perfectly brackets the $412.1 million estimate of Wall Street.

The story was very similar for professional and technical staffing solutions company Kforce (NASDAQ:KFRC), which advanced 14.1% after reporting its fourth-quarter results, and guiding its first-quarter revenue and EPS well ahead of the Street's current consensus estimates. For the quarter, Kforce's revenue improved 12%, to $302.9 million, as net income inched ever-so-slightly higher to $0.28, from $0.27 in the prior year. Kforce's CEO David Dunkel notes that Tech Flex provided the biggest boost to Kforce, with revenue up 18.3% year over year. What really excited investors, though, was the company's first-quarter guidance of $298 million-$304 million in revenue, and $0.15-$0.18 in EPS. Comparatively speaking, Wall Street analysts expected Kforce to report $292.6 million in revenue and $0.15 in EPS for the first-quarter. As for me, I'd still suggest approaching Kforce cautiously, as its top-line growth isn't translating par-for-par with its earnings growth, which could be a worrisome sign that Kforce's costs aren't under control.

Finally -- and keeping our theme of strong earnings reports driving big gains today -- position products developer Trimble Navigation (NASDAQ:TRMB) tacked on 14% after reporting better-than-expected fourth-quarter results. For the quarter Trimble delivered a 16% increase in year-over-year revenue, to $599.2 million, as adjusted EPS expanded to $0.43, from $0.28. Both results were clearly ahead of expectations that had called for just $0.36 in adjusted EPS on $567.4 million in revenue. Although the company's results demonstrate a better mix of higher-margin product sales, Trimble's CEO Steven Berglund noted that the company's growth in certain regions still remains uncertain. Following today's pop, I believe those cautious words should be enough to keep shareholders safely on the sidelines.

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Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.

The Motley Fool recommends Caesarstone. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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